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