<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________
----------------
<TABLE>
<CAPTION>
COMMISSION REGISTRANT; STATE OF INCORPORATION; I.R.S. EMPLOYER
FILE NUMBER ADDRESS; AND TELEPHONE NUMBER IDENTIFICATION NO.
----------- ----------------------------------- ------------------
<C> <S> <C>
1-3525 American Electric Power Company, Inc. 13-4922640
(A New York Corporation)
1 Riverside Plaza
Columbus, Ohio 43215
Telephone (614) 223-1000
0-18135 AEP Generating Company 31-1033833
(An Ohio Corporation)
1 Riverside Plaza
Columbus, Ohio 43215
Telephone (614) 223-1000
1-3457 Appalachian Power Company 54-0124790
(A Virginia Corporation)
40 Franklin Road, S.W.
Roanoke, Virginia 24011
Telephone (703) 985-2300
1-2680 Columbus Southern Power Company 31-4154203
(An Ohio Corporation)
215 North Front Street
Columbus, Ohio 43215
Telephone (614) 464-7700
1-3570 Indiana Michigan Power Company 35-0410455
(An Indiana Corporation)
One Summit Square
P.O. Box 60
Fort Wayne, Indiana 46801
Telephone (219) 425-2111
1-6858 Kentucky Power Company 61-0247775
(A Kentucky Corporation)
1701 Central Avenue
Ashland, Kentucky 41105
Telephone (606) 327-1111
1-6543 Ohio Power Company 31-4271000
(An Ohio Corporation)
301 Cleveland Avenue, S.W.
Canton, Ohio 44702
Telephone (216) 456-8173
</TABLE>
----------------
AEP Generating Company, Columbus Southern Power Company and Kentucky Power
Company meet the conditions set forth in General Instruction J(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 J(2) to such Form 10-K.
----------------
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 .
---- ----
<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
---------- ------------------- ---------------------
<C> <S> <C>
AEP Generating Company None
American Electric Power Common Stock,
Company, Inc. $6.50 par value............... New York Stock Exchange
Appalachian Power Cumulative Preferred Stock,
Company Voting, no par value:
4 1/2%....................... Philadelphia Stock Exchange
4.50%........................ Philadelphia Stock Exchange
7.40%........................ New York Stock Exchange
Columbus Southern None
Power Company
Indiana Michigan Cumulative Preferred Stock,
Power Company Non-Voting, $100 par value:
4 1/8%....................... Midwest Stock Exchange
7.08%........................ New York Stock Exchange
Kentucky Power Company None
Ohio Power Company Cumulative Preferred Stock,
Voting, $100 par value:
7.60%........................ New York Stock Exchange
7 6/10%...................... New York Stock Exchange
8.04%........................ New York Stock Exchange
</TABLE>
Indicate by check mark if disclosure of delinquent fil ers pursuant to Item
405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in the definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. X
-----
<PAGE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
<TABLE>
<CAPTION>
REGISTRANT TITLE OF EACH CLASS
---------- -------------------
<S> <C>
AEP Generating Company None
American Electric Power None
Company, Inc.
Appalachian Power None
Company
Columbus Southern None
Power Company
Indiana Michigan None
Power Company
Kentucky Power Company None
Ohio Power Company 4 1/2% Cumulative Preferred Stock, Voting, $100 par
value
</TABLE>
<TABLE>
<CAPTION>
AGGREGATE MARKET VALUE NUMBER OF SHARES
OF VOTING STOCK HELD OF COMMON STOCK
BY NON-AFFILIATES OF OUTSTANDING OF
THE REGISTRANTS AT THE REGISTRANTS AT
FEBRUARY 4, 1994 FEBRUARY 4, 1994
---------------------- ------------------
<S> <C> <C>
AEP Generating Company None 1,000
($1,000 par value)
American Electric Power $6,296,000,000 184,535,000
Company, Inc. ($6.50 par value)
Appalachian Power Company 43,000,000 13,499,500
(no par value)
Columbus Southern None 16,410,426
Power Company (no par value)
Indiana Michigan None 1,400,000
Power Company (no par value)
Kentucky Power Company None 1,009,000
($50 par value)
Ohio Power Company 154,000,000 27,952,473
(no par value)
</TABLE>
NOTE ON MARKET VALUE OF VOTING STOCK HELD BY NON-AFFILIATES
All of the common stock of AEP Generating Company, Appalachian Power Company,
Columbus Southern Power Company, Indiana Michigan Power Company, Kentucky Power
Company and Ohio Power Company is owned by American Electric Power Company,
Inc. (see Item 12 herein). The voting stock owned by non-affiliates of (i)
Appalachian Power Company consists of 555,365 shares of Cumulative Preferred
Stock, no par value; and (ii) Ohio Power Company consists of 1,712,403 shares
of Cumulative Preferred Stock, $100 par value. Some of the series of Cumulative
Preferred Stock are not regularly traded. The aggregate market value of the
Cumulative Preferred Stock is based on the average of the high and low prices
on the closest trading date to February 4, 1994 for series traded on the New
York or Philadelphia Stock Exchange, or the most recent reported bid prices for
those series not recently traded. Where recent market price information was not
available with respect to a series, the market price for such series is based
on the price of a recently traded series with an adjustment related to any
difference in the current yields of the two series.
<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
the fiscal year ended December 31, 1993: Part II
AEP Generating Company
American Electric Power Company, Inc.
Appalachian Power Company
Columbus Southern Power Company
Indiana Michigan Power Company
Kentucky Power Company
Ohio Power Company
Portions of Proxy Statement of American Electric Power
Company, Inc., dated March 10, 1994, for Annual Meeting
of Shareholders Part III
Portions of Information Statements of the following
companies for 1994 Annual Meeting of Shareholders, to be filed
within 120 days after December 31, 1993: Part III
Appalachian Power Company
Ohio Power Company
</TABLE>
----------------
THIS COMBINED FORM 10-K IS SEPARATELY FILED BY AEP GENERATING COMPANY,
AMERICAN ELECTRIC POWER COMPANY, INC., APPALACHIAN POWER COMPANY, COLUMBUS
SOUTHERN POWER COMPANY, INDIANA MICHIGAN POWER COMPANY, KENTUCKY POWER COMPANY
AND OHIO 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
Glossary of Terms............................................... i
Part I
Item 1. Business............................................. 1
Item 2. Properties........................................... 37
Item 3. Legal Proceedings.................................... 42
Item 4. Submission of Matters to a Vote of Security
Holders............................................. 44
Executive Officers of the Registrants............... ......... 44
Part II
Item 5. Market for Registrants' Common Equity and
Related Stockholder Matters......................... 47
Item 6. Selected Financial Data.............................. 47
Item 7. Management's Discussion and Analysis of Results
of Operations and Financial Condition............... 48
Item 8. Financial Statements and Supplementary Data.......... 48
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.............. 49
Part III
Item 10. Directors and Executive Officers of the
Registrants......................................... 50
Item 11. Executive Compensation............................... 51
Item 12. Security Ownership of Certain Beneficial Owners
and Management...................................... 55
Item 13. Certain Relationships and Related Transactions....... 56
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K................................. 57
Signatures...................................................... 59
Index to Financial Statement Schedules.......................... S-1
Independent Auditors' Report.................................... S-2
Exhibit Index................................................... E-1
</TABLE>
<PAGE>
GLOSSARY OF TERMS
When the following terms and abbreviations appear in the text of this report,
they have the meanings indicated below.
<TABLE>
<CAPTION>
TERM MEANING
---- -------
<C> <S>
AEGCo.................... AEP Generating Company, an electric utility subsidiary of AEP.
AEP...................... American Electric Power Company, Inc.
AEP System or the System. The American Electric Power System, an integrated electric
utility system, owned and operated by AEP's electric utility
subsidiaries.
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.
Buckeye.................. Buckeye Power, Inc., an unaffiliated corporation.
CCD Group................ CSPCo, CG&E and DP&L.
CG&E..................... The Cincinnati Gas & Electric Company, an unaffiliated utility
company.
Cook Plant............... The Donald C. Cook Nuclear Plant, owned by I&M.
CSPCo.................... Columbus Southern Power Company, an electric utility
subsidiary of AEP.
DOE...................... United States Department of Energy.
DP&L..................... The Dayton Power and Light Company, an unaffiliated utility
company.
Federal EPA.............. United States Environmental Protection Agency.
FERC..................... Federal Energy Regulatory Commission (an independent
commission within the DOE).
I&M...................... Indiana Michigan Power Company, an electric utility subsidiary
of AEP.
IURC..................... Indiana Utility Regulatory Commission.
KEPCo.................... Kentucky Power Company, an electric utility subsidiary of AEP.
KPSC..................... Kentucky Public Service Commission.
MPSC..................... Michigan Public Service Commission.
NEIL..................... Nuclear Electric Insurance Limited.
NPDES.................... National Pollutant Discharge Elimination System.
NRC...................... Nuclear Regulatory Commission.
Ohio EPA................. Ohio Environmental Protection Agency.
OPCo..................... Ohio Power Company, an electric utility subsidiary of AEP.
OVEC..................... Ohio Valley Electric Corporation, an electric utility company
in which AEP and CSPCo own a 44.2% equity interest.
PCB's.................... Polychlorinated biphenyls.
PFBC..................... Pressurized fluidized-bed combustion, a process in which
sulfur is removed during coal combustion and nitrogen oxide
formation is minimized.
PUCO..................... The Public Utilities Commission of Ohio.
RCRA..................... Resource Conservation and Recovery Act of 1976.
Rockport Plant........... A generating plant, consisting of two 1,300,000-kilowatt coal-
fired generating units, near Rockport, Indiana.
SEC...................... Securities and Exchange Commission.
Service Corporation...... American Electric Power Service Corporation, a service
subsidiary of AEP.
TVA...................... Tennessee Valley Authority.
VEPCo.................... Virginia Electric and Power Company, an unaffiliated utility
company.
Virginia SCC............. State Corporation Commission of Virginia.
West Virginia PSC........ Public Service Commission of West Virginia.
Zimmer or Zimmer Plant... Wm. H. Zimmer Generating Station, commonly owned by CSPCo,
CG&E and DP&L.
</TABLE>
i
<PAGE>
PART I -------------------------------------------------------------------
Item 1.BUSINESS
- --------------------------------------------------------------------------------
GENERAL
AEP was incorporated under the laws of the State of New York in 1906 and
reorganized in 1925. It is a public utility holding company which owns,
directly or indirectly, all of the outstanding common stock of its operating
electric utility subsidiaries. Substantially all of the operating revenues of
AEP and its subsidiaries are derived from the furnishing of electric service.
The service area of AEP's electric utility subsidiaries covers portions of
the states of Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and West
Virginia. The generating and transmission facilities of AEP's subsidiaries are
physically 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. At December
31, 1993, the subsidiaries of AEP had a total of 20,007 employees. AEP, as
such, has no employees. The principal operating subsidiaries of AEP are:
APCo (organized in Virginia in 1926), which is engaged in the generation,
purchase, transmission and distribution of electric power to approximately
838,000 customers in the southwestern portion of Virginia and southern West
Virginia, and in supplying electric power at wholesale to other electric
utility companies and municipalities in those states and in Tennessee. At
December 31, 1993, APCo and its wholly owned subsidiaries had 4,587
employees. A generating subsidiary of APCo, Kanawha Valley Power Company,
which owns and operates under Federal license three hydroelectric
generating stations located on Government lands adjacent to Government-
owned navigation dams on the Kanawha River in West Virginia, sells its net
output to APCo. Among the principal industries served by APCo are coal
mining, primary metals, chemicals, textiles, paper, stone, clay, glass and
concrete products and furniture. In addition to its AEP System
interconnection, APCo also is interconnected with the following
unaffiliated utility companies: Carolina Power & Light Company, Duke Power
Company and VEPCo. A comparatively small part of the properties and
business of APCo is located in the northeastern end of the Tennessee
Valley. 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), which is engaged in the generation,
purchase, transmission and distribution of electric power to approximately
578,000 customers in Ohio, and in supplying electric power at wholesale to
other electric utilities and to municipally owned distribution systems
within its service area. At December 31, 1993, CSPCo had 2,143 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.
Approximately 80% of CSPCo's retail revenues are derived from the Columbus
area. Among the principal industries served are food processing, chemicals,
primary metals, electronic machinery and paper products. In addition to its
AEP System interconnection, 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), which is engaged in the generation,
purchase, transmission and distribution of electric power to approximately
525,000 customers in northern and eastern Indiana and southwestern
Michigan, and in supplying electric power at wholesale to other electric
utility companies, rural electric cooperatives and municipalities. At
December 31, 1993, I&M had 3,944
1
<PAGE>
employees. Among the principal industries served are transportation
equipment, primary metals, fabricated metal products, electrical and
electronic machinery, 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 interconnection, I&M also is interconnected with
the following unaffiliated utility companies: Central Illinois Public
Service Company, CG&E, Commonwealth Edison Company, Consumers Power
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.
KEPCo (organized in Kentucky in 1919), which is engaged in the
generation, purchase, transmission and distribution of electric power to
approximately 161,000 customers in an area in eastern Kentucky, and in
supplying electric power at wholesale to other utilities and municipalities
in Kentucky. At December 31, 1993, KEPCo had 842 employees. In addition to
its AEP System interconnection, KEPCo also is interconnected with the
following unaffiliated utility companies: Kentucky Utilities Company and
East Kentucky Power Cooperative Inc. KEPCo is also interconnected with TVA.
Kingsport Power Company (organized in Virginia in 1917), which provides
electric service to approximately 41,000 customers in Kingsport and eight
neighboring communities in northeastern Tennessee. Kingsport Power Company
has no generating facilities of its own. It purchases electric power
distributed to its customers from APCo. At December 31, 1993, Kingsport
Power Company had 102 employees.
OPCo (organized in Ohio in 1907 and reincorporated in 1924), which is
engaged in the generation, purchase, transmission and distribution of
electric power to approximately 657,000 customers in the northwestern, east
central, eastern and southern sections of Ohio, and in supplying electric
power at wholesale to other electric utility companies and municipalities.
At December 31, 1993, OPCo and its wholly owned subsidiaries had 5,749
employees. Among the principal industries served by OPCo are primary
metals, stone, clay, glass and concrete products, rubber and plastic
products, petroleum refining, chemicals and metal and wire products. In
addition to its AEP System interconnection, 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.
Wheeling Power Company (organized in West Virginia in 1883 and
reincorporated in 1911), which provides electric service to approximately
41,000 customers in northern West Virginia. Wheeling Power Company has no
generating facilities of its own. It purchases electric power distributed
to its customers from OPCo. At December 31, 1993, Wheeling Power Company
had 143 employees.
Another principal electric utility subsidiary of AEP is AEGCo, which was
organized in Ohio in 1982 as an electric generating company. AEGCo sells power
at wholesale to I&M, KEPCo and VEPCo. AEGCo has no employees.
See Item 2 for information concerning the properties of the subsidiaries of
AEP.
The Service Corporation provides accounting, administrative, computer,
engineering, financial, legal and other services at cost to the AEP System
companies. The executive officers of AEP are all employees of the Service
Corporation.
COST REDUCTION PROGRAM
On November 5, 1992, AEP announced a major cost-control program. The program
outlined plans to combine certain operations of CSPCo and OPCo, focusing on the
functions performed in the headquarters of each company, and to restructure and
downsize the operations of the Service Corporation in Columbus, Ohio. The
program has resulted in the elimination of over 1,000 positions.
2
<PAGE>
REGULATION
General
AEP and its subsidiaries are subject to the broad regulatory provisions of
the Public Utility Holding Company Act of 1935 administered by the SEC. The
public utility subsidiaries' retail rates and certain other matters are subject
to regulation by the public utility commissions of the states in which they
operate. Such subsidiaries are also subject to regulation by the FERC under the
Federal Power Act in respect of rates for interstate sale at wholesale and
transmission of electric power, accounting and other matters and construction
and operation of hydroelectric projects. I&M is subject to regulation by the
NRC under the Atomic Energy Act of 1954, as amended, with respect to the
operation of the Cook Plant.
Conflict of Regulation
Public utility subsidiaries of AEP can be subject to regulation of the same
subject matter by two or more jurisdictions. In such situations, it is possible
that the decisions of such regulatory bodies may conflict or that the decision
of one such body may affect the cost of providing service and so the rates in
another jurisdiction. In a recent case involving OPCo, the U.S. Court of
Appeals for the District of Columbia held that the determination of costs to be
charged to associated companies by the SEC under the Public Utility Holding
Company Act of 1935 precluded the FERC from determining that such costs were
unreasonable for ratemaking purposes. The U.S. Supreme Court also has held that
a state commission may not conclude that a FERC approved wholesale power
agreement is unreasonable for state ratemaking purposes. Certain actions that
would overturn these decisions or otherwise affect the jurisdiction of the SEC
and FERC are under consideration by the U.S. Congress and these regulatory
bodies. Such conflicts of jurisdiction often result in litigation and if
resolved adversely to a public utility subsidiary of AEP could have a material
adverse effect on the results of operations or financial condition of such
subsidiary or AEP.
CLASSES OF SERVICE
The principal classes of service from which the major electric utility
subsidiaries of AEP derive revenues and the amount of such revenues (from
kilowatt-hour sales) during the year ended December 31, 1993 are as follows:
<TABLE>
<CAPTION>
AEP
AEGCO APCO CSPCO I&M KEPCO OPCO SYSTEM (A)
----- ---- ----- --- ----- ---- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Retail
Residential
Without Electric
Heating................ $ -- $ 242,177 $284,593 $ 205,315 $ 43,325 $ 256,547 $1,052,233
With Electric Heating.. -- 308,242 100,185 97,568 54,139 132,606 728,569
-------- ---------- -------- ---------- -------- ---------- ----------
Total Residential..... -- 550,419 384,778 302,883 97,464 389,153 1,780,802
Commercial............. -- 273,147 328,854 220,938 53,892 241,426 1,153,207
Industrial............. -- 359,946 137,460 250,939 90,501 609,140 1,514,691
Miscellaneous.......... -- 30,627 14,689 5,593 808 8,107 62,879
-------- ---------- -------- ---------- -------- ---------- ----------
Total Retail.......... -- 1,214,139 865,781 780,353 242,665 1,247,826 4,511,579
Wholesale (sales for
resale)................. 229,196 289,187 74,942 404,910 48,399 438,855 687,072
-------- ---------- -------- ---------- -------- ---------- ----------
Total from KWH Sales.. 229,196 1,503,326 940,723 1,185,263 291,064 1,686,681 5,198,651
Provision for Revenue
Refunds................. -- (331) -- (755) -- -- (926)
-------- ---------- -------- ---------- -------- ---------- ----------
Total Net of Provision
for
Revenue Refunds...... 229,196 1,502,995 940,723 1,184,508 291,064 1,686,681 5,197,725
Other Operating
Revenues................ 77 16,109 12,929 18,135 3,188 21,896 71,117
-------- ---------- -------- ---------- -------- ---------- ----------
Total Electric
Operating
Revenues............. $229,273 $1,519,104 $953,652 $1,202,643 $294,252 $1,708,577 $5,268,842
======== ========== ======== ========== ======== ========== ==========
</TABLE>
- --------
(a) Includes revenues of other subsidiaries not shown and elimination of
intercompany transactions.
3
<PAGE>
AEP SYSTEM POWER POOL, OFF-SYSTEM POWER SALES AND TRANSMISSION SERVICES
AEP's electric utility subsidiaries operate their generating plants and
transmission lines as a single interconnected and coordinated electric utility
system. APCo, CSPCo, I&M, KEPCo and OPCo are parties to the Interconnection
Agreement, dated July 6, 1951, as amended (the Interconnection Agreement),
defining how they share the costs and benefits associated with the System's
generating plants. This sharing is based upon each company's "member-load-
ratio," which is calculated monthly on the basis of each company's maximum
peak demand in relation to the sum of the maximum peak demands of all five
companies during the preceding 12 months.
The following table shows the net credits or (charges) allocated among the
parties under the Interconnection Agreement during the years ended December
31, 1991, 1992 and 1993:
<TABLE>
<CAPTION>
1991 1992 1993
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
APCo........................................... $(235,000) $(243,000) $(260,000)
CSPCo.......................................... (142,000) (118,000) (141,000)
I&M............................................ 148,000 71,000 183,000
KEPCo.......................................... 15,000 26,000 1,000
OPCo........................................... 214,000 264,000 217,000
</TABLE>
In addition, APCo, CSPCo, I&M, KEPCo and OPCo are parties to the
Transmission Agreement, dated April 1, 1984, as amended (the Transmission
Agreement), defining how they share the benefits and burdens associated with
their extra-high-voltage transmission system (facilities rated 345 kv and
above) and certain facilities operated at lower voltages (138 kv and above).
Like the Interconnection Agreement, this sharing is based upon each company's
"member-load-ratio."
The following table shows the net credits or (charges) allocated among the
parties to the Transmission Agreement during the years ended December 31,
1991, 1992 and 1993:
<TABLE>
<CAPTION>
1991 1992 1993
---- ---- ----
<S> <C> <C> <C>
(IN THOUSANDS)
APCo................................................ $ (7,000) $(8,000) $(3,200)
CSPCo............................................... (31,400) (29,900) (31,200)
I&M................................................. 46,200 48,200 47,400
KEPCo............................................... 5,700 4,200 3,800
OPCo................................................ (13,500) (14,500) (16,800)
</TABLE>
AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo also sell electric power on a
wholesale basis to non-affiliated electric utilities. Such sales are either
made by the AEP System and then allocated among APCo, CSPCo, I&M, KEPCo and
OPCo based on member-load-ratios or made by individual companies pursuant to
various long-term power agreements. The following table shows the amounts
contributed to operating income of the various companies from such sales
during the years ended December 31, 1991, 1992 and 1993:
<TABLE>
<CAPTION>
1991(A) 1992(A) 1993(A)
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
AEGCo(b)............................................. $ 33,900 $ 33,000 $ 32,500
APCo(c).............................................. 23,600 18,100 23,600
CSPCo(c)............................................. 12,500 9,100 12,000
I&M(c)(d)............................................ 35,600 31,300 35,300
KEPCo(c)............................................. 4,800 3,700 4,900
OPCo(c).............................................. 21,500 15,700 20,700
-------- -------- --------
Total System......................................... $131,900 $110,900 $129,000
======== ======== ========
</TABLE>
- --------
(a) Such sales do not include wholesale sales to entities such as municipal
agencies that may be full/partial requirement customers of AEP System
companies within their service areas. See the table under Classes of
Service for revenues from wholesale sales.
(b) All amounts for AEGCo are from sales made pursuant to a long-term power
agreement. See AEGCo--Unit Power Agreements.
(c) All amounts are from System sales which are allocated among APCo, CSPCo,
I&M, KEPCo and OPCo based upon member-load-ratio. All System sales made in
1991, 1992 and 1993 were made on a short-term basis, except that
$7,300,000, $11,500,000 and $16,800,000, respectively, of the contribution
to operating income for the total System were from long-term System sales.
(d) In addition to its allocation of System sales, the 1990, 1991 and 1992
amounts for I&M includes $21,100,000, $20,800,000 and $21,600,000 from a
long-term agreement to sell 250 megawatts of power scheduled to terminate
in 2009.
4
<PAGE>
The AEP System has long-term system agreements to sell 100 megawatts of
electric power through 1997 and to sell at times up to 200 megawatts of peaking
power for at least five years through March 1997 to unaffiliated utilities. The
AEP System continues to seek appropriate long-term wholesale power agreements
and will sell available power on a short-term basis. The future results of
operations of AEP and its operating companies will be affected by their ability
to make cost-effective wholesale sales or, if such sales are reduced, their
ability to timely raise retail rates.
APCo, CSPCo, I&M, KEPCo, OPCo and other System companies also provide
transmission services for non-affiliated companies. The following table shows
the amounts contributed to operating income of the various companies from such
services during the years ended December 31, 1991, 1992 and 1993:
<TABLE>
<CAPTION>
1991 1992 1993
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
APCo.................................................... $ 2,800 $ 3,000 $ 2,900
CSPCo................................................... 2,400 2,500 2,500
I&M..................................................... 6,400 6,600 7,700
KEPCo................................................... 500 600 600
OPCo.................................................... 9,800 10,100 9,900
------- ------- -------
Total System(a)......................................... $22,600 $23,500 $24,200
======= ======= =======
</TABLE>
- --------
(a) Includes revenues of other System companies not shown.
The Energy Policy Act of 1992 amended the Federal Power Act to authorize the
FERC under certain conditions to order utilities which own transmission
facilities to provide wholesale transmission services for other utilities and
entities generating electric power. See Rates--APCo for discussion of a current
proceeding in which certain municipal customers seek the FERC to order the AEP
System to provide certain transmission services.
OVEC
AEP, CSPCo and several unaffiliated utility companies jointly own OVEC, which
supplies the power requirements of a uranium enrichment plant near Portsmouth,
Ohio owned by the DOE. The aggregate equity participation of AEP and CSPCo in
OVEC is 44.2%. The DOE demand under OVEC's power agreement, which is subject to
change from time to time, is 1,929,000 kilowatts and is scheduled to remain at
about that level through the remaining term of the contract. The proceeds from
the sale of power by OVEC, aggregating $271,000,000 in 1993, are designed to be
sufficient for OVEC to meet its operating expenses and fixed costs and to
provide a return on its equity capital. APCo, CSPCo, I&M and OPCo, as
sponsoring companies, are entitled to receive from OVEC, and are obligated to
pay for, the power not required by DOE in proportion to their power
participation ratios, which averaged 42.1% in 1993. The power agreement with
DOE terminates on December 31, 2005, subject to early termination by DOE on not
less than three years notice. The power agreement among OVEC and the sponsoring
companies expires by its terms on March 12, 2006. The Clinton Administration is
considering closing either the Portsmouth, Ohio uranium enrichment plant or
DOE's other enrichment plant in Kentucky.
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 27 of the rural electric cooperatives
which operate in the State of Ohio at 297 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 January 18, 1994,
was recorded at 1,146,933 kilowatts.
5
<PAGE>
CERTAIN INDUSTRIAL CONTRACTS
Ravenswood Aluminum Corporation and Ormet Corporation operate major aluminum
reduction plants in the Ohio River Valley at Ravenswood, West Virginia, and in
the vicinity of Hannibal, Ohio, respectively. OPCo supplies all of the power
requirements of these plants pursuant to long-term contracts with such
companies which, subject to certain curtailment provisions, terminate in 1997
in the case of Ormet and 1998 in the case of Ravenswood. The power requirements
of such plants presently aggregate approximately 880,000 kilowatts. Because the
price of electricity to Ravenswood and Ormet is based on generation costs at
the Muskingum River and Kammer Plants, respectively, the implementation of the
Clean Air Act Amendments of 1990 or an unfavorable resolution of the stack
height regulation litigation (in the case of Kammer Plant) and administrative
proceedings, described under Environmental and Other Matters, could result in a
decrease in operations or closure of Ravenswood's and Ormet's aluminum
reduction plants. See Legal Proceedings for a discussion of litigation
involving Ormet.
AEGCO
Since its formation, AEGCo's business has consisted of the ownership and
financing of its 50% interest in the Rockport Plant and, more recently, 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, KEPCo and VEPCo, pursuant to unit power
agreements. Pursuant to these unit power agreements, AEGCo is entitled to
recover its full cost of service from the purchasers and will be entitled to
recover future increases in such costs, including increases in fuel and capital
costs. See Unit Power Agreements. Pursuant to a capital funds agreement, AEP
has agreed to provide cash capital contributions, or in certain circumstances
subordinated loans, to AEGCo, to the extent necessary to enable AEGCo, among
other things, to provide its proportionate share of funds required to permit
continuation of the commercial operation of the Rockport Plant and 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. See Capital Funds Agreement.
Unit Power Agreements
A unit power agreement between AEGCo and I&M (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, as when added to amounts received
by AEGCo from any other sources, will be at least 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 KEPCo, and a unit power agreement
between KEPCo and AEGCo, AEGCo sells KEPCo 30% of the power (and the energy
associated therewith) available to AEGCo from both units of the Rockport Plant.
KEPCo has agreed to pay to AEGCo in consideration for the right to receive such
power the same amounts which I&M would have paid AEGCo under the terms of the
I&M Power Agreement for such entitlement. The KEPCo unit power agreement
expires on December 31, 1999, unless extended.
A unit power agreement among AEGCo, I&M, VEPCo, and APCo provides for, among
other things, the sale of 70% of the power and energy available to AEGCo from
Unit 1 of the Rockport Plant to VEPCo by AEGCo from January 1, 1987 through
December 31, 1999. VEPCo has agreed to pay to AEGCo in consideration for the
right to receive such power those amounts which I&M would have paid AEGCo under
the terms of the I&M Power Agreement for such entitlement. Approximately 37% of
AEGCo's operating revenue in 1993 was derived from its sales to VEPCo.
6
<PAGE>
Capital Funds Agreement
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.
INDUSTRY PROBLEMS
The electric utility industry, including the operating subsidiaries of AEP,
has encountered at various times in the last 15 years significant problems in a
number of areas, including: delays in and limitations on the recovery of fuel
costs from customers; proposed legislation, initiative measures and other
actions designed to prohibit construction and operation of certain types of
power plants under certain conditions and to eliminate or reduce the extent of
the coverage of fuel adjustment clauses; inadequate rate increases and delays
in obtaining rate increases; jurisdictional disputes with state public
utilities commissions regarding the interstate operations of integrated
electric systems; requirements for additional expenditures for pollution
control facilities; increased capital and operating costs; construction delays
due, among other factors, to pollution control and environmental considerations
and to material, equipment and fuel shortages; the economic effects on net
income (which when combined with other factors may be immediate and adverse)
associated with placing large generating units and related facilities in
commercial operation, including the commencement at that time of substantial
charges for depreciation, taxes, maintenance and other operating expenses, and
the cessation of AFUDC with respect to such units; uncertainties as to
conservation efforts by customers and the effects of such efforts on load
growth; depressed economic conditions in certain regions of the United States;
increasingly competitive conditions in the wholesale and retail markets;
proposals to deregulate certain portions of the industry, revise the rules and
responsibilities under which new generating capacity is supplied and open
access to an electric utility's transmission system; and substantial increases
in construction costs and difficulties in financing due to high costs of
capital, uncertain capital markets, charter and indenture limitations
restricting conventional financing, and shortages of cash for construction and
other purposes.
SEASONALITY
Sales of electricity by the AEP System tend to increase during warmer summer
and cooler winter seasons because of the use of electricity by customers for
cooling and heating.
FRANCHISES
The operating companies of the AEP System hold franchises to provide electric
service in various municipalities in their service areas. These franchises have
varying provisions and expiration dates. In general, the operating companies
consider their franchises to be adequate for the conduct of their business.
COMPETITION
Retail
The public utility subsidiaries of AEP generally have the exclusive right to
sell electric power at retail within their service areas. However, they do
compete with self-generation and with distributors of alternative sources of
energy, 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
capacity of customers to utilize sources of energy other than electric power.
With respect to self-generation, the public utility subsidiaries of AEP believe
that they maintain a favorable competitive position on the basis of all of
these factors. With respect to alternative
7
<PAGE>
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 sources for electric power place them in a favorable competitive
position, even though their price may be higher than some such alternative
sources of energy.
Significant changes in the global economy in recent years have led to
increased price competition for industrial companies in the United States,
including those served by the AEP System. Such industrial companies have
requested price reductions from their suppliers, including their suppliers of
electric power. In addition, industrial companies which are downsizing or
reorganizing often close a facility based upon its costs, which 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, various off-peak or interruptible supply options and believe that, as
low cost suppliers of electric power, they will not be materially adversely
affected by this competition and may be benefitted by attracting new industrial
customers to their service territories.
The legislatures and/or the regulatory commissions in several states have
considered or are considering "retail wheeling" which, in general terms, means
the transmission by an electric utility of energy produced by another entity
over its transmission and distribution system to a retail customer in such
utility's service territory. A requirement to transmit directly to retail
customers would have the result of permitting retail customers to purchase
electric power, at the election of such customers, not only from the electric
utility in whose service area they are located but from any other electric
utility or independent power producer.
The MPSC began a proceeding on September 11, 1992 to investigate a proposal
by certain industrial companies for an experiment in retail wheeling in certain
service territories in Michigan, not including those of I&M. On August 27,
1993, an administrative law judge recommended that the MPSC authorize such
retail wheeling on a voluntary basis and that the proposal had not been shown
to be in the public interest, could harm other ratepayers and did not
adequately address the issues of stranded investment and utilities' obligation
to serve. The MPSC has not yet issued an order in this proceeding. In addition,
a retail wheeling bill was introduced in the Ohio House of Representatives in
February 1994.
Because adoption of retail wheeling would require resolution of complex
issues, such as who would pay for the unused generating plant of the utility
wheeling such power, it is not clear what effects will flow from its adoption
in any state. However, if retail wheeling is adopted, the public utility
subsidiaries of AEP believe that they have a favorable competitive position
because of their relatively low costs.
Wholesale
The public utility subsidiaries of AEP, like the electric industry generally,
face increasing competition to sell available power on a wholesale basis,
primarily to other public utilities. The Energy Policy Act of 1992 was
designed, among other things, to foster competition in the wholesale market (a)
through amendments to the Public Utility Holding Company Act of 1935,
facilitating the ownership and operation of generating facilities by "exempt
wholesale generators" (which may include independent power producers as well as
affiliates of electric utilities) and (b) through amendments to the Federal
Power Act, authorizing the FERC under certain conditions to order utilities
which own transmission facilities to provide wholesale transmission services
for other utilities and entities generating electric power. The principal
factors in competing for such sales are price (including fuel costs),
availability of capacity and reliability of service. The public utility
subsidiaries of AEP believe that they maintain a favorable competitive position
on the basis of all of these factors. However, because of the availability of
capacity of other utilities and the lower fuel prices in recent years, price
competition has been, and is expected for the next few years to be,
particularly important.
New Generation
When the AEP System needs new generation, the public utility subsidiaries of
AEP which wish to provide it will have to compete with exempt wholesale
generators, independent power producers and other
8
<PAGE>
utilities. Although the specific guidelines for such competition have not yet
been developed and may vary from jurisdiction to jurisdiction (see the
discussion below), significant factors will include price and reliability. AEP
and its subsidiaries believe that they can be competitive as to both of these
factors. However, no additional baseload generating capacity is expected to be
constructed by the AEP System for some time. See Construction and Financing
Program.
Indiana: On June 30, 1993, the IURC issued a notice of proposed rulemaking
for integrated resource planning which among other things would permit a
utility to acquire additional generation through bidding programs or other
means. The proposed rules would permit the utility to participate in the
bidding process. The Indiana Electric Association, on behalf of a group of
utilities including I&M, filed comments that support competitive bidding as an
optional method to acquire new generation.
Michigan: The MPSC has adopted guidelines governing the acquisition of new
capacity by large Michigan electric utilities. The guidelines do not apply to
I&M.
Ohio: On December 17, 1992, the PUCO issued an order proposing rules for
competitive bidding for new generating capacity, including transmission access
for winning bidders. The proposed rules would establish a rebuttable
presumption of prudence where new generating capacity is acquired through
competitive bidding and provide other incentives to use competitive bidding.
The proposed rules also contain procedures to ensure that bidders for a
utility's new capacity will have open access to certain transmission facilities
and prohibit the utility acquiring new capacity from withholding Clean Air Act
emission allowances from potential bidders. CSPCo and OPCo filed comments on
the proposed rules generally supporting promulgation of rules governing
competitive bidding but stating that the rules should not address access to
transmission facilities or emission allowances, because existing federal laws
address such concerns.
Virginia: The Virginia SCC has adopted minimum requirements for any electric
utility that elects to acquire new generation through a bidding program. An
electric utility is not required to use the bidding process and may participate
in the bidding process.
West Virginia: On October 8, 1993, the West Virginia PSC issued an order
proposing rules that generally require electric utilities to procure
competitively all new sources of generation. APCo and Wheeling Power Company
filed comments stating that the rules should not require competitive bidding
and should permit the utility to participate in the bidding process.
NEW BUSINESS DEVELOPMENT
AEP continues to consider new business opportunities, particularly those
which allow use of its expertise. These endeavors began in 1982 and are
conducted through AEP Energy Services, Inc. ("AEPES") and AEP Resources, Inc.
("Resources").
Resources' primary business focus is international and domestic cogeneration,
the independent power market, and the privatization of generation facilities in
the international market.
AEPES has continued to offer consulting services and market AEP System
expertise both domestically and internationally. AEPES contracts with other
public utilities, commercial concerns and government agencies for the rendition
of services and the licensing of intellectual property.
These continuing efforts to invest in and develop new business opportunities
offer the potential of earning returns which may exceed those of rate-regulated
operations. However, because of the absence of any assured return or rate of
return, they also involve a higher degree of risk which must be carefully
considered and assessed. AEP may make substantial investments in these and
other new businesses.
CONSTRUCTION AND FINANCING PROGRAM
The AEP System companies are engaged in a continuing construction program,
involving selection of sites, design and acquisition of equipment, and
installation of the generating, transmission, distribution and other facilities
necessary to provide for growing demands for electric service. However, AEP's
current load forecast indicates no need for new coal-fired baseload generation
until sometime after the year 2005. For many
9
<PAGE>
years System companies' loads grew at such a rate as to warrant efforts to
achieve major economies of scale, and thus reduce or limit the unit cost of the
power and energy supplied to the System's customers. From time to time, as the
System companies have encountered the industry problems described above, such
companies also have encountered limitations on their ability to secure the
capital necessary to finance construction expenditures.
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. The extent and timing of construction
expenditures and the nature of future financing activities may be dependent on,
among other things, the timing and amount of additional rate relief received.
See Rates.
PFBC Projects
Tidd Plant: In November 1990, OPCo began operating a 70,000 kilowatt PFBC
demonstration plant at the deactivated Tidd Plant on the Ohio River at
Brilliant, Ohio. The specific goal of the project is to demonstrate that the
combined-cycle PFBC technology is a cost-effective, reliable, and
environmentally superior alternative to conventional coal-fired electric power
generation with a flue-gas desulfurization system. Through December 31, 1993,
the Tidd Plant achieved 5,530 hours of coal-fired operation while demonstrating
the viability of the PFBC process in the reduction of targeted sulfur dioxide
and nitrogen oxide emissions. See Environmental and Other Matters for
information regarding restrictions on sulfur dioxide and nitrogen oxide
emissions from coal-fired power plants in the AEP System. Original funding for
the Tidd Plant project included provisions for a three-year test period
extending through February 1994. At this time, planned funding for the Tidd
Plant project contemplates an additional year of operation extending through
February 1995. However, if additional testing is required, the test period
could be extended past February 1995. The plant is planned to be deactivated at
the conclusion of the test program.
Total Tidd Plant construction costs (including PFBC development costs) and
total Tidd operating costs incurred through December 31, 1993 were $181,898,000
and $25,076,000, respectively. At such date, OPCo had received funding from DOE
and the State of Ohio in the aggregate amounts of $59,548,000 and $10,000,000,
respectively, and had recovered $123,186,000 from its retail customers. The
estimated total construction and operating costs of the Tidd Plant project are
$185,000,000 and $40,000,000, respectively, and OPCo expects to receive
additional funding from DOE so that the aggregate amount received from it will
be $60,200,000. OPCo is currently recovering approximately $500,000 per month
from its Ohio electric fuel component jurisdictional customers for costs
associated with the Tidd Plant project that are not recovered from DOE or the
State of Ohio and incurred after December 1, 1986. The PUCO, however, may
consider distributing such costs over total OPCo sales which may result in a
prospective reduction in the amount recoverable by OPCo.
PFBC Utility Demonstration Project: DOE is cost sharing with APCo development
of a 340,000 kilowatt commercial-size PFBC plant adjacent to APCo's Mountaineer
Plant in New Haven, West Virginia. DOE has agreed to continue funding the
design of the plant through at least January 1996. The present four-year effort
to refine the PFBC design extends through January 1996. The ultimate decision
to proceed with the construction of the commercial PFBC plant will hinge on the
confirmation of the need for new coal-fired baseload capacity, the readiness of
PFBC technology, and state regulatory commission approval.
Construction Expenditures
The following table shows the construction expenditures by AEGCo, APCo,
CSPCo, I&M, KEPCo, OPCo and the AEP System and their respective consolidated
subsidiaries during 1991, 1992 and 1993 and their current estimate of 1994
construction expenditures, in each case including AFUDC but excluding nuclear
fuel and other assets acquired under leases. The construction expenditures for
the years 1991-1993 were applied, and it is anticipated that the estimated
construction expenditures for 1994 will be applied, approximately as follows to
construction of the following classes of assets:
10
<PAGE>
<TABLE>
<CAPTION>
1991 1992 1993 1994
ACTUAL ACTUAL ACTUAL ESTIMATE
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
AEGCO
Generating plant and facilities............. $ 3,700 $ 3,600 $ 3,100 $ 4,300
-------- -------- -------- --------
TOTAL..................................... $ 3,700 $ 3,600 $ 3,100 $ 4,300
======== ======== ======== ========
APCO
Generating plant and facilities (a)......... $ 33,800 $ 34,400 $ 51,200 $ 64,200
Transmission lines and facilities........... 42,500 54,200 36,700 45,800
Distribution lines and facilities........... 102,200 91,600 98,200 92,400
General plant and other facilities.......... 12,300 11,500 4,800 17,300
-------- -------- -------- --------
TOTAL..................................... $190,800 $191,700 $190,900 $219,700
======== ======== ======== ========
CSPCO
Generating plant and facilities............. $ 49,800 $ 21,900 $33,300 $ 39,500
Transmission lines and facilities........... 11,300 11,600 10,100 4,600
Distribution lines and facilities........... 42,900 40,800 40,700 46,400
General plant and other facilities.......... 3,300 1,100 2,200 8,200
-------- -------- -------- --------
TOTAL..................................... $107,300 $ 75,400 $ 86,300 $ 98,700
======== ======== ======== ========
I&M (b)
Generating plant and facilities............. $ 48,200 $ 66,400 $ 50,200 $ 55,800
Transmission lines and facilities .......... 31,700 17,300 10,100 20,000
Distribution lines and facilities........... 38,800 39,200 41,300 42,000
General plant and other facilities.......... 5,000 3,500 6,700 5,200
-------- -------- -------- --------
TOTAL..................................... $123,700 $126,400 $108,300 $123,000
======== ======== ======== ========
KEPCO
Generating plant and facilities............. $ 5,300 $ 4,100 $ 8,100 $ 25,000
Transmission lines and facilities........... 4,000 8,700 6,700 9,400
Distribution lines and facilities........... 19,900 17,500 20,300 19,900
General plant and other facilities.......... 0 1,500 0 4,100
-------- -------- -------- --------
TOTAL..................................... $ 29,200 $ 31,800 $ 35,100 $ 58,400
======== ======== ======== ========
OPCO
Generating plant and facilities (c)(d)...... $132,900 $124,900 $112,700 $ 77,800
Transmission lines and facilities........... 19,500 18,900 28,600 34,300
Distribution lines and facilities........... 41,500 42,800 46,000 47,000
General plant and other facilities.......... 10,000 5,900 10,500 11,300
-------- -------- -------- --------
TOTAL..................................... $203,900 $192,500 $197,800 $170,400
======== ======== ======== ========
AEP SYSTEM
Generating plant and facilities (a)(c)(d)... $273,700 $255,300 $258,600 $266,600
Transmission lines and facilities........... 110,000 111,900 92,800 115,100
Distribution lines and facilities........... 250,800 237,700 252,300 255,800
General plant and other facilities.......... 30,700 23,700 24,400 46,500
-------- -------- -------- --------
TOTAL..................................... $665,200 $628,600 $628,100 $684,000
======== ======== ======== ========
</TABLE>
- --------
(a) Excludes expenditures for PFBC Utility Demonstration Project. See PFBC
Projects.
(b) Reflects restatement for 1991 to include effect of merging Michigan Power
Company into I&M.
(c) Includes expenditures for Tidd Plant which have been or are expected to be
funded through Federal/state grants and the fuel clause mechanism. See
PFBC Projects.
(d) Excludes expenditures associated with flue-gas desulfurization system
being constructed by a non-affiliate at the Gavin Plant which OPCo has
agreed to lease upon completion of construction. Actual expenditures for
1991, 1992 and 1993 and the current estimate for 1994 are $18,683,000,
$93,653,000, $256,673,000 and $230,000,000, respectively. See
Environmental and Other Matters--CAAA-AEP System Compliance Plan.
11
<PAGE>
Reference is made to the footnotes to the 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. If the System receives adequate rate
relief in future periods, and is able to finance additional construction
expenditures, and if the loads which are served by the System increase above
the levels currently projected, additional expenditures may be incurred in
subsequent years in amounts which would be substantial but which cannot be
accurately predicted at this time.
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 estimates of
capital requirements for the System's construction program.
Proposed Transmission Facilities: On March 23, 1990, APCo and VEPCo announced
plans, subject to regulatory approval, for major new transmission facilities.
APCo will construct approximately 115 miles of 765,000-volt line from APCo's
Wyoming station in southern West Virginia to APCo's Cloverdale station near
Roanoke, Virginia. VEPCo will construct approximately 102 miles of 500,000-volt
line from APCo's Joshua Falls station east of Lynchburg, Virginia to VEPCo's
Ladysmith station north of Richmond, Virginia. The construction of the
transmission lines and related station improvements will provide needed
reinforcement for APCo's internal load, reinforce the ability to exchange
electric energy between the two companies and relieve present constraints on
the transmission of electric energy from potential independent power producers
in the APCo service area to VEPCo. APCo's cost is estimated at $245,000,000
while VEPCo's cost is estimated at $164,000,000. Completion of the project is
presently scheduled for 1998 but the actual service date will be dependent upon
the time necessary to meet various regulatory requirements.
Hearings before the Virginia SCC were concluded in September 1993. A report
was issued by the hearing examiner in December 1993 which recommended that the
Virginia SCC grant APCo approval to construct the proposed 765,000-volt line. A
decision by the Virginia SCC is pending.
APCo refiled with the West Virginia PSC in February 1993 its application for
certification. An application filed in June 1992 was withdrawn at the request
of the West Virginia PSC to permit additional time for review by the West
Virginia PSC. The West Virginia PSC rejected APCo's application for
certification in May 1993, directing APCo to supplement its line siting
information. APCo intends to refile its application with the West Virginia PSC.
Hearings are expected to be held in late 1994 with a decision expected in early
1995.
The Jefferson National Forest (JNF) is directing the preparation of an
Environmental Impact Statement (EIS) which will be required prior to the
granting of special use permits for crossing Federal lands. The present
schedule of the JNF calls for completion of the draft EIS in September 1994 and
the final EIS in February 1995.
Environmental Expenditures: Expenditures related to compliance with air and
water quality standards, included in the gross additions to plant of the
System, during 1991, 1992 and 1993 and the current estimate for 1994 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 may have
been or may be adopted.
<TABLE>
<CAPTION>
1991 1992 1993 1994
ACTUAL ACTUAL ACTUAL ESTIMATE
-------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
AEGCo......................................... $ 0 $ 0 $ 0 $ 900
APCo (a)...................................... 7,100 11,200 16,800 22,100
CSPCo......................................... 7,100 6,500 15,800 23,900
I&M........................................... 100 0 0 3,700
KEPCo......................................... 200 100 1,000 9,000
OPCo (b)(c)................................... 56,700 61,600 31,600 24,500
------- ------- ------- -------
AEP System (a)(b)(c).......................... $71,200 $79,400 $65,200 $84,100
======= ======= ======= =======
</TABLE>
12
<PAGE>
- --------
(a) Excludes expenditures for PFBC Utility Demonstration Project. See PFBC
Projects.
(b) Includes expenditures for Tidd Plant which have been or are expected to be
funded through Federal/state grants and the fuel clause mechanism. See
PFBC Projects.
(c) Excludes expenditures associated with flue-gas desulfurization system
being constructed by a non-affiliate at the Gavin Plant which OPCo has
agreed, subject to PUCO approval, to lease upon completion of
construction. Actual expenditures for 1991, 1992 and 1993 and the current
estimate for 1994 are $18,683,000, $93,653,000, $256,673,000 and
$230,000,000, respectively. See Environmental and Other Matters--CAAA-AEP
System Compliance Plan.
Financing
It has been the practice of AEP's operating subsidiaries to finance current
construction expenditures in excess of available internally generated funds by
initially issuing unsecured short-term debt, principally commercial paper and
bank loans, at times 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 preferred stock, and cash
capital contributions by AEP to the subsidiaries. It has been the practice of
AEP, in turn, to finance cash capital contributions to the common stock
equities of the operating subsidiaries by issuing unsecured short-term debt,
principally commercial paper, and then to sell additional shares of Common
Stock of AEP for the purpose of retiring the short-term debt previously
incurred. Since 1985, however, AEP has sold no shares of Common Stock. If
necessary, AEP will issue shares of Common Stock pursuant to its Dividend
Reinvestment and Stock Purchase Plan. Although prevailing interest costs of
short-term bank debt and commercial paper generally have been lower than
prevailing interest costs of long-term debt securities, whenever interest
costs of short-term debt exceed costs of long-term debt, the companies might
be adversely affected by reliance on the use of short-term debt to finance
their construction and other capital requirements.
During the period 1991-1993, external funds from financings and capital
contributions by AEP amounted, with respect to APCo, CSPCo and KEPCo to
approximately 37%, 38% and 31%, respectively, of the aggregate construction
expenditures shown above. During this same period, the amount of funds used to
retire long-term and short-term debt and preferred stock of AEGCo, I&M and
OPCo exceeded the amount of funds from financings and capital contributions by
AEP.
The ability of AEP and its operating subsidiaries to issue short-term debt
is limited by regulatory restrictions and, in the case of most of the
operating subsidiaries, by provisions contained in their charters and in
certain debt and other instruments. The approximate amounts of short-term debt
which the companies estimate that they were permitted to issue under the most
restrictive such restriction, at January 1, 1994, and the respective amounts
of short-term debt outstanding on that date, on a corporate basis, are shown
in the following tabulation:
<TABLE>
<CAPTION>
TOTAL
SHORT-TERM DEBT AEP AEGCO APCO CSPCO I&M KEPCO OPCO AEP SYSTEM(A)
---------------- ---- ------ ----- ------ ---- ------ ----- --------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Amount authorized.... $150 $50 $215 $140 $127 $100 $222 $1,054
==== === ==== ==== ==== ==== ==== ======
Amount outstanding:
Notes payable...... $ -- $15 $ -- $ 12 $ -- $26 $ -- $ 63
Commercial paper... 65 -- 36 13 50 12 38 214
---- --- ---- ---- ---- ---- ---- ------
$ 65 $15 $ 36 $ 25 $ 50 $38 $ 38 $ 277
==== === ==== ==== ==== ==== ==== ======
</TABLE>
- --------
(a) Includes short-term debt of other subsidiaries not shown.
Reference is made to the footnotes to the financial statements incorporated
by reference in Item 8 for further information with respect to unused short-
term bank lines of credit.
In order to issue additional long-term debt and preferred stock, it is
necessary for APCo, CSPCo, I&M, KEPCo and OPCo to comply with earnings
coverage requirements contained in their respective mortgages, debenture
indentures and charters. The most restrictive of these provisions in each
instance generally requires
13
<PAGE>
(1) for the issuance of additional long-term debt by APCo, I&M and OPCo, for
purposes other than the refunding of outstanding long-term debt securities, a
minimum, before income tax, earnings coverage of twice the pro forma annual
interest charges on long-term debt, (2) for the issuance of first mortgage
bonds by CSPCo and KEPCo for purposes other than the refunding of outstanding
first mortgage bonds, a minimum, before income tax, earnings coverage of twice
the pro forma annual interest charges on first mortgage bonds and (3) for the
issuance of additional preferred stock by APCo, I&M and OPCo, a minimum, after
income tax, gross income coverage of one and one-half times pro forma annual
interest charges and preferred stock dividends, in each case for a period of
twelve consecutive calendar months within the fifteen calendar months
immediately preceding the proposed new issue. In computing such coverages, the
companies include as a component of earnings revenues collected subject to
refund (where applicable) and, to the extent not limited by the instrument
under which the computation is made, AFUDC, including amounts positioned and
classi-fied as an allowance for borrowed funds used during construction. These
coverage provisions have from time to time restricted the ability of one or
more of the above subsidiaries of AEP to issue senior securities in the amounts
considered to be desirable.
The respective long-term debt and preferred stock coverages of APCo, CSPCo,
I&M, KEPCo and OPCo under their respective debenture indenture, mortgage and
charter provisions, calculated on the foregoing basis and in accordance with
the respective amounts then recorded in the accounts of the companies, assuming
the respective short-term debt of the companies at those dates were to remain
outstanding for a twelve-month period at the respective rates of interest
prevailing at those dates, were at least those stated in the following table:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1991 1992 1993
---- ---- ----
<S> <C> <C> <C>
APCo
Debt coverage.................................................. 3.76 3.50 3.62
Preferred stock coverage....................................... 2.08 1.99 2.04
CSPCo
Mortgage coverage.............................................. 1.49 2.16 2.91
I&M
Debt coverage.................................................. 4.10 3.55 4.59
Preferred stock coverage....................................... 2.24 2.06 2.48
KEPCo
Mortgage coverage.............................................. 4.50 3.34 2.19
OPCo
Debt coverage.................................................. 3.95 3.36 4.65
Preferred stock coverage....................................... 2.24 2.22 2.88
</TABLE>
Although certain other subsidiaries of AEP either are not subject to any
coverage restrictions or are not subject to restrictions as constraining as
those to which APCo, CSPCo, I&M, KEPCo and OPCo are subject, their ability to
finance substantial portions of their construction programs may be subject to
market limitations and other constraints unless other assurances are furnished.
AEP believes that the ability of its operating subsidiaries to issue short-
and long-term debt securities and preferred stock in the amounts required to
finance their respective construction programs depends upon the timely approval
of pending and future rate increase applications. If one or more of the
operating subsidiaries are unable to continue the issuance and sale of
securities on an orderly basis, such company or companies will be required to
consider the use of alternative financing arrangements, if available, which may
be more costly or the curtailment of construction and other outlays.
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, coal mining and
14
<PAGE>
transportation equipment and facilities and nuclear fuel. Pollution control
revenue bonds have been used in the past and may be used in the future in
connection with the construction of pollution control facilities; however,
Federal tax law has limited the utilization of this type of financing except
for purposes of certain financing of solid waste disposal facilities and of
certain refunding of outstanding pollution control revenue bonds issued before
August 16, 1986.
Shares of AEP Common Stock may be sold by AEP from time to time at prices
below the then current book value per share and repurchased by AEP at prices
above book value. Such sales or purchases, if any, would have a dilutive effect
on the book value of then outstanding shares but are not expected to have a
material adverse effect on AEP's business including its future financing plans
or capabilities and pending construction projects.
CONSERVATION AND LOAD MANAGEMENT
For some years, the AEP System has put in place a series of customer programs
for encouraging electric conservation and load management (CLM). The CLM
programs also are referred to in the electric utility industry as "demand-side
management" programs (DSM) since they affect the demand for electricity as
opposed to electricity supply. The AEP System is committed to integrated
resource planning and has in place a detailed analysis procedure in which
effective demand-side and supply-side options are both considered in order to
determine the least cost approach to provide reliable electric service for its
customers, taking into account environmental and other considerations. Recovery
of demand-side program expenditures through rates is being reviewed by AEP's
respective regulatory commissions as discussed below in Rates.
RATES
General
In recent years the operating subsidiaries of AEP have filed a series of rate
increase applications with their respective state commissions and the FERC and
expect that they will continue to do so whenever necessary as increases in
operating, construction and capital costs exceed increases in revenues
resulting from previously granted rate increases and increased customer demand.
All of the seven states served by the AEP System, as well as the FERC, either
permit the incorporation of fuel adjustment clauses in a utility company's
rates and tariffs, which are designed to permit upward or downward adjustments
in revenues to reflect increases or decreases in fuel costs above or below the
designated base cost of fuel set forth in the particular rate or tariff, or
permit the inclusion of specified levels of fuel costs as part of such rate or
tariff.
AEP cannot predict the timing or probability of approvals regarding
applications for additional rate changes, the outcome of action by regulatory
commissions or courts with respect to such matters, or the effect thereof on
the earnings and business of the AEP System.
FERC Regulatory Matters: On March 31, 1993, the FERC issued its final rules,
effective January 1, 1993, regarding accounting for allowances under the Clean
Air Act Amendments of 1990. The rules provide for the use of "fair value" in
the valuation of allowances traded between affiliates and establishment of FERC
accounts to record regulatory assets and liabilities. See Environmental and
Other Matters--Air Pollution Control.
APCo
FERC: On February 14, 1992, APCo filed with the FERC applications for an
increase in its wholesale rates to Kingsport Power Company and non-affiliated
customers in the amounts of approximately $3,933,000 and $4,759,000,
respectively. APCo began collecting the rate increases, subject to refund, on
September 15, 1992. In addition, the Financial Accounting Standards Board has
issued Statement of Financial Accounting Standards No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions (SFAS 106) which
requires employers, beginning in 1993, to accrue for the costs of retiree
benefits other than pensions. These rates include the higher level of SFAS 106
costs. On November 9, 1993, the administrative law judge issued an initial
decision recommending, among other things, the higher level of postretirement
benefits other than pensions under SFAS 106. FERC action on APCo's applications
is pending.
15
<PAGE>
In June 1993, certain municipal customers filed an application with the FERC
for an order requiring the AEP System to provide transmission service for 50
megawatts (mw) of base load power purchased from an unaffiliated utility and
the reduction by 50 mw of the power these customers purchase from APCo under
existing 10-year Electric Service Agreements ("ESAs"). APCo maintains that its
agreements with these customers are full-requirements contracts which preclude
the customers from purchasing power from third parties. On December 1, 1993,
the administrative law judge issued an initial decision that the ESAs are not
full requirements contracts and that the ESAs give these municipal wholesale
customers the option of substituting alternative sources of power for energy
purchased from APCo. The proposed 50 mw reduction would reduce net non-fuel
revenue by $16,900,000 over the period April 1994 through June 1997 (end of
ESAs). On February 10, 1994, the FERC issued orders (1) affirming, in part, the
administrative law judge's initial decision and (2) instituting a proceeding to
determine the appropriate rate and terms for the transmission of this power to
the municipal customers. On March 11, 1994, AEP System companies filed a
petition for rehearing of the FERC's order affirming the administrative law
judge's decision.
Virginia: On December 4, 1992, APCo filed with the Virginia SCC a request to
increase rates by approximately $31,377,000 annually. APCo's filing requests,
among other things, approval to establish a capacity charge tracking mechanism
to track changes in its capacity charges from the AEP System Power Pool,
increased West Virginia allocated business and occupation taxes discussed below
and increased SFAS 106 costs. On December 29, 1992, the Virginia SCC issued an
order suspending APCo's proposed rates until May 3, 1993. In June 1993, the
Virginia SCC staff recommended a $10,500,000 annual rate increase and, after
hearings in July 1993, the Hearing Examiner issued a report recommending a
$7,800,000 annual rate increase. A Virginia SCC order is pending.
On March 27, 1992, the Virginia SCC issued a final order regarding its
investigation of CLM programs of Virginia's utilities. The Virginia SCC adopted
rules regarding the rate recovery of promotional allowances designed to achieve
energy conservation, load reduction or improved energy efficiency. Rate
recovery for such promotions will be allowed only for cost-effective CLM
programs, and not for those designed primarily to increase load or market
share, unless a company proves that the program is cost-effective and serves
the overall public interest. The Virginia SCC also directed Virginia utilities
to submit their CLM programs for formal review and approval.
In accordance with the March 27, 1992 order of the Virginia SCC, in order to
promote the goals of cost-effective utility conservation, efficiency and load
management, on October 16, 1992, APCo filed an application with the Virginia
SCC for approval to implement six demand side management pilot programs in its
service territory, including a residential rate experiment. On March 4, 1993,
the Virginia SCC issued an order approving implementation of five of the six
programs. The storage water heater program was transferred to APCo's pending
Virginia retail rate case discussed above for adjudication. Rate recovery for
all of these programs is also being sought in the Virginia rate case.
The Virginia SCC, in its order of March 27, 1992, also directed its staff to
determine the appropriate methods for evaluating the cost-effectiveness of CLM
programs and to submit an interim report outlining the scope and procedure of
the investigation. The staff submitted its Report on the Cost/Benefit Analysis
of Demand Side Management Programs on February 9, 1993. Therein the staff
stated that a multi-perspective approach to determining the cost and benefits
of demand-side management programs is needed in order to evaluate the full
impact of programs on a utility and its customers. The staff stated that
programs should be evaluated from the perspective of the program participant,
the non-participant, the utility and all ratepayers.
On June 28, 1993, the Virginia SCC issued an order promulgating rules on the
proper cost/benefit tests to be conducted on proposed DSM programs. The rules
provide that utilities shall analyze a proposed DSM program from a multi-
perspective approach considering, at a minimum, the quantifiable benefits and
costs of a program to the participating customer, the cost of the DSM program
incurred by the utility, the difference between the change in total revenues
paid to the utility and the change in total costs to a utility resulting from
the DSM program, and the cost of a program as a resource option to the utility
and its ratepayers as a whole. The order specifies minimum guidelines to
provide direction to utilities in developing applications for
16
<PAGE>
approval of DSM programs. Utilities must seek Virginia SCC approval of pilot or
experimental programs that involve rates or promotional allowances, but other
limited pilot or experimental programs may be conducted without prior approval.
West Virginia: In January 1992, APCo filed with the Supreme Court of Appeals
of West Virginia a petition for appeal which sought a review and reversal of
the West Virginia PSC's November 1, 1991 order which disallowed recovery of
$12,700,000 annually relating to the allocation treatment of business and
occupation taxes. In April 1992, the court issued an order denying APCo's
appeal. APCo has received recovery of the non-West Virginia jurisdictional
share of these taxes in its Virginia and FERC jurisdictions.
On February 22, 1993, the West Virginia PSC approved an increase in APCo's
Expanded Net Energy Cost (ENEC) rates of $24,400,000 annually. ENEC rates are
approved annually as part of the West Virginia PSC's review of APCo's power
supply costs which include fuel, purchased power and AEP System Power Pool
capacity charges and credits for APCo's share of Power Pool generation costs
and wholesale sales. In approving the new rates, the West Virginia PSC placed
APCo on notice that the annual review process, including the traditional fuel
elements of the review and deferred accounting with prospective actual cost
recoveries, would be closely examined at the next review.
On October 28, 1993, the West Virginia PSC approved, with certain
modifications, a settlement agreement among the parties to the ENEC proceeding.
The approved agreement temporarily suspended the annual ENEC recovery
proceedings, reduced ENEC rates by $8,000,000 annually effective November 1,
1993, and froze current base rates and the reduced ENEC rate for a three-year
period ending October 31, 1996. Deferral accounting will not be used for new
ENEC cost variances incurred from November 1993 through October 1996. The ENEC
actual underrecovery balance on October 31, 1993 of $13,300,000 will be
collected through a component of the revised ENEC rates over the three-year
period ending October 31, 1996. The agreement also provides for a net decrease
in West Virginia depreciation expense of $4,300,000 annually (with no change to
base rates) effective November 1, 1995. APCo also agreed to invest at least
$90,000,000 in distribution facilities in West Virginia between October 13,
1993 and October 31, 1996.
On November 5, 1992, APCo filed an application with the West Virginia PSC for
approval to implement seven demand-side management programs. On February 8,
1993, the West Virginia PSC issued an order approving the seven demand side
management programs, but limited availability of one program to only existing
electric water heating customers. On April 14, 1993, the West Virginia PSC by
order clarified the availability to customers with electric water heating and
new customers with all-electric homes.
CSPCo
Zimmer Plant: The Zimmer Plant was placed in commercial operation as a 1,300-
megawatt coal-fired plant on March 30, 1991. CSPCo owns 25.4% of the Zimmer
Plant with the remainder owned by two unaffiliated companies, CG&E (46.5%) and
DP&L (28.1%) (collectively, the Owners).
Zimmer Plant--Rate Recovery: On April 2, 1991, CSPCo filed a request with the
PUCO to increase rates $202,500,000 on an annual basis principally to recover
its share of the costs of operation of the Zimmer Plant and a return on its
investment. On May 12, 1992, the PUCO issued an order on CSPCo's rate request.
The order provided for a phased-in rate increase of $123,000,000 to be
implemented in three steps over a two-year period and excluded from rate base
$165,000,000 of Zimmer Plant costs composed of an allowance for funds used
during construction accrued from February 1984 through February 1986, nuclear
wind-down costs and a loss on the sale of nuclear fuel. The order also provided
for the recovery of deferred post in-service operating expenses over 10 years.
CSPCo requested a rehearing with the PUCO which was denied except for rehearing
of certain minor rate design and accounting related issues. CSPCo and the PUCO
staff signed a stipulation agreement resolving the minor issues for which the
PUCO granted rehearing. On August 20, 1992, the PUCO approved the stipulation
which provided CSPCo with approximately $1,500,000 of additional revenues
annually.
17
<PAGE>
CSPCo filed an appeal with the Ohio Supreme Court on September 1, 1992
regarding the $165,000,000 excluded from rate base and challenging the PUCO's
authority to order a phased-in rate plan. CSPCo's appeal stated (1) that the
PUCO failed to abide by the terms of a PUCO-approved 1985 stipulation agreement
regarding CSPCo's investment in the Zimmer Plant and (2) that the PUCO did not
have authority to order phased-in rates.
In November 1993, the Supreme Court issued a decision on CSPCo's appeal
affirming the disallowance and finding that the PUCO did not have statutory
authority to order phased-in rates. The court instructed the PUCO to fix rates
to provide gross annual revenues in accordance with the law and to provide a
mechanism to recover the revenues deferred under the phase-in order which
through December 31, 1993 totaled $93,900,000.
As a result of the ruling, 1993 net income was reduced by $144,500,000 after
tax to reflect the disallowance and in January 1994, the PUCO approved a 7.11%
or $57,167,000 rate increase effective February 1, 1994. The increase is
comprised of a 3.72% base rate increase and a temporary 3.39% surcharge, which
will be in effect until the phase-in plan deferrals are recovered, estimated to
be for a period of less than four and one-half years. The recovery of deferrals
and the increase in rates to the full rate level will not affect net income.
Other Ohio Regulatory Matters: On April 30, 1992, CSPCo and OPCo filed their
individual 1992 long-term forecast reports and integrated resource plans. On
September 23, 1993, the PUCO issued its opinion and order approving CSPCo's and
OPCo's long-term forecast reports. The PUCO order directs CSPCo and OPCo to
proceed with a number of specific demand-side management programs and any other
programs determined to be cost-effective.
Reference is made to Environmental and Other Matters--Clean Air Act
Amendments of 1990 for a discussion of emission allowances. On January 9, 1992,
the PUCO issued an entry opening a generic docket to investigate trading and
usage of, and accounting treatment for, emission allowances by electric
utilities in Ohio. On January 20, 1993 the PUCO issued proposed guidelines
concerning emission allowances, including the guideline that gains or losses on
transactions involving emission allowances created by rate base assets should
generally flow through to ratepayers. On March 25, 1993, the PUCO issued its
final guidelines concerning emission allowances. The final guidelines state
that the PUCO expects that Ohio utilities will take advantage of the allowance
trading market, and encourages all trades that can be economically justified.
The final guidelines include the proposed guideline that gains or losses on
transactions involving emission allowances created by rate base assets should
generally flow through to ratepayers. The final guidelines also provide that
allowance plans, procedures, practices, trading activity, and associated costs
should be reviewed annually in the electric fuel component since the cost of
these allowances are part of the acquisition and delivery costs of fuel.
On September 17, 1993, CSPCo and OPCo filed an Application for
Conservation/Renewable Reserve Allowances. The application requested an award
of 18 allowances and was certified by the PUCO on September 3, 1993. On January
27, 1994, Federal EPA notified AEP that it would defer awarding allowances to
CSPCo and OPCo pending further documentation from the PUCO of CSPCo's and
OPCo's compliance with appropriate eligibility requirements.
Reference is made to the caption Environmental and Other Matters--Clean Air
Amendments of 1990--AEP System Compliance Plan for information regarding AEP's
compliance plan which has been filed with the PUCO.
In October 1991, the PUCO announced that the Governor of Ohio and the Ohio
General Assembly directed the PUCO to develop a long-term energy strategy for
the State of Ohio. On December 4, 1992, the PUCO, on behalf of the Interagency
Ohio Energy Strategy (OES) Task Force, released its interim report. CSPCo and
OPCo jointly filed comments on February 15, 1993.
18
<PAGE>
On September 3, 1992 the PUCO began an investigation into incentive based
ratemaking under Ohio's existing ratemaking statutes. Joint comments were filed
in November 1992 by CSPCo and OPCo.
I&M
FERC: In June 1990 an initial decision was issued by a FERC administrative
law judge regarding a complaint filed by a wholesale customer concerning the
reasonableness of I&M's coal costs from an unaffiliated supplier who leased a
Utah mining operation from I&M in 1986 and the coal transportation charges of
affiliates. In February 1993 the FERC reversed the decision of the
administrative law judge and dismissed the complaint. In December 1993 the
wholesale customer appealed the FERC order to the U.S. Court of Appeals,
District of Columbia Circuit.
Indiana: In April 1992 I&M filed testimony and exhibits with the IURC seeking
a $44,800,000 increase in annual rates to recover, among other things,
increased operating costs including expenses associated with nuclear operation
and maintenance, an increase in the provision for the cost of decommissioning
the Cook Plant, increased accruals for the cost of postretirement benefits
other than pensions as mandated by SFAS 106 and revised depreciation accrual
rates. On November 12, 1993, the IURC issued an order granting a $34,700,000
annual rate increase. The IURC approved substantially all of I&M's proposals
including, among other things, increased operation and maintenance expenses
associated with the Cook Plant with an increase in the provision for nuclear
decommissioning costs, increased accruals for the cost of postretirement
benefits other than pensions and an increase in depreciation expense based on
revised accrual rates (including costs for the demolition of I&M's fossil-fired
generating stations at the end of their useful lives).
In June 1993 the IURC issued a notice of proposed rulemaking for integrated
resource planning (IRP) guidelines, including consideration of demand-side
management, resource bidding and independent power producers. In October 1993,
the Indiana Electric Association filed the joint comments of some of its
members, including I&M, indicating their support for the IURC's efforts to
develop new guidelines relating to IRP.
Michigan: On February 21, 1992, I&M submitted to the MPSC Staff its three-
year conservation plan. After settlement discussions, I&M submitted to Staff a
revised three-year conservation plan that reflects demand-side management
program costs and an incentive package and that establishes I&M's next Michigan
retail rate case as the forum to consider recovery of lost revenues. The MPSC
approved a settlement agreement in September 1993 which established recovery of
DSM program expenses and an incentive plan.
In October 1993, the MPSC approved a settlement agreement authorizing I&M to
increase its annual provision for the cost to decommission the Cook Plant from
approximately $2,800,000 to a level of $4,000,000, effective November 1, 1993,
with further increases to annual levels of $5,100,000 and $6,000,000, six and
twelve months later, respectively.
KEPCo
FERC: On October 28, 1993, KEPCo filed an application to begin serving the
City of Vanceburg as a full requirements customer, effective January 1, 1994,
which will yield annual revenues of $1,448,000.
On August 15, 1991, the KPSC issued an order which initiated its
investigation of the compliance strategies of electric utilities related to the
Clean Air Act Amendments of 1990. On September 4, 1991, KEPCo filed its
preliminary plan for compliance which is the same systemwide compliance report
filed with the PUCO discussed under the caption CAAA-AEP System Compliance
Plan. KEPCo's Big Sandy Plant is not subject to Phase I emission requirements;
however, KEPCo may incur a portion of the costs of Phase I compliance for the
AEP System through the AEP System Power Pool. On March 30, 1992, the KPSC
issued an order requiring all electric utilities with Phase I affected units to
file their complete acid rain permit applications filed with Federal EPA or
explain why such permit applications are not being filed. On April 6, 1993,
KEPCo responded by letter that KEPCo has no generating units which are Phase I-
affected; however,
19
<PAGE>
AEP's Phase I permit applications were provided. On August 18, 1993, the KPSC
issued an order which indicated utilities should be prepared to explain their
actions regarding extension and bonus allowances. For unreasonable activities,
cost disallowances would occur. Appropriate ratemaking treatment of allowance
trading and use will be determined on a case-by-case basis.
On July 24, 1992, the KPSC began an investigation into the feasibility of
implementing demand-side management cost recovery and incentive mechanisms.
OPCo
Reference is made to Rates--CSPCo regarding generic proceedings by the PUCO
relating to demand-side management programs, emission allowance trading, the
review of OPCo's long-term forecast report, the Ohio Energy Strategy Task Force
and incentive-based ratemaking.
In April 1991, the municipal wholesale customers of OPCo filed a complaint
with the FERC seeking refunds back to 1982 for alleged overcharges for certain
affiliated fuel costs. The complaint contends that the price of coal from two
of OPCo's affiliated mines violated the FERC's market price requirement for
affiliate coal pricing. In February 1993, FERC issued an order dismissing the
complaint and, in September 1993, the wholesale customers appealed the FERC
order to the U.S. Court of Appeals for the Sixth Circuit.
On November 25, 1992, the PUCO issued an order approving a stipulation
agreement with OPCo, the staff of the PUCO and the Ohio Consumers' Counsel. The
agreement provided for, among other things, a predetermined price of $1.64 per
million Btus for coal consumed by OPCo at four of its generating stations for
the three-year period ended November 30, 1994; a subsequent 15-year
predetermined price of $1.575 per million Btus for coal consumed at the Gavin
Plant with quarterly price adjustments; and a limit on the recoverable cost for
the Gavin scrubbers which is discussed under Environmental and Other Matters-
Clean Air Act Amendments of 1990-AEP System Compliance Plan. After November 30,
2009, the price that OPCo can recover for coal from its affiliated Meigs mine
will be limited to the lower of cost or the then-current market price. The
predetermined prices will provide OPCo with an opportunity to accelerate
recovery of its investment in and the liabilities of its Meigs mining operation
attributable to its Ohio jurisdiction to the extent the actual cost of coal
burned at the four plants is below the predetermined prices. In March 1993, the
Industrial Energy Consumers of OPCo and The Sierra Club appealed the PUCO order
to the Supreme Court of Ohio. OPCo has participated in these proceedings.
OPCo has restructured its Meigs mining operation to operate at a reduced
level of production. As a result, OPCo will purchase replacement coal under
long-term contracts and on the spot market. It is expected that the replacement
coal will be at prices below the Meigs production costs. Management reviewed
the potential impact of the stipulation and restructuring to determine OPCo's
ability to recover the cost of its Meigs mining operation. Based on the
estimated future cost of coal for the Gavin Plant, management believes that
OPCo should be able to recover the Ohio jurisdictional cost of its Meigs mining
operation under the terms of the stipulation agreement.
In November 1992, the municipal wholesale customers of OPCo filed two
complaints. One complaint was filed with the FERC requesting an investigation
of OPCo's July 1992 sale of the Martinka mining operation to an unaffiliated
company. The FERC dismissed this complaint in June 1993. The other complaint
was filed with the SEC requesting an investigation of the Martinka sale and an
investigation into the pricing of OPCo's affiliated coal purchases back to
1986. OPCo has filed a response with the SEC seeking to dismiss this complaint.
The PUCO is reviewing the Martinka sale and related unaffiliated fuel contracts
in OPCo's current fuel clause proceedings.
If additional regulatory actions further limit recovery of affiliated coal
costs, results of operations could continue to be adversely impacted and the
continued operation of some or all of OPCo's affiliated coal mines could be
adversely impacted. The inability to recover affiliated coal costs and, if
necessary, any future cost of
20
<PAGE>
mine closure, including the investment in and cost to maintain the facilities
shutdown, leased asset buy-outs, employee benefit costs and required
reclamation costs, through the rate-making process or through the disposition
of assets could have a material adverse effect on results of operations and
financial condition.
Reference is made to Construction and Financing Program-PFBC Projects-Tidd
Plant for information concerning the recovery through rates of certain Tidd
Plant project costs.
Reference is made to the caption Environmental and Other Matters--CAAA-AEP
System Compliance Plan for information regarding the AEP System's plan to
comply with the Clean Air Act Amendments of 1990.
FUEL SUPPLY
The following table shows the sources of power generated by the AEP System:
<TABLE>
<CAPTION>
1990 1991 1992 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Coal................................................... 90% 86% 93% 86%
Nuclear................................................ 9% 13% 6% 13%
Hydroelectric and other................................ 1% 1% 1% 1%
</TABLE>
Variations in the generation of nuclear power are primarily related to
refueling outages and, in 1992, a forced outage at Cook Plant Unit 2. See Cook
Nuclear Plant.
Coal
The Clean Air Act Amendments of 1990 provide for the issuance of annual
allowance allocations covering sulfur dioxide emissions at levels below
historic emission levels for many coal-fired generating units of the AEP
System. Phase I of this program must be met by 1995 and Phase II must be met by
2000, with both phases requiring significant changes in coal supplies and
suppliers. The full extent of such changes, particularly in regard to Phase II,
however, has not been determined. See Environmental and Other Matters--Air
Pollution Control--CAAA-AEP System Compliance Plan for the current compliance
plan.
In order to meet emission standards for existing and new emission sources,
the AEP System companies will, in any event, have to obtain coal supplies, in
addition to coal reserves now owned by System companies, through the
acquisition of additional coal reserves and/or by entering into additional
supply agreements, either on a long-term or spot basis, at prices and upon
terms which cannot now be predicted.
No representation is made that any of the coal rights owned or controlled by
the System will, in future years, produce for the System any major portion of
the overall coal supply needed for consumption at the coal-fired generating
units of the System. Although AEP believes that in the long run it will be able
to secure coal of adequate quality and in adequate quantities to enable
existing and new units to comply with emission standards applicable to such
sources, no assurance can be given that coal of such quality and quantity will
in fact be available. No assurance can be given either that statutes or
regulations limiting emissions from existing and new sources will not be
further revised in future years to specify lower sulfur contents than now in
effect or other restrictions. See Environmental and Other Matters herein.
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 energy to
other regions or systems experiencing fuel shortages, and to rate-making
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. What regulatory actions, if any, may result
from the foregoing, or from further legislative actions relating to a national
energy crisis cannot be predicted, but such actions could adversely affect the
revenues, operations and properties of AEP.
21
<PAGE>
System companies have developed programs to conserve coal supplies at System
plants which involve, on a progressive basis, limitations on sales of power and
energy to neighboring utilities, appeals to customers for voluntary limitations
of electric usage to essential needs, curtailment of sales to certain
industrial customers, voltage reductions and, finally, mandatory reductions in
cases where current coal supplies fall below minimum levels. 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 mining of coal reserves is subject to Federal requirements with respect
to the development and operation of coal mines, and to state and Federal
regulations relating to land reclamation and environmental protection,
including Federal strip mining legislation enacted in August 1977. Continual
evaluation and study is given to possible closure of existing coal mines and
divestiture or acquisition of coal properties in light of Federal and state
environmental and mining laws and regulations which may affect the System's
need for or ability to mine such coal.
Western coal purchased by System companies is transported by rail to a
terminal on the Ohio River for transloading to barges for delivery to
generating stations on the river. Subsidiaries of AEP lease approximately 3,200
coal hopper cars to be used in unit train movements, as well as 17 towboats,
295 jumbo barges and 198 standard barges. Subsidiaries of AEP also own or lease
coal transfer facilities at various locations on the river.
The System generating companies procure coal from coal reserves which are
owned or mined by subsidiaries of AEP, and through purchases pursuant to long-
term contracts, or on a spot purchase basis, from unaffiliated producers. The
following table shows the amount of coal delivered to the AEP System during the
past five years, the proportion of such coal which was obtained either from
coal-mining subsidiaries, from unaffiliated suppliers under long-term contracts
or through spot or short-term purchases, and the average delivered price of
spot coal purchased by System companies:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Total coal delivered to
AEP operated plants (thousands of
tons)............................... 45,025 52,087 45,232 44,738 40,561
Sources (percentage):
Subsidiaries........................ 25% 25% 28% 25% 20%
Long-term contracts.................. 56% 58% 62% 65% 66%
Spot or short-term purchases......... 19% 17% 10% 10% 14%
Average price per ton of spot-purchased
coal.................................. $25.17 $26.75 $25.40 $23.88 $23.55
</TABLE>
The average cost of coal consumed during the past five years by all AEP
System companies, AEGCo, APCo, CSPCo, I&M, KEPCo and OPCo is shown in the
following tables:
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
DOLLARS PER TON
<S> <C> <C> <C> <C> <C>
AEP System Companies......................... $37.05 $35.23 $35.16 $34.31 $33.57
AEGCo........................................ 24.33 21.05 20.65 20.11 17.74
APCo......................................... 39.52 39.77 41.99 43.00 42.65
CSPCo........................................ 35.50 37.01 35.18 33.87 33.87
I&M.......................................... 32.14 27.18 25.57 24.23 23.80
KEPCo........................................ 29.03 30.71 31.38 30.24 27.08
OPCo......................................... 40.04 40.13 40.18 38.36 38.12
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993
------ ------ ------ ------ ------
CENTS PER MILLION BTU'S
<S> <C> <C> <C> <C> <C>
AEP System Companies.................... 162.44c 158.10c 158.88c 154.41c 150.89c
AEGCo................................... 149.75 126.21 123.33 120.90 107.71
APCo.................................... 160.27 160.94 169.48 173.05 173.32
CSPCo................................... 153.77 159.83 152.55 143.94 143.66
I&M..................................... 162.67 143.43 139.16 135.11 129.39
KEPCo................................... 122.92 129.72 132.25 126.92 113.90
OPCo.................................... 172.25 171.10 171.65 163.89 161.25
</TABLE>
The coal supplies at AEP System plants vary from time to time depending on
various factors, including customers' usage of electric energy, space
limitations, the rate of consumption at particular plants, labor unrest and
weather conditions which may interrupt deliveries. At December 31, 1993, the
System's coal inventory was approximately 58 days of normal System usage. This
estimate assumes that the total supply would be utilized by increasing or
decreasing generation at particular plants.
The following tabulation shows the total consumption during 1993 of the coal-
fired generating units of AEP's principal operating subsidiaries, coal
requirements of these units over the remainder of their useful lives and the
average sulfur content of coal delivered in 1993 to these units. Reference is
made to Environmental and Other Matters for information concerning current
emissions limitations in the AEP System's various jurisdictions and the effects
of the Clean Air Act Amendments.
<TABLE>
<CAPTION>
AVERAGE SULFUR CONTENT
ESTIMATED REQUIREMENTS OF DELIVERED COAL
TOTAL CONSUMPTION FOR REMAINDER OF -----------------------------
DURING 1993 USEFUL LIVES POUNDS OF SO/2/
(IN THOUSANDS OF TONS) (IN MILLIONS OF TONS)(A) BY WEIGHT PER MILLION BTU'S
------------------------ -------------------------- ---------- ------------------
<S> <C> <C> <C> <C>
AEGCo (b)............... 5,077 220 0.3% 0.7
APCo.................... 8,339 321 0.7% 1.1
CSPCo (c)............... 5,406 182 3.2% 5.4
I&M (d)................. 6,572 255 0.7% 1.6
KEPCo................... 2,292 73 1.1% 1.9
OPCo.................... 17,419 538 2.8% 4.8
</TABLE>
- --------
(a)Preliminary estimates of the effects of the Clean Air Act Amendments of 1990
are included.
(b)Reflects AEGCo's 50% interest in the Rockport Plant.
(c)Includes coal requirements for CSPCo's interest in Beckjord, Stuart and
Zimmer Plants.
(d)Includes I&M's 50% interest in the Rockport Plant.
AEGCo: See Fuel Supply--I&M for a discussion of the coal supply for the
Rockport Plant.
APCo: APCo, or its subsidiaries formerly engaged in coal mining, control coal
reserves in the State of West Virginia which contain approximately 42,000,000
tons of clean recoverable coal, ranging in sulfur content between 1.0% and 3.5%
sulfur by weight (weighted average, 2.6% sulfur by weight).
Substantially all of the coal consumed at APCo's generating plants is
obtained from unaffiliated suppliers under long-term contracts or on a spot
purchase basis.
The average sulfur content by weight of the coal received by APCo at its
generating stations approximated 0.7% during 1993, whereas the maximum sulfur
content permitted, for emission standard purposes, for existing plants in the
regions in which APCo's generating stations are located ranged between 0.78%
and 2% by weight depending in some circumstances on the calorific value of the
coal which can be obtained for some generating stations.
CSPCo: CSPCo owns an undivided one-half interest in 24,000,000 tons of clean
recoverable deep-mineable coal in the State of Ohio which is located in the
vicinity of its decommissioned Poston Plant and
23
<PAGE>
has an average sulfur content of 2.4% by weight. Peabody Coal Company
(Peabody), which owns the remaining one-half interest, has the right to mine
and sell all of the jointly owned coal to any party on terms negotiated by
Peabody. CSPCo has an option and right of first refusal (exercisable within a
specified period after tender by Peabody) which will permit it to purchase this
coal on the same terms as those of any contract which Peabody may negotiate
with a third party. In the event that CSPCo does not exercise such right, it is
entitled to receive a royalty on the coal from this reserve which Peabody sells
to others. However, in such a case, this coal will not be available for CSPCo's
use.
CSPCo also owns coal reserves in eastern and southeastern Ohio which contain
approximately 46,000,000 tons of clean recoverable coal with a sulfur content
of approximately 4.5% sulfur by weight and reserves that contain approximately
10,000,000 tons of clean recoverable coal with a sulfur content of
approximately 2.4% sulfur by weight.
CSPCo has entered into a coal supply agreement with an unaffiliated supplier
for the delivery of 1,600,000 tons of coal per year from 1992 through March
2011. Such coal contains approximately 5% sulfur by weight and is washed to
improve its quality and consistency for use principally at Units 1 through 4 of
the Conesville Plant.
CSPCo has been informed by CG&E and DP&L that, with respect to the CCD Group
units partly owned but not operated by CSPCo, sufficient coal has been
contracted for or is believed to be available for the approximate lives of the
respective units operated by them. Under the terms of the operating agreements
with respect to CCD Group units, each operating company is contractually
responsible for obtaining the needed fuel.
I&M: I&M has acquired surface ownership interest in lands in Wyoming which,
it is estimated, are underlaid by approximately 730,000,000 tons of clean
recoverable coal with an average sulfur content by weight of approximately
0.5%. Federal and state coal leases which would provide the rights and
authorization to extract this coal have not been obtained. I&M is attempting to
sell its interest in these lands.
I&M has entered into coal supply agreements with unaffiliated suppliers
pursuant to which the suppliers are delivering low sulfur coal from surface
mines in Wyoming principally for consumption by the Rockport Plant. Under these
agreements, the suppliers will sell to I&M, for consumption by I&M at the
Rockport Plant or consignment to other System companies, approximately
175,000,000 tons of coal with an average sulfur content not exceeding 1.2
pounds of sulfur dioxide per million Btu's of heat input. A contract for
100,000,000 tons expires on December 31, 2014 and a contract for 75,000,000
tons expires on December 31, 2004.
I&M or its subsidiaries own or control coal reserves in Carbon County, Utah
which are estimated to contain 227,000,000 tons of clean recoverable coal with
an average sulfur content by weight of approximately 0.5% sulfur. In 1986, I&M
and its two subsidiaries signed agreements under which certain of such coal
rights, land, and related mining and preparation equipment and facilities were
leased or subleased on a long-term basis to unaffiliated interests. In 1993,
the remainder of those land and coal rights containing approximately
108,000,000 tons of clean recoverable coal were leased on a long-term basis to
unaffiliated interests. Mining operations in Carbon County formerly conducted
by I&M were suspended in 1984.
KEPCo: Substantially all of the coal consumed at KEPCo's Big Sandy Plant is
obtained from unaffiliated suppliers under long-term contracts or on a spot
purchase basis. KEPCo has entered into coal supply agreements with unaffiliated
suppliers pursuant to which KEPCo will receive approximately 2,211,000 tons of
coal in 1994. To the extent that KEPCo has additional coal requirements, it may
purchase coal from the spot market and/or suppliers under contract to supply
other System companies.
OPCo: OPCo and certain of its coal-mining subsidiaries own or control coal
reserves in the State of Ohio which contain approximately 234,000,000 tons of
clean recoverable coal, which ranges in sulfur content
24
<PAGE>
between 3.4% and 4.5% sulfur by weight (weighted average, 3.8%), which can be
recovered based upon existing mining plans and projections and employing
current mining practices and techniques. OPCo and certain of its mining
subsidiaries own an additional 113,000,000 tons of clean recoverable coal in
Ohio which ranges in sulfur content between 2.4% and 3.4% sulfur by weight
(weighted average 2.7%). Recovery of this coal would require substantial
development.
