<PAGE> File No. 70-8307
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________
POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM U-1
__________________________________
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
AEP ENERGY SERVICES, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of company or companies filing this statement
and addresses of principal executive offices)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
G. P. Maloney, Executive Vice President
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
Jeffrey D. Cross, General Counsel
AEP ENERGY SERVICES, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
American Electric Power Company, Inc. ("American") and AEP
Energy Services, Inc. ("AEPES") hereby amends its Application or
Declaration on Form U-1 in File No. 70-8307 by supplying the
following Exhibits and financial statements:
Exhibit B-1 Proposed form of Service Agreement
between AEPES and Resources or
Investments
Exhibit B-2 Proposed form of new Service Agreement
between AEPSC and AEPES
Exhibit B-3 Service Agreement between an Operating
Subsidiary and AEPES
Exhibit B-4 Proposed form of amendment to Service
Agreement between an Operating Subsidiary
and AEPES
Exhibit E Map of the Region (to be filed under Form
SE)
Balance Sheet as of December 31, 1994 and Statement of Income
for the 12 months ended December 31, 1994, of AEPES.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this amendment to be signed on their behalf by the undersigned
thereunto duly authorized.
AMERICAN ELECTRIC POWER COMPANY, INC.
By__/s/ G. P. Maloney_________________
Vice President
AEP ENERGY SERVICES, INC.
By__/s/ G. P. Maloney_________________
President
Dated: March 7, 1995
70-8307.pe3
<PAGE> Exhibit B-1
AGREEMENT BETWEEN
AEP ENERGY SERVICES, INC.
and
AEP RESOURCES, INC.
Dated: _______________, 1995
THIS AGREEMENT, made and entered into as of _______________,
1995, by and between AEP ENERGY SERVICES, INC., a corporation
organized under the laws of the State of Ohio ("AEPES") and AEP
RESOURCES, INC., a corporation organized under the laws of the
State of Ohio ("Client Company").
W I T N E S S E T H :
WHEREAS, both AEPES and the Client Company are associate
companies in the American Electric Power System (hereinafter called
the "System"), which is comprised of American Electric Power
Company, Inc. (hereinafter called "American") and its subsidiary
companies; and
WHEREAS, Client Company is authorized under the Public Utility
Holding Company Act of 1935, as amended ("1935 Act") by orders of
the Securities and Exchange Commission ("Commission") dated June 6,
1989, October 8, 1993 and February 4, 1994 (HCAR Nos. 24898, 25905
and 25984, respectively), to engage in preliminary development
activities relating to exempt wholesale generators, foreign utility
companies, qualifying cogeneration and small power production
facilities and certain independent power projects (collectively,
"Power Projects"); and
WHEREAS, AEPES is authorized under the 1935 Act by order of
the Commission dated __________, 1995 (HCAR ) to provide
services to the Client Company and may develop an organization of
employees who are experienced in the development and administration
of Power Projects; and
WHEREAS, subject to the terms and conditions herein described,
AEPES is willing, upon request by Client Company, to render such
services and provide such property and resources to Client Company
at cost, determined in accordance with applicable rules,
regulations and orders of the Commission under the 1935 Act;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein, the parties hereto hereby agree as
follows:
ARTICLE I. DEFINITIONS
As used hereinafter, the following terms, in addition to those
elsewhere defined in this Agreement, shall have the following
meanings unless the context otherwise requires:
A. "Services" shall mean the services that AEPES may provide
to the Client Company.
B. "Intellectual Property" means any process, program or
technique which is protected by the copyright, patent or trademark
laws, or as a trade secret, and which has been specifically and
knowingly incorporated into, exhibited in, or reduced to a tangible
writing, drawing, manual, computer program, product or similar
manifestation or thing.
ARTICLE II. AGREEMENT TO FURNISH SERVICES
Upon its receipt of Client Company's work order or other
request therefor, AEPES will, if it has or can have available the
personnel and resources needed to fill the work order on request,
furnish to Client Company upon the terms and conditions hereinafter
set forth Services, at such times, for such periods and in such
manner as Client Company may from time to time request; provided,
however, that the determination of whether AEPES has the available
personnel and resources to perform in accordance with the work
order or request will be entirely within the discretion of AEPES,
and AEPES may at its option elect not to perform any requested
Services, except that, once having agreed to perform pursuant to a
work order or request, AEPES cannot withdraw or depart from such
performance without the consent of Client Company, which consent
will not be unreasonably withheld.
ARTICLE III. INTELLECTUAL PROPERTY
Unless expressly agreed otherwise, AEPES shall own all
Intellectual Property developed during the course of providing
Services to the Client Company, except as AEPES's proprietary
interest therein may be limited by contractual commitments,
applicable laws and regulations, and the legal rights and
entitlements of others. Nothing herein shall be construed as
granting or conferring any proprietary interest in such
Intellectual Property to or upon Client Company.
ARTICLE IV. COMPENSATION OF AEPES
As compensation for Services actually requested by Client
Company and rendered to it by AEPES, Client Company hereby agrees
to pay to AEPES the cost of such services, computed in accordance
with applicable rules and regulations (including Rules 90 and 91
under the 1935 Act) and accounting standards. As soon as
practicable after the close of each month, AEPES will issue to
Client Company an invoice and detail of charges, and all amounts so
billed shall be paid by Client Company within thirty days after
receipt thereof. The cost of Services to be paid by Client Company
shall include direct charges and Client Company's pro rata share of
certain of AEPES's costs, determined as set forth below:
A. Direct Charges
To the extent that the costs incurred by AEPES in connection
with Services rendered by it to Client Company can be identified
and related to a particular transaction, direct charges will be
made by AEPES to Client Company.
B. Prorated Charges
Such costs incurred by AEPES in connection with rendering
Services to Client Company as cannot be identified and related to
a particular transaction will be charged to Client Company in a
fair and equitable manner.
ARTICLE V. WORK ORDERS
The Services will be performed in accordance with work orders
or requests issued or made by or on behalf of Client Company and
accepted by AEPES, and all services will be assigned an applicable
work order number to enable specific work to be properly allocated
by project or other appropriate basis. Work orders shall be as
specific as practicable in defining the Services requested to be
performed. Client Company shall have the right from time to time
to amend, alter or rescind any work order, provided that (i) any
such amendment or alteration which results in a material change in
the scope of the work to be performed or equipment to be provided
is agreed to by AEPES; (ii) the costs for the Services covered by
the work order will include any expense incurred by AEPES as a
direct result of such amendment, alteration or rescission of the
work order, and (iii) no amendment, alteration or rescission of a
work order will release Client Company from liability for all costs
already incurred or contracted for by AEPES pursuant to the work
order, regardless of whether the work associated with such costs
has been completed.
