UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1999
----------------------------------------------
OR
/ / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ________________ to ___________________________
Commission File Number 1-9936
EDISON INTERNATIONAL
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-4137452
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2244 Walnut Grove Avenue
(P.O. Box 800)
Rosemead, California
(Address of principal 91770
executive offices) (Zip Code)
(626) 302-2222
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has 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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding at November 8,1999
- ----------------------------------- ------------------------------------
Common Stock, no par value 347,207,106
==============================================================================
<PAGE>
EDISON INTERNATIONAL
INDEX
----- Page
No.
----
Part I. Financial Information:
Item 1. Consolidated Financial Statements:
Consolidated Statements of Income -- Three and Nine
Months Ended September 30, 1999, and 1998 1
Consolidated Statements of Comprehensive Income --
Three and Nine Months Ended September 30, 1999, and 1998 1
Consolidated Balance Sheets -- September 30, 1999,
and December 31, 1998 2
Consolidated Statements of Cash Flows -- Nine Months
Ended September 30, 1999, and 1998 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 9
Part II. Other Information:
Item 1. Legal Proceedings 25
Item 6. Exhibits and Reports on Form 8-K 30
<PAGE>
EDISON INTERNATIONAL
PART I -- FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except per-share amounts
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended
September 30, September 30,
- ------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Electric utility $ 2,303,881 $ 2,369,492 $ 5,701,360 $ 5,610,963
Unregulated power generation 537,162 241,136 1,076,398 666,864
Financial services and other 115,924 143,020 382,946 324,415
- ------------------------------------------------------------------------------------------------------------------------
Total operating revenue 2,956,967 2,753,648 7,160,704 6,602,242
- ------------------------------------------------------------------------------------------------------------------------
Fuel 174,292 101,438 407,369 369,018
Purchased power -- contracts 823,470 908,407 1,856,130 2,010,269
Purchased power -- power exchange-- net 317,391 393,739 531,490 433,838
Provisions for regulatory adjustment clauses-- net (201,430) (447,676) (562,179) (289,314)
Other operation and maintenance 684,526 731,126 2,072,838 1,881,393
Depreciation, decommissioning and amortization 485,830 408,766 1,338,638 1,224,120
Property and other taxes 29,915 32,460 98,616 106,416
Net loss (gain) on sale of utility plant 767 89,939 (2,158) (529,099)
- ------------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,314,761 2,218,199 5,740,744 5,206,641
- ------------------------------------------------------------------------------------------------------------------------
Operating income 642,206 535,449 1,419,960 1,395,601
- ------------------------------------------------------------------------------------------------------------------------
Interest and dividend income 27,051 28,202 70,015 83,996
Other nonoperating income (deductions)-- net (4,352) 28,586 15,188 18,592
- ------------------------------------------------------------------------------------------------------------------------
Total other income-- net 22,699 56,788 85,203 102,588
- ------------------------------------------------------------------------------------------------------------------------
Income before fixed charges and taxes 664,905 592,237 1,505,163 1,498,189
- ------------------------------------------------------------------------------------------------------------------------
Interest and amortization on long-term debt 205,506 165,802 526,853 492,420
Other interest expense-- net 39,219 16,960 115,398 54,621
Capitalized interest (4,994) (4,822) (22,804) (13,187)
Dividends on preferred securities 14,220 3,304 21,598 9,905
Dividends on utility preferred stock 8,445 5,612 20,253 19,019
- ------------------------------------------------------------------------------------------------------------------------
Total fixed charges 262,396 186,856 661,298 562,778
- ------------------------------------------------------------------------------------------------------------------------
Minority interest 980 (279) 2,988 2,088
- ------------------------------------------------------------------------------------------------------------------------
Income before income taxes 401,529 405,660 840,877 933,323
Income taxes 146,192 189,363 313,907 427,713
- ------------------------------------------------------------------------------------------------------------------------
Net income $ 255,337 $ 216,297 $ 526,970 $ 505,610
- ------------------------------------------------------------------------------------------------------------------------
Weighted-average shares of common stock
outstanding 347,207 353,285 347,654 361,417
Basic earnings per share $0.74 $0.61 $1.52 $1.40
Diluted earnings per share $0.73 $0.60 $1.51 $1.38
Dividends declared per common share $0.27 $0.26 $0.81 $0.78
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
In thousands
3 Months Ended 9 Months Ended
September 30, September 30,
- ------------------------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Net income $ 255,337 $ 216,297 $ 526,970 $ 505,610
Cumulative translation adjustments-- net 47,304 6,913 5,590 7,646
Unrealized gain (loss) on securities-- net 29,616 (24,665) 18,594 (9,267)
Reclassification adjustment for gains
included in net income (13,654) -- (45,899) --
- ------------------------------------------------------------------------------------------------------------------------
Comprehensive income $ 318,603 $ 198,545 $ 505,255 $ 503,989
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
EDISON INTERNATIONAL
CONSOLIDATED BALANCE SHEETS
In thousands
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------------------
ASSETS (Unaudited)
<S> <C> <C>
Cash and equivalents $ 1,218,637 $ 583,556
Receivables, including unbilled revenue, less allowances of
$32,066 and $24,272 for uncollectible accounts at respective dates 1,604,096 1,315,830
Fuel inventory 71,965 51,299
Materials and supplies, at average cost 289,982 116,259
Accumulated deferred income taxes-- net 143,448 274,851
Regulatory balancing accounts-- net 127,516 287,377
Prepayments and other current assets 180,696 137,920
- ---------------------------------------------------------------------------------------------------------------------
Total current assets 3,636,340 2,767,092
- ---------------------------------------------------------------------------------------------------------------------
Nonutility property -- less accumulated provision for
depreciation of $406,912 and $296,732 at respective dates 8,134,514 3,072,354
Nuclear decommissioning trusts 2,326,847 2,239,929
Investments in partnerships and unconsolidated subsidiaries 2,406,404 1,615,106
Investments in leveraged leases 1,784,379 1,621,133
Other investments 269,365 572,856
- ---------------------------------------------------------------------------------------------------------------------
Total investments and other assets 14,921,509 9,121,378
- ---------------------------------------------------------------------------------------------------------------------
Utility plant, at original cost:
Transmission and distribution 12,134,001 11,771,678
Generation 1,698,781 1,689,469
Accumulated provision for depreciation
and decommissioning (7,265,355) (6,896,479)
Construction work in progress 703,742 516,664
Nuclear fuel, at amortized cost 148,785 172,250
- ---------------------------------------------------------------------------------------------------------------------
Total utility plant 7,419,954 7,253,582
- ---------------------------------------------------------------------------------------------------------------------
Unamortized nuclear investment-- net 1,564,807 2,161,998
Income tax-related deferred charges 1,352,336 1,463,256
Regulatory balancing accounts-- net 1,250,085 361,404
Unamortized debt issuance and reacquisition expense 346,286 348,816
Other deferred charges 1,651,505 1,220,353
- ---------------------------------------------------------------------------------------------------------------------
Total deferred charges 6,165,019 5,555,827
- ---------------------------------------------------------------------------------------------------------------------
Total assets $ 32,142,822 $ 24,697,879
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
EDISON INTERNATIONAL
CONSOLIDATED BALANCE SHEETS
In thousands, except share amounts
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- --------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited)
<S> <C> <C>
Current portion of long-term debt $ 1,113,930 $ 920,333
Short-term debt 1,452,325 565,626
Accounts payable 727,444 489,751
Accrued taxes 736,032 629,906
Accrued interest 194,845 146,773
Dividends payable 100,177 91,742
Deferred unbilled revenue and other current liabilities 1,857,314 1,442,149
- --------------------------------------------------------------------------------------------------------------------
Total current liabilities 6,182,067 4,286,280
- --------------------------------------------------------------------------------------------------------------------
Long-term debt 11,257,272 8,008,154
- --------------------------------------------------------------------------------------------------------------------
Accumulated deferred income taxes-- net 5,531,871 4,591,236
Accumulated deferred investment tax credits 237,724 270,689
Customer advances and other deferred credits 1,633,524 1,424,986
Other long-term liabilities 764,809 467,109
- --------------------------------------------------------------------------------------------------------------------
Total deferred credits and other liabilities 8,167,928 6,754,020
- --------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (Notes 1 and 2)
Minority interest 12,412 15,701
- --------------------------------------------------------------------------------------------------------------------
Preferred stock:
Not subject to mandatory redemption 128,755 128,755
Subject to mandatory redemption 255,700 255,700
Company-obligated mandatorily redeemable securities
of subsidiaries holding solely parent company debentures 633,392 150,000
Other preferred securities 275,590 --
- --------------------------------------------------------------------------------------------------------------------
Total preferred securities of subsidiaries 1,293,437 534,455
- --------------------------------------------------------------------------------------------------------------------
Common stock (347,207,106 and 350,553,197
shares outstanding at respective dates) 2,090,188 2,109,279
Accumulated other comprehensive income:
Cumulative translation adjustments-- net 35,289 29,699
Unrealized gain in equity securities-- net 26,554 53,859
Retained earnings 3,077,675 2,906,432
- --------------------------------------------------------------------------------------------------------------------
Total common shareholders' equity 5,229,706 5,099,269
- --------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 32,142,822 $ 24,697,879
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
EDISON INTERNATIONAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands
<TABLE>
<CAPTION>
9 Months Ended
September 30,
- --------------------------------------------------------------------------------------------------------------------
1999 1998
- --------------------------------------------------------------------------------------------------------------------
(Unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net income $ 526,970 $ 505,610
Adjustments for non-cash items:
Depreciation, decommissioning and amortization 1,338,638 1,224,120
Other amortization 70,279 69,638
Rate phase-in plan -- 3,777
Deferred income taxes and investment tax credits 256,460 170,246
Equity in income from partnerships and unconsolidated
subsidiaries (198,079) (160,710)
Income from leveraged leases (163,952) (152,984)
Other long-term liabilities 103,822 36,293
Regulatory balancing account-- long-term (888,681) (400,997)
Regulatory asset related to the sale of generating plants 183 (219,301)
Net loss (gain) on sale of generating plants (883) (551,984)
Other-- net 18,194 (6,987)
Changes in working capital:
Receivables (262,372) (351,185)
Regulatory balancing accounts 159,861 186,772
Fuel inventory, materials and supplies (3,656) 19,070
Prepayments and other current assets (76,062) (91,469)
Accrued interest and taxes 184,815 262,980
Accounts payable and other current liabilities 671,696 533,401
Distributions from partnerships and unconsolidated subsidiaries 117,001 117,108
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,854,234 1,193,398
- --------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Long-term debt issued 4,338,640 944,916
Long-term debt repaid (805,998) (1,287,354)
Common stock repurchased (92,023) (653,740)
Preferred securities issued 761,024 --
Preferred stocks redeemed -- (74,300)
Rate reduction notes repaid (178,280) (161,070)
Nuclear fuel financing-- net (22,844) (11,478)
Short-term debt financing-- net 882,270 (23,951)
Dividends paid (279,003) (281,870)
Other-- net 87 367
- --------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 4,603,873 (1,548,480)
- --------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property and plant (955,442) (622,625)
Purchase of nonutility power station (3,959,011) --
Proceeds from sale of assets 23,174 1,200,213
Funding of nuclear decommissioning trusts (95,473) (118,196)
Investments in partnerships and unconsolidated subsidiaries (846,026) (343,007)
Unrealized gain (loss) on securities-- net (27,305) (9,267)
Investments in leveraged leases 466 (458,509)
Other-- net 36,591 (4,078)
- --------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (5,823,026) (355,469)
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and equivalents 635,081 (710,551)
Cash and equivalents, beginning of period 583,556 1,906,505
- --------------------------------------------------------------------------------------------------------------------
Cash and equivalents, end of period $ 1,218,637 $ 1,195,954
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
EDISON INTERNATIONAL
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Management's Statement
In the opinion of management, all adjustments have been made that are necessary
to present a fair statement of the financial position and results of operations
for the periods covered by this report.
Edison International's significant accounting policies were described in Note 1
of "Notes to Consolidated Financial Statements" included in its 1998 Annual
Report on Form 10-K filed with the Securities and Exchange Commission. Edison
International follows the same accounting policies for interim reporting
purposes. This quarterly report should be read in conjunction with Edison
International's 1998 Annual Report and Form 10-K filed with the Securities and
Exchange Commission.
Certain prior-period amounts were reclassified to conform to the September 30,
1999, financial statement presentation.
Since April 1, 1998, when the new market structure began, Southern California
Edison Company (SCE) has been selling all of its generation through the power
exchange (PX), as mandated by the California Public Utilities Commission's
(CPUC) 1995 restructuring decision. Through the PX, SCE satisfies the electric
energy needs of customers who did not choose an alternative energy provider.
These transactions through the PX are reported as Purchased power - power
exchange - net. Generation sales through the PX were $565 million and $1.2
billion for the three and nine months ended September 30, 1999, respectively,
and $687 million and $991 million for the three and nine months ended September
30, 1998, respectively. Purchases through the PX were $882 million and $1.7
billion for the three and nine months ended September 30, 1999, respectively,
and $1.1 billion and $1.4 billion for the three and nine months ended September
30, 1998, respectively.
Note 1. Regulatory Matters
Federal Energy Regulatory Commission (FERC) Transmission Rate Case
SCE filed its first FERC transmission rate case in March 1997. The filing
proposed a transmission revenue requirement of $211 million. In March 1999, a
proposed FERC decision was issued recommending a return on equity of 9.68%
(compared to SCE's current CPUC rate for distribution of 11.6%) and a lower
revenue requirement. SCE filed briefs opposing the proposed decision in May
1999. In response to a recent FERC ruling, on November 1, 1999, SCE filed
additional evidence regarding return on equity. A final FERC decision is
expected in early 2000. SCE does not expect the final decision to have a
material effect on its results of operations or financial position.
Recovery of Restructuring Implementation Costs
The independent system operator (ISO) assumed operational control of the
transmission system after the ISO and PX began accepting bids and schedules for
electricity purchases on March 31, 1998. The restructuring implementation costs
related to the start-up and development of the PX, which were paid by the
utilities, were to be recovered from all retail customers over the four-year
transition period. SCE's share of the charge is $45 million, plus interest and
fees. SCE's share of the ISO's start-up and development costs (approximately $16
million per year) will be paid over a 10-year period. In May 1998, SCE filed an
application with the CPUC to identify the categories of such costs (including
costs related to the implementation of direct access), and to establish the
reasonableness of those costs incurred in 1997.
On September 16, 1999, the CPUC approved a settlement between SCE, the CPUC's
Office of Ratepayer Advocates and several other parties allowing SCE to recover
substantially all (approximately $300 million) of its restructuring
implementation costs (incurred and estimated) for the period 1997-2001. In
addition, the settlement provides that up to $210 million of generation-related
costs (transition costs) that are displaced by recovery of the restructuring
implementation costs during the rate freeze may be recovered after December 31,
2001, the date SCE would cease to recover these transition costs under
restructuring legislation.
5
<PAGE>
Note 2. Contingencies
In addition to the matters disclosed in these notes, Edison International is
involved in legal, tax, and regulatory proceedings before various courts and
governmental agencies regarding matters arising in the ordinary course of
business. Edison International believes the outcome of these other proceedings
will not materially affect its results of operations or liquidity.
Environmental Protection
Edison International is subject to numerous environmental laws and regulations,
which require it to incur substantial costs to operate existing facilities,
construct and operate new facilities, and mitigate or remove the effect of past
operations on the environment.
Edison International records its environmental liabilities when site assessments
and/or remedial actions are probable and a range of reasonably likely cleanup
costs can be estimated. Edison International reviews its sites and measures the
liability quarterly, by assessing a range of reasonably likely costs for each
identified site using currently available information, including existing
technology, presently enacted laws and regulations, experience gained at similar
sites, and the probable level of involvement and financial condition of other
potentially responsible parties. These estimates include costs for site
investigations, remediation, operations and maintenance, monitoring and site
closure. Unless there is a probable amount, Edison International records the
lower end of this reasonably likely range of costs (classified as other
long-term liabilities at undiscounted amounts).
Edison International's recorded estimated minimum liability to remediate its 49
identified sites is $165 million. The ultimate costs to clean up Edison
International's identified sites may vary from its recorded liability due to
numerous uncertainties inherent in the estimation process, such as: the extent
and nature of contamination; the scarcity of reliable data for identified sites;
the varying costs of alternative cleanup methods; developments resulting from
investigatory studies; the possibility of identifying additional sites; and the
time periods over which site remediation is expected to occur. Edison
International believes that, due to these uncertainties, it is reasonably
possible that cleanup costs could exceed its recorded liability by up to $284
million. The upper limit of this range of costs was estimated using assumptions
least favorable to Edison International among a range of reasonably possible
outcomes. SCE has sold all of its gas- and oil-fueled generation plants and has
retained some liability associated with the divested properties.
The CPUC allows SCE to recover environmental-cleanup costs at 41 of its sites,
representing $85 million of its recorded liability, through an incentive
mechanism (SCE may request to include additional sites). Under this mechanism,
SCE will recover 90% of cleanup costs through customer rates; shareholders fund
the remaining 10%, with the opportunity to recover these costs from insurance
carriers and other third parties. SCE has successfully settled insurance claims
with all responsible carriers. Costs incurred at SCE's remaining sites are
expected to be recovered through customer rates. SCE has recorded a regulatory
asset of $130 million for its estimated minimum environmental-cleanup costs
expected to be recovered through customer rates.
Edison International's identified sites include several sites for which there is
a lack of currently available information, including the nature and magnitude of
contamination, and the extent, if any, that Edison International may be held
responsible for contributing to any costs incurred for remediating these sites.
Thus, no reasonable estimate of cleanup costs can now be made for these sites.
Edison International expects to clean up its identified sites over a period of
up to 30 years. Remediation costs in each of the next several years are expected
to range from $5 million to $15 million.
6
<PAGE>
Based on currently available information, Edison International believes it is
unlikely that it will incur amounts in excess of the upper limit of the
estimated range and, based upon the CPUC's regulatory treatment of
environmental-cleanup costs, Edison International believes that costs ultimately
recorded will not materially affect its results of operations or financial
position. There can be no assurance, however, that future developments,
including additional information about existing sites or the identification of
new sites, will not require material revisions to such estimates.
Nuclear Insurance
Federal law limits public liability claims from a nuclear incident to $9.8
billion. SCE and other owners of the San Onofre and Palo Verde nuclear plants
have purchased the maximum private primary insurance available ($200 million).
The balance is covered by the industry's retrospective rating plan that uses
deferred premium charges to every reactor licensee if a nuclear incident at any
licensed reactor in the U.S. results in claims and/or costs which exceed the
primary insurance at that plant site. Federal regulations require this secondary
level of financial protection. The Nuclear Regulatory Commission exempted San
Onofre Unit 1 from this secondary level, effective June 1994. The maximum
deferred premium for each nuclear incident is $88 million per reactor, but not
more than $10 million per reactor may be charged in any one year for each
incident. Based on its ownership interests, SCE could be required to pay a
maximum of $175 million per nuclear incident. However, it would have to pay no
more than $20 million per incident in any one year. Such amounts include a 5%
surcharge if additional funds are needed to satisfy public liability claims and
are subject to adjustment for inflation. If the public liability limit above is
insufficient, federal regulations may impose further revenue-raising measures to
pay claims, including a possible additional assessment on all licensed reactor
operators.
Property damage insurance covers losses up to $500 million, including
decontamination costs, at San Onofre and Palo Verde. Decontamination liability
and property damage coverage exceeding the primary $500 million also has been
purchased in amounts greater than federal requirements. Additional insurance
covers part of replacement power expenses during an accident-related nuclear
unit outage. These policies are issued primarily by mutual insurance companies
owned by utilities with nuclear facilities. If losses at any nuclear facility
covered by the arrangement were to exceed the accumulated funds for these
insurance programs, SCE could be assessed retrospective premium adjustments of
up to $21 million per year. Insurance premiums are charged to operating expense.
Spent Nuclear Fuel
Under federal law, the Department of Energy (DOE) is responsible for the
selection and development of a facility for the disposal of spent nuclear fuel
and high-level radioactive waste. Such a facility was to be in operation by
January 1998. However, the DOE did not meet its obligation. It is not certain
when the DOE will begin accepting spent nuclear fuel from San Onofre or from
other nuclear power plants.
SCE has primary responsibility for the interim storage of its spent nuclear fuel
at San Onofre. Current capability to store spent fuel is estimated to be
adequate through 2005. Meeting spent-fuel storage requirements beyond that
period would require new and separate interim storage facilities, the costs for
which have not been determined. Extended delays by the DOE could lead to
consideration of costly alternatives involving siting and environmental issues.
SCE has paid the DOE the required one-time fee applicable to nuclear generation
at San Onofre through April 6, 1983, (approximately $24 million, plus interest).
SCE is also paying the required quarterly fee equal to one mill per
kilowatt-hour of nuclear-generated electricity sold after April 6, 1983.
Palo Verde on-site spent fuel storage capacity will accommodate needs until 2002
for Units 1 and 2, and until 2003 for Unit 3. Arizona Public Service Company,
operating agent for Palo Verde, is constructing an interim fuel storage facility
that is expected to be completed in 2002.
7
<PAGE>
SCE and other owners of nuclear power plants may be able to recover interim
storage costs arising from DOE delays in the acceptance of utility spent nuclear
fuel by pursuing relief under the terms of the contracts, as directed by the
courts, or through other court actions.
Note 3. Business Segments
Edison International's reportable business segments include its electric utility
operation segment (SCE), an unregulated power generation segment (EME), and a
financial services provider segment (Edison Capital).
Segment information for the three and nine months ended September 30, 1999, and
1998, respectively, was:
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended
September 30, September 30,
- -------------------------------------------------------------------------------------------------------------------
In thousands 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------
Operating Revenue: (Unaudited)
<S> <C> <C> <C> <C>
Electric utility $ 2,303,881 $ 2,369,492 $ 5,701,360 $ 5,610,963
Unregulated power generation 537,162 241,136 1,076,398 666,864
Financial services 58,638 65,752 222,124 164,844
Other* 57,286 77,268 160,822 159,571
- -------------------------------------------------------------------------------------------------------------------
Consolidated Edison International $ 2,956,967 $ 2,753,648 $ 7,160,704 $ 6,602,242
- -------------------------------------------------------------------------------------------------------------------
Net Income:
Electric utility $ 160,106 $ 162,892 $ 342,838 $ 375,079
Unregulated power generation 86,605 44,778 136,176 101,066
Financial services 34,658 26,489 108,798 70,638
Other* (26,032) (17,862) (60,842) (41,173)
- -------------------------------------------------------------------------------------------------------------------
Consolidated Edison International $ 255,337 $ 216,297 $ 526,970 $ 505,610
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes amounts from nonutility subsidiaries not significant as a reportable
segment.
Total segment assets at September 30, 1999, were: electric utility, $17.6
billion; unregulated power generation, $11.2 billion; financial services, $2.7
billion; other, $600 million.
Note 4. Subsequent Events
On October 25, 1999, SCE issued $175 million of floating-rate notes due October
2000.
On October 29, 1999, a trust that is an affiliate of Edison International issued
$325 million of 8.6% cumulative quarterly income preferred securities, which are
guaranteed by Edison International. These securities have a stated maturity of
October 2029, but are redeemable at the option of Edison International, in whole
or in part, beginning October 2004.
8
<PAGE>
EDISON INTERNATIONAL
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Results of Operations
Earnings
Edison International's basic earnings per share were 74(cent) and $1.52,
respectively, for the three and nine months ended September 30, 1999, compared
to 61(cent) and $1.40 for the same periods in 1998. Southern California Edison's
(SCE) earnings for the three and nine months ended September 30, 1999, were
46(cent) and 99(cent), respectively, unchanged and down 5(cent), respectively,
from the year-earlier periods. The decrease in SCE's year-to-date earnings was
mainly due to the 1999 scheduled refueling outages at the San Onofre Nuclear
Generating Station. Edison Mission Energy (EME) and Edison Capital had combined
earnings of 35(cent) and 70(cent), respectively, compared to 21(cent) and
48(cent), during the same periods in 1998. The quarterly increase was mostly due
to earnings contributions from the Homer City Generating Station, acquired in
March 1999, and higher capacity revenue at the First Hydro pumped-storage
facility due to system outages in the United Kingdom (U.K.) which raised
capacity prices, partially offset by higher interest expense resulting from
increased borrowings to finance acquisitions at EME. An increase in earnings
from infrastructure investments and the recognition of previously deferred gains
on housing syndications at Edison Capital also contributed to the quarterly
increase. The year-to-date increase was primarily due to EME's Homer City and
First Hydro projects, and earnings contributions from infrastructure investments
and the closing of five affordable housing syndications at Edison Capital. The
year-to-date increase was partially offset by higher operating costs and
interest expense at EME. Edison Enterprises and the parent company were
responsible for a combined negative earnings impact for the three and nine
months ended September 30, 1999, of 7(cent) and 17(cent), respectively, compared
with 6(cent) and 12(cent) for the same periods in 1998. The decreases in
earnings were primarily due to continued investment in Edison Enterprises'
subsidiaries and higher interest expense at the parent company.
