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<SEC-DOCUMENT>0000004904-03-000086.txt : 20030320
<SEC-HEADER>0000004904-03-000086.hdr.sgml : 20030320
<ACCEPTANCE-DATETIME>20030320170458
ACCESSION NUMBER: 0000004904-03-000086
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 21
CONFORMED PERIOD OF REPORT: 20021231
FILED AS OF DATE: 20030320
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: AMERICAN ELECTRIC POWER CO INC
CENTRAL INDEX KEY: 0000004904
STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911]
IRS NUMBER: 134922640
STATE OF INCORPORATION: NY
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-03525
FILM NUMBER: 03610921
BUSINESS ADDRESS:
STREET 1: 1 RIVERSIDE PLZ
CITY: COLUMBUS
STATE: OH
ZIP: 43215
BUSINESS PHONE: 6142231000
FORMER COMPANY:
FORMER CONFORMED NAME: KINGSPORT UTILITIES INC
DATE OF NAME CHANGE: 19660906
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>module.txt
<DESCRIPTION>AEP AND SUBSIDIARIES
<TEXT>
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-K
---------------------------
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from -------------- to --------------
<Table>
<Caption>
COMMISSION REGISTRANTS; STATES OF INCORPORATION; I.R.S. EMPLOYER
FILE NUMBER ADDRESS AND TELEPHONE NUMBER IDENTIFICATION NOS.
----------- ------------------------------------- -------------------
<S> <C> <C>
1-3525 AMERICAN ELECTRIC POWER COMPANY, INC. (A New York 13-4922640
Corporation)
0-18135 AEP GENERATING COMPANY (An Ohio Corporation) 31-1033833
0-346 AEP TEXAS CENTRAL COMPANY (A Texas Corporation) 74-0550600
0-340 AEP TEXAS NORTH COMPANY (A Texas Corporation) 75-0646790
1-3457 APPALACHIAN POWER COMPANY (A Virginia Corporation) 54-0124790
1-2680 COLUMBUS SOUTHERN POWER COMPANY (An Ohio Corporation) 31-4154203
1-3570 INDIANA MICHIGAN POWER COMPANY (An Indiana Corporation) 35-0410455
1-6858 KENTUCKY POWER COMPANY (A Kentucky Corporation) 61-0247775
1-6543 OHIO POWER COMPANY (An Ohio Corporation) 31-4271000
0-343 PUBLIC SERVICE COMPANY OF OKLAHOMA (An Oklahoma Corporation) 73-0410895
1-3146 SOUTHWESTERN ELECTRIC POWER COMPANY (A Delaware Corporation) 72-0323455
1 Riverside Plaza, Columbus, Ohio 43215
Telephone (614) 223-1000
</Table>
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X . No.
Indicate by check mark if disclosure of delinquent filers with respect to
American Electric Power Company, Inc. pursuant to Item 405 of Regulation S-K
(229.405 of this chapter) is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Indicate by check mark if disclosure of delinquent filers with respect to
Appalachian Power Company, Indiana Michigan Power Company or Ohio Power Company
pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's
knowledge, in definitive proxy or information statements of Appalachian Power
Company or Ohio Power Company incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. X
Indicate by check mark whether American Electric Power Company, Inc. is an
accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of
1934). Yes X No __
Indicate by check mark whether AEP Generating Company, AEP Texas Central
Company, AEP Texas North Company, Appalachian Power Company, Columbus Southern
Power Company, Indiana Michigan Power Company, Kentucky Power Company, Ohio
Power Company, Public Service Company of Oklahoma and Southwestern Electric
Power Company are accelerated filers (as defined in Rule 12b-2 of the Securities
Exchange Act of 1934). Yes __ No X
AEP Generating Company, AEP Texas North Company, Columbus Southern Power
Company, Kentucky Power Company and Public Service Company of Oklahoma meet the
conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and are
therefore filing this Form 10-K with the reduced disclosure format specified in
General Instruction I(2) to such Form 10-K.
<PAGE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<Table>
<Caption>
NAME OF EACH EXCHANGE
REGISTRANT TITLE OF EACH CLASS ON WHICH REGISTERED
---------- ------------------- ---------------------
<S> <C> <C>
AEP Generating Company None
AEP Texas Central Company None
AEP Texas North Company None
American Electric Common Stock,
Power Company, Inc. $6.50 par value.................................. New York Stock Exchange
9.25% Equity Units................................. New York Stock Exchange
Appalachian Power Company 7.20% Senior Notes, Series A, Due 2038............. New York Stock Exchange
7.30% Senior Notes, Series B, Due 2038............. New York Stock Exchange
Columbus Southern Power Company None
CPL Capital I 8.00% Cumulative Quarterly Income
Preferred Securities, Series A, Liquidation
Preference $25 per Preferred Security............ New York Stock Exchange
Indiana Michigan 8% Junior Subordinated Debentures, Series A, Due
Power Company 2026............................................. New York Stock Exchange
7.60% Junior Subordinated Deferrable
Interest Debentures, Series B, Due 2038.......... New York Stock Exchange
6% Senior Notes, Series D, Due 2032................ New York Stock Exchange
Kentucky Power Company 8.72% Junior Subordinated Deferrable
Interest Debentures, Series A, Due 2025.......... New York Stock Exchange
Ohio Power Company 7 3/8% Senior Notes, Series A, Due 2038............ New York Stock Exchange
Public Service Company 6% Senior Notes, Series B, Due 2032................ New York Stock Exchange
of Oklahoma
PSO Capital I 8.00% Trust Originated Preferred
Securities, Series A, Liquidation
Preference $25 per Preferred Security............ New York Stock Exchange
SWEPCo Capital I 7.875% Trust Preferred Securities,
Series A, Liquidation amount $25
per Preferred Security........................... New York Stock Exchange
Southwestern Electric None
Power Company
</Table>
<PAGE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
<Table>
<Caption>
REGISTRANT TITLE OF EACH CLASS
---------- -------------------
<S> <C>
AEP Generating Company None
AEP Texas Central Company 4.00% Cumulative Preferred Stock, Non-Voting, $100 par value
4.20% Cumulative Preferred Stock, Non-Voting, $100 par value
AEP Texas North Company None
American Electric Power Company, Inc. None
Appalachian Power Company 4.50% Cumulative Preferred Stock, Voting, no par value
Columbus Southern Power Company None
Indiana Michigan Power Company 4.125% Cumulative Preferred Stock, Non-Voting, $100 par
value
Kentucky Power Company None
Ohio Power Company 4.50% Cumulative Preferred Stock, Voting, $100 par value
Public Service Company of Oklahoma None
Southwestern Electric Power Company 4.28% Cumulative Preferred Stock, Non-Voting, $100 par value
4.65% Cumulative Preferred Stock, Non-Voting, $100 par value
5.00% Cumulative Preferred Stock, Non-Voting, $100 par value
</Table>
<Table>
<Caption>
AGGREGATE MARKET VALUE
OF VOTING AND NON-VOTING NUMBER OF SHARES
COMMON EQUITY HELD OF COMMON STOCK
BY NON-AFFILIATES OF OUTSTANDING OF
THE REGISTRANTS AT THE REGISTRANTS AT
JUNE 28, 2002 JUNE 28, 2002
------------------------ ------------------
<S> <C> <C>
AEP Generating Company None 1,000
($1,000 par value)
AEP Texas Central Company None 2,211,678
($25 par value)
AEP Texas North Company None 5,488,560
($25 par value)
American Electric Power Company, Inc. $13,560,125,474 338,833,720
($6.50 par value)
Appalachian Power Company None 13,499,500
(no par value)
Columbus Southern Power Company None 16,410,426
(no par value)
Indiana Michigan Power Company None 1,400,000
(no par value)
Kentucky Power Company None 1,009,000
($50 par value)
Ohio Power Company None 27,952,473
(no par value)
Public Service Company of Oklahoma None 9,013,000
($15 par value)
Southwestern Electric Power Company None 7,536,640
($18 par value)
</Table>
NOTE ON MARKET VALUE OF COMMON EQUITY HELD BY NON-AFFILIATES
American Electric Power Company, Inc. owns, directly or indirectly, all of
the common stock of AEP Generating Company, AEP Texas Central Company, AEP Texas
North Company, Appalachian Power Company, Columbus Southern Power Company,
Indiana Michigan Power Company, Kentucky Power Company, Ohio Power Company,
Public Service Company of Oklahoma and Southwestern Electric Power Company (see
Item 12 herein).
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
<Table>
<Caption>
PART OF FORM 10-K
INTO WHICH DOCUMENT
DESCRIPTION IS INCORPORATED
- ----------- -------------------
<S> <C>
Portions of Annual Reports of the following companies for Part II
the fiscal year ended December 31, 2002:
AEP Generating Company
AEP Texas Central Company
AEP Texas North Company
American Electric Power Company, Inc.
Appalachian Power Company
Columbus Southern Power Company
Indiana Michigan Power Company
Kentucky Power Company
Ohio Power Company
Public Service Company of Oklahoma
Southwestern Electric Power Company
Portions of Proxy Statement of American Electric Power Part III
Company, Inc. for 2003 Annual Meeting of Shareholders, to be
filed within 120 days after December 31, 2002
Portions of Information Statements of the following Part III
companies for 2003 Annual Meeting of Shareholders, to be
filed within 120 days after December 31, 2002:
Appalachian Power Company
Ohio Power Company
</Table>
------------------
THIS COMBINED FORM 10-K IS SEPARATELY FILED BY AEP GENERATING COMPANY,
AEP TEXAS CENTRAL COMPANY, AEP TEXAS NORTH COMPANY, AMERICAN ELECTRIC POWER
COMPANY, INC., APPALACHIAN POWER COMPANY, COLUMBUS SOUTHERN POWER COMPANY,
INDIANA MICHIGAN POWER COMPANY, KENTUCKY POWER COMPANY, OHIO POWER COMPANY,
PUBLIC SERVICE COMPANY OF OKLAHOMA AND SOUTHWESTERN ELECTRIC POWER COMPANY.
INFORMATION CONTAINED HEREIN RELATING TO ANY INDIVIDUAL REGISTRANT IS FILED BY
SUCH REGISTRANT ON ITS OWN BEHALF. EXCEPT FOR AMERICAN ELECTRIC POWER COMPANY,
INC., EACH REGISTRANT MAKES NO REPRESENTATION AS TO INFORMATION RELATING TO THE
OTHER REGISTRANTS.
YOU CAN ACCESS FINANCIAL AND OTHER INFORMATION AT AEP'S WEBSITE. THE
ADDRESS IS WWW.AEP.COM. AEP MAKES AVAILABLE, FREE OF CHARGE ON ITS WEBSITE,
COPIES OF ITS ANNUAL REPORT ON FORM 10-K, QUARTERLY REPORTS ON FORM 10-Q,
CURRENT REPORTS ON FORM 8-K AND AMENDMENTS TO THOSE REPORTS FILED OR FURNISHED
PURSUANT TO SECTION 13(A) OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 AS
SOON AS REASONABLY PRACTICABLE AFTER FILING SUCH MATERIAL ELECTRONICALLY OR
OTHERWISE FURNISHING IT TO THE SEC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
NUMBER
------
<S> <C> <C> <C>
Glossary of Terms........................................................... i
Forward-Looking Information................................................. 1
PART I
Item 1. Business.................................................... 2
Item 2. Properties.................................................. 26
Item 3. Legal Proceedings........................................... 29
Item 4. Submission of Matters to a Vote of Security Holders......... 30
Executive Officers of the Registrants.................................... 30
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 32
Item 6. Selected Financial Data..................................... 32
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition........................ 33
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk...................................................... 33
Item 8. Financial Statements and Supplementary Data................. 33
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 33
PART III
Item 10. Directors and Executive Officers of the Registrants......... 33
Item 11. Executive Compensation...................................... 34
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters................ 34
Item 13. Certain Relationships and Related Transactions.............. 37
PART IV
Item 14. Controls and Procedures..................................... 37
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form
8-K....................................................... 37
Signatures.................................................................. 39
Certifications.............................................................. 42
Index to Financial Statement Schedules...................................... S-1
Independent Auditors' Report................................................ S-2
Exhibit Index............................................................... E-1
</Table>
<PAGE>
GLOSSARY OF TERMS
The following abbreviations or acronyms used in this Form 10-K are defined
below:
<Table>
<Caption>
ABBREVIATION OR ACRONYM DEFINITION
----------------------- ----------
<S> <C>
AEGCo. ................................ AEP Generating Company, an electric utility subsidiary of
AEP
AEP.................................... American Electric Power Company, Inc.
AEPES.................................. AEP Energy Services, Inc., a subsidiary of AEP
AEP Power Pool......................... APCo, CSPCo, I&M, KPCo and OPCo, as parties to the
Interconnection Agreement
AEPR................................... AEP Resources, Inc., a subsidiary of AEP
AEPSC or Service Corporation........... American Electric Power Service Corporation, a service
subsidiary of AEP
AEP System or the System............... The American Electric Power System, an integrated electric
utility system, owned and operated by AEP's electric utility
subsidiaries
AEP Utilities.......................... AEP Utilities, Inc., subsidiary of AEP, formerly, Central
and South West Corporation
AFUDC.................................. Allowance for funds used during construction. Defined in
regulatory systems of accounts as the net cost of borrowed
funds used for construction and a reasonable rate of
return on other funds when so used.
APCo. ................................. Appalachian Power Company, an electric utility subsidiary of
AEP
Btu.................................... British thermal unit
Buckeye................................ Buckeye Power, Inc., an unaffiliated corporation
CAA.................................... Clean Air Act
CAAA................................... Clean Air Act Amendments of 1990
Cardinal Station....................... Generating facility co-owned by Buckeye and OPCo
Centrica............................... Centrica U.S. Holdings, Inc., and its affiliates
collectively, unaffiliated companies
CERCLA................................. Comprehensive Environmental Response, Compensation and
Liability Act of 1980
CG&E................................... The Cincinnati Gas & Electric Company, an unaffiliated
utility company
Cook Plant............................. The Donald C. Cook Nuclear Plant, owned by I&M, located near
Bridgman, Michigan
CSPCo. ................................ Columbus Southern Power Company, a public utility subsidiary
of AEP
CSW Operating Agreement................ Agreement, dated January 1, 1997, by and among PSO, SWEPCo,
TCC and TNC governing generating capacity allocation
DOE.................................... United States Department of Energy
DP&L................................... The Dayton Power and Light Company, an unaffiliated utility
company
East Zone Companies of AEP............. APCo, CSPCo, I&M, KPCo and OPCo
ECOM................................... Excess cost over market
EMF.................................... Electric and Magnetic Fields
EPA.................................... United States Environmental Protection Agency
ERCOT.................................. Electric Reliability Council of Texas
EWG.................................... Exempt wholesale generator, as defined under PUHCA
FERC................................... Federal Energy Regulatory Commission
Fitch.................................. Fitch Ratings, Inc.
FPA.................................... Federal Power Act
FUCO................................... Foreign utility company as defined under PUHCA
I&M.................................... Indiana Michigan Power Company, a public utility subsidiary
of AEP
I&M Power Agreement.................... Unit Power Agreement Between AEGCo and I&M, dated March 31,
1982
Interconnection Agreement.............. Agreement, dated July 6, 1951, by and among APCo, CSPCo,
I&M, KPCo and OPCo, defining the sharing of costs and
benefits associated with their respective generating
plants
IURC................................... Indiana Utility Regulatory Commission
KPCo. ................................. Kentucky Power Company, a public utility subsidiary of AEP
LLWPA.................................. Low-Level Waste Policy Act of 1980
LPSC................................... Louisiana Public Service Commission
MECPL.................................. Mutual Energy CPL, L.P., a Texas REP and former AEP
affiliate
MEWTU.................................. Mutual Energy WTU, L.P., a Texas REP and former AEP
affiliate
MISO................................... Midwest Independent Transmission System Operator
Moody's................................ Moody's Investors Service, Inc.
</Table>
i
<PAGE>
<Table>
<Caption>
ABBREVIATION OR ACRONYM DEFINITION
----------------------- ----------
<S> <C>
MTM.................................... Marked-to-market
MW..................................... Megawatt
NOx.................................... Nitrogen oxide
NPC.................................... National Power Cooperatives, Inc., an unaffiliated
corporation
NRC.................................... Nuclear Regulatory Commission
OASIS.................................. Open Access Same-time Information System
OATT................................... Open Access Transmission Tariff, filed with FERC
OCC.................................... Corporation Commission of the State of Oklahoma
Ohio Act............................... Ohio electric restructuring legislation
OPCo. ................................. Ohio Power Company, a public utility subsidiary of AEP
OVEC................................... Ohio Valley Electric Corporation, an electric utility
company in which AEP and CSPCo together own a 44.2% equity
interest
PJM.................................... PJM Interconnection, L.L.C.
Pro Serv............................... AEP Pro Serv, Inc., a subsidiary of AEP
PSO.................................... Public Service Company of Oklahoma, a public utility
subsidiary of AEP
PTB.................................... Price to beat, as defined by the Texas Act
PUCO................................... The Public Utilities Commission of Ohio
PUCT................................... Public Utility Commission of Texas
PUHCA.................................. Public Utility Holding Company Act of 1935, as amended
QF..................................... Qualifying facility, as defined under the Public Utility
Regulatory Policies Act of 1978
RCRA................................... Resource Conservation and Recovery Act of 1976, as amended
REP.................................... Retail electricity provider
Rockport Plant......................... A generating plant, consisting of two 1,300,000-kilowatt
coal-fired generating units, near Rockport, Indiana
RTO.................................... Regional Transmission Organization
SEC.................................... Securities and Exchange Commission
S&P.................................... Standard & Poor's Ratings Service
SO(2).................................. Sulfur dioxide
SO(2) Allowance........................ An allowance to emit one ton of sulfur dioxide granted under
the Clean Air Act Amendments of 1990
SPP.................................... Southwest Power Pool
STPNOC................................. STP Nuclear Operating Company, a non-profit Texas
corporation which operates STP on behalf of its joint
owners, including TCC
SWEPCo. ............................... Southwestern Electric Power Company, a public utility
subsidiary of AEP
TCA.................................... Transmission Coordination Agreement dated January 1, 1997 by
and among, PSO, SWEPCo, TCC, TNC and AEPSC, which allocates
costs and benefits in connection with the operation of the
transmission assets of the four public utility
subsidiaries
TCC.................................... AEP Texas Central Company, formerly Central Power and Light
Company, a public utility subsidiary of AEP
TEA.................................... Transmission Equalization Agreement dated April 1, 1984 by
and among APCo, CSPCo, I&M, KPCo and OPCo, which allocates
costs and benefits in connection with the operation of
transmission assets
Texas Act.............................. Texas electric restructuring legislation
TNC.................................... AEP Texas North Company, formerly West Texas Utilities
Company, a public utility subsidiary of AEP
TVA.................................... Tennessee Valley Authority
UCOS................................... Unbundled cost of service
Virginia Act........................... Virginia electric restructuring legislation
VSCC................................... Virginia State Corporation Commission
WVPSC.................................. West Virginia Public Service Commission
West Zone Companies of AEP............. PSO, SWEPCo, TCC and TNC
</Table>
ii
<PAGE>
FORWARD-LOOKING INFORMATION
- --------------------------------------------------------------------------------
This report made by AEP and certain of its subsidiaries contains
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934. Although AEP and each of its subsidiaries believe that
their expectations are based on reasonable assumptions, any such statements may
be influenced by factors that could cause actual outcomes and results to be
materially different from those projected. Among the factors that could cause
actual results to differ materially from those in the forward-looking statements
are:
- Electric load and customer growth.
- Abnormal weather conditions
- Available sources and costs of fuels.
- Availability of generating capacity.
- The speed and degree to which competition is introduced to AEP's power
generation business.
- The ability to recover stranded costs in connection with
possible/proposed deregulation of generation.
- New legislation and government regulation
- Oversight and/or investigation of the energy sector or its participants.
- The ability of AEP to successfully control its costs.
- The success of acquiring new business ventures and disposing of existing
investments that no longer match AEP's corporate profile.
- International and country-specific developments affecting AEP's foreign
investments, including the disposition of any current foreign investments
and potential additional foreign investments.
- The economic climate and growth in AEP's service territory and changes in
market demand and demographic patterns.
- Inflationary trends.
- Electricity and gas market prices.
- Interest rates.
- Liquidity in the banking, capital and wholesale power markets.
- Actions of rating agencies.
- Changes in technology, including the increased use of distributed
generation within AEP's transmission and distribution service territory.
- Other risks and unforeseen events, including wars, the effects of
terrorism, embargoes and other catastrophic events.
1
<PAGE>
PART I
- --------------------------------------------------------------------------------
Item 1. BUSINESS
- --------------------------------------------------------------------------------
GENERAL
OVERVIEW AND DESCRIPTION OF SUBSIDIARIES
AEP was incorporated under the laws of the State of New York in 1906 and
reorganized in 1925. It is a registered public utility holding company under
PUHCA that owns, directly or indirectly, all of the outstanding common stock of
its public utility subsidiaries and varying percentages of other subsidiaries.
The service areas of AEP's public utility subsidiaries cover portions of
the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma,
Tennessee, Texas, Virginia and West Virginia. The generating and transmission
facilities of AEP's public utility subsidiaries are interconnected, and their
operations are coordinated, as a single integrated electric utility system.
Transmission networks are interconnected with extensive distribution facilities
in the territories served. The public utility subsidiaries of AEP, which do
business as "American Electric Power," have traditionally provided electric
service, consisting of generation, transmission and distribution, on an
integrated basis to their retail customers. Restructuring legislation in
Michigan, Ohio, Texas and Virginia has caused or will cause AEP public utility
subsidiaries in those states to unbundle previously integrated regulated rates
for their retail customers.
The AEP System is an integrated electric utility system and, as a result,
the member companies of the AEP System have contractual, financial and other
business relationships with the other member companies, such as participation in
the AEP System savings and retirement plans and tax returns, sales of
electricity and transportation and handling of fuel. The member companies of the
AEP System also obtain certain accounting, administrative, information systems,
engineering, financial, legal, maintenance and other services at cost from a
common provider, AEPSC.
At December 31, 2002, the subsidiaries of AEP had a total of 22,083
employees. AEP, because it is a holding company rather than an operating
company, has no employees. The public utility subsidiaries of AEP are:
APCo (organized in Virginia in 1926) is engaged in the generation,
transmission and distribution of electric power to approximately 925,000
retail customers in the southwestern portion of Virginia and southern West
Virginia, and in supplying and marketing electric power at wholesale to other
electric utility companies, municipalities and other market participants. At
December 31, 2002, APCo and its wholly owned subsidiaries had 2,520 employees.
Among the principal industries served by APCo are coal mining, primary metals,
chemicals and textile mill products. In addition to its AEP System
interconnections, APCo also is interconnected with the following unaffiliated
utility companies: Carolina Power & Light Company, Duke Energy Corporation and
Virginia Electric and Power Company. APCo has several points of
interconnection with TVA and has entered into agreements with TVA under which
APCo and TVA interchange and transfer electric power over portions of their
respective systems.
CSPCo (organized in Ohio in 1937, the earliest direct predecessor company
having been organized in 1883) is engaged in the generation, transmission and
distribution of electric power to approximately 689,000 retail customers in
Ohio, and in supplying and marketing electric power at wholesale to other
electric utilities, municipalities and other market participants. At December
31, 2002, CSPCo had 1,171 employees. CSPCo's service area is comprised of two
areas in Ohio, which include portions of twenty-five counties. One area
includes the City of Columbus and the other is a predominantly rural area in
south central Ohio. Among the principal industries served are food processing,
chemicals, primary metals, electronic machinery and paper products. In
addition to its AEP System interconnections, CSPCo also is interconnected with
the following unaffiliated utility companies: CG&E, DP&L and Ohio Edison
Company.
I&M (organized in Indiana in 1925) is engaged in the generation,
transmission and distribution of electric power to approximately 571,000
retail customers in northern and eastern Indiana and southwestern Michigan,
and in supplying and marketing electric power at wholesale to other electric
utility companies, rural electric cooperatives, municipalities and other
market participants. At December 31, 2002, I&M had 2,667 employees. Among the
principal industries served are primary metals, transportation equipment,
electrical and electronic
2
<PAGE>
machinery, fabricated metal products, rubber and miscellaneous plastic
products and chemicals and allied products. Since 1975, I&M has leased and
operated the assets of the municipal system of the City of Fort Wayne,
Indiana. In addition to its AEP System interconnections, I&M also is
interconnected with the following unaffiliated utility companies: Central
Illinois Public Service Company, CG&E, Commonwealth Edison Company, Consumers
Energy Company, Illinois Power Company, Indianapolis Power & Light Company,
Louisville Gas and Electric Company, Northern Indiana Public Service Company,
PSI Energy Inc. and Richmond Power & Light Company.
KPCo (organized in Kentucky in 1919) is engaged in the generation,
transmission and distribution of electric power to approximately 174,000
retail customers in an area in eastern Kentucky, and in supplying and
marketing electric power at wholesale to other electric utility companies,
municipalities and other market participants. At December 31, 2002, KPCo had
412 employees. In addition to its AEP System interconnections, KPCo also is
interconnected with the following unaffiliated utility companies: Kentucky
Utilities Company and East Kentucky Power Cooperative Inc. KPCo is also
interconnected with TVA.
Kingsport Power Company (organized in Virginia in 1917) provides electric
service to approximately 46,000 retail customers in Kingsport and eight
neighboring communities in northeastern Tennessee. Kingsport Power Company
does not own any generating facilities. It purchases electric power from APCo
for distribution to its customers. At December 31, 2002, Kingsport Power
Company had 57 employees.
OPCo (organized in Ohio in 1907 and re-incorporated in 1924) is engaged
in the generation, transmission and distribution of electric power to
approximately 702,000 retail customers in the northwestern, east central,
eastern and southern sections of Ohio, and in supplying and marketing electric
power at wholesale to other electric utility companies, municipalities and
other market participants. At December 31, 2002, OPCo had 1,988 employees.
Among the principal industries served by OPCo are primary metals, rubber and
plastic products, stone, clay, glass and concrete products, petroleum refining
and chemicals. In addition to its AEP System interconnections, OPCo also is
interconnected with the following unaffiliated utility companies: CG&E, The
Cleveland Electric Illuminating Company, DP&L, Duquesne Light Company,
Kentucky Utilities Company, Monongahela Power Company, Ohio Edison Company,
The Toledo Edison Company and West Penn Power Company.
PSO (organized in Oklahoma in 1913) is engaged in the generation,
transmission and distribution of electric power to approximately 505,000
retail customers in eastern and southwestern Oklahoma, and in supplying and
marketing electric power at wholesale to other electric utility companies,
municipalities, rural electric cooperatives and other market participants. At
December 31, 2002, PSO had 998 employees. Among the principal industries
served by PSO are natural gas and oil production, oil refining, steel
processing, aircraft maintenance, paper manufacturing and timber products,
glass, chemicals, cement, plastics, aerospace manufacturing,
telecommunications, and rubber goods. In addition to its AEP System
interconnections, PSO also is interconnected with Ameren Corporation, Empire
District Electric Co., Oklahoma Gas & Electric Co., Southwestern Public
Service Co. and Westar Energy Inc.
SWEPCo (organized in Delaware in 1912) is engaged in the generation,
transmission and distribution of electric power to approximately 437,000
retail customers in northeastern Texas, northwestern Louisiana and western
Arkansas, and in supplying and marketing electric power at wholesale to other
electric utility companies, municipalities, rural electric cooperatives and
other market participants. At December 31, 2002, SWEPCo had 1,372 employees.
Among the principal industries served by SWEPCo are natural gas and oil
production, petroleum refining, manufacturing of pulp and paper, chemicals,
food processing, and metal refining. The territory served by SWEPCo also
includes several military installations, colleges, and universities. In
addition to its AEP System interconnections, SWEPCo is also interconnected
with CLECO Corp., Empire District Electric Co., Entergy Corp. and Oklahoma Gas
& Electric Co.
TCC (organized in Texas in 1945) is engaged in the generation,
transmission and sale of power to affiliated and non-affiliated entities and
the distribution of electric power to approximately 689,000 retail customers
through REPs in southern Texas, and in supplying and marketing electric power
at wholesale to other electric utility companies, municipalities, rural
electric cooperatives and other market
3
<PAGE>
participants. At December 31, 2002, TCC had 1,248 employees. Among the
principal industries served by TCC are oil and gas extraction, food
processing, apparel, metal refining, chemical and petroleum refining,
plastics, and machinery equipment. In addition to its AEP System
interconnections, TCC is a member of ERCOT.
TNC (organized in Texas in 1927) is engaged in the generation,
transmission and sale of power to affiliated and non-affiliated entities and
the distribution of electric power to approximately 189,000 retail customers
through REPs in west and central Texas, and in supplying and marketing
electric power at wholesale to other electric utility companies,
municipalities, rural electric cooperatives and other market participants. At
December 31, 2002, TNC had 595 employees. The principal industry served by TNC
is agriculture. The territory served by TNC also includes several military
installations and correctional facilities. In addition to its AEP System
interconnections, TNC is a member of ERCOT.
Wheeling Power Company (organized in West Virginia in 1883 and
reincorporated in 1911) provides electric service to approximately 41,000
retail customers in northern West Virginia. Wheeling Power Company does not
own any generating facilities. It purchases electric power from OPCo for
distribution to its customers. At December 31, 2002, Wheeling Power Company
had 59 employees.
AEGCo (organized in Ohio in 1982) is an electric generating company.
AEGCo sells power at wholesale to I&M and KPCo. AEGCo has no employees.
Service Company Subsidiary
AEP also owns a service company subsidiary, AEPSC. AEPSC provides
accounting, administrative, information systems, engineering, financial, legal,
maintenance and other services at cost to the AEP System companies. The
executive officers of AEP and its public utility subsidiaries are all employees
of AEPSC. At December 31, 2002, AEPSC had 6,548 employees.
CLASSES OF SERVICE
The principal classes of service from which the public utility subsidiaries
of AEP derive revenues and the amount of such revenues during the year ended
December 31, 2002 are as follows:
<Table>
<Caption>
AEP
SYSTEM(A) APCo CSPCo I&M KPCo
----------- ---------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Wholesale Business:
Residential........................ $ 3,713,000 $ 616,509 $ 533,061 $ 371,329 $ 118,654
Commercial......................... 2,156,000 276,238 442,847 224,843 50,075
Industrial......................... 1,903,000 353,841 138,174 330,428 96,716
Other Retail Customers............. 385,000 80,429 38,018 61,450 16,911
Energy Delivery.................... (3,551,000) (594,089) (492,278) (321,721) (132,054)
----------- ---------- ---------- ---------- ---------
Total Retail.................... 4,606,000 732,928 659,822 666,329 150,302
Marketing and
Trading-Electricity............. 2,227,000 204,878 134,836 279,705 50,056
Marketing and Trading-Gas.......... 3,021,000 0 0 0 0
Unrealized MTM Income:
Electric........................ 136,000 18,089 13,388 0 0
Gas............................. (399,000) 0 0 0 0
Other.............................. 1,397,000 264,486 99,836 259,009 46,271
----------- ---------- ---------- ---------- ---------
Total Wholesale Business........ 10,988,000 1,220,381 907,882 1,205,043 246,629
----------- ---------- ---------- ---------- ---------
Energy Delivery Business:
Transmission....................... 922,000 186,960 107,673 118,812 50,381
Distribution....................... 2,629,000 407,129 384,605 202,909 81,673
----------- ---------- ---------- ---------- ---------
Total Energy Delivery........... 3,551,000 594,089 492,278 321,721 132,054
----------- ---------- ---------- ---------- ---------
Total Other Investments......... 16,000 0 0 0 0
----------- ---------- ---------- ---------- ---------
Total Revenues................ $14,555,000 $1,814,470 $1,400,160 $1,526,764 $ 378,683
=========== ========== ========== ========== =========
</Table>
4
<PAGE>
<Table>
<Caption>
OPCo PSO SWEPCo TCC TNC
---------- --------- ---------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Wholesale Business:
Residential........................... $ 475,210 $ 315,711 $ 313,023 $ 49,210 $ 8,651
Commercial............................ 244,943 218,718 212,626 32,518 4,098
Industrial............................ 531,085 162,386 214,622 12,395 2,134
Other Retail Customers................ 71,737 38,998 33,104 3,594 1,638
Energy Delivery....................... (589,673) (275,547) (348,236) (554,547) (73,353)
---------- --------- ---------- ---------- --------
Total Retail....................... 733,302 460,266 425,139 (456,830) (56,832)
Marketing and Trading-Electricity..... 219,488 17,394 157,159 811,800 283,883
Marketing and Trading-Gas............. 0 0 0 0 0
Unrealized MTM Income:
Electric........................... 25,574 0 (3,686) (8,490) (1,473)
Gas................................ 0 0 0 0 0
Other................................. 545,088 40,440 157,872 789,466 151,809
---------- --------- ---------- ---------- --------
Total Wholesale Business........... 1,523,452 518,100 736,484 1,135,946 377,387
---------- --------- ---------- ---------- --------
Energy Delivery Business:
Transmission.......................... 162,660 63,178 92,076 68,003 25,273
Distribution.......................... 427,013 212,369 256,160 486,544 48,080
---------- --------- ---------- ---------- --------
Total Energy Delivery.............. 589,673 275,547 348,236 554,547 73,353
---------- --------- ---------- ---------- --------
Total Other Investments............ 0 0 0 0 0
---------- --------- ---------- ---------- --------
Total Revenues................... $2,113,125 $ 793,647 $1,084,720 $1,690,493 $450,740
========== ========= ========== ========== ========
</Table>
- ---------------
(a) Includes revenues of other subsidiaries not shown. Intercompany transactions
have been eliminated, including AEGCo's total revenues of $213,281,000 for
the year ended December 31, 2002, all of which resulted from its wholesale
business, including its marketing and trading of power.
REGULATION
Except for retail generation sales in Ohio, Virginia and the ERCOT area of
Texas, AEP's public utility subsidiaries' retail rates and certain other matters
are subject to traditional regulation by the state utility commissions. Retail
sales in Michigan, while still regulated, are now made at unbundled rates. Other
states in AEP's service territory have also passed restructuring legislation
that has not been implemented or has been repealed. See Electric Restructuring
and Customer Choice Legislation and Energy Delivery--Regulation--Rates. AEP's
subsidiaries are also subject to regulation by the FERC under the FPA. I&M and
TCC are subject to regulation by the NRC under the Atomic Energy Act of 1954, as
amended, with respect to the operation of the Cook Plant and STP, respectively.
AEP and its subsidiaries are also subject to the broad regulatory provisions of
PUHCA administered by the SEC.
FERC
Under the FPA, FERC regulates rates for interstate sales at wholesale,
transmission of electric power, accounting and other matters, including
construction and operation of hydroelectric projects. FERC regulations require
AEP to provide open access transmission service at FERC-approved rates. The
transmission service regulated by FERC is predominantly wholesale transmission
service, which is service not associated with bundled electricity sales to
retail customers. FERC also regulates unbundled transmission service to retail
customers.
Under the FPA, the FERC regulates the sale of power for resale in
interstate commerce by (i) approving contracts for wholesale sales to municipal
and cooperative utilities and (ii) granting authority to public utilities to
sell power at wholesale at market-based rates upon a showing that the seller
lacks the ability to improperly influence market prices. AEP has
5
<PAGE>
market-rate authority from FERC, under which most of its wholesale marketing
activity takes place. In November 2001, the FERC issued an order in connection
with its triennial review of AEP's market based pricing authority requiring (i)
certain actions by AEP in connection with its sales and purchases within its
control area and (ii) posting of information related to generation facility
status on AEP's website. AEP has appealed this order, and the FERC has issued an
order delaying the effective date of the order. See Note 9 to the consolidated
financial statements, entitled Commitments and Contingencies, incorporated by
reference in Item 8, for more information on the current status of this
proceeding.
SEC
The provisions of PUHCA, administered by the SEC, regulate many aspects of
a registered holding company system, such as the AEP System. PUHCA limits the
operations of a registered holding company system to a single integrated public
utility system and such other businesses as are incidental or necessary to the
operations of the system. In addition, PUHCA governs, among other things,
financings, sales or acquisitions of assets and intra-system transactions.
PUHCA and the rules and orders of the SEC currently require that
transactions between associated companies in a registered holding company system
be performed at cost with limited exceptions. Over the years, the AEP System has
developed numerous affiliated service, sales and construction relationships and,
in some cases, invested significant capital and developed significant operations
in reliance upon the ability to recover its full costs under these provisions.
The Division of Investment Management of the SEC has recommended the
conditional repeal of PUHCA. Under its recommendation, certain oversight
authority would be transferred to the FERC. Legislation has since been
introduced in numerous sessions of Congress that would repeal PUHCA, but such
legislation has not passed.
AEP-CSW MERGER
On June 15, 2000, CSW (now known as AEP Utilities, Inc.) merged with and
into a wholly-owned merger subsidiary of AEP. As a result, CSW became a wholly
owned subsidiary of AEP. The four wholly owned public utility subsidiaries of
CSW--PSO, SWEPCo, TCC and TNC--became indirect wholly owned public utility
subsidiaries of AEP as a result of the merger. The merger was approved by the
FERC and the SEC (with respect to PUHCA).
On January 18, 2002, the U.S. Court of Appeals for the District of Columbia
ruled that the SEC failed to properly explain how the merger met the
requirements of PUHCA and remanded the case to the SEC for further review. The
court held that the SEC had not adequately explained its conclusions that the
merger met PUHCA requirements that the merging entities be "physically
interconnected" and that the combined entity was confined to a "single area or
region."
Management believes that the merger meets the requirements of PUHCA and
expects the matter to be resolved favorably.
ELECTRIC RESTRUCTURING AND CUSTOMER CHOICE LEGISLATION
Certain states in AEP's service area have adopted restructuring or customer
choice legislation. In general, this legislation provides for a transition from
bundled cost-based rate regulated electric service to unbundled cost-based rates
for transmission and distribution service and market pricing for the supply of
electricity with customer choice of supplier. At a minimum, this legislation
allows retail customers to select alternative generation suppliers. Electric
restructuring and/or customer choice began on January 1, 2001 in Ohio and on
January 1, 2002 in Michigan, Virginia and the ERCOT area of Texas. Electric
restructuring in the SPP area of Texas, also scheduled to begin on January 1,
2002, has been delayed by the PUCT. AEP's public utility subsidiaries operate in
both the ERCOT and SPP areas of Texas.
Implementation of legislation enacted in Oklahoma and West Virginia to
allow retail customers to choose their electricity supplier is on hold. In 2001
Oklahoma delayed implementation of customer choice indefinitely. Before West
Virginia's choice plan can be effective, tax legislation must be passed to
preserve pre-legislation levels of funding for state and local governments. No
further legislation has been passed related to restructuring in West Virginia.
In February 2003, Arkansas repealed its restructuring legislation.
See Note 7 to the consolidated financial statements, entitled Effects of
Regulation, incorporated by reference in Item 8, for a discussion of the effect
of restructuring and customer choice legislation on accounting procedures. See
Management's Discussion
6
<PAGE>
and Analysis of Results of Operations and Financial Condition, under the
headings entitled Industry Restructuring and Corporate Separation for a
discussion of AEP's corporate separation plan filed with the FERC and related
settlement agreements with state commissions and other intervenors.
Michigan Customer Choice
Customer choice commenced for I&M's Michigan customers on January 1, 2002.
Rates for retail electric service for I&M's Michigan customers were unbundled
(though they continue to be regulated) to allow customers the ability to
evaluate the cost of generation service for comparison with other suppliers. At
December 31, 2002, none of I&M's Michigan customers had elected to change
suppliers and no alternative electric suppliers are registered to compete in
I&M's Michigan service territory.
Ohio Restructuring
The Ohio Act requires vertically integrated electric utility companies that
offer competitive retail electric service in Ohio to separate their generating
functions from their transmission and distribution functions. Following the
market development period (which will terminate no later than December 31,
2005), retail customers will receive distribution and, where applicable,
transmission service from the incumbent utility whose distribution rates will be
approved by the PUCO and whose transmission rates will be approved by the FERC.
See General--Regulation--FERC for a discussion of FERC regulation of
transmission rates and Energy Delivery--Regulation--Rates--Ohio for a discussion
of the impact of restructuring on distribution rates.
CSPCo and OPCo are each presently operating as functionally separated
electric utility companies and no longer charge bundled rates for retail
electric service. Each has sought and, from certain regulatory authorities,
obtained regulatory approval to legally separate its transmission and
distribution assets from its generation assets. CSPCo and OPCo are, however,
currently determining the regulatory feasibility of complying with restructuring
legislation through continued functional separation. Assuming regulatory
compliance, it is currently their intention to remain functionally separated.
Texas Restructuring
The Texas Act substantially amends the regulatory structure governing
electric utilities in Texas in order to allow retail electric competition for
all customers and requires each utility to separate into (i) a REP, (ii) a power
generation company and (iii) a transmission and distribution utility. Upon
separation, neither the REP nor the power generation company will be subject to
traditional cost of service rate regulation. See Energy Delivery--Regulation--
Rates--Texas for a discussion of the impact of restructuring on rates.