ARTICLE VI. LIMITATION OF LIABILITY AND INDEMNIFICATION
A. AEPES will exercise due care to assure that the Services
are performed in a workmanlike manner, meet the standards and
specifications set forth in the applicable work order or request
with respect to such services, and comply with applicable standards
of law and regulation. However, failure to meet these obligations
shall in no event subject AEPES to any claims or liabilities other
than to reperform the work at cost such that it fully complies with
the work order, request or standard, as the case may be. AEPES
makes no other warranty with respect to its performance of the
Services, and Client Company agrees to accept such Services without
further warranty of any nature. The Client Company shall and does
hereby indemnify and agree to save harmless and defend AEPES from
the payment of any sum or sums of money on account of, or resulting
from, claims or suits growing out of (i) injuries to or the death
of any person, (ii) damage to or loss of any property, and/or (iii)
other damages in any way attributable to or arising out of the
performance and prosecution of any project or work performed by or
on behalf of Client Company, whether or not the same results or
allegedly results from the claimed or actual negligence or breach
of warranty of, or wilful conduct by, Client Company or of its
employees, agents or subcontractors or any combination thereof.
Further, Client Company shall and does hereby indemnify and agree
to save harmless and defend AEPES (a) from any and all liens,
garnishments, attachments, claims, suits, costs, attorneys' fees,
cost of investigation and of defense resulting from, incurred in
connection with, or relating to any such claims, (b) from the
payment of any such sum or sums of money, and (c) from the payment
of any penalties, fines, damages, suits or claims (and any liens or
attachments asserted in connection therewith) arising out of (i)
any alleged or actual violation of law, court order, or
governmental agency rule or regulation committed by or existing
with respect to Client Company or its employees, agents or
subcontractors (except AEPES when not performing Services
hereunder), (ii) any alleged or actual breaches of contract by
Client Company, (iii) any claims made by or on account of any
employee, agent or subcontractor (except AEPES when not performing
Services hereunder or an employee or agent of AEPES where such
claim does not arise specifically in connection with the
performance of Services hereunder) of Client Company, or for (iv)
services or labor performed, materials, provisions or supplies
furnished or board of men which have been purchased or allegedly
contracted for by or on behalf of the Client Company, its
employees, agents or sub-contractors (except AEPES when not
performing Services hereunder).
B. AEPES shall within five business days after it receives
notice of any claims, action, damages or liability against which it
will expect to be indemnified pursuant to Article VI(A), notify
Client Company of such claims, actions, damages or liabilities.
Thereafter, Client Company may at its own expense, upon notice to
AEPES, defend or participate in the defense of such action or claim
or any negotiation for settlement of such action or claim, provided
that unless Client Company proceeds promptly and in good faith to
pay or defend such action or claim, then AEPES shall have the right
(but not the obligation), in good faith, upon ten days' notice to
Client Company, to pay, settle, compromise or proceed to defend any
such action or claim without the further participation by Client
Company. Client Company will immediately pay (or reimburse AEPES,
as the case may be) any payments, settlements, compromises,
judgments, costs or expenses made or incurred by AEPES in or
resulting from the pursuit by AEPES of such right. If any judgment
is rendered against AEPES in any action defended by Client Company
or from which AEPES is otherwise entitled to indemnification under
Article VI(A), or any lien attached to the assets of AEPES in
connection therewith, Client Company immediately upon such entry or
attachment shall pay the judgment in full or discharge any such
lien unless, at its expense and direction, appeal shall be taken
under which the execution of the judgment or satisfaction of the
lien is stayed. If and when a final and unappealable judgment is
rendered against AEPES in any such action, Client Company shall
forthwith pay such judgment or discharge such lien prior to the
time that AEPES would be legally held to do so.
C. Client Company shall maintain at all times adequate
levels of insurance to discharge financially its obligations under
this Article VI.
ARTICLE VII. MISCELLANEOUS
This Agreement shall be binding upon the successors and
assigns of the parties hereto, and AEPES shall be entitled to
subcontract any of its obligations under this Agreement or under
any purchase order or work order issued hereunder. This Agreement
may not be modified or amended in any respect except in writing
executed by the parties hereto. This Agreement shall be construed
and enforced under and in accordance with the laws of the State of
Ohio. This Agreement may be executed in counterparts, each one of
which when fully executed shall be deemed to have the same dignity,
force and effect as if the original. No provision of this
Agreement shall be deemed waived nor breach of this Agreement
consented to unless waiver or consent is set forth in writing and
executed by the party hereto making such waiver or consent.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their respective corporate names by one
of their duly authorized officers.
AEP ENERGY SERVICES, INC.
_________________________
AEP RESOURCES, INC.
_________________________
a:\service.agr\es-risrv.agr
<PAGE> Exhibit B-2
AGREEMENT BETWEEN
AMERICAN ELECTRIC POWER SERVICE CORPORATION
and
AEP ENERGY SERVICES, INC.
Dated: , 1995
THIS AGREEMENT, made and entered into as of , by
and between AMERICAN ELECTRIC POWER SERVICE CORPORATION, a
corporation organized under the laws of the State of New York
(hereinafter sometimes referred to as "Service Company") and AEP
ENERGY SERVICES, INC., a corporation organized under the laws of
the State of Ohio (hereinafter sometimes referred to as "Client
Company").
W I T N E S S E T H :
WHEREAS, both the Service Company and the Client Company are
associate companies in the American Electric Power System
(hereinafter called the "System"), which is comprised of American
Electric Power Company, Inc. (hereinafter called "American") and
its subsidiary companies; and the Service Company, which is a
wholly-owned subsidiary of American, is approved by the Securities
and Exchange Commission as a subsidiary service company pursuant to
the provisions of Section 13 of the Public Utility Holding Company
Act of 1935, as amended (hereinafter called the "1935 Act"), and
maintains an organization of employees who are experienced in the
problems and operations of public utilities and related businesses,
together with appropriate facilities and equipment, through which
it is prepared to furnish services, as hereinafter provided to the
Client Company and to other member companies in the System (the
Client together with such other member companies are hereinafter
referred to collectively as "Client Companies" ); and
WHEREAS, in the performance of past and future services for
the Client Companies, Service Company has acquired and will acquire
certain properties and other resources; and
WHEREAS, Client Company is authorized under the 1935 Act by
order of the Commission dated April 21, 1982 and , 1995
to provide certain services, to non-affiliate companies, agencies
and other business concerns and to certain affiliate companies; and
WHEREAS, economies and increased efficiencies will result from
the performance by Service Company of services for Client Company
and the provision of certain property and resources to Client
Company as herein provided; and
WHEREAS, subject to the terms and conditions herein described,
Service Company is willing, upon request by Client Company, to
render such services and provide such property and resources to
Client Company at cost, determined in accordance with applicable
rules, regulations and orders of the Commission under the Act;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein, the parties hereto hereby agree as
follows:
ARTICLE I. DEFINITIONS
As used hereinafter, the following terms, in addition to those
elsewhere defined in this Agreement, shall have the following
meanings unless the context otherwise requires:
A. "Services" shall mean the services described in Articles
III, IV and V hereof.
B. "Non-Affiliate" means any corporation, company, agency,
government, business, entity or person other than American, a
direct or indirect subsidiary of American, or a person employed by
American or any of such subsidiaries.
