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Exhibit B-3.1
AFFILIATED INTERESTS AGREEMENT
Dated as of December 4, 1995
Among
Unicom Corporation
Commonwealth Edison Company
And
Each of the Entities Identified on Exhibit A Hereto
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<TABLE>
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ARTICLE I
Definitions and Interpretation................. 1
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Section 1.1 Definitions....................................... 1
Section 1.2 Purpose and Intent; Interpretation................ 2
ARTICLE II
Use of Facilities and Services................ 3
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Section 2.1 Facilities........................................ 3
Section 2.2 Services.......................................... 3
Section 2.3 Joint Purchasing.................................. 4
Section 2.4 Cash Management................................... 5
Section 2.5 Tax Sharing....................................... 5
Section 2.6 Agreements, Etc................................... 5
ARTICLE III
Asset Sales.......................... 6
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Section 3.1 Real Property Transfers........................... 6
Section 3.2 Tangible Personal Property........................ 6
Section 3.3 Intangible Assets................................. 6
Section 3.4 Unicom Stock...................................... 6
Section 3.5 Agreements, Etc................................... 6
ARTICLE IV
Charges: Payment...................... 7
-----------------
Section 4.1 Charges........................................... 7
Section 4.2 Accounting........................................ 7
Section 4.3 Invoicing, Payment................................ 8
ARTICLE V
Cost Apportionment Methodology.................. 9
------------------------------
Section 5.1 General Principles................................ 9
Section 5.2 Fully Distributed Costs........................... 10
Section 5.3 Costs Charged to/from Unicom...................... 13
ARTICLE VI
Limitations of Liability.................... 14
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Section 6.1 No Warranties For Facilities or Services.......... 14
Section 6.2 Limited Warranties For Asset Sales................ 15
Section 6.3 No Partnership.................................... 15
Section 6.4 No Third Party Beneficiaries...................... 15
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ARTICLE VII
Term................................... 15
----
Section 7.1 Term.................................................. 15
Section 7.2 Termination........................................... 16
Section 7.3 Tax Sharing Agreement................................. 16
ARTICLE VIII
Confidential Information..................... 16
------------------------
ARTICLE IX
Miscellaneous........................... 17
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Section 9.1 Entire Agreement; Amendments.......................... 17
Section 9.2 New Parties........................................... 17
Section 9.3 Assignment............................................ 17
Section 9.4 Access to Records..................................... 17
Section 9.5 Partial Invalidity.................................... 18
Section 9.6 Waiver................................................ 18
Section 9.7 Governing Law......................................... 18
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AFFILIATED INTERESTS AGREEMENT
THIS AFFILIATED INTERESTS AGREEMENT (this "Agreement") is made and
entered into as of the 4th day of December, 1995, among Unicom Corporation, an
Illinois corporation ("Unicom"), Commonwealth Edison Company, an Illinois
corporation ("ComEd"), and each of the entities identified on Exhibit A hereto,
as such Exhibit A may be amended from time to time in accordance with the
provisions of this Agreement.
W I T N E S S E T H:
WHEREAS, the parties are related by virtue of common ownership,
directly or indirectly, of their equity securities by Unicom; and
WHEREAS, the parties believe that the central management of certain
services, the provisions to each other of certain services and facilities, and
the transfer of certain property are or may be efficient and cost-effective, and
the parties desire to make provision for these and other transactions as between
ComEd and a Unicom Entity or Entities;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties hereby agree as follows:
ARTICLE I
Definitions and Interpretation
------------------------------
Section 1.1. Definitions. As used in this Agreement, the following
terms shall have the respective meanings set for the below unless the context
otherwise requires:
"Acquiring Party" means a Party who desires to acquire real property,
interests in real property, tangible personal property or Intangible Assets
from a Selling party.
"ICC" means the Illinois Commerce Commission.
"Intangible Assets" mean, for the purposes of this Agreement, items for
which costs have been incurred to create future economic benefits that have
not been recorded as assets on the Selling party's financial statements.
Intangible Assets include, but are not limited to, operational activities
or intellectual property derived from internal research and development
efforts.
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"Investment Guidelines" means the investment guidelines attached hereto
as Exhibit B, as such Exhibit may be amended from time to time with the
approval of the ICC.
"Party" means each, and "Parties" means all, of the entities who are
from time to time a party to this Agreement.
"Provider" means a Party who has been requested to, and who is able and
willing to, furnish facilities, provide services or both to a Requestor
under the terms of this Agreement.
"Requestor" means a Party who desires to use facilities, receive
services or both, and has requested another Party to furnish such
facilities, provide such services or both.
"Selling Party" means a Party who is willing to sell and transfer real
property, interests in real property, tangible personal property of
Intangible Assets to an Acquiring Party.
"Tax Sharing Agreement" means the Unicom Group Income Tax Allocation
Agreement attached to this Agreement as Exhibit C, as such Exhibit may be
amended from time to time with the approval of the ICC.
"Unicom Entity" means any of Unicom and the entities identified on
Exhibit A.
Section 1.2. Purpose of Intent; Interpretation. (a) The purposes and
intent of this Agreement are to set forth procedures and policies to govern (i)
transactions between a Unicom Entity and ComEd, whether such transactions occur
directly or indirectly as the end result of a series of related transactions and
(ii) the allocation of certain joint service costs. It is not intended to
govern transactions between Unicom Entities, although such entities may elect to
apply the provisions of this Agreement to specific transactions, or to govern
transactions between ComEd and its subsidiaries. This Agreement shall be
interpreted in accordance with such purposes and intent.
(b) The headings of Articles and Sections contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Articles, Sections and Exhibits
refer to articles, sections and exhibits of this Agreement unless otherwise
stated. Words such as "herein", "hereinafter", "hereof", "hereto", "hereby" and
"hereunder", and words of like import, unless the context requires otherwise,
refer to this Agreement (including the Exhibits hereto).