Operating Revenue
As a result of industry restructuring, customers have an option to buy power
from SCE or directly from the power exchange (PX), thus becoming direct access
customers. Direct access customers are continuing to be billed by SCE, but are
also given a credit for the generation portion of their bills. Electric utility
revenue decreased 3% for the three months ended September 30, 1999, compared to
the year-earlier period, primarily due to a credit given to customers who choose
direct access. Electric utility revenue increased for the nine months ended
September 30, 1999, compared to the same period last year. The increase resulted
primarily from maintenance service SCE is providing the new owners of the
divested gas- and oil-fueled plants, partially offset by the energy credit given
to direct access customers in the third quarter of 1999. Over 93% of electric
utility revenue was from retail sales. Retail rates are regulated by the
California Public Utilities Commission (CPUC) and wholesale rates are regulated
by the Federal Energy Regulatory Commission (FERC).
Due to warmer weather during the summer months, electric utility revenue during
the third quarter of each year is significantly higher than other quarters.
Legislation enacted in September 1996 provided for, among other things, a 10%
rate reduction for residential and small commercial customers beginning in 1998
and other rates to remain frozen at June 1996 levels (system average of
10.1(cent) per kilowatt-hour). See the discussion in Utility Regulatory
Environment below.
Unregulated power generation revenue increased substantially for both the
quarter and year-to-date periods ended September 30, 1999, compared to the same
periods in 1998. The increases at EME were mainly due to revenue from Homer
City, the Ferrybridge and Fiddler's Ferry generating facilities (acquired in
July 1999 from PowerGen), and First Hydro.
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Financial services and other revenue decreased 19% for the three months ended
September 30, 1999, compared to the year-earlier period, mostly due to a
decrease in real estate revenue. Third quarter 1998 revenue included the sale of
seven properties. Additionally, third quarter 1999 revenue decreased due to the
closing of five affordable housing syndications in the first half of 1999.
Financial services and other revenue increased 18% for the nine months ended
September 30, 1999, primarily due to the closing of five affordable housing
syndications, additional lease transactions and the Westec acquisition in 1998.
Operating Expenses
Fuel expense increased 72% and 10%, respectively, for the three and nine months
ended September 30, 1999, compared to the same periods in 1998. The increases
were primarily related to an increase at EME for expenses at Homer City and the
Ferrybridge and Fiddler's Ferry generating facilities. The year-to-date increase
was partially offset by a decrease at SCE resulting from the sale of the
generating plants in 1998.
Since April 1, 1998, SCE has been required to sell all of its generated power
through the PX and acquire all of its power through the PX to distribute to its
customers. These transactions with the PX are reported net. PX purchased-power
expense decreased for the quarter ended September 30, 1999, compared to the
year-earlier period, due to lower prices and lower volume of purchases during
the third quarter of 1999. The lower volume was partially due to an increase in
direct access customers. PX purchased-power expense increased for the
year-to-date period due to higher prices in May and June of 1999. There were no
comparable purchases during the first quarter of 1998. SCE is continuing to
purchase power under existing contracts from certain nonutility generators
(known as qualifying facilities) and from other utilities. This purchased power
is also sold through the PX. Purchased-power expense -- contracts decreased for
the three and nine months ended September 30, 1999, compared to the same periods
last year, primarily due to SCE entering into settlements to end its contractual
obligations with certain qualifying facilities. SCE was required under federal
law to purchase power from certain qualifying facilities at CPUC-mandated prices
even though energy and capacity prices under these contracts are generally
higher than other sources. For the twelve months ended September 30, 1999, SCE
paid about $1.5 billion (including energy and capacity payments) more for these
power purchases than the cost of power available from other sources.
Provisions for regulatory adjustment clauses increased for the three months
ended September 30, 1999, compared to the year-earlier period. The quarterly
increase primarily reflects overcollections related to the difference between
generation-related revenue and generation-related costs and overcollections
related to the administration of public purpose funds. These overcollections
were partially offset by revenue deferrals related to the rate-making treatment
of the rate reduction notes. This rate-making treatment has allowed for the
deferral of the recovery of a portion of the transition-related costs, from a
four-year period to a 10-year period. Provisions for regulatory adjustment
clauses decreased for the nine months ended September 30, 1999, compared to same
period last year. The decrease was mainly due to undercollections related to the
difference between generation-related revenue and generation-related costs and
the rate-making treatment of the rate reduction notes. These undercollections
were partially offset by overcollections related to the administration of public
purpose funds. See the discussion in Revenue and Cost-Recovery Mechanisms.
Other operation and maintenance expenses decreased 6% for the three months ended
September 30, 1999, compared to the same period in 1998. The decrease is
primarily due to decreases at SCE related to a reduction in mandated
transmission service (known as must-run reliability services) expenses due to a
new calculation method adopted by the FERC and lower maintenance expenses at
distribution facilities, partially offset by an increase in SCE's grid
management payments to the independent system operator (ISO) and increased plant
operating expenses at EME due to the Homer City and Ferrybridge and Fiddler's
Ferry generating facilities acquisitions in 1999. Other operation and
maintenance expenses increased for the nine months ended September 30, 1999,
mostly due to EME's third quarter 1999 increases discussed above, as well as a
second quarter 1999 increase at EME related to Homer City. Also contributing to
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the year-to-date increase were increases in direct access activities and PX
costs incurred by SCE, additional reserves for five affordable housing
syndications at Edison Capital and increased operating expenses at Edison
Enterprises related to its 1998 Westec acquisition.
Depreciation, decommissioning and amortization expense increased 19% and 9%,
respectively, for the quarter and nine months ended September 30, 1999, compared
to the year-earlier periods. The quarterly increase is primarily due to SCE's
recovery of direct-access related items as a result of a recent CPUC decision,
as well as an increase at EME related to the Ferrybridge and Fiddler's Ferry
generating facilities and to Homer City. The year-to-date increase also reflects
additional expense in the second quarter of 1999 related to Homer City.
Net loss (gain) on sale of utility plant resulted from the sale of SCE's 12 gas-
and oil-fueled generation plants in 1998. Gains were used to reduce stranded
costs. Losses will be recovered from customers over the transition period.
Other Income
Interest and dividend income decreased 17% for the nine months ended September
30, 1999, compared to the same period in 1998, primarily due to lower cash
balances at EME.
Other nonoperating income decreased for both the three and nine months ended
September 30, 1999, compared to the same periods in 1998. The quarterly decrease
was primarily due to additional accruals at SCE for regulatory matters in 1999
and the reversal of an accrual in 1998, partially offset by SCE's gain on sale
of an equity investment. The year-to-date decrease was mostly due to a first
quarter 1999 write-off of start-up costs at EME (EME was required to write off
these previously capitalized start-up costs due to an accounting rule change
effective January 1999), as well as the third quarter decrease at SCE discussed
above. These decreases were almost completely offset by an increase at SCE
resulting from the gain on sales of equity investments.
Fixed Charges and Taxes
Interest and amortization on long-term debt increased 24% and 7%, respectively,
for the three and nine months ended September 30, 1999, compared to same periods
in 1998, primarily due to additional long-term debt at EME related to its Homer
City and Ferrybridge and Fiddler's Ferry generating facilities acquisitions. The
year-to-date increase was partially offset by a decrease at SCE due to an
adjustment of accrued interest in first quarter 1998 related to the rate
reduction notes issued in December 1997.
Other interest expense increased substantially for both the quarter and
nine-month period ended September 30, 1999, compared to the year-earlier
periods, mostly due to additional debt for financing EME's Homer City and
Ferrybridge and Fiddler's Ferry generating facilities acquisitions, and higher
overall short-term debt balances at SCE and at Edison International, the parent
company, necessary to meet general cash requirements during the periods.
Dividends on preferred securities increased for both the three and nine months
ended September 30, 1999, compared to the same periods in 1998, due to an
additional issuance of preferred securities at EME, primarily during the second
quarter of 1999, and an issuance of quarterly income securities at Edison
International, the parent company, in July 1999.
Capitalized interest increased for the nine months ended September 30, 1999,
compared to the same period in 1998, primarily due to EME's investment in its
EcoElectrica project in December 1998.
Income taxes decreased 23% and 27%, respectively, for the three and nine months
ended September 30, 1999, compared to the year-earlier periods. The quarterly
decrease was primarily due to SCE's increased tax expense associated with the
gain on plant sales in 1998, as well as a decrease in taxes associated with
additional accruals at SCE for regulatory matters in 1999. The year-to-date
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decrease was mostly due to lower pre-tax income at SCE, a lower effective tax
rate at EME in 1999, as well as the third quarter explanation above. The lower
effective tax rate at EME was the result of lower foreign income taxes which
resulted from the permanent reinvestment of earnings from foreign affiliates
located in different foreign tax jurisdictions.
Financial Condition
Edison International's liquidity is primarily affected by debt maturities,
dividend payments, capital expenditures, and investments in partnerships and
unconsolidated subsidiaries. Capital resources include cash from operations and
external financings.
Edison International's board of directors has authorized the repurchase of up to
$2.8 billion (increased from $2.3 billion in July 1998) of its outstanding
shares of common stock. Edison International repurchased approximately 101
million shares ($2.4 billion) between January 1995 and February 28, 1999, funded
by dividends from its subsidiaries and the proceeds of the rate reduction notes
issuance.
Edison International's dividend payout ratio for the twelve-month period ended
September 30, 1999, was 53.5%.
Cash Flows from Operating Activities
Net cash provided by operating activities totaled $1.9 billion for the nine
months ended September 30, 1999, compared to $1.2 billion for the same period in
1998. For the first nine months of 1999, Edison International's cash flow
coverage of dividends was 6.6 times compared to 4.2 times for the same period in
1998. The increase in 1999 was primarily due to the net gain on sales of SCE's
generating plants in 1998.
Cash Flows from Financing Activities
At September 30, 1999, Edison International and its subsidiaries had $1.7
billion of borrowing capacity available under lines of credit totaling $3.3
billion. SCE had total lines of credit of $1.25 billion, with $50 million
available for short-term debt and $515 million available for the long-term
refinancing of its variable-rate pollution-control bonds. The parent company had
total lines of credit of $590 million, with $231 million available. The
nonutility companies had total lines of credit of $1.5 billion, with $919
million available to finance general cash requirements. These unsecured lines of
credit are at negotiated or bank index rates with various expiration dates.
SCE's short-term debt is used to finance fuel inventories and general cash
requirements. Both EME's short-term and long-term debt are used for acquisitions
and general corporate purposes. SCE's long-term debt is used mainly to finance
capital expenditures. SCE's external financings are influenced by market
conditions and other factors, including limitations imposed by its articles of
incorporation and trust indenture. As of September 30, 1999, SCE could issue
approximately $11.2 billion of additional first and refunding mortgage bonds and
$2.9 billion of preferred stock at current interest and dividend rates.
EME has firm commitments of $194 million to make equity and other contributions
for the ISAB project in Italy, the EcoElectrica project in Puerto Rico and the
Tri Energy project in Thailand. EME also has contingent obligations to make
additional contributions of $185 million, primarily for equity support
guarantees related to the Paiton project in Indonesia.
EME may incur additional obligations to make equity and other contributions to
projects in the future. EME believes it will have sufficient liquidity to meet
these equity requirements from cash provided by operating activities, proceeds
from the repayment of loans to energy projects and funds available from EME's
revolving line of credit.
Edison Capital has firm commitments of $378 million to fund affordable housing,
and energy and infrastructure investments.
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California law prohibits SCE from incurring or guaranteeing debt for its
affiliates that are not rate-regulated. Additionally, the CPUC regulates SCE's
capital structure, limiting the dividends it may pay Edison International. At
September 30, 1999, SCE had the capacity to pay approximately $586 million in
additional dividends and continue to maintain its authorized capital structure.
These restrictions are not expected to affect Edison International's ability to
meet its cash obligations.
In December 1997, SCE Funding LLC, a special purpose entity, of which SCE is the
sole member, issued approximately $2.5 billion of rate reduction notes to
Bankers Trust Company of California, as certificate trustee for the California
Infrastructure and Economic Development Bank Special Purpose Trust SCE-1
(Trust), which is a special purpose entity established by the State of
California. The terms of the rate reduction notes generally mirror the terms of
the pass-through certificates issued by the Trust, which are known as rate
reduction certificates. The proceeds of the rate reduction notes were used by
SCE Funding LLC to purchase from SCE an enforceable right known as transition
property. Transition property is a current property right created pursuant to
the restructuring legislation and a financing order of the CPUC and consists
generally of the right to be paid a specified amount from a non-bypassable rate
charged to residential and small commercial customers. Despite the legal sale of
the transition property by SCE to SCE Funding LLC, the amounts reflected as
assets on SCE's balance sheet have not been reduced by the amount of the
transition property sold to SCE Funding LLC, and the liabilities of SCE Funding
LLC for the rate reduction notes are for accounting purposes reflected as
long-term liabilities on the consolidated balance sheets of SCE. SCE used the
proceeds from the sale of the transition property to retire debt and equity
securities.
The remaining series of outstanding rate reduction notes have scheduled
maturities beginning in 2000 and ending in 2007, with interest rates ranging
from 6.14% to 6.42%. The rate reduction notes are secured solely by the
transition property and certain other assets of SCE Funding LLC, and there is no
recourse to SCE or Edison International.
Although SCE Funding LLC is consolidated with SCE in the financial statements,
as required by generally accepted accounting principles, SCE Funding LLC is
legally separate from SCE, the assets of SCE Funding LLC are not available to
creditors of SCE or Edison International, and the transition property is legally
not an asset of SCE or Edison International.
On October 25, 1999, SCE issued $175 million of floating rate notes, due October
2000.
On October 29, 1999, a trust that is an affiliate of Edison International issued
$325 million of 8.6% cumulative quarterly income preferred securities, which are
guaranteed by Edison International. These securities have a stated maturity of
October 2029, but are redeemable at the option of Edison International, in whole
or in part, beginning October 2004.
Cash Flows from Investing Activities
Cash flows from investing activities are affected by additions to property and
plant, purchases of nonutility power stations, the nonutility companies'
investments in partnerships and unconsolidated subsidiaries, proceeds from the
sale of assets (see the discussion in Utility Regulatory Environment below), and
funding of nuclear decommissioning trusts. Decommissioning costs are accrued and
recovered in rates over the term of each nuclear generating facility's operating
license. SCE estimates that it will spend approximately $8.6 billion through
2060 to decommission its nuclear facilities. This estimate is based on SCE's
current-dollar decommissioning costs ($1.9 billion), escalated at rates ranging
from 0.3% to 10.0% (depending on the cost element) annually. These costs are
expected to be funded from independent decommissioning trusts which receive SCE
contributions of approximately $25 million per year.
Cash used for the nonutility subsidiaries' investing activities was $5.0 billion
for the nine-month period ended September 30, 1999, compared to $606 million for
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the same period in 1998. The increase is primarily due to EME's acquisition of
Homer City in March 1999, Contact Energy in May 1999, and the Ferrybridge and
Fiddler's Ferry generating facilities in July 1999.
Market Risk Exposures
Edison International's primary market risk exposures arise from fluctuations in
energy prices, interest rates and foreign exchange rates. Edison International's
risk management policy allows the use of derivative financial instruments to
manage its financial exposures, but prohibits the use of these instruments for
speculative or trading purposes.
As a result of the rate freeze established in the restructuring legislation,
SCE's transition costs are recovered as the residual component of rates once the
costs for distribution, transmission, public purpose programs, nuclear
decommissioning and the cost of supplying power to its customers through the PX
and ISO have already been recovered. Accordingly, more revenue will be available
to cover transition costs when market prices in the PX and ISO are low than when
PX and ISO prices are high. The PX and ISO market prices to date have generally
been reasonable, although some irregular price spikes have occurred. The ISO has
responded to price spikes in the market for reliability services (referred to as
ancillary services) by imposing a price cap on the market for such services
until certain actions have been completed to improve the functioning of those
markets. Similarly, the ISO currently maintains a cap on its market for
imbalance energy until adequate measures to improve the efficient operation of
the market have been implemented. The caps in these markets mitigate the risk of
costly price spikes that would reduce the revenue available to SCE to pay
transition costs. The price cap instituted by the ISO in the summer of 1998 was
$250/MWh. In October 1999, that cap was raised to $750/MWh and will remain at
that level through the summer of 2000, unless certain identified market
improvements do not occur. Under such circumstances, the price cap will be
reduced to $500/MWh. SCE has entered into hedges against high natural gas
prices, since increases in natural gas prices tend to raise the price of
electricity.
In July 1999, SCE began participating in forward purchases through a PX block
forward market. In the PX block forward market, SCE can purchase monthly blocks
of energy for six days a week (excluding Sundays and holidays) for 16 hours a
day. These purchases can be made up to 12 months in advance of the delivery
date. The CPUC has currently limited SCE's use of the PX block forward market to
a maximum of approximately 2,400 MW in any month. SCE requested permission from
the CPUC to begin a pilot demand responsiveness program that would allow
customers to be paid to curtail their load during times of very high prices.
This request was denied for 1999, but SCE will continue to work with the CPUC
and others to implement some form of demand responsiveness programs prior to the
summer of 2000.
Changes in interest rates, electricity pool pricing and fluctuations in foreign
currency exchange rates can have a significant impact on EME's results of
operations. EME has mitigated a portion of the risk of interest rate
fluctuations by arranging for fixed rate or variable rate financing with
interest rate swaps or other hedging mechanisms for the majority of its project
financings. Interest expense includes $19 million and $16 million, respectively,
for the nine month periods ended September 30, 1999, and September 30, 1998, as
a result of interest rate swap and collar agreements. The maturity dates of
several of EME's interest rate swap and collar agreements do not correspond to
the term of the underlying debt. EME does not believe that interest rate
fluctuations will have a material adverse effect on its results of operations or
financial position.
Projects in the U.K. sell their electric energy and capacity through a
centralized electricity pool, which establishes a half-hourly clearing price, or
pool price, for electric energy. The pool price is extremely volatile, and can
vary by a factor of ten or more over the course of a few hours due to large
differentials in demand according to the time of day. First Hydro, and
Ferrybridge and Fiddler's Ferry mitigate a portion of the market risk of the
pool by entering into contracts for differences (electricity rate swap
agreements), related to either the selling or purchasing price of power, where a
contract specifies a price at which the electricity will be traded, and the
parties to the agreements make payments, calculated on the difference between
the price in the contract and the pool price for the element of power under
contract. These contracts are sold in various structures. These contracts act as
a means of stabilizing production revenue or purchasing costs by removing an
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element of their net exposure to pool price volatility. A proposal to replace
the current structure of the forward-contracts market and the pool has been made
by the Director General of Electricity Supply, at the request of the Minister of
Science, Energy and Industry in the U.K. The Minister has recommended that the
proposal be implemented by April 2000. Further definition of the proposal will
be required before the effects of the changes can be evaluated. Implementation
of the proposal may also require legislation.
Electric power generated at Homer City is sold under bilateral arrangements with
domestic utilities and power marketers under short-term contracts (two years or
less) or to the Pennsylvania-New Jersey-Maryland Power Interconnection (PJM) or
the New York Power Pool (NYPP). The PJM pool has a market which establishes an
hourly clearing price. Homer City is located in the PJM pool area and is
physically connected to high-voltage transmission lines serving both the PJM and
NYPP markets. Power can also be transmitted to the mid-western United States.
EME has developed risk management policies and procedures which, among other
matters, address credit risk. It is EME's policy to sell to investment grade
counterparties or counterparties that have an investment grade guarantor. EME
intends on hedging a portion of the electric output of the plant in order to
lock in desirable outcomes. EME plans to manage the margin that is spread
between electric prices and fuel prices when deemed appropriate. EME plans to
use forward contracts, swaps, futures or options contracts to achieve those
objectives.
Loy Yang B sells its electric energy through a centralized electricity pool,
which provides for a system of generator bidding, central dispatch and a
settlements system based on a clearing market for each half-hour of every day.
The Victorian Power Exchange, operator and administrator of the pool, determines
a system marginal price each half-hour. To mitigate the exposure to price
volatility of the electricity traded in the pool, Loy Yang B has entered into a
number of financial hedges. From May 8, 1997, to December 31, 2000, 53% to 64%
of the plant output sold is hedged under vesting contracts, with the remainder
of the plant capacity hedged under the state hedge described below. Vesting
contracts were put into place by the State Government of Victoria, Australia
(State), between each generator and each distributor, prior to the privatization
of electric power distributors in order to provide more predictable pricing for
those electricity customers that were unable to choose their electricity
retailer. Vesting contracts set base strike prices at which the electricity will
be traded, and the parties to the agreement make payments, calculated based on
the difference between the price in the contract and the half-hourly pool
clearing price for the element of power under contract. These contracts are sold
in various structures. These contracts are accounted for as electricity rate
swap agreements. The state hedge is a long-term contractual arrangement based
upon a fixed price commencing May 8, 1997, and terminating October 31, 2016. The
State guarantees the State Electricity Commission of Victoria's obligations
under the state hedge.
EME's electric revenue decreased by $3 million for the nine months ended
September 30, 1999, compared to an increase of $88 million for the same period
in 1998, as a result of electricity rate swap agreements and other hedging
activities.
As EME continues to expand into foreign markets, fluctuations in foreign
currency exchange rates can affect the amount of its equity contributions to,
distributions from and results of operations of its foreign projects. At times,
EME has hedged a portion of its current exposure to fluctuations in foreign
exchange rates where it deems appropriate through financial derivatives,
offsetting obligations denominated in foreign currencies, and indexing
underlying project agreements to U.S. dollars or other indices reasonably
expected to correlate with foreign exchange movements. Statistical forecasting
techniques are used to help assess foreign exchange risk and the probabilities
of various outcomes. There can be no assurance, however, that fluctuations in
exchange rates will be fully offset by hedges or that currency movements and the
relationship between macroeconomic variables will behave in a manner that is
consistent with historical or forecasted relationships.
A wholly owned subsidiary of EME owns a 40% interest in the Paiton project, a
1,230-MW coal-fired power plant in Indonesia. The tariff is higher in the early
years and steps down over time. The tariff for the Paiton project includes
infrastructure to be used in common by other units at the Paiton complex. The
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plant's output is fully contracted with the state-owned electricity company for
payment in Indonesian Rupiah, with the portion of such payments intended to
cover non-Rupiah project costs (including returns to investors) indexed to the
Indonesian Rupiah/U.S. dollar exchange rate established at the time of the power
purchase agreement in February 1994. The state-owned electricity company's
payment obligations are supported by the Indonesian Government. The project
received substantial finance and insurance support from the Export-Import Bank
of the United States, The Export-Import Bank of Japan, the U.S. Overseas Private
Investment Corporation and the Ministry of International Trade and Industry of
Japan. The projected rate of growth of the Indonesian economy and the exchange
rate of Indonesian Rupiah into U.S. dollars have deteriorated significantly
since the Paiton project was contracted, approved and financed. The Paiton
project's senior debt ratings have been reduced from investment grade to
speculative grade based on the rating agencies' perceived increased risk that
the state-owned electricity company might not be able to honor the electricity
sales contract with Paiton. The Indonesian government has arranged to reschedule
sovereign debt owed to foreign governments and has entered into discussions
about rescheduling sovereign debt owed to private lenders. Certain events
(including those discussed in the paragraph below) which, with the passage of
time or upon notice, may mature into defaults of the project's debt agreement
have occurred. On October 15, 1999, the project entered into an interim
agreement with its lenders, in which the lenders waived such defaults until July
31, 2000. However, such waiver may expire on an earlier date if additional
defaults (other than those specifically waived) or certain other specified
events occur.