C. "Intellectual Property" means any process, program or
technique which is protected by the copyright, patent or trademark
laws, or as a trade secret, and which has been specifically and
knowingly incorporated into, exhibited in, or reduced to a tangible
writing, drawing, manual, computer program, product or similar
manifestation or thing.
ARTICLE II. AGREEMENT TO FURNISH SERVICES
A. Upon its receipt of Client Company's work order or other
request therefor, Service Company will, if it has or can have
available the personnel and resources needed to fill the work order
on request, furnish to Client Company upon the terms and conditions
hereinafter set forth such of the Services, at such times, for such
periods and in such manner as Client Company may from time to time
request; provided, however, that the determination of whether
Service Company has the available personnel and resources to
perform in accordance with the work order or request will be
entirely within the discretion of Service Company, and Service
Company may at its option elect not to perform any requested
Services, except that, once having agreed to perform pursuant to a
work order or request, Service Company cannot withdraw or depart
from such performance without the consent of Client Company.
B. The provision of Services by Service Company pursuant to
this Agreement shall in all cases and notwithstanding anything
herein contained to the contrary be subject to any limitations
contained in authorizations, rules or regulations of those
governmental agencies, if any, having jurisdiction over Service
Company, Client Company, or such provision of Services.
ARTICLE III. DESCRIPTION OF SERVICES
The Services to be provided by Service Company hereunder shall
include the following:
1. Administrative Services
Provide services and advice related to the planning and
administration related to the construction of office and service
buildings.
2. Civil Engineering
Provide services and advice to Client Company on projects
related to construction as it concerns cement foundations, steel
frames of buildings and terminals.
3. Computer Applications
Provide electronic data processing services which would
include:
a) Machine-related data processing services.
b) Computer applications activity - services such as
feasibility studies for new applications,
enhancement of existing applications and other
related activity.
4. Construction
Provide services and advice to Client Company in connection
with construction projects which would include:
a) Project Control and Support
Administration of labor contracts on construction
projects, the development and monitoring of cost
estimates on major projects, and the general overview of
major projects.
b) Plant Construction
Monitoring and interceding in labor contract
negotiations, labor relations, establishing and reviewing
labor rate changes, and developing labor contracts and
their terms.
c) Transmission and Distribution Construction
Monitoring the construction of transmission and
distribution lines. Assemble cost estimates, prepare
capital forecasts, visit construction sites to ensure
that design, engineering and construction activities all
coincide with proposed plans, and work on contracts for
outside construction crews.
5. Design
Provide services related to drawings and designs of power
plants, substations and service buildings, the main area of
concentration being the design of power plants and components or
sub-systems therein.
6. Electrical Engineering
Provide services and advice related to transmission and
distribution lines, which services include:
a) Planning for the upgrade of transmission and
distribution lines.
b) Planning for and assisting in the engineering of
distribution line construction jobs.
c) Assisting in failure problems.
d) Participating in the preparation of construction
budgets.
e) Negotiating contracts relating to the purchase of
equipment for maintenance and construction
projects.
7. Executive Group
This group, consisting of the Chairman of the Board, the
President and any Vice Chairmen of the Service Company and their
staffs, will advise and assist the officers and employees of Client
Company in connection with various phases of its business and
operations, including particularly, but not exclusively, those
phases which involve coordination of planning or operation between
Client Company and other entities.
8. Finance
Provide services and advice in the areas of financings, cash
management, investor relations, and sale and leaseback activities.
9. Fuel Supply
Provide services and advice relating to the mining and
procurement of coal. Activities would include:
a) Management and financial analysis related to fuel
supplies.
b) Planning and engineering services related to mining
activity, including civil, mechanical, electrical,
mining, environmental and industrial engineering
and geological studies and exploration.
c) Administration of mining, preparation of coal for
burning, maintenance of mining equipment, and
various mine safety activities.
d) Purchasing of mine-related materials and supplies,
construction and rental contracts and land
management.
e) Preparation and dissemination of information on the
environment and miners' health and safety.
f) Fuel procurement and fuel transportation.
10. Insurance and Pension
Provide services and advice for the maintenance and renewal of
all types of insurance coverage and the administration of pension
plans and other employee benefit programs.
11. Legal
Provide services and advice relating to financings, financial
reporting, shareholder meetings, contracts, real estate, leasing
and other legal matters.
12. Materials Handling
Provide services and advice for the handling and the
transportation of coal to storage facilities via rail, river or
overland, and for the transporting of fly ash and bottom ash to
disposal areas, or to arrangements for the sale of such materials
to third parties.
13. Mechanical Engineering
Provide services and assistance in the design of new power
plants and components or sub-systems therein.
14. Operations
Provide services and advice relating to engineering plant
maintenance and system operation. Activities would include:
a) Plant Engineering
Engineering assistance and support to generating plants.
b) Plant Maintenance
Maintenance assistance to generating plants, including
compilation of the overall maintenance schedules,
assistance in planning of outage time, coordination of
resources available during outages, technical assistance
on metallurgy, welding testing and quality control, and
tracking of maintenance costs.
c) System Operation
Activities related to the economic dispatch of energy.
15. Personnel
Provide services and advice relating to the administration of
personnel policies. Activities would include:
a) Establishment of policies regarding compensation
and benefits.
b) Supervision of compliance with legal requirements
in the areas of equal employment practices, safety
and health, among others.
c) Establishment of management development programs.
d) Providing legal counsel in connection with
lawsuits, interpretations of labor laws, and
supervision of the activities of outside legal
counsel.
e) Supervision of labor negotiations and establishment
of policies with labor unions.
16. Public Affairs
Provide services and advice on all phases of the Client
Company's business, including media relations, news releases,
advertising and promotional activities.
17. Purchasing
Provide services and advice relating to the procurement of
equipment and stores items, including market research, preparation
of commitments, requests for quotations, and preparation of bid
summaries.
18. System Planning
Provide services and advice relating to generation, bulk
transmission and regional power supply planning.
19. Technical Education
Provide training to personnel of Client Company or of Non-
Affiliates. Develop and make available training procedures,
materials and facilities, and provide instructors.
20. Treasury
Perform for Client Company all such bookkeeping, accounting
and auditing services and install such internal accounting and
auditing procedures as are required by Client Company to maintain
its books and records properly and account for and safeguard its
operations and properties. Advise and assist Client Company in
connection with the installation of accounting systems and similar
problems, requirements of regulatory bodies with respect to
accounting, studies of accounting procedures and practices to
improve efficiency, book entries resulting from unusual financial
transactions, internal audits, employment of independent auditors,
preparation and analyses of financial and operating reports and
other statistical matters relating to Client Company or its
customers, preparation of annual reports to stockholders,
regulatory commissions, insurance companies and others,
standardization of accounting and statistical forms in the interest
of economy, and other accounting and statistical matters.