OPCo and certain of its coal-mining subsidiaries also own or control coal
reserves in the State of West Virginia which contain approximately 108,000,000
tons of clean recoverable coal ranging in sulfur content between 1.4% and 3.3%
sulfur by weight (weighted average, 2.1%) of which approximately 31,000,000
tons can be recovered based upon existing mining plans and projections and
employing current mining practices and techniques.
On July 1, 1992, a coal-mining subsidiary of OPCo sold its Martinka mining
operations and most of its related coal reserves to an unaffiliated company for
approximately $139,000,000 and the assumption of certain future liabilities.
Concurrently OPCo entered into a 20-year agreement with an affiliate of the
buyer of the Martinka mine to purchase up to 2,500,000 tons of low sulfur coal
annually, including coal that will enable OPCo to comply with the Clean Air Act
Amendments. The Martinka sale did not have a significant impact on results of
operations and financial condition. The Martinka mining operation represented
approximately 20% of affiliated coal deliveries to OPCo.
Nuclear
I&M has made commitments to meet certain of the nuclear fuel requirements of
the Cook Plant. The nuclear fuel cycle consists of the mining and milling of
uranium ore to uranium concentrates; the conversion of uranium concentrates to
uranium hexafluoride; the enrichment of uranium hexafluoride; the fabrication
of fuel assemblies; the utilization of nuclear fuel in the reactor; and the
reprocessing or other disposition of spent fuel. 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 beyond the existing
contractual commitments shown in the following table. I&M has made and will
make purchases of uranium in various forms in the spot market until it decides
that deliveries under long-term supply contracts are warranted. The following
table shows the year through which contracts have been entered into to provide
the requirements of the units for the various segments of the nuclear fuel
cycle.
<TABLE>
<CAPTION>
URANIUM
CONCENTRATES CONVERSION ENRICHMENT (1) FABRICATION REPROCESSING (2)
-------------- ----------- --------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Unit 1.................. -- -- 2000 1998 --
Unit 2.................. -- -- 2000 1998 --
</TABLE>
- --------
(1) I&M has a requirements-type contract with DOE. I&M has partially terminated
the contract, subject to revocation of the termination, so that it may
procure enrichment services cost-effectively from the spot market. I&M also
has a contract with Cogema, Inc. for the supply of enrichment services
through 1995, depending on market conditions.
(2) No reprocessing facility in the United States currently is in operation.
I&M has contracted for reprocessing services at a facility on which
construction has been halted. Lack of reprocessing services has resulted in
the need to increase on-site storage capacity for spent fuel.
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 to permit normal operations through 2010.
I&M's costs of nuclear fuel consumed do not assume any residual or salvage
value for residual plutonium and uranium.
Nuclear Waste
The Nuclear Waste Policy Act of 1982, as amended, establishes Federal
responsibility for the permanent off-site disposal of spent nuclear fuel and
high-level radioactive waste. Disposal costs are paid by fees assessed
25
<PAGE>
against owners of nuclear plants and deposited into the Nuclear Waste Fund
created by the Act. In 1983 I&M entered into a contract with DOE for the
disposal of spent nuclear fuel. Under terms of the contract, for the disposal
of nuclear fuel consumed after April 6, 1983 by I&M's Cook Plant, I&M is paying
to the fund a fee of one mill per kilowatt-hour, which I&M is currently
recovering from customers. For the disposal of nuclear fuel consumed prior to
April 7, 1983, I&M must pay the U.S. Treasury a fee estimated at approximately
$71,964,000, exclusive of interest of $75,845,000 at December 31, 1993. I&M
deferred this amount plus accrued interest on its balance sheet pending
recovery through the rate-making process. I&M has received regulatory approval
for the recovery of this amount and is reducing the amount deferred as it is
being recovered. Because of the current uncertainties surrounding DOE's program
to provide for permanent disposal of spent nuclear fuel, I&M has not yet
commenced paying this fee. At December 31, 1993, funds collected from customers
to dispose of spent nuclear fuel and related earnings totaled $133,000,000.
I&M has received regulatory approval from all of its jurisdictions to recover
an approved level of decommissioning costs in revenues which amounted to
$13,000,000 in 1993, $12,000,000 in 1992 and $11,000,000 in 1991. An aggregate
amount of $170,000,000 had been set aside by I&M for nuclear decommissioning at
December 31, 1993. The recoveries were approved by I&M's state regulatory
commissions after the commissions reviewed studies by an independent consulting
firm employed by I&M (FERC recovery is based on an earlier study). The most
recent study estimates, based on changed conditions (related to delays in DOE's
program for disposal of spent nuclear fuel and other factors), that the cost of
post-shutdown fuel storage and decommissioning at the Cook Plant is in the
range of $588,000,000 to $1.102 billion in 1991 dollars for the cases studied.
The substantial increase is primarily due to the possible need to store spent
nuclear fuel at the plant site for an extended time after the plant ceases
operation, delaying the commencement of dismantling activities. Variables in
the length of time spent nuclear fuel must be stored at the plant subsequent to
ceasing operations, which is dependent on future developments in DOE's program
for disposal of spent nuclear fuel, have widened the range of the estimate. I&M
will continue to reevaluate periodically the cost of decommissioning and to
seek regulatory approval to revise its rates as necessary.
Funds recovered through the rate-making process for disposal of spent nuclear
fuel consumed prior to April 7, 1983 and for nuclear decommissioning have been
segregated and deposited in external funds for the future payment of such
costs.
The ultimate cost of radiological decommissioning may be materially different
from the amounts derived from the estimates contained in the site-specific
study as a result of (a) the type of decommissioning plan selected, (b) the
escalation of various cost elements (including, but not limited to, general
inflation), (c) the further development of regulatory requirements governing
decommissioning, (d) limited experience to date in decommissioning such
facilities and (e) the technology available at the time of decommissioning
differing significantly from that assumed in these studies. Accordingly,
management is unable to provide assurance that the ultimate cost of
decommissioning the Cook Plant will not be significantly greater than current
projections.
In recent years, costs associated with nuclear plants have increased and
become less predictable, in large part due to changing regulatory requirements.
Nuclear industry-wide and Cook Plant initiatives have contributed to slowing
the growth of operating and maintenance costs. However, the ability of I&M to
obtain adequate and timely recovery of costs associated with the Cook Plant,
including replacement power and retirement costs, has become more uncertain.
The Low-Level Waste Policy Act of 1980 (LLWPA) mandates that the
responsibility for the disposal of low-level waste rests with the individual
states. Low-level radioactive waste consists largely of ordinary trash and
other items that have come in contact with radioactive materials. To facilitate
this approach, the LLWPA authorized states to enter into regional compacts for
low-level waste disposal subject to Congressional approval. The LLWPA also
specified that, beginning in 1986, approved compacts may prohibit the
importation of low-level waste from other regions, thereby providing a strong
incentive for states to enter
26
<PAGE>
into compacts. As 1986 approached it became apparent that no new disposal
facilities would be operational, and enforcement of the LLWPA would leave no
disposal capacity for the majority of the low-level waste generated in the
United States. Congress, therefore, passed the Low-Level Waste Policy
Amendments Act of 1985 in conjunction with approval of seven regional compacts,
including the Midwest Compact which governed the region in which the Cook Plant
is located.
In 1990, Nevada, South Carolina and Washington, the three states with
operating disposal sites, determined that Michigan was out of compliance with
milestones established by the LLWPA which were designed to force development of
new disposal sites by the end of 1992. Failure of a state or compact region to
have met a milestone could result in denial of access to operating sites for
waste generators within the state. Since November 1990, the Cook Plant has been
denied access to these operating sites. The Cook Plant's low-level radioactive
waste is currently being stored on-site. I&M has completed construction of an
on-site radioactive material storage facility at the Cook Plant for temporary
preshipment storage of the plant's low-level radioactive waste. The facility
can hold as much low-level waste as the Cook Plant is expected to produce
through approximately 2001, and the building could be expanded to accommodate
the storage of such waste through approximately 2017. Currently, the Cook Plant
produces about 7,000 cubic feet of low-level waste annually.
Management is unable to predict when a permanent disposal site for Michigan
low-level waste will be available.
Energy Policy Act--Nuclear Fees
The Energy Policy Act of 1992 (Energy Act), contains a provision to fund the
decommissioning and decontamination of DOE's existing uranium enrichment
facilities from a combination of sources including assessments against electric
utilities which purchased enrichment services from DOE facilities. I&M's
assessment is estimated to be approximately $58,320,000 subject to inflation
adjustments and is payable in annual assessments over 15 years commencing in
1993. I&M recorded a provision as a regulatory asset concurrent with the
recording of the liability. The first year estimated assessment has been
recorded as fuel expense and, under the provisions of the Energy Act, the
expense is being recovered in I&M's fuel rate adjustment proceedings.
ENVIRONMENTAL AND OTHER MATTERS
AEP's subsidiaries are 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.
It is expected that costs related to environmental requirements will
eventually be reflected in the rates of AEP's operating subsidiaries and that,
in the long term, AEP's operating subsidiaries will be able to provide for such
environmental controls as are required. However, some customers may curtail or
cease operations as a consequence of higher energy costs. There can be no
assurance that all such costs will be recovered.
Except as noted herein, AEP's subsidiaries which own or operate generating
facilities generally are in compliance with pollution control laws and
regulations.
Air Pollution Control
Clean Air Act Amendments of 1990: For the AEP System, compliance with the
Clean Air Act Amendments of 1990 (CAAA) is expected to require substantial
expenditures for which management intends to seek recovery through increases in
the rates of AEP's operating subsidiaries. OPCo is expected to incur a major
portion of such costs. There can be no assurance that all such costs will be
recovered. See Construction and Financing Program--Construction Expenditures.
27
<PAGE>
The CAAA creates an emission allowance program pursuant to which utilities
are authorized to emit a designated quantity of sulfur dioxide, measured in
tons per year, on a system wide or aggregate basis. A utility or utility system
will be deemed to operate in compliance with the legislation if its aggregate
annual emissions do not exceed the total number of allowances that are
allocated to the utility or utility system by the Federal government and net
acquisitions through purchases. Effective January 1, 2000, the legislation
establishes a maximum national aggregate ceiling on allowances allocated to
fossil fuel-fired units larger than 25 MW. The allowance cap is set at 8.95
million tons.
Emission reductions are required by virtue of the establishment of annual
allowance allocations at a level below historical emission levels for many
utility units. For units that emitted sulfur dioxide above a rate of 2.5 pounds
per million Btu heat input in 1985, the CAAA establishes sulfur dioxide
allowance limitations (caps or ceilings on emissions) premised upon sulfur
dioxide emissions at a rate of 2.5 pounds as of the Phase I deadline of January
1, 1995. The following AEP System plants are Phase I-affected units: I&M's
Breed Plant and Tanners Creek Unit 4; CSPCo's Beckjord Unit 6, Conesville Units
1-4 and Picway Unit 5; OPCo's Gavin Units 1-2, Muskingum River Units 1-5,
Cardinal Unit 1, Mitchell Units 1-2 and Kammer Units 1-3.
In the aggregate, these Phase I-affected units must annually limit emissions to
no more than Phase I allowances held beginning in 1995. Phase I-affected units
which are retrofitted with flue-gas desulfurization equipment (scrubbers) with
a removal efficiency of 90% or greater prior to January 1, 1997 may be
allocated a sufficient number of reserve allowances to provide a two-year
extension to comply with Phase I allowance limitations.
On January 11, 1993, Federal EPA published final regulations in the Federal
Register which cover the Acid Rain Permit Program, Allowance System, Continuous
Emission Monitoring, Excess Emissions Penalties and Offset Plans and Appeal
Procedures. These regulations included allocation of allowances for Phase I
sources. On March 12, 1993, several environmental groups, the State of New York
and a number of utilities (including APCo, CSPCo, I&M, KEPCo and OPCo) filed
petitions in the United States Court of Appeals for the District of Columbia
Circuit seeking a review of the regulations. Oral argument has been scheduled.
Phase I permit applications and compliance plans were filed for all Phase I-
affected units in the AEP System and Phase I permits have been issued for
Gavin, Muskingum River, Kammer and Breed plants. Proposed permits were issued
for Cardinal, Tidd, Mitchell, Conesville and Picway plants and for Amos Units 1
and 2, Big Sandy Unit 2, Glen Lyn Unit 6, Rockport Unit 1 and Tanners Creek
Unit 4. Pursuant to regulations promulgated by Federal EPA under Title IV of
the CAAA, Phase II affected units may be designated as substitution units in
Acid Rain Permit compliance plans. A Phase II substitution unit achieving the
applicable Phase I NOx emission limit in 1995 is exempt from any more stringent
Phase II NOx emission limits. Phase II units designated as substitution units
in AEP system compliance plans included Amos Units 1 and 2, Glen Lyn Unit 6,
Rockport Unit 1, Big Sandy Unit 2 and Tidd. Federal EPA is proposing to approve
substitution plans for certain of these units for the year 1995 only. For the
years 1996-1999, action would be taken based upon regulations then in effect.
On September 10, 1993, APCo, CSPCo, I&M, KEPCo and OPCo and a group of
unaffiliated utilities filed a petition in the U.S. Court of Appeals for the
District of Columbia Circuit seeking a review of the determination by Federal
EPA that it had authority to defer action on acid rain compliance plans.
Federal EPA has filed a motion to dismiss the appeal. On November 18, 1993,
Federal EPA published proposed rule revisions governing substitution and
reduced utilization plans which are generally more restrictive than those
currently in effect and would apply to Phase I substitution and compensating
unit plans for the years 1996-1999.
OPCo has filed an Early Ranking Application with Federal EPA for Gavin Units
1 and 2 seeking issuance of extension reserve allowances for both units based
on installation of scrubbers. Because of expected oversubscription of these
allowances, OPCo and other unaffiliated utilities formed an emission allowance
pool
28
<PAGE>
to assure receipt of a portion of the allowances. In March 1993, Federal EPA
conducted a lottery to determine order of receipt of the allowances. OPCo's
application for Gavin Plant received a full allotment of the requested
allowances. Based on participation in the emission allowance pool, OPCo will
receive approximately 88% of the total allowances it requested.
All fossil fuel-fired generating units with capacity greater than 25 MW are
affected in Phase II of the acid rain control program. All Phase II-affected
units are allocated allowances with which compliance must be accomplished no
later than January 1, 2000. The basis for Phase II allowance allocation
depends on 1985 sulfur dioxide emission rates--if a unit emitted sulfur
dioxide in 1985 at a rate in excess of 1.2 pounds per million Btu heat input,
the allowance allocation is premised upon an emission rate of 1.2 pounds as of
the Phase II deadline of January 1, 2000; if a unit emitted sulfur dioxide in
1985 at a rate of less than 1.2 pounds, the allowance allocation is in most
instances premised upon the actual 1985 emission rate.
The CAAA contemplates four general methods of compliance: (i) fuel
switching; (ii) technological methods of control such as scrubbers; (iii)
capacity utilization adjustments; and (iv) acquisition of allowances to cover
anticipated emissions levels. The AEP System permit application and compliance
plan filings reflect, to some extent, each method of compliance.
The acid rain title also contains provisions concerning nitrogen oxides
emissions. On March 1, 1994, the Federal EPA Administrator signed final
regulations governing nitrogen oxides emissions from tangentially fired and
dry bottom wall-fired boilers at Phase I units. For tangentially fired boilers
and dry bottom wall-fired boilers (other than units applying cell burner
technology), the proposed emission limitations are 0.45 pounds nitrogen oxides
per million Btu heat input and 0.50 pounds nitrogen oxides per million Btu
heat input, respectively, and must be achieved no later than January 1, 1995.
The five AEP System units which are subject to the January 1, 1995 Phase I
deadline are OPCo's Mitchell Units 1-2 and CSPCo's Conesville Units 3 and 4
and Picway Unit 5. With the exception of Conesville Unit 4 for which no
retrofit controls are deemed necessary to achieve Phase I NOx emission
limitations, the above units will be retrofitted to achieve these limits.
Capital expenditures for these activities are included as a component of the
cost of compliance with all Phase I requirements applicable to these units.
For wet bottom wall-fired boilers, cyclone boilers, units applying cell
burner technology and all other types of boilers, emission limitations
comparable in cost to the controls applicable to tangentially fired boilers
and non-cell burner dry bottom wall-fired boilers are to be adopted no later
than January 1, 1997. The 1997 nitrogen oxides emission limitations are
required to be met by Phase II-affected sources as of January 1, 2000.
The CAAA contains additional provisions, other than the acid rain title,
which could require reductions in emissions of nitrogen oxides from fossil
fuel-fired power plants. Title I, dealing generally with nonattainment of
ambient air quality standards, establishes a tiered system for classifying
degrees of nonattainment with air quality standards for ozone and mandates
that Federal EPA in cooperation with the states issue, within 240 days of
enactment, ozone "attainment" or "nonattainment" designations for airsheds
throughout the country. Depending upon the severity of nonattainment within a
given nonattainment area, reductions in nitrogen oxides emissions from fossil
fuel-fired power plants may be required as part of a state's plan for
achieving attainment with ozone air quality standards. The deadlines for
submission of new state plans and the accomplishment of mandated emission
reductions, as well as the nature of stationary source nitrogen oxides control
requirements, also depend upon the severity of a given airshed's
nonattainment. While ozone nonattainment is largely restricted to urban areas,
several AEP System generating stations could be determined to be affecting
ozone concentrations and may therefore eventually be required to reduce
nitrogen oxides emissions pursuant to Title I. Plants currently located in
areas being evaluated for imposition of additional emission controls include
Zimmer and Beckjord Unit 6 (both partially owned by CSPCo), I&M's Tanners
Creek Plant, KEPCo's Big Sandy Plant, OPCo's Gavin Plant and APCo's Amos,
Sporn, Kanawha River and Mountaineer plants. On February 25, 1994, the West
Virginia Department of Environmental Protection issued a Consent Order for
APCo's Amos Units 1 and 2, requiring reductions in nitrogen oxides emissions
from these units after June 1, 1995. The reduction in nitrogen oxides
emissions will be less than that required under Title IV of the CAAA but will
be required at an earlier time.
29
<PAGE>
Utility boilers are potentially subject to additional control requirements
under Title III of the CAAA governing hazardous air pollutant emissions.
Federal EPA is directed to conduct studies concerning the potential public
health impacts of pollutants identified by the legislation as hazardous in
connection with their emission from electric utility steam generating units.
Federal EPA was required to report the results of this study to Congress by
November 1993 and is required to regulate emission of these pollutants from
electric utility steam generating units if it is determined that such
regulation is necessary and appropriate, based on the results of the study.
Federal EPA has informed Congress that completion of this study will be delayed
significantly beyond the November 1993 deadline. Additionally, Federal EPA is
directed to study the deposition of hazardous pollutants to the Great Lakes,
the Chesapeake Bay, Lake Champlain and other coastal waters. As part of this
assessment, Federal EPA is authorized to adopt regulations by November 1995 to
prevent serious adverse effects to public health and serious or widespread
environmental effects. It is possible that emissions from electric utility
generating units may be regulated under this water body deposition assessment
program.
The CAAA expands the enforcement authority of the Federal government by
increasing the range of civil and criminal penalties for violations of the
Clean Air Act and enhancing administrative civil provisions, adding a citizens
suit provision and imposing a national operating permit system, emission fee
program and enhanced monitoring, record keeping and reporting requirements for
existing and new sources.
CAAA-AEP System Compliance Plan: Management reviewed the provisions of the
CAAA and evaluated various compliance strategies on a systemwide basis. The
selection of any compliance alternatives for the AEP System's generating plants
was dependent on the method of compliance selected for OPCo's Gavin Plant, one
of the AEP System's largest plants (2,600 mw) which emits about 25 percent of
the System's total sulfur dioxide emissions and about 44 percent of emissions
from OPCo's plants in Ohio. Alternatives considered for the Gavin Plant were
switching to low-sulfur coal which would come from mines outside Ohio or
installation of scrubbers which would allow the continued burning of high-
sulfur coal.
A systemwide Phase I CAAA compliance report was filed with the PUCO in 1991
comparing preliminary estimates of revenue requirements for the two compliance
alternatives at Gavin. Although the preliminary compliance report showed lower
projected AEP System revenue requirements for fuel switching rather than
installing OPCo-owned scrubbers, the PUCO issued an order which strongly
encouraged OPCo to keep both the fuel switching and scrubbing options open.
OPCo continued to study the alternatives and in April 1992 filed a Phase I CAAA
compliance plan.
OPCo's compliance plan filing was made under an Ohio law enacted in 1991 that
provides utilities with an opportunity to obtain advance PUCO approval of a
compliance plan provided that, among other things, the PUCO determines that it
represents a least-cost approach. Once approved by the PUCO, such plans are
deemed prudent for subsequent PUCO rate proceedings. On November 25, 1992, the
PUCO issued orders approving (i) OPCo's stipulation agreement with the PUCO
staff and the Ohio Consumers' Counsel regarding the predetermined price of coal
discussed below and in Rates and (ii) OPCo's compliance plan. The actual rate
treatment of costs associated with the compliance plan will be determined in a
future rate case. In March 1993, the Industrial Energy Consumers of OPCo (IEC)
and The Sierra Club each appealed the PUCO orders regarding the stipulation
agreement and compliance plan to the Supreme Court of Ohio. The IEC and Sierra
Club seek to overturn the PUCO decisions. OPCo has participated in these
proceedings.
The compliance plan sets forth, as part of an AEP System least-cost strategy,
compliance measures for the AEP System's affected generating units including
the installation of scrubbers at the Gavin Plant. In order to lower the cost of
compliance, the plan proposed to lease the scrubbers which are to be installed
at the Gavin Plant early in 1995. The plan also provides for Gavin to burn Ohio
high-sulfur coal supplied, in part, by OPCo's affiliated Meigs mine which will
operate at reduced capacity and in part by new long-term contracts with
unaffiliated sources and spot market purchases.
30
<PAGE>
Under the terms of the compliance plan, OPCo's Muskingum River Unit 5 will
switch to low-sulfur coal by 1995 and Kammer Units 1-3 will switch to moderate
sulfur coal. The PUCO also indicated that management should take steps to have
Cardinal Unit 1 available for fuel switching for Phase I compliance. The PUCO
is examining in OPCo's current fuel clause proceeding whether it would be a
lower-cost alternative to fuel-switch Cardinal Unit 1 in Phase I rather than
Phase II as specified in AEP's compliance plan. CSPCo's Conesville Units 1-3
will be modified to enable these units to burn coal or natural gas to comply.
Actual fuel choice will depend on the cost and availability of gas. Although
the compliance plan originally contemplated that CSPCo's Picway Unit 5 also
would be modified to enable this unit to burn coal or natural gas to comply,
this proposed modification has been indefinitely deferred. Beckjord Unit 6
(owned with CG&E and DP&L) will switch to moderate sulfur coal. Current plans
call for I&M's Tanners Creek Unit 4 to switch to moderate sulfur coal and for
retirement of I&M's Breed Plant in 1994. Eight additional units are subject to
Phase I rules, but no operating or fuel changes are planned, because they will
hold allowances sufficient for compliance.
Since the approved plan reflects fuel switching to comply at OPCo's
Muskingum River Plant and Cardinal Unit 1, mining operations at OPCo's other
wholly-owned coal-mining subsidiaries, Central Ohio Coal Company and Windsor
Coal Company, could be shut down. Central Ohio Coal Company and Windsor Coal
Company supply coal to Muskingum River Plant and Cardinal Plant, respectively.
The current plan for Central Ohio Coal Company provides for continuing at the
current operating level until mid-1994, and then reducing to approximately a
50% operating level until 1999. The cost of affiliated mine shutdowns would be
substantial. Shutdown costs for Central Ohio Coal Company and Windsor Coal
Company include investments in the mines, leased asset buy-outs, reclamation
and employee benefits and were estimated to be approximately $250,000,000 at
December 31, 1993. Management expects to recover costs of compliance with the
CAAA from ratepayers. Lack of recovery of the cost of CAAA compliance,
including the lease cost of the Gavin scrubbers and the investment in and cost
of closing affected affiliated mining operations, could materially adversely
affect AEP's and OPCo's results of operations and financial condition.
In August 1992 OPCo signed a stipulation agreement with the PUCO staff and
the Ohio Consumers' Counsel which provides that, among other things, the
recoverable cost of the Gavin scrubbers is not to exceed $815,000,000. The
scrubbers are currently under construction. See Construction and Financing
Program. Management expects that the cost of the scrubbers will be at least
10% less than this amount.
In September 1992 OPCo entered into an agreement for the lease of scrubbers
at the Gavin Plant with JMG Funding, Limited Partnership, an unaffiliated
entity. Under the terms of the agreement for lease, OPCo, as agent for JMG,
will build the scrubbers and upon completion, subject to certain conditions,
will lease the scrubbers from JMG. The agreement for lease provides for JMG to
pay the cost of construction. The lease will be accounted for as an operating
lease. On December 9, 1993, the PUCO approved the terms of the lease
agreement.
With respect to the construction of the scrubbers at the Gavin Plant, OPCo
has received a permit from the U.S. Army Corps of Engineers to conduct certain
activities in the navigable waters and affecting wetlands. Other
environmentally related permits have been received from state agencies or are
being sought.
Global Climate Change: Increasing concentrations of "greenhouse gases,"
including carbon dioxide (CO/2/), in the atmosphere have led to concerns about
the potential for the earth's climate to change. As a result of the AEP
System's historical practice of using low-cost indigenous coal supplies to
produce electricity, AEP System power plants are significant sources of CO/2/
emissions. The proponents of the theory of global climate change maintain that
the increasing concentrations of man-made greenhouse gases will cause some of
the sun's energy that is normally radiated back into space to be trapped in
the atmosphere and that, as a result, the global temperature will increase.
Management is working to support further efforts to properly study the issue
of global climate change to define the extent, if any, to which it poses a
threat to the environment before new restrictions are imposed. Management is
concerned that new laws may be passed or new regulations promulgated without
sufficient scientific study and support.
31
<PAGE>
At the Earth Summit in Rio de Janeiro, Brazil in June 1992, over 150
nations, including the United States, signed a global climate change treaty.
Each country that ratifies the treaty commits itself to a process of achieving
the aim of reducing greenhouse gas emissions, including CO/2/, to their 1990
level by the year 2000. On October 7, 1992, the U.S. Senate ratified the
treaty. The treaty goes into effect on March 21, 1994.
In accordance with the obligations set forth in the global climate change
treaty, on April 21, 1993, President Clinton committed the United States to
reducing greenhouse gas emissions to 1990 levels by the year 2000. On October
19, 1993, the President unveiled the Administration's Climate Change Action
Plan for meeting his emission reduction target. The plan emphasizes reductions
in fossil fuel use, the largest source of CO/2/ emissions, primarily through
reliance on voluntary energy efficiency programs and voluntary partnerships
between the Federal government and U.S. industry. One such collaboration is
between the electric utility industry and the U.S. Department of Energy. Known
as the Utility Climate Challenge, this initiative is intended to identify
voluntary, cost-effective measures to limit or offset future greenhouse gas
emissions. Although AEP is participating in this effort, such actions will not
be undertaken if they threaten the AEP System's economic competitiveness or if
they are unacceptable to its regulators.
Since the AEP System is a major emitter of carbon dioxide, its financial
condition and results of operations could be materially adversely affected by
the imposition of controls on carbon dioxide emissions if the compliance costs
incurred are not fully recovered from ratepayers. In addition, any program to
stabilize or reduce carbon dioxide emissions is expected to impose substantial
costs on industry and society, and could seriously erode the economic base
that AEP's operations serve.
Ohio: On July 29, 1988, Federal EPA issued a notice of violation alleging
that OPCo's Muskingum River Plant operated in violation of Ohio EPA's
regulation governing visible emissions during 1987. At a November 1988
enforcement conference pursuant to Clean Air Act Section 113, OPCo
representatives presented evidence to Federal EPA indicating that the notice
of violation was not supported by factual evidence nor by law. Federal EPA has
yet to take further action.
On March 9, 1993, Federal EPA, Region V, issued a notice of violation
alleging that Stuart Station (owned by CSPCo, CG&E and DP&L) was in violation
of Ohio's State Implementation Plan rules relating to opacity. This notice of
violation has been resolved without penalty.
West Virginia: The West Virginia Air Pollution Control Commission
promulgated sulfur dioxide limitations effective February 1978. Federal EPA
has approved these regulations as they apply to APCo's and OPCo's plants,
except for OPCo's Mitchell and Kammer Plants. The emission limitations for the
Mitchell Plant have been approved by Federal EPA for primary ambient air
quality (health-related) standards only. The West Virginia Air Pollution
Control Commission is obliged to reanalyze sulfur dioxide emission limits for
the Mitchell Plant with respect to secondary ambient air quality (welfare-
related) standards. Because of the lengthy time and uncertainty associated
with the stack height rulemaking and litigation discussed in detail below, it
is not certain when Federal EPA will take dispositive action regarding the
Mitchell and Kammer Plants.
Stack Height Regulations: On June 27, 1985, Federal EPA issued stack height
regulations pursuant to an order of the United States Court of Appeals for the
District of Columbia Circuit. These regulations were appealed by a number of
states, environmental groups and investor-owned electric utilities (including
APCo, CSPCo, I&M, KEPCo and OPCo), along with three electric utility trade
associations. OPCo also filed a separate petition for review to raise issues
unique to its Kammer Plant. Various petitions for reconsideration filed with
and denied by Federal EPA were also appealed. This litigation was consolidated
into a single case.
On January 22, 1988, the U.S. Court of Appeals issued a decision in part
upholding the June 1985 stack height rules and remanding certain of the June
1985 rules to Federal EPA for further consideration. With respect to Kammer
Plant, the January 1988 court decision rejected OPCo's appeal, holding that
Federal EPA acted lawfully in revoking stack height credit previously granted
for Kammer Plant in October 1982. OPCo
32
<PAGE>
is in the process of initiating administrative proceedings under the 1985 stack
height rules with the State of West Virginia and Federal EPA in an effort to
preserve stack height credit for Kammer Plant. Federal EPA has yet to commence
administrative proceedings to incorporate changes in the 1985 stack height
rules as mandated by the January 1988 court decision.
While it is not possible to state with particularity the ultimate impact of
the final rules on AEP System operations, at present it appears that the most
likely AEP System plants at which the final rules could possibly result in
substantially more stringent emission limitations are CSPCo's Conesville Plant,
AEGCo's and I&M's Rockport Plant, I&M's Tanners Creek Plant and OPCo's Gavin
and Kammer plants. Gavin and Rockport plants were not affected by Federal EPA's
stack height rules as issued in June 1985. However, the provision exempting
these plants was remanded to Federal EPA in the January 1988 court decision.
Accordingly, the ultimate impact of the stack height rules on Gavin and
Rockport plants will not be known until Federal EPA completes administrative
proceedings on remand and reissues final stack height rules. OPCo and AEGCo and
I&M intend to participate in the remand rulemaking affecting Gavin and Rockport
plants, respectively.
State air pollution control agencies will be required to implement the stack
height rules by revising emission limitations for sources subject to the rules
and submitting such revisions to Federal EPA.
On June 1, 1989, Ohio EPA adopted a rule concerning CSPCo's Conesville Plant
in response to Federal EPA's stack height rules adopted in 1985. Under Federal
EPA policy published in January 1988, emission reductions required by the stack
height rules may be obtained at plants other than the plant directly affected
by the rules, and thereafter credited to the directly affected plant. Under
Ohio EPA's June 1 rule, the sulfur dioxide emission limitations for Conesville
Units 5 and 6 remain at 1.2 pounds sulfur dioxide per million Btu heat input as
long as the emission rate at CSPCo's retired Poston Units 1-4 remains at 0.0
pounds sulfur dioxide per million Btu heat input. Federal EPA has yet to take
action concerning Ohio EPA's June 1 rule.
Administrative Developments Regarding Sulfur Dioxide: Federal EPA, in the
Federal Register dated April 26, 1988, issued a "provisional" decision that
proposed to retain present national ambient air quality standards for sulfur
dioxide and did not propose adoption of a new, more restrictive, short-term
primary (health-related) standard. Federal EPA is expected to issue a final
rule after its review of public comments filed in response to the proposed
rule. In the context of this sulfur dioxide standard rulemaking, Federal EPA is
considering a number of significant policy changes in the rules governing
sulfur dioxide emissions. Principal among these possible regulatory changes is
the adoption of a new, short-term primary national ambient air quality standard
for sulfur dioxide. Adoption of any of these changes could require substantial
reductions in sulfur dioxide emissions from the System's coal-fired generating
plants which would entail substantial capital and operating costs.
Life Extension: On July 21, 1992, Federal EPA published final regulations in
the Federal Register governing application of new source rules to generating
plant repairs and pollution control projects undertaken to comply with the
Clean Air Act Amendments of 1990. Generally, the rule provides that plants
undertaking pollution control projects will not trigger new source review
requirements. The Natural Resource Defense Council and a group of utilities,
including five AEP System companies, have filed petitions in the U.S. Court of
Appeals for the District of Columbia Circuit seeking a review of the
regulations.
Water Pollution Control
Under the Clean Water Act, effluent limitations requiring application of the
best available technology economically achievable are to be applied, and those
limitations require that no pollutants be discharged if Federal EPA finds
elimination of such discharges is technologically and economically achievable.
The Clean Water Act provides citizens with a cause of action to enforce
compliance with its pollution control requirements. Since 1982, many such
actions against NPDES permit holders have been filed. To date, no AEP System
plants have been named in such actions.
33
<PAGE>
All System Plants are operating with NPDES permits. These will expire during
the time period 1994-96, except for Breed Plant's permit which has expired, but
for which a timely renewal application was filed. Under EPA's regulations,
operation under an expired NPDES permit is authorized provided an application
is filed at least 180 days prior to expiration. Renewal applications are being
prepared or have been filed for renewal of NPDES permits which expire in 1994.
The NPDES permits generally require that certain thermal impact study
programs be undertaken. These studies have been completed for all System
plants. Thermal variances are in effect for all plants with once-through
cooling water, except for Conesville and Muskingum River Plants for which
thermal variances expired on May 1, 1993. Requests for revised thermal
variances for these two plants have been made but the permitting agency has not
made a final determination on the requests. If thermal variances for these
plants are not renewed, the plants could be required to reduce generation,
particularly in late summer months.
Certain mining operations conducted by System companies as discussed under
Fuel Supply are also subject to Federal and state water pollution control
requirements, which may entail substantial expenditures for control facilities,
not included at present in the System's construction cost estimates set forth
herein. See Item 3. Legal Proceedings--Meigs Mine with respect to litigation
regarding certain discharges from OPCo's Meigs Mines.
The Federal Water Quality Act of 1987 requires states to adopt stringent
water quality standards for a large category of toxic pollutants and to
identify specialized control measures for dischargers to waters where water
quality standards are not being met. Implementation of these provisions could
result in significant costs to the AEP System if biological monitoring
requirements and water quality-based effluent limits are placed in NPDES
permits.
Hazardous Substances and Wastes
Section 311 of the Clean Water Act imposes substantial penalties for spills
of Federal EPA-listed hazardous substances into water and for failure to report
such spills. The Comprehensive Environmental Response, Compensation, and
Liability Act expanded the reporting requirements to cover the release of
hazardous substances generally into the environment, including water, land and
air. AEP's subsidiaries store and use some of these hazardous substances,
including PCB's contained in certain capacitors and transformers, but the
occurrence and ramifications of a spill or release of such substances cannot be
predicted. The Comprehensive Environmental Response, Compensation, and
Liability Act provides governmental agencies with the authority to require
clean-up of hazardous waste sites and releases of hazardous substances into the
environment. Since liability under this Act is strict and can be applied
retroactively, AEP System companies which previously disposed of PCB-containing
electrical equipment and other hazardous substances may be required to
participate in remedial activities at such disposal sites should environmental
problems result. AEP System companies are presently identified as parties
responsible for clean-up at nine federal sites, including I&M at five sites,
KEPCo at one site, OPCo at two sites and Wheeling Power Company at one site.
I&M also has been named as a party responsible for clean-up at one state site.
The companies' share of clean-up costs, however, is not expected to be
significant. AEP System companies, including I&M and OPCo, also have been named
as defendants in contribution lawsuits for two additional sites.
In addition to handling hazardous substances, the System companies generate
solid waste associated with the combustion of coal, the vast majority of which
is fly ash, bottom ash and flue gas desulfurization wastes. These wastes
presently are considered to be non-hazardous under RCRA and applicable state
law and the wastes are treated and disposed in surface impoundments or
landfills in accordance with state permits or authorization. As required by
RCRA, EPA evaluated whether high volume coal combustion wastes (such as fly
ash, bottom ash and flue gas desulfurization wastes) should be regulated as
hazardous waste. In August, 1993 EPA issued a regulatory determination that
such high volume coal combustion wastes should not be regulated as hazardous
waste. For low volume coal combustion wastes, such as metal and boiler cleaning
wastes, Federal EPA will gather additional information and make a regulatory
determination by April 1998.
34
<PAGE>
Until that time, these low volume wastes are provisionally excluded from
regulation under the hazardous waste provisions of RCRA. All presently
generated hazardous waste is being disposed of at permitted off-site facilities
in compliance with applicable Federal and state laws and regulations. For
System facilities which generate such wastes, System companies have filed the
requisite notices and are complying with RCRA and applicable state regulations
for generators. Nuclear waste produced at the Cook Plant is excluded from
regulation under RCRA.
Federal EPA's technical requirements for underground storage tanks containing
petroleum will require retrofitting or replacement of an appreciable number of
tanks. Compliance costs for tank replacement and site remediation have not been
significant to date.
Electric and Magnetic Fields (EMF)
EMF is 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, or being used in 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 EMF and health effects, the
majority of studies have indicated no such association. The epidemiological
studies that have received the most public attention reflect a weak correlation
between surrogate or indirect estimates of EMF exposure and certain cancers.
Studies using direct measurements of EMF exposure show no such association.
In addition, the research has not shown any causal relationship between EMF
exposure and cancer, or any other adverse health effects. Additional studies,
which are intended to provide a better understanding of the subject, are
continuing.
Federal EPA is currently studying whether exposure to EMF is associated with
cancer in humans. In 1990, Federal EPA issued a draft report on EMF, received
interagency review and public comment, and is in the process of preparing its
final report. A December 1992 brochure from Federal EPA, Questions And Answers
About Electric And Magnetic Fields (EMFs), states at page 3, "The bottom line
is that there is no established cause and effect relationship between EMF
exposure and cancer or other disease."
The Energy Policy Act of 1992 established a coordinated Federal EMF research
program. The program funding is $65,000,000 over five years, half of which is
to be provided by private parties including utilities. AEP has committed to
contribute $446,571 over the five-year period.
AEP's participation is a continuation of its efforts to support further
research and to communicate with its customers about this issue. Its operating
company subsidiaries provide their residential customers with information and
field measurements on request, although there is no scientific basis for
interpreting such measurements.
A number of lawsuits based on EMF-related grounds have been filed in recent
years against electric utilities. A suit was filed on May 23, 1990 against I&M
involving claims that EMF from a 345 KV transmission line caused adverse health
effects. No specific amount has been requested for damages in this case and no
trial date has been set.
Some states have enacted regulations to limit the strength of magnetic fields
at the edge of transmission line rights-of-way. No state which the AEP System
serves has done so. On March 22, 1993, The Ohio Power Siting Board issued its
amended rules providing for additional consideration of the possible effects of
EMF in the certification of electric transmission facilities. Under the amended
EMF rules, persons seeking approval to build electric transmission lines would
have to provide estimates of EMF from transmission lines under a
35
<PAGE>
variety of conditions. In addition, applicants would be required to address
possible health effects and discuss the consideration of design alternatives
with respect to EMF.
In April 1993, the State of Indiana enacted a law which provides that the
IURC shall determine, based on the preponderance of evidence in the scientific
literature, whether rules are necessary to protect the public health from EMF.
If the IURC determines that such rules are necessary, the IURC is required to
adopt rules that reasonably protect the public health from EMF.
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 operation and financial condition of AEP and its
operating subsidiaries could be materially adversely affected unless these
costs can be recovered from rate payers.
RESEARCH AND DEVELOPMENT
AEP and its subsidiaries are involved in a number of research projects which
are directed towards developing more efficient methods of burning coal,
reducing the contaminants resulting from combustion of coal, and improving the
efficiency and reliability of power transmission and distribution, including
load management. See Construction and Financing Program--PFBC Projects.
AEP System operating companies have elected to join the Electric Power
Research Institute (EPRI), a nonprofit organization that manages research and
development on behalf of the U.S. electric utility industry. EPRI, founded in
1973, manages technical research and development programs for its members to
improve power production, delivery and use. Approximately 700 utilities are
members. EPRI has agreed to a membership program with AEP whereby dues will be
phased in over four years. AEP's operating companies intend to seek recovery of
these dues through rates, which recovery is anticipated to closely relate to
each company's membership date.
Total research and development expenditures by AEP and its subsidiaries were
approximately $13,700,000 for the year ended December 31, 1993, $14,200,000 for
the year ended December 31, 1992 and $15,100,000 for the year ended December
31, 1991 including $10,900,000, $11,700,000 and $11,900,000, respectively, for
Tidd Plant and related PFBC costs.
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<PAGE>
Item 2.PROPERTIES
- --------------------------------------------------------------------------------
At December 31, 1993, subsidiaries of AEP owned (or leased where indicated)
generating plants with the net power capabilities (winter rating) shown in the
following table:
<TABLE>
<CAPTION>
NET
OWNER, KILOWATT
PLANT TYPE AND NAME LOCATION (NEAR) CAPABILITY
--------------------- ---------------- -----------
<S> <C> <C>
AEP Generating Company:
Steam -- Coal-Fired:
Rockport Plant (AEGCo share) Rockport, Indiana 1,300,000(a)
----------
Appalachian Power Company:
Steam -- Coal-Fired:
John E. Amos, Units 1 & 2 St. Albans, West Virginia 1,600,000
John E. Amos, Unit 3 (APCo share) St. Albans, West Virginia 433,000(b)
Clinch River Carbo, Virginia 705,000
Glen Lyn Glen Lyn, Virginia 335,000
Kanawha River Glasgow, West Virginia 400,000
Mountaineer New Haven, West Virginia 1,300,000
Philip Sporn, Units 1 & 3 New Haven, West Virginia 308,000
Hydroelectric -- Conventional:
Buck Ivanhoe, Virginia 10,000
Byllesby Byllesby, Virginia 20,000
Claytor Radford, Virginia 76,000
Leesville Leesville, Virginia 40,000
Niagara Roanoke, Virginia 3,000
Reusens Lynchburg, Virginia 12,000
Hydroelectric -- Pumped Storage:
Smith Mountain Penhook, Virginia 565,000
----------
5,807,000
----------
Columbus Southern Power Company:
Steam -- Coal-Fired:
Beckjord, Unit 6 New Richmond, Ohio 53,000(c)
Conesville, Units 1-3, 5 & 6 Coshocton, Ohio 1,165,000
Conesville, Unit 4 Coshocton, Ohio 339,000(c)
Picway, Unit 5 Columbus, Ohio 100,000
Stuart, Units 1-4 Aberdeen, Ohio 608,000(c)
Zimmer Moscow, Ohio 330,000(c)
----------
2,595,000
----------
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
NET
OWNER, KILOWATT
PLANT TYPE AND NAME LOCATION (NEAR) CAPABILITY
--------------------- ---------------- -----------
<S> <C> <C>
Indiana Michigan Power Company:
Steam -- Coal-Fired:
Breed Sullivan, Indiana 325,000(d)
Rockport Plant (I&M share) Rockport, Indiana 1,300,000(a)
Tanners Creek Lawrenceburg, Indiana 995,000
Steam -- Nuclear:
Donald C. Cook Bridgman, Michigan 2,110,000
Gas Turbine:
Fourth Street Fort Wayne, Indiana 18,000(e)
Hydroelectric -- Conventional:
Berrien Springs Berien Springs, Michigan 3,000
Buchanan Buchanan, Michigan 2,000
Constantine Constantine, Michigan 1,000
Elkhart Elkhart, Indiana 1,000
Mottville Mottville, Michigan 1,000
Twin Branch Mishawaka, Indiana 3,000
----------
4,759,000
----------
Kanawha Valley Power Company:
Hydroelectric -- Conventional:
London Montgomery, West Virginia 16,000
Marmet Marmet, West Virginia 16,000
Winfield Winfield, West Virginia 19,000
----------
51,000
----------
Kentucky Power Company:
Steam -- Coal-Fired:
Big Sandy Louisa, Kentucky 1,060,000
----------
Ohio Power Company:
Steam -- Coal-Fired:
John E. Amos, Unit 3 (OPCo share) St. Albans, West Virginia 867,000(b)
Cardinal, Unit 1 Brilliant, Ohio 600,000
General James M. Gavin Cheshire, Ohio 2,600,000
Kammer Captina, West Virginia 630,000
Mitchell Captina, West Virginia 1,600,000
Muskingum River Beverly, Ohio 1,425,000
Philip Sporn, Units 2, 4 & 5 New Haven, West Virginia 742,000
Hydroelectric -- Conventional:
Racine Racine, Ohio 48,000
----------
8,512,000
----------
Total Generating
Capability............. 24,084,000
==========
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
NET
OWNER, KILOWATT
PLANT TYPE AND NAME LOCATION (NEAR) CAPABILITY
- --------------------- ---------------- -----------
<S> <C> <C>
Summary:
Total Steam --
Coal-Fired..................................................... 21,120,000
Nuclear........................................................ 2,110,000
Total Hydroelectric --
Conventional................................................... 271,000
Pumped Storage................................................. 565,000
Other........................................................... 18,000
----------
Total Generating Capability..................... 24,084,000
==========
</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) Represents CSPCo's ownership interest in generating units owned in common
with CG&E and DP&L.
(d) I&M plans to close the Breed Plant on March 31, 1994.
(e) Leased from the City of Fort Wayne. Indiana. Since 1975, I&M has leased and
operated the assets of the municipal system of the City of Fort Wayne,
Indiana under a 35-year lease with a provision for an additional 15-year
extension at the election of I&M.
See Item 1 under Fuel Supply, for information concerning coal reserves owned
or controlled by subsidiaries of AEP.
The following table sets forth the total circuit miles of transmission and
distribution lines of the AEP System, APCo, CSPCo, I&M, KEPCo and OPCo and that
portion of the total representing 765,000-volt lines:
<TABLE>
<CAPTION>
TOTAL CIRCUIT MILES
OF TRANSMISSION AND CIRCUIT MILES OF
DISTRIBUTION LINES 765,000-VOLT LINES
-------------------- -------------------
<S> <C> <C>
AEP System (a) 123,357(b) 2,022
APCo 48,190 641
CSPCo (a) 13,937 --
I&M 20,634 614
KEPCo 9,735 258
OPCo 27,941 509
</TABLE>
- --------
(a)Includes jointly owned lines.
(b)Includes lines of other AEP System companies not shown.
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 physical properties of APCo, CSPCo, I&M, KEPCo and OPCo
are subject to the lien of the mortgage and deed of trust securing the first
mortgage bonds of each such company.
39
<PAGE>
SYSTEM TRANSMISSION LINES AND FACILITY SITING
Legislation in the states of Indiana, Kentucky, Michigan, Ohio, 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.
PEAK DEMAND
The AEP System is interconnected through 119 high-voltage transmission
interconnections with 29 neighboring electric utility systems. The all-time and
1993 one-hour peak demands were 25,174,000 and 22,142,000 kilowatts,
respectively, (including 6,459,000 and 4,043,000 kilowatts, respectively, of
scheduled deliveries to unaffiliated systems which the System might, on
appropriate notice, have elected not to schedule for delivery) and occurred on
January 18, 1994 and July 26, 1993, respectively. The net dependable capacity
to serve the System load on such dates, including power available under
contractual obligations, was 24,202,000 and 23,896,000 kilowatts, respectively.
The all-time and 1993 one-hour internal peak demands were 19,236,000 and
18,085,000 kilowatts, respectively, and occurred on January 19, 1994 and July
28, 1993, respectively. The net dependable capacity to serve the System load on
such dates, including power available under contractual arrangements, was
24,202,000 and 23,896,000 kilowatts, respectively. The all-time one-hour
integrated and internal net system peak demands and 1993 peak demands for AEP's
generating subsidiaries are shown in the following tabulation:
<TABLE>
<CAPTION>
ALL-TIME ONE-HOUR INTEGRATED 1993 ONE-HOUR INTEGRATED
NET SYSTEM PEAK DEMAND NET SYSTEM PEAK DEMAND
----------------------------- -----------------------------
(IN THOUSANDS)
NUMBER OF NUMBER OF
KILOWATTS DATE KILOWATTS DATE
----------- ----- ----------- ----
<S> <C> <C> <C> <C>
APCo 8,203 January 19, 1994 6,472 July 7, 1993
CSPCo 3,778 January 18, 1994 3,740 July 9, 1993
I&M 4,700 February 12, 1986 4,312 August 26, 1993
KEPCo 1,575 January 19, 1994 1,340 July 26, 1993
OPCo 7,034 January 18, 1994 6,271 July 26, 1993
<CAPTION>
ALL-TIME ONE-HOUR INTEGRATED 1993 ONE-HOUR INTEGRATED
NET INTERNAL PEAK DEMAND NET INTERNAL PEAK DEMAND
----------------------------- -----------------------------
(IN THOUSANDS)
NUMBER OF NUMBER OF
KILOWATTS DATE KILOWATTS DATE
----------- ----- ----------- ----
<S> <C> <C> <C> <C>
APCo 6,887 January 19, 1994 5,906 February 19, 1993
CSPCo 3,167 August 30, 1993 3,167 August 30, 1993
I&M 3,513 August 17, 1988 3,468 August 27, 1993
KEPCo 1,309 January 19, 1994 1,218 February 19, 1993
OPCo 5,436 January 21, 1994 5,302 August 27, 1993
</TABLE>
HYDROELECTRIC PLANTS
Licenses for hydroelectric plants, issued under the Federal Power Act,
reserve to the United States the right to take over the project at the
expiration of the license term, to issue a new license to another entity, or to
relicense the project to the existing licensee. In the event that a project is
taken over by the United States or licensed to a new licensee, the Federal
Power Act provides for payment to the existing licensee of its "net investment"
plus severance damages. Licenses for six System hydroelectric plants expired in
1993 and applications for new licenses for these plants were filed in 1991. The
existing licenses for these plants were extended on an annual basis and will be
renewed automatically until new licenses are issued. No competing license
applications were filed. One new license was issued in March 1994.
40
<PAGE>
COOK NUCLEAR PLANT
Unit 1 of the Cook Plant, which was placed in commercial operation in 1975,
has a nominal net electric rating of 1,020,000 kilowatts. Unit 1's availability
factor was 100% during 1993 and 64.8% during 1992. Unit 2, of slightly
different design, has a nominal net electrical rating of 1,090,000 kilowatts
and was placed in commercial operation in 1978. Unit 2's availability factor
was 96.6% during 1993 and 19.5% during 1992. The availability of Units 1 and 2
was affected in 1992 by outages to refuel and Unit 2 main turbine/generator
vibrational problems.
Units 1 and 2 are licensed by the NRC to operate at 100% of rated thermal
power to October 25, 2014 and December 23, 2017, respectively.
NUCLEAR INSURANCE
The Price-Anderson Act limits public liability for a nuclear incident at any
nuclear plant in the United States to $9.4 billion. I&M has insurance coverage
for liability from a nuclear incident at its Cook Plant. Such coverage is
provided through a combination of private liability insurance, with the maximum
amount available of $200,000,000, and mandatory participation for the remainder
of the $9.4 billion liability, in an industry retrospective deferred premium
plan which would, in case of a nuclear incident, assess all licensees of
nuclear plants in the U.S. Under the deferred premium plan, I&M could be
assessed up to $158,600,000 payable in annual installments of $20,000,000 in
the event of a nuclear incident at Cook or any other nuclear plant in the U.S.
There is no limit on the number of incidents for which I&M could be assessed
these sums.
I&M also has property damage, decontamination and decommissioning insurance
for loss resulting from damage to the Cook Plant facilities in the amount of
$2.75 billion. Nuclear insurance pools provide $1.265 billion of coverage and
Nuclear Electric Insurance Limited (NEIL) and Energy Insurance Bermuda (EIB)
provide the remainder. If NEIL's and EIB's losses exceed their available
resources, I&M would be subject to a total retrospective premium assessment of
up to $15,327,023. NRC regulations require that, in the event of an accident,
whenever the estimated costs of reactor stabilization and site decontamination
exceed $100,000,000, the insurance proceeds must be used, first, to return the
reactor to, and maintain it in, a safe and stable condition and, second, to
decontaminate the reactor and reactor station site in accordance with a plan
approved by the NRC. The insurers then would indemnify I&M for property damage
up to $2.5 billion less any amounts used for stabilization and decontamination.
The remaining $250,000,000, as provided by NEIL (reduced by any stabilization
and decontamination expenditures over $2.5 billion), would cover
decommissioning costs in excess of funds already collected for decommissioning.
See Fuel Supply--Nuclear Waste.
NEIL's extra-expense program provides insurance to cover extra costs
resulting from a prolonged accidental outage of a nuclear unit. I&M's policy
insures against such increased costs up to approximately $3,500,000 per week
(starting 21 weeks after the outage) for one year, $2,350,000 per week for the
second and third years, or 80% of those amounts per unit if both units are down
for the same reason. If NEIL's losses exceed its available resources, I&M would
be subject to a total retrospective premium assessment of up to $8,929,456.
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 and
costs of replacement power in the event of a nuclear incident at the Cook
Plant. 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 operation and the financial condition of AEP, I&M and other AEP
System companies.
41
<PAGE>
Item 3.LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
In February 1990 the Supreme Court of Indiana overturned an order of the
IURC, affirmed by the Indiana Court of Appeals, which had awarded I&M the right
to serve a General Motors Corporation light truck manufacturing facility
located in Fort Wayne. In August 1990 the IURC issued an order transferring the
right to serve the GM facility to an unaffiliated local distribution utility.
In October 1990 the local distribution utility sued I&M in Indiana under a
provision of Indiana law that allows the local distribution utility to seek
damages equal to the gross revenues received by a utility that renders retail
service in the designated service territory of another utility. On November 30,
1992, the DeKalb Circuit Court granted I&M's motion for summary judgment to
dismiss the local distribution utility's complaint. The local distribution
utility has begun an appeal to the Indiana Court of Appeals. I&M received
revenues of approximately $29,000,000 from serving the GM facility. It is not
clear whether the plaintiffs claim will be upheld on appeal because the service
was rendered in accordance with an IURC order I&M believed in good faith to be
valid.
On April 4, 1991, then Secretary of Labor Lynn Martin announced that the U.S.
Department of Labor ("DOL") had issued a total of 4,710 citations to operators
of 847 coal mines who allegedly submitted respirable dust sampling cassettes
that had been altered so as to remove a portion of the dust. The cassettes were
submitted in compliance with DOL regulations which require systematic sampling
of airborne dust in coal mines and submission of the entire cassettes (which
include filters for collecting dust particulates) to the Mine Safety and Health
Administration ("MSHA") for analysis. The amount of dust contained on the
cassette's filter determines an operator's compliance with respirable dust
standards under the law. OPCo's Meigs No. 2, Meigs No. 31, Martinka, and
Windsor Coal mines received 16, 3, 15 and 2 citations, respectively. MSHA has
assessed civil penalties totalling $56,900 for all these citations. OPCo's
samples in question involve about 1 percent of the 2,500 air samples that OPCo
submitted over a 20-month period from 1989 through 1991 to the DOL. OPCo is
contesting the citations before the Federal Mine Safety and Health Review
Commission. An administrative hearing was held before an administrative law
judge with respect to all affected coal operators. On July 20, 1993, the
administrative law judge rendered a decision in this case holding that the
Secretary of Labor failed to establish that the presence of a "white center" on
the dust sampling filter indicated intentional alteration. The administrative
law judge has set for trial the case of an unaffiliated mine to determine if
there was an intentional alteration of the dust sampling filter. All remaining
cases, including the citations involving OPCo's mines, have been stayed.
On September 21, 1993, CSPCo was served with a complaint issued by Region V,
Federal EPA which alleged violations by Conesville Plant of the Toxic
Substances Control Act and proposed a penalty of $41,000. On October 4, 1993,
I&M was served with a complaint issued by Region V, Federal EPA which alleged
violations by Breed Plant of the Clean Water Act and proposed a penalty of
$70,000. On October 4, 1993, OPCo was served with a complaint issued by Region
V, Federal EPA which alleged violations by OPCo's General Service Center
(Canton, Ohio) of the Toxic Substances Control Act and proposed a penalty of
$24,000. Settlement discussions have been held in each of these cases and it is
expected that these matters will be resolved shortly.
On June 18, 1993, OPCo was served with a complaint issued by Region V,
Federal EPA which alleged violations by Muskingum River Plant of the Toxic
Substances Control Act and proposed a penalty of $87,000. In February 1994,
OPCo paid a penalty of $12,185 and agreed to undertake supplemental
environmental projects in 1994 valued at $61,547.
On February 28, 1994, Ormet Corporation filed a complaint in the U.S.
District Court, Northern District of West Virginia, against AEP, OPCo, the
Service Corporation and two of its employees, Federal EPA and the Administrator
of Federal EPA. Ormet is the operator of a major aluminum reduction plant in
Ohio and is a customer of OPCo. See Certain Industrial Contracts. Pursuant to
the Clean Air Act Amendments of 1990, OPCo received sulfur dioxide emission
allowances for its Kammer Plant. See Environmental and Other
42
<PAGE>
Matters. Ormet's complaint seeks a declaration that it is the owner of
approximately 89% of the Phase I and Phase II allowances issued for use by the
Kammer Plant. OPCo believes that since it is the owner and operator of Kammer
Plant and Ormet is a contract power customer, Ormet is not entitled to any of
the allowances attributable to the Kammer Plant.
See Item 1 for a discussion of certain environmental and rate matters.
Meigs Mine--On July 11, 1993, water from an adjoining sealed and abandoned
mine owned by Southern Ohio Coal Company ("SOCCo"), a mining subsidiary of
OPCo, entered Meigs 31 mine, one of two mines currently being operated by
SOCCo. Ohio EPA approved a plan to pump water from the mine to certain Ohio
River tributaries under stringent conditions for biological and water quality
monitoring and restoring the streams after pumping.
On July 30, pumping commenced in accordance with the Ohio EPA approved plan.
Since September 16, 1993, SOCCo has processed all water removed from the mine
through its expanded treatment system and is in compliance with the effluent
limitations in its water discharge permit. Pumping has removed most of the
water that entered the mine on July 11 and the mine was returned to service in
February 1994.
On July 26, 1993, the Ohio Department of Natural Resources Division of
Reclamation issued an administrative order directing SOCCo to cease pumping due
to that agency's concern over possible environmental harm. On July 26, 1993,
following SOCCo's appeal of the cessation order, the chairman of the
Reclamation Board of Review issued a temporary stay pending a hearing by the
full Reclamation Board. On January 14, 1994, the administrative proceeding was
settled on the basis of agreements by the Division of Reclamation to dismiss
the administrative order and by SOCCo to treat all water removed from the mine
in accordance with its discharge permit and to pay certain expenses of the
Division of Reclamation.
On August 19, 1993, the U.S. District Court for the Southern District of Ohio
granted SOCCo's motion for a preliminary injunction against the Federal Office
of Surface Mining Reclamation and Enforcement ("OSM") and Federal EPA
preventing them from exercising jurisdiction to issue orders to cease pumping.
On August 30, 1993, the U.S. Court of Appeals for the Sixth Circuit denied
OSM's motion for a stay of the District Court's preliminary injunction but
granted Federal EPA's motion for a stay in part which allowed Federal EPA to
investigate and make findings with respect to alleged violations of the Clean
Water Act and thereafter to exercise its enforcement authority under the Clean
Water Act if a violation was identified. On September 2, 1993, Federal EPA
issued an administrative order requiring a partial cessation of pumping, the
effect of which was delayed by Federal EPA until September 8, 1993. On
September 8, 1993, the District Court granted SOCCo's motion requesting that
enforcement of the Federal EPA order be stayed. On September 23, 1993, the
Court of Appeals ruled that the District Court could not review the Federal EPA
order in the absence of a civil enforcement action and lifted the stay. A
further decision of the Court of Appeals with respect to the appeal of the
preliminary injunction is pending.
On January 3, 1994, the District Court held that the complaint filed by SOCCo
should not be dismissed and concluded that sufficient legal and factual grounds
existed for the court to consider SOCCo's claim that Federal EPA could not
override Ohio EPA's authorization for SOCCo to bypass its water treatment
system on an emergency basis during pumping activities. In a separate opinion,
the District Court denied Federal EPA's request that the District Court defer
consideration of SOCCo's motion involving a request for a Declaration of Rights
with respect to the mine water releases into area streams.
The West Virginia Division of Environmental Protection ("West Virginia DEP")
has proposed fining SOCCo $1,800,000 for violations of West Virginia Water
Quality Standards and permitting requirements alleged to have resulted from the
release of mine water into the Ohio River. SOCCo is meeting with the West
Virginia DEP in an attempt to resolve this matter.
Although management is unable to predict what enforcement action Federal EPA
or OSM may take, the resolution of the aforementioned litigation, environmental
mitigation costs and mine restoration costs are not expected to have a material
adverse impact on results of operations or financial condition.
43
<PAGE>
Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------------------------
AEP, APCO, I&M AND OPCO. None.
AEGCO, CSPCO AND KEPCO. Omitted pursuant to Instruction J(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 15, 1994.
<TABLE>
<CAPTION>
NAME AGE OFFICE (A)
---- --- ----------
<C> <C> <S>
E. Linn Draper, Jr... 52 Chairman of the Board, President and Chief
Executive Officer of AEP and of the Service
Corporation
Peter J. DeMaria..... 59 Treasurer of AEP; Executive Vice President-
Administration and Chief Accounting Officer of the
Service Corporation
William J. Lhota..... 54 Executive Vice President of the Service Corporation
A. Joseph Dowd....... 64 Secretary of AEP; Senior Vice President, General
Counsel and Assistant Secretary of the Service
Corporation
Charles A. Ebetino, Senior Vice President-Fuel Supply of the Service
Jr.................. 41 Corporation
Gerald P. Maloney.... 61 Vice President of AEP; Executive Vice President-
Chief Financial Officer of the Service Corporation
James J. Markowsky... 49 Executive Vice President--Engineering &
Construction of the Service Corporation
</TABLE>
- --------
(a) All of the executive officers listed above have been employed by the
Service Corporation or System companies in various capacities (AEP, as
such, has no employees) during the past five years, except E. Linn Draper,
Jr. who was Chairman of the Board, President and Chief Executive Officer of
Gulf States Utilities Company from 1987 until 1992 when he joined AEP and
the Service Corporation. 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
The names of the executive officers of APCo, the positions they hold with
APCo, their ages as of March 15, 1994, and a brief account of their business
experience during the past five years appears below. The directors and
executive officers of APCo are elected annually to serve a one-year term.
<TABLE>
<CAPTION>
NAME AGE POSITION (A) PERIOD
---- --- ------------ ------
<C> <C> <S> <C>
E. Linn Draper, Jr... 52 Director 1992-Present
Chairman of the Board and Chief
Executive Officer 1993-Present
Vice President 1992-1993
Chairman of the Board, President and
Chief Executive Officer of AEP and
the Service Corporation 1993-Present
President of AEP 1992-1993
President and Chief Operating
Officer of the Service Corporation 1992-1993
Chairman of the Board, President and
Chief Executive Officer of Gulf
States Utilities Company 1987-1992
Joseph H. Vipperman.. 53 Director 1985-Present
President and Chief Operating
Officer 1990-Present
Executive Vice President 1989-1990
Vice President 1985-1989
Executive Vice President-Operations
of the Service Corporation 1984-1989
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION (A) PERIOD
---- --- ------------ ------
<C> <C> <S> <C>
Peter J. DeMaria......... 59 Director 1988-Present
Vice President 1991-Present
Treasurer 1978-Present
Treasurer of AEP 1978-Present
Executive Vice President-
Administration and Chief
Accounting Officer of the
Service Corporation 1984-Present
Treasurer of the Service
Corporation 1989-1990
A. Joseph Dowd........... 64 Director and Vice President 1977-Present
Secretary of AEP 1974-Present
Senior Vice President and General
Counsel of the Service
Corporation 1975-Present
Assistant Secretary of the
Service Corporation 1969-Present
William J. Lhota......... 54 Director 1990-Present
Vice President 1989-Present
Executive Vice President of the
Service Corporation 1993-Present
Executive Vice President-
Operations of the Service
Corporation 1989-1993
President and Chief Operating
Officer of CSPCo 1987-1989
Gerald P. Maloney........ 61 Director and Vice President 1970-Present
Vice President of AEP 1974-Present
Executive Vice President-Chief
Financial Officer of the Service
Corporation 1991-Present
Senior Vice President-Finance of
the Service Corporation 1974-1990
James J. Markowsky....... 49 Director 1993-Present
Executive Vice President-
Engineering and Construction of
the Service Corporation 1993-Present
Senior Vice President and Chief
Engineer of the Service
Corporation 1988-1993
Senior Vice President-Fuel Supply
Charles A. Ebetino, Jr. . 41 of the Service Corporation 1993-Present
Vice President-Fuel Procurement
and Transportation of the
Service Corporation 1990-1993
Managing Director-Coal
Procurement of the Service
Corporation 1986-1990
</TABLE>
- --------
(a)Positions are with APCo unless otherwise indicated.
OPCO
The names of the executive officers of OPCo, the positions they hold with
OPCo, their ages as of March 15, 1994, and a brief account of their business
experience during the past five years appear below. The directors and executive
officers of OPCo are elected annually to serve a one-year term.
<TABLE>
<CAPTION>
NAME AGE POSITION (A) PERIOD
---- --- ------------ ------
<C> <C> <S> <C>
E. Linn Draper, Jr. . 52 Director 1992-Present
Chairman of the Board and Chief
Executive Officer 1993-Present
Vice President 1992-1993
Chairman of the Board, President and
Chief Executive Officer of AEP and
the Service Corporation 1993-Present
President of AEP 1992-1993
President and Chief Operating
Officer of the Service Corporation 1992-1993
Chairman of the Board, President and
Chief Executive Officer of Gulf
States Utilities Company 1987-1992
Director, President and Chief
Carl A. Erikson...... 43 Operating Officer 1993-Present
Vice President 1990-1992
Vice President of the Service
Corporation and Executive Assistant
to E. Linn Draper, Jr. 1992-Present
Assistant to Executive Vice
President-Operations of the Service
Corporation 1989-1990
Peter J. DeMaria..... 59 Director and Treasurer 1978-Present
Vice President 1991-Present
Treasurer of AEP 1978-Present
Executive Vice President-
Administration and Chief Accounting
Officer of the Service Corporation 1984-Present
Treasurer of the Service Corporation 1989-1990
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION (A) PERIOD
---- --- ------------ ------
<C> <C> <S> <C>
A. Joseph Dowd....... 64 Director and Vice President 1977-Present
Secretary of AEP 1974-Present
Senior Vice President and General
Counsel of the Service Corporation 1975-Present
Assistant Secretary of the Service
Corporation 1969-Present
William J. Lhota..... 54 Director and Vice President 1989-Present
Executive Vice President of the
Service Corporation 1993-Present
Executive Vice President-Operations
of the Service Corporation 1989-1993
President and Chief Operating
Officer of CSPCo 1987-1989
Gerald P. Maloney.... 61 Director 1973-Present
Vice President 1970-Present
Vice President of AEP 1974-Present
Executive Vice President-Chief
Financial Officer of the Service
Corporation 1991-Present
Senior Vice President-Finance of the
Service Corporation 1974-1990
James J.Markowsky.... 49 Director 1989-Present
Executive Vice President-Engineering
and Construction of the Service
Corporation 1993-Present
Senior Vice President and Chief
Engineer of the Service Corporation 1988-1993
Charles A. Ebertino, Senior Vice President-Fuel Supply of
Jr.................. 41 the Service Corporation 1993-Present
Vice President-Fuel Procurement and
Transportation of the Service
Corporation 1990-1993
Managing Director-Coal Procurement
of the Service Corporation 1986-1990
</TABLE>
- --------
(a)Positions are with OPCo unless otherwise indicated.
46
<PAGE>
PART II
---------------------------------------------------------------------
Item 5.MARKET FOR REGISTRANTS' COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
AEP. AEP Common Stock is traded principally on the New York Stock Exchange.
The following table sets forth for the calendar periods indicated the high and
low sales prices for the Common Stock as reported on the New York Stock
Exchange Composite Tape and the amount of cash dividends paid per share of
Common Stock.
<TABLE>
<CAPTION>
PER SHARE
---------------
QUARTER ENDED MARKET PRICE
- ------------- ---------------
HIGH LOW DIVIDEND(1)
------- ------- -----------
<S> <C> <C> <C>
March 1992.......................................... $34 1/4 $30 3/8 $.60
June 1992........................................... 32 5/8 30 3/8 .60
September 1992...................................... 35 1/4 31 3/4 .60
December 1992....................................... 33 3/8 30 3/4 .60
March 1993.......................................... 37 32 .60
June 1993........................................... 38 1/2 33 3/8 .60
September 1993...................................... 40 3/8 37 1/4 .60
December 1993....................................... 39 5/8 34 5/8 .60
</TABLE>
- --------
(1) See Note 5 of the Notes to the Consolidated Financial Statements of AEP for
information regarding restrictions on payment of dividends.
At December 31, 1993, AEP had approximately 194,000 shareholders of record.
AEGCO, APCO, CSPCO, I&M, KEPCO AND OPCO. The information required by this
item is not applicable as the common stock of all these companies is held
solely by AEP.
Item 6.SELECTED FINANCIAL DATA
- --------------------------------------------------------------------------------
AEGCO. Omitted pursuant to Instruction J(2)(a).
AEP. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the AEP
1993 Annual Report (for the fiscal year ended December 31, 1993).
APCO. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the
APCo 1993 Annual Report (for the fiscal year ended December 31, 1993).
CSPCO. Omitted pursuant to Instruction J(2)(a).
I&M. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the I&M
1993 Annual Report (for the fiscal year ended December 31, 1993).
KEPCO. Omitted pursuant to Instruction J(2)(a).
OPCO. The information required by this item is incorporated herein by
reference to the material under Selected Consolidated Financial Data in the
OPCo 1993 Annual Report (for the fiscal year ended December 31, 1993).
47
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
- --------------------------------------------------------------------------------
AEGCO. Omitted pursuant to Instruction J(2)(a). Management's narrative
analysis of the results of operations and other information required by
Instruction J(2)(a) is incorporated herein by reference to the material under
Management's Narrative Analysis of Results of Operations in the AEGCo 1993
Annual Report (for the fiscal year ended December 31, 1993).
AEP. 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 Financial Condition in the AEP 1993 Annual Report (for the
fiscal year ended December 31, 1993).
APCO. 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 Financial Condition in the APCo 1993 Annual Report (for the
fiscal year ended December 31, 1993).
CSPCO. Omitted pursuant to Instruction J(2)(a). Management's narrative
analysis of the results of operations and other information required by
Instruction J(2)(a) is incorporated herein by reference to the material under
Management's Narrative Analysis of Results of Operations in the CSPCo 1993
Annual Report (for the fiscal year ended December 31, 1993).
I&M. 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 Financial Condition in the I&M 1993 Annual Report (for the
fiscal year ended December 31, 1993).
KEPCO. Omitted pursuant to Instruction J(2)(a). Management's narrative
analysis of the results of operations and other information required by
Instruction J(2)(a) is incorporated herein by reference to the material under
Management's Narrative Analysis of Results of Operations in the KEPCo 1993
Annual Report (for the fiscal year ended December 31, 1993).
OPCO. 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 Financial Condition in the OPCo 1993 Annual Report (for the
fiscal year ended December 31, 1993).
Item 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- --------------------------------------------------------------------------------
AEGCO. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
AEP. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
APCO. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
CSPCO. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
I&M. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
48
<PAGE>
KEPCO. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
OPCO. The information required by this item is incorporated herein by
reference to the financial statements and supplementary data described under
Item 14 herein.
Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------
AEGCO, AEP, APCO, CSPCO, I&M, KEPCO AND OPCO. None.
49
<PAGE>
PART III --------------------------------------------------------------------
Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
- --------------------------------------------------------------------------------
AEGCO. Omitted pursuant to Instruction J(2)(c).
AEP. The information required by this item is incorporated herein by
reference to the material under Nominees for Director and Share Ownership of
Directors and Executive Officers of the definitive proxy statement of AEP,
dated March 10, 1994, for the 1994 annual meeting of shareholders. Reference
also is made to the information under the caption Executive Officers of the
Registrants in Part I of this report.
APCO. 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 1994 annual meeting of stockholders, to
be filed within 120 days after December 31, 1993. Reference also is made to the
information under the caption Executive Officers of the Registrants in Part I
of this report.
CSPCO. Omitted pursuant to Instruction J(2)(c).
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 15, 1994, and a brief account of
their business experience during the past five years appear below. The
directors and executive officers of I&M are elected annually to serve a one-
year term.
<TABLE>
<CAPTION>
NAME AGE POSITION (A)(B)(C) PERIOD
---- --- ------------------ ------
<C> <C> <S> <C>
E. Linn Draper, Jr. . 52 Director 1992-Present
Chairman of the Board and Chief 1993-Present
Executive Officer
Vice President 1992-1993
Chairman of the Board, President and 1993-Present
Chief Executive Officer of AEP
and of the Service Corporation
President of AEP 1992-1993
President and Chief Operating 1992-1993
Officer of the Service Corporation
Chairman of the Board, President and 1987-1992
Chief Executive Officer of Gulf
States Utilities Company
Richard C. Menge..... 58 Director 1976-Present
President and Chief Operating 1989-Present
Officer
Mark A. Bailey....... 41 Director and Vice President 1989-Present
Peter J. DeMaria..... 59 Director 1992-Present
Vice President 1991-Present
Treasurer 1978-Present
Treasurer of AEP 1978-Present
Executive Vice President- 1984-Present
Administration and Chief Accounting
Officer of the Service Corporation
Treasurer of the Service Corporation 1989-1990
William N. D'Onofrio. 45 Director and Vice President 1984-Present
A. Joseph Dowd....... 64 Director 1993-Present
Vice President 1977-Present
Secretary of AEP 1974-Present
Senior Vice President and General 1975-Present
Counsel of the Service Corporation
Assistant Secretary of the Service 1969-Present
Corporation
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION (A)(B)(C) PERIOD
---- --- ------------------ ------
<C> <C> <S> <C>
William J. Lhota..... 54 Director and Vice President 1989-Present
Executive Vice President of the 1993-Present
Service Corporation
Executive Vice President-Operations 1989-1993
of the Service Corporation
Gerald P. Maloney.... 61 Director 1978-Present
Vice President 1970-Present
Vice President of AEP 1974-Present
Executive Vice President-Chief 1991-Present
Financial Officer of the Service
Corporation
Senior Vice President-Finance of the 1974-1990
Service Corporation
R. E. Prater......... 43 Director 1993-Present
Division Manager 1989-Present
D. B. Synowiec....... 50 Director 1993-Present
Plant Manager 1990-1993
Assistant Plant Manager 1983-1990
W. E. Walters........ 46 Director 1991-Present
Executive Assistant to President 1987-Present
Charles A. Ebetino, Senior Vice President-Fuel Supply of 1993-Present
Jr. ................. 41 the Service Corporation
Vice President-Fuel Procurement & 1990-1993
Transportation of the Service
Corporation
Managing Director-Coal Procurement 1986-1990
of the Service Corporation
Vice President 1993-Present
James J. Markowsky... 49 Executive Vice President-Engineering 1993-Present
& Construction of the Service
Corporation
Senior Vice President and Chief 1988-1993
Engineer of the Service Corporation
</TABLE>
- --------
(a)Positions are with I&M unless otherwise indicated.
(b)Dr. Draper is a director of Pacific Nuclear Systems, Inc. and Mr. Lhota is
a director of Huntington Bancshares Incorporated.
(c)Messrs. DeMaria, Dowd, Draper, Lhota and Maloney are directors of AEGCo,
APCo, CSPCo, KEPCo and OPCo. Messrs. DeMaria, Dowd, Draper and Maloney are
also directors of AEP.
KEPCO. Omitted pursuant to Instruction J(2)(c).
OPCO. The information required by this item is incorporated herein by
reference to the material under the heading Election of Directors of the
definitive information statement of OPCo for the 1994 annual meeting of
shareholders, to be filed within 120 days after December 31, 1993. Reference
also is made to the information under the caption Executive Officers of the
Registrants in Part I of this report.
Item 11.EXECUTIVE COMPENSATION
- -------------------------------------------------------------------------------
AEGCO. Omitted pursuant to Instruction J(2)(c).
AEP. The information required by this item is incorporated herein by
reference to the material under Compensation of Directors, Executive
Compensation and the performance graph of the definitive proxy statement of
AEP, dated March 10, 1994, for the 1994 annual meeting of shareholders.
APCO. The information required by this item is incorporated herein by
reference to the material under Executive Compensation of the definitive
information statement of APCo for the 1994 annual meeting of stockholders, to
be filed within 120 days after December 31, 1993.
CSPCO. Omitted pursuant to Instruction J(2)(c).
KEPCO. Omitted pursuant to Instruction J(2)(c).
51
<PAGE>
OPCO. The information required by this item is incorporated herein by
reference to the material under Executive Compensation of the definitive
information statement of OPCo for the 1994 annual meeting of shareholders, to
be filed within 120 days after December 31, 1993.
I&M Certain executive officers of I&M are employees of the Service
Corporation. The salaries of these executive officers are paid by the Service
Corporation and a portion of their salaries has been allocated and charged to
I&M. The following table shows for 1993, 1992 and 1991 the compensation earned
from all AEP System companies by (i) the chief executive officer and four
other most highly compensated executive officers (as defined by regulations of
the SEC) of I&M at December 31, 1993 and (ii) a chief executive officer and
executive officer, both of whom retired in 1993.
Summary Compensation Table
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------
ALL OTHER
SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2)
--------------------------- ---- ------- ------- ------------
<S> <C> <C> <C> <C>
E. LINN DRAPER, JR.--Chairman of the board 1993 538,333 148,742 18,180
and chief executive officer of I&M; chairman 1992 395,833 8,730 63,700
of the board, president and chief executive
officer of AEP and the Service Corporation;
chairman of the board and chief executive
officer of other AEP System companies (3)
RICHARD E. DISBROW--Chairman of the board and 1993 200,000 55,260 102,753
chief executive officer of I&M, AEP, the 1992 600,000 13,234 17,676
Service Corporation and other AEP System 1991 540,000 86,994 17,272
companies (3)
PETER J. DEMARIA--Vice president, treasurer 1993 280,000 77,364 17,811
and director of I&M; treasurer and director 1992 273,000 6,021 15,576
of AEP; executive vice president- 1991 258,000 41,564 14,987
administration and chief accounting officer
and director of the Service Corporation;
vice president, treasurer and director of
other AEP System companies
JOHN E. KATLIC--Senior vice president-fuel 1993 279,167 74,677 45,452
supply and director of the Service 1992 325,000 6,400 9,396
Corporation; president, chief operating 1991 300,000 38,419 9,402
officer and director of coal mining
subsidiaries (retired October 31, 1993)
G. P. MALONEY--Vice president and director of 1993 269,000 74,325 18,000
I&M; vice president of AEP; executive vice 1992 261,000 5,757 17,036
president-chief financial officer and 1991 246,000 39,631 16,662
director of the Service Corporation; vice
president and director of other AEP System
companies
A. JOSEPH DOWD--Vice president and director 1993 268,000 61,707 15,760
of I&M; secretary and director of AEP; 1992 260,000 4,779 13,876
senior vice president, general counsel, 1991 245,000 32,891 14,002
assistant secretary and director of the
Service Corporation; vice president and
director of other AEP System companies
WILLIAM J. LHOTA--Vice president and director 1993 249,000 68,799 17,160
of I&M; executive vice president and 1992 230,000 5,073 15,116
director of the Service Corporation; vice 1991 210,000 33,831 14,385
president and director of other AEP System
companies
</TABLE>
- --------
(1) Reflects payments under the AEP Management Incentive Compensation Plan
("MICP") in which individuals in key management positions with AEP System
companies participate. Amounts for 1993 are estimates but should not
change significantly. For 1991 and 1993, these amounts included both cash
paid and a portion deferred in the form of restricted stock units. These
units are paid out in cash after three years based on the price of AEP
Common Stock at that time. Dividend equivalents are paid during the three-
year period. At December 31, 1993, Dr. Draper and Messrs. DeMaria,
Maloney, Dowd and Lhota held 813, 746, 715, 593 and 639 units having a
value of $30,177, $27,701, $26,526, $22,020 and $23,730, respectively,
based upon a $37 1/8 per share closing price of AEP's Common Stock as
reported on the New York Stock Exchange. For 1992, MICP payments were made
entirely in cash.
52
<PAGE>
(2) Includes amounts contributed by AEP System companies under the American
Electric Power System Employees Savings Plan on behalf of their employee
participants. For 1993 this amount was $7,075 for Dr. Draper and Messrs.
Katlic, Maloney, Dowd and Lhota and $6,000 for Mr. Disbrow and $7,006 for
Mr. DeMaria. The AEP System Savings Plan is available to all employees of
AEP System companies (except for employees covered by certain collective
bargaining agreements) who have met minimum service requirements.
Includes director's fees for AEP System companies. For 1993 these fees were:
Dr. Draper, $11,105; Mr. Disbrow, $3,580; Mr. DeMaria, $10,805; Mr. Katlic,
$2,300; Mr. Maloney, $10,925; Mr. Dowd, $8,685; and Mr. Lhota, $10,085.
Includes payments of $93,173 and $36,077 for unused accrued vacation which
Messrs. Disbrow and Katlic, respectively, received upon their retirement.
(3) Dr. Draper was elected chairman of the board and chief executive officer
of I&M and other AEP System companies and chairman of the board, president
and chief executive officer of AEP and the Service Corporation, succeeding
Mr. Disbrow, who retired, effective April 28, 1993.
Retirement Benefits
The American Electric Power System Retirement Plan provides pensions for all
employees of AEP System companies (except for employees covered by certain
collective bargaining agreements), including the executive officers of I&M.
The Retirement Plan is a noncontributory defined benefit plan.
The following table shows the approximate annual annuities under the
Retirement Plan that would be payable to employees in certain higher salary
classifications, assuming retirement at age 65 after various periods of
service. The amounts shown in the table are the straight life annuities
payable under the Plan without reduction for the joint and survivor annuity.
Retirement benefits listed in the table are not subject to any deduction for
Social Security or other offset amounts. The retirement annuity is reduced 3%
per year in the case of retirement between ages 60 and 62 and further reduced
6% per year in the case of retirement between ages 55 and 60. If an employee
retires after age 62, there is no reduction in the retirement annuity.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF ACCREDITED SERVICE
-----------------------------------------------------
HIGHEST AVERAGE
ANNUAL EARNINGS 15 20 25 30 35 40
- --------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$250,000................. $ 58,155 $ 77,540 $ 96,925 $116,310 $135,695 $152,230
350,000................. 82,155 109,540 136,925 164,310 191,695 214,970
450,000................. 106,155 141,540 176,925 212,310 247,695 277,620
550,000................. 130,155 173,540 216,925 260,310 303,695 340,270
700,000................. 166,155 221,540 276,925 332,310 387,695 434,245
</TABLE>
Compensation upon which retirement benefits are based consists of the
average of the 36 consecutive months of the employee's highest salary, as
listed in the Summary Compensation Table, out of the employee's most recent 10
years of service. With respect to Messrs. Disbrow and Katlic, since they
retired in 1993, the amounts of $600,000 and $316,944, respectively, are the
actual salaries upon which their retirement benefits are based. Mr. Disbrow's
retirement benefit was enhanced by computing his benefit based on his 1992
base salary. As of December 31, 1993, the number of full years of service
credited under the Retirement Plan to each of the executive officers of I&M
named in the Summary Compensation Table were as follows: Dr. Draper, 1 year;
Mr. Disbrow, 39 years; Mr. DeMaria, 34 years; Mr. Katlic, 10 years; Mr.
Maloney, 38 years; Mr. Dowd, 31 years; and Mr. Lhota, 29 years.
Dr. Draper's employment agreement described below provides him with a
supplemental retirement annuity that credits him with 24 years of service in
addition to his years of service credited under the Retirement Plan less his
actual pension entitlement under the Retirement Plan and any pension
entitlements from prior employers.
53
<PAGE>
Mr. Katlic has a contract with the Service Corporation under which the
Service Corporation agrees to provide him with a supplemental retirement
annuity equal to the annual pension that Mr. Katlic would have received with
service of 30 years under the AEP System Retirement Plan as then in effect,
less his actual annual pension entitlement under the Retirement Plan. Mr.
Katlic commenced receiving his supplemental annuity upon his retirement
effective October 31, 1993.
AEP has determined to pay supplemental retirement benefits to 23 AEP System
employees (including Messrs. Disbrow, DeMaria, Maloney and Lhota) whose
pensions may be adversely affected by amendments to the Retirement Plan made as
a result of the Tax Reform Act of 1986. Such payments, if any, will be equal to
any reduction occurring because of such amendments. Upon his retirement on
April 28, 1993, Mr. Disbrow began receiving an annual supplemental benefit of
$2,642. Assuming retirement of the remaining eligible employees in 1994, none
would be eligible to receive supplemental benefits.
AEP made available a voluntary deferred-compensation program in 1982 and
1986, which permitted certain executive employees of AEP System companies to
defer receipt of a portion of their salaries. Under this program, an executive
was able to defer up to 10% or 15% annually (depending on the terms of the
program offered), over a four-year period, of his or her salary, and receive
supplemental retirement or survivor benefit payments over a 15-year period. The
amount of supplemental retirement payments received is dependent upon the
amount deferred, age at the time the deferral election was made, and number of
years until the executive retires. The following table sets forth, for the
executive officers named in the Summary Compensation Table, the amounts of
annual deferrals and, assuming retirement at age 65, annual supplemental
retirement payments under the 1982 and 1986 programs.
<TABLE>
<CAPTION>
1982 PROGRAM 1986 PROGRAM
------------------------- -------------------------
ANNUAL ANNUAL AMOUNT OF ANNUAL ANNUAL AMOUNT OF
AMOUNT SUPPLEMENTAL AMOUNT SUPPLEMENTAL
DEFERRED RETIREMENT DEFERRED RETIREMENT
(4-YEAR PAYMENT (4-YEAR PAYMENT
NAME PERIOD) (15-YEAR PERIOD) PERIOD) (15-YEAR PERIOD)
- ---- -------- ---------------- -------- ----------------
<S> <C> <C> <C> <C>
Mr. Disbrow................. $15,000 $54,375 -- --
Mr. DeMaria................. 10,000 52,000 $13,000 $53,300
Mr. Katlic.................. 15,000 24,500 -- --
Mr. Maloney................. 15,000 67,500 16,000 56,400
Mr. Dowd.................... 10,000 34,000 10,000 25,500
</TABLE>
Employment Agreement
Dr. Draper has a contract with AEP and the Service Corporation which provides
for his employment for an initial term from no later than March 15, 1992 until
March 15, 1997. Dr. Draper commenced his employment with AEP and the Service
Corporation on March 1, 1992. AEP or the Service Corporation may terminate the
contract at any time and, if this is done for reasons other than cause and
other than as a result of Dr. Draper's death or permanent disability, the
Service Corporation must pay Dr. Draper's then base salary through March 15,
1997, less any amounts received by Dr. Draper from other employment.
--------------
Directors of I&M receive a fee of $100 for each meeting of the Board of
Directors attended in addition to their salaries.
--------------
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, transportation and handling of fuel, sales or rentals of property
and interest or dividend payments on the securities held by the companies'
respective parents.
54
<PAGE>
Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- -------------------------------------------------------------------------------
AEGCO. Omitted pursuant to Instruction J(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, dated March 10, 1994, for
the 1994 annual meeting of shareholders.
APCO. 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 1994 annual
meeting of stockholders, to be filed within 120 days after December 31, 1993.
CSPCO. Omitted pursuant to Instruction J(2)(c).
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.
The table below shows the number of shares of AEP Common Stock that were
beneficially owned, directly or indirectly, as of December 31, 1993, 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 set forth opposite his
name. Fractions of shares have been rounded to the nearest whole share.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP (A)
------------------------
<S> <C>
Mark A. Bailey................................. 594
Peter J. DeMaria............................... 5,789(b)(c)
Richard E. Disbrow............................. 9,822(b)
William N. D'Onofrio........................... 2,948
A. J. Dowd..................................... 4,707
E. Linn Draper, Jr............................. 951(b)
J. E. Katlic................................... 2,290
William J. Lhota............................... 6,673(b)(c)
Gerald P. Maloney.............................. 4,227(b)(c)
Richard C. Menge............................... 2,652(b)
R. E. Prater................................... 1,609
D. B. Synowiec................................. 1,808
W. E. Walters.................................. 3,729
All directors and executive officers as a group
(13 persons).................................. 125,076(c)(d)
</TABLE>
- --------
(a) The amounts include shares held by the trustee of the AEP Employees
Savings Plan, over which directors, nominees and executive officers have
voting power, but the investment/disposition power is subject to the terms
of such Plan, as follows: Mr. Bailey, 550 shares; Mr. DeMaria, 2,081
shares; Mr. Disbrow, 4,027 shares; Mr. D'Onofrio, 2,889 shares; Mr.