One of the Paiton units began commercial operation in May 1999 and the other
unit in July 1999. Because of the economic downturn, the state-owned electricity
company is experiencing low electricity demand and has therefore ordered no
power from the Paiton plant; however, under the terms of the power purchase
agreement, the state-owned electricity company is required to continue to pay
for capacity and fixed operating costs once each unit and the plant achieve
commercial operation. An invoice for these charges for May 1999 has been
submitted and a partial payment based on an arbitrary exchange rate that does
not comply with the terms of the power purchase agreement, was received.
Invoices for capacity charges and fixed operating costs for June, July, August
and September 1999 have been submitted; no payment has been received. In
addition, the state-owned electricity company has filed a lawsuit, which is
currently suspended, contesting the validity of its agreement to purchase
electricity from the project. The state-owned electricity company and the
project have begun discussions to renegotiate the power supply contract.
However, it is not yet known what form the renegotiation may take. Any material
modifications of the contract could also require a renegotiation of the Paiton
project's debt agreement. The impact of any such renegotiations with the
state-owned electricity company, the Indonesian government or the project's
creditors on EME's expected return on its investment in Paiton is uncertain at
this time, however, EME believes that it will ultimately recover its investment
in the project.
Projected Capital Requirements
Edison International's projected construction expenditures for the next five
years are: 1999 -- $982 million; 2000 -- $940 million; 2001 -- $891 million;
2002 -- $860 million; and 2003 -- $856 million.
Long-term debt maturities and sinking fund requirements for the five
twelve-month periods following September 30, 1999, are: 2000 -- $830 million;
2001 -- $1.0 billion; 2002 -- $534 million; 2003 -- $817 million; and 2004 --
$592 million.
Preferred stock redemption requirements for the five twelve-month periods
following September 30, 1999, are: 2000 and 2001 -- zero; 2002 -- $105 million;
2003 -- $9 million; and 2004 -- $9 million.
EME Acquisitions
In March 1999, EME completed the acquisition of the 1,884-MW Homer City
Generating Station for approximately $1.8 billion. Homer City was jointly owned
by subsidiaries of GPU, Inc. and New York State Electric & Gas Corporation. The
coal-fired facility has the rights to direct, high-voltage interconnections to
both the New York Power Pool and the Pennsylvania-New Jersey-Maryland Power
Pool. The plant is located near Pittsburgh, Pennsylvania. EME is operating the
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plant, which is one of the lowest-cost generation facilities in the region. EME
financed the acquisition with a combination of debt secured by the project, EME
corporate debt, cash and EME corporate revolving debt.
In March 1999, EME entered into agreements to acquire the fossil-fuel generating
assets of Commonwealth Edison Company (ComEd) for approximately $5 billion. The
coal-, gas- and oil-fired generating facilities have a total capacity of 9,510
MW. In conjunction with the acquisition, EME, who will own and operate the
facilities through a subsidiary, Midwest Generation, will invest additional
capital in the plants to upgrade pollution controls, extend plant life, improve
reliability and reduce generation cost. The transaction is expected to close by
year-end 1999. In connection with the acquisition, it is expected that a
subsidiary of EME will enter into transition contracts with ComEd, in which
ComEd will retain power purchase agreements with EME, enabling ComEd access to
certain amounts of plant output for the next five years to serve its customers.
In May 1999, EME completed its acquisition of a 40% interest in New Zealand
government-owned Contact Energy Ltd. for approximately $635 million. The New
Zealand government sold the remaining 60% of Contact Energy to the public
through an initial public offering. Contact Energy owns and operates
hydroelectric, geothermal and natural gas-fired generating plants in New Zealand
with a total generating capacity of 1,930 MW. EME financed the acquisition with
subsidiary debt, an equity contribution from Edison International and cash.
In July 1999, EME completed its acquisition of two electric generating plants,
Ferrybridge and Fiddler's Ferry, located in the U.K. from PowerGen, a U.K.
utility, for approximately $2 billion. Each of the plants has a generating
capacity of about 2,000 MW. The acquisition was financed primarily through a
combination of debt secured by the project and equity from Edison International.
In October 1999, EME acquired the remaining 20% interest in the Roosecote Power
Project, a 220 MW gas-fired power station located in northern England, for
approximately 9.6 million pounds sterling (U.S. $16 million).
Utility Regulatory Environment
SCE currently operates in a highly regulated environment in which it has an
obligation to deliver electric service to customers in return for an exclusive
franchise within its service territory. This regulatory environment is changing
as a result of a 1995 CPUC decision on restructuring and state legislation
enacted in 1996. The Statute substantially adopted the CPUC's restructuring
decision by addressing stranded-cost recovery for utilities and providing a
certain cost-recovery time period for the transition costs associated with
generation-related assets. The Statute also included provisions to finance a
portion of the stranded costs that residential and small commercial customers
would have paid between 1998 and 2001, which allowed SCE to reduce rates by at
least 10% to these customers, effective January 1, 1998. The Statute mandated
other rates to remain frozen at June 1996 levels (system average of 10.1(cent)
per kilowatt-hour), including those for large commercial and industrial
customers, and included provisions for continued funding for energy
conservation, low-income programs and renewable resources. Despite the rate
freeze, SCE expects to be able to recover its revenue requirement during the
1998--2001 transition period. In addition, the Statute mandated the
implementation of the competition transition charge (CTC) (see the detailed
discussion below) that provides utilities the opportunity to recover costs made
uneconomic by electric utility restructuring.
Revenue and Cost-Recovery Mechanisms
Revenue is determined by various mechanisms depending on the utility operation.
Revenue related to distribution operations is being determined through a
performance-based rate-making mechanism (PBR) and the distribution assets have
the opportunity to earn a CPUC-authorized 9.49% return. The distribution PBR
will extend through December 2001. Key elements of the distribution PBR include:
distribution rates indexed for inflation based on the Consumer Price Index less
a productivity factor; adjustments for cost changes that are not within SCE's
control; a cost-of-capital trigger mechanism based on changes in a bond index;
standards for customer satisfaction; service reliability and safety; and a net
revenue-sharing mechanism that determines how customers and shareholders will
share gains and losses from distribution operations. Transmission revenue is
being determined through FERC-authorized rates that are subject to refund.
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SCE's transition costs are being recovered through a non-bypassable CTC. This
charge applies to all customers who were using or began using utility services
on or after the CPUC's December 1995 restructuring decision date. SCE has
estimated its transition costs to be approximately $10.6 billion (1998 net
present value) from 1998 through 2030. This estimate was based on incurred
costs, forecasts of future costs and assumed market prices. However, changes in
the assumed market prices could materially affect these estimates. Transition
costs related to power-purchase contracts are being recovered through the terms
of their contracts while most of the remaining transition costs will be
recovered through 2001. The potential transition costs are comprised of $6.4
billion from SCE's qualifying facilities contracts, which are the direct result
of prior legislative and regulatory mandates, and $4.2 billion from costs
pertaining to certain generating assets (including the 1998 sale of SCE's
generating plants) and regulatory commitments consisting of costs incurred
(whose recovery has been deferred by the CPUC) to provide service to customers.
Such commitments include the recovery of income tax benefits previously flowed
through to customers, postretirement benefit transition costs, accelerated
recovery of San Onofre Units 2 and 3 and the Palo Verde Nuclear Generating
Station, and certain other costs. During 1998, SCE sold all of its gas- and
oil-fueled generation plants for $1.2 billion, over $500 million more than the
combined book value. Net proceeds of the sales were used to reduce stranded
costs, which otherwise were expected to be collected through the CTC mechanism.
If events occur during the restructuring process that result in all or a portion
of the transition costs being improbable of recovery, SCE could have write-offs
associated with these costs if they are not recovered through another regulatory
mechanism.
Revenue from generation-related operations is being determined through the
competitive market and the CTC mechanism, which now includes the nuclear
rate-making agreements. The portion of revenue related to fossil and
hydroelectric generation operations that is made uneconomic by electric industry
restructuring is recovered through the CTC mechanism. The portion that is
economic is recovered through the market. SCE's costs associated with its
hydroelectric plants are being recovered through a performance-based mechanism.
The mechanism sets the hydroelectric revenue requirement and establishes a
formula for extending it through the duration of the electric industry
restructuring transition period, or until market valuation of the hydroelectric
facilities, whichever occurs first. The mechanism provides that power sales
revenue from hydroelectric facilities in excess of the hydroelectric revenue
requirement be credited against the costs to transition to a competitive market.
In 1999, fossil and hydroelectric generation assets have the opportunity to earn
a 7.22% return.
SCE is recovering its investment in its nuclear facilities on an accelerated
basis in exchange for a lower authorized rate of return. SCE's nuclear assets
are earning an annual rate of return of 7.35%. In addition, the San Onofre plan
authorizes a fixed rate of approximately 4(cent) per kilowatt-hour generated for
operating costs including incremental capital costs, and nuclear fuel and
nuclear fuel financing costs. The San Onofre plan commenced in April 1996, and
ends in December 2001 for the accelerated recovery portion and in December 2003
for the incentive-pricing portion. Palo Verde's operating costs, including
incremental capital costs, and nuclear fuel and nuclear fuel financing costs,
are subject to balancing account treatment. The Palo Verde plan commenced in
January 1997 and ends in December 2001. Beginning January 1, 1998, both the San
Onofre and Palo Verde rate-making plans became part of the CTC mechanism.
The changes in distribution, transmission and generation revenue from the
regulatory mechanisms discussed above, excluding the effects of other rate
actions, are expected to have an approximately $20 million negative impact on
1999 earnings.
In March 1997, SCE filed its first FERC transmission rate case. In March 1999, a
proposed FERC decision was issued which recommended a reduced rate of return on
equity of 9.68% (compared to SCE's current CPUC rate for distribution of 11.6%)
and a reduced return on transmission assets of 8.41% (compared to the current
rate of 9.43% being earned on transmission assets). SCE filed comments opposing
the proposed decision in May 1999. In response to a recent FERC ruling, on
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November 1, 1999, SCE filed additional evidence regarding return on equity. A
final FERC decision is expected in early 2000. SCE does not expect the final
decision to have a material effect on its results of operations or financial
position.
Restructuring Implementation Costs
The ISO assumed operational control of the transmission system after the ISO and
PX had begun accepting bids and schedules for electricity purchases on March 31,
1998. The restructuring implementation costs related to the start-up and
development of the PX, which are paid by the utilities, were to be recovered
from all retail customers over the four-year transition period. SCE's share of
the charge is $45 million, plus interest and fees. SCE's share of the ISO's
start-up and development costs (approximately $16 million per year) will be paid
over a 10-year period. In May 1998, SCE filed an application with the CPUC to
identify the categories of such costs (including costs related to the
implementation of direct access) and to establish the reasonableness of those
costs incurred in 1997.
On September 16, 1999, the CPUC approved the settlement agreement between SCE,
the CPUC's Office of Ratepayer Advocates and several other parties allowing SCE
to recover substantially all (approximately $300 million) of its restructuring
implementation costs (incurred and estimated) for the period 1997-2001. In
addition, the settlement provides that up to $210 million of generation-related
costs (transition costs) that are displaced by recovery of the restructuring
implementation costs during the rate freeze may be recovered after December 31,
2001, the date SCE would cease to recover these transition costs under
restructuring legislation.
Accounting for Utility Generation-Related Assets
If the CPUC's electric industry restructuring plan continues as described above,
SCE will be allowed to recover its transition costs through non-bypassable
charges to its distribution customers (although its investment in certain
generation assets would be subject to a lower authorized rate of return). In
1997, SCE discontinued application of accounting principles for rate-regulated
enterprises for its investment in generation facilities based on new accounting
guidance. The new guidance did not require SCE to write off any of its
generation-related assets, including related regulatory assets. SCE has retained
these assets on its balance sheet because the Statute and restructuring plan
referred to above make probable their recovery through a non-bypassable CTC to
distribution customers. The regulatory assets relate primarily to the recovery
of accelerated income tax benefits previously flowed through to customers,
purchased power contract termination payments and unamortized losses on
reacquired debt. The new accounting guidance also permits the recording of new
generation-related regulatory assets during the transition period that are
probable of recovery through the CTC mechanism.
During the second quarter of 1998, additional guidance was developed related to
the application of asset impairment standards to these assets. Using this
guidance resulted in SCE reducing its remaining nuclear plant investment by $2.6
billion (as of June 30, 1998) and recording a regulatory asset on its balance
sheet for the same amount. For this impairment assessment, the fair value of the
investment was calculated by discounting future net cash flows. This
reclassification had no effect on SCE's results of operations.
If during the transition period events were to occur that made the recovery of
these generation-related regulatory assets no longer probable, SCE would be
required to write off the remaining balance of such assets (approximately $2.6
billion, after tax, at September 30, 1999) as a one-time, non-cash charge
against earnings. At this time, SCE cannot predict what other revisions will
ultimately be made during the restructuring process in subsequent proceedings or
the effect, after the transition period, that competition will have on its
results of operations or financial position.
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Environmental Protection
Edison International is subject to numerous environmental laws and regulations,
which require it to incur substantial costs to operate existing facilities,
construct and operate new facilities, and mitigate or remove the effect of past
operations on the environment.
As further discussed in Note 2 to the Consolidated Financial Statements, Edison
International records its environmental liabilities when site assessments and/or
remedial actions are probable and a range of reasonably likely cleanup costs can
be estimated. Edison International reviews its sites and measures the liability
quarterly, by assessing a range of reasonably likely costs for each identified
site. Unless there is a probable amount, Edison International records the lower
end of this likely range of costs.
Edison International's recorded estimated minimum liability to remediate its 49
identified sites is $165 million. One of SCE's sites, a former pole-treating
facility, is considered a federal Superfund site and represents 40% of its
recorded liability. The ultimate costs to clean up Edison International's
identified sites may vary from its recorded liability due to numerous
uncertainties inherent in the estimation process. Edison International believes
that, due to these uncertainties, it is reasonably possible that cleanup costs
could exceed its recorded liability by up to $284 million. The upper limit of
this range of costs was estimated using assumptions least favorable to Edison
International among a range of reasonably possible outcomes. SCE has sold all of
its gas- and oil-fueled power plants and has retained some liability associated
with the divested properties.
The CPUC allows SCE to recover environmental-cleanup costs at 41 of its sites,
representing $85 million of its recorded liability, through an incentive
mechanism. Under this mechanism, SCE will recover 90% of cleanup costs through
customer rates; shareholders fund the remaining 10%, with the opportunity to
recover these costs from insurance carriers and other third parties. SCE has
successfully settled insurance claims with all responsible carriers. Costs
incurred at SCE's remaining sites are expected to be recovered through customer
rates. SCE has recorded a regulatory asset of $130 million for its estimated
minimum environmental-cleanup costs expected to be recovered through customer
rates.
Edison International's identified sites include several sites for which there is
a lack of currently available information, including the nature and magnitude of
contamination, and the extent, if any, that Edison International may be held
responsible for contributing to any costs incurred for remediating these sites.
Thus, no reasonable estimate of cleanup costs can be made for these sites.
Edison International expects to clean up its identified sites over a period of
up to 30 years. Remediation costs in each of the next several years are expected
to range from $5 million to $15 million.
Based on currently available information, Edison International believes it is
unlikely that it will incur amounts in excess of the upper limit of the
estimated range and, based upon the CPUC's regulatory treatment of
environmental-cleanup costs, Edison International believes that costs ultimately
recorded will not materially affect its results of operations or financial
position. There can be no assurance, however, that future developments,
including additional information about existing sites or the identification of
new sites, will not require material revisions to such estimates.
The 1990 Federal Clean Air Act requires power producers to have emissions
allowances to emit sulfur dioxide. Power companies receive emissions allowances
from the federal government and may bank or sell excess allowances. SCE expects
to have excess allowances under Phase II of the Clean Air Act (2000 and later).
The act also calls for a study to determine if additional regulations are needed
to reduce regional haze in the southwestern U.S. In addition, another study was
undertaken to determine the specific impact of air contaminant emissions from
the Mohave Generating Station on visibility in Grand Canyon National Park. The
final report on this study, which was issued in March 1999, found negligible
correlation between measured Mohave station tracer concentrations and visibility
impairment. The absence of any obvious relationship cannot rule out Mohave
station contributions to haze in Grand Canyon National Park, but strongly
suggests that other sources were primarily responsible for the haze. In June
1999, the Environmental Protection Agency issued an advanced notice of proposed
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rulemaking regarding assessment of visibility impairment at the Grand Canyon.
SCE intends to file comments on the proposed rulemaking. At this time, SCE is
unable to predict the potential effect of these studies on sulfur dioxide
regulations for Mohave, or what effect the final reports may have on SCE's
results of operations or financial position.
Edison International's projected environmental capital expenditures are $900
million for the 1999-2003 period, mainly for undergrounding certain transmission
and distribution lines.
San Onofre Steam Generator Tubes
The San Onofre Units 2 and 3 steam generators have performed relatively well
through the first 15 years of operation, with low rates of ongoing steam
generator tube degradation. However, during the Unit 2 scheduled refueling and
inspection outage in 1997, an increased rate of tube degradation was identified,
which resulted in the removal of more tubes from service than had been expected.
The steam generator design allows for the removal of up to 10% of the tubes
before the rated capacity of the unit must be reduced. As a result of the
increased degradation, a mid-cycle inspection outage was conducted in early 1998
for Unit 2. Continued degradation was found during this inspection. A favorable
or decreasing trend in degradation was observed during inspection in the
scheduled refueling outage in January 1999. Analysis of results of the January
1999 inspection has determined that a mid-cycle inspection outage in early 2000
will be unnecessary. With the results from the January 1999 outage, 7.5% of the
tubes have now been removed from service.
During Unit 3's refueling outage, which was completed in May 1999, a complete
inspection of the steam generator tubes was performed. Results obtained were
within expectations. To date, 5.4% of Unit 3's tubes have been removed from
service. During the refueling, follow-up inspections of the tube support
thinning problem first detected in 1997 were performed. These inspections
confirmed that corrective actions taken in 1997 were effective and the thinning
has been stabilized.
New Accounting Rules
An accounting rule which requires that costs related to start-up activities be
expensed as incurred became effective January 1, 1999. Although this new
accounting rule did not materially affect Edison International's results of
operations or financial position, EME wrote off approximately $14 million in
previously capitalized start-up costs in first quarter 1999.
In June 1998, a new accounting standard for derivative instruments and hedging
activities was issued. The new standard, which as amended will be effective
January 1, 2001, requires all derivatives to be recognized on the balance sheet
at fair value. Gains or losses from changes in fair value would be recognized in
earnings in the period of change unless the derivative is designated as a
hedging instrument. Gains or losses from hedges of a forecasted transaction or
foreign currency exposure would be reflected in other comprehensive income.
Gains or losses from hedges of a recognized asset or liability or a firm
commitment would be reflected in earnings for the ineffective portion of the
hedge. SCE anticipates that most of its derivatives under the new standard would
qualify for hedge accounting. SCE expects to recover in rates any market price
changes from its derivatives that could potentially affect earnings. Edison
International is studying the impact of the new standard on its nonutility
subsidiaries, and is unable to predict at this time the impact on its financial
statements.
Year 2000 Issue
Many of the existing computer systems at Edison International were originally
programmed to represent any date by using six digits (e.g., 12/31/99) rather
than eight digits (e.g., 12/31/1999). Accordingly, such programs, if not
appropriately addressed, could fail or create erroneous results when attempting
to process information containing dates after December 31, 1999. This situation
has been referred to generally as the Year 2000 Issue.
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Edison International has a comprehensive program in place to address potential
Year 2000 impacts. Edison International provides overall coordination of this
effort, working with its affiliates. Edison International divides Year 2000
activities into five phases: inventory, impact assessment, remediation, testing
and implementation. Edison International met its goal to have 100% of its
critical systems Year 2000-ready by July 1, 1999. A critical system is defined
as those applications and systems, including embedded processor technology,
which if not appropriately remediated, may have a significant impact on
customers, the health and safety of the public and/or personnel, the revenue
stream, or regulatory compliance. A system, application or physical asset is
deemed to be Year 2000-ready if it is determined by Edison International to be
suitable for continued use through 2028 (or through the last year of the
anticipated life of the asset, whichever occurs first), even though it may not
be fully Year 2000-compliant. A system, application, or physical asset is deemed
to be Year 2000-compliant if it accurately processes date/time data, such as
calculating, comparing, and sequencing from, into, and between the 20th and 21st
centuries, 1999 and 2000, and leap-year calculations.
Edison International has structured the scope of the program to focus on three
principal categories: mainframe computing, distributed computing and physical
assets (also known as embedded processors). The mainframe and distributed
computing assets consist of computer application systems (software). Physical
assets include information technology infrastructure (hardware, operating system
software) and embedded processor technology in generation, transmission,
distribution, and facilities components.
Included among SCE's critical applications that are Year 2000-ready are the
financial, customer information and billing, material management, and human
resource systems. Work has also been completed on critical physical assets in
the areas of information technology infrastructure, as well as embedded
processor technology in generation, transmission, distribution and facilities
assets. SCE filed a statement with the Nuclear Regulatory Commission (NRC) on
June 28, 1999, stating that its Year 2000 readiness program has been completed
for those systems within the scope of its license, NRC regulations and other
critical systems required for continued operation of San Onofre Units 2 and 3.
EME achieved Year 2000-readiness of its critical systems as of July 1, 1999.
Assurances from third party operated plants have been received indicating
comprehensive Year 2000 remediation programs. Monitoring of these efforts is
ongoing. Plants under construction have obtained assurances from new
construction and development contractors, who have been requested to make
certain that this is part of their goals. General warranty of plants would
likely include any equipment issues that may arise regarding Year 2000 in the
current year.
Edison Enterprises achieved Year 2000-readiness of critical systems on June 30,
1999. Included among Edison Enterprises' critical systems are those related to
Edison Select's residential security services, Edison Source's energy-related
products and services, and Edison Utility Services' transmission and
distribution outsourcing, outage management, billing and new utility
construction services.
Edison Capital achieved Year 2000-readiness of its critical systems as of July
1, 1999. Included among Edison Capital's critical systems are those related to
the provision of capital and financial services in the areas of
energy/infrastructure and affordable housing.
Ongoing efforts continue to focus on guarding against reintroduction of
components that are not Year 2000-ready into Year 2000-ready systems. Also,
business acquisitions routinely involve an analysis of Year 2000 readiness and
are incorporated into the overall program as necessary.
The other essential component of Edison International's Year 2000 program is to
identify and assess vendor products and business partners for Year 2000
readiness, as these external parties may have the potential to impact Edison
International's Year 2000 readiness. Edison International has implemented,
through its affiliates and their departments, a process to identify and contact
vendors and business partners to determine their Year 2000 status. Evaluation of
responses and other follow-up activities are substantially complete. Edison
International's general policy requires that all newly purchased products and
services be Year 2000-ready or otherwise designed to allow Edison International
to determine whether such products and services present Year 2000 issues. SCE is
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also working to address Year 2000 issues related to all ISO and PX interfaces,
as well as joint ownership facilities. SCE and other Edison International
affiliates exchange Year 2000-readiness information (including, but not limited
to, test results and related data) with one another and certain external parties
as part of their Year 2000-readiness efforts.
Edison International's current estimate of its Year 2000 costs, including the
costs of new hardware and software application modification, work on contingency
planning efforts discussed below and continuing work on non-critical assets, is
$72 million, about 38% of which is expected to be capital costs. Edison
International's Year 2000 costs expended through September 30, 1999, were
approximately $63 million. SCE expects current rate levels for providing
electric service to be sufficient to provide funding for utility-related
modifications.
Although Edison International expects that its critical facilities, systems,
information technology infrastructure and physical assets will remain fully Year
2000-ready, there can be no assurance that the facilities, systems,
infrastructure and physical assets of other companies on which the systems and
operations of Edison International rely will be converted on a timely basis
and/or remain ready for 2000. Edison International believes that prudent
business practices call for development of contingency plans. These plans
include provisions for monitoring, validating and managing the continued
performance of Edison International Year 2000-sensitive systems and assets
during critical transition periods, development of work-arounds and expedited
fix-on-failure strategies. Where appropriate, contingency plans include
scheduling of key personnel, identification of alternate suppliers and securing
adequate on-site supplies of critical materials. For example, SCE plans to have
more than 500 additional personnel, over and above normal holiday staffing, at
key facilities for the Year 2000 rollover.
Edison International has implemented a Year 2000 contingency planning process as
a part of its Year 2000 remediation program. As part of this process, SCE, EME,
Edison Enterprises, and Edison Capital are required to assess the Year 2000
risks, including both internal and external risks and dependencies, associated
with critical systems and assets, that are date aware or date sensitive. This
includes assessment of Year 2000 risks for all indispensable or critical
business processes and key facilities.