SWEPCo, TCC and TNC initially filed a restructuring plan in January 2000
(which they subsequently updated) that the PUCT approved in February 2002. The
updated restructuring plan provided for the legal separation of TCC's and TNC's
assets in accordance with the Texas Act into (i) an affiliate power generation
company, (ii) a transmission and distribution utility and (iii) various REPs,
including those subsequently purchased by Centrica (see below). TCC and TNC
continue to pursue legal separation as required by the Texas Act. The PUCT has
delayed the implementation of the plan for SWEPCo operations within the SPP area
of Texas.
Under the Texas Act, a REP, which itself cannot own any generation assets,
obtains its electricity from power generation companies, EWGs and other
generating entities and provides services at generally unregulated rates, except
that the prices that may be charged to residential and small commercial
customers by REPs affiliated with a utility within the affiliated utility's
service area are set by the PUCT until January 1, 2007. This set price is
referred to as the "price to beat" rate (PTB). Affiliate REPs are required to
offer the PTB rate to all residential and small commercial customers (with a
peak usage of less than 1,000 KW) effective January 1, 2002. As described below,
AEP sold its affiliate REPs that must provide PTB service. The PTB rate is still
relevant to AEP, however, in determining (i) the contingent portion of the sales
price of the affiliate REPs AEP sold and (ii) certain of AEP's obligations in
the 2004 true-up proceedings.
Prior to the start of retail competition in January 2002, AEP formed MECPL
and MEWTU to act as affiliate REPs for TCC and TNC respectively. MECPL and MEWTU
were sold in December 2002 to Centrica, which assumed all of the rights and
obligations of an affiliated REP, including the provision of PTB service and the
obligation to provide data necessary for TCC's and TNC's 2004 true-up
proceeding. In connection with the sale, TCC and TNC have contracted to supply
approximately 90% of MECPL's and
7
<PAGE>
MEWTU's respective power requirements relating to former TCC and TNC PTB
customers for a two-year period. See Note 12 to the consolidated financial
statements, entitled Acquisitions, Distributions and Discontinued Operations,
incorporated by reference in Item 8, for more information on the sale of these
REPs and AEP's contractual rights and obligations in connection with the sale.
The Texas Act also allows certain transmission and distribution utilities
whose generation assets were unbundled to recover certain regulatory assets and
stranded costs related to their generation assets. For a discussion of (i)
regulatory assets and stranded costs subject to recovery by TCC and (ii) rate
adjustments made after implementation of restructuring to allow recovery of
certain costs by or with respect to TCC and TNC, see Energy Delivery--Regulatory
Assets, Stranded Cost Recovery and Certain Post-Restructuring Rate Adjustments.
Virginia Restructuring
The Virginia Act was enacted in 1999 providing for retail choice of
generation suppliers to be phased in over the January 1, 2002 to January 1, 2004
period. The Virginia Act required jurisdictional utilities to unbundle their
power supply and energy delivery rates and to file functional separation plans
by January 1, 2002. APCo filed its plan and, following VSCC approval of a
settlement agreement, now operates in Virginia as a functionally separated
electric utility charging unbundled rates for its retail sales of electricity.
The settlement agreement addressed functional separation, leaving decisions
related to legal separation for later VSCC consideration.
FINANCING
General
AEP's goal is to use cash from operations to fund capital expenditures,
dividends and working capital. Short-term debt is used as an interim bridge for
timing differences in the need for cash or to fund debt maturities until
permanent financing is arranged.
It has been the practice of AEP's operating subsidiaries to finance current
construction expenditures in excess of available cash from operations by
initially incurring short-term debt, up to levels authorized by regulatory
agencies, and then to reduce the short-term debt with the proceeds of subsequent
sales by such subsidiaries of long-term debt securities and cash capital
contributions by AEP. In the past, short-term debt has come from AEP's
commercial paper program and revolving credit facilities. Proceeds were loaned
to the subsidiaries through intercompany notes under the AEP money pool. The
recent downgrade of AEP's commercial paper rating by Moody's, described below,
may limit AEP's access to commercial paper on terms as favorable as those of
recent years. Therefore, AEP may establish commercial paper programs for certain
of its public utility subsidiaries and AEP Utilities. Certain public utility
subsidiaries of AEP also sell accounts receivable to provide liquidity.
AEP's revolving credit agreements (which backstop the commercial paper
program) include covenants and events of default typical for this type of
facility, including a maximum debt/capital test and a $50 million
cross-acceleration provision. At December 31, 2002, AEP was in compliance with
its debt covenants. With the exception of a voluntary bankruptcy or insolvency,
any event of default has either or both a cure period or notice requirement
before termination of the agreements. A voluntary bankruptcy or insolvency would
be considered an immediate termination event.
AEP's subsidiaries have also utilized, and expect to continue to utilize,
additional financing arrangements, such as leasing arrangements, including the
leasing of utility assets and coal mining and transportation equipment and
facilities.
Credit Ratings
The rating agencies have been conducting credit reviews of AEP and its
registrant subsidiaries. The agencies are also reviewing many companies in the
energy sector due to issues that impact the entire industry.
In February 2003 Moody's completed its review of AEP and its rated
subsidiaries. The results of that review were downgrades of the following
ratings for unsecured debt: AEP from Baa2 to Baa3, APCo from Baa1 to Baa2, TCC
from Baa1 to Baa2, PSO from A2 to Baa1, SWEPCo from A2 to Baa1. TNC, which had
no senior unsecured notes outstanding at the time of the ratings action, had its
mortgage bond debt downgraded from A2 to A3. AEP's commercial paper was also
concurrently downgraded from P-2 to P-3. The completion of this review was a
culmination of earlier ratings action in 2002 that had included a downgrade of
AEP from Baa1 to Baa2. With the completion of the reviews, Moody's has placed
AEP and its rated subsidiaries on stable outlook.
8
<PAGE>
In March 2003 S&P completed its review of AEP and its rated subsidiaries.
The results of that review were downgrades of the ratings for unsecured debt for
AEP and its rated subsidiaries from BBB+ to BBB. AEP's commercial paper rating
was affirmed at A-2. With the completion of the reviews, S&P has placed AEP and
its rated subsidiaries on stable outlook.
In March 2003 Fitch completed its review of AEP. The result of that review
was a downgrade of AEP's unsecured debt rating from BBB+ to BBB. AEP's
commercial paper rating was affirmed at F-2. With the completion of the reviews,
Fitch has placed AEP and its rated subsidiaries on stable outlook.
See Management's Discussion and Analysis of Financial Condition, Accounting
Policies and Other Matters, incorporated by reference in Item 7, under the
heading entitled Financial Condition for additional information with respect to
AEP's credit ratings, liquidity and specific financing activities.
ENVIRONMENTAL AND OTHER MATTERS
General
AEP's subsidiaries are currently subject to regulation by federal, state
and local authorities with regard to air and water-quality control and other
environmental matters, and are subject to zoning and other regulation by local
authorities. The environmental issues that are potentially material to the AEP
system include:
- The CAA and CAAA and state laws and regulations (including State
Implementation Plans) that require compliance, obtaining permits and
reporting as to air emissions.
- Litigation with the federal and certain state governments and certain
special interest groups regarding whether modifications to or maintenance
of certain coal-fired generating plants required additional permitting or
pollution control technology. See Management's Discussion and Analysis of
Financial Condition, Accounting Policies and Other Matters under the
heading entitled Federal EPA Complaint and Notice of Violation and Note 9
to the consolidated financial statements entitled Commitments and
Contingencies, incorporated by reference in Items 7 and 8 respectively
for further information.
- Rules issued by the EPA and certain states that require substantial
reductions in NOx emissions. The compliance dates for these rules range
from 2003 to 2005. AEP is installing (or has installed) emission control
technology and is taking other measures to comply with required
reductions. See Management's Discussion and Analysis of Financial
Condition, Accounting Policies and Other Matters and Note 9 to the
consolidated financial statements entitled Commitments and Contingencies,
incorporated by reference in Items 7 and 8 respectively, under the
heading entitled NOx Reductions for further information.
- CERCLA, which imposes upon owners and previous owners of sites, as well
as transporters and generators of hazardous material disposed of at such
sites, costs for environmental remediation. AEP does not, however,
anticipate that any of its currently identified CERCLA-related issues
will result in material costs or penalties to the AEP System. See
Management's Discussion and Analysis of Financial Condition, Accounting
Policies and Other Matters, incorporated by reference in Item 7, under
the heading entitled Superfund for further information.
- The Federal Clean Water Act, which prohibits the discharge of pollutants
into waters of the United States except pursuant to appropriate permits.
There are, however, no matters material to the AEP System currently
pending under the Clean Water Act.
- Solid and hazardous waste laws and regulations, which govern the
management and disposal of certain wastes. The majority of solid waste
created from the combustion of coal and fossil fuels is fly ash and other
coal combustion byproducts, which the EPA has determined are not
hazardous waste governed subject to RCRA.
In addition to imposing continuing compliance obligations, these laws and
regulations authorize the imposition of substantial penalties for noncompliance,
including fines, injunctive relief and other sanctions.
AEP's subsidiaries will confront several new environmental policies and
regulations over the next decade with the potential for substantial control
costs and premature retirement of some generating plants. These could include
(i) new or additional controls on sulfur dioxide, NOx and mercury emissions from
future laws or regulations, or the possibility of an
9
<PAGE>
adverse decision in the new source review litigation; (ii) a new Clean Water Act
rule to reduce fish and other aquatic organisms killed at once-through cooled
power plants; (iii) finalization and implementation of more stringent water
quality-based permit limits; and (iv) a possible future requirement to reduce
carbon dioxide emissions. See Management's Discussion and Analysis of Financial
Condition, Accounting Policies and Other Matters, incorporated by reference in
Item 7, under the heading entitled Environmental Concerns and Issues for
information on current environmental issues.
AEP expects costs related to environmental controls to eventually be
reflected in some jurisdictions in the rates of AEP's public utility
subsidiaries. In Michigan, Ohio, Texas and Virginia, those costs may not be
recoverable if future market prices for electricity generated by plants in those
jurisdictions are insufficient to permit AEP to recover such costs. Moreover,
legislation adopted by certain states and proposed at the state and federal
level governing restructuring of the electric utility industry may also affect
the recovery of certain of these costs. There can be no assurance that these
costs will be recovered.
AEP's international operations are subject to environmental regulation by
various authorities within the host countries. Under certain circumstances,
these authorities may require modifications to these facilities and operations
or impose fines and other costs for violations of applicable statutes and
regulations. From time to time, these operations are named as parties to various
legal claims, actions, complaints or other proceedings related to environmental
matters. AEP's UK generation facilities will be subject to additional
environmental constraints in 2008 (which become more stringent after 2015)
because they are subject to regulation governing large combustion plants. In the
fourth quarter of 2002, AEP decided not to install certain emission control
technology on its Fiddler's Ferry and Ferrybridge generation facilities in 2008.
This decision and its legal and regulatory consequences will result in a
significant reduction in the estimated economic life of those facilities.
The cost of complying with applicable environmental laws, regulations and
rules is expected to be material to the AEP System.
See Management's Discussion and Analysis of Results of Operations and
Management's Discussion and Analysis of Financial Condition, Accounting Policies
and Other Matters and Note 9 to the consolidated financial statements entitled
Commitments and Contingencies, incorporated by reference in Items 7 and 8,
respectively, for further information with respect to environmental matters.
Environmental Expenditures
Expenditures related to generation facility compliance with air and water
quality standards during 2001 and 2002 and the current estimate for 2003 are
shown below. Substantial expenditures in addition to the amounts set forth below
may be required by the System in future years in connection with the
modification and addition of facilities at generating plants for environmental
quality controls in order to comply with air and water quality standards which
have been or may be adopted. Future expenditures could be significantly greater
if litigation regarding whether AEP properly installed emission control
equipment on its plants is resolved against AEP. See Note 9 to the consolidated
financial statements, entitled Commitments and Contingencies, incorporated by
reference in Item 8, for more information regarding this litigation and
environmental expenditures in general.
<Table>
<Caption>
2001 2002 2003
ACTUAL ACTUAL ESTIMATE
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
AEGCo................ $ 3,500 $ 1,200 $ 11,200
APCo................. 99,200 108,400 65,700
CSPCo................ 22,500 25,400 39,300
I&M.................. 700 1,200 18,500
KPCo................. 11,200 110,600 39,900
OPCo................. 125,300 110,300 53,100
PSO.................. 400 1,200 100
SWEPCo............... 9,200 3,400 9,000
TCC.................. 2,500 600 0
TNC.................. 800 1,900 0
-------- -------- --------
AEP System........... $275,300 $364,200 $236,800
======== ======== ========
</Table>
Electric and Magnetic Fields
EMF are found everywhere there is electricity. Electric fields are created
by the presence of electric charges. Magnetic fields are produced by the flow of
those charges. This means that EMF is created by electricity flowing in
transmission and distribution lines, electrical equipment, household wiring, and
appliances.
A number of studies in the past several years have examined the possibility
of adverse health effects from EMF. While some of the epidemiological studies
have indicated some association between exposure to
10
<PAGE>
EMF and health effects, none has produced any conclusive evidence that EMF does
or does not cause adverse health effects.
Management cannot predict the ultimate impact of the question of EMF
exposure and adverse health effects. If further research shows that EMF exposure
contributes to increased risk of cancer or other health problems, or if the
courts conclude that EMF exposure harms individuals and that utilities are
liable for damages, or if states limit the strength of magnetic fields to such a
level that the current electricity delivery system must be significantly
changed, then the results of operations and financial condition of AEP and its
operating subsidiaries could be materially adversely affected unless these costs
can be recovered from customers.
WHOLESALE OPERATIONS
GENERAL
AEP conducts its wholesale business operations through its public utility
subsidiaries (through which AEP also conducts its energy delivery operations),
AEPES, AEPR and Pro Serv. Wholesale operations use and manage the following
assets:
- Power generation facilities (or interests therein) owned by AEP's public
utility and other subsidiaries;
- Natural gas pipeline, storage and processing facilities;
- Coal mines and related facilities; and
- Barge, rail and other fuel transportation related assets.
Wholesale operations include the following activities:
- Through AEP's public utility subsidiaries, the generation and sale of
power (i) to retail customers at unbundled or bundled rates regulated at
least in part by state public utility commissions and (ii) at wholesale
at rates regulated, in certain instances, by the FERC.
- Trading and marketing energy commodities in transactions predominantly
limited to risk management around assets used or managed by AEP's
wholesale operations, including electric power, natural gas, natural gas
liquids, oil, coal, and SO(2) allowances in North America and, where
applicable, Europe. Electric power transactions in the United States are
conducted principally through AEP's public utility subsidiaries. Other
energy commodity and allowances transactions are conducted through AEPES
and AEPR.
- Entering into long-term transactions to buy or sell capacity, energy, and
ancillary services of electric generating facilities, either existing or
to be constructed, at various locations in North America and Europe.
- Through Pro Serv, providing engineering, construction, project management
and other consulting services for energy-related projects.
In October 2002 AEP announced its plans to reduce the exposure to energy
trading markets and to downsize the trading and wholesale marketing operations.
It is expected that in the future power trading and marketing operations will be
smaller in scope and size, will generally be limited to risk management around
AEP's assets and, accordingly, focused in those regions in which AEP owns
assets.
POWER GENERATION
General
Power generation accounts for the majority of wholesale operations revenue.
In 2002, on an as-reported basis, power generation revenue included the
following components: (i) 63% from retail sales at predominantly regulated
rates; (ii) 33% from power marketing transactions of a type AEP intends to
continue and which are regulated in certain instances by the FERC; (iii) 3% from
retail sales at rates not regulated by states; and (iv) 1% attributable to power
marketing transactions of a type that management has stated are transitional.
This final category of transactions will be reduced consistent with AEP's
decision to scale back certain trading and marketing operations as described in
the preceding paragraph.
AEP's public utility subsidiaries own approximately 38,000 MW of domestic
generation. See Deactivation and Planned Disposition of Generating Facilities
for a discussion of planned reductions in AEP's generating fleet. Other AEP
subsidiaries hold interests in entities owning 1,879 MW of domestic power
facilities and 5,235 MW of international power facilities. The AEP public
utility subsidiaries operate their generating plants as a single interconnected
and coordinated electric utility system. See Item 2 - Properties for more
information regarding generation facilities.
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AEP Power Pool and CSW Operating Agreement
APCo, CSPCo, I&M, KPCo and OPCo are parties to the Interconnection
Agreement, dated July 6, 1951, as amended (Interconnection Agreement), defining
how they share the costs and benefits associated with their generating plants.
This sharing is based upon each company's "member-load-ratio."
The member-load ratio is calculated monthly by dividing such company's
highest monthly peak demand for the last twelve months by the aggregate of the
highest monthly peak demand for the last twelve months for all east zone
operating companies. As of December 31, 2002, the member-load ratios were as
follows:
<Table>
<Caption>
PEAK
DEMAND MEMBER-LOAD
(KW) RATIO (%)
------ -----------
<S> <C> <C>
APCo..................... 6,010 28.2
CSPCo.................... 4,040 19.0
I&M...................... 4,323 20.3
KPCo..................... 1,551 7.3
OPCo..................... 5,360 25.2
</Table>
Although the FERC has approved the right of withdrawal of CSPCo and OPCo
from the AEP Power Pool as part of its order approving the settlement agreements
and AEP's FERC restructuring application, CSPCo and OPCo have remained a party
to the AEP Power Pool. If CSPCo and OPCo continue to remain in the AEP Power
Pool, notification to or approval by the FERC may be required. See Management's
Discussion and Analysis of Results of Operations and Financial Condition, under
the headings entitled Industry Restructuring and Corporate Separation for a
discussion of AEP's corporate separation plan filed with the FERC and related
settlement agreements with state commissions and other intervenors.
The following table shows the net credits or (charges) allocated among the
parties under the Interconnection Agreement and AEP System Interim Allowance
Agreement during the years ended December 31, 2000, 2001 and 2002:
<Table>
<Caption>
2000 2001 2002
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
APCo. ............... $(274,000) $(256,700) $(127,000)
CSPCo................ (250,400) (251,200) (267,000)
I&M.................. 93,900 166,200 113,600
KPCo. ............... (21,500) (27,600) (46,500)
OPCo. ............... 452,000 369,300 326,900
</Table>
PSO, SWEPCo, TCC and TNC, and AEPSC are parties to a Restated and Amended
Operating Agreement originally dated as of January 1, 1997 (CSW Operating
Agreement). The CSW Operating Agreement requires the west zone public utility
subsidiaries to maintain specified annual planning reserve margins and requires
the subsidiaries that have capacity in excess of the required margins to make
such capacity available for sale to other AEP west zone subsidiaries as capacity
commitments. The CSW Operating Agreement also delegates to AEP Service
Corporation the authority to coordinate the acquisition, disposition, planning,
design and construction of generating units and to supervise the operation and
maintenance of a central control center.
The following table shows the net credits or (charges) allocated among the
parties under the CSW Operating Agreement during the years ended December 31,
2000, 2001 and 2002:
<Table>
<Caption>
2000 2001 2002
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
PSO.................. $(9,000) $(6,500) $(53,700)
SWEPCo............... 55,400 62,300 67,800
TCC.................. 3,600 (13,500) 15,400
TNC.................. (50,000) (42,300) (29,500)
</Table>
Power generated by or allocated or provided under the Interconnection
Agreement or CSW Operating Agreement to any public utility subsidiary is often
sold to customers (or in the case of the ERCOT area of Texas, REPs) by such
public utility subsidiary at rates approved (other than in the ERCOT area of
Texas) by the public utility commission in the jurisdiction of sale. In Ohio,
Virginia and the ERCOT area of Texas, such rates are based on a statutory
formula as those jurisdictions transition to the use of market rates for
generation. See Energy Delivery -- Regulation -- Rates.
Under the Interconnection Agreement, power allocated to a public utility
subsidiary that is not required to serve its native load is sold at wholesale on
behalf of such subsidiary. Under the CSW Operating Agreement, power generated
that is not needed to serve the native load of any public utility subsidiary is
sold at wholesale by the generating subsidiary. See Trading and Marketing of
Energy Commodities for a discussion of the trading and marketing of such power.
AEP's System Integration Agreement provides for the integration and
coordination of AEP's east and west zone operating subsidiaries, joint dispatch
of generation within the AEP System, and the distribu-
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<PAGE>
tion, between the two operating zones, of costs and benefits associated with the
System's generating plants. It is designed to function as an umbrella agreement
in addition to the Interconnection Agreement and the CSW Operating Agreement,
each of which controls the distribution of costs and benefits within each zone.
Competition and Regulation
Retail Sales: AEP's public utility subsidiaries have the right (which in
some cases is exclusive) to sell electric power at retail within their
respective service areas in the states of Arkansas, Indiana, Kentucky,
Louisiana, Oklahoma, Tennessee, West Virginia and the SPP area of Texas. In
Michigan, Ohio and Virginia, AEP's public utility subsidiaries continue to
provide service to customers who have not been offered or have not selected
alternate service from competing suppliers. In those states, service is
currently being provided according to prescribed rules and rates. In the ERCOT
area of Texas, TCC and TNC sell power to Centrica, which provides PTB service to
certain former customers of TCC and TNC and must compete for customers.
AEP's public utility subsidiaries also compete with self-generation and
with distributors of other energy sources, such as natural gas, fuel oil and
coal, within their service areas. The primary factors in such competition are
price, reliability of service and the capability of customers to utilize sources
of energy other than electric power. With respect to competing generators and
self-generation, the public utility subsidiaries of AEP believe that they
generally maintain a favorable competitive position. With respect to alternative
sources of energy, the public utility subsidiaries of AEP believe that the
reliability of their service and the limited ability of customers to substitute
other cost-effective sources for electric power place them in a favorable
competitive position, even though their prices may be higher than the costs of
some other sources of energy.
Significant changes in the global economy in recent years have led to
increased price competition for industrial customers in the United States,
including those served by the AEP System. Some of these industrial customers
have requested price reductions from their suppliers of electric power. In
addition, industrial customers that are downsizing or reorganizing often close a
facility based upon its costs, which may include, among other things, the cost
of electric power. The public utility subsidiaries of AEP cooperate with such
customers to meet their business needs through, for example, providing various
off-peak or interruptible supply options pursuant to tariffs filed with the
various state commissions. Occasionally, these rates are first negotiated, and
then filed with the state commissions. The public utility subsidiaries believe
that they are unlikely to be materially adversely affected by this competition.
See Energy Delivery -- Regulation -- Rates for a description of the setting
of rates for power sold at bundled or unbundled state-regulated rates.
Wholesale Sales: The public utility subsidiaries of AEP, like the electric
industry generally, face increasing competition in the sale of available power
on a wholesale basis, primarily to other public utilities and power marketers.
The Energy Policy Act of 1992 was designed, among other things, to foster
competition in the wholesale market by creating a generation market with fewer
barriers to entry and mandating that all generators have equal access to
transmission services. As a result, there are more generators able to
participate in this market. The principal factors in competing for wholesale
sales are price (including fuel costs), availability of capacity and power and
reliability of service.
The public utility subsidiaries of AEP are subject to regulation by the
FERC under the Federal Power Act in respect of rates for interstate sales at
wholesale. See General -- Regulation -- FERC.
Seasonality
Sale of electric power is generally a seasonal business. In many parts of
the country, demand for power peaks during the hot summer months, with market
prices also peaking at that time. In other areas, power demand peaks during the
winter. The pattern of this fluctuation may change due to the nature and
location of AEP's facilities and the terms of power sale contracts AEP enters
into. In addition, AEP has historically sold less power, and consequently earned
less income, when weather conditions are milder. Unusually mild weather in the
future could diminish AEP's results of operations and may impact its financial
condition.
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<PAGE>
Fuel Supply
The following table shows the sources of power generated by the AEP System:
<Table>
<Caption>
2000 2001 2002
---- ---- ----
<S> <C> <C> <C>
Coal........................ 78% 74% 78%
Natural Gas................. 13% 12% 8%
Nuclear..................... 5% 11% 11%
Hydroelectric and other..... 4% 3% 3%
</Table>
Variations in the generation of nuclear power are primarily related to
refueling outages and, in a portion of 2000, the shutdown of the Cook Plant to
respond to issues raised by the NRC. Variations in the generation of natural gas
power are primarily related to the availability of cheaper alternatives to
fulfill certain power requirements and to deactivate certain of its gas-fired
plants.
Coal and Lignite: AEP System generating companies procure coal and lignite
under a combination of purchasing arrangements including long-term contracts,
affiliate operations, short-term, and spot agreements with various producers and
coal trading firms. AEP believes, but cannot provide assurances that, it will be
able to secure coal and lignite of adequate quality and in adequate quantities
to operate its coal and lignite-fired units.
The following table shows the amount of coal delivered to the AEP System
during the past three years and the average delivered price of spot coal
purchased by System companies:
<Table>
<Caption>
2000 2001 2002
------- ------- -------
<S> <C> <C> <C>
Total coal delivered
to AEP operated
plants (thousands
of tons)........... 73,259 73,889 76,442
Average price per ton
of spot-purchased
coal............... $ 24.03 $ 27.30 $ 27.06
</Table>
The coal supplies at AEP System plants vary from time to time depending on
various factors, including customers' usage of electric power, space
limitations, the rate of consumption at particular plants, labor unrest and
weather conditions which may interrupt deliveries. At December 31, 2002, the
System's coal inventory was roughly 56 days of normal usage. This estimate
assumes that the total supply would be utilized through the operation of plants
that use coal most efficiently.
In cases of emergency or shortage, system companies have developed programs
to conserve coal supplies at their plants. Such programs have been filed and
reviewed with officials of federal and state agencies and, in some cases, the
state regulatory agency has prescribed actions to be taken under specified
circumstances by System companies, subject to the jurisdiction of such agencies.
The FERC has adopted regulations relating, among other things, to the
circumstances under which, in the event of fuel emergencies or shortages, it
might order electric utilities to generate and transmit electric power to other
regions or systems experiencing fuel shortages, and to ratemaking principles by
which such electric utilities would be compensated. In addition, the federal
government is authorized, under prescribed conditions, to allocate coal and to
require the transportation thereof, for the use of power plants or major
fuel-burning installations.
Natural Gas: AEP, through its public utility subsidiaries, consumed over
163 billion cubic feet of natural gas during 2002 for generating power. A
majority of the gas fired electric generation plants are connected to at least
two natural gas pipelines, which provides greater access to competitive supplies
and improves reliability. A portfolio of long-term and short-term purchase and
transportation agreements (that are acquired on a competitive basis and based on
market prices) supplies natural gas requirements for each plant.
Nuclear: I&M and STPNOC have made commitments to meet certain of the
nuclear fuel requirements of the Cook Plant and STP, respectively. Steps
currently are being taken, based upon the planned fuel cycles for the Cook
Plant, to review and evaluate I&M's requirements for the supply of nuclear fuel.
I&M has made and will make purchases of uranium in various forms in the spot,
short-term, and mid-term markets until it decides that deliveries under
long-term supply contracts are warranted. TCC and the other STP participants
have entered into contracts with suppliers for (i) 100% of the uranium
concentrate sufficient for the operation of both STP units through spring 2006
and (ii) 50% of the uranium concentrate needed for STP through spring 2007.
For purposes of the storage of high-level radioactive waste in the form of
spent nuclear fuel, I&M has completed modifications to its spent nuclear fuel
storage pool. AEP anticipates that the Cook Plant has storage capacity to permit
normal operations through 2012. STP has on-site storage facilities with the
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<PAGE>
capability to store the spent nuclear fuel generated by the STP units over their
licensed lives.
Nuclear Waste and Decommissioning
I&M, as the owner of the Cook Plant, and TCC, as a partial owner of STP,
have a significant future financial commitment to safely dispose of SNF and
decommission and decontaminate the plants. The ultimate cost of retiring the
Cook Plant and STP may be materially different from estimates and funding
targets as a result of the:
- Type of decommissioning plan selected;
- Escalation of various cost elements (including, but not limited to,
general inflation);
- Further development of regulatory requirements governing decommissioning;
- Limited availability to date of significant experience in decommissioning
such facilities;
- Technology available at the time of decommissioning differing
significantly from that assumed in these studies; and
- Availability of nuclear waste disposal facilities.
Accordingly, management is unable to provide assurance that the ultimate cost of
decommissioning the Cook Plant and STP will not be significantly different than
current projections.
See Management's Discussion and Analysis of Results of Operations and
Management's Discussion and Analysis of Financial Condition, Accounting Policies
and Other Matters and Note 9 to the consolidated financial statements, entitled
Commitments and Contingencies, which are incorporated by reference in Items 7
and 8, respectively, for information with respect to nuclear waste and
decommissioning and related litigation.
Low-Level Radioactive Waste: The LLWPA mandates that the responsibility for
the disposal of low-level radioactive waste rests with the individual states.
Low-level radioactive waste consists largely of ordinary refuse and other items
that have come in contact with radioactive materials. Michigan and Texas do not
currently have disposal sites for such waste available. AEP cannot predict when
such sites may be available, but South Carolina and Utah operate low-level
radioactive waste disposal sites and accept low-level radioactive waste from
Michigan and Texas. AEP's access to the South Carolina facility is currently
allowed through the end of fiscal year 2008.
Deactivation and Planned Disposition of Generation Facilities
In September 2002, AEP indicated to ERCOT its intent to deactivate 16
gas-fired power plants (8 TCC plants and 8 TNC plants). ERCOT subsequently
conducted reliability studies that determined that seven plants (4 TCC plants
and 3 TNC plants) would be required to ensure reliability of the electricity
grid. As a result of these studies, ERCOT and AEP agreed to enter into
reliability must run agreements (which expired in December 2002, but have been
renewed for all but two units of these plants) to continue operation of these
plants. With ERCOT's approval, AEP proceeded with its planned deactivation of
the remaining nine plants.
TCC has also filed a plan of divestiture with the PUCT proposing to sell
all of its power generation assets in an effort to determine its level of
stranded costs in accordance with the Texas Act. The PUCT has dismissed its
proceeding relating to TCC's plan of divestiture in anticipation of promulgating
rules of general application regarding stranded cost determination for nuclear
facilities. See Energy Delivery-Regulatory Assets and Stranded Cost Recovery and
Post-Restructuring Wires Charges.
The assets to be sold have a generating capacity of 4,497 MW and include
eight gas-fired generating plants, one coal-fired plant, TCC's interest in
another coal-fired plant, a hydroelectric facility and TCC's interest in STP.
See Note 8 to the consolidated financial statements entitled Customer Choice and
Industry Restructuring, incorporated by reference in Item 8, for more
information on the planned disposition of TCC generation facilities.
TRADING AND MARKETING OF ENERGY COMMODITIES
AEP enters into transactions for the purchase and sale of electricity and
natural gas as part of wholesale trading operations. Electric and gas
transactions are executed over-the-counter with counterparties or through
brokers. Gas transactions are also executed through brokerage accounts with
brokers who are registered with the Commodity Futures Trading Commission.
Brokers and counterparties may require cash or cash related instruments to be
deposited on these transactions as margin against open positions.
AEP trades electricity and gas contracts with numerous counterparties.
Since AEP's open energy trading contracts are valued based on changes in
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<PAGE>
market prices of the related commodities, our exposures change daily.
In October 2002, AEP announced its plans to reduce its exposure to energy
trading markets and to downsize the trading and wholesale marketing operations.
It is expected that in the future power trading and marketing operations will be
smaller in scope, will generally be limited to risk management around AEP assets
and, accordingly, focused in regions in which AEP owns assets.
Energy Market Investigations
During 2002, several governmental entities launched investigations of
participants in energy trading markets, including AEP. A number of those
investigations resulted in data requests of AEP. See Management's Discussion and
Analysis of Financial Condition, Accounting Policies and Other Matters,
incorporated by reference in Item 7, under the heading Energy Market
Investigations.
NATURAL GAS PIPELINE, STORAGE AND PROCESSING FACILITIES
AEP, through certain subsidiaries, operates and owns an interest in a
significant amount of gas-related assets, including:
- 6,400 miles of natural gas pipelines between two systems;
- 128 billion cubic feet of storage among two facilities;
- Five natural gas processing plants; and
- Certain gas marketing contracts.
COAL MINES AND RELATED FACILITIES
AEP, through certain subsidiaries, holds various properties, coal reserves,
mining operations and royalty interests in Colorado, Kentucky, Louisiana, Ohio,
Pennsylvania and West Virginia.
BARGE, RAIL AND OTHER FUEL TRANSPORTATION RELATED ASSETS
AEP, through MEMCO Barge Line Inc., is engaged in the transportation of
coal and dry bulk commodities, primarily on the Ohio, Illinois, and Lower
Mississippi rivers for AEP, as well as unaffiliated customers. AEP, through
certain subsidiaries, owns or leases 7,000 railcars, 1,800 barges, 37 tug boats
and two coal handling terminals with 20 million tons of annual capacity.
STRUCTURED ARRANGEMENTS INVOLVING CAPACITY, ENERGY, AND ANCILLARY SERVICES
Dow
AEP has entered into an agreement with The Dow Chemical Company to
construct a 900 MW cogeneration facility at Dow's chemical facility in
Plaquemine, Louisiana. Commercial operation is expected in November 2003. AEP is
entitled to 100% of the facility's capacity and energy over The Dow Chemical
Company's requirements and has contracted to sell the power from this facility
to an unaffiliated party.
Buckeye
In January 2000, OPCo and NPC, an affiliate of Buckeye, entered into an
agreement relating to the construction and operation of a 510 MW gas-fired
electric generating peaking facility to be owned by NPC. From the commercial
operation date (which occurred in 2002) until the end of 2005, OPCo will be
entitled to 100% of the power generated by the facility, and responsible for the
fuel and other costs of the facility. After 2005, NPC and OPCo will be entitled
to 80% and 20%, respectively, of the power of the facility, and both parties
will generally be responsible for the fuel and other costs of the facility. OPCo
will also provide certain back-up power to NPC.
CERTAIN POWER AGREEMENTS
AEGCo
Since its formation in 1982, AEGCo's business has consisted of the
ownership and financing of its 50% interest in Unit 1 of the Rockport Plant and,
since 1989, leasing of its 50% interest in Unit 2 of the Rockport Plant. The
operating revenues of AEGCo are derived from the sale of capacity and energy
associated with its interest in the Rockport Plant to I&M and KPCo pursuant to
unit power agreements.
The I&M Power Agreement provides for the sale by AEGCo to I&M of all the
power (and the energy associated therewith) available to AEGCo at the Rockport
Plant. I&M is obligated, whether or not power is available from AEGCo, to pay as
a demand charge for the right to receive such power (and as an energy charge for
any associated energy taken by I&M). Such amounts, when added to amounts
received by AEGCo from any other sources, will be at least
16
<PAGE>
sufficient to enable AEGCo to pay all its operating and other expenses,
including a rate of return on the common equity of AEGCo as approved by FERC,
currently 12.16%. The I&M Power Agreement will continue in effect until the date
that the last of the lease terms of Unit 2 of the Rockport Plant has expired
unless extended in specified circumstances.
Pursuant to an assignment between I&M and KPCo, and a unit power agreement
between KPCo and AEGCo, AEGCo sells KPCo 30% of the power (and the energy
associated therewith) available to AEGCo from both units of the Rockport Plant.
KPCo has agreed to pay to AEGCo the same amounts which I&M would have paid AEGCo
under the terms of the I&M Power Agreement for such entitlement. The KPCo unit
power agreement expires on December 31, 2004. The agreement will be extended
until December 31, 2009 for Unit 1 and December 31, 2022 for Unit 2 if AEP's
restructuring settlement agreement filed with the FERC becomes effective.
AEGCo and AEP have entered into a capital funds agreement pursuant to
which, among other things, AEP has unconditionally agreed to make cash capital
contributions, or in certain circumstances subordinated loans, to AEGCo to the
extent necessary to enable AEGCo to (i) maintain such an equity component of
capitalization as required by governmental regulatory authorities; (ii) provide
its proportionate share of the funds required to permit commercial operation of
the Rockport Plant; (iii) enable AEGCo to perform all of its obligations,
covenants and agreements under, among other things, all loan agreements, leases
and related documents to which AEGCo is or becomes a party (AEGCo Agreements);
and (iv) pay all indebtedness, obligations and liabilities of AEGCo (AEGCo
Obligations) under the AEGCo Agreements, other than indebtedness, obligations or
liabilities owing to AEP. The capital funds agreement will terminate after all
AEGCo Obligations have been paid in full.
OVEC
AEP, CSPCo and several unaffiliated utility companies jointly own OVEC. The
aggregate equity participation of AEP and CSPCo in OVEC is 44.2%. Until
September 1, 2001, OVEC supplied the power requirements of a uranium enrichment
plant near Portsmouth, Ohio owned by the DOE. The sponsoring companies are now
entitled to receive and pay for all OVEC capacity (approximately 2,200 MW) in
proportion to their power participation ratios. The aggregate power
participation ratio of APCo, CSPCo, I&M and OPCo is 42.1%. The proceeds from the
sale of power by OVEC are designed to be sufficient for OVEC to meet its
operating expenses and fixed costs and to provide a return on its equity
capital. The Inter-Company Power Agreement, which defines the rights of the
owners and sets the power participation ratio of each, will expire by its terms
on March 12, 2006.
Buckeye
Contractual arrangements among OPCo, Buckeye and other investor-owned
electric utility companies in Ohio provide for the transmission and delivery,
over facilities of OPCo and of other investor-owned utility companies, of power
generated by the two units at the Cardinal Station owned by Buckeye and back-up
power to which Buckeye is entitled from OPCo under such contractual
arrangements, to facilities owned by 25 of the rural electric cooperatives which
operate in the State of Ohio at 342 delivery points. Buckeye is entitled under
such arrangements to receive, and is obligated to pay for, the excess of its
maximum one-hour coincident peak demand plus a 15% reserve margin over the
1,226,500 kilowatts of capacity of the generating units which Buckeye currently
owns in the Cardinal Station. Such demand, which occurred on August 1, 2002, was
recorded at 1,398,559 kilowatts.
ENERGY DELIVERY
GENERAL
AEP's public utility subsidiaries own and operate transmission and
distribution lines and other facilities to deliver electric power. See Item
2--Properties for more information regarding the transmission and distribution
lines. Most of the transmission and distribution services are sold, in
combination with electric power, to retail customers of AEP's public utility
subsidiaries in their service territories. These sales are made at rates
established by the state utility commissions of the states in which they
operate, and in some instances, the FERC as well. See Regulation-- Rates. The
FERC regulates and approves the rates for wholesale transmission transactions.
See General--Regulation-- FERC. As discussed below, some transmission services
also are separately sold to non-affiliated companies.
AEP's public utility subsidiaries hold franchises or other rights to
provide electric service in various municipalities and regions in their service
areas. In some cases, these franchises provide the utility with the exclusive
right to provide electric service. These franchises have varying provisions and
expiration
17
<PAGE>
dates. In general, the operating companies consider their franchises to be
adequate for the conduct of their business. For a discussion of competition in
the sale of power, see Wholesale Operations-- Generation-- Competition and
Regulation.
REGULATION
AEP is in the business of providing generation, transmission and
distribution services. The transmission and distribution functions are part of
AEP's energy delivery segment. The generation function is part of AEP's
wholesale operations segment. This discussion covers the regulation of
transmission and distribution, but also generation sold at retail (which would
otherwise be included in the wholesale operations segment discussion).
Rates
Historically, state utility commissions have established electric service
rates on a cost-of-service basis, which is designed to allow a utility an
opportunity to recover its cost of providing service and to earn a reasonable
return on its investment used in providing that service. A utility's cost of
service is generally comprised of its operating expenses, including operation
and maintenance expense, depreciation expense and taxes. State utility
commissions periodically adjust rates pursuant to a review of (i) a utility's
revenues and expenses during a defined test period and (ii) such utility's level
of investment. Absent a legal limitation, such as a law limiting the frequency
of rate changes or capping rates for a period of time as part of a transition to
customer choice of generation suppliers, a state utility commission can review
and change rates on its own initiative. Some states may initiate reviews at the
request of a utility, customer, governmental or other representative of a group
of customers. Such parties may, however, agree with one another not to request
reviews of or changes to rates for a specified period of time.
The rates of AEP's public utility subsidiaries are generally based on the
cost of providing traditional bundled electric service (i.e., generation,
transmission and distribution service). In Ohio, Virginia and the ERCOT area of
Texas, rates are transitioning from bundled cost-based rates for electric
service to unbundled cost-based rates for transmission and distribution service
on the one hand, and market pricing for and/or customer choice of generation on
the other.
Historically, the state regulatory frameworks in the service area of the
AEP System reflected specified fuel costs as part of bundled (or, more recently,
unbundled) rates or incorporated fuel adjustment clauses in a utility's rates
and tariffs. Fuel adjustment clauses permit periodic adjustments to fuel cost
recovery from customers and therefore provide protection against exposure to
fuel cost changes. While the historical framework remains in a portion of AEP's
service territory, recovery of increased fuel costs (i) is no longer provided
for in Ohio and (ii) may be limited in Indiana and Michigan, which have capped
rates. Fuel recovery is also limited in the ERCOT area of Texas, but because AEP
sold MECPL and MEWTU, there is little impact on AEP of fuel recovery procedures
related to service in ERCOT.
