<PAGE>
File No. 074-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-9C-3
QUARTERLY REPORT
For the quarter ended June 30, 1997
Filed Pursuant to Rule 58 of the Public Utility Holding Company
Act of 1935
by
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
<PAGE>
<TABLE>
AMERICAN ELECTRIC POWER COMPANY, INC.
FORM U-9C-3
For the Quarter Ended June 30, 1997
<CAPTION>
CONTENTS
Page
<S> <C>
ITEM 1 - Organization Chart 1
ITEM 2 - Issuances and Renewals of Securities and
Capital Contributions 1
ITEM 3 - Associated Transactions 2
ITEM 4 - Summary of Aggregate Investment 3
ITEM 5 - Other Investments 3
ITEM 6 - Financial Statements and Exhibits 4
Statements of Income 5
Balance Sheet 6
Exhibits 7
/TABLE
<PAGE>
<PAGE>
<TABLE>
ITEM 1 - ORGANIZATION CHART
<CAPTION>
Name Energy or Percentage
of Reporting gas-related Date of State of Of Voting Nature of
Company Company Organization Organization Securities Held Business
<S> <C> <C> <C> <C> <C>
AEP Energy Services, Energy September 24, 1996 Ohio 100% To broker and market
Inc. (AEPES) Energy commodities
ITEM 2 - ISSUANCES AND RENEWALS OF SECURITIES AND CAPITAL CONTRIBUTIONS
SECURITIES:
<CAPTION>
Company Type of Principal Person to Collateral Consideration
Issuing Security Amount of Issue or Cost of Whom Security Given With Received for
Security Issued Security Renewal Capital Was Issued Security Each Security
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
AEPES Short-term Variance Part of
Debt $1,925 Issue N/A Financial AEP System $1,925
Institutions Joint Credit
Facility
CAPITAL CONTRIBUTIONS:
<CAPTION>
Company Company Amount
Contributing Receiving of
Capital Capital Capital Contribution
(in thousands)
<S> <C> <C>
American Electric Power Company, Inc. AEPES $1,000
</TABLE>
<PAGE>
<PAGE>
<TABLE>
ITEM 3 - ASSOCIATED TRANSACTIONS
Part I -- Transactions performed by reporting companies on behalf of associate companies
<CAPTION>
Reporting Associate
Company Company Types of Direct Indirect Total
Rendering Receiving Services Costs Costs Cost Amount
Services Services Rendered Charged Charged of Capital Billed
<S>
NONE
Part II -- Transactions performed by associate companies on behalf of reporting companies
<CAPTION>
Associate Reporting
Company Company Types of Direct Indirect Total
Rendering Receiving Services Costs Costs Cost Amount
Services Services Rendered Charged Charged of Capital Billed
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
American Electric
Power Service Corporation AEPES Administrative and Marketing $1,638 $406 $ - $2,044
Kentucky Power Company AEPES Marketing 2 3 - 5
Ohio Power Company AEPES Marketing 12 13 - 25
Columbus Southern Power Company AEPES Marketing 12 13 - 25
AEP Resources Engineering &
Services Company AEPES Marketing 16 3 - 19
Total $1,680 $438 $ - $2,118
</TABLE>
<PAGE>
<TABLE>
ITEM 4 - SUMMARY OF AGGREGATE INVESTMENT
<CAPTION>
Investments in energy-related companies:
(in thousands)
<S> <C> <C> <C>
Total consolidated capitalization as of June 30, 1997 $10,167,125 Line 1
Total capitalization multipled by 15%
(line 1 multiplied by 0.15) 1,525,069 Line 2
Greater of $50 million or line 2 $1,525,069 Line 3
Total current aggregate investment:
(categorized by major line of energy-related business)
Energy-related business 28,525
Total current aggregate investment 28,525 Line 4
Difference between the greater of $50 million or 15%
of capitalization and the total aggregate investment
of the registered holding company system
(line 3 less line 4) $1,496,544 Line 5
<CAPTION>
Investments in gas-related companies:
<S>
NONE
ITEM 5 - OTHER INVESTMENTS
<CAPTION>
Major Line Other Other
of Energy-Related Investment in Last Investment in This Reason for Difference in
Business U-9C-3 Report U-9C-3 Report Other Investment
<S>
NONE
</TABLE>
<PAGE>
<TABLE>
ITEM 6 - FINANCIAL STATEMENTS AND EXHIBITS
<CAPTION>
List all financial statements and exhibits filed as a part of this report.
<S>
Financial Statements:
<C>
Statements of Income - filed under confidential treatment pursuant to Rule 104(b).