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ARTICLE II
Use of Facilities and Services
------------------------------
Section 2.1. Facilities. Upon the terms and subject to the conditions
of this Agreement, a Requestor may request a Provider or Providers to make
available or provide, and, subject to the provisos at the end of this Section,
such Provider or Providers shall make available or provide to such Requestor,
the use of:
(a) facilities, including, without limitation, office space, warehouse
and storage space, transportation facilities (including, without
limitation, dock and port facilities, rail sidings and truck facilities),
repair facilities, manufacturing and production facilities, fixtures and
office furniture and equipment;
(b) computer equipment (both stand-alone and mainframe) and networks,
peripheral devices, storage media, and software;
(c) communications equipment, including, without limitation, audio and
video equipment, radio equipment, telecommunications equipment and
networks, and transmission and switching capability;
(d) vehicles, including, without limitation, automobiles, trucks,
vans, trailers, railcars, marine vessels, transport equipment, material
handling equipment and construction equipment; and
(e) machinery, equipment, tools, parts and supplies;
provided, however, that a Provider shall have no obligation to provide any of
the foregoing to the extent that such item or items are not available (either
because such Provider does not possess the item or the item is otherwise being
used); and provided further, it is understood that a Provider has sole
discretion in scheduling the use by a Requestor of facilities, equipment or
capabilities so as to avoid interference with such Provider's operations.
Section 2.2. Services. Upon the terms and subject to the conditions
of this Agreement, a Requestor may request a Provider or Providers to provide,
and, subject to the provisos at the end of this Section, such Provider or
Providers shall provide to such Requestor:
(a) Administrative and management services, including, without
limitation, accounting (including, without limitation, bookkeeping,
billing, accounts receivable administration and accounts payable
administration, and financial reporting); audit; executive; finance;
insurance; information systems services;
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investment advisory services; legal; library; record keeping; secretarial
and other general office support; real estate management; security holder
services; tax; treasury; and other administrative and management services;
(b) personnel services, including, without limitation, recruiting;
training and evaluation services; payroll processing; employee benefits
administration and processing; labor negotiations and management; and
related services;
(c) purchasing services, including, without limitation, preparation
and analysis of product specifications, requests for proposals and similar
solicitations; vendor and vendor-product evaluations; purchase order
processing; receipt, handling, warehousing and disbursement of purchased
items; contract negotiation and administration; inventory management and
disbursement; and similar services; and
(d) operational services, including, without limitation, drafting and
technical specification development and evaluation; consulting;
engineering; environmental; nuclear; construction; design; resource
planning; economic and strategic analysis; research; testing; training;
customer solicitation, support and other marketing related services; public
and governmental relations; and other operational services;
provided, however, that a Provider shall have no obligation to provide any of
the foregoing to the extent that it is not capable of providing such service
(either because such Provider does not have personnel capable of providing the
requested service or the service is otherwise being used); and provided further,
it is understood that a Provider has sole discretion in scheduling the use by a
Requestor of services so as to avoid interference with such Provider's
operations.
Section 2.3. Joint Purchasing. A party may also request that another
Party or Parties enter into arrangements to effect the joint purchase of goods
or services from third parties; provided, however, that if ComEd is so requested
to enter into or to participate in such arrangements, it shall do so only if its
fully distributed cost for such goods or services is not thereby increased; and
provided further, that no Party shall be required to purchase a service which it
is otherwise capable of providing or obtaining. In the event that any such
arrangements are established, one Party may be designated as, or serve as, agent
for the other Parties to the arrangement and may administer the arrangement
(including billing and collecting amounts due the vendor(s)) for the other
Parties.
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Section 2.4. Cash Management. The Parties may enter into one or more
arrangements providing for the central collection, management, investment and
disbursement of cash by a Party. If such an arrangement is established, then:
(a) the Parties participating in such arrangement shall establish
appropriate intercompany accounts to track the amount of cash transferred
and/or received by each Party to such arrangement and the pro rata portion
of the earnings received by each such party from the investment of cash;
(b) the Party responsible under the arrangement for the management
and investment of such cash shall establish a separate account or accounts
for such purpose, which account(s) and the records associated therewith
shall clearly indicate that other Parties have an interest in said
account(s) and the proceeds thereof and shall not be subject to set-off by
the bank or other institution holding the same except to the limited extent
of expenses arising from the management, handling and investment of the
account(s); and
(c) if and to the extent that an account contains cash received from
ComEd, such account may be invested, and reinvested, in the investments
described in the Investment Guidelines, subject, however, to the need to
maintain suitable liquidity in such account in order to meet the cash needs
of the Parties participating in the arrangement; it being understood that
the Investment Guidelines shall not be the exclusive means by which cash of
Parties other than ComEd may be invested.
Section 2.5. Tax Sharing. Each Party who is eligible to be included
in a consolidated tax return filing by Unicom shall, by virtue of this Section
2.5, be deemed a party to, and shall observe and comply with the provisions of,
the Tax Sharing Agreement.
Section 2.6. Agreements, Etc. A Provider and Requestor may evidence
their agreement with respect to the availability, provision or use of the
facilities, services and activities described in this Article II by entering
into an agreement, lease, license or other written memorandum or evidence;
provided such agreement, lease, license or other written memorandum or evidence
shall not contain terms inconsistent with this Agreement; and further provided
that this Section 2.6 shall not be deemed to require any such agreement, lease,
license or other written memorandum or evidence.