The following state-by-state analysis summarizes the regulatory environment
of each jurisdiction in which AEP operates. Several public utility subsidiaries
operate in more than one jurisdiction.
Indiana: I&M provides retail electric service in Indiana at a bundled rate
approved by the IURC. While rates are set on a cost-of-service basis, utilities
may also generally seek to adjust fuel clause rates quarterly. I&M's base rate
is capped through December 31, 2004 and its fuel recovery rate is capped through
February 29, 2004.
Ohio: CSPCo and OPCo operate as functionally separated utilities and
provide "default" retail electric service to customers at unbundled rates
established by the Ohio Act through December 31, 2005. Thereafter, CSPCo and
OPCo will continue to provide distribution services to retail customers at rates
approved by the PUCO. These rates will be frozen from December 31, 2005 to (i)
December 31, 2008 for CSPCo and (ii) December 31, 2007 for OPCo. Transmission
services will continue to be provided at rates established by the FERC. Default
retail generation service rates will be based on market prices pursuant to rules
currently under consideration by the PUCO.
Oklahoma: PSO provides retail electric service in Oklahoma at a bundled
rate approved by the OCC. PSO's rates are set on a cost-of-service basis. Fuel
and purchased power costs above the amount included in base rates are recovered
by applying a fuel adjustment factor to retail kilowatt-hour sales. The factor
is adjusted quarterly and is based upon forecasted fuel and purchased power
costs. Over or under collections of fuel costs for prior periods can be
recovered when new quarterly factors are established.
Texas: The Texas Act requires the legal separation of generation-related
assets from transmission and
18
<PAGE>
distribution assets. TCC and TNC currently operate on a functionally separated
basis. In January 2002, TCC and TNC transferred all their retail customers in
the ERCOT area of Texas to MECPL, MEWTU and AEP Commercial and Industrial REP
(an AEP affiliate). TNC's retail SPP customers were ultimately transferred to
Mutual Energy SWEPCo L.P. (an AEP affiliate). TCC and TNC provide retail
transmission and distribution service on a cost-of-service basis at rates
approved by the PUCT and wholesale transmission service under tariffs approved
by the FERC consistent with PUCT rules.
The implementation of the business separation plan for SWEPCo operations in
the SPP area of Texas was delayed by the PUCT. As such, SWEPCo's Texas
operations continue to operate and to be regulated as a traditional bundled
utility with both base and fuel rates.
Virginia: APCo provides unbundled retail electric service in Virginia.
APCo's unbundled generation, transmission (which reflect FERC approved
transmission rates) and distribution rates as well as its functional separation
plan were approved by the VSCC in December 2001.
The Virginia Act capped base rates at their mid-1999 levels until the end
of the transition period (July 1, 2007), or sooner if the VSCC finds that a
competitive market for generation exists in Virginia. The Virginia Act permits
APCo to seek a one-time change to its capped non-generation rates after January
1, 2004. The Virginia Act allows adjustments to fuel rates during the transition
period and continues to permit utilities to recover their actual fuel costs, the
fuel component of their purchased power costs and certain capacity charges. APCo
recovers its generation capacity charges through capped base rates.
West Virginia: APCo and Wheeling Power Company provide retail electric
service at bundled rates approved by the WVPSC. A plan to introduce customer
choice was approved by the West Virginia Legislature in its 2000 legislative
session. However, implementation of that plan was placed on hold pending
necessary changes to the state's tax laws in a subsequent session. Those changes
have not been made.
While West Virginia generally allows recovery of fuel costs, the most
recent proceeding resulted in the suspension of an active fuel clause for APCo
and WPCo (though they continue to recover fuel costs through fixed bundled
rates). APCo and Wheeling Power Company are currently unable to change the
current level of fuel cost recovery, though this ability could be reinstated in
a future proceeding.
Other Jurisdictions: The public utility subsidiaries of AEP also provide
service at regulated bundled rates in Arkansas, Kentucky, Louisiana and
Tennessee and regulated unbundled rates in Michigan.
19
<PAGE>
The table below illustrates the current rate regulation status of the
states in which the public utility subsidiaries of AEP operate:
<Table>
<Caption>
FUEL CLAUSE RATES PERCENTAGE
------------------------------------------------- OF AEP
STATUS OF BASE RATES FOR SYSTEM SALES SYSTEM
----------------------------------------------- PROFITS SHARED RETAIL
JURISDICTION POWER SUPPLY ENERGY DELIVERY STATUS INCLUDES W/RATEPAYERS REVENUES(1)
- ------------ ---------------------- ---------------------- -------------- -------------- --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Ohio Frozen through 2005 Distribution frozen None Not applicable Not applicable 30%
through 2007 for OPCo
and 2008 for CSP;
Transmission frozen
through 2005
Texas
(TCC, TNC) See footnote 2 Not capped or frozen Not applicable Not applicable Not applicable 17%(2)
Texas
(SWEPCo) Capped until 6/15/03 Active Fuel and fuel Yes, above base 3%
portion of levels
purchased
power
Indiana Capped until 1/1/05(3) Capped until Fuel and fuel No 10%
3/1/04(3) portion of
purchased
power
Virginia Capped until as late Capped until as late Active Fuel and fuel No 9%
as 7/1/07(4) as 7/1/07(4) portion of
purchased
power
West Virginia Fixed(5) Suspended(5) Fuel and fuel Yes, but 9%
portion of suspended
purchased
power
Oklahoma Cap expired 1/1/03 Active Fuel and fuel Yes 9%
portion of
purchased
power
Louisiana Capped until 6/15/05 Active Fuel and fuel Yes, above base 5%
portion of levels
purchased
power
Kentucky Frozen until 6/15/03(6) Active Fuel and fuel Yes, above base 3%
portion of levels
purchased
power
Arkansas Capped until 6/15/03 Active Fuel and fuel Yes, above base 2%
portion of levels
purchased
power
Michigan Capped until 1/1/05(7) Capped until 1/1/05(7) Capped until Fuel and fuel Yes, in some 2%
1/1/04(8) portion of areas, but
purchased suspended
power
Tennessee Not capped or frozen Active Fuel and fuel No 1%
portion of
purchased
power
</Table>
- ---------------------------------
(1) Represents the percentage of revenues from sales to retail customers from
AEP utility companies operating in each state to the total AEP System
revenues from sales to retail customers for the year ended December 31,
2002.
(2) Retail electric service in the ERCOT area of Texas is provided to most
customers through unaffiliated REPs which must offer PTB rates until January
1, 2007. The percentage of revenues shown includes revenues from power sales
contracts between MECPL and TCC and MEWTU and TNC.
20
<PAGE>
(3) Capped base and fuel rates pursuant to a 1999 settlement with base rate
freeze extended pursuant to merger stipulation.
(4) Base rates are capped until the earlier of 7/1/07 or a finding by the VSCC
that a competitive market for generation exists. One-time change in
non-generation rates is allowed in Virginia after 1/1/04.
(5) Rates fixed and expanded net energy clause suspended in West Virginia
pursuant to a 1999 rate case stipulation, but subject to change in a future
proceeding.
(6) Utilities may request that an environmental surcharge be imposed to recover
costs associated with the installation of emission control equipment.
(7) Capped base and fuel rates pursuant to a 1999 settlement and base rates
extended pursuant to merger stipulation.
(8) Michigan fuel rates capped until 1/1/04 pursuant to a 1999 fuel settlement.
AEP TRANSMISSION POOL
Transmission Equalization Agreement
APCo, CSPCo, I&M, KPCo and OPCo operate their transmission lines as a
single interconnected and coordinated system and are parties to the Transmission
Equalization Agreement, dated April 1, 1984, as amended (TEA), defining how they
share the costs and benefits associated with their relative ownership of the
extra-high-voltage transmission system (facilities rated 345 KV and above) and
certain facilities operated at lower voltages (138 KV and above). This sharing
is based upon each company's "member-load ratio." The member-load ratio is
calculated monthly by dividing such company's highest monthly peak demand for
the last twelve months by the aggregate of the highest monthly peak demand for
the last twelve months for all east zone operating companies. As of December 31,
2002, the member-load ratios were as follows:
<Table>
<Caption>
PEAK
DEMAND MEMBER-LOAD
(KW) RATIO (%)
------ -----------
<S> <C> <C>
APCo..................... 6,010 28.2
CSPCo.................... 4,040 19.0
I&M...................... 4,323 20.3
KPCo..................... 1,551 7.3
OPCo..................... 5,360 25.2
</Table>
The following table shows the net credits or (charges) allocated among the
parties to the TEA during the years ended December 31, 2000, 2001 and 2002:
<Table>
<Caption>
2000 2001 2002
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
APCo................. $ 3,400 $ 3,100 $ 13,400
CSPCo................ (38,300) (40,200) (42,200)
I&M.................. 43,800 41,300 36,100
KPCo................. 6,000 4,600 5,400
OPCo................. (14,900) (8,800) (12,700)
</Table>
Transmission Coordination Agreement
PSO, SWEPCo, TCC, TNC and AEPSC are parties to a Transmission Coordination
Agreement originally dated as of January 1, 1997 (TCA). The TCA establishes a
coordinating committee, which is charged with the responsibility of overseeing
the coordinated planning of the transmission facilities of the west zone public
utility subsidiaries, including the performance of transmission planning
studies, the interaction of such subsidiaries with independent system operators
and other regional bodies interested in transmission planning and compliance
with the terms of the OATT filed with the FERC and the rules of the FERC
relating to such tariff.
Under the TCA, the west zone public utility subsidiaries have delegated to
AEPSC the responsibility of monitoring the reliability of their transmission
systems and administering the AEP OATT on their behalf. The TCA also provides
for the allocation among the west zone public utility subsidiaries of revenues
collected for transmission and ancillary services provided under the AEP OATT.
The following table shows the net credits or (charges) allocated among the
parties to the TCA during the years ended December 31, 2000, 2001 and 2002:
<Table>
<Caption>
2000 2001 2002
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
PSO................... $ 3,300 $ 4,000 $ 4,200
SWEPCo................ 5,900 5,400 5,000
TCC................... (3,400) (3,900) (3,600)
TNC................... (5,800) (5,500) (5,600)
</Table>
Transmission Services for Non-Affiliates
In addition to providing transmission services in connection with their own
power sales, AEP's public utility subsidiaries and other System companies also
provide transmission services for non-affiliated compa-
21
<PAGE>
nies. See Regulation--Regional Transmission Organizations. AEP's public utility
subsidiaries are subject to regulation by the FERC under the FPA in respect of
transmission of electric power.
Coordination of East and West Zone Transmission
AEP's System Transmission Integration Agreement provides for the
integration and coordination of the planning, operation and maintenance of the
transmission facilities of AEP's east and west zone public utility subsidiaries.
The System Transmission Integration Agreement functions as an umbrella agreement
in addition to the TEA and the TCA. The System Transmission Integration
Agreement contains two service schedules that govern:
- The allocation of transmission costs and revenues and
- The allocation of third-party transmission costs and revenues and System
dispatch costs.
The System Transmission Integration Agreement contemplates that additional
service schedules may be added as circumstances warrant.
COMPETITION
The public utility subsidiaries of AEP, like many other electric utilities,
have traditionally provided electric generation and energy delivery, consisting
of transmission and distribution services, as a single product to their retail
customers. Legislation has been enacted in Michigan, Ohio, Texas and Virginia
that allows for customer choice of generation supplier. Although restructuring
legislation has been passed in Oklahoma and West Virginia, it has been delayed
indefinitely in Oklahoma and not implemented in West Virginia. In addition,
restructuring legislation in Arkansas has been repealed. See General--Electric
Restructuring Legislation. Customer choice legislation generally allows
competition in the generation and sale of electric power, but not in its
transmission and distribution.
See Management's Discussion and Analysis of Results of Operations and
Management's Discussion and Analysis of Financial Condition, Accounting Policies
and Other Matters and Note 8 to the consolidated financial statements entitled
Customer Choice and Industry Restructuring incorporated by reference in Items 7
and 8, respectively, for further information with respect to restructuring
legislation affecting AEP subsidiaries.
SEASONALITY
Sale of electric power is generally a seasonal business. In many parts of
the country, demand for power peaks during the hot summer months, with market
prices also peaking at that time. In other areas, power demand peaks during the
winter. The pattern of this fluctuation may change due to the nature and
location of AEP's facilities and the terms of power sale contracts AEP enters
into. In addition, AEP has historically sold less power, and consequently earned
less income, when weather conditions are milder. Unusually mild weather in the
future could diminish AEP's results of operations and may impact its financial
condition.
REGIONAL TRANSMISSION ORGANIZATIONS
On April 24, 1996, the FERC issued orders 888 and 889. These orders require
each public utility that owns or controls interstate transmission facilities to
file an open access network and point-to-point transmission tariff that offers
services comparable to the utility's own uses of its transmission system. The
orders also require utilities to functionally unbundle their services, by
requiring them to use their own tariffs in making off-system and third-party
sales. As part of the orders, the FERC issued a pro-forma tariff that reflects
the Commission's views on the minimum non-price terms and conditions for
non-discriminatory transmission service. In addition, the orders require all
transmitting utilities to establish an Open Access Same-time Information System
(OASIS), which electronically posts transmission information such as available
capacity and prices, and require utilities to comply with Standards of Conduct
that prohibit utilities' system operators from providing non-public transmission
information to the utility's merchant employees. The orders also allow a utility
to seek recovery of certain prudently incurred stranded costs that result from
unbundled transmission service.
In December 1999, FERC issued Order 2000, which provides for the voluntary
formation of RTOs, entities created to operate, plan and control utility
transmission assets. Order 2000 also prescribes certain characteristics and
functions of acceptable RTO proposals.
AEP is required, as a condition of FERC's approval in 2000 of AEP's merger
with CSW, to transfer functional control of its transmission facilities to one
or more RTOs. In May 2002, AEP announced an agreement with PJM to pursue terms
for its east zone public utility subsidiaries to participate in PJM, a
22
<PAGE>
FERC approved RTO. In July 2002, the FERC tentatively approved AEP subsidiaries'
decision to join PJM, subject to certain conditions being met. The satisfaction
of these conditions is only partially within AEP's control. AEP's public utility
subsidiaries have filed applications with the state utility commissions of
Indiana, Kentucky, Ohio and Virginia requesting approval of the transfer of
functional control of transmission assets in those states to PJM. Those
applications are pending. In February 2003, the Virginia legislature enacted
legislation that would prohibit the transfer of functional control of
transmission assets to an RTO until at least July 2004.
In July 2002, FERC conditionally accepted filings related to a proposed
consolidation of MISO and the SPP. In that order the FERC required AEP's west
zone subsidiaries in SPP to file reasons why those subsidiaries should not be
required to join MISO. SWEPCo has filed an application with the LPSC requesting
approval of the transfer of functional control of its Louisiana transmission
assets to MISO and intends to make a similar filing in Arkansas with respect to
its Arkansas transmission assets. AEP presently plans to transfer functional
control of its transmission facilities in SPP to MISO or the merged MISO/SPP.
TEXAS REGULATORY ASSETS AND STRANDED COST RECOVERY AND POST-RESTRUCTURING WIRES
CHARGES
Certain transmission and distribution utilities in Texas whose generation
assets were unbundled pursuant to the Texas Act may recover generation-related
regulatory assets and generation-related stranded costs. Regulatory assets
consist of the Texas jurisdictional amount of generation-related regulatory
assets and liabilities in the audited financial statements as of December 31,
1998. Stranded costs consist of the positive excess of the net regulated book
value of generation assets over the market value of those assets, taking
specified factors into account. The Texas Act allows alternative methods of
valuation to determine the fair market value of generation assets, including
outright sale, full and partial stock valuation and asset exchanges, and also,
for nuclear generation assets, the ECOM model.
The Texas Act further permits utilities to establish a special purpose
entity to issue securitization bonds for the recovery of regulatory assets and,
after the 2004 true-up proceeding, the amount of stranded costs and remaining
regulatory assets not previously securitized. Securitization bonds allow for
regulatory assets and stranded costs to be refinanced with recovery of the bond
principal and financing costs ensured through a non-bypassable rate surcharge by
the regulated transmission and distribution utility over the life of the
securitization bonds. Any stranded costs not recovered through the sale of
securitization bonds may be recovered through a separate non-bypassable
competitive transition charge to transmission and distribution customers.
Regulatory Assets
In 1999, TCC filed an application with the PUCT to securitize approximately
$1.27 billion of its retail generation-related regulatory assets and
approximately $47 million in other qualified restructuring costs. On March 27,
2000, the PUCT issued an order authorizing issuance of up to $797 million of
securitization bonds including $764 million for recovery of net generation-
related regulatory assets and $33 million for other qualified refinancing costs.
The securitization bonds were issued in February 2002. TCC has included a
transition charge in its distribution rates to repay the bonds over a 14-year
period. In addition, another $185 million of generation-related regulatory
assets are being recovered through distribution rates beginning in January 2002.
Remaining generation-related regulatory assets of approximately $214 million
originally included by TCC in its 1999 securitization request along with certain
other regulatory assets will be included in TCC's request to recover stranded
costs in the 2004 true-up proceeding.
Stranded Costs
In a March 2000 filing with the PUCT to determine unbundled transmission
and distribution charges and initial stranded cost recovery, TCC requested
recovery of an additional $1.1 billion of stranded costs and regulatory assets
that were not securitized. In October 2001, the PUCT issued an order in the UCOS
proceeding determining an initial amount of TCC ECOM or stranded costs of
approximately negative $615 million based upon the PUCT's ECOM model. The ruling
indicated that TCC costs were below market after securitization of regulatory
assets. TCC disagrees with the ruling and believes it has positive stranded
costs in addition to the securitized regulatory assets.
As a result of this stranded cost determination, the PUCT ordered TCC to
refund $55 million of estimated excess earnings for the period 1999 through 2001
to customers through a credit applied to distribu-
23
<PAGE>
tion rates over a five-year period. TCC appealed the PUCT's estimate of stranded
costs and refund of excess earnings, among other issues, to the Travis County
District Court. This estimate may be superseded by a final determination made as
part of the 2004 true-up proceedings.
The final amount of TCC's stranded costs including regulatory assets and
ECOM will be established by the PUCT in the 2004 true-up proceeding. Pursuant to
PUCT rules, if TCC's total stranded costs determined in the 2004 true-up
proceeding are less than the amount of securitized regulatory assets, the PUCT
can implement an offsetting credit to transmission and distribution rates. The
Texas Third Circuit Court of Appeals ruled in February 2003 that the Texas Act
does not contemplate the refunding to customers of negative stranded costs. In
addition, the Court ruled that negative stranded costs cannot be offset against
other true-up adjustments, including under-recovered fuel amounts. This ruling
may be appealed to the Texas Supreme Court, which has discretion as to whether
to accept and consider the appeal.
2004 True-Up Proceedings
Beginning as early as January 2004, the PUCT will conduct true-up
proceedings (with respect to the ERCOT area of Texas) for each investor-owned
utility, its affiliated REP and affiliated power generation company. The purpose
of the true-up proceeding is to (i) quantify and reconcile the amount of
stranded costs and generation-related regulatory assets that have not yet been
securitized, (ii) conduct a true-up of the PUCT ECOM model for 2002 and 2003 to
reflect market prices determined in required capacity auctions, (iii) establish
final fuel recovery balances and (iv) determine the price to beat clawback
component. The true-up proceeding will generally result in either additional
charges or credits to retail customers through transmission and distribution
rates collected by their REPs and remitted to the utility.
Stranded Cost and Generation-Related Regulatory Asset Determination: The
Texas Act authorized the use of several valuation methodologies to quantify
stranded costs and generation-related regulatory assets in the 2004 true-up
proceeding, including by the sale of assets. TCC filed a plan of divestiture
with the PUCT in December 2002 seeking approval to sell its generation assets to
determine their market value. The PUCT has dismissed its proceeding relating to
TCC's plan of divestiture in anticipation of promulgating rules of general
application regarding stranded cost determination. If the PUCT determines the
sale of assets methodology cannot be used to determine the market value of STP,
TCC intends to pursue the use of one or more market valuation methods.
Divestiture of TCC's interest in STP to a nonaffiliate will also require NRC
approval. TNC does not have any recoverable stranded costs or generation-related
regulatory assets that can be considered as part of the 2004 true-up.
ECOM/Capacity Auction Component: The PUCT used a computer model or
projection, called an ECOM model, to estimate stranded costs related to
generation plant assets in the UCOS proceeding. In connection with using the
ECOM model to calculate the stranded cost estimate, the PUCT estimated the
market power prices that will be received in the competitive wholesale
generation market. Any difference between the ECOM model market prices and
actual market power prices as measured by generation capacity auctions required
by the Texas Act during the period of January 1, 2002 through December 31, 2003
will be a component of the 2004 true-up proceeding, either increasing or
decreasing the amount of recovery for TCC. Auctions to date have generally
indicated that market prices have been lower than the PUCT's ECOM estimates.
Unless this is reversed, TCC's recovery in the 2004 true-up proceeding would be
increased. In the event TCC has transferred its generation assets to an
affiliate, the Texas Act would require TCC to remit to its affiliate the
recovery amount accruing after the transfer. See Note 8 to the consolidated
financial statements, entitled Customer Choice and Industry Restructuring,
incorporated by reference in Item 8, for a discussion of the current calculation
of the difference between the market price and ECOM estimate.
Fuel Recovery Balance Determination: The amount TCC or TNC recovers in the
2004 true-up proceeding could be increased or reduced (or the amount TCC must
refund could be increased) by any under or over-recovery of fuel. The fuel
component will be determined by the amount of fuel costs and expenses the PUCT
approves based on a final fuel reconciliation that TCC filed on December 2, 2002
and that TNC filed on June 3, 2002. TCC's fuel reconciliation covers its fuel
costs from the period beginning July 1, 1998 and ending December 31, 2001. TCC's
fuel reconciliation filing seeks approval for $1.6 billion in fuel expense
collected from retail customers during that period. TCC's fuel reconciliation
filing reflects a fuel over-recovery balance, as of December 31, 2001, of $63.5
million, including
24
<PAGE>
interest. A procedural schedule has been set with a hearing scheduled to begin
May 7, 2003. TNC's fuel reconciliation requests approval of $292 million in fuel
costs associated with serving both ERCOT and SPP retail customers from July 1,
2000 through December 31, 2001. It reflects a fuel under-recovery balance, as of
December 31, 2001, of $26.9 million, including interest. The amounts in this
paragraph may periodically be adjusted as filings are updated or adjusted. A
final order from the PUCT is expected in the first half of 2003. Any under or
over-recovery, plus interest thereon, will be recovered from or returned to
customers as a component of the 2004 true-up proceeding.
Price to Beat Clawback Component: The amount TCC or TNC recovers in the
2004 true-up proceeding could be reduced (or the amount TCC or TNC must refund
could be increased) by the PTB clawback component. If MECPL and MEWTU (which are
no longer affiliated with TCC or TNC) continue to serve 60% or more of TCC's and
TNC's respective PTB load as of January 1, 2004 and the PTB (reduced by
non-bypassable wires charges) exceeds the market price of electricity, any such
excess must be credited to customers of TCC and TNC in the 2004 true-up
proceeding, by up to $150 per customer, subject to certain adjustments. The
Texas Act provides that MECPL and MEWTU effectively indemnify TCC and TNC,
respectively, for any PTB clawback amounts assessed them. The MECPL and MEWTU
sale agreements provide that Centrica (as purchaser of MECPL and MEWTU) and AEP
Utilities (the parent of TCC and TNC, as seller of MECPL and MEWTU) will share
responsibility for this indemnity.
Further Securitization Bonds and Wires Charges: After final determination
of its stranded costs and other true-up adjustments by the PUCT, TCC expects to
issue securitization bonds in the amount of its non-securitized stranded costs
and generation-related regulatory assets determined in the 2004 true-up
proceeding. The bonds can have a maximum term of 15 years. If securitization
bonds are not issued to finance all non-securitized stranded costs and
generation-related regulatory assets, TCC will seek recovery of these amounts as
well as its other true-up adjustments, through a non-bypassable competition
transition charge in transmission and distribution rates.
For a discussion of recovery of regulatory assets and stranded costs in
Ohio and Virginia, see Note 8 to the consolidated financial statements entitled
Customer Choice and Industry Restructuring, incorporated by reference in Item 8.
OTHER INVESTMENTS
AEP has made certain investments in telecommunications, international
energy and other concerns. In 2002, AEP wrote down the value of certain of those
investments. See Management's Discussion and Analysis of Results of Operations
and Management's Discussion and Analysis of Financial Condition, Accounting
Policies and Other Matters and Note 13 to the consolidated financial statements
entitled Asset Impairment and Investment Value Losses, incorporated by reference
in Items 7 and 8, respectively.
AEP also sold the following foreign investments in 2002:
- SEEBOARD, an electricity supply and distribution company in the United
Kingdom serving 2,000,000 customers and covering 3,000 square miles of
service territory.
- CitiPower, a retail electricity and gas supply and distribution
subsidiary in Australia serving 240,000 customers.
25
<PAGE>
Item 2. PROPERTIES
- --------------------------------------------------------------------------------
GENERATION FACILITIES
General
At December 31, 2002, the AEP System owned (or leased where indicated)
generating plants with net power capabilities (east zone public utility
subsidiaries-winter rating; west zone public utility subsidiaries-summer rating)
shown in the following table:
<Table>
<Caption>
COAL NATURAL GAS HYDRO NUCLEAR LIGNITE OTHER TOTAL
COMPANY STATIONS MW MW MW MW MW MW MW
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AEGCo 1(a) 1,300 1,300
APCo 17(b) 5,073 777 5,850
CSPCo 6(e) 2,595 2,595
I&M 10(a) 2,295 11 2,110 4,416
KPCo 1 1,060 1,060
OPCo 8(b)(f) 8,472 48 8,520
PSO 8(c) 1,043 3,169 25(g) 4,237
SWEPCo 9 1,848 1,797 842 4,487
TCC 12(c)(d)(h) 686 3,175 6 630 4,497
TNC 12(c) 377 999 16(g) 1,392
- ------------------------------------------------------------------------------------------------------------
Totals: 84 24,749 9,140 842 2,740 842 41 38,354
- ------------------------------------------------------------------------------------------------------------
</Table>
- ------------------------------------
(a) Unit 1 of the Rockport Plant is owned one-half by AEGCo and one-half by I&M.
Unit 2 of the Rockport Plant is leased one-half by AEGCo and one-half by
I&M. The leases terminate in 2022 unless extended.
(b) Unit 3 of the John E. Amos Plant is owned one-third by APCo and two-thirds
by OPCo.
(c) PSO, TCC and TNC jointly own the Oklaunion power station. Their respective
ownership interests are reflected in this table.
(d) Reflects TCC's interest in STP.
(e) CSPCo owns generating units in common with CG&E and DP&L. Its ownership
interest of 1,330 MW is reflected in this table.
(f) The scrubber facilities at the General James M. Gavin Plant are leased. The
lease terminates in 2010 unless extended.
(g) PSO and TNC have 25 MW and 10 MW respectively of facilities designed
primarily to burn oil. TNC has one 6 MW wind farm facility.
(h) See Item 1 -- Wholesale Operations -- Power Generation -- Planned
Deactivation and Planned Disposition of Generation Facilities for a
discussion of TCC's planned disposition of its generation facilities.
In addition to the generating facilities described above, AEP has ownership
interests in other electrical generating facilities, both foreign and domestic.
Information concerning these facilities at December 31, 2002 is listed below.
<Table>
<Caption>
CAPACITY OWNERSHIP
FACILITY FUEL LOCATION TOTAL MW INTEREST STATUS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Brush II Natural gas Colorado 68 47.75% QF
Eastex Natural gas Texas 440 50% QF
Indian Mesa Wind Texas 161 100% EWG
Mulberry Natural gas Florida 120 46.25% QF
Newgulf Natural gas Texas 85 100% EWG
Orange Cogen Natural gas Florida 103 50% QF
Sweeny Natural gas Texas 480 50% QF
Thermo Cogeneration Natural gas Colorado 272 50% QF
Trent Wind Farm Wind Texas 150 100% EWG
- ----------------------------------------------------------------------------------------------------------
Total U.S. 1,879
- ----------------------------------------------------------------------------------------------------------
</Table>
26
<PAGE>
<Table>
<Caption>
CAPACITY OWNERSHIP
FACILITY FUEL LOCATION TOTAL MW INTEREST STATUS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bajio Natural gas Mexico 605 50% FUCO
Ferrybridge Coal United Kingdom 2,000 100% FUCO
Fiddler's Ferry Coal United Kingdom 2,000 100% FUCO
Nanyang Coal China 250 70% FUCO
Southcoast Natural gas United Kingdom 380 50% FUCO
- ----------------------------------------------------------------------------------------------------------
Total International 5,235
- ----------------------------------------------------------------------------------------------------------
</Table>
See Item 1 -- Wholesale Operations for information concerning natural gas
pipelines, storage and processing facilities, transportation related assets and
coal operations and reserves owned or controlled by AEP subsidiaries.
Cook Nuclear Plant and STP
The following table provides operating information relating to the Cook
Plant and STP.
<Table>
<Caption>
COOK PLANT STP(A)
--------------------- ---------------------
UNIT 1 UNIT 2 UNIT 1 UNIT 2
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
YEAR PLACED IN
OPERATION.......... 1975 1978 1988 1989
YEAR OF EXPIRATION OF
NRC LICENSE (B).... 2014 2017 2027 2028
NOMINAL NET
ELECTRICAL RATING
IN KILOWATTS....... 1,020,000 1,090,000 1,250,600 1,250,600
NET CAPACITY FACTORS
2002............... 86.6% 80.5% 99.2% 75.0%
2001 (C)........... 87.3% 83.4% 94.4% 87.1%
2000 (D)........... 1.4% 50.0% 78.2% 96.1%
</Table>
- ------------------------------------
(a) Reflects total plant.
(b) For economic or other reasons, operation of the Cook Plant and STP for the
full term of their operating licenses cannot be assured.
(c) The capacity factor for both units of the Cook Plant was significantly
reduced in 2001 due to an unplanned dual maintenance outage in September
2001 to implement design changes that improved the performance of the
essential service water system.
(d) The Cook Plant was shut down in September 1997 to respond to issues raised
regarding the operability of certain safety systems. The restart of both
units of the Cook Plant was completed with Unit 2 reaching 100% power on
July 5, 2000 and Unit 1 achieving 100% power on January 3, 2001.
Costs associated with the operation (excluding fuel), maintenance and
retirement of nuclear plants continue to be of greater significance and less
predictable than costs associated with other sources of generation, in large
part due to changing regulatory requirements and safety standards, availability
of nuclear waste disposal facilities and experience gained in the construction
and operation of nuclear facilities. I&M and TCC may also incur costs and
experience reduced output at Cook Plant and STP, respectively, because of the
design criteria prevailing at the time of construction and the age of the
plant's systems and equipment. Nuclear industry-wide and Cook Plant and STP
initiatives have contributed to slowing the growth of operating and maintenance
costs at these plants. However, the ability of I&M and TCC to obtain adequate
and timely recovery of costs associated with the Cook Plant and STP,
respectively, including replacement power, any unamortized investment at the end
of the useful life of the Cook Plant and STP (whether scheduled or premature),
the carrying costs of that investment and retirement costs, is not assured. See
Item 1 -- Wholesale Operations -- Power Generation -- Planned Deactivation and
Planned Disposition of Generation Facilities for a discussion of TCC's planned
disposition of its interest in STP.
POTENTIAL UNINSURED LOSSES
Some potential losses or liabilities may not be insurable or the amount of
insurance carried may not be sufficient to meet potential losses and
liabilities, including liabilities relating to damage to the Cook Plant or STP
and costs of replacement power in the event of a nuclear incident at the Cook
Plant or STP. Future losses or liabilities which are not completely insured,
unless allowed to be recovered through rates, could have a material adverse
effect on results of operations and the financial condition of AEP, I&M, TCC and
other AEP System companies. See Note 9 to the consolidated financial statements
entitled Commitments and Contingencies, incorporated by reference in Item 8, for
information with respect to nuclear incident liability insurance.
27
<PAGE>
TRANSMISSION AND DISTRIBUTION FACILITIES
The following table sets forth the total overhead circuit miles of
transmission and distribution lines of the AEP System and its operating
companies and that portion of the total representing 765,000-volt lines:
<Table>
<Caption>
TOTAL OVERHEAD
CIRCUIT MILES OF
TRANSMISSION AND CIRCUIT MILES OF
DISTRIBUTION LINES 765,000-VOLT LINES
------------------ ------------------
<S> <C> <C>
AEP System (a)....... 226,330(b) 2,023
APCo. ............. 50,756 642
CSPCo (a).......... 12,255 --
I&M................ 25,128 615
Kingsport Power
Company......... 1,335 --
KPCo. ............. 10,555 258
OPCo. ............. 35,551 509
PSO................ 21,539 --
SWEPCo............. 20,075 --
TCC................ 33,515 --
TNC................ 13,637 --
Wheeling Power
Company......... 1,941 --
</Table>
- ------------------------------------
(a) Includes 766 miles of 345,000-volt jointly owned lines.
(b) Includes 73 miles of transmission lines not identified with an operating
company.
TITLES
The AEP System's electric generating stations are generally located on
lands owned in fee simple. The greater portion of the transmission and
distribution lines of the System has been constructed over lands of private
owners pursuant to easements or along public highways and streets pursuant to
appropriate statutory authority. The rights of the System in the realty on which
its facilities are located are considered by it to be adequate for its use in
the conduct of its business. Minor defects and irregularities customarily found
in title to properties of like size and character may exist, but such defects
and irregularities do not materially impair the use of the properties affected
thereby. System companies generally have the right of eminent domain whereby
they may, if necessary, acquire, perfect or secure titles to or easements on
privately held lands used or to be used in their utility operations.
Substantially all the fixed physical properties and franchises of the AEP
System operating companies, except for limited exceptions, are subject to the
lien of the mortgage and deed of trust securing the first mortgage bonds of each
such company.
SYSTEM TRANSMISSION LINES AND FACILITY SITING
Legislation in the states of Arkansas, Indiana, Kentucky, Michigan, Ohio,
Texas, Virginia, and West Virginia requires prior approval of sites of
generating facilities and/or routes of high-voltage transmission lines. Delays
and additional costs in constructing facilities have been experienced as a
result of proceedings conducted pursuant to such statutes, as well as in
proceedings in which operating companies have sought to acquire rights-of-way
through condemnation, and such proceedings may result in additional delays and
costs in future years.
CONSTRUCTION PROGRAM
General
The AEP System is continuously involved in assessing the adequacy of its
generation, transmission, distribution and other facilities to plan and provide
for the reliable supply of electric power and energy to its customers. In this
assessment process, assumptions are continually being reviewed as new
information becomes available, and assessments and plans are modified, as
appropriate. Thus, System reinforcement plans are subject to change,
particularly with the restructuring of the electric utility industry.
Proposed Transmission Facilities
APCo is proceeding with its plan to build the Wyoming-Jacksons Ferry
765,000-volt transmission line. The WVPSC and the VSCC have issued certificates
authorizing construction and operation of the line. On December 31, 2002, the
U.S. Forest Service issued a final environmental impact statement and record of
decision to allow the use of federal lands in the Jefferson National Forest for
construction of a portion of the line. Additional state and federal permits are
expected to be issued in the first half of 2003. Through December 31, 2002 APCo
had invested approximately $51 million in this project. The line is estimated to
cost $287 million with completion scheduled in 2006.
28
<PAGE>
Construction Expenditures
The following table shows construction expenditures during 2000, 2001 and
2002 and current estimates of 2003 construction expenditures, in each case
including AFUDC but excluding assets acquired under leases.
<Table>
<Caption>
2000 2001 2002 2003
ACTUAL ACTUAL ACTUAL ESTIMATE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
AEP System (a)....... $1,773,400 $1,832,000 $1,709,800 $1,458,100
AEGCo. ............ 5,200 6,900 5,300 21,400
APCo. ............. 199,300 306,000 276,500 247,900
CSPCo. ............ 128,000 132,500 136,800 142,300
I&M................ 171,100 91,100 159,400 188,000
KPCo. ............. 36,200 37,200 178,700 72,300
OPCo. ............. 254,000 344,600 354,800 241,000
PSO................ 176,900 124,900 89,400 81,500
SWEPCo. ........... 120,200 112,100 111,800 104,900
TCC................ 199,500 194,100 151,500 126,800
TNC................ 64,500 39,800 43,600 46,500
</Table>
(a) Includes expenditures of other subsidiaries not shown.
See Note 9 to the consolidated financial statements entitled Commitments
and Contingencies, incorporated by reference in Item 8, for further information
with respect to the construction plans of AEP and its operating subsidiaries for
the next three years.
The System construction program is reviewed continuously and is revised
from time to time in response to changes in estimates of customer demand,
business and economic conditions, the cost and availability of capital,
environmental requirements and other factors. Changes in construction schedules
and costs, and in estimates and projections of needs for additional facilities,
as well as variations from currently anticipated levels of net earnings, Federal
income and other taxes, and other factors affecting cash requirements, may
increase or decrease the estimated capital requirements for the System's
construction program.
Item 3. LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
For a discussion of material legal proceedings, see Note 9 to the
consolidated financial statements, entitled Commitments and Contingencies,
incorporated by reference in Item 8.
29
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------------------------
AEP, APCO, I&M, OPCO, SWEPCO AND TCC. None.
AEGCO, CSPCO, KPCO, PSO AND TNC. Omitted pursuant to Instruction I(2)(c).
---------------------
EXECUTIVE OFFICERS OF THE REGISTRANTS
AEP. The following persons are, or may be deemed, executive officers of
AEP. Their ages are given as of March 1, 2003.
<Table>
<Caption>
NAME AGE OFFICE (A)
- ---- --- ----------
<S> <C> <C>
E. Linn Draper, Jr. ........... 61 Chairman of the Board, President and Chief Executive Officer
of AEP and of the Service Corporation
Thomas V. Shockley, III........ 57 Vice Chairman of AEP and Vice Chairman and Chief Operating
Officer of the Service Corporation
Henry W. Fayne................. 56 Vice President of AEP, Executive Vice President of the
Service Corporation
Thomas M. Hagan................ 58 Executive Vice President-Shared Services of the Service
Corporation
Holly K. Koeppel............... 44 Executive Vice President of the Service Corporation
Robert P. Powers............... 49 Executive Vice President-Nuclear Generation and Technical
Services of the Service Corporation
Susan Tomasky.................. 49 Vice President of AEP, Executive Vice President-Policy,
Finance and Strategic Planning of the Service Corporation
</Table>
- ---------------
(a) Dr. Draper and Mr. Fayne have been employed by the Service Corporation or
System companies in various capacities (AEP, as such, has no employees) for
the past five years. Prior to joining the Service Corporation in July 1998
as Senior Vice President-Generation, Mr. Powers was Vice President of
Pacific Gas & Electric and plant manager of its Diablo Canyon Nuclear
Generating Station (1996-1998). Prior to joining the Service Corporation in
July 1998 as Senior Vice President, Ms. Tomasky was a partner with the law
firm of Hogan & Hartson (August 1997-July 1998) and General Counsel of the
Federal Energy Regulatory Commission (May 1993-August 1997). Prior to
joining the Service Corporation in June 2000 as Senior Vice President-
Governmental Affairs, Mr. Hagan was Senior Vice President-External Affairs
of CSW. Prior to joining the Service Corporation in July 2000 as Vice
President-New Ventures, Ms. Koeppel was Regional Vice President of
Asia-Pacific Operations for Consolidated Natural Gas International
(1996-2000). Messrs. Hagan and Powers, Ms. Koeppel and Ms. Tomasky became
executive officers of AEP effective with their promotions to Executive Vice
President on September 9, 2002, October 24, 2001, November 18, 2002 and
January 26, 2000, respectively. Prior to joining the Service Corporation in
his current position upon the merger with CSW, Mr. Shockley was President
and Chief Operating Officer of CSW (1997-2000) and Executive Vice President
of CSW (1990-1997). All of the above officers are appointed annually for a
one-year term by the board of directors of AEP, the board of directors of
the Service Corporation, or both, as the case may be.
APCO, I&M, OPCO, SWEPCO AND TCC. The names of the executive officers of
APCo, I&M, OPCo, SWEPCo and TCC, the positions they hold with these companies,
their ages as of March 1, 2003, and a brief account of their business experience
during the past five years appear below. The directors and executive officers of
APCo, I&M, OPCo, SWEPCo and TCC are elected annually to serve a one-year term.