Balance Sheet - filed under confidential treatment pursuant to Rule 104(b).
Exhibits:
<S> <C>
1. Service Agreements between AEP Energy Services, Inc. and Appalachian Power Company,
Columbus Southern Power Company, Indiana Michigan Power Company, Kentucky Power
Company, Kingsport Power Company, Ohio Power Company and Wheeling Power Company,
respectively.
2. Copies of other contracts required by Item 3 - filed under confidential treatment
pursuant to Rule 104(b).
3. Certificate stating that a copy of the U-9C-3 for the previous quarter has been filed
with the Ohio, Kentucky, Virginia, West Virginia, Tennessee, Indiana and Michigan State
Commissions. - NOT APPLICABLE.
</TABLE>
<PAGE>
<PAGE>
SIGNATURE
The undersigned system company has duly caused this quarterly report to be
signed on its behalf by the undersigned, thereunto duly authorized, pursuant to
the requirements of the Public Utility Holding Company Act of 1935.
AMERICAN ELECTRIC POWER COMPANY, INC.
By /s/ G.P. Maloney
G.P. Maloney
Vice President
August 27, 1997
<PAGE>
<PAGE>
AGREEMENT BETWEEN
INDIANA MICHIGAN POWER COMPANY
and
AEP ENERGY SOLUTIONS, INC.
THIS AGREEMENT, made and entered into as of September 27, 1996
by and between INDIANA MICHIGAN POWER COMPANY, a corporation
organized under the laws of the State of Indiana (hereinafter
sometimes referred to as "Operating Company") and AEP ENERGY
SOLUTIONS, 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 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
<PAGE>
WHEREAS, Client Company is authorized under the 1935 Act by
order of the Securities and Exchange Commission dated September 13,
1996, to utilize those services, properties and resources of
Operating Company, as well as those provided by other members of
the American System, to broker and market energy commodities; 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. 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
or request, furnish to Client Company upon the terms and conditions
<PAGE>
hereinafter set forth services, for such periods and in such manner
as Client Company may from time to time request (the "Services");
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.
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 II. 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,
<PAGE>
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 III. 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
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
<PAGE>
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 IV. 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
<PAGE>
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 V. 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 Services at cost so that they fully comply
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 indemnify and agree to save harmless and defend
<PAGE>
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 of any Service, 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 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
Operating Company where such claim does not arise specifically in
<PAGE>
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 V(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
<PAGE>
which Operating Company is otherwise entitled to indemnification
under Article V(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 V.
ARTICLE VI. 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
<PAGE>
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.<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
INDIANA MICHIGAN POWER COMPANY
By: ____________________
G.P. Maloney, Vice President
AEP ENERGY SOLUTIONS, INC.
By: _____________________
G.P. Maloney, Vice President
<PAGE>
<PAGE>
AGREEMENT BETWEEN
COLUMBUS SOUTHERN POWER COMPANY
and
AEP ENERGY SOLUTIONS, INC.
THIS AGREEMENT, made and entered into as of September 27, 1996
by and between COLUMBUS SOUTHERN POWER COMPANY, a corporation
organized under the laws of the State of Ohio (hereinafter
sometimes referred to as "Operating Company") and AEP ENERGY
SOLUTIONS, 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 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
<PAGE>
WHEREAS, Client Company is authorized under the 1935 Act by
order of the Securities and Exchange Commission dated September 13,
1996, to utilize those services, properties and resources of
Operating Company, as well as those provided by other members of
the American System, to broker and market energy commodities; 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. 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
or request, furnish to Client Company upon the terms and conditions
hereinafter set forth services, for such periods and in such manner
as Client Company may from time to time request (the "Services");
<PAGE>
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.
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 II. 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
<PAGE>
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 III. 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
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
<PAGE>
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 IV. 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
<PAGE>
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 V. 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 Services at cost so that they fully comply
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 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)
<PAGE>
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 of any Service, 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 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
Operating 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,
<PAGE>
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 V(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 V(A), or any lien attached to the assets of Operating
<PAGE>
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 V.
ARTICLE VI. 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
<PAGE>
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.<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
COLUMBUS SOUTHERN POWER COMPANY
By: ____________________
A.A. Pena, Treasurer
AEP ENERGY SOLUTIONS, INC.
By: _____________________
A.A. Pena, Treasurer
<PAGE>
<PAGE>
AGREEMENT BETWEEN
KINGSPORT POWER COMPANY
and
AEP ENERGY SOLUTIONS, INC.