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ARTICLE III
Asset Sales
-----------
Section 3.1. Real Property Transfers. Upon the terms and subject to
the conditions of this Agreement, an Acquiring Party may purchase from a Selling
Party, and the Selling Party may sell to the Acquiring party, real property or
interests in real property; provided, however, that the value of the real
property or interests in the real property proposed to be transferred (as such
value is determined in accordance with Section 5.1(a)) shall not exceed
$300,000/(AMENDMENT 1)/ without approval of the specific agreement by the ICC.
Section 3.2. Tangible Personal Property. Upon the terms and subject
to the conditions of this Agreement, an Acquiring Party may purchase from a
Selling Party, and the Selling Party may sell to the Acquiring Party, tangible
personal property; provided, however, that the value of the tangible personal
property proposed to be transferred (as such value is determined in accordance
with Section 5.1(a)) shall not exceed $300,000 without approval of the specific
agreement by the ICC (it being understood that the foregoing limitation shall
not apply to the transfer of tangible personal property by ComEd which is not
necessary or useful to ComEd in the performance of its duties to the public);
and provided further, that this Section 3.2 shall not apply to joint purchasing
arrangements (and the transactions thereunder) entered into pursuant to Section
2.3 of this Agreement.
Section 3.3. Intangible Assets. Subject to approval by the ICC of the
specific agreement, an Acquiring Party may enter into an agreement with a
Selling Party to purchase, and the Acquiring Party may purchase from the Selling
Party and the Selling Party may sell to the Acquiring Party pursuant to such
agreement, Intangible Assets. Any such Intangible Assets shall be valued in
accordance with Section 5.1(c).
Section 3.4. Unicom Stock. Upon the terms and subject to the
conditions of this Agreement, Unicom may issue and sell to ComEd shares of
Unicom's Common Stock for the sole purpose of enabling ComEd to meet its
obligations to its directors and employees in respect of compensation (it being
understood that ComEd would cause any shares so purchased and received to be
reissued to such directors or employees in payment of such compensation
obligations).
Section 3.5. Agreements, Etc. An Acquiring Party and a Selling Party
may evidence their agreement with respect to the sale of real property and/or
tangible personal property described in Sections 3.1 or 3.2 by entering into an
agreement or other written
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memorandum or evidence; provided such agreement or other written memorandum or
evidence shall not contain terms inconsistent with this Agreement; and further
provided that this Section 3.5 shall not be deemed to require any such agreement
or other written memorandum or evidence.
ARTICLE IV
Charges; Payment
----------------
Section 4.1. Charges. (a) Charges for the use of facilities,
equipment, capabilities or services under Sections 2.1 and 2.2 shall be
determined in accordance with Section 5.1(b); charges for assets sold and
transferred under Sections 3.1, 3.2 and 3.4 shall be determined in accordance
with the provisions of Section 5.1(a); and charges for assets sold and
transferred under Section 3.3 shall be determined in accordance with the
provisions of Section 5.1(c). By requesting the use of facilities, equipment,
capabilities and/or services, a Requestor shall be deemed to have agreed to pay,
and shall pay, to the Provider or Providers the charge determined therefor in
accordance with Section 5.1(b). By acquiring real property, interests therein,
tangible personal property or Intangible Assets in accordance with the
provisions of Article III, an Acquiring Party shall be deemed to have agreed to
pay, and shall pay, to the Selling Party the charge determined therefor in
accordance with Section 5.1(a) or, in the case of Intangible Assets, Section
5.1(c).
(b) Charges related to arrangements under Section 2.3 for the joint
purchase of goods or services shall be determined in accordance with Section
5.1(a), in the case of asset transfers, and Section 5.1(b), in the case of
services and overhead, administrative and other costs.
(c) Charges of third parties related to the establishment and
operation of any account or accounts established under Section 2.4 and the
investment of the proceeds, and the earnings resulting from the investment
thereof, shall be allocated to the Parties participating therein based upon the
daily balance of cash maintained by each Party in such account or accounts.
Charges related to the administration of the account by a Party's personnel
shall be determined in accordance with Section 5.1(b).
Section 4.2. Accounting. Each Party shall maintain adequate books and
records with respect to the transactions subject to this Agreement and shall
establish unique function numbers in its general ledger system which shall be
used to record the costs to be apportioned to the other Parties. Each Party
shall be responsible for maintaining internal controls to ensure the costs
associated with transactions covered by this Agreement are properly and
consistently allocated and billed in accordance with the terms and provisions of
this Agreement.
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Section 4.3. Invoicing, Payment. Invoicing and payment for the
facilities and services specified in Article II, the asset sales specified in
Article III or the joint services costs specified in Section 5.3(a) shall be as
follows:
(a) for the use of facilities, equipment or capabilities specified in
Section 2.1 or the provision of services specified in Section 2.2, a
Provider shall invoice the Requestor on a monthly basis for the charges
therefor as provided in Section 4.1(a), and such invoices shall be payable
within thirty days of receipt;
(b) for joint purchasing arrangements specified in Section 2.3, a
party participating in any such arrangement shall be invoiced for charges
as provided in Section 4.1(b), which invoices will be payable according to
the terms set by the vendor(s) providing the purchased goods or services,
or if a Party has been selected to administer such arrangement, pursuant to
invoices rendered by such Party or the vendor of the good or services,
which invoices will be payable no later than thirty days after receipt;
(c) for cash management activities under Section 2.4, (i) the party
responsible for administering the activities shall invoice the other
participating Parties for the charges therefor as provided in Section
4.1(c), which invoices shall be payable within thirty days of receipt, or
(ii) the charges for such activities may be offset against the cash amounts
held thereunder, provided a written statement of such charges and the
amount of the offset is provided to the participating Parties monthly;
(d) for the tax sharing arrangement specified in Section 2.5, charges
and payments shall be made as provided in the Tax Sharing Agreement;
(e) for the sale of real property or interests in real property
specified in Section 3.1, the Acquiring Party shall pay the charges
therefor as provided in Section 4.1(a) to the Selling Party upon the
closing of the sale and transfer of such real property or interests
therein;
(f) for the sale of tangible personal property specified in Section
3.2, the Selling Party shall invoice the Acquiring Party for the charges
therefor as provided in Section 4.1(a), and such invoices shall be payable
within thirty days of receipt;
(g) for the transfer of Unicom Common Stock specified in Section 3.4,
ComEd shall pay the charges therefor as provided in Section 4.1(a) and such
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payment shall be made to Unicom concurrently with the issuance and delivery
of the shares of such stock; and
(h) for joint service costs under Section 5.3(a), Unicom shall invoice
the other Parties for such costs as provided in Section 5.3(c), and such
invoices shall be payable within thirty days of receipt.