30
<PAGE>
<Table>
<Caption>
NAME AGE POSITION (A)(B) PERIOD
- ---- --- --------------- ------
<S> <C> <C> <C>
E. Linn Draper, Jr. ........... 61 Director of SWEPCo and TCC 2000-Present
Chairman of the Board and Chief Executive Officer
of SWEPCo and TCC 2000-Present
Director of APCo, I&M and OPCo 1992-Present
Chairman of the Board and Chief Executive Officer
of APCo, I&M and OPCo 1993-Present
Chairman of the Board, President and Chief
Executive Officer of AEP and the Service Corporation 1993-Present
Thomas V. Shockley, III........ 57 Director and Vice President of APCo, I&M, OPCo,
SWEPCo and TCC 2000-Present
Chief Operating Officer of the Service Corporation 2001-Present
Vice Chairman of AEP and the Service Corporation 2000-Present
President and Chief Operating Officer of CSW 1997-2000
Executive Vice President of CSW 1990-1997
Henry W. Fayne................. 56 President of APCo, I&M, OPCo, SWEPCo and TCC 2001-Present
Director of SWEPCo and TCC 2000-Present
Director of APCo 1995-Present
Director of OPCo 1993-Present
Director of I&M 1998-Present
Vice President of SWEPCo and TCC 2000-2001
Vice President of APCo, I&M and OPCo 1998-2001
Vice President of AEP 1998-Present
Chief Financial Officer of AEP 1998-2001
Executive Vice President of the Service Corporation 2001-Present
Executive Vice President-Finance and Analysis of
the Service Corporation 2000-2001
Executive Vice President-Financial Services of the
Service Corporation 1998-2000
Senior Vice President-Corporate Planning & Budgeting
of the Service Corporation 1995-1998
Thomas M. Hagan................ 58 Director and Vice President of APCo, I&M, OPCo,
SWEPCo and TCC 2002-Present
Executive Vice President-Shared Services of the
Service Corporation 2002-Present
Senior Vice President-Governmental Affairs of the
Service Corporation 2000-2002
Senior Vice President-External Affairs of CSW 1996-2000
Holly K. Koeppel............... 44 Executive Vice President of the Service Corporation 2002-Present
Vice President-New Ventures 2000-2002
Regional Vice President of Asia-Pacific Operations
for Consolidated Natural Gas International 1996-2000
</Table>
31
<PAGE>
<Table>
<Caption>
NAME AGE POSITION (A)(B) PERIOD
- ---- --- --------------- ------
<S> <C> <C> <C>
Robert P. Powers............... 49 Director and Vice President of APCo, I&M, OPCo,
SWEPCo and TCC 2001-Present
Director of I&M 2001-Present
Vice President of I&M 1998-Present
Executive Vice President- Generation 2003-Present
Executive Vice President-Nuclear Generation and
Technical Services of the Service Corporation 2001-2003
Senior Vice President-Nuclear Operations of the
Service Corporation 2000-2001
Senior Vice President-Nuclear Generation of the
Service Corporation 1998-2000
Vice President of Pacific Gas & Electric and Plant
Manager of its Diablo Canyon Nuclear Generating
Station 1996-1998
Susan Tomasky.................. 49 Director and Vice President of APCo, I&M, OPCo,
SWEPCo and TCC 2000-Present
Executive Vice President-Policy, Finance and
Strategic Planning of the Service Corporation 2001-Present
Executive Vice President-Legal, Policy and
Corporate Communications and General Counsel of
the Service Corporation 2000-2001
Senior Vice President and General Counsel of the
Service Corporation 1998-2000
Hogan & Hartson (law firm) 1997-1998
General Counsel of the FERC 1993-1997
</Table>
- ---------------
(a) Dr. Draper is a director of BCP Management, Inc., which is the general
partner of Borden Chemicals and Plastics L.P.
(b) Dr. Draper, Messrs. Fayne, Hagan, Powers and Shockley and Ms. Tomasky are
directors of AEGCo, CSPCo, KPCo, PSO and TNC. Dr. Draper and Mr. Shockley
are also directors of AEP.
PART II
- --------------------------------------------------------------------------------
Item 5. MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
AEP. The information required by this item is incorporated herein by
reference to the material under Common Stock and Dividend Information in the
2002 Annual Report.
AEGCO, APCO, CSPCO, I&M, KPCO, OPCO, PSO, SWEPCO, TCC AND TNC. The common
stock of these companies is held solely by AEP. The amounts of cash dividends on
common stock paid by these companies to AEP during 2002 and 2001 are
incorporated by reference to the material under Statement of Retained Earningsin
the 2002 Annual Reports.
Item 6. SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
AEGCO, CSPCO, KPCO, PSO AND TNC. Omitted pursuant to Instruction I(2)(a).
AEP, APCO, I&M, OPCO, SWEPCO AND TCC. The information required by this item
is incorporated herein by reference to the material under Selected Consolidated
Financial Data in the 2002 Annual Reports.
32
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
- --------------------------------------------------------------------------------
AEGCO, CSPCO, KPCO, PSO AND TNC. Omitted pursuant to Instruction I(2)(a).
Management's narrative analysis of the results of operations and other
information required by Instruction I(2)(a) is incorporated herein by reference
to the material under Management's Narrative Analysis of Results of Operations
in the 2002 Annual Reports.
AEP, APCO, I&M, OPCO, SWEPCO AND TCC. The information required by this item
is incorporated herein by reference to the material under Management's
Discussion and Analysis of Results of Operations and Management's Discussion and
Analysis of Financial Condition, Contingencies and Other Matters in the 2002
Annual Reports.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------------------
AEGCO, AEP, APCO, CSPCO, I&M, KPCO, OPCO, PSO, SWEPCO, TCC AND TNC. The
information required by this item is incorporated herein by reference to the
material under Management's Discussion and Analysis of Financial Condition,
Contingencies and Other Matters in the 2002 Annual Reports.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
AEGCO, AEP, APCO, CSPCO, I&M, KPCO, OPCO, PSO, SWEPCO, TCC AND TNC. The
information required by this item is incorporated herein by reference to the
financial statements and financial statement schedules described under Item 15
herein.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------
AEGCO, AEP, APCO, CSPCO, I&M, KPCO, OPCO, PSO, SWEPCO, TCC AND TNC. None.
PART III
- --------------------------------------------------------------------------------
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
- --------------------------------------------------------------------------------
AEGCO, CSPCO, KPCO, PSO AND TNC. Omitted pursuant to Instruction I(2)(c).
AEP. The information required by this item is incorporated herein by
reference to the material under Nominees for Director and Section 16(a)
Beneficial Ownership Reporting Compliance of the definitive proxy statement of
AEP for the 2003 annual meeting of shareholders, to be filed within 120 days
after December 31, 2002. Reference also is made to the information under the
caption Executive Officers of the Registrants in Part I of this report.
APCO AND OPCO. The information required by this item is incorporated herein
by reference to the material under Election of Directors of the definitive
information statement of each company for the 2003 annual meeting of
stockholders, to be filed within 120 days after December 31, 2002. Reference
also is made to the information under the caption Executive Officers of the
Registrants in Part I of this report.
SWEPCO AND TCC. The information required by this item is incorporated
herein by reference to the material under Election of Directors of the
definitive information statement of APCo for the 2003 annual meeting of
stockholders, to be filed within 120 days after December 31, 2002. Reference
also is made to the information under the caption Executive Officers of the
Registrants in Part I of this report.
I&M. The names of the directors and executive officers of I&M, the
positions they hold with I&M, their ages as of March 12, 2003, and a brief
account of their business experience during the past five years appear below and
under the caption Executive Officers of the Registrants in Part I of this
report.
33
<PAGE>
<Table>
<Caption>
NAME AGE POSITION (A) PERIOD
- ---- --- ------------ ------
<S> <C> <C> <C>
K. G. Boyd..................... 51 Director 1997-Present
Vice President (Appointed) -- Fort Wayne Region
Distribution Operations 2000-Present
Indiana Region Manager 1997-2000
John E. Ehler.................. 46 Director 2001-Present
Manager of Distribution Systems-Fort Wayne District 2000-Present
Region Operations Manager 1997-2000
David L. Lahrman............... 51 Director and Manager, Region Support 2001-Present
Fort Wayne District Manager 1997-2001
Marc E. Lewis.................. 48 Director 2001-Present
Assistant General Counsel of the Service
Corporation 2001-Present
Senior Counsel of the Service Corporation 2000-2001
Senior Attorney of the Service Corporation 1994-2000
Susanne M. Moorman............. 53 Director and General Manager, Community Services 2000-Present
Manager, Customer Services Operations 1997-2000
John R. Sampson................ 50 Director and Vice President 1999-Present
Indiana State President 2000-Present
Indiana & Michigan State President 1999-2000
Site Vice President, Cook Nuclear Plant 1998-1999
Plant Manager, Cook Nuclear Plant 1996-1998
D. B. Synowiec................. 59 Director 1995-Present
Plant Manager, Rockport Plant 1990-Present
</Table>
- ---------------
(a) Positions are with I&M unless otherwise indicated.
Item 11. EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
AEGCO, CSPCO, KPCO, PSO AND TNC. Omitted pursuant to Instruction I(2)(c).
AEP. The information required by this item is incorporated herein by
reference to the material under Directors Compensation and Stock Ownership
Guidelines, Executive Compensation and the performance graph of the definitive
proxy statement of AEP for the 2003 annual meeting of shareholders to be filed
within 120 days after December 31, 2002.
APCO AND OPCO. The information required by this item is incorporated herein
by reference to the material under Executive Compensation of the definitive
information statement of each company for the 2003 annual meeting of
stockholders, to be filed within 120 days after December 31, 2002.
I&M, SWEPCO AND TCC. The information required by this item is incorporated
herein by reference to the material under Executive Compensationof the
definitive information statement of APCo for the 2003 annual meeting of
stockholders, to be filed within 120 days after December 31, 2002.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
AEGCO, CSPCO, KPCO, PSO AND TNC. Omitted pursuant to Instruction I(2)(c).
AEP. The information required by this item is incorporated herein by
reference to the material under Share Ownership of Directors and Executive
Officers of the definitive proxy statement of AEP for the 2003 annual meeting of
shareholders to be filed within 120 days after December 31, 2002.
APCO AND OPCO. The information required by this item is incorporated herein
by reference to the material under Share Ownership of Directors and Executive
Officers in the definitive information state-
34
<PAGE>
ment of each company for the 2003 annual meeting of stockholders, to be filed
within 120 days after December 31, 2002.
I&M. All 1,400,000 outstanding shares of Common Stock, no par value, of I&M
are directly and beneficially held by AEP. Holders of the Cumulative Preferred
Stock of I&M generally have no voting rights, except with respect to certain
corporate actions and in the event of certain defaults in the payment of
dividends on such shares.
SWEPCO AND TCC. The information required by this item is incorporated
herein by reference to the material under Share Ownership of Directors and
Executive Officers in the definitive information statement of APCo for the 2003
annual meeting of stockholders, to be filed within 120 days after December 31,
2002.
The table below shows the number of shares of AEP Common Stock and
stock-based units that were beneficially owned, directly or indirectly, as of
January 1, 2003, by each director and nominee of I&M and each of the executive
officers of I&M named in the summary compensation table, and by all directors
and executive officers of I&M as a group. It is based on information provided to
I&M by such persons. No such person owns any shares of any series of the
Cumulative Preferred Stock of I&M. Unless otherwise noted, each person has sole
voting power and investment power over the number of shares of AEP Common Stock
and stock-based units set forth opposite his or her name. Fractions of shares
and units have been rounded to the nearest whole number.
<Table>
<Caption>
STOCK
NAME SHARES (A) UNITS (B) TOTAL
- ---- ---------- --------- ---------
<S> <C> <C> <C>
Karl G. Boyd................................................ 10,675 607 11,282
E. Linn Draper, Jr. ........................................ 472,034(c) 117,803 589,837
John E. Ehler............................................... 11 -- 11
Henry W. Fayne.............................................. 139,787(d) 12,362 152,149
Thomas M. Hagan............................................. 54,392 140 54,532
David L. Lahrman............................................ 430 -- 430
Marc E. Lewis............................................... 3,290 -- 3,290
Susanne M. Moorman.......................................... 908 -- 908
Robert P. Powers............................................ 65,862 1,293 67,155
John R. Sampson............................................. 10,643 173 10,816
Thomas V. Shockley, III..................................... 211,067(d)(e) -- 211,067
David B. Synowiec........................................... 7,645 182 7,827
Susan Tomasky............................................... 134,449(d) 6,126 140,575
All Directors and Executive Officers........................ 1,196,424(d)(f) 138,686 1,335,110
</Table>
- ---------------
(a) Includes share equivalents held in the AEP Retirement Savings Plan in the
amounts listed below:
<Table>
<Caption>
AEP RETIREMENT SAVINGS
NAME PLAN (SHARE EQUIVALENTS)
---- ------------------------
<S> <C>
Mr. Boyd.......................... 675
Dr. Draper........................ 4,659
Mr. Ehler......................... 11
Mr. Fayne......................... 5,804
Mr. Hagan......................... 2,515
Mr. Lahrman....................... 430
Mr. Lewis......................... 1,207
</Table>
<Table>
<Caption>
AEP RETIREMENT SAVINGS
NAME PLAN (SHARE EQUIVALENTS)
---- ------------------------
<S> <C>
Ms. Moorman....................... 908
Mr. Powers........................ 596
Mr. Sampson....................... 643
Mr. Shockley...................... 7,104
Mr. Synowiec...................... 4,312
Ms. Tomasky....................... 1,116
All Directors and Executive
Officers........................ 29,980
</Table>
With respect to the share equivalents held in the AEP Retirement Savings
Plan, such persons have sole voting power, but the investment/disposition
power is subject to the terms of the Plan. Also, includes the following
numbers of shares attributable to options exercisable within 60 days: Mr.
Boyd, 10,000; Dr. Draper, 466,666;
35
<PAGE>
Mr. Hagan, 41,666; Mr. Lewis, 2,083; Mr. Powers, 65,266; Mr. Sampson,
10,000; Mr. Shockley, 166,666; Mr. Synowiec, 3,333; and Mr. Fayne and Ms.
Tomasky, 133,333.
(b) This column includes amounts deferred in stock units and held under AEP's
officer benefit plans.
(c) Includes 661 shares held by Dr. Draper in joint tenancy with a family
member.
(d) Does not include, for Messrs. Fayne, and Shockley and Ms. Tomasky, 85,231
shares in the American Electric Power System Educational Trust Fund over
which Messrs. Fayne and Shockley and Ms. Tomasky share voting and investment
power as trustees (they disclaim beneficial ownership). The amount of shares
shown for all directors and executive officers as a group includes these
shares.
(e) Includes 496 shares held by family members of Mr. Shockley over which he
disclaimed beneficial ownership.
(f) Represents less than 1% of the total number of shares outstanding.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes the ability of AEP to issue common stock
pursuant to equity compensation plans as of December 31, 2002:
<Table>
<Caption>
NUMBER OF SECURITIES
NUMBER OF REMAINING AVAILABLE
SECURITIES TO BE FOR FUTURE ISSUANCE
ISSUED UPON WEIGHTED AVERAGE UNDER EQUITY
EXERCISE OF EXERCISE PRICE OF COMPENSATION PLANS
OUTSTANDING OPTIONS OUTSTANDING (EXCLUDING SECURITIES
WARRANTS AND OPTIONS, WARRANTS REFLECTED IN
RIGHTS AND RIGHTS COLUMN (a))
PLAN CATEGORY (a) (b) (c)
- ------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C>
Equity compensation plans approved by security
holders(1)................................... 8,779,217 $33.5767 6,901,693(2)
Equity compensation plans not approved by
security holders............................. 0 N/A 0
Total........................................ 8,779,217 $33.5767 6,901,693
</Table>
- ------------------------------------
(1) Consists of shares to be issued upon exercise of outstanding options granted
under the American Electric Power System 2000 Long-Term Incentive Plan, the
CSW 1992 Long-Term Incentive Plan (CSW Plan) and the AEP Deferred
Compensation and Stock Plan for Non-Employee Directors. The CSW Plan was in
effect prior to the consummation of the AEP-CSW merger. All unexercised
options granted under the CSW Plan were converted into 0.6 options to
purchase AEP common shares, vested on the merger date and will expire ten
years after their grant date. No additional options will be issued under the
CSW Plan.
(2) Excludes shares available for further issuance under the AEP Deferred
Compensation and Stock Plan for Non-Employee Directors, which does not have
a limit on the number of shares which may be issued. The amount of shares is
capped, however, by the annual retainer amount paid to the Non-Employee
Directors.
36
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
AEP, AEGCO, APCO, CSPCO, I&M, KPCO, OPCO, PSO, SWEPCO, TCC AND TNC: None.
PART IV
- --------------------------------------------------------------------------------
Item 14. CONTROLS AND PROCEDURES
- --------------------------------------------------------------------------------
AEP maintains disclosure controls and procedures designed to ensure that
the information AEP must disclose in its filings with the Securities and
Exchange Commission is recorded, processed, summarized and reported on a timely
basis. AEP's principal executive officer and principal financial officer have
reviewed and evaluated AEP's disclosure controls and procedures as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as
amended (the Exchange Act) as of a date within 90 days prior to the filing date
of this report (the Evaluation Date). Such officers have concluded that, as of
the Evaluation Date, AEP's disclosure controls and procedures are effective in
accumulating and communicating to management on a timely basis information
required to be disclosed in AEP's periodic filings under the Exchange Act.
Since the Evaluation Date, there have not been any significant changes in
AEP's internal controls, or in other factors that could significantly affect
these controls.
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------------
(a) The following documents are filed as a part of this report:
1. FINANCIAL STATEMENTS:
The following financial statements have been incorporated herein by
reference pursuant to Item 8.
<Table>
<Caption>
PAGE
----
<S> <C> <C>
AEGCo:
Statements of Income for the years ended December 31, 2002, 2001,
and 2000; Statements of Retained Earnings for the years ended
December 31, 2002, 2001, and 2000; Balance Sheets as of December
31, 2002 and 2001; Statements of Cash Flows for the years ended
December 31, 2002, 2001, and 2000; Statements of Capitalization as
of December 31, 2002 and 2001; Combined Notes to Financial
Statements; Independent Auditors' Report.
AEP and Subsidiary Companies:
Consolidated Statements of Operations for the years ended
December 31, 2002, 2001, and 2000; Consolidated Balance Sheets
as of December 31, 2002 and 2001; Consolidated Statements of
Cash Flows for the years ended December 31, 2002, 2001, and
2000; Consolidated Statements of Common Shareholders' Equity and
Comprehensive Income for the years ended December 31, 2002,
2001, and 2000; Schedule of Consolidated Cumulative Preferred
Stocks of Subsidiaries at December 31, 2002 and 2001; Schedule
of Consolidated Long-term Debt of Subsidiaries at December 31,
2002 and 2001; Combined Notes to Consolidated Financial
Statements; Independent Auditors' Report.
APCo, CSPCo, I&M, PSO, SWEPCo and TCC:
Consolidated Statements of Income for the years ended December
31, 2002, 2001, and 2000; Consolidated Statements of
Comprehensive Income for the years ended December 31, 2002,
2001, and 2000; Consolidated Statements of Retained Earnings for
the years ended December 31, 2002, 2001, and 2000; Consolidated
Balance Sheets as of December 31, 2002 and 2001; Consolidated
Statements of Cash Flows for the years ended December 31, 2002,
2001, and 2000; Consolidated Statements of Capitalization as of
December 31, 2002 and 2001; Schedule of Long-term Debt as of
December 31, 2002 and 2001; Combined Notes to Consolidated
Financial Statements; Independent Auditors' Report.
</Table>
37
<PAGE>
KPCo, OPCo and TNC:
Statements of Income (or Statements of Operations) for the years
ended December 31, 2002, 2001, and 2000; Statements of
Comprehensive Income for the years ended December 31, 2002, 2001,
and 2000; Statements of Retained Earnings for the years ended
December 31, 2002, 2001, and 2000; Balance Sheets as of December
31, 2002 and 2001; Statements of Cash Flows for the years ended
December 31, 2002, 2001, and 2000; Statements of Capitalization as
of December 31, 2002 and 2001; Schedule of Long-term Debt as of
December 31, 2002 and 2001; Combined Notes to Financial
Statements; Independent Auditors' Report.
2. FINANCIAL STATEMENT SCHEDULES:
Financial Statement Schedules are listed in the Index to S-1
Financial Statement Schedules (Certain schedules have been
omitted because the required information is contained in the
notes to financial statements or because such schedules are not
required or are not applicable). Independent Auditors' Report
3. EXHIBITS:
Exhibits for AEGCo, AEP, APCo, CSPCo, I&M, KPCo, OPCo, PSO, E-1
SWEPCo, TCC and TNC are listed in the Exhibit Index and are
incorporated herein by reference
(b) Reports on Forms 8-K:
<Table>
<Caption>
COMPANY REPORTING DATE OF REPORT ITEM REPORTED
- ----------------- ----------------- ----------------------------------------------
<S> <C> <C>
APCo, CSPCo, I&M, KPCo, OPCo, PSO,
SWEPCo, TCC and TNC.................. November 18, 2002 Item 5. Other Events
I&M.................................. November 22, 2002 Item 5. Other Events
Item 7. Financial Statements and Exhibits
I&M.................................. November 25, 2002 Item 5. Other Events
Item 7. Financial Statements and Exhibits
PSO.................................. November 26, 2002 Item 5. Other Events
Item 7. Financial Statements and Exhibits
</Table>
Reports on Forms 8-K/A:
<Table>
<Caption>
COMPANY REPORTING DATE OF REPORT ITEM REPORTED
- ----------------- ----------------- ----------------------------------------------
<S> <C> <C>
PSO, SWEPCo, TCC and TNC............. November 26, 2002 Item 7. Financial Statements and Exhibits
</Table>
(c) Exhibits: See Exhibit Index beginning on page E-1.
38
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
AMERICAN ELECTRIC POWER COMPANY, INC.
By:
/s/ SUSAN TOMASKY
-------------------------------------
(SUSAN TOMASKY, VICE PRESIDENT,
SECRETARY AND CHIEF FINANCIAL
OFFICER)
Date: March 20, 2003
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. LINN DRAPER, JR. Chairman of the Board, March 20, 2003
President,
Chief Executive Officer
And Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ SUSAN TOMASKY Vice President, Secretary and March 20, 2003
- ------------------------------------------------ Chief Financial Officer
(SUSAN TOMASKY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ JOSEPH M. BUONAIUTO Controller and March 20, 2003
- ------------------------------------------------ Chief Accounting Officer
(JOSEPH M. BUONAIUTO)
(IV) A MAJORITY OF THE DIRECTORS:
*E. R. BROOKS
*DONALD M. CARLTON
*JOHN P. DESBARRES
*ROBERT W. FRI
*WILLIAM R. HOWELL
*LESTER A. HUDSON, JR.
*LEONARD J. KUJAWA
*RICHARD L. SANDOR
*THOMAS V. SHOCKLEY, III
*DONALD G. SMITH
*LINDA GILLESPIE STUNTZ
*KATHRYN D. SULLIVAN March 20, 2003
*By: /s/ SUSAN TOMASKY
------------------------------------------
(SUSAN TOMASKY, ATTORNEY-IN-FACT)
</Table>
39
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE
UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE
TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
AEP GENERATING COMPANY
AEP TEXAS CENTRAL COMPANY
AEP TEXAS NORTH COMPANY
APPALACHIAN POWER COMPANY
COLUMBUS SOUTHERN POWER COMPANY
KENTUCKY POWER COMPANY
OHIO POWER COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
SOUTHWESTERN ELECTRIC POWER COMPANY
By:
/s/ SUSAN TOMASKY
-------------------------------------
(SUSAN TOMASKY, VICE PRESIDENT)
Date: March 20, 2003
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
(i) PRINCIPAL EXECUTIVE OFFICER:
*E. LINN DRAPER, JR. Chairman of the Board, March 20, 2003
President,
Chief Executive Officer
And Director
(ii) PRINCIPAL FINANCIAL OFFICER:
/s/ SUSAN TOMASKY Vice President, Secretary, March 20, 2003
- ------------------------------------------------ Chief Financial Officer and Director
(SUSAN TOMASKY)
(iii) PRINCIPAL ACCOUNTING OFFICER:
/s/ JOSEPH M. BUONAIUTO Controller and March 20, 2003
- ------------------------------------------------ Chief Accounting Officer
(JOSEPH M. BUONAIUTO)
(iv) A MAJORITY OF THE DIRECTORS:
*HENRY W. FAYNE
*THOMAS M. HAGAN
*A. A. PENA
*ROBERT P. POWERS
*THOMAS V. SHOCKLEY, III March 20, 2003
*By: /s/ SUSAN TOMASKY
------------------------------------------
(SUSAN TOMASKY, ATTORNEY-IN-FACT)
</Table>
40
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. THE SIGNATURE OF THE
UNDERSIGNED COMPANY SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING REFERENCE
TO SUCH COMPANY AND ANY SUBSIDIARIES THEREOF.
INDIANA MICHIGAN POWER COMPANY
By:
/s/ SUSAN TOMASKY
-------------------------------------
(SUSAN TOMASKY, VICE PRESIDENT)
Date: March 20, 2003
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. THE SIGNATURE OF
EACH OF THE UNDERSIGNED SHALL BE DEEMED TO RELATE ONLY TO MATTERS HAVING
REFERENCE TO THE ABOVE-NAMED COMPANY AND ANY SUBSIDIARIES THEREOF.
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
(i) PRINCIPAL EXECUTIVE OFFICER:
*E. LINN DRAPER, JR. Chairman of the Board, March 20, 2003
President,
Chief Executive Officer
and Director
(ii) PRINCIPAL FINANCIAL OFFICER:
/s/ SUSAN TOMASKY Vice President, Secretary, March 20, 2003
- ------------------------------------------------ Chief Financial Officer
(SUSAN TOMASKY) and Director
(iii) PRINCIPAL ACCOUNTING OFFICER:
/s/ JOSEPH M. BUONAIUTO Controller and March 20, 2003
- ------------------------------------------------ Chief Accounting Officer
(JOSEPH M. BUONAIUTO)
(iv) A MAJORITY OF THE DIRECTORS:
*K. G. BOYD
*JOHN E. EHLER
*HENRY W. FAYNE
*THOMAS M. HAGAN
*DAVID L. LAHRMAN
*MARC E. LEWIS
*SUSANNE M. MOORMAN
*ROBERT P. POWERS
*JOHN R. SAMPSON
*THOMAS V. SHOCKLEY, III
*D. B. SYNOWIEC March 20, 2003
*By: /s/ SUSAN TOMASKY
------------------------------------------
(SUSAN TOMASKY, ATTORNEY-IN-FACT)
</Table>
41
<PAGE>
CERTIFICATIONS
I, E. Linn Draper, Jr., certify that:
1. I have reviewed this annual report on Form 10-K of:
American Electric Power Company, Inc.
AEP Generating Company
AEP Texas Central Company
AEP Texas North Company
Appalachian Power Company
Columbus Southern Power Company
Indiana Michigan Power Company
Kentucky Power Company
Ohio Power Company
Public Service Company of Oklahoma
Southwestern Electric Power Company
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Dated: March 20, 2003 By:
/s/ E. LINN DRAPER, JR.
--------------------------------------
E. Linn Draper, Jr.
Chief Executive Officer
42
<PAGE>
I, Susan Tomasky, certify that:
1. I have reviewed this annual report on Form 10-K of:
American Electric Power Company, Inc.
AEP Generating Company
AEP Texas Central Company
AEP Texas North Company
Appalachian Power Company
Columbus Southern Power Company
Indiana Michigan Power Company
Kentucky Power Company
Ohio Power Company
Public Service Company of Oklahoma
Southwestern Electric Power Company
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
annual report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Dated: March 20, 2003 By:
/s/ SUSAN TOMASKY
--------------------------------------
Susan Tomasky
Chief Financial Officer
43
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
<Table>
<Caption>
PAGE
----
<S> <C>
INDEPENDENT AUDITORS' REPORT................................ S-2
The following financial statement schedules are included in
this report on the pages indicated
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY
COMPANIES
Schedule II -- Valuation and Qualifying Accounts and
Reserves.............................................. S-3
AEP TEXAS CENTRAL COMPANY AND SUBSIDIARIES
Schedule II -- Valuation and Qualifying Accounts and
Reserves.............................................. S-3
AEP TEXAS NORTH COMPANY
Schedule II -- Valuation and Qualifying Accounts and
Reserves.............................................. S-3
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
Schedule II -- Valuation and Qualifying Accounts and
Reserves.............................................. S-4
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
Schedule II -- Valuation and Qualifying Accounts and
Reserves.............................................. S-4
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
Schedule II -- Valuation and Qualifying Accounts and
Reserves.............................................. S-4
KENTUCKY POWER COMPANY
Schedule II -- Valuation and Qualifying Accounts and
Reserves.............................................. S-5
OHIO POWER COMPANY
Schedule II -- Valuation and Qualifying Accounts and
Reserves.............................................. S-5
PUBLIC SERVICE COMPANY OF OKLAHOMA AND SUBSIDIARIES
Schedule II -- Valuation and Qualifying Accounts and
Reserves.............................................. S-5
SOUTHWESTERN ELECTRIC POWER COMPANY AND SUBSIDIARIES
Schedule II -- Valuation and Qualifying Accounts and
Reserves.............................................. S-6
</Table>
S-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARIES:
We have audited the consolidated financial statements of American Electric
Power Company, Inc. and subsidiaries and the financial statements of certain of
its subsidiaries, listed in Item 15 herein, as of December 31, 2002 and 2001,
and for each of the three years in the period ended December 31, 2002, and have
issued our reports thereon dated February 21, 2003; such financial statements
and reports are included in the 2002 Annual Reports and are incorporated herein
by reference. Our audits also included the financial statement schedules of
American Electric Power Company, Inc. and subsidiaries and of certain of its
subsidiaries, listed in Item 15. These financial statement schedules are the
responsibility of the respective company's management. Our responsibility is to
express an opinion based on our audits. In our opinion, such financial statement
schedules, when considered in relation to the corresponding basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
Deloitte & Touche LLP
Columbus, Ohio
February 21, 2003
S-2
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(a) DEDUCTIONS(b) PERIOD
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS:
Accumulated Provision for
Uncollectible Accounts:
Year Ended December 31, 2002........... $69,416 $ 97,772 $11,766 $59,723 $119,231
======= ======== ======= ======= ========
Year Ended December 31, 2001(c)........ $31,905 $109,635 $20,763 $92,887 $ 69,416
======= ======== ======= ======= ========
Year Ended December 31, 2000(c)........ $27,091 $ 51,457 $11,729 $58,372 $ 31,905
======= ======== ======= ======= ========
</Table>
- ---------------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) 2001 and 2000 amounts have been adjusted to reflect the treatment of
SEEBOARD and CitiPower as discontinued operations in AEP's Consolidated
Statements of Operations.
AEP TEXAS CENTRAL COMPANY AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(a) DEDUCTIONS(b) PERIOD
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS:
Accumulated Provision for
Uncollectible Accounts:
Year Ended December 31, 2002........... $ 186 $ 162 $ 1 $ 3 $ 346
====== ====== ====== ====== ======
Year Ended December 31, 2001........... $1,675 $ 186 $ -- $1,675 $ 186
====== ====== ====== ====== ======
Year Ended December 31, 2000........... $ -- $1,675 $ -- $ -- $1,675
====== ====== ====== ====== ======
</Table>
- ---------------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
AEP TEXAS NORTH COMPANY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(a) DEDUCTIONS(b) PERIOD
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS:
Accumulated Provision for
Uncollectible Accounts:
Year Ended December 31, 2002........... $ 196 $4,846 $ 17 $ 18 $5,041
====== ====== ====== ====== ======
Year Ended December 31, 2001........... $ 288 $ 13 $ 35 $ 140 $ 196
====== ====== ====== ====== ======
Year Ended December 31, 2000........... $ 186 $1,499 $ 46 $1,443 $ 288
====== ====== ====== ====== ======
</Table>
- ---------------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
S-3
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(a) DEDUCTIONS(b) PERIOD
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS:
Accumulated Provision for
Uncollectible Accounts:
Year Ended December 31, 2002........... $1,877 $3,937 $12,367 $4,742 $13,439
====== ====== ======= ====== =======
Year Ended December 31, 2001........... $2,588 $2,644 $ 1,017 $4,372 $ 1,877
====== ====== ======= ====== =======
Year Ended December 31, 2000........... $2,609 $6,592 $ 1,526 $8,139 $ 2,588
====== ====== ======= ====== =======
</Table>
- ---------------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(a) DEDUCTIONS(b) PERIOD
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS:
Accumulated Provision for
Uncollectible Accounts:
Year Ended December 31, 2002........... $ 745 $ (100) $ -- $ 11 $ 634
====== ====== ====== ====== ======
Year Ended December 31, 2001........... $ 659 $ 331 $ -- $ 245 $ 745
====== ====== ====== ====== ======
Year Ended December 31, 2000........... $3,045 $2,082 $1,405 $5,873 $ 659
====== ====== ====== ====== ======
</Table>
- ---------------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(a) DEDUCTIONS(b) PERIOD
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS:
Accumulated Provision for
Uncollectible Accounts:
Year Ended December 31, 2002........... $ 741 $ (161) $ -- $ 2 $ 578
====== ====== ====== ====== ======
Year Ended December 31, 2001........... $ 759 $ 65 $ 3 $ 86 $ 741
====== ====== ====== ====== ======
Year Ended December 31, 2000........... $1,848 $ (235) $ 907 $1,761 $ 759
====== ====== ====== ====== ======
</Table>
- ---------------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
S-4
<PAGE>
KENTUCKY POWER COMPANY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(a) DEDUCTIONS(b) PERIOD
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS:
Accumulated Provision for
Uncollectible Accounts:
Year Ended December 31, 2002........... $ 264 $ (68) $ -- $ 4 $ 192
====== ====== ====== ====== ======
Year Ended December 31, 2001........... $ 282 $ -- $ (24) $ (6) $ 264
====== ====== ====== ====== ======
Year Ended December 31, 2000........... $ 637 $ 187 $ 9 $ 551 $ 282
====== ====== ====== ====== ======
</Table>
- ---------------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
OHIO POWER COMPANY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(a) DEDUCTIONS(b) PERIOD
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS:
Accumulated Provision for
Uncollectible Accounts:
Year Ended December 31, 2002........... $1,379 $ (457) $ -- $ 13 $ 909
====== ====== ====== ====== ======
Year Ended December 31, 2001........... $1,054 $ 554 $ -- $ 229 $1,379
====== ====== ====== ====== ======
Year Ended December 31, 2000........... $2,223 $ 472 $ 778 $2,419 $1,054
====== ====== ====== ====== ======
</Table>
- ---------------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
PUBLIC SERVICE COMPANY OF OKLAHOMA AND SUBSIDIARY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(a) DEDUCTIONS(b) PERIOD
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS:
Accumulated Provision for
Uncollectible Accounts:
Year Ended December 31, 2002........... $ 44 $ 7 $ 33 $ -- $ 84
====== ====== ====== ====== ======
Year Ended December 31, 2001........... $ 467 $ 44 $ -- $ 467 $ 44
====== ====== ====== ====== ======
Year Ended December 31, 2000........... $ -- $ 467 $ -- $ -- $ 467
====== ====== ====== ====== ======
</Table>
- ---------------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
S-5
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS(A) DEDUCTIONS(B) PERIOD
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
DEDUCTED FROM ASSETS:
Accumulated Provision for
Uncollectible Accounts:
Year Ended December 31, 2002........... $ 89 $2,036 $ 4 $ 1 $2,128
====== ====== ======= ====== ======
Year Ended December 31, 2001........... $ 911 $ 89 $ -- $ 911 $ 89
====== ====== ======= ====== ======
Year Ended December 31, 2000........... $4,428 $ 911 $(4,428) $ -- $ 911
====== ====== ======= ====== ======
</Table>
- ---------------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
S-6
<PAGE>
EXHIBIT INDEX
Certain of the following exhibits, designated with an asterisk (*), are
filed herewith. The exhibits not so designated have heretofore been filed with
the Commission and, pursuant to 17 C.F.R. 229.10(d) and 240.12b-32, are
incorporated herein by reference to the documents indicated in brackets
following the descriptions of such exhibits. Exhibits, designated with a dagger
(+), are management contracts or compensatory plans or arrangements required to
be filed as an Exhibit to this Form pursuant to Item 14(c) of this report.
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
AEGCO
3(a) -- Copy of Articles of Incorporation of AEGCo [Registration
Statement on Form 10 for the Common Shares of AEGCo, File
No. 0-18135, Exhibit 3(a)].
3(b) -- Copy of the Code of Regulations of AEGCo (amended as of June
15, 2000) [Annual Report on Form 10-K of AEGCo for the
fiscal year ended December 31, 2000, File No. 0-18135,
Exhibit 3(b)].
10(a) -- Copy of Capital Funds Agreement dated as of December 30,
1988 between AEGCo and AEP [Registration Statement No.
33-32752, Exhibit 28(a)].
10(b)(1) -- Copy of Unit Power Agreement dated as of March 31, 1982
between AEGCo and I&M, as amended [Registration Statement
No. 33-32752, Exhibits 28(b)(1)(A) and 28(b)(1)(B)].
10(b)(2) -- Copy of Unit Power Agreement, dated as of August 1, 1984,
among AEGCo, I&M and KPCo [Registration Statement No.
33-32752, Exhibit 28(b)(2)].
10(c) -- Copy of Lease Agreements, dated as of December 1, 1989,
between AEGCo and Wilmington Trust Company, as amended
[Registration Statement No. 33-32752, Exhibits 28(c)(1)(C),
28(c)(2)(C), 28(c)(3)(C), 28(c)(4)(C), 28(c)(5)(C) and
28(c)(6)(C); Annual Report on Form 10-K of AEGCo for the
fiscal year ended December 31, 1993, File No. 0-18135,
Exhibits 10(c)(1)(B), 10(c)(2)(B), 10(c)(3)(B), 10(c)(4)(B),
10(c)(5)(B) and 10(c)(6)(B)].
*13 -- Copy of those portions of the AEGCo 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Financial Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
AEP++
3(a) -- Copy of Restated Certificate of Incorporation of AEP, dated
October 29, 1997 [Quarterly Report on Form 10-Q of AEP for
the quarter ended September 30, 1997, File No. 1-3525,
Exhibit 3(a)].
3(b) -- Copy of Certificate of Amendment of the Restated Certificate
of Incorporation of AEP, dated January 13, 1999 [Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 1998, File No. 1-3525, Exhibit 3(b)].
3(c) -- Composite copy of the Restated Certificate of Incorporation
of AEP, as amended [Annual Report on Form 10-K of AEP for
the fiscal year ended December 31, 1998, File No. 1-3525,
Exhibit 3(c)].
3(d) -- Copy of By-Laws of AEP, as amended through January 28, 1998
[Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1997, File No. 1-3525, Exhibit 3(b)].
4(a) -- Indenture (for unsecured debt securities), dated as of May
1, 2001, between AEP and The Bank of New York, as Trustee
[Registration Statement No. 333-86050, Exhibits 4(a), 4(b)
and 4(c)].
*4(b) -- Third Supplemental Indenture, dated as of June 11, 2002,
between AEP and The Bank of New York, as Trustee, for 5.75%
Senior Notes, Series C, due August 16, 2007.
</Table>
E-1
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
*4(c) -- Forward Purchase Contract Agreement, dated as of June 11,
2002, between AEP and The Bank of New York, as Forward
Purchase Contract Agent.
10(a) -- Interconnection Agreement, dated July 6, 1951, among APCo,
CSPCo, KPCo, OPCo and I&M and with the Service Corporation,
as amended [Registration Statement No. 2-52910, Exhibit
5(a); Registration Statement No. 2-61009, Exhibit 5(b); and
Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
*10(b) -- Restated and Amended Operating Agreement, dated as of
January 1, 1998, among PSO, TCC, TNC, SWEPCo and AEPSC.
10(c) -- Transmission Agreement, dated April 1, 1984, among APCo,
CSPCo, I&M, KPCo, OPCo and with the Service Corporation as
agent, as amended [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1985, File No. 1-3525,
Exhibit 10(b); and Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1988, File No. 1-3525,
Exhibit 10(b)(2)].
*10(d) -- Transmission Coordination Agreement, dated October 29, 1998,
among PSO, TCC, TNC, SWEPCo and AEPSC.
10(e) -- Lease Agreements, dated as of December 1, 1989, between
AEGCo or I&M and Wilmington Trust Company, as amended
[Registration Statement No. 33-32752, Exhibits 28(c)(1)(C),
28(c)(2)(C), 28(c)(3)(C), 28(c)(4)(C), 28(c)(5)(C) and
28(c)(6)(C); Registration Statement No. 33-32753, Exhibits
28(a)(1)(C), 28(a)(2)(C), 28(a)(3)(C), 28(a)(4)(C),
28(a)(5)(C) and 28(a)(6)(C); and Annual Report on Form 10-K
of AEGCo for the fiscal year ended December 31, 1993, File
No. 0-18135, Exhibits 10(c)(1)(B), 10(c)(2)(B), 10(c)(3)(B),
10(c)(4)(B), 10(c)(5)(B) and 10(c)(6)(B); Annual Report on
Form 10-K of I&M for the fiscal year ended December 31,
1993, File No. 1-3570, Exhibits 10(e)(1)(B), 10(e)(2)(B),
10(e)(3)(B), 10(e)(4)(B), 10(e)(5)(B) and 10(e)(6)(B)].
10(f) -- Lease Agreement dated January 20, 1995 between OPCo and JMG
Funding, Limited Partnership, and amendment thereto
(confidential treatment requested) [Annual Report on Form
10-K of OPCo for the fiscal year ended December 31, 1994,
File No. 1-6543, Exhibit 10(l)(2)].