THIS AGREEMENT, made and entered into as of September 27, 1996
by and between KINGSPORT POWER COMPANY, a corporation organized
under the laws of the State of Tennessee (hereinafter sometimes
referred to as "Operating Company") and AEP ENERGY SOLUTIONS, 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 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
<PAGE>
WHEREAS, Client Company is authorized under the 1935 Act by
order of the Securities and Exchange Commission dated September 13,
1996, to utilize those services, properties and resources of
Operating Company, as well as those provided by other members of
the American System, to broker and market energy commodities; 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. 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
or request, furnish to Client Company upon the terms and conditions
hereinafter set forth services, for such periods and in such manner
as Client Company may from time to time request (the "Services");
<PAGE>
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.
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 II. 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
<PAGE>
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 III. 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
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
<PAGE>
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 IV. 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
<PAGE>
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 V. 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 Services at cost so that they fully comply
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 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)
<PAGE>
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 of any Service, 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 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
Operating 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,
<PAGE>
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 V(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 V(A), or any lien attached to the assets of Operating
<PAGE>
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 V.
ARTICLE VI. 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
<PAGE>
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.<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
KINGSPORT POWER COMPANY
By: ____________________
A.A. Pena, Treasurer
AEP ENERGY SOLUTIONS, INC.
By: _____________________
A.A. Pena, Treasurer
<PAGE>
<PAGE>
AGREEMENT BETWEEN
WHEELING POWER COMPANY
and
AEP ENERGY SOLUTIONS, INC.
THIS AGREEMENT, made and entered into as of January 9, 1997 by
and between WHEELING POWER COMPANY, a corporation organized under
the laws of the State of West Virginia (hereinafter sometimes
referred to as "Operating Company") and AEP ENERGY SOLUTIONS, 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 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
<PAGE>
WHEREAS, Client Company is authorized under the 1935 Act by
order of the Securities and Exchange Commission dated September 13,
1996, to utilize those services, properties and resources of
Operating Company, as well as those provided by other members of
the American System, to broker and market energy commodities; 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. 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
or request, furnish to Client Company upon the terms and conditions
hereinafter set forth services, for such periods and in such manner
as Client Company may from time to time request (the "Services");
<PAGE>
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.
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 II. 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
<PAGE>
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 III. 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
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
<PAGE>
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 IV. 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
<PAGE>
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 V. 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 Services at cost so that they fully comply
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 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)
<PAGE>
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 of any Service, 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 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
Operating 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,
<PAGE>
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 V(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 V(A), or any lien attached to the assets of Operating
<PAGE>
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 V.
ARTICLE VI. 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
<PAGE>
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.<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
WHEELING POWER COMPANY
By: ____________________
A.A. Pena, Treasurer
AEP ENERGY SOLUTIONS, INC.
By: _____________________
A.A. Pena, Treasurer
<PAGE>
<PAGE>
AGREEMENT BETWEEN
KENTUCKY POWER COMPANY
and
AEP ENERGY SOLUTIONS, INC.
THIS AGREEMENT, made and entered into as of September 27, 1996
by and between KENTUCKY POWER COMPANY, a corporation organized
under the laws of the Commonwealth of Kentucky (hereinafter
sometimes referred to as "Operating Company") and AEP ENERGY
SOLUTIONS, 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 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
<PAGE>
WHEREAS, Client Company is authorized under the 1935 Act by
order of the Securities and Exchange Commission dated September 13,
1996, to utilize those services, properties and resources of
Operating Company, as well as those provided by other members of
the American System, to broker and market energy commodities; 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. 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
or request, furnish to Client Company upon the terms and conditions
hereinafter set forth services, for such periods and in such manner
as Client Company may from time to time request (the "Services");
<PAGE>
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.
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 II. 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
<PAGE>
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 III. 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
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
<PAGE>
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 IV. 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
<PAGE>
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 V. 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 Services at cost so that they fully comply
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 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)
<PAGE>
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 of any Service, 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 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
Operating 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,
<PAGE>
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 V(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 V(A), or any lien attached to the assets of Operating
<PAGE>
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 V.
ARTICLE VI. 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
<PAGE>
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.<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
KENTUCKY POWER COMPANY
By: ____________________
A.A. Pena, Treasurer
AEP ENERGY SOLUTIONS, INC.
By: _____________________
A.A. Pena, Treasurer
<PAGE>
<PAGE>
AGREEMENT BETWEEN
OHIO POWER COMPANY
and
AEP ENERGY SOLUTIONS, INC.
