ASSET CONTRIBUTION AGREEMENT BETWEEN OHIO POWER COMPANY AND AEP GENERATION RESOURCES INC. December 31, 2013

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	Table of Contents
				Page
Article I DEFINITIONS				2
	Section 1.01 Definitions			2
Article II TRANSFER OF ASSETS				11
	Section 2.01 Transfer of Assets			11
	Section 2.02 Excluded Assets			13
	Section 2.03 Assumed Liabilities			14
	Section 2.04 Excluded Liabilities			15
Article III ASSET TRANSFER; CLOSING				16
	Section 3.01 Asset Transfer			16
	Section 3.02 Proration			16
	Section 3.03 Closing			167
	Section 3.04 Closing Deliveries			17
Article IV REPRESENTATIONS AND WARRANTIES				19
	Section 4.01 Representations and Warranties of Transferor			19
	Section 4.02 Representations and Warranties of Transferee			25
Article V CERTAIN COVENANTS AND AGREEMENTS				27
	Section 5.01 Transfer Tax; Recording Costs			27
	Section 5.02 Further Assurances			27
	Section 5.03 Survival			29
	Section 5.04 Indemnification by Transferor			29
	Section 5.05 Indemnification by Transferee			29
Article VI MISCELLANEOUS PROVISIONS				30
	Section 6.01 Notices			30
	Section 6.02 Waiver			30
	Section 6.03 Entire Agreement; Amendment; Etc.			31
	Section 6.04 Assignment			31
	Section 6.05 Severability			32
	Section 6.06 Governing Law			32
	Section 6.07 Counterparts: Facsimile Execution			32
	Section 6.08 Schedules			33
	Section 6.09 Specific Performance			33
EXHIBITS
Exhibit A		Form of Assignment of Contracts
Exhibit B		Form of Assignment of Easements and Rights of Way
Exhibit C		Form of Assignment of Real Property Leases
Exhibit D		Form of Assumption Agreement
Exhibit E		Form of Asset Transfer Agreement

SCHEDULES
Schedule 1.01		Assumed Payables
Schedule 1.02		Reserved
Schedule 1.03		Debt
Schedule 1.04		Easements and Rights of Way
Schedule 1.05		Franklin Real Property
Schedule 1.06		Generating Plants
Schedule 1.07		Pollution Control Bonds
Schedule 1.08		Rail Transportation Assets
Schedule 1.09		River Transportation Assets
Schedule 2.01(c)		Real Property
Schedule 2.01(p)		Tangible Personal Property
Schedule 2.01(q)		Miscellaneous
Schedule 2.01(t)		Generation Transmission Assets
Schedule 4.01(e)		Leased Real Property and Real Property Leases
Schedule 4.01(g)		Environmental Matters and Environmental Permits
Schedule 4.01(i)		Contracts
Schedule 4.01(j)		Legal Proceedings
Schedule 4.01(k)		Permits

 

 

 

This Asset Contribution Agreement (this "Agreement"), dated as of December 31,  2013, is between Ohio Power Company, an Ohio corporation ("Transferor"), and AEP Generation Resources Inc., a Delaware corporation ("Transferee").  Collectively, Transferee and Transferor may be referred to herein as the "Parties" and each, individually, as a "Party."

 

W I T N E S S E T H

 

WHEREAS, Transferor owns or holds interests in certain electric generating plants and related facilities in the states of Ohio and West Virginia; leases for barges, towboats and railcars utilized in connection with the delivery of coal and other products to Transferor’s generating plants;  and certain other assets, improvements, equipment, properties (both tangible, including real and personal property, and intangible), and rights associated therewith or ancillary thereto, all as more specifically described herein.

 

WHEREAS, Transferor desires to transfer and assign to Transferee, and Transferee desires to acquire and assume from Transferor, the Transferred Assets (as hereinafter defined) and certain liabilities, upon the terms and conditions hereinafter set forth;

 

WHEREAS, concurrently with, and as a condition to, the execution and delivery of this Agreement, Transferor and Transferee are executing and delivering an Assumption Agreement, pursuant to which, and subject to the terms and conditions thereof, Transferor has agreed to assign and Transferee has agreed to assume, concurrently with the closing of the transactions contemplated herein, certain liabilities of Transferor as described therein;

 

WHEREAS, Transferor and Transferee intend that the transfer of the Transferred Assets contemplated herein qualify as contributions to capital under Section 351 of the Internal Revenue Code of 1986, as amended; and

 

WHEREAS, Transferor directly owns all of the outstanding capital stock of Transferee.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements, representations and warranties hereinafter set forth, the Parties, intending to be legally bound, hereby agree as follows:

 

 

      Section 1.01 Definitions.