10(g) -- Modification No. 1 to the AEP System Interim Allowance
Agreement, dated July 28, 1994, among APCo, CSPCo, I&M,
KPCo, OPCo and the Service Corporation [Annual Report on
Form 10-K of AEP for the fiscal year ended December 31,
1996, File No. 1-3525, Exhibit 10(l)].
10(h)(1) -- Agreement and Plan of Merger, dated as of December 21, 1997,
By and Among American Electric Power Company, Inc., Augusta
Acquisition Corporation and Central and South West
Corporation [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1997, File No. 1-3525,
Exhibit 10(f)].
10(h)(2) -- Amendment No. 1, dated as of December 31, 1999, to the
Agreement and Plan of Merger [Current Report on Form 8-K of
AEP dated December 15, 1999, File No. 1-3525, Exhibit 10].
+10(i)(1) -- AEP Deferred Compensation Agreement for certain executive
officers [Annual Report on Form 10-K of AEP for the fiscal
year ended December 31, 1985, File No. 1-3525, Exhibit
10(e)].
+10(i)(2) -- Amendment to AEP Deferred Compensation Agreement for certain
executive officers [Annual Report on Form 10-K of AEP for
the fiscal year ended December 31, 1986, File No. 1-3525,
Exhibit 10(d)(2)].
+10(j) -- AEP Accident Coverage Insurance Plan for directors [Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 1985, File No. 1-3525, Exhibit 10(g)].
+10(k)(1) -- AEP Deferred Compensation and Stock Plan for Non-Employee
Directors, as amended June 1, 2000 [Annual Report on Form
10-K of AEP for the fiscal year ended December 31, 2000,
File No. 1-3525, Exhibit 10(i)(1)].
</Table>
E-2
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
+10(k)(2) -- AEP Stock Unit Accumulation Plan for Non-Employee Directors,
as amended January 1, 2002[Annual Report on Form 10-K of AEP
for the fiscal year ended December 31, 2001, File No.
1-3525, Exhibit 10(i)(2)].
+10(l)(1)(A) -- AEP System Excess Benefit Plan, Amended and Restated as of
January 1, 2001 [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 2000, File No. 1-3525,
Exhibit 10(j)(1)(A)].
+10(l)(1)(B) -- Guaranty by AEP of the Service Corporation Excess Benefits
Plan [Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1990, File No. 1-3525, Exhibit
10(h)(1)(B)].
*+10(l)(1)(C) -- First Amendment to AEP System Excess Benefit Plan, dated as
of March 5, 2003.
+10(l)(2) -- AEP System Supplemental Retirement Savings Plan, Amended and
Restated as of June 1, 2001 (Non-Qualified) [Registration
Statement No. 333-66048, Exhibit 4].
+10(l)(3) -- Service Corporation Umbrella Trust for Executives [Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 1993, File No. 1-3525, Exhibit 10(g)(3)].
+10(m)(1) -- Employment Agreement between E. Linn Draper, Jr. and AEP and
the Service Corporation [Annual Report on Form 10-K of AEGCo
for the fiscal year ended December 31, 1991, File No.
0-18135, Exhibit 10(g)(3)].
+10(m)(2) -- Memorandum of agreement between Susan Tomasky and the
Service Corporation dated January 3, 2001 [Annual Report on
Form 10-K of AEP for the fiscal year ended December 31,
2000, File No. 1-3525, Exhibit 10(s)].
*+10(m)(3)(A) -- Letter Agreement dated June 23, 2000 between AEPSC and Holly
K. Koeppel.
*+10(m)(3)(B) -- Letter Agreement dated April 19, 2001 between AEPR and Holly
K. Koeppel.
*+10(m)(4) -- Employment Agreement dated July 29, 1998 between AEPSC and
Robert P. Powers.
+10(n) -- AEP System Senior Officer Annual Incentive Compensation Plan
[Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1996, File No. 1-3525, Exhibit 10(i)(1)].
+10(o)(1) -- AEP System Survivor Benefit Plan, effective January 27, 1998
[Quarterly Report on Form 10-Q of AEP for the quarter ended
September 30, 1998, File No. 1-3525, Exhibit 10].
*+10(o)(2) -- First Amendment to AEP System Survivor Benefit Plan, as
amended and restated effective January 31, 2000.
+10(p) -- AEP Senior Executive Severance Plan for Merger with Central
and South West Corporation, effective March 1, 1999 [Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 1998, File No. 1-3525, Exhibit 10(o)].
*+10(q)(1) -- AEP System Incentive Compensation Deferral Plan dated
January 1, 2001.
*+10(q)(2) -- First Amendment to AEP System Incentive Compensation
Deferral Plan dated December 6, 2002.
*+10(r) -- AEP System Nuclear Performance Long Term Incentive
Compensation Plan dated August 1, 1998.
*+10(s) -- Nuclear Key Contributor Retention Plan dated May 1, 2000.
+10(t) -- AEP Change In Control Agreement [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 2001, File No.
1-3525, Exhibit 10(o)].
+10(u) -- AEP System 2000 Long-Term Incentive Plan [Proxy Statement of
AEP, March 10, 2000].
+10(v)(1) -- Central and South West System Special Executive Retirement
Plan as amended and restated effective July 1, 1997 [Annual
Report on Form 10-K of CSW for the fiscal year ended
December 31, 1998, File No. 1-1443, Exhibit 18].
+10(v)(2) -- Certified CSW Board Resolution of April 18, 1991 [Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 2001, File No. 1-3525, Exhibit 10(r)(2)].
+10(v)(3) -- CSW 1992 Long-Term Incentive Plan [Proxy Statement of CSW,
March 13, 1992].
</Table>
E-3
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
+10(v)(4) -- Central and South West Corporation Executive Deferred
Savings Plan as amended and restated effective as of January
1, 1997 [Annual Report on Form 10-K of CSW for the fiscal
year ended December 31, 1998, File No. 1-1443, Exhibit 24].
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the AEP 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
*21 -- List of subsidiaries of AEP.
*23 -- Consent of Deloitte & Touche LLP.
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Financial Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
APCO++
3(a) -- Copy of Restated Articles of Incorporation of APCo, and
amendments thereto to November 4, 1993 [Registration
Statement No. 33-50163, Exhibit 4(a); Registration Statement
No. 33-53805, Exhibits 4(b) and 4(c)].
3(b) -- Copy of Articles of Amendment to the Restated Articles of
Incorporation of APCo, dated June 6, 1994 [Annual Report on
Form 10-K of APCo for the fiscal year ended December 31,
1994, File No. 1-3457, Exhibit 3(b)].
3(c) -- Copy of Articles of Amendment to the Restated Articles of
Incorporation of APCo, dated March 6, 1997 [Annual Report on
Form 10-K of APCo for the fiscal year ended December 31,
1996, File No. 1-3457, Exhibit 3(c)].
3(d) -- Composite copy of the Restated Articles of Incorporation of
APCo (amended as of March 7, 1997) [Annual Report on Form
10-K of APCo for the fiscal year ended December 31, 1996,
File No. 1-3457, Exhibit 3(d)].
3(e) -- Copy of By-Laws of APCo (amended as of October 24, 2001)
[Annual Report on Form 10-K of APCo for the fiscal year
ended December 31, 2001, File No. 1-3457, Exhibit 3(e)].
4(a) -- Copy of Mortgage and Deed of Trust, dated as of December 1,
1940, between APCo and Bankers Trust Company and R. Gregory
Page, as Trustees, as amended and supplemented [Registration
Statement No. 2-7289, Exhibit 7(b); Registration Statement
No. 2-19884, Exhibit 2(1); Registration Statement No.
2-24453, Exhibit 2(n); Registration Statement No. 2-60015,
Exhibits 2(b)(2), 2(b)(3), 2(b)(4), 2(b)(5), 2(b)(6),
2(b)(7), 2(b)(8), 2(b)(9), 2(b)(10), 2(b)(12), 2(b)(14),
2(b)(15), 2(b)(16), 2(b)(17), 2(b)(18), 2(b)(19), 2(b)(20),
2(b)(21), 2(b)(22), 2(b)(23), 2(b)(24), 2(b)(25), 2(b)(26),
2(b)(27) and 2(b)(28); Registration Statement No. 2-64102,
Exhibit 2(b)(29); Registration Statement No. 2-66457,
Exhibits (2)(b)(30) and 2(b)(31); Registration Statement No.
2-69217, Exhibit 2(b)(32); Registration Statement No.
2-86237, Exhibit 4(b); Registration Statement No. 33-11723,
Exhibit 4(b); Registration Statement No. 33-17003, Exhibit
4(a)(ii), Registration Statement No. 33-30964, Exhibit 4(b);
Registration Statement No. 33-40720, Exhibit 4(b);
Registration Statement No. 33-45219, Exhibit 4(b);
Registration Statement No. 33-46128, Exhibits 4(b) and 4(c);
Registration Statement No. 33-53410, Exhibit 4(b);
Registration Statement No. 33-59834, Exhibit 4(b);
Registration Statement No. 33-50229, Exhibits 4(b) and 4(c);
Registration Statement No. 33-58431, Exhibits 4(b), 4(c),
4(d) and 4(e); Registration Statement No. 333-01049,
Exhibits 4(b) and 4(c); Registration Statement No.
333-20305, Exhibits 4(b) and 4(c); Annual Report on Form
10-K of APCo for the fiscal year ended December 31, 1996,
File No. 1-3457, Exhibit 4(b); Annual Report on Form 10-K of
APCo for the fiscal year ended December 31, 1998, File No.
1-3457, Exhibit 4(b)].
</Table>
E-4
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
4(b) -- Indenture (for unsecured debt securities), dated as of
January 1, 1998, between APCo and The Bank of New York, As
Trustee [Registration Statement No. 333-45927, Exhibit 4(a);
Registration Statement No. 333-49071, Exhibit 4(b);
Registration Statement No. 333-84061, Exhibits 4(b) and
4(c); Annual Report on Form 10-K of APCo for the fiscal year
ended December 31, 1999, File No. 1-3457, Exhibit 4(c);
Registration Statement No. 333-81402, Exhibits 4(b), 4(c)
and 4(d); Registration Statement No. 333-100451, Exhibit
4(b)].
*4(c) -- Copy of Company Order and Officer's Certificate, dated
November 6, 2002, establishing terms of 4.3148% Senior
Notes, Series F, due 2007.
10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between
OVEC and United States of America, acting by and through the
United States Atomic Energy Commission, and, subsequent to
January 18, 1975, the Administrator of the Energy Research
and Development Administration, as amended [Registration
Statement No. 2-60015, Exhibit 5(a); Registration Statement
No. 2-63234, Exhibit 5(a)(1)(B); Registration Statement No
2-66301, Exhibit 5(a)(1)(C); Registration Statement No.
2-67728, Exhibit 5(a)(1)(D); Annual Report on Form 10-K of
APCo for the fiscal year ended December 31, 1989, File No.
1-3457, Exhibit 10(a)(1)(F); and Annual Report on Form 10-K
of APCo for the fiscal year ended December 31, 1992, File
No. 1-3457, Exhibit 10(a)(1)(B)].
10(a)(2) -- Copy of Inter-Company Power Agreement, dated as of July 10,
1953, among OVEC and the Sponsoring Companies, as amended
[Registration Statement No. 2-60015, Exhibit 5(c);
Registration Statement No. 2-67728, Exhibit 5(a)(3)(B); and
Annual Report on Form 10-K of APCo for the fiscal year ended
December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC
and Indiana-Kentucky Electric Corporation, as amended
[Registration Statement No. 2-60015, Exhibit 5(e)].
10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, among
APCo, CSPCo, KPCo, OPCo and I&M and with the Service
Corporation, as amended [Registration Statement No. 2-52910,
Exhibit 5(a); Registration Statement No. 2-61009, Exhibit
5(b); Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among
APCo, CSPCo, I&M, KPCo, OPCo and with the Service
Corporation as agent, as amended [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 1985, File No.
1-3525, Exhibit 10(b); Annual Report on Form 10-K of AEP for
the fiscal year ended December 31, 1988, File No. 1-3525,
Exhibit 10(b)(2)].
10(d) -- Copy of Modification No. 1 to the AEP System Interim
Allowance Agreement, dated July 28, 1994, among APCo, CSPCo,
I&M, KPCo, OPCo and the Service Corporation [Annual Report
on Form 10-K of AEP for the fiscal year ended December 31,
1996, File No. 1-3525, Exhibit 10(l)].
10(e)(1) -- Agreement and Plan of Merger, dated as of December 21, 1997,
By and Among American Electric Power Company, Inc., Augusta
Acquisition Corporation and Central and South West
Corporation [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1997, File No. 1-3525,
Exhibit 10(f)].
10(e)(2) -- Amendment No. 1, dated as of December 31, 1999, to the
Agreement and Plan of Merger [Current Report on Form 8-K of
APCo dated December 15, 1999, File No. 1-3457, Exhibit 10].
+10(f)(1) -- AEP Deferred Compensation Agreement for certain executive
officers [Annual Report on Form 10-K of AEP for the fiscal
year ended December 31, 1985, File No. 1-3525, Exhibit
10(e)].
+10(f)(2) -- Amendment to AEP Deferred Compensation Agreement for certain
executive officers [Annual Report on Form 10-K of AEP for
the fiscal year ended December 31, 1986, File No. 1-3525,
Exhibit 10(d)(2)].
</Table>
E-5
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
+10(g) -- AEP System Senior Officer Annual Incentive Compensation Plan
[Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1996, File No. 1-3525, Exhibit 10(i)(1)].
+10(h)(1)(A) -- AEP System Excess Benefit Plan, Amended and Restated as of
January 1, 2001 [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 2000, File No. 1-3525,
Exhibit 10(j)(1)(A)].
*+10(h)(1)(B) -- First Amendment to AEP System Excess Benefit Plan, dated as
of March 5, 2003.
+10(h)(2) -- AEP System Supplemental Retirement Savings Plan, Amended and
Restated as of January 1, 2001 (Non-Qualified) [Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 2000, File No. 1-3525, Exhibit 10(j)(2)].
+10(h)(3) -- Umbrella Trust for Executives [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 1993, File No.
1-3525, Exhibit 10(g)(3)].
+10(i)(1) -- Employment Agreement between E. Linn Draper, Jr. and AEP and
the Service Corporation [Annual Report on Form 10-K of AEGCo
for the fiscal year ended December 31, 1991, File No.
0-18135, Exhibit 10(g)(3)].
+10(i)(2) -- Memorandum of agreement between Susan Tomasky and the
Service Corporation dated January 3, 2001 [Annual Report on
Form 10-K of AEP for the fiscal year ended December 31,
2000, File No. 1-3525, Exhibit 10(s)].
*+10(i)(3) -- Employment Agreement dated July 29, 1998 between AEPSC and
Robert P. Powers.
+10(j)(1) -- AEP System Survivor Benefit Plan, effective January 27, 1998
[Quarterly Report on Form 10-Q of AEP for the quarter ended
September 30, 1998, File No. 1-3525, Exhibit 10].
*+10(j)(2) -- First Amendment to AEP System Survivor Benefit Plan, as
amended and restated effective January 31, 2000.
+10(k) -- AEP Senior Executive Severance Plan for Merger with Central
and South West Corporation, effective March 1, 1999[Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 1998, File No. 1-3525, Exhibit 10(o)].
+10(l) -- AEP Change In Control Agreement [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 2001, File No.
1-3525, Exhibit 10(o)].
+10(m) -- AEP System 2000 Long-Term Incentive Plan [Proxy Statement of
AEP, March 10, 2000].
+10(n)(1) -- Central and South West System Special Executive Retirement
Plan as amended and restated effective July 1, 1997 [Annual
Report on Form 10-K of CSW for the fiscal year ended
December 31, 1998, File No. 1-1443, Exhibit 18].
+10(n)(2) -- Certified CSW Board Resolution of April 18, 1991 [Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 2001, File No. 1-3525, Exhibit 10(r)(2)].
+10(n)(3) -- CSW 1992 Long-Term Incentive Plan [Proxy Statement of CSW,
March 13, 1992].
*+10(o)(1) -- AEP System Incentive Compensation Deferral Plan dated
January 1, 2001.
*+10(o)(2) -- First Amendment to AEP System Incentive Compensation
Deferral Plan dated December 6, 2002.
*+10(p) -- AEP System Nuclear Performance Long Term Incentive
Compensation Plan dated August 1, 1998.
*+10(q) -- Nuclear Key Contributor Retention Plan dated May 1, 2000.
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the APCo 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
21 -- List of subsidiaries of APCo [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 2002, File No.
1-3525, Exhibit 21].
*23 -- Consent of Deloitte & Touche LLP
</Table>
E-6
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Financial Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
CSPCO++
3(a) -- Copy of Amended Articles of Incorporation of CSPCo, as
amended to March 6, 1992 [Registration Statement No.
33-53377, Exhibit 4(a)].
3(b) -- Copy of Certificate of Amendment to Amended Articles of
Incorporation of CSPCo, dated May 19, 1994 [Annual Report on
Form 10-K of CSPCo for the fiscal year ended December 31,
1994, File No. 1-2680, Exhibit 3(b)].
3(c) -- Composite copy of Amended Articles of Incorporation of
CSPCo, as amended [Annual Report on Form 10-K of CSPCo for
the fiscal year ended December 31, 1994, File No. 1-2680,
Exhibit 3(c)].
3(d) -- Copy of Code of Regulations and By-Laws of CSPCo [Annual
Report on Form 10-K of CSPCo for the fiscal year ended
December 31, 1987, File No. 1-2680, Exhibit 3(d)].
4(a) -- Copy of Indenture of Mortgage and Deed of Trust, dated
September 1, 1940, between CSPCo and City Bank Farmers Trust
Company (now Citibank, N.A.), as trustee, as supplemented
and amended [Registration Statement No. 2-59411, Exhibits
2(B) and 2(C); Registration Statement No. 2-80535, Exhibit
4(b); Registration Statement No. 2-87091, Exhibit 4(b);
Registration Statement No. 2-93208, Exhibit 4(b);
Registration Statement No. 2-97652, Exhibit 4(b);
Registration Statement No. 33-7081, Exhibit 4(b);
Registration Statement No. 33-12389, Exhibit 4(b);
Registration Statement No. 33-19227, Exhibits 4(b), 4(e),
4(f), 4(g) and 4(h); Registration Statement No. 33-35651,
Exhibit 4(b); Registration Statement No. 33-46859, Exhibits
4(b) and 4(c); Registration Statement No. 33-50316, Exhibits
4(b) and 4(c); Registration Statement No. 33-60336, Exhibits
4(b), 4(c) and 4(d); Registration Statement No. 33-50447,
Exhibits 4(b) and 4(c); Annual Report on Form 10-K of CSPCo
for the fiscal year ended December 31, 1993, File No.
1-2680, Exhibit 4(b)].
4(b) -- Copy of Indenture (for unsecured debt securities), dated as
of September 1, 1997, between CSPCo and Bankers Trust
Company, as Trustee [Registration Statement No. 333-54025,
Exhibits 4(a), 4(b), 4(c) and 4(d); Annual Report on Form
10-K of CSPCo for the fiscal year ended December 31, 1998,
File No. 1-2680, Exhibits 4(c) and 4(d)].
10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between
OVEC and United States of America, acting by and through the
United States Atomic Energy Commission, and, subsequent to
January 18, 1975, the Administrator of the Energy Research
and Development Administration, as amended [Registration
Statement No. 2-60015, Exhibit 5(a); Registration Statement
No. 2-63234, Exhibit 5(a)(1)(B); Registration Statement No.
2-66301, Exhibit 5(a)(1)(C); Registration Statement No.
2-67728, Exhibit 5(a)(1)(B); Annual Report on Form 10-K of
APCo for the fiscal year ended December 31, 1989, File No.
1-3457, Exhibit 10(a)(1)(F); and Annual Report on Form 10-K
of APCo for the fiscal year ended December 31, 1992, File
No. 1-3457, Exhibit 10(a)(1)(B)].
10(a)(2) -- Copy of Inter-Company Power Agreement, dated July 10, 1953,
among OVEC and the Sponsoring Companies, as amended
[Registration Statement No. 2-60015, Exhibit 5(c);
Registration Statement No. 2-67728, Exhibit 5(a)(3)(B); and
Annual Report on Form 10-K of APCo for the fiscal year ended
December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC
and Indiana-Kentucky Electric Corporation, as amended
[Registration Statement No. 2-60015, Exhibit 5(e)].
</Table>
E-7
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, among
APCo, CSPCo, KPCo, OPCo and I&M and the Service Corporation,
as amended [Registration Statement No. 2-52910, Exhibit
5(a); Registration Statement No. 2-61009, Exhibit 5(b); and
Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1990, File No. 1-3525, Exhibit 10(a)(3)].
10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among
APCo, CSPCo, I&M, KPCo, OPCo, and with the Service
Corporation as agent, as amended [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 1985, File No.
1-3525, Exhibit 10(b); and Annual Report on Form 10-K of AEP
for the fiscal year ended December 31, 1988, File No.
1-3525, Exhibit 10(b)(2)].
10(d) -- Copy of Modification No. 1 to the AEP System Interim
Allowance Agreement, dated July 28, 1994, among APCo, CSPCo,
I&M, KPCo, OPCo and the Service Corporation [Annual Report
on Form 10-K of AEP for the fiscal year ended December 31,
1996, File No. 1-3525, Exhibit 10(l)].
10(e)(1) -- Agreement and Plan of Merger, dated as of December 21, 1997,
By and Among American Electric Power Company, Inc., Augusta
Acquisition Corporation and Central and South West
Corporation [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1997, File No. 1-3525,
Exhibit 10(f)].
10(e)(2) -- Amendment No. 1, dated as of December 31, 1999, to the
Agreement and Plan of Merger [Current Report on Form 8-K of
CSPCo dated December 15, 1999, File No. 1-2680, Exhibit 10].
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the CSPCo 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
21 -- List of subsidiaries of CSPCo [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 2002, File No.
1-3525, Exhibit 21]
*23 -- Consent of Deloitte & Touche LLP.
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Financial Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
I&M++
3(a) -- Copy of the Amended Articles of Acceptance of I&M and
amendments thereto [Annual Report on Form 10-K of I&M for
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 3(a)].
3(b) -- Copy of Articles of Amendment to the Amended Articles of
Acceptance of I&M, dated March 6, 1997 [Annual Report on
Form 10-K of I&M for fiscal year ended December 31, 1996,
File No. 1-3570, Exhibit 3(b)].
3(c) -- Composite Copy of the Amended Articles of Acceptance of I&M
(amended as of March 7, 1997) [Annual Report on Form 10-K of
I&M for the fiscal year ended December 31, 1996, File No.
1-3570, Exhibit 3(c)].
3(d) -- Copy of the By-Laws of I&M (amended as of November 28, 2001)
[Annual Report on Form 10-K of I&M for the fiscal year ended
December 31, 2001, File No. 1-3570, Exhibit 3(d)].
</Table>
E-8
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
4(a) -- Copy of Mortgage and Deed of Trust, dated as of June 1,
1939, between I&M and Irving Trust Company (now The Bank of
New York) and various individuals, as Trustees, as amended
and supplemented [Registration Statement No. 2-7597, Exhibit
7(a); Registration Statement No. 2-60665, Exhibits 2(c)(2),
2(c)(3), 2(c)(4), 2(c)(5), 2(c)(6), 2(c)(7), 2(c)(8),
2(c)(9), 2(c)(10), 2(c)(11), 2(c)(12), 2(c)(13), 2(c)(14),
2(c)(15), (2)(c)(16), and 2(c)(17); Registration Statement
No. 2-63234, Exhibit 2(b)(18); Registration Statement No.
2-65389, Exhibit 2(a)(19); Registration Statement No.
2-67728, Exhibit 2(b)(20); Registration Statement No.
2-85016, Exhibit 4(b); Registration Statement No. 33-5728,
Exhibit 4(c); Registration Statement No. 33-9280, Exhibit
4(b); Registration Statement No. 33-11230, Exhibit 4(b);
Registration Statement No. 33-19620, Exhibits 4(a)(ii),
4(a)(iii), 4(a)(iv) and 4(a)(v); Registration Statement No.
33-46851, Exhibits 4(b)(i), 4(b)(ii) and 4(b)(iii);
Registration Statement No. 33-54480, Exhibits 4(b)(I) and
4(b)(ii); Registration Statement No. 33-60886, Exhibit
4(b)(I); Registration Statement No. 33-50521, Exhibits
4(b)(I), 4(b)(ii) and 4(b)(iii); Annual Report on Form 10-K
of I&M for the fiscal year ended December 31, 1993, File No.
1-3570, Exhibit 4(b); Annual Report on Form 10-K of I&M for
the fiscal year ended December 31, 1994, File No. 1-3570,
Exhibit 4(b); Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1996, File No. 1-3570,
Exhibit 4(b)].
4(b) -- Copy of Indenture (for unsecured debt securities), dated as
of October 1, 1998, between I&M and The Bank of New York, as
Trustee [Registration Statement No. 333-88523, Exhibits
4(a), 4(b) and 4(c); Registration Statement No. 333-58656,
Exhibits 4(b) and 4(c); Annual Report of Form 10-K of I&M
for fiscal year ended December 31, 2001, File No. 1-3570,
Exhibit 4(c)].
*4(c) -- Copy of Company Order and Officer's Certificate, dated
November 22, 2002 establishing certain terms of the 6%
Senior Notes, Series D, due 2032.
4(d) -- Copy of Company Order and Officers' Certificate, dated
December 12, 2001, establishing certain terms of the 6.125%
Notes, Series C, due 2006. [Annual Report on Form 10-K of
I&M for the fiscal year ended December 31, 2001, File No.
1-3570, Exhibit 4(c)].
10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between
OVEC and United States of America, acting by and through the
United States Atomic Energy Commission, and, subsequent to
January 18, 1975, the Administrator of the Energy Research
and Development Administration, as amended [Registration
Statement No. 2-60015, Exhibit 5(a); Registration Statement
No. 2-63234, Exhibit 5(a)(1)(B); Registration Statement No.
2-66301, Exhibit 5(a)(1)(C); Registration Statement No.
2-67728, Exhibit 5(a)(1)(D); Annual Report on Form 10-K of
APCo for the fiscal year ended December 31, 1989, File No.
1-3457, Exhibit 10(a)(1)(F); and Annual Report on Form 10-K
of APCo for the fiscal year ended December 31, 1992, File
No. 1-3457, Exhibit 10(a)(1)(B)].
10(a)(2) -- Copy of Inter-Company Power Agreement, dated as of July 10,
1953, among OVEC and the Sponsoring Companies, as amended
[Registration Statement No. 2-60015, Exhibit 5(c);
Registration Statement No. 2-67728, Exhibit 5(a)(3)(B);
Annual Report on Form 10-K of APCo for the fiscal year ended
December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC
and Indiana-Kentucky Electric Corporation, as amended
[Registration Statement No. 2-60015, Exhibit 5(e)].
10(a)(4) -- Copy of Inter-Company Power Agreement, dated as of July 10,
1953, among OVEC and the Sponsoring Companies, as amended
[Registration Statement No. 2-60015, Exhibit 5(c);
Registration Statement No. 2-67728, Exhibit 5(a)(3)(B);
Annual Report on Form 10-K of APCo for the fiscal year ended
December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, among
APCo, CSPCo, KPCo, I&M, and OPCo and with the Service
Corporation, as amended [Registration Statement No. 2-52910,
Exhibit 5(a); Registration Statement No. 2-61009, Exhibit
5(b); and Annual Report on Form 10-K of AEP for the fiscal
year ended December 31, 1990, File No. 1-3525, Exhibit
10(a)(3)].
</Table>
E-9
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among
APCo, CSPCo, I&M, KPCo, OPCo and with the Service
Corporation as agent, as amended [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 1985, File No.
1-3525, Exhibit 10(b); and Annual Report on Form 10-K of AEP
for the fiscal year ended December 31, 1988, File No.
1-3525, Exhibit 10(b)(2)].
10(d) -- Copy of Modification No. 1 to the AEP System Interim
Allowance Agreement, dated July 28, 1994, among APCo, CSPCo,
I&M, KPCo, OPCo and the Service Corporation [Annual Report
on Form 10-K of AEP for the fiscal year ended December 1,
1996, File No. 1-3525, Exhibit 10(l)].
10(e) -- Copy of Nuclear Material Lease Agreement, dated as of
December 1, 1990, between I&M and DCC Fuel Corporation
[Annual Report on Form 10-K of I&M for the fiscal year ended
December 31, 1993, File No. 1-3570, Exhibit 10(d)].
10(f) -- Copy of Lease Agreements, dated as of December 1, 1989,
between I&M and Wilmington Trust Company, as amended
[Registration Statement No. 33-32753, Exhibits 28(a)(1)(C),
28(a)(2)(C), 28(a)(3)(C), 28(a)(4)(C), 28(a)(5)(C) and
28(a)(6)(C); Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibits 10(e)(1)(B), 10(e)(2)(B), 10(e)(3)(B), 10(e)(4)(B),
10(e)(5)(B) and 10(e)(6)(B)].
10(g)(1) -- Agreement and Plan of Merger, dated as of December 21, 1997,
By and Among American Electric Power Company, Inc., Augusta
Acquisition Corporation and Central and South West
Corporation [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1997, File No. 1-3525,
Exhibit 10(f)].
10(g)(2) -- Amendment No. 1, dated as of December 31, 1999, to the
Agreement and Plan of Merger [Current Report on Form 8-K of
I&M dated December 15, 1999, File No. 1-3570, Exhibit 10].
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the I&M 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
21 -- List of subsidiaries of I&M [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 2002, File No.
1-3525, Exhibit 21].
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Financial Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
KPCO++
3(a) -- Copy of Restated Articles of Incorporation of KPCo [Annual
Report on Form 10-K of KPCo for the fiscal year ended
December 31, 1991, File No. 1-6858, Exhibit 3(a)].
3(b) -- Copy of By-Laws of KPCo (amended as of June 15, 2000)
[Annual Report on Form 10-K of KPCo for the fiscal year
ended December 31, 2000, File No. 1-6858, Exhibit 3(b)].
4(a) -- Copy of Mortgage and Deed of Trust, dated May 1, 1949,
between KPCo and Bankers Trust Company (now Deutsche Bank
Trust Company Americas, as supplemented and amended
[Registration Statement No. 2-65820, Exhibits 2(b)(1),
2(b)(2), 2(b)(3), 2(b)(4), 2(b)(5), and 2(b)(6);
Registration Statement No. 33-39394, Exhibits 4(b) and 4(c);
Registration Statement No. 33-53226, Exhibits 4(b) and 4(c);
Registration Statement No. 33-61808, Exhibits 4(b) and 4(c),
Registration Statement No. 33-53007, Exhibits 4(b), 4(c) and
4(d)].
4(b) -- Copy of Indenture (for unsecured debt securities), dated as
of September 1, 1997, between KPCo and Bankers Trust
Company, as Trustee [Registration Statement No. 333-75785,
Exhibits 4(a), 4(b), 4(c) and 4(d); Registration Statement
No. 333-87216, Exhibits 4E) and 4(f).
*4(c) -- Copy of Company Order and Officer's Certificate, dated June
28, 2002 establishing certain terms of the 5.50% Senior
Notes, Series A, due 2007.
</Table>
E-10
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
*4(d) -- Copy of Company Order and Officer's Certificate, dated
November 6, 2002 establishing certain terms of the 4.3148%
Senior Notes, Series B, due 2007.
*4(e) -- Copy of Company Order and Officer's Certificate, dated
December 12, 2002 establishing certain terms of the 4.368%
Senior Notes, Series C, due 2007.
10(a) -- Copy of Interconnection Agreement, dated July 6, 1951, among
APCo, CSPCo, KPCo, I&M and OPCo and with the Service
Corporation, as amended [Registration Statement No. 2-52910,
Exhibit 5(a);Registration Statement No. 2-61009, Exhibit
5(b); and Annual Report on Form 10-K of AEP for the fiscal
year ended December 31, 1990, File No. 1-3525, Exhibit
10(a)(3)].
10(b) -- Copy of Transmission Agreement, dated April 1, 1984, among
APCo, CSPCo, I&M, KPCo, OPCo and with the Service
Corporation as agent, as amended [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 1985, File No.
1-3525, Exhibit 10(b); and Annual Report on Form 10-K of AEP
for the fiscal year ended December 31, 1988, File No.
1-3525, Exhibit 10(b)(2)].
10(c) -- Copy of Modification No. 1 to the AEP System Interim
Allowance Agreement, dated July 28, 1994, among APCo, CSPCo,
I&M, KPCo, OPCo and the Service Corporation [Annual Report
on Form 10-K of AEP for the fiscal year ended December 31,
1996, File No. 1-3525, Exhibit 10(l)].
10(d)(1) -- Agreement and Plan of Merger, dated as of December 21, 1997,
By and Among American Electric Power Company, Inc., Augusta
Acquisition Corporation and Central and South West
Corporation [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1997, File No. 1-3525,
Exhibit 10(f)].
10(d)(2) -- Amendment No. 1, dated as of December 31, 1999, to the
Agreement and Plan of Merger [Current Report on Form 8-K of
KPCo dated December 15, 1999, File No. 1-6858, Exhibit 10].
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the KPCo 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
*23 -- Consent of Deloitte & Touche LLP
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Financial Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
OPCO++
3(a) -- Copy of Amended Articles of Incorporation of OPCo, and
amendments thereto to December 31, 1993 [Registration
Statement No. 33-50139, Exhibit 4(a); Annual Report on Form
10-K of OPCo for the fiscal year ended December 31, 1993,
File No. 1-6543, Exhibit 3(b)].
3(b) -- Copy of Certificate of Amendment to Amended Articles of
Incorporation of OPCo, dated May 3, 1994 [Annual Report on
Form 10-K of OPCo for the fiscal year ended December 31,
1994, File No. 1-6543, Exhibit 3(b)].
3(c) -- Copy of Certificate of Amendment to Amended Articles of
Incorporation of OPCo, dated March 6, 1997 [Annual Report on
Form 10-K of OPCo for the fiscal year ended December 31,
1996, File No. 1-6543, Exhibit 3(c)].
3(d) -- Copy of Certificate of Amendment to Amended Articles of
Incorporation of OPCo, dated June 3, 2002 [Quarterly Report
on Form 10-Q of OPCo for the quarter ended June 30, 2002,
File No. 1-6543, Exhibit 3(d)].
3(e) -- Composite copy of the Amended Articles of Incorporation of
OPCo (amended as of June 3, 2002) [[Quarterly Report on Form
10-Q of OPCo for the quarter ended June 30, 2002, File No.
1-6543, Exhibit 3(e)].
</Table>
E-11
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
3(f) -- Copy of Code of Regulations of OPCo [Annual Report on Form
10-K of OPCo for the fiscal year ended December 31, 1990,
File No. 1-6543, Exhibit 3(d)].
4(a) -- Copy of Mortgage and Deed of Trust, dated as of October 1,
1938, between OPCo and Manufacturers Hanover Trust Company
(now Chemical Bank), as Trustee, as amended and supplemented
[Registration Statement No. 2-3828, Exhibit B-4;
Registration Statement No. 2-60721, Exhibits 2(c)(2),
2(c)(3), 2(c)(4), 2(c)(5), 2(c)(6), 2(c)(7), 2(c)(8),
2(c)(9), 2(c)(10), 2(c)(11), 2(c)(12), 2(c)(13), 2(c)(14),
2(c)(15), 2(c)(16), 2(c)(17), 2(c)(18), 2(c)(19), 2(c)(20),
2(c)(21), 2(c)(22), 2(c)(23), 2(c)(24), 2(c)(25), 2(c)(26),
2(c)(27), 2(c)(28), 2(c)(29), 2(c)(30), and 2(c)(31);
Registration Statement No. 2-83591, Exhibit 4(b);
Registration Statement No. 33-21208, Exhibits 4(a)(ii),
4(a)(iii) and 4(a)(iv); Registration Statement No. 33-31069,
Exhibit 4(a)(ii); Registration Statement No. 33-44995,
Exhibit 4(a)(ii); Registration Statement No. 33-59006,
Exhibits 4(a)(ii), 4(a)(iii) and 4(a)(iv); Registration
Statement No. 33-50373, Exhibits 4(a)(ii), 4(a)(iii) and
4(a)(iv); Annual Report on Form 10-K of OPCo for the fiscal
year ended December 31, 1993, File No. 1-6543, Exhibit
4(b)].
4(b) -- Copy of Indenture (for unsecured debt securities), dated as
of September 1, 1997, between OPCo and Bankers Trust Company
(now Deutsche Bank Trust Company Americas), as Trustee
[Registration Statement No. 333-49595, Exhibits 4(a), 4(b)
and 4(c); Annual Report on Form 10-K of OPCo for the fiscal
year ended December 31, 1998, File No. 1-6543, Exhibits 4(c)
and 4(d); Annual Report on Form 10-K of OPCo for the fiscal
year ended December 31, 1999, File No. 1-6543, Exhibits 4(c)
and 4(d); Annual Report on Form 10-K of OPCo for the fiscal
year ended December 31, 2000, File No. 1-6543, Exhibit
4(c)].
10(a)(1) -- Copy of Power Agreement, dated October 15, 1952, between
OVEC and United States of America, acting by and through the
United States Atomic Energy Commission, and, subsequent to
January 18, 1975, the Administrator of the Energy Research
and Development Administration, as amended [Registration
Statement No. 2-60015, Exhibit 5(a); Registration Statement
No. 2-63234, Exhibit 5(a)(1)(B); Registration Statement No.
2-66301, Exhibit 5(a)(1)(C); Registration Statement No.
2-67728, Exhibit 5(a)(1)(D); Annual Report on Form 10-K of
APCo for the fiscal year ended December 31, 1989, File No.
1-3457, Exhibit 10(a)(1)(F); Annual Report on Form 10-K of
APCo for the fiscal year ended December 31, 1992, File No.
1-3457, Exhibit 10(a)(1)(B)].
10(a)(2) -- Copy of Inter-Company Power Agreement, dated July 10, 1953,
among OVEC and the Sponsoring Companies, as amended
[Registration Statement No. 2-60015, Exhibit 5(c);
Registration Statement No. 2-67728, Exhibit 5(a)(3)(B);
Annual Report on Form 10-K of APCo for the fiscal year ended
December 31, 1992, File No. 1-3457, Exhibit 10(a)(2)(B)].
10(a)(3) -- Copy of Power Agreement, dated July 10, 1953, between OVEC
and Indiana-Kentucky Electric Corporation, as amended
[Registration Statement No. 2-60015, Exhibit 5(e)].
10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, among
APCo, CSPCo, KPCo, I&M and OPCo and with the Service
Corporation, as amended [Registration Statement No. 2-52910,
Exhibit 5(a); Registration Statement No. 2-61009, Exhibit
5(b); Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1990, File 1-3525, Exhibit 10(a)(3)].
10(c) -- Copy of Transmission Agreement, dated April 1, 1984, among
APCo, CSPCo, I&M, KPCo, OPCo and with the Service
Corporation as agent [Annual Report on Form 10-K of AEP for
the fiscal year ended December 31, 1985, File No. 1-3525,
Exhibit 10(b); Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1988, File No. 1-3525,
Exhibit 10(b)(2)].
10(d) -- Copy of Modification No. 1 to the AEP System Interim
Allowance Agreement, dated July 28, 1994, among APCo, CSPCo,
I&M, KPCo, OPCo and the Service Corporation [Annual Report
on Form 10-K of AEP for the fiscal year ended December 31,
1996, File No. 1-3525, Exhibit 10(l)].
</Table>
E-12
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
10(e) -- Copy of Amendment No. 1, dated October 1, 1973, to Station
Agreement dated January 1, 1968, among OPCo, Buckeye and
Cardinal Operating Company, and amendments thereto [Annual
Report on Form 10-K of OPCo for the fiscal year ended
December 31, 1993, File No. 1-6543, Exhibit 10(f)].
10(f) -- Lease Agreement dated January 20, 1995 between OPCo and JMG
Funding, Limited Partnership, and amendment thereto
(confidential treatment requested) [Annual Report on Form
10-K of OPCo for the fiscal year ended December 31, 1994,
File No. 1-6543, Exhibit 10(l)(2)].
10(g)(1) -- Agreement and Plan of Merger, dated as of December 21, 1997,
by and among American Electric Power Company, Inc., Augusta
Acquisition Corporation and Central and South West
Corporation [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1997, File No. 1-3525,
Exhibit 10(f)].
10(g)(2) -- Amendment No. 1, dated as of December 31, 1999, to the
Agreement and Plan of Merger [Current Report on Form 8-K of
OPCo dated December 15, 1999, File No. 1-6543, Exhibit 10].
+10(h) -- AEP System Senior Officer Annual Incentive Compensation Plan
[Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1996, File No. 1-3525, Exhibit 10(i)(1)].
+10(i)(1)(A) -- AEP System Excess Benefit Plan, Amended and Restated as of
January 1, 2001 [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 2000, File No. 1-3525,
Exhibit 10(j)(1)(A)].
*+10(i)(1)(B) -- First Amendment to AEP System Excess Benefit Plan, dated as
of March 5, 2003.
+10(i)(2) -- AEP System Supplemental Retirement Savings Plan, Amended and
Restated as of January 1, 2001 (Non-Qualified) [Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 2000, File No. 1-3525, Exhibit 10(j)(2)].