ARTICLE IV. PROVISION OF PERSONNEL
When specifically requested by Client Company, Service Company
may loan its employees to Client Company. In that event, such
loaned employees will be under the sole supervision and control of
Client Company for such period or periods of time as are necessary
to complete the work to be performed by such employees. Such
employees may be withdrawn by Service Company from tasks assigned
by Client Company only with the consent of Client Company, which
consent will not be unreasonably withheld in the event of a
demonstrable emergency requiring the use of such employees in
another capacity for Service Company. Client Company will be
responsible for the actions and activities of such employees while
engaged in the performance of the work to the same degree as though
such persons were employees of Client Company; provided that, such
persons shall remain the employees of Service Company, and nothing
herein shall be construed as creating the employer-employee
relationship between Client Company and such persons. Accordingly,
as part of Services, Service Company, during periods when such
employees are loaned to Client Company, will continue to provide to
such employees those same payroll, pension, savings, tax
withholding, unemployment, bookkeeping and other personnel support
services then being utilized by Service Company in connection with
compensating and benefiting such employees.
ARTICLE V. EXCHANGE OF INTELLECTUAL PROPERTY
A. Client Company shall own all Intellectual Property
developed during the course of its business utilizing personnel and
other resources of Service Company, except as Client Company's
proprietary interest therein may be limited by contractual
commitments of Client Company to Non-Affiliates, applicable laws
and regulations, and the legal rights and entitlements of others.
Nothing herein shall be construed as granting or conferring any
proprietary interest in such Intellectual Property to or upon
Service Company. Nevertheless, should Client Company in the course
of its business develop Intellectual Property, it will make such
Intellectual Property available for utilization by any associate
company of Client Company in the American Electric Power System
without charge (except the actual expenses incurred by Client
Company in connection with making such Intellectual Property so
available); provided, however, that such availability shall also be
dependent upon and subject to any contractual commitments of Client
Company, applicable laws and regulations, and the legal rights and
entitlements of others.
B. As part of the Services, Service Company will make
available to Client Company for use or for re-sale or licensing all
Intellectual Property heretofore or hereafter developed or obtained
by Service Company at the fees provided in Article VIII below,
provided, however, that such availability shall be dependent and
subject to any contractual commitments of Service Company,
applicable laws and regulations, and the legal rights and
entitlement of others.
ARTICLE VI. COMPENSATION OF SERVICE COMPANY
As compensation for Services actually requested by Client
Company and rendered to it by Service Company, Client Company
hereby agrees to pay to Service Company the cost of such services,
except as described in Article V(B), computed in accordance with
applicable rules and regulations (including Rules 90 and 91 under
the 1935 Act) and accounting standards. As soon as practicable
after the close of each month, Service Company will issue to Client
Company an invoice and detail of charges, and all amounts so billed
shall be paid by Client Company within thirty days after receipt
thereof. The cost of Services to be paid by Client Company shall
include direct charges and Client Company's pro rata share of
certain of Service Company's costs, determined as set forth below:
A. Direct Charges. To the extent that the costs incurred by
Service Company in connection with Services rendered by it to
Client Company can be identified and related to a particular
transaction, direct charges will be made by Service Company to
Client Company.
B. Prorated Charges. Such costs incurred by Service Company
in connection with rendering Services to Client Company as cannot
be identified and related to a particular transaction will be
charged to Client Company in a fair and equitable manner in
accordance with the Service Company's then effective applicable
methods of allocation filed with the Commission.
ARTICLE VII. WORK ORDERS
The Services will be performed in accordance with work orders
or requests issued or made by or on behalf of Client Company and
accepted by Service Company, and all services will be assigned an
applicable work order number to enable specific work to be properly
allocated by project or other appropriate basis. Work orders shall
be as specific as practicable in defining the Services requested to
be performed. Client Company shall have the right from time to
time to amend, alter or rescind any work order, provided that (i)
any such amendment or alteration which results in a material change
in the scope of the work to be performed or equipment to be
provided is agreed to by Service Company; (ii) the costs for the
Services covered by the work order will include any expense
incurred by Service Company as a direct result of such amendment,
alteration or rescission of the work order, and (iii) no amendment,
alteration or rescission of a work order will release Client
Company from liability for all costs already incurred or contracted
for by Service Company pursuant to the work order, regardless of
whether the work associated with such costs has been completed.
ARTICLE VIII. DISPOSITION OF INTELLECTUAL PROPERTY
In the event Client Company sells or licenses Intellectual
Property heretofore or hereafter developed by Service Company for
one or more of the Client Operating Companies, Client Company shall
pay to Service Company (1) 70% of the revenues from the
Intellectual Property until Service Company recovers the
programming and development costs of the Intellectual Property and
(2) 20% of such revenues thereafter.
ARTICLE IX. LIMITATION OF LIABILITY AND INDEMNIFICATION
A. In performing the Services hereunder (except to the
extent such services are being performed by employees loaned to and
under the supervision of Client Company), Service Company will
exercise due care to assure that the services are performed in a
workmanlike manner, meet the standards and specifications set forth
in the applicable work order or request with respect to such
services, and comply with applicable standards of law and
regulation. However, failure to meet these obligations shall in no
event subject Service Company to any claims or liabilities other
than to reperform the work at cost such that it fully complies with
the work order, request or standard, as the case may be. Service
Company makes no other warranty with respect to its performance of
the Services, and Client Company agrees to accept such Services
without further warranty of any nature. The Client Company shall
and does hereby indemnify and agree to save harmless and defend
Service Company from the payment of any sum or sums of money on
account of, or resulting from, claims or suits growing out of (i)
injuries to or the death of any person, (ii) damage to or loss of
any property, and/or (iii) other damages in any way attributable to
or arising out of the performance and prosecution of any project or
work performed by or on behalf of Client Company, whether or not
the same results or allegedly results from the claimed or actual
negligence or breach of warranty of, or wilful conduct by, Client
Company or of its employees, agents or subcontractors or any
combination thereof. Further, Client Company shall and does hereby
indemnify and agree to save harmless and defend Service Company (a)
from any and all liens, garnishments, attachments, claims, suits,
costs, attorneys' fees, cost of investigation and of defense
resulting from, incurred in connection with, or relating to any
such claims, (b) from the payment of any such sum or sums of money,
and (c) from the payment of any penalties, fines, damages, suits or
claims (and any liens or attachments asserted in connection
therewith) arising out of (i) any alleged or actual violation of
law, court order, or governmental agency rule or regulation
committed by or existing with respect to Client Company or its
employees, agents or subcontractors (except Service Company when
not performing Services hereunder), (ii) any alleged or actual
breaches of contract by Client Company, (iii) any claims made by or
on account of any employee, agent or subcontractor (except Service
Company when not performing Services hereunder or an employee or
agent of Service Company where such claim does not arise
specifically in connection with the performance of Services
hereunder) of Client Company, or for (iv) services or labor
performed, materials, provisions or supplies furnished or board of
men which have been purchased or allegedly contracted for by or on
behalf of the Client Company, its employees, agents or sub-
contractors (except Service Company when not performing services
hereunder).