Where appropriate, the SCE plans utilize or supplement the existing Corporate
Emergency Response and Recovery Plan, and Information Technology disaster
recovery plan, for identified Year 2000-related events. SCE's Year 2000
contingency plans are designed to coordinate and interface with the ISO and PX
and to satisfy Western System Coordinating Council (WSCC) and North America
Electric Reliability Council (NERC) recommendations and Nuclear Energy Institute
guidelines. SCE has worked with, and will continue to work with, these industry
groups, as well as the Electric Power Research Institute and other major
interconnecting utilities regarding its contingency plans. Initial development
of these plans was completed in June 1999. SCE filed a report on its contingency
plans with the CPUC, as required, on July 1, 1999. Contingency plans have been
used in conducting SCE and electric industry drills and will continue to be used
to conduct internal exercises during the fourth quarter of 1999. SCE expects
that its contingency plans will continue to be revised and enhanced as 2000
approaches.
Although SCE's Year 2000 contingency plans use risk-based methods, the plans are
being evaluated against the NERC/WSCC suggested "more probable" and "credible
worst case scenarios." SCE believes that the most reasonably likely worst case
Year 2000 scenario would be small, localized interruptions of service which
would be restored in a timeframe that is within normal service levels.
EME's Year 2000 contingency plans have been developed using risk-based methods
and following Edison International's Year 2000 guidelines and procedures.
Generating plant contingency plans have been developed and reviewed for any
significant issues and to schedule appropriate testing and/or training. Such
contingency plans include developing strategies for dealing with Year
2000-related processing failures or malfunctions due to EME's internal systems
or from external parties. EME's Year 2000 contingency planning program, which
includes development of contingency plans, allocations of resources and plan
testing, has been completed.
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Edison Enterprises' Year 2000 contingency plans for Edison Enterprises
companies, including Edison Select, Edison Source and Edison Utility Services,
have been developed using risk-based methods and following Edison
International's Year 2000 guidelines and procedures. Edison Enterprises' Year
2000 contingency planning program is continuing, and staffing assignments are
being planned for the Year 2000 rollover period.
Edison Capital's Year 2000 contingency plan was developed using risk-based
methods and following Edison International's Year 2000 guidelines and
procedures. The Year 2000 contingency plan has been included within Edison
Capital's general disaster recovery plan which is currently pending senior
management review and approval. Edison Capital's general disaster recovery plan,
including Year 2000 recovery contingencies, is scheduled to be made effective in
November 1999.
Edison International does not expect the Year 2000 Issue to have a material
adverse effect on its results of operation or financial position; however, if
not effectively remediated, and despite the adoption of contingency plans,
negative effects from Year 2000 issues, including those related to internal
systems, vendors, business partners, the ISO, the PX or customers, could cause
results to differ.
Forward-looking Information
In the preceding Management's Discussion and Analysis of Results of Operations
and Financial Condition and elsewhere in this quarterly report, the words
estimates, expects, anticipates, believes, and other similar expressions are
intended to identify forward-looking information that involves risks and
uncertainties. Actual results or outcomes could differ materially as a result of
such important factors as further actions by state and federal regulatory bodies
setting rates and implementing the restructuring of the electric utility
industry; the effects of new laws and regulations relating to restructuring and
other matters; the effects of increased competition in the electric utility
business and other energy-related businesses, including direct customer access
to retail energy suppliers and the unbundling of revenue cycle services such as
metering and billing; changes in prices of electricity and fuel costs; the terms
of divestiture of utility generation assets; changes in market interest or
currency exchange rates; risks of doing business in foreign countries, such as
political changes and currency devaluations; power plant construction and
operation risks; new or increased environmental liabilities; the ability to
create and expand new businesses, such as telecommunications; the effects of the
Year 2000 Issue; municipalization and other unforeseen events.
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PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Edison International
Geothermal Generators' Litigation
Edison International, The Mission Group, and Mission Power Engineering Company,
have been named as defendants in a lawsuit more fully described under "Southern
California Edison Company - Geothermal Generators' Litigation below."
Edison Mission Energy
PMNC Litigation
In February 1997, a civil action was commenced in the Superior Court of the
State of California, Orange County, entitled The Parsons Corporation and PMNC v.
Brooklyn Navy Yard Cogeneration Partners, L.P. (Brooklyn Navy Yard), Mission
Energy New York, Inc. and B-41 Associates, L.P., in which plaintiffs assert
general monetary claims under the construction turnkey agreement in the amount
of $136.8 million. In addition to defending this action, Brooklyn Navy Yard has
also filed an action in the Supreme Court of the State of New York, Kings County
entitled Brooklyn Navy Yard Cogeneration Partners, L.P. v. PMNC, Parsons Main of
New York, Inc., Nab Construction Corporation, L.K. Comstock & Co., Inc. and The
Parsons Corporation, asserting general monetary claims in excess of $13 million
under the construction turnkey agreement. On March 26, 1998, the Superior Court
in the California action granted PMNC's motion for attachment against Brooklyn
Navy Yard in the amount of $43 million and PMNC subsequently attached three
Brooklyn Navy Yard bank accounts, located in California, in the amount of $0.5
million. Brooklyn Navy Yard is appealing the attachment order. On the same day,
the Court stayed all proceedings in the California action pending an order by
the New York Appellate Court of the appeal by PMNC of a denial of its motion to
dismiss the New York action. That appeal was denied following a hearing on
September 29, 1998. On March 9, 1999, Brooklyn Navy Yard filed a partial Motion
for Summary Judgment in the New York action. The motion was denied on two counts
and conditionally granted on a third count.
P. T. Perusahaan Listrik Negara
One of EME's subsidiaries, MEC Indonesia, B.V. (MEC Indonesia), owns a 40%
interest in P. T. Paiton Energy, (formerly known as Paiton Energy Company), an
Indonesian limited liability company ("PE"). PE constructed a 1,230 MW
coal-fired power project in East Java, Indonesia (the "Paiton Project"). The
Paiton Project has achieved commercial operation. In 1994, PE entered into a
Power Purchase Agreement ("PPA") with Indonesia's state-owned electricity
company, P. T. Perusahaan Listrik Negara ("PLN"), pursuant to which PLN is
obligated to purchase the capacity and energy of the Paiton Project.
On October 7, 1999, PLN announced that it had filed a lawsuit in the Central
Jakarta District Court against PE seeking to annul the PPA, notwithstanding that
PE continued to seek a negotiated basis on which to operate the plant for an
interim period during which the parties could discuss longer term remedies for
the effect on the project of the current financial crisis affecting Indonesia.
The terms of the PPA provide that any disputes with respect thereto must be
submitted to arbitration in Stockholm, Sweden, and cannot be brought in the
courts of any country. Accordingly, immediately following the filing of PLN's
lawsuit, PE commenced an arbitration in accordance with the terms of the PPA in
order to confirm the validity of the agreement and to protect the interests of
PE's shareholders, lenders and other credit support providers. In accordance
with Indonesian procedures applicable to PLN's lawsuit, PE was served with PLN's
complaint on October 22, 1999. In its complaint, PLN has generally alleged that
the PPA was the result of corruption, cronyism and nepotism and is "one-sided
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and against the public interest". The first court hearing was held on October
25, at which procedural matters were discussed, including the possibility of the
court granting a stay of up to thirty days to give the parties time to reach an
out of court settlement. On November 1, a second hearing was held at which the
court granted a fourteen-day suspension of the proceedings until November 15,
1999, to allow the parties to pursue a negotiated settlement. PE agreed to
suspend any proceedings in the arbitration initiated by PE for an equivalent
period. PE intends to contest the jurisdiction of the Indonesian courts, based
on the PPA's provision for binding arbitration, and will otherwise contest the
allegations made in PLN's complaint.
Southern California Edison Company
Geothermal Generators' Litigation
On June 9, 1997, SCE filed a complaint in Los Angeles County Superior Court
against an independent power producer of geothermal generation and six of its
affiliated entities (Coso parties). SCE alleges that in order to avoid power
production plant shutdowns caused by excessive noncondensable gas in the
geothermal field brine, the Coso parties routinely vented highly toxic hydrogen
sulfide gas from unmonitored release points beginning in 1990 and continuing
through at least 1994, in violation of applicable federal, state, and local
environmental law. According to SCE, these violations constituted material
breaches by the Coso parties of their obligations under their contracts with SCE
and applicable law. The complaint sought termination of the contracts and
damages for excess power purchase payments made to the Coso parties. The Coso
parties' motion to transfer venue to Inyo County Superior Court was granted on
August 31, 1997. On June 1, 1998, the Court struck SCE's request for termination
of the contracts, leaving SCE with its claim for damages and other relief. On
February 16, 1999, the Court denied the Coso parties' motion for judgment on the
pleadings directed to SCE's first amended complaint.
The Coso parties have also asserted various claims against SCE, The Mission
Group, and Mission Power Engineering Company (Mission parties) in a cross
complaint filed in the action commenced by SCE as well as in a separate action
filed against SCE by three of the Coso parties in Inyo County Superior Court. In
November 1997, the Court struck all but two causes of action asserted in the
separate action on the grounds that they should have been raised as part of the
Coso parties' cross-complaint, and ordered the remaining two causes of action
consolidated for all purposes with the action filed by SCE.
The Coso parties subsequently filed second and third amended cross-complaints.
The third amended cross-complaint names SCE, the Mission parties and Edison
International. As against SCE, the third amended cross-complaint purports to
state causes of action for declaratory relief, breach of the covenant of good
faith and fair dealing; inducing breach of agreements between the Coso parties
and their former employees; breach of an earlier settlement agreement between
the Mission parties and the Coso parties; slander and disparagement, injunctive
relief and restitution for unfair business practices; anticipatory breach of the
contracts; and violations of Public Utilities Code ss.ss. 453, 702 and 2106. As
against the Mission parties, the third amended cross-complaint seeks damages for
breach of warranty of authority with respect to the settlement agreement, and
for equitable indemnity. The Coso parties voluntarily dismissed Edison
International from the third amended cross-complaint on December 4, 1998. As
against SCE, the third amended cross-complaint seeks restitution, compensatory
damages in excess of $115 million, punitive damages in an amount not less than
$400 million, interest, attorney's fees, declaratory relief, and injunctive
relief.
On September 21, 1998, SCE filed an answer to the third amended cross-complaint
generally denying the allegations contained therein and asserting affirmative
defenses. In addition, SCE filed a cross-complaint for reformation of the
contracts alleging that if they are not susceptible to SCE's interpretation,
they should be reformed to reflect the parties' true intention. SCE subsequently
voluntarily filed a first amended cross-complaint. On February 26, 1999, after
the Court had sustained a demurrer to its first amended cross-complaint, SCE
filed a second amended cross-complaint for reformation.
26
<PAGE>
Following various pre-trial motions filed by the Mission parties and Edison
International, the Coso parties purported to file a fourth amended
cross-complaint on December 23, 1998, against the Mission parties only. The
Mission parties' demurrer to and motion to strike directed to the fourth amended
cross-complaint was heard and taken under submission on March 10, 1999.
On December 15, 1998, the Court granted the Coso parties leave to file a second
amended complaint in the separately filed (now consolidated) action. The second
amended complaint, which names SCE and Edison International, alleges that SCE
engaged in anti-competitive conduct, false advertising, and conduct proscribed
by Public Utilities Code ss. 2106, and seeks injunctive relief, restitution, and
punitive damages. On January 20, 1999, SCE filed three motions to strike several
portions of the second amended complaint on the grounds, among others, that the
CPUC or FERC have either exclusive or primary jurisdiction over the matters
asserted therein, and that SCE's alleged conduct was in furtherance of
constitutionally protected rights of free speech and petition and therefore not
actionable. These matters were heard on February 22, 1999, and taken under
submission at that time. Edison International also filed a demurrer and motion
to strike the second amended complaint. The Court denied the motion to strike
and overruled the demurrer on March 22, 1999.
On April 1, 1999, the Court signed a stipulation and order submitted by the
parties staying all proceedings to allow the parties to engage in settlement
discussions. The Court and the parties have continued the stay in effect through
and including November 30, 1999, in order to permit the continuation of
settlement discussions. As a result of the stay, all discovery has been
suspended. Furthermore, during the period of the stay, the Court will not issue
orders or rulings on matters taken under submission.
The Court has set a trial date of March 1, 2000, but, in light of the stay
currently in effect, has reserved jurisdiction to advance or to continue the
trial date. The materiality of net final judgments against SCE in these actions
would be largely dependent on the extent to which any damages or additional
payments which might result therefrom are recoverable through rates.
27
<PAGE>
San Onofre Personal Injury Litigation
SCE is actively involved in three lawsuits claiming personal injuries allegedly
resulting from exposure to radiation at San Onofre. On August 31, 1995, the wife
and daughter of a former San Onofre security supervisor sued SCE and SDG&E in
the U.S. District Court for the Southern District of California. Plaintiffs also
named Combustion Engineering and the Institute of Nuclear Power Operations as
defendants. All trial court proceedings were stayed pending ruling of the Ninth
Circuit Court of Appeals, on an appeal of a lower court's judgment in favor of
SCE in two earlier cases raising similar allegations. On May 28, 1998, the Court
of Appeal affirmed these judgments. Pursuant to an agreement of the parties as
described below, all proceedings in this matter have been stayed.
On November 17, 1995, an SCE employee and his wife sued SCE in the U.S. District
Court for the Southern District of California. Plaintiffs also named Combustion
Engineering. The trial in this case resulted in a jury verdict for both
defendants. The plaintiffs' motion for a new trial was denied. Plaintiffs filed
an appeal of the trial court's judgment to the Ninth Circuit Court of Appeals.
Briefing on the appeal was completed in January 1999 and the parties are
awaiting a date for oral argument to be set by the Court. A decision is not
expected until at least early 2000.
On November 28, 1995, a former contract worker at San Onofre, her husband, and
her son, sued SCE in the U.S. District Court for the Southern District of
California. Plaintiffs also named Combustion Engineering. On August 12, 1996,
the Court dismissed the claims of the former worker and her husband with
prejudice, leaving only the son as plaintiff. Pursuant to an agreement of the
parties as described below, all proceedings in this matter have been stayed.
In March of 1999, SCE reached an agreement with the plaintiffs in both of the
above cases currently pending at the U.S. District Court level to stay all
proceedings including trial, pending the results of the case currently before
the Ninth Circuit Court of Appeals. The parties agreed that if the plaintiffs in
that case do not receive a favorable determination on appeal, then the two cases
at the District Court level will be dismissed. If, however, those plaintiffs
receive a favorable determination on their appeal, then the two cases will be
set for trial. On March 23, 1999, the District Court approved the parties' stay
agreement in both cases.
SCE was previously involved, along with other defendants, in two earlier cases
raising allegations similar to those described above. Although SCE is no longer
actively involved in these actions, the impact on SCE, if any, from further
proceedings in those cases against the remaining defendants cannot be determined
at this time.
Mohave Generating Station Environmental Litigation
On February 19, 1998, the Sierra Club and the Grand Canyon Trust filed suit in
the U.S. District Court of Nevada against SCE and the other three co-owners of
Mohave Generating Station (Mohave). The lawsuit alleges that Mohave has been
violating various provisions of the Clean Air Act (CAA), the Nevada state
implementation plan, certain Environmental Protection Agency orders, and
applicable pollution permits relating to opacity and sulfur dioxide emission
limits over the last five years. The plaintiffs seek declaratory and injunctive
relief as well as civil penalties. Under the CAA, the maximum civil penalty
obtainable is $25,000 per day per violation. SCE and the co-owners obtained an
extension to respond to the complaint pending the court's ruling on a motion to
dismiss filed by the defendants. The plaintiffs filed an opposition to the
defendants' motion to dismiss as well as a separate motion for partial summary
judgment on May 8, 1998.
On June 4, 1998, the plaintiffs served SCE and the other Mohave co-owners with a
60-day supplemental notice of intent to sue. This supplemental notice identified
additional causes of action as well as an additional plaintiff (National Parks
and Conservation Association) to be added to the proceedings. On November 12,
1998, the court bifurcated the liability and damage phases of the case and
granted plaintiffs' motion to amend the complaint to add the National Parks and
Conservation Association as a plaintiff.
28
<PAGE>
On December 8, 1998, defendants filed a supplemental memorandum in support of
defendants' opposition to plaintiffs' motion for partial summary judgment. On
February 4, 1999, plaintiffs filed their first amended complaint to add the
National Parks and Conservation Association as a plaintiff in the action. On
March 10, 1999, defendants filed a motion for partial summary judgment. On March
11, 1999, plaintiffs filed a motion for partial summary judgment to establish
emission limit violations as alleged in certain of the causes of action in their
first amended complaint.
On March 8, 1999, the parties filed a stipulated request for a 60-day stay which
was granted and ordered by the Court on March 9, 1999. A subsequent stay was
granted, which was to expire on July 6, 1999, before being extended to July 20,
1999. No further stay has been sought or is in effect at this time. On July 6,
1999, each party filed an opposition to the other parties' motion for summary
judgment. On August 2, 1999, defendants filed a reply to plaintiff's opposition.
On August 5, 1999, plaintiffs filed a reply to defendant's opposition. On
October 6, 1999, the parties filed a consent decree with the Federal District
Court in Las Vegas, requesting the judge to approve the decree, and
simultaneously dismiss the lawsuit. The decree provides that certain
environmental control hardware (lime spray dryers, fabric filter baghouses and
low NOx burners) should be installed on the facility by December 31, 2005, in
order to continue to operate the plant as a coal-fired facility after that date.
Navajo Nation Litigation
On June 18, 1999, SCE was served with a complaint filed by the Navajo Nation in
the United States District Court for the District of Columbia against Peabody
Holding Company and certain of its affiliates (Peabody), Salt River Project
Agricultural Improvement and Power District, and SCE. The complaint asserts
claims against the defendants for, among other things, violations of the federal
RICO statute, interference with fiduciary duties and contractual relations,
fraudulent misrepresentation by nondisclosure, and various contract-related
claims. Peabody supplies coal from mines on Navajo Nation lands to Mohave. The
complaint claims that the defendants' actions prevented the Navajo Nation from
obtaining the full value in royalty rates for the coal. The complaint seeks
damages of not less than $600 million, trebling of that amount, and punitive
damages of not less than $1 billion, as well as a declaration that Peabody's
lease and contract rights to mine coal on Navajo Nation lands should be
terminated. SCE joined Peabody's motion to strike the Navajo Nation's complaint.
In addition, SCE and the other defendants filed motions to dismiss, which will
be argued on February 11, 2000. In the meantime, the Court has stayed discovery.
29
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Restated Articles of Incorporation of Edison International dated May 7,
1998 (File No. 1-9936, Form 10-K for the year ended December 31, 1998)*
3.2 Certificate of Determination of Series A Junior participating Cumulative
Preferred Stock of Edison International dated November 21, 1998 (Form 8-A
dated November 21, 1998)*
3.3 Amended Bylaws of Edison International as adopted by the Board of Directors
on April 15, 1999 (File No. 1-9936, Form 10-Q for the quarter ended March
31, 1999)*
4.1 Senior Indenture dated September 28, 1999
4.2 Supplemental Indenture No. 1 dated September 28, 1999
4.3 6-7/8% Notes Due 2004
10.1 Amendment to Rights Agreement, dated September 16, 1999
10.2 Executive Retirement Plan Restated Effective April 1, 1999
10.3 Executive Supplemental Benefit Program as Amended January 30, 1990
11. Computation of Primary and Fully Diluted Earnings Per Share
27. Financial Data Schedule
(b) Reports on Form 8-K:
August 9, 1999 Item 5: Other Events: EIX Trust I issued and
delivered $500 million of 7.875% Cumulative
Quarterly Income Preferred Securities
September 23, 1999 Item 5: Other Events: $750 million note financing
- ---------------------
* Incorporated by reference pursuant to Rule 12b-32.