+10(i)(3) -- Umbrella Trust for Executives [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 1993, File No.
1-3525, Exhibit 10(g)(3)].
+10(j)(1) -- Employment Agreement between E. Linn Draper, Jr. and AEP and
the Service Corporation [Annual Report on Form 10-K of AEGCo
for the fiscal year ended December 31, 1991, File No.
0-18135, Exhibit 10(g)(3)].
+10(j)(2) -- Memorandum of agreement between Susan Tomasky and the
Service Corporation dated January 3, 2001 [Annual Report on
Form 10-K of AEP for the fiscal year ended December 31,
2000, File No. 1-3525, Exhibit 10(s)].
*+10(j)(3) -- Employment Agreement dated July 29, 1998 between AEPSC and
Robert P. Powers.
+10(k)(1) -- AEP System Survivor Benefit Plan, effective January 27, 1998
[Quarterly Report on Form 10-Q of AEP for the quarter ended
September 30, 1998, File No. 1-3525, Exhibit 10].
*+10(k)(2) -- First Amendment to AEP System Survivor Benefit Plan, as
amended and restated effective January 31, 2000.
+10(l) -- AEP Senior Executive Severance Plan for Merger with Central
and South West Corporation, effective March 1, 1999[Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 1998, File No. 1-3525, Exhibit 10(o)].
+10(m) -- AEP Change In Control Agreement [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 2001, File No.
1-3525, Exhibit 10(o)].
+10(n) -- AEP System 2000 Long-Term Incentive Plan [Proxy Statement of
AEP, March 10, 2000].
+10(o)(1) -- Central and South West System Special Executive Retirement
Plan as amended and restated effective July 1, 1997 [Annual
Report on Form 10-K of CSW for the fiscal year ended
December 31, 1998, File No. 1-1443, Exhibit 18].
+10(o)(2) -- Certified CSW Board Resolution of April 18, 1991 [Annual
Report on Form 10-K of AEP for the fiscal year ended
December 31, 2001, File No. 1-3525, Exhibit 10(r)(2)].
+10(o)(3) -- CSW 1992 Long-Term Incentive Plan [Proxy Statement of CSW,
March 13, 1992].
*+10(p)(1) -- AEP System Incentive Compensation Deferral Plan dated
January 1, 2001.
</Table>
E-13
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
*+10(p)(2) -- First Amendment to AEP System Incentive Compensation
Deferral Plan dated December 6, 2002.
*+10(q) -- AEP System Nuclear Performance Long Term Incentive
Compensation Plan dated August 1, 1998.
*+10(r) -- Nuclear Key Contributor Retention Plan dated May 1, 2000.
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the OPCo 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
21 -- List of subsidiaries of OPCo [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 2002, File No.
1-3525, Exhibit 21].
*23 -- Consent of Deloitte & Touche LLP.
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Financial Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
PSO++
3(a) -- Restated Certificate of Incorporation of PSO [Annual Report
on Form U5S of Central and South West Corporation for the
fiscal year ended December 31, 1996, File No. 1-1443,
Exhibit B-3.1].
3(b) -- By-Laws of PSO (amended as of June 28, 2000) [Annual Report
on Form 10-K of PSO for the fiscal year ended December 31,
2000, File No. 0-343, Exhibit 3(b)].
4(a) -- Indenture, dated July 1, 1945, between and Liberty Bank and
Trust Company of Tulsa, National Association, as Trustee, as
amended and supplemented [Registration Statement No.
2-60712, Exhibit 5.03; Registration Statement No. 2-64432,
Exhibit 2.02; Registration Statement No. 2-65871, Exhibit
2.02; Form U-1 No. 70-6822, Exhibit 2; Form U-1 No. 70-7234,
Exhibit 3; Registration Statement No. 33-48650, Exhibit
4(b); Registration Statement No. 33-49143, Exhibit 4(c);
Registration Statement No. 33-49575, Exhibit 4(b); Annual
Report on Form 10-K of PSO for the fiscal year ended
December 31, 1993, File No. 0-343, Exhibit 4(b); Current
Report on Form 8-K of PSO dated March 4, 1996, No. 0-343,
Exhibit 4.01; Current Report on Form 8-K of PSO dated March
4, 1996, No. 0-343, Exhibit 4.02; Current Report on Form 8-K
of PSO dated March 4, 1996, No. 0-343, Exhibit 4.03].
4(b) -- PSO-obligated, mandatorily redeemable preferred securities
of subsidiary trust holding solely Junior Subordinated
Debentures of PSO:
(1) Indenture, dated as of May 1, 1997, between PSO and The
Bank of New York, as Trustee [Quarterly Report on Form 10-Q
of PSO dated March 31, 1997, File No. 0-343, Exhibits
4.6 and 4.7].
(2) Amended and Restated Trust Agreement of PSO Capital I,
dated as of May 1, 1997, among PSO, as Depositor, The Bank
of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and the Administrative
Trustee [Quarterly Report on Form 10-Q of PSO dated
March 31, 1997, File No. 0-343, Exhibit 4.8].
</Table>
E-14
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
(3) Guarantee Agreement, dated as of May 1, 1997, delivered
by PSO for the benefit of the holders of PSO Capital I's
Preferred Securities [Quarterly Report on Form 10-Q of
PSO dated March 31, 1997, File No. 0-343, Exhibits 4.9].
(4) Agreement as to Expenses and Liabilities, dated as of
May 1, 1997, between PSO and PSO Capital I [Quarterly Report
on Form 10-Q of PSO dated March 31, 1997, File No.
0-343, Exhibits 4.10].
4(c) -- Indenture (for unsecured debt securities), dated as of
November 1, 2000, between PSO and The Bank of New York, as
Trustee [Registration Statement No. 333-100623, Exhibits
4(a) and 4(b)].
*4(d) -- Second Supplemental Indenture, dated as of November 26, 2002
establishing certain terms of the 6% Senior Notes, Series B,
due 2032.
*10(a) -- Copy of Restated and Amended Operating Agreement, dated as
of January 1, 1998, among PSO, TCC, TNC, SWEPCo and AEPSC.
*10(b) -- Transmission Coordination Agreement, dated October 29, 1998,
among PSO, TCC, TNC, SWEPCo and AEPSC.
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the PSO 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
21 -- List of subsidiaries of PSO [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 2002, File No.
1-3525, Exhibit 21]
*23 -- Consent of Deloitte & Touche LLP.
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Financial Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
SWEPCO++
3(a) -- Restated Certificate of Incorporation, as amended through
May 6, 1997, including Certificate of Amendment of Restated
Certificate of Incorporation [Quarterly Report on Form 10-Q
of SWEPCo for the quarter ended March 31, 1997, File No.
1-3146, Exhibit 3.4].
3(b) -- By-Laws of SWEPCo (amended as of April 27, 2000) [Quarterly
Report on Form 10-Q of SWEPCo for the quarter ended March
31, 2000, File No. 1-3146, Exhibit 3.3].
4(a) -- Indenture, dated February 1, 1940, between SWEPCo and
Continental Bank, National Association and M. J. Kruger, as
Trustees, as amended and supplemented [Registration
Statement No. 2-60712, Exhibit 5.04; Registration Statement
No. 2-61943, Exhibit 2.02; Registration Statement No.
2-66033, Exhibit 2.02; Registration Statement No. 2-71126,
Exhibit 2.02; Registration Statement No. 2-77165, Exhibit
2.02; Form U-1 No. 70-7121, Exhibit 4; Form U-1 No. 70-7233,
Exhibit 3; Form U-1 No. 70-7676, Exhibit 3; Form U-1 No.
70-7934, Exhibit 10; Form U-1 No. 72-8041, Exhibit 10(b);
Form U-1 No. 70-8041, Exhibit 10(c); Form U-1 No. 70-8239,
Exhibit 10(a)].
4(b) -- SWEPCO-obligated, mandatorily redeemable preferred
securities of subsidiary trust holding solely Junior
Subordinated Debentures of SWEPCo:
(1) Indenture, dated as of May 1, 1997, between SWEPCo and
the Bank of New York, as Trustee [Quarterly Report on Form
10-Q of SWEPCo dated March 31, 1997, File No. 1-3146,
Exhibits 4.11 and 4.12].
(2) Amended and Restated Trust Agreement of SWEPCo Capital
I, dated as of May 1, 1997, among SWEPCo, as Depositor, the
Bank of New York, as Property Trustee, The Bank of New
York (Delaware), as Delaware Trustee, and the
Administrative Trustee [Quarterly Report on Form 10-Q of
SWEPCo dated March 31, 1997, File No. 1-3146, Exhibit
4.13].
</Table>
E-15
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
(3) Guarantee Agreement, dated as of May 1, 1997, delivered
by SWEPCo for the benefit of the holders of SWEPCo Capital
I's Preferred Securities [Quarterly Report on Form 10-Q
of SWEPCo dated March 31, 1997, File No. 1-3146, Exhibit
4.14].
(4) Agreement as to Expenses and Liabilities, dated as of
May 1, 1997 between SWEPCo and SWEPCo Capital I [Quarterly
Report on Form 10-Q of SWEPCo dated March 31, 1997, File
No. 1-3146, Exhibits 4.15].
4(c) -- Indenture (for unsecured debt securities), dated as of
February 4, 2000, between SWEPCo and The Bank of New York,
as Trustee [Registration Statement No. 333-87834, Exhibits
4(a) and 4(b); Form 8-K of SWEPCo filed on June 26, 2002,
File No. 1-3146, Exhibit 4(b)].
*10(a) -- Copy of Restated and Amended Operating Agreement, dated as
of January 1, 1998, among PSO, TCC, TNC, SWEPCo and AEPSC.
*10(b) -- Transmission Coordination Agreement, dated October 29, 1998,
among PSO, TCC, TNC, SWEPCo and AEPSC.
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the SWEPCo 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
21 -- List of subsidiaries of SWEPCo [Annual Report on Form 10-K
of AEP for the fiscal year ended December 31, 2002, File No.
1-3525, Exhibit 21]
*23 -- Consent of Deloitte & Touche LLP.
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Financial Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
TCC++
3(a) -- Restated Articles of Incorporation Without Amendment,
Articles of Correction to Restated Articles of Incorporation
Without Amendment, Articles of Amendment to Restated
Articles of Incorporation, Statements of Registered Office
and/or Agent, and Articles of Amendment to the Articles of
Incorporation [Quarterly Report on Form 10-Q of TCC for the
quarter ended March 31, 1997, File No. 0-346, Exhibit 3.1].
*3(b) -- Articles of Amendment to Restated Articles of Incorporation
of TCC dated December 18, 2002.
3(c) -- By-Laws of TCC (amended as of April 19, 2000) [Annual Report
on Form 10-K of TCC for the fiscal year ended December 31,
2000, File No. 0-346, Exhibit 3(b)].
4(a) -- Indenture of Mortgage or Deed of Trust, dated November 1,
1943, between TCC and The First National Bank of Chicago and
R. D. Manella, as Trustees, as amended and supplemented
[Registration Statement No. 2-60712, Exhibit 5.01;
Registration Statement No. 2-62271, Exhibit 2.02; Form U-1
No. 70-7003, Exhibit 17; Registration Statement No. 2-98944,
Exhibit 4 (b); Form U-1 No. 70-7236, Exhibit 4; Form U-1 No.
70-7249, Exhibit 4; Form U-1 No. 70-7520, Exhibit 2; Form
U-1 No. 70-7721, Exhibit 3; Form U-1 No. 70-7725, Exhibit
10; Form U-1 No. 70-8053, Exhibit 10 (a); Form U-1 No.
70-8053, Exhibit 10 (b); Form U-1 No. 70-8053, Exhibit 10
(c); Form U-1 No. 70-8053, Exhibit 10 (d); Form U-1 No.
70-8053, Exhibit 10 (e); Form U-1 No. 70-8053, Exhibit 10
(f)].
4(b) -- TCC-obligated, mandatorily redeemable preferred securities
of subsidiary trust holding solely Junior Subordinated
Debentures of TCC:
(1) Indenture, dated as of May 1, 1997, between TCC and the
Bank of New York, as Trustee [Quarterly Report on Form 10-Q
of TCC dated March 31, 1997, File No. 0-346, Exhibits
4.1 and 4.2].
</Table>
E-16
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
(2) Amended and Restated Trust Agreement of TCC Capital I,
dated as of May 1, 1997, among TCC, as Depositor, the Bank
of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and the Administrative
Trustee [Quarterly Report on Form 10-Q of TCC dated
March 31, 1997, File No. 0-346, Exhibit 4.3].
(3) Guarantee Agreement, dated as of May 1, 1997, delivered
by TCC for the benefit of the holders of TCC Capital I's
Preferred Securities [Quarterly Report on Form 10-Q of
TCC dated March 31, 1997, File No. 0-346, Exhibit 4.4].
(4) Agreement as to Expenses and Liabilities dated as of May
1, 1997, between TCC and TCC Capital I [Quarterly Report on
Form 10-Q of TCC dated March 31, 1997, File No. 0-346,
Exhibit 4.5].
4(c) -- Indenture (for unsecured debt securities), dated as of
November 15, 1999, between TCC and The Bank of New York, as
Trustee, as amended and supplemented [Annual Report on Form
10-K of TCC for the fiscal year ended December 31, 2000,
File No. 0-346, Exhibits 4(c), 4(d) and 4(e)].
*10(a) -- Copy of Restated and Amended Operating Agreement, dated as
of January 1, 1998, among PSO, TCC, TNC, SWEPCo and AEPSC.
*10(b) -- Transmission Coordination Agreement, dated October 29, 1998,
among PSO, TCC, TNC, SWEPCo and AEPSC.
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the TCC 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
21 -- List of subsidiaries of TCC [Annual Report on Form 10-K of
AEP for the fiscal year ended December 31, 2002, File No.
1-3525, Exhibit 21]
*23 -- Consent of Deloitte & Touche LLP.
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Financial Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
TNC++
3(a) -- Restated Articles of Incorporation, as amended, and Articles
of Amendment to the Articles of Incorporation [Annual Report
on Form 10-K of TNC for the fiscal year ended December 31,
1996, File No. 0-340, Exhibit 3.5].
*3(b) -- Articles of Amendment to Restated Articles of Incorporation
of TNC dated December 17, 2002.
3(c) -- By-Laws of TNC (amended as of May 1, 2000) [Quarterly Report
on Form 10-Q of TNC for the quarter ended March 31, 2000,
File No. 0-340, Exhibit 3.4].
4(a) -- Indenture, dated August 1, 1943, between TNC and Harris
Trust and Savings Bank and J. Bartolini, as Trustees, as
amended and supplemented [Registration Statement No.
2-60712, Exhibit 5.05; Registration Statement No. 2-63931,
Exhibit 2.02; Registration Statement No. 2-74408, Exhibit
4.02; Form U-1 No. 70-6820, Exhibit 12; Form U-1 No.
70-6925, Exhibit 13; Registration Statement No. 2-98843,
Exhibit 4(b); Form U-1 No. 70-7237, Exhibit 4; Form U-1 No.
70-7719, Exhibit 3; Form U-1 No. 70-7936, Exhibit 10; Form
U-1 No. 70-8057, Exhibit 10; Form U-1 No. 70-8265, Exhibit
10; Form U-1 No. 70-8057, Exhibit 10(b); Form U-1 No.
70-8057, Exhibit 10(c)].
*10(a) -- Copy of Restated and Amended Operating Agreement, dated as
of January 1, 1998, among PSO, TCC, TNC, SWEPCo and AEPSC.
*10(b) -- Transmission Coordination Agreement, dated October 29, 1998,
among PSO, TCC, TNC, SWEPCo and AEPSC.
*12 -- Statement re: Computation of Ratios.
</Table>
E-17
<PAGE>
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- --------------- -----------
<C> <C> <S>
*13 -- Copy of those portions of the TNC 2002 Annual Report (for
the fiscal year ended December 31, 2002) which are
incorporated by reference in this filing.
*24 -- Power of Attorney.
*99(a) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
*99(b) -- Certification of Chief Executive Officer Pursuant to Section
1350 of Chapter 63 of Title 18 of the United States Code.
</Table>
----------------------
++ Certain instruments defining the rights of holders of long-term debt of
the registrants included in the financial statements of registrants filed
herewith have been omitted because the total amount of securities authorized
thereunder does not exceed 10% of the total assets of registrants. The
registrants hereby agree to furnish a copy of any such omitted instrument to the
SEC upon request.
E-18
<PAGE>
(LOGO)
RECYCLE LOGO
PRINTED ON RECYCLED PAPER
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>4
<FILENAME>x4b.txt
<DESCRIPTION>(B) THIRD SUPP INDENTURE
<TEXT>
<PAGE>
EXHIBIT 4(b)
AMERICAN ELECTRIC POWER COMPANY, INC.
AND
THE BANK OF NEW YORK,
as Trustee
-----------------------
THIRD SUPPLEMENTAL INDENTURE
Dated as of June 11, 2002
TO
INDENTURE
Dated as of May 1, 2001
5.75% Senior Notes Due August 16, 2007
-----------------------
<PAGE>
TABLE OF CONTENTS*
ARTICLE ONE
GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES
Section 1.1. Definitions................................................1
Section 1.2. Establishment, Designation and Principal Amount............3
Section 1.3. Payment of Principal and Interest..........................4
Section 1.4. Denominations..............................................6
Section 1.5. Global Securities..........................................6
Section 1.6. Remarketing................................................7
Section 1.7. Optional Remarketing.......................................13
Section 1.8. Sinking Fund...............................................14
Section 1.9. Redemption and Repurchase..................................14
Section 1.10. Covenants..................................................14
Section 1.11. Defeasance.................................................14
Section 1.12. Tax Event Redemption.......................................15
Section 1.13. Tax Treatment..............................................16
ARTICLE II
MISCELLANEOUS PROVISIONS
Section 2.1. Recitals by Company........................................16
Section 2.2. Ratification and Incorporation of Original Indenture.......16
Section 2.3. Executed in Counterparts...................................16
Section 2.4. Separability...............................................16
Section 2.5. Governing Law..............................................17
Exhibit A Form of Senior Note........................................A-1
- -------------------------
* This Table of Contents does not constitute part of the Indenture or have
any bearing upon the interpretation of any of its terms and provisions.
<PAGE>
THIRD SUPPLEMENTAL INDENTURE, dated as of June 11, 2002 (the "Third
Supplemental Indenture"), between AMERICAN ELECTRIC POWER COMPANY, INC., a
corporation duly organized and existing under the laws of the State of New York
(hereinafter sometimes referred to as the "Company"), and THE BANK OF NEW YORK,
a New York banking corporation, as trustee (hereinafter sometimes referred to as
the "Trustee"), under the Indenture dated as of May 1, 2001 between the Company
and the Trustee (the "Original Indenture"). The Original Indenture, as
previously supplemented from time to time, including by this Third Supplemental
Indenture, is hereafter referred to as the "Indenture."
WITNESSETH:
WHEREAS, the Company has executed and delivered the Original Indenture to
the Trustee to provide for the issuance of unsecured promissory notes or other
evidences of indebtedness (the "Securities") in an unlimited aggregate principal
amount, to be issued from time to time in one or more series as provided in the
Original Indenture; and
WHEREAS, pursuant to the terms of the Original Indenture, the Company
desires to provide for the establishment of a new series of its Securities (said
series being hereinafter referred to as the "Senior Notes"), the form and
substance of such Senior Notes and the terms, provisions and conditions thereof
to be set forth as provided in the Original Indenture and this Third
Supplemental Indenture; and
WHEREAS, the Company desires and has requested the Trustee to join with it
in the execution and delivery of this Third Supplemental Indenture, and all
requirements necessary to make this Third Supplemental Indenture a valid
instrument, in accordance with its terms, and to make the Senior Notes, when
executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been performed and fulfilled, and the
execution and delivery hereof have been in all respects duly authorized;
NOW THEREFORE, in consideration of the purchase and acceptance of the
Senior Notes by the holders thereof, and for the purpose of setting forth, as
provided in the Original Indenture, the form and substance of the Senior Notes
and the terms, provisions and conditions thereof, the Company covenants and
agrees with the Trustee as follows:
ARTICLE ONE
GENERAL TERMS AND CONDITIONS OF THE SENIOR NOTES
SECTION 1.1. Definitions.
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Except as otherwise expressly provided in or pursuant to this Third
Supplemental Indenture or unless the context otherwise requires:
(1) a term defined in the Original Indenture has the same meaning when
used in this Third Supplemental Indenture;
(2) a term defined anywhere in this Third Supplemental Indenture has
the same meaning throughout;
(3) the singular includes the plural and vice versa;
(4) headings are for convenience of reference only and do not affect
interpretation;
(5) capitalized terms used herein for which no definition is provided
herein shall have the meanings set forth in the Original Indenture, the
Forward Purchase Contract Agreement, the Remarketing Agreement or the
Pledge Agreement, as the case may be and as the context may require; and
(6) the following terms have the meanings given to them in this
Section 1.1(6):
"Business Day" means any day other than a Saturday, Sunday or any
other day on which banking institutions and trust companies the
State of New York or at a place of payment are authorized or
required by law, regulation or executive order to be closed.
"Company" has the meaning set forth in the preamble.
"Contingent Payment Regulations" has the meaning set forth in
Section 1.13.
"Forward Purchase Contract Agent" means The Bank of New York.
"Forward Purchase Contract Agreement" means the agreement, dated
as of June 11, 2002, between the Company and the Forward Purchase
Contract Agent.
"Global Securities" has the meaning set forth in Section 1.5.
"Interest Payment Date" has the meaning set forth in Section 1.3.
"Pledge Agreement" means the Pledge Agreement, dated as of June
11, 2002, between the Company and The Bank of New York, as
Forward Purchase Contract Agent, Collateral Agent, Custodial
Agent and Securities Intermediary.
"Regular Record Date" means, with respect to each Interest
Payment Date, the close of business on the Business Day preceding
such Interest Payment Date; provided, that with respect to
Separate Notes that are not in book-entry only form, the Regular
Record Date shall be the close of business on the 15th Business
Day preceding such Interest Payment Date.
"Remarketing" means any remarketing conducted pursuant to and in
accordance with the Remarketing Agreement.
"Remarketing Agreement" means the Remarketing Agreement, dated as
of June 11, 2002, by and among the Company, the Remarketing Agent
and the Forward Purchase Contract Agent.
"Remarketing Value" means
(i) the value at the Remarketing Date or any Subsequent
Remarketing Date, as the case may be, of either (a) U.S.
Treasury securities that will pay, on or prior to the
Payment Date falling on the Stock Purchase Date, an amount
of cash equal to the aggregate interest payment that is
scheduled to be payable on that Payment Date, on (x) the
Notes which are included in Equity Units and are
participating in the remarketing and (y) the Separate Notes
which are to be remarketed pursuant to Section 4.5(d) of the
Pledge Agreement, assuming for that purpose that the
interest rate on the Notes is equal to the Coupon Rate, if
the Remarketing occurs prior to the fourth Business Day
preceding the Stock Purchase Date, or (b) an amount of cash
equal to the aggregate interest payment that is scheduled to
be payable on that Payment Date, on (x) the Notes which are
included in Equity Units and are participating in the
remarketing and (y) the Separate Notes which are to be
remarketed pursuant to Section 4.5(d) of the Pledge
Agreement and Section 1.6 of this Third Supplemental
Indenture, assuming for that purpose that the interest rate
on the Notes is equal to the Coupon Rate, if the Remarketing
occurs on or after the fourth Business Day preceding the
Stock Purchase Date; and
(ii) the value at the Remarketing Date or any Subsequent
Remarketing Date, as the case may be, of either (a) U.S.
Treasury securities that will pay, on or prior to the Stock
Purchase Date, an amount of cash equal to the Stated Amount
of (x) such Notes which are included in Equity Units and are
participating in the remarketing and (y) the Separate Notes
which are to be remarketed pursuant to Section 4.5(d) of the
Pledge Agreement, if the Remarketing occurs prior to the
fourth Business Day preceding the Stock Purchase Date, or
(b) an amount of cash equal to the Stated Amount of (x) such
Notes which are included in Equity Units and are
participating in the remarketing and (y) the Separate Notes
which are to be remarketed pursuant to Section 4.5(d) of the
Pledge Agreement and Section 1.6 of this Third Supplemental
Indenture, if the Remarketing occurs on or after the fourth
Business Day preceding the Stock Purchase Date
provided that for purposes of clauses (1) and (2) above, the
Remarketing Value shall be calculated on the assumptions that (x)
the U.S. Treasury securities are highly liquid and mature on or
within 35 days prior to the Stock Purchase Date, as determined in
good faith by the Remarketing Agent in a manner intended to
minimize the cash value of the U.S. Treasury securities, and (y)
the U.S. Treasury securities are valued based on the ask-side
price of the U.S. Treasury securities at a time between 9:00 a.m.
and 11:00 a.m., New York City time, selected by the Remarketing
Agent, on the Remarketing Date or any Subsequent Remarketing
Date, as the case may be, as determined on a third-day settlement
basis by reasonable and customary means selected in good faith by
the Remarketing Agent, plus accrued interest to that date.
"Reset Rate" means the interest rate per annum with respect to
the Senior Notes that is determined by the Remarketing Agent
pursuant to the Remarketing Agreement as follows:
(i) in connection with a successful Remarketing, the rate of
interest that, in the opinion of the Remarketing Agent,
will, when applied to the Outstanding Senior Notes, enable
the then current aggregate market value of the Senior Notes
to have a value equal to approximately, but not less than,
100.25% of the Remarketing Value as of the Remarketing Date
or as of any Subsequent Remarketing Date, as the case may
be; or
(ii) upon the occurrence of a Failed Remarketing, the rate of
interest applicable to the Senior Notes initially until (A)
the Senior Notes are successfully remarketed pursuant to the
Forward Purchase Contract Agreement and the Remarketing
Agreement or (B) if the Last Failed Remarketing shall have
occurred, a market rate of interest as determined in
accordance with Section 1.6 of this Supplemental Indenture.
"Senior Notes" has the meaning set forth in the recitals.
"Stated Maturity" means August 16, 2007.
"Telerate" means the Dow Jones Telerate Service.
"Tax Event Redemption Date" has the meaning set forth in Section
1.11.
SECTION 1.2. Establishment, Designation and Principal Amount.
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(a) There shall be and is hereby authorized a series of Securities under
the Original Indenture designated the "5.75% Senior Notes Due August 16, 2007,"
in the initial aggregate principal amount of $300,000,000, which amount shall be
as set forth in the Company Order for the authentication and delivery of the
Senior Notes pursuant to Section 2.04 of the Original Indenture. Such aggregate
principal amount of the 5.75% Senior Notes Due August 16, 2007 may be increased
from time to time in accordance with Section 2.01 of the Original Indenture.
(b) The Senior Notes shall mature and the principal shall be due and
payable together with all accrued and unpaid interest thereon on August 16,
2007.
(c) The Senior Notes that are part of the Equity Units shall be issued in
definitive fully registered form (the "Registered Securities"), without coupons,
in substantially the form set out in Exhibit A hereto. The entire principal
amount of the Senior Notes shall initially be evidenced by one or more
certificates issued to The Bank of New York, as the Forward Purchase Contract
Agent under the Forward Purchase Contract Agreement (as defined below).
(d) The Senior Notes that, in accordance with the Forward Purchase Contract
Agreement, are no longer part of Equity Units shall be represented initially by
Global Securities (as defined below). Each such Registered Security and Global
Security shall represent such aggregate principal amount of the Outstanding
Senior Notes as shall be from time to time endorsed thereon, which principal
amounts may be increased or decreased, as applicable, to reflect Transfers from
Pledged Notes to Separate Notes and Transfers from Separate Notes to Pledged
Notes. Any such increase or decrease in the aggregate principal amount of (i)
Registered Securities shall be made by the Collateral Agent and (ii) Global
Securities representing Senior Notes shall be made by the Trustee, as custodian
of the Global Securities, in each case upon the instructions of the Collateral
Agent given pursuant to Article IV of the Pledge Agreement.
SECTION 1.3. Payment of Principal and Interest.
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(a) The unpaid principal amount of the Senior Notes shall initially bear
interest at the rate of 5.75% per annum, payable on each February 16, May 16,
August 16 and November 16 (each, with respect to the Senior Notes, an "Interest
Payment Date"), from the original date of issuance, to, but excluding, the
earlier of (i) the settlement date of a successful Remarketing under the Forward
Purchase Contract Agreement or (ii) the Stock Purchase Date, and, thereafter, at
the Reset Rate to, but excluding, the Stated Maturity of the Senior Notes.
(b) Interest shall be payable quarterly in arrears on each Interest Payment
Date to the Person in whose name the Senior Notes are registered on the Regular
Record Date for such Interest Payment Date; provided that interest payable on
the Stated Maturity of principal as provided herein shall be paid to the person
to whom principal is payable. Any such interest not punctually paid or duly
provided for with respect to any Interest Payment Date falling after the Stock
Purchase Date shall forthwith cease to be payable to the registered holders on
such regular record date, and may be paid to the person or persons in whose name
the Senior Notes are registered at the close of business on a special record
date to be fixed by the Trustee for the payment of such defaulted interest,
notice whereof shall be given to the registered holders of the Senior Notes not
less than ten (10) days prior to such special record date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange, if any, on which the Senior Notes may be listed, and upon
such notice as may be required by such exchange, all as more fully provided in
Section 2.03 of the Original Indenture.
(c) The amount of interest payable for any period will be computed (1) for
any quarterly period, on the basis of a 360-day year of twelve 30-day months,
(2) for any period shorter than a full quarterly period, on the basis of a
30-day month and (3) for periods of less than a month, on the basis of the
actual number of days elapsed per 30-day month. If any date on which principal
or interest is payable is not a Business Day, then payment of principal or
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(d) Payment of the principal of and interest on the Senior Notes shall be
made at an Office or Agency of the Company or at the Office of the Agent in The
City of New York in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts,
with any such payment that is due on the Stated Maturity of any Senior Notes
being made upon surrender of such Senior Notes to the Office or Agency of the
Company or at the Office of the Agent in The City of New York. Payments of
interest will be made, subject to such surrender where applicable, at the option
of the Company, (i) by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register or (ii) by wire
transfer at such place and to such account at a banking institution in the
United States as may be designated in writing to the Trustee at least sixteen
(16) days prior to the date for payment by the Person entitled hereto.
SECTION 1.4. Denominations.
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The Senior Notes shall be issued in denominations of $50 and integral
multiples of $50.
SECTION 1.5..Global Securities.
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(a) The Senior Notes that, in accordance with the Forward Purchase Contract
Agreement, are no longer part of the Equity Units will be issued initially in
the form of one or more global securities (the "Global Securities") registered
in the name of DTC or its nominee. Except under the limited circumstances
described below or in Section 1.3 above, Senior Notes represented by such Global
Securities will not be exchangeable for, and will not otherwise be issuable as,
Senior Notes in definitive form. The Global Securities described above may not
be transferred except by DTC to a nominee of DTC or by a nominee of DTC to DTC
or another nominee of DTC or to a successor Depository or its nominee.
(b) Owners of beneficial interests in such a Global Security will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing a Senior Note shall be exchangeable, except for
another Global Security of like denomination and tenor to be registered in the
name of DTC or its nominee or to a successor Depository or its nominee or except
as described below. The rights of owners of beneficial interests in such a
Global Security shall be exercised only through DTC.
(c) A Global Security shall be exchangeable for Senior Notes registered in
the names of persons other than DTC or its nominee only if (i) DTC notifies the
Company that it is unwilling or unable to continue as a Depository for such
Global Security and no successor Depository shall have been appointed by the
Company within 90 days of receipt by the Company of such notification, or if at
any time DTC ceases to be a clearing agency registered under the Securities
Exchange Act of 1934 at a time when DTC is required to be so registered to act
as such Depository and no successor Depository shall have been appointed by the
Company within 90 days after it becomes aware of such cessation, or (ii) the
Company in its sole discretion determines that it no longer has any senior debt
securities represented by global securities or that it will permit a Global
Security to be exchangeable or an Event of Default under the Indenture has
occurred and is continuing. Any Global Security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for Senior Notes registered in such
names as DTC shall direct.
SECTION 1.6. Remarketing.
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(a) The Pledged Notes comprising part of Equity Units and the Separate
Notes of holders of Separate Notes that have elected to participate in the
Remarketing shall be remarketed by the Remarketing Agent on the Remarketing
Date. A Holder of Equity Units may elect not to participate in a Remarketing and
retain the Senior Notes underlying such Equity Units by notifying the Forward
Purchase Contract Agent of such election and delivering the Opt-out Treasury
Consideration to the Forward Purchase Contract Agent not later than 10:00 a.m.
on the fourth Business Day prior to the Remarketing Date, as applicable (or, in
the case of a Failed Remarketing, not later than 10:00 a.m. on the fourth
Business Day immediately prior to the subsequent Remarketing Period). Upon
receipt thereof by the Forward Purchase Contract Agent, the Forward Purchase
Contract Agent shall deliver such Opt-out Treasury Consideration to the
Collateral Agent, which will, for the benefit of the Company, thereupon apply
such Opt-out Treasury Consideration to secure such Holder's obligations under
the Forward Purchase Contracts. On the first Business Day immediately preceding
the Remarketing Date (or, in the case of a Failed Remarketing, the subsequent
Remarketing Period), the Collateral Agent, pursuant to the terms of the Pledge
Agreement, will deliver the Pledged Notes to the Forward Purchase Contract
Agent. Within three Business Days following any Remarketing Period (A) if the
Remarketing was successful, the Forward Purchase Contract Agent shall distribute
such Notes to the new Holders thereof and (B) if there was a Failed Remarketing,
the Forward Purchase Contract Agent will deliver such Notes to the Collateral
Agent, which will, for the benefit of the Company, thereupon apply such Notes
that are a component of Equity Units to secure such Holders' obligations under
the Forward Purchase Contracts, return any Opt-out Treasury Consideration
delivered by such Holders to such Holders and return the Separate Notes to the
holders thereof. A Holder that does not so deliver the Opt-out Treasury
Consideration or has not settled the related Purchase Contract through a Cash
Settlement or an Early Settlement pursuant to Sections 5.4 and 5.9 of the
Forward Purchase Contract Agreement shall be deemed to have elected to
participate in the Remarketing.
(b) On the seventh Business Day prior to the Remarketing Date or the first
day of any subsequent Remarketing Period, the Company shall give Holders of
Equity Units and Holders of Separate Notes notice of the Remarketing in an
Authorized Newspaper, including the specific U.S. Treasury security or
securities (including the CUSIP number and/or the principal terms of such
Treasury security or securities) that must be delivered by Holders of Equity
Units that elect not to participate in the Remarketing pursuant to Section
5.4(g) of the Forward Purchase Contract Agreement, no later than 10:00 a.m. (New
York City time) on the seventh Business Day preceding the Remarketing Date. Not
later than seven nor more than 15 calendar days prior to any Remarketing Period,
the Company shall request DTC (or any successor Clearing Agency) to notify,
directly or indirectly, each Beneficial Owner or Clearing Agency Participant
holding Equity Units or Stripped Units and each Beneficial Owner of a Separate
Note of the Remarketing and of the procedures that must be followed in
connection with the Remarketing.
(c) The Forward Purchase Contract Agent shall notify, by 10:00 a.m., New
York City time, on the third Business Date preceding the Remarketing Date or the
first day of any subsequent Remarketing Period, as applicable, the Remarketing
Agent and the Collateral Agent of the aggregate number of Senior Notes of Equity
Units Holders to be remarketed. On the third Business Day immediately preceding
the Remarketing Date or the first day of any subsequent Remarketing Period, as
applicable, no later than by 10:00 a.m. New York City time, pursuant to the
terms of the Pledge Agreement, the Custodial Agent will notify the Remarketing
Agent of the aggregate number of Separate Notes to be remarketed. On the third
Business Day immediately preceding the Remarketing Date or the first day of any
subsequent Remarketing Period, as applicable, the Collateral Agent and the
Custodial Agent, pursuant to the terms of the Pledge Agreement, will deliver for
Remarketing to the Remarketing Agent all Notes to be remarketed. Upon receipt of
such notice from the Forward Purchase Contract Agent and the Custodial Agent and
such Notes from the Collateral Agent and the Custodial Agent, the Remarketing
Agent will, on the Remarketing Date, use its commercially reasonable best
efforts to establish a Reset Rate pursuant to clause (i) of the definition of
Reset Rate and remarket such Senior Notes pursuant to the Remarketing procedures
in the Remarketing Agreement.
(d) The right of each Holder of Senior Notes to have its Senior Notes
tendered for purchase will be limited to the extent that (i) the Remarketing
Agent conducts a Remarketing pursuant to the terms of the Remarketing Agreement,
(ii) the Remarketing Agent is able to find a purchaser or purchasers for the
tendered Senior Notes and (iii) such purchaser or purchasers deliver the
purchase price therefor to the Remarketing Agent.
(e) Upon receipt of the notice provided above in paragraph (c) from the
Forward Purchase Contract Agent and the Custodial Agent and such Notes from the
Collateral Agent and the Custodial Agent, the Remarketing Agent will, on the
Remarketing Date, use its commercially reasonable best efforts to (i) establish
a rate of interest that, in the opinion of the Remarketing Agent, will, when
applied to the outstanding Notes, enable the then current aggregate market value
of the Notes to have a value equal to approximately, but not less than, 100.25%
of the Remarketing Value as of the Remarketing Date or as of any Subsequent
Remarketing Date, as the case may be (the "Reset Rate") and (ii) sell such Notes
on such date at a price equal to approximately, but not less than, 100.25% of
the Remarketing Value.
(f) If, in spite of using its commercially reasonable best efforts, the
Remarketing Agent cannot establish the Reset Rate and remarket the Notes
included in the remarketing at a price equal to approximately, but not less
than, 100.25% of the Remarketing Value, the Remarketing Agent will again attempt
to establish the Reset Rate and remarket the Notes included in the remarketing
at a price equal to approximately, but not less than, 100.25% of the Remarketing
Value on each of the two immediately following Business Days. If the Remarketing
Agent cannot remarket the Notes included in the remarketing at a price equal to
approximately, but not less than, 100.25% of the Remarketing Value on any of
those days, it will attempt to establish the Reset Rate and remarket the Notes
included in the remarketing at a price equal to approximately, but not less
than, 100.25% of the Remarketing Value on each of the three Business Days
immediately preceding June 16, 2005. If the Remarketing Agent cannot remarket
the Notes included in the remarketing at a price equal to approximately, but not
less than, 100.25% of the Remarketing Value on any of those days, it will
attempt to establish the Reset Rate and remarket the Notes included in the
remarketing at a price equal to approximately, but not less than, 100.25% of the
Remarketing Value on each of the three Business Days immediately preceding July
16, 2005. If the Remarketing Agent cannot establish the Reset Rate and remarket
the Notes included in the remarketing at a price equal to approximately, but not
less than, 100.25% of the Remarketing Value either on any of the two Business
Days immediately following the Remarketing Date or on any of the three Business
Days immediately preceding June 16, 2005 or on any of the three Business Days
immediately preceding July 16, 2005, the remarketing in each period will be
deemed to have failed (each, a "Failed Remarketing"). If the Remarketing Agent
cannot establish the Reset Rate and remarket the Notes included in the
remarketing at a price equal to approximately, but not less than, 100.25% of the
Remarketing Value on any of the three Business Days immediately preceding July
16, 2005, the Remarketing Agent will further attempt to establish the Reset Rate
and remarket the Notes included in the remarketing at a price equal to
approximately, but not less than, 100.25% of the Remarketing Value on each of
the three Business Days immediately preceding August 12, 2005. If, in spite of
using its commercially reasonable best efforts, the Remarketing Agent fails to
remarket the Notes underlying the Equity Units at a price equal to
approximately, but not less than, 100.25% of the Remarketing Value in accordance
with the terms of the Pledge Agreement by 4:00 p.m., New York City time, on the
third Business Day immediately preceding the Stock Purchase Date, a "Last Failed
Remarketing" will be deemed to have occurred.
(g) If a successful Remarketing shall have occurred prior to the fourth
Business Day preceding the Stock Purchase Date, the Remarketing Agent will, in
accordance with the Forward Purchase Contract Agreement and the Remarketing
Agreement:
(i) deduct and retain for itself the Remarketing Fee;
(ii) use the proceeds from such successful Remarketing to purchase the
Agent-purchased Treasury Consideration with the CUSIP numbers, if
any, selected by the Remarketing Agent, described in clauses (1)
and (2) of the definition of Remarketing Value related to the
Senior Notes of Holders of Equity Units that were remarketed;
(iii)if any Separate Notes were remarketed, remit to the Collateral
Agent for payment to the Holders of such Separate Notes sold in
the Remarketing the remaining proceeds from such successful
Remarketing attributable to the Separate Notes; and
(iv) if there remain any proceeds from such successful Remarketing,
after the application of such proceeds as set forth in clauses
(i) through (iii) of this sentence, then remit such remaining
proceeds to the Forward Purchase Contract Agent for payment to
the Holders of the Equity Units that were remarketed, on a pro
rata basis, in accordance with the Remarketing Agreement.