Late payments shall bear interest at a rate per annum equal to the rate of
interest announced from time to time by The First National Bank of Chicago as
its "corporate base rate," and such interest shall be based on the period of
time that the payment is late.
ARTICLE V
Cost Apportionment Methodology
------------------------------
Section 5.1. General Principles. The following general principles
shall be used in setting charges for transactions between ComEd and Unicom
Entities:
(a) Sales of Assets. Asset sales between ComEd and a Unicom Entity
shall be charged by the Selling Party to the Acquiring Party at: (i) the
fair market value of the transferred asset, as evidenced by (1) the
prevailing price for which the same or similar assets are offered for sale
to the general public by the Selling Party (e.g., for ComEd, the tariffed
charge or other pricing mechanism approved by the ICC) or, if no such
prevailing price exists, (2) the price at which nonaffiliated vendors offer
the same or similar assets for sale by reference to quoted market prices,
independent appraisals or other objectively determinable evidence or, if no
such fair market value is objectively or practicably determinable, (ii) the
historical cost of the asset to the Selling Party, less all applicable
valuation reserves.
(b) Use of Facilities or Services.
(i) Facilities or services provided by ComEd to a Unicom Entity
shall be charged by the Provider to the Requestor at: (1) the
prevailing price for which the facility or service is provided for sale
to the general public by the Provider (i.e., the tariffed rate or other
pricing mechanism approved by the ICC) or, if no such prevailing price
exists, (2) the fully distributed cost (determined as provided in
Section 5.2) incurred by the Provider in providing such facility or
service to the Requestor.
(ii) Facilities or services provided by a Unicom Entity to ComEd
shall be charged by the Provider to the Requestor at: (1) the
prevailing price for which the facility or service is provided for
sale to the general public by
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the Provider (i.e., the price charged to nonaffiliates if such
transactions with nonaffiliates constitute a substantial portion of
such Unicom Entity's total revenues from such transactions) or, if no
such prevailing price exists, (2) an amount not to exceed the fully
distributed cost (determined as provided in Section 5.2) incurred in
providing such facility or service.
(c) Sales of Intangible Assets. Intangible Asset sales between ComEd
and a Unicom Entity shall be charged by the Selling Party to the Acquiring
Party (i) under a mechanism to reflect the fair market value of the asset
as determined by an appraisal or other fair market value study or, if no
such fair market value is objectively or practicably determinable, (ii) at
the fully distributed cost incurred to purchase or develop the asset,
adjusted to reflect imputed depreciation of, if applicable, and carrying
costs on the unrecorded asset.
Costs shall be charged to a Party in accordance with these general principles
using either a direct charge or an allocation methodology. Costs of assets or
services specifically attributable to a Party should be charged directly to such
Party. Joint and common costs not specifically attributable to a Party should
be charged to the appropriate Parties based on specific allocation
methodologies. The Parties intend to develop and implement a set of guidelines
to address applications of the foregoing general principles.
Section 5.2. Fully Distributed Costs. Costs charged on a fully
distributed cost basis shall reflect the amounts of direct labor, direct
materials and direct purchased services associated with the related asset or
service as provided in subsections (a) and (b). These amounts shall be
increased by a portion of indirect costs to reflect labor, administrative and
general and other overhead amounts as provided in subsection (c).
(a) Direct Costs. Costs incurred that are specifically attributable
to a Party shall be directly charged to the appropriate function.
(i) Direct Labor. Amounts of direct labor charged to a Party
shall be based on an employee's actual direct labor rate, reflecting
the effects of overtime and non-productive time.
For most employees, direct labor shall be charged to a Party
under a positive time reporting methodology under which an employee
shall report each pay period the number of hours incurred in
performing activities for such Party. Based on the time reported each
pay period, the regular, predetermined account distribution for the
employee shall be adjusted to reflect the distribution of direct labor
charges to the appropriate affiliate function.
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Some departments or organizations are expected to provide a
recurring, predictable level of services to a Party or Parties. For
these departments or organizations, annual reviews shall be performed
to determine a normal distribution of time to such Party or Parties.
The distribution percentages derived from such reviews shall then be
used to allocate time with respect to each pay period. For these
departments or organizations, direct labor shall be charged to a Party
or Parties under an exception time reporting methodology. That is,
significant deviations of actual activity from these predetermined
percentages shall be reported and shall result in adjustments to the
predetermined distribution of direct labor charges to the affiliate
functions.
Officers of each Party shall also utilize an exception time
reporting methodology. Distribution percentages derived from an
annual review for each Officer shall be used to allocate time with
respect to each pay period. Significant deviations of actual activity
from the predetermined percentages shall be reported and shall result
in adjustments to the predetermined distribution of direct labor
charges to the affiliate functions.