30
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
EDISON INTERNATIONAL
(Registrant)
By THOMAS M. NOONAN
------------------------------------
THOMAS M. NOONAN
Vice President and Controller
By KENNETH S. STEWART
------------------------------------
KENNETH S. STEWART
Assistant General Counsel and
Assistant Secretary
November 10, 1999
EDISON INTERNATIONAL
TO
HARRIS TRUST AND SAVINGS BANK
Trustee
--------------------------------------------
Senior Indenture
Dated as of September 28, 1999
--------------------------------------------
<PAGE>
CERTAIN SECTIONS OF THIS INDENTURE RELATING TO SECTIONS 310 THROUGH 318,
INCLUSIVE, OF THE TRUST INDENTURE ACT OF 1939:
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
--------------- -----------------
Section 310(a)(1)........................................ 609
(a)(2).................................... 609
(a)(3).................................... Not Applicable
(a)(4).................................... Not Applicable
(b)....................................... 608
610
Section 311(a)........................................... 613
(b)....................................... 613
Section 312(a)........................................... 701
702
(b)....................................... 702
(c)....................................... 702
Section 313(a)........................................... 703
(b)....................................... 703
(c)....................................... 703
(d)....................................... 703
Section 314(a)........................................... 704
(a)(4) 101
1005
(b)....................................... Not Applicable
(c)(1).................................... 102
(c)(2).................................... 102
(c)(3).................................... Not Applicable
(d)....................................... Not Applicable
(e)....................................... 102
Section 315(a)........................................... 601
(b)....................................... 602
(c)....................................... 601
(d)....................................... 601
(e)....................................... 514
Section 316(a)........................................... 101
(a)(1)(A)................................. 502
512
(a)(1)(B)................................. 513
(a)(2).................................... Not Applicable
(b)....................................... 508
(c)....................................... 104
Section 317(a)(1)........................................ 503
(a)(2).................................... 504
(b)....................................... 1003
Section 318(a)........................................... 107
- -------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties...........................................................................................................1
Recitals of the Corporation.......................................................................................1
ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...............................................1
Section 101. Definitions.....................................................................................1
Section 102. Compliance Certificates and Opinions............................................................7
Section 103. Form of Documents Delivered to Trustee..........................................................7
Section 104. Acts of Holders; Record Dates...................................................................8
Section 105. Notices, Etc., to Trustee and Corporation......................................................10
Section 106. Notice to Holders; Waiver......................................................................11
Section 107. Conflict with Trust Indenture Act..............................................................11
Section 108. Effect of Headings and Table of Contents.......................................................11
Section 109. Successors and Assigns.........................................................................11
Section 110. Separability Clause............................................................................11
Section 111. Benefits of Indenture..........................................................................12
Section 112. Governing Law..................................................................................12
Section 113. Legal Holidays.................................................................................12
Section 114. No Security Interest Created...................................................................12
ARTICLE II. SECURITY FORMS......................................................................................12
Section 201. Forms Generally................................................................................12
Section 202. Form of Face of Security.......................................................................13
Section 203. Form of Reverse of Security....................................................................15
Section 204. Form of Legend for Global Securities...........................................................18
Section 205. Form of Trustee's Certificate of Authentication................................................19
ARTICLE III. THE SECURITIES.....................................................................................19
Section 301. Amount Unlimited; Issuable in Series...........................................................19
Section 302. Denominations..................................................................................22
Section 303. Execution, Authentication, Delivery and Dating.................................................22
Section 304. Temporary Securities...........................................................................24
Section 305. Registration, Registration of Transfer and Exchange............................................25
Section 306. Mutilated, Destroyed, Lost and Stolen Securities...............................................26
Section 307. Payment of Interest; Interest Rights Preserved.................................................27
Section 308. Persons Deemed Owners..........................................................................28
Section 309. Cancellation...................................................................................29
Section 310. Computation of Interest........................................................................29
Section 311. CUSIP Numbers..................................................................................29
<PAGE>
ARTICLE IV. SATISFACTION AND DISCHARGE..........................................................................30
Section 401. Satisfaction and Discharge of Indenture........................................................30
Section 402. Application of Trust Money.....................................................................31
ARTICLE V. REMEDIES 31
Section 501. Events of Default..............................................................................31
Section 502. Acceleration of Maturity; Rescission and Annulment.............................................33
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee................................34
Section 504. Trustee May File Proofs of Claim...............................................................34
Section 505. Trustee May Enforce Claims Without Possession of Securities....................................35
Section 506. Application of Money Collected.................................................................35
Section 507. Limitation on Suits............................................................................36
Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest......................36
Section 509. Restoration of Rights and Remedies.............................................................36
Section 510. Rights and Remedies Cumulative.................................................................37
Section 511. Delay or Omission Not Waiver...................................................................37
Section 512. Control By Holders.............................................................................37
Section 513. Waiver of Past Defaults........................................................................38
Section 514. Undertaking for Costs..........................................................................38
Section 515. Waiver of Stay or Extension Laws...............................................................38
ARTICLE VI. THE TRUSTEE.........................................................................................39
Section 601. Certain Duties and Responsibilities............................................................39
Section 602. Notice of Defaults.............................................................................39
Section 603. Certain Rights of Trustee......................................................................39
Section 604. Not Responsible for Recitals or Issuance of Securities.........................................40
Section 605. May Hold Securities............................................................................40
Section 606. Money Held in Trust............................................................................41
Section 607. Compensation and Reimbursement.................................................................41
Section 608. Conflicting Interests..........................................................................41
Section 609. Corporate Trustee Required; Eligibility........................................................42
Section 610. Resignation and Removal; Appointment of Successor..............................................42
Section 611. Acceptance of Appointment by Successor.........................................................43
Section 612. Merger, Conversion, Consolidation or Succession to Business....................................44
Section 613. Preferential Collection of Claims Against Corporation..........................................45
Section 614. Appointment of Authenticating Agent............................................................45
Section 615. Trustee's Application for Instructions from the Corporation....................................46
ARTICLE VII. HOLDERS'LISTS AND REPORTS BY TRUSTEE AND CORPORATION...............................................47
Section 701. Corporation to Furnish Trustee Names and Addresses of Holders..................................47
Section 702. Preservation of Information; Communications to Holders.........................................47
Section 703. Reports by Trustee.............................................................................47
Section 704. Reports by Corporation.........................................................................48
<PAGE>
ARTICLE VIII. CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER.....................................................48
Section 801. Corporation May Consolidate, Etc., Only on Certain Terms.......................................48
Section 802. Successor Substituted..........................................................................49
ARTICLE IX. SUPPLEMENTAL INDENTURES.............................................................................50
Section 901. Supplemental Indentures Without Consent of Holders.............................................50
Section 902. Supplemental Indentures With Consent of Holders................................................51
Section 903. Execution of Supplemental Indentures...........................................................52
Section 904. Effect of Supplemental Indentures..............................................................52
Section 905. Conformity with Trust Indenture Act............................................................52
Section 906. Reference in Securities to Supplemental Indentures.............................................52
ARTICLE X. COVENANTS 53
Section 1001. Payment of Principal, Premium and Interest....................................................53
Section 1002. Maintenance of Office or Agency...............................................................53
Section 1003. Money for Securities Payments to Be Held in Trust.............................................53
Section 1004. Corporate Existence...........................................................................54
Section 1005. Statement by Officers as to Default...........................................................55
Section 1006. Waiver of Certain Covenants...................................................................55
Section 1007. Calculation of Original Issue Discount........................................................55
ARTICLE XI. REDEMPTION OF SECURITIES............................................................................55
Section 1101. Applicability of Article......................................................................55
Section 1102. Election to Redeem; Notice to Trustee.........................................................55
Section 1103. Selection by Trustee of Securities to Be Redeemed.............................................56
Section 1104. Notice of Redemption..........................................................................57
Section 1105. Deposit of Redemption Price...................................................................58
Section 1106. Securities Payable on Redemption Date.........................................................58
Section 1107. Securities Redeemed in Part...................................................................58
ARTICLE XII. SINKING FUNDS......................................................................................59
Section 1201. Applicability of Article......................................................................59
Section 1202. Satisfaction of Sinking Fund Payments with Securities.........................................59
Section 1203. Redemption of Securities for Sinking Fund.....................................................59
ARTICLE XIII. DEFEASANCE AND COVENANT DEFEASANCE................................................................60
Section 1301. Applicability of Article......................................................................60
Section 1302. Defeasance and Discharge......................................................................60
Section 1303. Covenant Defeasance...........................................................................60
Section 1304. Conditions to Defeasance or Covenant Defeasance...............................................61
Section 1305. Deposited Money and Government Obligations to Be Held in
Trust; Miscellaneous Provisions...............................................................62
<PAGE>
ARTICLE XIV. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS....................................63
Section 1401. Indenture and Securities Solely Corporate Obligations.........................................63
Testimonium......................................................................................................65
Signatures and Seals.............................................................................................65
</TABLE>
<PAGE>
INDENTURE, dated as of September 28, 1999, between Edison International, a
corporation duly organized and existing under the laws of the State of
California (herein called the "Corporation"), having its principal office at
2244 Walnut Grove Avenue, Rosemead, California 91770, and Harris Trust and
Savings Bank, an Illinois banking corporation, as Trustee (herein called the
"Trustee").
RECITALS OF THE CORPORATION
The Corporation has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured senior
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Corporation, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually agreed, for the equal and proportionate
benefit of all Holders of the Securities or of series thereof, as follows:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 101. Definitions
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture Act,
either directly or by reference therein, have the meanings assigned to them
therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as
are generally accepted in the United States of America;
(4) unless the context otherwise requires, any reference to an "Article" or a
"Section" refers to an Article or a Section, as the case may be, of this
Indenture; and
1
<PAGE>
(5) the words "herein," "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act," when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Board of Directors" means either the board of directors of the Corporation
or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Corporation to have been duly adopted by the
Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day," when used with respect to any Place of Payment, means a day
other than (i) a Saturday or a Sunday, (ii) a day on which banking institutions
in that Place of Payment or Los Angeles, California, are authorized or obligated
by law or executive order to remain closed or (iii) a day on which the Corporate
Trust Office of the Trustee is closed for business.
"Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Corporation" means the Person named as the "Corporation" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Corporation" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Corporation by any one of its Chairman of the Board,
its President, its Chief Financial Officer, any Vice President, its Treasurer or
any Assistant Treasurer, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date hereof is located at 311 W. Monroe, Chicago, IL 60606.
2
<PAGE>
"corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series issuable in
whole or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security that evidences all or part of the
Securities of any series which is issued to a Depositary or a nominee thereof
for such series in accordance with Section 301(17).
"Government Obligation" has the meaning specified in Section 1304.
"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof, including, for
all purposes of this instrument and any such supplemental indenture, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this instrument and any such supplemental indenture, respectively. The term
"Indenture" shall also include the terms of particular series of Securities
established as contemplated by Section 301.
"interest," when used with respect to an Original Issue Discount Security
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date," when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"Maturity," when used with respect to any Security, means the date on which
the principal of such Security or an installment of principal becomes due and
3
<PAGE>
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in Section
501(4).
"Officer's Certificate" means a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Financial Officer, any Vice President, the Treasurer, any Assistant Treasurer,
the Controller, an Assistant Controller, the Secretary or any Assistant
Secretary, of the Corporation, and delivered to the Trustee. One of the officers
signing an Officer's Certificate given pursuant to Section 1005 shall be the
principal executive, financial or accounting officer of the Corporation.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Corporation, or other counsel.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding," when used with respect to Securities, means, as of the date
of determination, all Securities theretofore authenticated and delivered under
this Indenture, except:
(1) Securities theretofore canceled by the Trustee or delivered to the Trustee
for cancellation;
(2) Securities for whose payment or redemption the necessary amount of money or
money's worth has been theretofore deposited with the Trustee or any Paying
Agent (other than the Corporation) in trust or set aside and segregated in
trust by the Corporation (if the Corporation shall act as its own Paying
Agent) for the Holders of such Securities; provided that, if such
Securities are to be redeemed, notice of such redemption has been duly
given pursuant to this Indenture or provision therefor satisfactory to the
Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant to Section
1302; and
(4) Securities which have been paid pursuant to Section 306 or in exchange for
or in lieu of which other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof satisfactory to
it that such Securities are held by a bona fide purchaser in whose hands
such Securities are valid obligations of the Corporation;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, (A) the principal amount of an Original Issue
Discount Security which shall be deemed to be Outstanding shall be the amount
4
<PAGE>
of the principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 502, (B)
if, as of such date, the principal amount payable at the Stated Maturity of a
Security is not determinable, the principal amount of such Security which shall
be deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Security denominated
in one or more foreign currencies or currency units which shall be deemed to be
Outstanding shall be the U.S. dollar equivalent, determined as of such date in
the manner provided as contemplated by Section 301, of the principal amount of
such Security (or, in the case of a Security described in Clause (A) or (B)
above, of the amount determined as provided in such Clause), and (D) Securities
owned by the Corporation or any other obligor upon the Securities or any
Affiliate of the Corporation or of such other obligor, whether of record or
beneficially, shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which a Responsible Officer of the Trustee actually
knows to be so owned shall be so disregarded. Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Corporation or
any other obligor upon the Securities or any Affiliate of the Corporation or of
such other obligor.
"Paying Agent" means any Person authorized by the Corporation to pay the
principal of or any premium or interest on any Securities on behalf of the
Corporation.
"Periodic Offering" means an offering of Securities of a series from time
to time the specific terms of which Securities, including without limitation the
rate or rates of interest or formula for determining the rate or rates of
interest thereon, if any, the Stated Maturity or Maturities thereof and the
redemption provisions, if any, with respect thereto, are to be determined by the
Corporation upon the issuance of such Securities.
"Person" means any individual, corporation, partnership, limited liability
company or corporation, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any series,
means the place or places where the principal of and any premium and interest on
the Securities of that series are payable as specified as contemplated by
Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
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"Redemption Price," when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date on
the Securities of any series means the date specified for that purpose as
contemplated by Section 301.
"Responsible Officer," when used with respect to the Trustee, means any
vice president, any assistant vice president, any senior trust officer or
assistant trust officer, any trust officer, or any other officer associated with
the corporate trust department of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of such person's knowledge of and
familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of this Indenture
and more particularly means any Securities authenticated and delivered under
this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute successor
thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the date on which the principal of such Security or such
installment of principal or interest is due and payable, in the case of such
principal, as such date may be advanced or extended as provided pursuant to the
terms of such Security and this Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" shall mean, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
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"Vice President," when used with respect to the Corporation or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
Section 102. Compliance Certificates and Opinions
Upon any application or request by the Corporation to the Trustee to take
any action under any provision of this Indenture, the Corporation shall furnish
to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officer's Certificate, if to be given by an officer of the Corporation, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or opinion has
read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he or she has
made such examination or investigation as is necessary to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Corporation may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such Officer's Certificate or opinion is
based are erroneous. Any such certificate or opinion of counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Corporation stating that the
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information with respect to such factual matters is in the possession of the
Corporation, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever, subsequent to the receipt by the Trustee of any Board Resolution,
Officer's Certificate, Opinion of Counsel or other document or instrument, a
clerical, typographical or other inadvertent or unintentional error or omission
shall be discovered therein, a new document or instrument may be substituted
therefor in corrected form with the same force and effect as if originally filed
in the corrected form and, irrespective of the date or dates of the actual
execution and/or delivery thereof, such substitute document or instrument shall
be deemed to have been executed and/or delivered as of the date or dates
required with respect to the document or instrument for which it is substituted.
Anything in this Indenture to the contrary notwithstanding, if any such
corrective document or instrument indicates that action has been taken by or at
the request of the Corporation which could not have been taken had the original
document or instrument not contained such error or omission, the action so taken
shall not be invalidated or otherwise rendered ineffective but shall be and
remain in full force and effect, except to the extent that such action was a
result of willful misconduct or bad faith. Without limiting the generality of
the foregoing, any Securities issued under the authority of such defective
document or instrument shall nevertheless be the valid obligations of the
Corporation entitled to the benefits of this Indenture equally and ratably with
all other Outstanding Securities, except as aforesaid.
Section 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Corporation.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Corporation, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than the signer's individual capacity, such
certificate or affidavit shall also constitute sufficient proof of the signer's
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authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Corporation
in reliance thereon, whether or not notation of such action is made upon such
Security.
The Corporation may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series; provided that the
Corporation may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next paragraph. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of the relevant series on such record date, and no other Holders,
shall be entitled to take or revoke the relevant action, whether or not such
Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Corporation from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be canceled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities of the relevant
series on the date such action is taken. Promptly after any record date is set
pursuant to this paragraph, the Corporation, at its own expense, shall cause
notice of such record date, the proposed action by Holders and the applicable
Expiration Date to be given to the Trustee in writing and to each Holder of
Securities of the relevant series in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction or to revoke
the same, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities of such series on such record date.
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Nothing in this paragraph shall be construed to prevent the Trustee from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be canceled and of no
effect), and nothing in this paragraph shall be construed to render ineffective
any action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Trustee, at the
Corporation's expense, shall cause notice of such record date, the proposed
action by Holders and the applicable Expiration Date to be sent to the
Corporation in writing and to each Holder of Securities of the relevant series
in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 106, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Security may do so with regard to
all or any part of the principal amount of such Security or by one or more duly
appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 105. Notices, Etc., to Trustee and Corporation.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Corporation shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing
(which may be made via facsimile) to or with the Trustee at its Corporate
Trust Office, Attention: Indenture Trust, or
(2) the Corporation by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Corporation
addressed to it at the address of its principal office specified in the
first paragraph of this instrument, Attention: Treasurer, or at any other
address previously furnished in writing to the Trustee by the Corporation.
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Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Corporation shall
bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
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Section 111. Benefits of Indenture.
Unless otherwise specified pursuant to Section 301 with respect to the
Securities of any series, nothing in this Indenture or in the Securities,
express or implied, shall give to any Person, other than the parties hereto,
their successors hereunder and the Holders, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts
of laws principles thereof.
Section 113. Legal Holidays.
Unless otherwise specified pursuant to Section 301 with respect to the
Securities of any series, in any case where any Interest Payment Date,
Redemption Date or Stated Maturity of any Security shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or of the Securities
(other than a provision of any Security which specifically states that such
provision shall apply in lieu of this Section)) payment of interest or principal
(and premium, if any) need not be made on such date, but may be made on the next
succeeding Business Day, unless that Business Day is in a different calendar
year, in which case the payment will be made on the preceding Business Day, in
each case, with the same force and effect as if made on the Interest Payment
Date or Redemption Date, or at the Stated Maturity.
Section 114. No Security Interest Created.
Nothing in this Indenture or in the Securities expressed or implied, shall
be construed to constitute a security interest under the Uniform Commercial Code
or similar legislation, as now or hereafter enacted and in effect in any
jurisdiction where property of the Corporation or its subsidiaries is located.
ARTICLE II
SECURITY FORMS
Section 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth
in this Article, or in such other form as shall be established by or pursuant to
one or more Board Resolutions or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or Depositary therefor or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. If the form of Securities of any series is established by
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action taken pursuant to a Board Resolution, a copy of an appropriate record of
such action shall be certified by the Secretary or an Assistant Secretary of the
Corporation or an Officer's Certificate pursuant to Section 301 and delivered to
the Trustee at or prior to the delivery of the Company Order contemplated by
Section 303 for the authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
Section 202. Form of Face of Security.
[Insert any legend required by the Internal Revenue Code and the
regulations thereunder.]
EDISON INTERNATIONAL
---------------------
$ ----------
No. _________ CUSIP No. ____
Edison International, a corporation duly organized and existing under the
laws of the State of California (herein called the "Corporation," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to ______________________, or registered
assigns, the principal sum of ________ Dollars on _________________________ [if
the Security is to bear interest prior to Maturity and interest payment periods
are not extendable, insert - , and to pay interest thereon from __________ or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, [insert - semi-annually, quarterly, monthly or other
description of the relevant payment period] on [________, ________,] and
__________ in each year, commencing _______________, at the rate of ____% per
annum, until the principal hereof is paid or made available for payment [if
applicable, insert - , provided that any principal and premium, and any such
installment of interest, which is overdue shall bear interest at the rate of
___% per annum (to the extent that the payment of such interest shall be legally
enforceable), from the dates such amounts are due until they are paid or made
available for payment, and such interest shall be payable on demand]. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in such Indenture, be paid to the Person in whose
name this Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the [___________________] (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on
such Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not less than 10 days prior to such Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of this series
may be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said Indenture].
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[If the Security is not to bear interest prior to Maturity, insert - The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal and any overdue premium shall
bear interest at the rate of ____% per annum (to the extent that the payment of
such interest shall be legally enforceable), from the dates such amounts are due
until they are paid or made available for payment. Interest on any overdue
principal or premium shall be payable on demand. Any such interest on overdue
principal or premium which is not paid on demand shall bear interest at the rate
of ____% per annum (to the extent that the payment of such interest on interest
shall be legally enforceable), from the date of such demand until the amount so
demanded is paid or made available for payment. Interest on any overdue interest
shall be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable,
insert - any such] interest on this Security will be made at the office or
agency of the Corporation maintained for that purpose in _________________, in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts [if applicable, insert -
; provided, however, that at the option of the Corporation payment of interest
may be made by check mailed to the address of the Person entitled thereto as
such address shall appear in the Security Register or by wire transfer at such
place and to such account at a banking institution in the United States as may
be designated in writing to the Trustee at least sixteen (16) days prior to the
date for payment by the Person entitled thereto].
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed under its corporate seal.
Dated as of Date of Authentication: EDISON INTERNATIONAL
By ______________________________
Attest:
__________________________
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Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Corporation (herein called the "Securities"), issued and to be issued in one or
more series under a Senior Indenture, dated as of ________, ______ (herein
called the "Indenture," which term shall have the meaning assigned to it in such
instrument), between the Corporation and Harris Trust and Savings Bank, as
Trustee (herein called the "Trustee," which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture for a
statement of the respective rights, limitation of rights, duties and immunities
thereunder of the Corporation, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof [if
applicable, insert - , limited in aggregate principal amount to $__________].
If applicable, insert - The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable, insert -
(1) on ____________ in any year commencing with the year _____ and ending with
the year _____ through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)] at any time [if
applicable, insert - on or after ___________, ____], as a whole or in part, at
the election of the Corporation, at the following Redemption Prices (expressed
as percentages of the principal amount): If redeemed [if applicable, insert - on
or before _________________, ___%, and if redeemed] during the 12-month period
beginning _________ of the years indicated,
Year Redemption Price Year Redemption Price
---- ---------------- ---- ----------------
and thereafter at a Redemption Price equal to ____% of the principal
amount, together in the case of any such redemption [if applicable, insert -
(whether through operation of the sinking fund or otherwise)] with accrued
interest to the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.]
[If applicable, insert - The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on ____________ in
any year commencing with the year ______ and ending with the year _____ through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth in the table below, and (2) at any time [if
applicable, insert - on or after _____________], as a whole or in part, at the
election of the Corporation, at the Redemption Prices for redemption otherwise
than through operation of the sinking fund (expressed as percentages of the
principal amount) set forth in the table below: If redeemed during the 12- month
period beginning ________ of the years indicated,
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Redemption Price Redemption Price for
for Redemption Otherwise Than
Redemption Through Through Operation
Operation of the of the Sinking Fund
Year Sinking Fund
---- ------------------ -------------------------
and thereafter at a Redemption Price equal to _____% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert - Notwithstanding the foregoing, the Corporation may
not, prior to _________, redeem any Securities of this series as contemplated by
[if applicable, insert - Clause (2) of] the preceding paragraph as a part of, or
in anticipation of, any refunding operation by the application, directly or
indirectly, of moneys borrowed having an interest cost to the Corporation
(calculated in accordance with generally accepted financial practice) of less
than ____% per annum.]
[If applicable, insert - The sinking fund for this series provides for the
redemption on __________ in each year beginning with the year _______ and ending
with the year ______ of [if applicable, insert - not less than $___________
("mandatory sinking fund") and not more than] $____________ aggregate principal
amount of Securities of this series. Securities of this series acquired or
redeemed by the Corporation otherwise than through [if applicable, insert -
mandatory] sinking fund payments may be credited against subsequent [if
applicable, insert - mandatory] sinking fund payments otherwise required to be
made [if applicable, insert - , in the inverse order in which they become due].]
[If the Security is subject to redemption of any kind, insert - In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert - The Indenture contains provisions for defeasance
at any time of [the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security] [, in
each case] upon compliance with certain conditions set forth in the Indenture.]
[If the Security is not an Original Issue Discount Security, insert - If an
Event of Default with respect to Securities of this series shall occur and be
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continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert - If an
Event of Default with respect to Securities of this series shall occur and be
continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to [insert formula for determining the
amount]. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal, premium and interest (in each
case to the extent that the payment of such interest shall be legally
enforceable), all of the Corporation's obligations in respect of the payment of
the principal of and premium and interest, if any, on the Securities of this
series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Securities of all series
affected under the Indenture at any time by the Corporation and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
of all series at the time Outstanding affected thereby (voting as one class).
The Indenture contains provisions permitting the Holders of not less than a
majority in principal amount of the Securities of all series at the time
Outstanding with respect to which a default under the Indenture shall have
occurred and be continuing (voting as one class), on behalf of the Holders of
the Securities of all such series, to waive, with certain exceptions, such past
default with respect to all such series and its consequences. The Indenture also
permits the Holders of not less than a majority in principal amount of the
Securities of each series at the time Outstanding, on behalf of the Holders of
all Securities of such series, to waive compliance by the Corporation with
certain provisions of the Indenture. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the registration
of transfer hereof or in exchange therefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder
of this Security shall not have the right to institute any proceeding with
respect to the Indenture or for the appointment of a receiver or trustee or for
any other remedy thereunder unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee reasonable indemnity, and the Trustee
shall not have received from the Holders of a majority in principal amount of
Securities of this series at the time Outstanding a direction inconsistent with
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
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No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Corporation, which
is absolute and unconditional, to pay the principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Corporation in any place where the principal of and any premium
and interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Corporation and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of this series
and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of [$1,000 and any integral multiple thereof]. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security be overdue, and neither the
Corporation, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
The Indenture and the Securities issued thereby shall be governed by and
construed in accordance with the laws of the State of California.
Section 204. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the
Securities evidenced thereby, every Global Security authenticated and delivered
hereunder shall bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A
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SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
Section 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
Harris Trust and Savings Bank,
As Trustee
By: ________________________________
Authorized Signatory
Dated: _________________
ARTICLE III.
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, in an Officer's Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish the
Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of the
series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 304, 305, 306, 906 or 1106 and except for any
Securities which, pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
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(3) the Person to whom any interest on a Security of the series shall be
payable, if other than the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities of the series is
payable or the method by which such date shall be determined and the right,
if any, to shorten or extend the date on which the principal of any
Securities of the series is payable and the conditions to any such change;
(5) the rate or rates at which any Securities of the series shall bear
interest, if any, or the method by which such rate or rates shall be
determined; the date or dates from which any such interest shall accrue;
the Interest Payment Dates on which any such interest shall be payable; the
manner (if any) of determination of such Interest Payment Dates; and the
Regular Record Date, if any, for any such interest payable on any Interest
Payment Date;
(6) the right, if any, to extend the interest payment periods and the terms of
such extension or extensions;
(7) the place or places where the principal of and any premium and interest on
any Securities of the series shall be payable and whether, if acceptable to
the Trustee, any principal of such Securities shall be payable without
presentation or surrender thereof;
(8) the period or periods within which, or the date or dates on which, the
price or prices at which and the terms and conditions upon which any
Securities of the series may be redeemed, in whole or in part, at the
option of the Corporation and, if other than by a Board Resolution, the
manner in which any election by the Corporation to redeem the Securities
shall be evidenced;
(9) the obligation, if any, of the Corporation to redeem or purchase any
Securities of the series pursuant to any sinking fund, purchase fund or
analogous provisions or at the option of the Holder thereof and the period
or periods within which, the price or prices at which and the terms and
conditions upon which any Securities of the series shall be redeemed or
purchased, in whole or in part, pursuant to such obligation;
(10) if other than denominations of $1,000 and any integral multiple thereof,
the denominations in which any Securities of the series shall be issuable;
(11) if the amount of principal of or any premium or interest on any Securities
of the series may be determined with reference to an index or pursuant to a
formula, the manner in which such amounts shall be determined;
(12) if other than the currency of the United States of America, the currency,
currencies or currency units in which the principal of or any premium or
interest on any Securities of the series shall be payable and the manner
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of determining the equivalent thereof in the currency of the United States
of America for any purpose, including for purposes of the definition of
"Outstanding" in Section 101;
(13) if the principal of or any premium or interest on any Securities of the
series is to be payable, at the election of the Corporation or the Holder
thereof, in one or more currencies or currency units other than that or
those in which such Securities are stated to be payable, the currency,
currencies or currency units in which the principal of or any premium or
interest on such Securities as to which such election is made shall be
payable, the periods within which and the terms and conditions upon which
such election is to be made and the amount so payable (or the manner in
which such amount shall be determined);
(14) if other than the entire principal amount thereof, the portion of the
principal amount of any Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof pursuant to
Section 502;
(15) if the principal amount payable at the Stated Maturity of any Securities of
the series will not be determinable as of any one or more dates prior to
the Stated Maturity, the amount which shall be deemed to be the principal
amount of such Securities as of any such date for any purpose thereunder or
hereunder, including the principal amount thereof which shall be due and
payable upon any Maturity other than the Stated Maturity or which shall be
deemed to be Outstanding as of any date prior to the Stated Maturity (or,
in any such case, the manner in which such amount deemed to be the
principal amount shall be determined);
(16) if either or both of Sections 1302 and 1303 do not apply to any Securities
of the series;
(17) if applicable, that any Securities of the series shall be issuable in whole
or in part in the form of one or more Global Securities and, in such case,
the respective Depositary or Depositaries for such Global Securities, the
form of any legend or legends which shall be borne by any such Global
Security in addition to or in lieu of that set forth in Section 204 and any
circumstances in addition to or in lieu of those set forth in Clause (2) of
the last paragraph of Section 305 in which any such Global Security may be
exchanged in whole or in part for Securities registered, and any transfer
of such Global Security in whole or in part may be registered, in the name
or names of Persons other than the Depositary for such Global Security or a
nominee thereof;
(18) any addition, modification or deletion of any Events of Default or
covenants provided with respect to any Securities of the series and any
change in the right of the Trustee or the requisite Holders of such
Securities to declare the principal amount thereof due and payable pursuant
to Section 502;
(19) any addition to or change in the covenants set forth in Article Ten which
applies to Securities of the series; and
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(20) any other terms of the series.