(h) In the case of a successful Remarketing occurring prior to the fourth
Business Day preceding the Stock Purchase Date, on or prior to the third
Business Day following the Remarketing Date or any Subsequent Remarketing Date,
the Remarketing Agent shall deliver such Agent-purchased Treasury Consideration
to the Forward Purchase Contract Agent, which shall thereupon deliver such
Agent-purchased Treasury Consideration to the Collateral Agent. The Collateral
Agent, for the benefit of the Company, will thereupon apply such Agent-purchased
Treasury Consideration, in accordance with the Pledge Agreement, to secure such
Holders' obligations under the Forward Purchase Contracts.
(i) If a successful Remarketing shall have occurred on or after the fourth
Business Day preceding the Stock Purchase Date, the Remarketing Agent will, in
accordance with the Forward Purchase Contract Agreement and the Remarketing
Agreement:
(i) deduct and retain for itself the Remarketing Fee;
(ii) pay the proceeds from such successful Remarketing to the Forward
Purchase Contract Agent, which shall thereupon deliver such
proceeds to the Collateral Agent which, for the benefit of the
Company, will thereupon apply such proceeds, in accordance with
the Pledge Agreement in direct settlement of the Holders'
obligations under the Forward Purchase Contracts;
(iii)if any Separate Notes were remarketed, remit to the Collateral
Agent for payment to the Holders of such Separate Notes sold in
the Remarketing the remaining proceeds from such successful
Remarketing attributable to the Separate Notes; and
(iv) if there remain any proceeds from such successful Remarketing,
after the application of such proceeds as set forth in clauses
(i) through (iii) of this sentence, then remit such remaining
proceeds to the Forward Purchase Contract Agent for payment to
the Holders of the Equity Units that were remarketed, on a pro
rata basis, in accordance with the Remarketing Agreement.
(j) If a successful Remarketing occurs, by approximately 4:30 p.m. (New
York City time) on the Remarketing Date, the Remarketing Agent shall advise, by
telephone (promptly confirmed in writing in the case of clause (i)):
(i) the Company, the Forward Purchase Contract Agent, the Collateral
Agent, the Securities Intermediary, DTC and the Trustee of the
Reset Rate determined in the Remarketing;
(ii) each purchaser (or the Depository Participant thereof) of Senior
Notes in the Remarketing of the Reset Rate and the number of
Senior Notes such purchaser is to purchase; and
(iii)each purchaser to give instructions to its Depository
Participant to pay the purchase price on the date of settlement
for such Remarketing in same day funds against delivery of the
remarketed Senior Notes purchased through the facilities of DTC.
(k) Any distribution to Holders of excess funds and interest described in
this Section 1.6 shall be payable at the Office of the Agent in The City of New
York maintained for that purpose or, at the option of the Holder or the holder
of Separate Notes, as applicable, by check mailed to the address of the Person
entitled thereto at such address as it appears on the relevant Register or by
wire transfer to an account specified by the Holder or the holder of Separate
Notes, as applicable.
(l) If a Failed Remarketing occurs, the Remarketing Agent and the Company,
as applicable, shall take the following actions:
(i) the Remarketing Agent shall notify by telephone the Company, the
Forward Purchase Contract Agent, the Collateral Agent and the
Trustee, that a Failed Remarketing has occurred, whereupon the
Company shall notify the Clearing Agency, by telephone, that a
Failed Remarketing has occurred;
(ii) with respect to any Remarketing Period during which no successful
Remarketing occurred, the Company shall publish notice by means
of Bloomberg and Reuters newswires, such notice to be published
no later than the fourth Business Day following the end of such
Remarketing Period;
(iii)the Remarketing Agent shall determine the Reset Rate in
accordance with clause (ii) of the Reset Rate definition; and
(iv) the Remarketing Agent shall remit, within three Business Days
following the end of a Remarketing Period which constituted a
Failed Remarketing, the Pledged Notes that were to be remarketed
to the Collateral Agent and the Separate Notes that were to be
remarketed to the Custodial Agent.
(m) If upon a Last Failed Remarketing, the Collateral Agent delivers any
Senior Notes to the Company in full satisfaction of the Holder's obligation
under the related Forward Purchase Contracts, any accumulated and unpaid
interest on such Notes will become payable by the Company to the Forward
Purchase Contract Agent for payment to the Holder of the Equity Units to which
such Notes relate. Such payment will be made by the Company on or prior to 11:00
a.m., New York City time, on the Stock Purchase Date in lawful money of the
United States by certified or cashier's check or wire transfer in immediately
available funds payable to or upon the order of the Forward Purchase Contract
Agent. Upon the occurrence of a Last Failed Remarketing, the Company will retain
and dispose of the Pledged Notes of all Holders in satisfaction of the Holders'
obligations under the related Forward Purchase Contracts. The Company will
publish notice by means of Bloomberg and Reuters newswires of any Remarketing
Period during which no successful Remarketing occurred, such notice to be
published not later than the fourth Business Day following the end of such
Remarketing Period. The Company will cause a notice of the Last Failed
Remarketing to be published on the fourth Business Day following the date of the
Last Failed Remarketing in an Authorized Newspaper.
(n) In the event of a Last Failed Remarketing, the Remarketing Agent shall
determine the Reset Rate that shall apply to the Senior Notes held by the
Holders of Equity Units that elected not to participate in the remarketing and
Holders of Separate Notes according to the following method, provided that in no
event shall the Reset Rate exceed the maximum rate permitted by state usury laws
and other applicable laws. After the Last Failed Remarketing, the Remarketing
Agent will take the average of the interest rates quoted to it by three
nationally recognized investment banks selected by the Company, which are
underwriters or dealers in debt securities similar to the Senior Notes, that in
their judgment reflects an accurate market rate of interest applicable to the
Senior Notes at that time. Following receipt of these quotes, the Remarketing
Agent will have the right, in its sole judgment, to either recalculate the
average based on only two of the quoted interest rates if one of the three
quotes, in the Remarketing Agent's sole discretion, did not reflect market
conditions or, alternatively, determine a consensus among the investment banks
rather than a strict mathematical average by taking into account all relevant
qualitative and quantitative factors. These factors may include, but shall not
limited to, maturity of the Senior Notes, the credit rating and credit risk of
the Company and companies of similar industries, the then yield to maturity of
the Senior Notes and the state of the markets for primary and secondary sales of
similar debt securities.
(o) In accordance with DTC's normal procedures, on the date of settlement
of such Remarketing or the Stock Purchase Date, as applicable, the transactions
described above with respect to each Senior Notes remarketed in the Remarketing
shall be executed through DTC, and the accounts of the respective Depository
Participants shall be debited and credited and such remarketed Senior Notes
delivered by book entry as necessary to effect purchases and sales of such
remarketed Senior Notes. DTC shall make payment in accordance with its normal
procedures.
(p) If any Holder of Senior Notes selling Senior Notes in the Remarketing
fails to deliver such Senior Notes, the direct or indirect Depository
Participant of such selling Holder and of any other Person who was to have
purchased Senior Notes in the Remarketing may deliver to any such other Person
an aggregate principal amount of Senior Notes that is less than the aggregate
principal amount of Senior Notes that otherwise was to be purchased by such
Person. In such event, the aggregate principal amount of Senior Notes to be so
delivered shall be determined by such direct or indirect Depository Participant,
and delivery of such lesser aggregate principal amount of Senior Notes shall
constitute good delivery.
(q) The Remarketing Agent is not obligated to purchase any Senior Notes
that otherwise would remain unsold in the Remarketing. Neither the Company nor
the Remarketing Agent shall be obligated in any case to provide funds to make
payment upon tender of the Senior Notes for Remarketing.
(r) Under the Remarketing Agreement, the Company, in its capacity as issuer
of the Senior Notes, shall be liable for, and shall pay, any and all costs and
expenses incurred in connection with the Remarketing, other than the Remarketing
Fee.
(s) The settlement procedures set forth herein, including provisions for
payment by purchasers of the remarketed Senior Notes in the Remarketing, shall
be subject to modification to the extent required by DTC or if the book-entry
system is no longer available for the remarketed Senior Notes at the time of the
Remarketing, to facilitate the Remarketing of the remarketed Senior Notes in
certificated form, and shall provide for the authentication and delivery of
Senior Notes in a principal amount equal to the unremarketed portion of such
Senior Notes. In addition, the Remarketing Agent may modify the settlement
procedures set forth herein in order to facilitate the settlement process.
SECTION 1.7. Optional Remarketing.
- ----------------------------------
(a) On or prior to the fourth Business Day immediately preceding either the
Remarketing Date or if applicable, the first day of any subsequent Remarketing
Period, but no earlier than the Interest Payment Date immediately preceding the
last Interest Payment Date before the Stock Purchase Date, holders of Separate
Notes may elect to have their Separate Notes remarketed by Transferring their
Separate Notes and delivering a notice of such election, substantially in the
form of Exhibit C to the Pledge Agreement, to the Collateral Agent. On the third
Business Day immediately prior to the Remarketing Date or the first day of any
subsequent Remarketing Period, by 10:00 a.m., New York City time, the Collateral
Agent shall notify the Remarketing Agent of the number of such Separate Notes to
be remarketed. The Collateral Agent will hold such Separate Notes in an account
separate from the Collateral Account. A holder of Separate Notes electing to
have its Separate Notes remarketed will also have the right to withdraw such
election by written notice to the Collateral Agent, substantially in the form of
Exhibit D to the Pledge Agreement, on or prior to the fourth Business Day
immediately preceding the applicable Remarketing Date or the first day of a
subsequent Remarketing Period, upon which notice the Collateral Agent will
return such Separate Notes to such holder.
(b) On the third Business Day immediately preceding the Remarketing Date or
the first day of any subsequent Remarketing Period, the Collateral Agent at the
written direction of the Remarketing Agent will deliver to the Remarketing Agent
for Remarketing all Separate Notes delivered to the Collateral Agent pursuant to
Section 4.5(d) of the Pledge Agreement and not withdrawn pursuant to the terms
thereof prior to such date. If the holder of the Separate Notes delivers only
such notice but not the Separate Notes subject to such notice, then none of such
holder's Separate Notes shall be included in the Remarketing. Once the holder of
Separate Notes elects to participate in the Remarketing, such Separate Notes
will be remarketed in the Remarketing, unless such notice is properly withdrawn.
In accordance with Section 4.5(d) of the Pledge Agreement, upon the occurrence
of a Failed Remarketing, the Remarketing Agent will promptly return such
Separate Notes to the Collateral Agent for redelivery to such holders of such
Separate Notes.
SECTION 1.8. Sinking Fund.
- --------------------------
The Senior Notes shall not be entitled to any sinking fund.
SECTION 1.9. Redemption and Repurchase.
- ---------------------------------------
Except as provided in Section 1.12, the Senior Notes shall not be
redeemable prior to their Stated Maturity.
SECTION 1.10. Covenants.
- ------------------------
(a) For so long as any Senior Notes of this series remain outstanding, the
Company will not create or incur or allow any of its subsidiaries to create or
incur any pledge or security interest on any of the capital stock of a Public
Utility Subsidiary held by the Company or one of its subsidiaries or a
Significant Subsidiary.
For purposes of this covenant:
(i) Public Utility Subsidiary means, at any particular time, a direct or
indirect subsidiary of the Company that, as a substantial part of its
business, distributes or transmits electric energy to retail or
wholesale customers at rates or tariffs that are regulated by either a
state or Federal regulatory authority.
(ii) Significant Subsidiary means, at any particular time, any direct
subsidiary of the Company whose consolidated gross assets or
consolidated gross revenues (having regard to the Company's direct
beneficial interest in the shares, or the like, of that subsidiary)
represent at least 25% of the Company's consolidated gross assets or
consolidated gross revenues appearing in the most recent audited
financial statements of the Company as of the date of determination.
(b) The provisions of Article Ten of the Original Indenture shall be
applicable to the Senior Notes.
SECTION 1.11. Defeasance.
- -------------------------
The provisions of Section 11.01 of the Original Indenture shall not apply
to the Senior Notes.
SECTION 1.12. Tax Event Redemption.
- -----------------------------------
(a) If a Tax Event shall occur, the Company may, at its option, redeem the
Senior Notes in whole (but not in part) at any time at a price per Senior Note
equal to the Redemption Price. Installments of interest on the Senior Notes that
are due and payable on or prior to the date of redemption (the "Tax Event
Redemption Date") will be payable to the Holders of the Senior Notes registered
as such on the Record Date next preceding such Tax Event Redemption Date. If,
following the settlement of the Forward Purchase Contracts and following the
occurrence of a Tax Event, the Company, at its option, redeems the Senior Notes,
the proceeds of the redemption will be payable in cash to the Holders of the
Senior Notes.
(b) If the Company exercises its option to redeem the Senior Notes
following the occurrence of a Tax Event prior to the Remarketing Date, or if
there has not been a successful Remarketing prior to the Stock Purchase Date,
the Company shall in the notice to the Trustee pursuant to Section 3.02 of the
Original Indenture specify the Redemption Price. Upon the specification of the
Redemption Price by the Company, the Company shall appoint the Collateral Agent
to acquire the Treasury Portfolio in consultation with the Company and in
accordance with the Forward Purchase Contract Agreement. The Collateral Agent
shall then apply, out of the aggregate Redemption Price for the Senior Notes
that are components of Equity Units, an amount equal to the aggregate Redemption
Amount for the Senior Notes that are components of Equity Units to purchase on
behalf of the Holders of Equity Units the Treasury Portfolio and promptly remit
the remaining portion, if any, of such aggregate Redemption Price to the Forward
Purchase Contract Agent for payment to the Holders of such Equity Units. The
Treasury Portfolio will be substituted for the Pledged Notes, and will be
pledged to the Collateral Agent in accordance with the terms of the Pledge
Agreement to secure the obligation of each Holder of an Equity Unit to purchase
the Common Stock under the Forward Purchase Contract constituting a part of such
Equity Units. Payment of the Redemption Price to Holders of Separate Notes shall
be made in cash on the Tax Event Redemption Date.
(c) If a Tax Event Redemption occurs after the earlier of a successful
Remarketing or the Stock Purchase Date, payment of the Redemption Price to each
Holder of Senior Notes shall be made by the Trustee (subject to its receipt of
funds), no later than 12:00 noon, New York City time, on the Tax Event
Redemption Date, by check or wire transfer in immediately available funds
(provided the necessary wire instructions have been provided to the Trustee at
least 15 days prior to the Tax Event Redemption Date) at such place and to such
account as may be designated by each such Holder of Senior Notes, including the
Collateral Agent. If the Trustee holds immediately available funds sufficient to
pay the Redemption Price of the Senior Notes, then, on such Tax Event Redemption
Date, such Senior Notes will cease to be Outstanding.
(d) The Trustee shall have no duty or liability to determine or verify the
Redemption Price. Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the Tax Event Redemption Date to each registered
Holder of the Senior Notes to be repaid at its registered address. Unless the
Company defaults in payment of the Redemption Price, on and after the Tax Event
Redemption Date interest shall cease to accrue on the Senior Notes, whether or
not such Senior Notes have been received by the Company, and all other rights of
the Holders in respect of the Senior Notes shall terminate and lapse (other than
the right to receive the Redemption Price upon delivery of such Senior Notes but
without interest on such Redemption Price).
SECTION 1.13. Tax Treatment.
- ----------------------------
The Company agrees, and by acceptance of a beneficial ownership interest in
the Senior Notes, each beneficial holder of Senior Notes will be deemed to have
agreed (1) to treat the acquisition of an Equity Unit as the acquisition of the
Senior Note and the Forward Purchase Contract constituting the Equity Unit and
to allocate the purchase price of the Equity Unit between the Senior Note and
the Forward Purchase Contract as $50 and $0, respectively, (2) to treat the
Senior Notes as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the
"Contingent Payment Regulations") for United States federal income tax purposes
and (3) to be bound by the Company's determination of the "comparable yield" and
"projected payment schedule," within the meaning of the Contingent Payment
Regulations, with respect to the Senior Notes for United States federal income
tax purposes. A Holder of Senior Notes may obtain the amount of original issue
discount, issue date, yield to maturity, comparable yield and projected payment
schedule by submitting a written request for it to the Company at the following
address: American Electric Power, Investor Relations, One Riverside Plaza,
Columbus, Ohio 43215.
ARTICLE TWO
MISCELLANEOUS PROVISIONS
SECTION 2.1. Recitals by Company.
- ---------------------------------
The recitals in this Third Supplemental Indenture are made by the Company
only and not by the Trustee, and all of the provisions contained in the Original
Indenture in respect of the rights, privileges, immunities, powers and duties of
the Trustee shall be applicable in respect of the Senior Notes and of this Third
Supplemental Indenture as fully and with like effect as if set forth herein in
full.
SECTION 2.2. Ratification and Incorporation of Original Indenture.
- ------------------------------------------------------------------
As supplemented hereby, the Original Indenture is in all respects ratified
and confirmed, and the Original Indenture and this Third Supplemental Indenture
shall be read, taken and construed as one and the same instrument.
SECTION 2.3. .Executed in Counterparts.
- ---------------------------------------
This Third Supplemental Indenture may be executed in several counterparts,
each of which shall be deemed to be an original, and such counterparts shall
together constitute but one and the same instrument.
SECTION 2.4. Separability.
- -------------------------------
In case any provisions contained in this Third Supplemental Indenture or in
any Senior Note shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 2.5. Governing Law.
- ---------------------------
THIS THIRD SUPPLEMENTAL INDENTURE AND EACH SENIOR NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE OR INSTRUMENTS ENTERED INTO AND, IN EACH CASE, PERFORMED IN SAID
STATE.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed, all as of the day and year first above written.
AMERICAN ELECTRIC POWER COMPANY, INC.
By: /s/ A. A. Pena
Name: A. A. Pena
Title: Treasurer
THE BANK OF NEW YORK, as Trustee
By: /s/ Terence Rawlins
Name: Terence Rawlins
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF SENIOR NOTE
[Face of Note]
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY OR ANY SUCCESSOR DEPOSITARY
APPOINTED AS SUCH PURSUANT TO THE INDENTURE (THE "DEPOSITARY") TO A NOMINEE OF
THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO SUCH A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OR TRANSFER, EXCHANGE OR PAYMENT,
AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF THE DEPOSITARY OR ITS
NOMINEE OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY AND ANY PAYMENT IS MADE TO THE DEPOSITARY OR ITS NOMINEE, ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF HAS AN INTEREST HEREIN.]*
CUSIP No.
ISIN No.
No. ___ $_______________
AMERICAN ELECTRIC POWER COMPANY, INC.
5.75% Senior Notes Due August 16, 2007
American Electric Power Company, Inc., a corporation duly organized and
existing under the laws of New York (the "Company," which term includes any
successor corporation under the Indenture hereinafter referred to), for value
received, hereby promises to pay to [Cede & Co.]* or registered assigns, the
principal sum of _______________________ United States Dollars [, or such other
principal amount as shall be set forth in the Schedule of Increases or Decreases
attached hereto,]** at the Company's Office or Agency or Office of the Agent in
The City of New York for said purpose, on August 16, 2007 in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to pay interest
thereon from June 11, 2002 or from the next most recent date to which interest
has been paid or duly provided for, quarterly in arrears on each February 16,
May 16, August 16 and November 16 of each year (each such date, an "Interest
Payment Date"), commencing on August 16, 2002, at the rate of 5.75% per annum
to, but excluding, the earlier of (i) the settlement date of a successful
Remarketing under the Forward Purchase Contract Agreement or (ii) the Stock
Purchase Date, and, thereafter, at the Reset Rate to, but excluding, the Stated
Maturity.
- -----------------------------
* Insert in Global Securities.
** Insert in Global Securities and Pledged Notes.
The amount of interest so payable for any period shall be computed (i) for
any full quarterly period on the basis of a 360-day year of twelve 30-day months
and (ii) for any period shorter than a full quarterly period, on the basis of a
30-day month and, for periods of less than a month, on the basis of the actual
number of days elapsed per 30-day month. In the event that any Interest Payment
Date is not a Business Day, then payment of the interest or principal payable on
such date will be made on the next succeeding day which is a Business Day and no
interest shall accrue in respect of the amounts which payment is so delayed for
the period from and after such interest payment date or other payment date,
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
Payments of the principal of and interest on the Senior Notes shall be made
at said Office or Agency of the Company or at the Office of the Agent in The
City of New York to which interest on the Senior Notes has been paid or duly
provided for, until payment of said principal sum has been made or duly provided
for; provided that, unless this Senior Note is a Senior Note issued in global
form ("Global Security"), interest may be paid, at the option of the Company,
(i) by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register or (ii) by wire transfer at such
place and to such account at a banking institution in the United States as may
be designated in writing to the Trustee at least sixteen (16) days prior to the
date for payment by the Person entitled thereto. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date, as provided
in the Indenture, as hereinafter defined, shall be paid to the Person in whose
name this Note (or one or more Predecessor Securities) shall have been
registered at the close of business on the Regular Record Date with respect to
such Interest Payment Date, provided that interest payable on the Stated
Maturity or any redemption date shall be paid to the Person to whom principal is
paid. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and
shall be paid as provided in said Indenture.
Reference is hereby made to the further provisions of this Senior Note set
forth herein, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to herein by manual signature, this Senior Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated: ___________________
AMERICAN ELECTRIC POWER COMPANY, INC.
By: _________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated in accordance with,
and referred to in, the within-mentioned Indenture.
Dated: ___________________
THE BANK OF NEW YORK, as Trustee
By: __________________________
Authorized Signatory
<PAGE>
[Reverse of Note]
American Electric Power Company, Inc.
5.75% Senior Notes Due August 16, 2007
This Senior Note is one of a duly authorized issue of securities of the
Company (the "Securities"), issued and to be issued in one or more series under
an Indenture, dated as of May 1, 2001 (the "Original Indenture"), as previously
supplemented and as to be supplemented by a third supplemental indenture, dated
as of June 11, 2002 (the "Third Supplemental Indenture" and the Original
Indenture, as so supplemented, the "Indenture"), between the Company and The
Bank of New York, a New York banking corporation, as trustee (the "Trustee,"
which term includes any successor trustee under the Indenture), and reference is
hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders and of the terms upon which the Securities are, and are
to be, authenticated and delivered. This Senior Note is one of a series
designated as 5.75% Senior Notes Due August 16, 2007 of the Company (hereinafter
called the "Senior Notes"), issued under the Original Indenture, which is
limited in aggregate principal amount to $300,000,000.
Neither the Original Indenture nor the Senior Notes limit or otherwise
restrict the amount of indebtedness which may be incurred or other securities
which may be issued by the Company. The Senior Notes issued under the Indenture
are direct, unsecured obligations of the Company and will mature on August 16,
2007. The Senior Notes rank on parity with all other unsecured, unsubordinated
indebtedness of the Company.
The Senior Notes will bear interest as set forth on the face hereof and in
the Third Supplemental Indenture. The Reset Rate will be the interest rate per
annum that is determined by the Remarketing Agent pursuant to the Remarketing
Agreement as follows: (i) in connection with a successful Remarketing, the rate
of interest that will, when applied to the Outstanding Notes, enable the then
current aggregate market value of the Notes to have a value equal to
approximately, but not less than, 100.25% of the Remarketing Value as of the
Remarketing Date or as of any Subsequent Remarketing Date, as the case may be,
or (ii) upon the occurrence of a Failed Remarketing the rate of interest
applicable to the Senior Notes initially until (A) the Senior Notes are
successfully remarketed pursuant to the Forward Purchase Contract Agreement and
the Remarketing Agreement or (B) if the Last Failed Remarketing shall have
occurred, in accordance with the method as described below.
Notwithstanding anything herein to the contrary, the Reset Rate shall in no
event exceed the maximum rate, if any, permitted by applicable law.
In the event of a Last Failed Remarketing, the Remarketing Agent shall
determine the Reset Rate that shall apply to the Senior Notes held by the
Holders of Equity Units that elected not to participate in the remarketing and
Holders of Separate Notes according to the following method. After the Last
Failed Remarketing, the Remarketing Agent will take the average of the interest
rates quoted to it by three nationally recognized investment banks selected by
the Company, which are underwriters or dealers in debt securities similar to the
Senior Notes, that in their judgment reflects an accurate market rate of
interest applicable to the Senior Notes at that time. Following receipt of these
quotes, the Remarketing Agent will have the right, in its sole judgment, to
either recalculate the average based on only two of the quoted interest rates if
one of the three quotes, in the Remarketing Agent's sole discretion, did not
reflect market conditions or, alternatively, determine a consensus among the
investment banks rather than a strict mathematical average by taking into
account all relevant qualitative and quantitative factors. These factors may
include, but shall not limited to, maturity of the Senior Notes, the credit
rating and credit risk of the Company and companies of similar industries, the
then yield to maturity of the Senior Notes and the state of the markets for
primary and secondary sales of similar debt securities.
The Senior Notes are not redeemable prior to maturity except pursuant to a
Tax Event in accordance with the Third Supplemental Indenture. If a Tax Event
shall occur, the Company may, at its option, redeem the Senior Notes in whole
(but not in part) at any time at a price per Senior Note equal to the Redemption
Price. Installments of interest on the Senior Notes that are due and payable on
or prior to the date of redemption will be payable to the Holders of the Senior
Notes registered as such at the close of business on the Record Date next
preceding such Tax Event Redemption Date. If, following the settlement of the
Forward Purchase Contracts and following the occurrence of a Tax Event, the
Company, at its option, redeems the Senior Notes, the proceeds of the redemption
will be payable in cash to the Holders of the Senior Notes.
The Company agrees, and by acceptance of a beneficial ownership interest in
the Senior Notes, each beneficial holder of Senior Notes will be deemed to have
agreed (1) for United States federal, state and local income and franchise tax
purposes to treat the acquisition of an Equity Unit as the acquisition of the
Senior Note and the Forward Purchase Contract constituting the Equity Unit, (2)
to treat the Senior Notes as indebtedness that is subject to Treas. Reg. Sec.
1.1275-4 (the "Contingent Payment Regulations") for United States federal income
tax purposes and (3) to be bound by the Company's determination of the
"comparable yield" and "projected payment schedule," within the meaning of the
Contingent Payment Regulations, with respect to the Senior Notes for United
States federal income tax purposes. A Holder of Senior Notes may obtain the
amount of original issue discount, issue date, yield to maturity, comparable
yield and projected payment schedule by submitting a written request for it to
the Company at the following address: American Electric Power, Investor
Relations, One Riverside Plaza, Columbus, Ohio 43215.
The Senior Notes are not entitled to any sinking fund.
The Senior Notes that are a component of Equity Units or that so elect
under Section 1.7 of the Supplemental Indenture will be subject to Remarketing
and, in the case of a Failed Remarketing, the Collateral Agent for the benefit
of the Company reserves all of its rights as a secured party of the Pledged
Notes with respect thereto and, subject to applicable law and Section 5.4 of the
Forward Purchase Contract Agreement, may, among other things, permit the Company
to cause the Senior Notes to be sold or to retain and cancel such Senior Notes,
in either case, in full satisfaction of the Holders' obligations under the
Forward Purchase Contracts.
If an Event of Default with respect to the Senior Notes shall occur and be
continuing, the principal of the Senior Notes may be declared due and payable in
the manner and with the effect provided in the Indenture. The Senior Indenture
provides that in certain circumstances such declaration and its consequences may
be waived by the Holders of a majority in aggregate principal amount of the
Senior Notes then Outstanding. However, any such consent or waiver by the Holder
shall not affect any subsequent default or impair any right consequent thereon.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Securities of all series affected by such supplemental
indenture or indentures at the time outstanding voting as one class, as defined
in the Indenture, to execute supplemental indentures for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of any Securities of
any series, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, or reduce any premium payable upon the
redemption thereof, or reduce the amount of the principal of a Discount Security
that would be due and payable upon a declaration of acceleration of the maturity
thereof pursuant to the Indenture, without the consent of the holder of each
Senior Note then outstanding and affected; (ii) reduce the aforesaid percentage
of Senior Notes, the holders of which are required to consent to any such
supplemental indenture, or reduce the percentage of Senior Notes, the holders of
which are required to waive any default and its consequences, without the
consent of the holder of each Senior Note then outstanding and affected thereby;
or (iii) modify any provision of Section 6.01(c) of the Indenture (except to
increase the percentage of principal amount of securities required to rescind
and annul any declaration of amounts due and payable under the Senior Notes),
without the consent of the holder of each Senior Note then outstanding and
affected thereby. The Indenture also contains provisions permitting the Holders
of a majority in aggregate principal amount of the Senior Notes of any series at
the time outstanding affected thereby, on behalf of the Holders of the Senior
Notes of such series, to waive any past default in the performance of any of the
covenants contained in the Indenture, or established pursuant to the Indenture
with respect to such series, and its consequences, except a default in the
payment of the principal of or premium, if any, or interest on any of the Notes
of such series. Any such consent or waiver by the registered Holder of this Note
(unless revoked as provided in the Indenture) shall be conclusive and binding
upon such Holder and upon all future Holders and owners of this Note and of any
Note issued in exchange herefor or in place hereof (whether by registration of
transfer or otherwise), irrespective of whether or not any notation of such
consent or waiver is made upon this Note.
Restrictive Covenants
- ---------------------
Limitation upon Liens of Certain Subsidiaries
For so long as any Senior Notes of this series remain outstanding, the
Company will not create or incur or allow any of its subsidiaries to create or
incur any pledge or security interest on any of the capital stock of a Public
Utility Subsidiary held by the Company or one of its subsidiaries or a
Significant Subsidiary.
For purposes of this covenant:
(i) Public Utility Subsidiary means, at any particular time, a direct or
indirect subsidiary of the Company that, as a substantial part of its
business, distributes or transmits electric energy to retail or
wholesale customers at rates or tariffs that are regulated by either a
state or Federal regulatory authority.
(ii) Significant Subsidiary means, at any particular time, any direct
subsidiary of ours whose consolidated gross assets or consolidated
gross revenues (having regard to the Company's direct beneficial
interest in the shares, or the like, of that subsidiary) represent at
least 25% of the Company's consolidated gross assets or consolidated
gross revenues appearing in the most recent audited financial
statements of the Company as of the date of determination.
Limitation upon Mergers, Consolidations and Sale of Assets
The provisions of Article Ten of the Indenture shall be applicable to the
Senior Notes of this series.
The Indenture contains provisions for defeasance of (a) the entire
indebtedness evidenced by this Senior Note and (b) certain restrictive covenants
upon compliance by the Company with certain conditions set forth therein;
provided, however, Section 11.01 of the Original Indenture shall not apply to
the Senior Notes.
No reference herein to the Indenture and no provision of this Senior Note
or of the Indenture shall alter or impair the obligation of the Company, which
are absolute and unconditional, to pay the principal of (and premium, if any)
and interest, if any, on this Senior Note at the times, places and rates, and in
the coin or currency, herein prescribed.
The Senior Notes of this series are issuable only in registered form
without coupons in minimum denominations of $50 or any integral multiple of $50
over such minimum denomination. At the Office or Agency of the Company or at the
Office of the Agent in The City of New York referred to on the face hereof and
as provided in the Indenture and subject to certain limitations therein set
forth, the Senior Notes are exchangeable for a like aggregate principal amount
of Senior Notes and of like tenor of a difference authorized denomination, as
requested by the Holder surrendering the same.
As provided in the Indenture and subject to certain limitations therein set
forth, this Senior Note is transferable by the registered holder hereof on the
Security Register of the Company, upon surrender of this Senior Note for
registration of transfer at the office or agency of the Company as may be
designated by the Company accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by the
registered Holder hereof or his or her attorney duly authorized in writing, and
thereupon one or more new Senior Notes of authorized denominations and for the
same aggregate principal amount and series will be issued to the designated
transferee or transferees. No service charge will be made for any such transfer,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in relation thereto.
Prior to due presentment of this Senior Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Senior Note is registered as the owner hereof for
all purposes, whether or not this Senior Note be overdue and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Senior Note, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, or any indenture
supplement thereto, against any incorporator, stockholder, officer or director,
past, present or future, as such, of the Company or of any predecessor or
successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.
THIS SENIOR NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SAID STATE.
All terms used in this Senior Note (and not otherwise defined in this
Senior Note) that are defined in the Indenture, the Forward Purchase Contract
Agreement, the Remarketing Agreement or the Pledge Agreement, as the case may
be, shall have the meanings assigned to them in the Indenture, the Forward
Purchase Contract Agreement, the Remarketing Agreement or the Pledge Agreement,
as the case may be and as the context may require.
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto
- -----------------------------------------------------------------------------.
(please insert Social Security or other identifying number of assignee)
- -----------------------------------------------------------------------------.
- -----------------------------------------------------------------------------.
- -----------------------------------------------------------------------------.
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
the within Senior Note and all rights thereunder, hereby irrevocably
constituting and appointing
- -----------------------------------------------------------------------------.
- -----------------------------------------------------------------------------.
- -----------------------------------------------------------------------------.
- -----------------------------------------------------------------------------.
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agent to transfer said Senior Note on the books of the Company, with full power
of substitution in the premises.
Dated:_______________ __, ______
----------------------------
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular without
alteration or enlargement, or any change whatever.
<PAGE>
<TABLE>
<CAPTION>
[TO BE ATTACHED TO GLOBAL CERTIFICATES AND PLEDGED NOTES]
SCHEDULE OF INCREASES OR DECREASES
The following increases or decreases in this [Global Certificate] [Pledged
Note] have been made:
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Principal amount of
Amount of decrease Amount of increase in Senior Notes
in principal amount principal amount of evidenced by the
of Senior Notes Senior Notes [Global Certificate] Signature of
evidenced by the evidenced by the [Pledged Note] authorized signatory
[Global Certificate] [Global Certificate] following such of Trustee or
Date [Pledged Note] [Pledged Note] decrease or increase Collateral Agent
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</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>5
<FILENAME>x4c.txt
<DESCRIPTION>(C) FORWARD PURCHASE CONTRACT
<TEXT>
<PAGE>
EXHIBIT 4(c)
AMERICAN ELECTRIC POWER COMPANY, INC.
AND
THE BANK OF NEW YORK
AS FORWARD PURCHASE CONTRACT AGENT
FORWARD PURCHASE CONTRACT AGREEMENT
Dated as of June 11, 2002
<PAGE>
Table of Contents
. Page
ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........... 1
Section 1.1 Definitions.................................................. 1
Section 1.2 Compliance Certificates and Opinions.........................13
Section 1.3 Form of Documents Delivered to Agent.........................14
Section 1.4 Acts of Holders; Record Dates................................14
Section 1.5 Notices......................................................16
Section 1.6 Notice to Holders; Waiver....................................16
Section 1.7 Effect of Headings and Table of Contents.....................17
Section 1.8 Successors and Assigns.......................................17
Section 1.9 Separability Clause..........................................17
Section 1.10 Benefits of Agreement........................................17
Section 1.11 Governing Law................................................17
Section 1.12 Legal Holidays...............................................17
Section 1.13 Counterparts.................................................18
Section 1.14 Inspection of Agreement......................................18
ARTICLE II. CERTIFICATE FORMS................................................18
Section 2.1 Forms of Certificates Generally..............................18
Section 2.2 Form of Agent's Certificate of Authentication................19
ARTICLE III. THE EQUITY UNITS................................................20
Section 3.1 Title and Terms; Denominations...............................20
Section 3.2 Rights and Obligations Evidenced by the Certificates.........20
Section 3.3 Execution, Authentication, Delivery and Dating...............21
Section 3.4 Temporary Certificates.......................................22
Section 3.5 Registration; Registration of Transfer and Exchange..........22
Section 3.6 Book-Entry Interests.........................................24
Section 3.7 Notices To Holders...........................................24
Section 3.8 Appointment of Successor Clearing Agency.....................24
Section 3.9 Definitive Certificates......................................24
Section 3.10 Mutilated, Destroyed, Lost and Stolen Certificates...........25
Section 3.11 Persons Deemed Owners........................................26
Section 3.12 Cancellation.................................................27
Section 3.13 Establishment of Stripped Units..............................27
Section 3.14 Reestablishment of Equity Units..............................28
Section 3.15 Transfer of Collateral Upon Occurrence of Termination Event..30
Section 3.16 No Consent to Assumption.....................................30
ARTICLE IV. THE NOTES........................................................30
Section 4.1 Payment of Interest; Rights to Interest Payments
Preserved; Notice....................................30
Section 4.2 Notice and Voting............................................31
Section 4.3 Tax Event Redemption.........................................32
ARTICLE V. THE FORWARD PURCHASE CONTRACTS; THE REMARKETING...................32
Section 5.1 Purchase of Shares of Common Stock...........................32
Section 5.2 Contract Adjustment Payments...................................
Section 5.3 Deferral of Contract Adjustment Payments.....................35
Section 5.4 Payment of Purchase Price; Remarketing.......................37
Section 5.5 Issuance of Shares of Common Stock...........................42
Section 5.6 Adjustment of Settlement Rate................................42
Section 5.7 Notice of Adjustments and Certain Other Events...............49
Section 5.8 Termination Event; Notice....................................50
Section 5.9 Early Settlement.............................................50
Section 5.10 Early Settlement Upon Merger.................................52
Section 5.11 Charges and Taxes............................................53
Section 5.12 No Fractional Shares.........................................54
Section 5.13 Tax Treatment................................................54
ARTICLE VI. REMEDIES.........................................................54
Section 6.1 Unconditional Right of Holders to Purchase Common Stock......54
Section 6.2 Restoration of Rights and Remedies...........................55
Section 6.3 Rights and Remedies Cumulative...............................55
Section 6.4 Delay or Omission Not Waiver.................................55
Section 6.5 Undertaking For Costs........................................55
Section 6.6 Waiver of Stay or Extension Laws.............................56
ARTICLE VII. THE AGENT.......................................................56
Section 7.1 Certain Duties, Rights and Immunities........................56
Section 7.2 Notice of Default............................................58
Section 7.3 Certain Rights of Agent......................................58
Section 7.4 Not Responsible For Recitals, Etc............................59
Section 7.5 May Hold Equity Units and Stripped Units and Other Dealings..60
Section 7.6 Money Held In Custody........................................60
Section 7.7 Compensation and Reimbursement...............................60
Section 7.8 Corporate Agent Required; Eligibility........................61
Section 7.9 Resignation and Removal; Appointment of Successor............61
Section 7.10 Acceptance of Appointment By Successor.......................62
Section 7.11 Merger, Conversion, Consolidation or Succession to Business..63
Section 7.12 Preservation of Information; Communications to Holders.......63
Section 7.13 Failure to Act...............................................63
Section 7.14 No Obligations of Agent......................................64
Section 7.15 Tax Compliance...............................................64
ARTICLE VIII. SUPPLEMENTAL AGREEMENTS........................................65
Section 8.1 Supplemental Agreements Without Consent of Holders...........65
Section 8.2 Supplemental Agreements With Consent of Holders..............65
Section 8.3 Execution of Supplemental Agreements.........................67
Section 8.4 Effect of Supplemental Agreements............................67
Section 8.5 Reference to Supplemental Agreements.........................67
ARTICLE IX. CONSOLIDATION, MERGER, SALE OR CONVEYANCE........................67
Section 9.1 Company May Consolidate, Etc., Only on Certain Terms.........67
Section 9.2 Successor Substituted........................................68
ARTICLE X. COVENANTS.........................................................68
Section 10.1 Performance Under Forward Purchase Contracts.................68
Section 10.2 Maintenance of Office or Agency..............................68
Section 10.3 Company to Reserve Common Stock..............................69
Section 10.4 Covenants as to Common Stock.................................69
Section 10.5 Statements of Officer of the Company as to Default...........69
Section 10.6 ERISA........................................................70
EXHIBITS
Exhibit A...Form of Equity Units Certificate
Exhibit B...Form of Stripped Units Certificate
Exhibit C...Instruction from Forward Purchase Contract Agent to Collateral Agent
Exhibit D...Instruction to Forward Purchase Contract Agent
Exhibit E...Notice to Settle by Cash
<PAGE>
FORWARD PURCHASE CONTRACT AGREEMENT, dated as of June 11, 2002, between
American Electric Power Company, Inc., a New York corporation (the "Company"),
and The Bank of New York, a New York banking corporation, acting as Forward
Purchase Contract Agent for the Holders of Equity Units and Stripped Units from
time to time (the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Equity Units and Stripped Units.
All things necessary to make the Forward Purchase Contracts, when the
Certificates are executed by the Company and authenticated, executed on behalf
of the Holders and delivered by the Agent, as provided in this Agreement, the
valid obligations of the Company, and to constitute this Agreement a valid
agreement of the Company, in accordance with its terms, have been done.
For and in consideration of the premises and the purchase of the Equity
Units by the Holders thereof, the Company and the Agent mutually agree as
follows:
ARTICLE .
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1 Definitions.
- ------------------------
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular, and
nouns and pronouns of the masculine gender include the feminine and neuter
genders;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States;
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision; and
(d) the following terms have the meanings given to them in this
Section 1.1(d):
"Act" when used with respect to any Holder, has the meaning specified
in Section 1.4.
"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Agent" means the Person named as the "Agent" in the first paragraph
of this instrument until a successor Agent shall have become such
pursuant to the applicable provisions of this Agreement, and
thereafter "Agent" shall mean such Person.
"Agent-purchased Treasury Consideration" has the meaning specified in
Section 5.4(d).
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions
hereof.
"Applicable Market Value" has the meaning specified in Section 5.1(c).