THIS AGREEMENT, made and entered into as of September 27, 1996
by and between OHIO POWER COMPANY, a corporation organized under
the laws of the State of Ohio (hereinafter sometimes referred to as
"Operating Company") and AEP ENERGY SOLUTIONS, 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 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
<PAGE>
WHEREAS, Client Company is authorized under the 1935 Act by
order of the Securities and Exchange Commission dated September 13,
1996, to utilize those services, properties and resources of
Operating Company, as well as those provided by other members of
the American System, to broker and market energy commodities; 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. 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
or request, furnish to Client Company upon the terms and conditions
hereinafter set forth services, for such periods and in such manner
as Client Company may from time to time request (the "Services");
<PAGE>
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.
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 II. 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
<PAGE>
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 III. 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
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
<PAGE>
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 IV. 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
<PAGE>
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 V. 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 Services at cost so that they fully comply
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 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)
<PAGE>
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 of any Service, 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 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
Operating 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,
<PAGE>
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 V(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 V(A), or any lien attached to the assets of Operating
<PAGE>
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 V.
ARTICLE VI. 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
<PAGE>
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.<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
OHIO POWER COMPANY
By: ____________________
A.A. Pena, Treasurer
AEP ENERGY SOLUTIONS, INC.
By: _____________________
A.A. Pena, Treasurer
<PAGE>
<PAGE>
AGREEMENT BETWEEN
APPALACHIAN POWER COMPANY
and
AEP ENERGY SERVICES, INC.
(formerly AEP ENERGY SOLUTIONS, INC.)
THIS AGREEMENT, made and entered into as of March 6, 1997 by
and between APPALACHIAN POWER COMPANY, a corporation organized
under the laws of the Commonwealth of Virginia (hereinafter some-
times referred to as "Operating Company") and AEP ENERGY SERVICES,
INC. (formerly AEP Energy Solutions, 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 Operating Company and the Client Company are
associate companies in the American Electric Power System (herein-
after called the "System"), which is comprised of American Electric
Power Company, Inc. (hereinafter called "American") and its subsid-
iary 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
<PAGE>
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
order of the Securities and Exchange Commission dated September 13,
1996, to utilize those services, properties and resources of
Operating Company, as well as those provided by other members of
the American System, to broker and market energy commodities; 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. 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
or request, furnish to Client Company upon the terms and conditions
hereinafter set forth services, for such periods and in such manner
<PAGE>
as Client Company may from time to time request (the "Services");
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 per-
formance without the consent of Client Company.
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 govern-
mental agencies, if any, having jurisdiction over Operating
Company, Client Company, or such provision of Services.
ARTICLE II. 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 con-
trol 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
<PAGE>
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 with-
holding, unemployment, bookkeeping and other personnel support
services then being utilized by Operating Company in connection
with compensating and benefiting such employees.
ARTICLE III. 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
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
<PAGE>
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 trans-
action, direct charges will be made by Operating Company to Client
Company.
B. Prorated Charges. Such costs incurred by Operating Com-
pany 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 IV. 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 pro-
vided 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,
<PAGE>
alteration or rescission of the work order; and (iii) no amendment,
alteration or rescission of a work order will release Client Com-
pany 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 V. 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 ser-
vices, and comply with applicable standards of law and regulation.
However, failure to meet these obligations shall in no event sub-
ject Operating Company to any claims or liabilities other than to
reperform the Services at cost so that they fully comply 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
indemnify and agree to save harmless and defend Operating Company
from the payment of any sum or sums of money on account of, or re-
sulting 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
<PAGE>
the performance of any Service, 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 indemnify and agree to save harmless
and defend Operating Company (a) from any and all liens, garnish-
ments, 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 penal-
ties, 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 Com-
pany 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 (ex-
cept Operating Company when not performing Services hereunder or an
employee or agent of Operating 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 per-
formed, materials, provisions or supplies furnished or board of men
which have been purchased or allegedly contracted for by or on be
<PAGE>
half of the Client Company, its employees, agents or subcontractors
(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 liabil-
ity against which it will expect to be indemnified pursuant to
Article V(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 settle-
ment 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 Com-
pany, 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 Oper-
ating 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 V(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 dis
<PAGE>
charge any such lien unless, at its expense and direction, appeal
shall be taken under which the execution of the judgment or satis-
faction of the lien is stayed. If and when a final and unappeal-
able judgment is rendered against Operating Company in any such
action, Client Company shall forthwith pay such judgment or dis-
charge 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 V.
ARTICLE VI. 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 obli-
gations 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 origi-
nal. No provision of this Agreement shall be deemed waived nor
breach of this Agreement consented to unless waiver or consent is
<PAGE>
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 as of the day and year first above
written.
APPALACHIAN POWER COMPANY
By:
G. P. Maloney
Vice President
AEP ENERGY SERVICES, INC.
By:
G. P. Maloney
Vice President