Overtime shall be reflected in the direct labor rates charged to a
Party. For bargaining unit employees, direct labor shall be charged
based on the base and overtime pay amounts actually incurred under a
Party's collective bargaining agreements. Likewise, for management
employees who are compensated for overtime, direct labor shall be
charged based on the actual pay amounts incurred for such employees,
including overtime. For management employees not compensated for
overtime, direct labor charges to affiliates shall be adjusted, on a
departmental or organizational basis, to reflect estimated overtime
incurred based on an overtime review performed annually.
All direct labor charges shall be increased by a factor to reflect
nonproductive time. The nonproductive time factor shall be developed
annually based on a review of actual nonproductive time incurred for
the previous year. The nonproductive time factor reflects time
incurred for training, vacations, holidays, disability, jury duty and
other paid absences.
(ii) Direct Materials and Purchased Services. Amounts incurred
for materials or purchased services directly attributable to a Party
shall be charged directly to the appropriate function for that Party
using standard voucher account distribution procedures.
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(iii) Costs of Facilities, Equipment, Machinery, Furniture
and Fixtures. The costs allocated to any Party for the use of a
Party's facilities, equipment, machinery, furniture or fixtures shall
include an amount to reflect the cost of such assets (e.g.,
depreciation, operations, maintenance, etc.) and, for owned assets or
assets leased under capital leases, a return equal to the rate of
return on rate base most recently allowed to ComEd by the ICC.
(b) Allocated Costs. Costs incurred that are not specifically
attributable to a Party but that have joint benefit to two or more Parties
shall be charged to the appropriate functions based on specified allocation
methodologies. The allocation methodologies used shall be reasonably based
on cost causative measures to ensure an equitable allocation among such
Parties.
(c) Indirect Costs. The direct and allocated costs apportioned to a
Party or Parties shall be increased to reflect indirect labor,
administrative and general and other overhead amounts. These indirect
costs are not specifically identifiable or attributable to the direct costs
incurred on behalf of a Party.
(i) Labor Loading. All direct labor charges apportioned to a
Party (either apportioned directly or using an allocation methodology)
shall be increased by a loading factor to reflect indirect labor-
driven costs. For each Party, this loading factor shall be determined
annually based on actual indirect labor-driven charges incurred during
the prior year as a percentage of total direct labor charges incurred
in that year. The labor loading rate pool shall include payroll
taxes; medical, dental and vision insurance costs; pension and other
postretirement health care benefits costs; incentive compensation plan
costs; employee savings plans' costs; and other labor-driven costs
such as payroll department, employee benefits department, mailroom,
office facilities and non-customer related postage costs.
(ii) Information Systems Loading. All direct labor costs
apportioned to a Party shall be increased by a loading factor to
reflect information systems related costs associated with mainframe
and local area network usage and operations, hardware and software
costs and telecommunications services. For each Party, this loading
factor shall be based on the actual costs incurred during the prior
year as a percentage of the corresponding actual total direct labor
charges incurred in that year.
(iii) Common Costs Loading. All direct labor, direct materials,
direct purchased services and indirect labor costs (including the
information systems loading amounts) apportioned to a Party shall be
increased by a
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loading factor to reflect administrative and general and other
overhead amounts, including the overhead costs of each Party's
information systems function. For each Party, this loading factor
shall be determined annually based on actual administrative and
general and other overhead charges incurred during the prior year as a
percentage of actual total operations and maintenance expense incurred
in that year. The common costs loading rate pool shall include costs
for departments that support other departments that provide services
directly to a Party. In ADDITION to the general and administrative
costs of the information systems function, representative costs in the
common costs pool shall include printing and duplicating services,
forms and office supplies, communications services, library services
and other similar costs.
Section 5.3. Costs Charged to/from Unicom. Unicom shall maintain
unique function numbers in its general ledger system: Consolidated Pool
functions (as described in Section 5.3(a)) and Unallocated Pool functions (as
described in Section 5.3(b)). All apportioned and billed to Unicom by other
Parties shall be charged to one of these two types of functions.
(a) Consolidated Pool. The Consolidated Pool shall be charged with
costs related to activities that jointly benefit all of the Parties. Each
month, the costs accumulated in the Consolidated Pool shall be apportioned
and billed to the Parties (other than Unicom) using a two /(AMENDMENT 1)/
factor formula methodology. A representative listing of the types of
services for which costs shall be charged to the Consolidated Pool is as
follows:
Corporate Services
Graphics
Library
Mail
Office and Building
Word Processing
Financial and Accounting Services
Information Systems
Investor Relations
Legal
Procurement
Regulatory
Risk Management
Secretary's Office
Shareholder Services
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(b) Unallocated Pool. The Unallocated Pool shall be charged
with costs that have been determined as not appropriate for apportionment
by Unicom to the other Parties. These costs primarily relate to Unicom's
diversification, political and philanthropic activities. A representative
listing of the types of services for which costs shall be charged to the
Unallocated Pool is as follows:
Advertising
Corporate Relations
Philanthropy
Political Advocacy
Public Relations
Diversification Efforts (i.e., new business development)
Marketing
Research and Development
Strategic Analysis
(c) Two Factor Formula Methodology. Monthly, costs charged to the
Consolidated Pool shall be apportioned and billed by Unicom to the other
Parties based on a two factor formula methodology. Under this approach,
each such Party is allocated and billed for a portion of the total costs in
the Consolidated Pool based on an average of such Party's gross payroll and
total asset amounts relative to the corresponding averages for the other
parties. To adjust for seasonality in operations, the gross payroll amount
used in this allocation shall be the most recent twelve-month period for
which such figure is available. The total asset amount shall reflect the
average total assets for the month being allocated. Total assets shall
include, without limitation, cash, investments, accounts receivable, the
net book value of property, plant and equipment and nuclear fuel, coal and
material and supplies inventories, as applicable. /(AMENDMENT 1)/
ARTICLE VI
Limitations of Liability
------------------------
Section 6.1. No Warranties for Facilities or Services. Each Party
acknowledges and agrees that any facilities, equipment or capabilities made
available, and any services provided, by a Provider to a Requestor hereunder,
are so made available or provided WITHOUT ANY WARRANTY (WHETHER EXPRESS, IMPLIED
OR STATUTORY AND NOTWITHSTANDING ANY ORAL OR WRITTEN STATEMENT BY A PARTY'S
EMPLOYEES, REPRESENTATIVES OR AGENTS TO THE CONTRARY) WHATSOEVER. ALL SUCH
WARRANTIES (INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND
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<PAGE>
FITNESS FOR A PARTICULAR PURPOSE) ARE HEREBY DISCLAIMED AND EXCLUDED.