"Applicable Ownership Interest" means, with respect to an Equity Unit
and the U.S. Treasury Securities in the Treasury Portfolio, (A) for
the principal amount of a Note, a 1/20, or 5.0%, undivided beneficial
ownership interest in a $1,000 principal or interest amount of a
principal or interest strip in a U.S. Treasury security included in
such Treasury Portfolio which matures on or prior to the Stock
Purchase Date and (B) for the scheduled interest Payment Date on the
Notes that occurs on the Stock Purchase Date, in the case of a
successful remarketing, or for each scheduled interest Payment Date on
the Notes that occurs after the Tax Event Redemption Date and on or
before the Stock Purchase Date, in the case of a Tax Event Redemption,
a 0.071875% undivided beneficial ownership interest in a $1,000
principal or interest amount of a principal or interest strip in a
U.S. Treasury security included in the Treasury Portfolio that matures
on or prior to that interest Payment Date or Dates.
"Applicants" has the meaning specified in Section 7.12(b).
"Bankruptcy Code" means Title 11 of the United States Code, or any
other law of the United States that from time to time provides a
uniform system of bankruptcy laws.
"Beneficial Owner" means, with respect to a Book-Entry Interest, a
Person who is the beneficial owner of such Book-Entry Interest as
reflected on the books of the Clearing Agency or on the books of a
Person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each
case in accordance with the rules of such Clearing Agency).
"Board of Directors" means either the Board of Directors of the
Company or any other committee of such Board duly authorized to act
generally or in any particular respect for such Board hereunder.
"Board Resolution" means (i) a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect
on the date of such certification or (ii) a copy of a unanimous
written consent of the Board of Directors.
"Book-Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and
made through book entries by a Clearing Agency as described in Section
3.6.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which banking institutions and trust companies in the
State of New York or at a place of payment are authorized or required
by law, regulation or executive order to be closed.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated, whether voting or non-voting)
corporate stock or similar interests in other types of entities.
"Cash Merger" has the meaning specified in Section 5.10(a).
"Cash Settlement" has the meaning specified in Section 5.4(a).
"Certificate" means an Equity Units Certificate or a Stripped Units
Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as
a Depository for the Equity Units and Stripped Units and in whose
name, or in the name of a nominee of that organization, shall be
registered a Global Certificate and which shall undertake to effect
book-entry transfers and pledges of the Equity Units and Stripped
Units.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Price" has the meaning specified in Section 5.1(c).
"Code" means Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"Collateral" has the meaning specified in Section 2.1(a) of the Pledge
Agreement.
"Collateral Agent" means The Bank of New York, as Collateral Agent
under the Pledge Agreement until a successor Collateral Agent shall
have become such pursuant to the applicable provisions of the Pledge
Agreement, and thereafter "Collateral Agent" shall mean the Person who
is then the Collateral Agent thereunder.
"Collateral Substitution" has the meaning specified in Section
3.13(a).
"Common Stock" means the common stock, par value $6.50 per share, of
the Company.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such
pursuant to the applicable provisions of this Agreement, and
thereafter "Company" shall mean such successor.
"Constituent Person" has the meaning specified in Section 5.6(b).
"Contract Adjustment Payments" means, in the case of Equity Units and
Stripped Units, the amount payable by the Company in respect of each
Forward Purchase Contract constituting a part of such Equity Units or
Stripped Units, equal to 3.50% per year of the Stated Amount, in each
case computed (1) for any full quarterly period on the basis of a
360-day year of twelve 30-day months, and (2) for any period shorter
than a full quarterly period, on the basis of a 30-day month and (3)
for periods of less than a month, on the basis of the actual number of
days elapsed per 30-day month, plus any Deferred Contract Adjustment
Payments accrued pursuant to Section 5.3.
"Corporate Trust Office" means the office of the Agent at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at The Bank
of New York, 101 Barclay Street, New York, New York 10286.
"Coupon Rate" means the percentage rate per annum at which each Note
will bear interest initially.
"Current Market Price" has the meaning specified in Section 5.6(a)(8).
"Custodial Agent" means The Bank of New York, as Custodial Agent under
the Pledge Agreement until a successor Custodial Agent shall have
become such pursuant to the applicable provisions of the Pledge
Agreement, and thereafter "Custodial Agent" shall mean the Person who
is then the Custodial Agent thereunder.
"Deferred Contract Adjustment Payments" has the meaning specified in
Section 5.3.
"Depository" means, initially, DTC, until another Clearing Agency
becomes its successor, and thereafter "Depository" shall mean such
successor.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Early Settlement" has the meaning specified in Section 5.9(a).
"Early Settlement Amount" has the meaning specified in Section 5.9(a).
"Early Settlement Date" has the meaning specified in Section 5.9(a).
"Early Settlement Rate" has the meaning specified in Section 5.9(b).
"Equity Units" means the collective rights and obligations of a Holder
of an Equity Units Certificate in respect of a Note or the appropriate
Treasury Consideration or Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, subject in each case to the
Pledge thereof, and the related Forward Purchase Contract.
"Equity Units Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Equity Units
specified on such certificate, substantially in the form of Exhibit A
hereto.
"Equity Units Register" and "Equity Units Registrar" have the
respective meanings specified in Section 3.5(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time,
and the rules and regulations promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.4(f).
"Expiration Time" has the meaning specified in Section 5.6(a)(6).
"Failed Remarketing" has the meaning specified in Section 5.4(e).
"Fair Market Value" with respect to securities distributed in a
Spin-Off means (a) in the case of any Spin-Off that is effected
simultaneously with an Initial Public Offering of such securities, the
Initial Public Offering price of those securities, and (b) in the case
of any other Spin-Off, the average of the Sale Prices of those
securities over the first 10 Trading Days after the effective date of
such Spin-Off.
"Forward Purchase Contract," when used with respect to any Equity
Units or Stripped Units, means the contract forming a part of such
Equity Unit or Stripped Unit and obligating the Company to sell and
the Holder of such Equity Unit or Stripped Unit to purchase Common
Stock on the terms and subject to the conditions set forth in Article
Five.
"Forward Purchase Contract Settlement Fund" has the meaning specified
in Section 5.5.
"Global Certificate" means a Certificate that evidences all or part of
the Units and is registered in the name of a Depository or a nominee
thereof.
"Holder" means the Person in whose name the Units evidenced by an
Equity Units Certificate or a Stripped Units Certificate is registered
in the Equity Units Register or the Stripped Units Register, as the
case may be.
"Indenture" means the Indenture, dated as of May 1, 2001, between the
Company and the Trustee as supplemented by any officers' certificate
or supplemental indenture.
"Initial Public Offering," with respect to any Spin-Off, means the
first time securities of the same class or type as the securities
being distributed in the Spin-Off are bone fide offered to the public
for cash.
"Issuer Order" or "Issuer Request" means a written order or request
signed in the name of the Company by the Chief Executive Officer, the
Chief Financial Officer, the President, any Vice-President, the
Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary (or other officer performing similar functions) of the
Company and delivered to the Agent.
"Last Failed Remarketing" has the meaning specified in Section
5.4(e)(i).
"Merger Early Settlement" has the meaning specified in Section 5.10.
"Merger Early Settlement Amount" has the meaning specified in Section
5.10.
"Merger Early Settlement Date" has the meaning specified in Section
5.10.
"Non-electing Share" has the meaning specified in Section 5.6(b).
"Notes" means the series of senior debt securities of the Company
designated the 5.75% Senior Notes Due August 16, 2007, to be issued
under the Indenture.
"NYSE" has the meaning specified in Section 5.1(c).
"Office of the Agent in The City of New York" means an office where
Certificates may be presented or surrendered for acquisition of shares
of Common Stock, transfer or exchange, Notes may be presented for
payment or surrendered for transfer or exchange, and where notices and
demands to or upon the Company in respect of Units may be served, such
office being located initially at 101 Barclay Street, New York, New
York 10286.
"Officer's Certificate" means a certificate signed by the Chief
Executive Officer, the Chief Financial Officer, the President, any
Vice-President, the Treasurer, any Assistant Treasurer, the Secretary
or any Assistant Secretary (or other officer performing similar
functions) of the Company and delivered to the Agent.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company or an
Affiliate of the Company.
"Opt-out Treasury Consideration" has the meaning specified in Section
5.4(g).
"Outstanding Units" means, as of the date of determination, all Equity
Units or Stripped Units evidenced by Certificates theretofore
authenticated, executed and delivered under this Agreement, except:
(i) If a Termination Event has occurred, (A) Stripped Units and (B)
Equity Units for which the related Note or the appropriate
Treasury Consideration or Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, has been theretofore
deposited with the Agent in trust for the Holders of such Equity
Units;
(ii) Equity Units and Stripped Units evidenced by Certificates
theretofore cancelled by the Agent or delivered to the Agent for
cancellation or deemed cancelled pursuant to the provisions of
this Agreement; and
(iii)Equity Units and Stripped Units evidenced by Certificates in
exchange for or in lieu of which other Certificates have been
authenticated, executed on behalf of the Holder and delivered
pursuant to this Agreement, other than any such Certificate in
respect of which there shall have been presented to the Agent
proof satisfactory to it that such Certificate is held by a bona
fide purchaser in whose hands the Equity Units or Stripped Units
evidenced by such Certificate are valid obligations of the
Company;
provided, that in determining whether the Holders of the requisite
number of the Equity Units or Stripped Units have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Equity Units or Stripped Units owned by the Company or any Affiliate
of the Company shall be disregarded and deemed not to be outstanding,
except that, in determining whether the Agent shall be protected in
relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Equity Units or Stripped Units which a
Responsible Officer of the Agent actually knows to be so owned shall
be so disregarded. Equity Units or Stripped Units so owned which have
been pledged in good faith may be regarded as Outstanding Units if the
pledgee establishes to the satisfaction of the Agent the pledgee's
right so to act with respect to such Equity Units or Stripped Units
and that the pledgee is not the Company or any Affiliate of the
Company.
"Payment Date" means each February 16, May 16, August 16 and November
16, commencing August 16, 2002.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Plan" means an employee benefit plan that is subject to Title I of
ERISA, a plan, individual retirement account or other arrangement that
is subject to Section 4975 of the Code or any similar law or any
entity whose underlying assets are considered to include "plan assets"
of any such plan, account or arrangement.
"Pledge" means the pledge under the Pledge Agreement of the Notes, the
Treasury Securities or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio, in each case
constituting a part of the Equity Units or Stripped Units, property,
cash, securities, financial assets and security entitlements of the
Collateral Account (as defined in Section 1.1 of the Pledge Agreement)
and any proceeds of any of the foregoing.
"Pledge Agreement" means the Pledge Agreement, dated as of the date
hereof, by and among the Company, the Collateral Agent, the Custodial
Agent, the Securities Intermediary and the Agent, on its own behalf
and as attorney-in-fact for the Holders from time to time of the
Equity Units and Stripped Units.
"Pledged Applicable Ownership Interest in the Treasury Portfolio" has
the meaning specified in Section 2.1(c) of the Pledge Agreement.
"Pledged Notes" has the meaning specified in Section 2.1(c) of the
Pledge Agreement.
"Pledged Treasury Consideration" has the meaning specified in Section
2.1(c) of the Pledge Agreement.
"Pledged Treasury Securities" has the meaning specified in Section
2.1(c) of the Pledge Agreement.
"Predecessor Certificate" means a Predecessor Equity Units Certificate
or a Predecessor Stripped Units Certificate.
"Predecessor Equity Units Certificate" of any particular Equity Units
Certificate means every previous Equity Units Certificate evidencing
all or a portion of the rights and obligations of the Company and the
Holder under the Equity Units evidenced thereby; and, for the purposes
of this definition, any Equity Units Certificate authenticated and
delivered under Section 3.10 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Equity Units Certificate shall be
deemed to evidence the same rights and obligations of the Company and
the Holder as the mutilated, destroyed, lost or stolen Equity Units
Certificate.
"Predecessor Stripped Units Certificate" of any particular Stripped
Units Certificate means every previous Stripped Units Certificate
evidencing all or a portion of the rights and obligations of the
Company and the Holder under the Stripped Units evidenced thereby;
and, for the purposes of this definition, any Stripped Units
Certificate authenticated and delivered under Section 3.10 in exchange
for or in lieu of a mutilated, destroyed, lost or stolen Stripped
Units Certificate shall be deemed to evidence the same rights and
obligations of the Company and the Holder as the mutilated, destroyed,
lost or stolen Stripped Units Certificate.
"Purchase Price" has the meaning specified in Section 5.1(a).
"Purchased Shares" has the meaning specified in Section 5.6(a)(6).
"Quotation Agent" means J.P. Morgan Securities Inc. or its successor
or any other primary U.S. government securities dealer in New York
City selected by the Company.
"Record Date" for the distribution payable on any Payment Date means,
as to any Global Certificate, the Business Day next preceding such
Payment Date, and as to any other Certificate, the 15th day preceding
such Payment Date.
"Redemption Amount" means, (A) in the case of a Tax Event Redemption
occurring prior to the earlier of a successful remarketing of the
Notes or the Stock Purchase Date, for each Note the product of (i) the
Stated Amount of such Note and (ii) a fraction whose numerator is the
applicable Treasury Portfolio Purchase Price and whose denominator is
the aggregate principal amount of Notes outstanding on the Tax Event
Redemption Date, and (B) in the case of a Tax Event Redemption
occurring after the earlier of a successful remarketing of the Notes
or the Stock Purchase Date, for each Note the Stated Amount of the
Note.
"Redemption Price" means the redemption price per Note equal to the
Redemption Amount.
"Register" means the Equity Units Register and the Stripped Units
Register, as applicable.
"Registrar" means the Equity Units Registrar and the Stripped Units
Registrar, as applicable.
"Remarketing Agent" means Salomon Smith Barney Inc. or its successor
under the Remarketing Agreement.
"Remarketing Agreement" means the Remarketing Agreement dated June 11,
2002 by and among the Company, the Remarketing Agent and the Agent.
"Remarketing Date" means the third Business Day preceding May 16,
2005.
"Remarketing Fee" has the meaning specified in Section 5.4(d).
"Remarketing Period" means the three Business Day period either: (i)
beginning on the Remarketing Date and ending after the two immediately
following Business Days; (ii) immediately preceding June 16, 2005;
(iii) immediately preceding July 16, 2005; or (iv) immediately
preceding August 12, 2005.
"Remarketing Value" means
(1) the value at the Remarketing Date or any Subsequent Remarketing
Date, as the case may be, of either (a) U.S. Treasury securities
that will pay, on or prior to the Payment Date falling on the
Stock Purchase Date, an amount of cash equal to the aggregate
interest payment that is scheduled to be payable on that Payment
Date, on (x) the Notes which are included in Equity Units and are
participating in the remarketing and (y) the Separate Notes which
are to be remarketed pursuant to Section 4.5(d) of the Pledge
Agreement and Section 1.6 of the Supplemental Indenture, assuming
for that purpose that the interest rate on the Notes is equal to
the Coupon Rate, if the remarketing occurs prior to the fourth
Business Day preceding the Stock Purchase Date, or (b) an amount
of cash equal to the aggregate interest payment that is scheduled
to be payable on that Payment Date, on (x) the Notes which are
included in Equity Units and are participating in the remarketing
and (y) the Separate Notes which are to be remarketed pursuant to
Section 4.5(d) of the Pledge Agreement, assuming for that purpose
that the interest rate on the Notes is equal to the Coupon Rate,
if the remarketing occurs on or after the fourth Business Day
preceding the Stock Purchase Date; and
(2) the value at the Remarketing Date or any Subsequent Remarketing
Date, as the case may be, of either (a) U.S. Treasury securities
that will pay, on or prior to the Stock Purchase Date, an amount
of cash equal to the Stated Amount of (x) such Notes which are
included in Equity Units and are participating in the remarketing
and (y) the Separate Notes which are to be remarketed pursuant to
Section 4.5(d) of the Pledge Agreement and Section 1.6 of the
Supplemental Indenture, if the remarketing occurs prior to the
fourth Business Day preceding the Stock Purchase Date, or (b) an
amount of cash equal to the Stated Amount of (x) such Notes which
are included in Equity Units and are participating in the
remarketing and (y) the Separate Notes which are to be remarketed
pursuant to Section 4.5(d) of the Pledge Agreement, if the
remarketing occurs on or after the fourth Business Day preceding
the Stock Purchase Date
provided that for purposes of clauses (1) and (2) above, the
Remarketing Value shall be calculated on the assumptions that (x) the
U.S. Treasury securities are highly liquid and mature on or within 35
days prior to the Stock Purchase Date, as determined in good faith by
the Remarketing Agent in a manner intended to minimize the cash value
of the U.S. Treasury securities, and (y) the U.S. Treasury securities
are valued based on the ask-side price of the U.S. Treasury securities
at a time between 9:00 a.m. and 11:00 a.m., New York City time,
selected by the Remarketing Agent, on the Remarketing Date or any
Subsequent Remarketing Date, as the case may be, as determined on a
third-day settlement basis by reasonable and customary means selected
in good faith by the Remarketing Agent, plus accrued interest to that
date.
"Reorganization Event" has the meaning specified in Section 5.6(b).
"Reset Rate" has the meaning specified in Section 5.4(c).
"Responsible Officer" means, when used with respect to the Agent, any
officer within the corporate trust department of the Agent (or any
successor of the Agent), including any Vice-President, any assistant
Vice-President, any assistant secretary, any assistant treasurer, any
trust officer, any senior trust officer or any other officer of the
Agent who customarily performs functions similar to those performed by
the Persons who at the time shall be such officers, respectively, or
to whom any corporate trust matter is referred because of such
Person's knowledge of and familiarity with the particular subject and
who, in each of the above cases, shall have direct responsibility for
the administration of this Agreement.
"Sale Price" of the Common Stock or any securities distributed in a
Spin-Off, as the case may be, on any Trading Day means the closing
sale price per share (or if no closing sale price is reported, the
average of the bid and asked prices or, if more than one in either
case, the average of the average bid and the average asked prices) on
such Trading Day as reported in composite transactions for the
principal U.S. securities exchange on which the Common Stock or such
securities are traded or, if the Common Stock or such securities are
not listed on a U.S. national or regional securities exchange, as
reported by NASDAQ.
"Securities Act" means the Securities Act of 1933, and any statute
successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated thereunder.
"Securities Intermediary" means The Bank of New York, in its capacity
as securities intermediary under the Pledge Agreement, together with
its successors in such capacity.
"Separate Notes" has the meaning specified in Section 1.1 of the
Pledge Agreement.
"Settlement Date" means any Early Settlement Date or Merger Early
Settlement Date or the Stock Purchase Date.
"Settlement Rate" has the meaning specified in Section 5.1(a).
"Spin-Off" means a dividend or other distribution of shares of Capital
Stock of any class or series, or similar equity interests, of or
relating to a subsidiary or other business unit of the Company.
"Stated Amount" means, with respect to any one Note, Equity Unit or
Stripped Unit, $50.
"Stock Purchase Date" means August 16, 2005.
"Stripped Units" means the collective rights and obligations of a
holder of a Stripped Units Certificate in respect of a 1/20 undivided
beneficial interest in a Treasury Security, subject in each case to
the Pledge thereof, and the related Forward Purchase Contract.
"Stripped Units Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Stripped Units
specified on such certificate, substantially in the form of Exhibit B
hereto.
"Stripped Units Register" and "Stripped Units Registrar" have the
respective meanings specified in Section 3.5(a).
"Subsequent Remarketing Date" means, provided there has been one or
more Failed Remarketings, the date on which the Remarketing Agent has
consummated a remarketing in accordance with Section 5.4 hereof and
Section 1.6 of the Indenture, such date to be no later than the third
Business Day immediately preceding the Stock Purchase Date.
"Supplemental Indenture" means a supplemental indenture dated as of
June 11, 2002, between the Company and the Trustee to the indenture
dated as of May 1, 2001, between the Company and the Trustee.
"Tax Event" means the receipt by the Company of an opinion of
nationally recognized independent tax counsel experienced in such
matters, which may be Simpson Thacher & Bartlett, to the effect that
there is more than an insubstantial risk that interest payable by the
Company on the Notes would not be deductible, in whole or in part, by
the Company for United States federal income tax purposes, as a result
of (a) any amendment to, or change (including any announced proposed
change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or
therein affecting taxation, (b) any amendment to or change in an
official interpretation or application of such laws or regulations by
any legislative body, court, governmental agency or regulatory
authority or (c) any interpretation or pronouncement that provides for
a position with respect to such laws or regulations that differs from
the generally accepted position on June 11, 2002, which amendment,
change or proposed change is effective or which interpretation or
pronouncement is announced on or after June 11, 2002.
"Tax Event Redemption" means, if a Tax Event shall occur, the
redemption of the Notes, at the option of the Company, in whole but
not in part, on not less than 30 days' nor more than 60 days' written
notice.
"Tax Event Redemption Date" means the date upon which a Tax Event
Redemption is to occur.
"Termination Date" means the date, if any, on which a Termination
Event occurs.
"Termination Event" means the occurrence of any of the following
events, at any time on or prior to the Stock Purchase Date:
(i) the entry by a court having competent jurisdiction of:
(a) a decree or order for relief in respect of the Company in an
involuntary proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law or a decree
or order adjudging the Company to be insolvent, or approving
a petition seeking reorganization, arrangement, adjustment
or composition of the Company and such decree or order shall
remain unstayed and in effect for a period of 60 consecutive
days; or
(b) a final and non-appealable order appointing a custodian,
receiver, liquidator, assignee, trustee or other similar
official of the Company or of any substantial part of the
property of the Company ordering the winding up or
liquidation of the affairs of the Company; or
(ii) the commencement by the Company of a voluntary proceeding under
any applicable bankruptcy, insolvency, reorganization or other
similar law or of a voluntary proceeding seeking to be
adjudicated insolvent or the consent by the Company to the entry
of a decree or order for relief in an involuntary proceeding
under any applicable bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any insolvency
proceedings against it, or the filling by the Company of a
petition or answer or consent seeking organization or relief
under any applicable law, or the consent by the Company to the
filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
trustee or similar official of the or any substantial part of the
property of the Company or the making by the Company of an
assignment for the benefit of creditors, or the taking of
corporate action by the Company or any in furtherance of any such
action.
"Threshold Appreciation Price" has the meaning specified in Section
5.1(a)(i).
"TIA" means the Trust Indenture Act of 1939, and any statute successor
thereto, in each case as amended from time to time, and the rules and
regulations promulgated thereunder.
"Trading Day" has the meaning specified in Section 5.1(c).
"Transaction Documents" has the meaning specified in Section 7.1(a).
"Treasury Consideration" means the Agent-purchased Treasury
Consideration or the Opt-out Treasury Consideration.
"Treasury Portfolio" means: (i) if a Tax Event Redemption occurs prior
to a successful remarketing of the Notes or the Stock Purchase Date, a
portfolio of zero-coupon U.S. Treasury Securities consisting of
principal or interest strips of U.S. Treasury Securities that mature
on or prior to the Stock Purchase Date in an aggregate amount equal to
the aggregate principal amount of the Notes included in the Equity
Units on the Tax Event Redemption Date and, with respect to each
scheduled interest Payment Date on the Notes that occurs after the Tax
Event Redemption Date and on or before the Stock Purchase Date,
interest or principal strips of U.S. Treasury Securities that mature
on or prior to such Payment Date in an aggregate amount equal to the
aggregate interest payment that would be due on the aggregate
principal amount of the Notes included in the Equity Units on such
Payment Date if the interest rate of the Notes were not reset on the
applicable Remarketing Date, and (ii) solely for purposes of
determining the Treasury Portfolio Purchase Price in the case of a Tax
Event Redemption Date occurring prior to a successful remarketing of
the Notes, a portfolio of zero-coupon U.S. Treasury Securities
consisting of principal or interest strips of U.S. Treasury Securities
that mature on or prior to the Stock Purchase Date in an aggregate
amount equal to the aggregate principal amount of the Notes
outstanding on the Tax Event Redemption Date and with respect to each
scheduled interest Payment Date on the Notes outstanding that occurs
after the Tax Event Redemption Date and on or before the Stock
Purchase Date, interest or principal strips of U.S. Treasury
Securities that mature on or prior to such interest Payment Date in an
aggregate amount equal to the aggregate interest payment that would be
due on the aggregate principal amount of the Notes outstanding on the
Tax Event Redemption Date.
"Treasury Portfolio Purchase Price" means the lowest aggregate price
quoted by a primary U.S. government securities dealer in New York City
to the Quotation Agent on the third Business Day immediately preceding
the Tax Event Redemption Date for the purchase of the Treasury
Portfolio for settlement on the Tax Event Redemption Date.
"Treasury Security" means a zero-coupon U.S. Treasury security (CUSIP
Number 912803AG8) maturing on August 15, 2005 that will pay $1,000 on
such maturity date.
"Trustee" means The Bank of New York, a New York banking corporation,
as trustee under the Indenture, or any successor thereto.
"Underwriting Agreement" means the Underwriting Agreement relating to
the Equity Units dated June 5, 2002 between the Company and the
underwriters named therein.
"Vice-President" means any vice-president, whether or not designated
by a number or a word or words added before or after the title
"vice-president."
Section 1.2 Compliance Certificates and Opinions.
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Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action under any
provision of this Agreement, the Company shall furnish to the Agent an Officer's
Certificate stating that all conditions precedent, if any, provided for in this
Agreement relating to the proposed action have been complied with and, if
requested by the Agent, an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent, if any, have been complied with,
except that in the case of any such application or request as to which the
furnishing of such documents is specifically required by any provision of this
Agreement relating to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Agreement (other than the Officer's Certificate
provided for in Section 10.5) shall include:
(a) a statement that the individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he or she has
made such examination or investigation as is necessary to enable such
individual to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such individual, such
condition or covenant has been complied with.
Section 1.3 Form of Documents Delivered to Agent.
- -------------------------------------------------
(a) In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one
such Person, or that they be so certified or covered by only one document,
but one such Person may certify or give an opinion with respect to some
matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or
several documents.
(b) Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or
in the exercise of reasonable care should know, that the certificate or
opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters,
upon a certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect to such
factual matters is in the possession of the Company unless such counsel
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.4 Acts of Holders; Record Dates.
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(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
of such Holders duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Agent and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and (subject to
Section 7.1) conclusive in favor of the Agent and the Company, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Agent deems
sufficient.
(c) The ownership of Equity Units or Stripped Units shall be proved by
the Equity Units Register or the Stripped Units Register, as the case may
be.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Certificate shall bind every
future Holder of the same Certificate and the Holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or
in lieu thereof in respect of anything done, omitted or suffered to be done
by the Agent or the Company in reliance thereon, whether or not notation of
such action is made upon such Certificate.
(e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Units entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Agreement to be given, made or
taken by Holders of Equity Units and Stripped Units. If any record date is
set pursuant to this paragraph, the Holders of the Outstanding Units on
such record date, and no other Holders, shall be entitled to take the
relevant action with respect to the Equity Units or the Stripped Units, as
the case may be, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder
unless taken on or prior to the applicable Expiration Date by Holders of
the requisite number of Outstanding Units on such record date. Nothing in
this paragraph shall be construed to prevent the Company from setting a new
record date for any action for which a record date has previously been set
pursuant to this paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be cancelled and of no
effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite number of
Outstanding Units on the date such action is taken. Promptly after any
record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by
Holders and the applicable Expiration Date to be given to the Agent in
writing and to each Holder of Equity Units and Stripped Units in the manner
set forth in Section 1.6.
(f) With respect to any record date set pursuant to this Section, the
Company may designate any date as the "Expiration Date" and from time to
time may change the Expiration Date to any earlier or later day; provided
that no such change shall be effective unless notice of the proposed new
Expiration Date is given to the Agent in writing, and to each Holder of
Equity Units and Stripped Units in the manner set forth in Section 1.6, on
or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section,
the Company shall be deemed to have initially designated the 180th day
after such record date as the Expiration Date with respect thereto, subject
to its right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the
180th day after the applicable record date.
Section 1.5 Notices.
- --------------------
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Agreement to be
made upon, given or furnished to, or filed with:
(a) the Agent by any Holder or by the Company shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing and personally delivered,
mailed, first-class postage prepaid, telecopied or delivered by overnight
air courier guaranteeing next day delivery, to the Agent at 101 Barclay
Street, New York, New York 10286, telecopy number: (212) 328-8243,
Attention: Corporate Trust Department, or at any other address furnished in
writing by the Agent to the Holders and the Company; or
(b) the Company by the Agent or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing and personally delivered,
mailed, first-class postage prepaid, telecopied or delivered by overnight
air courier guaranteeing next day delivery, to the Company at American
Electric Power Company, Inc., 1 Riverside Plaza, Columbus, Ohio 43215,
telecopy number: (614) 223-1687, Attention: General Counsel, or at any
other address furnished in writing to the Agent and the Holders by the
Company; or
(c) the Collateral Agent by the Agent, the Company or any Holder shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered, mailed, first-class postage prepaid, telecopied or
delivered by overnight air courier guaranteeing next day delivery,
addressed to the Collateral Agent at 101 Barclay Street, New York, New York
10286, telecopy number: (212) 328-8243, Attention: Corporate Trust
Department, or at any other address furnished in writing by the Collateral
Agent to the Agent, the Company and the Holders; or
(d) the Trustee by the Company shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if made, given,
furnished or filed in writing and personally delivered, mailed, first-class
postage prepaid, telecopied or delivered by overnight air courier
guaranteeing next day delivery, addressed to the Trustee at The Bank of New
York, 101 Barclay Street, New York, New York 10286, telecopy number: (212)
328-8243, Attention: Corporate Trust Department, or at any other address
furnished in writing by the Trustee to the Company.
Section 1.6 Notice to Holders; Waiver.
- --------------------------------------
(a) Where this Agreement provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each
Holder affected by such event, at its address as it appears in the
applicable Register, not later than the latest date, and not earlier than
the earliest date, prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Agent, but
such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
(b) In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the
Agent shall constitute a sufficient notification for every purpose
hereunder.
Section 1.7 Effect of Headings and Table of Contents.
- -----------------------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.8 Successors and Assigns.
- -----------------------------------
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.9 Separability Clause.
- --------------------------------
In case any provision in this Agreement or in the Equity Units or
Stripped Units shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof and thereof
shall not in any way be affected or impaired thereby.
Section 1.10 Benefits of Agreement.
- -----------------------------------
Nothing in this Agreement or in the Equity Units or Stripped Units, express
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder and, to the extent provided hereby, the Holders, any
benefits or any legal or equitable right, remedy or claim under this Agreement.
The Holders from time to time shall be beneficiaries of this Agreement and shall
be bound by all of the terms and conditions hereof and of the Equity Units and
Stripped Units evidenced by their Certificates by their acceptance of delivery
of such Certificates.
Section 1.11 Governing Law.
- ---------------------------
This Agreement and the Equity Units and Stripped Units shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to its principles of conflicts of laws.
Section 1.12 Legal Holidays.
- ----------------------------
(a) In any case where any Payment Date shall not be a Business Day,
then (notwithstanding any other provision of this Agreement or the Equity
Units Certificates) payments on the Notes shall not be made on such date,
but such payments shall be made on the next succeeding Business Day with
the same force and effect as if made on such Payment Date, provided that no
interest shall accrue or be payable by the Company for the period from and
after any such Payment Date, except that if such next succeeding Business
Day is in the next succeeding calendar year, such payment shall be made on
the Business Day immediately preceding the Payment Date with the same force
and effect as if made on such Payment Date.
(b) If any date on which Contract Adjustment Payments are to be made
on the Forward Purchase Contracts is not a Business Day, then payment of
the Contract Adjustment Payments payable on that date will be made on the
next succeeding day which is a Business Day, and no interest or additional
payment will be paid in respect of the delay. However, if that Business Day
is in the next succeeding calendar year, the payment will be made on the
Business Day immediately preceding the Payment Date with the same force and
effect as if made on that Payment Date.
(c) In any case where the Stock Purchase Date shall not be a Business
Day, then (notwithstanding any other provision of this Agreement or the
Certificates), the Forward Purchase Contracts shall not be performed on
such date, but the Forward Purchase Contracts shall be performed on the
immediately following Business Day with the same force and effect as if
performed on the Stock Purchase Date.
Section 1.13 Counterparts.
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This Agreement may be executed in any number of counterparts by the parties
hereto, each of which, when so executed and delivered, shall be deemed an
original, but all such counterparts shall together constitute one and the same
instrument.
Section 1.14 Inspection of Agreement.
- -------------------------------------
A copy of this Agreement shall be available at all reasonable times during
normal business hours at the Corporate Trust Office for inspection by any
Holder.
ARTICLE II.
CERTIFICATE FORMS
Section 2.1 Forms of Certificates Generally.
- --------------------------------------------
(a) The Equity Units Certificates (including the form of Forward
Purchase Contract forming part of the Equity Units evidenced thereby) shall
be in substantially the form set forth in Exhibit A hereto, with such
letters, numbers or other marks of identification or designation and such
legends or endorsements printed thereon, as may be required by the rules of
any securities exchange or quotation system on which the Equity Units are
listed or quoted for trading or any Depository therefor, or as may,
consistently herewith, be determined by the officers of the Company
executing such Equity Units Certificates, as evidenced by their execution
of the Equity Units Certificates.
(b) The definitive Equity Units Certificates shall be printed or may
be produced in any other manner, all as determined by the officers of the
Company executing such Equity Units Certificates, consistent with the
provisions of this Agreement, as evidenced by their execution thereof.
(c) The Stripped Units Certificates (including the form of Forward
Purchase Contracts forming part of the Stripped Units evidenced thereby)
shall be in substantially the form set forth in Exhibit B hereto, with such
letters, numbers or other marks of identification or designation and such
legends or endorsements printed thereon as may be required by the rules of
any securities exchange or quotation system on which the Stripped Units may
be listed or quoted for trading or any Depository therefor, or as may,
consistently herewith, be determined by the officers of the Company
executing such Stripped Units Certificates, as evidenced by their execution
of the Stripped Units Certificates.
(d) The definitive Stripped Units Certificates shall be printed or may
be produced in any other manner, all as determined by the officers of the
Company executing such Stripped Units Certificates, consistent with the
provisions of this Agreement, as evidenced by their execution thereof.
(e) Every Global Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE FORWARD
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE FORWARD PURCHASE CONTRACT AGREEMENT."
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the Company or
its agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co., or such other name as requested
by an authorized representative of The Depository Trust Company, and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein."
Section 2.2 Form of Agent's Certificate of Authentication.
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(a) The form of the Agent's certificate of authentication of the
Equity Units shall be in substantially the form set forth on the form of
the Equity Units Certificates.
(b) The form of the Agent's certificate of authentication of the
Stripped Units shall be in substantially the form set forth on the form of
the Stripped Units Certificates.
ARTICLE III.
THE EQUITY UNITS
Section 3.1 Title and Terms; Denominations.
- -------------------------------------------
(a) The aggregate number of Equity Units and Stripped Units, if any,
evidenced by Certificates authenticated, executed on behalf of the Holders
and delivered hereunder is limited to 6,000,000 (6,900,000 if the
Underwriters' (as defined in the Underwriting Agreement) over-allotment
option pursuant to the Underwriting Agreement is exercised in full), except
for Certificates authenticated, executed and delivered upon registration of
transfer of, in exchange for, or in lieu of other Certificates pursuant to
Section 3.4, 3.5, 3.10, 3.13, 3.14, 5.9, 5.10 or 8.5.
(b) The Certificates shall be issuable only in registered form and
only in denominations of a single Equity Unit and any integral multiple
thereof.
Section 3.2 Rights and Obligations Evidenced by the Certificates.
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(a) Each Equity Units Certificate shall evidence the number of Equity
Units specified therein, with each such Equity Units Certificate
representing the ownership by the Holder thereof of a beneficial interest
in a Note or the appropriate Treasury Consideration or Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, subject to the
Pledge of such Note or such Treasury Consideration or Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, by such Holder
pursuant to the Pledge Agreement, and the rights and obligations of the
Holder thereof and the Company under one Forward Purchase Contract. The
Agent as attorney-in-fact for, and on behalf of, the Holder of each Equity
Unit shall pledge, pursuant to the Pledge Agreement, the Note or the
appropriate Treasury Consideration or Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, forming a part of such Equity
Units, to the Collateral Agent and grant to the Collateral Agent a security
interest in the right, title, and interest of such Holder in such Note or
such Treasury Consideration or Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, for the benefit of the Company, to
secure the obligation of the Holder under each Forward Purchase Contract to
purchase the Common Stock of the Company. Prior to the purchase of shares
of Common Stock under each Forward Purchase Contract, such Forward Purchase
Contracts shall not entitle the Holders of Equity Units Certificates to any
of the rights of a holder of shares of Common Stock, including, without
limitation, the right to vote or receive any dividends or other payments or
to consent or to receive notice as stockholders in respect of the meetings
of stockholders or for the election of directors of the Company or for any
other matter, or any other rights whatsoever as stockholders of the
Company.
(b) Each Stripped Units Certificate shall evidence the number of
Stripped Units specified therein, with each such Stripped Units Certificate
representing the ownership by the Holder thereof of a 1/20 undivided
beneficial interest in a Treasury Security, subject to the Pledge of such
interest in such Treasury Security by such Holder pursuant to the Pledge
Agreement, and the rights and obligations of the Holder thereof and the
Company under one Forward Purchase Contract. The Agent as attorney-in-fact
for, and on behalf of, the Holder of each Stripped Unit shall pledge,
pursuant to the Pledge Agreement, the Treasury Security, forming a part of
such Stripped Unit, to the Collateral Agent and grant to the Collateral
Agent a security interest in the right, title and interest of such Holder
in such Treasury Security for the benefit of the Company, to secure the
obligation of the Holder under each Forward Purchase Contract to purchase
shares of Common Stock pursuant to this Agreement and the related Forward
Purchase Contract. Prior to the purchase of shares of Common Stock under
each Forward Purchase Contract, such Forward Purchase Contracts shall not
entitle the Holders of Stripped Units Certificates to any of the rights of
a holder of shares of Common Stock, including, without limitation, the
right to vote or receive any dividends or other payments or to consent or
to receive notice as stockholders in respect of the meetings of
stockholders or for the election of directors of the Company or for any
other matter, or any other rights whatsoever as stockholders of the
Company.
Section 3.3 Execution, Authentication, Delivery and Dating.
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(a) Subject to the provisions of Sections 3.13 and 3.14, upon the
execution and delivery of this Agreement, and at any time and from time to
time thereafter, the Company may deliver Certificates executed by the
Company to the Agent for authentication, execution on behalf of the Holders
and delivery, together with its Issuer Order for authentication of such
Certificates, and the Agent in accordance with such Issuer Order shall
authenticate, execute on behalf of the Holders and deliver such
Certificates.
(b) The Certificates shall be executed on behalf of the Company by the
Chief Executive Officer, the Chief Financial Officer, the President, any
Vice-President, the Treasurer, any Assistant Treasurer, the Secretary or
any Assistant Secretary (or other officer performing similar functions) of
the Company and delivered to the Agent. The signature of any of these
officers on the Certificates may be manual or by facsimile.
(c) Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of
such Certificates or did not hold such offices at the date of such
Certificates.
(d) No Forward Purchase Contract evidenced by a Certificate shall be
valid until such Certificate has been executed on behalf of the Holder by
the manual signature of an authorized signatory of the Agent, as such
Holder's attorney-in-fact. Such signature by an authorized signatory of the
Agent shall be conclusive evidence that the Holder of such Certificate has
entered into the Forward Purchase Contracts evidenced by such Certificate.
(e) Each Certificate shall be dated the date of its authentication.
(f) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by an authorized signatory of the Agent by
manual signature, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder.
Section 3.4 Temporary Certificates.
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(a) Pending the preparation of definitive Certificates, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holders, and deliver, in lieu of such definitive
Certificates, temporary Certificates which are in substantially the form
set forth in Exhibit A or Exhibit B hereto, as the case may be, with such
letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Equity Units
or Stripped Units, as the case may be, are listed, or as may, consistent
herewith, be determined by the officers of the Company executing such
Certificates, as evidenced by their execution of the Certificates.
(b) If temporary Certificates are issued, the Company will cause
definitive Certificates to be prepared without unreasonable delay. After
the preparation of definitive Certificates, the temporary Certificates
shall be exchangeable for definitive Certificates upon surrender of the
temporary Certificates at the Corporate Trust Office, at the expense of the
Company and without charge to the Holder. Upon surrender for cancellation
of any one or more temporary Certificates, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute on behalf
of the Holder, and deliver in exchange therefor, one or more definitive
Certificates of like tenor and denominations and evidencing a like number
of Equity Units or Stripped Units, as the case may be, as the temporary
Certificate or Certificates so surrendered. Until so exchanged, the
temporary Certificates shall in all respects evidence the same benefits and
the same obligations with respect to the Equity Units or Stripped Units, as
the case may be, evidenced thereby as definitive Certificates.
Section 3.5 Registration; Registration of Transfer and Exchange.
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(a) The Agent shall keep at the Corporate Trust Office a register (the
"Equity Units Register") in which, subject to such reasonable regulations
as it may prescribe, the Agent shall provide for the registration of Equity
Units Certificates and of transfers of Equ