Katlic, 2,230 shares; Mr. Lhota, 5,245 shares; Mr. Maloney, 2,142 shares;
Mr. Menge, 2,566 shares; Mr. Prater, 1,561 shares; Mr. Synowiec, 1,754
shares; Mr. Walters, 3,685 shares; and all directors and executive
officers as a group, 33,806 shares. Messrs. Disbrow's, Dowd's and
Maloney's holdings include 85 shares each; Messrs. Bailey's, DeMaria's,
D'Onofrio's, Katlic's, Lhota's, Menge's, Prater's, Synowiec's, and
Walter's holdings include 44, 83, 59, 60, 60, 62, 48, 53 and 45 shares,
respectively; and the holdings of all directors and executive officers as
a group include 738 shares, each held by the trustee of the AEP Employee
Stock Ownership Plan, over which shares such persons have sole voting
power, but the investment/disposition power is subject to the terms of
such Plan.
55
<PAGE>
(b) Includes shares with respect to which such directors, nominees and
executive officers share voting and investment power as follows: Mr.
DeMaria, 3,624 shares; Mr. Disbrow, 283 shares; Mr. Draper, 115 shares;
Mr. Lhota, 1,368 shares; Mr. Maloney, 2,000 shares; Mr. Menge, 24 shares;
and all directors and executive officers as a group, 7,883 shares. Mr.
DeMaria disclaims beneficial ownership of 807 shares.
(c) 85,231 shares in the American Electric Power System Educational Trust
Fund, over which Messrs. DeMaria, Lhota and Maloney share voting and
investment power as trustees (they disclaim beneficial ownership of such
shares), are not included in their individual totals, but are included in
the group total.
(d) Represents less than 1 percent of the total number of shares outstanding
on December 31, 1993.
KEPCO. Omitted pursuant to Instruction J(2)(c).
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 statement of OPCo for the 1994 annual
meeting of shareholders, to be filed within 120 days after December 31, 1993.
Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------------------------------
AEP. The information required by this item is incorporated herein by
reference to the material under Transactions With Management of the definitive
proxy statement of AEP, dated March 10, 1994, for the 1994 annual meeting of
shareholders.
APCO, I&M AND OPCO. None.
AEGCO, CSPCO, AND KEPCO. Omitted pursuant to Instruction J(2)(c).
56
<PAGE>
PART IV -------------------------------------------------------------------
Item 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- --------------------------------------------------------------------------------
(a) The following documents are filed as a part of this report:
<TABLE>
<S> <C>
1. Financial Statements: PAGE
----
The following financial statements have been incorporated herein by
reference pursuant to Item 8.
AEGCo:
Independent Auditors' Report; Statements of Income for the years ended
December 31, 1993, 1992 and 1991; Statements of Retained Earnings for
the years ended December 31, 1993, 1992 and 1991; Balance Sheets as
of December 31, 1993 and 1992; Statements of Cash Flows for the years
ended December 31, 1993, 1992 and 1991; Notes to Financial
Statements.
AEP and its subsidiaries consolidated:
Consolidated Statements of Income for the years ended December 31,
1993, 1992 and 1991; Consolidated Statements of Retained Earnings for
the years ended December 31, 1993, 1992 and 1991; Consolidated
Statements of Cash Flows for the years ended December 31, 1993, 1992
and 1991; Consolidated Balance Sheets as of December 31, 1993 and
1992; Notes to Consolidated Financial Statements; Schedule of
Cumulative Preferred Stocks of Subsidiaries at December 31, 1993 and
1992; Schedule of Consolidated Long-term Debt Outstanding at December
31, 1993 and 1992; Independent Auditors' Report.
APCo:
Independent Auditors' Report; Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991; Consolidated Balance
Sheets as of December 31, 1993 and 1992; Consolidated Statements of
Cash Flows for the years ended December 31, 1993, 1992 and 1991;
Consolidated Statements of Retained Earnings for the years ended
December 31, 1993, 1992 and 1991; Notes to Consolidated Financial
Statements.
CSPCo:
Independent Auditors' Report; Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991; Consolidated Balance
Sheets as of December 31, 1993 and 1992; Consolidated Statements of
Cash Flows for the years ended December 31, 1993, 1992 and 1991;
Consolidated Statements of Retained Earnings for the years ended
December 31, 1993, 1992 and 1991; Notes to Consolidated Financial
Statements.
I&M:
Independent Auditors' Report; Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991; Consolidated Balance
Sheets as of December 31, 1993 and 1992; Consolidated Statements of
Cash Flows for the years ended December 31, 1993, 1992 and 1991;
Consolidated Statements of Retained Earnings for the years ended
December 31, 1993, 1992 and 1991; Notes to Consolidated Financial
Statements.
KEPCo:
Independent Auditors' Report; Statements of Income for the years ended
December 31, 1993, 1992 and 1991; Statements of Retained Earnings for
the years ended December 31, 1993, 1992 and 1991; Statements of Cash
Flows for the years ended December 31, 1993, 1992 and 1991; Balance
Sheets as of December 31, 1993 and 1992; Notes to Financial
Statements.
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
OPCo:
Independent Auditors' Report; Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991; Consolidated Balance
Sheets as of December 31, 1993 and 1992; Consolidated Statements of
Cash Flows for the years ended December 31, 1993, 1992 and 1991;
Consolidated Statements of Retained Earnings for the years ended
December 31, 1993, 1992 and 1991; Notes to Consolidated Financial
Statements.
2. Financial Statement Schedules:
Financial Statement Schedules are listed in the Index to 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.)...... S-1
Independent Auditors' Report............................................. S-2
3. Exhibits:
Exhibits for AEGCo, AEP, APCo, CSPCo, I&M, KEPCo and OPCo are listed in
the Exhibit Index and are incorporated herein by reference.............. E-1
</TABLE>
(b) No Reports on Form 8-K were filed during the quarter ended December 31,
1993.
58
<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
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
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.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. President, Chief
Executive Officer
and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Vice President, March 23, 1994
- ------------------------------------- Treasurer and
(P. J. DEMARIA) Director
(IV) A MAJORITY OF THE DIRECTORS:
*A. Joseph Dowd
*Henry Fayne
*John R. Jones, III
*Wm. J. Lhota
*James J. Markowsky
/s/ G. P. Maloney
*By:
---------------------------------- March 23, 1994
(G. P. MALONEY, ATTORNEY-IN-FACT)
59
<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/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
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.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the
Board, President,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Treasurer and March 23, 1994
- ------------------------------------- Director
(P. J. DEMARIA)
(IV) A MAJORITY OF THE DIRECTORS:
*A. Joseph Dowd
*Robert M. Duncan
*Arthur G. Hansen
*Lester A. Hudson, Jr.
*Angus E. Peyton
*Toy F. Reid
*W. Ann Reynolds
*Linda Gillespie Stuntz
*Morris Tanenbaum
*Ann Haymond Zwinger
*By: /s/ G. P. Maloney
---------------------------------- March 23, 1994
(G. P. MALONEY, ATTORNEY-IN-FACT)
60
<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.
Appalachian Power Company
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
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.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Vice President, March 23, 1994
- ------------------------------------- Treasurer and
(P. J. DEMARIA) Director
(IV) A MAJORITY OF THE DIRECTORS:
*A. Joseph Dowd
*Luke M. Feck
*Wm. J. Lhota
*James J. Markowsky
*J. H. Vipperman
*By: /s/ G. P. Maloney
---------------------------------- March 23, 1994
(G. P. MALONEY, ATTORNEY-IN-FACT)
61
<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.
Columbus Southern Power Company
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
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.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
Vice President, March 23, 1994
/s/ P. J. DeMaria Treasurer and
- ------------------------------------- Director
(P. J. DEMARIA)
(IV) A MAJORITY OF THE DIRECTORS:
*A. Joseph Dowd
*C. A. Erikson
*Henry Fayne
*Wm. J. Lhota
*James J. Markowsky
*By: /s/ G. P. Maloney
---------------------------------- March 23, 1994
(G. P. MALONEY, ATTORNEY-IN-FACT)
62
<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/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
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.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Vice President, March 23, 1994
- ------------------------------------- Treasurer and
(P. J. DEMARIA) Director
(IV) A MAJORITY OF THE DIRECTORS:
*Mark A. Bailey
*W. N. D'Onofrio
*A. Joseph Dowd
*Wm. J. Lhota
*Richard C. Menge
*R. E. Prater
*D. B. Synowiec
*W. E. Walters
*By: /s/ G. P. Maloney March 23, 1994
----------------------------------
(G. P. MALONEY, ATTORNEY-IN-FACT)
63
<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.
Kentucky Power Company
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
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.
SIGNATURE TITLE DATE
--------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Vice President, March 23, 1994
- ------------------------------------- Treasurer and
(P. J. DEMARIA) Director
(IV) A MAJORITY OF THE DIRECTORS:
*C. R. Boyle, III
*A. Joseph Dowd
*Wm. J. Lhota
*Ronald A. Petti
*By: /s/ G. P. Maloney
--------------------------------- March 23, 1994
(G. P. MALONEY, ATTORNEY-IN-FACT)
64
<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.
Ohio Power Company
By: /s/ G. P. Maloney
---------------------------------
(G. P. MALONEY, VICE PRESIDENT)
Date: March 23, 1994
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.
SIGNATURES TITLE DATE
---------- ----- ----
(I) PRINCIPAL EXECUTIVE OFFICER:
*E. Linn Draper, Jr. Chairman of the Board,
Chief Executive
Officer and Director
(II) PRINCIPAL FINANCIAL OFFICER:
/s/ G. P. Maloney Vice President and March 23, 1994
- ------------------------------------- Director
(G. P. MALONEY)
(III) PRINCIPAL ACCOUNTING OFFICER:
/s/ P. J. DeMaria Vice President, March 23, 1994
- ------------------------------------- Treasurer and
(P. J. DEMARIA) Director
(IV) A MAJORITY OF THE DIRECTORS:
*A. Joseph Dowd
*C. A. Erikson
*Henry Fayne
*Wm. J. Lhota
*James J. Markowsky
*By: /s/ G. P. Maloney March 23, 1994
----------------------------------
(G. P. MALONEY, ATTORNEY-IN-FACT)
65
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
----
<C> <C> <S> <C>
INDEPENDENT AUDITORS' REPORT.............................................. S-2
The following financial statement schedules for the years ended December
31, 1993, 1992 and
1991 are included in this report on the pages indicated.
<CAPTION>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES
<C> <C> <S> <C>
Schedule V -- Property, Plant and Equipment........................ S-3
Schedule VI -- Accumulated Depreciation and Amortization
of Property, Plant and Equipment..................... S-4
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-5
Schedule IX -- Short-term Borrowings................................ S-6
AEP GENERATING COMPANY
Schedule V -- Property, Plant and Equipment........................ S-7
Schedule VI -- Accumulated Depreciation
of Property, Plant and Equipment..................... S-8
Schedule IX -- Short-term Borrowings................................ S-9
APPALACHIAN POWER COMPANY AND SUBSIDIARIES
Schedule V -- Property, Plant and Equipment........................ S-10
Schedule VI -- Accumulated Depreciation and Amortization
of Property, Plant and Equipment..................... S-11
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-12
Schedule IX -- Short-term Borrowings................................ S-13
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES
Schedule V -- Property, Plant and Equipment........................ S-14
Schedule VI -- Accumulated Depreciation
of Property, Plant and Equipment..................... S-15
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-16
Schedule IX -- Short-term Borrowings................................ S-17
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES
Schedule V -- Property, Plant and Equipment........................ S-18
Schedule VI -- Accumulated Depreciation and Amortization
of Property, Plant and Equipment..................... S-19
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-20
Schedule IX -- Short-term Borrowings................................ S-21
KENTUCKY POWER COMPANY
Schedule V -- Property, Plant and Equipment........................ S-22
Schedule VI -- Accumulated Depreciation and Amortization
of Property, Plant and Equipment..................... S-23
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-24
Schedule IX -- Short-term Borrowings................................ S-25
OHIO POWER COMPANY AND SUBSIDIARIES
Schedule V -- Property, Plant and Equipment........................ S-26
Schedule VI -- Accumulated Depreciation and Amortization
of Property, Plant and Equipment..................... S-27
Schedule VIII -- Valuation and Qualifying Accounts and Reserves....... S-28
Schedule IX -- Short-term Borrowings................................ S-29
</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 its subsidiaries and the financial statements of
certain of its subsidiaries, listed in Item 14 herein, as of December 31, 1993
and 1992, and for each of the three years in the period ended December 31,
1993, and have issued our reports thereon dated February 22, 1994; such
financial statements and reports are included in your respective 1993 Annual
Report to Shareowners and are incorporated herein by reference. Our audits also
included the financial statement schedules of American Electric Power Company,
Inc. and its subsidiaries and of certain of its subsidiaries, listed in Item
14. 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
Columbus, Ohio
February 22, 1994
S-2
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE V --
PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- --------------------------------------------------------------------------------
1993 1992 1991 1990
----------- ----------- ----------- -----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production:
Steam -- Fossil-fired....... $ 7,595,258 $ 7,663,103 $ 7,562,339 $ 6,598,477
Steam -- Nuclear............ 1,483,872 1,454,541 1,442,892 1,401,648
Transmission................. 3,169,347 3,108,787 3,001,159 2,898,426
Distribution................. 3,743,047 3,549,332 3,362,168 3,196,734
General (including mining as-
sets and nuclear fuel)...... 1,406,159 1,443,436 1,485,322 1,429,040
Construction Work in Pro-
gress....................... 314,489 290,547 294,258 1,128,399
----------- ----------- ----------- -----------
Total Electric Utility
Plant...................... 17,712,172 17,509,746 17,148,138 16,652,724
NONUTILITY PROPERTY AND OTHER
PROPERTY INVESTMENTS.......... 399,182 392,348 357,543 361,593
----------- ----------- ----------- -----------
Total....................... $18,111,354 $17,902,094 $17,505,681 $17,014,317
=========== =========== =========== ===========
</TABLE>
Total additions of $676,404,000 in 1993, $718,154,000 in 1992 and
$733,909,000 in 1991 were less than 10% of the total as of the respective year-
ends. Retirements or sales of $278,435,000 in 1993, $297,460,000 in 1992 and
$198,352,000 in 1991 were less than 10% of the total as of the respective year-
ends. There were no additions to individual accounts in excess of two percent
of total assets other than transfers from Construction Work in Progress.
Amortization of nuclear fuel of $41,325,000 in 1993, $19,343,000 in 1992 and
$50,124,000 in 1991 was credited directly to the property account and charged
to fuel expense. In 1993 other charges include a reduction of $157,535,000 to
reflect the PUCO disallowance of a portion of the Zimmer Plant investment as
discussed in Note 3 of the Notes to Consolidated Financial Statements.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Consolidated Financial Statements. The
current provisions were determined using the following composite rates for
functional classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production:
Steam -- Fossil-fired................................. 3.2% to 4.6%
Steam -- Nuclear...................................... 3.4%
Transmission........................................... 1.7% to 2.7%
Distribution........................................... 3.4% to 4.2%
General................................................ 1.7% to 3.8%
</TABLE>
S-3
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE VI --
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $3,031,186 $266,379 $102,831 $(10,299) $3,184,435
Steam -- Nuclear.. 691,605 57,274 26,196 1 722,684
Transmission........ 988,745 61,924 14,346 2,128 1,038,451
Distribution........ 1,060,477 131,114 72,527 1,693 1,120,757
General............. 509,247 72,205 56,792 21,144 545,804
---------- -------- -------- -------- ----------
Total........... $6,281,260 $588,896 $272,692 $ 14,667 $6,612,131
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF NON-
UTILITY PROPERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 112,089 $ 10,924 $ 12,196 $ 8,283 $ 119,100
========== ======== ======== ======== ==========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $2,852,539 $260,053 $ 83,573 $ 2,167 $3,031,186
Steam -- Nuclear.. 638,563 54,842 1,800 691,605
Transmission........ 940,326 60,390 11,705 (266) 988,745
Distribution........ 1,010,778 126,184 77,317 832 1,060,477
General............. 509,978 76,441 95,332 18,160 509,247
---------- -------- -------- -------- ----------
Total........... $5,952,184 $577,910 $269,727 $ 20,893 $6,281,260
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF NON-
UTILITY PROPERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 100,293 $ 10,064 $ (178) $ 1,554 $ 112,089
========== ======== ======== ======== ==========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $2,659,971 $249,507 $ 57,998 $ 1,059 $2,852,539
Steam -- Nuclear.. 589,526 55,140 6,033 (70) 638,563
Transmission........ 904,357 59,073 22,706 (398) 940,326
Distribution........ 953,193 120,499 64,364 1,450 1,010,778
General............. 481,296 78,059 62,429 13,052 509,978
---------- -------- -------- -------- ----------
Total........... $5,588,343 $562,278 $213,530 $ 15,093 $5,952,184
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF NON-
UTILITY PROPERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 95,070 $ 11,232 $ 7,282 $ 1,273 $ 100,293
========== ======== ======== ======== ==========
</TABLE>
S-4
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE VIII --
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 DEDUCTIONS PERIOD
- -----------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 7,287 $ 14,237 $ 4,163(a) $21,639(b) $ 4,048
======== ======== ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 8,123 $(1,036) $ 184(c) $ 3,918(d) $ 3,353
Nuclear Plant
Decommissioning
Costs.......... 146,451 23,255(e) -0- -0- 169,706
Uranium Enrichment
Decontamination
and
Decommissioning
Fund Assess-
ment........... 45,500 -0- -0- 10,517(d) 34,983
Workers' Compensa-
tion and Other. 60,348 24,762 2,521 29,591(d,f) 58,040
-------- -------- ------- ------- --------
Total............ $260,422 $ 46,981 $ 2,705 $44,026 $266,082
======== ======== ======= ======= ========
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 9,599 $ 12,888 $ 4,096(a) $19,296(b) $ 7,287
======== ======== ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 12,874 $ (878) $ 385(c) $ 4,258(d) $ 8,123
Nuclear Plant
Decommissioning
Costs.......... 125,716 20,735(e) -0- -0- 146,451
Uranium Enrichment
Decontamination
and
Decommissioning
Fund Assess-
ment........... -0- -0- 45,500 -0- 45,500
Workers' Compensa-
tion and Other. 52,987 29,012 12,956 34,607(d) 60,348
-------- -------- ------- ------- --------
Total............ $191,577 $48,869 $58,841 $38,865 $260,422
======== ======== ======= ======= ========
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 11,827 $12,517 $ 3,625(a) $18,370(b) $ 9,599
======== ======== ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 20,831 $ (1,531) $ 221(c) $ 6,647(d) $ 12,874
Nuclear Plant
Decommissioning
Costs.......... 106,632 19,084(e) -0- -0- 125,716
Workers' Compensa-
tion and Other. 47,142 29,449 2,987 26,591(d) 52,987
-------- -------- ------- ------- --------
Total............ $174,605 $47,002 $ 3,208 $33,238 $191,577
======== ======== ======= ======= ========
</TABLE>
- --------
(a)Recoveries on accounts previously written off.
(b)Uncollectible accounts written off.
(c)Billings to others.
(d)Payments and accrual adjustments.
(e)Includes interest on trust funds.
(f)Adjust royalty provision.
S-5
<PAGE>
AMERICAN ELECTRIC POWER COMPANY, INC. AND SUBSIDIARY COMPANIES SCHEDULE IX --
SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- ----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $ 65,526 3.5% $ 70,425 $ 47,282 3.3%
Commercial Paper...... 213,450 3.7 256,950 141,829 3.3
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ 79,150 4.0% $115,875 $ 72,889 3.9%
Commercial Paper...... 174,004 4.1 314,355 167,328 4.2
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $ 76,783 5.3% $149,970 $ 82,886 6.3%
Commercial Paper...... 335,600 5.4 335,600 170,528 6.3
</TABLE>
- --------
(a)Sum of month-end short-term borrowings divided by number of months
outstanding.
(b)Interest for the period divided by average amount outstanding.
S-6
<PAGE>
AEP GENERATING COMPANY SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- -------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- -------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production -- Steam -- Fossil-
fired............................. $627,502 $622,274 $619,728 $616,469
General.......................... 1,757 1,774 1,809 1,830
Construction Work in Progress.... 1,773 3,933 3,762 4,654
-------- -------- -------- --------
Total.......................... $631,032 $627,981 $625,299 $622,953
======== ======== ======== ========
</TABLE>
Total additions of $4,089,000 in 1993, $4,512,000 in 1992 and $3,796,000 in
1991 were less than 10% of the total as of the respective year-ends.
Retirements or sales of $1,038,000 in 1993, $1,830,000 in 1992 and $1,450,000
in 1991 were less than 10% of the total as of the respective year-ends. There
were no additions to individual accounts in excess of two percent of total
assets.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Financial Statements. The current
provisions were determined using the following composite rates for functional
classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production -- Steam-- Fossil-fired.................. 3.5%
General............................................. 3.8%
</TABLE>
S-7
<PAGE>
AEP GENERATING COMPANY SCHEDULE VI -- ACCUMULATED DEPRECIATION OF PROPERTY,
PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-
fired........... $160,443 $21,899 $ 980 $-0- $181,362
General............. 215 40 30 225
-------- ------- ------ ---- --------
Total............. $160,658 $21,939 $1,010 $-0- $181,587
======== ======= ====== ==== ========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-
fired........... $140,465 $21,679 $1,701 $-0- $160,443
General............. 201 45 31 215
-------- ------- ------ ---- --------
Total............. $140,666 $21,724 $1,732 $-0- $160,658
======== ======= ====== ==== ========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-
fired........... $120,447 $21,506 $1,491 $ 3 $140,465
General............. 156 59 11 (3) 201
-------- ------- ------ ---- --------
Total............. $120,603 $21,565 $1,502 $-0- $140,666
======== ======= ====== ==== ========
</TABLE>
S-8
<PAGE>
AEP GENERATING COMPANY SCHEDULE IX -- SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- ----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $15,250 3.5% $15,250 $15,250 3.4%
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ -0- --% $ -0- $ -0- --%
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $ -0- --% $ -0- $ -0- --%
</TABLE>
- --------
(a)Sum of month-end short-term borrowings divided by number of months
outstanding.
(b)Interest for the period divided by average amount outstanding.
S-9
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND
EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- --------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production:
Steam -- Fossil-fired.......... $1,631,038 $1,605,660 $1,589,041 $1,550,486
Hydro.......................... 149,967 146,048 144,971 143,482
Transmission..................... 987,147 956,169 893,110 857,490
Distribution..................... 1,225,436 1,153,799 1,086,706 1,021,681
General.......................... 140,942 131,654 112,648 93,342
Construction Work in Progress.... 59,170 45,405 58,357 54,034
---------- ---------- ---------- ----------
Total Electric Utility Plant... 4,193,700 4,038,735 3,884,833 3,720,515
NONUTILITY PROPERTY AND OTHER PROP-
ERTY INVESTMENTS.................. 86,275 87,908 87,059 85,791
---------- ---------- ---------- ----------
Total.......................... $4,279,975 $4,126,643 $3,971,892 $3,806,306
========== ========== ========== ==========
</TABLE>
Total additions of $201,169,000 in 1993, $198,116,000 in 1992 and
$196,937,000 in 1991 were less than 10% of the total as of the respective year-
ends. Retirements or sales of $47,254,000 in 1993, $42,926,000 in 1992 and
$32,428,000 in 1991 were less than 10% of the total as of the respective year-
ends. There were no additions to individual accounts in excess of two percent
of total assets other than transfers from Construction Work in Progress.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Consolidated Financial Statements. The
current provisions were determined using the following composite rates for
functional classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production:
Steam -- Fossil-fired............................... 3.6%
Hydro............................................... 2.5%
Transmission........................................... 2.2%
Distribution........................................... 3.5%
General................................................ 3.3%
</TABLE>
S-10
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED
DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $ 770,638 $ 57,009 $17,212 $1,081 $ 811,516
Hydro............. 68,895 3,356 376 (2) 71,873
Transmission........ 255,010 20,202 5,459 116 269,869
Distribution........ 341,780 40,966 27,966 (129) 354,651
General............. 40,755 7,346 5,774 619 42,946
---------- -------- ------- ------ ----------
Total............. $1,477,078 $128,879 $56,787 $1,685 $1,550,855
========== ======== ======= ====== ==========
ACCUMULATED
DEPRECIATION AND
AMORTIZATION
OF NONUTILITY
PROPERTY AND OTHER
PROPERTY
INVESTMENTS......... $ 35,874 $ 1,844 $ 512 $ 664 $ 37,870
========== ======== ======= ====== ==========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $ 727,961 $ 53,934 $12,262 $1,005 $ 770,638
Hydro............. 66,603 2,717 425 68,895
Transmission........ 241,793 19,141 5,912 (12) 255,010
Distribution........ 330,855 40,110 29,196 11 341,780
General............. 37,862 6,676 4,028 245 40,755
---------- -------- ------- ------ ----------
Total............. $1,405,074 $122,578 $51,823 $1,249 $1,477,078
========== ======== ======= ====== ==========
ACCUMULATED DEPRECIA-
TION AND AMORTIZA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 32,865 $ 1,858 $ 4 $1,155 $ 35,874
========== ======== ======= ====== ==========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-
fired.................. $ 684,633 $ 52,686 $10,339 $ 981 $ 727,961
Hydro............. 64,154 2,701 253 1 66,603
Transmission........ 229,699 18,113 5,426 (593) 241,793
Distribution........ 312,964 37,621 20,328 598 330,855
General............. 36,859 5,448 4,891 446 37,862
---------- -------- ------- ------ ----------
Total............. $1,328,309 $116,569 $41,237 $1,433 $1,405,074
========== ======== ======= ====== ==========
ACCUMULATED DEPRECIA-
TION AND AMORTIZA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 30,214 $ 1,868 $ 155 $ 938 $ 32,865
========== ======== ======= ====== ==========
</TABLE>
S-11
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- 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 DEDUCTIONS PERIOD
- ----------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 724 $3,392 $627(a) $3,399(b) $ 1,344
======= ====== ==== ====== =======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation and Other. $ 9,159 $6,021 $738 $3,940(c) $11,978
======= ====== ==== ====== =======
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 987 $1,810 $672(a) $2,745(b) $ 724
======= ====== ==== ====== =======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compensa-
tion and Oth-
er........... $ 9,033 $3,486 $518 $3,878(c) $ 9,159
======= ====== ==== ====== =======
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 989 $2,036 $527(a) $2,565(b) $ 987
======= ====== ==== ====== =======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compensa-
tion and Oth-
er........... $10,822 $3,397 $490 $5,676(c) $ 9,033
======= ====== ==== ====== =======
</TABLE>
- --------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) Payments and transfers.
S-12
<PAGE>
APPALACHIAN POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $ 3,400 3.6% $19,000 $ 5,021 3.3%
Commercial Paper...... 36,100 3.4 78,050 49,548 3.2
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ 4,300 4.0% $ 5,050 $ 4,692 4.1%
Commercial Paper...... 75,550 3.9 80,500 46,665 4.5
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $ 5,150 5.1% $17,950 $ 7,523 6.3%
Commercial Paper...... 93,900 5.2 93,900 36,584 6.7
</TABLE>
- --------
(a) Sum of month-end short-term borrowings divided by number of months
outstanding.
(b) Interest for the period divided by average amount outstanding.
S-13
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT
AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- --------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production -- Steam -- Fossil-
fired.............................. $1,443,506 $1,586,554 $1,581,389 $ 712,451
Transmission..................... 295,539 292,125 282,610 267,777
Distribution..................... 755,342 719,781 685,486 652,894
General.......................... 97,874 94,599 93,262 89,617
Construction Work in Progress.... 52,794 31,447 24,512 852,760
---------- ---------- ---------- ----------
Total Electric Utility Plant... 2,645,055 2,724,506 2,667,259 2,575,499
NONUTILITY PROPERTY AND OTHER PROP-
ERTY INVESTMENTS.................. 20,465 19,253 18,219 17,900
---------- ---------- ---------- ----------
Total.......................... $2,665,520 $2,743,759 $2,685,478 $2,593,399
========== ========== ========== ==========
</TABLE>
Total additions of $97,455,000 in 1993, $80,279,000 in 1992 and $111,856,000
in 1991 were less than 10% of the total as of the respective year-ends.
Retirements or sales of $18,161,000 in 1993, $21,999,000 in 1992 and
$19,773,000 in 1991 were less than 10% of the total as of the respective year-
ends. There were no additions to individual accounts in excess of two percent
of total assets other than transfers from Construction Work in Progress. In
1993 other charges include a reduction of $157,535,000 to reflect the PUCO
disallowance of a portion of the Zimmer Plant investment as discussed in Note 2
of the Notes to Consolidated Financial Statements.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Consolidated Financial Statements. The
current provisions were determined using the following composite rates for
functional classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production -- Steam -- Fossil-fired..................... 3.2%
Transmission............................................ 2.3%
Distribution............................................ 3.7%
General................................................. 3.5%
</TABLE>
S-14
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED
DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- -----------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $336,754 $48,779 $ 6,847 $(10,213)(a) $368,473
Transmission........ 117,462 6,351 586 123,227
Distribution........ 272,536 27,043 8,392 (4) 291,183
General............. 27,615 5,398 4,083 4 28,934
-------- ------- ------- -------- --------
Total............. $754,367 $87,571 $19,908 $(10,213) $811,817
======== ======= ======= ======== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 932 $ 120 $ 221 $ -0- $ 831
======== ======= ======= ======== ========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $298,466 $50,423 $12,135 $336,754
Transmission........ 112,456 6,493 1,061 $ (426) 117,462
Distribution........ 254,597 26,250 8,737 426 272,536
General............. 27,566 4,602 4,508 (45) 27,615
-------- ------- ------- -------- --------
Total............. $693,085 $87,768 $26,441 $ (45) $754,367
======== ======= ======= ======== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 777 $ 160 $ 50 $ 45 $ 932
======== ======= ======= ======== ========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $265,452 $43,051 $10,037 $298,466
Transmission........ 106,471 6,760 753 $ (22) 112,456
Distribution........ 236,574 25,759 7,758 22 254,597
General............. 30,644 4,348 7,395 (31) 27,566
-------- ------- ------- -------- --------
Total............. $639,141 $79,918 $25,943 $ (31) $693,085
======== ======= ======= ======== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 877 $ 142 $ 287 $ 45 $ 777
======== ======= ======= ======== ========
</TABLE>
- --------
(a) Reflects the write-off of accumulated depreciation related to a portion
of the Zimmer Plant investment that was disallowed by the PUCO as discussed in
Note 2 of the Notes to Consolidated Financial Statements.
S-15
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- 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 DEDUCTIONS PERIOD
- ----------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $1,332 $4,167 $2,106(a) $6,614(b) $ 991
====== ====== ====== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation and Oth-
er.............. $3,226 $2,026 $ 207 $ 432 $5,027
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $1,134 $4,593 $1,981(a) $6,376(b) $1,332
====== ====== ====== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation and Oth-
er.............. $3,779 $ (63) $ 123 $ 613(c) $3,226
====== ====== ====== ====== ======
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $1,272 $4,407 $1,753(a) $6,298(b) $1,134
====== ====== ====== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation and Oth-
er.............. $1,620 $2,704 $ 59 $ 604(c) $3,779
====== ====== ====== ====== ======
</TABLE>
- --------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) Payments.
S-16
<PAGE>
COLUMBUS SOUTHERN POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM
BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $12,500 3.6% $37,250 $22,861 3.3%
Commercial Paper...... 12,725 3.8 60,250 21,756 3.3
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $34,750 3.9% $71,600 $36,534 3.8%
Commercial Paper...... 19,069 4.2 73,910 45,251 4.1
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $15,725 5.2% $52,275 $31,583 6.2%
Commercial Paper...... 50,475 5.6 50,475 26,929 6.3
</TABLE>
- --------
(a) Sum of month-end short-term borrowings divided by number of months
outstanding.
(b) Interest for the period divided by average amount outstanding.
S-17
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT
AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- -------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ---------- ---
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- -------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production:
Steam -- Fossil-fired...... $1,118,655 $1,105,364 $1,085,337 $1,074,214
Steam -- Nuclear........... 1,483,872 1,454,541 1,442,892 1,401,648
Transmission................. 839,198 829,507 815,742 786,206
Distribution................. 608,752 576,309 551,055 520,988
General (including nuclear
fuel)......................... 152,470 182,414 157,340 185,781
Construction Work in Pro-
gress......................... 88,010 118,345 83,454 97,390
---------- ---------- ---------- ----------
Total Electric Utility
Plant......................... 4,290,957 4,266,480 4,135,820 4,066,227
NONUTILITY PROPERTY AND OTHER
PROPERTY INVESTMENTS.......... 193,493 191,743 190,518 200,405
---------- ---------- ---------- ----------
Total...................... $4,484,450 $4,458,223 $4,326,338 $4,266,632
========== ========== ========== ==========
</TABLE>
Total additions of $125,247,000 in 1993, $175,728,000 in 1992 and
$149,187,000 in 1991 were less than 10% of the total as of the respective year-
ends. Retirements or sales of $61,586,000 in 1993, $25,301,000 in 1992 and
$40,396,000 in 1991 were less than 10% of the total as of the respective year-
ends. There were no additions to individual accounts in excess of two percent
of total assets other than transfers from Construction Work in Progress.
Amortization of nuclear fuel of $41,325,000 in 1993, $19,343,000 in 1992 and
$50,124,000 in 1991 was credited directly to the property account and charged
to fuel expense.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Consolidated Financial Statements. The
current provisions were determined using the following composite rates for
functional classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production:
Steam -- Fossil-fired................................. 4.6%
Steam -- Nuclear...................................... 3.4%
Transmission............................................ 1.9%
Distribution............................................ 4.2%
General................................................. 3.8%
</TABLE>
S-18
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED
DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- ---------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-fired.............. $ 447,978 $ 42,417 $14,608 $ 6 $ 475,793
Steam -- Nuclear................... 691,605 57,274 26,196 1 722,684
Transmission......................... 277,512 17,316 1,717 (17) 293,094
Distribution......................... 180,363 21,710 11,179 17 190,911
General.............................. 33,980 5,610 7,228 (15) 32,347
---------- -------- ------- ------ ----------
Total............................ $1,631,438 $144,327 $60,928 $ (8) $1,714,829
========== ======== ======= ====== ==========
ACCUMULATED DEPRECIATION AND
AMORTIZATION
OF NONUTILITY PROPERTY AND OTHER
PROPERTY INVESTMENTS................. $ 62,766 $ 7,992 $ 9,615 $7,616 $ 68,759
========== ======== ======= ====== ==========
YEAR ENDED DECEMBER 31, 1992:
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-fired.............. $ 419,455 $ 40,964 $12,427 $ (14) $ 447,978
Steam -- Nuclear................... 638,563 54,842 1,800 691,605
Transmission......................... 259,890 17,076 (446) 100 277,512
Distribution......................... 171,809 20,349 11,690 (105) 180,363
General.............................. 31,632 5,126 2,795 17 33,980
---------- -------- ------- ------ ----------
Total............................ $1,521,349 $138,357 $28,266 $ (2) $1,631,438
========== ======== ======= ====== ==========
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF NONUTILITY PROPERTY AND
OTHER PROPERTY INVESTMENTS............ $ 55,028 $ 7,296 $ (93) $ 349 $ 62,766
========== ======== ======= ====== ==========
YEAR ENDED DECEMBER 31, 1991:
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF ELECTRIC UTILITY
PLANT:
Production:
Steam -- Fossil-fired.............. $ 386,116 $ 40,567 $ 7,302 $ 74 $ 419,455
Steam -- Nuclear................... 589,526 55,140 6,033 (70) 638,563
Transmission......................... 251,438 16,767 8,369 54 259,890
Distribution......................... 163,965 19,424 11,582 2 171,809
General.............................. 30,240 5,259 3,775 (92) 31,632
---------- -------- ------- ------ ----------
Total............................ $1,421,285 $137,157 $37,061 $ (32) $1,521,349
========== ======== ======= ====== ==========
ACCUMULATED DEPRECIATION AND
AMORTIZATION OF NONUTILITY PROPERTY
AND OTHER PROPERTY INVESTMENTS........ $ 52,730 $ 8,767 $ 6,759 $ 290 $ 55,028
========== ======== ======= ====== ==========
</TABLE>
S-19
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- 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 DEDUCTIONS PERIOD
- ------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 562 $ 1,380 $ 624(a) $ 2,062(b) $ 504
======== ======= ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 2,162 $ 685 $ -0- $ 2,847(d) $ -0-
Nuclear Plant
Decommissioning
Costs........... 146,451 23,255(e) -0- 169,706
Uranium Enrichment
Decontamination
and
Decommissioning
Fund Agreement. 45,500 -0- -0- 10,517(d) 34,983
Workers'
Compensation,
Coal Inventory
Adjustment, and
Other.......... 9,348 1,197 1,619 6,894(d)(f) 5,270
-------- ------- ------- ------- --------
Total............ $203,461 $25,137 $ 1,619 $20,258 $209,959
======== ======= ======= ======= ========
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 629 $ 1,736 $ 650(a) $ 2,453(b) $ 562
======== ======= ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 4,466 $ 356 $ -0- $ 2,660(d) $ 2,162
Nuclear Plant
Decommissioning
Costs........... 125,716 20,735(e) -0- -0- 146,451
Uranium Enrichment
Decontamination
and
Decommissioning
Fund Agreement. -0- -0- 45,500 -0- 45,500
Workers'
Compensation,
Coal Inventory
Adjustment, and
Other.......... 15,184 2,065 1,296 9,197(d) 9,348
-------- ------- ------- ------- --------
Total............ $145,366 $23,156 $46,796 $11,857 $203,461
======== ======= ======= ======= ========
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provision
for
Uncollectible Ac-
counts............ $ 714 $ 1,674 $ 645(a) $ 2,404(b) $ 629
======== ======= ======= ======= ========
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance........ $ 7,551 $ -0- $ 118(c) $ 3,203(d) $ 4,466
Nuclear Plant
Decommissioning
Costs........... 106,632 19,084(e) -0- -0- 125,716
Workers'
Compensation,
Coal Inventory
Adjustment, and
Other.......... 9,489 9,418 2,607 6,330(d) 15,184
-------- ------- ------- ------- --------
Total............ $123,672 $28,502 $ 2,725 $ 9,533 $145,366
======== ======= ======= ======= ========
</TABLE>
- --------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) Billings to others.
(d) Payments and accrual adjustments.
(e) Includes interest on trust funds.
(f) Adjust Royalty Provision.
S-20
<PAGE>
INDIANA MICHIGAN POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM
BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $ -0- -- % $17,200 $17,200 3.3%
Commercial Paper...... 50,075 3.6 50,075 27,832 3.3
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ -0- -- % $23,800 $12,431 3.9%
Commercial Paper...... 44,200 4.3 44,200 25,509 4.0
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $14,850 5.4% $32,325 $14,810 6.4%
Commercial Paper...... 36,100 5.5 36,100 15,010 6.4
</TABLE>
- --------
(a) Sum of month-end short-term borrowings divided by number of months
outstanding.
(b) Interest for the period divided by average amount outstanding.
S-21
<PAGE>
KENTUCKY POWER COMPANY SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- --------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production -- Steam -- Fossil-
fired........................... $211,617 $205,771 $204,045 $201,362
Transmission..................... 249,966 243,002 239,138 231,346
Distribution..................... 281,834 267,280 254,146 241,053
General.......................... 54,637 54,397 50,927 48,334
Construction Work in Progress.... 9,374 10,406 8,453 11,020
-------- -------- -------- --------
Total Electric Utility Plant... 807,428 780,856 756,709 733,115
NONUTILITY PROPERTY AND OTHER PROP-
ERTY INVESTMENTS.................. 6,846 7,249 7,217 7,217
-------- -------- -------- --------
Total.......................... $814,274 $788,105 $763,926 $740,332
======== ======== ======== ========
</TABLE>
Total additions of $37,808,000 in 1993, $35,203,000 in 1992 and $31,369,000
in 1991 were less than 10% of the total as of the respective year-ends.
Retirements or sales of $12,000,000 in 1993, $11,352,000 in 1992 and $8,092,000
in 1991 were less than 10% of the total as of the respective year-ends. There
were no additions to individual accounts in excess of two percent of total
assets other than transfers from Construction Work in Progress.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Financial Statements. The current
provisions were determined using the following composite rates for functional
classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production -- Steam -- Fossil-fired.................... 3.8%
Transmission........................................... 1.7%
Distribution........................................... 3.5%
General................................................ 2.5%
</TABLE>
S-22
<PAGE>
KENTUCKY POWER COMPANY SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $116,273 $ 7,853 $ 4,849 $-0- $119,277
Transmission........ 57,652 4,168 1,221 (1) 60,598
Distribution........ 52,542 9,405 5,233 9 56,723
General............. 11,875 2,329 2,103 (26) 12,075
-------- ------- ------- ---- --------
Total............. $238,342 $23,755 $13,406 $(18) $248,673
======== ======= ======= ==== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 828 $ 83 $ -0- $-0- $ 911
======== ======= ======= ==== ========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $110,714 $ 7,739 $ 2,184 $ 4 $116,273
Transmission........ 54,759 4,030 1,131 (6) 57,652
Distribution........ 49,640 8,966 6,064 52,542
General............. 11,096 2,181 1,369 (33) 11,875
-------- ------- ------- ---- --------
Total............. $226,209 $22,916 $10,748 $(35) $238,342
======== ======= ======= ==== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 740 $ 88 $ -0- $-0- $ 828
======== ======= ======= ==== ========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION AND
AMORTIZATION OF
ELECTRIC UTILITY
PLANT:
Production --
Steam -- Fossil-fired... $104,631 $ 7,524 $ 1,441 $-0- $110,714
Transmission........ 51,827 4,102 1,133 (37) 54,759
Distribution........ 47,370 8,531 6,292 31 49,640
General............. 9,808 1,811 493 (30) 11,096
-------- ------- ------- ---- --------
Total............. $213,636 $21,968 $9,359 $(36) $226,209
======== ======= ======= ==== ========
ACCUMULATED DEPRECIA-
TION
OF NONUTILITY PROP-
ERTY AND
OTHER PROPERTY IN-
VESTMENTS........... $ 663 $ 77 $ -0- $-0- $ 740
======== ======= ======= ==== ========
</TABLE>
S-23
<PAGE>
KENTUCKY POWER COMPANY SCHEDULE VIII -- 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 DEDUCTIONS PERIOD
- ---------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $ 248 $ 390 $179(a) $ 609(b) $ 208
====== ====== ==== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation
and Other....... $2,023 $1,323 $(22) $ 692(c) $2,632
====== ====== ==== ====== ======
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $ 352 $ 630 $106(a) $ 840(b) $ 248
====== ====== ==== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation
and Other....... $1,962 $1,162 $(34) $1,067(c) $2,023
====== ====== ==== ====== ======
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible
Accounts........ $ 148 $ 645 $ 84(a) $ 525(b) $ 352
====== ====== ==== ====== ======
NOT SHOWN ELSEWHERE:
Operating Reserves
for
Workers' Compen-
sation
and Other....... $1,240 $1,309 $121 $ 708(c) $1,962
====== ====== ==== ====== ======
</TABLE>
- --------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) Payments.
S-24
<PAGE>
KENTUCKY POWER COMPANY SCHEDULE IX -- SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $26,250 3.5% $26,250 $ 7,240 3.4%
Commercial Paper...... 11,900 3.8 35,300 19,394 3.4
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ 5,350 4.2% $13,000 $ 6,845 4.1%
Commercial Paper...... 11,550 4.2 11,550 4,350 3.8
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $18,500 5.0% $20,525 $11,675 7.9%
Commercial Paper...... -0- -- 21,200 8,908 6.8
</TABLE>
- --------
(a) Sum of month-end short-term borrowings divided by number of months
outstanding.
(b) Interest for the period divided by average amount outstanding.
S-25
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN F COLUMN F COLUMN F COLUMN F
- --------------------------------------------------------------------------------
1993 1992 1991 1990
---------- ---------- ---------- ----------
BALANCE AT BALANCE AT BALANCE AT BALANCE AT
END OF END OF END OF END OF
CLASSIFICATION PERIOD PERIOD PERIOD PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production -- Steam -- Fossil-
fired............................. $2,412,973 $2,391,432 $2,337,827 $2,300,012
Transmission..................... 767,548 758,134 741,085 727,159
Distribution..................... 766,639 731,559 689,588 668,259
General (including mining as-
sets)............................. 754,347 773,122 879,533 826,522
Construction Work in Progress.... 100,820 79,535 113,323 102,125
---------- ---------- ---------- ----------
Total Electric Utility Plant... 4,802,327 4,733,782 4,761,356 4,624,077
NONUTILITY PROPERTY AND OTHER PROP-
ERTY INVESTMENTS.................. 89,558 83,953 52,748 49,179
---------- ---------- ---------- ----------
Total.......................... $4,891,885 $4,817,735 $4,814,104 $4,673,256
========== ========== ========== ==========
</TABLE>
Total additions of $197,089,000 in 1993, $201,737,000 in 1992 and
$228,500,000 in 1991 were less than 10% of the total as of the respective year-
ends. Retirements or sales of $128,775,000 in 1993, $191,662,000 in 1992 and
$90,472,000 in 1991 were less than 10% of the total as of the respective year-
ends. There were no additions to individual accounts in excess of two percent
of total assets other than transfers from Construction Work in Progress.
The methods used to compute the annual provisions for depreciation are
described in Note 1 of the Notes to Consolidated Financial Statements. The
current provisions for other than mining assets were determined using the
following composite rates for functional classes of property:
<TABLE>
<CAPTION>
FUNCTIONAL CLASS OF PROPERTY COMPOSITE ANNUAL RATE
- --------------------------------------------------------------------------------
<S> <C>
Production -- Steam -- Fossil-fired..................... 3.6%
Transmission............................................ 1.7%
Distribution............................................ 3.9%
General................................................. 2.1%
</TABLE>
The current provisions for mining assets were calculated by use of the
following methods:
<TABLE>
<CAPTION>
DESCRIPTION METHOD
------------------------------- ----------------------------------------
<C> <S>
Mining Structures and Equipment Straight-Line method (original
lives range from 1 to 30 years)
Coal Interests and Mine Units-of-production method (based on
Development Costs estimated recoverable tonnages; current
rate averages 55 cents per ton)
</TABLE>
S-26
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE VI -- ACCUMULATED DEPRECIATION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES -- BALANCE AT
BEGINNING COSTS AND RETIREMENTS ADD END OF
DESCRIPTION OF PERIOD EXPENSES OR SALES (DEDUCT) PERIOD
- --------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
ACCUMULATED DEPRECIA-
TION AND AMORTIZA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-fired... $1,130,205 $ 85,065 $ 57,958 $ (1,172) $1,156,140
Transmission........ 265,418 13,130 5,261 2,029 275,316
Distribution........ 180,959 28,503 18,480 1,750 192,732
General (including
mining assets)......... 339,429 38,022 30,100 20,543 367,894
---------- -------- -------- -------- ----------
Total............. $1,916,011 $164,720 $111,799 $ 23,150 $1,992,082
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION OF
NONUTILITY PROPERTY
AND OTHER
PROPERTY INVEST-
MENTS............... $ 11,467 $ 800 $ 1,652 $ (2) $ 10,613
========== ======== ======== ======== ==========
YEAR ENDED DECEMBER 31,
1992:
ACCUMULATED DEPRECIA-
TION AND AMORTIZA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-fired... $1,088,875 $ 82,596 $ 42,438 $ 1,172 $1,130,205
Transmission........ 255,931 12,903 3,493 77 265,418
Distribution........ 172,672 27,180 19,357 464 180,959
General (including
mining assets)......... 354,233 45,633 78,384 17,947 339,429
---------- -------- -------- -------- ----------
Total............. $1,871,711 $168,312 $143,672 $ 19,660 $1,916,011
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION OF
NONUTILITY PROPERTY
AND OTHER
PROPERTY INVEST-
MENTS............... $ 10,740 $ 588 $ (139) $ -0- $ 11,467
========== ======== ======== ======== ==========
YEAR ENDED DECEMBER 31,
1991:
ACCUMULATED DEPRECIA-
TION AND AMORTIZA-
TION
OF ELECTRIC UTILITY
PLANT:
Production --
Steam-- Fossil-fired... $1,034,539 $ 81,472 $ 27,136 $ -0- $1,088,875
Transmission........ 250,219 12,600 7,093 205 255,931
Distribution........ 162,754 25,983 16,780 715 172,672
General (including
mining assets)......... 328,787 51,907 39,192 12,731 354,233
---------- -------- -------- -------- ----------
Total............. $1,776,299 $171,962 $ 90,201 $ 13,651 $1,871,711
========== ======== ======== ======== ==========
ACCUMULATED DEPRECIA-
TION OF
NONUTILITY PROPERTY
AND OTHER
PROPERTY INVEST-
MENTS............... $ 10,473 $ 347 $ 80 $ -0- $ 10,740
========== ======== ======== ======== ==========
</TABLE>
S-27
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE VIII -- 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 DEDUCTIONS PERIOD
- ------------------------------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 4,353 $ 4,812 $ 549(a) $ 8,754(b) $ 960
======= ======= ======= ======= =======
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance....... $ 5,961 $(1,721) $ 184(c) $ 1,071(d) $ 3,353
Reclamation....... 8,537 7,508 -0- 7,313(d) 8,732
Workers' Compensa-
tion and Oth-
er........... 20,302 5,790 (91) 9,327(d) 16,674
------- ------- ------- ------- -------
Total........... $34,800 $11,577 $ 93 $17,711 $28,759
======= ======= ======= ======= =======
YEAR ENDED DECEMBER 31,
1992:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 4,815 $ 4,084 $ 618(a) $ 5,164(b) $ 4,353
======= ======= ======= ======= =======
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance....... $ 8,336 $(1,239) $ 297(c) $ 1,433(d) $ 5,961
Reclamation....... 9,089 7,456 -0- 8,008(d) 8,537
Workers' Compensa-
tion and Oth-
er........... 7,938 11,690 11,026 10,352(d) 20,302
------- ------- ------- ------- -------
Total........... $25,363 $17,907 $11,323 $19,793 $34,800
======= ======= ======= ======= =======
YEAR ENDED DECEMBER 31,
1991:
DEDUCTED FROM ASSETS:
Accumulated Provi-
sion for
Uncollectible Ac-
counts........... $ 8,540 $ 2,042 $ 557(a) $ 6,324(b) $ 4,815
======= ======= ======= ======= =======
NOT SHOWN ELSEWHERE:
Operating Reserves:
Maintenance....... $11,532 $(1,531) $ 56(c) $ 1,721(d) $ 8,336
Reclamation....... 13,121 2,329 -0- 6,361(d) 9,089
Workers' Compensa-
tion and Oth-
er........... 6,873 9,355 (295) 7,995(d) 7,938
------- ------- ------- ------- -------
Total........... $31,526 $10,153 $ (239) $16,077 $25,363
======= ======= ======= ======= =======
</TABLE>
- --------
(a) Recoveries on accounts previously written off.
(b) Uncollectible accounts written off.
(c) Billings to others.
(d) Payments.
S-28
<PAGE>
OHIO POWER COMPANY AND SUBSIDIARIES SCHEDULE IX -- SHORT-TERM BORROWINGS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------
MAXIMUM AVERAGE WEIGHTED
CATEGORY OF WEIGHTED AMOUNT AMOUNT AVERAGE
AGGREGATE BALANCE AT AVERAGE OUTSTANDING OUTSTANDING INTEREST RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD (A) PERIOD (B)
- -----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
1993:
Notes Payable......... $ 2,251 3.1% $ 45,650 $10,564 3.2%
Commercial Paper...... 38,000 3.6 68,700 33,033 3.4
YEAR ENDED DECEMBER 31,
1992:
Notes Payable......... $ -0- --% $ 26,000 $14,167 4.2%
Commercial Paper...... -0- -- 102,945 70,711 4.2
YEAR ENDED DECEMBER 31,
1991:
Notes Payable......... $ 1,208 6.0% $ 45,995 $13,065 6.0%
Commercial Paper...... 132,325 5.4 132,325 77,492 6.3
</TABLE>
- --------
(a) Sum of month-end short-term borrowings divided by number of months
outstanding.
(b) Interest for the period divided by average amount outstanding.
S-29
<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. (S)201.24 and (S)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.
AEGCO
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
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 [Registration
Statement on Form 10 for the Common Shares of AEGCo, 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 KEPCo [Registration Statement No. 33-
32752, Exhibit 28(b)(2)].
10(b)(3) -- Copy of Agreement, dated as of October 1, 1984, among AEGCo,
I&M, APCo and Virginia Electric and Power Company
[Registration Statement No. 33-32752, Exhibit 28(b)(3)].
10(c)(1)(A) -- Copy of Lease Agreement (AEGCO Trust 1), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(1)(C)].
*10(c)(1)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 1), dated as of
October 15, 1990.
10(c)(2)(A) -- Copy of Lease Agreement (AEGCO Trust 2), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(2)(C)].
*10(c)(2)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 2), dated as of
October 15, 1990.
10(c)(3)(A) -- Copy of Lease Agreement (AEGCO Trust 3), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(3)(C)].
*10(c)(3)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 3), dated as of
October 15, 1990.
10(c)(4)(A) -- Copy of Lease Agreement (AEGCO Trust 4), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(4)(C)].
*10(c)(4)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 4), dated as of
October 15, 1990.
10(c)(5)(A) -- Copy of Lease Agreement (AEGCO Trust 5), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(5)(C)].
*10(c)(5)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 5), dated as of
October 15, 1990.
10(c)(6)(A) -- Copy of Lease Agreement (AEGCO Trust 6), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(6)(C)].
*10(c)(6)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 6), dated as of
October 15, 1990.
*13 -- Copy of those portions of the AEGCo 1993 Annual Report (for
the fiscal year ended December 31, 1993) which are
incorporated by reference in this filing,
*24 -- Power of Attorney.
</TABLE>
E-1
<PAGE>
AEGCO (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
AEP++
3(a) -- Copy of Restated Certificate of Incorporation of AEP, dated
April 26, 1978 [Registration Statement No. 2-62778, Exhibit
2(a)].
3(b)(1) -- Copy of Certificate of Amendment of the Restated Certificate
of Incorporation of AEP, dated April 23, 1980 [Registration
Statement No. 33-1052, Exhibit 4(b)].
3(b)(2) -- Copy of Certificate of Amendment of the Restated Certificate
of Incorporation of AEP, dated April 28, 1982 [Registration
Statement No. 33-1052, Exhibit 4(c)].
3(b)(3) -- Copy of Certificate of Amendment of the Restated Certificate
of Incorporation of AEP, dated April 25, 1984 [Registration
Statement No. 33-1052, Exhibit 4(d)].
3(b)(4) -- Copy of Certificate of Change of the Restated Certificate of
Incorporation of AEP, dated July 5, 1984 [Registration
Statement No. 33-1052, Exhibit 4(e)].
3(b)(5) -- Copy of Certificate of Amendment of the Restated Certificate
of Incorporation of AEP, dated April 27, 1988 [Registration
Statement No. 33-1052, Exhibit 4(f)].
3(c) -- Composite copy of the Restated Certificate of Incorporation
of AEP, as amended. [Registration Statement No. 33-1052,
Exhibit 4(g)].
3(d) -- Copy of By-Laws of AEP, as amended through July 26, 1989
[Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1989, File No. 1-3525, Exhibit 3(d)].
10(a) -- Interconnection Agreement, dated July 6, 1951, among APCo,
CSPCo, KEPCo, 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) -- Copy of Transmission Agreement, dated April 1, 1984, among
APCo, CSPCo, I&M, KEPCo, 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)(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(c)(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(d) -- AEP Deferred Compensation Agreement for directors, as
amended, effective October 24, 1984 [Annual Report on Form
10-K of AEP for the fiscal year ended December 31, 1984,
File No. 1-3525, Exhibit 10(e)].
+10(e) -- 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(f) -- AEP Retirement Plan for directors [Annual Report on Form 10-
K of AEP for the fiscal year ended December 31, 1986, File
No. 1-3525, Exhibit 10(g)].
*+10(g)(1)(A) -- Excess Benefits Plan.
+10(g)(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(g)(2) -- AEP System Supplemental Savings Plan (Non-Qualified).
*+10(g)(3) -- Service Corporation Umbrella Trust(TM) for Executives.
</TABLE>
E-2
<PAGE>
AEP++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+10(h)(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(h)(2) -- Employment Agreement between John E. Katlic and the Service
Corporation [Annual Report on Form 10-K of AEGCo for the
fiscal year ended December 31, 1990, File No. 0-18135,
Exhibit 10(g)(2)].
*+10(i)(1) -- AEP Management Incentive Compensation Plan.
*+10(i)(2) -- American Electric Power System Performance Share Incentive
Plan.
10(j)(1)(A) -- Copy of Lease Agreement (AEGCO Trust 1), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(1)(C)].
10(j)(1)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 1), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(1)(B)].
10(j)(2)(A) -- Copy of Lease Agreement (AEGCO Trust 2), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(2)(C)].
10(j)(2)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 2), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(2)(B)].
10(j)(3)(A) -- Copy of Lease Agreement (AEGCO Trust 3), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(3)(C)].
10(j)(3)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 3), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(3)(B)].
10(j)(4)(A) -- Copy of Lease Agreement (AEGCO Trust 4), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(4)(C)].
10(j)(4)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 4), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(4)(B)].
10(j)(5)(A) -- Copy of Lease Agreement (AEGCO Trust 5), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(5)(C)].
10(j)(5)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 5), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(5)(B)].
10(j)(6)(A) -- Copy of Lease Agreement (AEGCO Trust 6), dated as of December
1, 1989, between AEGCo and Wilmington Trust Company
[Registration Statement No. 33-32752, Exhibit 28(c)(6)(C)].
10(j)(6)(B) -- Copy of Lease Supplement No. 1 (AEGCO Trust 6), dated as of
October 15, 1990. [Annual Report on Form 10-K of AEGCo for
the fiscal year ended December 31, 1993, File No. 0-18135,
Exhibit 10(c)(6)(B)].
10(j)(7)(A) -- Copy of Lease Agreement (I&M Trust 1), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(1)(C)].
</TABLE>
E-3
<PAGE>
AEP++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10(j)(7)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 1), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(1)(B)]
10(j)(8)(A) -- Copy of Lease Agreement (I&M Trust 2), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(2)(C)].
10(j)(8)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 2), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(2)(B)].
10(j)(9)(A) -- Copy of Lease Agreement (I&M Trust 3), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(3)(C)].
10(j)(9)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 3), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(3)(B)].
10(j)(10)(A) -- Copy of Lease Agreement (I&M Trust 4), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(4)(C)].
10(j)(10)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 4), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(4)(B)].
10(j)(11)(A) -- Copy of Lease Agreement (I&M Trust 5), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(5)(C)].
10(j)(11)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 5), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(5)(B)].
10(j)(12)(A) -- Copy of Lease Agreement (I&M Trust 6), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(6)(C)].
10(j)(12)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 6), dated as of
October 15, 1990 [Annual Report on Form 10-K of I&M for the
fiscal year ended December 31, 1993, File No. 1-3570,
Exhibit 10(e)(6)(B)].
10(k) -- Copy of Agreement for Lease, dated as of September 17, 1992,
between JMG Funding, Limited Partnership and OPCo [Annual
Report on Form 10-K of OPCo for the fiscal year ended
December 31, 1992, File No. 1-6543, Exhibit 10(l)].
*13 -- Copy of those portions of the AEP 1993 Annual Report (for
the fiscal year ended December 31, 1993) which are
incorporated by reference in this filing.
*21 -- List of subsidiaries of AEP.
*23 -- Consent of Deloitte & Touche.
*24 -- Power of Attorney.
APCO++
3(a) -- Copy of Restated Articles of Incorporation of APCo, and
amendments thereto to March 24, 1992 [Registration Statement
No. 33-50163; Exhibit 4(a)].
*3(b) -- Copy of Articles of Amendment to the Restated Articles of
Incorporation of APCo dated October 4, 1993 and October 28,
1993.
*3(c) -- Composite copy of the Restated Articles of Incorporation of
APCo, as amended.
3(d) -- Copy of By-Laws of APCo [Annual Report on Form 10-K of APCo
for the fiscal year ended December 31, 1990, File No. 1-3457
Exhibit 3(d)].
</TABLE>
E-4
<PAGE>
APCO++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
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 to May 15, 1993
[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)].
*4(b) -- Copy of Indentures Supplemental dated October 1, 1993 and
November 1, 1993 to Mortgage and Deed of Trust.
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, KEPCo, 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, KEPCo, 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)(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(d)(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(e)(1) -- Management Incentive Compensation Plan [Annual Report on Form
10-K of AEP for the fiscal year ended December 31, 1993, File
No. 1-3525, Exhibit 10(i)].
</TABLE>
E-5
<PAGE>
APCO++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
+10(e)(2) -- American Electric Power System Performance Share Incentive
Plan [Annual Report on Form 10-K of AEP for the fiscal year
ended December 31, 1993, File No. 1-3525, Exhibit 10(i)(2)].
+10(f)(1) -- Excess Benefits Plan [Annual Report on Form 10-K of AEP for
the fiscal year ended December 31, 1993, File No. 1-3525,
Exhibit 10(g)(1)(A)].
+10(f)(2) -- AEP System Supplemental Savings Plan (Non-Qualified) [Annual
Report on Form 10-K of AEP for the fiscal year ended December
31, 1993, File No. 1-3525, Exhibit 10(g)(2)].
+10(f)(3) -- Umbrella Trust(TM) 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(g)(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(g)(2) -- Employment Agreement between John E. Katlic and the Service
Corporation [Annual Report on Form 10-K of AEGCo for the
fiscal year ended December 31, 1990, File No.
0-18135, Exhibit 10(g)(2)].
*12 -- Statement re: Computation of Ratios
*13 -- Copy of those portions of the APCo 1993 Annual Report (for
the fiscal year ended December 31, 1993) 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, 1993, File No. 1-
3525, Exhibit 22].
*23 -- Consent of Deloitte & Touche
*24 -- Power of Attorney
CSPCO++
3(a) -- Copy of Amended Articles of Incorporation of CSPCo
[Registration Statement No. 33-45950, Exhibit 4(a)].
3(b)(1) -- Copy of Certificate of Amendment to Amended Articles of
Incorporation of CSPCo, dated November 19, 1990 [Registration
Statement No. 33-45950, Exhibit 4(b)].
3(b)(2) -- Copy of Certificate of Amendment to Amended Articles of
Incorporation of CSPCo, dated March 6, 1992 [Certificate of
Notification on Form U-6B-2, dated March 23, 1992].
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, 1991, 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)].
*4(b) -- Copy of Supplemental Indentures dated October 1, 1993,
January 1, 1994 and March 1, 1994 to Indenture of Mortgage
and Deed of Trust.
</TABLE>
E-6
<PAGE>
CSPCO++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
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)].
10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, among
APCo, CSPCo, KEPCo, 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, KEPCo, 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)].
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the CSPCo 1993 Annual Report (for the
fiscal year ended December 31, 1993) 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, 1993, File No. 1-3525,
Exhibit 22].
*23 -- Consent of Deloitte & Touche.
*24 -- Power of Attorney.
I&M++
*3(a) -- Copy of the Amended Articles of Acceptance of I&M and amendments
thereto.
*3(b) -- Composite Copy of the Amended Articles of Acceptance of I&M, as
amended.
3(c) -- Copy of the By-Laws of I&M [Annual Report on Form 10-K of I&M
for the fiscal year ended December 31, 1990, File No 1-3570,
Exhibit 3(d)].
</TABLE>
E-7
<PAGE>
I&M++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<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)].
*4(b) -- Copy of Indentures Supplemental dated October 15, 1993 and
February 1, 1994 to Mortgage and Deed of Trust.
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(b) -- Copy of Interconnection Agreement, dated July 6, 1951,
between APCo, CSPCo, KEPCo, 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(c) -- Copy of Transmission Agreement, dated April 1, 1984, among
APCo, CSPCo, I&M, KEPCo, 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 Nuclear Material Lease Agreement, dated as of
December 1, 1990, between I&M and DCC Fuel Corporation.
10(e)(1)(A) -- Copy of Lease Agreement (I&M Trust 1), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(1)(C)].
*10(e)(1)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 1), dated as of
October 15, 1990.
</TABLE>
E-8
<PAGE>
I&M++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10(e)(2)(A) -- Copy of Lease Agreement (I&M Trust 2), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(2)(C)].
*10(e)(2)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 2), dated as of
October 15, 1990.
10(e)(3)(A) -- Copy of Lease Agreement (I&M Trust 3), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(3)(C)].
*10(e)(3)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 3), dated as of
October 15, 1990.
10(e)(4)(A) -- Copy of Lease Agreement (I&M Trust 4), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(4)(C)].
*10(e)(4)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 4), dated as of
October 15, 1990.
10(e)(5)(A) -- Copy of Lease Agreement (I&M Trust 5), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(5)(C)].
*10(e)(5)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 5), dated as of
October 15, 1990.
10(e)(6)(A) -- Copy of Lease Agreement (I&M Trust 6), dated as of December
1, 1989, between I&M and Wilmington Trust Company
[Registration Statement No. 33-32753, Exhibit 28(a)(6)(C)].
*10(e)(6)(B) -- Copy of Lease Supplement No. 1 (I&M Trust 6), dated as of
October 15, 1990.
*12 -- Statement re: Computation of Ratios
*13 -- Copy of those portions of the I&M 1993 Annual Report (for the
fiscal year ended December 31, 1993) 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, 1993, File No. 1-
3525, Exhibit 22].
*23 -- Consent of Deloitte & Touche.
*24 -- Power of Attorney.
KEPCO
3(a) -- Copy of Restated Articles of Incorporation of KEPCo [Annual
Report on Form 10-K of KEPCo for the fiscal year ended
December 31, 1991, File No. 1-6858, Exhibit 3(a)].
3(b) -- Copy of By-Laws of KEPCo [Annual Report on Form 10-K of KEPCo
for the fiscal year ended December 31, 1990, File No. 1-6858,
Exhibit 3(b)].
4(a)(1) -- Copy of Mortgage and Deed of Trust, dated May 1, 1949,
between KEPCo and Bankers Trust Company, 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)].
*4(a)(2) -- Copy of Indentures Supplemental dated May 1, 1993, June 1,
1993 and June 15, 1993 to Mortgage and Deed of Trust.
10(a) -- Copy of Interconnection Agreement, dated July 6, 1951, among
APCo, CSPCo, KEPCo, 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>
KEPCO (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <C> <S>
10(b) -- Copy of Transmission Agreement, dated April 1, 1984, among APCo,
CSPCo, I&M, KEPCo, 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)].
*12 -- Statement re: Computation of Ratios.
*13 -- Copy those portions of the KEPCo 1993 Annual Report (for the
fiscal year ended December 31, 1993) which are incorporated by
reference in this filing.
*23 -- Consent of Deloitte & Touche.
*24 -- Power of Attorney.
OPCO++
3(a) -- Copy of Amended Articles of Incorporation of OPCo, and
amendments thereto to April 6, 1993 [Registration Statement No.
33-50139, Exhibit 4(a)].
*3(b) -- Copy of Certificates of Amendment to the Amended Articles of
Incorporation of OPCo, dated October 4, 1993 and October 28,
1993.
*3(c) -- Composite copy of the Amended Articles of Incorporation of OPCo,
as amended.
3(d) -- 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)(vi); 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)].
*4(b) -- Copy of Indentures Supplemental dated October 1, 1993, November
1, 1993 and December 1, 1993.
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)].
</TABLE>
E-10
<PAGE>
OPCO++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10(b) -- Copy of Interconnection Agreement, dated July 6, 1951, between
APCo, CSPCo, KEPCo, 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, KEPCo, 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 Agreement, dated June 18, 1968, between OPCo and Kaiser
Aluminum & Chemical Corporation (now known as Ravenswood
Aluminum Corporation) and First Supplemental Agreement thereto
[Registration Statement No. 2-31625, Exhibit 4(c); Annual Report
on Form 10-K of OPCo for the fiscal year ended December 31,
1986, File No. 1-6543, Exhibit 10(d)(2)].
*10(e) -- Copy of Power Agreement, dated November 16, 1966, between OPCo
and Ormet Generating Corporation and First Supplemental
Agreement thereto.
*10(f) -- 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.
+10(g)(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(g)(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(h)(1) -- Management Incentive Compensation Plan [Annual Report on Form
10-K of AEP for the fiscal year ended December 31, 1993, File
No. 1-3525, Exhibit 10(i)].
+10(h)(2) -- American Electric Power System Performance Share Incentive Plan
[Annual Report on Form 10-K of AEP for the fiscal year ended
December 31, 1993, File No. 1-3525, Exhibit 10(i)(2)].
+10(i)(1) -- Excess Benefits Plan [Annual Report on Form 10-K of AEP for the
fiscal year ended December 31, 1993, File No. 1-3525, Exhibit
10(g)(1)(A)].
+10(i)(2) -- AEP System Supplemental Savings Plan (Non-Qualified) [Annual
Report on Form 10-K of AEP for the fiscal year ended December
31, 1993, File No. 1-3525, Exhibit 10(g)(2)].
+10(i)(3) -- Umbrella Trust (TM) 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)(2)].
+10(j)(2) -- Employment Agreement between John E. Katlic and the Service
Corporation [Annual Report on Form 10-K of AEGCo for the fiscal
year ended December 31, 1990, File No. 0-18135, Exhibit
10(g)(2)].
10(k) -- Agreement for Lease dated as of September 17, 1992 between JMG
Funding, Limited Partnership and OPCo [Annual Report on Form 10-
K of OPCo for the fiscal year ended December 31, 1992, File No.
1-6543, Exhibit 10(l)].
*12 -- Statement re: Computation of Ratios.
*13 -- Copy of those portions of the OPCo 1993 Annual Report (for the
fiscal year ended December 31, 1993) which are incorporated by
reference in this filing.
</TABLE>
E-11
<PAGE>
OPCO++ (continued)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
21 -- List of subsidiaries of OPCo [Annual Report on Form 10-K of AEP
for the fiscal year ended December 31, 1993, File No. 1-3525,
Exhibit 22].
*23 -- Consent of Deloitte & Touche.
*24 -- Power of Attorney.
</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-12
AMENDED ARTICLES OF ACCEPTANCE
OF
INDIANA MICHIGAN POWER COMPANY
As Filed with the Secretary of State of Indiana
on October 30, 1980
ARTICLE I
1. The name of this Corporation shall be INDIANA MICHIGAN
POWER COMPANY.
2. The purpose or purposes of the Corporation are as
follows:
I. To generate and produce electricity and to transmit,
sell and distribute the same to the public, either directly or
through the sale of electric energy to other utilities, within
and without the States of Indiana and Michigan.
II. To engage in the business of mining coal and other
minerals or substances; to purchase, lease and otherwise
acquire coal lands, mines and the products thereof; to mine,
produce, store, sell and transport coal and other minerals or
substances and, to accomplish such purposes, to take, hold and
own real estate or interests therein, including leases,
permits or licenses granted under the provisions of the
Mineral Leasing Act of February 25, 1920, as amended, and to
own, operate and maintain such machinery, works, equipment and
appliances as the carrying out of the objects above mentioned
may require.
III. To transact any or all lawful business for which
corporations may be incorporated under the Indiana General
Corporation Act.
3. The period during which it is to continue as a
corporation is unlimited.
4. The post office address of its principal office is One
Summit Square, P. O. Box 60, Ft. Wayne, Indiana 46801. The name
and post office address of its resident agent is Elio Bafile, One
Summit Square, P. O. Box 60, Ft. Wayne, Indiana 46801.
5. The total number of shares into which its authorized
capital stock is to be divided is 15,950,000 shares, consisting of
shares as follows:
2,250,000 shares having a par value of $100;
11,200,000 shares having a par value of $25; and
2,500,000 shares without par value.
6. The number of shares of the capital stock of the
Corporation is to be divided into two classes, consisting of: (a)
two million five hundred thousand (2,500,000) shares, without
nominal or par value, of Common Stock and (b) two million two
hundred fifty thousand (2,250,000) shares, of the par value of $100
each, and eleven million two hundred thousand (11,200,000) shares,
of the par value of $25 each, of Cumulative Preferred Stock, which
may be issued in series as hereinafter provided. The voting
powers, designations, preferences, relative, participating,
optional or other special rights, qualifications, limitations or
restrictions of the above classes of stock, and the power of the
Board of Directors to cause the Cumulative Preferred Stock to be
issued in series, and the designation, description and terms of the
series of Cumulative Preferred Stock heretofore created, are as
follows:
A. Cumulative Preferred Stock
(1) Subject to and in accordance with the provisions of
this paragraph and the following paragraphs (2) through (28)
hereof, the Board of Directors is hereby empowered to cause
the Cumulative Preferred Stock to be issued in different
series. The shares of different series may vary, as may be
determined by the Board of Directors prior to the issue
thereof (except in the case of the series of Cumulative
Preferred Stock classified and designated in paragraphs (9)
through (28) hereof), as to:
(a) The distinctive serial designation and number
of shares of such series;
(b) The rate of dividends (within such limits as
shall be permitted by law) payable on the shares of the
particular series;
(c) The prices (not less than the amount limited by
law) and terms upon which the shares of the particular
series may be redeemed;
(d) The amount or amounts which shall be paid to
the holders of the shares of the particular series in
case of voluntary or involuntary dissolution or any
distribution of assets;
(e) The terms and amount of sinking fund
requirements (if any) for the purchase or redemption of
the shares of the particular series.
The shares of all series of the Cumulative Preferred Stock
shall in all other respects be equal, except as to the par
value thereof and the voting rights with respect thereto as
hereinafter provided.
(2) The holders of each series of the Cumulative
Preferred Stock at the time outstanding shall be entitled to
receive, but only when and as declared by the Board of
Directors, out of funds legally available for the payment of
dividends, cumulative preferential dividends, at the annual
dividend rate for the particular series fixed as herein
provided, payable quarter-yearly on dates to be fixed by the
Board of Directors, to stockholders of record on the
respective dates, not exceeding thirty (30) days and not less
than ten (10) days preceding such dividend payment dates, to
be fixed by the Board of Directors. Where the dividend rate
of any series of the Cumulative Preferred Stock with a par
value of $100 per share is designated as a specified
percentage per annum, the holders of such series shall be
entitled to receive annually dividends thereon calculated, per
share, at the percentage specified for such series multiplied
by $100. No dividends shall be declared on any series of the
Cumulative Preferred Stock in respect of any quarter-yearly
dividend period unless there shall likewise be declared on all
shares of all series of the Cumulative Preferred Stock at the
time outstanding, like proportionate dividends, ratably, in
proportion to the respective annual dividend rates fixed
therefor, in respect of the same quarter-yearly dividend
period, to the extent that such shares are entitled to receive
dividends for such quarter-yearly dividend period. The
dividends on shares of all series of the Cumulative Preferred
Stock shall be cumulative. In the case of all shares of each
particular series, the dividends on shares of such series
shall be cumulative from the date of issue thereof unless the
Corporation shall have established regular quarter-yearly
dividend periods with respect to such series, in which case
such dividends shall be cumulative from the first day of the
current quarter-yearly dividend period in which shares of such
series shall have been issued. Unless dividends on all
outstanding shares of each series of the Cumulative Preferred
Stock, at the annual dividend rate and from the dates for
accumulation thereof fixed as herein provided, shall have been
paid for all past quarter-yearly dividend periods, but without
interest on cumulative dividends, no dividends shall be paid
or declared and no other distribution shall be made on the
Common Stock, and no Common Stock shall be purchased or
otherwise acquired for value by the Corporation. The holders
of the Cumulative Preferred Stock of any series shall not be
entitled to receive any dividends thereon other than the
dividends referred to in this paragraph (2).
(3) The Corporation, by action of its Board of
Directors, may redeem the whole or any part of any series of
the Cumulative Preferred Stock, at any time or from time to
time, by paying in cash the redemption price of the shares of
the particular series, fixed therefor as herein provided,
together with a sum in the case of each share of each series
so to be redeemed, computed at the annual dividend rate for
the series of which the particular share is a part, from the
date from which dividends on such share became cumulative to
the date fixed for such redemption, less the aggregate of the
dividends theretofore or on such redemption date paid thereon.
Notice of every such redemption shall be given by publication
at least once in one daily newspaper printed in the English
language and of general circulation in Fort Wayne, Indiana,
and in one daily newspaper printed in the English language and
of general circulation in the Borough of Manhattan, The City
of New York, the first publication in such newspapers to be at
least thirty (30) days and not more than sixty (60) days prior
to the date fixed for such redemption. At least thirty (30)
days' and not more than sixty (60) days' previous notice of
every such redemption shall also be mailed to the holders of
record of the shares of the Cumulative Preferred Stock so to
be redeemed, at their respective addresses as the same shall
appear on the books of the Corporation; but no failure to mail
such notice nor any defect therein or in the mailing thereof
shall affect the validity of the proceedings for the
redemption of any shares of the Cumulative Preferred Stock so
to be redeemed. In case of the redemption of a part only of
any series of the Cumulative Preferred Stock at the time
outstanding, the Corporation shall select by lot the shares so
to be redeemed. The Board of Directors shall have full power
and authority, subject to the limitations and provisions
herein contained, to prescribe the manner in which, and the
terms and conditions upon which, the shares of the Cumulative
Preferred Stock shall be redeemed from time to time. If such
notice of redemption shall have been duly given by
publication, and if on or before the redemption date specified
in such notice all funds necessary for such redemption shall
have been set aside by the Corporation, separate and apart
from its other funds, in trust for the account of the holders
of the shares to be redeemed, so as to be and continue to be
available therefor, then, notwithstanding that any certificate
for such shares so called for redemption shall not have been
surrendered for cancellation, from and after the date fixed
for redemption, the shares represented thereby shall no longer
be deemed outstanding, the right to receive dividends thereon
shall cease to accrue and all rights with respect to such
shares so called for redemption shall forthwith on such
redemption date cease and terminate, except only the right of
the holders thereof to receive, out of the funds so set aside
in trust, the amount payable upon redemption thereof, without
interest; provided, however, that the Corporation may, after
giving notice by publication of any such redemption as
hereinbefore provided or after giving to the bank or trust
company hereinafter referred to irrevocable authorization to
give such notice by publication, and at any time prior to the
redemption date specified in such notice, deposit in trust,
for the account of the holders of the shares to be redeemed,
so as to be and continue to be available therefor, funds
necessary for such redemption with a bank or trust company in
good standing, organized under the laws of the United States
of America or of the State of New York, doing business in the
Borough of Manhattan, The City of New York, and having
capital, surplus and undivided profits aggregating at least
$50,000,000, or a bank or trust company in good standing
organized under the laws of the State of Indiana, doing
business in Fort Wayne, Indiana, selected by the Board of
Directors of the Corporation and designated in such notice of
redemption, and, upon such deposit in trust, all shares with
respect to which such deposits shall have been made shall no
longer be deemed to be outstanding, and all rights with
respect to such shares shall forthwith cease and terminate,
except only the right of the holders thereof to receive at any
time from and after the date of such deposit, the amount
payable upon the redemption thereof, without interest.
Nothing herein contained shall limit any right of the
Corporation to purchase or otherwise acquire any shares of the
Cumulative Preferred Stock; provided, however, that the
Corporation shall not redeem, purchase or otherwise acquire
any shares of the Cumulative Preferred Stock, if, at the time
of such redemption, purchase or other acquisition, dividends
payable on the Cumulative Preferred Stock of any Series of any
series shall be in default in whole or in part, unless, prior
to or concurrently with such redemption, purchase or other
acquisition, all such defaults shall be cured or unless such
redemption, purchase or other acquisition shall have been
ordered, approved or permitted by the Securities and Exchange
Commission, or by a successor commission or other regulatory
authority of the United States of America having jurisdiction
in the premises, under the provisions of the Public Utility
Holding Company Act of 1935 as at the time in effect or any
legislation enacted in substitution therefor.
(4) Before any amount shall be paid to, or any assets
distributed among, the holders of the Common Stock upon any
liquidation, dissolution or winding up of the Corporation, and
after paying or providing for the payment of all creditors of
the Corporation, the holders of each series of the Cumulative
Preferred Stock at the time outstanding shall be entitled to
be paid in cash the amount for the particular series fixed
therefor as herein provided, together with a sum in the case
of each share of each series, computed at the annual dividend
rate for the series of which the particular share is a part,
from the date from which dividends on such share became
cumulative to the date fixed for the payment of such
distributive amount, less the aggregate of the dividends
theretofore or on such date paid thereon; but no payments on
account of such distributive amounts shall be made to the
holders of any series of the Cumulative Preferred Stock unless
there shall likewise be paid at the same time to the holders
of each other series of the Cumulative Preferred Stock at the
time outstanding like proportionate distributive amounts,
ratably, in proportion to the full distributive amounts to
which they are respectively entitled as herein provided. The
holders of the Cumulative Preferred Stock of any series shall
not be entitled to receive any amounts with respect thereto
upon any liquidation, dissolution or winding up of the
Corporation other than the amounts referred to in this para-
graph. Neither the consolidation or merger of the Corporation
with any other corporation or corporations, nor the sale or
transfer by the Corporation of all or any part of its assets,
shall be deemed to be liquidation, dissolution or winding up
of the Corporation.
(5) Whenever the full dividends on all series of the
Cumulative Preferred Stock at the time outstanding for all
past quarter-yearly dividend periods shall have been paid or
declared and set apart for payment, then, subject to the
provisions of subparagraph (7)(B)(d) hereof, such dividends
(payable in cash, stock or otherwise) as may be determined by
the Board of Directors may be declared and paid on the Common
Stock, but only out of funds legally available for the payment
of dividends; provided, however, that so long as any shares of
the Cumulative Preferred Stock of any series are outstanding,
the Corporation shall not declare or pay any dividends on the
Common Stock of the Corporation except as follows:
(a) If and so long as the Common Stock Equity at
the end of the calendar month immediately preceding the
date on which a dividend on Common Stock is declared is,
or as a result of such dividend would become, less than
20% of total capitalization, the Corporation shall not
declare such dividend in an amount which, together with
all other dividends on Common Stock paid within the year
ending with and including the date on which such dividend
is payable, exceeds 50% of the net income of the
Corporation available for dividends on the Common Stock
(less any Depreciation Deficiency) for the twelve full
calendar months immediately preceding the month in which
such dividend is declared, except in an amount not
exceeding the aggregate of dividends on Common Stock
which could have been, but have not been, declared under
this clause (a); and
(b) If and so long as the Common Stock Equity at
the end of the calendar month immediately preceding the
date on which a dividend on Common Stock is declared is,
or as a result of such dividend would become, less than
25% but not less than 20% of total capitalization, the
Corporation shall not declare such dividend in an amount
which, together with all other dividends on Common Stock
paid within the year ending with and including the date
on which such dividend is payable, exceeds 75% of the net
income of the Corporation available for dividends on the
Common Stock (less any Depreciation Deficiency) for the
twelve full calendar months immediately preceding the
month in which such dividend is declared, except in an
amount not exceeding the aggregate of dividends on Common
Stock which could have been, but have not been, declared
under clause (a) above and this clause (b); and
(c) At any time when the Common Stock Equity is 25%
or more of total capitalization, the Corporation may not
declare dividends on shares of the Common Stock which
would reduce the Common Stock Equity below 25% of total
capitalization, except to the extent provided in clause
(a) and clause (b) above.
For the purposes of this paragraph (5) only:
(i) The term "Common Stock Equity" shall
mean the sum of the par value of, or stated value
or capital represented by, the shares of Common
Stock of the Corporation outstanding, and the
surplus, earned, capital, and paid-in, of the
Corporation (including any premiums on Common Stock
but excluding any premiums on the Cumulative
Preferred Stock) whether or not available for the
payment of dividends on the Common Stock; provided,
however, that there shall be deducted from such sum
(I) the amount of any Depreciation Deficiency for
the period from December 31, 1952 to the end of the
calendar month immediately preceding the date on
which a dividend on Common Stock is declared and
(II) the amount, if any, by which the aggregate of
all amounts payable upon the involuntary
dissolution, liquidation or winding up of the
Corporation to the holders of the Cumulative
Preferred Stock and of any other class of stock
ranking prior to or on a parity with the Cumulative
Preferred Stock as to dividends or distributions
exceeds the aggregate of the capital of the
Corporation applicable to such Cumulative Preferred
Stock and class of stock ranking prior to or on a
parity with the Cumulative Preferred Stock as to
dividends or distributions;
(ii) The term "total capitalization" shall
mean the sum of the par value of, or stated value
or capital represented by, the capital stock of all
classes of the Corporation outstanding, the
surplus, earned, capital and paid-in, of the
Corporation (including any premiums on any such
capital stock), whether or not available for the
payment of dividends on the Common Stock, and the
principal amount of all debt of the Corporation
outstanding, maturing more than twelve months after
the date of the determination of the total
capitalization, less any amount required to be
deducted in the determination of Common Stock
Equity as in clause (i) above provided;
(iii) The term "dividends on Common Stock"
shall embrace dividends on Common Stock of the
Corporation (other than dividends payable only in
shares of such Common Stock), distributions on, and
purchases or other acquisitions for value of any
Common Stock of the Corporation; and
(iv) The term "Depreciation Deficiency"
shall mean, as to any specified period, the amount by
which the aggregate of (I) all amounts credited to
the depreciation reserve account of the Corporation
through charges to operating revenue deductions or
otherwise as provided in the Uniform System of
Accounts prescribed for Public Utilities and
Licensees by the Federal Energy Regulatory
Commission and of (II) all charges for maintenance,
shall have been less than 15% of all operating
revenues of the Corporation (excluding therefrom
non-operating income and revenues derived directly
from properties leased to the Corporation), less
all charges to income made by the Corporation for
purchased power and for the net amount of electric
energy received by the Corporation through
interchange.
(6) In the event of any liquidation, dissolution or
winding up of the Corporation, all assets and funds of the
Corporation remaining after paying or providing for the
payment of all creditors of the Corporation, and after paying
or providing for the payment to the holders of shares of all
series of the Cumulative Preferred Stock of the full
distributive amounts to which they are respectively entitled
as herein provided, shall be divided among and paid to the
holders of the Common Stock according to their respective
rights and interests.
(7)(A) So long as any shares of the Cumulative Preferred
Stock of any series are outstanding, the Corporation shall
not, without the consent (given by vote at a meeting called
for that purpose) of the holders of such shares entitled to
cast at least two-thirds of the total number of votes which
holders of the Cumulative Preferred Stock then outstanding are
entitled to cast:
(a) Create, authorize or issue any stock (other
than a series of the Cumulative Preferred Stock) ranking
prior to or on a parity with the Cumulative Preferred
Stock as to dividends or distributions, or any obligation
or security convertible into shares of any such stock;
provided, however, that any such stock, obligation or
security (other than stock issued in connection with the
conversion of any such obligation or security) shall not
be issued except within a period of 180 days after the
meeting at which consent to the issuance thereof shall be
given; or
(b) Amend, alter, change or repeal any of the
express terms of the Cumulative Preferred Stock or of any
series of the Cumulative Preferred Stock then outstanding
in a manner substantially prejudicial to the holders
thereof; provided, however, that if any such amendment,
alteration, change or repeal would be substantially
prejudicial to the holders of one or more, but not all,
of the series of the Cumulative Preferred Stock at the
time outstanding, only such consent of the holders of
two-thirds of the total number of shares of all series
prejudicially affected shall be required.
(B) So long as any shares of the Cumulative Preferred
Stock of any series are outstanding, the Corporation shall
not, without the consent (given by vote at a meeting called
for that purpose) of the holders of such shares entitled to
cast a majority of the total number of votes which holders of
the Cumulative Preferred Stock then outstanding are entitled
to cast:
(a) Increase the total authorized amount of the
Cumulative Preferred Stock; or
(b) Merge or consolidate with or into any other
corporation or corporations, unless such merger or con-
solidation, or the issuance and assumption of all
securities to be issued or assumed in connection with any
such merger or consolidation, shall have been ordered,
approved, or permitted by the Securities and Exchange
Commission, or by any successor commission or regulatory
authority of the United States of America having juris-
diction in the premises, under the provisions of the
Public Utility Holding Company Act of 1935 as at the time
in effect or any legislation enacted in substitution
therefor, provided that the provisions of this clause (b)
shall not apply to a purchase or other acquisition by the
Corporation of franchises or assets of another
corporation in any manner which does not involve a merger
or consolidation; or
(c) Issue or assume any unsecured debt securities
for purposes other than
(i) the reacquisition, redemption or other
retirement of any evidences of indebtedness
theretofore issued or assumed by the Corporation,
or
(ii) the reacquisition, redemption or other
retirement of all outstanding shares of the
Cumulative Preferred Stock,
if, immediately after such issue or assumption, the total
principal amount of all unsecured debt securities (other than
the principal amount of all long-term unsecured debt
securities not in excess of 10% of the Capitalization of the
Corporation) issued or assumed by the Corporation and then
outstanding would exceed 10% of the Capitalization of the
Corporation.