B. The Service Company shall within five business days after
it receives notice of any claims, action, damages or liability
against which it will expect to be indemnified pursuant to Article
IX(A), notify Client Company of such claims, actions, damages or
liabilities. Thereafter, Client Company may at its own expense,
upon notice to Service Company, defend or participate in the
defense of such action or claim or any negotiation for settlement
of such action or claim, provided that unless Client Company
proceeds promptly and in good faith to pay or defend such action or
claim, then Service Company shall have the right (but not the
obligation), in good faith, upon ten days notice to Client Company,
to pay, settle, compromise or proceed to defend any such action or
claim without the further participation by Client Company. Client
Company will immediately pay (or reimburse Service Company, as the
case may be) any payments, settlements, compromises, judgments,
costs or expenses made or incurred by Service Company in or
resulting from the pursuit by Service Company of such right. If
any judgment is rendered against Service Company in any action
defended by Client Company or from which Service Company is
otherwise entitled to indemnification under Article IX(A), or any
lien attached to the assets of Service Company in connection
therewith, Client Company immediately upon such entry or attachment
shall pay the judgment in full or discharge any such lien unless,
at its expense and direction, appeal shall be taken under which the
execution of the judgment or satisfaction of the lien is stayed.
If and when a final and unappealable judgment is rendered against
Service Company in any such action, Client Company shall forthwith
pay such judgment or discharge such lien prior to the time that
Service Company would be legally held to do so.
C. Client Company shall maintain at all times adequate
levels of insurance to discharge financially its obligations under
this Article IX.
ARTICLE X. MISCELLANEOUS
This Agreement shall be binding upon the successors and
assigns of the parties hereto, provided that Service Company shall
not be entitled to assign or subcontract out any of its obligations
under this Agreement or under any purchase order or work order
issued hereunder without the prior written approval of Client
Company. This Agreement may not be modified or amended in any
respect except in writing executed by the parties hereto. This
Agreement shall be construed and enforced under and in accordance
with the laws of the State of Ohio. This Agreement may be executed
in counterparts, each one of which when fully executed shall be
deemed to have the same dignity, force and effect as if the
original. No provision of this Agreement shall be deemed waived
nor breach of this Agreement consented to unless waiver or consent
is set forth in writing and executed by the party hereto making
such waiver or consent. Upon execution and delivery of this
Agreement, the Agreement dated May 26, 1982 between Service Company
and Client Company shall terminate and any service being performed
thereunder shall continue to be performed under and subject to the
terms of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
AMERICAN ELECTRIC POWER
SERVICE CORPORATION
Vice President
AEP ENERGY SERVICES, INC.
President
a:\service.agr\es-sc95.agr
[Conformed Copy]
<PAGE> Exhibit B-3
AGREEMENT BETWEEN
APPALACHIAN POWER COMPANY
and
AEP ENERGY SERVICES, INC.
Dated: October 3, 1983
THIS AGREEMENT, made and entered into as of October 3, 1983,
by and between APPALACHIAN POWER COMPANY, a corporation organized
under the laws of the State of Virginia, party of the first part
(hereinafter sometimes referred to as "Operating Company") and AEP
ENERGY SERVICES, INC., a corporation organized under the laws of
the State of Ohio, party of the second part (hereinafter sometimes
referred to as "Client Company" ).
W I T N E S S E T H :
WHEREAS, both the Operating Company and the Client Company are
associate companies in the American Electric Power System
(hereinafter called the "System"), which is comprised of American
Electric Power Company, Inc. (hereinafter called "American") and
its subsidiary companies; and the Operating Company, which is a
wholly-owned subsidiary of American, is an electric utility company
within the meaning of Section 2(a)(3) of the Public Utility Holding
Company Act of 1935 (hereinafter called the "1935 Act"), and
maintains an organization of employees who are experienced in the
problems and operations of public utilities and related businesses,
together with appropriate facilities and equipment, and, in the
course of its operations as an electric utility company, has
acquired and will acquire certain properties and other resources;
and
WHEREAS, Client Company is authorized under the 1935 Act by
orders of the Securities and Exchange Commission dated March 28,
1983, and June 20, 1983, to utilize those services, properties and
resources of Operating Company, as well as those provided by other
members of the American System, to sell management, technical and
training services and expertise to non-affiliate companies,
agencies and other business concerns, including domestic and
foreign governmental agencies, public utilities, industrial
concerns, or entities owning, operating or performing services for
any of them; and
WHEREAS, economies and increased efficiencies will result from
the performance by Operating Company of services for Client Company
and the provision of certain property and resources to Client
Company as herein provided; and
WHEREAS, subject to the terms and conditions herein described,
Operating Company is willing, upon request by Client Company, to
render such services and provide such property and resources to
Client Company at cost, determined in accordance with applicable
rules, regulations and orders of the Commission under the 1935 Act;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein, the parties hereto hereby agree as
follows:
ARTICLE I. DEFINITIONS
As used hereinafter, the following terms, in addition to those
elsewhere defined in this Agreement, shall have the following
meanings unless the context otherwise requires:
A. "Services" shall mean the services described in Articles
III, IV and V hereof.
B. "Non-Affiliate" means any corporation, company, agency,
government, business, entity or person other than American, a
direct or indirect subsidiary of American, or a person employed by
American or any of such subsidiaries.
C. "Intellectual Property" means any process, program or
technique which is protected by the copyright, patent or trademark
laws, or as a trade secret, and which has been specifically and
knowingly incorporated into, exhibited in, or reduced to a tangible
writing, drawing, manual, computer program, product or similar
manifestation or thing.
ARTICLE II. AGREEMENT TO FURNISH SERVICES
A. Upon its receipt of Client Company's work order or other
request therefor, Operating Company will, if it has or can have
available the personnel and resources needed to fill the work order
on request, furnish to Client Company upon the terms and conditions
hereinafter set forth such of the Services, at such times, for such
periods and in such manner as Client Company may from time to time
request; provided, however, that the determination of whether
Operating Company has the available personnel and resources to
perform in accordance with the work order or request will be
entirely within the discretion of Operating Company, and Operating
Company may at its option elect not to perform any requested
Services, except that, once having agreed to perform pursuant to a
work order or request, Operating Company cannot withdraw or depart
from such performance without the consent of Client Company, which
consent will not be unreasonably withheld.
B. The provision of Services by Operating Company pursuant
to this Agreement shall in all cases and notwithstanding anything
herein contained to the contrary be subject to any limitations
contained in authorizations, rules or regulations of those
governmental agencies, if any, having jurisdiction over Operating
Company, Client Company, or such provision of Services.
ARTICLE III. DESCRIPTION OF SERVICES
The services to be provided by Operating Company to Client
Company hereunder shall include the following:
1. Environmental Engineering
Provide services and advice relating to policies and
procedures for compliance with environmental regulations. The
activities would include:
a) Consulting with state commissions regarding the
development and enactment of regulations.
b) Dealing with new and existing plant situations
regarding the applications for and operating
requirements of air, water and solid waste permits.
c) Reviewing the sufficiency of permits and
environmental laws, and assisting in the
preparation of statements in regard thereto.
d) Reviewing current and projected research projects.
2. Executive Group
This group, consisting of the Chairman of the Board, the
President and any Vice President of the Company and their staffs,
will advise and assist the officers and employees of Client Company
in connection with various phases of its business and operations,
including particularly, but not exclusively, those phases which
involve coordination of planning or operation between Client
Company and other entities.