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officer's Certificate referred to
above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Corporation and
delivered to the Trustee at or prior to the delivery of the Officer's
Certificate setting forth the terms or the manner of determining the terms of
the series.
With respect to Securities of a series offered in a Periodic Offering, the
Board Resolution (or action taken pursuant thereto), Officer's Certificate or
supplemental indenture referred to above may provide general terms or parameters
for Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Company Order or
that such terms shall be determined by the Corporation in accordance with other
procedures specified in a Company Order as contemplated by the third paragraph
of Section 303.
Notwithstanding Section 301(2) herein and unless otherwise expressly
provided with respect to a series of Securities, the aggregate principal amount
of a series of Securities may be increased and additional Securities of such
series may be issued up to the maximum aggregate principal amount authorized
with respect to such series as increased.
Section 302. Denominations.
The Securities of each series shall be issuable only in fully registered
form without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Securities of any series, the Securities of such series
shall be issuable in denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Corporation by its
Chairman of the Board, its Chief Executive Officer, its President, a Vice
President or the Treasurer, under its corporate seal reproduced thereon (which
may be by facsimile) attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Securities may be
manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Corporation shall bind the
Corporation, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
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At any time and from time to time after the execution and delivery of this
Indenture, the Corporation may deliver Securities of any series executed by the
Corporation to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order shall authenticate and deliver such
Securities, provided, however, that in the case of Securities offered in a
Periodic Offering, the Trustee shall authenticate and deliver such Securities
from time to time in accordance with such other procedures (including, without
limitation, the receipt by the Trustee of oral or electronic instructions from
the Corporation or its duly authorized agents, promptly confirmed in writing)
acceptable to the Trustee as may be specified by or pursuant to a Company Order
delivered to the Trustee prior to the time of the first authentication of
Securities of such series. If the form or terms of the Securities of the series
have been established by or pursuant to one or more Board Resolutions as
permitted by Sections 201 and 301, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 601) shall be fully protected in relying upon, an Opinion of Counsel
stating,
(1) if the form of such Securities has been established by or pursuant to Board
Resolution as permitted by Section 201, that such form has been established
in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been, or in the case of Securities of
a series offered in a Periodic Offering, will be, established by or
pursuant to Board Resolution as permitted by Section 301, that such terms
have been, or in the case of Securities of a series offered in a Periodic
Offering, will be, established in conformity with the provisions of this
Indenture, subject, in the case of Securities of a series offered in a
Periodic Offering, to any conditions specified in such Opinion of Counsel;
and
(3) that such Securities, when issued and executed by the Corporation and when
authenticated and delivered by the Trustee in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Corporation enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officer's Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Security of such series if such documents are delivered
at or prior to the authentication upon original issuance of the first Security
of such series to be issued.
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With respect to Securities of a series offered in a Periodic Offering, the
Trustee may rely, as to the authorization by the Corporation of any of such
Securities, the form and terms thereof and the legality, validity, binding
effect and enforceability thereof, upon the Opinion of Counsel and the other
documents delivered pursuant to Sections 201 and 301 and this Section, as
applicable, in connection with the first authentication of Securities of such
series.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder. Notwithstanding the foregoing, if any Security shall have been
authenticated and delivered hereunder but never issued and sold by the
Corporation, and the Corporation shall deliver such Security to the Trustee for
cancellation as provided in Section 309, for all purposes of this Indenture such
Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Corporation may execute, and upon Company Order the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Corporation will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Corporation in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series, the Corporation shall execute and
the Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series, of any authorized denominations and of
like tenor and aggregate principal amount. Until so exchanged, the temporary
Securities of any series shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of such series and tenor.
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Section 305. Registration, Registration of Transfer and Exchange.
The Corporation shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office or in any other
office or agency of the Corporation in a Place of Payment being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Corporation shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of registering Securities and
transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of a series at
the office or agency of the Corporation in a Place of Payment for that series,
the Corporation shall execute, and the Trustee shall authenticate and deliver,
in the name of the designated transferee or transferees, one or more new
Securities of the same series, of any authorized denominations and of like tenor
and aggregate principal amount.
At the option of the Holder, Securities of any series may be exchanged for
other Securities of the same series, of any authorized denominations and of like
tenor and aggregate principal amount, upon surrender of the Securities to be
exchanged at such office or agency. Whenever any Securities are so surrendered
for exchange, the Corporation shall execute, and the Trustee shall authenticate
and deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Corporation, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Corporation or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Corporation and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Corporation may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906 or 1106 not involving any transfer.
If the Securities of any series (or of any series and specified tenor) are
to be redeemed, the Corporation shall not be required (A) to issue, register the
transfer of or exchange any Securities of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Securities selected for redemption and ending at the close of business on
the day of such mailing, or (B) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
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The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Securities:
(1) Each Global Security authenticated under this Indenture shall be registered
in the name of the Depositary designated for such Global Security or a
nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global Security
may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (A) such Depositary has notified the Corporation
that it is unwilling or unable to continue as Depositary for such Global
Security and a successor Depositary has not been appointed by the
Corporation within 90 days of receipt by the Corporation of such
notification, (B) if at any time the Depositary ceases to be a clearing
agency registered under the Exchange Act at a time when the Depositary is
required to be so registered to act as such Depositary and no successor
Depositary shall have been appointed by the Corporation within 90 days
after it became aware of such cessation, or (C) there shall exist such
circumstances, if any, in addition to or in lieu of the foregoing as have
been specified for this purpose as contemplated by Section 301.
Notwithstanding the foregoing, the Corporation may at any time in its sole
discretion determine that Securities issued in the form of a Global
Security shall no longer be represented in whole or in part by such Global
Security, and the Trustee, upon receipt of a Company Order therefor, shall
authenticate and deliver definitive Securities in exchange in whole or in
part for such Global Security.
(3) Subject to Clause (2) above, any exchange or transfer of a Global Security
for other Securities may be made in whole or in part, and all Securities
issued in exchange for or upon transfer of a Global Security or any portion
thereof shall be registered in such names as the Depositary for such Global
Security shall direct.
(4) Every Security authenticated and delivered upon registration of transfer
of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Section, Section 304, 306, 906 or 1106 or
otherwise, shall be authenticated and delivered in the form of, and shall
be, a Global Security, unless such Security is registered in the name of a
Person other than the Depositary for such Global Security or a nominee
thereof.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Corporation
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
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If there shall be delivered to the Corporation and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Corporation or the Trustee that such Security has been acquired by a bona fide
purchaser, the Corporation shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Corporation in its discretion may,
instead of issuing a new Security, pay such Security. Upon the issuance of any
new Security under this Section, the Corporation may require the payment of a
sum sufficient to cover any tax, fee, assessment or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee and its agents and counsel) connected
therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Corporation, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect to
any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Except as otherwise provided as contemplated by Section 301 with respect to
any series of Securities, any interest on any Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Corporation, at
its election in each case, as provided in Clause (1) or (2) below:
(1) The Corporation may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Corporation shall notify the Trustee
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in writing of the amount of Defaulted Interest proposed to be paid on each
Security of such series and the date of the proposed payment, and at the
same time the Corporation shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Corporation of such Special Record Date and, in the
name and at the expense of the Corporation, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be given to each Holder of Securities of such series in the
manner set forth in Section 106, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so mailed, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall
no longer be payable pursuant to the following Clause (2).
(2) The Corporation may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange, if any, on which such
Securities may be listed, and upon such notice as may be required by such
exchange, if, after notice given by the Corporation to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be
deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and any premium
and (subject to Section 307) any interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Corporation, the Trustee nor any agent of the Corporation or the Trustee shall
be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
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records relating to or payments made on account of beneficial ownership interest
of a Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any Global Security, nothing
herein shall prevent the Company, the Trustee, or any Agent of the Company or
the Trustee, from giving effect to any written certification, proxy or other
authorization furnished by any depositary, as a Holder, with respect to such
Global Security or impair, as between such depositary and owners of beneficial
interests in such Global Security, the operation of customary practices
governing the exercise of the rights of such depositary as Holder of such Global
Security.
Section 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Corporation may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Corporation may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Corporation has not issued and sold, and all Securities so
delivered shall be promptly canceled by the Trustee. No Securities shall be
authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities held by the Trustee shall be disposed of in its customary manner or
as directed by a Company Order; provided, however, that the Trustee shall not be
required to destroy such canceled Securities.
Section 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a 360-day year of twelve 30-day months.
Section 311. CUSIP Numbers.
The Corporation in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.
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ARTICLE IV.
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, at the expense of
the Corporation, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered (other than (i)
Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 306 and (ii) Securities
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Corporation and thereafter repaid
to the Corporation or discharged from such trust, as provided in
Section 1003) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one
year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Corporation,
and the Corporation, in the case of (i), (ii) or (iii) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust for the
purpose (i) money in an amount, (ii) Government Obligations (as defined in
Section 1304) which through the scheduled payment of principal and interest
in respect thereof in accordance with their terms will provide, not later
than the due date of any payment, money in an amount, or (iii) a
combination thereof, sufficient, in the case of (ii) or (iii), in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge, and which shall be applied by the Trustee to pay and
discharge, the entire indebtedness on such Securities not theretofore
delivered to the Trustee for cancellation, for principal and any premium
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and interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption Date,
as the case may be;
(2) the Corporation has paid or caused to be paid all other sums payable
hereunder by the Corporation; and
(3) the Corporation has delivered to the Trustee an Officer's Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Corporation to the Trustee under Section 607, the obligations
of the Corporation to any Authenticating Agent under Section 614 and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of Clause
(1) of this Section, the obligations of the Trustee under Section 402 and the
last paragraph of Section 1003 shall survive such satisfaction and discharge.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Corporation acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE V.
REMEDIES
Section 501. Events of Default.
"Event of Default," wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body),
unless it is inapplicable to a particular series or is specifically deleted or
modified in the Board Resolution (or action taken pursuant thereto), Officer's
Certificate or supplemental indenture under which such series of Securities is
issued or has been deleted or modified in an indenture supplemental hereto:
(1) default in the payment of any interest upon any Security of that series
when it becomes due and payable, and continuance of such default for a
period of 30 days; provided, however, that if the Corporation is permitted
by the terms of the Securities of such series to defer the payment in
question, the date on which such payment is due and payable shall be the
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date on which the Corporation is required to make payment following such
deferral, if such deferral has been elected pursuant to the terms of the
Securities; or
(2) default in the payment of the principal of or any premium on any Security
of that series at its Maturity; or
(3) default in the making of any sinking fund payment, when and as due by the
terms of a Security of that series, and continuance of such default for a
period of 60 days; or
(4) default in the performance, or breach, of any covenant of the Corporation
in this Indenture (other than a covenant a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with or which
has expressly been included in this Indenture solely for the benefit of
series of Securities other than that series), and continuance of such
default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Corporation by the Trustee or to the
Corporation and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities of that series a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder, unless the
Trustee, or the Trustee and the Holders of a principal amount of Securities
of such series not less than the principal amount of Securities the Holders
of which gave such notice, as the case may be, shall agree in writing to an
extension of such period prior to its expiration; provided, however, that
the Trustee, or the Trustee and the Holders of such principal amount of
Securities of such series, as the case may be, shall be deemed to have
agreed to an extension of such period if corrective action is initiated by
the Corporation within such period and is being diligently pursued; or
(5) the entry by a court having jurisdiction in the premises of (A) a decree or
order for relief in respect of the Corporation in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Corporation a bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of
or in respect of the Corporation under any applicable federal or state law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Corporation or of any
substantial part of its property, or ordering the winding-up or liquidation
of its affairs, and the continuance of any such decree or order for relief
or any such other decree or order unstayed and in effect for a period of 90
consecutive days; or
(6) the commencement by the Corporation of a voluntary case or proceeding under
any applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or
order for relief in respect of the Corporation in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by it
of a petition or answer or consent seeking reorganization or relief under
any applicable federal or state law, or the consent by it to the filing of
such petition or to the appointment of or taking possession by a custodian,
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receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Corporation or of any substantial part of its property, or
the making by it of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts generally as
they become due, or the authorization of any such action by the Board of
Directors; or
(7) any other Event of Default provided with respect to Securities of that
series.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of not less than 25% in principal amount of the Outstanding Securities
of that series may declare the principal amount of all the Securities of that
series (or, if any Securities of that series are Original Issue Discount
Securities, such portion of the principal amount of such Securities as may be
specified by the terms thereof) to be due and payable immediately, by a notice
in writing to the Corporation (and to the Trustee if given by Holders), and upon
any such declaration such principal amount (or specified amount) shall become
immediately due and payable.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount of the
Outstanding Securities of such series, by written notice to the Corporation and
the Trustee, may rescind and annul such declaration and its consequences if
(1) the Corporation has paid or deposited with the Trustee a sum sufficient to
pay
(A) all overdue interest on all Securities of that series,
(B) the principal of (and premium, if any, on) any Securities of that
series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed
therefor in such Securities,
(C) to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate or rates prescribed therefor in such
Securities, and
(D) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel;
and
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(2) all Events of Default with respect to Securities of that series, other than
the non-payment of the principal of Securities of that series which have
become due solely by such declaration of acceleration, have been cured or
waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Corporation covenants that if
(1) default is made in the payment of any interest on any Security when such
interest becomes due and payable and such default continues for a period of
30 days, or
(2) default is made in the payment of the principal of (or premium, if any, on)
any Security at the Maturity thereof,
the Corporation will, upon demand of the Trustee, pay to it, for the benefit of
the Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Corporation fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Corporation or any other obligor upon such Securities and collect
the moneys adjudged or decreed to be payable in the manner provided by law out
of the property of the Corporation or any other obligor upon such Securities,
wherever situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Corporation (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
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in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section 607;
Second: To the payment of the amounts then due and unpaid for principal of
and any premium and interest on the Securities in respect of which or for
the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Securities for principal and any premium and interest,
respectively; and
Third: To the payment of the balance, if any, to the Corporation.
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Section 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture, or for
the appointment of a receiver or trustee, or for any other remedy hereunder,
unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the Outstanding
Securities of all affected series, considered as one class, or, in the case
of an Event of Default of the character specified above in Section 501(1),
(2) or (3), that series, shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable indemnity
against the costs, expenses and liabilities to be incurred in compliance
with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and offer
of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the
Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Securities of all affected series, considered as
one class, or, in the case of an Event of Default of the character
specified above in Section 501(1), (2) or (3), that series,
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Security on the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Corporation, the Trustee and the Holders shall be restored
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severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
306, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 512. Control By Holders.
The Holders of a majority in principal amount of the Outstanding Securities
of any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Securities of
such series; provided that
(1) such direction shall not be in conflict with any rule of law or with this
Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee which is
not inconsistent with such direction, and
(3) subject to the provisions of Section 601, the Trustee shall have the right
to decline to follow any such direction if the Trustee in good faith shall,
by a Responsible Officer or Officers of the Trustee, determine that the
proceeding so directed would involve the Trustee in personal liability.
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If an Event of Default is continuing with respect to all Outstanding
Securities, the Holders of a majority in principal amount of all the Outstanding
Securities, considered as one class, shall have the right to make such
direction, and not the Holders of Securities of any one series.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of all series with respect to which any default under the
Indenture shall have occurred and be continuing (voting as one class) may, on
behalf of the Holders of all Securities of all such series, waive such past
default under the Indenture and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on any
Security of such series, or
(2) in respect of a covenant or provision hereof which under Article Nine
cannot be modified or amended without the consent of the Holder of each
Outstanding Security of the series affected.
Upon any such waiver, such default shall cease to exist and be deemed not
to have occurred, and any Event of Default arising therefrom shall be deemed to
have been cured and not to have occurred, for every purpose of this Indenture;
but no such waiver shall extend to any subsequent or other default or impair any
right consequent thereon.
Section 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs, including legal fees and expenses of such
suit, and may assess costs against any such party litigant, in the manner and to
the extent provided in the Trust Indenture Act; provided that neither this
Section nor the Trust Indenture Act shall be deemed to authorize any court to
require such an undertaking or to make such an assessment in (i) any suit
instituted by the Trustee, (ii) any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of the
Outstanding Securities of any series, or (iii) any suit instituted by any Holder
for the enforcement of the payment of the principal of (or premium, if any) or
interest on any Security on or after the respective Stated Maturities expressed
in such Security (or, in the case of redemption, on or after the Redemption
Date).
Section 515. Waiver of Stay or Extension Laws.
The Corporation covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Corporation (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
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and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI.
THE TRUSTEE
Section 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
Section 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series, the
Trustee shall give the Holders of Securities of such series notice of such
default as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(4) with respect to Securities of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Securities of such series.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may conclusively rely and shall be fully protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(2) any request or direction of the Corporation mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order or as
otherwise expressly provided herein, and any resolution of the Board of
Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall deem it
desirable that a matter be proved or established prior to taking, suffering
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or omitting any action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officer's Certificate;
(4) the Trustee may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel with respect to legal matters shall
be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled, at reasonable times previously notified to the
Corporation, to examine the relevant books, records and premises of the
Corporation, personally or by agent or attorney at the sole cost of the
Corporation and shall incur no liability or additional liability of any
kind by reason of such inquiry or investigation; and
(7) the Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys
and the Trustee shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed with due care by it
hereunder.
Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Corporation, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Corporation of Securities or the proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Corporation, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Corporation with the same rights it
would have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
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Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Corporation.
Section 607. Compensation and Reimbursement.
The Corporation agrees
(1) to pay to the Trustee from time to time such compensation as shall be
agreed to in writing between the Corporation and the Trustee for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee
upon its request for all expenses, disbursements and advances incurred or
made by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and disbursements
of its agents and counsel), except any such expense, disbursement or
advance as may be attributable to its negligence, willful misconduct or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any and all
loss, liability, damage, claim or expense, including taxes (other than
taxes based on the income of the Trustee) incurred without negligence,
willful misconduct or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim whether asserted by the Corporation, a Holder or any other Person or
liability in connection with the exercise or performance of any of its
powers or duties hereunder.
The Trustee shall have a lien prior to the Securities upon all property and
funds held by it hereunder for any amount owing it or any predecessor Trustee
pursuant to this Section 607, except with respect to funds held in trust for the
benefit of the Holders of particular Securities.
Without limiting any rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with an Event
of Default specified in Section 501(5) or Section 501(6), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
Section 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
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interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to
Securities of more than one series.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder with respect to the
Securities of each series, which may be Trustee hereunder for Securities of one
or more other series. Each Trustee shall be a Person that is eligible pursuant
to the Trust Indenture Act to act as such and has a combined capital and surplus
of at least $50,000,000. If any such Person publishes reports of condition at
least annually, pursuant to law or to the requirements of its supervising or
examining authority, then for the purposes of this Section and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee
with respect to the Securities of any series shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one or
more series by giving written notice thereof to the Corporation. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition, at the expense of the
Corporation, any court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
The Trustee may be removed at any time with respect to the Securities of
any series by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series, delivered to the Trustee and to the
Corporation. Upon such removal, the Corporation may petition, at its expense,
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written request
therefor by the Corporation or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall fail to
resign after written request therefor by the Corporation or by any such
Holder, or
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(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Corporation by a Board Resolution may remove the
Trustee with respect to all Securities, or (B) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect to
the Securities of one or more series, the Corporation, by a Board Resolution,
shall promptly appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 611. If, within one year after such resignation, removal
or incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Securities of any series shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Securities of such series
delivered to the Corporation and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 611, become the successor Trustee
with respect to the Securities of such series and to that extent supersede the
successor Trustee appointed by the Corporation. If no successor Trustee with
respect to the Securities of any series shall have been so appointed by the
Corporation or the Holders and accepted appointment in the manner required by
Section 611, any Holder who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
The Corporation shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment of
a successor Trustee with respect to the Securities of any series to all Holders
of Securities of such series in the manner provided in Section 106. Each notice
shall include the name of the successor Trustee with respect to the Securities
of such series and the address of its Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with respect to
all Securities, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Corporation and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Corporation or the successor Trustee, such retiring Trustee shall, upon
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payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect to
the Securities of one or more (but not all) series, the Corporation, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Corporation or any successor Trustee,
such retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
Upon request of any such successor Trustee, the Corporation shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided that
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such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Corporation.
If and when the Trustee shall be or become a creditor of the Corporation
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Corporation (or any such other obligor).
Section 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents acceptable to the
Corporation with respect to one or more series of Securities which shall be
authorized to act on behalf of the Trustee to authenticate Securities of such
series issued upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Corporation and shall at all times be a corporation organized
and doing business under the laws of the United States of America, any State
thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$50,000,000 and subject to supervision or examination by federal or state
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, such Authenticating Agent shall
resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided that such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.
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An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Corporation. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Corporation. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Corporation and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Corporation agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
Harris Trust and Savings Bank,
As Trustee
By:
As Authenticating Agent
By:
Authorized Signatory
Section 615. Trustee's Application for Instructions from the Corporation.
Any application by the Trustee for written instructions from the
Corporation may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable to the Corporation for any action
taken by, or omission of, the Trustee in accordance with a proposal included in
such application on or after the date specified in such application (which date
shall not be less than three Business Days after the date any officer of the
Corporation actually receives such application, unless any such officer shall
have consented in writing to any earlier date) unless prior to taking any such
action (or the effective date in the case of an omission), the Trustee shall
have received written instructions in response to such application specifying
the action to be taken or omitted.
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ARTICLE VII.
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND CORPORATION
Section 701. Corporation to Furnish Trustee Names and Addresses of Holders.
The Corporation will furnish or cause to be furnished to the Trustee
(1) 15 days after each Regular Record Date, a list, in such form as the Trustee
may reasonably require, of the names and addresses of the Holders of
Securities of each series as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing, within 30 days
after the receipt by the Corporation of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such
list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
Section 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with
the Corporation and the Trustee that neither the Corporation nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
Section 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
60 days after each May 15 following the date of this Indenture, deliver to
Holders a brief report, dated as of such May 15, which complies with the
provisions of such Section 313(a).
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A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee, with each stock exchange upon which any
Securities are listed, with the Commission and with the Corporation. The
Corporation will promptly notify the Trustee when any Securities are listed on
any stock exchange or any delisting thereof.
Section 704. Reports by Corporation.
The Corporation shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission. Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Corporation's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).
ARTICLE VIII.
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
Section 801. Corporation May Consolidate, Etc., Only on Certain Terms.