For the purposes of this subparagraph (c) only:
(I) "unsecured debt securities" shall be
deemed to mean any unsecured notes, debentures, or
other securities representing unsecured
indebtedness, but shall not include contractual
commitments and agreements for the purchase of
property, materials, power, energy or equipment to
be used, consumed or resold in the ordinary course
of the Corporation's business;
(II) "long-term unsecured debt securities"
shall be deemed to mean all unsecured debt
securities outstanding, as of any specified time of
computation, other than (x) unsecured debt
securities maturing by their terms on a date less
than ten years subsequent to such time of
computation, and (y) the principal amount required
under any sinking fund or other debt retirement
provision, to be reacquired, redeemed or otherwise
retired by the Corporation on a date less than ten
years subsequent to such time of computation;
provided, however, that the principal amount of any
class of unsecured debt securities, which at the
time of issuance or assumption by the Corporation
matured by its terms on a date ten or more years
subsequent to such issuance or assumption, and
which at the time of such computation (aa) is not
required to be reacquired, redeemed or otherwise
retired, through sinking fund or other debt
retirement provision, prior to the maturity of such
class or (bb) represents the final maturity of a
series of maturities within such class, shall
continue to be deemed to be long-term unsecured
debt securities until such final requirement or
maturity shall occur on a date less than five years
subsequent to such time of computation; and
(III) the "Capitalization of the Corporation"
shall be deemed to mean, as of any specified time
of computation, an amount equal to the sum of the
total principal amount of all bonds or other debt
securities representing secured indebtedness issued
or assumed by the Corporation and then to be
outstanding, and the aggregate of the par value of,
or stated capital represented by, the outstanding
shares of all classes of stock and of the surplus
of the Corporation, paid in, earned and other, if
any; or
(d) Issue, sell or otherwise dispose of any shares
of the Cumulative Preferred Stock unless (i) the net
income of the Corporation, determined in accordance with
generally accepted accounting practices to be available
for the payment of dividends for a period of twelve (12)
consecutive calendar months within the fifteen (15)
calendar months immediately preceding the issuance, sale
or disposition of such stock (but less any Depreciation
Deficiency for said period), shall have been at least
equal to twice the annual dividend requirements on all
outstanding shares of the Cumulative Preferred Stock,
including the shares proposed to be issued; (ii) the
gross income of the Corporation for said period,
determined in accordance with generally accepted
accounting practices (but in any event after deducting
the amount for said period charged by the Corporation on
its books to depreciation expense and in addition thereto
any Depreciation Deficiency for said period) to be
available for the payment of interest, shall have been at
least one and one-half times the sum of (I) the annual
interest charges on all interest bearing indebtedness of
the Corporation and (II) the annual dividend requirements
on all outstanding shares of the Cumulative Preferred
Stock and of all other classes of stock ranking prior to
or on a parity with the Cumulative Preferred Stock as to
dividends or distributions, including the shares proposed
to be issued; and (iii) the aggregate of the capital of
the Corporation applicable to the Common Stock and of the
surplus of the Corporation immediately after such
issuance, sale or other disposition, less any
Depreciation Deficiency for the period from December 31,
1952 to such date, shall be not less than the amount
payable upon the involuntary dissolution, liquidation or
winding up of the Corporation to the holders of the
Cumulative Preferred Stock, excluding from the foregoing
computation all stock which is to be retired in
connection with such additional issue; provided, that the
Corporation shall not thereafter pay any dividends on the
Common Stock unless immediately thereafter the aggregate
of the capital of the Corporation applicable to the
Common Stock and of the surplus of the Corporation, less
than Depreciation Deficiency for the period from December
31, 1952 to such date, shall be not less than the amount
payable upon the involuntary dissolution, liquidation or
winding up of the Corporation to the holders of the
Cumulative Preferred Stock.
For the purposes of this subparagraph (d) only, the
term "Depreciation Deficiency" shall mean, as to any
specified period, the amount by which the aggregate of
(i) all amounts credited to the depreciation reserve
account of the Corporation through charges to operating
revenue deductions or otherwise as provided in the
Uniform System of Accounts prescribed for Public
Utilities and Licensees by the Federal Energy Regulatory
Commission and of (ii) all charges for maintenance, shall
have been less than 15% of all operating revenues of the
Corporation (excluding therefrom non-operating income and
revenues derived directly from properties leased to the
Corporation), less all charges to income made by the
Corporation for purchased power and for the net amount of
electric energy received by the Corporation through
interchange.
(8)(A) Every holder of the Common Stock shall have one
vote for each share of Common Stock held by him, for the
election of Directors and upon all other matters, except as
otherwise provided in this paragraph (8) hereof. No holder of
the Cumulative Preferred Stock shall be entitled to vote at
any meeting of stockholders or at any election of the
Corporation or otherwise to participate in any action taken by
the Corporation or the stockholders thereof, except for those
purposes, if any, for which said right to vote or otherwise to
participate cannot be denied or waived under the laws of the
State of Indiana and except as otherwise provided in
paragraphs (7), (8) and (10)(c) hereof. Whenever the holders
of the Cumulative Preferred Stock shall be entitled to vote as
a class for the election of Directors or on any other matter,
the holders of shares of Cumulative Preferred Stock with a par
value of $100 per share shall be entitled to cast one vote for
each such share and the holders of shares of Cumulative
Preferred Stock with a par value of $25 per share shall be
entitled to cast one-quarter of one vote for each such share.
(B) If and when dividends payable on the Cumulative
Preferred Stock shall be in default in any amount equivalent
to four full quarter-yearly dividends on all shares of all
series of the Cumulative Preferred Stock at the time
outstanding, and until all dividends in default on the
Cumulative Preferred Stock shall have been paid, the holders
of all shares of the Cumulative Preferred Stock, voting
separately as one class, shall be entitled to elect the
smallest number of Directors necessary to constitute a
majority of the full Board of Directors, and the holders of
the Common Stock, voting separately as a class, shall be
entitled to elect the remaining Directors of the Corporation.
The terms of office of all persons who may be Directors of the
Corporation at the time shall terminate upon the election of
a majority of the Board of Directors by the holders of the
Cumulative Preferred Stock, except that if the holders of the
Common Stock shall not have elected the remaining Directors of
the Corporation, then, and only in that event, the Directors
of the Corporation in office just prior to the election of a
majority of the Board of Directors by the holders of the
Cumulative Preferred Stock shall elect the remaining Directors
of the Corporation.
(C) If and when all dividends then in default on the
Cumulative Preferred Stock at the time outstanding shall be
paid (and such dividends shall be declared and paid out of any
funds legally available therefor as soon as reasonably
practicable), the Cumulative Preferred Stock shall thereupon
be divested of any special right with respect to the election
of Directors provided in subparagraph (B) hereof, and the
voting power of the Common Stock shall revert to the status
existing before the occurrence of such default; but always
subject to the same provisions for vesting such special rights
in the Cumulative Preferred Stock in case of further like
default or defaults in dividends thereon. Upon the
termination of any such special right the terms of office of
all persons who may have been elected Directors of the
Corporation by vote of the holders of the Cumulative Preferred
Stock, as a class, pursuant to such special right shall
forthwith terminate.
(D) In case of any vacancy in the Board of Directors
occurring among the Directors elected by the holders of the
Cumulative Preferred Stock, as a class, pursuant to subpara-
graph (B) hereof, such vacancy shall be filled by the vote of
a majority of the remaining Directors (or by the remaining
Director if there be but one) elected by the holders of the
Cumulative Preferred Stock. In case of a vacancy in the Board
of Directors occurring among the Directors elected otherwise
than by the holders of the Cumulative Preferred Stock, such
vacancy shall be filled by the vote of a majority of the
remaining Directors (or by the remaining Director if there be
but one) elected otherwise than by the holders of the
Cumulative Preferred Stock.
(E) Whenever the holders of the Cumulative Preferred
Stock, as a class, become entitled to elect Directors of the
Corporation pursuant to subparagraph (B) hereof, it shall be
the duty of the president, a vice-president or the secretary
of the Corporation forthwith to call, and to cause notice to
be given to the stockholders entitled to vote at, a meeting to
be held at such time as the Corporation's officers may fix,
not less than thirty nor more than sixty days after the
accrual of such right, for the purpose of electing Directors.
The notice so given shall be mailed to each holder of record
of the Cumulative Preferred Stock at such address as appears
upon the records of the Corporation and shall set forth, among
other things, (i) that by reason of the fact that dividends
payable on the Cumulative Preferred Stock are in default in an
amount equivalent to four full quarter-yearly dividends, the
holders of the Cumulative Preferred Stock, voting separately
as a class, have the right to elect the smallest number of
Directors necessary to constitute a majority of the full Board
of Directors of the Corporation, (ii) that any holder of the
Cumulative Preferred Stock has the right, at any reasonable
time, to inspect, and make copies of, the list or lists of
holders of the Cumulative Preferred Stock maintained at the
principal office of the Corporation or at the office of any
Transfer Agent of the Cumulative Preferred Stock, and (iii)
either the entirety of this paragraph or the substance thereof
with respect to the number of shares of the Cumulative
Preferred Stock required to be represented at any meeting, or
adjournment thereof, called for the election of Directors of
the Corporation. At the first meeting of stockholders held
for the purpose of electing Directors during such time as the
holders of the Cumulative Preferred Stock shall have the
special right, voting separately as a class, to elect
Directors, the presence in person or by proxy of the holders
of a majority of the outstanding shares of Common Stock shall
be required to constitute a quorum of such class for the
election of Directors, and the presence in person or by proxy
of the holders of shares entitled to cast a majority of the
votes which holders of the outstanding Cumulative Preferred
Stock are entitled to cast shall be required to constitute a
quorum of such class for the election of Directors; provided,
however, that in the absence of a quorum of the holders of the
Cumulative Preferred Stock, no election of Directors shall be
held, but a majority of the holders of the Cumulative
Preferred Stock who are present in person or by proxy shall
have power to adjourn the election of the Directors to a date
not less than fifteen nor more than fifty days from the giving
of the notice of such adjourned meeting hereinafter provided
for; and provided, further, that at such adjourned meeting,
the presence in person or by proxy of the holders of shares
entitled to cost 35% of the total number of votes which
holders of the outstanding Cumulative Preferred Stock are
entitled to cast shall be required to constitute a quorum of
such class for the election of Directors. In the event such
first meeting of stockholders shall be so adjourned, it shall
be the duty of the president, a vice-president or the
secretary of the Corporation, within ten days from the date on
which such first meeting shall have been adjourned, to cause
notice of such adjourned meeting to be given to the
stockholders entitled to vote thereat, such adjourned meeting
to be held not less than fifteen days nor more than fifty days
from the giving of such second notice. Such second notice
shall be given in the form and manner hereinabove provided for
with respect to the notice required to be given of such first
meeting of stockholders, and shall further set forth that a
quorum was not present at such first meeting and that the
holders of shares entitled to cast 35% of the total number of
votes which holders of the outstanding Cumulative Preferred
Stock are entitled to cast shall be required to constitute a
quorum of such class for the election of Directors at such
adjourned meeting. If the requisite quorum of holders of the
Cumulative Preferred Stock shall not be present at said
adjourned meeting, then the Directors of the Corporation then
in office shall remain in office until the next Annual Meeting
of the Corporation, or special meeting in lieu thereof, and
until their successors shall have been elected and shall
qualify. Neither such first meeting nor such adjourned
meeting shall be held on a date within sixty days of the date
of the next Annual Meeting of the Corporation or special
meeting in lieu thereof. At each Annual Meeting of the
Corporation, or special meeting in lieu thereof, held during
such time as the holders of the Cumulative Preferred Stock,
voting separately as a class, shall have the right to elect a
majority of the Board of Directors, the foregoing provisions
of this subparagraph shall govern such Annual Meeting, or
special meeting in lieu thereof, as if said Annual Meeting or
special meeting were the first meeting of stockholders held
for the purpose of electing Directors after the right of the
holders of the Cumulative Preferred Stock, voting separately
as a class, to elect a majority of the Board of Directors,
should have accrued, with the exception that, until the
holders of the Cumulative Preferred Stock shall have elected
a majority of the Board of Directors, if at any adjourned
Annual Meeting, or special meeting in lieu thereof, holders of
shares entitled to cast 35% of the total number of votes which
holders of the outstanding Cumulative Preferred Stock are
entitled to cast are not present in person or by proxy, all
the Directors to be elected shall be elected by a vote of the
holders of a majority of the shares of Common Stock of the
Corporation present or represented at the meeting.
(F) Except when some mandatory provision of law shall
be controlling and except as otherwise provided in
subparagraph (7)(A)(b) hereof, whenever shares of two or more
series of the Cumulative Preferred Stock are outstanding, no
particular series of the Cumulative Preferred Stock shall be
entitled to vote as a separate series on any matter and all
shares of the Cumulative Preferred Stock of all series shall
be deemed to constitute but one class for any purpose for
which a vote of the stockholders of the Corporation by classes
may now or hereafter be required.
(9) The Corporation hereby classifies $12,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock which shall be designated as "4-
1/8% Cumulative Preferred Stock", consisting of 120,000 shares
of the par value of $100 per share.
(10) The preferences, rights, qualifications, limitations
and restrictions of the shares of the 4-1/8% Cumulative
Preferred Stock, in the respects in which the shares of such
series may vary from shares of other series of the Cumulative
Preferred Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 4-1/8% per annum;
(b) The redemption price for such series shall be
$108.125 per share until October 1, 1949, and on and
after October 1, 1949, $106.125 per share;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
liquidation, dissolution or winding up of the Corporation
shall be:
$105.125 per share, upon any voluntary liquidation,
dissolution or winding up of the Corporation, except that
if such voluntary liquidation, dissolution or winding up
of the Corporation shall have been approved by the vote
in favor thereof of the holders of a majority of the
total number of shares of the 4-1/8% Cumulative Preferred
Stock then outstanding, given at a meeting called for
that purpose, the amount so payable on such voluntary
liquidation, dissolution, or winding up shall be $100 per
share; or
$100 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation; and
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of the 4-1/8%
Cumulative Preferred Stock.
(11) The Corporation hereby classifies $6,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"4.56% Cumulative Preferred Stock", consisting of 60,000
shares of the par value of $100 each.
(12) The relative rights, preferences, limitations, and
restrictions of the shares of the 4.56% Cumulative Preferred
Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 4.56% per annum;
(b) Such series shall not be subject to redemption
prior to October 1, 1956; the redemption price for shares
of such series shall be $104 per share on and after
October 1, 1956 but prior to October 1, 1958; $103 per
share on and after October 1, 1958 but prior to October
1, 1963; and $102 per share on October 1, 1963 and
thereafter;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be $100 per share;
and
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of the 4.56%
Cumulative Preferred Stock.
(13) The Corporation hereby classifies $4,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"4.12% Cumulative Preferred Stock", consisting of 40,000
shares of the par value of $100 each.
(14) The relative rights, preferences, limitations and
restrictions of the shares of the 4.12% Cumulative Preferred
Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 4.12% per annum;
(b) The redemption price for such series shall be
$105.728 per share until October 1, 1959; $104.728 per
share on and after October 1, 1959 but prior to October
1, 1964; $103.728 per share on and after October 1, 1964
but prior to October 1, 1969; and $102.728 per share on
October 1, 1969 and thereafter;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or $100 per
share, in the event of any involuntary liquidation,
dissolution or winding up of the Corporation;
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of the 4.12%
Cumulative Preferred Stock.
(15) The Corporation hereby classifies $30,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"7.08% Cumulative Preferred Stock", consisting of 300,000
shares of the par value of $100 each.
(16) The relative rights, preferences, limitations and
restrictions of the shares of the 7.08% Cumulative Preferred
Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 7.08% per annum;
(b) The redemption price for such series shall be
$108.22 per share prior to February 1, 1976; $106.45 per
share on and after February 1, 1976 but prior to February
1, 1981; $104.68 per share on and after February 1, 1981
but prior to February 1, 1986; $102.91 per share on and
after February 1, 1986 but prior to February 1, 1991; and
$101.85 per share on February 1, 1991 and thereafter
provided, however, that no share of such series shall be
redeemed prior to February 1, 1976 if such redemption is
for the purpose or in anticipation of refunding such
share, directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 7.07% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or $100 per
share in the event of any involuntary liquidation,
dissolution or winding up of the Corporation; and
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of such series.
(17) The Corporation hereby classifies $35,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"7.76% Cumulative Preferred Stock", consisting of 350,000
shares of par value of $100 each.
(18) The relative rights, preferences, limitations and
restrictions of the shares of the 7.76% Cumulative Preferred
Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 7.76% per annum;
(b) The redemption price for such series shall be
$109.26 per share prior to November 1, 1976; $107.32 per
share on and after November 1, 1976 but prior to November
1, 1981; $105.38 per share on and after November 1, 1981
but prior to November 1, 1986; $103.44 per share on and
after November 1, 1986 but prior to November 1, 1991; and
$102.28 per share on November 1, 1991 and thereafter;
provided, however, that no share of such series shall be
redeemed prior to November 1, 1976 if such redemption is
for the purpose or in anticipation of refunding such
share, directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 7.74% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or $100 per
share in the event of any involuntary liquidation,
dissolution or winding up of the Corporation;
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of such series.
(19) The Corporation hereby classifies $30,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"8.68% Cumulative Preferred Stock", consisting of 300,000
shares of the par value of $100 each.
(20) The relative rights, preferences, limitations and
restrictions of the shares of the 8.68% Cumulative Preferred
Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 8.68% per annum;
(b) The redemption price for such series shall be
$109.61 per share prior to December 1, 1978; $107.44 per
share on and after December 1, 1978 but prior to December
1, 1983; $105.27 per share on and after December 1, 1983
but prior to December 1, 1988; $103.10 per share on and
after December 1, 1988 but prior to December 1, 1993; and
$101.80 per share on December 1, 1993 and thereafter;
provided, however, that no share of such series shall be
redeemed prior to December 1, 1978 if such redemption is
for the purpose or in anticipation of refunding such
share directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 8.68% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or $100 per
share in the event of any involuntary liquidation,
dissolution or winding up of the Corporation;
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of such series.
(21) The Corporation hereby classifies $30,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as "12%
Cumulative Preferred Stock", consisting of 300,000 shares of
the par value of $100 each.
(22) The relative rights preferences, limitations and
restrictions of the shares of the 12% Cumulative Preferred
Stock shall be as follows:
(a) The annual dividend rate for such series shall
be 12% per annum;
(b) The redemption price for such series shall be
$112.00 per share prior to September 1, 1985; $106.00 per
share on and after September 1, 1985 but prior to
September 1, 1990; $103.00 per share on and after
September 1, 1990 but prior to September 1, 1995; and
$101.20 per share on September 1, 1995 and thereafter;
provided, however, that no share of such series shall be
redeemed prior to September 1, 1980 if such redemption is
for the purpose or in anticipation of refunding such
share, directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 12.75% per annum;
(c) the preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price provided in subparagraph (b) hereof in effect at
the date of any voluntary liquidation, dissolution or
winding up of the Corporation; or $100 per share in the
event of any involuntary liquidation, dissolution or
winding up of the Corporation;
(d)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law on
October 1 in each year commencing with the year 1980,
redeem as and for a sinking fund requirement, out of
funds legally available therefor, a number of shares
equal to 5% of the total number of shares classified as
12% Cumulative Preferred Stock in paragraph (21) hereof
at a redemption price of $100 per share. The sinking
fund requirement shall be cumulative so that if on any
such October 1 the sinking fund requirement shall not
have been met, then such sinking fund requirement, to the
extent not met, shall become an additional sinking fund
requirement for the next succeeding October 1 on which
such redemption may be effected.
(2) The Corporation shall have the non-
cumulative option, on any sinking fund date as provided
in subparagraph (d)(1) hereof, to redeem at a redemption
price of $100 per share, an additional number of shares
equal to 5% of the total number of shares classified as
12% Cumulative Preferred Stock in paragraph (21) hereof.
No redemption made pursuant to this subparagraph (d)(2)
shall be deemed to fulfill any sinking fund requirement
established pursuant to subparagraph (d)(1).
(3) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on October 1 of any year pursuant to subparagraph
(d)(1) shares of such series theretofore purchased or
otherwise acquired by the Corporation.
(23) The Corporation hereby classifies $40,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"$2.15 Cumulative Preferred Stock", consisting of 1,600,000
shares of the par value of $25 each.
(24) The relative rights, preferences, limitations and
restrictions of the shares of the $2.15 Cumulative Preferred
Stock shall be as follows:
(a) The annual dividend rate for such series shall
be $2.15 per annum;
(b) The redemption price for such series shall be
$27.15 per share prior to May 1, 1982; $26.61 per share
on and after May 1, 1982 but prior to May 1, 1987; $26.08
per share on and after May 1, 1987 but prior to May 1,
1992; $25.54 per share on and after May 1, 1992 but prior
to May 1, 1997; and $25.22 per share on May 1, 1997 and
thereafter; provided, however, that no share of such
series shall be redeemed prior to May 1, 1982 if such
redemption is for the purpose or in anticipation of
refunding such share, directly or indirectly, through the
incurring of debt, or through the issuance of capital
stock ranking equally with or prior to the shares of such
series as to dividends or assets, if such debt has an
effective interest cost to the Corporation (computed in
accordance with generally accepted financial practice),
or such capital stock has an effective dividend cost to
the Corporation (so computed), of less than 8.99% per
annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price provided in subparagraph (b) hereof in effect at
the date of any voluntary liquidation, dissolution or
winding up of the Corporation; or $25 per share in the
event of any involuntary liquidation, dissolution or
winding up of the Corporation; and
(d) There shall not be any sinking fund
requirements for the purchase or redemption of the shares
of such series.
(25) The Corporation hereby classifies $40,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"$2.25 Cumulative Preferred Stock", consisting of 1,600,000
shares of the par value of $25 each.
(26) The relative rights, preferences, limitations and
restrictions of the shares of the $2.25 Cumulative Preferred
Stock shall be as follows:
(a) The annual dividend rate for such series shall
be $2.25 per annum;
(b) The redemption price for such series shall be
$27.25 per share prior to March 1, 1983; $26.69 per share
on and after March 1, 1983 but prior to March 1, 1988;
$26.13 per share on and after March 1, 1988 but prior to
March 1, 1993; $25.56 per share on and after March 1,
1993 but prior to March 1, 1998; and $25.23 per share on
March 1, 1998 and thereafter; provided, however, that no
share of such series shall be redeemed prior to March 1,
1983 if such redemption is for the purpose or in
anticipation of refunding such share, directly or
indirectly, through the incurring of debt, or through the
issuance of capital stock ranking equally with or prior
to the shares of such series as to dividends or assets,
if such debt has an effective interest cost to the
Corporation (computed in accordance with generally
accepted financial practice), or such capital stock has
an effective dividend cost to the Corporation (so
computed), of less than 9.32% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price provided in subparagraph (b) hereof in effect at
the date of any voluntary liquidation, dissolution or
winding up of the Corporation; or $25 per share in the
event of any involuntary liquidation, dissolution or
winding up of the Corporation; and
(d) There shall not be any sinking fund
requirements for the purchase or redemption of the shares
of such series.
(27) The Corporation hereby classifies $40,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"$2.75 Cumulative Preferred Stock", consisting of 1,600,000
shares of the par value of $25 each.
(28) The relative rights, preferences, limitations and
restrictions of the shares of the $2.75 Cumulative Preferred
Stock shall be as follows:
(a) The annual dividend rate for such series shall
be $2.75 per annum;
(b) The redemption price for such series shall be
$27.75 per share prior to October 1, 1984; $27.07 per
share on and after October 1, 1984 but prior to October
1, 1989; $26.38 per share on and after October 1, 1989
but prior to October 1, 1994; $25.69 per share on and
after October 1, 1994 but prior to October 1, 1999;
$25.28 per share on October 1, 1999 and thereafter;
provided, however, that no share of such series shall be
redeemed prior to October 1, 1984 if such redemption is
for the purpose or in anticipation of refunding such
share, directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 11.31% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price provided in subparagraph (b) hereof in effect at
the date of any voluntary liquidation, dissolution or
winding up of the Corporation; or $25 per share in the
event of any involuntary liquidation, dissolution or
winding up of the Corporation; and
(d)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law on
October 1 in each year commencing with the year 1984,
redeem as and for a sinking fund requirement, out of
funds legally available therefor, a number of shares
equal to 5% of the total number of shares classified as
$2.75 Cumulative Preferred Stock in paragraph (27) hereof
at a redemption price of $25 per share. The sinking fund
requirement shall be cumulative so that if on any such
October 1 the sinking fund requirement shall not have
been met, then such sinking fund requirement, to the
extent not met, shall become an additional sinking fund
requirement for the next succeeding October 1 on which
such redemption may be effected.
(2) The Corporation shall have the non-
cumulative option, on any sinking fund date as provided
in subparagraph (d)(1) hereof, to redeem at a redemption
price of $25 per share, an additional number of shares
equal to 5% of the total number of shares classified as
$2.75 Cumulative Preferred Stock in paragraph (27)
hereof. No redemption made pursuant to this sub-
paragraph (d)(2) shall be deemed to fulfill any sinking
fund requirement established pursuant to subparagraph
(d)(1).
(3) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on October 1 of any year pursuant to subparagraph
(d)(1) shares of such series theretofore purchased or
otherwise acquired by the Corporation.
The Corporation hereby classifies $40,000,000 par
value of the Cumulative Preferred Stock as a series of
such Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"$3.63 Cumulative Preferred Stock", consisting of
1,600,000 shares of the par value of $25 each.
The relative rights, preferences, limitations and
restrictions of the shares of the $3.63 Cumu-lative
Preferred Stock shall be as follows:
(a) The annual dividend rate for such series shall
be $3.63 per annum;
(b) The redemption price for such series shall be
$28.63 per share prior to November 1, 1986; $27.72 per
share on and after November 1, 1986 but prior to November
1, 1991; $26.82 per share on and after November 1, 1991
but prior to November 1, 1996; and $25.91 per share on
and after November 1, 1996 but prior to November 1, 2001;
and $25.36 per share on November 1, 2001 and thereafter;
provided, however, that no share of such series shall be
redeemed prior to November 1, 1986 if such redemption is
for the purpose or in anticipation of refunding such
share, directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 15% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price provided in paragraph (b) hereof in effect at the
date of any voluntary liquidation, dissolution or winding
up of the Corporation; or $25 per share in the event of
any involuntary liquidation, dissolution or winding up of
the Corporation; and
(d)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law on
January 1 in each year commencing with the year 1987,
redeem as and for a sinking fund requirement, out of
funds legally available therefor, a number of shares
equal to 5% of the total number of shares classified as
$3.63 Cumulative Preferred Stock in this resolution at a
redemption price of $25 per share. The sinking fund
requirement shall be cumulative so that if on any such
January 1 the sinking fund requirement shall not have
been met, then such sinking fund requirement, to the
extent not met, shall become an additional sinking fund
requirement for the next succeeding January 1 on which
such redemption may be effected.
(2) The Corporation shall have the non-
cumulative option, on any sinking fund date as provided
in subparagraph (d)(1) hereof, to redeem at a redemption
price of $25 per share, an additional number of shares
equal to 5% of the total number of shares classified as
$3.63 Cumulative Preferred Stock in this resolution. No
redemption made pursuant to this subparagraph (d)(2)
shall be deemed to fulfill any sinking fund requirement
established pursuant to subparagraph (d)(1).
(3) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on January 1 of any year pursuant to subparagraph
(d)(1) shares of such series theretofore purchased or
otherwise acquired by the Corporation.
B. Common Stock
Each share of the Common Stock shall be equal in all respects
to every other share of the Common Stock.
____________________
All stock of the Corporation without par value, whether
authorized herein or upon subsequent increase of capital, may
be issued from time to time for such consideration as may be
fixed from time to time by the Board of Directors and approved
by any governmental authorities having jurisdiction in the
premises if and to the extent that such approval is required
by law.
7. As to the voting rights and powers of the shares of each
class and of each series see paragraphs (7), (8) and (10)(c) under
Article 6 above.
8. The stated capital of the Corporation at the time of
filing these Amended Articles is at least one thousand dollars
($1,000).
9. The maximum number of Directors of this Corporation shall
be fifteen (15). The exact number of Directors which shall
constitute the whole Board of Directors of this Corporation shall
be such as from time to time shall be specified by the by-laws, but
at not less than three (3) nor at more than fifteen (15). Whenever
the by-laws do not specify such exact number, then such number
shall be eleven (11). A majority in number of the Board of
Directors shall be bona fide residents and citizens of the State of
Indiana while acting as such Directors.
10. The names and post-office addresses of the Directors of
the Corporation are as follows:
Frank N. Bien, 180 East Broad Street,
Columbus, Ohio 43215
William A. Black, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
Lawrence R. Brunke, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
Richard E. Disbrow, 180 East Broad Street,
Columbus, Ohio 43215
John E. Dolan, 180 East Broad Street,
Columbus, Ohio 43215
Gerald E. LeMasters, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
Gerald P. Maloney, 2 Broadway,
New York, New York 10004
Richard C. Menge, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
C. Wayne Roahrig, 419 N. Walnut Street,
Muncie, Indiana 47305
Jack F. Stark, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
W. S. White, Jr., 180 East Broad Street,
Columbus, Ohio 43215
The names and addresses of the President and the
Secretary of the Corporation are as follows:
President: William A. Black, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
Secretary: John R. Burton, 180 East Broad Street,
Columbus, Ohio 43215
11. All meetings of stockholders may be held within or
without the State of Indiana at such place as shall be specified in
the call thereof.
INDIANA MICHIGAN POWER COMPANY
ARTICLES OF AMENDMENT
to the
AMENDED ARTICLES OF ACCEPTANCE, AS AMENDED
______________________________
Indiana Michigan Power Company (the "Corporation")
desiring to give notice of corporate action effectuating an
amendment of its Amended Articles of Acceptance, states that:
Article I - Amendment
1. The name of the Corporation is INDIANA MICHIGAN
POWER COMPANY.
2. Upon the effectiveness of these Articles of
Amendment, Article 6A of the Corporation's Amended Articles of
Acceptance shall be amended by adding a new paragraph (29), which
shall read as follows:
(29) (a) The designation, description and terms of a new
series of 300,000 shares of Cumulative Preferred Stock, $100
par value, are set forth in this paragraph (29). The
distinctive serial designation of such series which is here-by
created shall be "6-7/8% Cumulative Preferred Stock".
(b) The annual dividend rate for such series shall
be 6-7/8% per share per annum, which dividend shall be
calculated, per share, at such percentage multiplied by $100.
Dividends on all shares of said series issued prior to the
record date for the initial dividend payable on all shares of
such series shall be cumulative from the date of initial
issuance of the shares of such series.
(c) Such series shall not be subject to redemp-tion
prior to February 1, 2003; the regular redemption price for
shares of such series shall be $100 per share on or after
February 1, 2003, plus an amount equal to accrued and unpaid
dividends to the date of redemption.
(d) The preferential amounts to which the holders
of shares of such series shall be entitled upon any volun-tary
or involuntary liquidation, dissolution or winding up of the
Corporation shall be $100 per share, plus an amount equal to
accrued and unpaid dividends to the date of redemption.
(e)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as there
shall remain outstanding any shares of such series, the
Corporation shall, to the extent permitted by law, on April 1,
2003 and on each April 1 thereafter to and including April 1,
2007, redeem as and for a sinking fund requirement, out of
funds legally available therefor, a number of shares equal to
5% of the total number of shares initially classified as 6-
7/8% Cumulative Preferred Stock in this paragraph (29) at a
sinking fund redemption price of $100 per share plus accrued
and unpaid dividends to the date of redemption. The sinking
fund requirement shall be cumulative so that if on any such
April 1 the sinking fund requirement shall not have been met,
then such sinking fund requirement, to the extent not met,
shall become an additional sinking fund requirement for the
next succeeding April 1 on which such redemption may be
effected.
(e)(2) The remaining shares of such series
outstanding on April 1, 2008 will be redeemed, to the extent
permitted by law, by mandatory redemption, out of funds
legally available therefor, on such date at a mandatory
redemption price of $100 per share plus accrued and unpaid
dividends to the date of redemption.
(e)(3) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement due
on April 1 of any year pursuant to subparagraph (e)(1) shares
of such series theretofore purchased or otherwise acquired by
the Corporation and not previously credited against any such
sinking fund requirement.
(f) The shares of such series shall not have any
rights to convert the same into and/or purchase stock of any
other series or class or any other securities, or any special
rights other than those specified herein.
Article II - Manner of Adoption and Vote
1. The foregoing amendment was adopted by vote of the
Corporation's Board of Directors, on January 28, 1993.
2. The amendment was duly adopted by the Board of
Directors of the Corporation without shareholder action, and
shareholder action was not required.
3. The manner of adoption of the amendment by the
Corporation's Board of Directors constitutes full legal compliance
with the provisions of the Indiana Business Corporation Law and the
Corporation's Amended Articles of Acceptance and By-Laws.
In witness whereof, the undersigned officer of Indiana
Michigan Power Company has executed these Articles of Amendment,
this 28th day of January, 1993.
INDIANA MICHIGAN POWER COMPANY
By /s/ Jeffrey D. Cross
(Jeffrey D. Cross)
INDIANA MICHIGAN POWER COMPANY
ARTICLES OF AMENDMENT
to the
AMENDED ARTICLES OF ACCEPTANCE, AS AMENDED
______________________________
Indiana Michigan Power Company (the "Corporation")
desiring to give notice of corporate action effectuating an
amendment of its Amended Articles of Acceptance, states that:
Article I - Amendment
1. The name of the Corporation is INDIANA MICHIGAN
POWER COMPANY.
2. Upon the effectiveness of these Articles of
Amendment, Article 6A of the Corporation's Amended Articles of
Acceptance shall be amended by adding a new paragraph (30), which
shall read as follows:
(30) (a) The designation, description and terms of a new
series of 400,000 shares of Cumulative Preferred Stock, $100
par value, are set forth in this paragraph (30). The
distinctive serial designation of such series which is here-by
created shall be "5.90% Cumulative Preferred Stock".
(b) The annual dividend rate for such series shall
be 5.90% per share per annum, which dividend shall be
calculated, per share, at such percentage multiplied by $100.
Dividends on all shares of said series issued prior to the
record date for the initial dividend payable on all shares of
such series shall be cumulative from the date of initial
issuance of the shares of such series.
(c) Such series shall not be subject to redemp-tion
prior to November 1, 2003; the redemption price for shares of
such series shall be $100 per share on or after November 1,
2003, plus an amount equal to accrued and unpaid dividends to
the date of redemption.
(d) The preferential amounts to which the holders
of shares of such series shall be entitled upon any volun-tary
or involuntary liquidation, dissolution or winding up of the
Corporation shall be $100 per share, plus an amount equal to
accrued and unpaid dividends.
(e)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as there
shall remain outstanding any shares of such series, the
Corporation shall, to the extent permitted by law, on January
1, 2004 and on each January 1 thereafter to and including
January 1, 2008, redeem as and for a sinking fund requirement,
out of funds legally available therefor, a number of shares
equal to 5% of the total number of shares initially classified
as 5.90% Cumulative Preferred Stock in this paragraph (30) at
a sinking fund redemption price of $100 per share, plus
accrued and unpaid dividends to the date of redemption. The
remaining shares of such series outstanding on January 1, 2009
will be redeemed as a final sinking fund requirement, to the
extent permitted by law, out of funds legally available
therefor, on such date at a sinking fund redemption price of
$100 per share, plus accrued and unpaid dividends to the date
of redemption. The sinking fund requirement shall be
cumulative so that if on any such January 1 the sinking fund
requirement shall not have been met, then such sinking fund
requirement, to the extent not met, shall become an additional
sinking fund requirement for the next succeeding January 1 on
which such redemption may be effected.
(e)(2) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement due
on January 1 of any year pursuant to subparagraph (e)(1)
shares of such series theretofore purchased or otherwise
acquired by the Corporation and not previously credited
against any such sinking fund requirement.
(f) The shares of such series shall not have any
rights to convert the same into and/or purchase stock of any
other series or class or any other securities, or any special
rights other than those specified herein.
Article II - Manner of Adoption and Vote
1. The foregoing amendment was adopted by vote of the
Corporation's Board of Directors, on October 14, 1993.
2. The amendment was duly adopted by the Board of
Directors of the Corporation without shareholder action, and
shareholder action was not required.
3. The manner of adoption of the amendment by the
Corporation's Board of Directors constitutes full legal compliance
with the provisions of the Indiana Business Corporation Law and the
Corporation's Amended Articles of Acceptance and By-Laws.
In witness whereof, the undersigned officer of Indiana
Michigan Power Company has executed these Articles of Amendment,
this 28th day of October, 1993.
INDIANA MICHIGAN POWER COMPANY
By /s/ Jeffrey D. Cross
(Jeffrey D. Cross)
Assistant Secretary
INDIANA MICHIGAN POWER COMPANY
ARTICLES OF AMENDMENT
to the
AMENDED ARTICLES OF ACCEPTANCE, AS AMENDED
______________________________
Indiana Michigan Power Company (the "Corporation")
desiring to give notice of corporate action effectuating an
amendment of its Amended Articles of Acceptance, states that:
Recitals
A. The Corporation is authorized to issue 2,250,000 shares
of Cumulative Preferred Stock, $100 par value, in different series
and 11,200,000 shares of Cumulative Preferred Stock, $25 par value,
in different series.
B. The Corporation's Amended Articles of Acceptance, as
amended and in effect immediately prior to the effectiveness of
these Articles of Amendment, classify and designate nine such
series of Cumulative Preferred Stock, $100 par value, aggregating
2,170,000 shares and four such series of Cumulative Preferred
Stock, $25 par value, aggregating 6,400,000 shares, none of which
are currently outstanding and all of which constitute authorized
but unissued shares of Cumulative Preferred Stock, $25 par value,
undesignated as to series.
C. The series classified and designated by paragraphs (21)
and (22) of Article 6A of the Amended Articles of Acceptance,
consisting of 300,000 shares of 12% Cumulative Preferred Stock, has
been duly redeemed in whole, and the shares of such series are no
longer outstanding and constitute authorized but unissued shares of
Cumulative Preferred Stock, $100 par value, undesignated as to
series.
D. Subject to and in accordance with the provisions of
Article 6A of the Amended Articles of Acceptance, the Board of
Directors of the Corporation desires to classify and designate an
additional series of Cumulative Preferred Stock, $100 par value, of
the Corporation, as set forth herein.
Article I - Amendment
1. The name of the Corporation is INDIANA MICHIGAN
POWER COMPANY.
2. Upon the effectiveness of these Articles of
Amendment, Article 6A of the Corporation's Amended Articles of
Acceptance shall be amended by adding a new paragraph (31), which
shall read as follows:
(31) (a) The designation, description and terms of a new
series of 300,000 shares of Cumulative Preferred Stock, $100
par value, are set forth in this paragraph (31). The
distinctive serial designation of such series which is hereby
created shall be "6-1/4% Cumulative Preferred Stock".
(b) The annual dividend rate for such series shall
be 6-1/4% per share per annum, which dividend shall be
calculated, per share, at such percentage multiplied by $100.
Dividends on all shares of said series issued prior to the
record date for the initial dividend payable on all shares of
such series shall be cumulative from the date of initial
issuance of the shares of such series.
(c) Such series shall not be subject to redemption
prior to December 1, 2003; the redemption price for shares of
such series shall be $100 per share on or after December 1,
2003, plus an amount equal to accrued and unpaid dividends to
the date of redemption.
(d) The preferential amounts to which the holders
of shares of such series shall be entitled upon any voluntary
or involuntary liquidation, dissolution or winding up of the
Corporation shall be $100 per share, plus an amount equal to
accrued and unpaid dividends.
(e)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as there
shall remain outstanding any shares of such series, the
Corporation shall, to the extent permitted by law, on April 1,
2004 and on each April 1 thereafter to and including April 1,
2008, redeem as and for a sinking fund requirement, out of
funds legally available therefor, a number of shares equal to
5% of the total number of shares initially classified as 6-
1/4% Cumulative Preferred Stock in this paragraph (31) at a
sinking fund redemption price of $100 per share, plus accrued
and unpaid dividends to the date of redemption. The remaining
shares of such series outstanding on April 1, 2009 will be
redeemed as a final sinking fund requirement, to the extent
permitted by law, out of funds legally available therefor, on
such date at a sinking fund redemption price of $100 per
share, plus accrued and unpaid dividends to the date of
redemption. The sinking fund requirement shall be cumulative
so that if on any such April 1 the sinking fund requirement
shall not have been met, then such sinking fund requirement,
to the extent not met, shall become an additional sinking fund
requirement for the next succeeding April 1 on which such
redemption may be effected.
(e)(2) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement due
on April 1 of any year pursuant to subparagraph (e)(1) shares
of such series theretofore purchased or otherwise acquired by
the Corporation and not previously credited against any such
sinking fund requirement.
(f) The shares of such series shall not have any
rights to convert the same into and/or purchase stock of any
other series or class or any other securities, or any special
rights other than those specified herein.
Article II - Manner of Adoption and Vote
1. The foregoing amendment was adopted by vote of the
Corporation's Board of Directors, on November 18, 1993.
2. The amendment was duly adopted by the Board of
Directors of the Corporation without shareholder action, and
shareholder action was not required.
3. The manner of adoption of the amendment by the
Corporation's Board of Directors constitutes full legal compliance
with the provisions of the Indiana Business Corporation Law and the
Corporation's Amended Articles of Acceptance and By-Laws.
In witness whereof, the undersigned officer of Indiana
Michigan Power Company has executed these Articles of Amendment,
this 19th day of November, 1993.
INDIANA MICHIGAN POWER COMPANY
By /s/ Jeffrey D. Cross
(Jeffrey D. Cross)
Assistant Secretary
INDIANA MICHIGAN POWER COMPANY
ARTICLES OF AMENDMENT
to the
AMENDED ARTICLES OF ACCEPTANCE, AS AMENDED
______________________________
Indiana Michigan Power Company (the "Corporation")
desiring to give notice of corporate action effectuating an
amendment of its Amended Articles of Acceptance, states that:
Recitals
A. The Corporation is authorized to issue 2,250,000 shares
of Cumulative Preferred Stock, $100 par value, in different series
and 11,200,000 shares of Cumulative Preferred Stock, $25 par value,
in different series.
B. The series classified and designated by paragraphs (19)
and (20) of Article 6A of the Amended Articles of Acceptance,
consisting of 300,000 shares of 8.68% Cumulative Preferred Stock,
has been duly redeemed in whole, and the shares of such series are
no longer outstanding and constitute authorized but unissued shares
of Cumulative Preferred Stock, $100 par value, undesignated as to
series.
C. Subject to and in accordance with the provisions of
Article 6A of the Amended Articles of Acceptance, the Board of
Directors of the Corporation desires to classify and designate an
additional series of Cumulative Preferred Stock, $100 par value, of
the Corporation, as set forth herein.
Article I - Amendment
1. The name of the Corporation is INDIANA MICHIGAN
POWER COMPANY.
2. Upon the effectiveness of these Articles of
Amendment, Article 6A of the Corporation's Amended Articles of
Acceptance, as amended, shall be amended by adding a new paragraph
(32), which shall read as follows:
(32) (a) The designation, description and terms of a new
series of 350,000 shares of Cumulative Preferred Stock, $100
par value, are set forth in this paragraph (32). The
distinctive serial designation of such series which is hereby
created shall be "6.30% Cumulative Preferred Stock".
(b) The annual dividend rate for such series shall
be 6.30% per share per annum, which dividend shall be
calculated, per share, at such percentage multiplied by $100.
Dividends on all shares of said series issued prior to the
record date for the initial dividend payable on all shares of
such series shall be cumulative from the date of initial
issuance of the shares of such series.
(c) Such series shall not be subject to redemption
prior to March 1, 2004; the redemption price for shares of
such series shall be $100 per share on or after March 1, 2004,
plus an amount equal to accrued and unpaid dividends to the
date of redemption.
(d) The preferential amounts to which the holders
of shares of such series shall be entitled upon any voluntary
or involuntary liquidation, dissolution or winding up of the
Corporation shall be $100 per share, plus an amount equal to
accrued and unpaid dividends.
(e)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as there
shall remain outstanding any shares of such series, the
Corporation shall, to the extent permitted by law, on July 1,
2004 and on each July 1 thereafter to and including July 1,
2008, redeem as and for a sinking fund requirement, out of
funds legally available therefor, a number of shares equal to
5% of the total number of shares initially classified as 6.30%
Cumulative Preferred Stock in this paragraph (32) at a sinking
fund redemption price of $100 per share, plus accrued and
unpaid dividends to the date of redemption. The remaining
shares of such series outstanding on July 1, 2009 will be
redeemed as a final sinking fund requirement, to the extent
permitted by law, out of funds legally available therefor, on
such date at a sinking fund redemption price of $100 per
share, plus accrued and unpaid dividends to the date of
redemption. The sinking fund requirement shall be cumulative
so that if on any such July 1 the sinking fund requirement
shall not have been met, then such sinking fund requirement,
to the extent not met, shall become an additional sinking fund
requirement for the next succeeding July 1 on which such
redemption may be effected.
(e)(2) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement due
on July 1 of any year pursuant to subparagraph (e)(1) shares
of such series theretofore purchased or otherwise acquired by
the Corporation and not previously credited against any such
sinking fund requirement.
(f) The shares of such series shall not have any
rights to convert the same into and/or purchase stock of any
other series or class or any other securities, or any special
rights other than those specified herein.
Article II - Manner of Adoption and Vote
1. The foregoing amendment was adopted by vote of the
Corporation's Board of Directors, on January 13, 1994.
2. The amendment was duly adopted by the Board of
Directors of the Corporation without shareholder action, and
shareholder action was not required.
3. The manner of adoption of the amendment by the
Corporation's Board of Directors constitutes full legal compliance
with the provisions of the Indiana Business Corporation Law and the
Corporation's Amended Articles of Acceptance and By-Laws.
In witness whereof, the undersigned officer of Indiana
Michigan Power Company has executed these Articles of Amendment,
this 18th day of January, 1994.
INDIANA MICHIGAN POWER COMPANY
By /s/ John B. Shinnock
(John B. Shinnock)
Assistant Secretary
[COMPOSITE]
AMENDED ARTICLES OF ACCEPTANCE
OF
INDIANA MICHIGAN POWER COMPANY
ARTICLE I
1. The name of this Corporation shall be INDIANA MICHIGAN
POWER COMPANY.
2. The purpose or purposes of the Corporation are as
follows:
I. To generate and produce electricity and to transmit,
sell and distribute the same to the public, either directly or
through the sale of electric energy to other utilities, within
and without the States of Indiana and Michigan.
II. To engage in the business of mining coal and other
minerals or substances; to purchase, lease and otherwise
acquire coal lands, mines and the products thereof; to mine,
produce, store, sell and transport coal and other minerals or
substances and, to accomplish such purposes, to take, hold and
own real estate or interests therein, including leases,
permits or licenses granted under the provisions of the
Mineral Leasing Act of February 25, 1920, as amended, and to
own, operate and maintain such machinery, works, equipment and
appliances as the carrying out of the objects above mentioned
may require.
III. To transact any or all lawful business for which
corporations may be incorporated under the Indiana General
Corporation Act.
3. The period during which it is to continue as a
corporation is unlimited.
4. The post office address of its principal office is One
Summit Square, P. O. Box 60, Ft. Wayne, Indiana 46801. The name
and post office address of its resident agent is Elio Bafile, One
Summit Square, P. O. Box 60, Ft. Wayne, Indiana 46801.
5. The total number of shares into which its authorized
capital stock is to be divided is 15,950,000 shares, consisting of
shares as follows:
2,250,000 shares having a par value of $100;
11,200,000 shares having a par value of $25; and
2,500,000 shares without par value.
6. The number of shares of the capital stock of the
Corporation is to be divided into two classes, consisting of: (a)
two million five hundred thousand (2,500,000) shares, without
nominal or par value, of Common Stock and (b) two million two
hundred fifty thousand (2,250,000) shares, of the par value of $100
each, and eleven million two hundred thousand (11,200,000) shares,
of the par value of $25 each, of Cumulative Preferred Stock, which
may be issued in series as hereinafter provided. The voting
powers, designations, preferences, relative, participating,
optional or other special rights, qualifications, limitations or
restrictions of the above classes of stock, and the power of the
Board of Directors to cause the Cumulative Preferred Stock to be
issued in series, and the designation, description and terms of the
series of Cumulative Preferred Stock heretofore created, are as
follows:
A. Cumulative Preferred Stock
(1) Subject to and in accordance with the provisions of
this paragraph and the following paragraphs (2) through (28)
hereof, the Board of Directors is hereby empowered to cause
the Cumulative Preferred Stock to be issued in different
series. The shares of different series may vary, as may be
determined by the Board of Directors prior to the issue
thereof (except in the case of the series of Cumulative
Preferred Stock classified and designated in paragraphs (9)
through (28) hereof), as to:
(a) The distinctive serial designation and number
of shares of such series;
(b) The rate of dividends (within such limits as
shall be permitted by law) payable on the shares of the
particular series;
(c) The prices (not less than the amount limited by
law) and terms upon which the shares of the particular
series may be redeemed;
(d) The amount or amounts which shall be paid to
the holders of the shares of the particular series in
case of voluntary or involuntary dissolution or any
distribution of assets;
(e) The terms and amount of sinking fund
requirements (if any) for the purchase or redemption of
the shares of the particular series.
The shares of all series of the Cumulative Preferred Stock
shall in all other respects be equal, except as to the par
value thereof and the voting rights with respect thereto as
hereinafter provided.
(2) The holders of each series of the Cumulative
Preferred Stock at the time outstanding shall be entitled to
receive, but only when and as declared by the Board of
Directors, out of funds legally available for the payment of
dividends, cumulative preferential dividends, at the annual
dividend rate for the particular series fixed as herein
provided, payable quarter-yearly on dates to be fixed by the
Board of Directors, to stockholders of record on the
respective dates, not exceeding thirty (30) days and not less
than ten (10) days preceding such dividend payment dates, to
be fixed by the Board of Directors. Where the dividend rate
of any series of the Cumulative Preferred Stock with a par
value of $100 per share is designated as a specified
percentage per annum, the holders of such series shall be
entitled to receive annually dividends thereon calculated, per
share, at the percentage specified for such series multiplied
by $100. No dividends shall be declared on any series of the
Cumulative Preferred Stock in respect of any quarter-yearly
dividend period unless there shall likewise be declared on all
shares of all series of the Cumulative Preferred Stock at the
time outstanding, like proportionate dividends, ratably, in
proportion to the respective annual dividend rates fixed
therefor, in respect of the same quarter-yearly dividend
period, to the extent that such shares are entitled to receive
dividends for such quarter-yearly dividend period. The
dividends on shares of all series of the Cumulative Preferred
Stock shall be cumulative. In the case of all shares of each
particular series, the dividends on shares of such series
shall be cumulative from the date of issue thereof unless the
Corporation shall have established regular quarter-yearly
dividend periods with respect to such series, in which case
such dividends shall be cumulative from the first day of the
current quarter-yearly dividend period in which shares of such
series shall have been issued. Unless dividends on all
outstanding shares of each series of the Cumulative Preferred
Stock, at the annual dividend rate and from the dates for
accumulation thereof fixed as herein provided, shall have been
paid for all past quarter-yearly dividend periods, but without
interest on cumulative dividends, no dividends shall be paid
or declared and no other distribution shall be made on the
Common Stock, and no Common Stock shall be purchased or
otherwise acquired for value by the Corporation. The holders
of the Cumulative Preferred Stock of any series shall not be
entitled to receive any dividends thereon other than the
dividends referred to in this paragraph (2).
(3) The Corporation, by action of its Board of
Directors, may redeem the whole or any part of any series of
the Cumulative Preferred Stock, at any time or from time to
time, by paying in cash the redemption price of the shares of
the particular series, fixed therefor as herein provided,
together with a sum in the case of each share of each series
so to be redeemed, computed at the annual dividend rate for
the series of which the particular share is a part, from the
date from which dividends on such share became cumulative to
the date fixed for such redemption, less the aggregate of the
dividends theretofore or on such redemption date paid thereon.
Notice of every such redemption shall be given by publication
at least once in one daily newspaper printed in the English
language and of general circulation in Fort Wayne, Indiana,
and in one daily newspaper printed in the English language and
of general circulation in the Borough of Manhattan, The City
of New York, the first publication in such newspapers to be at
least thirty (30) days and not more than sixty (60) days prior
to the date fixed for such redemption. At least thirty (30)
days' and not more than sixty (60) days' previous notice of
every such redemption shall also be mailed to the holders of
record of the shares of the Cumulative Preferred Stock so to
be redeemed, at their respective addresses as the same shall
appear on the books of the Corporation; but no failure to mail
such notice nor any defect therein or in the mailing thereof
shall affect the validity of the proceedings for the
redemption of any shares of the Cumulative Preferred Stock so
to be redeemed. In case of the redemption of a part only of
any series of the Cumulative Preferred Stock at the time
outstanding, the Corporation shall select by lot the shares so
to be redeemed. The Board of Directors shall have full power
and authority, subject to the limitations and provisions
herein contained, to prescribe the manner in which, and the
terms and conditions upon which, the shares of the Cumulative
Preferred Stock shall be redeemed from time to time. If such
notice of redemption shall have been duly given by
publication, and if on or before the redemption date specified
in such notice all funds necessary for such redemption shall
have been set aside by the Corporation, separate and apart
from its other funds, in trust for the account of the holders
of the shares to be redeemed, so as to be and continue to be
available therefor, then, notwithstanding that any certificate
for such shares so called for redemption shall not have been
surrendered for cancellation, from and after the date fixed
for redemption, the shares represented thereby shall no longer
be deemed outstanding, the right to receive dividends thereon
shall cease to accrue and all rights with respect to such
shares so called for redemption shall forthwith on such
redemption date cease and terminate, except only the right of
the holders thereof to receive, out of the funds so set aside
in trust, the amount payable upon redemption thereof, without
interest; provided, however, that the Corporation may, after
giving notice by publication of any such redemption as
hereinbefore provided or after giving to the bank or trust
company hereinafter referred to irrevocable authorization to
give such notice by publication, and at any time prior to the
redemption date specified in such notice, deposit in trust,
for the account of the holders of the shares to be redeemed,
so as to be and continue to be available therefor, funds
necessary for such redemption with a bank or trust company in
good standing, organized under the laws of the United States
of America or of the State of New York, doing business in the
Borough of Manhattan, The City of New York, and having
capital, surplus and undivided profits aggregating at least
$50,000,000, or a bank or trust company in good standing
organized under the laws of the State of Indiana, doing
business in Fort Wayne, Indiana, selected by the Board of
Directors of the Corporation and designated in such notice of
redemption, and, upon such deposit in trust, all shares with
respect to which such deposits shall have been made shall no
longer be deemed to be outstanding, and all rights with
respect to such shares shall forthwith cease and terminate,
except only the right of the holders thereof to receive at any
time from and after the date of such deposit, the amount
payable upon the redemption thereof, without interest.
Nothing herein contained shall limit any right of the
Corporation to purchase or otherwise acquire any shares of the
Cumulative Preferred Stock; provided, however, that the
Corporation shall not redeem, purchase or otherwise acquire
any shares of the Cumulative Preferred Stock, if, at the time
of such redemption, purchase or other acquisition, dividends
payable on the Cumulative Preferred Stock of any Series of any
series shall be in default in whole or in part, unless, prior
to or concurrently with such redemption, purchase or other
acquisition, all such defaults shall be cured or unless such
redemption, purchase or other acquisition shall have been
ordered, approved or permitted by the Securities and Exchange
Commission, or by a successor commission or other regulatory
authority of the United States of America having jurisdiction
in the premises, under the provisions of the Public Utility
Holding Company Act of 1935 as at the time in effect or any
legislation enacted in substitution therefor.
(4) Before any amount shall be paid to, or any assets
distributed among, the holders of the Common Stock upon any
liquidation, dissolution or winding up of the Corporation, and
after paying or providing for the payment of all creditors of
the Corporation, the holders of each series of the Cumulative
Preferred Stock at the time outstanding shall be entitled to
be paid in cash the amount for the particular series fixed
therefor as herein provided, together with a sum in the case
of each share of each series, computed at the annual dividend
rate for the series of which the particular share is a part,
from the date from which dividends on such share became
cumulative to the date fixed for the payment of such
distributive amount, less the aggregate of the dividends
theretofore or on such date paid thereon; but no payments on
account of such distributive amounts shall be made to the
holders of any series of the Cumulative Preferred Stock unless
there shall likewise be paid at the same time to the holders
of each other series of the Cumulative Preferred Stock at the
time outstanding like proportionate distributive amounts,
ratably, in proportion to the full distributive amounts to
which they are respectively entitled as herein provided. The
holders of the Cumulative Preferred Stock of any series shall
not be entitled to receive any amounts with respect thereto
upon any liquidation, dissolution or winding up of the
Corporation other than the amounts referred to in this para-
graph. Neither the consolidation or merger of the Corporation
with any other corporation or corporations, nor the sale or
transfer by the Corporation of all or any part of its assets,
shall be deemed to be liquidation, dissolution or winding up
of the Corporation.
(5) Whenever the full dividends on all series of the
Cumulative Preferred Stock at the time outstanding for all
past quarter-yearly dividend periods shall have been paid or
declared and set apart for payment, then, subject to the
provisions of subparagraph (7)(B)(d) hereof, such dividends
(payable in cash, stock or otherwise) as may be determined by
the Board of Directors may be declared and paid on the Common
Stock, but only out of funds legally available for the payment
of dividends; provided, however, that so long as any shares of
the Cumulative Preferred Stock of any series are outstanding,
the Corporation shall not declare or pay any dividends on the
Common Stock of the Corporation except as follows:
(a) If and so long as the Common Stock Equity at
the end of the calendar month immediately preceding the
date on which a dividend on Common Stock is declared is,
or as a result of such dividend would become, less than
20% of total capitalization, the Corporation shall not
declare such dividend in an amount which, together with
all other dividends on Common Stock paid within the year
ending with and including the date on which such dividend
is payable, exceeds 50% of the net income of the
Corporation available for dividends on the Common Stock
(less any Depreciation Deficiency) for the twelve full
calendar months immediately preceding the month in which
such dividend is declared, except in an amount not
exceeding the aggregate of dividends on Common Stock
which could have been, but have not been, declared under
this clause (a); and
(b) If and so long as the Common Stock Equity at
the end of the calendar month immediately preceding the
date on which a dividend on Common Stock is declared is,
or as a result of such dividend would become, less than
25% but not less than 20% of total capitalization, the
Corporation shall not declare such dividend in an amount
which, together with all other dividends on Common Stock
paid within the year ending with and including the date
on which such dividend is payable, exceeds 75% of the net
income of the Corporation available for dividends on the
Common Stock (less any Depreciation Deficiency) for the
twelve full calendar months immediately preceding the
month in which such dividend is declared, except in an
amount not exceeding the aggregate of dividends on Common
Stock which could have been, but have not been, declared
under clause (a) above and this clause (b); and
(c) At any time when the Common Stock Equity is 25%
or more of total capitalization, the Corporation may not
declare dividends on shares of the Common Stock which
would reduce the Common Stock Equity below 25% of total
capitalization, except to the extent provided in clause
(a) and clause (b) above.
For the purposes of this paragraph (5) only:
(i) The term "Common Stock Equity" shall
mean the sum of the par value of, or stated value
or capital represented by, the shares of Common
Stock of the Corporation outstanding, and the
surplus, earned, capital, and paid-in, of the
Corporation (including any premiums on Common Stock
but excluding any premiums on the Cumulative
Preferred Stock) whether or not available for the
payment of dividends on the Common Stock; provided,
however, that there shall be deducted from such sum
(I) the amount of any Depreciation Deficiency for
the period from December 31, 1952 to the end of the
calendar month immediately preceding the date on
which a dividend on Common Stock is declared and
(II) the amount, if any, by which the aggregate of
all amounts payable upon the involuntary
dissolution, liquidation or winding up of the
Corporation to the holders of the Cumulative
Preferred Stock and of any other class of stock
ranking prior to or on a parity with the Cumulative
Preferred Stock as to dividends or distributions
exceeds the aggregate of the capital of the
Corporation applicable to such Cumulative Preferred
Stock and class of stock ranking prior to or on a
parity with the Cumulative Preferred Stock as to
dividends or distributions;
(ii) The term "total capitalization" shall
mean the sum of the par value of, or stated value
or capital represented by, the capital stock of all
classes of the Corporation outstanding, the
surplus, earned, capital and paid-in, of the
Corporation (including any premiums on any such
capital stock), whether or not available for the
payment of dividends on the Common Stock, and the
principal amount of all debt of the Corporation
outstanding, maturing more than twelve months after
the date of the determination of the total
capitalization, less any amount required to be
deducted in the determination of Common Stock
Equity as in clause (i) above provided;
(iii) The term "dividends on Common Stock"
shall embrace dividends on Common Stock of the
Corporation (other than dividends payable only in
shares of such Common Stock), distributions on, and
purchases or other acquisitions for value of any
Common Stock of the Corporation; and
(iv) The term "Depreciation Deficiency" shall
mean, as to any specified period, the amount by
which the aggregate of (I) all amounts credited to
the depreciation reserve account of the Corporation
through charges to operating revenue deductions or
otherwise as provided in the Uniform System of
Accounts prescribed for Public Utilities and
Licensees by the Federal Energy Regulatory
Commission and of (II) all charges for maintenance,
shall have been less than 15% of all operating
revenues of the Corporation (excluding therefrom
non-operating income and revenues derived directly
from properties leased to the Corporation), less
all charges to income made by the Corporation for
purchased power and for the net amount of electric
energy received by the Corporation through
interchange.
(6) In the event of any liquidation, dissolution or
winding up of the Corporation, all assets and funds of the
Corporation remaining after paying or providing for the
payment of all creditors of the Corporation, and after paying
or providing for the payment to the holders of shares of all
series of the Cumulative Preferred Stock of the full
distributive amounts to which they are respectively entitled
as herein provided, shall be divided among and paid to the
holders of the Common Stock according to their respective
rights and interests.
(7)(A) So long as any shares of the Cumulative Preferred
Stock of any series are outstanding, the Corporation shall
not, without the consent (given by vote at a meeting called
for that purpose) of the holders of such shares entitled to
cast at least two-thirds of the total number of votes which
holders of the Cumulative Preferred Stock then outstanding are
entitled to cast:
(a) Create, authorize or issue any stock (other
than a series of the Cumulative Preferred Stock) ranking
prior to or on a parity with the Cumulative Preferred
Stock as to dividends or distributions, or any obligation
or security convertible into shares of any such stock;
provided, however, that any such stock, obligation or
security (other than stock issued in connection with the
conversion of any such obligation or security) shall not
be issued except within a period of 180 days after the
meeting at which consent to the issuance thereof shall be
given; or
(b) Amend, alter, change or repeal any of the
express terms of the Cumulative Preferred Stock or of any
series of the Cumulative Preferred Stock then outstanding
in a manner substantially prejudicial to the holders
thereof; provided, however, that if any such amendment,
alteration, change or repeal would be substantially
prejudicial to the holders of one or more, but not all,
of the series of the Cumulative Preferred Stock at the
time outstanding, only such consent of the holders of
two-thirds of the total number of shares of all series
prejudicially affected shall be required.
(B) So long as any shares of the Cumulative Preferred
Stock of any series are outstanding, the Corporation shall
not, without the consent (given by vote at a meeting called
for that purpose) of the holders of such shares entitled to
cast a majority of the total number of votes which holders of
the Cumulative Preferred Stock then outstanding are entitled
to cast:
(a) Increase the total authorized amount of the
Cumulative Preferred Stock; or
(b) Merge or consolidate with or into any other
corporation or corporations, unless such merger or con-
solidation, or the issuance and assumption of all
securities to be issued or assumed in connection with any
such merger or consolidation, shall have been ordered,
approved, or permitted by the Securities and Exchange
Commission, or by any successor commission or regulatory
authority of the United States of America having juris-
diction in the premises, under the provisions of the
Public Utility Holding Company Act of 1935 as at the time
in effect or any legislation enacted in substitution
therefor, provided that the provisions of this clause (b)
shall not apply to a purchase or other acquisition by the
Corporation of franchises or assets of another
corporation in any manner which does not involve a merger
or consolidation; or
(c) Issue or assume any unsecured debt securities
for purposes other than
(i) the reacquisition, redemption or other
retirement of any evidences of indebtedness
theretofore issued or assumed by the Corporation,
or
(ii) the reacquisition, redemption or other
retirement of all outstanding shares of the
Cumulative Preferred Stock,
if, immediately after such issue or assumption, the total
principal amount of all unsecured debt securities (other than
the principal amount of all long-term unsecured debt
securities not in excess of 10% of the Capitalization of the
Corporation) issued or assumed by the Corporation and then
outstanding would exceed 10% of the Capitalization of the
Corporation.
For the purposes of this subparagraph (c) only:
(I) "unsecured debt securities" shall be
deemed to mean any unsecured notes, debentures, or
other securities representing unsecured
indebtedness, but shall not include contractual
commitments and agreements for the purchase of
property, materials, power, energy or equipment to
be used, consumed or resold in the ordinary course
of the Corporation's business;
(II) "long-term unsecured debt securities"
shall be deemed to mean all unsecured debt
securities outstanding, as of any specified time of
computation, other than (x) unsecured debt
securities maturing by their terms on a date less
than ten years subsequent to such time of
computation, and (y) the principal amount required
under any sinking fund or other debt retirement
provision, to be reacquired, redeemed or otherwise
retired by the Corporation on a date less than ten
years subsequent to such time of computation;
provided, however, that the principal amount of any
class of unsecured debt securities, which at the
time of issuance or assumption by the Corporation
matured by its terms on a date ten or more years
subsequent to such issuance or assumption, and
which at the time of such computation (aa) is not
required to be reacquired, redeemed or otherwise
retired, through sinking fund or other debt
retirement provision, prior to the maturity of such
class or (bb) represents the final maturity of a
series of maturities within such class, shall
continue to be deemed to be long-term unsecured
debt securities until such final requirement or
maturity shall occur on a date less than five years
subsequent to such time of computation; and
(III) the "Capitalization of the Corporation"
shall be deemed to mean, as of any specified time
of computation, an amount equal to the sum of the
total principal amount of all bonds or other debt
securities representing secured indebtedness issued
or assumed by the Corporation and then to be
outstanding, and the aggregate of the par value of,
or stated capital represented by, the outstanding
shares of all classes of stock and of the surplus
of the Corporation, paid in, earned and other, if
any; or
(d) Issue, sell or otherwise dispose of any shares
of the Cumulative Preferred Stock unless (i) the net
income of the Corporation, determined in accordance with
generally accepted accounting practices to be available
for the payment of dividends for a period of twelve (12)
consecutive calendar months within the fifteen (15)
calendar months immediately preceding the issuance, sale
or disposition of such stock (but less any Depreciation
Deficiency for said period), shall have been at least
equal to twice the annual dividend requirements on all
outstanding shares of the Cumulative Preferred Stock,
including the shares proposed to be issued; (ii) the
gross income of the Corporation for said period,
determined in accordance with generally accepted
accounting practices (but in any event after deducting
the amount for said period charged by the Corporation on
its books to depreciation expense and in addition thereto
any Depreciation Deficiency for said period) to be
available for the payment of interest, shall have been at
least one and one-half times the sum of (I) the annual
interest charges on all interest bearing indebtedness of
the Corporation and (II) the annual dividend requirements
on all outstanding shares of the Cumulative Preferred
Stock and of all other classes of stock ranking prior to
or on a parity with the Cumulative Preferred Stock as to
dividends or distributions, including the shares proposed
to be issued; and (iii) the aggregate of the capital of
the Corporation applicable to the Common Stock and of the
surplus of the Corporation immediately after such
issuance, sale or other disposition, less any
Depreciation Deficiency for the period from December 31,
1952 to such date, shall be not less than the amount
payable upon the involuntary dissolution, liquidation or
winding up of the Corporation to the holders of the
Cumulative Preferred Stock, excluding from the foregoing
computation all stock which is to be retired in
connection with such additional issue; provided, that the
Corporation shall not thereafter pay any dividends on the
Common Stock unless immediately thereafter the aggregate
of the capital of the Corporation applicable to the
Common Stock and of the surplus of the Corporation, less
than Depreciation Deficiency for the period from December
31, 1952 to such date, shall be not less than the amount
payable upon the involuntary dissolution, liquidation or
winding up of the Corporation to the holders of the
Cumulative Preferred Stock.
For the purposes of this subparagraph (d) only, the
term "Depreciation Deficiency" shall mean, as to any
specified period, the amount by which the aggregate of
(i) all amounts credited to the depreciation reserve
account of the Corporation through charges to operating
revenue deductions or otherwise as provided in the
Uniform System of Accounts prescribed for Public
Utilities and Licensees by the Federal Energy Regulatory
Commission and of (ii) all charges for maintenance, shall
have been less than 15% of all operating revenues of the
Corporation (excluding therefrom non-operating income and
revenues derived directly from properties leased to the
Corporation), less all charges to income made by the
Corporation for purchased power and for the net amount of
electric energy received by the Corporation through
interchange.
(8)(A) Every holder of the Common Stock shall have one
vote for each share of Common Stock held by him, for the
election of Directors and upon all other matters, except as
otherwise provided in this paragraph (8) hereof. No holder of
the Cumulative Preferred Stock shall be entitled to vote at
any meeting of stockholders or at any election of the
Corporation or otherwise to participate in any action taken by
the Corporation or the stockholders thereof, except for those
purposes, if any, for which said right to vote or otherwise to
participate cannot be denied or waived under the laws of the
State of Indiana and except as otherwise provided in
paragraphs (7), (8) and (10)(c) hereof. Whenever the holders
of the Cumulative Preferred Stock shall be entitled to vote as
a class for the election of Directors or on any other matter,
the holders of shares of Cumulative Preferred Stock with a par
value of $100 per share shall be entitled to cast one vote for
each such share and the holders of shares of Cumulative
Preferred Stock with a par value of $25 per share shall be
entitled to cast one-quarter of one vote for each such share.
(B) If and when dividends payable on the Cumulative
Preferred Stock shall be in default in any amount equivalent
to four full quarter-yearly dividends on all shares of all
series of the Cumulative Preferred Stock at the time
outstanding, and until all dividends in default on the
Cumulative Preferred Stock shall have been paid, the holders
of all shares of the Cumulative Preferred Stock, voting
separately as one class, shall be entitled to elect the
smallest number of Directors necessary to constitute a
majority of the full Board of Directors, and the holders of
the Common Stock, voting separately as a class, shall be
entitled to elect the remaining Directors of the Corporation.
The terms of office of all persons who may be Directors of the
Corporation at the time shall terminate upon the election of
a majority of the Board of Directors by the holders of the
Cumulative Preferred Stock, except that if the holders of the
Common Stock shall not have elected the remaining Directors of
the Corporation, then, and only in that event, the Directors
of the Corporation in office just prior to the election of a
majority of the Board of Directors by the holders of the
Cumulative Preferred Stock shall elect the remaining Directors
of the Corporation.
(C) If and when all dividends then in default on the
Cumulative Preferred Stock at the time outstanding shall be
paid (and such dividends shall be declared and paid out of any
funds legally available therefor as soon as reasonably
practicable), the Cumulative Preferred Stock shall thereupon
be divested of any special right with respect to the election
of Directors provided in subparagraph (B) hereof, and the
voting power of the Common Stock shall revert to the status
existing before the occurrence of such default; but always
subject to the same provisions for vesting such special rights
in the Cumulative Preferred Stock in case of further like
default or defaults in dividends thereon. Upon the
termination of any such special right the terms of office of
all persons who may have been elected Directors of the
Corporation by vote of the holders of the Cumulative Preferred
Stock, as a class, pursuant to such special right shall
forthwith terminate.
(D) In case of any vacancy in the Board of Directors
occurring among the Directors elected by the holders of the
Cumulative Preferred Stock, as a class, pursuant to subpara-
graph (B) hereof, such vacancy shall be filled by the vote of
a majority of the remaining Directors (or by the remaining
Director if there be but one) elected by the holders of the
Cumulative Preferred Stock. In case of a vacancy in the Board
of Directors occurring among the Directors elected otherwise
than by the holders of the Cumulative Preferred Stock, such
vacancy shall be filled by the vote of a majority of the
remaining Directors (or by the remaining Director if there be
but one) elected otherwise than by the holders of the
Cumulative Preferred Stock.
(E) Whenever the holders of the Cumulative Preferred
Stock, as a class, become entitled to elect Directors of the
Corporation pursuant to subparagraph (B) hereof, it shall be
the duty of the president, a vice-president or the secretary
of the Corporation forthwith to call, and to cause notice to
be given to the stockholders entitled to vote at, a meeting to
be held at such time as the Corporation's officers may fix,
not less than thirty nor more than sixty days after the
accrual of such right, for the purpose of electing Directors.
The notice so given shall be mailed to each holder of record
of the Cumulative Preferred Stock at such address as appears
upon the records of the Corporation and shall set forth, among
other things, (i) that by reason of the fact that dividends
payable on the Cumulative Preferred Stock are in default in an
amount equivalent to four full quarter-yearly dividends, the
holders of the Cumulative Preferred Stock, voting separately
as a class, have the right to elect the smallest number of
Directors necessary to constitute a majority of the full Board
of Directors of the Corporation, (ii) that any holder of the
Cumulative Preferred Stock has the right, at any reasonable
time, to inspect, and make copies of, the list or lists of
holders of the Cumulative Preferred Stock maintained at the
principal office of the Corporation or at the office of any
Transfer Agent of the Cumulative Preferred Stock, and (iii)
either the entirety of this paragraph or the substance thereof
with respect to the number of shares of the Cumulative
Preferred Stock required to be represented at any meeting, or
adjournment thereof, called for the election of Directors of
the Corporation. At the first meeting of stockholders held
for the purpose of electing Directors during such time as the
holders of the Cumulative Preferred Stock shall have the
special right, voting separately as a class, to elect
Directors, the presence in person or by proxy of the holders
of a majority of the outstanding shares of Common Stock shall
be required to constitute a quorum of such class for the
election of Directors, and the presence in person or by proxy
of the holders of shares entitled to cast a majority of the
votes which holders of the outstanding Cumulative Preferred
Stock are entitled to cast shall be required to constitute a
quorum of such class for the election of Directors; provided,
however, that in the absence of a quorum of the holders of the
Cumulative Preferred Stock, no election of Directors shall be
held, but a majority of the holders of the Cumulative
Preferred Stock who are present in person or by proxy shall
have power to adjourn the election of the Directors to a date
not less than fifteen nor more than fifty days from the giving
of the notice of such adjourned meeting hereinafter provided
for; and provided, further, that at such adjourned meeting,
the presence in person or by proxy of the holders of shares
entitled to cost 35% of the total number of votes which
holders of the outstanding Cumulative Preferred Stock are
entitled to cast shall be required to constitute a quorum of
such class for the election of Directors. In the event such
first meeting of stockholders shall be so adjourned, it shall
be the duty of the president, a vice-president or the
secretary of the Corporation, within ten days from the date on
which such first meeting shall have been adjourned, to cause
notice of such adjourned meeting to be given to the
stockholders entitled to vote thereat, such adjourned meeting
to be held not less than fifteen days nor more than fifty days
from the giving of such second notice. Such second notice
shall be given in the form and manner hereinabove provided for
with respect to the notice required to be given of such first
meeting of stockholders, and shall further set forth that a
quorum was not present at such first meeting and that the
holders of shares entitled to cast 35% of the total number of
votes which holders of the outstanding Cumulative Preferred
Stock are entitled to cast shall be required to constitute a
quorum of such class for the election of Directors at such
adjourned meeting. If the requisite quorum of holders of the
Cumulative Preferred Stock shall not be present at said
adjourned meeting, then the Directors of the Corporation then
in office shall remain in office until the next Annual Meeting
of the Corporation, or special meeting in lieu thereof, and
until their successors shall have been elected and shall
qualify. Neither such first meeting nor such adjourned
meeting shall be held on a date within sixty days of the date
of the next Annual Meeting of the Corporation or special
meeting in lieu thereof. At each Annual Meeting of the
Corporation, or special meeting in lieu thereof, held during
such time as the holders of the Cumulative Preferred Stock,
voting separately as a class, shall have the right to elect a
majority of the Board of Directors, the foregoing provisions
of this subparagraph shall govern such Annual Meeting, or
special meeting in lieu thereof, as if said Annual Meeting or
special meeting were the first meeting of stockholders held
for the purpose of electing Directors after the right of the
holders of the Cumulative Preferred Stock, voting separately
as a class, to elect a majority of the Board of Directors,
should have accrued, with the exception that, until the
holders of the Cumulative Preferred Stock shall have elected
a majority of the Board of Directors, if at any adjourned
Annual Meeting, or special meeting in lieu thereof, holders of
shares entitled to cast 35% of the total number of votes which
holders of the outstanding Cumulative Preferred Stock are
entitled to cast are not present in person or by proxy, all
the Directors to be elected shall be elected by a vote of the
holders of a majority of the shares of Common Stock of the
Corporation present or represented at the meeting.
(F) Except when some mandatory provision of law shall
be controlling and except as otherwise provided in
subparagraph (7)(A)(b) hereof, whenever shares of two or more
series of the Cumulative Preferred Stock are outstanding, no
particular series of the Cumulative Preferred Stock shall be
entitled to vote as a separate series on any matter and all
shares of the Cumulative Preferred Stock of all series shall
be deemed to constitute but one class for any purpose for
which a vote of the stockholders of the Corporation by classes
may now or hereafter be required.
(9) The Corporation hereby classifies $12,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock which shall be designated as "4-
1/8% Cumulative Preferred Stock", consisting of 120,000 shares
of the par value of $100 per share.
(10) The preferences, rights, qualifications, limitations
and restrictions of the shares of the 4-1/8% Cumulative
Preferred Stock, in the respects in which the shares of such
series may vary from shares of other series of the Cumulative
Preferred Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 4-1/8% per annum;
(b) The redemption price for such series shall be
$108.125 per share until October 1, 1949, and on and
after October 1, 1949, $106.125 per share;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
liquidation, dissolution or winding up of the Corporation
shall be:
$105.125 per share, upon any voluntary liquidation,
dissolution or winding up of the Corporation, except that
if such voluntary liquidation, dissolution or winding up
of the Corporation shall have been approved by the vote
in favor thereof of the holders of a majority of the
total number of shares of the 4-1/8% Cumulative Preferred
Stock then outstanding, given at a meeting called for
that purpose, the amount so payable on such voluntary
liquidation, dissolution, or winding up shall be $100 per
share; or
$100 per share, in the event of any involuntary
liquidation, dissolution or winding up of the
Corporation; and
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of the 4-1/8%
Cumulative Preferred Stock.
(11) The Corporation hereby classifies $6,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"4.56% Cumulative Preferred Stock", consisting of 60,000
shares of the par value of $100 each.
(12) The relative rights, preferences, limitations, and
restrictions of the shares of the 4.56% Cumulative Preferred
Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 4.56% per annum;
(b) Such series shall not be subject to redemption
prior to October 1, 1956; the redemption price for shares
of such series shall be $104 per share on and after
October 1, 1956 but prior to October 1, 1958; $103 per
share on and after October 1, 1958 but prior to October
1, 1963; and $102 per share on October 1, 1963 and
thereafter;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be $100 per share;
and
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of the 4.56%
Cumulative Preferred Stock.
(13) The Corporation hereby classifies $4,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"4.12% Cumulative Preferred Stock", consisting of 40,000
shares of the par value of $100 each.
(14) The relative rights, preferences, limitations and
restrictions of the shares of the 4.12% Cumulative Preferred
Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 4.12% per annum;
(b) The redemption price for such series shall be
$105.728 per share until October 1, 1959; $104.728 per
share on and after October 1, 1959 but prior to October
1, 1964; $103.728 per share on and after October 1, 1964
but prior to October 1, 1969; and $102.728 per share on
October 1, 1969 and thereafter;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or $100 per
share, in the event of any involuntary liquidation,
dissolution or winding up of the Corporation;
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of the 4.12%
Cumulative Preferred Stock.
(15) The Corporation hereby classifies $30,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"7.08% Cumulative Preferred Stock", consisting of 300,000
shares of the par value of $100 each.
(16) The relative rights, preferences, limitations and
restrictions of the shares of the 7.08% Cumulative Preferred
Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 7.08% per annum;
(b) The redemption price for such series shall be
$108.22 per share prior to February 1, 1976; $106.45 per
share on and after February 1, 1976 but prior to February
1, 1981; $104.68 per share on and after February 1, 1981
but prior to February 1, 1986; $102.91 per share on and
after February 1, 1986 but prior to February 1, 1991; and
$101.85 per share on February 1, 1991 and thereafter
provided, however, that no share of such series shall be
redeemed prior to February 1, 1976 if such redemption is
for the purpose or in anticipation of refunding such
share, directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 7.07% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or $100 per
share in the event of any involuntary liquidation,
dissolution or winding up of the Corporation; and
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of such series.
(17) The Corporation hereby classifies $35,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"7.76% Cumulative Preferred Stock", consisting of 350,000
shares of par value of $100 each.
(18) The relative rights, preferences, limitations and
restrictions of the shares of the 7.76% Cumulative Preferred
Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 7.76% per annum;
(b) The redemption price for such series shall be
$109.26 per share prior to November 1, 1976; $107.32 per
share on and after November 1, 1976 but prior to November
1, 1981; $105.38 per share on and after November 1, 1981
but prior to November 1, 1986; $103.44 per share on and
after November 1, 1986 but prior to November 1, 1991; and
$102.28 per share on November 1, 1991 and thereafter;
provided, however, that no share of such series shall be
redeemed prior to November 1, 1976 if such redemption is
for the purpose or in anticipation of refunding such
share, directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 7.74% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or $100 per
share in the event of any involuntary liquidation,
dissolution or winding up of the Corporation;
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of such series.
(19) The Corporation hereby classifies $30,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"8.68% Cumulative Preferred Stock", consisting of 300,000
shares of the par value of $100 each.
(20) The relative rights, preferences, limitations and
restrictions of the shares of the 8.68% Cumulative Preferred
Stock, shall be as follows:
(a) The annual dividend rate for such series shall
be 8.68% per annum;
(b) The redemption price for such series shall be
$109.61 per share prior to December 1, 1978; $107.44 per
share on and after December 1, 1978 but prior to December
1, 1983; $105.27 per share on and after December 1, 1983
but prior to December 1, 1988; $103.10 per share on and
after December 1, 1988 but prior to December 1, 1993; and
$101.80 per share on December 1, 1993 and thereafter;
provided, however, that no share of such series shall be
redeemed prior to December 1, 1978 if such redemption is
for the purpose or in anticipation of refunding such
share directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 8.68% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price in effect at the date of any voluntary liquidation,
dissolution or winding up of the Corporation; or $100 per
share in the event of any involuntary liquidation,
dissolution or winding up of the Corporation;
(d) There shall not be any sinking fund provided
for the purchase or redemption of shares of such series.
(21) The Corporation hereby classifies $30,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as "12%
Cumulative Preferred Stock", consisting of 300,000 shares of
the par value of $100 each.
(22) The relative rights preferences, limitations and
restrictions of the shares of the 12% Cumulative Preferred
Stock shall be as follows:
(a) The annual dividend rate for such series shall
be 12% per annum;
(b) The redemption price for such series shall be
$112.00 per share prior to September 1, 1985; $106.00 per
share on and after September 1, 1985 but prior to
September 1, 1990; $103.00 per share on and after
September 1, 1990 but prior to September 1, 1995; and
$101.20 per share on September 1, 1995 and thereafter;
provided, however, that no share of such series shall be
redeemed prior to September 1, 1980 if such redemption is
for the purpose or in anticipation of refunding such
share, directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 12.75% per annum;
(c) the preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price provided in subparagraph (b) hereof in effect at
the date of any voluntary liquidation, dissolution or
winding up of the Corporation; or $100 per share in the
event of any involuntary liquidation, dissolution or
winding up of the Corporation;
(d)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law on
October 1 in each year commencing with the year 1980,
redeem as and for a sinking fund requirement, out of
funds legally available therefor, a number of shares
equal to 5% of the total number of shares classified as
12% Cumulative Preferred Stock in paragraph (21) hereof
at a redemption price of $100 per share. The sinking
fund requirement shall be cumulative so that if on any
such October 1 the sinking fund requirement shall not
have been met, then such sinking fund requirement, to the
extent not met, shall become an additional sinking fund
requirement for the next succeeding October 1 on which
such redemption may be effected.
(2) The Corporation shall have the non-
cumulative option, on any sinking fund date as provided
in subparagraph (d)(1) hereof, to redeem at a redemption
price of $100 per share, an additional number of shares
equal to 5% of the total number of shares classified as
12% Cumulative Preferred Stock in paragraph (21) hereof.
No redemption made pursuant to this subparagraph (d)(2)
shall be deemed to fulfill any sinking fund requirement
established pursuant to subparagraph (d)(1).
(3) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on October 1 of any year pursuant to subparagraph
(d)(1) shares of such series theretofore purchased or
otherwise acquired by the Corporation.
(23) The Corporation hereby classifies $40,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"$2.15 Cumulative Preferred Stock", consisting of 1,600,000
shares of the par value of $25 each.
(24) The relative rights, preferences, limitations and
restrictions of the shares of the $2.15 Cumulative Preferred
Stock shall be as follows:
(a) The annual dividend rate for such series shall
be $2.15 per annum;
(b) The redemption price for such series shall be
$27.15 per share prior to May 1, 1982; $26.61 per share
on and after May 1, 1982 but prior to May 1, 1987; $26.08
per share on and after May 1, 1987 but prior to May 1,
1992; $25.54 per share on and after May 1, 1992 but prior
to May 1, 1997; and $25.22 per share on May 1, 1997 and
thereafter; provided, however, that no share of such
series shall be redeemed prior to May 1, 1982 if such
redemption is for the purpose or in anticipation of
refunding such share, directly or indirectly, through the
incurring of debt, or through the issuance of capital
stock ranking equally with or prior to the shares of such
series as to dividends or assets, if such debt has an
effective interest cost to the Corporation (computed in
accordance with generally accepted financial practice),
or such capital stock has an effective dividend cost to
the Corporation (so computed), of less than 8.99% per
annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price provided in subparagraph (b) hereof in effect at
the date of any voluntary liquidation, dissolution or
winding up of the Corporation; or $25 per share in the
event of any involuntary liquidation, dissolution or
winding up of the Corporation; and
(d) There shall not be any sinking fund
requirements for the purchase or redemption of the shares
of such series.
(25) The Corporation hereby classifies $40,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"$2.25 Cumulative Preferred Stock", consisting of 1,600,000
shares of the par value of $25 each.
(26) The relative rights, preferences, limitations and
restrictions of the shares of the $2.25 Cumulative Preferred
Stock shall be as follows:
(a) The annual dividend rate for such series shall
be $2.25 per annum;
(b) The redemption price for such series shall be
$27.25 per share prior to March 1, 1983; $26.69 per share
on and after March 1, 1983 but prior to March 1, 1988;
$26.13 per share on and after March 1, 1988 but prior to
March 1, 1993; $25.56 per share on and after March 1,
1993 but prior to March 1, 1998; and $25.23 per share on
March 1, 1998 and thereafter; provided, however, that no
share of such series shall be redeemed prior to March 1,
1983 if such redemption is for the purpose or in
anticipation of refunding such share, directly or
indirectly, through the incurring of debt, or through the
issuance of capital stock ranking equally with or prior
to the shares of such series as to dividends or assets,
if such debt has an effective interest cost to the
Corporation (computed in accordance with generally
accepted financial practice), or such capital stock has
an effective dividend cost to the Corporation (so
computed), of less than 9.32% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price provided in subparagraph (b) hereof in effect at
the date of any voluntary liquidation, dissolution or
winding up of the Corporation; or $25 per share in the
event of any involuntary liquidation, dissolution or
winding up of the Corporation; and
(d) There shall not be any sinking fund
requirements for the purchase or redemption of the shares
of such series.
(27) The Corporation hereby classifies $40,000,000 par
value of the Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"$2.75 Cumulative Preferred Stock", consisting of 1,600,000
shares of the par value of $25 each.