 

        (a) As used in this Agreement, the following terms have the following meanings:

 

"Affiliate" means a Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.  The term "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

"Ancillary Agreements" means the Assumption Agreement, the Asset Transfer Agreement, the Deeds, the Assignment of Easements and Rights of Way, the Assignment of Real Property Leases, the Assignment of Contracts and any other agreements or instruments entered into between the Parties with respect to the transactions contemplated by this Agreement.

 

"Asset Transfer Agreement" means the Asset Transfer Agreement to be executed and delivered at Closing by Transferor to Transferee in substantially the form attached hereto as Exhibit E.

 

"Assignment of Contracts" means the Assignment of Contracts agreement to be entered into between Transferor and Transferee at Closing in substantially the form attached hereto as Exhibit A.

 

"Assignment of Easements and Rights of Way" means the Assignments of Easements and Rights of Way agreements to be entered into between Transferor and Transferee at Closing in substantially the form attached hereto as Exhibit B.

 

"Assignment of Real Property Leases" means the Assignment of Real Property Leases agreements to be entered into by and between Transferor and Transferee at Closing in substantially the form attached hereto as Exhibit C.

 

"Assumed Liabilities" has the meaning set forth in Section 2.03.

 

"Assumed Payables" means those payables owed by Transferor with respect to the Transferred Assets as generally set forth in Schedule 1.01.

 

"Assumption Agreement" means the Assumption Agreement to be entered into between Transferor and Transferee at Closing in substantially the form attached hereto as Exhibit D.

 

"Business Day" means a day other than a Saturday, Sunday or day on which banks are permitted or required to remain closed in the state of Ohio.

 

"Cardinal Stock" means fifty percent of the outstanding capital stock of the Cardinal Operating Company.

 

"Central Coal Stock" means fifty percent of the outstanding capital stock of the Central Coal Company.

 

"CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time.

 

"Closing" has the meaning set forth in Section 3.03.

 

"Closing Date" has the meaning set forth in Section 3.03.

 

“Conesville Stock" means the outstanding capital stock of the Conesville Coal Preparation Company, a wholly owned subsidiary of Transferor.

 

"Contracts" has the meaning set forth in Section 4.01(i).

 

"CWIP" has the meaning set forth in the definition of "Improvements".

 

"Debt" means the long-term and short-term debt owed by Transferor as described in Schedule 1.03.

 

"Deeds" means those certain deeds to be executed and delivered at Closing by Transferor to Transferee.

 

"Deferred Tax Assets" means the Transferor’s deferred tax assets relating to the Transferred Assets or any assumed Liability that is carried on its books.

 

"Deferred Tax Liability" means the Transferor’s deferred tax liability relating to the Transferred Assets or any assumed Liability that is carried on its books.

 

"Easements and Rights of Way" means the easements and rights of way as described in Schedule 1.04.

 

"Effective Time" has the meaning set forth in Section 3.03.

 

"Emissions Allowances" means all authorizations issued to Transferor by a Governmental Authority pursuant to a statutory or regulatory program promulgated by a Governmental Authority pursuant to which air emissions sources subject to the program are authorized to emit a prescribed quantity of air emissions.

 

"Encumbrance" means any security interest, pledge, mortgage, lien, charge, option to purchase, lease, claim, restriction, covenant, title defect, hypothecation, assignment, deposit arrangement or other encumbrance of any kind or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including any conditional sale or title retention agreement).

 

"Environment" means soil, land surface, or subsurface strata, surface waters (including navigable waters, streams, ponds, drainage basins, reservoirs and wetlands), ground waters, stream sediments, ambient air, plant and animal life, and any other environmental medium or natural resource.            

 

"Environmental Condition" means the presence or Release to the Environment, whether at the Real Property, the Leased Real Property or real property covered by the Easements and Rights of Way or otherwise, of Hazardous Substances, including any migration of Hazardous Substances through air, soil or groundwater at, to or from the Real Property, the Leased Real Property or the real property covered by the Easements and Rights of Way or at, to or from any Off-Site Location, regardless of when such presence or Release occurred or is discovered.