The Corporation shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and no Person shall consolidate with or merge into the
Corporation or convey, transfer or lease its properties and assets substantially
as an entirety to the Corporation, unless:
(1) in case the Corporation shall consolidate with or merge into another Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, the Person formed by such consolidation or into
which the Corporation is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Corporation
substantially as an entirety shall be a corporation, partnership, limited
liability company or trust organized and existing under the laws of the
United States of America or any State thereof or the District of Columbia
and shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, the due
and punctual payment of the principal of (and premium, if any) and interest
on all the Securities and the performance of every covenant of this
Indenture on the part of the Corporation to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of Default,
and no event which, after notice of lapse of time, or both, would become an
Event of Default, shall have occurred and be continuing;
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(3) such other conditions as may be specified pursuant to Section 301 with
respect to the Securities of any series shall have been satisfied; and
(4) the Corporation shall deliver to the Trustee an Officer's Certificate and
an Opinion of Counsel, each stating that such consolidation, merger,
conveyance or transfer and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with
this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with; and the Trustee, subject to
Section 601, may rely upon such Officer's Certificate and Opinion of
Counsel as conclusive evidence that such transaction complies with this
Section 801.
Section 802. Successor Substituted.
Upon any consolidation of the Corporation with, or merger of the
Corporation into, any other Person or any conveyance or transfer of the
properties and assets of the Corporation as an entirety or substantially as an
entirety in accordance with Section 801, the successor Person formed by such
consolidation or into which the Corporation is merged or to which such
conveyance or transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Corporation under this Indenture with the
same effect as if such successor Person had been named as the Corporation
herein, and thereafter the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.
Such successor Person may cause to be signed, and may issue either in its
own name or in the name of the Corporation, any or all of the Securities
issuable hereunder which theretofore shall not have been signed by the
Corporation and delivered to the Trustee; and, upon the order of such successor
Person instead of the Corporation, and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously shall have been signed and
delivered by the officers of the Corporation to the Trustee for authentication
pursuant to such provisions and any Securities which such successor Person
thereafter shall cause to be signed and delivered to the Trustee on its behalf
for the purpose pursuant to such provisions. All the Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Securities theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Securities had been issued at the date of the
execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.
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ARTICLE IX.
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Corporation, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form reasonably satisfactory
to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Corporation and the
assumption by any such successor of the covenants of the Corporation herein
and in the Securities; or
(2) to add to the covenants of the Corporation for the benefit of the Holders
of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Corporation; or
(3) to add any additional Events of Default for the benefit of the Holders of
all or any series of Securities (and if such additional Events of Default
are to be for the benefit of less than all series of Securities, stating
that such additional Events of Default are expressly being included solely
for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to such extent
as shall be necessary to permit or facilitate the issuance of Securities in
bearer form, registrable or not registrable as to principal, and with or
without interest coupons, or to facilitate the issuance of Securities in
uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this Indenture in
respect of one or more series of Securities; provided that any such
addition, change or elimination (A) shall neither (i) apply to any Security
of any series created prior to the execution of such supplemental indenture
and entitled to the benefit of such provision nor (ii) modify the rights of
the Holder of any such Security with respect to such provision or (B) shall
become effective only when there is no such Security Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as permitted by
Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by a
successor Trustee with respect to the Securities of one or more series and
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to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
611; or
(9) to cure any ambiguity, to correct or supplement any provision herein which
may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture; provided that such action pursuant to this Clause (9)
shall not adversely affect the interests of the Holders of Securities of
any series in any material respect.
Section 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Securities of all series affected by such supplemental
indenture (voting as one class), by Act of said Holders delivered to the
Corporation and the Trustee, the Corporation, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture, or modifying in any manner the rights of the Holders of
Securities under this Indenture; provided, however, that no such supplemental
indenture shall, without the consent of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Security (other than pursuant to the terms
of such Security), or reduce the principal amount thereof or the rate of
interest thereon or any premium payable upon the redemption thereof, or
reduce the amount of the principal of an Original Issue Discount Security
or any other Security which would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502 or change the
coin or currency in which any Security or any premium or interest thereon
is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity thereof (or, in the case
of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding Securities of
any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture,
or
(3) modify any of the provisions of this Section, Section 513 or Section 1006,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby;
provided, however, that this clause shall not be deemed to require the
consent of any Holder with respect to changes in the references to "the
Trustee" and concomitant changes in this Section and Section 1006, or the
deletion of this proviso, in accordance with the requirements of Sections
611 and 901(8).
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A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
Section 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Corporation shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Corporation, to any such supplemental indenture
may be prepared and executed by the Corporation and authenticated and delivered
by the Trustee in exchange for Outstanding Securities of such series.
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ARTICLE X.
COVENANTS
Section 1001. Payment of Principal, Premium and Interest.
The Corporation covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Corporation will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Corporation in respect of the Securities of that series and this
Indenture may be served. The Corporation will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Corporation shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Corporation hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Corporation may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Corporation of its obligation to maintain an
office or agency in each Place of Payment for Securities of any series for such
purposes. The Corporation will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Corporation shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of or any premium or interest on any of the Securities of that series,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal and any premium and interest so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Corporation shall have one or more Paying Agents for any
series of Securities, it will, on or prior to each due date of the principal of
or any premium or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay such amount, such sum to be held as
provided by the Trust Indenture Act, and (unless such Paying Agent is the
Trustee) the Corporation will promptly notify the Trustee of its action or
failure so to act.
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The Corporation will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will (1) hold all sums held by it for
the payment of the principal of (and premium, if any) or interest on Securities
in trust for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided, (2) give
the Trustee notice of any default by the Corporation (or any other obligor upon
the Securities) in the making of any payment of principal (and premium, if any)
or interest, (3) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (4) during the continuance of any default
by the Corporation (or any other obligor upon the Securities of that series) in
the making of any payment in respect of the Securities of that series, upon the
written request of the Trustee, forthwith pay to the Trustee all sums held in
trust by such- Paying Agent for payment in respect of the Securities of that
series.
The Corporation may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust hereunder by the Corporation or such Paying Agent, such sums to be held by
the Trustee upon the same trusts as those upon which such sums were held by the
Corporation or such Paying Agent; and, upon such payment by any Paying Agent to
the Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Corporation, in trust for the payment of the principal of or any premium or
interest on any Security of any series and remaining unclaimed for two years
after such principal, premium or interest has become due and payable shall be
paid to the Corporation on Company Request, or (if then held by the Corporation)
shall be discharged from such trust; and the Holder of such Security shall
thereafter, as an unsecured general creditor, look only to the Corporation for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Corporation as trustee
thereof, shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Corporation cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in the Borough of Manhattan, The City of New York, New York,
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the
Corporation.
Section 1004. Corporate Existence.
Subject to Article Eight, the Corporation will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises.
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Section 1005. Statement by Officers as to Default.
The Corporation will deliver to the Trustee, on or before October 15 of
each calendar year or on or before such other day in each calendar year as the
Corporation and the Trustee may from time to time agree upon, an Officer's
Certificate, stating whether or not to the best knowledge of the signers thereof
the Corporation is in default in the performance and observance of any of the
terms, provisions and conditions of this Indenture (without regard to any period
of grace or requirement of notice provided hereunder) and, if the Corporation
shall be in default, specifying all such defaults and the nature and status
thereof of which they may have knowledge.
Section 1006. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301 for Securities
of such series, the Corporation may, with respect to the Securities of any
series, omit in any particular instance to comply with any term, provision or
condition set forth in any covenant provided pursuant to Section 301(19), 901(2)
or 901(7) for the benefit of the Holders of such series if before the time for
such compliance the Holders of not less than a majority in principal amount of
the Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Corporation and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
Section 1007. Calculation of Original Issue Discount.
The Corporation shall file with the Trustee promptly at the end of each
calendar year (i) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on Outstanding
Securities as of the end of such year and (ii) such other specific information
relating to such original issue discount as may then be relevant under the
Internal Revenue Code of 1986, as amended from time to time.
ARTICLE 10.
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for such Securities) in accordance with
this Article.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Corporation to redeem any Securities shall be evidenced
by a Board Resolution or in another manner specified as contemplated by Section
301 for such Securities. In case of any redemption at the election of the
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Corporation, the Corporation shall, at least 45 days prior to the Redemption
Date fixed by the Corporation (unless a shorter notice shall be satisfactory to
the Trustee), notify the Trustee of such Redemption Date, of the principal
amount of Securities of such series to be redeemed and, if applicable, of the
tenor of the Securities to be redeemed. In the case of any redemption of
Securities (A) prior to the expiration of any restriction on such redemption
provided in the terms of such Securities or elsewhere in this Indenture, or (B)
pursuant to an election of the Corporation which is subject to a condition
specified in the terms of such Securities or elsewhere in this Indenture, the
Corporation shall furnish the Trustee with an Officer's Certificate evidencing
compliance with such restriction or condition.
Section 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all the Securities of such series and of a specified tenor are to be redeemed or
unless such redemption affects only a single Security), the particular
Securities to be redeemed shall be selected not more than 60 days prior to the
Redemption Date by the Trustee, from the Outstanding Securities of such series
not previously called for redemption, by such method as the Trustee shall deem
fair and appropriate and which may provide for the selection for redemption of a
portion of the principal amount of any Security of such series; provided that
the unredeemed portion of the principal amount of any Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security. If less than all the Securities of such series
and of a specified tenor are to be redeemed (unless such redemption affects only
a single Security), the particular Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Trustee, from the
Outstanding Securities of such series and specified tenor not previously called
for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Corporation in writing of the
Securities selected for redemption as aforesaid and, in the case of any
Securities selected for partial redemption as aforesaid, the principal amount
thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with respect
to any redemption affecting only a single Security, whether such Security is to
be redeemed in whole or in part. In the case of any such redemption in part, the
unredeemed portion of the principal amount of the Security shall be in an
authorized denomination (which shall not be less than the minimum authorized
denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
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Section 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall identify the Securities to be redeemed
(including CUSIP number(s)) and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities of any series and of a
specified tenor consisting of more than a single Security are to be
redeemed, the identification (and, in the case of partial redemption of any
such Securities, the principal amounts) of the particular Securities to be
redeemed and, if less than all the Outstanding Securities of any series and
of a specified tenor consisting of a single Security are to be redeemed,
the principal amount of the particular Security to be redeemed;
(4) that on the Redemption Date the Redemption Price, together with accrued
interest, if any, to the Redemption Date, will become due and payable upon
each such Security to be redeemed and, if applicable, that interest thereon
will cease to accrue on and after said date;
(5) the place or places where each such Security is to be surrendered for
payment of the Redemption Price and accrued interest, if any, unless it
shall have been specified as contemplated by Section 301 with respect to
such Securities that such surrender shall not be required;
(6) that the redemption is for a sinking fund, if such is the case; and
(7) such other matters as the Corporation shall deem desirable or appropriate.
Unless otherwise specified with respect to any Securities in accordance
with Section 301, with respect to any redemption of Securities at the election
of the Corporation, unless, upon the giving of notice of such redemption,
Defeasance shall have been effected with respect to such Securities pursuant to
Section 1302, such notice may state that such redemption shall be conditional
upon the receipt by the Trustee or the Paying Agent(s) for such Securities, on
or prior to the date fixed for such redemption, of money sufficient to pay the
principal of and any premium and interest on such Securities and that if such
money shall not have been so received such notice shall be of no force or effect
and the Corporation shall not be required to redeem such Securities. In the
event that such notice of redemption contains such a condition and such money is
not so received, the redemption shall not be made and within a reasonable time
thereafter notice shall be given, in the manner in which the notice of
redemption was given, that such money was not so received and such redemption
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was not required to be made, and the Trustee or Paying Agent(s) for the
Securities otherwise to have been redeemed shall promptly return to the Holders
thereof any of such Securities which had been surrendered for payment upon such
redemption.
Notice of redemption of Securities to be redeemed at the election of the
Corporation, and any notice of non-satisfaction of redemption as aforesaid,
shall be given by the Corporation or, at the Corporation's request, by the
Trustee in the name and at the expense of the Corporation. Subject to the
preceding paragraph, any such notice of redemption shall be irrevocable.
Section 1105. Deposit of Redemption Price.
On or prior to the Redemption Date specified in the notice of redemption
given as provided in Section 1104, the Corporation will deposit with the Trustee
or with one or more Paying Agents (or if the Corporation is acting as its own
Paying Agent, the Corporation will segregate and hold in trust as provided in
Section 1003) an amount of money sufficient to pay the Redemption Price of; and
any accrued interest on, all the Securities which are to be redeemed on that
date.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, and the conditions, if
any, set forth in such notice having been satisfied, the Securities or portions
thereof so to be redeemed shall, on the Redemption Date, become due and payable
at the Redemption Price therein specified, and from and after such date (unless,
in the case of an unconditional notice of redemption, the Corporation shall
default in the payment of the Redemption Price and accrued interest, if any)
such Securities or portions thereof, if interest-bearing, shall cease to bear
interest. Upon surrender of any such Security for redemption in accordance with
said notice, such Security or portion thereof shall be paid by the Corporation
at the Redemption Price, together with accrued interest, if any, to the
Redemption Date; provided, however, that no such surrender shall be a condition
to such payment if so specified as contemplated by Section 301 with respect to
such Security, and provided further that, unless otherwise specified as
contemplated by Section 301, installments of interest whose Stated Maturity is
on or prior to the Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Security.
Section 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Corporation or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Corporation and the Trustee duly executed by, the Holder thereof or his
attorney duly authorized in writing), and the Corporation shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of the same series and of like
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tenor, of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
ARTICLE XII.
SINKING FUNDS
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Securities of any series except as otherwise specified as
contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
any Securities is herein referred to as a "mandatory sinking fund payment," and
any payment in excess of such minimum amount provided for by the terms of such
Securities is herein referred to as an "optional sinking fund payment." If
provided for by the terms of any Securities, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 1202. Each sinking
fund payment shall be applied to the redemption of Securities as provided for by
the terms of such Securities.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
The Corporation (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Corporation pursuant to the terms of such Securities or through the application
of permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to any Securities of such series required to be made
pursuant to the terms of such Securities as and to the extent provided for by
the terms of such Securities; provided that the Securities to be so credited
have not been previously so credited. The Securities to be so credited shall be
received and credited for such purpose by the Trustee at the Redemption Price,
as specified in the Securities so to be redeemed, for redemption through
operation of the sinking fund and the amount of such sinking fund payment shall
be reduced accordingly.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
Securities, the Corporation will deliver to the Trustee an Officer's Certificate
specifying the amount of the next ensuing sinking fund payment for such
Securities pursuant to the terms of such Securities, the portion thereof, if
any, which is to be satisfied by payment of cash and the portion thereof, if
any, which is to be satisfied by delivering and crediting Securities pursuant to
Section 1202 and stating the basis for such credit and that such Securities have
not been previously so credited and will also deliver to the Trustee any
Securities to be so delivered. Not less than 30 days prior to each such sinking
fund payment date, the Trustee shall select the Securities to be redeemed upon
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such sinking fund payment date in the manner specified in Section 1103 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Corporation in the manner provided in Section 1104. Such notice having
been duly given, the redemption of such Securities shall be made upon the terms
and in the manner stated in Sections 1105 and 1106.
ARTICLE XIII.
DEFEASANCE AND COVENANT DEFEASANCE
Section 1301. Applicability of Article.
Unless, pursuant to Section 301, provision is made that either or both of
(A) defeasance of any Securities or any series of Securities under Section 1302
and (B) covenant defeasance of any Securities or any series of Securities under
Section 1303 shall not apply to such Securities of a series, then the provisions
of either or both of Sections 1302 and Section 1303, as the case may be,
together with Sections 1304 and 1305, shall be applicable to the Outstanding
Securities of such series upon compliance with the conditions set forth below in
this Article.
Section 1302. Defeasance and Discharge.
The Corporation may cause itself to be discharged from its obligations with
respect to any Securities or any series of Securities on and after the date the
conditions set forth in Section 1304 are satisfied (hereinafter called
"Defeasance"). For this purpose, such Defeasance means that the Corporation
shall be deemed to have paid and discharged the entire indebtedness represented
by such Securities and to have satisfied all its other obligations under such
Securities and this Indenture insofar as such Securities are concerned (and the
Trustee, at the expense of the Corporation, shall execute proper instruments
acknowledging the same), subject to the following which shall survive until
otherwise terminated or discharged hereunder: (1) the rights of Holders of such
Securities to receive, solely from the trust fund described in Section 1304 and
as more fully set forth in such Section, payments in respect of the principal of
and any premium and interest on such Securities when payments are due, (2) the
Corporation's obligations with respect to such Securities under Sections 304,
305, 306, 1002 and 1003 and with respect to the Trustee under Section 607, (3)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
(4) this Article. Subject to compliance with this Article, Defeasance with
respect to any Securities or any series of Securities by the Corporation is
permitted under this Section 1302 notwithstanding the prior exercise by the
Corporation of its rights under Section 1303 with respect to such Securities.
Following a Defeasance, payment of such Securities may not be accelerated
because of an Event of Default.
Section 1303. Covenant Defeasance.
The Corporation may cause itself to be released from its obligations under
any covenants provided pursuant to Section 301(19), 901(2), 901(6) or 901(7)
with respect to any Securities or any series of Securities for the benefit of
the Holders of such Securities and the occurrence of any event specified in
Sections 501(4) (with respect to any such covenants provided pursuant to Section
301(19), 901(2), 901(6) or 901(7)) or 501(7) shall be deemed not to be or result
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in an Event of Default with respect to such Securities as provided in this
Section, in each case on and after the date the conditions set forth in Section
1304 are satisfied (hereinafter called "Covenant Defeasance"). For this purpose,
such Covenant Defeasance means that, with respect to such Securities, the
Corporation may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such specified Section (to
the extent so specified in the case of Section 501(4)), whether directly or
indirectly by reason of any reference elsewhere herein to any such Section or by
reason of any reference in any such Section to any other provision herein or in
any other document, but the remainder of this Indenture and such Securities
shall be unaffected thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 1302 or
Section 1303 to any Securities or any series of Securities, as the case may be:
(1) The Corporation shall irrevocably have deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (A) money in an
amount, or (B) Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms
will provide, not later than the due date of any payment, money in an
amount, or (C) a combination thereof, sufficient, in the case of (B) or
(C), in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee to
pay and discharge, the principal of and any premium and interest on such
Securities on the respective Stated Maturities or on any Redemption Date
established pursuant to Clause (3) below, in accordance with the terms of
this Indenture and such Securities. As used herein, "Government Obligation"
means (x) any security which is (i) a direct obligation of the United
States of America or the government which issued the foreign currency in
which such Securities are payable, for the payment of which its full faith
and credit is pledged or (ii) an obligation of a Person controlled or
supervised by and acting as an agency or instrumentality of the United
States of America or such government which issued the foreign currency in
which such Securities are payable, the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America or such other government, which, in either case (i) or (ii), is not
callable or redeemable at the option of the issuer thereof, and (y) any
depositary receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any Government Obligation
which is specified in clause (x) above and held by such bank for the
account of the holder of such depositary receipt, or with respect to any
specific payment of principal of or interest on any Government Obligation
which is so specified and held, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received
by the custodian in respect of the Government Obligation or the specific
payment of principal or interest evidenced by such depositary receipt.
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(2) No event which is, or after notice or lapse of time or both would become,
an Event of Default with respect to such Securities or any other Securities
shall have occurred and be continuing at the time of such deposit or, with
regard to any such event specified in Sections 501(5) and (6), at any time
on or prior to the 90th day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until after
such 90th day).
(3) If the Securities are to be redeemed prior to Stated Maturity (other than
from mandatory sinking fund payments or analogous payments), notice of such
redemption shall have been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee shall have been made.
(4) The Corporation shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
Section 1305. Deposited Money and Government Obligations to Be Held in Trust;
Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all money
and Government Obligations (including the proceeds thereof) deposited with the
Trustee pursuant to Section 1304 in respect of any Securities shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or through any
such Paying Agent (including the Corporation acting as its own Paying Agent) as
the Trustee may determine, to the Holders of such Securities, of all sums due
and to become due thereon in respect of principal and any premium and interest,
but money so held in trust need not be segregated from other funds except to the
extent required by law.
The Corporation shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 1304 or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee shall
deliver or pay to the Corporation from time to time upon Company Request any
money or Government Obligations held by it as provided in Section 1304 with
respect to any Securities which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect the Defeasance or Covenant Defeasance, as
the case may be, with respect to such Securities.
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ARTICLE XIV.
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 1401. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of or any premium or interest
on any Security, or for any claim based thereon or otherwise in respect thereof,
and no recourse under or upon any obligation, covenant or agreement of the
Corporation in this Indenture or in any supplemental indenture, or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Corporation or of any successor
corporation, either directly or through the Corporation or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Securities.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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In Witness Whereof, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
EDISON INTERNATIONAL
By Mary C. Simpson
-------------------------
Name: Mary C. Simpson
Title: Assistant Treasurer
Attest:
Kenneth S. Stewart
- --------------------------
Kenneth S. Stewart
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: J. L. Bartolini
----------------------------
J. L. Bartolini
Authorized Signatory
Attest:
C. Potter
- ---------------------------
C. Potter
EDISON INTERNATIONAL
TO
HARRIS TRUST AND SAVINGS BANK,
AS TRUSTEE
SUPPLEMENTAL INDENTURE NO. 1
Dated as of September 28, 1999
$750,000,000
6-7/8% Notes Due 2004
<PAGE>
EDISON INTERNATIONAL
$750,000,000
6-7/8% Notes Due 2004
SUPPLEMENTAL INDENTURE NO. 1
SUPPLEMENTAL INDENTURE No. 1, dated as of September 28, 1999, between
Edison International, a California corporation (the "Corporation"), and Harris
Trust and Savings Bank, an Illinois banking corporation, as Trustee (the
"Trustee").
RECITALS
The Corporation and the Trustee have heretofore executed a Senior
Indenture, dated as of September 28, 1999 (the "Senior Indenture"), providing
for the issuance from time to time of series of the Corporation's Securities.
Section 301 of the Senior Indenture provides for various matters with
respect to any series of Securities issued under the Senior Indenture to be
established in an indenture supplemental to the Senior Indenture.
Section 901 of the Senior Indenture provides for the Corporation and the
Trustee to enter into an indenture supplemental to the Senior Indenture to
establish the form or terms of Securities of any series as provided by Sections
201 or 301 of the Senior Indenture.
For and in consideration of the premises and the issuance of the series of
Securities provided for herein, it is mutually covenanted and agreed, for the
equal and proportionate benefit of the Holders of the Securities of such series,
as follows:
ARTICLE 1
RELATION TO INDENTURE; DEFINITIONS
Section 1.1. This Supplemental Indenture No. 1 constitutes an integral part
of the Senior Indenture.
Section 1.2. For all purposes of this Supplemental Indenture No. 1, except
as otherwise expressly provided or unless the context otherwise requires:
(1) capitalized terms used herein without definition will have the meanings
specified in the Senior Indenture;
<PAGE>
(2) the terms defined in this Article have the meanings assigned to them in
this Article and include the plural as well as the singular;
(3) all other terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(4) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted in the
United States of America;
(5) unless the context otherwise requires, any reference to an "Article" or
a "Section" refers to an Article or a Section, as the case may be, of this
Supplemental Indenture No. 1; and
(6) the words "herein," "hereof," "hereunder" and other words of similar
import refer to this Supplemental Indenture No. 1 as a whole and not to any
particular Article, Section or other subdivision.
(7) Specific Definitions:
(a) "Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per year equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for that redemption date.
(b) "Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
remaining term of the Notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing
new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes.
(c) "Comparable Treasury Price" means, with respect to any redemption date (i)
the average of the Reference Treasury Dealer Quotations for that redemption
date, after excluding the highest and lowest of the Reference Treasury
Dealer Quotations, or (ii) if the Trustee obtains fewer than three
Reference Treasury Dealer Quotations, the average of all Reference Treasury
Dealer Quotations so received.
(d) "Interest Payment Date" shall have the meaning specified in Section 2.4
hereof.
(e) "Notes" shall have the meaning specified in Section 2.1 hereof.
(f) "Quotation Agent" means the Reference Treasury Dealer appointed by the
Corporation.
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<PAGE>
(g) "Reference Treasury Dealer" means (i) each of Salomon Smith Barney Inc.,
J.P. Morgan Securities Inc., Banc of America Securities LLC and Goldman,
Sachs & Co. and their respective successors, unless any of them ceases to
be a primary U.S. Government securities dealer in New York City, and (ii)
any other primary U.S. Government securities dealer in New York City
selected by the Corporation.