(28) The relative rights, preferences, limitations and
restrictions of the shares of the $2.75 Cumulative Preferred
Stock shall be as follows:
(a) The annual dividend rate for such series shall
be $2.75 per annum;
(b) The redemption price for such series shall be
$27.75 per share prior to October 1, 1984; $27.07 per
share on and after October 1, 1984 but prior to October
1, 1989; $26.38 per share on and after October 1, 1989
but prior to October 1, 1994; $25.69 per share on and
after October 1, 1994 but prior to October 1, 1999;
$25.28 per share on October 1, 1999 and thereafter;
provided, however, that no share of such series shall be
redeemed prior to October 1, 1984 if such redemption is
for the purpose or in anticipation of refunding such
share, directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 11.31% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price provided in subparagraph (b) hereof in effect at
the date of any voluntary liquidation, dissolution or
winding up of the Corporation; or $25 per share in the
event of any involuntary liquidation, dissolution or
winding up of the Corporation; and
(d)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law on
October 1 in each year commencing with the year 1984,
redeem as and for a sinking fund requirement, out of
funds legally available therefor, a number of shares
equal to 5% of the total number of shares classified as
$2.75 Cumulative Preferred Stock in paragraph (27) hereof
at a redemption price of $25 per share. The sinking fund
requirement shall be cumulative so that if on any such
October 1 the sinking fund requirement shall not have
been met, then such sinking fund requirement, to the
extent not met, shall become an additional sinking fund
requirement for the next succeeding October 1 on which
such redemption may be effected.
(2) The Corporation shall have the non-
cumulative option, on any sinking fund date as provided
in subparagraph (d)(1) hereof, to redeem at a redemption
price of $25 per share, an additional number of shares
equal to 5% of the total number of shares classified as
$2.75 Cumulative Preferred Stock in paragraph (27)
hereof. No redemption made pursuant to this sub-
paragraph (d)(2) shall be deemed to fulfill any sinking
fund requirement established pursuant to subparagraph
(d)(1).
(3) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on October 1 of any year pursuant to subparagraph
(d)(1) shares of such series theretofore purchased or
otherwise acquired by the Corporation.
The Corporation hereby classifies $40,000,000 par
value of the Cumulative Preferred Stock as a series of
such Cumulative Preferred Stock as a series of such
Cumulative Preferred Stock, which shall be designated as
"$3.63 Cumulative Preferred Stock", consisting of
1,600,000 shares of the par value of $25 each.
The relative rights, preferences, limitations and
restrictions of the shares of the $3.63 Cumulative
Preferred Stock shall be as follows:
(a) The annual dividend rate for such series shall
be $3.63 per annum;
(b) The redemption price for such series shall be
$28.63 per share prior to November 1, 1986; $27.72 per
share on and after November 1, 1986 but prior to November
1, 1991; $26.82 per share on and after November 1, 1991
but prior to November 1, 1996; and $25.91 per share on
and after November 1, 1996 but prior to November 1, 2001;
and $25.36 per share on November 1, 2001 and thereafter;
provided, however, that no share of such series shall be
redeemed prior to November 1, 1986 if such redemption is
for the purpose or in anticipation of refunding such
share, directly or indirectly, through the incurring of
debt, or through the issuance of capital stock ranking
equally with or prior to the shares of such series as to
dividends or assets, if such debt has an effective
interest cost to the Corporation (computed in accordance
with generally accepted financial practice), or such
capital stock has an effective dividend cost to the
Corporation (so computed), of less than 15% per annum;
(c) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be the redemption
price provided in paragraph (b) hereof in effect at the
date of any voluntary liquidation, dissolution or winding
up of the Corporation; or $25 per share in the event of
any involuntary liquidation, dissolution or winding up of
the Corporation; and
(d)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law on
January 1 in each year commencing with the year 1987,
redeem as and for a sinking fund requirement, out of
funds legally available therefor, a number of shares
equal to 5% of the total number of shares classified as
$3.63 Cumulative Preferred Stock in this resolution at a
redemption price of $25 per share. The sinking fund
requirement shall be cumulative so that if on any such
January 1 the sinking fund requirement shall not have
been met, then such sinking fund requirement, to the
extent not met, shall become an additional sinking fund
requirement for the next succeeding January 1 on which
such redemption may be effected.
(2) The Corporation shall have the non-
cumulative option, on any sinking fund date as provided
in subparagraph (d)(1) hereof, to redeem at a redemption
price of $25 per share, an additional number of shares
equal to 5% of the total number of shares classified as
$3.63 Cumulative Preferred Stock in this resolution. No
redemption made pursuant to this subparagraph (d)(2)
shall be deemed to fulfill any sinking fund requirement
established pursuant to subparagraph (d)(1).
(3) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on January 1 of any year pursuant to subparagraph
(d)(1) shares of such series theretofore purchased or
otherwise acquired by the Corporation.
(29) (a) The designation, description and terms of a new
series of 300,000 shares of Cumulative Preferred Stock,
$100 par value, are set forth in this paragraph (29).
The distinctive serial designation of such series which
is hereby created shall be "6-7/8% Cumulative Preferred
Stock".
(b) The annual dividend rate for such series shall
be 6-7/8% per share per annum, which dividend shall be
calculated, per share, at such percentage multiplied by
$100. Dividends on all shares of said series issued
prior to the record date for the initial dividend payable
on all shares of such series shall be cumulative from the
date of initial issuance of the shares of such series.
(c) Such series shall not be subject to redemption
prior to February 1, 2003; the regular redemption price
for shares of such series shall be $100 per share on or
after February 1, 2003, plus an amount equal to accrued
and unpaid dividends to the date of redemption.
(d) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be $100 per share,
plus an amount equal to accrued and unpaid dividends to
the date of redemption.
(e)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law, on
April 1, 2003 and on each April 1 thereafter to and
including April 1, 2007, redeem as and for a sinking fund
requirement, out of funds legally available therefor, a
number of shares equal to 5% of the total number of
shares initially classified as 6-7/8% Cumulative
Preferred Stock in this paragraph (29) at a sinking fund
redemption price of $100 per share plus accrued and
unpaid dividends to the date of redemption. The sinking
fund requirement shall be cumulative so that if on any
such April 1 the sinking fund requirement shall not have
been met, then such sinking fund requirement, to the
extent not met, shall become an additional sinking fund
requirement for the next succeeding April 1 on which such
redemption may be effected.
(2) The remaining shares of such series
outstanding on April 1, 2008 will be redeemed, to the
extent permitted by law, by mandatory redemption, out of
funds legally available therefor, on such date at a
mandatory redemption price of $100 per share plus accrued
and unpaid dividends to the date of redemption.
(3) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on April 1 of any year pursuant to subparagraph
(e)(1) shares of such series theretofore purchased or
otherwise acquired by the Corporation and not previously
credited against any such sinking fund requirement.
(f) The shares of such series shall not have any
rights to convert the same into and/or purchase stock of
any other series or class or any other securities, or any
special rights other than those specified herein.
(30) (a) The designation, description and terms of a new
series of 400,000 shares of Cumulative Preferred Stock,
$100 par value, are set forth in this paragraph (30).
The distinctive serial designation of such series which
is here-by created shall be "5.90% Cumulative Preferred
Stock".
(b) The annual dividend rate for such series shall
be 5.90% per share per annum, which dividend shall be
calculated, per share, at such percentage multiplied by
$100. Dividends on all shares of said series issued
prior to the record date for the initial dividend payable
on all shares of such series shall be cumulative from the
date of initial issuance of the shares of such series.
(c) Such series shall not be subject to redemption
prior to November 1, 2003; the redemption price for
shares of such series shall be $100 per share on or after
November 1, 2003, plus an amount equal to accrued and
unpaid dividends to the date of redemption.
(d) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be $100 per share,
plus an amount equal to accrued and unpaid dividends.
(e)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law, on
January 1, 2004 and on each January 1 thereafter to and
including January 1, 2008, redeem as and for a sinking
fund requirement, out of funds legally available
therefor, a number of shares equal to 5% of the total
number of shares initially classified as 5.90% Cumulative
Preferred Stock in this paragraph (30) at a sinking fund
redemption price of $100 per share, plus accrued and
unpaid dividends to the date of redemption. The
remaining shares of such series outstanding on January 1,
2009 will be redeemed as a final sinking fund
requirement, to the extent permitted by law, out of funds
legally available therefor, on such date at a sinking
fund redemption price of $100 per share, plus accrued and
unpaid dividends to the date of redemption. The sinking
fund requirement shall be cumulative so that if on any
such January 1 the sinking fund requirement shall not
have been met, then such sinking fund requirement, to the
extent not met, shall become an additional sinking fund
requirement for the next succeeding January 1 on which
such redemption may be effected.
(2) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on January 1 of any year pursuant to subparagraph
(e)(1) shares of such series theretofore purchased or
otherwise acquired by the Corporation and not previously
credited against any such sinking fund requirement.
(f) The shares of such series shall not have any
rights to convert the same into and/or purchase stock of
any other series or class or any other securities, or any
special rights other than those specified herein.
(31) (a) The designation, description and terms of a new
series of 300,000 shares of Cumulative Preferred Stock,
$100 par value, are set forth in this paragraph (31).
The distinctive serial designation of such series which
is hereby created shall be "6-1/4% Cumulative Preferred
Stock".
(b) The annual dividend rate for such series shall
be 6-1/4% per share per annum, which dividend shall be
calculated, per share, at such percentage multiplied by
$100. Dividends on all shares of said series issued
prior to the record date for the initial dividend payable
on all shares of such series shall be cumulative from the
date of initial issuance of the shares of such series.
(c) Such series shall not be subject to redemption
prior to December 1, 2003; the redemption price for
shares of such series shall be $100 per share on or after
December 1, 2003, plus an amount equal to accrued and
unpaid dividends to the date of redemption.
(d) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be $100 per share,
plus an amount equal to accrued and unpaid dividends.
(e)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law, on
April 1, 2004 and on each April 1 thereafter to and
including April 1, 2008, redeem as and for a sinking fund
requirement, out of funds legally available therefor, a
number of shares equal to 5% of the total number of
shares initially classified as 6-1/4% Cumulative
Preferred Stock in this paragraph (31) at a sinking fund
redemption price of $100 per share, plus accrued and
unpaid dividends to the date of redemption. The
remaining shares of such series outstanding on April 1,
2009 will be redeemed as a final sinking fund
requirement, to the extent permitted by law, out of funds
legally available therefor, on such date at a sinking
fund redemption price of $100 per share, plus accrued and
unpaid dividends to the date of redemption. The sinking
fund requirement shall be cumulative so that if on any
such April 1 the sinking fund requirement shall not have
been met, then such sinking fund requirement, to the
extent not met, shall become an additional sinking fund
requirement for the next succeeding April 1 on which such
redemption may be effected.
(2) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on April 1 of any year pursuant to subparagraph
(e)(1) shares of such series theretofore purchased or
otherwise acquired by the Corporation and not previously
credited against any such sinking fund requirement.
(f) The shares of such series shall not have any
rights to convert the same into and/or purchase stock of
any other series or class or any other securities, or any
special rights other than those specified herein.
(32) (a) The designation, description and terms of a new
series of 350,000 shares of Cumulative Preferred Stock,
$100 par value, are set forth in this paragraph (32).
The distinctive serial designation of such series which
is hereby created shall be "6.30% Cumulative Preferred
Stock".
(b) The annual dividend rate for such series shall
be 6.30% per share per annum, which dividend shall be
calculated, per share, at such percentage multiplied by
$100. Dividends on all shares of said series issued
prior to the record date for the initial dividend payable
on all shares of such series shall be cumulative from the
date of initial issuance of the shares of such series.
(c) Such series shall not be subject to redemption
prior to March 1, 2004; the redemption price for shares
of such series shall be $100 per share on or after March
1, 2004, plus an amount equal to accrued and unpaid
dividends to the date of redemption.
(d) The preferential amounts to which the holders
of shares of such series shall be entitled upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation shall be $100 per share,
plus an amount equal to accrued and unpaid dividends.
(e)(1) A sinking fund shall be established for the
retirement of the shares of such series. So long as
there shall remain outstanding any shares of such series,
the Corporation shall, to the extent permitted by law, on
July 1, 2004 and on each July 1 thereafter to and
including July 1, 2008, redeem as and for a sinking fund
requirement, out of funds legally available therefor, a
number of shares equal to 5% of the total number of
shares initially classified as 6.30% Cumulative Preferred
Stock in this paragraph (32) at a sinking fund redemption
price of $100 per share, plus accrued and unpaid
dividends to the date of redemption. The remaining
shares of such series outstanding on July 1, 2009 will be
redeemed as a final sinking fund requirement, to the
extent permitted by law, out of funds legally available
therefor, on such date at a sinking fund redemption price
of $100 per share, plus accrued and unpaid dividends to
the date of redemption. The sinking fund requirement
shall be cumulative so that if on any such July 1 the
sinking fund requirement shall not have been met, then
such sinking fund requirement, to the extent not met,
shall become an additional sinking fund requirement for
the next succeeding July 1 on which such redemption may
be effected.
(2) The Corporation shall be entitled, at its
election, to credit against the sinking fund requirement
due on July 1 of any year pursuant to subparagraph (e)(1)
shares of such series theretofore purchased or otherwise
acquired by the Corporation and not previously credited
against any such sinking fund requirement.
(f) The shares of such series shall not have any
rights to convert the same into and/or purchase stock of
any other series or class or any other securities, or any
special rights other than those specified herein.
B. Common Stock
Each share of the Common Stock shall be equal in all respects
to every other share of the Common Stock.
____________________
All stock of the Corporation without par value, whether
authorized herein or upon subsequent increase of capital, may
be issued from time to time for such consideration as may be
fixed from time to time by the Board of Directors and approved
by any governmental authorities having jurisdiction in the
premises if and to the extent that such approval is required
by law.
7. As to the voting rights and powers of the shares of each
class and of each series see paragraphs (7), (8) and (10)(c) under
Article 6 above.
8. The stated capital of the Corporation at the time of
filing these Amended Articles is at least one thousand dollars
($1,000).
9. The maximum number of Directors of this Corporation shall
be fifteen (15). The exact number of Directors which shall
constitute the whole Board of Directors of this Corporation shall
be such as from time to time shall be specified by the by-laws, but
at not less than three (3) nor at more than fifteen (15). Whenever
the by-laws do not specify such exact number, then such number
shall be eleven (11). A majority in number of the Board of
Directors shall be bona fide residents and citizens of the State of
Indiana while acting as such Directors.
10. The names and post-office addresses of the Directors of
the Corporation are as follows:
Frank N. Bien, 180 East Broad Street,
Columbus, Ohio 43215
William A. Black, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
Lawrence R. Brunke, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
Richard E. Disbrow, 180 East Broad Street,
Columbus, Ohio 43215
John E. Dolan, 180 East Broad Street,
Columbus, Ohio 43215
Gerald E. LeMasters, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
Gerald P. Maloney, 2 Broadway,
New York, New York 10004
Richard C. Menge, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
C. Wayne Roahrig, 419 N. Walnut Street,
Muncie, Indiana 47305
Jack F. Stark, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
W. S. White, Jr., 180 East Broad Street,
Columbus, Ohio 43215
The names and addresses of the President and the
Secretary of the Corporation are as follows:
President: William A. Black, 2101 Spy Run Avenue,
Fort Wayne, Indiana 46801
Secretary: John R. Burton, 180 East Broad Street,
Columbus, Ohio 43215
11. All meetings of stockholders may be held within or
without the State of Indiana at such place as shall be specified in
the call thereof.
<PAGE>
Indenture Supplemental
to
Mortgage and Deed of Trust
(Dated as of June 1, 1939)
EXECUTED BY
INDIANA MICHIGAN POWER COMPANY
(Formerly Indiana & Michigan Electric Company)
TO
THE BANK OF NEW YORK
(Formerly Irving Trust Company)
Trustee
Dated as of October 15, 1993
$40,000,000 First Mortgage Bonds,
Designated Secured Medium Term Notes,
7.20% Series due February 1, 2024
TABLE OF CONTENTS*
Page
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals
Execution of Mortgage and supplemental indentures . . . . 1
Termination of Individual Trustee . . . . . . . . . . . . 2
Acquisition of property rights and property . . . . . . . 2
Provision for issuance of bonds in one or
more series . . . . . . . . . . . . . . . . . . . . . . 2
Right to execute supplemental indenture . . . . . . . . . 2
First Mortgage Bonds heretofore issued in
several series. . . . . . . . . . . . . . . . . . . . . 3
Issue of new First Mortgage Bonds, Designated Secured
Medium Term Notes, of the 46th Series . . . . . . . . . 3
Fourth 1993 Supplemental Indenture . . . . . . . . . . . 3
Compliance with legal requirements. . . . . . . . . . . . 3
Granting Clauses . . . . . . . . . . . . . . . . . . . . . . . 3
Description of Property. . . . . . . . . . . . . . . . . . . . 4
Appurtenances, Etc.. . . . . . . . . . . . . . . . . . . . . . 4
Habendum . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Subject to Reservations, Etc.. . . . . . . . . . . . . . . . . 5
Grant in Trust . . . . . . . . . . . . . . . . . . . . . . . . 5
Sec. 1. Supplement to Original Indenture by addition of
new Sec. 20 SS thereto . . . . . . . . . . . . . . 6
Sec. 2. Supplement to Original Indenture by addition of
new Article III XXX. . . . . . . . . . . . . . . . .9
Sec. 3. Provisions for record date for meetings of bond-
holders. . . . . . . . . . . . . . . . . . . . . . .9
Sec. 4. Fourth 1993 Supplemental Indenture and Original
Indenture to be construed as one instrument. . . . 10
Limitation on rights of others . . . . . . . . . . 10
Trustee assumes no responsibility for
correctness of recitals of fact. . . . . . . . . . 10
Execution in counterparts. . . . . . . . . . . . . 10
Testimonium. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Signatures and Seals . . . . . . . . . . . . . . . . . . . . . 11
Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . 13
Schedule I . . . . . . . . . . . . . . . . . . . . . . . . . I-1
_________________________________
* The Table of Contents shall not be deemed to be any part of
the Indenture Supplemental to Mortgage and Deed of Trust.
SUPPLEMENTAL INDENTURE, dated as of the fifteenth day of
October in the year One Thousand Nine Hundred and Ninety-Three,
made and entered into by and between Indiana Michigan Power
Company, a corporation of the State of Indiana, the corporate title
of which was, prior to September 9, 1987, Indiana & Michigan
Electric Company, with its principal executive office and place of
business located at One Summit Square, Fort Wayne, Indiana 46801
(hereinafter sometimes called the "Company"), party of the first
part, and The Bank of New York (formerly Irving Trust Company), a
corporation of the State of New York, with its principal corporate
trust office at 101 Barclay Street, New York, N.Y. 10286
(hereinafter sometimes called the "Corporate Trustee" or
"Trustee"), as Trustee, party of the second part.
Whereas, the Company has heretofore executed and delivered its
Mortgage and Deed of Trust, dated as of June 1, 1939, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of
September 1, 1948, an Indenture Supplemental to Mortgage and Deed
of Trust, dated as of June 1, 1950, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of January 1, 1952, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
September 1, 1953, an Indenture Supplemental to Mortgage and Deed
of Trust, dated as of October 1, 1954, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of February 1, 1958, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
November 1, 1958, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of August 1, 1963, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of May 1, 1968, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1969, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of April 1, 1970, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of February 1, 1971, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of December 1,
1973, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of June 1, 1974, an Indenture Supplemental to Mortgage and
Deed of Trust, dated as of March 1, 1975, an Indenture Supplemental
to Mortgage and Deed of Trust, dated as of September 1, 1975, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
March 1, 1978, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of January 1, 1979, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of February 1, 1980, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
June 1, 1980, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of March 1, 1981, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of November 1, 1981, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
April 1, 1982, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of August 1, 1983, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of July 1, 1986, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of October 1,
1986, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of February 1, 1987, a further Indenture Supplemental to
Mortgage and Deed of Trust, dated as of February 1, 1987, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
May 1, 1987, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of July 1, 1987, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of May 1, 1991, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1991, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of June 3, 1991, an Indenture Supplemental to Mortgage and
Deed of Trust, dated as of May 1, 1992, an Indenture Supplemental
to Mortgage and Deed of Trust, dated as of October 15, 1992, an
Indenture Supplemental to Mortgage and Deed of Trust dated as of
December 1, 1992, an Indenture Supplemental to Mortgage and Deed of
Trust dated as of June 1, 1993, an Indenture Supplemental to
Mortgage and Deed of Trust dated as of August 1, 1993 and an
Indenture Supplemental to Mortgage and Deed of Trust dated as of
September 15, 1993 (hereinafter called the "Third 1993 Supplemental
Indenture") (the Mortgage and Deed of Trust, as amended and
supplemented by said Supplemental Indentures, being hereinafter
called the "Original Indenture"), to the Trustee for the security
of all bonds of the Company outstanding thereunder, and by said
Original Indenture conveyed to the Trustee, upon certain trusts,
terms and conditions, and with and subject to certain provisos and
covenants therein contained, all and singular the property, rights
and franchises which the Company then owned or should thereafter
acquire, excepting any property expressly excepted by the terms of
the Original Indenture; and
Whereas, effective June 16, 1988, pursuant to Section 100G of
the Original Indenture, the Individual Trustee resigned and all
powers of the Individual Trustee then terminated, as did the
Individual Trustee's right, title and interest in and to the trust
estate, and without appointment of a new trustee as successor to
said Individual Trustee, all the right, title and powers of the
Trustees thereupon devolved upon the Corporate Trustee and its
successors alone; and
Whereas, in addition to the property described in the Original
Indenture, the Company has acquired certain property rights and
property hereinafter described and has covenanted in Section 42 of
the Original Indenture to execute and deliver such further
instruments and do such further acts as may be necessary or proper
to make subject to the lien thereof any property thereafter
acquired and intended to be subject to such lien; and
Whereas, the Original Indenture provides that bonds issued
thereunder may be issued in one or more series and further provides
that, with respect to each series, the rate of interest, the date
or dates of maturity, the dates for the payment of interest, the
terms and rates of optional redemption, and other terms and
conditions not inconsistent with the Original Indenture may be
established prior to the issue of bonds of such series by an
indenture supplemental to the Original Indenture; and
Whereas, Section 115 of the Original Indenture provides that
any power, privilege or right expressly or impliedly reserved to or
in any way conferred upon the Company by any provision of the
Original Indenture, whether such power, privilege or right is in
any way restricted or is unrestricted, may be in whole or in part
waived or surrendered or subjected to any restriction if at the
time unrestricted or to additional restriction if already
restricted, and that the Company may enter into any further
covenants, limitations or restrictions for the benefit of any one
or more series of bonds issued under the Original Indenture and
provides that a breach thereof shall be equivalent to a default
under the Original Indenture, or the Company may cure any ambiguity
or correct or supplement any defective or inconsistent provisions
contained in the Original Indenture or in any indenture
supplemental to the Original Indenture, by an instrument in
writing, properly executed and acknowledged, and that the Trustee
is authorized to join with the Company in the execution of any such
instrument or instruments; and
Whereas, the Company has heretofore issued, from time to time,
in accordance with the provisions of said Original Indenture, bonds
of the several series and in the respective principal amounts
therein specified, and, of the bonds so issued pursuant to the
Original Indenture, $625,000,000 aggregate principal amount are
outstanding as of the close of business on the date first above
mentioned; and
Whereas, the Company, by appropriate corporate action in
conformity with the terms of the Original Indenture, has duly
determined to create a series of bonds under the Original Indenture
to be entitled and designated as "First Mortgage Bonds, Designated
Secured Medium Term Notes, 7.20% Series due February 1, 2024"
(herein sometimes referred to as the "bonds of the 46th Series");
and
Whereas, each of the bonds of the 46th Series is to be
substantially in the form set forth in Schedule I to this
Supplemental Indenture (hereinafter sometimes referred to as the
"Fourth 1993 Supplemental Indenture"); and
Whereas, the Company, in the exercise of the powers and
authorities conferred upon and reserved to it under and by virtue
of the provisions of the Original Indenture, and pursuant to
resolutions of its Board of Directors, has duly resolved and
determined to make, execute and deliver to the Trustee a
supplemental indenture, in the form hereof, for the purposes herein
provided; and
Whereas, all conditions and requirements necessary to make
this Fourth 1993 Supplemental Indenture a valid, binding and legal
instrument in accordance with its terms, have been done, performed
and fulfilled, and the execution and delivery thereof have been in
all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That Indiana Michigan Power Company, in consideration of the
premises and of the sum of One Dollar ($1.00) and other good and
valuable consideration paid to it by the Trustee at or before the
ensealing and delivery of these presents, the receipt whereof is
hereby acknowledged, and in order to secure the payment of both the
principal of and interest and premium, if any, on the bonds from
time to time issued under and secured by the Original Indenture and
this Fourth 1993 Supplemental Indenture, according to their tenor
and effect, and the performance of all the provisions of the
Original Indenture and this Fourth 1993 Supplemental Indenture
(including any further indenture or indentures supplemental to the
Original Indenture and any modification or alteration made as in
the Original Indenture provided) and of said bonds, has granted,
bargained, sold, warranted, released, conveyed, assigned,
transferred, mortgaged, pledged, set over and confirmed, and by
these presents does grant, bargain, sell, warrant, release, convey,
assign, transfer, mortgage, pledge, set over and confirm unto The
Bank of New York, as Trustee, and to its successor or successors in
said trust, and to it and its assigns forever, all of the following
described properties of the Company, that is to say: all property,
real, personal and mixed, tangible and intangible owned by the
Company on the date of the execution hereof, acquired since the
execution and delivery of the Third 1993 Supplemental Indenture
(except such property as is hereinafter expressly excepted from the
lien and operation of this Fourth 1993 Supplemental Indenture).
The property covered by the lien of the Original Indenture and
this Fourth 1993 Supplemental Indenture shall include particularly,
among other property, without prejudice to the generality of the
language hereinbefore or hereinafter contained, all property,
whether real, personal or mixed (except any hereinafter expressly
excepted), and wheresoever situated, now owned by the Company and
acquired since the execution and delivery of the Third 1993
Supplemental Indenture, including (without in any wise limiting or
impairing by the enumeration of the same the scope and intent of
the foregoing or of any general description contained in this
Fourth 1993 Supplemental Indenture) all lands, rights of way and
roads; all water or riparian rights and interests therein; all dams
and dam sites and rights; all plants for the generation of
electricity, power houses, steam heat plants, hot water plants,
substations, transmission lines, distributing systems and vehicles;
all offices, buildings and structures, and the equipment thereof;
all machinery, engines, boilers, turbines, dynamos, machines,
regulators, meters, transformers, generators and motors; all
appliances whether electrical or mechanical, conduits, cables and
lines; all mains and pipes, whether for water, steam heat, or other
purposes; all poles, wires, tools, implements, apparatus and
furniture; all municipal franchises and other franchises and all
permits, grants and consents; all lines for the transmission and/or
distribution of electric current, steam heat or water for any
purpose, including towers, poles, wires, cables, pipes, conduits
and all apparatus for use in connection therewith; all real estate,
lands, leases, leaseholds (excepting the last day of the term of
each lease and leasehold); all easements, servitudes, licenses,
permits, rights, powers, franchises, privileges, rights of way and
other rights in or relating to real estate or the occupancy of the
same and (except as hereinafter expressly excepted) all the right,
title and interest of the Company in and to all other property of
any kind or nature appertaining to and/or used and/or occupied
and/or enjoyed in connection with any property hereinbefore
described;
Together with all and singular the tenements, hereditaments
and appurtenances belonging or in any wise appertaining to the
aforesaid property or any part thereof, with the reversion and
reversions, remainder and remainders and (subject to the provisions
of Section 57 of the Original Indenture) the tolls, rents,
revenues, issues, earnings, income, product and profits thereof,
and all the estate, right, title and interest and claim whatsoever,
at law as well as in equity, which the Company now has or may
hereafter acquire in and to the aforesaid property and franchises
and every part and parcel thereof.
Provided that, in addition to the reservations and exceptions
herein elsewhere contained, the following are not and are not
intended to be granted, bargained, sold, warranted, released,
conveyed, assigned, transferred, mortgaged, pledged, set over or
confirmed hereunder and are hereby expressly excepted from the lien
and operation of the Original Indenture and of this Fourth 1993
Supplemental Indenture, viz: (1) cash, shares of stock and
obligations (including bonds, notes and other securities) not
hereafter specifically pledged, or deposited or delivered hereunder
or under the Original Indenture or hereinafter or therein
covenanted so to be; (2) goods, wares, merchandise, equipment,
materials or supplies acquired for the purpose of sale or resale in
the usual course of business or for consumption in the operation of
any properties of the Company; (3) judgments, accounts and choses
in action, the proceeds of which the Company is not obligated as
provided in the Original Indenture or as hereinafter provided to
deposit with the Trustee hereunder or thereunder; provided,
however, that the properties and rights expressly excepted from the
lien and operation of the Original Indenture and this Fourth 1993
Supplemental Indenture in the above subdivisions (2) and (3) shall
(to the extent permitted by law) cease to be so excepted, in the
event that the Trustee or a receiver or trustee shall enter upon
and take possession of the mortgaged and pledged property in the
manner provided in Article XII of the Original Indenture by reason
of the occurrence of a completed default, as defined in said
Article XII.
To have and to hold all such properties, real, personal and
mixed, granted, bargained, sold, warranted, released, conveyed,
assigned, transferred, mortgaged, pledged, set over, or confirmed
by the Company as aforesaid, or intended so to be, unto the Trustee
and its successors in the trust.
Subject, however, to the reservations, exceptions, limitations
and restrictions contained in the several deeds, leases,
servitudes, franchises and contracts or other instruments through
which the Company acquired and/or claims title to and/or enjoys the
use of the aforesaid properties; and subject also to encumbrances
of the character defined in Section 6 of the Original Indenture as
"excepted encumbrances", insofar as the same may attach to any of
the property embraced herein.
In trust nevertheless, upon the terms and trusts in the
Original Indenture and in this Fourth 1993 Supplemental Indenture
set forth, for the benefit and security of those who shall hold the
bonds and coupons issued and to be issued hereunder and under the
Original Indenture, or any of them, in accordance with the terms of
the Original Indenture and of this Fourth 1993 Supplemental
Indenture, without preference, priority or distinction as to lien
of any of said bonds or coupons over any others thereof by reason
of priority in the time of issue or negotiation thereof, or
otherwise howsoever, subject, however, to the conditions,
provisions and covenants set forth in the Original Indenture and in
this Fourth 1993 Supplemental Indenture.
AND THIS INDENTURE FURTHER WITNESSETH:
That in further consideration of the premises and for the
considerations aforesaid, the Company, for itself and its
successors and assigns, hereby covenants and agrees to and with the
Trustee, and its successor or successors in such trust, as follows:
Section 1. The Original Indenture is hereby supplemented
by adding immediately after Section 20 RR, a new Section 20 SS, as
follows:
Section 20 SS. The Company hereby creates a forty-sixth
series of bonds to be issued under and secured by this
Indenture, to be designated and to be distinguished from the
bonds of all other series by the title "First Mortgage Bonds,
Designated Secured Medium Term Notes, 7.20% Series due
February 1, 2024" (herein sometimes referred to as the "46th
Series"). The form of the bonds of the 46th Series shall be
substantially as set forth in Schedule I to the supplemental
indenture creating the bonds of the 46th Series.
Bonds of the 46th Series shall mature on the date
specified in their title. Unless otherwise determined by the
Company, the bonds of the 46th Series shall be issued in fully
registered form without coupons in denominations of $1,000 and
integral multiples thereof; the principal of and premium (if
any) and interest on each said bond to be payable at the
office or agency of the Company, in the Borough of Manhattan,
The City of New York, in lawful money of the United States of
America, provided that at the option of the Company interest
may be mailed to registered owners of the bonds at their
respective addresses that appear on the register thereof; and
the rate of interest shall be the rate per annum specified in
the title thereof, payable semi-annually on the first days of
February and August of each year (commencing February 1, 1994)
and on their maturity date.
The person in whose name any bond of the 46th Series is
registered at the close of business on any record date (as
herein below defined) with respect to any regular semi-annual
interest payment date (other than interest payable upon
redemption or maturity) shall be entitled to receive the
interest payable on such interest payment date notwithstanding
the cancellation of such bond of the 46th Series upon any
registration of transfer or exchange thereof (including any
exchange effected as an incident to a partial redemption
thereof) subsequent to the record date and prior to such
interest payment date, except, if and to the extent that the
Company shall default in the payment of the interest due on
such interest payment date, then the registered holders of
bonds of the 46th Series on such record date shall have no
further right to or claim in respect of such defaulted
interest as such registered holders on such record date, and
the persons entitled to receive payment of any defaulted
interest thereafter payable or paid on any bonds of the 46th
Series shall be the registered holders of such bonds of the
46th Series (or any bond or bonds issued, directly or after
intermediate transactions, upon transfer or exchange or in
substitution thereof) on the date of payment of such defaulted
interest. Interest payable upon redemption or maturity shall
be payable to the person to whom the principal is paid. The
term "record date" as used in this Section 20 SS, and in the
form of bonds of the 46th Series, with respect to any regular
semi-annual interest payment date (other than interest payable
upon redemption or maturity) shall mean the January 15 next
preceding a February 1 interest payment date or the July 15
next preceding an August 1 interest payment date, as the case
may be, or, if such January 15 or July 15 is not a Business
Day (as defined hereinbelow), the next preceding Business Day.
The term "Business Day" with respect to any bond of the 46th
Series shall mean any day, other than a Saturday or Sunday,
which is not a day on which banking institutions or trust
companies in The City of New York, New York, or the city in
which is located any office or agency maintained for the
payment of principal of or premium, if any, or interest on
such bond of the 46th Series are authorized or required by
law, regulation or executive order to remain closed.
Every registered bond of the 46th Series shall be dated
the date of authentication ("Issue Date") and shall bear
interest computed on the basis of a 360-day year consisting of
twelve 30-day months from its Issue Date or from the latest
semi-annual interest payment date to which interest has been
paid on the bonds of the 46th Series preceding the Issue Date,
unless such Issue Date be an interest payment date to which
interest is being paid on the bonds of the 46th Series, in
which case it shall bear interest from its Issue Date or
unless the Issue Date be the record date for the interest
payment date first following the date of original issuance of
bonds of the 46th Series ("Original Issue Date") or a date
prior to such record date, then from the Original Issue Date;
provided, that, so long as there is no existing default in the
payment of interest on said bonds, the holder of any bond
authenticated by the Trustee between the record date for any
regular semi-annual interest payment date (other than interest
payable upon redemption or maturity) and such interest payment
date shall not be entitled to the payment of the interest due
on such interest payment date and shall have no claim against
the Company with respect thereto; provided, further, that, if
and to the extent the Company shall default in the payment of
the interest due on such interest payment date, then any such
bond shall bear interest from the February 1 or August 1, as
the case may be, next preceding its Issue Date, to which
interest has been paid or, if the Company shall be in default
with respect to the interest payment date first following the
Original Issue Date, then from the Original Issue Date.
If any semi-annual interest payment date, redemption
date, or the maturity date is not a Business Day, payment of
amounts due on such date may be made on the next succeeding
Business Day, and, if such payment is made or duly provided
for on such Business Day, no interest shall accrue on such
amounts for the period from and after such interest payment
date, redemption date or the maturity date, as the case may
be, to such Business Day.
Notwithstanding the provisions of Section 14 of this
Indenture, the bonds of the 46th Series shall be executed on
behalf of the Company by its Chairman of the Board, by its
President or by one of its Vice Presidents or by one of its
officers designated by the Board of Directors of the Company
for such purpose, whose signature may be a facsimile, and its
corporate seal shall be thereunto affixed or printed thereon
and attested by its Secretary or one of its Assistant
Secretaries, and the provisions of the penultimate sentence of
said Section 14 shall be applicable to such bonds of the 46th
Series.
The bonds of the 46th Series shall be redeemable prior to
maturity at the option of the Company in whole at any time or
in part from time to time, upon not less than thirty but not
more than ninety days' previous notice given by mail to the
registered holders of the bonds to be so redeemed, to the
addresses that shall appear upon the register thereof, all as
provided in Article X of this Indenture, and as in this
section provided, and as further set forth in the form of bond
contained in Schedule I to the supplemental indenture creating
the bonds of the 46th Series.
In case the Company shall at any time elect to redeem all
or any part of the bonds of the 46th Series it shall give
notice to the effect that it has elected to redeem all or a
part thereof, as the case may be, on a date therein
designated, specifying in case of redemption of a part of the
bonds of 46th Series the distinctive numbers of the bonds to
be redeemed, and in every case stating in substance that on
said date there will become and be due and payable upon each
bond so to be redeemed, at the office or agency of the Company
in the Borough of Manhattan, The City of New York, the
redemption price thereof (or a specified portion thereof in
the case of partial redemption), and that on and after such
date interest thereon will cease to accrue.
The Company shall not be required to make transfers or
exchanges of the bonds of the 46th Series for a period of
sixteen days next preceding any selection of bonds of the 46th
Series to be redeemed or to make transfers or exchanges of any
bonds of the 46th Series designated in whole or in part for
redemption. Notwithstanding the provisions of Section 12 of
this Indenture, the Company shall not be required to make
transfers or exchanges of bonds of the 46th Series for a
period of sixteen days next preceding any interest payment
date.
Registered bonds of the 46th Series shall be transferable
upon presentation and surrender thereof, for cancellation, at
the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or
agency of the Company as the Company may designate, by the
registered holders thereof, in person or by duly authorized
attorney, in the manner and upon payment, if required by the
Company, of the charges prescribed in this Indenture. In the
manner and upon payment, if the Company shall require it, of
the charges prescribed in this Indenture, registered bonds of
the 46th Series may be exchanged for a like aggregate
principal amount of registered bonds of the 46th Series of
other authorized denominations, upon presentation and
surrender thereof, for cancellation, at the office or agency
of the Company in the Borough of Manhattan, The City of New
York and at such other office or agency of the Company as the
Company may from time to time designate.
Section 2. The Original Indenture is hereby supplemented
by adding thereto the following new Article III XXX to be added
after Article III WWW of the Original Indenture:
ARTICLE III XXX.
Initial Issuance of Bonds of the 46th Series.
Section 21 XXX. In accordance with and upon compliance with
such provisions of this Indenture as shall be selected for such
purpose by the officers of the Company duly authorized to take such
action, bonds of the 46th Series in an aggregate principal amount
not exceeding $40,000,000 shall forthwith be executed by the
Company and delivered to the Trustee and shall be authenticated by
the Trustee and delivered to or upon the order of the Company
(without awaiting the filing and recording of the supplemental
indenture creating the 46th Series except to the extent required by
Section 28 of this Indenture).
Section 3. At any meeting of bondholders held as provided for
in Article XVIII of the Original Indenture at which holders of
bonds of the 46th Series are entitled to vote, all holders of bonds
of the 46th Series at the time of such meeting shall be entitled to
vote thereat; provided, however, that the Trustee may, and upon
request of the Company or of a majority of the bondholders of the
46th Series shall, fix a day not exceeding ninety days preceding
the date for which the meeting is called as a record date for the
determination of holders of bonds of the 46th Series entitled to
notice of and to vote at such meeting and any adjournment thereof
and only such registered owners who shall have been such registered
owners on the date so fixed, and who are entitled to vote such
bonds of the 46th Series at the meeting, shall be entitled to
receive notice of such meeting.
Section 4. As supplemented by this Fourth 1993
Supplemental Indenture, the Original Indenture is in all respects
ratified and confirmed and the Original Indenture and this Fourth
1993 Supplemental Indenture shall be read, taken and construed as
one and the same instrument. The bonds of the 46th Series are the
original debt secured by this Fourth 1993 Supplemental Indenture
and the Original Indenture, and this Fourth 1993 Supplemental
Indenture and the Original Indenture shall be, and be deemed to be,
the original lien instrument securing the bonds of the 46th Series.
Nothing contained in this Fourth 1993 Supplemental Indenture
shall, or shall be construed to, confer upon any person other than
the owners of bonds issued under the Original Indenture and this
Fourth 1993 Supplemental Indenture, the Company and the Trustee,
any right to avail themselves of any benefit of any provision of
the Original Indenture or of this Fourth 1993 Supplemental
Indenture.
The Trustee assumes no responsibility for the correctness of
the recitals of facts contained herein and makes no representations
as to the validity of this Fourth 1993 Supplemental Indenture.
This Fourth 1993 Supplemental Indenture may be simultaneously
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original; but such counterparts
shall together constitute but one and the same instrument.
In Witness Whereof, Indiana Michigan Power Company, party of
the first part, has caused this instrument to be signed in its name
and behalf by its President, a Vice President or an Assistant
Treasurer, and its corporate seal to be hereunto affixed and
attested by its Secretary or an Assistant Secretary, and The Bank
of New York, party of the second part, has caused this instrument
to be signed in its name and behalf by a Vice President or an
Assistant Vice President and its corporate seal to be hereunto
affixed and attested by an Assistant Treasurer. Executed and
delivered in The City of New York, N.Y., as of the day and year
first above written.
INDIANA MICHIGAN POWER COMPANY
[Seal] By /s/ B. M. Barber
(B. M. Barber)
Assistant Treasurer
Attest:
/s/ Jeffrey D. Cross
(Jeffrey D. Cross)
Assistant Secretary
Signed, sealed and delivered by
Indiana Michigan Power Company
in the presence of
/s/ Ann B. Graf
(Ann B. Graf)
/s/ Armando A. Pena
(Armando A. Pena)
The Bank of New York,
as Trustee
[Seal] By /s/ S. D. Mineo
(S. D. Mineo)
Vice President
Attest:
/s/ Lucille Firrincieli
(Lucille Firrincieli)
Assistant Treasurer
Signed, sealed and delivered by
The Bank of New York in the presence of:
/s/ R. Schneck
(R. Schneck)
/s/ E. Elcock
(E. Elcock)
State of Ohio )
) SS.:
County of Franklin )
On this 29th day of October, 1993, personally appeared before
me, a Notary Public within and for said County in the State
aforesaid, B. M. BARBER and JEFFREY D. CROSS, to me known and known
to me to be respectively an Assistant Treasurer and Assistant
Secretary of INDIANA MICHIGAN POWER COMPANY, one of the
corporations named in and which executed the foregoing instrument,
who severally acknowledged that they did sign and seal said
instrument as such Assistant Treasurer and Assistant Secretary for
and on behalf of said corporation and that the same is their free
act and deed as such Assistant Treasurer and Assistant Secretary,
respectively, and the free and corporate act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal at Columbus, Ohio, this 29th day of October, 1993.
[Notarial Seal]
/s/ Brenda R. Heavill
BRENDA R. HEAVILL
Notary Public, State of Ohio
My Commission Expires 8-19-98
State of New York )
) SS.:
County of New York )
I certify that on this 1st day of November, 1993, before me
Patricia M. Carillo, a Notary Public in and for said County and
State, appeared S. D. Mineo, to me personally known and known to me
to be a Vice President of The Bank of New York and one of the
persons whose name is signed to the foregoing instrument, who,
being by me duly sworn, deposed and said that he resides at 87 Main
Street, Glen Rock, NJ 07452, that he is a Vice President of The
Bank of New York, that he knows the corporate seal of said
corporation; that the seal affixed to the foregoing instrument is
the corporate seal of the said corporation; that it was so affixed
by order of said corporation, and that he signed his name as Vice
President of said corporation to said instrument by like order; and
thereupon said S. D. Mineo acknowledged that he signed said
instrument as his free and voluntary act and that said corporation
executed said instrument, as Trustee, as its free and voluntary act
for the purposes and uses therein set forth.
In Witness Whereof I have hereunto set my hand and official
seal this 1st day of November, 1993.
[Seal]
/s/ Patricia M. Carillo
Patricia M. Carillo
Notary Public, State of New York
No. 41-4747732
Qualified in Queens County
Certificate Filed in New York County
Commission Expires May 31, 1995
This instrument was drafted by Jeffrey D. Cross, whose
business address is 1 Riverside Plaza, Columbus, Ohio 43215.
SCHEDULE I
INDIANA MICHIGAN POWER COMPANY
FIRST MORTGAGE BOND, DESIGNATED
SECURED MEDIUM TERM NOTE, 7.20%
SERIES DUE FEBRUARY 1, 2024
Bond No.
Original Issue Date: November 9, 1993
Principal Amount:
Semi-annual Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
CUSIP No: 45489H AP 2
INDIANA MICHIGAN POWER COMPANY, a corporation of the
State of Indiana (hereinafter called the "Company"), for value
received, hereby promises to pay to ____________ or registered
assigns, the Principal Amount set forth above on the maturity date
specified in the title of this bond in lawful money of the United
States of America, at the office or agency of the Company in the
Borough of Manhattan, The City of New York, and to pay to the
registered holder hereof interest on said amount from the date of
authentication of this bond (herein called the "Issue Date") or the
latest semi-annual interest payment date to which interest has been
paid on the bonds of this series preceding the Issue Date, unless
the Issue Date be an interest payment date to which interest is
being paid, in which case from the Issue Date or unless the Issue
Date be the record date for the interest payment date first
following the Original Issue Date set forth above or a date prior
to such record date, then from the Original Issue Date (or, if the
Issue Date is between the record date for any interest payment date
and such interest payment date, then from such interest payment
date, provided, however, that if and to the extent that the Company
shall default in the payment of the interest due on such interest
payment date, then from the next preceding semi-annual interest
payment date to which interest has been paid on the bonds of this
series, or if such interest payment date is the interest payment
date first following the Original Issue Date set forth above, then
from the Original Issue Date), until the principal hereof shall
have become due and payable, at the rate per annum specified in the
title of this bond, payable on February 1 and August 1 of each year
(commencing February 1, 1994) and on the maturity date specified in
the title of this bond; provided that, at the option of the
Company, such interest may be paid by check, mailed to the
registered owner of this bond at such owner's address appearing on
the register hereof.
This bond is one of a duly authorized issue of bonds of the
Company, issuable in series, and is one of a series known as its
First Mortgage Bonds, of the series designated in its title, all
bonds of all series issued and to be issued under and equally
secured (except in so far as any sinking fund, established in
accordance with the provisions of the Mortgage hereinafter
mentioned, may afford additional security for the bonds of any
particular series) by a Mortgage and Deed of Trust (herein,
together with any indentures supplemental thereto, called the
Mortgage), dated as of June 1, 1939, executed by the Company to
IRVING TRUST COMPANY (now THE BANK OF NEW YORK) and FREDERICK G.
HERBST, as Trustees, to which Mortgage reference is made for a
description of the property mortgaged and pledged, the nature and
extent of the security, the rights of the holders of the bonds and
of the Trustee in respect thereof, the duties and immunities of the
Trustee, and the terms and conditions upon which the bonds are
secured. With the consent of the Company and to the extent
permitted by and as provided in the Mortgage, the rights and
obligations of the Company and/or of the holders of the bonds
and/or coupons and/or the terms and provisions of the Mortgage
and/or of any instruments supplemental thereto may be modified or
altered by the affirmative vote of the holders of at least seventy-
five per centum (75%) in principal amount of the bonds affected by
such modification or alteration, then outstanding under the
Mortgage (excluding bonds disqualified from voting by reason of the
Company's interest therein as provided in the Mortgage); provided
that without the consent of the holder hereof no such modification
or alteration shall permit the extension of the maturity of the
principal of or interest on this bond or the reduction in the rate
of interest hereon or any other modification in the terms of
payment of such principal or interest or the creation of a lien on
the mortgaged and pledged property ranking prior to or on a parity
with the lien of the Mortgage or the deprivation of the holder
hereof of a lien upon such property or reduce the above percentage.
As provided in said Mortgage, said bonds may be for various
principal sums and are issuable in series, which may mature at
different times, may bear interest at different rates and may
otherwise vary as therein provided. This bond is created by an
Indenture Supplemental dated as of October 15, 1993 (the "Fourth
1993 Supplemental Indenture"), as provided for in said Mortgage.
The interest payable on any February 1 or August 1 (other than
interest payable upon redemption or maturity) will, subject to
certain exceptions provided in said Fourth 1993 Supplemental
Indenture, be paid to the person in whose name this bond is
registered at the close of business on the record date, which shall
be the January 15 or July 15, as the case may be, next preceding
such interest payment date, or, if such January 15 or July 15 is
not a Business Day (as hereinbelow defined), the next preceding
Business Day. Interest payable upon redemption or maturity shall
be payable to the person to whom the principal is paid. The term
"Business Day" means any day, other than a Saturday or Sunday,
which is not a day on which banking institutions or trust companies
in The City of New York, New York or the city in which is located
any office or agency maintained for the payment of principal of or
interest on bonds of this series are authorized or required by law,
regulation or executive order to remain closed.
If any semi-annual interest payment date, redemption date or
the maturity date is not a Business Day, payment of amounts due on
such date may be made on the next succeeding Business Day, and, if
such payment is made or duly provided for on such Business Day, no
interest shall accrue on such amounts for the period from and after
such interest payment date, redemption date or the maturity date,
as the case may be, to such Business Day.
The Company and the Trustee may deem and treat the person in
whose name this bond is registered as the absolute owner hereof for
the purpose of receiving payment of or on account of principal or
(subject to the provisions hereof) interest hereon and for all
other purposes and the Company and the Trustee shall not be
affected by any notice to the contrary.
The Company shall not be required to make transfers or
exchanges of bonds of this series for a period of sixteen days next
preceding any interest payment date, or next preceding any
selection of bonds of this series to be redeemed, and the Company
shall not be required to make transfers or exchanges of any bonds
of this series designated for redemption in whole or in part.
Any or all of the bonds of this Series may be redeemed by the
Company on or after February 1, 2004, at its option, or by
operation of various provisions of the Mortgage, in whole at any
time or in part from time to time, upon not less than thirty but
not more than ninety days' previous notice given by mail to the
registered holders of the bonds to be redeemed, all as provided in
the Mortgage, (a) if redeemed otherwise than by the use or
application of cash deposited pursuant to the maintenance and
replacement provisions contained in Part II(a) of Section 20 of the
Mortgage and otherwise than by the use of proceeds of released
property or the proceeds of insurance, at an amount equal to a
percentage of the principal amount thereof determined as set forth
in Annex A hereto under the heading "Regular Redemption Price"
together in each case with accrued interest to the date fixed for
redemption, or (b) if redeemed by the use or application of cash
deposited pursuant to the maintenance and replacement provisions
contained in Part II(a) of Section 20 of the Mortgage or by the use
of proceeds of released property or the proceeds of insurance, at
an amount equal to 100% of the principal amount thereof together in
each case with accrued interest to the date fixed for redemption.
The principal hereof may be declared or may become due prior
to the express date of the maturity hereof on the conditions, in
the manner and at the time set forth in the Mortgage, upon the
occurrence of a completed default as in the Mortgage provided.
This bond is transferable as prescribed in the Mortgage by the
registered owner hereof in person, or by his duly authorized
attorney, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or agency
of the Company as the Company may designate, upon surrender and
cancellation of this bond and upon payment, if the Company shall
require it, of the transfer charges prescribed in the Mortgage,
and, thereupon, a new registered bond or bonds of authorized
denominations of the same series for a like principal amount will
be issued to the transferee in exchange herefor as provided in the
Mortgage. In the manner and upon payment, if the Company shall
require it, of the charges prescribed in the Mortgage, registered
bonds of this series may be exchanged for a like aggregate
principal amount of registered bonds of other authorized
denominations of the same series, upon presentation and surrender
thereof, for cancellation, at the office or agency of the Company
in the Borough of Manhattan, The City of New York, or at such other
office or agency of the Company as the Company may designate.
No recourse shall be had for the payment of the principal of
or interest on this bond against any incorporator or any past,
present or future stockholder, officer or director, as such, of the
Company, or of any successor corporation, either directly or
through the Company or any successor corporation, under any rule of
law, statute or constitution or by the enforcement of any
assessment or otherwise, all such liability of incorporators,
stockholders, officers and directors, as such, being waived and
released by the holder or owner hereof by the acceptance of this
bond and being likewise waived and released by the terms of the
Mortgage.
This bond shall not become valid or obligatory for any purpose
until THE BANK OF NEW YORK, the Trustee under the Mortgage, or its
successor thereunder, shall have signed the form of Authentication
Certificate endorsed hereon.
In Witness Whereof, Indiana Michigan Power Company has caused
this instrument to be duly executed under its corporate seal.
Dated:
INDIANA MICHIGAN POWER COMPANY
By________________________
Vice President
(SEAL)
Attest:___________________
Assistant Secretary
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the bonds,
of the series herein designated,
described in the within-mentioned
Mortgage.
THE BANK OF NEW YORK,
as Trustee,
By______________________________
Authorized Officer
ANNEX A TO FIRST MORTGAGE BOND,
DESIGNATED SECURED MEDIUM TERM NOTE,
7.20% SERIES DUE FEBRUARY 1, 2024
(If redeemed during
the twelve months Regular
beginning February 1) Redemption
Year Price
2004 103.60%
2005 103.24
2006 102.88
2007 102.52
2008 102.16
2009 101.80
2010 101.44
2011 101.08
2012 100.72
2013 100.36
2014 100.00
2015 100.00
2016 100.00
2017 100.00
2018 100.00
2019 100.00
2020 100.00
2021 100.00
2022 100.00
2023 100.00
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
_______________________________________
________________________________________________________________
________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
________________________________________________________________
ASSIGNEE) the within Bond and all rights thereunder, hereby
________________________________________________________________
irrevocably constituting and appointing such person attorney to
________________________________________________________________
transfer such bond on the books of the Issuer, 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 Bond in every
particular without alteration or enlargement or any
change whatsoever.
<PAGE>
Indenture Supplemental
to
Mortgage and Deed of Trust
(Dated as of June 1, 1939)
EXECUTED BY
INDIANA MICHIGAN POWER COMPANY
(Formerly Indiana & Michigan Electric Company)
TO
THE BANK OF NEW YORK
(Formerly Irving Trust Company)
Trustee
Dated as of February 1, 1994
$25,000,000 First Mortgage Bonds,
Designated Secured Medium Term Notes,
7.50% Series due March 1, 2024
$25,000,000 First Mortgage Bonds,
Designated Secured Medium Term Notes,
6.55% Series due March 1, 2004
TABLE OF CONTENTS*
Page
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals
Execution of Mortgage and supplemental indentures . . . . 1
Termination of Individual Trustee . . . . . . . . . . . . 2
Acquisition of property rights and property . . . . . . . 2
Provision for issuance of bonds in one or
more series . . . . . . . . . . . . . . . . . . . . . . 2
Right to execute supplemental indenture . . . . . . . . . 2
First Mortgage Bonds heretofore issued in
several series. . . . . . . . . . . . . . . . . . . . . 3
Issue of new First Mortgage Bonds, Designated Secured
Medium Term Notes, of the 47th Series . . . . . . . . . 3
Issue of new First Mortgage Bonds, Designated Secured
Medium Term Notes, of the 48th Series . . . . . . . . . 3
First 1994 Supplemental Indenture . . . . . . . . . . . . 3
Compliance with legal requirements. . . . . . . . . . . . 4
Granting Clauses . . . . . . . . . . . . . . . . . . . . . . . 4
Description of Property. . . . . . . . . . . . . . . . . . . . 4
Appurtenances, Etc.. . . . . . . . . . . . . . . . . . . . . . 5
Habendum . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Subject to Reservations, Etc.. . . . . . . . . . . . . . . . . 6
Grant in Trust . . . . . . . . . . . . . . . . . . . . . . . . 6
Sec. 1. Supplement to Original Indenture by addition of
new Sec. 20 TT thereto . . . . . . . . . . . . . . 6
Sec. 2. Supplement to Original Indenture by addition of
new Sec. 20 UU thereto . . . . . . . . . . . . . . 10
Sec. 3. Supplement to Original Indenture by addition of
new Article III YYY. . . . . . . . . . . . . . . . 13
Sec. 4. Supplement to Original Indenture by addition of
new Article III ZZZ. . . . . . . . . . . . . . . . 13
Sec. 5. Provisions for record date for meetings of bond-
holders. . . . . . . . . . . . . . . . . . . . . . 14
_________________________________
*The Table of Contents shall not be deemed to be any part of the
Indenture Supplemental to Mortgage and Deed of Trust.
Sec. 6. First 1994 Supplemental Indenture and Original
Indenture to be construed as one instrument. . . . 14
Limitation on rights of others . . . . . . . . . . 14
Trustee assumes no responsibility for
correctness of recitals of fact. . . . . . . . . . 14
Execution in counterparts. . . . . . . . . . . . . 14
Testimonium. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Signatures and Seals . . . . . . . . . . . . . . . . . . . . . 15
Acknowledgments. . . . . . . . . . . . . . . . . . . . . . . . 17
Schedule I . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Schedule II. . . . . . . . . . . . . . . . . . . . . . . . . II-1
INDENTURE SUPPLEMENTAL, dated as of the first day of February
in the year One Thousand Nine Hundred and Ninety-Four, made and
entered into by and between Indiana Michigan Power Company, a
corporation of the State of Indiana, the corporate title of which
was, prior to September 9, 1987, Indiana & Michigan Electric
Company, with its principal executive office and place of business
located at One Summit Square, Fort Wayne, Indiana 46801
(hereinafter sometimes called the "Company"), party of the first
part, and The Bank of New York (formerly Irving Trust Company), a
corporation of the State of New York, with its principal corporate
trust office at 101 Barclay Street, New York, N.Y. 10286
(hereinafter sometimes called the "Corporate Trustee" or
"Trustee"), as Trustee, party of the second part.
Whereas, the Company has heretofore executed and delivered its
Mortgage and Deed of Trust, dated as of June 1, 1939, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of
September 1, 1948, an Indenture Supplemental to Mortgage and Deed
of Trust, dated as of June 1, 1950, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of January 1, 1952, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
September 1, 1953, an Indenture Supplemental to Mortgage and Deed
of Trust, dated as of October 1, 1954, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of February 1, 1958, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
November 1, 1958, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of August 1, 1963, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of May 1, 1968, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1969, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of April 1, 1970, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of February 1, 1971, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of December 1,
1973, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of June 1, 1974, an Indenture Supplemental to Mortgage and
Deed of Trust, dated as of March 1, 1975, an Indenture Supplemental
to Mortgage and Deed of Trust, dated as of September 1, 1975, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
March 1, 1978, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of January 1, 1979, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of February 1, 1980, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
June 1, 1980, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of March 1, 1981, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of November 1, 1981, an Inden-
ture Supplemental to Mortgage and Deed of Trust, dated as of April
1, 1982, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of August 1, 1983, an Indenture Supplemental to Mortgage
and Deed of Trust, dated as of July 1, 1986, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of October 1,
1986, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of February 1, 1987, a further Indenture Supplemental to
Mortgage and Deed of Trust, dated as of February 1, 1987, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
May 1, 1987, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of July 1, 1987, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of May 1, 1991, an Indenture
Supplemental to Mortgage and Deed of Trust, dated as of June 1,
1991, an Indenture Supplemental to Mortgage and Deed of Trust,
dated as of June 3, 1991, an Indenture Supplemental to Mortgage and
Deed of Trust, dated as of May 1, 1992, an Indenture Supplemental
to Mortgage and Deed of Trust, dated as of October 15, 1992, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
December 1, 1992, an Indenture Supplemental to Mortgage and Deed of
Trust, dated as of June 1, 1993, an Indenture Supplemental to
Mortgage and Deed of Trust, dated as of August 1, 1993, an
Indenture Supplemental to Mortgage and Deed of Trust, dated as of
September 15, 1993 and an Indenture Supplemental to Mortgage and
Deed of Trust, dated as of October 15, 1993 (hereinafter called the
"Fourth 1993 Supplemental Indenture") (the Mortgage and Deed of
Trust, as amended and supplemented by said Supplemental Indentures,
being hereinafter called the "Original Indenture"), to the Trustee
for the security of all bonds of the Company outstanding
thereunder, and by said Original Indenture conveyed to the Trustee,
upon certain trusts, terms and conditions, and with and subject to
certain provisos and covenants therein contained, all and singular
the property, rights and franchises which the Company then owned or
should thereafter acquire, excepting any property expressly
excepted by the terms of the Original Indenture; and
Whereas, effective June 16, 1988, pursuant to Section 100G of
the Original Indenture, the Individual Trustee resigned and all
powers of the Individual Trustee then terminated, as did the
Individual Trustee's right, title and interest in and to the trust
estate, and without appointment of a new trustee as successor to
said Individual Trustee, all the right, title and powers of the
Trustees thereupon devolved upon the Corporate Trustee and its
successors alone; and
Whereas, in addition to the property described in the Original
Indenture, the Company has acquired certain property rights and
property hereinafter described and has covenanted in Section 42 of
the Original Indenture to execute and deliver such further
instruments and do such further acts as may be necessary or proper
to make subject to the lien thereof any property thereafter
acquired and intended to be subject to such lien; and
Whereas, the Original Indenture provides that bonds issued
thereunder may be issued in one or more series and further provides
that, with respect to each series, the rate of interest, the date
or dates of maturity, the dates for the payment of interest, the
terms and rates of optional redemption, and other terms and
conditions not inconsistent with the Original Indenture may be
established prior to the issue of bonds of such series by an
indenture supplemental to the Original Indenture; and
Whereas, Section 115 of the Original Indenture provides that
any power, privilege or right expressly or impliedly reserved to or
in any way conferred upon the Company by any provision of the
Original Indenture, whether such power, privilege or right is in
any way restricted or is unrestricted, may be in whole or in part
waived or surrendered or subjected to any restriction if at the
time unrestricted or to additional restriction if already
restricted, and that the Company may enter into any further
covenants, limitations or restrictions for the benefit of any one
or more series of bonds issued under the Original Indenture and
provides that a breach thereof shall be equivalent to a default
under the Original Indenture, or the Company may cure any ambiguity
or correct or supplement any defective or inconsistent provisions
contained in the Original Indenture or in any indenture
supplemental to the Original Indenture, by an instrument in
writing, properly executed and acknowledged, and that the Trustee
is authorized to join with the Company in the execution of any such
instrument or instruments; and
Whereas, the Company has heretofore issued, from time to time,
in accordance with the provisions of said Original Indenture, bonds
of the several series and in the respective principal amounts
therein specified, and, of the bonds so issued pursuant to the
Original Indenture, $575,000,000 aggregate principal amount are
outstanding as of the close of business on the date first above
mentioned; and
Whereas, the Company, by appropriate corporate action in
conformity with the terms of the Original Indenture, has duly
determined to create a series of bonds under the Original Indenture
to be entitled and designated as "First Mortgage Bonds, Designated
Secured Medium Term Notes, 7.50% Series due March 1, 2024" (herein
sometimes referred to as the "bonds of the 47th Series"); and
Whereas, each of the bonds of the 47th Series is to be
substantially in the form set forth in Schedule I to this Indenture
Supplemental (hereinafter sometimes referred to as the "First 1994
Supplemental Indenture"); and
Whereas, the Company, by appropriate corporate action in
conformity with the terms of the Original Indenture, has duly
determined to create a series of bonds under the Original Indenture
to be entitled and designated as "First Mortgage Bonds, Designated
Secured Medium Term Notes, 6.55% Series due March 1, 2004"
(hereinafter sometimes referred to as the "bonds of the 48th
Series"); and
Whereas, each of the bonds of the 48th Series is to be
substantially in the form set forth in Schedule II to the First
1994 Supplemental Indenture; and
Whereas, the Company, in the exercise of the powers and
authorities conferred upon and reserved to it under and by virtue
of the provisions of the Original Indenture, and pursuant to
resolutions of its Board of Directors, has duly resolved and
determined to make, execute and deliver to the Trustee a
supplemental indenture, in the form hereof, for the purposes herein
provided; and
Whereas, all conditions and requirements necessary to make
this First 1994 Supplemental Indenture a valid, binding and legal
instrument in accordance with its terms, have been done, performed
and fulfilled, and the execution and delivery thereof have been in
all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That Indiana Michigan Power Company, in consideration of the
premises and of the sum of One Dollar ($1.00) and other good and
valuable consideration paid to it by the Trustee at or before the
ensealing and delivery of these presents, the receipt whereof is
hereby acknowledged, and in order to secure the payment of both the
principal of and interest and premium, if any, on the bonds from
time to time issued under and secured by the Original Indenture and
this First 1994 Supplemental Indenture, according to their tenor
and effect, and the performance of all the provisions of the
Original Indenture and this First 1994 Supplemental Indenture
(including any further indenture or indentures supplemental to the
Original Indenture and any modification or alteration made as in
the Original Indenture provided) and of said bonds, has granted,
bargained, sold, warranted, released, conveyed, assigned,
transferred, mortgaged, pledged, set over and confirmed, and by
these presents does grant, bargain, sell, warrant, release, convey,
assign, transfer, mortgage, pledge, set over and confirm unto The
Bank of New York, as Trustee, and to its successor or successors in
said trust, and to it and its assigns forever, all of the following
described properties of the Company, that is to say: all property,
real, personal and mixed, tangible and intangible owned by the
Company on the date of the execution hereof, acquired since the
execution and delivery of the Fourth 1993 Supplemental Indenture
(except such property as is hereinafter expressly excepted from the
lien and operation of this First 1994 Supplemental Indenture).
The property covered by the lien of the Original Indenture and
this First 1994 Supplemental Indenture shall include particularly,
among other property, without prejudice to the generality of the
language hereinbefore or hereinafter contained, all property,
whether real, personal or mixed (except any hereinafter expressly
excepted), and wheresoever situated, now owned by the Company and
acquired since the execution and delivery of the Fourth 1993
Supplemental Indenture, including (without in any wise limiting or
impairing by the enumeration of the same the scope and intent of
the foregoing or of any general description contained in this First
1994 Supplemental Indenture) all lands, rights of way and roads;
all water or riparian rights and interests therein; all dams and
dam sites and rights; all plants for the generation of electricity,
power houses, steam heat plants, hot water plants, substations,
transmission lines, distributing systems and vehicles; all offices,
buildings and structures, and the equipment thereof; all machinery,
engines, boilers, turbines, dynamos, machines, regulators, meters,
transformers, generators and motors; all appliances whether
electrical or mechanical, conduits, cables and lines; all mains and
pipes, whether for water, steam heat, or other purposes; all poles,
wires, tools, implements, apparatus and furniture; all municipal
franchises and other franchises and all permits, grants and
consents; all lines for the transmission and/or distribution of
electric current, steam heat or water for any purpose, including
towers, poles, wires, cables, pipes, conduits and all apparatus for
use in connection therewith; all real estate, lands, leases,
leaseholds (excepting the last day of the term of each lease and
leasehold); all easements, servitudes, licenses, permits, rights,
powers, franchises, privileges, rights of way and other rights in
or relating to real estate or the occupancy of the same and (except
as hereinafter expressly excepted) all the right, title and
interest of the Company in and to all other property of any kind or
nature appertaining to and/or used and/or occupied and/or enjoyed
in connection with any property hereinbefore described;
Together with all and singular the tenements, hereditaments
and appurtenances belonging or in any wise appertaining to the
aforesaid property or any part thereof, with the reversion and
reversions, remainder and remainders and (subject to the provisions
of Section 57 of the Original Indenture) the tolls, rents,
revenues, issues, earnings, income, product and profits thereof,
and all the estate, right, title and interest and claim whatsoever,
at law as well as in equity, which the Company now has or may
hereafter acquire in and to the aforesaid property and franchises
and every part and parcel thereof.
Provided that, in addition to the reservations and exceptions
herein elsewhere contained, the following are not and are not
intended to be granted, bargained, sold, warranted, released,
conveyed, assigned, transferred, mortgaged, pledged, set over or
confirmed hereunder and are hereby expressly excepted from the lien
and operation of the Original Indenture and of this First 1994
Supplemental Indenture, viz: (1) cash, shares of stock and
obligations (including bonds, notes and other securities) not
hereafter specifically pledged, or deposited or delivered hereunder
or under the Original Indenture or hereinafter or therein
covenanted so to be; (2) goods, wares, merchandise, equipment,
materials or supplies acquired for the purpose of sale or resale in
the usual course of business or for consumption in the operation of
any properties of the Company; (3) judgments, accounts and choses
in action, the proceeds of which the Company is not obligated as
provided in the Original Indenture or as hereinafter provided to
deposit with the Trustee hereunder or thereunder; provided,
however, that the properties and rights expressly excepted from the
lien and operation of the Original Indenture and this First 1994
Supplemental Indenture in the above subdivisions (2) and (3) shall
(to the extent permitted by law) cease to be so excepted, in the
event that the Trustee or a receiver or trustee shall enter upon
and take possession of the mortgaged and pledged property in the
manner provided in Article XII of the Original Indenture by reason
of the occurrence of a completed default, as defined in said
Article XII.
To have and to hold all such properties, real, personal and
mixed, granted, bargained, sold, warranted, released, conveyed,
assigned, transferred, mortgaged, pledged, set over, or confirmed
by the Company as aforesaid, or intended so to be, unto the Trustee
and its successors in the trust.
Subject, however, to the reservations, exceptions, limitations
and restrictions contained in the several deeds, leases,
servitudes, franchises and contracts or other instruments through
which the Company acquired and/or claims title to and/or enjoys the
use of the aforesaid properties; and subject also to encumbrances
of the character defined in Section 6 of the Original Indenture as
"excepted encumbrances", insofar as the same may attach to any of
the property embraced herein.
In trust nevertheless, upon the terms and trusts in the
Original Indenture and in this First 1994 Supplemental Indenture
set forth, for the benefit and security of those who shall hold the
bonds and coupons issued and to be issued hereunder and under the
Original Indenture, or any of them, in accordance with the terms of
the Original Indenture and of this First 1994 Supplemental
Indenture, without preference, priority or distinction as to lien
of any of said bonds or coupons over any others thereof by reason
of priority in the time of issue or negotiation thereof, or
otherwise howsoever, subject, however, to the conditions,
provisions and covenants set forth in the Original Indenture and in
this First 1994 Supplemental Indenture.
AND THIS INDENTURE FURTHER WITNESSETH:
That in further consideration of the premises and for the
considerations aforesaid, the Company, for itself and its
successors and assigns, hereby covenants and agrees to and with the
Trustee, and its successor or successors in such trust, as follows:
Section 1. The Original Indenture is hereby supplemented
by adding immediately after Section 20 SS, a new Section 20 TT, as
follows:
Section 20 TT. The Company hereby creates a forty-
seventh series of bonds to be issued under and secured by this
Indenture, to be designated and to be distinguished from the
bonds of all other series by the title "First Mortgage Bonds,
Designated Secured Medium Term Notes, 7.50% Series due March
1, 2024" (herein sometimes referred to as the "47th Series").
The form of the bonds of the 47th Series shall be
substantially as set forth in Schedule I to the supplemental
indenture creating the bonds of the 47th Series.
Bonds of the 47th Series shall mature on the date
specified in their title. Unless otherwise determined by the
Company, the bonds of the 47th Series shall be issued in fully
registered form without coupons in denominations of $1,000 and
integral multiples thereof; the principal of and premium (if
any) and interest on each said bond to be payable at the
office or agency of the Company, in the Borough of Manhattan,
The City of New York, in lawful money of the United States of
America, provided that at the option of the Company interest
may be mailed to registered owners of the bonds at their
respective addresses that appear on the register thereof; and
the rate of interest shall be the rate per annum specified in
the title thereof, payable semi-annually on the first days of
February and August of each year (commencing August 1, 1994)
and on their maturity date.
The person in whose name any bond of the 47th Series is
registered at the close of business on any record date (as
hereinbelow defined) with respect to any regular semi-annual
interest payment date (other than interest payable upon
redemption) shall be entitled to receive the interest payable
on such interest payment date notwithstanding the cancellation
of such bond of the 47th Series upon any registration of
transfer or exchange thereof (including any exchange effected
as an incident to a partial redemption thereof) subsequent to
the record date and prior to such interest payment date,
except, if and to the extent that the Company shall default in
the payment of the interest due on such interest payment date,
then the registered holders of bonds of the 47th Series on
such record date shall have no further right to or claim in
respect of such defaulted interest as such registered holders
on such record date, and the persons entitled to receive
payment of any defaulted interest thereafter payable or paid
on any bonds of the 47th Series shall be the registered
holders of such bonds of the 47th Series (or any bond or bonds
issued, directly or after intermediate transactions, upon
transfer or exchange or in substitution thereof) on the date
of payment of such defaulted interest. Interest payable upon
redemption or maturity shall be payable to the person to whom
principal is paid. The term "record date" as used in this
Section 20 TT, and in the form of bonds of the 47th Series,
with respect to any regular semi-annual interest payment date
(other than interest payable upon redemption) shall mean the
January 15 next preceding a February 1 interest payment date
or the July 15 next preceding an August 1 interest payment
date, as the case may be, or, if such January 15 or July 15 is
not a Business Day (as defined hereinbelow), the next
preceding Business Day. The term "Business Day" with respect
to any bond of the 47th Series shall mean any day, other than
a Saturday or Sunday, which is not a day on which banking
institutions or trust companies in The City of New York, New
York or the city in which is located any office or agency
maintained for the payment of principal of or premium, if any,
or interest on such bond of the 47th Series are authorized or
required by law, regulation or executive order to remain
closed.
Every registered bond of the 47th Series shall be dated
the date of authentication ("Issue Date") and shall bear
interest computed on the basis of a 360-day year consisting of
twelve 30-day months from its Issue Date or from the latest
semi-annual interest payment date to which interest has been
paid on the bonds of the 47th Series preceding the Issue Date,
unless such Issue Date be an interest payment date to which
interest is being paid on the bonds of the 47th Series, in
which case it shall bear interest from its Issue Date or
unless the Issue Date be the record date for the interest
payment date first following the date of original issuance of
bonds of the 47th Series ("Original Issue Date"), or a date
prior to such record date, then from the Original Issue Date;
provided, that, so long as there is no existing default in the
payment of interest on said bonds, the holder of any bond
authenticated by the Trustee between the record date for any
regular semi-annual interest payment date (other than interest
payable upon redemption) and such interest payment date shall
not be entitled to the payment of the interest due on such
interest payment date and shall have no claim against the
Company with respect thereto; provided, further, that, if and
to the extent the Company shall default in the payment of the
interest due on such interest payment date, then any such bond
shall bear interest from the February 1 or August 1, as the
case may be, next preceding its Issue Date, to which interest
has been paid or, if the Company shall be in default with
respect to the interest payment date first following the
Original Issue Date, then from the Original Issue Date.
If any semi-annual interest payment date, redemption
date, or the maturity date is not a Business Day, payment of
amounts due on such date may be made on the next succeeding
Business Day, and, if such payment is made or duly provided
for on such Business Day, no interest shall accrue on such
amounts for the period from and after such interest payment
date, redemption date, or the maturity date, as the case may
be, to such Business Day.
Notwithstanding the provisions of Section 14 of this
Indenture, the bonds of the 47th Series shall be executed on
behalf of the Company by its Chairman of the Board, by its
President or by one of its Vice Presidents or by one of its
officers designated by the Board of Directors of the Company
for such purpose, whose signature may be a facsimile, and its
corporate seal shall be thereunto affixed or printed thereon
and attested by its Secretary or one of its Assistant
Secretaries, and the provisions of the penultimate sentence of
said Section 14 shall be applicable to such bonds of the 47th
Series.
The bonds of the 47th Series shall be redeemable prior to
maturity at the option of the Company in whole at any time or
in part from time to time, upon not less than thirty but not
more than ninety days' previous notice given by mail to the
registered holders of the bonds to be so redeemed, to the
addresses that shall appear upon the register thereof, all as
provided in Article X of this Indenture, and as in this
section provided, and as further set forth in the form of bond
contained in Schedule I to the supplemental indenture creating
the bonds of the 47th Series.
In case the Company shall at any time elect to redeem all
or any part of the bonds of the 47th Series it shall give
notice to the effect that it has elected to redeem all or a
part thereof, as the case may be, on a date therein
designated, specifying in case of redemption of a part of the
bonds of the 47th Series the distinctive numbers of the bonds
to be redeemed, and in every case stating in substance that on
said date there will become and be due and payable upon each
bond so to be redeemed, at the office or agency of the Company
in the Borough of Manhattan, The City of New York, the
redemption price thereof (or a specified portion thereof in
the case of partial redemption), and that on and after such
date interest thereon will cease to accrue.
The Company shall not be required to make transfers or
exchanges of the bonds of the 47th Series for a period of
sixteen days next preceding any selection of bonds of the 47th
Series to be redeemed or to make transfers or exchanges of any
bonds of the 47th Series designated in whole or in part for
redemption. Notwithstanding the provisions of Section 12 of
this Indenture, the Company shall not be required to make
transfers or exchanges of bonds of the 47th Series for a
period of sixteen days next preceding any interest payment
date.
Registered bonds of the 47th Series shall be transferable
upon presentation and surrender thereof, for cancellation, at
the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or
agency of the Company as the Company may designate, by the
registered holders thereof, in person or by duly authorized
attorney, in the manner and upon payment, if required by the
Company, of the charges prescribed in this Indenture. In the
manner and upon payment, if the Company shall require it, of
the charges prescribed in this Indenture, registered bonds of
the 47th Series may be exchanged for a like aggregate
principal amount of registered bonds of the 47th Series of
other authorized denominations, upon presentation and
surrender thereof, for cancellation, at the office or agency
of the Company in the Borough of Manhattan, The City of New
York and at such other office or agency of the Company as the
Company may from time to time designate.
Section 2. The Original Indenture is hereby supplemented
by adding immediately after Section 20 TT, a new Section 20 UU, as
follows:
Section 20 UU. The Company hereby creates a forty-eighth
series of bonds to be issued under and secured by this
Indenture, to be designated and to be distinguished from the
bonds of all other series by the title "First Mortgage Bonds,
Designated Secured Medium Term Notes, 6.55% Series due March
1, 2004" (herein sometimes referred to as the "48th Series").
The form of the bonds of the 48th Series shall be
substantially as set forth in Schedule II to the supplemental
indenture creating the bonds of the 48th Series.
Bonds of the 48th Series shall mature on the date
specified in their title. Unless otherwise determined by the
Company, the bonds of the 48th Series shall be issued in fully
registered form without coupons in denominations of $1,000 and
integral multiples thereof; the principal of and premium (if
any) and interest on each said bond to be payable at the
office or agency of the Company, in the Borough of Manhattan,
The City of New York, in lawful money of the United States of
America, provided that at the option of the Company interest
may be mailed to registered owners of the bonds at their
respective addresses that appear on the register thereof; and
the rate of interest shall be the rate per annum specified in
the title thereof, payable semi-annually on the first days of
February and August of each year (commencing August 1, 1994)
and on their maturity date.
The person in whose name any bond of the 48th Series is
registered at the close of business on any record date (as
hereinbelow defined) with respect to any regular semi-annual
interest payment date (other than interest payable upon
redemption) shall be entitled to receive the interest payable
on such interest payment date notwithstanding the cancellation
of such bond of the 48th Series upon any registration of
transfer or exchange thereof (including any exchange effected
as an incident to a partial redemption thereof) subsequent to
the record date and prior to such interest payment date,
except, if and to the extent that the Company shall default in
the payment of the interest due on such interest payment date,
then the registered holders of bonds of the 48th Series on
such record date shall have no further right to or claim in
respect of such defaulted interest as such registered holders
on such record date, and the persons entitled to receive
payment of any defaulted interest thereafter payable or paid
on any bonds of the 48th Series shall be the registered
holders of such bonds of the 48th Series (or any bond or bonds
issued, directly or after intermediate transactions, upon
transfer or exchange or in substitution thereof) on the date
of payment of such defaulted interest. Interest payable upon
redemption or maturity shall be payable to the person to whom
principal is paid. The term "record date" as used in this
Section 20 UU, and in the form of bonds of the 48th Series,
with respect to any regular semi-annual interest payment date
(other than interest payable upon redemption) shall mean the
January 15 next preceding a February 1 interest payment date
or the July 15 next preceding an August 1 interest payment
date, as the case may be, or, if such January 15 or July 15 is
not a Business Day (as defined hereinbelow), the next
preceding Business Day. The term "Business Day" with respect
to any bond of the 48th Series shall mean any day, other than
a Saturday or Sunday, which is not a day on which banking
institutions or trust companies in The City of New York, New
York, or the city in which is located any office or agency
maintained for the payment of principal of or premium, if any,
or interest on such bond of the 48th Series are authorized or
required by law, regulation or executive order to remain
closed.
Every registered bond of the 48th Series shall be dated
the date of authentication ("Issue Date") and shall bear
interest computed on the basis of a 360-day year consisting of
twelve 30-day months from its Issue Date or from the latest
semi-annual interest payment date to which interest has been
paid on the bonds of the 48th Series preceding the Issue Date,
unless such Issue Date be an interest payment date to which
interest is being paid on the bonds of the 48th Series, in
which case it shall bear interest from its Issue Date or
unless the Issue Date be the record date for the interest
payment date first following the date of original issuance of
bonds of the 48th Series ("Original Issue Date") or a date
prior to such record date, then from the Original Issue Date;
provided, that, so long as there is no existing default in the
payment of interest on said bonds, the holder of any bond
authenticated by the Trustee between the record date for any
regular semi-annual interest payment date (other than interest
payable upon redemption) and such interest payment date shall
not be entitled to the payment of the interest due on such
interest payment date and shall have no claim against the
Company with respect thereto; provided, further, that, if and
to the extent the Company shall default in the payment of the
interest due on such interest payment date, then any such bond
shall bear interest from the February 1 or August 1, as the
case may be, next preceding its Issue Date, to which interest
has been paid or, if the Company shall be in default with
respect to the interest payment date first following the
Original Issue Date, then from the Original Issue Date.
If any semi-annual interest payment date, redemption
date, or the maturity date is not a Business Day, payment of
amounts due on such date may be made on the next succeeding
Business Day, and, if such payment is made or duly provided
for on such Business Day, no interest shall accrue on such
amounts for the period from and after such interest payment
date, redemption date or the maturity date, as the case may
be, to such Business Day.
Notwithstanding the provisions of Section 14 of this
Indenture, the bonds of the 48th Series shall be executed on
behalf of the Company by its Chairman of the Board, by its
President or by one of its Vice Presidents or by one of its
officers designated by the Board of Directors of the Company
for such purpose, whose signature may be a facsimile, and its
corporate seal shall be thereunto affixed or printed thereon
and attested by its Secretary or one of its Assistant
Secretaries, and the provisions of the penultimate sentence of
said Section 14 shall be applicable to such bonds of the 48th
Series.
The bonds of the 48th Series shall be redeemable prior to
maturity at the option of the Company in whole at any time or
in part from time to time, upon not less than thirty but not
more than ninety days' previous notice given by mail to the
registered holders of the bonds to be so redeemed, to the
addresses that shall appear upon the register thereof, all as
provided in Article X of this Indenture, and as in this
section provided, and as further set forth in the form of bond
contained in Schedule II to the supplemental indenture
creating the bonds of the 48th Series.
In case the Company shall at any time elect to redeem all
or any part of the bonds of the 48th Series it shall give
notice to the effect that it has elected to redeem all or a
part thereof, as the case may be, on a date therein
designated, specifying in case of redemption of a part of the
bonds of the 48th Series the distinctive numbers of the bonds
to be redeemed, and in every case stating in substance that on
said date there will become and be due and payable upon each
bond so to be redeemed, at the office or agency of the Company
in the Borough of Manhattan, The City of New York, the
redemption price thereof (or a specified portion thereof in
the case of partial redemption), and that on and after such
date interest thereon will cease to accrue.
The Company shall not be required to make transfers or
exchanges of the bonds of the 48th Series for a period of
sixteen days next preceding any selection of bonds of the 48th
Series to be redeemed or to make transfers or exchanges of any
bonds of the 48th Series designated in whole or in part for
redemption. Notwithstanding the provisions of Section 12 of
this Indenture, the Company shall not be required to make
transfers or exchanges of bonds of the 48th Series for a
period of sixteen days next preceding any interest payment
date.
Registered bonds of the 48th Series shall be transferable
upon presentation and surrender thereof, for cancellation, at
the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or
agency of the Company as the Company may designate, by the
registered holders thereof, in person or by duly authorized
attorney, in the manner and upon payment, if required by the
Company, of the charges prescribed in this Indenture. In the
manner and upon payment, if the Company shall require it, of
the charges prescribed in this Indenture, registered bonds of
the 48th Series may be exchanged for a like aggregate
principal amount of registered bonds of the 48th Series of
other authorized denominations, upon presentation and
surrender thereof, for cancellation, at the office or agency
of the Company in the Borough of Manhattan, The City of New
York and at such other office or agency of the Company as the
Company may from time to time designate.
Section 3. The Original Indenture is hereby supplemented
by adding thereto the following new Article III YYY to be added
after Article III XXX of the Original Indenture:
ARTICLE III YYY.
Initial Issuance of Bonds of the 47th Series.
Section 21 YYY. In accordance with and upon compliance with
such provisions of this Indenture as shall be selected for such
purpose by the officers of the Company duly authorized to take such
action, bonds of the 47th Series in an aggregate principal amount
not exceeding $25,000,000 shall forthwith be executed by the
Company and delivered to the Trustee and shall be authenticated by
the Trustee and delivered to or upon the order of the Company
(without awaiting the filing and recording of the supplemental
indenture creating the 47th Series except to the extent required by
Section 28 of this Indenture).
Section 4. The Original Indenture is hereby supplemented
by adding thereto the following new Article III ZZZ to be added
after Article III YYY of the Original Indenture:
ARTICLE III ZZZ.
Initial Issuance of Bonds of the 48th Series.
Section 21 ZZZ. In accordance with and upon compliance with
such provisions of this Indenture as shall be selected for such
purpose by the officers of the Company duly authorized to take such
action, bonds of the 48th Series in an aggregate principal amount
not exceeding $25,000,000 shall forthwith be executed by the
Company and delivered to the Trustee and shall be authenticated by
the Trustee and delivered to or upon the order of the Company
(without awaiting the filing and recording of the supplemental
indenture creating the 48th Series except to the extent required by
Section 28 of this Indenture).
Section 5. At any meeting of bondholders held as provided
for in Article XVIII of the Original Indenture at which holders of
bonds of the 47th Series or bonds of the 48th Series are entitled
to vote, all holders of bonds of the 47th Series or bonds of the
48th Series at the time of such meeting shall be entitled to vote
thereat; provided, however, that the Trustee may, and upon request
of the Company or of a majority of the bondholders of the 47th
Series or the 48th Series shall, fix a day not exceeding ninety
days preceding the date for which the meeting is called as a record
date for the determination of holders of bonds of the 47th Series
or of the 48th Series, as the case may be, entitled to notice of
and to vote at such meeting and any adjournment thereof and only
such registered owners who shall have been such registered owners
on the date so fixed, and who are entitled to vote such bonds of
the 47th Series or the 48th Series at the meeting, shall be
entitled to receive notice of such meeting.
Section 6. As supplemented by this First 1994 Supplemental
Indenture, the Original Indenture is in all respects ratified and
confirmed and the Original Indenture and this First 1994 Supplemen-
tal Indenture shall be read, taken and construed as one and the
same instrument. The bonds of the 47th Series and the bonds of the
48th Series are the original debt secured by this First 1994
Supplemental Indenture and the Original Indenture, and this First
1994 Supple-mental Indenture and the Original Indenture shall be,
and be deemed to be, the original lien instrument securing the
bonds of the 47th Series and the bonds of the 48th Series.
Nothing contained in this First 1994 Supplemental Indenture
shall, or shall be construed to, confer upon any person other than
the owners of bonds issued under the Original Indenture and this
First 1994 Supplemental Indenture, the Company and the Trustee, any
right to avail themselves of any benefit of any provision of the
Original Indenture or of this First 1994 Supplemental Indenture.
The Trustee assumes no responsibility for the correctness of
the recitals of facts contained herein and makes no representations
as to the validity of this First 1994 Supplemental Indenture.
This First 1994 Supplemental Indenture may be simultaneously
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original; but such counterparts
shall together constitute but one and the same instrument.
In Witness Whereof, Indiana Michigan Power Company, party of
the first part, has caused this instrument to be signed in its name
and behalf by its President, a Vice President or an Assistant
Treasurer, and its corporate seal to be hereunto affixed and
attested by its Secretary or an Assistant Secretary, and The Bank
of New York, party of the second part, has caused this instrument
to be signed in its name and behalf by a Vice President or an
Assistant Vice President and its corporate seal to be hereunto
affixed and attested by an Assistant Treasurer. Executed and
delivered in The City of New York, N.Y., as of the day and year
first above written.