 

"Environmental Laws" means all (i) Laws relating to pollution or protection of the environment, natural resources or human health and safety, including Laws relating to Releases or threatened Releases of Hazardous Substances or otherwise relating to the manufacture, formulation, generation, processing, distribution, use, treatment, storage, Release, transport, remediation, abatement, cleanup or handling of Hazardous Substances; (iii) Laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Substances; and (iii) Laws relating to the management or use of natural resources.

 

"Environmental Permits" has the meaning set forth in Section 4.01(g).

 

"Excluded Assets" has the meaning set forth in Section 2.02.

 

"Excluded Liabilities" has the meaning set forth in Section 2.04.

 

"FERC" means the Federal Energy Regulatory Commission.

 

"Franklin Real Property" means that certain real property held by Franklin Real Estate Company, a wholly owned subsidiary of the Parent, as agent for and for the benefit of Transferor’s electric generation assets as more specifically described in Schedule 1.05.

 

"Generating Plants" means the electric generating plants, including all related equipment and facilities, described in Schedule 1.06 that is owned by Transferor or in which Transfer holds a direct or indirect ownership interest.

 

"Generation Transmission Assets" has the meaning set forth in Section 2.01(t).

 

"Good Utility Practice" means any of the practices, methods and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods or acts which, in the exercise of reasonable judgment in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition.

 

"Governmental Authority" means any: (i) nation, state, county, city, town, village, district, or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign, or other government; (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); (iv) multi-national organization or body; or (v) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

 

"Hazardous Substances" means (i) any petrochemical or petroleum products, oil or coal ash, radioactive materials, radon gas, asbestos in any form that is or could become friable, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid which may contain levels of polychlorinated biphenyls; (ii) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "hazardous constituents," "restricted hazardous materials," "extremely hazardous substances," "toxic substances," "contaminants," "pollutants," "toxic pollutants," or words of similar meaning and regulatory effect under any applicable

 

"Improvements" means all buildings, structures, machinery and equipment (including all fuel handling and storage facilities), fixtures, construction work in progress ("CWIP"), and other improvements, including all piping, cables and similar equipment forming part of the mechanical, electrical, plumbing or HVAC infrastructure of any building, structure or equipment, located on and affixed to the Real Property, the Leased Real Property and the Easements and Rights of Way.

 

"Intellectual Property" means all of the following and similar intangible property and related proprietary rights, interests and protections, however arising, (i) all software necessary to operate or maintain the Transferred Assets, (ii) confidential information, formulas, designs, devices, technology, know-how, research and development, inventions, methods, processes, compositions and other trade secrets, whether or not patentable and (iii) patented and patentable designs and inventions, all design, plant and utility patents, letters patent, utility models, pending patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and applications.

 

"Inventories" means (i) all inventories of fuels and consumables owned by Transferor for use at the Generating Plants, whether located on Real Property, Leased Real Property or the Easements and Rights of Way associated with the Generating Plants or in transit thereto or stored offsite and (ii) all materials and supplies, including without limitation, spare parts, owned by Transferor for use at or in connection with the Generating Plants, the Rail Transportation Assets and the River Transportation Assets.

 

"Knowledge" means the actual and current knowledge of the corporate officer or officers of the specified Person charged with responsibility for the particular function as of the date of this Agreement, or, with respect to any certificate delivered pursuant to this Agreement, the date of delivery of the certificate, without any implication of verification or investigation concerning such knowledge.

 

"Laws" means all laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of the United States, any foreign country and any

 

"Leased Real Property" has the meaning set forth in Section 4.01(e)(i).

 

"Liability" means any liability or obligation, whether known or unknown, whether asserted or not asserted, whether absolute or contingent, whether accrued or not accrued, whether liquidated or not liquidated, whether incurred or consequential, and whether due or to become due.

 

"Material Adverse Effect" means (i) any event, circumstance or condition materially impairing the ability of Transferor to perform its obligations under this Agreement or any Ancillary Agreement or (ii) any change in or effect on the Transferred Assets that is materially adverse to the Transferred Assets, other than (a) any change resulting from changes in the international, national, regional or local wholesale or retail markets for electricity, (b) any change resulting from changes in the international, national, regional or local markets for fuel or consumables used at the Generating Plants, (c) any change resulting from changes in the North American, national, regional or local electric transmission system, and (d) any change in Law generally applicable to similarly situated Persons.