Section 6.2. Limited Warranties For Asset Sales. (a) Except as
provided in Section 6.2(b), each Party acknowledges and agrees that any real
property, interests in real property, tangible personal property or Intangible
Assets sold and transferred in accordance with Article III is so sold and
transferred WITHOUT ANY WARRANTY (WHETHER EXPRESS, IMPLIED OR STATUTORY AND
NOTWITHSTANDING ANY ORAL OR WRITTEN STATEMENT BY A SELLING PARTY'S EMPLOYEES,
REPRESENTATIVES OR AGENTS TO THE CONTRARY) WHATSOEVER. ALL SUCH WARRANTIES
(INCLUDING, WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE) ARE HEREBY DISCLAIMED AND EXCLUDED.
(b) In connection with a sale and transfer of real property, interests
in real property, tangible personal property or Intangible Assets pursuant
to Article III, the Selling Party shall be deemed to have represented and
warranted to the Acquiring Party that: (i) title conveyed is good, (ii)
conveyance of such title is authorized and rightful, and (iii) the title so
conveyed is free and clear of all liens, claims, encumbrances or security
interests of persons or entities claiming by or through the Selling Party,
except, in the case of this clause (iii), as the Acquiring Party and the
Selling Party may otherwise agree.
Section 6.3. No Partnership. The Parties acknowledge and agree that
this Agreement does not create a partnership between, or a joint venture of, a
Party and any other Party. Each Party is an independent contractor and nothing
contained in this Agreement shall be construed to constitute any Party as the
agent of any other Party except as expressly set forth in Sections 2.3 and 2.4.
Section 6.4. No Third Party Beneficiaries. This Agreement is intended
for the exclusive benefit of the Parties hereto and is not intended, and shall
not be deemed or construed, to create any rights in, or responsibilities or
obligations to, their parties.
ARTICLE VII
Term
----
Section 7.1. Term. This Agreement will be effective on the date it is
approved by the ICC and shall continue, unless terminated as provided in Section
7.2 or renewed as hereinafter provided, until the tenth anniversary of such date
(the "Initial Term"). Unless written notice that this Agreement shall terminate
on the last day of the Initial Term or any then current renewal term is provided
by a Party at least 30 days prior to the expiration of the Initial Term or such
renewal term, this Agreement shall continue
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<PAGE>
for successive renewal terms of five years as to such Party and any other
Parties not providing any such termination notice.
Section 7.2. Termination. Any Party may terminate this Agreement as
to it by providing at least 30 days prior written notice to the other Parties of
the effective date of such termination. In addition, this Agreement shall
terminate as to a Party upon the date that Unicom determines that such Party
shall no longer be a party to this Agreement and shall automatically terminate
as to a Party upon the date that Unicom ceases, directly or indirectly, to own
equity securities in such Party. Any such termination shall not affect the
terminating Party's accrued rights and obligations under this Agreement arising
prior to the effective date of termination or its obligations under Section 9.4.
Section 7.3. Tax Sharing Agreement. Notwithstanding anything to the
contrary in Sections 7.1 or 7.2, a Party shall continue to be bound by the
provisions of the Tax Sharing Agreement until the earlier of (i) the termination
of the Tax Sharing Agreement, as provided in PART C.II.D ("Amendment and
Termination") of the Tax Sharing Agreement or (ii) the time at which such Party
is not permitted, under applicable law, to be a "Member" or an "Included
Member," as those terms are defined in the Tax Sharing Agreement.
ARTICLE VIII
Confidential Information
------------------------
Each Party shall treat in confidence all information which it shall
have obtained regarding the other Parties and their respective businesses during
the course of the performance of this Agreement. Such information shall not be
communicated to any person other than the Parties to this Agreement, except to
the extent disclosure of such information is required by a governmental
authority. If a Party is required to disclose confidential information to a
governmental authority, such Party shall take reasonable steps to make such
disclosure confidential under the rules of such governmental authority.
Information provided hereunder shall remain the sole property of the Party
providing such information. The obligation of a Party to treat such information
in confidence shall not apply to any information which (i) is or becomes
available to such Party from a source other than the Party providing such
information, or (ii) is or becomes available to the public other than as a
result of disclosure by such Party or its agents.
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<PAGE>
ARTICLE IX
Miscellaneous
-------------
Section 9.1. Entire Agreement; Amendments. Upon its effectiveness as
provided in Section 7.1, this Agreement shall constitute the sole and entire
agreement among the Parties with respect to the subject matter hereof and shall
supersede all previous agreements, proposals, oral or written, negotiations,
representations, commitments and all other communications between some or all of
the Parties. Except as provided in Section 9.2 with respect to new Parties and
except that Unicom may amend Exhibit A to this Agreement to delete any
terminated Party, this Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each of
the Parties hereto.