3. Land Management
Provide services and advice relating to real estate, such as:
a) Review of purchase negotiations and contracts.
b) Review of sales negotiations and contracts.
c) Studies to determine excess or insufficient
holdings of real estate.
d) Recommend disposition to others of unused property
for future use.
e) Studies of future plant sites and power line
corridors.
4. Marketing and Customer Services
Provide services and advice relating to utility end-use
customer needs, such as, applications of energy-efficient systems
and methods, energy management, heating, ventilation and air
conditioning, training, co-generation and small power production
analysis and application.
5. Power Plant Generation
a) Provide services and assistance in the engineering,
design, operation and maintenance of power plants
and related facilities. Provide services in
applications, such as, boilers, turbines,
generators, auxiliaries, combustion of fuels,
piping, instrumentation, controls, beating,
ventilation, air conditioning and fire protection.
b) Provide services and advice for the handling and
the transportation of coal and other materials to
storage facilities via rail, river, conveyor or
overland, and for the transporting of fly ash and
bottom ash to disposal areas or to the arrangement
for the sale and best future use of such materials
to third parties.
c) Provide planning and engineering services related
to the uses of coal, preparation of coal for
burning and safety activities.
6. Public Affairs
a) Prepare and disseminate information on all phases
of the utility business, including assisting with
news media, news releases, advertising and news
letters.
b) Provide Client Company with video tapes as well as
other audio-visual materials.
7. Purchasing and Stores
Provide services and advice relating to the procurement of
equipment and stores items, including market research, preparation
of commitments, requests for quotations, preparation of bid
summaries and expediting delivery of materials and services.
8. Rates, Tariffs and Contracts
Provide services and advice relating to rates and evaluations.
Activities would include the following:
a) Interconnection
Arrange contract terms for System Power Pool purchases
and sales.
b) Special Contracts
Administer special contracts to provide services.
c) Rates
Coordinate and prepare rate cases. Also participate in
the "hearing aspects" of fuel clause matters.
d) Rate Research and Design
Review the cost of service to different rate
jurisdictions and to customer classes within rate
jurisdictions.
9. System Operations
a) Provide services and assistance in the engineering,
design, operation and maintenance of systems,
programs and equipment to improve the economics,
efficient application and scheduling of generating,
transmission, distribution and associated
facilities.
b) Provide computer services and applications useful
to Client Company, such as:
1) Machine-related data processing services.
2) Computer applications activity-services
including feasibility studies for and
development of new applications, enhancement
of existing applications and other related
activity.
10. Technical Education
Provide training to personnel of Client Company or of non-
affiliates. Develop and make available training procedures,
materials and facilities, and provide instructors.
11. Transmission and Distribution
Provide services and advice related to new or existing
transmission lines, which services include:
a) Planning for the upgrade of transmission and
distribution lines.
b) Planning for and assisting in the engineering of
distribution line construction jobs.
c) Assisting in reliability problems.
d) Providing services and advice related to system
planning.
e) Negotiating contracts relating to the purchase of
equipment for maintenance and construction
projects.
f) Providing services and advice relating to research
and development projects.
g) Providing services and advice relating to
educational programs.
h) Monitoring the construction of transmission and
distribution lines, assemble cost estimates,
prepare capital forecasts, provide construction
management to ensure that design, engineering and
construction activities all coincide with proposed
plans, work on contracts for outside construction
crews, including the administration of labor
contracts on construction projects.
i) Providing civil engineering services and advice to
Client Company on projects related to construction
as it concerns siting, surveying, design and
engineering, the preparation of drawings and cost
estimates.
j) Providing services and advice relating to approval
of bids by outside contractor for maintenance along
rights-of-way, such maintenance to include trimming
trees and brush, groundline treatment of poles,
painting towers and stations, and aerial patrol of
rights-of-way. In addition, monitor the work of
the contractors for purposes of cost control and
adherence to contract terms. Also review safety
standards.
ARTICLE IV. PROVISION OF PERSONNEL
When specifically requested by Client Company, Operating
Company may loan its employees to Client Company. In that event,
such loaned employees will be under the sole supervision and
control of Client Company for such period or periods of time as are
necessary to complete the work to be performed by such employees.
Such employees may be withdrawn by Operating Company from tasks
assigned by Client Company only with the consent of Client Company,
which consent will not be unreasonably withheld in the event of a
demonstrable emergency requiring the use of such employees in
another capacity for Operating Company. Client Company will be
responsible for the actions and activities of such employees while
engaged in the performance of the work to the same degree as though
such persons were employees of Client Company; provided that, such
persons shall remain the employees of the Operating Company, and
nothing herein shall be construed as creating the employer-employee
relationship between Client Company and such persons. Accordingly,
as part of Services, Operating Company, during periods when such
employees are loaned to Client Company, will continue to provide to
such employees those same payroll, pension, savings, tax
withholding, unemployment, bookkeeping and other personnel support
services then being utilized by Operating Company in connection
with compensating and benefiting such employees.
ARTICLE V. EXCHANGE OF INTELLECTUAL PROPERTY
A. Client Company shall own all Intellectual Property
developed during the course of its business utilizing personnel and
other resources of Operating Company, except as Client Company's
proprietary interest therein may be limited by contractual
commitments of Client Company to Non-Affiliates, applicable laws
and regulations, and the legal rights and entitlements of others.
Nothing herein shall be construed as granting or conferring any
proprietary interest in such Intellectual Property to or upon
Operating Company. Nevertheless, should Client Company in the
course of its business develop Intellectual Property, it will make
such Intellectual Property available for utilization by any
associate company of Client Company in the American Electric Power
System without charge (except the actual expenses incurred by
Client Company in connection with making such Intellectual Property
so available); provided, however, that such availability shall also
be dependent upon and subject to any contractual commitments of
Client Company to Non-Affiliates, applicable laws and regulations,
and the legal rights and entitlements of others.
B. As part of the Services, Operating Company will make
available to Client Company for use or for re-sale or licensing to
Non-Affiliates all Intellectual Property heretofore or hereafter
developed or obtained by Operating Company without charge (except
for the actual expenses incurred in making the same available, and
except as otherwise provided in Article VIII below), provided,
however, that such availability shall be dependent and subject to
any contractual commitments of Operating Company to Non-Affiliates,
applicable laws and regulations, and the legal rights and
entitlement of others.
ARTICLE VI. COMPENSATION OF OPERATING COMPANY
As compensation for services actually requested by Client
Company and rendered to it by Operating Company, Client Company
hereby agrees to pay to Operating Company the cost of such
services, except as described in Article V(B), computed in
accordance with applicable rules and regulations (including Rules
90 and 91 under the 1935 Act) and accounting standards. As soon as
practicable after the close of each month, Operating Company will
issue to Client Company an invoice and detail of charges, and all
amounts so billed shall be paid by Client Company within thirty
days after receipt thereof. The cost of Services to be paid by
Client Company shall include direct charges and Client Company's
pro rata share of certain of Operating Company's costs, determined
as set forth below:
A. Direct Charges
To the extent that the costs incurred by Operating Company in
connection with Services rendered by it to Client Company can be
identified and related to a particular transaction, direct charges
will be made by Operating Company to Client Company.