INDIANA MICHIGAN POWER COMPANY
[Seal] By /s/ B. M. Barber
(B. M. Barber)
Assistant Treasurer
Attest:
/s/ Jeffrey D. Cross
(Jeffrey D. Cross)
Assistant Secretary
Signed, sealed and delivered by
Indiana Michigan Power Company
in the presence of
/s/ Ann B. Graf
(Ann B. Graf)
/s/ Armando A. Pena
(Armando A. Pena)
The Bank of New York,
as Trustee
[Seal] By /s/ S. D. Mineo
(S. D. Mineo)
Vice President
Attest:
/s/ Lucille Firrincieli
(Lucille Firrincieli)
Assistant Treasurer
Signed, sealed and delivered by
The Bank of New York in the presence of:
/s/ T. Shea
(T. Shea)
/s/ E. Elcock
(E. Elcock)
State of Ohio }
} ss.:
County of Franklin }
On this 21st day of February, 1994, personally appeared
before me, a Notary Public within and for said County in the State
aforesaid, B. M. BARBER and JEFFREY D. CROSS, to me known and known
to me to be respectively an Assistant Treasurer and Assistant
Secretary of INDIANA MICHIGAN POWER COMPANY, one of the
corporations named in and which executed the foregoing instrument,
who severally acknowledged that they did sign and seal said
instrument as such Assistant Treasurer and Assistant Secretary for
and on behalf of said corporation and that the same is their free
act and deed as such Assistant Treasurer and Assistant Secretary,
respectively, and the free and corporate act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal at Columbus, Ohio, this 21st day of February, 1994.
[Notarial Seal]
/s/ Mary M. Soltesz
Mary M. Soltesz
Notary Public, State of Ohio
My Commission Expires 7-13-94
State of New York )
) SS.:
County of New York )
I certify that on this 22nd day of February, 1994, before me
Patricia M. Carillo, a Notary Public in and for said County and
State, appeared S. D. Mineo, to me personally known and known to me
to be a Vice President of The Bank of New York and one of the
persons whose name is signed to the foregoing instrument, who,
being by me duly sworn, deposed and said that he resides at 87 Main
Street, Glen Rock, NJ 07452, that he is a Vice President of The
Bank of New York, that he knows the corporate seal of said
corporation; that the seal affixed to the foregoing instrument is
the corporate seal of the said corporation; that it was so affixed
by order of said corporation, and that he signed his name as Vice
President of said corporation to said instrument by like order; and
thereupon said S. D. Mineo acknowledged that he signed said
instrument as his free and voluntary act and that said corporation
executed said instrument, as Trustee, as its free and voluntary act
for the purposes and uses therein set forth.
In Witness Whereof I have hereunto set my hand and official
seal this 22nd day of February, 1994.
[Seal]
/s/ Patricia M. Carillo
Patricia M. Carillo
Notary Public, State of New York
No. 41-4747732
Qualified in Queens County
Certificate Filed in New York County
Commission Expires May 31, 1995
This instrument was drafted by Jeffrey D. Cross, whose
business address is 1 Riverside Plaza, Columbus, Ohio 43215.
SCHEDULE I
INDIANA MICHIGAN POWER COMPANY
FIRST MORTGAGE BOND, DESIGNATED
SECURED MEDIUM TERM NOTE, 7.50%
SERIES DUE MARCH 1, 2024
Bond No.
Original Issue Date: March 1, 1994
Principal Amount:
Semi-annual Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
CUSIP No.: 45489H AR 8
INDIANA MICHIGAN POWER COMPANY, a corporation of the
State of Indiana (hereinafter called the "Company"), for value
received, hereby promises to pay to ____________ or registered
assigns, the Principal Amount set forth above on the maturity date
specified in the title of this bond in lawful money of the United
States of America, at the office or agency of the Company in the
Borough of Manhattan, The City of New York, and to pay to the
registered holder hereof interest on said amount from the date of
authentication of this bond (herein called the "Issue Date") or the
latest semi-annual interest payment date to which interest has been
paid on the bonds of this series preceding the Issue Date, unless
the Issue Date be an interest payment date to which interest is
being paid, in which case from the Issue Date or unless the Issue
Date be the record date for the interest payment date first
following the Original Issue Date set forth above or a date prior
to such record date, then from the Original Issue Date (or, if the
Issue Date is between the record date for any interest payment date
and such interest payment date, then from such interest payment
date, provided, however, that if and to the extent that the Company
shall default in the payment of the interest due on such interest
payment date, then from the next preceding semi-annual interest
payment date to which interest has been paid on the bonds of this
series, or if such interest payment date is the interest payment
date first following the Original Issue Date set forth above, then
from the Original Issue Date), until the principal hereof shall
have become due and payable, at the rate per annum specified in the
title of this bond, payable on February 1 and August 1 of each year
(commencing August 1, 1994) and on the maturity date specified in
the title of this bond; provided that, at the option of the
Company, such interest may be paid by check, mailed to the
registered owner of this bond at such owner's address appearing on
the register hereof.
This bond is one of a duly authorized issue of bonds of the
Company, issuable in series, and is one of a series known as its
First Mortgage Bonds, of the series designated in its title, all
bonds of all series issued and to be issued under and equally
secured (except in so far as any sinking fund, established in
accordance with the provisions of the Mortgage hereinafter
mentioned, may afford additional security for the bonds of any
particular series) by a Mortgage and Deed of Trust (herein,
together with any indentures supplemental thereto, called the
Mortgage), dated as of June 1, 1939, executed by the Company to
IRVING TRUST COMPANY (now THE BANK OF NEW YORK) and FREDERICK G.
HERBST, as Trustees, to which Mortgage reference is made for a
description of the property mortgaged and pledged, the nature and
extent of the security, the rights of the holders of the bonds and
of the Trustee in respect thereof, the duties and immunities of the
Trustee, and the terms and conditions upon which the bonds are
secured. With the consent of the Company and to the extent
permitted by and as provided in the Mortgage, the rights and
obligations of the Company and/or of the holders of the bonds
and/or coupons and/or the terms and provisions of the Mortgage
and/or of any instruments supplemental thereto may be modified or
altered by the affirmative vote of the holders of at least seventy-
five per centum (75%) in principal amount of the bonds affected by
such modification or alteration, then outstanding under the
Mortgage (excluding bonds disqualified from voting by reason of the
Company's interest therein as provided in the Mortgage); provided
that without the consent of the holder hereof no such modification
or alteration shall permit the extension of the maturity of the
principal of or interest on this bond or the reduction in the rate
of interest hereon or any other modification in the terms of
payment of such principal or interest or the creation of a lien on
the mortgaged and pledged property ranking prior to or on a parity
with the lien of the Mortgage or the deprivation of the holder
hereof of a lien upon such property or reduce the above percentage.
As provided in said Mortgage, said bonds may be for various
principal sums and are issuable in series, which may mature at
different times, may bear interest at different rates and may
otherwise vary as therein provided. This bond is created by an
Indenture Supplemental dated as of February 1, 1994 (the "First
1994 Supplemental Indenture"), as provided for in said Mortgage.
The interest payable on any February 1 or August 1 (other than
interest payable upon redemption) will, subject to certain
exceptions provided in said First 1994 Supplemental Indenture, be
paid to the person in whose name this bond is registered at the
close of business on the record date, which shall be the January 15
or July 15, as the case may be, next preceding such interest
payment date, or, if such January 15 or July 15 is not a Business
Day (as hereinbelow defined), the next preceding Business Day.
Interest payable upon redemption or maturity shall be payable to
the person to whom principal is paid. The term "Business Day"
means any day, other than a Saturday or Sunday, which is not a day
on which banking institutions or trust companies in The City of New
York, New York or the city in which is located any office or agency
maintained for the payment of principal of or interest on bonds of
this series are authorized or required by law, regulation or
executive order to remain closed.
If any semi-annual interest payment date, redemption date, or
the maturity date is not a Business Day, payment of amounts due on
such date may be made on the next succeeding Business Day, and, if
such payment is made or duly provided for on such Business Day, no
interest shall accrue on such amounts for the period from and after
such interest payment date, redemption date or the maturity date,
as the case may be, to such Business Day.
The Company and the Trustee may deem and treat the person in
whose name this bond is registered as the absolute owner hereof for
the purpose of receiving payment of or on account of principal or
(subject to the provisions hereof) interest hereon and for all
other purposes and the Company and the Trustee shall not be
affected by any notice to the contrary.
The Company shall not be required to make transfers or
exchanges of bonds of this series for a period of sixteen days next
preceding any interest payment date, or next preceding any
selection of bonds of this series to be redeemed, and the Company
shall not be required to make transfers or exchanges of any bonds
of this series designated for redemption in whole or in part.
Any or all of the bonds of this Series may be redeemed by the
Company on or after March 1, 2004, at its option, or by operation
of various provisions of the Mortgage, in whole at any time or in
part from time to time, upon not less than thirty but not more than
ninety days' previous notice given by mail to the registered
holders of the bonds to be redeemed, all as provided in the
Mortgage, (a) if redeemed otherwise than by the use or application
of cash deposited pursuant to the maintenance and replacement
provisions contained in Part II(a) of Section 20 of the Mortgage
and otherwise than by the use of proceeds of released property or
the proceeds of insurance, at an amount equal to a percentage of
the principal amount thereof determined as set forth in Annex A
hereto under the heading "Regular Redemption Price" together in
each case with accrued interest to the date fixed for redemption,
or (b) if redeemed by the use or application of cash deposited
pursuant to the maintenance and replacement provisions contained in
Part II(a) of Section 20 of the Mortgage or by the use of proceeds
of released property or the proceeds of insurance, at an amount
equal to 100% of the principal amount thereof together in each case
with accrued interest to the date fixed for redemption.
The principal hereof may be declared or may become due prior
to the express date of the maturity hereof on the conditions, in
the manner and at the time set forth in the Mortgage, upon the
occurrence of a completed default as in the Mortgage provided.
This bond is transferable as prescribed in the Mortgage by the
registered owner hereof in person, or by his duly authorized
attorney, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or agency
of the Company as the Company may designate, upon surrender and
cancellation of this bond and upon payment, if the Company shall
require it, of the transfer charges prescribed in the Mortgage,
and, thereupon, a new registered bond or bonds of authorized
denominations of the same series for a like principal amount will
be issued to the transferee in exchange herefor as provided in the
Mortgage. In the manner and upon payment, if the Company shall
require it, of the charges prescribed in the Mortgage, registered
bonds of this series may be exchanged for a like aggregate
principal amount of registered bonds of other authorized
denominations of the same series, upon presentation and surrender
thereof, for cancellation, at the office or agency of the Company
in the Borough of Manhattan, The City of New York, or at such other
office or agency of the Company as the Company may designate.
No recourse shall be had for the payment of the principal of
or interest on this bond against any incorporator or any past,
present or future stockholder, officer or director, as such, of the
Company, or of any successor corporation, either directly or
through the Company or any successor corporation, under any rule of
law, statute or constitution or by the enforcement of any
assessment or otherwise, all such liability of incorporators,
stockholders, officers and directors, as such, being waived and
released by the holder or owner hereof by the acceptance of this
bond and being likewise waived and released by the terms of the
Mortgage.
This bond shall not become valid or obligatory for any purpose
until THE BANK OF NEW YORK, the Trustee under the Mortgage, or its
successor thereunder, shall have signed the form of Authentication
Certificate endorsed hereon.
In Witness Whereof, Indiana Michigan Power Company has caused
this instrument to be duly executed under its corporate seal.
Dated:
INDIANA MICHIGAN POWER COMPANY
By______________________________
Vice President
(SEAL)
Attest:_________________________
Assistant Secretary
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the bonds,
of the series herein designated,
described in the within-mentioned
Mortgage.
THE BANK OF NEW YORK,
as Trustee,
By______________________________
Authorized Officer
ANNEX A TO FIRST MORTGAGE BOND,
DESIGNATED SECURED MEDIUM TERM NOTE,
7.50% SERIES DUE MARCH 1, 2024
(If redeemed during the twelve Regular
months beginning March 1) Redemption
Year Price
2004 103.75%
2005 103.38
2006 103.00
2007 102.63
2008 102.25
2009 101.88
2010 101.50
2011 101.13
2012 100.75
2013 100.38
2014 100.00
2015 100.00
2016 100.00
2017 100.00
2018 100.00
2019 100.00
2020 100.00
2021 100.00
2022 100.00
2023 100.00
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
_______________________________________
________________________________________________________________
________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
________________________________________________________________
ASSIGNEE) the within Bond and all rights thereunder, hereby
________________________________________________________________
irrevocably constituting and appointing such person attorney to
________________________________________________________________
transfer such bond on the books of the Issuer, 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 Bond in every
particular without alteration or enlargement or any
change whatsoever.
SCHEDULE II
INDIANA MICHIGAN POWER COMPANY
FIRST MORTGAGE BOND, DESIGNATED
SECURED MEDIUM TERM NOTE, 6.55%
SERIES DUE MARCH 1, 2004
Bond No.
Original Issue Date: March 1, 1994
Principal Amount:
Semi-annual Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
CUSIP No.: 45489H AQ 0
INDIANA MICHIGAN POWER COMPANY, a corporation of the
State of Indiana (hereinafter called the "Company"), for value
received, hereby promises to pay to ____________ or registered
assigns, the Principal Amount set forth above on the maturity date
specified in the title of this bond in lawful money of the United
States of America, at the office or agency of the Company in the
Borough of Manhattan, The City of New York, and to pay to the
registered holder hereof interest on said amount from the date of
authentication of this bond (herein called the "Issue Date") or the
latest semi-annual interest payment date to which interest has been
paid on the bonds of this series preceding the Issue Date, unless
the Issue Date be an interest payment date to which interest is
being paid, in which case from the Issue Date or unless the Issue
Date be the record date for the interest payment date first
following the Original Issue Date set forth above or a date prior
to such record date, then from the Original Issue Date (or, if the
Issue Date is between the record date for any interest payment date
and such interest payment date, then from such interest payment
date, provided, however, that if and to the extent that the Company
shall default in the payment of the interest due on such interest
payment date, then from the next preceding semi-annual interest
payment date to which interest has been paid on the bonds of this
series, or if such interest payment date is the interest payment
date first following the Original Issue Date set forth above, then
from the Original Issue Date), until the principal hereof shall
have become due and payable, at the rate per annum specified in the
title of this bond, payable on February 1 and August 1 of each year
(commencing August 1, 1994) and on the maturity date specified in
the title of this bond; provided that, at the option of the
Company, such interest may be paid by check, mailed to the
registered owner of this bond at such owner's address appearing on
the register hereof.
This bond is one of a duly authorized issue of bonds of the
Company, issuable in series, and is one of a series known as its
First Mortgage Bonds, of the series designated in its title, all
bonds of all series issued and to be issued under and equally
secured (except in so far as any sinking fund, established in
accordance with the provisions of the Mortgage hereinafter
mentioned, may afford additional security for the bonds of any
particular series) by a Mortgage and Deed of Trust (herein,
together with any indentures supplemental thereto, called the
Mortgage), dated as of June 1, 1939, executed by the Company to
IRVING TRUST COMPANY (now THE BANK OF NEW YORK) and FREDERICK G.
HERBST, as Trustees, to which Mortgage reference is made for a
description of the property mortgaged and pledged, the nature and
extent of the security, the rights of the holders of the bonds and
of the Trustee in respect thereof, the duties and immunities of the
Trustee, and the terms and conditions upon which the bonds are
secured. With the consent of the Company and to the extent
permitted by and as provided in the Mortgage, the rights and
obligations of the Company and/or of the holders of the bonds
and/or coupons and/or the terms and provisions of the Mortgage
and/or of any instruments supplemental thereto may be modified or
altered by the affirmative vote of the holders of at least seventy-
five per centum (75%) in principal amount of the bonds affected by
such modification or alteration, then outstanding under the
Mortgage (excluding bonds disqualified from voting by reason of the
Company's interest therein as provided in the Mortgage); provided
that without the consent of the holder hereof no such modification
or alteration shall permit the extension of the maturity of the
principal of or interest on this bond or the reduction in the rate
of interest hereon or any other modification in the terms of
payment of such principal or interest or the creation of a lien on
the mortgaged and pledged property ranking prior to or on a parity
with the lien of the Mortgage or the deprivation of the holder
hereof of a lien upon such property or reduce the above percentage.
As provided in said Mortgage, said bonds may be for various
principal sums and are issuable in series, which may mature at
different times, may bear interest at different rates and may
otherwise vary as therein provided. This bond is created by an
Indenture Supplemental dated as of February 1, 1994 (the "First
1994 Supplemental Indenture"), as provided for in said Mortgage.
The interest payable on any February 1 or August 1 (other than
interest payable upon redemption) will, subject to certain
exceptions provided in said First 1994 Supplemental Indenture, be
paid to the person in whose name this bond is registered at the
close of business on the record date, which shall be the January 15
or July 15, as the case may be, next preceding such interest
payment date, or, if such January 15 or July 15 is not a Business
Day (as hereinbelow defined), the next preceding Business Day.
Interest payable upon redemption or maturity shall be payable to
the person to whom principal is paid. The term "Business Day"
means any day, other than a Saturday or Sunday, which is not a day
on which banking institutions or trust companies in The City of New
York, New York or the city in which is located any office or agency
maintained for the payment of principal of or interest on bonds of
this series are authorized or required by law, regulation or
executive order to remain closed.
If any semi-annual interest payment date, redemption date or
the maturity date is not a Business Day, payment of amounts due on
such date may be made on the next succeeding Business Day, and, if
such payment is made or duly provided for on such Business Day, no
interest shall accrue on such amounts for the period from and after
such interest payment date, redemption date or the maturity date,
as the case may be, to such Business Day.
The Company and the Trustee may deem and treat the person in
whose name this bond is registered as the absolute owner hereof for
the purpose of receiving payment of or on account of principal or
(subject to the provisions hereof) interest hereon and for all
other purposes and the Company and the Trustee shall not be
affected by any notice to the contrary.
The Company shall not be required to make transfers or
exchanges of bonds of this series for a period of sixteen days next
preceding any interest payment date, or next preceding any
selection of bonds of this series to be redeemed, and the Company
shall not be required to make transfers or exchanges of any bonds
of this series designated for redemption in whole or in part.
Any or all of the bonds of this Series may be redeemed by the
Company on or after March 1, 1999, at its option, or by operation
of various provisions of the Mortgage, in whole at any time or in
part from time to time, upon not less than thirty but not more than
ninety days' previous notice given by mail to the registered
holders of the bonds to be redeemed, all as provided in the
Mortgage, (a) if redeemed otherwise than by the use or application
of cash deposited pursuant to the maintenance and replacement
provisions contained in Part II(a) of Section 20 of the Mortgage
and otherwise than by the use of proceeds of released property or
the proceeds of insurance, at an amount equal to a percentage of
the principal amount thereof determined as set forth in Annex A
hereto under the heading "Regular Redemption Price" together in
each case with accrued interest to the date fixed for redemption,
or (b) if redeemed by the use or application of cash deposited
pursuant to the maintenance and replacement provisions contained in
Part II(a) of Section 20 of the Mortgage or by the use of proceeds
of released property or the proceeds of insurance, at an amount
equal to 100% of the principal amount thereof together in each case
with accrued interest to the date fixed for redemption.
The principal hereof may be declared or may become due prior
to the express date of the maturity hereof on the conditions, in
the manner and at the time set forth in the Mortgage, upon the
occurrence of a completed default as in the Mortgage provided.
This bond is transferable as prescribed in the Mortgage by the
registered owner hereof in person, or by his duly authorized
attorney, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, and at such other office or agency
of the Company as the Company may designate, upon surrender and
cancellation of this bond and upon payment, if the Company shall
require it, of the transfer charges prescribed in the Mortgage,
and, thereupon, a new registered bond or bonds of authorized
denominations of the same series for a like principal amount will
be issued to the transferee in exchange herefor as provided in the
Mortgage. In the manner and upon payment, if the Company shall
require it, of the charges prescribed in the Mortgage, registered
bonds of this series may be exchanged for a like aggregate
principal amount of registered bonds of other authorized
denominations of the same series, upon presentation and surrender
thereof, for cancellation, at the office or agency of the Company
in the Borough of Manhattan, The City of New York, or at such other
office or agency of the Company as the Company may designate.
No recourse shall be had for the payment of the principal of
or interest on this bond against any incorporator or any past,
present or future stockholder, officer or director, as such, of the
Company, or of any successor corporation, either directly or
through the Company or any successor corporation, under any rule of
law, statute or constitution or by the enforcement of any
assessment or otherwise, all such liability of incorporators,
stockholders, officers and directors, as such, being waived and
released by the holder or owner hereof by the acceptance of this
bond and being likewise waived and released by the terms of the
Mortgage.
This bond shall not become valid or obligatory for any purpose
until THE BANK OF NEW YORK, the Trustee under the Mortgage, or its
successor thereunder, shall have signed the form of Authentication
Certificate endorsed hereon.
In Witness Whereof, Indiana Michigan Power Company has caused
this instrument to be duly executed under its corporate seal.
Dated:
INDIANA MICHIGAN POWER COMPANY
By____________________________
Vice President
(SEAL)
Attest:_______________________
Assistant Secretary
TRUSTEE'S AUTHENTICATION CERTIFICATE
This bond is one of the bonds,
of the series herein designated,
described in the within-mentioned
Mortgage.
THE BANK OF NEW YORK,
as Trustee,
By______________________________
Authorized Officer
ANNEX A TO FIRST MORTGAGE BOND,
DESIGNATED SECURED MEDIUM TERM NOTE,
6.55% SERIES DUE MARCH 1, 2004
(If redeemed during the twelve Regular
months beginning March 1) Redemption
Year Price
1999 101.88%
2000 100.94
2001 100.00
2002 100.00
2003 100.00
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
_______________________________________
________________________________________________________________
________________________________________________________________
(PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
________________________________________________________________
ASSIGNEE) the within Bond and all rights thereunder, hereby
________________________________________________________________
irrevocably constituting and appointing such person attorney to
________________________________________________________________
transfer such bond on the books of the Issuer, 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 Bond in every
particular without alteration or enlargement or any
change whatsoever.
<PAGE>
NUCLEAR MATERIAL LEASE AGREEMENT
Dated as of December 1, 1990
between
DCC FUEL CORPORATION,
as Lessor
and
INDIANA MICHIGAN POWER COMPANY,
as Lessee
I N D E X
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . .1
2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . .1
3. Title to Remain in the Lessor; Quiet Enjoyment;
Fuel Management; Location . . . . . . . . . . . . . . . . .2
4. Agreement for Lease of Nuclear Material . . . . . . . . . .4
5. Orders for Nuclear Material and Services;
Assigned Agreements . . . . . . . . . . . . . . . . . . . .4
6. Leasing Records; Payment of Costs of Lessor . . . . . . . .6
7. No Warranties or Representation by Lessor . . . . . . . . .9
8. Lease Term; Early Termination; Termination of Leasing
Records . . . . . . . . . . . . . . . . . . . . . . . . . 11
9. Payment of Rent; Payments with Respect to the Lessor's
Financing Costs . . . . . . . . . . . . . . . . . . . . . 13
10. Compliance with Laws; Restricted Use of Nuclear
Material; Assignments; Permitted Liens; Spent Fuel. . . . 16
11. Permitted Contests. . . . . . . . . . . . . . . . . . . . 22
12. Insurance; Compliance with Insurance Requirements . . . . 24
13. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 26
14. Casualty and Other Events . . . . . . . . . . . . . . . . 30
15. Nuclear Material to Remain Personal Property. . . . . . . 31
16. Events of Default . . . . . . . . . . . . . . . . . . . . 32
17. Rights of the Lessor Upon Default of the Lessee . . . . . 33
18. Termination After Certain Events. . . . . . . . . . . . . 36
19. Investment Tax Credit . . . . . . . . . . . . . . . . . . 40
20. Certificates; Information; Financial Statements . . . . . 41
21. Obligation of the Lessee to Pay Rent. . . . . . . . . . . 43
22. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 44
NUCLEAR MATERIAL LEASE AGREEMENT
LEASE AGREEMENT dated as of the 1st day of December, 1990, by
and between DCC FUEL CORPORATION, an Ohio corporation (herein
called the "Lessor"), and INDIANA MICHIGAN POWER COMPANY, an
Indiana corporation (herein called the "Lessee").
In consideration of the mutual covenants contained herein, the
parties covenant and agree as follows:
1. Definitions.
Except as otherwise provided herein, defined terms when used
in this Lease Agreement (including the Exhibits hereto) shall.
have the respective meanings set forth in Appendix A hereto.
2. Notices.
Any notice, demand or other communication which by any
provision of this Lease Agreement is required or provided to be
given shall be deemed to have been delivered if in writing
addressed as provided below and actually delivered by mail,
courier, telex or facsimile at the following addresses:
(i) If to the Lessor, DCC Fuel Corporation, c/o
The Huntington Trust Company, N.A., 917 Euclid Avenue,
Cleveland, Ohio 44115, marked for the attention of Dennis R.
Franko, or at such other address as it may have furnished to
the Lessee and the Secured Parties; or
(ii) If to the Lessee, Indiana Michigan Power
Company, c/o American Electric Power Service Corporation, 1
Riverside Plaza, Columbus, Ohio 43215, marked for the
attention of the Senior Vice President-Finance, or at such
other address as it may have furnished the Lessor and the
Secured Parties in writing; or
(iii) except as otherwise requested in writing by
any Secured Party, any notice, demand or communication which
by any provision of this Lease Agreement is required or
provided to be given to the Secured Parties shall be deemed to
have been delivered to all the Secured Parties if a single
copy thereof is delivered to each of (a) The Prudential
Insurance Company of America, c/o PruCapital Management, Inc.,
Agent, Three Gateway Center, 10th Floor, 100 Mulberry Street,
Newark, New Jersey 07102-4077, marked for the attention of the
Project Management Group and (b) Prudential Power Funding
Associates, Four Gateway Center, 100 Mulberry Street, Newark,
New Jersey 07102-4069, marked for the attention of Team
Central, or at such other address as either may have furnished
the Lessor and the Lessee in writing.
3. Title to Remain in the Lessor; Quiet Enjoyment; Fuel
Management; Location.
(a) The Lessor and the Lessee hereby acknowledge that this
Lease Agreement is a lease and is intended to secure the
obligations of the Lessee to pay installments of Rent hereunder as
the same become due; that, subject to the provisions of Section
10(h) hereof, the Lessor has title to and is the owner of the
Nuclear Material; and that the relationship between the Lessor and
the Lessee shall always be only that of the Lessor and the Lessee.
(b) The Lessor (including its successors and assigns) agrees
and covenants that, so long as the Lessee makes timely payments of
Rent and fully performs all other obligations to be performed by
the Lessee hereunder, the Lessor (including its successors and
assigns) shall not hinder or interfere with the Lessee's peaceable
and quiet enjoyment of the possession and use of Nuclear Material
leased hereunder, for the term or terms herein provided, subject,
however, to the terms of this Lease Agreement.
(c) So long as no Lease Event of Default shall have occurred
and be continuing and the Lessor shall not have elected to exercise
any of its remedies under Section 17 hereof, the Lessee shall have
full right and lawful authority to engage in Fuel Management. The
Lessee is hereby designated the lawful representative of the Lessor
in all dealings with Manufacturers and any regulatory agency having
jurisdiction over the ownership or possession of the Nuclear
Material.
(d) The Lessee covenants to the Lessor that the Nuclear
Material location will be limited to: (x) the Manufacturers'
facilities, (y) transit between Manufacturers' facilities and other
Manufacturers' facilities or a Generating Facility and (z) a
Generating Facility. Each assembly of the Nuclear Material will be
located during its Heat Production and "cooling-off" stage at a
Generating Facility.
4. Agreement for Lease of Nuclear Material.
The Lessor shall lease to the Lessee and the Lessee shall
lease from the Lessor such Nuclear Material as may be mutually
agreed upon, provided that the total Stipulated Casualty Value of
all Nuclear Material leased hereunder at any one time shall not
exceed $140,000,000 in the aggregate or such other amount as the
Lessor and the Lessee may agree to in writing ("Maximum Stipulated
Casualty Value"). The Lessor and the Lessee shall evidence their
agreement to lease particular Nuclear Material in accordance with
the terms and provisions of this Lease Agreement by signing and
delivering to each other, from time to time, Leasing Records,
substantially in the form of Exhibit A or Exhibit B hereto, as
applicable, covering such Nuclear Material. Nothing contained
herein shall be deemed to prohibit the Lessee from leasing from
other lessors or otherwise obtaining other nuclear material for use
in any Generating Facility, subject to the provisions with respect
to intermingling contained in Section 6 hereof.
5. Orders for Nuclear Material and Services; Assigned Agreements.
(a) The Nuclear Material Contracts listed in Exhibit C
hereto, relating, among other things, to the purchase of, and
services to be performed with respect to, Nuclear Material were
entered into by the Lessee prior to the date of this Lease
Agreement. Any further agreements which the Lessee deems necessary
or desirable with respect to the purchase of or services to be
performed on Nuclear Material to be leased hereunder may be
negotiated by the Lessee and executed by the Lessee in its own
name, or, where permitted, as agent for the Lessor.
(b) So long as no Lease Event of Default shall have occurred
and be continuing, and subject to the approval of the Lessor and to
the limitation on the Maximum Stipulated Casualty Value of Nuclear
Material contained in Section 4, the interests of the Lessee under
the agreements listed in Exhibit C, and the interests of the Lessee
under any further Nuclear Material Contracts (whether executed and
delivered before or after the date of this agreement) pursuant to
which the Lessee desires to purchase Nuclear Material or have
services performed on any Nuclear Material leased or to be leased
hereunder, may be assigned to the Lessor under an Assignment
Agreement substantially in the form of Exhibit D hereto or in such
form, approved by the Lessor, as shall be required pursuant to the
applicable terms of the agreements listed in Exhibit C. The Lessee
shall use its best efforts to cause the other parties to such
agreements to consent to such assignment. Upon such assignment and
consent with respect to any Nuclear Material Contract, the Lessor,
subject to the limitation on the Maximum Stipulated Casualty Value
of Nuclear Material contained in Section 4, shall make all payment,
which are required thereunder for the purchase of Nuclear Material
or for services to be performed thereon, such payments to be made
as provided in Section 6.
(c) So long as no Lease Event of Default shall have occurred
and be continuing, the Lessor hereby authorizes the Lessee, at the
Lessee's cost and expense, to assert all rights and claims, and to
bring suits, actions and proceedings, in its own name or in the
name of the Lessor, in respect of any Manufacturer's warranties or
undertakings, express or implied, relating to any portion of the
Nuclear Material and to retain the proceeds of any such suits,
actions and proceedings.
(d) Notwithstanding any other provision of this Lease
Agreement or any other Basic Document, the Lessee shall not be
obligated to provide the Lessor, the Lender, the Purchasers or any
other Secured Party with a copy of, or any information relating to,
any portion of an Assigned Agreement other than as permitted by the
Assignment Agreement related to such Assigned Agreement.
6. Leasing Records; Payment of Costs of Lessor.
(a) Interim Leasing Records.
An Interim Leasing Record shall be dated the date that
the Lessor first makes any payment with respect to the Acquisition
Cost of Nuclear Material, and shall set forth the full description
of the Nuclear Material specified therein, the Acquisition Cost and
location thereof, and such other details with respect to such
Nuclear Material as the parties may agree. During the period of
preparation and processing or reprocessing of Nuclear Material
subject to an Interim Leasing Record, if the Lessor shall make any
further payment or payments or if the Lessor receives any payment
or payments representing a credit against the Acquisition Cost
previously paid with respect to such Nuclear Material, a
supplemental Interim Leasing Record dated the date that the Lessor
makes each such further payment or the date of receipt of any such
credit shall be signed by the Lessor and the Lessee to record the
revised Acquisition Cost, after giving effect to any such payments
or credits with respect to such Nuclear Material, any change in
location and such additional details as the parties may agree.
(b) Final Leasing Records.
For Nuclear Material previously covered by an Interim
Leasing Record, the Final Leasing Record shall be dated the first
day of the month following the date of completion of the first 200
full power hours of Heat Production of such Nuclear Material,
unless such date is the first day of a month, in which case the
Final Leasing Record shall be dated such date. For Nuclear
Material not previously covered by an Interim Leasing Record, the
Final Leasing Record shall be dated the date that the Lessor first
makes any payment with respect to the Acquisition Cost of such
Nuclear Material. A Final Leasing Record shall set forth a full
description of the Nuclear Material specified therein, the
Acquisition Cost thereof, the BTU Charge, the location, and such
other details with respect to such Nuclear Material as the parties
may agree.
(c) Payment of Nuclear Material Costs.
Invoices of Manufacturers, or of other persons performing
services, covering Nuclear Material to be leased hereunder shall be
forwarded to the Lessor in care of the Lessee at the Lessee's
address. Upon receipt by the Lessee of an invoice covering Nuclear
Material to be leased hereunder, the Lessee shall review such
invoice and upon the Lessee's approval thereof, the Lessee shall
forward such invoice endorsed with the Lessee's approval to the
Lessor, together with a Leasing Record completed and signed by a
Lessee Representative covering such Nuclear Material. The Lessee's
invoice for any cost incurred by it and includable in the
Acquisition Cost of any Nuclear Material shall be forwarded to the
Lessor and to the Secured Parties, together with a Leasing Record
completed and signed by a Lessee Representative covering such
costs. After receipt of such invoice and Leasing Record, the
Lessor, subject to the limitation on the Maximum Stipulated
Casualty Value of Nuclear Material contained in Section 4, shall
pay such invoice as provided therein or in the related purchase
agreement and shall execute the Leasing Record and return a copy
thereof to the Lessee and the Secured Parties. The Leasing Record
shall be dated as provided for in this Lease Agreement. To the
extent that the Acquisition Cost of the Nuclear Material covered by
any Leasing Record has been paid or incurred by the Lessee, the
Lessor, subject to the limitation on Maximum Stipulated Casualty
Value of Nuclear Material contained in Section 4, shall promptly
reimburse the Lessee. The Lessee shall (i) pay all costs and
expenses of freight, packing, insurance, handling, storage,
shipment and delivery of the Nuclear Material to the extent that
the same have not been included in the Acquisition Cost; and (ii)
at its own cost and expense, furnish such labor, equipment and
other facilities and supplies, if any, as may be required to
install and erect the Nuclear Material to the extent that the cost
and expense thereof have not been included in the Acquisition Cost.
Such installation and erection shall be in accordance with the
specifications and requirements of each Manufacturer.
(d) Intermingling of Fuel Assemblies.
Nuclear Material specified in a Leasing Record and leased
hereunder shall, subject to the provisions of Section 10(h) hereof,
be owned exclusively by the Lessor and leased to the Lessee
hereunder. The Lessee agrees that in no case will it cause or
permit nuclear material owned by any person, firm or corporation
other than the Lessor to be included in an assembly or sub-assembly
which is owned by the Lessor and leased hereunder. However, fuel
assemblies or sub-assemblies owned by the Lessor and leased to the
Lessee hereunder may be intermingled in a Generating Facility with
fuel assemblies or sub-assemblies not owned by the Lessor and
leased to the Lessee hereunder, provided that the Nuclear Material
constituting assemblies or sub-assemblies owned by the Lessor shall
be readily identifiable by serial number or other distinguishing
marks. The Lessor shall not be liable to the Lessee for any
failure or delay in obtaining Nuclear Material or making delivery
thereof.
7. No Warranties or Representation by Lessor.
THE NUCLEAR MATERIAL IS LEASED AS-IS, WHERE-IS IN THE
CONDITION THEREOF AND SUBJECT TO THE RIGHTS OF ANY PARTIES IN
POSSESSION THEREOF, THE STATE OF THE TITLE THERETO, THE RIGHTS OF
OWNERSHIP THEREIN AND TO ALL APPLICABLE LAWS, RULES, REGULATIONS,
ORDERS, WRITS, INJUNCTIONS, DECREES, CONSENTS, APPROVALS,
EXEMPTIONS, AUTHORIZATIONS, LICENSES AND WITHHOLDING OF OBJECTIONS
OF ANY GOVERNMENTAL OR PUBLIC BODY OR AUTHORITY AND ALL OTHER
REQUIREMENTS HAVING THE FORCE OF LAW APPLICABLE AT ANY TIME TO ANY
OF THE NUCLEAR MATERIALS OR ANY ACT OR TRANSACTION WITH RESPECT
THERETO OR PURSUANT TO THIS LEASE AGREEMENT, IN EACH CASE AS IN
EXISTENCE WHEN THE SAME FIRST BECOMES SUBJECT TO THIS LEASE
AGREEMENT, WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND BY THE
LESSOR, OR ANY PERSON ACTING ON ITS BEHALF. THE LESSEE
ACKNOWLEDGES AND AGREES THAT NEITHER THE LESSOR, ITS DIRECTORS,
OFFICERS AND EMPLOYEES, ANY COMPANY, PERSON OR FIRM CONTROLLING,
CONTROLLED BY OR UNDER COMMON CONTROL WITH ANY OF THEM NOR ANY
OTHER PERSON ACTING ON BEHALF OF THE LESSOR HAS HAD AT ANY TIME
PHYSICAL POSSESSION OF ANY PORTION OF THE NUCLEAR MATERIAL, HAS
MADE ANY INSPECTION THEREOF, HAS GIVEN ANY ADVICE TO THE LESSEE OR
HAS MADE ANY RECOMMENDATION TO THE LESSEE WITH RESPECT TO THE
CHOICE OF THE SUPPLIER, VENDOR OR PROCESSOR OF THE NUCLEAR MATERIAL
LEASED OR TO BE LEASED HEREUNDER OR WITH RESPECT TO THE PROCESSING,
MILLING, CONVERSION, ENRICHMENT, FABRICATION, CONTAINERIZATION,
TRANSPORTATION, UTILIZATION, STORAGE OR REPROCESSING OF THE SAME.
THE LESSEE ALSO ACKNOWLEDGES AND AGREES THAT NEITHER THE LESSOR,
ITS DIRECTORS, OFFICERS AND EMPLOYEES, ANY COMPANY, PERSON OR FIRM
CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL WITH ANY OF
THEM, NOR ANYONE ACTING ON BEHALF OF THE LESSOR HAS MADE ANY
WARRANTY OR OTHER REPRESENTATION, EXPRESS OR IMPLIED, THAT THE
NUCLEAR MATERIAL LEASED OR TO BE LEASED UNDER THIS LEASE AGREEMENT
(a) WILL NOT RESULT IN INJURY OR DAMAGE TO PERSONS OR PROPERTY, (b)
WILL BE USEABLE BY THE LESSEE OR WILL ACCOMPLISH THE RESULTS WHICH
THE LESSEE INTENDS FOR SUCH NUCLEAR MATERIAL, OR (c) IS SAFE IN ANY
MANNER OR RESPECT. THE LESSEE ALSO ACKNOWLEDGES AND AGREES THAT
THE LESSOR, ITS DIRECTORS, OFFICERS AND EMPLOYEES, ANY COMPANY,
PERSON OR FIRM CONTROLLING, CONTROLLED BY OR UNDER COMMON CONTROL
WITH ANY OF THEM, AND ANYONE ACTING ON BEHALF OF ANY OF THEM IS NOT
A MANUFACTURER OR ENGAGED IN THE SALE OR DISTRIBUTION OF NUCLEAR
MATERIAL AND HAS NOT MADE AND DOES NOT HEREBY MAKE ANY
REPRESENTATION, WARRANTY OR COVENANT, EXPRESS OR IMPLIED, WITH
RESPECT TO THE MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
CONDITION, QUALITY, USEABILITY, DURABILITY, SUITABILITY OR
CONSEQUENCES OF USE OR MISUSE OF THE NUCLEAR MATERIAL IN ANY
RESPECT OR IN CONNECTION WITH OR FOR THE PURPOSES OR USES OF THE
LESSEE, OR ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND OR
CHARACTER WHATSOEVER, EXPRESS OR IMPLIED.
8. Lease Term; Early Termination; Termination of Leasing Records
(a) The Lessor hereby leases to the Lessee, and the Lessee
hereby leases from the Lessor, the Nuclear Material for the term
provided in this Lease Agreement and subject to the terms and
provisions hereof.
(b) The term of this Lease Agreement shall begin at 12:01
A.M., Cleveland, Ohio time, on December 27, 1990, and, unless
earlier terminated as provided in this Section 8 or in Sections 17
or 18 hereof, shall end at the close of business in Cleveland, Ohio
on the Scheduled Termination Date.
(c) The Lessee may at any time on or after January 1, 1992,
terminate the Lease Agreement and the lease of Nuclear Material by
giving written notice ("Notice of Lease Termination") thereof to
the Lessor and to the Secured Parties. Such Notice of Lease
Termination, shall specify a Termination Settlement Date, which
shall be the first Business Day of a calendar month not less than
30 days following the date of said Notice of Lease Termination, and
not later than the Scheduled Termination Date in effect on the date
such notice is given.
(d) Following the giving of a notice of termination of
automatic extension of the Scheduled Termination Date or the giving
of a Notice of Lease Termination under section 8(c) hereof, all
obligations of the Lessor and Lessee hereunder, including the
obligations of the Lessee to pay Basic Rent and Additional Rent,
and of the Lessor to acquire and pay for Nuclear Material and lease
the same to the Lessee, shall continue until the Termination
Settlement Date. On such Termination Settlement Date, the Lessee
shall be obligated to pay to the Lessor, as the purchase price for
the Nuclear Material, an amount equal to the sum of (x) the
Stipulated Casualty Value of all Nuclear Material leased hereunder
as of the Termination Settlement Date and (y) the Termination Rent
on the Termination Settlement Date. The Lessor shall be obligated
to deliver to the Lessee or to any designee of the Lessee a
Lessor's Bill of Sale vesting title to and ownership of the Nuclear
Material in the Lessee or in the Lessee's designee free and clear
of all Liens under the Collateral Agreements (but only if the
Secured Parties are obligated to release such liens in accordance
with Section 11 of the Security Agreement).
(e) The Lessee shall deliver to the Lessor and to the Secured
Parties an SCV Confirmation Schedule in the form of Exhibit F
hereto on or within 30 days following the date on which any Nuclear
Material leased hereunder is removed from the reactor of either
Generating Facility for purposes of "cooling-off" preliminary to
reprocessing or permanent on-site safe storage and/or off-site
disposal. If the Lessee elects within 30 days following the
receipt by Lessor of such SCV Confirmation Schedule to extend the
lease term thereof for the purposes of reprocessing any such
Nuclear Material, then the Lessor and the Lessee shall enter into
an Interim Leasing Record with respect to such Nuclear Material in
its then condition. In all other cases, the Final Leasing Record
with respect to any such Nuclear Material shall be terminated and
the Lessee shall immediately pay to the Lessor all amounts,
including Stipulated Casualty Value, with respect to such Nuclear
Material, and, upon receipt thereof, the Lessor shall transfer
title to such Nuclear Material, free and clear of the Liens created
by the Collateral Agreements (but only if the Secured Parties are
obligated to release such Liens in accordance with Section 11 of
the Security Agreement), to the Lessee or to any third party
designated by Lessee by executing and delivering to the Lessee or
any such designee a Lessor's Bill of Sale.
9. Payment of Rent; Payments with Respect to the Lessor's
Financing Costs.
(a) Basic Rent.
The Lessee shall pay Basic Rent monthly in advance on the
first day of the month, except that Basic Rent for any partial
first month of the lease of any Nuclear Material shall be paid on
the first day of such lease term. If such first day of the month
or first day of the lease term is not a Business Day then payment
shall be made on the next following Business Day.
(b) Additional Rent.
In addition to the Basic Rent, the Lessee will also pay
from time to time as provided in this Lease Agreement or on demand
of the Lessor, all Additional Rent in or within five (5) days of
the due date thereof; provided, however, that any amount of
Additional Rent due with respect to Yield Maintenance Amount shall
be paid to the Lessor on the same date that the Lessor is obligated
to make such payment under the Note Agreement. In the event of any
failure by the Lessee to pay any Additional Rent, the Lessor shall
have all the rights, powers and remedies as in the case of failure
to pay Basic Rent.
(c) Prepayments of Basic Rent.
The Lessee may prepay Basic Rent at any time. Such
payment shall be credited against subsequent amounts owed by the
Lessee on account of Basic Rent.
(d) Wire Payment; Procedure for Paying Basic Rent.
All payments of Rent and other payments to be made by the
Lessee to the Lessor pursuant to this Lease Agreement shall be paid
to the Lessor (or, at the Lessor's request, to the Secured Parties)
in Federal funds or in other funds immediately available at such
address. The Lessee shall furnish to the Lessor each month during
the Lease Term a summary of the rental calculations for such month
covering all outstanding Leasing Records.
On the Basic Rent Payment Date, the Lessee shall deliver
to the Lessor a signed and completed SCV Confirmation Schedule.
All such Schedules delivered by the Lessee pursuant to the
provisions of this Lease Agreement shall constitute representations
of the Lessee as to the accuracy of the matters contained therein.
(e) Purchase of Nuclear Material by Lessee.
The Lessee shall, upon the regularly scheduled final
maturity date of one or more Notes of the Lessor, in each case
under circumstances where the Lessor cannot obtain funds to meet
such maturities through the proceeds of borrowings by the Lessor
under the Credit Agreement and the Note Agreement, purchase an
amount of Nuclear Material to be designated by the Lessee not less
than 3 Business Days prior to such purchase, by delivering to the
Lessor an SCV Confirmation Schedule in the form of Exhibit F hereto
showing that the Stipulated Casualty Value of the designated
Nuclear Material is not less than the amount of the Lessor's
borrowings maturing under the circumstances set forth above. On
the date specified for such purchase, the Lessee shall pay an
amount equal to the Stipulated Casualty Value thereof, together
with any Additional Rent then due and payable to the Lessor.
Thereupon, the Lessor shall deliver to the Lessee a Lessor's Bill
of Sale transferring to the Lessee for no additional consideration,
all right, title, interest and claim of the Lessor to such portion
of the Nuclear Material free and clear of the Liens under the
Collateral Agreements (but only if the Secured Parties are
obligated to release such Liens in accordance with Section 11 of
the Security Agreement). Thereupon, such portion of the Nuclear
Material shall cease to be subject to any provision of this Lease
Agreement and, if the Secured Parties are obligated to release such
Liens pursuant to such section, of the Collateral Agreements. Upon
delivery of such Bill of Sale, the Lessor and the Lessee shall
execute a supplemental Leasing Record eliminating such portion of
the Nuclear Material from the description of the Nuclear Material
leased hereunder and making other necessary changes to the Leasing
Record.
10. Compliance with Laws; Restricted Use of Nuclear Material;
Assignments; Permitted Liens; Spent Fuel.
(a) Compliance with Legal Requirements.
Subject to the provisions of Section 11 hereof, the
Lessee agrees to comply with all Legal Requirements.
(b) Recording of Title.
The Lessee shall promptly and duly execute, deliver, file
and record all such further counterparts of this Lease Agreement or
such certificates, Bills of Sale, financing and continuation
statements and other instruments as may be reasonably requested by
the Lessor, and take such further actions as the Lessor shall from
time to time reasonably request, in order to establish, perfect and
maintain the rights and remedies created or intended to be created
in favor of the Lessor and the Secured Parties hereunder and the
Lessor's title to and interest in the Nuclear Material as against
the Lessee or any third party in any applicable jurisdiction.
(c) Exclusive Use of Nuclear Material.
So long as no Lease Event of Default shall have occurred
and be continuing, the Lessee may use the Nuclear Material in the
regular course of its business or in the business of any subsidiary
or affiliate of the Lessee, and may, subject to Section 3(d) hereof
and after notice in writing to the Lessor and at the Lessee's sole
expense (without limiting the Lessee's rights to request payment by
the Lessor of such expense as provided in Section 6 hereof), move
such Nuclear Material to any other location for the purpose of
having services performed thereon in connection with any stage of
the Nuclear Material Cycle other than Heat Production and the
"cooling-off" stage, provided that (i) no such action shall
materially reduce the then fair market value of such Nuclear
Material, (ii) such Nuclear Material shall be and remain the
property of the Lessor, subject to this Lease Agreement, (iii) all
Legal Requirements (including, without limitation, all necessary
government approvals) shall have been met or obtained, and all
necessary or advisable recordings, filings and registrations which
the Lessor shall reasonably consider advisable shall have been duly
made in order to protect the validity and effectiveness of this
Lease Agreement and the security interest created in the Security
Agreement, and (iv) in the case of any movement of Nuclear Material
to any location outside the continental United States, the Lessee
shall have delivered to the Lessor and the Secured Parties evidence
reasonably satisfactory to the Lessor and Secured Parties
(including, if requested, an opinion of independent outside counsel
to the .Lessee) that insurance and/or indemnification against
liability to third persons for death or injury or damage to
property exists protecting the interests of the Lessor, the Lessee,
and the Secured Parties. The Lessee shall maintain and make
available to the Lessor for examination upon reasonable notice
complete and adequate records pertaining to receipt, possession,
use, location, movement, physical inventories and any other
information reasonably requested by the Lessor with respect to the
Nuclear Material leased by the Lessee.
(d) Additional Lessee Covenants.
The Lessee agrees to use every reasonable precaution to
prevent loss or damage to the Nuclear Material leased hereunder.
All individuals handling or operating Nuclear Material in the
possession of the Lessee shall be conclusively presumed not to be
agents of the Lessor. The Lessee shall cooperate fully with the
Lessor and all insurance companies and governmental agencies
providing insurance under Section 12 hereof in the investigation
and defense of any claims or suits arising from the licensing.
acquisition, storage, containerization, transportation, blending,
transfer, consumption, leasing, insuring, operating, disposing,
fabricating and reprocessing of the Nuclear Material. To the
extent required by any applicable law or regulation, the Lessee
shall attach to the Nuclear Material the form of required notice to
protect or disclose the ownership of the Lessor or that the Nuclear
Material is leased. So long as no Lease Event of Default shall
have occurred and be continuing, the Lessor will assign or
otherwise make available to the Lessee all of its rights under any
Manufacturer's warranty on Nuclear Material. The Lessee shall pay
all costs, expenses, fees and charges, except Acquisition Costs,
incurred by the Lessee in connection with the use and operation of
Nuclear Material leased hereunder during the Lease Term of such
Nuclear Material. The Lessee hereby assumes all risks of loss or
damage of Nuclear Material however caused and shall, at its own
expense, keep the Nuclear Material in good operating condition and
repair, reasonable wear and tear, obsolescence and exhaustion
excepted.
(e) Assignment by Lessor.
Except as otherwise herein provided, the Lessor may not,
without the prior written consent of the Lessee, sell, assign,
transfer or convey the Nuclear Material or any interest therein or
in the Lease Agreement, or grant to any party a security interest
in, or create a lien or encumbrance upon, all or any part of its
right, title and interest in this Lease Agreement and in any
Nuclear Material leased hereunder, provided that such consent shall
not be required if (i) the Lessor shall advise the Lessee of such
action, (ii) any such security interest, lien, encumbrance or
assignment shall be expressly subject and subordinate to the
interest of the Lessee in such Nuclear Material and in this Lease
Agreement, and to all terms and provisions of this Lease Agreement,
and (iii) the Lessor shall be and remain responsible for the
performance of all terms, conditions and obligations under this
Lease Agreement required to be performed by the Lessor, including
but not limited to Lessor's obligations under Section 3 hereof.
After receipt by the Lessee of written notice from the Lessor of
any assignment by the Lessor of Rents or other sums payable by
Lessee under this Lease Agreement, the Lessee shall make such
payments as directed in such notice of assignment and such payments
shall discharge the obligations of the Lessee hereunder to the
extent of such payments. The Lessee hereby consents to the
security interest and other rights and interests granted to the
Secured Parties under the Security Agreement, dated as of the date
first above written.
(f) Liens; Permitted Liens.
The Lessee will not directly or indirectly create or
permit to be created or to remain, and will discharge, any
mortgage, lien, encumbrance or charge on, security interest in, or
conditional sale or other title retention agreement with respect
to, the Nuclear Material or any portion thereof, or upon the
Lessee's leasehold interest therein, or upon the Basic Rent,
Additional Rent, or any other sum payable under this Lease
Agreement, other than Permitted Liens and other liens, charges or
encumbrances resulting from acts of the Lessor or securing
obligations of the Lessor which the Lessee is not obligated to pay
or discharge under the terms of this Lease Agreement.
(g) Assignment by Lessee.
Subject to all applicable law, rules and regulations, the
Lessee may assign any right or interest which it may have under
this Lease Agreement or in any Nuclear Material to a subsidiary or
affiliate of the Lessee in which case such subsidiary or affiliate
shall, 'except as otherwise provided in this sentence, be deemed to
be the Lessee hereunder, provided, however, that in any such case
the Lessee shall give prior written notice of such assignment to
the Lessor and to the Secured Parties, and provided further that no
such assignment shall in any way limit or affect the Lessee's
obligations and duties hereunder.
(h) Transfer of Title to Manufacturers.
The parties recognize that, during the processing and
reprocessing of Nuclear Material before and after its utilization
in the Generating Facilities for the production of power, the
Manufacturer performing services on the Nuclear Material may
require that title thereto be transferred to such Manufacturer
and/or that the Nuclear Material be commingled with other nuclear
material, with an obligation for the Manufacturer, upon completion
of the services, to reconvey a specified amount of nuclear
material. The standard enrichment contracts of the Department of
Energy contain such provisions. Therefore, the parties hereto
agree that Nuclear Material leased hereunder may become subject to
such a contract provision, and that the action contemplated by such
provision may be taken, notwithstanding any provision of this Lease
Agreement to the contrary, that, as between the Lessor and the
Lessee, such Nuclear Material shall be deemed to be still leased
hereunder while title thereto is in the Manufacturer, and that the
nuclear material exchanged by the Manufacturer upon completion of
its services shall be automatically leased hereunder in
substitution for the Nuclear Material originally delivered to the
Manufacturer.
(i) Spent Fuel.
Without the consent of the Lessor, the Lessee shall not
permit any Nuclear Material leased hereunder, which shall have been
removed from a Generating Facility for the purpose of "cooling-
off", storage, repair or reprocessing, to be removed from the site
of the Generating Facilities unless (i) the new site of such
Nuclear Material is a facility maintaining liability insurance and
indemnification fully insuring and indemnifying the Lessor, the
Lessee and the Secured Parties under the Atomic Energy Act and any
other law, rule or regulation, or (ii) the lease of such Nuclear
Material shall, concurrently with its removal from the Generating
Facilities, be terminated by the Lessee pursuant to the provisions
of Section 8 or 18 hereof, as applicable, with the Lessee acquiring
the ownership thereof pursuant to Section 8(d) or Section 18(d), as
applicable.
11. Permitted Contests.
The Lessee, at its expense, may in its own name or, if
necessary and permitted, in the name of the Lessor or Secured
Parties (and, if necessary but not so permitted, the Lessee may
require the Lessor or the Secured Parties to) contest after prior
notice to the Lessor, by appropriate legal proceedings conducted in
good faith and with due diligence, the amount, validity or
application, in whole or in part, of any Imposition or lien
therefor, or any Legal Requirements or Insurance Requirements, or
any matter underlying Lessee's indemnity obligations under Section
13 hereof, or any other mortgage, lien, encumbrance, charge,
security interest, conditional sale or other contract or agreement
referred to in Section 10 hereof; provided that (i) in the case of
an unpaid Imposition or lien therefor, such proceedings shall
suspend the collection thereof from the Lessor, (ii) neither the
Nuclear Material or any portion thereof, nor the taking of any step
necessary or proper with respect thereto in the management thereof
through any stage of the Nuclear Material Cycle, nor the
performance of any other act required to be performed by the Lessee
under this Lease Agreement would be enjoined, prevented or
otherwise interfered with, (iii) the Lessor would not be subject to
any additional civil liability (other than interest which the
Lessee agrees to pay), or any criminal liability, for failure to
pay any such Imposition or to comply with any such Legal
Requirements or Insurance Requirements or any such other mortgage,
lien, encumbrance, charge, contract or agreement, and (iv) the
Lessee shall have set aside on its books adequate reserves (in
accordance with generally accepted accounting principles) with
respect thereto and shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by the
Lessor. The Lessee will pay, and save the Lessor harmless against,
all losses, judgments, decrees and costs, including attorneys' fees
and expenses, in connection with any such contest and will,
promptly after the determination of such contest pay and discharge
the amounts which shall be levied, assessed or imposed or
determined to be payable therein, together with all penalties,
fines, interest, costs and expenses thereon or in connection
therewith and such indemnification and each other indemnification
obligation in favor of the Lessor hereunder shall survive any
termination of this Lease Agreement in whole or in part.
12. Insurance; Compliance with Insurance Requirements.
The Lessee shall comply with all Insurance Requirements and
with all Legal Requirements pertaining to insurance. Without
limiting the foregoing, the Lessee shall:
(a) Liability Insurance.
At its own cost and expense, procure and maintain, or
cause to be procured and maintained, liability insurance and
indemnification with respect to Nuclear Material leased hereunder
insuring and indemnifying the Lessor, the Lessee, and the Secured
Parties to the full extent required or available under the Atomic
Energy Act or under any other law, rule or regulation. In the
event the provisions of the Atomic Energy Act with respect to
liability insurance and the indemnification of licensees and
operators of Nuclear Material thereunder or any other provisions of
the Atomic Energy Act which benefit the Lessor or the Secured
Parties shall change, then the Lessee shall use its best efforts to
obtain equivalent insurance and indemnification from the Nuclear
Regulatory Commission or from such other public and/or private
sources from whom such coverage is available.
(b) Casualty Insurance.
At its own cost and expense, procure and maintain
physical damage insurance with respect to the Nuclear Material
insuring the Lessor and the Secured Parties against loss or damage
to the Nuclear Material to the extent that such insurance coverage
may be available from public and private sources. The Lessee may
self-insure with respect to liability and physical damage insurance
to the extent of $2,500,000, which amount may be increased from
time to time as the Lessor and the Lessee may agree in writing,
provided that such self-insurance is permitted under all applicable
law, rules and regulations.
(c) Third Parties - Insurance Requirements.
Use its best efforts to provide that Nuclear Material,
while in the possession of third parties, is covered for liability
insurance to the maximum extent available, and for physical damage
insurance in an amount not less than the Stipulated Casualty Value
of such Nuclear Material. To the extent that any such third party
is maintaining such insurance coverage for the Nuclear Material;
the Lessee shall have no obligation hereunder to do so.
(d) Named Insureds; Loss Payees.
Provide for the Lessor and the Secured Parties to be
named insureds where possible, and, with respect to physical damage
coverage, named loss payees in all insurance policies and
indemnification agreements relating to the Nuclear Material
required under this Section. All such policies and, where
possible, indemnification agreements, shall provide for at least
ten (10) days prior written notice to the Lessor and to the Secured
Parties of any cancellation or material alteration of such
policies.
(e) Insurance Certificates.
Upon request of the Lessor or the Secured Parties,
provide Lessor or the Secured Parties with copies of the policies
or insurance certificates in respect of the insurance procured
pursuant to the provisions of this Section, and will advise the
Lessor and the Secured Parties of all expirations and renewals of
policies and all notices issued by the insurers thereunder. Within
a six-month period from the execution of this Lease Agreement and
at yearly intervals thereafter, the Lessee will furnish to the
Lessor and the Secured Parties a certificate as to the insurance
coverage provided pursuant to this Section and will further give
notice as to any material change in the nature of such coverage,
including, to the best of the Lessee's knowledge, any material
change in the provisions of the Atomic Energy Act or applicable
rule or regulation thereunder with respect to liability insurance
and indemnification, or in the application, interpretation or
enforcement thereof. The Lessor shall be under no duty to examine
such insurance policies or indemnification agreements or to advise
the Lessee in case the Lessee is not in compliance with any
Insurance Requirements.
13. Indemnity.
Without limitation of any other provision of this Lease
Agreement, including Section 11, the Lessee agrees to indemnify and
hold harmless the Lessor and the Secured Parties and all companies,
persons or firms controlling, controlled by, or under common
control with either of them and the respective share-holders,
directors, officers and employees of the foregoing against any and
all claims, demands and liabilities of whatsoever nature, and all
costs, losses, damages, obligations, penalties, causes of action,
judgments and expenses (including reasonable attorneys' fees and
expenses) directly or indirectly relating to or in any way arising
out of:
(a) defects in title to Nuclear Material on acquisition by
the Lessor, ownership of and interest in the Nuclear Material
leased or to be leased hereunder (the term "Nuclear Material" when
used in this Section 12 shall include, in addition to all other
Nuclear Material, nuclear material the lease of which has been
terminated hereunder and which is in storage, or is being
transported to storage, and which has not been sold or disposed of
by the Lessor to the Lessee or to a third party) or the licensing,
ordering, rejection, use, nonuse, misuse, possession, control,
installation, acquisition, storage, containerization,
transportation, blending, transfer, consumption, leasing, insuring,
operating, disposing, fabricating, refining, milling, enriching,
conversion, cooling, processing, condition, operation, repair and
reprocessing thereof, or resulting from the condition of the
environment including the adjoining and/or underlying land, water,
buildings, streets or ways, except to the extent that such costs
are included in the Acquisition Cost of Nuclear Material leased or
to be leased hereunder within the Maximum Stipulated Casualty Value
specified within the limits provided by Section 4 hereof (or within
any change of such limit agreed to in writing by the Lessor and the
Lessee), and except for any general administrative expenses of the
Secured Parties and of such representative;
(b) all costs, charges, damages or expenses and royalties
and/or claims and expenses of litigation (including, but not
limited to, attorneys' fees), arising out of or necessitated by the
assertion of any claim or demand based upon any infringement or
alleged infringement of any patent or other right, by or in respect
of any Nuclear Material; provided, however, that the Lessor will
make available to the Lessee all of the Lessor's rights under any
similar indemnification from a Manufacturer under any Nuclear
Material Contract;
(c) all federal, state, county, municipal or other fees and
taxes of whatsoever nature including, but not limited to, license,
qualification, franchise, sales, use, business, gross receipts, ad
valorem, property, excise, and occupation fees and taxes and
penalties and interest thereon, whether assessed, levied against or
payable by the Lessor or to which the Lessor is subject with
respect to the Nuclear Material or the ownership thereof or
interest therein or the licensing, ordering, ownership, use,
possession, control, acquisition, storage, containerization,
transportation, blending, milling, enriching, transfer,
consumption, leasing, insuring, operating, disposing, fabricating,
refining, conversion, cooling and reprocessing of Nuclear Material,
or measured in any way by the value thereof or by the business of
investment in, financing of or ownership by the Lessor with respect
thereto; provided, however, that Lessee shall not be obligated to
indemnify the Secured Parties for any taxes, whether federal, state
or local, based on or measured by net income of the Secured Parties
where taxable income is computed in substantially the same manner
as taxable income is computed under the Code;
(d) any injury to or disease, sickness or death of persons,
or loss of or damage to property occurring through or resulting
from any Nuclear Incident involving or connected in any way with
the Nuclear Material or any portion thereof;
(e) any violation, or alleged violation, of this Lease
Agreement by the Lessee or of any contracts or agreements to which
the Lessee is a party or by which it is bound or any laws, rules,
regulations, orders, writs, injunctions, decrees, consents,
approvals, exemptions, authorizations, licenses and withholdings of
objection, of any governmental or public body or authority and all
other requirements having the force of law applicable at any time
to the Nuclear Material or any action or transaction by the Lessee
with respect thereto or pursuant to this Lease Agreement;
(f) performance of any labor or service or the furnishing of
any materials in respect of the Nuclear Material or any portion
thereof, except to the extent that such costs are included in the
Acquisition Cost of such Nuclear Material within the Maximum
Stipulated Casualty Value specified provided in Section 4 hereof
(or within any change of such limit agreed to in writing by the
Lessor and the Lessee);
(g) liabilities based upon a theory of strict liability in
tort, negligence or willful acts to the extent that such
liabilities relate to the Nuclear Material or any action or
transaction with respect thereto or pursuant to this Lease
Agreement; or
(h) the Lease Agreement, the Nuclear Material or any related
transactions or documents.
The Lessee shall, forthwith, upon demand, reimburse the
Lessor, the Secured Parties or other indemnified parties, as the
case may be, for any sum or sums expended with respect to any of
the foregoing or advance such amount, upon request by the Lessor,
the Secured Parties or such other party for payment thereof;
provided, however, that the Lessee shall not indemnify any party
seeking indemnification under this Section 13, for any claims,
demands, liabilities, costs or expenses (other than any such
claims, demands, liabilities, costs, or expenses arising out of the
gross negligence or willful misconduct of such party) which arise
or result from, or relate to obligations of such party as an
insurer under contracts or agreements of insurance or reinsurance.
Without limiting any of the foregoing provisions of this Section
13, to the extent that the Lessee in fact indemnifies the Lessor,
the Secured Parties or such other party under this indemnity
provision, the Lessee shall be subrogated to the rights of the
Lessor, the Secured Parties and such other party in the affected
transaction and shall have a right to determine the settlement of
claims therein, provided that any such rights to which the Lessee
shall be subrogated shall be subordinate and subject in right of
payment to the prior payment in full of all liabilities to the
Lessor of the person or entity in respect of which such rights
exist. The foregoing indemnity shall not be affected by any
termination of this Lease Agreement, or of the lease of any Nuclear
Material hereunder.
14. Casualty and Other Events.
Upon the occurrence of any one or more of the following
events:
(a) the loss, destruction or damage beyond repair of any
Nuclear Material leased hereunder;
(b) the commandeering or attachment of any Nuclear Material
leased hereunder by reason of the act of any governmental
instrumentality for a period exceeding ninety (90) days; or
(c) a determination by the Lessee in its sole discretion that
any Nuclear Material is no longer useful in its then condition for
the purpose of generating power in either Generating Facility or is
economically unserviceable to the to the Lessee, provided that no
Lease Event of Default has occurred and is continuing and provided
that no such determination may be made by Lessee with respect to
such Nuclear Material prior to January 1, 1994;
Then, in any such case, the Lessee promptly shall give
written notice of any such event and upon the earlier of (i) 10
days following receipt of any insurance or other proceeds paid with
respect to the foregoing and (ii) two hundred and seventy (270)
days of the occurrence of any such event, the Lessee shall pay to
the Lessor an amount equal to the then Stipulated Casualty Value of
such Nuclear Material, together with any Basic Rent and Additional
Rent then due. The lease of such Nuclear Material hereunder and
the obligation of the Lessee to pay Basic Rent and Additional Rent
with respect to such Nuclear Material shall continue until the day
on which the Lessor receives payment of such Stipulated Casualty
Value, Basic Rent and Additional Rent. Upon receipt of such
payment, the Lessor shall deliver to the Lessee a Lessor's Bill of
Sale transferring all right, title, interest and claim of the
Lessor to such Nuclear Material, free and clear of the Liens
created by the Collateral Agreements (but only if the Secured
Parties are obligated to release such Liens in accordance with
Section 11 of the Security Agreement), and thereupon the lease with
respect to such Nuclear Material shall terminate.
15. Nuclear Material to Remain Personal Property.
It is expressly understood and agreed that the Nuclear
Material shall be and remain personal property notwithstanding the
manner in which it may be attached or affixed to realty and
notwithstanding any law or custom or the provisions of any lease,
mortgage or other instrument applicable to any such realty. The
Lessee agrees to indemnify the Lessor and the Secured Parties
against and to hold the Lessor and the Secured Parties harmless
from all losses, costs and expenses (including reasonable
attorneys' fees and expenses) resulting from any of the Nuclear
Material becoming part of any realty. Upon termination of the
lease of any Nuclear Material, any costs of removal,
transportation, storage and delivery of such Nuclear Material shall
be paid by the Lessee. The Lessor and the Secured Parties shall
not be liable for any physical damage caused to any realty or any
building by reason of the removal of the Nuclear Material
therefrom.
16. Events of Default.
Each of the following events of default by the Lessee shall
constitute a "Lease Event of Default" and give rise to the rights
on the part of the Lessor described in Section 17 hereof:
(a) Default in the payment of Basic Rent or Additional Rent,
if any, on the date on which such payment is due and the
continuance of such default for ten (10) days;
(b) Default in the payment of Termination Rent or any amount
required to be paid under Section 9(e) on the date on which such
payment is due;
(c) Default in the payment or performance of any other
liability or obligation or covenant of the Lessee to the Lessor,
and the continuance of such default for thirty (30) days after
written notice to the Lessee sent by registered or certified mail;
provided that, no such default shall be deemed a Lease Event of
Default if (i) such default is curable but cannot be cured within
such thirty (30)-day period, (ii) the Lessee is diligently pursuing
such cure and effects such cure within 360 days of the date of such
default, and (iii) during the continuance thereof, such default
does not impair in any material respect the rights of the Lessor or
the Secured Parties in the Collateral or subject the Lessor or the
Secured Parties to onerous regulation or to any material
liabilities under law;
(d) The admission of insolvency or bankruptcy, inability to
pay debts as they mature, or entering into receivership on the part
of Lessee;
(e) The institution of bankruptcy, reorganization,
liquidation or receivership proceedings by or against the Lessee
and, if instituted against the Lessee, its consent thereto or the
pendency of such proceedings for sixty (60) days; or
(f) Other than pursuant to a condemnation proceeding, any
court, governmental officer or agency shall, under color of legal
authority, take and hold possession of any substantial part of the
property or assets of the Lessee.
17. Rights of the Lessor Upon Default of the Lessee.
Upon the occurrence of any Lease Event of Default, the Lessor
may, in its discretion, and shall, at the direction of the Secured
Parties, do one or more of the following:
(a) Terminate the lease of any Nuclear Material upon five (5)
days written notice to the Lessee sent by registered or certified
mail;
(b) Whether or not any lease of any Nuclear Material is
terminated, and, subject to any applicable law or regulation, take
immediate possession of any or all Nuclear Material or cause such
Nuclear Material to be taken from the possession of the Lessee, and
for such purpose, enter upon any premises without liability for so
doing or require the Lessee, at the Lessee's expense, to deliver
the Nuclear Material, properly containerized and insulated for
shipping to the Lessor or to such other person as Lessor may
designate, in which case the risk of loss shall be upon the Lessee
until such delivery is made;
(c) Whether or not any action has been taken under (a) or (b)
above, and subject to any applicable law or regulation, sell any
Nuclear Material (with or without the concurrence or request of the
Lessee) for cash at public or private sale and the Lessee shall be
liable for and shall promptly pay to the Lessor all unpaid Rent to
the date of receipt by the Lessor of the proceeds of such sale plus
any deficiency between the net proceeds of such sale and the
Stipulated Casualty Value of such Nuclear Material at the time of
such payment by the Lessee;
(d) Subject to any applicable law or regulation, sell in a
commercially reasonable manner, dispose of, hold, use, operate,
remove, lease or keep idle any Nuclear Material as the Lessor in
its sole discretion may decide, without any obligation to account
to the Lessee with respect to such action or inaction or any
proceeds thereof, except that the net proceeds of any such selling,
disposing of, holding, using, operating or leasing shall be
credited by the Lessor against any amount due to the Lessor from
the Lessee hereunder;
(e) Terminate this Lease Agreement as to any or all of the
Nuclear Material, or exercise any other right or remedy which may
be available under applicable law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for the
breach hereof.
If the Lessee fails to deliver, promptly after written
request, the Nuclear Material pursuant to (b), above, subject to
reasonable wear and tear, use and exhaustion, in good operating
condition and repair, or converts or destroys any Nuclear Material,
the Lessee shall be liable to the Lessor for all Rent then due and
payable on the Nuclear Material, all other amounts then due and
payable under this Lease Agreement, the then Stipulated Casualty
Value of such Nuclear Material, plus any loss, damage and expense
(including without limitation reasonable attorneys' fees and
disbursements) sustained by the Lessor by reason of such Lease
Event of Default and the exercise of the Lessor's remedies with
respect thereto, including any costs incurred under the Credit
Agreement, the Note Agreement, and the Security Agreement, and any
other amounts owed to the Secured Parties with respect to the
Notes. If, upon the occurrence of a Lease Event of Default, the
Lessee delivers Nuclear Material to the Lessor or to such other
person as Lessor may designate, or if the Lessor repossesses or
causes Nuclear Material to be repossessed on its behalf, the Lessee
shall be liable for and the Lessor may recover from the Lessee all
Rent on the Nuclear Material due and payable to the date of such
delivery or repossession, all other amounts due and payable under
this Lease Agreement, plus any loss, damage and expense (including
without limitation reasonable attorneys' fees and disbursements)
sustained by the Lessor by reason of such Lease Event of Default
and the exercise of the Lessor's remedies with respect thereto. No
remedy referred to in this Section 17 is intended to be exclusive,
but each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to the Lessor at law or in
equity and the exercise in whole or in part by the Lessor of any
one or more of such remedies shall not preclude the simultaneous or
later exercise by the Lessor of any or all such other remedies. No
waiver by the Lessor of any Lease Event of Default hereunder shall
in any way be, or be construed to be, a waiver of any future or
subsequent Lease Event of Default.
18. Termination After Certain Events.
(a) This Lease Agreement shall terminate prior to the
expiration of its term upon the happening of any of the following
"Terminating Events":
(i) Any change in, or new interpretation by a
governmental authority having jurisdiction relating to the
Price-Anderson Act, as amended, or the Atomic Energy Act, or
the regulations of the Nuclear Regulatory Commission
thereunder, in each case as in effect on the date of this
Lease Agreement, as a result of which, in the opinion of
independent counsel selected by the Lessor and reasonably
satisfactory to the Lessee and the Secured Parties, the Lessor
is prohibited from asserting any material right, protection or
defense available under applicable law as of the date of this
Lease Agreement with respect to civil or criminal actions
brought in connection with a Nuclear Incident;
(ii) There shall have occurred a Deemed Loss Event;
(iii) Any law or regulation or interpretation (judicial,
regulatory or otherwise) of any law or regulation shall be
adopted or enforced by any Court or governmental or regulatory
authority, and as a result of such adoption or enforcement,
approval of the transactions contemplated by this Lease
Agreement shall be required and shall not have been obtained
within any applicable grace period after such adoption or
enforcement, or as a result of which adoption or enforcement
this Lease Agreement or any transaction contemplated hereby,
including any payments to be made by the Lessee or the
ownership of the Nuclear Material by the Lessor, shall be or
become unlawful, or the performance of this Lease Agreement
shall be rendered impracticable in any material way;
(iv) The occurrence of a Nuclear Incident at either
Generating Facility as a result of which such Generating
Facility ceases to operate (or if such Generating Facility is
not in operation immediately prior to such Nuclear Incident,
the failure to resume operation as a result of such Nuclear
Incident) for a period of 24 consecutive months;
(v) There shall occur the revocation or material
adverse modification of any authorization, consent, exemption
or approval theretofore obtained from any regulatory body or
governmental authority necessary for the carrying out of the
intent and purposes of this Lease Agreement, or the actions or
transactions contemplated hereby, and the effectiveness of any
such revocation or material adverse modification shall not be
stayed pending any appeal thereof; or
(vi) If, with respect to either Generating Facility, any
governmental licenses, approvals or consents with respect to
such Generating Facility, without which such Generating
Facility cannot continue to operate, shall have been revoked
and the Lessee does not, in good faith, within 180 days of
such revocation, represent in writing to the Lessor that the
Lessee has made a good faith determination that such
Generating Facility will return to operation within 24 months
of such revocation, or for any other reason the Lessee shall
cease operating the Generating Facility for a period of 24
consecutive months.
(b) Upon the happening of any of the events listed in Section
18(a) hereof, this Lease Agreement shall cease and terminate,
except with respect to obligations and liabilities of the Lessee,
actual or contingent, which arose under the Lease Agreement on or
prior to the date of termination and except for the Lessee's
obligations set forth in Sections 10, 12 and 13 hereof, and in this
Section 18, all of which obligations will continue until the
delivery of documentation by the Lessor and the payment by the
Lessee provided for below, and except that after such delivery and
payment, the Lessee's obligations under Section 13 shall continue
as therein set forth as shall all of Lessee's indemnification
obligations set forth in other sections of this Lease Agreement.
Notwithstanding the foregoing, if a Terminating Event described in
either Section 18(a)(iv) or (vi) shall occur with respect to one
but not both of the Generating Facilities, then the lease of
Nuclear Material hereunder shall terminate only with respect to
such Nuclear Material as is then used in or specially designed for
use in the Generating Facility affected.
(c) Upon such termination, the entire interest of the Lessor
in the Nuclear Material, or in the case of a Terminating Event
described in Section 18(a)(iv) or (vi), the portion thereof
determined in accordance with Section 18(b), shall automatically
transfer to and be vested in the Lessee, without the necessity of
any action by either the Lessor or the Lessee, provided, however,
that if the Lessor shall have theretofore approved in writing such
person and the terms of such transfer, the entire interest of the
Lessor in such Nuclear Material shall, upon such termination,
automatically transfer to and be vested in any person designated by
the Lessee.
(d) Promptly after either party hereto shall learn of the
happening of any of the events listed in Section 18(a) hereof, such
party shall give notice thereof to the other party hereto and to
the Secured Parties, which notice shall (x) acknowledge that the
Lease Agreement has terminated, or, in the case of a Terminating
Event described in Section 18(a)(iv) or (vi), that the lease with
respect to a portion of the Nuclear Material hereunder shall have
terminated, subject to the continuing obligations of the Lessee
mentioned above, and that title to and ownership of such Nuclear
Material has transferred to and vested in the Lessee or such other
person, and (y) specify a Termination Settlement Date occurring, if
the notice is given by the Lessor, 270 days after the giving of
such notice or, if the notice is given by the Lessee, not less than
90 nor more than 270 days after the giving of such notice. After
such termination of this Lease Agreement and until such Termination
Settlement Date, the Lessee shall continue to pay Basic Rent and
Additional Rent. On such Termination Settlement Date, the Lessee
shall be obligated to pay to the Lessor as the purchase price for
the Nuclear Material, an amount equal to the sum of (x) Stipulated
Casualty Value of the Nuclear Material as of the Termination
Settlement Date, and (y) the Termination Rent on the Termination
Settlement Date. The Lessor shall be obligated to deliver to the
Lessee a Lessor's Bill of Sale on an as-is, where-is, non-
installment, cash sale basis, without recourse to or warranty or
agreement of any kind by the Lessor acknowledging the above
described transfer and vesting of title and ownership of the
Nuclear Material, free and clear of the Liens created by the
Collateral Agreements (but only if the Secured Parties are
obligated to release such Liens in accordance with Section 11 of
the Security Agreement).
19. Investment Tax Credit.
To the extent that the Lessee determines the Nuclear Material
is or becomes eligible for any investment or similar credit under
the Code as now or hereafter in effect, the Lessee shall request in
writing that the Lessor elect to treat the Lessee as having
acquired such Nuclear Material which is leased hereunder, and, if
permitted to do so under the Code and under any other applicable
law, rule or regulation, the Lessor, pursuant to such request of
the Lessee, shall provide the Lessee with an appropriate investment
credit election and the Lessee shall consent to such election. A
condition to the Lessor's making such election will be the
provision by the Lessee of a report or statement with respect to
all Nuclear Material as to which the investment credit election is
applicable. Such report or statement shall contain such
information and be in such form as may be required for Internal
Revenue Service reporting purposes. The Lessee shall indemnify and
hold harmless the Lessor and any affiliates with respect to any
adverse tax consequence, other than the loss of the credit, which
may result from such election.
20. Certificates; Information; Financial Statements.
(a) The Lessee will from time to time deliver to the Lessor
and the Secured Parties, promptly upon reasonable request:
(i) a statement executed by any Vice President of the Lessee,
certifying the dates to which the sums payable hereunder have been
paid, that this Lease Agreement is unmodified and in full effect
(or, if there have been modifications, that this Lease Agreement is
in full effect as modified, and identifying such modifications) and
that no Lease Event of Default has occurred and is continuing (or
specifying the nature and period of existence of any thereof and
what action the Lessee is taking or proposes to take with respect
thereto), (ii) such information with respect to the Nuclear
Material, as may reasonably be requested, and (iii) such
information with respect to the Lessee's operations, business,
property, assets, financial condition or litigation as the Lessor
or any assignee of the Lessor shall reasonably request.
(b) the Lessee will deliver to the Lessor and the Secured
Parties:
(i) Quarterly Financial Statements.
As soon as practicable and in any event within 90
days after the end of each quarterly period (other than the
last quarterly period) in each fiscal year, a balance sheet of
the Lessee as of the end of such quarter, and a comparative
earnings statement and cash flows statement of the Lessee for
such quarter, each certified as true and correct by the chief
accounting officer thereof;
(ii) Annual Financial Statements.
As soon as practicable and in any event within 120
days after the end of each fiscal year, an annual report of
the Lessee consisting of its financial statements, including
a balance sheet as of the end of such fiscal year and
statements of income and cash flows for the year then ended,
with all notes thereto, setting forth in each case in
comparative form corresponding consolidated figures from the
preceding annual audit, all in reasonable detail and certified
by independent public accountants of recognized standing
selected by the Lessee;
(iii) SEC Reports, etc.
With reasonable promptness, copies of all reports on
Form 8-K filed by the Lessee with the Securities and Exchange
Commission (or any governmental body or agency succeeding to
the functions of the Securities and Exchange Commission);
(iv) Other Information.
With reasonable promptness, such other financial
data as the Lessor and the Secured Parties may reasonably
request. Together with each delivery of financial statements
required by clause (b)(ii) above, the Lessee will deliver to
the Lessor and the Secured Parties an Officer's Certificate
demonstrating compliance by the Lessee with the terms of this
Lease Agreement and stating that there exists no Lease Event
of Default or, if any Lease Event of Default exists,
specifying the nature and period of existence thereof and.
what action the Lessee proposes to take with respect thereto.
The Lessee also covenants that forthwith upon the chief
executive officer, principal financial officer or principal
accounting officer of the Lessee obtaining knowledge of a
Lease Event of Default, it will deliver to the Lessor and the
Secured Parties an Officer's Certificate specifying the nature
and period of existence thereof and what action the Lessee
proposes to take with respect thereto.
21. Obligation of the Lessee to Pay Rent.
The Lessee's obligation to pay, as the same becomes due, Basic
Rent, Additional Rent, Termination Rent, and all other amounts
payable hereunder shall, subject to the covenant of the Lessor
contained in Section 3 hereof, be absolute and unconditional and
shall not be affected by any circumstance, including, without
limitation; (i) any setoff, counterclaim, recoupment, defense or
other right which the Lessee may have against the Lessor or anyone
else for any reason whatsoever; (ii) any defect in the title,
compliance with specifications, condition, design, operation or
fitness for use of, or any damage to or loss or destruction of, any
Nuclear Material; or (iii) any interruption or cessation in the use
or possession of any Nuclear Material by the Lessee for any reason
whatsoever; provided, however, that if an interruption or cessation
in the Lessee's use or possession of any Nuclear Material is caused
by any attachment or similar act by or on behalf of any creditor of
the Lessor, and is not attributable to any failure by the Lessee to
perform its obligations under this Lease Agreement, then the
Lessee's obligation to pay any of the foregoing amounts with
respect to such Nuclear Material shall be appropriately reduced for
the period of such interruption or cessation. The Lessee hereby
waives, to the extent permitted by applicable law, any and all
rights which it may now have or which at any time hereafter may be
conferred upon it, by statute or otherwise, to terminate, cancel,
quit or surrender this Lease Agreement except in accordance with
the express terms hereof. Each payment of Rent and each other
payment made by the Lessee shall be final and the Lessee will not
seek to recover all or any part of such payment from the Lessor for
any reason whatsoever.
22. Miscellaneous.
(a) Successors and Assigns.
This Lease Agreement shall be binding upon the Lessee and
the Lessor and their respective successors and assigns, and shall
inure to the benefit of the Lessee and the Lessor and their
respective successors and assigns.
(b) Waivers.
The parties hereto agree that either party shall not by
act, delay, omission or otherwise be deemed to have waived any of
its rights or remedies hereunder unless such waiver is given in
writing. A waiver on one occasion shall not be construed as a
waiver on any other occasion.
(c) Entire Agreement.
This Lease Agreement, together with the written
instruments provided for or contemplated hereby, the other Basic
Documents and other written agreements between the parties dated as
of the date hereof, constitute the entire agreement between the
parties hereto with respect to the leasing of Nuclear Material and
no representations, warranties, promises, guaranties or agreements,
oral or written, express or implied, have been made by either party
hereto, or by any one else with respect to this Lease Agreement or
the Nuclear Material leased hereunder, except as may be expressly
provided for herein or therein. Any change or modification of this
Lease Agreement must be in writing and duly executed by the parties
hereto.
(d) Descriptive Headings.
The captions in this Lease Agreement are for convenience
of reference only and shall not be deemed to affect the meaning or
construction of any of the provisions hereof.
(e) Severability.
Any provision of this Lease Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by
applicable law, the Lessee hereby waives any provision of law which
renders any provision hereof prohibited or unenforceable in any
respect.
(f) Governing Law.
This Lease Agreement and the rights and obligations of
the parties hereunder shall be construed in accordance with and be
governed by the law of the State of Ohio.
(g) No Recourse.
This Lease Agreement is intended to be a corporate
obligation of the Lessor only, and all of the statements,
representations, covenants and agreements made by the Lessor
contained herein are made and intended only for the purpose of
binding the Lessor and establishing the existence of rights and
remedies provided for herein which can be exercised and enforced
against the Lessor. Therefore, anything contained in this Lease
Agreement to the contrary notwithstanding, no recourse may be made
against any incorporator, shareholder (direct or indirect),
affiliate, director, officer, employee or agent of the Lessor with
respect to claims against the Lessor arising under or relating to
this Lease Agreement; provided, however, that nothing in this
Section 20(g) shall relieve the Lessor from its corporate
obligations under this Lease Agreement.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused
this Lease Agreement to be executed and delivered by their duly
authorized officers as of the day and year first above written.
DCC FUEL CORPORATION,
Lessor
ATTEST
/s/ Terrence J. Stone____ By /s/ Richard J. Wild____
Secretary Vice President
INDIANA MICHIGAN POWER COMPANY,
Lessee
ATTEST
/s/ Jeffrey D. Cross_____ By /s/ G. P. Maloney______
Assistant Secretary Vice President
STATE OF OHIO )
COUNTY OF FRANKLIN ) SS:
On this 27th day of December, 1990, before me personally
appeared G. P. Maloney, to me personally known, who, being by me
duly sworn, says that he is Vice President of Indiana Michigan
Power Company, that said instrument was signed on behalf of said
corporation by authority of its Board of Directors and he
acknowledged that the execution of the foregoing instrument was the
free act and deed of said corporation.
___/s/ Mary M. Soltesz___________
Notary Public
My Commission Expires: 7-13-94
STATE OF OHIO )
COUNTY OF CUYAHOGA ) SS:
On this 26th day of December, 1990, before me personally
appeared Terrence J. Stone, to me personally known, who, being by
me duly sworn, says that he is Vice President of DCC Fuel
Corporation, that said instrument was signed on behalf of said
corporation by authority of its Board of Directors and he
acknowledged that the execution of the foregoing instrument was the
free act and deed of said corporation.
__/s/ Elsie M. Kuzminchuk________
Notary Public
My Commission Expires: 2-2-92
APPENDIX A
DEFINITIONS
As used in the Basic Documents (as defined below), the
following terms shall have the following meanings (such definitions
to be applicable to both singular and plural forms of the terms
defined), except as otherwise specifically defined therein:
"Acquisition Cost" means the purchase price of any
Nuclear Material, any progress payments made thereon, costs of
milling, conversion, enrichment, fabrication, installation,
delivery, redelivery, containerization, storage, reprocessing, any
other costs incurred by the Company in acquiring the Nuclear
Material, plus in any case (i) any consulting costs incurred in
connection with any of the above enumerated costs, (ii) any
allowance for funds used during construction with respect to
Nuclear Material purchased by the Company, (iii) at the option of
Lessee, any Monthly Rent Component payable by Lessee to the Company
with respect to any Nuclear Material prior to the completion of the
first 200 full power hours of Heat Production of such Nuclear
Material, (iv) any sales, excise or other taxes and charges payable
by the Company with respect to any such payment for such Nuclear
Material, (v) at the option of Lessee, any Monthly Financing Charge
payable by Lessee to the Company with respect to Nuclear Material
during any period in which such Nuclear Material is subject to an
Interim Leasing Record, but excluding any interest charges or
penalties for late payment by the Company of the purchase price or
any portion thereof, if such late payment results from the
negligence of the Company, (vi) such other costs with respect to
any Nuclear Material as may be agreed by the Company and Lessee and
approved by the Lender and the Purchasers, in each case in writing,
and, in the case of any Nuclear Material removed from the
Generating Facilities for the purpose of "cooling off" and repair
or reprocessing, shall include the Stipulated Casualty Value
thereof at the time of such removal, if any, and (vii) at the
option of Lessee, any Financing Costs. Any amount realized by the
Company from the disposition of the by-products (including, but not
limited to, plutonium) of Nuclear Material specified in a Leasing
Record during the repair or reprocessing of such Nuclear Material
while leased hereunder shall be credited against the Acquisition
Cost of such Nuclear Material.