Section 9.2. New Parties. Any other entity which is or may become an
affiliate of Unicom or any of the other Parties to this Agreement may become a
party to this Agreement by executing an agreement adopting all of the terms and
conditions of this Agreement. Such agreement must be signed by Unicom in order
to become effective, but need not be signed by any other Party to this
Agreement. Upon such execution by Unicom, such entity shall be deemed to be a
Party and shall be included within the definition of "Party" for all purposes
hereof, and Exhibit A shall be amended to add such entity. Before such
execution by Unicom, ComEd shall provide the staff of the ICC with thirty days'
notice that another Party will be added to this Agreement. /(ALSO SEE ATTACHED
STIPULATION)/
Section 9.3. Assignment. This Agreement may not be assigned by any
party without the prior written consent of Unicom.
Section 9.4. Access to Records. During the term of this Agreement and
for a period of seven years after the expiration or termination of this
Agreement as to a Party, such Party shall have reasonable access to and the
right to examine any and all books, documents, papers and records which pertain
to services and facilities provided by the other Parties under this Agreement to
such Party, and such Party shall provide access to, and the opportunity to
examine, all such records which pertain to services and facilities provided to
the other Parties under this Agreement by such Party. Each Party shall maintain
all such records for a period of seven years after expiration or termination of
this Agreement as to such Party. In addition, during the term of this Agreement
and for a period of seven years after the expiration or termination of this
Agreement as to a Unicom Entity, the ICC shall have access to the books and
records of such Unicom Entity as set forth in the Order entered by the ICC in
Docket No. 95-0615 on March 12, 1997.
/(AMENDMENT 1)/
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<PAGE>
Section 9.5. Partial Invalidity. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable. In the event that it is determined that the charges for a
particular transaction covered by this Agreement were not determined properly
for any reason, such determination and/or finding shall not affect the validity
of such transaction; provided, however, that if the transaction involved ComEd
and a Unicom Entity, Unicom (or, if Unicom so determines, such Unicom Entity)
shall pay to or reimburse ComEd, or ComEd shall pay to or reimburse such Unicom
Entity, as the case may be, for the difference between the amount that was
charged in connection with the transaction and the charge that is determined to
be proper under the provisions of Article V.
Section 9.6. Waiver. Failure by any Party to insist upon strict
performance of any term or condition herein shall not be deemed a waiver of any
rights or remedies that such Party may have against any other Party nor in any
way to affect the validity of this Agreement or any part hereof or the right of
such Party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to constitute a waiver of any other
or subsequent breach.
Section 9.7. Governing Law. This Agreement shall be governed by,
construed and interpreted pursuant to, the laws of the State of Illinois.
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<PAGE>
IN WITNESS WHEREOF, the Parties have each caused this Agreement to be
executed by a duly authorized representative as of the day and year first above
written.
UNICOM CORPORATION
By: __________________________
Name: David A. Scholz
Title: Secretary
COMMONWEALTH EDISON COMPANY
By: __________________________
Name: David A. Scholz
Title: Secretary
UNICOM ENTERPRISES INC.
By: __________________________
Name: David A. Scholz
Title: Secretary
UNICOM RESOURCES INC.
By: __________________________
Name: David A. Scholz
Title: Secretary
UNICOM TECHNOLOGY DEVELOPMENT INC.
By: __________________________
Name: David A. Scholz
Title: Secretary
UNICOM THERMAL TECHNOLOGIES INC.
By: __________________________
Name: David A. Scholz
Title: Secretary
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<PAGE>
EXHIBIT T-3
ARES CERTIFICATION
AMENDMENT A
TO AFFILIATED INTERESTS AGREEMENT
---------------------------------
Unicom Corporation, an Illinois corporation ("Unicom"), Commonwealth
Edison Company, an Illinois corporation ("ComEd"), and each of the entities
identified from time to time on Exhibit A to the Affiliated Interests Agreement
dated as of December 4, 1995 (the "Agreement"), hereby agree that the Agreement
is amended, pursuant to Section 9.1 of the Agreement, as follows:
1. The purposes and intent of this amendment are to set forth procedures
and policies to govern: (a) transactions between Unicom Energy, Inc. ("Unicom
Energy"), ComEd's "affiliated interest in competition with alternative retail
electric suppliers," as that term is defined by 83 Ill. Adm. Code (S) 450.10 (as
amended from time to time), and ComEd's "affiliated interests" as that term is
defined by Section 7-101 of the Public Utilities Act (the "Act") (220 ILCS 5/7-
101)) and which are parties to the Agreement, whether such transactions occur
directly or indirectly as the end result of a series of related transactions;
and (b) the allocation of certain joint service costs. Notwithstanding subparts
(a) and (b), this amendment is not intended to govern transactions between
Unicom Energy and ComEd's affiliated interests which are parties to the
Agreement except to the extent required by Part 450 of the Illinois Commerce
Commission's rules on Non-Discrimination In Affiliate Transactions For Electric
Utilities (83 Ill. Adm. Code (S) 450 et seq.) (as amended from time to time).
-- ----
2. Any transaction between Unicom Energy and an affiliated interest
of ComEd that is a party to the Agreement shall be on whatever terms and
conditions Unicom Energy and the affiliated interest agree to, except that if
ComEd provided some or all of the facilities and services to the affiliated
interest that are the subject of the transaction, then (a) the pricing of those
facilities and services shall be at the same price as if ComEd had directly
provided the facilities and services to Unicom Energy, i.e., in accordance with
----
the Agreement and (b) the transfer of those facilities and services shall be
recorded in accordance with the cost allocation guidelines and accounting
conventions set forth in the Agreement.
3. Nothing in this amendment should be construed as an admission,
concession, or recognition by ComEd, Unicom Energy, or any other signatory to
the Agreement and this Amendment A that the Illinois Commerce Commission has the
authority and/or jurisdiction to regulate transactions between Unicom Energy and
ComEd's "affiliated interests," as that term is defined by Section 7-101 of the
Act (220 ILCS 5/7-101).