B. Prorated Charges
Such costs incurred by Operating Company in connection with
rendering Services to Client Company as cannot be identified and
related to a particular transaction will be charged to Client
Company in a fair and equitable manner.
ARTICLE VII. WORK ORDERS
The Services will be performed in accordance with work orders
or requests issued or made by or on behalf of Client Company and
accepted by Operating Company, and all services will be assigned an
applicable work order number to enable specific work to be properly
allocated by project or other appropriate basis. Work orders shall
be as specific as practicable in defining the Services requested to
be performed. Client Company shall have the right from time to
time to amend, alter or rescind any work order, provided that (i)
any such amendment or alteration which results in a material change
in the scope of the work to be performed or equipment to be
provided is agreed to by Operating Company; (ii) the costs for the
Services covered by the work order will include any expense
incurred by Operating Company as a direct result of such amendment,
alteration or rescission of the work order, and (iii) no amendment,
alteration or rescission of a work order will release Client
Company from liability for all costs already incurred or contracted
for by Operating Company pursuant to the work order, regardless of
whether the work associated with such costs has been completed.
ARTICLE VIII. DISPOSITION OF INTELLECTUAL PROPERTY
In the event Client Company sells or licenses to Non-
Affiliates Intellectual Property heretofore or hereafter developed
by Operating Company for its own use, and as a result of such sale
or license such Intellectual Property is no longer available for
use by Operating Company, Client Company shall receive, as and when
received from such Non-Affiliates, a commission of thirty percent
(30%) of all net profits (after deducting marketing and any other
applicable expenses incurred by Client Company) earned from such
sale or licensing, and Operating Company shall receive seventy
percent (70%) of such net profits.
ARTICLE IX. LIMITATION OF LIABILITY AND INDEMNIFICATION
A. In performing the Services hereunder (except to the
extent such services are being performed by employees loaned to and
under the supervision of Client Company), Operating Company will
exercise due care to assure that the services are performed in a
workmanlike manner, meet the standards and specifications set forth
in the applicable work order or request with respect to such
services, and comply with applicable standards of law and
regulation. However, failure to meet these obligations shall in no
event subject Operating Company to any claims or liabilities other
than to reperform the work at cost such that it fully complies with
the work order, request or standard, as the case may be. Operating
Company makes no other warranty with respect to its performance of
the Services, and Client Company agrees to accept such Services
without further warranty of any nature. The Client Company shall
and does hereby indemnify and agree to save harmless and defend
Operating Company from the payment of any sum or sums of money on
account of, or resulting from, claims or suits growing out of (i)
injuries to or the death of any person, (ii) damage to or loss of
any property, and/or (iii) other damages in any way attributable to
or arising out of the performance and prosecution of any project or
work performed by or on behalf of Client Company for Non-
Affiliates, whether or not the same results or allegedly results
from the claimed or actual negligence or breach of warranty of, or
wilful conduct by, Client Company or of its employees, agents or
subcontractors or any combination thereof. Further, Client Company
shall and does hereby indemnify and agree to save harmless and
defend Operating Company (a) from any and all liens, garnishments,
attachments, claims, suits, costs, attorneys' fees, cost of
investigation and of defense resulting from, incurred in connection
with, or relating to any such claims, (b) from the payment of any
such sum or sums of money, and (c) from the payment of any
penalties, fines, damages, suits or claims (and any liens or
attachments asserted in connection therewith) arising out of (i)
any alleged or actual violation of law, court order, or
governmental agency rule or regulation committed by or existing
with respect to Client Company or its employees, agents or
subcontractors (except Operating Company when not performing
Services hereunder), (ii) any alleged or actual breaches of
contract by Client Company, (iii) any claims made by or on account
of any employee, agent or subcontractor (except Operating Company
when not performing Services hereunder or an employee or agent of
Service Company where such claim does not arise specifically in
connection with the performance of Services hereunder) of Client
Company, or for (iv) services or labor performed, materials,
provisions or supplies furnished or board of men which have been
purchased or allegedly contracted for by or on behalf of the Client
Company, its employees, agents or sub-contractors (except Operating
Company when not performing services hereunder).
B. The Operating Company shall within five business days
after it receives notice of any claims, action, damages or
liability against which it will expect to be indemnified pursuant
to Article IX(A), notify Client Company of such claims, actions,
damages or liabilities. Thereafter, Client Company may at its own
expense, upon notice to Operating Company, defend or participate in
the defense of such action or claim or any negotiation for
settlement of such action or claim, provided that unless Client
Company proceeds promptly and in good faith to pay or defend such
action or claim, then Operating Company shall have the right (but
not the obligation), in good faith, upon ten days notice to Client
Company, to pay, settle, compromise or proceed to defend any such
action or claim without the further participation by Client
Company. Client Company will immediately pay (or reimburse
Operating Company, as the case may be) any payments, settlements,
compromises, judgments, costs or expenses made or incurred by
Operating Company in or resulting from the pursuit by Operating
Company of such right. If any judgment is rendered against
Operating Company in any action defended by Client Company or from
which Operating Company is otherwise entitled to indemnification
under Article IX(A), or any lien attached to the assets of
Operating Company in connection therewith, Client Company
immediately upon such entry or attachment shall pay the judgment in
full or discharge any such lien unless, at its expense and
direction, appeal shall be taken under which the execution of the
judgment or satisfaction of the lien is stayed. If and when a
final and unappealable judgment is rendered against Operating
Company in any such action, Client Company shall forthwith pay such
judgment or discharge such lien prior to the time that Operating
Company would be legally held to do so.
C. Client Company shall maintain at all times adequate
levels of insurance to discharge financially its obligations under
this Article IX.
ARTICLE X. MISCELLANEOUS
This Agreement shall be binding upon the successors and
assigns of the parties hereto, provided that Operating Company
shall not be entitled to assign or subcontract out any of its
obligations under this Agreement or under any purchase order or
work order issued hereunder without the prior written approval of
Client Company. This Agreement may not be modified or amended in
any respect except in writing executed by the parties hereto. This
Agreement shall be construed and enforced under and in accordance
with the laws of the State of Ohio. This Agreement may be executed
in counterparts, each one of which when fully executed shall be
deemed to have the same dignity, force and effect as if the
original. No provision of this Agreement shall be deemed waived
nor breach of this Agreement consented to unless waiver or consent
is set forth in writing and executed by the party hereto making
such waiver or consent.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their respective corporate names by
their respective Presidents or one of their respective Vice
Presidents and their respective seals to be hereunto affixed and
attested by their respective Secretaries or one of their respective
Assistant Secretaries as of the day and year first above written.
APPALACHIAN POWER COMPANY
ATTEST: (Operating Company)
__/s/ J. Berg_____________ __/s/ John W. Vaughan____
AEP ENERGY SERVICES, INC.