"Additional Rent" shall mean all legal, accounting,
administrative and other operating expenses and taxes incurred by
the Company to the extent not paid as part of Basic Rent
(including, without limitation, any Cancellation Fees, Yield
Maintenance Amount, Commitment Cancellation Fee and all other
liabilities incurred or owed by the Company pursuant to the Basic
Documents), and all amounts (other than Basic Rent) that the Lessee
agrees to pay under the Lease Agreement (including, without
limitation, indemnification payable under the Lease Agreement,
general and administrative expenses of the Company, and, to the
extent not included in Acquisition Cost, Financing Costs) and
interest at the rate incurred by the Company or any Secured Party
as a result of any delay in payment by the Lessee to meet
obligations that would have been satisfied out of prompt payment by
the Lessee, and the amount of any and all other costs, losses,
damages, interest, taxes, deficiencies, liabilities, obligations,
actions, judgments, suits, claims, fees (including, without
limitation, attorneys' fees and disbursements) and expenses, of
every kind, nature, character and description, direct or indirect,
that may be imposed on or incurred by the Company as a result of,
arising from or relating to, in any manner whatsoever, one or more
Basic Documents, or any other document referred to therein, or the
transactions contemplated thereby or the enforcement thereof;
provided, however that Additional Rent shall not include expenses
incurred, and amounts owed, by the Company solely as a result of
the willful misconduct or gross negligence of the Owner Trustee,
and so long as no Lease Event of Default shall have occurred,
Additional Rent shall not include the principal of any Note due by
reason of acceleration. For purposes of calculating the interest
incurred by the Company or any Secured Party as a result of any
such delay, it shall be assumed that the Company or any Secured
Party, as applicable, incurred interest at the Credit Agreement
Default Rate.
"Affiliate" or any Person means any other Person directly
or indirectly controlling, controlled by or under direct or
indirect common control with such Person. For purposes of this
definition, the term "control," as used with respect to any Person,
shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by
contract or otherwise.
"Aggregate Commitment Amount" means $140,000,000.
"Aggregate Monthly Rent Component" shall mean the sum of
the Monthly Rent Components for all items of Nuclear Material which
are engaged in either reactor at the Generating Facility during the
relevant period.
"Assigned Agreement" means a Nuclear Material Contract
which has been assigned to the Company in the manner specified in
Section 5 of the Lease Agreement pursuant to a duly executed and
delivered Assignment Agreement. The term Assigned Agreement shall
include a Partially Assigned Agreement.
"Assignment Agreement" means an assignment agreement
substantially in the form of Exhibit D to the Lease Agreement.
"Atomic Energy Act" means the Atomic Energy Act of 1954,
as from time to time amended.
"Basic Documents" means the Lease Agreement, the Credit
Agreement, the Note Agreement, the Security Agreement, the Notes,
the Letter Agreement, the Assigned Agreements, the Assignment
Agreements, the Trust Agreement, each Bill of Sale, each Leasing
Record, each SCV Confirmation Schedule, and other agreements
related or incidental thereto which are identified in writing by
the Company, the Lessee and the Secured Parties as one of the
"Basic Documents" in each case, as such documents may be amended
from time to time.
"Basic Rent" means for any Basic Rent Period, the sum of
(a) that portion of the Monthly Financing Charge not allocated to
Acquisition Cost pursuant to the Lease Agreement plus (b) the
Monthly Rent Component a shown on a Basic Rent Schedule for such
Basic Rent Period.
"Basic Rent Payment Date" means, for any Basic Rent
Period, the first Business Day of the calendar month of such Basic
Rent Period.
"Basic Rent Period" means each calendar month or portion
thereof commencing on, in the case of the first such period, the
effective date of the Lease Agreement, and in the case of each
succeeding period, the first day following the immediately
preceding Basic Rent Period, and ending on the earliest of (i) the
last day of any calendar month or (ii) the Termination Settlement
Date.
"Basic Rent Schedule" means an instrument substantially
in the form of Annex I to Exhibit F to the Lease Agreement, which
is to be used by the Lessee to calculate Basic Rent for each Basic
Rent Period.
"Bill of Sale" means the Original Bill of Sale or a bill
of sale substantially in the form of Exhibit E to the Lease
Agreement, pursuant to which title to all or any portion of the
Nuclear Material is transferred to the Company or to the Lessee.
"BTU Charge" means the dollar amount set forth in the BTU
Charge Agreement which is used to calculate the Monthly Rent
Component. The BTU Charge initially set forth for any Nuclear
Material in any Final Leasing Record shall be the amount agreed by
Lessor and Lessee as set forth in Attachment 1 to Exhibit B to the
Lease Agreement based upon the reasonably anticipated operating
life, heat output, salvage value and utilization of such Nuclear
Material.
"BTU Charge Agreement" shall mean the agreement in the
form of Exhibit B to the Lease Agreement.
"Business Day" means any day other than (i) a Saturday or
Sunday, or (ii) a day on which banking institutions in either New
York City or Columbus, Ohio are authorized by law to close.
"Cancellation Fees" shall mean the fees payable to the
Purchasers pursuant to paragraph 2F of the Note Agreement.
"Capitalized Lease" means any and all lease obligations
which are or should be capitalized on the balance sheet of the
Person in question in accordance with generally accepted accounting
principles and Statement No. 13 of the Financial Accounting
Standards Board or any successor to such pronouncement regarding
lease accounting without regard for the accounting treatment
permitted or required under any applicable state or federal public
utility regulatory accounting system unless such treatment controls
the determination of the generally accepted accounting principles
applicable to such Person.
"Closing," with respect to the Note Agreement, shall have
the meaning specified therefor in paragraph 2D of such Note
Agreement, and with respect to the Credit Agreement, means December
27, 1990.
"Code" means the Internal Revenue Code of 1986, as from
time to time amended.
"Collateral" has the meaning set forth in the granting
clauses of the Security Agreement and includes all property of the
Company described in the Security Agreement as comprising part of
the Collateral.
"Collateral Agreements" means, collectively, the Security
Agreement, all Assignment Agreements, and any other assignment,
security agreement or instrument executed and delivered to the
Secured parties thereafter relating to property of the Company
which is security for the Notes.
"Collateral Equivalence Test" shall have the meaning
specified therefor in paragraph 3R of the Credit Agreement and
paragraph 4R of the Note Agreement.
"Commitment Cancellation Fee" means the fee, payable by
the Company under paragraph 2B(5) of the Credit Agreement on the
Termination Settlement Date specified by the Lessee in accordance
with Section 8(c) of the Lease Agreement, equal to the discounted
value of all future payments of Non-Usage Fee which would otherwise
have been payable by the Company under paragraph 2E of the Credit
Agreement for each calendar month from the Termination Settlement
Date to and including the Scheduled Termination Date, which fee
shall be calculated based upon zero utilization of the Floating
Rate Commitment amount during such period and a discount factor
(applied on a monthly basis) equal to the yield for U.S. Treasury
obligations having a final maturity equal to the number of months
between the Termination Settlement Date and the Scheduled
Termination Date, such yield to be linearly interpolated where U.S.
Treasury obligations do not exist for such period.
"Company" means the DCC Fuel Corporation.
"Consents and Agreements" means the agreements, each
substantially in the form attached as Exhibit 2 to Exhibit D to the
Lease Agreement, between the Lessee and the various contractors
under the Nuclear Material Contracts.
"Controlled Group" means a controlled group of
corporations of which Company is a member within the meaning of
Section 414(b) of the Code, any group of corporations or entities
under common control with Company within the meaning of Section
414(c) of the Code or any affiliated service group of which Company
is a member within the meaning of Section 414(m) of the Code.
"Credit Agreement" means the Floating Rate Credit
Agreement, dated as of December 1, 1990, between the Company and
the Lender, as it may be amended from time to time.
"Credit Agreement Default" means an event which would,
with the lapse of time or the giving of notice or both, constitute
a Credit Agreement Event of Default.
"Credit Agreement Default Rate" means the interest rate
per annum in effect from time to time equal to the greater of (i)
2% per annum in excess of the rate then in effect as specified in
paragraph 2C of the Credit Agreement, or (ii) the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York
from time to time in New York City as its "base rate."
"Credit Agreement Event of Default" means any one or more
of the events specified in paragraph 6A of the Credit Agreement.
"Deemed Loss Event" means the following event: if at any
time during the term of the Lease Agreement, (A) either the Company
or any of its respective Affiliates, by reason solely of the
ownership of the Nuclear Material or any part thereof or the lease
of the Nuclear Material to the Lessee under the Lease Agreement or
any other transaction contemplated by the Lease Agreement or any of
the other Basic Documents, shall be deemed, by any governmental
authority having jurisdiction, to be, or to be subject to
regulation as an "electric utility" or a "public utility" or a
"public utility holding company" or similar term, under an
applicable law or deemed a "public utility company" or a
"subsidiary company" or a "holding company" within the meaning of
the Public Utility Holding Company Act, (B) the Public Utility
Holding Company Act shall affect the legality, validity and
enforceability of the lease obligations of the Company and Lessee
under the Lease Agreement; or (C) either the Company or any Secured
Parties by reason solely of being a party to the Basic Documents
shall be required to obtain any consent, order or approval, of or
to make any filing or registration, or to give any notice to, any
governmental authority, or be subject to any liabilities, duties or
obligations under the Public Utility Holding Company Act, except in
any case if the same shall be solely the result of Nonburdensome
Regulation; provided, however, that if in compliance with
applicable laws, Lessee, with the cooperation of the Company, shall
have acted diligently and in good faith to contest or obtain an
exemption from the requirements of applicable laws described in
clauses (A), (B) or (C) that would otherwise constitute a Deemed
Loss Event, such Deemed Loss Event shall be deemed not to have
occurred so long as (I) Lessee shall have furnished to the Company
or such Secured Parties, as the case may be, an opinion of
independent counsel to the effect that there exists a reasonable
basis for such contest or exemption and that a determination under
such applicable laws shall be effectively stayed during the
application for exemption or contest and shall not be subject to
retroactive effect at the conclusion of such contest, (II) the
Company, any such Affiliate or such Secured Parties, as the case
may be, shall have determined in its sole discretion that such
contest or exemption shall not adversely affect their business or
involve any danger of the sale, foreclosure or loss of, or creation
of a Lien upon, the Collateral, and (III) Lessee shall have agreed
to indemnify the Company, its Affiliates or such Secured Parties,
as the case may be, for expenses incurred in connection with such
contest or exemption; and further provided, that a Deemed Loss
Event shall be deemed not to have occurred for such period as may
be approved by any governmental authority having jurisdiction, not
to exceed 270 days, following notice from Lessee to the Company or
such Secured Parties, as the case may be, that Lessee shall be
unable to furnish the opinion described in clause (I) of the next
preceding proviso or that any such contest shall not be successful
or such exemption shall not be available, during which the Company
shall use reasonable efforts to assign or transfer its interest in
the Collateral upon commercially reasonable terms and conditions,
provided that the Company shall not be required to assign or
transfer the Nuclear Material for a price which, after deduction of
sales tax and expenses of such sale incurred by the Company, shall
be less than the sum of (A) Stipulated Casualty Value determined as
of the date of such proposed sale, and (B) the Termination Rent
determined in accordance with Section 18 of the Lease Agreement.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as from time to time amended.
"Excepted Payments" means any indemnity, expense, or
other payment which by the terms of any of the Basic Documents
shall be payable to the Company in order for the Company to satisfy
its obligations pursuant to Section 7.8 of the Trust Agreement.
"Federal Energy Regulatory Commission" means the
independent regulatory commission of the Department of Energy of
the United States Government existing under the authority of the
Department of Energy Organization Act, as amended, or any successor
organization or organizations performing any identical or
substantially identical licensing and related regulatory functions.
"Federal Power Act" means the Federal Power Act, as
amended.
"Final Leasing Record" means a Leasing Record which
records the leasing of Nuclear Material during any period when such
Nuclear Material has completed the first 200 full power hours of
Heat Production. A Final Leasing Record shall be in the form of
Exhibit B to the Lease Agreement.
"Financing Costs" means (a) fees and other amounts owing
to any Secured Party or to the Owner Trustee under the Trust
Agreement, (b) legal fees and disbursements and other amounts
referred to in Section 8 of the Security Agreement, (c) legal,
accounting, and other fees and expenses incurred by the Lessee
and/or the Company in connection with the preparation, execution
and delivery of Basic Documents, or the issuance of the Notes, and
(d) such other reasonable fees and expenses of the Owner Trustee
and the Company as they may be entitled to under the Basic
Documents.
"Fixed Rate Commitment" shall mean the commitment of the
Purchasers to purchase Fixed Rate Notes from time to time in a
principal amount at any one time outstanding not to exceed
$125,000,000.
"Fixed Rate Notes" shall have the meaning specified
therefor in paragraph 2A of the Note Agreement.
"Floating Rate Commitment" shall mean the commitment of
the Lender to make Floating Rate Loans from time to time in a
principal amount at any one time outstanding not to exceed
$140,000,000.
"Floating Rate Loans" shall have the meaning specified
therefor in paragraph 2A of the Credit Agreement.
"Floating Rate Notes" shall have the meaning specified
therefor in paragraph 2A of the Credit Agreement.
"Fuel Management" means the design of, contracting for,
fixing the price and terms of acquisition of, management, movement,
removal, disengagement, storage and other activities in connection
with the acquisition, utilization, storage and disposal of the
Nuclear Material.
"Generating Facility" means each of Unit No. 1 and No. 2
of the Donald C. Cook Nuclear Generating Station, located at
Bridgman, Michigan.
"Heat Production" means the stage of the Nuclear Material
Cycle commencing with the commercial operation of a Generating
Facility, during which the Nuclear Material in question is
producing thermal energy which results in the production of net
positive electrical energy transmitted within the distribution
network of any utility and during which the Nuclear Material in
question is engaged in the reactor core of such Generating
Facility.
"Hereof," "herein," "hereunder" and words of similar
import when used in a Basic Document refer to such Basic Document
as a whole and not to any particular section or provision thereof.
"Impositions" means all payments required by public or
governmental authority in respect of any property subject to the
Lease Agreement or any transaction pursuant to the Lease Agreement
or any right or interest held by virtue of the Lease Agreement.
"Insurance Requirements" means all terms of any insurance
policy or indemnification agreement covering or applicable to (i)
any Nuclear Material or (ii) the Generating Facility or the Lessee
in its capacity as licensee of the Generating Facility, in each
case insofar as any insurance policy or indemnification agreement
directly or indirectly relates to the Nuclear Material or the
performance by the Lessee of its obligations under the Basic
Documents, and all requirements of the issuer of any such policy or
agreement necessary to keep such insurance or agreements in force.
"Interest Rate Acceptance" has the meaning specified
therefor in paragraph 2C of the Note Agreement.
"Interest Rate Notice" has the meaning specified therefor
in paragraph 2B of the Note Agreement.
"Interim Leasing Record" means a Leasing Record which
records the leasing of Nuclear Material (i) during any period prior
to completion of the first 200 full power hours of Heat Production
of such Nuclear Material that such Nuclear Material is leased, and
(ii) during any period commencing with the "cooling off" and
reprocessing of Nuclear Material and prior to the date of
completion of the first 200 full power hours of Heat Production of
such reprocessed Nuclear Material. An Interim Leasing Record shall
be in the form of Exhibit A to the Lease Agreement.
"Investment Company Act" means the Investment Company Act
of 1940, as from time to time amended.
"Issuance Notice" has the meaning specified therefor in
paragraph 2B of the Note Agreement.
"Lease Agreement" means the Nuclear Material Lease
Agreement, dated as of December 1, 1990, between the DCC Fuel
Corporation, as Lessor and the Indiana Michigan Power Company, as
Lessee, as the same may be modified, supplemented or amended from
time to time.
"Lease Event of Default" has the meaning specified
therefor in Section 16 of the Lease Agreement.
"Leasing Record" is a form signed by the Lessor and
Lessee to record the leasing under the Lease Agreement of the
Nuclear Material specified in such Leasing Record. A Leasing
Record shall be either an Interim Leasing Record or a Final Leasing
Record.
"Legal Requirements" means all applicable provisions of
the Atomic Energy Act, all applicable orders, rules, regulations
and other requirements of the Nuclear Regulatory Commission and the
Federal Energy Regulatory Commission, and all other laws, rules,
regulations and orders of any other jurisdiction or regulatory
authority relating to (i) the licensing, acquisition, storage,
containerization, transportation, blending, transfer, consumption,
leasing, insuring, using, operating, disposing, fabricating and
reprocessing of the Nuclear Material, (ii) the Generating Facility
or the Lessee in its capacity as licensee of the Generating
Facility, in each case insofar as such provisions, orders, rules,
regulations, laws and other requirements directly or indirectly
relate to the Nuclear Material or the performance by the Lessee of
its obligations under the Basic Documents, or (iii) the Basic
Documents, insofar as any of the foregoing directly or indirectly
apply to the Lessee.
"Lender" means PruLease, Inc., and its successors or
assigns.
"Lessee" has the meaning specified therefor in the
introduction to the Lease Agreement.
"Lessee Representative" means a person at the time
designated to act on behalf of Lessee by a written instrument
furnished to the Company and the Secured Parties containing the
specimen signature of such person and signed on behalf of Lessee by
any of its officers. The certificate may designate an alternate or
alternates. A Lessee Representative may be an employee of a Lessee
or of the Owner Trustee.
"Lessor" has the meaning specified therefor in the
introduction to the Lease Agreement, and its successors and
assigns.
"Lessor's Bill of Sale" means an instrument substantially
in the form of Exhibit E to the Lease Agreement.
"Letter Agreement" means the Letter Agreement, dated as
of December 1, 1990, between the Lessee, the Company, the
Purchasers and the Lender, as it may be amended from time to time.
"Lien" means any mortgage, pledge, lien, security
interest, title retention, charge or other encumbrance of any
nature whatsoever (including any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing
of or agreement to execute and deliver any financing statement
under the Uniform Commercial Code of any jurisdiction).
"Majority Secured Parties" means at any time the Secured
Parties holding at such time more than 50% of the outstanding
principal amount of all Secured Obligations.
"Manufacturer" means any supplier of Nuclear Material or
of any service (including without limitation, enrichment,
fabrication, transportation, storage and processing) in connection
therewith, or any agent or licensee of any such supplier.
"Manufacturer's Consent" means any consent which may be
given by a Manufacturer under a Nuclear Material Contract to the
assignment by the Lessee to the Company of all or a portion of the
Lessee's rights under such Nuclear Material Contract.
"Monthly Debt Service" for any month means the sum of the
Monthly Financing Charge for such month and the principal amount of
the Fixed Rate Notes due and payable on the first Business Day of
such month.
"Monthly Financing Charge" means, for any calendar month
or portion thereof, the sum of:
(a) (i) all interest payable by the Company during such
month with respect to all outstanding Notes, and (ii) the Non-Usage
Fee, if any, payable by the Company pursuant to the Credit
Agreement during such month; and
(b) the amounts paid or due and payable by the Company
with respect to the transactions contemplated by the Basic
Documents during such month for the following other fees, costs,
charges and expenses incurred or owed by the Company under or in
connection with the Lease Agreement or the other Basic Documents:
(i) legal, printing, reproduction, and closing fees, and expenses,
(ii) auditors', accountants' and attorneys' fees and expenses,
(iii) franchise taxes and income taxes, and (iv) any other fees and
expenses incurred by the Company under or in respect of the Basic
Documents.
Any figure used in the computation of any component of the Monthly
Financing Charge shall be stated to ten decimal places.
"Monthly Rent Component" for any Nuclear Material covered
by a Final Leasing Record for each full month during the lease of
such Nuclear Material shall be as follows:
(i) for the first full month the Monthly Rent Component shall
be zero;
(ii) for the second full month the Monthly Rent Component shall
be zero;
(iii) for the third full month the Monthly Rent Component shall
be an amount determined by multiplying (x) the number of British
Thermal Units of heat produced by such Nuclear Material during the
first full month while covered by the Final Leasing Record and also
during the first partial month, if any, such Nuclear Material was
covered by an Interim or Final Leasing Record and was engaged in
Heat Production by (y) the BTU Charge set forth in the Final
Leasing Record covering such Nuclear Material;
(iv) for each full month after the third full month, the
Monthly Rent Component shall be an amount determined by multiplying
(x) the number of British Thermal Units of heat produced by such
Nuclear Material during the second preceding month by (y) the BTU
Charge set forth in the Final Leasing Record covering such Nuclear
Material. The BTU Charge for any Nuclear Material may be revised
by Lessee at any time during the lease thereof to reflect any
reasonably anticipated change in its operating life, heat output,
salvage value or utilization. Such revision shall be affected by
Lessee executing and forwarding to the Lessor a revised Final
Leasing Record dated the first day of the following month and
setting forth such revised BTU Charge. Upon receipt of such
revised Final Leasing Record, Lessor shall execute and return a
copy thereof to the Lessee. Such revised BTU Charge shall be
applicable to such Nuclear Material for each month thereafter
beginning on the date of the revised Final Leasing Record.
"Nonburdensome Regulation" means (i) ministerial
regulatory requirements that do not impose limitations or
regulatory requirements on the business or activities of or
adversely affect the Company (or an Affiliate thereof) and that are
deemed, in the reasonable discretion of the Company, not to be
burdensome, or (ii) assuming redelivery of the Nuclear Material in
accordance with the Lease Agreement, regulation resulting from any
possession of the Nuclear Material (or right thereto) on or after
the termination of the Lease Agreement.
"Non-Usage Fee" means the fee payable pursuant to
paragraph 2E of the Credit Agreement.
"Note Agreement" means the Note Purchase Agreement, dated
as of December 1, 1990, between the Company and the Purchasers, as
it may be amended from time to time.
"Note Agreement Default" means an event which would, with
the lapse of time or the giving of notice or both, constitute a
Note Agreement Event of Default.
"Note Agreement Event of Default" means any one or more
of the events specified in paragraph 10A of the Note Agreement.
"Notes" means the Fixed Rate Notes and the Floating Rate
Notes.
"Notice of Lease Termination" has the meaning specified
therefor in Section 8(c) of the Lease Agreement.
"Nuclear Incident" shall have the meaning specified
therefor in the Atomic Energy Act, 42 U.S.C. Sec. 2014(q), as such
definition may be amended from time to time.
"Nuclear Material" means those items which have been
purchased by or on behalf of the Company for which a duly executed
Leasing Record has been delivered to the Company and which continue
to be subject to the Lease Agreement consisting of (i) the items
described in such Leasing Record and each of the components thereof
in the respective forms in which such items exist during each stage
of the Nuclear Material Cycle, being substances and equipment
which, when fabricated and assembled and loaded into a nuclear
reactor, are intended to produce heat, together with all
attachments, accessories, parts and additions and all improvements
and repairs thereto, and all replacements thereof and substitutions
therefor, and (ii) the substances and materials underlying the
right, title and interest of the Lessee under any Nuclear Material
Contract assigned to the Company pursuant to the Lease Agreement;
provided, however, that the term Nuclear Material shall not include
spent fuel.
"Nuclear Material Contract" means any contract, as from
time to time amended, modified or supplemented, entered into by the
Lessee with one or more Manufacturers relating to the acquisition
of Nuclear Material or any service in connection with the Nuclear
Material.
"Nuclear Material Cycle" means the various stages in the
process, whether physical or chemical, by which the component parts
of the Nuclear Material are designed, mined, milled, processed,
converted, enriched, fabricated into assemblies utilizable for Heat
Production, loaded or installed into a reactor core, utilized,
disengaged from a reactor core or stored, together with all
incidental processes with respect to the Nuclear Material at any
such stage.
"Nuclear Regulatory Commission" means the independent
regulatory commission of the United States Government existing
under the authority of the Energy Reorganization Act of 1974, as
amended, or any successor organization or organizations performing
any identical or substantially identical licensing and related
regulatory functions.
"Obligations" means (i) all items (including, without
limitation, Capitalized Leases but excluding shareholders' equity
and minority interests) which in accordance with generally accepted
accounting principles, should be reflected on the liability side of
a balance sheet as at the date as of which Obligations ar to be
determined; (ii) all obligations and liabilities (whether or not
reflected upon such balance sheet) secured by any Lien existing on
the Property held subject to such Lien, whether or not the
obligation or liability secured thereby shall have been assumed;
and (iii) all guarantees, endorsements (other than for collection
in the ordinary course of business) and contingent obligations in
respect of any liabilities of the type described in clauses (i) and
(ii) of this definition (whether or not reflected on such balance
sheet); provided, however, that the term "Obligations" shall not
include deferred taxes.
"Obligations for Borrowed Money or Deferred Purchase
Price" means all Obligations in respect of borrowed money or the
deferred purchase price of property or services.
"Officer's Certificate" means, with respect to any
corporation, a certificate signed by the President, any Vice
President, the Treasurer or any Assistant Treasurer of such
corporation, and with respect to any other entity, a certificate
signed by an individual generally authorized to execute and deliver
contracts on behalf of such entity.
"Opinion of Counsel" means a written opinion of counsel
who is acceptable to the Lender, or where it is stated as being an
opinion of counsel of a particular party, who is acceptable to such
party. The counsel may be counsel to the Owner Trustee, the
Company, the Lender or a Lessee.
"Original Bill of Sale" means the Bill of Sale for
nuclear material transferred from the Lessee to the Company.
"Owner Trust Beneficiary" means Indiana Michigan Power
Company.
"Owner Trust Estate" means all estate, right, title and
interest of the Owner Trustee in and to the outstanding stock of
the Company and in and to all monies, securities, investments,
instruments, documents, rights, claims, contracts, and other
property held by the Owner Trustee under the Trust Agreement;
provided, however, that there shall be excluded from the Owner
Trust Estate all Excepted Payments.
"Owner Trustee" means The Huntington Trust Company, N.A.,
acting as trustee under and pursuant to the Trust Agreement, and
its permitted successors.
"Partially Assigned Agreement" means a Nuclear Material
Contract which has been assigned, in part but not in full, to the
Company in the manner specified in Section 5 of the Lease Agreement
pursuant to a duly executed and delivered Assignment Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation,
created by Section 4002(a) of ERISA and any successor thereto.
"Permitted Liens" means (i) any assignment of the Lease
Agreement permitted thereby, by the Note Agreement and by the
Credit Agreement, (ii) liens for Impositions not yet payable, or
payable without the addition of any fine, penalty, interest or cost
for nonpayment, or being contested by the Lessee as permitted by
Section 11 of the Lease Agreement, (iii) liens and security
interests created by the Security Agreement, (iv) the title
transfer and commingling of the Nuclear Material contemplated by
paragraph (h) of Section 10 of the Lease Agreement, and (v) lines
of mechanics, laborers, materialmen, suppliers or vendors, or
rights thereto, incurred in the ordinary course of business for
sums of money which under the terms of the related contracts are
not more than 30 days past due or are being contested in good faith
by the Lessee as permitted by Section 11 of the Lease Agreement;
provided, however, that in each case, such reserve or other
appropriate provision, if any, as shall be required by generally
accepted accounting principles shall have been made in respect
thereto.
"Person" means any individual, partnership, joint
venture, corporation, trust, unincorporated organization or other
business entity or any government or any political subdivision or
agency thereof.
"Plan" means, with respect to any Person, any plan of a
type described in Section 4021(a) of ERISA in respect of which such
Person is an "employer" or a "substantial employer" as defined in
Sections 3(5) and 4001(a)(2) of ERISA, respectively.
"Proceeds" shall have the meaning assigned to it under
the Uniform Commercial Code, as amended, and, in any event, shall
include, but not be limited to, (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to the Company
from time to time with respect to the Collateral, (ii) any and all
payments (in any form whatsoever) made or due and payable to the
Company from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental body, authority, bureau
or agency (or any person acting under color of governmental
authority), and (iii) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Property" means any interests in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Public Utility Holding Company Act" means the Public
Utility Holding Company Act of 1935, as from time to time amended.
"Purchasers" means the Purchasers listed in Exhibit A to
the Note Agreement, and their respective successors or assigns.
"PSC" means the Public Service Commission of Michigan and
the Indiana Utility Regulatory Commission.
"Qualified Institution" means a commercial bank organized
under the laws of, and doing business in, the United States of
America or in any State thereof, which has combined capital,
surplus and undivided profits of at least $150,000,000 having trust
power.
"Related Person" means, with respect to any Person, any
trade or business, (whether or not incorporated) which, together
with such Person, is under common control as described in Section
414(c) of the Code.
"Rent" means Basic Rent, Additional Rent and Termination
Rent.
"Reportable Event" means any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder.
"Responsible Officer" means a duly elected or appointed,
authorized, and acting officer, agent or representative of the
Person acting.
"Scheduled Termination Date" means January 1, 1994,
provided that on January 1, 1992, and on the first day of each
month thereafter, the Scheduled Termination Date shall be
automatically extended by one month unless notice of termination of
such automatic extension is given by the Lessor to the Lessee and
the Secured Parties, by the Lessee to the Lessor and the Secured
Parties, or by any Purchaser or the Lender to the Lessor and the
Lessee, in which event the Scheduled Termination Date shall be the
Scheduled Termination Date in effect on the date such notice is
given.
"SCV Confirmation Schedule" means an instrument
substantially in the form of Exhibit F to the Lease Agreement which
is to be completed by the Lessee for the purpose of calculating and
acknowledging the SCV at the end of each Basic Rent Period.
"Secured Obligations" means each and every debt,
liability and obligation, of every type and description which the
Company may now or at any time hereafter owe to any Secured Party
under, pursuant to or in connection with the Note Agreement, the
Credit Agreement, any Floating Rate Note, any Fixed Rate Note or
any other Basic Document, whether such debt, liability or
obligation now exists or is hereafter created or incurred, and
whether it is or may be direct or indirect, due or to become due,
absolute or contingent, primary or secondary, liquidated or
unliquidated, or joint, several or joint and several, including,
without limitation, the principal of, interest on and any Yield-
Maintenance Amount or premium due with respect to any Floating Rate
Loan or Fixed Rate Note, any Non-Usage Fees, and Cancellation Fees,
Commitment Cancellation Fees and all indemnifications, costs,
expenses, fees and other compensation of the Secured Parties
provided for, and all other amounts owed to the Secured Parties,
under the Security Agreement, Credit Agreement, Note Agreement and
the other Basic Documents.
"Secured Parties" means the Lender, the Purchasers and
any other holder form time to time of any Note.
"Securities Act" means the Securities Act of 1933, as
from time to time amended.
"Security Agreement" means the Security Agreement, dated
as of December 1, 1990, between the Company and the Secured
Parties.
"Single Employer Plan" means any Plan which is not a
multi-employer plan as defined in Section 4001(a)(3) of ERISA.
"Stipulated Casualty Value" or "SCV" for any Nuclear
Material covered by any Leasing Record means an amount equal to the
Acquisition Cost for such Nuclear Material reduced by the aggregate
total amount, if any, of the Monthly Rent Components paid by Lessee
to the Lessor with respect to such Nuclear Material.
"Termination Date" means the earlier of (i) Scheduled
Termination Date, (ii) the Termination Settlement Date; or (iii)
any day on which the Fixed Rate Notes or Floating Rate Notes are
declared immediately due and payable pursuant to paragraph 7B(1) of
the Note Agreement or paragraph 6B(1) of the Credit Agreement.
"Termination Rent" means an amount which, when added to
the Stipulated Casualty Value and Basic Rent then payable by the
Lessee, if any, will be sufficient to enable the Company to retire,
at their respective maturities, all outstanding Notes and to pay
all charges, premiums and fees (including, without limitation, any
Yield-Maintenance Amount or Commitment Cancellation Fee) owed to
the Purchasers, the Lender and all holders of Notes under the
Credit Agreement and the Note Agreement and to pay all other
obligations of the Company incurred in connection with the
implementation of the transactions contemplated by the Basic
Documents.
"Termination Settlement Date" has the meaning specified
therefor in Section 8(c) or 18(d) of the Lease Agreement, as
applicable; or, in the event of termination of the Lease Agreement
pursuant to Section 8(b) thereof, the Scheduled Termination Date.
"Terminating Event has the meaning specified therefor in
Section 18 of the Lease Agreement.
"Trust" means the DCC Fuel Trust, a trust formed pursuant
to the Trust Agreement.
"Trust Agreement" means the Trust Agreement dated as of
December 1, 1990 among Indiana Michigan Power Company, as Trustor,
the Owner Trustee, as trustee, and the Lessee, as beneficiary, as
the same may be amended, modified or supplemented from time to
time.
"Trustor" means the institution designated as such in the
Trust Agreement and its permitted successors.
"UCC" means the Uniform Commercial Code as adopted and in
effect in the State of Ohio.
"Yield-Maintenance Amount" shall have the meaning
specified therefor in paragraph 9A of the Note Agreement.
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1 (I&M Trust 1) dated as of
October 15, 1990, to Lease Agreement (I&M Trust 1) dated as of
December 1, 1989 (the "Original Lease"), between WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Owner Trustee under the Amended and
Restated Trust Agreement (I&M Trust 1) dated as of December 1,
1989 with Philip Morris Capital Corporation (formerly known as
Philip Morris Credit Corporation), a Delaware corporation, as
Lessor, and INDIANA MICHIGAN POWER COMPANY, an Indiana
corporation, as Lessee.
WHEREAS, the Original Lease was recorded in the Office
of the Recorder of Spencer County, Indiana, on the 7th day of
December, 1989, as Instrument No. 89-4189 in Book No. 57, Page
No. 131;
WHEREAS, the Original Lease provides that in the event
any of the Pricing Assumptions proves to have been incorrect or
any Refunding Notes are issued, then in such cases (a) the
percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth, respectively, in Schedules 1, 2 and 3 to the
Original Lease shall be adjusted so as to preserve the Owner
Participant's Initial Theoretical Return, and (b) the Lessor and
the Lessee shall execute a supplement to the Original Lease
amending Schedules 1, 2 and 3 thereof to set forth such
recalculated percentages for Basic Rent, Stipulated Loss Value
and Termination Value, respectively; and
WHEREAS, Transaction Expenses paid by the Owner Trustee
with funds provided by the Owner Participant are other than as
set forth in the original Pricing Assumptions, and Refunding
Notes were issued on February 8, 1990, and on June 20, 1990, to
refund the Initial Series A Notes;
NOW, THEREFORE, in consideration of the premises and
other good and sufficient consideration, the Lessor and the
Lessee hereby agree as follows:
1. Capitalized terms used in this Lease Supplement and
not defined herein shall have the respective meanings assigned to
them in the Original Lease.
2. The percentages for Basic Rent set forth in
Schedule 1 hereto, the Stipulated Loss Value percentages set
forth in Schedule 2 hereto and the Termination Value percentages
set forth in Schedule 3 hereto shall replace any prior Schedules
1, 2 and 3 of the Original Lease, respectively, for all purposes.
3. This Lease Supplement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same
instrument.
4. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
EXCEPT AS TO MATTERS RELATING TO THE CREATION OF LEASEHOLD AND
SUBLEASEHOLD ESTATES HEREUNDER AND THE EXERCISE OF RIGHTS AND
REMEDIES WITH RESPECT TO SUCH LEASEHOLD AND SUBLEASEHOLD ESTATES,
WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF INDIANA.
5. The Owner Participant hereby authorizes and directs
the Owner Trustee, pursuant to Section 5.02 of the Trust
Agreement, to execute and deliver this Lease Supplement, perform
the terms of the Original Lease, as amended by this Lease
Supplement, and to execute and deliver Amendment No. 1 to Form U-
7D which is in a form approved by the Owner Participant.
6. This Lease Supplement may be executed in any number
of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one
and the same instrument.
IN WITNESS WHEREOF, the Lessor and Lessee have caused
this Lease Supplement to be duly executed as of the date and year
set forth in the opening paragraph hereof.
Lessor
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Owner Trustee
[CORPORATE SEAL]
Attest: /s/ Emmett R. Harmon By: /s/ James P. Lawler
Name: Emmett R. Harmon Name: James P. Lawler
Title: Vice President Title: Financial Services Officer
Lessee
INDIANA MICHIGAN POWER COMPANY
[CORPORATE SEAL]
Attest: /s/ Jeffrey D. Cross By: /s/ G. P. Maloney
Name: Jeffrey D. Cross Name: G.P. Maloney
Title: Asst. Secretary Title: Vice President
Consented and agreed to
PHILIP MORRIS CAPITAL CORPORATION
By: /s/ John J. Mulligan
Name: John J. Mulligan
Title: Director Lease Financing
STATE OF DELAWARE )
COUNTY OF NEW CASTLE) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared James P. Lawler and Emmett R. Harmon, the Financial
Services Officer and Vice President of WILMINGTON TRUST COMPANY,
who acknowledged themselves to be duly authorized officers of
WILMINGTON TRUST COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of WILMINGTON TRUST COMPANY.
/s/ Patricia A. Wallace
Name: Patricia A. Wallace
Notary Public
My Commission Expires: 4-20-91
Residing in New Castle County
STATE OF OHIO )
COUNTY OF FRANKLIN ) SS.:
On this, the 26th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared G.P. Maloney and Jeffrey D. Cross, the Vice President
and Assistant Secretary of INDIANA MICHIGAN POWER COMPANY, who
acknowledged themselves to be duly authorized officers of INDIANA
MICHIGAN POWER COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of INDIANA MICHIGAN POWER COMPANY.
/s/ Mary M. Soltesz
Name: MARY M. SOLTESZ
Notary Public
My Commission Expires: 7-13-94
Residing in Franklin County
STATE OF NEW YORK )
COUNTY OF NEW YORK ) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared John J. Mulligan, the Director Lease Financing of PHILIP
MORRIS CAPITAL CORPORATION, who acknowledged himself to be a duly
authorized officer of PHILIP MORRIS CAPITAL CORPORATION, and
that, as such officer, being authorized to do so, he executed the
foregoing instrument for the purposes therein contained by
signing the name of PHILIP MORRIS CAPITAL CORPORATION.
/s/ Acqullia A. Dobbs
Name: Acqullia A. Dobbs
Notary Public, State of New York
No. 24-4827512
Qualified in Kings County
Certificate Filed in New York County
Commission Expires: 1-31-91
Residing in Queens County
This instrument was prepared by James M. Cotter,
425 Lexington Avenue, New York, New York 10017-3939.
Schedule 1
[PMCC]
BASIC RENT PERCENTAGES
Basic Rent Payment Date Basic Rent Percentage
December 7, 1990 4.34768910%
June 7, 1991 4.34768910
December 7, 1991 4.34768910
June 7, 1992 4.34768910
December 7, 1992 4.34768910
June 7, 1993 4.34768910
December 7, 1993 4.34768910
June 7, 1994 4.34768910
December 7, 1994 4.34768910
June 7, 1995 4.34768910
December 7, 1995 4.34768910
June 7, 1996 4.34768910
December 7, 1996 4.34768910
June 7, 1997 4.34768910
December 7, 1997 4.34768910
June 7, 1998 4.34768910
December 7, 1998 4.34768910
June 7, 1999 4.34768910
December 7, 1999 4.34768910
June 7, 2000 4.34768910
December 7, 2000 4.34768910
June 7, 2001 4.34768910
December 7, 2001 4.34768910
June 7, 2002 4.34768910
December 7, 2002 4.34768910
June 7, 2003 4.34768910
December 7, 2003 4.34768910
June 7, 2004 4.34768910
December 7, 2004 4.34768910
June 7, 2005 4.34768910
December 7, 2005 4.34768910
June 7, 2006 4.34768910
December 7, 2006 4.34768910
June 7, 2007 4.34768910
December 7, 2007 4.34768910
June 7, 2008 4.34768910
December 7, 2008 4.34768910
June 7, 2009 4.34768910
December 7, 2009 4.34768910
June 7, 2010 4.34768910
December 7, 2010 4.34768910
June 7, 2011 4.34768910
December 7, 2011 4.34768910
June 7, 2012 4.34768910
December 7, 2012 4.34768910
June 7, 2013 4.34768910
December 7, 2013 4.34768910
June 7, 2014 4.34768910
December 7, 2014 4.34768910
June 7, 2015 4.34768910
December 7, 2015 4.34768910
June 7, 2016 4.34768910
December 7, 2016 4.34768910
June 7, 2017 4.34768910
December 7, 2017 4.34768910
June 7, 2018 4.34768910
December 7, 2018 4.34768910
June 7, 2019 4.34768910
December 7, 2019 4.34768910
June 7, 2020 4.34768910
December 7, 2020 4.34768910
June 7, 2021 4.34768910
December 7, 2021 4.34768910
June 7, 2022 4.34768910
December 7, 2022 4.34768910
Schedule 2
[PMCC]
STIPULATED LOSS VALUE PERCENTAGES
Stipulated Loss
Basic Rent Payment Date Value Percentage
December 7, 1990 103.62303237%
June 7, 1991 104.28046135
December 7, 1991 104.86919671
June 7, 1992 105.39602711
December 7, 1992 105.85958009
June 7, 1993 106.26632062
December 7, 1993 106.61609179
June 7, 1994 106.91239198
December 7, 1994 107.14769501
June 7, 1995 107.31510447
December 7, 1995 107.43229145
June 7, 1996 107.49707746
December 7, 1996 107.50311530
June 7, 1997 107.45284386
December 7, 1997 107.33991809
June 7, 1998 107.16652111
December 7, 1998 106.92631574
June 7, 1999 106.62120990
December 7, 1999 106.24488095
June 7, 2000 105.79894081
December 7, 2000 105.27708927
June 7, 2001 104.68061986
December 7, 2001 104.00326400
June 7, 2002 103.24597383
December 7, 2002 102.40268839
June 7, 2003 101.47393430
December 7, 2003 100.45355335
June 7, 2004 99.38050261
December 7, 2004 98.25629838
June 7, 2005 97.09847520
December 7, 2005 95.91240511
June 7, 2006 94.69469428
December 7, 2006 93.44828628
June 7, 2007 92.16934563
December 7, 2007 90.82143655
June 7, 2008 89.41502126
December 7, 2008 87.96741495
June 7, 2009 86.47613449
December 7, 2009 84.93623996
June 7, 2010 83.34682968
December 7, 2010 81.70649781
June 7, 2011 80.01446113
December 7, 2011 78.26825444
June 7, 2012 76.46704679
December 7, 2012 74.60821280
June 7, 2013 72.69087160
December 7, 2013 70.71222835
June 7, 2014 68.67135144
December 7, 2014 66.56527055
June 7, 2015 64.39680855
December 7, 2015 62.18141220
June 7, 2016 59.90701788
December 7, 2016 57.57921332
June 7, 2017 55.19116542
December 7, 2017 52.74922503
June 7, 2018 50.24607276
December 7, 2018 47.68891618
June 7, 2019 45.06991829
December 7, 2019 42.39724789
June 7, 2020 39.66246591
December 7, 2020 36.87468604
June 7, 2021 34.02486926
December 7, 2021 31.12326980
June 7, 2022 28.12677629
December 7, 2022 25.00000000
Schedule 3
[PMCC]
TERMINATION VALUE PERCENTAGES
Termination
Basic Rent Payment Date Value Percentage
December 7, 1990 103.62303237%
June 7, 1991 104.28046135
December 7, 1991 104.86919671
June 7, 1992 105.39602711
December 7, 1992 105.85958009
June 7, 1993 106.26632062
December 7, 1993 106.61609179
June 7, 1994 106.91239198
December 7, 1994 107.14769501
June 7, 1995 107.31510447
December 7, 1995 107.43229145
June 7, 1996 107.49707746
December 7, 1996 107.50311530
June 7, 1997 107.45284386
December 7, 1997 107.33991809
June 7, 1998 107.16652111
December 7, 1998 106.92631574
June 7, 1999 106.62120990
December 7, 1999 106.24488095
June 7, 2000 105.79894081
December 7, 2000 105.27708927
June 7, 2001 104.68061986
December 7, 2001 104.00326400
June 7, 2002 103.24597383
December 7, 2002 102.40268839
June 7, 2003 101.47393430
December 7, 2003 100.45355335
June 7, 2004 99.38050261
December 7, 2004 98.25629838
June 7, 2005 97.09847520
December 7, 2005 95.91240511
June 7, 2006 94.69469428
December 7, 2006 93.44828628
June 7, 2007 92.16934563
December 7, 2007 90.82143655
June 7, 2008 89.41502126
December 7, 2008 87.96741495
June 7, 2009 86.47613449
December 7, 2009 84.93623996
June 7, 2010 83.34682968
December 7, 2010 81.70649781
June 7, 2011 80.01446113
December 7, 2011 78.26825444
June 7, 2012 76.46704679
December 7, 2012 74.60821280
June 7, 2013 72.69087160
December 7, 2013 70.71222835
June 7, 2014 68.67135144
December 7, 2014 66.56527055
June 7, 2015 64.39680855
December 7, 2015 62.18141220
June 7, 2016 59.90701788
December 7, 2016 57.57921332
June 7, 2017 55.19116542
December 7, 2017 52.74922503
June 7, 2018 50.24607276
December 7, 2018 47.68891618
June 7, 2019 45.06991829
December 7, 2019 42.39724789
June 7, 2020 39.66246591
December 7, 2020 36.87468604
June 7, 2021 34.02486926
December 7, 2021 31.12326980
June 7, 2022 28.12677629
December 7, 2022 25.00000000
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1 (I&M Trust 2) dated as of
October 15, 1990, to Lease Agreement (I&M Trust 2) dated as of
December 1, 1989 (the "Original Lease"), between WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Owner Trustee under the Amended and
Restated Trust Agreement (I&M Trust 2) dated as of December 1,
1989 with Nynex Credit Company, a Delaware corporation, as
Lessor, and INDIANA MICHIGAN POWER COMPANY, an Indiana
corporation, as Lessee.
WHEREAS, the Original Lease was recorded in the Office
of the Recorder of Spencer County, Indiana, on the 7th day of
December, 1989, as Instrument No. 89-4190 in Book No. 57, Page
No. 182;
WHEREAS, the Original Lease provides that in the event
any of the Pricing Assumptions proves to have been incorrect or
any Refunding Notes are issued, then in such cases (a) the
percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth, respectively, in Schedules 1, 2 and 3 to the
Original Lease shall be adjusted so as to preserve the Owner
Participant's Initial Theoretical Return, and (b) the Lessor and
the Lessee shall execute a supplement to the Original Lease
amending Schedules 1, 2 and 3 thereof to set forth such
recalculated percentages for Basic Rent, Stipulated Loss Value
and Termination Value, respectively; and
WHEREAS, Transaction Expenses paid by the Owner Trustee
with funds provided by the Owner Participant are other than as
set forth in the original Pricing Assumptions, and Refunding
Notes were issued on February 8, 1990, and on June 20, 1990, to
refund the Initial Series A Notes;
NOW, THEREFORE, in consideration of the premises and
other good and sufficient consideration, the Lessor and the
Lessee hereby agree as follows:
1. Capitalized terms used in this Lease Supplement and
not defined herein shall have the respective meanings assigned to
them in the Original Lease.
2. The percentages for Basic Rent set forth in
Schedule 1 hereto, the Stipulated Loss Value percentages set
forth in Schedule 2 hereto and the Termination Value percentages
set forth in Schedule 3 hereto shall replace any prior Schedules
1, 2 and 3 of the Original Lease, respectively, for all purposes.
3. This Lease Supplement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same
instrument.
4. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
EXCEPT AS TO MATTERS RELATING TO THE CREATION OF LEASEHOLD AND
SUBLEASEHOLD ESTATES HEREUNDER AND THE EXERCISE OF RIGHTS AND
REMEDIES WITH RESPECT TO SUCH LEASEHOLD AND SUBLEASEHOLD ESTATES,
WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF INDIANA.
5. The Owner Participant hereby authorizes and directs
the Owner Trustee, pursuant to Section 5.02 of the Trust
Agreement, to execute and deliver this Lease Supplement, perform
the terms of the Original Lease, as amended by this Lease
Supplement, and to execute and deliver Amendment No. 1 to Form U-
7D which is in a form approved by the Owner Participant.
6. This Lease Supplement may be executed in any number
of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one
and the same instrument.
IN WITNESS WHEREOF, the Lessor and Lessee have caused
this Lease Supplement to be duly executed as of the date and year
set forth in the opening paragraph hereof.
Lessor
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Owner Trustee
[CORPORATE SEAL]
Attest: /s/ Emmett R. Harmon By: /s/ James P. Lawler
Name: Emmett R. Harmon Name: James P. Lawler
Title: Vice President Title: Financial Services Officer
Lessee
INDIANA MICHIGAN POWER COMPANY
[CORPORATE SEAL]
Attest: /s/ Jeffrey D. Cross By: /s/ G. P. Maloney
Name: Jeffrey D. Cross Name: G.P. Maloney
Title: Asst. Secretary Title: Vice President
Consented and agreed to
NYNEX CREDIT COMPANY
By: /s/ Paul H. Repp
Name: Paul H. Repp
Title: Vice President
STATE OF DELAWARE )
COUNTY OF NEW CASTLE) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared James P. Lawler and Emmett R. Harmon, the Financial
Services Officer and Vice President of WILMINGTON TRUST COMPANY,
who acknowledged themselves to be duly authorized officers of
WILMINGTON TRUST COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of WILMINGTON TRUST COMPANY.
/s/ Patricia A. Wallace
Name: Patricia A. Wallace
Notary Public
My Commission Expires: 4-20-91
Residing in New Castle County
STATE OF OHIO )
COUNTY OF FRANKLIN ) SS.:
On this, the 26th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared G.P. Maloney and Jeffrey D. Cross, the Vice President
and Assistant Secretary of INDIANA MICHIGAN POWER COMPANY, who
acknowledged themselves to be duly authorized officers of INDIANA
MICHIGAN POWER COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of INDIANA MICHIGAN POWER COMPANY.
/s/ Mary M. Soltesz
Name: MARY M. SOLTESZ
Notary Public
My Commission Expires: 7-13-94
Residing in Franklin County
STATE OF NEW YORK )
COUNTY OF NEW YORK ) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared Paul H. Repp, the Vice President of NYNEX CREDIT
COMPANY, who acknowledged himself to be a duly authorized officer
of NYNEX CREDIT COMPANY, and that, as such officer, being
authorized to do so, he executed the foregoing instrument for the
purposes therein contained by signing the name of NYNEX CREDIT
COMPANY.
/s/ Emilia M. Pitrelli
Name: Emilia M. Pitrelli
Notary Public, State of New York
No. 41-4862909
Qualified in Queens County
Commission Expires: 6-23-92
Residing in Queens County
This instrument was prepared by James M. Cotter,
425 Lexington Avenue, New York, New York 10017-3939.
Schedule 1
[NYNEX]
BASIC RENT PERCENTAGES
Basic Rent Payment Date Basic Rent Percentage
December 7, 1990 4.348753725%
June 7, 1991 4.348753725
December 7, 1991 4.348753725
June 7, 1992 4.348753725
December 7, 1992 4.348753725
June 7, 1993 4.348753725
December 7, 1993 4.348753725
June 7, 1994 4.348753725
December 7, 1994 4.348753725
June 7, 1995 4.348753725
December 7, 1995 4.348753725
June 7, 1996 4.348753725
December 7, 1996 4.348753725
June 7, 1997 4.348753725
December 7, 1997 4.348753725
June 7, 1998 4.348753725
December 7, 1998 4.348753725
June 7, 1999 4.348753725
December 7, 1999 4.348753725
June 7, 2000 4.348753725
December 7, 2000 4.348753725
June 7, 2001 4.348753725
December 7, 2001 4.348753725
June 7, 2002 4.348753725
December 7, 2002 4.348753725
June 7, 2003 4.348753725
December 7, 2003 4.348753725
June 7, 2004 4.348753725
December 7, 2004 4.348753725
June 7, 2005 4.348753725
December 7, 2005 4.348753725
June 7, 2006 4.348753725
December 7, 2006 4.348753725
June 7, 2007 4.348753725
December 7, 2007 4.348753725
June 7, 2008 4.348753725
December 7, 2008 4.348753725
June 7, 2009 4.348753725
December 7, 2009 4.348753725
June 7, 2010 4.348753725
December 7, 2010 4.348753725
June 7, 2011 4.348753725
December 7, 2011 4.348753725
June 7, 2012 4.348753725
December 7, 2012 4.348753725
June 7, 2013 4.348753725
December 7, 2013 4.348753725
June 7, 2014 4.348753725
December 7, 2014 4.348753725
June 7, 2015 4.348753725
December 7, 2015 4.348753725
June 7, 2016 4.348753725
December 7, 2016 4.348753725
June 7, 2017 4.348753725
December 7, 2017 4.348753725
June 7, 2018 4.348753725
December 7, 2018 4.348753725
June 7, 2019 4.348753725
December 7, 2019 4.348753725
June 7, 2020 4.348753725
December 7, 2020 4.348753725
June 7, 2021 4.348753725
December 7, 2021 4.348753725
June 7, 2022 4.348753725
December 7, 2022 4.348753725
Schedule 2
[NYNEX]
STIPULATED LOSS VALUE PERCENTAGES
Stipulated Loss
Basic Rent Payment Date Value Percentage
December 7, 1990 103.31588830%
June 7, 1991 103.96668846
December 7, 1991 104.54820977
June 7, 1992 105.06917078
December 7, 1992 105.52645054
June 7, 1993 105.92806630
December 7, 1993 106.27207143
June 7, 1994 106.56282073
December 7, 1994 106.79255481
June 7, 1995 106.96775419
December 7, 1995 107.08760881
June 7, 1996 107.15559627
December 7, 1996 107.16512635
June 7, 1997 107.11879730
December 7, 1997 107.00998582
June 7, 1998 106.84105190
December 7, 1998 106.60534104
June 7, 1999 106.30495695
December 7, 1999 105.93321652
June 7, 2000 105.49194787
December 7, 2000 104.97444254
June 7, 2001 104.38223241
December 7, 2001 103.70858785
June 7, 2002 102.95472228
December 7, 2002 102.11389007
June 7, 2003 101.19208592
December 7, 2003 100.20131268
June 7, 2004 99.15348223
December 7, 2004 98.06292466
June 7, 2005 96.92845186
December 7, 2005 95.75419361
June 7, 2006 94.54310397
December 7, 2006 93.28450363
June 7, 2007 91.98221751
December 7, 2007 90.63947818
June 7, 2008 89.25165419
December 7, 2008 87.82003153
June 7, 2009 86.33959050
December 7, 2009 84.81246968
June 7, 2010 83.23330031
December 7, 2010 81.60522982
June 7, 2011 79.92267915
December 7, 2011 78.18805392
June 7, 2012 76.39539426
December 7, 2012 74.54727652
June 7, 2013 72.63733464
December 7, 2013 70.66832303
June 7, 2014 68.63344537
December 7, 2014 66.53753182
June 7, 2015 64.38142577
December 7, 2015 62.17090946
June 7, 2016 59.90044887
December 7, 2016 57.57447908
June 7, 2017 55.18714896
December 7, 2017 52.74354095
June 7, 2018 50.23741615
December 7, 2018 47.67458656
June 7, 2019 45.04840444
December 7, 2019 42.36550332
June 7, 2020 39.61880543
December 7, 2020 36.81576851
June 7, 2021 33.94897890
December 7, 2021 31.02955942
June 7, 2022 28.07439269
December 7, 2022 25.00000021
Schedule 3
[NYNEX]
TERMINATION VALUE PERCENTAGES
Termination
Basic Rent Payment Date Value Percentage
December 7, 1990 103.31588830%
June 7, 1991 103.96668846
December 7, 1991 104.54820977
June 7, 1992 105.06917078
December 7, 1992 105.52645054
June 7, 1993 105.92806630
December 7, 1993 106.27207143
June 7, 1994 106.56282073
December 7, 1994 106.79255481
June 7, 1995 106.96775419
December 7, 1995 107.08760881
June 7, 1996 107.15559627
December 7, 1996 107.16512635
June 7, 1997 107.11879730
December 7, 1997 107.00998582
June 7, 1998 106.84105190
December 7, 1998 106.60534104
June 7, 1999 106.30495695
December 7, 1999 105.93321652
June 7, 2000 105.49194787
December 7, 2000 104.97444254
June 7, 2001 104.38223241
December 7, 2001 103.70858785
June 7, 2002 102.95472228
December 7, 2002 102.11389007
June 7, 2003 101.19208592
December 7, 2003 100.20131268
June 7, 2004 99.15348223
December 7, 2004 98.06292466
June 7, 2005 96.92845186
December 7, 2005 95.75419361
June 7, 2006 94.54310397
December 7, 2006 93.28450363
June 7, 2007 91.98221751
December 7, 2007 90.63947818
June 7, 2008 89.25165419
December 7, 2008 87.82003153
June 7, 2009 86.33959050
December 7, 2009 84.81246968
June 7, 2010 83.23330031
December 7, 2010 81.60522982
June 7, 2011 79.92267915
December 7, 2011 78.18805392
June 7, 2012 76.39539426
December 7, 2012 74.54727652
June 7, 2013 72.63733464
December 7, 2013 70.66832303
June 7, 2014 68.63344537
December 7, 2014 66.53753182
June 7, 2015 64.38142577
December 7, 2015 62.17090946
June 7, 2016 59.90044887
December 7, 2016 57.57447908
June 7, 2017 55.18714896
December 7, 2017 52.74354095
June 7, 2018 50.23741615
December 7, 2018 47.67458656
June 7, 2019 45.04840444
December 7, 2019 42.36550332
June 7, 2020 39.61880543
December 7, 2020 36.81576851
June 7, 2021 33.94897890
December 7, 2021 31.02955942
June 7, 2022 28.07439269
December 7, 2022 25.00000021
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1 (I&M Trust 3) dated as of
October 15, 1990, to Lease Agreement (I&M Trust 3) dated as of
December 1, 1989 (the "Original Lease"), between WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Owner Trustee under the Amended and
Restated Trust Agreement (I&M Trust 3) dated as of December 1,
1989 with First Chicago Leasing Corporation, a Delaware
corporation, as Lessor, and INDIANA MICHIGAN POWER COMPANY, an
Indiana corporation, as Lessee.
WHEREAS, the Original Lease was recorded in the Office
of the Recorder of Spencer County, Indiana, on the 7th day of
December, 1989, as Instrument No. 89-4191 in Book No. 57, Page
No. 232;
WHEREAS, the Original Lease provides that in the event
any of the Pricing Assumptions proves to have been incorrect or
any Refunding Notes are issued, then in such cases (a) the
percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth, respectively, in Schedules 1, 2 and 3 to the
Original Lease shall be adjusted so as to preserve the Owner
Participant's Initial Theoretical Return, and (b) the Lessor and
the Lessee shall execute a supplement to the Original Lease
amending Schedules 1, 2 and 3 thereof to set forth such
recalculated percentages for Basic Rent, Stipulated Loss Value
and Termination Value, respectively; and
WHEREAS, Transaction Expenses paid by the Owner Trustee
with funds provided by the Owner Participant are other than as
set forth in the original Pricing Assumptions, and Refunding
Notes were issued on February 8, 1990, and on June 20, 1990, to
refund the Initial Series A Notes;
NOW, THEREFORE, in consideration of the premises and
other good and sufficient consideration, the Lessor and the
Lessee hereby agree as follows:
1. Capitalized terms used in this Lease Supplement and
not defined herein shall have the respective meanings assigned to
them in the Original Lease.
2. The percentages for Basic Rent set forth in
Schedule 1 hereto, the Stipulated Loss Value percentages set
forth in Schedule 2 hereto and the Termination Value percentages
set forth in Schedule 3 hereto shall replace any prior Schedules
1, 2 and 3 of the Original Lease, respectively, for all purposes.
3. This Lease Supplement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same
instrument.
4. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
EXCEPT AS TO MATTERS RELATING TO THE CREATION OF LEASEHOLD AND
SUBLEASEHOLD ESTATES HEREUNDER AND THE EXERCISE OF RIGHTS AND
REMEDIES WITH RESPECT TO SUCH LEASEHOLD AND SUBLEASEHOLD ESTATES,
WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF INDIANA.
5. The Owner Participant hereby authorizes and directs
the Owner Trustee, pursuant to Section 5.02 of the Trust
Agreement, to execute and deliver this Lease Supplement, perform
the terms of the Original Lease, as amended by this Lease
Supplement, and to execute and deliver Amendment No. 1 to Form U-
7D which is in a form approved by the Owner Participant.
6. This Lease Supplement may be executed in any number
of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one
and the same instrument.
IN WITNESS WHEREOF, the Lessor and Lessee have caused
this Lease Supplement to be duly executed as of the date and year
set forth in the opening paragraph hereof.
Lessor
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Owner Trustee
[CORPORATE SEAL]
Attest: /s/ Emmett R. Harmon By: /s/ James P. Lawler
Name: Emmett R. Harmon Name: James P. Lawler
Title: Vice President Title: Financial Services Officer
Lessee
INDIANA MICHIGAN POWER COMPANY
[CORPORATE SEAL]
Attest: /s/ Jeffrey D. Cross By: /s/ G. P. Maloney
Name: Jeffrey D. Cross Name: G.P. Maloney
Title: Asst. Secretary Title: Vice President
Consented and agreed to
FIRST CHICAGO LEASING CORPORATION
By: /s/ Mit C. Buchanan
Name: Mit C. Buchanan
Title: Vice President
STATE OF DELAWARE )
COUNTY OF NEW CASTLE) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared James P. Lawler and Emmett R. Harmon, the Financial
Services Officer and Vice President of WILMINGTON TRUST COMPANY,
who acknowledged themselves to be duly authorized officers of
WILMINGTON TRUST COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of WILMINGTON TRUST COMPANY.
/s/ Sonja F. Allen
Name: Sonja F. Allen
Notary Public
My Commission Expires: 5-30-92
Residing in New Castle County
STATE OF OHIO )
COUNTY OF FRANKLIN ) SS.:
On this, the 26th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared G.P. Maloney and Jeffrey D. Cross, the Vice President
and Assistant Secretary of INDIANA MICHIGAN POWER COMPANY, who
acknowledged themselves to be duly authorized officers of INDIANA
MICHIGAN POWER COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of INDIANA MICHIGAN POWER COMPANY.
/s/ Mary M. Soltesz
Name: MARY M. SOLTESZ
Notary Public
My Commission Expires: 7-13-94
Residing in Franklin County
STATE OF ILLINOIS )
COUNTY OF COOK ) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared Mit C. Buchanan, the Vice President of FIRST CHICAGO
LEASING CORPORATION, who acknowledged himself to be a duly
authorized officer of FIRST CHICAGO LEASING CORPORATION, and
that, as such officer, being authorized to do so, he executed the
foregoing instrument for the purposes therein contained by
signing the name of FIRST CHICAGO LEASING CORPORATION.
/s/ Lisa L. Plum
Name: Lisa L. Plum
Notary Public, State of Illinois
My Commission Expires: 6-4-94
Residing in Cook County
This instrument was prepared by James M. Cotter,
425 Lexington Avenue, New York, New York 10017-3939.
Schedule 1
[FCLC]
BASIC RENT PERCENTAGES
Basic Rent Payment Date Basic Rent Percentage
December 7, 1990 4.339172086%
June 7, 1991 4.339172086
December 7, 1991 4.339172086
June 7, 1992 4.339172086
December 7, 1992 4.339172086
June 7, 1993 4.339172086
December 7, 1993 4.339172086
June 7, 1994 4.339172086
December 7, 1994 4.339172086
June 7, 1995 4.339172086
December 7, 1995 4.339172086
June 7, 1996 4.339172086
December 7, 1996 4.339172086
June 7, 1997 4.339172086
December 7, 1997 4.339172086
June 7, 1998 4.339172086
December 7, 1998 4.339172086
June 7, 1999 4.339172086
December 7, 1999 4.339172086
June 7, 2000 4.339172086
December 7, 2000 4.339172086
June 7, 2001 4.339172086
December 7, 2001 4.339172086
June 7, 2002 4.339172086
December 7, 2002 4.339172086
June 7, 2003 4.339172086
December 7, 2003 4.339172086
June 7, 2004 4.339172086
December 7, 2004 4.339172086
June 7, 2005 4.339172086
December 7, 2005 4.339172086
June 7, 2006 4.339172086
December 7, 2006 4.339172086
June 7, 2007 4.339172086
December 7, 2007 4.339172086
June 7, 2008 4.339172086
December 7, 2008 4.339172086
June 7, 2009 4.339172086
December 7, 2009 4.339172086
June 7, 2010 4.339172086
December 7, 2010 4.339172086
June 7, 2011 4.339172086
December 7, 2011 4.339172086
June 7, 2012 4.339172086
December 7, 2012 4.339172086
June 7, 2013 4.339172086
December 7, 2013 4.339172086
June 7, 2014 4.339172086
December 7, 2014 4.339172086
June 7, 2015 4.339172086
December 7, 2015 4.339172086
June 7, 2016 4.339172086
December 7, 2016 4.339172086
June 7, 2017 4.339172086
December 7, 2017 4.339172086
June 7, 2018 4.339172086
December 7, 2018 4.339172086
June 7, 2019 4.339172086
December 7, 2019 4.339172086
June 7, 2020 4.339172086
December 7, 2020 4.339172086
June 7, 2021 4.339172086
December 7, 2021 4.339172086
June 7, 2022 4.339172086
December 7, 2022 4.339172086
Schedule 2
[FCLC]
STIPULATED LOSS VALUE PERCENTAGES
Stipulated Loss
Basic Rent Payment Date Value Percentage
December 7, 1990 103.812301533%
June 7, 1991 104.717121427
December 7, 1991 105.532995582
June 7, 1992 106.272281831
December 7, 1992 106.930588512
June 7, 1993 107.519336575
December 7, 1993 108.035918374
June 7, 1994 108.486638252
December 7, 1994 108.860667869
June 7, 1995 109.167297479
December 7, 1995 109.405664971
June 7, 1996 109.580856950
December 7, 1996 109.683814688
June 7, 1997 109.718364612
December 7, 1997 109.675424163
June 7, 1998 109.558472975
December 7, 1998 109.358409613
June 7, 1999 109.078340510
December 7, 1999 108.709151578
June 7, 2000 108.253547845
December 7, 2000 107.702410265
June 7, 2001 107.058012404
December 7, 2001 106.311239583
June 7, 2002 105.463901905
December 7, 2002 104.509960649
June 7, 2003 103.490974192
December 7, 2003 102.423119618
June 7, 2004 101.304053329
December 7, 2004 100.131319343
June 7, 2005 98.902343847
December 7, 2005 97.613452952
June 7, 2006 96.266123920
December 7, 2006 94.886130416
June 7, 2007 93.462404646
December 7, 2007 91.983200582
June 7, 2008 90.460468116
December 7, 2008 88.890572565
June 7, 2009 87.271204226
December 7, 2009 85.602470461
June 7, 2010 83.880306374
December 7, 2010 82.107.76754
June 7, 2011 80.278.07462
December 7, 2011 78.395739000
June 7, 2012 76.453584935
December 7, 2012 74.455104131
June 7, 2013 72.394811775
December 7, 2013 70.275972427
June 7, 2014 68.091749755
December 7, 2014 65.845634869
June 7, 2015 63.530438428
December 7, 2015 61.160107017
June 7, 2016 58.746733228
December 7, 2016 56.300231691
June 7, 2017 53.815016668
December 7, 2017 51.302075192
June 7, 2018 48.755747687
December 7, 2018 46.188601888
June 7, 2019 43.594896966
December 7, 2019 40.988989234
June 7, 2020 38.365096617
December 7, 2020 35.739419144
June 7, 2021 33.106074838
December 7, 2021 30.437503900
June 7, 2022 27.756308945
December 7, 2022 25.000000000
Schedule 3
[FCLC]
TERMINATION VALUE PERCENTAGES
Termination
Basic Rent Payment Date Value Percentage
December 7, 1990 103.812301533%
June 7, 1991 104.717121427
December 7, 1991 105.532995582
June 7, 1992 106.272281831
December 7, 1992 106.930588512
June 7, 1993 107.519336575
December 7, 1993 108.035918374
June 7, 1994 108.486638252
December 7, 1994 108.860667869
June 7, 1995 109.167297479
December 7, 1995 109.405664971
June 7, 1996 109.580856950
December 7, 1996 109.683814688
June 7, 1997 109.718364612
December 7, 1997 109.675424163
June 7, 1998 109.558472975
December 7, 1998 109.358409613
June 7, 1999 109.078340510
December 7, 1999 108.709151578
June 7, 2000 108.253547845
December 7, 2000 107.702410265
June 7, 2001 107.058012404
December 7, 2001 106.311239583
June 7, 2002 105.463901905
December 7, 2002 104.509960649
June 7, 2003 103.490974192
December 7, 2003 102.423119618
June 7, 2004 101.304053329
December 7, 2004 100.131319343
June 7, 2005 98.902343847
December 7, 2005 97.613452952
June 7, 2006 96.266123920
December 7, 2006 94.886130416
June 7, 2007 93.462404646
December 7, 2007 91.983200582
June 7, 2008 90.460468116
December 7, 2008 88.890572565
June 7, 2009 87.271204226
December 7, 2009 85.602470461
June 7, 2010 83.880306374
December 7, 2010 82.107376754
June 7, 2011 80.278307462
December 7, 2011 78.395739000
June 7, 2012 76.453584935
December 7, 2012 74.455104131
June 7, 2013 72.394811775
December 7, 2013 70.275972427
June 7, 2014 68.091749755
December 7, 2014 65.845634869
June 7, 2015 63.530438428
December 7, 2015 61.160107017
June 7, 2016 58.746733228
December 7, 2016 56.300231691
June 7, 2017 53.815016668
December 7, 2017 51.302075192
June 7, 2018 48.755747687
December 7, 2018 46.188601888
June 7, 2019 43.594896966
December 7, 2019 40.988989234
June 7, 2020 38.365096617
December 7, 2020 35.739419144
June 7, 2021 33.106074838
December 7, 2021 30.437503900
June 7, 2022 27.756308945
December 7, 2022 25.000000000
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1 (I&M Trust 4) dated as of
October 15, 1990, to Lease Agreement (I&M Trust 4) dated as of
December 1, 1989 (the "Original Lease"), between WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Owner Trustee under the Amended and
Restated Trust Agreement (I&M Trust 4) dated as of December 1,
1989 with Natwest Leasing Corporation, a New York corporation, as
Lessor, and INDIANA MICHIGAN POWER COMPANY, an Indiana
corporation, as Lessee.
WHEREAS, the Original Lease was recorded in the Office
of the Recorder of Spencer County, Indiana, on the 7th day of
December, 1989, as Instrument No. 89-4192 in Book No. 57, Page
No. 283;
WHEREAS, the Original Lease provides that in the event
any of the Pricing Assumptions proves to have been incorrect or
any Refunding Notes are issued, then in such cases (a) the
percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth, respectively, in Schedules 1, 2 and 3 to the
Original Lease shall be adjusted so as to preserve the Owner
Participant's Initial Theoretical Return, and (b) the Lessor and
the Lessee shall execute a supplement to the Original Lease
amending Schedules 1, 2 and 3 thereof to set forth such
recalculated percentages for Basic Rent, Stipulated Loss Value
and Termination Value, respectively; and
WHEREAS, Transaction Expenses paid by the Owner Trustee
with funds provided by the Owner Participant are other than as
set forth in the original Pricing Assumptions, and Refunding
Notes were issued on February 8, 1990, and on June 20, 1990, to
refund the Initial Series A Notes;
NOW, THEREFORE, in consideration of the premises and
other good and sufficient consideration, the Lessor and the
Lessee hereby agree as follows:
1. Capitalized terms used in this Lease Supplement and
not defined herein shall have the respective meanings assigned to
them in the Original Lease.
2. The percentages for Basic Rent set forth in
Schedule 1 hereto, the Stipulated Loss Value percentages set
forth in Schedule 2 hereto and the Termination Value percentages
set forth in Schedule 3 hereto shall replace any prior Schedules
1, 2 and 3 of the Original Lease, respectively, for all purposes.
3. This Lease Supplement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same
instrument.
4. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
EXCEPT AS TO MATTERS RELATING TO THE CREATION OF LEASEHOLD AND
SUBLEASEHOLD ESTATES HEREUNDER AND THE EXERCISE OF RIGHTS AND
REMEDIES WITH RESPECT TO SUCH LEASEHOLD AND SUBLEASEHOLD ESTATES,
WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF INDIANA.
5. The Owner Participant hereby authorizes and directs
the Owner Trustee, pursuant to Section 5.02 of the Trust
Agreement, to execute and deliver this Lease Supplement, perform
the terms of the Original Lease, as amended by this Lease
Supplement, and to execute and deliver Amendment No. 1 to Form U-
7D which is in a form approved by the Owner Participant.
6. This Lease Supplement may be executed in any number
of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one
and the same instrument.
IN WITNESS WHEREOF, the Lessor and Lessee have caused
this Lease Supplement to be duly executed as of the date and year
set forth in the opening paragraph hereof.
Lessor
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Owner Trustee
[CORPORATE SEAL]
Attest: /s/ Emmett R. Harmon By: /s/ James P. Lawler
Name: Emmett R. Harmon Name: James P. Lawler
Title: Vice President Title: Financial Services Officer
Lessee
INDIANA MICHIGAN POWER COMPANY
[CORPORATE SEAL]
Attest: /s/ Jeffrey D. Cross By: /s/ G. P. Maloney
Name: Jeffrey D. Cross Name: G.P. Maloney
Title: Asst. Secretary Title: Vice President
Consented and agreed to
NATWEST LEASING CORPORATION
By: /s/ J. Michael Sutka
Name: J. Michael Sutka
Title: Vice President
STATE OF DELAWARE )
COUNTY OF NEW CASTLE) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared James P. Lawler and Emmett R. Harmon, the Financial
Services Officer and Vice President of WILMINGTON TRUST COMPANY,
who acknowledged themselves to be duly authorized officers of
WILMINGTON TRUST COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of WILMINGTON TRUST COMPANY.
/s/ Sonja F. Allen
Name: Sonja F. Allen
Notary Public
My Commission Expires: 5-30-92
Residing in New Castle County
STATE OF OHIO )
COUNTY OF FRANKLIN ) SS.:
On this, the 26th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared G.P. Maloney and Jeffrey D. Cross, the Vice President
and Assistant Secretary of INDIANA MICHIGAN POWER COMPANY, who
acknowledged themselves to be duly authorized officers of INDIANA
MICHIGAN POWER COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of INDIANA MICHIGAN POWER COMPANY.
/s/ Mary M. Soltesz
Name: MARY M. SOLTESZ
Notary Public
My Commission Expires: 7-13-94
Residing in Franklin County
STATE OF NEW YORK )
COUNTY OF NEW YORK ) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared J. Michael Sutka, the Vice President of NATWEST LEASING
CORPORATION, who acknowledged himself to be a duly authorized
officer of NATWEST LEASING CORPORATION, and that, as such
officer, being authorized to do so, he executed the foregoing
instrument for the purposes therein contained by signing the name
of NATWEST LEASING CORPORATION.
/s/ Barbara N. Herlihy
Name: Barbara N. Herlihy
Notary Public
My Commission Expires: 4-30-91
Residing in Bronx County
This instrument was prepared by James M. Cotter,
425 Lexington Avenue, New York, New York 10017-3939.
Schedule 1
[NATWEST]
BASIC RENT PERCENTAGES
Basic Rent Payment Date Basic Rent Percentage
December 7, 1990 4.341477991%
June 7, 1991 4.341477991
December 7, 1991 4.341477991
June 7, 1992 4.341477991
December 7, 1992 4.341477991
June 7, 1993 4.341477991
December 7, 1993 4.341477991
June 7, 1994 4.341477991
December 7, 1994 4.341477991
June 7, 1995 4.341477991
December 7, 1995 4.341477991
June 7, 1996 4.341477991
December 7, 1996 4.341477991
June 7, 1997 4.341477991
December 7, 1997 4.341477991
June 7, 1998 4.341477991
December 7, 1998 4.341477991
June 7, 1999 4.341477991
December 7, 1999 4.341477991
June 7, 2000 4.341477991
December 7, 2000 4.341477991
June 7, 2001 4.341477991
December 7, 2001 4.341477991
June 7, 2002 4.341477991
December 7, 2002 4.341477991
June 7, 2003 4.341477991
December 7, 2003 4.341477991
June 7, 2004 4.341477991
December 7, 2004 4.341477991
June 7, 2005 4.341477991
December 7, 2005 4.341477991
June 7, 2006 4.341477991
December 7, 2006 4.341477991
June 7, 2007 4.341477991
December 7, 2007 4.341477991
June 7, 2008 4.341477991
December 7, 2008 4.341477991
June 7, 2009 4.341477991
December 7, 2009 4.341477991
June 7, 2010 4.341477991
December 7, 2010 4.341477991
June 7, 2011 4.341477991
December 7, 2011 4.341477991
June 7, 2012 4.341477991
December 7, 2012 4.341477991
June 7, 2013 4.341477991
December 7, 2013 4.341477991
June 7, 2014 4.341477991
December 7, 2014 4.341477991
June 7, 2015 4.341477991
December 7, 2015 4.341477991
June 7, 2016 4.341477991
December 7, 2016 4.341477991
June 7, 2017 4.341477991
December 7, 2017 4.341477991
June 7, 2018 4.341477991
December 7, 2018 4.341477991
June 7, 2019 4.341477991
December 7, 2019 4.341477991
June 7, 2020 4.341477991
December 7, 2020 4.341477991
June 7, 2021 4.341477991
December 7, 2021 4.341477991
June 7, 2022 4.341477991
December 7, 2022 4.341477991
Schedule 2
[NATWEST]
STIPULATED LOSS VALUE PERCENTAGES
Stipulated Loss
Basic Rent Payment Date Value Percentage
December 7, 1990 104.992947787%
June 7, 1991 106.116986364
December 7, 1991 107.138870797
June 7, 1992 108.073138015
December 7, 1992 108.913930222
June 7, 1993 109.674889794
December 7, 1993 110.352338362
June 7, 1994 110.954438525
December 7, 1994 111.469066679
June 7, 1995 111.907311735
December 7, 1995 112.267445691
June 7, 1996 112.556146950
December 7, 1996 112.763475835
June 7, 1997 112.894684307
December 7, 1997 112.939960273
June 7, 1998 112.903721413
December 7, 1998 112.775471905
June 7, 1999 112.559106184
December 7, 1999 112.244164507
June 7, 2000 111.834066695
December 7, 2000 111.318404024
June 7, 2001 110.700087241
December 7, 2001 109.968776014
June 7, 2002 109.126835169
December 7, 2002 108.174655844
June 7, 2003 107.167267008
December 7, 2003 106.111143822
June 7, 2004 105.003936152
December 7, 2004 103.843180934
June 7, 2005 102.626296430
December 7, 2005 101.349597236
June 7, 2006 100.010152440
December 7, 2006 98.604887901
June 7, 2007 97.134569244
December 7, 2007 95.613952030
June 7, 2008 94.040320425
December 7, 2008 92.414834814
June 7, 2009 90.732356311
December 7, 2009 88.994653656
June 7, 2010 87.196662924
December 7, 2010 85.341343879
June 7, 2011 83.423424993
December 7, 2011 81.445030900
June 7, 2012 79.403070102
December 7, 2012 77.306801837
June 7, 2013 75.149585307
December 7, 2013 72.935143910
June 7, 2014 70.656434550
December 7, 2014 68.317328876
June 7, 2015 65.910372028
December 7, 2015 63.439658478
June 7, 2016 60.897310872
December 7, 2016 58.287659041
June 7, 2017 55.602381903
December 7, 2017 52.847865693
June 7, 2018 50.039541848
December 7, 2018 47.220688488
June 7, 2019 44.385032698
December 7, 2019 41.551503300
June 7, 2020 38.714139592
December 7, 2020 35.894501732
June 7, 2021 33.086743220
December 7, 2021 30.315554365
June 7, 2022 27.656260316
December 7, 2022 25.000000000
Schedule 3
[NATWEST]
TERMINATION VALUE PERCENTAGES
Termination
Basic Rent Payment Date Value Percentage
December 7, 1990 104.992947787%
June 7, 1991 106.116986364
December 7, 1991 107.138870797
June 7, 1992 108.073138015
December 7, 1992 108.913930222
June 7, 1993 109.674889794
December 7, 1993 110.352338362
June 7, 1994 110.954438525
December 7, 1994 111.469066679
June 7, 1995 111.907311735
December 7, 1995 112.267445691
June 7, 1996 112.556146950
December 7, 1996 112.763475835
June 7, 1997 112.894684307
December 7, 1997 112.939960273
June 7, 1998 112.903721413
December 7, 1998 112.775471905
June 7, 1999 112.559106184
December 7, 1999 112.244164507
June 7, 2000 111.834066695
December 7, 2000 111.318404024
June 7, 2001 110.700087241
December 7, 2001 109.968776014
June 7, 2002 109.126835169
December 7, 2002 108.174655844
June 7, 2003 107.167267008
December 7, 2003 106.111143822
June 7, 2004 105.003936152
December 7, 2004 103.843180934
June 7, 2005 102.626296430
December 7, 2005 101.349597236
June 7, 2006 100.010152440
December 7, 2006 98.604887901
June 7, 2007 97.134569244
December 7, 2007 95.613952030
June 7, 2008 94.040320425
December 7, 2008 92.414834814
June 7, 2009 90.732356311
December 7, 2009 88.994653656
June 7, 2010 87.196662924
December 7, 2010 85.341343879
June 7, 2011 83.423424993
December 7, 2011 81.445030900
June 7, 2012 79.403070102
December 7, 2012 77.306801837
June 7, 2013 75.149585307
December 7, 2013 72.935143910
June 7, 2014 70.656434550
December 7, 2014 68.317328876
June 7, 2015 65.910372028
December 7, 2015 63.439658478
June 7, 2016 60.897310872
December 7, 2016 58.287659041
June 7, 2017 55.602381903
December 7, 2017 52.847865693
June 7, 2018 50.039541848
December 7, 2018 47.220688488
June 7, 2019 44.385032698
December 7, 2019 41.551503300
June 7, 2020 38.714139592
December 7, 2020 35.894501732
June 7, 2021 33.086743220
December 7, 2021 30.315554365
June 7, 2022 27.656260316
December 7, 2022 25.000000000
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1 (I&M Trust 5) dated as of
October 15, 1990, to Lease Agreement (I&M Trust 5) dated as of
December 1, 1989 (the "Original Lease"), between WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Owner Trustee under the Amended and
Restated Trust Agreement (I&M Trust 5) dated as of December 1,
1989 with SNET Credit, Inc., a Connecticut corporation, as
Lessor, and INDIANA MICHIGAN POWER COMPANY, an Indiana
corporation, as Lessee.
WHEREAS, the Original Lease was recorded in the Office
of the Recorder of Spencer County, Indiana, on the 7th day of
December, 1989, as Instrument No. 89-4193 in Book No. 57, Page
No. 334;
WHEREAS, the Original Lease provides that in the event
any of the Pricing Assumptions proves to have been incorrect or
any Refunding Notes are issued, then in such cases (a) the
percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth, respectively, in Schedules 1, 2 and 3 to the
Original Lease shall be adjusted so as to preserve the Owner
Participant's Initial Theoretical Return, and (b) the Lessor and
the Lessee shall execute a supplement to the Original Lease
amending Schedules 1, 2 and 3 thereof to set forth such
recalculated percentages for Basic Rent, Stipulated Loss Value
and Termination Value, respectively; and
WHEREAS, Transaction Expenses paid by the Owner Trustee
with funds provided by the Owner Participant are other than as
set forth in the original Pricing Assumptions, and Refunding
Notes were issued on February 8, 1990, and on June 20, 1990, to
refund the Initial Series A Notes;
NOW, THEREFORE, in consideration of the premises and
other good and sufficient consideration, the Lessor and the
Lessee hereby agree as follows:
1. Capitalized terms used in this Lease Supplement and
not defined herein shall have the respective meanings assigned to
them in the Original Lease.
2. The percentages for Basic Rent set forth in
Schedule 1 hereto, the Stipulated Loss Value percentages set
forth in Schedule 2 hereto and the Termination Value percentages
set forth in Schedule 3 hereto shall replace any prior Schedules
1, 2 and 3 of the Original Lease, respectively, for all purposes.
3. This Lease Supplement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same
instrument.
4. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
EXCEPT AS TO MATTERS RELATING TO THE CREATION OF LEASEHOLD AND
SUBLEASEHOLD ESTATES HEREUNDER AND THE EXERCISE OF RIGHTS AND
REMEDIES WITH RESPECT TO SUCH LEASEHOLD AND SUBLEASEHOLD ESTATES,
WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF INDIANA.
5. The Owner Participant hereby authorizes and directs
the Owner Trustee, pursuant to Section 5.02 of the Trust
Agreement, to execute and deliver this Lease Supplement, perform
the terms of the Original Lease, as amended by this Lease
Supplement, and to execute and deliver Amendment No. 1 to Form U-
7D which is in a form approved by the Owner Participant.
6. This Lease Supplement may be executed in any number
of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one
and the same instrument.
IN WITNESS WHEREOF, the Lessor and Lessee have caused
this Lease Supplement to be duly executed as of the date and year
set forth in the opening paragraph hereof.
Lessor
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Owner Trustee
[CORPORATE SEAL]
Attest: /s/ Emmett R. Harmon By: /s/ James P. Lawler
Name: Emmett R. Harmon Name: James P. Lawler
Title: Vice President Title: Financial Services Officer
Lessee
INDIANA MICHIGAN POWER COMPANY
[CORPORATE SEAL]
Attest: /s/ Jeffrey D. Cross By: /s/ G. P. Maloney
Name: Jeffrey D. Cross Name: G.P. Maloney
Title: Asst. Secretary Title: Vice President
Consented and agreed to
SNET CREDIT INC.
By: /s/ Michael J. Marchese
Name: Michael J. Marchese
Title: Vice President
STATE OF DELAWARE )
COUNTY OF NEW CASTLE) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared James P. Lawler and Emmett R. Harmon, the Financial
Services Officer and Vice President of WILMINGTON TRUST COMPANY,
who acknowledged themselves to be duly authorized officers of
WILMINGTON TRUST COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of WILMINGTON TRUST COMPANY.
/s/ Sonja F. Allen
Name: Sonja F. Allen
Notary Public
My Commission Expires: 5-30-92
Residing in New Castle County
STATE OF OHIO )
COUNTY OF FRANKLIN ) SS.:
On this, the 26th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared G.P. Maloney and Jeffrey D. Cross, the Vice President
and Assistant Secretary of INDIANA MICHIGAN POWER COMPANY, who
acknowledged themselves to be duly authorized officers of INDIANA
MICHIGAN POWER COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of INDIANA MICHIGAN POWER COMPANY.
/s/ Mary M. Soltesz
Name: MARY M. SOLTESZ
Notary Public
My Commission Expires: 7-13-94
Residing in Franklin County
STATE OF CONNECTICUT)
COUNTY OF NEW HAVEN ) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared Michael J. Marchese, the Vice President of SNET CREDIT
INC., who acknowledged himself to be a duly authorized officer of
SNET CREDIT INC., and that, as such officer, being authorized to
do so, he executed the foregoing instrument for the purposes
therein contained by signing the name of SNET CREDIT INC.