 

"Net Book Value" means an amount in dollars, as reflected in the corresponding line item or items of the balance sheet of Transferor as of the applicable date for all Transferred Assets and all Assumed Liabilities.  With respect to the Transferred Assets, Net Book Value is equal to total Transferred Assets net of accumulated depreciation or amortization as appropriate.

 

"Off-Site Location" means any real property other than the Real Property, the Leased Real Property or real property covered by the Easements and Rights of Way.

 

"Organizational Documents" means (i) the articles or certificate of incorporation and the bylaws of a corporation; (ii) the limited liability company or operating agreement and certificate of formation of a limited liability company; (iii) the partnership agreement and any statement of partnership of a general partnership; (iv) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (v) any charter or similar document adopted or filed in connection with the creation, formation, or organization of a Person, and (vi) any amendment to any of the foregoing.

 

"Parent" means American Electric Power Company, Inc.

 

"Party" has the meaning set forth in the first paragraph of this Agreement.

 

"PCRB Support Notes" has the meaning set forth in Section 2.03(e).

 

"Permits" has the meaning set forth in Section 4.0l(k).

 

"Permitted Encumbrances" means: (i) mechanics’, carriers’, workmen’s, repairmen’s or other like Encumbrances arising or incurred in the ordinary course of business that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (ii) Encumbrances for Taxes not yet due or which are being contested in good faith by appropriate proceedings and that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; (iii) imperfections of title or encumbrances, if any, that, individually or in the aggregate, do not materially impair, and would not reasonably be expected to have a Material Adverse Effect; (iv) leases, subleases and similar agreements, and liens of any landlord or other third party on property over which Transferor has easement rights or on any Leased Real Property and subordination or similar agreements relating thereto; (v) leases, mineral reservations and conveyances, easements, covenants, rights-of-way and other similar restrictions of record; (vi) any conditions that may be shown by a current, accurate survey or physical inspection of the Real Property or the Leased Real Property made prior to the Closing;  (vii) zoning, planning, conservation restriction and other land use and environmental regulations by Governmental Authorities; (viii) the respective rights and obligations of the Parties under this Agreement and the Ancillary Agreements; (ix) Encumbrances resulting from legal proceedings being contested in good faith by appropriate proceedings that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and (x) other Encumbrances that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

"Person" means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, or other entity or Governmental Authority.

 

"Pollution Control Revenue Bonds" means the pollution control bonds held by the public and identified in Schedule 1.07.

 

"Rail Transportation Assets" means the railcar leases and associated rail equipment and facilities described in Schedule 1.08.

 

"Real Property" has the meaning set forth in Section 2.01(c).

 

"Real Property Leases" has the meaning set forth in Section 4.01(e)(i).

 

"Release" means any release, spill, leak, discharge, disposal of, pumping, pouring, emitting, emptying, injecting, leaching, dumping or allowing to escape into or through the environment.

 

"River Transportation Assets" means the barges and towboats leases, including associated equipment and facilities, described in Schedule 1.09.

 

"Tax" means all federal, state, local and foreign taxes, charges, fees, levies, imposts, duties or other assessments, including, without limitation, income, gross receipts, excise, employment, sales, use, transfer, license, payroll, franchise, severance, stamp, occupation, windfall profits, environmental (including taxes under Code Section 59A), premium, federal highway use, commercial rent, customs duties, capital stock, paid up capital, profits, withholding, social security, single business and unemployment, disability, real property, personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposed or required to be withheld by any Governmental Authority, including any interest, penalties or additions thereto, whether disputed or not.

 

"Transferee" has the meaning set forth in the first paragraph of this Agreement.

 

"Transferor" has the meaning set forth in the first paragraph of this Agreement.

 

"Transferor Held Stock" means, collectively, the Cardinal Stock, the Central Coal Stock and the Conesville Stock.

 

"Transferor's Retained Real Property" has the meaning set forth in Section 2.02(a).

 

"Transferred Assets" has the meaning set forth in Section 2.01.

 

 

 

 

 

IN WITNESS WHEREOF, each of the Parties has caused this Asset Contribution Agreement to be executed on its behalf by its respective officer thereunto duly authorized, all as of the day and year first above written.