<PAGE>
EXHIBIT T-4
ARES CERTIFICATION
SUBSIDIARY AFFILIATED INTERESTS AGREEMENT
-----------------------------------------
Unicom Energy, Inc. ("Unicom Energy"), Commonwealth Edison Company
("ComEd"), and the subsidiaries of ComEd, Commonwealth Research Corporation,
Concomber Ltd., Edison Development Company, Edison Development Canada Inc.,
ComEd of Indiana, Inc., ComEd Funding LLC, ComEd Transitional Funding Trust,
Cotter Corporation, ComEd Financing I, and ComEd Financing II (collectively the
"Subsidiaries") hereby agree as follows:
1. The purposes and intent of this agreement ( the "SAIA Agreement")
are to set forth procedures and policies to govern: (a) transactions between
Unicom Energy, ComEd's "affiliated interest in competition with alternative
retail electric suppliers," as that term is defined by 83 Ill. Adm. Code (S)
450.10 (as amended from time to time), and ComEd's Subsidiaries as that term is
defined above, whether such transactions occur directly or indirectly as the end
result of a series of related transactions; and (b) the allocation of certain
joint service costs. Notwithstanding subparts (a) and (b), this amendment is
not intended to govern transactions between Unicom Energy and ComEd's
Subsidiaries except to the extent required by Part 450 of the Illinois Commerce
Commission's rules on Non-Discrimination In Affiliate Transactions For Electric
Utilities (83 Ill. Adm. Code (S) 450 et seq.) (as amended from time to time).
-- ----
2. Any transaction between Unicom Energy and ComEd's Subsidiaries
shall be on whatever terms and conditions Unicom Energy and the Subsidiaries
agree to, except that if ComEd provided some or all of the facilities and
services to the ComEd subsidiary that are the subject of the transaction, then
(a) the pricing of those facilities and services shall be at the same price as
if ComEd had directly provided the facilities and services to Unicom Energy,
i.e., in accordance with the Agreement and (b) the transfer of those facilities
----
and services shall be recorded in accordance with the cost allocation guidelines
and accounting conventions set forth in ComEd's Affiliated Interests Agreement
dated as of December 4, 1995.
3. Nothing in this SAIA Agreement should be construed as an
admission, concession, or recognition by ComEd, Unicom Energy, or ComEd's
Subsidiaries that the Illinois Commerce Commission has the authority and/or
jurisdiction to regulate transactions between Unicom Energy and Commonwealth
Edison Company's "affiliated interests," including the Subsidiaries, as that
term is defined by Section 7-101 of the Act (220 ILCS 5/7-101).
<PAGE>
Staff and ComEd Joint Ex.1
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
COMMONWEALTH EDISON COMPANY )
)
Petition pursuant to Sections 7-101, )
7-102 and 7-204A of the Illinois )
Public Utilities Act for an order ) No. 95-0615
approving an agreement for the )
provision of facilities and services )
and the transfer of assets between )
Commonwealth Edison Company and Unicom )
Corporation and its subsidiaries )
STIPULATION
-----------
The Staff of the Illinois Commerce Commission ("Staff") and
Commonwealth Edison Company ("ComEd") hereby stipulate and agree as follows:
1. Among the issues addressed in this proceeding is the issue of
whether a new ComEd affiliate may become a party to the Affiliated Interest
Agreement ("AIA") without ComEd first obtaining separate approval of the
Illinois Commerce Commission
2. With respect to his issue, Staff and ComEd hereby agree as follows:
(a) As currently provided in the ALA and ComEd's Petition in this
proceeding, ComEd will offer information to Staff about the proposed
new affiliate and the projected type and frequency of transactions
with that affiliate 30 days before that new affiliate will become a
party to the AIA. The provision of this information will commence a
"30-day review period" during which Staff may investigate whether
<PAGE>
the provision of facilities and services to the new affiliate under
the terms of the AIA "is not in the public interest" within the
meaning of Section 7-101 of the Public Utilities Act.
(b) If, at any time prior to the expiration of the 30-day review period,
Staff notifies ComEd that it believes that the provision of facilities
and services to the new affiliate under the terms of the AIA is not in
the public interest within the meaning of Section 7-101 of the Public
Utilities Act, ComEd must file a petition at the Commission seeking
resolution of the issues raised by Staff within 30 days of Staff's
notice. Regardless of whether Staff so notifies ComEd, however, at
the expiration of the 30-day review period, the affiliate may become a
party to the AIA and engage in transactions with ComEd under the terms
of the AIA unless and until ordered otherwise by the Commission after
a hearing on ComEd's petition pursuant to this section.
(c) If Staff does not notify ComEd before the expiration of the 30-day
review period that Staff believes that the provision of facilities and
services to the new affiliate under the terms of the AIA is not in the
public interest within the meaning of Section 7-101 of the Public
Utilities Act, ComEd will file at the Commission as a Supplemental
Report in this docket information about the new affiliate and the
projected type and frequency of transactions, substantially in the
form attached to ComEd's petition in this proceeding as Attachment B.
At that time, the affiliate
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<PAGE>
may become a party to the AIA and engage in transactions with ComEd
under the AIA.
(d) At the end of the first 12-month period after a new affiliate has been
added to the AIA, ComEd will file with the Commission in this docket a
second Supplemental Report showing the actual type and frequency of
transactions with that affiliate over the previous 12 months,
including a listing of any asset transfers and ComEd's monthly
billings to the affiliate.
3. Staff and ComEd agree that these procedural provisions are adequate
to enforce the requirement that transactions between ComEd and its affiliates do
not adversely affect the public interest within the meaning of the Public
Utilities Act.
STAFF OF THE ILLINOIS COMMERCE
COMMISSION
By: _______________________________
COMMONWEALTH EDISON COMPANY
By: _______________________________
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