/s/ Joyce E. Basen
Name: Joyce E. Basen
Notary Public
My Commission Expires: 3-31-93
Residing in N.H. County
This instrument was prepared by James M. Cotter,
425 Lexington Avenue, New York, New York 10017-3939.
Schedule 1
[SNET]
BASIC RENT PERCENTAGES
Basic Rent Payment Date Basic Rent Percentage
December 7, 1990 4.341956830%
June 7, 1991 4.341956830
December 7, 1991 4.341956830
June 7, 1992 4.341956830
December 7, 1992 4.341956830
June 7, 1993 4.341956830
December 7, 1993 4.341956830
June 7, 1994 4.341956830
December 7, 1994 4.341956830
June 7, 1995 4.341956830
December 7, 1995 4.341956830
June 7, 1996 4.341956830
December 7, 1996 4.341956830
June 7, 1997 4.341956830
December 7, 1997 4.341956830
June 7, 1998 4.341956830
December 7, 1998 4.341956830
June 7, 1999 4.341956830
December 7, 1999 4.341956830
June 7, 2000 4.341956830
December 7, 2000 4.341956830
June 7, 2001 4.341956830
December 7, 2001 4.341956830
June 7, 2002 4.341956830
December 7, 2002 4.341956830
June 7, 2003 4.341956830
December 7, 2003 4.341956830
June 7, 2004 4.341956830
December 7, 2004 4.341956830
June 7, 2005 4.341956830
December 7, 2005 4.341956830
June 7, 2006 4.341956830
December 7, 2006 4.341956830
June 7, 2007 4.341956830
December 7, 2007 4.341956830
June 7, 2008 4.341956830
December 7, 2008 4.341956830
June 7, 2009 4.341956830
December 7, 2009 4.341956830
June 7, 2010 4.341956830
December 7, 2010 4.341956830
June 7, 2011 4.341956830
December 7, 2011 4.341956830
June 7, 2012 4.341956830
December 7, 2012 4.341956830
June 7, 2013 4.341956830
December 7, 2013 4.341956830
June 7, 2014 4.341956830
December 7, 2014 4.341956830
June 7, 2015 4.341956830
December 7, 2015 4.341956830
June 7, 2016 4.341956830
December 7, 2016 4.341956830
June 7, 2017 4.341956830
December 7, 2017 4.341956830
June 7, 2018 4.341956830
December 7, 2018 4.341956830
June 7, 2019 4.341956830
December 7, 2019 4.341956830
June 7, 2020 4.341956830
December 7, 2020 4.341956830
June 7, 2021 4.341956830
December 7, 2021 4.341956830
June 7, 2022 4.341956830
December 7, 2022 4.341956830
Schedule 2
[SNET]
STIPULATED LOSS VALUE PERCENTAGES
Stipulated Loss
Basic Rent Payment Date Value Percentage
December 7, 1990 104.959733226%
June 7, 1991 106.057565150
December 7, 1991 107.051749347
June 7, 1992 107.957276152
December 7, 1992 108.768680180
June 7, 1993 109.499884855
December 7, 1993 110.147708846
June 7, 1994 110.719806501
December 7, 1994 111.202884163
June 7, 1995 111.608247712
December 7, 1995 111.934782379
June 7, 1996 112.188723501
December 7, 1996 112.359004590
June 7, 1997 112.450314609
December 7, 1997 112.451540496
June 7, 1998 112.366930858
December 7, 1998 112.185329172
June 7, 1999 111.910508367
December 7, 1999 111.531272727
June 7, 2000 111.050881886
December 7, 2000 110.458106411
June 7, 2001 109.755652154
December 7, 2001 108.932263233
June 7, 2002 108.012897533
December 7, 2002 107.042634578
June 7, 2003 106.025839344
December 7, 2003 104.960280151
June 7, 2004 103.843618371
December 7, 2004 102.673403236
June 7, 2005 101.447066328
December 7, 2005 100.160942341
June 7, 2006 98.812116515
December 7, 2006 97.397531905
June 7, 2007 95.914496035
December 7, 2007 94.402196171
June 7, 2008 92.841953389
December 7, 2008 91.238177870
June 7, 2009 89.582764455
December 7, 2009 87.881184356
June 7, 2010 86.124855722
December 7, 2010 84.320411646
June 7, 2011 82.458935344
December 7, 2011 80.546512804
June 7, 2012 78.573682603
December 7, 2012 76.546903474
June 7, 2013 74.456141762
December 7, 2013 72.308251057
June 7, 2014 70.092609348
December 7, 2014 67.816532160
June 7, 2015 65.468752555
December 7, 2015 63.056978160
June 7, 2016 60.570748889
December 7, 2016 58.015270016
June 7, 2017 55.382926834
December 7, 2017 52.679982325
June 7, 2018 49.920371630
December 7, 2018 47.141183833
June 7, 2019 44.336504272
December 7, 2019 41.523062070
June 7, 2020 38.695119295
December 7, 2020 35.871840691
June 7, 2021 33.047525182
December 7, 2021 30.244073388
June 7, 2022 27.588261287
December 7, 2022 25.000000000
Schedule 3
[SNET]
TERMINATION VALUE PERCENTAGES
Termination
Basic Rent Payment Date Value Percentage
December 7, 1990 104.959733226%
June 7, 1991 106.057565150
December 7, 1991 107.051749347
June 7, 1992 107.957276152
December 7, 1992 108.768680180
June 7, 1993 109.499884855
December 7, 1993 110.147708846
June 7, 1994 110.719806501
December 7, 1994 111.202884163
June 7, 1995 111.608247712
December 7, 1995 111.934782379
June 7, 1996 112.188723501
December 7, 1996 112.359004590
June 7, 1997 112.450314609
December 7, 1997 112.451540496
June 7, 1998 112.366930858
December 7, 1998 112.185329172
June 7, 1999 111.910508367
December 7, 1999 111.531272727
June 7, 2000 111.050881886
December 7, 2000 110.458106411
June 7, 2001 109.755652154
December 7, 2001 108.932263233
June 7, 2002 108.012897533
December 7, 2002 107.042634578
June 7, 2003 106.025839344
December 7, 2003 104.960280151
June 7, 2004 103.843618371
December 7, 2004 102.673403236
June 7, 2005 101.447066328
December 7, 2005 100.160942341
June 7, 2006 98.812116515
December 7, 2006 97.397531905
June 7, 2007 95.914496035
December 7, 2007 94.402196171
June 7, 2008 92.841953389
December 7, 2008 91.238177870
June 7, 2009 89.582764455
December 7, 2009 87.881184356
June 7, 2010 86.124855722
December 7, 2010 84.320411646
June 7, 2011 82.458935344
December 7, 2011 80.546512804
June 7, 2012 78.573682603
December 7, 2012 76.546903474
June 7, 2013 74.456141762
December 7, 2013 72.308251057
June 7, 2014 70.092609348
December 7, 2014 67.816532160
June 7, 2015 65.468752555
December 7, 2015 63.056978160
June 7, 2016 60.570748889
December 7, 2016 58.015270016
June 7, 2017 55.382926834
December 7, 2017 52.679982325
June 7, 2018 49.920371630
December 7, 2018 47.141183833
June 7, 2019 44.336504272
December 7, 2019 41.523062070
June 7, 2020 38.695119295
December 7, 2020 35.871840691
June 7, 2021 33.047525182
December 7, 2021 30.244073388
June 7, 2022 27.588261287
December 7, 2022 25.000000000
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1 (I&M Trust 6) dated as of
October 15, 1990, to Lease Agreement (I&M Trust 6) dated as of
December 1, 1989 (the "Original Lease"), between WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity but solely as Owner Trustee under the Amended and
Restated Trust Agreement (I&M Trust 6) dated as of December 1,
1989 with NEMLC Leasing Associates No. 2, a Massachusetts limited
partnership, as Lessor, and INDIANA MICHIGAN POWER COMPANY, an
Indiana corporation, as Lessee.
WHEREAS, the Original Lease was recorded in the Office
of the Recorder of Spencer County, Indiana, on the 7th day of
December, 1989, as Instrument No. 89-4194 in Book No. 57, Page
No. 385;
WHEREAS, the Original Lease provides that in the event
any of the Pricing Assumptions proves to have been incorrect or
any Refunding Notes are issued, then in such cases (a) the
percentages for Basic Rent, Stipulated Loss Value and Termination
Value set forth, respectively, in Schedules 1, 2 and 3 to the
Original Lease shall be adjusted so as to preserve the Owner
Participant's Initial Theoretical Return, and (b) the Lessor and
the Lessee shall execute a supplement to the Original Lease
amending Schedules 1, 2 and 3 thereof to set forth such
recalculated percentages for Basic Rent, Stipulated Loss Value
and Termination Value, respectively; and
WHEREAS, Transaction Expenses paid by the Owner Trustee
with funds provided by the Owner Participant are other than as
set forth in the original Pricing Assumptions, and Refunding
Notes were issued on February 8, 1990, and on June 20, 1990, to
refund the Initial Series A Notes;
NOW, THEREFORE, in consideration of the premises and
other good and sufficient consideration, the Lessor and the
Lessee hereby agree as follows:
1. Capitalized terms used in this Lease Supplement and
not defined herein shall have the respective meanings assigned to
them in the Original Lease.
2. The percentages for Basic Rent set forth in
Schedule 1 hereto, the Stipulated Loss Value percentages set
forth in Schedule 2 hereto and the Termination Value percentages
set forth in Schedule 3 hereto shall replace any prior Schedules
1, 2 and 3 of the Original Lease, respectively, for all purposes.
3. This Lease Supplement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same
instrument.
4. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK
EXCEPT AS TO MATTERS RELATING TO THE CREATION OF LEASEHOLD AND
SUBLEASEHOLD ESTATES HEREUNDER AND THE EXERCISE OF RIGHTS AND
REMEDIES WITH RESPECT TO SUCH LEASEHOLD AND SUBLEASEHOLD ESTATES,
WHICH SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF INDIANA.
5. The Owner Participant hereby authorizes and directs
the Owner Trustee, pursuant to Section 5.02 of the Trust
Agreement, to execute and deliver this Lease Supplement, perform
the terms of the Original Lease, as amended by this Lease
Supplement, and to execute and deliver Amendment No. 1 to Form U-
7D which is in a form approved by the Owner Participant.
6. This Lease Supplement may be executed in any number
of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one
and the same instrument.
IN WITNESS WHEREOF, the Lessor and Lessee have caused
this Lease Supplement to be duly executed as of the date and year
set forth in the opening paragraph hereof.
Lessor
WILMINGTON TRUST COMPANY
not in its individual capacity
but solely as Owner Trustee
[CORPORATE SEAL]
Attest: /s/ Emmett R. Harmon By: /s/ James P. Lawler
Name: Emmett R. Harmon Name: James P. Lawler
Title: Vice President Title: Financial Services Officer
Lessee
INDIANA MICHIGAN POWER COMPANY
[CORPORATE SEAL]
Attest: /s/ Jeffrey D. Cross By: /s/ G. P. Maloney
Name: Jeffrey D. Cross Name: G.P. Maloney
Title: Asst. Secretary Title: Vice President
Consented and agreed to by:
NEMLC LEASING ASSOCIATES NO. 2,
By: NEMLC Leasing Corporation,
General Partner,
By: BOT Financial Corporation,
Attorney-in-fact
By: /s/ Gary L. Christensen
Name: Gary L. Christensen
Title: Senior Vice President
STATE OF DELAWARE )
COUNTY OF NEW CASTLE) SS.:
On this, the 30th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared James P. Lawler and Emmett R. Harmon, the Financial
Services Officer and Vice President of WILMINGTON TRUST COMPANY,
who acknowledged themselves to be duly authorized officers of
WILMINGTON TRUST COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of WILMINGTON TRUST COMPANY.
/s/ Sonja F. Allen
Name: Sonja F. Allen
Notary Public
My Commission Expires: 5-30-92
Residing in New Castle County
STATE OF OHIO )
COUNTY OF FRANKLIN ) SS.:
On this, the 26th day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared G.P. Maloney and Jeffrey D. Cross, the Vice President
and Assistant Secretary of INDIANA MICHIGAN POWER COMPANY, who
acknowledged themselves to be duly authorized officers of INDIANA
MICHIGAN POWER COMPANY, and that, as such officers, being
authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name
of INDIANA MICHIGAN POWER COMPANY.
/s/ Mary M. Soltesz
Name: MARY M. SOLTESZ
Notary Public
My Commission Expires: 7-13-94
Residing in Franklin County
COMMONWEALTH OF MASSACHUSETTS )
COUNTY OF SUFFOLK ) SS.:
On this, the 31st day of October, 1990, before me, a
Notary Public in and for said County and State, personally
appeared Gary L. Christensen, the Senior Vice President of BOT
FINANCIAL CORPORATION, the Attorney-in-Fact of NEMLC LEASING
CORPORATION, the general partner in NEMLC LEASING ASSOCIATES NO.
2, who acknowledged himself to be a duly authorized officer of
BOT FINANCIAL CORPORATION, the Attorney-in-Fact of NEMLC LEASING
CORPORATION, the general partner in NEMLC LEASING ASSOCIATES NO.
2, and that, as such officer, being authorized to do so, he
executed the foregoing instrument for the purposes therein
contained by signing the name of BOT FINANCIAL CORPORATION, the
Attorney-in-Fact of BOT FINANCIAL CORPORATION, as the general
partner in NEMLC LEASING ASSOCIATES NO. 2.
/s/ Mark A. Helman
Name: Mark A. Helman
Notary Public
My Commission Expires: 7-24-92
Residing in Norfolk County
This instrument was prepared by James M. Cotter,
425 Lexington Avenue, New York, New York 10017-3939.
Schedule 1
[NEMLC]
BASIC RENT PERCENTAGES
Basic Rent Payment Date Basic Rent Percentage
December 7, 1990 4.311192660%
June 7, 1991 4.311192660
December 7, 1991 4.311192660
June 7, 1992 4.311192660
December 7, 1992 4.311192660
June 7, 1993 4.311192660
December 7, 1993 4.311192660
June 7, 1994 4.311192660
December 7, 1994 4.311192660
June 7, 1995 4.311192660
December 7, 1995 4.311192660
June 7, 1996 4.311192660
December 7, 1996 4.311192660
June 7, 1997 4.311192660
December 7, 1997 4.311192660
June 7, 1998 4.311192660
December 7, 1998 4.311192660
June 7, 1999 4.311192660
December 7, 1999 4.311192660
June 7, 2000 4.311192660
December 7, 2000 4.311192660
June 7, 2001 4.311192660
December 7, 2001 4.311192660
June 7, 2002 4.311192660
December 7, 2002 4.311192660
June 7, 2003 4.311192660
December 7, 2003 4.311192660
June 7, 2004 4.311192660
December 7, 2004 4.311192660
June 7, 2005 4.311192660
December 7, 2005 4.311192660
June 7, 2006 4.311192660
December 7, 2006 4.311192660
June 7, 2007 4.311192660
December 7, 2007 4.311192660
June 7, 2008 4.311192660
December 7, 2008 4.311192660
June 7, 2009 4.311192660
December 7, 2009 4.311192660
June 7, 2010 4.311192660
December 7, 2010 4.311192660
June 7, 2011 4.311192660
December 7, 2011 4.311192660
June 7, 2012 4.311192660
December 7, 2012 4.311192660
June 7, 2013 4.311192660
December 7, 2013 4.311192660
June 7, 2014 4.311192660
December 7, 2014 4.311192660
June 7, 2015 4.311192660
December 7, 2015 4.311192660
June 7, 2016 4.311192660
December 7, 2016 4.311192660
June 7, 2017 4.311192660
December 7, 2017 4.311192660
June 7, 2018 4.311192660
December 7, 2018 4.311192660
June 7, 2019 4.311192660
December 7, 2019 4.311192660
June 7, 2020 4.311192660
December 7, 2020 4.311192660
June 7, 2021 4.311192660
December 7, 2021 4.311192660
June 7, 2022 4.311192660
December 7, 2022 4.311192660
Schedule 2
[NEMLC]
STIPULATED LOSS VALUE PERCENTAGES
Stipulated Loss
Basic Rent Payment Date Value Percentage
December 7, 1990 104.67426562%
June 7, 1991 105.55978999
December 7, 1991 106.33849364
June 7, 1992 107.02780944
December 7, 1992 107.62645760
June 7, 1993 108.14588517
December 7, 1993 108.58372784
June 7, 1994 108.94625799
December 7, 1994 109.22319872
June 7, 1995 109.42384518
December 7, 1995 109.54766977
June 7, 1996 109.59961888
December 7, 1996 109.57084292
June 7, 1997 109.46501338
December 7, 1997 109.27332050
June 7, 1998 108.99909498
December 7, 1998 108.63358001
June 7, 1999 108.17974181
December 7, 1999 107.62889179
June 7, 2000 106.98360628
December 7, 2000 106.23528257
June 7, 2001 105.38608042
December 7, 2001 104.42750344
June 7, 2002 103.36446042
December 7, 2002 102.22486804
June 7, 2003 101.03063187
December 7, 2003 99.77913178
June 7, 2004 98.46762191
December 7, 2004 97.09322479
June 7, 2005 95.65292496
December 7, 2005 94.14227296
June 7, 2006 92.56006032
December 7, 2006 90.93056608
June 7, 2007 89.26378007
December 7, 2007 87.55683962
June 7, 2008 85.81342175
December 7, 2008 84.04698655
June 7, 2009 82.25308585
December 7, 2009 80.43777121
June 7, 2010 78.59620364
December 7, 2010 76.73905053
June 7, 2011 74.86145666
December 7, 2011 72.97342102
June 7, 2012 71.06988672
December 7, 2012 69.16217511
June 7, 2013 67.24503990
December 7, 2013 65.33128597
June 7, 2014 63.41548814
December 7, 2014 61.51211513
June 7, 2015 59.61544459
December 7, 2015 57.74176097
June 7, 2016 55.88525217
December 7, 2016 54.03920376
June 7, 2017 52.13561298
December 7, 2017 50.15215540
June 7, 2018 48.07386865
December 7, 2018 45.90835338
June 7, 2019 43.63991485
December 7, 2019 41.27579385
June 7, 2020 38.79991980
December 7, 2020 36.21914091
June 7, 2021 33.51697658
December 7, 2021 30.69984684
June 7, 2022 27.86701094
December 7, 2022 25.00000000
Schedule 3
[NEMLC]
TERMINATION VALUE PERCENTAGES
Termination
Basic Rent Payment Date Value Percentage
December 7, 1990 104.67426562%
June 7, 1991 105.55978999
December 7, 1991 106.33849364
June 7, 1992 107.02780944
December 7, 1992 107.62645760
June 7, 1993 108.14588517
December 7, 1993 108.58372784
June 7, 1994 108.94625799
December 7, 1994 109.22319872
June 7, 1995 109.42384518
December 7, 1995 109.54766977
June 7, 1996 109.59961888
December 7, 1996 109.57084292
June 7, 1997 109.46501338
December 7, 1997 109.27332050
June 7, 1998 108.99909498
December 7, 1998 108.63358001
June 7, 1999 108.17974181
December 7, 1999 107.62889179
June 7, 2000 106.98360628
December 7, 2000 106.23528257
June 7, 2001 105.38608042
December 7, 2001 104.42750344
June 7, 2002 103.36446042
December 7, 2002 102.22486804
June 7, 2003 101.03063187
December 7, 2003 99.77913178
June 7, 2004 98.46762191
December 7, 2004 97.09322479
June 7, 2005 95.65292496
December 7, 2005 94.14227296
June 7, 2006 92.56006032
December 7, 2006 90.93056608
June 7, 2007 89.26378007
December 7, 2007 87.55683962
June 7, 2008 85.81342175
December 7, 2008 84.04698655
June 7, 2009 82.25308585
December 7, 2009 80.43777121
June 7, 2010 78.59620364
December 7, 2010 76.73905053
June 7, 2011 74.86145666
December 7, 2011 72.97342102
June 7, 2012 71.06988672
December 7, 2012 69.16217511
June 7, 2013 67.24503990
December 7, 2013 65.33128597
June 7, 2014 63.41548814
December 7, 2014 61.51211513
June 7, 2015 59.61544459
December 7, 2015 57.74176097
June 7, 2016 55.88525217
December 7, 2016 54.03920376
June 7, 2017 52.13561298
December 7, 2017 50.15215540
June 7, 2018 48.07386865
December 7, 2018 45.90835338
June 7, 2019 43.63991485
December 7, 2019 41.27579385
June 7, 2020 38.79991980
December 7, 2020 36.21914091
June 7, 2021 33.51697658
December 7, 2021 30.69984684
June 7, 2022 27.86701094
December 7, 2022 25.00000000
<PAGE>
<TABLE>
EXHIBIT 12
INDIANA MICHIGAN POWER COMPANY
Computation of Consolidated Ratio of Earnings to Fixed Charges
(in thousands except ratio data)
<CAPTION>
Year Ended December 31,
1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C>
Fixed Charges:
Interest on First Mortgage Bonds. . . . . . . . $ 94,216 $ 55,259 $ 52,933 $ 56,965 $ 53,771
Interest on Other Long-term Debt. . . . . . . . 37,900 33,170 30,202 26,330 23,504
Interest on Short-term Debt . . . . . . . . . . 6,387 1,282 2,564 1,614 1,085
Miscellaneous Interest Charges. . . . . . . . . 1,114 2,458 2,118 2,633 2,832
Estimated Interest Element in Lease Rentals . . 22,000 81,000 84,400 84,800 84,300
Total Fixed Charges. . . . . . . . . . . . $161,617 $173,169 $172,217 $172,342 $165,492
Earnings:
Net Income. . . . . . . . . . . . . . . . . . . $139,237 $118,391 $136,932 $123,948 $129,313
Plus Federal Income Taxes . . . . . . . . . . . 48,259 43,855 45,985 30,915 41,552
Plus State Income Taxes . . . . . . . . . . . . 5,727 6,607 5,541 2,281 8,226
Plus Fixed Charges (as above) . . . . . . . . . 161,617 173,169 172,217 172,342 165,492
Total Earnings . . . . . . . . . . . . . . $354,840 $342,022 $360,675 $329,486 $344,583
Ratio of Earnings to Fixed Charges. . . . . . . . 2.19 1.97 2.09 1.91 2.08
</TABLE>
<PAGE>
<TABLE>
Selected Consolidated Financial Data
<CAPTION>
Year Ended December 31,
1993 1992 1991 1990 1989
(in thousands)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENTS DATA:
Operating Revenues $1,202,643 $1,196,755 $1,225,867 $1,271,514 $1,135,587
Operating Expenses 992,723 1,001,235 998,578 1,070,023 921,604
Operating Income 209,920 195,520 227,289 201,491 213,983
Nonoperating Income (Loss) (234) 14,115 (3,721) 7,557 32,737
Income Before Interest Charges 209,686 209,635 223,568 209,048 246,720
Interest Charges 80,373 85,687 86,636 90,657 107,483
Net Income 129,313 123,948 136,932 118,391 139,237
Preferred Stock Dividend
Requirements 14,225 15,417 15,417 15,587 18,048
Earnings Applicable to
Common Stock $ 115,088 $ 108,531 $ 121,515 $ 102,804 $ 121,189
<CAPTION>
December 31,
1993 1992 1991 1990 1989
(in thousands)
<S> <C> <C> <C> <C> <C>
BALANCE SHEETS DATA:
Electric Utility Plant $4,290,957 $4,266,480 $4,135,820 $4,066,227 $3,969,602
Accumulated Depreciation and
Amortization 1,714,829 1,631,438 1,521,349 1,421,285 1,309,072
Net Electric Utility Plant $2,576,128 $2,635,042 $2,614,471 $2,644,942 $2,660,530
Regulatory Assets (a) $ 492,822 $ 268,816 $ 204,060 $ 240,754 $ 280,768
Total Assets $3,765,458 $3,645,798 $3,481,878 $3,501,925 $4,125,534
Common Stock and Paid-in
Capital $ 791,517 $ 782,741 $ 782,741 $ 782,741 $ 782,741
Retained Earnings 177,638 171,309 169,243 150,408 162,213
Total Common Shareowner's
Equity $ 969,155 $ 954,050 $ 951,984 $ 933,149 $ 944,954
Cumulative Preferred Stock:
Not Subject to Mandatory
Redemption $ 87,000 $ 197,000 $ 197,000 $ 197,000 $ 197,000
Subject to Mandatory
Redemption (b) 100,000 - - - 18,030
Total Cumulative Preferred
Stock $ 187,000 $ 197,000 $ 197,000 $ 197,000 $ 215,030
Long-term Debt (b) $1,073,154 $1,211,623 $1,130,709 $1,133,833 $1,532,736
Obligations Under Capital
Leases (b) $ 98,753 $ 126,689 $ 102,985 $ 133,447 $ 123,361
Total Capitalization and
Liabilities $3,765,458 $3,645,798 $3,481,878 $3,501,925 $4,125,534
(a) Effective January 1, 1993 a new accounting standard Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes, was adopted
resulting in an increase in regulatory assets. (See Note 1 of Notes to
Consolidated Financial Statements).
(b) Including portion due within one year.
</TABLE>
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Net Income Increases
Net income increased 4.3% in 1993 and decreased 9.5% in 1992. The
scheduled refueling of the two nuclear generating units and an unscheduled
outage at one of the units in 1992 required the purchase of more expensive
replacement power from the AEP System Power Pool (Power Pool) and reduced
wholesale sales to the Power Pool reducing net income in 1992. The return to
service of the nuclear units along with the retirement and the refinancing of
debt at lower interest rates was responsible for the increase in net income
in 1993.
Outlook
The electric utility industry is expected to undergo significant changes
for the remainder of the decade because of increasing competition in the
generation and sale of electricity and increasing energy flows resulting from
open transmission access. Although management believes that the Company is
well positioned, as a low cost producer, to compete, efforts will continue to
further reduce costs and increase effectiveness.
The Company faces additional challenges from compliance with the Clean
Air Act Amendments of 1990, other environmental concerns and costs, the cost
of operating, maintaining and eventually decommissioning the two nuclear
generating units and the disposal of their spent nuclear fuel that could
affect financial performance and possibly the ability to meet financial
obligations and commitments. While management believes the Company is
equipped to meet these challenges, future financial performance is heavily
dependent on the ability to obtain favorable rate-making treatment to recover
costs of service on a timely basis.
Future results of operations will be affected by several factors,
including the continued economic health of our service territory, the
weather, competition for wholesale sales, new environmental laws and
regulations and the rate-making policies of the Company's regulators. Many
of these factors are not generally within management's direct control yet
every effort will be made to work with regulators, government officials, and
current and prospective customers to positively influence these critical
factors and to take advantage of the opportunities increased
competition will bring.
<PAGE>
Operating Revenues and Energy Sales
Operating revenues increased $6 million in 1993 following a decline of $29
million in 1992. The 1993 increase and the 1992 decrease were attributable
to the Donald C. Cook Nuclear Plant (Cook Plant) generating units being out
of service for scheduled refueling and maintenance and an unscheduled outage
in 1992 which reduced the amount of energy the Company had available for sale
to the Power Pool.
The changes in revenues can be analyzed as follows:
Increase (Decrease)
From Previous Year
(dollars in millions) 1993 1992
Amount % Amount %
Retail:
Price variance $ (75.1) $ 42.3
Volume variance 40.3 3.0
(34.8) (4.3) 45.3 5.9
Wholesale:
Price variance (137.2) 75.2
Volume variance 172.7 (141.9)
35.5 9.6 (66.7) (15.3)
Other Operating Revenues 5.2 (7.7)
Total $ 5.9 0.5 $ (29.1) (2.4)
The unfavorable retail and wholesale price variances in 1993 reflect the
operation of fuel and power supply cost recovery mechanisms due to the
availability of the Cook Plant and lower average cost generation. Under the
retail jurisdictional fuel clauses, revenues were accrued in 1992 for future
recovery of higher cost replacement power during the nuclear outages.
The increase in 1993 retail sales volume reflects continuing improvement
in industrial sales, a return to normal weather and moderate growth in
residential and commercial customer classes. The increase in wholesale sales
volume in 1993 resulted from the increased availability of energy for
delivery to the Power Pool due to availability of the Cook Plant as well as
increased sales by the Power Pool to unaffiliated utilities which the Company
shares as a member of the Pool.
The substantial retail and wholesale price variance in 1992 resulted from
recovery of higher fossil fuel generation costs and power pool purchases
which were incurred during the Cook Plant outages. The reduction in 1992
wholesale sales volume reflects a decrease in sales to the Power Pool because
of the Cook Plant outages and reduced wholesale sales by the Power Pool.
Efforts to improve short-term wholesale sales are affected by the highly
competitive nature of the short-term energy market and other factors such as
unaffiliated generating plant availability, the weather and the economy, that
are not generally within management's control. Future results of operations
will be affected by the ability to make cost-effective wholesale sales or, if
such sales are reduced, the ability to timely raise retail rates.
<PAGE>
Operating Expenses Decline
Changes in the components of operating expenses were as follows:
Increase (Decrease)
From Previous Year
(dollars in millions) 1993 1992
Amount % Amount %
Fuel $ 26.4 13.6 $(57.5) (22.9)
Purchased Power (72.0) (40.0) 57.8 47.1
Other Operation 12.6 5.0 5.0 2.0
Maintenance 4.9 3.5 18.5 15.6
Depreciation and
Amortization 5.4 4.1 1.1 0.8
Amortization of Rockport
Plant Unit 1 Phase-in
Plan Deferrals (0.7) (4.0) (0.7) (3.9)
Taxes Other Than
Federal Income Taxes 5.7 9.2 (0.6) (0.9)
Federal Income Taxes 9.2 36.1 (20.9) (45.1)
Total $ (8.5) (0.9) $ 2.7 0.3
Fuel expense increased in 1993 due to the significant increase in nuclear
generation and a 6% increase in fossil generation, partially offset by a de-
crease in the average cost of fuel. The reduction in fuel expense in 1992
resulted largely from reduced generation due to outages at the two nuclear
units as well as lower average fossil fuel costs.
The decline in purchased power expense in 1993 reflects a reduced level of
energy receipts from the Power Pool because of the increased availability of
the nuclear units and reduced power purchases from AEP Generating Company as
a result of Rockport Plant maintenance outages. The increase in purchased
power expense in 1992 was the result of an increased level of energy receipts
from the Power Pool during the nuclear outages.
Certain other operation and maintenance procedures can be performed only
when a nuclear unit is out of service. Therefore, during the 1992 nuclear
refueling outages, significant other operation and maintenance expenses were
incurred. However, the impact on 1992 earnings from refueling outages was
mitigated through the implementation of levelized accounting in 1992.
Levelized accounting spreads the incremental cost of refueling outages so
that the cost of an average number of refuelings are reflected in each year's
expenses. The Company received regulatory approval to defer incremental
nuclear refueling outage costs and to amortize them from the start of an
outage until the beginning of the next outage. As a result, 1993 operating
expenses include the amortization of $35.2 million of incremental nuclear
refueling outage expenses that were deferred in 1992.
Taxes other than federal income taxes increased in 1993 primarily due to
a substantial increase in Indiana supplemental net income tax because the
nuclear refueling outage costs incurred in 1992 were tax deductible in that
year. There were no refueling outages in 1993. Federal income taxes
attributable to operations increased in 1993 due to an increase in pre-tax
operating income and a reduction in interest charges. The decline in federal
income taxes attributable to operations in 1992 reflects a decrease in pre-
tax operating income.
<PAGE>
Nonoperating Income and Financing Costs Decline
Nonoperating income declined in 1993 due to the implementation of
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes, the recordation in 1992 of interest income on federal income tax re-
funds in connection with the settlement of audits of prior years' tax returns
and the reversal of a provision in 1992 as a result of the successful
settlement of a coal royalty dispute with the state of Utah.
Interest expense declined in 1993 due to the retirement of $142 million
of long-term debt and the refinancing of $150 million of long-term debt and
$97 million of installment purchase contracts (IPC) at lower interest rates.
The decline in 1992 was largely attributable to the refinancing of $25
million of IPCs and a lower average interest rate on a variable rate IPC.
Accrued Utility Revenues and Taxes Accrued
At December 31, 1992 under retail fuel and power supply cost recovery
mechanisms, $38 million of fuel revenues were accrued related to fuel and
replacement power costs incurred during the nuclear unit outages. Both re-
tail jurisdictions approved recovery. Recovery was completed in the Indiana
jurisdiction and substantially completed in the Michigan jurisdiction in 1993
reducing the accrued utility revenues balance at December 31, 1993. The
remaining balance in the Michigan jurisdiction will be recovered in 1994.
Taxes accrued increased in 1993 reflecting the effects of federal income
tax return audit settlements recorded in 1992. A significant refund
resulting from the audit caused a reduction in the 1992 balance.
Regulatory Assets and Deferred
Tax Liabilities Increase
The Company prospectively adopted a new accounting standard for income
taxes on January 1, 1993. The new standard required, among other things,
that regulated entities record deferred tax liabilities on temporary differ-
ences previously flowed-through for rate-making and book accounting. Where
rate-making provides for flow-through treatment, corresponding regulatory
assets were recorded resulting in an increase in total assets and
liabilities.
Construction Spending
Gross plant and property additions were $125 million in 1993 and $176
million in 1992. Management estimates construction expenditures for the next
three years to be $410 million. The funds for construction of new facilities
and improvement of existing facilities come from a combination of internally
generated funds, short-term and long-term borrowings and investments in
common equity by the Company's parent, American Electric Power Company, Inc.
(AEP Co., Inc.). Approximately 92% of the construction expenditures for the
next three years will be financed internally with the remainder financed
externally.
Capital Resources
The Company generally issues short-term debt to provide for interim
financing of capital expenditures that exceed internally generated funds. At
December 31, 1993, unused short-term lines of credit of $537 million shared
with other AEP System companies were available. Short-term borrowings
increased by $5.9 million in 1993. A charter provision limits short-term
borrowings to $127 million. Periodic reductions of outstanding short-term
debt are made through issuance of long-term debt and preferred stock and
through equity capital contributions by the parent company.
The Company received or has requested regulatory approval to issue up to
$185 million of long-term debt and preferred stock. Management expects to
use the proceeds to retire short-term debt, refinance higher cost and
maturing long-term debt, refund cumulative preferred stock and fund
construction expenditures.
Unless the Company meets certain earnings or coverage tests, additional
long-term debt or preferred stock cannot be issued. In order to issue long-
term debt without refunding an equal amount of existing debt, pre-tax
earnings must be equal to at least twice annual interest charges on long-term
debt after giving effect to the new debt. To issue additional preferred
stock, after-tax gross income must be at least equal to one and one-half
times annual interest and preferred stock dividend requirements after giving
effect to the new preferred stock. The Company presently exceeds these
minimum coverage requirements. At December 31, 1993, long-term debt and
preferred stock coverage ratios were 4.59 and 2.48, respectively.
Recently a major credit rating agency reevaluated the credit worthiness
of companies in the electric utility industry based on perceived risk from
deregulation, increased competition, reduced load growth, escalating nuclear
plant costs and environmental concerns. The agency lowered its ratings
outlook for approximately one-third of the companies but not for Indiana
Michigan Power which was regarded by the agency as being relatively well
positioned to meet future competitive challenges.
Competition
Since 1990, the short-term wholesale energy market has been extremely
competitive. With the passage of the Energy Policy Act of 1992, which
provides for greater ease of transmission access and reduces certain regula-
tory restrictions for independent power producers (IPPs), competition is
expected to increase in the long-term wholesale market and in the
construction of new generating capacity. For example, IPPs are no longer
required to find an industrial host to utilize the steam by-product from the
generation of electricity to build a generating unit and avoid regulation
under the Public Utility Holding Company Act of 1935 (1935 Act). The Energy
Policy Act also exempts IPPs from requirements under the 1935 Act which,
among other things, permit IPPs to use greater amounts of lower cost debt
which may reduce overall cost of capital. Thus IPPs may have a competitive
advantage. Although the Energy Policy Act specifically prohibits the Federal
Energy Regulatory Commission from ordering retail transmission access, the
states can do so and many believe that the next logical step will be the
extension of competition for existing industrial customers which will present
both opportunities and challenges for the Company.
Although management believes that the Company is well positioned to
compete in this evolving competitive market because of its technical skills
and expertise and its position as a low cost producer, we intend to continue
to examine ways to improve the Company's competitive position. Efforts to
improve operations and reduce costs will continue in order to maintain and
enhance our position as a low cost producer.
Although management may have opportunities to improve shareholder value
through increased competition as a result of open transmission access and
other provisions of the Energy Policy Act of 1992, there is risk and
uncertainty, especially for retail ratepayers and shareholders, regarding
reliability of future transmission service and fair compensation for use of
the Company's extensive high voltage transmission facilities. Management's
goal is to ensure that, to the extent the Company's facilities are used by
others, there is fair and appropriate compensation.
Environmental Concerns and Cost Pressures
Clean Air Act
The Clean Air Act Amendments of 1990 (CAAA) require, among other things,
substantial reductions in sulfur dioxide and nitrogen oxides emitted from
electric generating plants.
Two of the Company's generating units, Tanners Creek Unit 4 and the
Breed Plant, are affected by the first phase of the CAAA. Tanners Creek Unit
4 will comply by fuel switching at minimal capital cost. Management decided
early in 1994 to close the 325 megawatt (mw) Breed Plant as of March 31,
1994, due to its design and age (commercial operation began in 1960) as well
as the additional cost of complying with the CAAA.
The closing of the Breed Plant is not expected to adversely affect
results of operations or financial condition except as it impacts ongoing
Power Pool credits and charges.
The ongoing earnings effect of closing the Breed Plant will be that the
Company will receive less capacity credits for being a net supplier to the
Power Pool, partially offset by a reduction in operation, maintenance and
depreciation expenses. As of December 31, 1993 the unfavorable effect on
earnings is expected to be $10 million annually. The Company will seek re-
covery of this additional cost in future rate cases.
Phase II of the CAAA, effective in the year 2000, will require further
actions to comply. Additional costs will be incurred and recovery from
customers will be sought for all CAAA costs.
Global Warming
Concern about global climate change, or "the greenhouse effect" has been
the focus of intensive debate within the United States and around the world.
Much of the uncertainty about what effects greenhouse gas concentrations will
have on the global climate results from a myriad of factors that affect
climate. Based on the terms of a 1992 United Nations treaty that pledged the
United States to reduce greenhouse gas emissions, the Clinton Administration
developed a voluntary plan to reduce by the year 2000 greenhouse gas emis-
sions to 1990 levels. The AEP System supports the plan and will work with
the U.S. Department of Energy (DOE) and other electric utility companies to
formulate a cost effective framework for limiting future greenhouse gas
emissions.
The AEP System strongly supports a policy of proactive environmental
stewardship, whereby actions are taken that make economic and environmental
sense on their own merits, irrespective of the uncertain threat of global
climate change. To reduce emissions, we support energy conservation
programs, development of more efficient generation and end-use technologies,
and forest management activities because they are cost effective and bring
long-term benefits to our service area. Should significant new measures to
control the burning of coal be enacted, they could affect the Company's
competitiveness and, if not recovered from customers, adversely impact
results of operations and financial condition.
<PAGE>
EMF
The potential for electric and magnetic fields (EMF) from transmission
and distribution facilities to adversely affect the public health is being
extensively researched. The AEP System continues to support EMF research to
help determine the extent, if any, to which EMF may adversely impact public
health. Our concern is that new laws imposing EMF limits may be passed or
new regulations promulgated without sufficient scientific study and evidence
to support them. As long as there is uncertainty about EMF, we will have
difficulty finding acceptable sites for our transmission facilities, which
could hamper economic growth within our service area. If the present energy
delivery system must be changed because of EMF concerns, or if the courts
conclude that EMF exposure harms individuals and that utilities are liable
for damages, then results of operations and financial condition could be
adversely affected, unless the costs can be recovered from customers.
Hazardous Material
By-products from the generation of electricity include materials such as
ash, slag, sludge, low level radioactive waste and spent nuclear fuel. In
addition, generating plants and transmission and distribution facilities have
used asbestos, polychlorinated biphenyls (PCBs) and other hazardous and non-
hazardous materials. Substantial costs to store and dispose of hazardous and
non-hazardous materials have been and will continue to be incurred.
Significant additional costs could be incurred to comply with new laws and
regulations if enacted and to clean up disposal sites under existing
legislation.
The Superfund created by the Comprehensive Environmental Response
Compensation and Liability Act addresses cleanup of hazardous substance
disposal sites and authorizes the United States Environmental Protection
Agency (Federal EPA) to administer the cleanup programs. The Company has
been named by the Federal EPA as a "potentially responsible party" (PRP) for
seven sites and has received information requests for three other sites. For
two of the PRP sites, liability has been settled with little impact on
results of operations. I&M also has been named a PRP at one Illinois site
and has received an information request for one Indiana site under analogous
state cleanup laws. Although the potential liability associated with each
site must be evaluated individually, several general statements can be made
regarding such potential liability.
Whether the Company disposed of hazardous substances at a particular
site is often unsubstantiated; the quantity of material disposed of at a site
was generally small; and the nature of the material generally disposed of was
non-hazardous. Typically, the Company is one of many parties named PRPs for
a site and, although liability is joint and several, at least some of the
other parties are financially sound enterprises. Therefore, present
estimates do not anticipate material cleanup costs for identified disposal
sites. However, if for unknown reasons, significant costs are incurred for
cleanup, results of operations and possibly financial condition would be
adversely affected unless the costs can by recovered from insurance proceeds
and/or customers.
Nuclear Operating Cost
Operation and maintenance costs of the Company's two-unit 2,110 mw
Donald C. Cook Nuclear Plant are directly impacted by increasing Nuclear
Regulatory Commission requirements and increasing maintenance requirements
related to the aging of the units (Unit 1 began commercial operation in 1975
and Unit 2 in 1978). While nuclear fuel cost has declined, the estimated
cost to decommission the plant has increased to a range of $588 million to
$1.1 billion. The increase in the range from previous estimates is
attributable to uncertainty regarding future delays in the DOE's mandatory
Spent Nuclear Fuel (SNF) disposal program. Delays in finding a permanent
repository for SNF have increased costs reflecting a need to store SNF at the
plant site for an extended time after the plant ceases operations. Manage-
ment intends to continue to seek recovery of increasing decommissioning costs
over the remaining plant life. We continue to examine our operations for
better ways to operate and maintain our two nuclear units to control the
growth in operation, maintenance and decommissioning costs. Management
recently restructured its nuclear operations and staff to address these
concerns. Efforts are continuing to shorten refueling and maintenance
outages, to reduce their cost and to minimize the cost of replacement energy
during the outage periods. Should the nuclear units be retired early for
any reason or costs of maintaining, operating and decommissioning the
plant and disposing of its spent nuclear fuel not be recovered through
rates, results of operations and financial condition would be adversely
affected.
Litigation
The Company is involved in a number of legal proceedings and claims.
While we are unable to predict the outcome of such litigation, it is not
expected that the resolution of these matters will have a material adverse
effect on financial condition.
New Accounting Standards
Two new accounting standards were issued in 1993 that were adopted in
1994. The implementation of these new standards will not have a significant
effect on results of operations or financial condition.
Effects of Inflation
Inflation affects the cost of replacing utility plant and the cost of
operating and maintaining such plant. The rate-making process generally
limits recovery to the historical cost of assets resulting in economic losses
when inflation effects are not recovered from customers on a timely basis.
However, economic gains that result from the repayment of long-term debt with
inflated dollars partly offset such losses.
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareowners and Board of
Directors of Indiana Michigan Power Company:
We have audited the accompanying consolidated balance sheets of Indiana
Michigan Power Company and its subsidiaries as of December 31, 1993 and 1992,
and the related consolidated statements of income, retained earnings, and
cash flows for each of the three years in the period ended December 31, 1993.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Indiana Michigan Power Company
and its subsidiaries as of December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1993 in conformity with generally accepted
accounting principles.
As discussed in Notes 1 and 6 in Notes to Consolidated Financial Statements,
effective January 1, 1993, the Company changed its method of accounting for
income taxes to conform with Statement of Financial Accounting Standards No.
109 "Accounting for Income Taxes," and its method of accounting for
postretirement benefits other than pensions to conform with Statement of
Financial Accounting Standards No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions."
DELOITTE & TOUCHE
Columbus, Ohio
February 22, 1994
<PAGE>
<PAGE>
<TABLE>
Consolidated Statements of Income
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES $1,202,643 $1,196,755 $1,225,867
OPERATING EXPENSES:
Fuel 220,206 193,830 251,325
Purchased Power 108,274 180,365 122,573
Other Operation 264,543 251,897 246,935
Maintenance 142,637 137,787 119,242
Depreciation and Amortization 138,794 133,365 132,285
Amortization of Rockport Plant Unit 1
Phase-in Plan Deferrals 15,644 16,303 16,961
Taxes Other Than Federal Income Taxes 67,918 62,189 62,783
Federal Income Taxes 34,707 25,499 46,474
Total Operating Expenses 992,723 1,001,235 998,578
OPERATING INCOME 209,920 195,520 227,289
NONOPERATING INCOME (LOSS) (234) 14,115 (3,721)
INCOME BEFORE INTEREST CHARGES 209,686 209,635 223,568
INTEREST CHARGES 80,373 85,687 86,636
NET INCOME 129,313 123,948 136,932
PREFERRED STOCK DIVIDEND REQUIREMENTS 14,225 15,417 15,417
EARNINGS APPLICABLE TO COMMON STOCK $ 115,088 $ 108,531 $ 121,515
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Consolidated Balance Sheets
<CAPTION>
December 31,
1993 1992
(in thousands)
<S> <C> <C>
ASSETS
ELECTRIC UTILITY PLANT:
Production $2,602,527 $2,559,905
Transmission 839,198 829,507
Distribution 608,752 576,309
General (including nuclear fuel) 152,470 182,414
Construction Work in Progress 88,010 118,345
Total Electric Utility Plant 4,290,957 4,266,480
Accumulated Depreciation and Amortization 1,714,829 1,631,438
NET ELECTRIC UTILITY PLANT 2,576,128 2,635,042
OTHER PROPERTY AND INVESTMENTS 432,459 403,111
CURRENT ASSETS:
Cash and Cash Equivalents 3,752 7,459
Accounts Receivable:
Customers 67,246 62,325
Affiliated Companies 24,507 41,139
Miscellaneous 30,087 31,536
Allowance for Uncollectible Accounts (504) (562)
Fuel - at average cost 34,476 53,210
Materials and Supplies - at average cost 57,800 54,004
Accrued Utility Revenues 34,642 78,555
Prepayments 12,043 11,163
TOTAL CURRENT ASSETS 264,049 338,829
REGULATORY ASSETS:
Amounts Due From Customers For
Future Federal Income Taxes 286,948 -
Other 205,874 268,816
TOTAL REGULATORY ASSETS 492,822 268,816
TOTAL $3,765,458 $3,645,798
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
December 31,
1993 1992
(in thousands)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 2,500,000 Shares
Outstanding - 1,400,000 Shares $ 56,584 $ 56,584
Paid-in Capital 734,933 726,157
Retained Earnings 177,638 171,309
Total Common Shareowner's Equity 969,155 954,050
Cumulative Preferred Stock:
Not Subject to Mandatory Redemption 87,000 197,000
Subject to Mandatory Redemption 100,000 -
Long-term Debt 1,073,154 1,168,721
TOTAL CAPITALIZATION 2,229,309 2,319,771
OTHER NONCURRENT LIABILITIES 288,197 297,475
CURRENT LIABILITIES:
Long-term Debt Due Within One Year - 42,902
Short-term Debt - Commercial Paper 50,075 44,200
Accounts Payable:
General 40,437 37,214
Affiliated Companies 17,481 12,471
Taxes Accrued 54,473 15,829
Interest Accrued 18,894 22,759
Obligations Under Capital Leases 20,585 32,745
Other 79,367 71,891
TOTAL CURRENT LIABILITIES 281,312 280,011
DEFERRED FEDERAL INCOME TAXES 553,920 316,877
DEFERRED INVESTMENT TAX CREDITS 186,032 195,043
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2 211,446 218,754
DEFERRED CREDITS 15,242 17,867
COMMITMENTS AND CONTINGENCIES (Note 3)
TOTAL $3,765,458 $3,645,798
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 129,313 $ 123,948 $ 136,932
Adjustments for Noncash Items:
Depreciation and Amortization 148,270 141,453 141,813
Amortization of Rockport Plant
Unit 1 Phase-in Plan Deferrals 15,644 16,303 16,961
Amortization (Deferral) of Incremental
Nuclear Refueling Outage Expenses (net) 33,827 (47,200) -
Deferred Federal Income Taxes (49,905) 29,897 (21,877)
Deferred Investment Tax Credits (8,543) (9,673) (9,188)
Changes in Certain Current Assets and
Liabilities:
Accounts Receivable (net) 13,102 (7,432) (4,389)
Fuel, Materials and Supplies 14,938 1,018 (14,520)
Accrued Utility Revenues 43,913 (41,068) 3,816
Accounts Payable 8,233 (15,088) (15,222)
Taxes Accrued 38,644 4,514 9,937
Other (net) (17,064) (16,448) 4,446
Net Cash Flows From
Operating Activities 370,372 180,224 248,709
INVESTING ACTIVITIES:
Construction Expenditures (108,867) (125,908) (122,597)
Proceeds from Sales of Property
and Other 5,385 903 3,246
Net Cash Flows Used For
Investing Activities (103,482) (125,005) (119,351)
FINANCING ACTIVITIES:
Capital Contributions
from Parent Company 10,000 - -
Issuance of Cumulative
Preferred Stock 98,776 - -
Issuance of Long-term Debt 243,426 271,722 78,634
Retirement of Cumulative
Preferred Stock (112,300) - -
Retirement of Long-term Debt (392,093) (203,185) (92,623)
Change in Short-term Debt (net) 5,875 (6,750) 12,055
Dividends Paid on Common Stock (108,696) (106,465) (102,680)
Dividends Paid on Cumulative
Preferred Stock (15,585) (15,417) (15,417)
Net Cash Flows Used For
Financing Activities (270,597) (60,095) (120,031)
Net Increase (Decrease) in Cash and
Cash Equivalents (3,707) (4,876) 9,327
Cash and Cash Equivalents January 1 7,459 12,335 3,008
Cash and Cash Equivalents December 31 $ 3,752 $ 7,459 $ 12,335
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Consolidated Statements of Retained Earnings
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Retained Earnings January 1 $171,309 $169,243 $150,408
Net Income 129,313 123,948 136,932
300,622 293,191 287,340
Deductions:
Cash Dividends Declared:
Common Stock 108,696 106,465 102,680
Cumulative Preferred Stock:
4-1/8% Series 495 495 495
4.56% Series 273 273 273
4.12% Series 165 165 165
5.90% Series 374 - -
6-1/4% Series 161 - -
6-7/8% Series 1,799 - -
7.08% Series 2,124 2,124 2,124
7.76% Series 2,716 2,716 2,716
8.68% Series 2,517 2,604 2,604
$2.15 Series 3,001 3,440 3,440
$2.25 Series 600 3,600 3,600
Total Cash Dividends Declared 122,921 121,882 118,097
Other 63 - -
Total Deductions 122,984 121,882 118,097
Retained Earnings December 31 $177,638 $171,309 $169,243
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
Organization
Indiana Michigan Power Company (the Company or I&M) is a wholly-owned
subsidiary of American Electric Power Company, Inc. (AEP Co., Inc.), a public
utility holding company. The Company is engaged in the generation, purchase,
transmission and distribution of electric power in northern and eastern
Indiana and a portion of southwestern Michigan. As a member of the American
Electric Power (AEP) System Power Pool (Power Pool) and a signatory company
to the AEP Transmission Equalization Agreement, its facilities are operated
in conjunction with the facilities of certain other AEP Co., Inc. owned
utilities as an integrated utility system.
The Company has two wholly-owned subsidiaries, Blackhawk Coal Company and
Price River Coal Company, that were formerly engaged in coal-mining
operations. Blackhawk Coal Company currently leases and subleases portions
of its Utah coal rights, land and related mining equipment to unaffiliated
companies. Price River Coal Company, which owns no land or mineral rights,
is inactive.
Regulation
As a member of the AEP System, I&M is subject to regulation by the Securi-
ties and Exchange Commission (SEC) under the Public Utility Holding Company
Act of 1935 (1935 Act). Retail rates are regulated by the Indiana Utility
Regulatory Commission (IURC) and the Michigan Public Service Commission
(MPSC). The Federal Energy Regulatory Commission (FERC) regulates wholesale
rates.
Principles of Consolidation
The consolidated financial statements include I&M and its wholly-owned
subsidiaries. Significant intercompany items were eliminated in consolida-
tion.
Basis of Accounting
As a rate-regulated entity, I&M's financial statements reflect the actions
of regulators that result in the recognition of revenues and expenses in
different time periods than enterprises that are not rate regulated. In
accordance with Statement of Financial Accounting Standards (SFAS) No. 71,
Accounting for the Effects of Certain Types of Regulation (SFAS 71),
regulatory assets and liabilities are recorded to defer expenses or
revenues reflecting such rate-making differences.
Utility Plant
Electric utility plant is stated at original cost and is generally subject
to first mortgage liens. Additions, major replacements and betterments are
added to the plant accounts. Retirements from the plant accounts and
associated removal costs, net of salvage, are deducted from accumulated
depreciation.
The costs of labor, materials and overheads incurred to operate and
maintain utility plant are included in operating expenses.
Allowance for Funds Used During Construction (AFUDC)
AFUDC is a noncash income item that is recovered over the service life of
utility plant through depreciation and represents the estimated cost of bor-
rowed and equity funds used to finance construction projects. The average
rates used to accrue AFUDC were 8.75% in 1993 and 9.25% in 1992 and 1991 and
the amounts of AFUDC accrued were $1.7 million, $3.8 million and $2.1 million
in 1993, 1992 and 1991, respectively.
Depreciation and Amortization
Depreciation is provided on a straight-line basis over the estimated
useful lives of utility plant and is calculated largely through the use of
composite rates by functional class (i.e., production, transmission,
distribution, etc.). Amounts to be used for demolition of non-nuclear plant
are presently recovered through depreciation charges included in rates. The
accounting and rate-making treatment afforded nuclear decommissioning costs
and nuclear fuel disposal costs are discussed in Note 3.
Rockport Plant
Rockport Plant consists of two 1,300 megawatt (mw) coal-fired units. I&M
and AEP Generating Company (AEGCo), an affiliate, each owns 50% of one unit
(Rockport 1) and each leases a 50% interest in the other unit (Rockport 2)
from unaffiliated lessors under an operating lease. The gain on the sale and
leaseback of Rockport 2 was deferred and is being amortized, with related
taxes, over the initial lease term which expires in 2022.
Rate phase-in plans provide for the recovery and straight-line
amortization through 1997 of prior- year deferrals of Rockport 1 costs.
Deferred amounts under the phase-in plans were $59 million and $75 million at
December 31, 1993 and 1992, respectively.
Cash and Cash Equivalents
Cash and cash equivalents include temporary cash investments with original
maturities of three months or less.
Operating Revenues
Revenues include an accrual for electricity consumed but unbilled at
month-end as well as billed revenues.
Fuel Costs
Fuel costs are matched with revenues in accordance with rate commission
orders. Revenues are accrued related to unrecovered fuel in both retail
jurisdictions and for replacement power costs in the Michigan jurisdiction
until approved for billing. Wholesale jurisdictional fuel cost changes are
expensed and billed as incurred.
Levelization of Nuclear Refueling Outage Costs
Incremental operation and maintenance costs associated with refueling
outages at the Donald C. Cook Nuclear Plant (Cook Plant) are deferred with
the approval of regulators for amortization over the period (generally
eighteen months) beginning with the commencement of an outage until the
beginning of the next outage. Deferred amounts were $13.4 million and $47.2
million at December 31, 1993, and 1992, respectively.
Income Taxes
Effective January 1, 1993, the Company adopted the liability method of
accounting for income taxes as prescribed by SFAS 109, Accounting for Income
Taxes. Under this standard deferred federal income taxes are provided for
all temporary differences between the book cost and tax basis of assets and
liabilities which will result in a future tax consequence. In prior years
deferred federal income taxes were provided for timing differences between
book and taxable income except where flow-through accounting for certain
differences was reflected in rates. Flow-through accounting is a method
whereby federal income tax expense for a particular item is the same for
accounting and rate-making as in the federal income tax return. As a result
of the adoption of SFAS 109 significant additional deferred tax liabilities
were recorded for items afforded flow-through treatment in rates. In accor-
dance with SFAS 71 significant corresponding regulatory assets were also
recorded to reflect the future recovery of additional taxes due when the
temporary differences reverse. As a result of this change in accounting
effective January 1, 1993, deferred federal income tax liabilities increased
by $259.6 million and regulatory assets by $254.3 million, and net income was
reduced by $5.3 million.
Investment tax credits utilized in prior years' federal income tax returns
were deferred and are being amortized over the life of the related plant
investment in accordance with rate-making treatment.
Debt and Preferred Stock
Gains and losses on reacquired debt are deferred and amortized over the
term of the reacquired debt. If the debt is refinanced the reacquisition
costs are deferred and amortized over the term of the replacement debt.
Debt discount or premium and debt issuance expenses are amortized over the
term of the related debt, with the amortization included in interest charges.
Redemption premiums paid to reacquire preferred stock are deferred and
amortized in accordance with rate-making treatment. The excess of par value
over costs of preferred stock reacquired to meet sinking fund requirements is
credited to paid-in capital.
Other Property and Investments
Other property and investments are generally stated at cost.
Reclassifications
Certain prior-period amounts were reclassified to conform with current-
period presentation.
<PAGE>
2. RATE MATTERS:
Rate Activity
In November 1993 the IURC granted a $34.7 million annual rate increase in
response to the Company's request for a $44.8 million increase filed in April
1992. The new rates include, among other things, recovery of the ongoing
amounts being accrued for postretirement benefits other than pensions (OPEB),
an increase in the provision for nuclear plant decommissioning costs and the
amortization of deferred incremental nuclear plant refueling outage costs.
In October 1993 the MPSC approved a settlement agreement that provides for
a three-step increase in recovery of nuclear decommissioning costs for the
Cook Plant. The first step increase of $1.2 million annually was effective
in November 1993. The second and third steps provide for recoveries to be
increased by $1 million annually in May 1994 and an additional $1 million
annually in November 1994. The MPSC also ordered that a new decommissioning
study be filed before December 1994.
Unaffiliated Coal and Affiliated Transportation Cost Recovery
In October 1993 the FERC denied a request by a wholesale customer seeking
rehearing of a February 1993 order. The February 1993 order reversed a 1990
administrative law judge's initial decision and dismissed the wholesale
customer's complaint concerning the reasonableness of coal costs from an
unaffiliated supplier who leased a Utah mining operation from the Company in
1986 and affiliated coal transportation charges. In December 1993 the
wholesale customer appealed the FERC order to the U.S. Court of Appeals.
3. COMMITMENTS AND CONTINGENCIES:
Construction and Other Commitments
Substantial construction commitments have been made although no new
generating capacity is expected to be constructed until the next century.
The aggregate construction program expenditures for 1994-1996 are estimated
to be $410 million and include the capital cost of compliance with the Clean
Air Act Amendments of 1990 (CAAA).
Long-term fuel supply contracts contain clauses for periodic adjustments.
The retail jurisdictions have fuel clause mechanisms that provide with the
regulators' review and approval for deferred recovery of changes in the cost
of fuel. The contracts are for various terms, the longest of which extend to
2014, and contain various clauses that would release the Company from its
obligation under certain force majeure conditions.
Unit Power Agreements
The Company is committed under unit power agreements to purchase 70% of
AEGCo's Rockport Plant capacity unless it is sold to unaffiliated utilities.
AEGCo has one long-term contract with an unaffiliated utility that expires in
1999 for 455 mw of Rockport Plant capacity.
The Company sells under contract up to 250 mw of Rockport Plant capacity
to Carolina Power and Light Company, an unaffiliated utility. The contract
expires in 2009.
<PAGE>
Litigation
An appeal to the Indiana Court of Appeals by a local distribution utility
of a 1992 DeKalb County Circuit Court of Indiana decision is pending. The
circuit court dismissed the case filed under a provision of Indiana law that
allows the local distribution utility to seek damages equal to the gross
revenues received by the Company for rendering service in the designated
service territory of the local distribution utility. The Company had re-
ceived approximately $29 million in gross revenues from a major industrial
customer in the local distribution utility's service territory. The case
resulted from a Supreme Court of Indiana decision which overruled an appeals
court and voided an IURC order which assigned the major industrial customer
to the Company.
The Company is involved in other legal proceedings and claims. While
management is unable to predict the outcome of litigation, it is not expected
that the resolution of these other matters will have a material adverse
effect on financial condition.
Clean Air
The CAAA require significant reductions in sulfur dioxide and nitrogen
oxides emitted from various AEP System generating plants. The law estab-
lished a deadline of 1995 for the first phase of reductions in sulfur dioxide
emissions (Phase I) and the year 2000 for the second phase (Phase II) as well
as a permanent nationwide cap on sulfur dioxide emissions after 1999.
The AEP Systemwide compliance plan calls for fuel switching to medium-
sulfur coal at I&M's Tanners Creek Unit 4 with minimal capital cost. The
Breed unit which is a Phase I affected unit is scheduled to close on March
31, 1994. The Company's other generating units are not affected in Phase I.
The Company will incur additional costs to comply with Phase II
requirements at its generating plants. In addition, a portion of the costs
of compliance for the AEP System may be incurred through the Power Pool
(which is described in Note 5). If I&M is unable to recover compliance costs
from its customers, results of operations and financial condition would be
adversely impacted.
Other Environmental Matters
The Company and its subsidiaries are regulated by federal, state and local
authorities with respect to air and water quality and other environmental
matters.
The generation of electricity produces non-hazardous and hazardous by-
products. Asbestos, polychlorinated biphenyls (PCBs) and other hazardous
materials have been used in the generating plants and
transmission/distribution facilities. Substantial costs to store and dispose
of hazardous and non-hazardous materials have been incurred and will be
incurred. Significant additional costs could be incurred in the future to
meet the requirements of new laws and regulations, if enacted, and to clean
up disposal sites under existing legislation.
The Superfund created by the Comprehensive Environmental Response
Compensation and Liability Act addresses cleanup of hazardous substance
disposal sites and authorizes the United States Environmental Protection
Agency (Federal EPA) to administer the cleanup programs. The Company has
been named by the Federal EPA as a "potentially responsible party" (PRP) for
seven sites and has received information requests for three other sites. For
two of the PRP sites, liability has been settled with little impact on
results of operations. I&M also has been named a PRP at one Illinois site
and has received an information request for one Indiana site under analogous
state cleanup laws. Although the potential liability associated with each
site must be evaluated individually, several general statements can be made
regarding such potential liability.
Whether the Company disposed of hazardous substances at a particular site
is often unsubstantiated; the quantity of material disposed of at a site was
generally small; and the nature of the material generally disposed of was
non-hazardous. Typically, the Company is one of many parties named PRPs for
a site and, although liability is joint and several, at least some of the
other parties are generally financially sound enterprises. Therefore,
present estimates do not anticipate material cleanup costs for identified
disposal sites. However, if for unknown reasons, significant costs are
incurred for cleanup, results of operations and possibly financial condition
would be adversely affected unless the costs can by recovered from insurance
proceeds and/or customers.
Nuclear Plant
I&M owns and operates the two-unit 2,110 mw Cook Plant under licenses
granted by regulatory authorities. The operation of a nuclear facility
involves special risks, potential liabilities, and specific regulatory and
safety requirements. Should a nuclear incident occur at any facility in the
United States liability could be substantial. Should nuclear losses or
liabilities be underinsured or exceed accumulated funds, or should rate
recovery be denied, results of operations and financial condition would be
negatively affected. Specific information about risk management and
potential liabilities is discussed below.
Nuclear Insurance
Public liability is limited by law to $9.4 billion should an incident
occur at any licensed reactor in the United States. Commercially available
insurance provides $200 million of this coverage. In the event of a nuclear
incident at any nuclear plant in the United States the remainder of the
liability would be provided by a deferred premium assessment of $79.3 million
on each licensed reactor payable in annual installments of $10 million. As a
result, I&M could be assessed $158.6 million per nuclear incident payable in
annual installments of $20 million. The number of incidents for which
payments could be required is not limited.
Nuclear insurance pools and other insurance policies provide $2.75 billion
of property damage, decommissioning and decontamination coverage for Cook
Plant. Additional insurance provides coverage for extra costs resulting from
a prolonged accidental Cook Plant outage. Some of the policies have deferred
premium provisions which could be triggered by losses in excess of the
insurer's resources. The losses could result from claims at the Cook Plant
or certain other nuclear units. The Company could be assessed up to $24
million under these policies.
Spent Nuclear Fuel Disposal
Federal law provides for government responsibility for permanent spent
nuclear fuel disposal and assesses nuclear plant owners fees for spent fuel
disposal. The fee of one mill per kilowatthour for fuel consumed after April
6, 1983 is being collected from customers and remitted to the U.S. Treasury.
Fees and related interest of $148 million for fuel consumed prior to April 7,
1983 have been recorded as long-term debt and a regulatory asset. The
regulatory asset is being amortized as rate recovery occurs. I&M has not
paid the government the pre-April 1983 fees due to various factors including
continued delays and uncertainties related to the federal disposal program.
At December 31, 1993, funds collected from customers to dispose of nuclear
fuel and related earnings totalling $133 million were held in external funds
included in the financial statements as other property and investments.
Decommissioning
Decommissioning costs are accrued over the service life of the Cook Plant.
The licenses to operate the two nuclear units expire in 2014 and 2017. After
expiration of the licenses the plant is expected to be decommissioned through
dismantling. Estimated decommissioning costs range from $588 million to $1.1
billion in 1991 dollars. The wide range is caused by variables in the
estimated length of time spent nuclear fuel must be stored at the plant
subsequent to ceasing operations which depends on future developments in the
federal government's spent nuclear fuel disposal program. Decommissioning
costs are being recovered based on at least the lower end of the range in the
current and prior studies. I&M records decommissioning costs in other
operation expense and records a noncurrent decommissioning liability equal to
the rate recovery which was $13 million in 1993, $12 million in 1992 and $11
million in 1991. Decommissioning amounts recovered from customers are
deposited in external trusts. Trust fund earnings increase the fund assets
and the recorded liability. Trust fund earnings decrease the amount to be
recovered from ratepayers. At December 31, 1993, the decommissioning trust
fund balance and the accumulated provision for decommissioning were $170
million.
In recent rate increases, which are discussed in Note 2, the Company
received additional annual amounts for the decommissioning of the Cook Plant
of $10 million in its Indiana jurisdiction and $3.2 million phased-in in its
Michigan jurisdiction.
4. COMMON SHAREOWNER'S EQUITY:
Mortgage indentures, debentures, charter provisions and orders of
regulatory authorities place various restrictions on the use of retained
earnings for the payment of cash dividends on common stock. At December 31,
1993, $5.9 million of retained earnings were restricted. Regulatory approval
is required to pay dividends out of paid-in capital.
In 1993, I&M's parent made a cash capital contribution of $10 million.
Also in 1993 $1.2 million, representing the issuance costs for three series
of cumulative preferred stock, was charged to paid-in capital. There were no
other transactions affecting the common stock or paid-in capital accounts in
1993, 1992 or 1991.
5. RELATED PARTY TRANSACTIONS:
Benefits and costs of the System's generating plants are shared by members
of the Power Pool. Under the terms of the System Interconnection Agreement,
capacity charges and credits are designed to allocate the cost of the
System's capacity among the Power Pool members based on their relative peak
demands and generating reserves. Power Pool members are compensated for the
out-of-pocket costs of energy delivered to the Power Pool and charged for
energy received from the Power Pool.
Operating revenues include $204.6 million in 1993, $154.1 million in 1992
and $204.8 million in 1991 for supplying energy and capacity to the Power
Pool. Purchased power expense includes charges of $20.9 million in 1993,
$82.6 million in 1992 and $24.6 million in 1991 for energy received from the
Power Pool.
Power Pool members share in wholesale sales to unaffiliated utilities made
by the Power Pool. The Company's share was included in operating revenues in
the amount of $57 million in 1993, $45.8 million in 1992 and $65.5 million in
1991.
In addition, the Power Pool purchases power from unaffiliated companies
for immediate resale to other unaffiliated utilities. The Company's share of
these purchases was included in purchased power expense and totaled $5.1
million in 1993, $6.5 million in 1992 and $13.7 million in 1991. Revenues
from these transactions are included in the above Power Pool wholesale sales.
The cost of power purchased from AEGCo, an affiliated company that is not
a member of the Power Pool, was included in purchased power expense in the
amounts of $78.9 million, $88 million and $83 million in 1993, 1992 and 1991,
respectively.
The Company operates the Rockport Plant and bills AEGCo for its share of
operating costs.
AEP System companies participate in a transmission equalization agreement.
This agreement combines certain AEP System companies' investments in
transmission facilities and shares the costs of ownership in proportion to
the System companies' respective peak demands. Pursuant to the terms of the
agreement, credits of $47.4 million, $48.2 million and $46.2 million were
recorded in other operation expense for transmission services in 1993, 1992
and 1991, respectively.
Revenues from providing barging services were recorded in nonoperating
income as follows:
Year Ended December 31,
1993 1992 1991
(in thousands)
Affiliated Companies $25,372 $24,753 $23,863
Unaffiliated Companies 1,717 3,964 4,641
Total $27,089 $28,717 $28,504
American Electric Power Service Corporation (AEPSC) provides certain
managerial and professional services to AEP System companies. The costs of
the services are determined by AEPSC on a direct-charge basis to the extent
practicable and on reasonable bases of proration for indirect costs. The
charges for services are made at cost and include no compensation for the use
of equity capital, which is furnished to AEPSC by AEP Co., Inc. Billings
from AEPSC are capitalized or expensed depending on the nature of the
services rendered. AEPSC and its billings are subject to the regulation of
the SEC under the 1935 Act.
6. BENEFIT PLANS:
The Company and its subsidiaries participate in the AEP System pension
plan, a trusteed, noncontributory defined benefit plan covering all employees
meeting eligibility requirements. Benefits are based on service years and
compensation levels. Effective January 1, 1992 employees may retire without
reduction of benefits at age 62 and with reduced benefits as early as age 55.
Pension costs are allocated by first charging each System company with its
service cost and then allocating the remaining pension cost in proportion to
its share of the projected benefit obligation. The funding policy is to make
annual trust fund contributions equal to the net periodic pension cost up to
the maximum amount deductible for federal income taxes, but not less than the
minimum contribution required by law.
Net pension costs for the years ended December 31, 1993, 1992 and 1991
were $4.7 million, $5.6 million and $2.3 million, respectively.
An employee savings plan is offered which allows participants to
contribute up to 16% of their salaries into three investment alternatives,
including AEP Co., Inc. common stock. The Company contributes an amount
equal to one-half of the first 6% of the employees' contribution. The
Company's contribution is invested in AEP Co., Inc. common stock and totaled
$3.5 million in 1993, $3.3 million in 1992 and $3.1 million in 1991.
The AEP System provides certain other benefits for retired employees under
an AEP System other postretirement benefit plan. Substantially all employees
are eligible for health care and life insurance benefits if they have at
least 10 service years and, effective January 1, 1992, are age 55 at retire-
ment. Prior to 1993, net costs of these benefits were recognized as an
expense when paid and totaled $2.7 million and $2.6 million in 1992 and 1991,
respectively.
SFAS 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, was adopted in January 1993. SFAS 106 requires the accrual of the
present value liability for the cost of postretirement benefits other than
pensions (OPEB) during the employee's service years. Prior service costs are
being recognized as a transition obligation over 20 years in accordance with
SFAS 106. OPEB costs are based on actuarially-determined stand alone costs
for each System company. The funding policy is to contribute incremental
amounts recovered through rates and cash generated by the corporate owned
life insurance (COLI) program. The annual accrued costs for 1993 required by
SFAS 106 for employees and retirees, which includes the recognition of one-
twentieth of the prior service transition obligation, was $12.4 million.
The Company received approval from the IURC to recover the increased OPEB
costs. In the Michigan and wholesale jurisdictions, the Company received
authority to defer the increased OPEB costs which are not being currently
recovered in rates. Future recovery of the deferrals and the annual ongoing
OPEB costs will be sought in the next base rate filings. At December 31,
1993, $6.2 million of incremental OPEB costs were deferred.
To reduce the impact of adopting SFAS 106, management took several
measures. First, a Voluntary Employees Beneficiary Association (VEBA) trust
fund for OPEB benefits was established. A $4.3 million advance contribution
was made to the trust fund in 1990, the maximum amount deductible for federal
income tax purposes. In 1993, a $700,000 contribution was made to the VEBA
trust fund from amounts recovered from ratepayers. In addition, to help fund
and reduce the future costs of OPEB benefits, a COLI program was implemented,
except where restricted by state law. The insurance policies have a
substantial cash surrender value which is recorded, net of equally
substantial policy loans, as other property and investments. The policies
generated cash of $600,000 in 1993, $1,700,000 in 1992 and $700,000 in 1991
inclusive of related tax benefits which was contributed to the VEBA trust
fund. In 1997 the premium will be fully paid and the cash generated by the
policies should increase significantly.
7. SUPPLEMENTARY INFORMATION:
Year Ended December 31,
1993 1992 1991
(in thousands)
Taxes other than federal
income taxes include:
Real and Personal
Property $35,683 $35,818 $33,265
State Gross Receipts,
Excise, Franchise
and Miscellaneous
State and Local 15,008 15,179 15,902
Payroll 9,001 8,911 8,075
State Income 8,226 2,281 5,541
Total $67,918 $62,189 $62,783
Cash was paid for:
Interest (net of
capitalized amounts) $82,509 $84,691 $84,581
Income Taxes 68,303 15,285 73,694
Noncash acquisitions
under capital
leases were 15,467 47,905 25,624
<PAGE>
<PAGE>
<TABLE>
8. FEDERAL INCOME TAXES:
The details of federal income taxes as reported are as follows:
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Charged (Credited) to Operating
Expenses (net):
Current $ 93,974 $ 9,122 $ 73,702
Deferred (50,959) 25,405 (18,793)
Deferred Investment Tax Credits (8,308) (9,028) (8,435)
Total 34,707 25,499 46,474
Charged (Credited) to
Nonoperating Income (net):
Current 6,026 1,569 3,348
Deferred 1,054 4,492 (3,084)
Deferred Investment Tax Credits (235) (645) (753)
Total 6,845 5,416 (489)
Total Federal Income Taxes as Reported $ 41,552 $30,915 $ 45,985
The following is a reconciliation of the difference between the amount of
federal income taxes computed by multiplying book income before federal
income taxes by the statutory tax rate, and the amount of federal income taxes
reported.
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Net Income $129,313 $123,948 $136,932
Federal Income Taxes 41,552 30,915 45,985
Pre-tax Book Income $170,865 $154,863 $182,917
Federal Income Tax on Pre-tax Book
Income at Statutory Rate (35% in 1993
and 34% in 1992 and 1991) $59,803 $52,653 $62,192
Increase (Decrease) in Federal Income Tax
Resulting From the Following Items:
Removal Costs (2,632) (3,042) (2,259)
Adoption of SFAS 109 5,271 - -
Investment Tax Credits (net) (8,543) (9,011) (9,087)
Corporate Owned Life Insurance (4,697) (4,402) (3,044)
Other (7,650) (5,283) (1,817)
Total Federal Income Taxes as Reported $41,552 $30,915 $45,985
Effective Federal Income Tax Rate 24.3% 20.0% 25.1%
</TABLE>
<PAGE>
<PAGE>
<TABLE>
The following are the principal components of federal income taxes as
reported:
<CAPTION>
Year Ended December 31,
1993 1992 1991
(in thousands)
<S> <C> <C> <C>
Current:
Federal Income Taxes $100,000 $10,029 $76,949
Investment Tax Credits - 662 101
Total Current Federal Income Taxes 100,000 10,691 77,050
Deferred:
Depreciation (12,167) (8,356) (6,969)
Unrecovered and Levelized Fuel (13,795) 11,729 (670)
Nuclear Fuel (3,271) 5,410 (6,484)
Deferred Return - Rockport Plant Unit 1 (2,644) (2,772) (2,864)
Deferred Net Gain - Rockport
Plant Unit 2 3,922 4,230 3,098
Levelized Nuclear Refueling Costs (11,488) 16,048 -
Accrued Interest Income (3,854) 3,854 -
Adoption of SFAS 109 5,271 - -
Other (11,879) (246) (7,988)
Total Deferred Federal Income Taxes (49,905) 29,897 (21,877)
Total Deferred Investment Tax Credits (8,543) (9,673) (9,188)
Total Federal Income Taxes as Reported $ 41,552 $30,915 $ 45,985
</TABLE>
The Company and its subsidiaries join in the filing of a consolidated
federal income tax return with their affiliates in the AEP System. The
allocation of the AEP System's current consolidated federal income tax to the
System companies is in accordance with SEC rules under the 1935 Act. These
rules permit the allocation of the benefit of current tax losses and invest-
ment tax credits utilized to the System companies giving rise to them in
determining their current tax expense. The tax loss of the System parent
company, AEP Co., Inc., is allocated to its subsidiaries with taxable income.
With the exception of the loss of the parent company, the method of
allocation approximates a separate return result for each company in the
consolidated group.
The AEP System settled with the Internal Revenue Service (IRS) all issues
from the audits of the consolidated federal income tax returns for the years
prior to 1988. Returns for the years 1988 through 1990 are presently being
audited by the IRS. In the opinion of management, the final settlement of
open years will not have a material effect on results of operations.
<PAGE>
The net deferred tax liability of $553.9 million at December 31, 1993 is
composed of deferred tax assets of $233.4 million and deferred tax
liabilities of $787.3 million. The significant temporary differences giving
rise to the net deferred tax liability are:
Deferred Tax Asset
(Liability)
(in thousands)
Property Related Temporary Differences $(494,966)
Amounts Due From Customers
For Future Federal Income Taxes (100,432)
Deferred Net Gain -
Rockport Plant Unit 2 62,761
All Other (net) (21,283)
Total Net Deferred Tax Liability $(553,920)
9. LEASES:
Leases of property, plant and equipment are for periods up to 35 years and
require payments of related property taxes, maintenance and operating costs.
The majority of the leases have purchase or renewal options and will be
renewed or replaced by other leases.
Lease rentals are generally charged to operating expense in accordance
with rate-making treatment. The components of rentals are as follows:
Year Ended December 31,
1993 1992 1991
(in thousands)
Operating Leases $103,884 $109,466 $101,013
Amortization of
Capital Leases 46,063 24,124 54,528
Interest on
Capital Leases 8,873 7,473 9,907
Total Rental
Payments $158,820 $141,063 $165,448
<PAGE>
Properties under capital leases and related obligations recorded on the
Consolidated Balance Sheets are as follows:
December 31,
1993 1992
(in thousands)
Electric Utility Plant:
Production $ 8,033 $ 11,407
Distribution 14,717 14,702
General:
Nuclear Fuel
(net of amortization) 45,661 84,208
Other 48,418 46,494
Total Electric Utility
Plant 116,829 156,811
Accumulated Amortization 27,359 30,630
Net Electric Utility
Plant 89,470 126,181
Other Property 11,269 2,327
Accumulated Amortization 1,986 1,819
Net Other Property 9,283 508
Net Properties under
Capital Lease $ 98,753 $126,689
Obligations under
Capital Leases $ 98,753 $126,689
Less Portion Due Within
One Year 20,585 32,745
Noncurrent Liability $ 78,168 $ 93,944
<PAGE>
Properties under operating leases and related obligations are not included
in the Consolidated Balance Sheets.
Future minimum lease rentals consisted of the following at December 31,
1993:
Non-
Cancelable
Capital Operating
Leases Leases
(in thousands)
1994 $ 9,380 $ 98,667
1995 8,574 98,203
1996 7,601 97,885
1997 6,889 96,029
1998 6,257 91,118
Later Years 38,383 2,011,781
Total Future Minimum
Lease Payments 77,084(a) $2,493,683
Less Estimated
Interest Element 23,992
Estimated Present
Value of Future
Minimum Lease
Payments 53,092
Unamortized Nuclear
Fuel 45,661
Total $98,753
(a) Minimum lease rentals do not include nuclear fuel rentals. The rental
payments are based on the heat produced plus carrying
charges on the unamortized nuclear fuel balance.
<PAGE>
10. CUMULATIVE PREFERRED STOCK:
At December 31, 1993, authorized shares of cumulative preferred stock were
as follows:
Par Value Shares Authorized
$100 2,250,000
25 11,200,000
The cumulative preferred stock is callable at the price indicated plus
accrued dividends. The involuntary liquidation preference is par value.
Unissued shares of the cumulative preferred stock may or may not possess
mandatory redemption characteristics upon issuance. The Company issued
350,000 shares of 6.30% Cumulative Preferred Stock Subject to Mandatory
Redemption, par value $100, on February 8, 1994 and redeemed 350,000 shares
of 7.76% Cumulative Preferred Stock Not Subject to Mandatory Redemption, par
value $100, on February 14, 1994.
<TABLE>
A. Cumulative Preferred Stock Not Subject to Mandatory Redemption:
<CAPTION>
Call Price Shares Amount
December 31, Par Number of Shares Redeemed Outstanding December 31,
Series 1993 Value Year Ended December 31, December 31, 1993 1993 1992
1993 1992 1991 (in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
4-1/8% $106.125 $100 - - - 120,000 $ 12,000 $ 12,000
4.56% 102 100 - - - 60,000 6,000 6,000
4.12% 102.728 100 - - - 40,000 4,000 4,000
7.08% 101.85 100 - - - 300,000 30,000 30,000
7.76% 102.28 100 - - - 350,000 35,000 35,000
8.68% - - 300,000 - - - - 30,000
$2.15 - - 1,600,000 - - - - 40,000
$2.25 - - 1,600,000 - - - - 40,000
$ 87,000 $197,000
B. Cumulative Preferred Stock Subject to Mandatory Redemption:
<CAPTION>
Shares Amount
Par Outstanding December 31,
Series(a) Value December 31, 1993 1993 1992
(in thousands)
<S> <C> <C> <C> <C>
5.90% (b) $100 400,000 $ 40,000 $ -
6-1/4%(c) 100 300,000 30,000 -
6-7/8%(d) 100 300,000 30,000 -
$100,000 $ -
(a) Not callable until after 2002. There are no aggregate sinking fund provisions through 2002.
(b) Shares issued November 1993. Commencing in 2004 and continuing through the year 2008, a sinking fund for the 5.90% cumulative
preferred stock will require the redemption of 20,000 shares each year and the redemption of the remaining shares outstanding on
January 1, 2009, in each case at $100 per share.
(c) Shares issued November 1993. Commencing in 2004 and continuing through the year 2008, a sinking fund for the 6-1/4%
cumulative preferred stock will require the redemption of 15,000 shares each year and the redemption of the remaining shares
outstanding on April 1, 2009, in each case at $100 per share.
</TABLE>
<PAGE>
11. LONG-TERM DEBT AND LINES OF CREDIT:
Long-term debt by major category was outstanding as follows:
December 31,
1993 1992
(in thousands)
First Mortgage Bonds $ 571,468 $ 713,916
Installment Purchase
Contracts 307,823 308,333
Other Long-term Debt (a) 147,810 143,321
Notes Payable to Banks 40,000 40,000
Sinking Fund Debentures 6,053 6,053
1,073,154 1,211,623
Less Portion Due Within
One Year - 42,902
Total $1,073,154 $1,168,721
(a) Nuclear Fuel Disposal Costs including interest accrued. See Note 3.
First mortgage bonds outstanding were as follows:
December 31,
1993 1992
(in thousands)
% Rate Due
4-3/8 1993 - August 1 $ - $ 42,902
7-7/8 1997 - February 1 - 50,000
9-1/8 1997 - July 1 - 75,000
7 1998 - May 1 35,000 35,000
7.30 1999 - December 15 35,000 35,000
8-7/8 2000 - April 1 - 50,000
7.60 2002 - November 1 50,000 50,000
7.70 2002 - December 15 40,000 40,000
6.80 2003 - July 1 20,000 -
6.55 2003 - October 1 20,000 -
6.10 2003 - November 1 30,000 -
8-3/8 2003 - December 1 - 40,000
9-1/2 2008 - March 1 - 34,034
8-3/4 2017 - February 1 100,000 100,000
9.50 2021 - May 1 10,000 10,000
9.50 2021 - May 1 10,000 10,000
9.50 2021 - May 1 20,000 20,000
8.75 2022 - May 1 50,000 50,000
8.50 2022 - December 15 75,000 75,000
7.80 2023 - July 1 20,000 -
7.35 2023 - October 1 20,000 -
7.20 2024 - February 1 40,000 -
Unamortized Discount (net) (3,532) (3,020)
571,468 713,916
Less Portion Due Within One Year - 42,902
Total $571,468 $671,014
<PAGE>
Certain indentures relating to the first mortgage bonds contain
improvement, maintenance and replacement provisions requiring the deposit of
cash or bonds with the trustee, or in lieu thereof, certification of unfunded
property additions.
Installment purchase contracts have been entered into in connection with
the issuance of pollution control revenue bonds by governmental authorities
as follows:
December 31,
1993 1992
(in thousands)
% Rate Due
City of Lawrenceburg, Indiana:
7 2006 - May 1 $ - $ 40,000
6-7/8 2006 - May 1 - 12,000
7 2015 - April 1 25,000 25,000
5.9 2019 - November 1 52,000 -
City of Rockport, Indiana:
9-1/4 2014 - August 1 50,000 50,000
6-3/4(a)2014 - August 1 50,000 50,000
(b) 2014 - August 1 50,000 50,000
7.6 2016 - March 1 40,000 40,000
City of Sullivan, Indiana:
7-3/8 2004 - May 1 - 7,000
6-7/8 2006 - May 1 - 25,000
7-1/2 2009 - May 1 - 13,000
5.95 2009 - May 1 45,000 -
Unamortized Discount (4,177) (3,667)
Total $307,823 $308,333
(a) The adjustable interest rate changed on August 1, 1990 and will change
every five years thereafter.
(b) The variable interest rate is determined weekly. The average weighted
interest was 3.0% in 1993 and 3.7% for 1992.
Under the terms of certain installment purchase contracts, the Company is
required to pay amounts sufficient to enable the cities to pay interest on
and the principal (at stated maturities and upon mandatory redemption) of
related pollution control revenue bonds issued to finance the construction of
pollution control facilities at certain generating plants. On certain series
the principal is payable at stated maturities or on the demand of the bond-
holders at periodic interest adjustment dates. Accordingly, the installment
purchase contracts have been classified for repayment purposes based on their
next interest rate adjustment date. Certain series are supported by bank
letters of credit which expire in 1995.
A $40 million unsecured promissory note payable to a bank is due November
19, 1995 at an annual interest rate of 9.07%.
<PAGE>
The sinking fund debentures are due May 1, 1998 at an interest rate of 7-
1/4%. Prior to December 31, 1993, sufficient principal amounts of debentures
had been reacquired in anticipation of all future sinking fund requirements.
Additional debentures of up to $300,000 may be called annually.
At December 31, 1993, annual long-term debt payments, excluding premium or
discount, are as follows:
Principal Amount
(in thousands)
1994 $ -
1995 140,000
1996 -
1997 -
1998 41,053
Later Years 899,810
Total $1,080,863
Short-term debt borrowings are limited by provisions of the 1935 Act to
$200 million and further limited by charter provisions to $127 million.
Lines of credit are shared with AEP System companies and at December 31, 1993
and 1992 were available in the amounts of $537 million and $521 million,
respectively. Commitment fees of approximately 3/16 of 1% a year are paid to
the banks to maintain the lines of credit.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The carrying amounts of cash and cash equivalents, accounts receivable,
short-term debt, and accounts payable approximate fair value because of the
short-term maturity of these instruments. At December 31, 1993 and 1992
fair values for external trust funds were $321 million and $270 million and
carrying values were $303 million and $262 million, respectively. Fair
values for long-term debt were $1.1 billion and $1.2 billion at December 31,
1993 and 1992, respectively. Fair value at December 31, 1993 for preferred
stocks subject to mandatory redemption, which were issued in 1993, was $99
million. Fair values are based on quoted market prices for the same or
similar issues and the current dividend or interest rates offered for
instruments of the same remaining maturities. External trust funds are used
to accumulate funds collected from customers for future nuclear liabilities
and are reported on the balance sheet as other property and investments. The
carrying amount of the pre-April 1983 spent nuclear fuel disposal liability
approximates the Company's best estimate of its fair value.
<PAGE>
13. UNAUDITED QUARTERLY FINANCIAL INFORMATION:
Quarterly Periods
Ended Operating Operating Net
Revenues Income Income
(in thousands)
1993
March 31 $302,968 $53,269 $28,522
June 30 278,100 40,722 21,397
September 30 320,409 52,898 33,658
December 31 301,166 63,031 45,736
1992
March 31 301,134 54,022 35,035
June 30 280,421 43,535 24,844
September 30 311,080 45,323 24,384
December 31 304,120 52,640 39,685
Fourth quarter 1992 net income includes $13 million comprised of interest
on prior years' federal income tax refunds and cost reductions due to
favorable benefit plans experience.
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 33-50521 of Indiana Michigan Power Company on Form
S-3 of our reports dated February 22, 1994, appearing in and
incorporated by reference in this Annual Report on Form 10-K of
Indiana Michigan Power Company for the year ended December 31,
1993.
/s/ Deloitte & Touche
Deloitte & Touche
Columbus, Ohio
March 30, 1994
<PAGE> Exhibit 24
POWER OF ATTORNEY
INDIANA MICHIGAN POWER COMPANY
Annual Report on Form lO-K for the Fiscal Year Ended
December 31, 1993
The undersigned directors of INDIANA MICHIGAN POWER COMPANY,
an Indiana corporation (the "Company"), do hereby constitute and
appoint E. LINN DRAPER, JR., G. P. MALONEY, A. JOSEPH DOWD and P.
J. DE MARIA, and each of them, their attorneys-in-fact and agents,
to execute for them, and in their names, and in any and all of
their capacities, the Annual Report of the Company on Form lO-K,
pursuant to Section 13 of the Securities Exchange Act of 1934, for
the fiscal year ended December 31, 1993, and any and all amendments
thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform every act
and thing required or necessary to be done, as fully to all intents
and purposes as the undersigned might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned have signed these presents
this 24th day of February, 1994.
/s/ Mark A. Bailey /s/ Wm. J. Lhota
Mark A. Bailey Wm. J. Lhota
/s/ P. J. DeMaria /s/ G. P. Maloney
P. J. DeMaria G. P. Maloney
/s/ W. N. D'Onofrio /s/ Richard C. Menge
W. N. D'Onofrio Richard C. Menge
/s/ A. Joseph Dowd /s/ R. E. Prater
A. Joseph Dowd R. E. Prater
/s/ E. Linn Draper, Jr. /s/ D. B. Synowiec
E. Linn Draper, Jr. D. B. Synowiec
/s/ W. E. Walters
W. E. Walters