ATTEST: (Client Company)
__/s/ W. E. Olson_________ __/s/ R. E. Disbrow______
<PAGE> Exhibit B-4
AMENDMENT NO. 1
to
AGREEMENT BETWEEN
APPALACHIAN POWER COMPANY
and
AEP ENERGY SERVICES, INC.
Dated: ______________, 1995
THIS AGREEMENT, made and entered into as of ,
1995, by and between APPALACHIAN POWER COMPANY, a corporation
organized under the laws of the State of Virginia, party of the
first part (hereinafter sometimes referred to as "Operating
Company") and AEP ENERGY SERVICES, INC., a corporation organized
under the laws of the State of Ohio, party of the second part
(hereinafter sometimes referred to as "Client Company").
W I T N E S S E T H :
WHEREAS, the Operating Company and the Client Company are
parties to an Agreement, dated as of October 3, 1983, pursuant to
which Operating Company has agreed to provide, and Client Company
to pay for, certain services, properties and other resources, when
and as requested by Client Company in accordance with such
Agreement; and
WHEREAS, the Operating Company and Client Company now wish to
amend said Agreement to reflect the terms of an order of the
Securities and Exchange Commission dated , 1995;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein, the Operating Company and Client Company
hereby agree to amend the Agreement as follows:
Section 1. ARTICLE V, paragraph B of the Agreement is
amended to read as follows:
"B. As part of the Services, Operating Company will
make available to Client Company for use or for re-sale
or licensing all Intellectual Property heretofore or
hereafter developed or obtained by Operating Company at
the fees provided in Article VIII below, provided,
however, that such availability shall be dependent and
subject to any contractual commitments of Operating
Company, applicable laws and regulations, and the legal
rights and entitlement of others."
Section 2. ARTICLE VIII, of the Agreement is amended to
read as follows:
"ARTICLE VIII. DISPOSITION OF INTELLECTUAL PROPERTY
In the event Client Company sells or licenses
Intellectual Property heretofore or hereafter developed
by Operating Company for its own use, Client Company
shall pay to Operating Company (1) 70% of the revenues
from the Intellectual Property until Operating Company
recovers the programming and development costs of the
Intellectual Property and (2) 20% of such revenues
thereafter."
Section 3. ARTICLE IX, paragraph A of the Agreement is
amended by deleting the phrase "for Non-Affiliates" from the fourth
sentence thereof.
This Amendment No. 1 may be executed in any number of
counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be executed as of the day and year first above
written.
APPALACHIAN POWER COMPANY
Vice President
AEP ENERGY SERVICES, INC.
President
a:\service.agr\es-apagr.amd
<PAGE>
<TABLE>
AEP ENERGY SERVICES, INC.
STATEMENTS OF INCOME
UNAUDITED
<CAPTION>
Twelve Months Ended
December 31, 1994
(in thousands)
<S> <C>
REVENUES:
Services Rendered. . . . . . . . . . . . . . . . . . . . $ 494
Miscellaneous Income . . . . . . . . . . . . . . . . . . 67
TOTAL REVENUES . . . . . . . . . . . . . . . . . 561
EXPENSES:
Outside Services Employed. . . . . . . . . . . . . . . . 2,871
Office Supplies and Services . . . . . . . . . . . . . . 37
Taxes Other Than Federal
Income Taxes . . . . . . . . . . . . . . . . . . . . . 4
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . 51
TOTAL EXPENSES . . . . . . . . . . . . . . . . . 2,963
LOSS BEFORE FEDERAL INCOME TAXES . . . . . . . . . . . . . (2,402)
FEDERAL INCOME TAX CREDIT. . . . . . . . . . . . . . . . . (840)
NET LOSS . . . . . . . . . . . . . . . . . . . . . . . . . $(1,562)
The common stock of the Company is wholly owned
by American Electric Power Company, Inc.
</TABLE>
<PAGE>
<TABLE>
AEP ENERGY SERVICES, INC.
BALANCE SHEET
UNAUDITED
<CAPTION>
December 31, 1994
(in thousands)
ASSETS
<S> <C>
PROPERTY:
Flash Fill Patent. . . . . . . . . . . . . . . . . . . . $ 27
Accumulated Amortization . . . . . . . . . . . . . . . . 4
NET PROPERTY . . . . . . . . . . . . . . . . . . 23
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . . . . 215
Accounts Receivable. . . . . . . . . . . . . . . . . . . 335
Accrued Tax Benefits. . . . . . . . . . . . . . . . . . 122
Prepayments. . . . . . . . . . . . . . . . . . . . . . . 5
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . 677
DEFERRED CHARGES . . . . . . . . . . . . . . . . . . . . . 349
TOTAL ASSETS . . . . . . . . . . . . . . . . . $1,049
CAPITALIZATION AND LIABILITIES
SHAREOWNER'S EQUITY:
Common Stock - Par Value $1,000:
Authorized - 1,000 Shares
Outstanding - 110 Shares. . . . . . . . . . . . . . . $ 110
Paid-in Capital . . . . . . . . . . . . . . . . . . . . 2,390
Accumulated Deficit . . . . . . . . . . . . . . . . . . (1,863)
TOTAL SHAREOWNER'S EQUITY. . . . . . . . . . . . 637
CURRENT LIABILITIES - Accounts Payable -
Affiliated Company. . . . . . . . . . . . . . . . . . . 412
TOTAL CAPITALIZATION AND LIABILITIES. . . . . $1,049
</TABLE>
<PAGE>
AEP ENERGY SERVICES, INC.
ADDITIONAL INFORMATION
FOR THE QUARTER ENDED DECEMBER 31, 1994
1. CONSULTING SERVICES
AEP Energy Services, Inc. (AEPES) has provided
consulting services to a contractor who is performing work
on a U.S. Agency for International Development sponsored
Energy Efficiency and Market Reform Project in Russia and
the republics of Kyrgyzstan and Georgia. AEPES has provided
management assessment consulting services to an industrial
company's plant in Hong Kong.
2. INTELLECTUAL PROPERTY
There were no sales of intellectual property
during this reporting period.
3. GUARANTEES OR ASSUMPTION OF LIABILITIES BY AEP ON
BEHALF OF AEPES
None.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> OPUR1
<CIK> 0000791094
<NAME> AEP ENERGY SERVICES, INC.
<MULTIPLIER> 1,000
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
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<CAPITAL-SURPLUS-PAID-IN> 2,390
<RETAINED-EARNINGS> (1,863)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 637
0
0
<LONG-TERM-DEBT-NET> 0
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<LONG-TERM-NOTES-PAYABLE> 0
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0
<CAPITAL-LEASE-OBLIGATIONS> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 412
<TOT-CAPITALIZATION-AND-LIAB> 1,049
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<OPERATING-INCOME-LOSS> 0
<OTHER-INCOME-NET> (1,562)
<INCOME-BEFORE-INTEREST-EXPEN> (1,562)
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<NET-INCOME> (1,562)
0
<EARNINGS-AVAILABLE-FOR-COMM> (1,562)
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<CASH-FLOW-OPERATIONS> (1,632)
<EPS-PRIMARY> 0<FN>
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<FN>
<F1> All common stock owned by parent company; no EPS required.
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</TABLE>