(h) "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as
determined by the Corporation, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by that Reference
Treasury Dealer at 5:00 p.m., New York City time, on the third business day
preceding that redemption date.
(i) "Regular Record Date" means, for the interest payable on any Interest
Payment Date the date which is fifteen days immediately prior to such
Interest Payment Date (whether or not a Business Day).
ARTICLE 2
THE SERIES OF SECURITIES
Section 2.1. Title of the Securities. There shall be a series of Securities
designated the "6-7/8% Notes Due 2004" (the "Notes").
Section 2.2. Limitation on Aggregate Principal Amount; Date of Notes. The
aggregate principal amount of the Notes shall be limited to $750,000,000. Each
Note shall be dated the date of its authentication.
Section 2.3. Principal Payment Date. Subject to Section 2.4 hereof, the
principal amount of the Notes Outstanding (together with any accrued and unpaid
interest shall be payable in a single installment on September 15, 2004.
Section 2.4. Interest and Interest Rates. The rate of interest on each Note
shall be 6-7/8% per annum, accruing from September 28, 1999. Interest shall be
payable, semi-annually in arrears, on March 15 and September 15 of each year
(each such date, an "Interest Payment Date"), commencing with March 15, 2000.
The amount of interest payable for any period shall be computed on the basis of
a 360-day year of twelve 30-day months. For any period of less than a full
month, interest payable shall reflect interest on the Notes computed on the
basis of the actual number of elapsed days based on a month of 30 days in a
360-day year. In the event that any date on which interest is payable on a Note
is not a Business Day, then a payment of the interest payable on such date will
be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in
3
<PAGE>
whose name such Note is registered in the Security Register at the close of
business on the Regular Record Date for such interest installment. The interest
so payable on any Note which is not punctually paid or duly provided for on any
Interest Payment Date shall forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name such Note
is registered in the Security Register at the close of business on a date
("Special Record Date") for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Notes not less than
10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Senior Indenture.
Section 2.5. Place of Payment. The Place of Payment where the Notes may be
presented or surrendered for payment, where the Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Corporation in respect of the Notes and the Senior Indenture may be served
shall be the Corporate Trust Office of the Trustee.
Section 2.6. Redemption. The Corporation may, at its option, subject to the
terms and conditions of Article XI of the Senior Indenture, redeem the Notes in
whole at any time or in part from time to time, at a redemption price equal to
the greater of (i) 100% of the principal amount of the Notes to be redeemed and
(ii) as determined by the Quotation Agent, the sum of the present values of the
remaining scheduled payments of principal and interest in respect of the Notes
to be redeemed (not including any portion of such payments of interest accrued,
as of the date of redemption) discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate plus 15 basis points, plus, in each case, accrued
interest to the date of redemption.
Section 2.7. Exchange. At any time, the Corporation may cause the Notes to
be distributed to Holders of the Notes in definitive certificated form upon
prior notice to the Trustee.
Section 2.8. Denomination. The Notes shall be in registered form without
coupons and shall be issuable in denominations of $1000 and integral multiples
thereof.
Section 2.9. Currency. Principal and interest and other amounts payable on
the Notes shall be paid in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debt.
Section 2.10. Form of Notes. The Notes shall be issuable in whole in the
form of one or more Global Securities, and the Depository for such Global
Securities shall be Depository Trust Company, New York, New York. The Notes
shall be substantially in the form attached as Exhibit A hereto.
Section 2.11. Securities Registrar and Paying Agent; Unclaimed Amounts. The
Trustee shall initially serve as Security Registrar and Paying Agent. Any amount
paid to the Trustee or any Paying Agent, or held in trust by the Corporation,
for payments on any Note, that remains unclaimed at the end of two years after
such amount is due will be repaid to the Corporation.
4
<PAGE>
Section 2.12. No Sinking Fund Obligations. The Corporation has no
obligation to redeem or purchase any Notes pursuant to any sinking fund or
analogous requirement or upon the happening of a specified event or at the
option of a Holder thereof.
ARTICLE 3
MISCELLANEOUS PROVISIONS
Section 3.1. The Senior Indenture, as supplemented and amended by this
Supplemental Indenture No. 1, is in all respects hereby adopted, ratified and
confirmed.
Section 3.2. This Supplemental Indenture No. 1 may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 3.3. Nothing in this Supplemental Indenture No. 1, express or
implied, shall give to any Person, other than the parties hereto and their
successors and assigns, and the Holders of the Notes, any benefit or legal or
equitable right, remedy or claim under this Supplemental Indenture No. 1 or the
Senior Indenture.
Section 3.4. THIS SUPPLEMENTAL INDENTURE NO. 1 AND EACH NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture No. 1 to be duly executed, as of the day and year first written above.
EDISON INTERNATIONAL
By: Mary C. Simpson
----------------------------
Name: Mary C. Simpson
Title: Assistant Treasurer
Attest: Kenneth S. Stewart
-----------------------
Kenneth S. Stewart
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: J. L. Bartolini
-----------------------------
J. L. Bartolini
Authorized Signatory
Attest: C. Potter
-------------------
C. Potter
6
<PAGE>
EXHIBIT A
[FORM OF FACE OF NOTE]
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.
THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO
TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
EDISON INTERNATIONAL
6-7/8% Note Due 2004
$ ----------
No. _________ CUSIP No. 281020AB3
Edison International, a corporation duly organized and existing under the
laws of the State of California (herein called the "Corporation," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to
__________________________________________, or registered assigns, the principal
sum of __________________________________________ Dollars on September 15, 2004,
and to pay interest thereon from September 28, 1999 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears, on March 15 and September 15 in each year, commencing
March 15, 2000, at the rate of 6-7/8% per annum, until the principal hereof is
paid or made available for payment. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Note (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of the Notes not less than
10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and any such interest on
this Note will be made at the office or agency of the Trustee maintained for
that purpose in Chicago, Illinois, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the
A-1
<PAGE>
Corporation payment of interest may be made by check mailed to the address
of the Person entitled thereto as such address shall appear in the Security
Register or by wire transfer at such place and to such account at a banking
institution in the United States as may be designated in writing to the Trustee
at least sixteen (16) days prior to the date for payment by the Person entitled
thereto.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
A-2
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed under its corporate seal.
Dated as of Date of Authentication: EDISON INTERNATIONAL
By:
Name: Mary C. Simpson
Title: Assistant Treasurer
Attest:
This is one of the 6-7/8% Notes Due 2004 referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank,
as Trustee
By:
Authorized Signatory
Dated: _________________
A-3
<PAGE>
[FORM OF REVERSE OF NOTE]
This 6-7/8% Note Due 2004 is one of a duly authorized issue of securities
of the Corporation (herein called the "Note"), issued and to be issued in one or
more series under a Senior Indenture, dated as of September 28, 1999, (herein
called the "Indenture," which term shall have the meaning assigned to it in such
instrument), between the Corporation and Harris Trust and Savings Bank, as
Trustee (herein called the "Trustee," which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture for a
statement of the respective rights, limitation of rights, duties and immunities
thereunder of the Corporation, the Trustee and the Holders of the Notes and of
the terms upon which the Notes are, and are to be, authenticated and delivered.
This Note is one of the series designated on the face hereof, limited in
aggregate principal amount to $750,000,000.
The Notes are subject to redemption in whole at any time or in part from
time to time upon not less than 30 days' notice to the Trustee by mail, at the
option of the Corporation and at a Redemption Price equal to (1) 100% of the
principal amount and (2) as determined by the Quotation Agent, the sum of the
present values of the remaining scheduled payments of principal and interest in
respect of the Notes to be redeemed (not including any portion of such payments
of interest accrued, as of the date of redemption) discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate plus 15 basis points, plus, in each
case, accrued interest to the date of redemption.
In the event of redemption of this Note in part only, a new Note or Notes
and of like tenor for the unredeemed portion hereof will be issued in the name
of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Note or certain restrictive covenants and Events of Default
with respect to this Note, in each case upon compliance with certain conditions
set forth in the Indenture.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Securities of all series
affected under the Indenture at any time by the Corporation and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
of all series at the time Outstanding affected thereby (voting as one class).
The Indenture contains provisions permitting the Holders of not less than a
majority in principal amount of the Securities of all series at the time
Outstanding with respect to which a default under the Indenture shall have
occurred and be continuing (voting as one class), on behalf of the
A-5
<PAGE>
Holders of the Securities of all such series, to waive, with certain
exceptions, such past default with respect to all such series and its
consequences. The Indenture also permits the Holders of not less than a majority
in principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Corporation with certain provisions of the Indenture. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange therefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.
As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of the Notes at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Note for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Corporation, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Security Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Security Registrar in any place where the principal of and any premium and
interest on this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of the Notes and of like
tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and neither the Corporation,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
The Indenture and the Notes issued thereby shall be governed by and
construed in accordance with the laws of the State of California.
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.
THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO
TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
EDISON INTERNATIONAL
6-7/8% Note Due 2004
No. 0001 $ 200,000,000
CUSIP No. 281020 AB 3
Edison International, a corporation duly organized and existing under the
laws of the State of California (herein called the "Corporation," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Harris Trust and Saving Bank, as
Trustee, or registered assigns, for the benefit of the Holders, the principal
sum of TWO HUNDRED MILLION DOLLARS ($200,000,000) on September 15, 2004, and to
pay interest thereon from September 28, 1999 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
in arrears, on March 15 and September 15 in each year, commencing March 15,
2000, at the rate of 6-7/8% per annum, until the principal hereof is paid or
made available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest. Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of the Notes not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and any such interest on
this Note will be made at the office or agency of the Trustee maintained for
that purpose in Chicago, Illinois, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Corporation payment
of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the
<PAGE>
Security Register or by wire transfer at such place and to such account at
a banking institution in the United States as may be designated in writing to
the Trustee at least sixteen (16) days prior to the date for payment by the
Person entitled thereto.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed under its corporate seal.
Dated as of Date of Authentication: EDISON INTERNATIONAL
By: Mary C. Simpson
-----------------------
Title: Assistant Treasurer
Attest: Kenneth S. Stewart
-------------------------
Kenneth S. Stewart
This is one of the 6-7/8% Notes Due 2004 referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank,
as Trustee
By: J. L. Bartolinis
---------------------------
J. L. Bartolini
Authorized Signatory
Dated: _________________
<PAGE>
This 6-7/8% Note Due 2004 is one of a duly authorized issue of securities
of the Corporation (herein called the "Note"), issued and to be issued in one or
more series under a Senior Indenture, dated as of September 28, 1999, (herein
called the "Indenture," which term shall have the meaning assigned to it in such
instrument), between the Corporation and Harris Trust and Savings Bank, as
Trustee (herein called the "Trustee," which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture for a
statement of the respective rights, limitation of rights, duties and immunities
thereunder of the Corporation, the Trustee and the Holders of the Notes and of
the terms upon which the Notes are, and are to be, authenticated and delivered.
This Note is one of the series designated on the face hereof, limited in
aggregate principal amount to $750,000,000.
The Notes are subject to redemption in whole at any time or in part from
time to time upon not less than 30 days' notice to the Trustee by mail, at the
option of the Corporation and at a Redemption Price equal to (1) 100% of the
principal amount and (2) as determined by the Quotation Agent, the sum of the
present values of the remaining scheduled payments of principal and interest in
respect of the Notes to be redeemed (not including any portion of such payments
of interest accrued, as of the date of redemption) discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate plus 15 basis points, plus, in each
case, accrued interest to the date of redemption.
In the event of redemption of this Note in part only, a new Note or Notes
and of like tenor for the unredeemed portion hereof will be issued in the name
of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Note or certain restrictive covenants and Events of Default
with respect to this Note, in each case upon compliance with certain conditions
set forth in the Indenture.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Securities of all series
affected under the Indenture at any time by the Corporation and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
of all series at the time Outstanding affected thereby (voting as one class).
The Indenture contains provisions permitting the Holders of not less than a
majority in principal amount of the Securities of all series at the time
Outstanding with respect to which a default under the Indenture shall have
occurred and be continuing (voting as one class), on behalf of the Holders of
the Securities of all such series, to waive, with certain exceptions, such past
default with respect to all such series and its consequences. The Indenture also
permits the Holders of not less than a majority
<PAGE>
in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Corporation with certain provisions of the Indenture. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange therefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of the Notes at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Note for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Corporation, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Security Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Security Registrar in any place where the principal of and any premium and
interest on this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of the Notes and of like
tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
<PAGE>
Prior to due presentment of this Note for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and neither the Corporation,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
The Indenture and the Notes issued thereby shall be governed by and
construed in accordance with the laws of the State of California.
<PAGE>
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE
REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED,
IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
EDISON INTERNATIONAL
6-7/8% Note Due 2004
No. 0002 $ 200,000,000
----
CUSIP No. 281020 AB 3
Edison International, a corporation duly organized and existing under the
laws of the State of California (herein called the "Corporation," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Harris Trust and Saving Bank, as
Trustee, or registered assigns, for the benefit of the Holders, the principal
sum of TWO HUNDRED MILLION DOLLARS ($200,000,000) on September 15, 2004, and to
pay interest thereon from September 28, 1999 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
in arrears, on March 15 and September 15 in each year, commencing March 15,
2000, at the rate of 6-7/8% per annum, until the principal hereof is paid or
made available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest. Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of the Notes not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and any such interest on
this Note will be made at the office or agency of the Trustee maintained for
that purpose in Chicago, Illinois, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Corporation payment
of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the
<PAGE>
Security Register or by wire transfer at such place and to such account at
a banking institution in the United States as may be designated in writing to
the Trustee at least sixteen (16) days prior to the date for payment by the
Person entitled thereto.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed under its corporate seal.
Dated as of Date of Authentication: EDISON INTERNATIONAL
By : Mary C. Simpson
--------------------------
Name: Mary C. Simpson
Title: Assistant Treasurer
Attest: Kenneth S. Stewart
---------------------
Kenneth S. Stewart
This is one of the 6-7/8% Notes Due 2004 referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank,
as Trustee
By: J. L. Bartolini
-------------------------
J. L. Bartolini
Authorized Signatory
Dated: _________________
<PAGE>
This 6-7/8% Note Due 2004 is one of a duly authorized issue of securities
of the Corporation (herein called the "Note"), issued and to be issued in one or
more series under a Senior Indenture, dated as of September 28, 1999, (herein
called the "Indenture," which term shall have the meaning assigned to it in such
instrument), between the Corporation and Harris Trust and Savings Bank, as
Trustee (herein called the "Trustee," which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture for a
statement of the respective rights, limitation of rights, duties and immunities
thereunder of the Corporation, the Trustee and the Holders of the Notes and of
the terms upon which the Notes are, and are to be, authenticated and delivered.
This Note is one of the series designated on the face hereof, limited in
aggregate principal amount to $750,000,000.
The Notes are subject to redemption in whole at any time or in part from
time to time upon not less than 30 days' notice to the Trustee by mail, at the
option of the Corporation and at a Redemption Price equal to (1) 100% of the
principal amount and (2) as determined by the Quotation Agent, the sum of the
present values of the remaining scheduled payments of principal and interest in
respect of the Notes to be redeemed (not including any portion of such payments
of interest accrued, as of the date of redemption) discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate plus 15 basis points, plus, in each
case, accrued interest to the date of redemption.
In the event of redemption of this Note in part only, a new Note or Notes
and of like tenor for the unredeemed portion hereof will be issued in the name
of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Note or certain restrictive covenants and Events of Default
with respect to this Note, in each case upon compliance with certain conditions
set forth in the Indenture.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Securities of all series
affected under the Indenture at any time by the Corporation and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
of all series at the time Outstanding affected thereby (voting as one class).
The Indenture contains provisions permitting the Holders of not less than a
majority in principal amount of the Securities of all series at the time
Outstanding with respect to which a default under the Indenture shall have
occurred and be continuing (voting as one class), on behalf of the Holders of
the Securities of all such series, to waive, with certain exceptions, such past
default with respect to all such series and its consequences. The Indenture also
permits the Holders of not less than a majority
<PAGE>
in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Corporation with certain provisions of the Indenture. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange therefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of the Notes at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Note for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Corporation, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Security Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Security Registrar in any place where the principal of and any premium and
interest on this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of the Notes and of like
tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
<PAGE>
Prior to due presentment of this Note for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and neither the Corporation,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
The Indenture and the Notes issued thereby shall be governed by and
construed in accordance with the laws of the State of California.
<PAGE>
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE
REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED,
IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
EDISON INTERNATIONAL
6-7/8% Note Due 2004
No. 0003 $ 200,000,000
----
CUSIP No. 281020 AB 3
Edison International, a corporation duly organized and existing under the
laws of the State of California (herein called the "Corporation," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Harris Trust and Saving Bank, as
Trustee, or registered assigns, for the benefit of the Holders, the principal
sum of TWO HUNDRED MILLION DOLLARS ($200,000,000) on September 15, 2004, and to
pay interest thereon from September 28, 1999 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semi-annually
in arrears, on March 15 and September 15 in each year, commencing March 15,
2000, at the rate of 6-7/8% per annum, until the principal hereof is paid or
made available for payment. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest. Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of the Notes not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and any such interest on
this Note will be made at the office or agency of the Trustee maintained for
that purpose in Chicago, Illinois, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Corporation payment
of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the
<PAGE>
Security Register or by wire transfer at such place and to such account at
a banking institution in the United States as may be designated in writing to
the Trustee at least sixteen (16) days prior to the date for payment by the
Person entitled thereto.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed under its corporate seal.
Dated as of Date of Authentication: EDISON INTERNATIONAL
By: Mary C. Simpson
----------------------
Name:Mary C. Simpson
Title:Assistant Teasurer
Attest: Kenneth S. Stewart
-----------------------
Kenneth S. Stewart
This is one of the 6-7/8% Notes Due 2004 referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank,
as Trustee
By: J. L. Bartolini
--------------------------
J. L. Bartolini
Authorized Signatory
Dated: ________________-
<PAGE>
This 6-7/8% Note Due 2004 is one of a duly authorized issue of securities
of the Corporation (herein called the "Note"), issued and to be issued in one or
more series under a Senior Indenture, dated as of September 28, 1999, (herein
called the "Indenture," which term shall have the meaning assigned to it in such
instrument), between the Corporation and Harris Trust and Savings Bank, as
Trustee (herein called the "Trustee," which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture for a
statement of the respective rights, limitation of rights, duties and immunities
thereunder of the Corporation, the Trustee and the Holders of the Notes and of
the terms upon which the Notes are, and are to be, authenticated and delivered.
This Note is one of the series designated on the face hereof, limited in
aggregate principal amount to $750,000,000.
The Notes are subject to redemption in whole at any time or in part from
time to time upon not less than 30 days' notice to the Trustee by mail, at the
option of the Corporation and at a Redemption Price equal to (1) 100% of the
principal amount and (2) as determined by the Quotation Agent, the sum of the
present values of the remaining scheduled payments of principal and interest in
respect of the Notes to be redeemed (not including any portion of such payments
of interest accrued, as of the date of redemption) discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate plus 15 basis points, plus, in each
case, accrued interest to the date of redemption.
In the event of redemption of this Note in part only, a new Note or Notes
and of like tenor for the unredeemed portion hereof will be issued in the name
of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Note or certain restrictive covenants and Events of Default
with respect to this Note, in each case upon compliance with certain conditions
set forth in the Indenture.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Securities of all series
affected under the Indenture at any time by the Corporation and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
of all series at the time Outstanding affected thereby (voting as one class).
The Indenture contains provisions permitting the Holders of not less than a
majority in principal amount of the Securities of all series at the time
Outstanding with respect to which a default under the Indenture shall have
occurred and be continuing (voting as one class), on behalf of the Holders of
the Securities of all such series, to waive, with certain exceptions, such past
default with respect to all such series and its consequences. The Indenture also
permits the Holders of not less than a majority
<PAGE>
in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Corporation with certain provisions of the Indenture. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange therefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of the Notes at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Note for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Corporation, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Security Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Security Registrar in any place where the principal of and any premium and
interest on this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of the Notes and of like
tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
<PAGE>
Prior to due presentment of this Note for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and neither the Corporation,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
The Indenture and the Notes issued thereby shall be governed by and
construed in accordance with the laws of the State of California.
<PAGE>
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE
REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED,
IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
EDISON INTERNATIONAL
6-7/8% Note Due 2004
No. 0004 $ 150,000,000
----
CUSIP No. 281020 AB 3
Edison International, a corporation duly organized and existing under the
laws of the State of California (herein called the "Corporation," which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Harris Trust and Saving Bank, as
Trustee, or registered assigns, for the benefit of the Holders, the principal
sum of ONE HUNDRED FIFTY MILLION DOLLARS ($150,000,000) on September 15, 2004,
and to pay interest thereon from September 28, 1999 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears, on March 15 and September 15 in each year, commencing
March 15, 2000, at the rate of 6-7/8% per annum, until the principal hereof is
paid or made available for payment. The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Note (or one
or more Predecessor Securities) is registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest to be fixed by
the Trustee, notice whereof shall be given to Holders of the Notes not less than
10 days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Notes may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and any such interest on
this Note will be made at the office or agency of the Trustee maintained for
that purpose in Chicago, Illinois, in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Corporation payment
of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the
<PAGE>
Security Register or by wire transfer at such place and to such account at
a banking institution in the United States as may be designated in writing to
the Trustee at least sixteen (16) days prior to the date for payment by the
Person entitled thereto.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this instrument to be duly
executed under its corporate seal.
Dated as of Date of Authentication: EDISON INTERNATIONAL
By: Mary C. Simpson
----------------------
Name: Mary C. Simpson
Title: Assistant Treasurer
Attest: Kenneth S. Stewart
---------------------
Kenneth S. Stewart
This is one of the 6-7/8% Notes Due 2004 referred to in the
within-mentioned Indenture.
Harris Trust and Savings Bank,
as Trustee
By: J.L. Bartolini
--------------------------------
J. L. Bartolini
Authorized Signatory
Dated: _________________
<PAGE>
This 6-7/8% Note Due 2004 is one of a duly authorized issue of securities
of the Corporation (herein called the "Note"), issued and to be issued in one or
more series under a Senior Indenture, dated as of September 28, 1999, (herein
called the "Indenture," which term shall have the meaning assigned to it in such
instrument), between the Corporation and Harris Trust and Savings Bank, as
Trustee (herein called the "Trustee," which term includes any successor trustee
under the Indenture), and reference is hereby made to the Indenture for a
statement of the respective rights, limitation of rights, duties and immunities
thereunder of the Corporation, the Trustee and the Holders of the Notes and of
the terms upon which the Notes are, and are to be, authenticated and delivered.
This Note is one of the series designated on the face hereof, limited in
aggregate principal amount to $750,000,000.
The Notes are subject to redemption in whole at any time or in part from
time to time upon not less than 30 days' notice to the Trustee by mail, at the
option of the Corporation and at a Redemption Price equal to (1) 100% of the
principal amount and (2) as determined by the Quotation Agent, the sum of the
present values of the remaining scheduled payments of principal and interest in
respect of the Notes to be redeemed (not including any portion of such payments
of interest accrued, as of the date of redemption) discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate plus 15 basis points, plus, in each
case, accrued interest to the date of redemption.
In the event of redemption of this Note in part only, a new Note or Notes
and of like tenor for the unredeemed portion hereof will be issued in the name
of the Holder hereof upon the cancellation hereof.
The Indenture contains provisions for defeasance at any time of the entire
indebtedness of this Note or certain restrictive covenants and Events of Default
with respect to this Note, in each case upon compliance with certain conditions
set forth in the Indenture.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of the Notes may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Securities of all series
affected under the Indenture at any time by the Corporation and the Trustee with
the consent of the Holders of a majority in principal amount of the Securities
of all series at the time Outstanding affected thereby (voting as one class).
The Indenture contains provisions permitting the Holders of not less than a
majority in principal amount of the Securities of all series at the time
Outstanding with respect to which a default under the Indenture shall have
occurred and be continuing (voting as one class), on behalf of the Holders of
the Securities of all such series, to waive, with certain exceptions, such past
default with respect to all such series and its consequences. The Indenture also
permits the Holders of not less than a majority
<PAGE>
in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Corporation with certain provisions of the Indenture. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange therefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Note.
As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes, the Holders of not less than 25% in principal amount of the Notes at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of the Notes at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Note for the enforcement of any payment of principal hereof or any premium
or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Corporation, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registrable in the Security Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Security Registrar in any place where the principal of and any premium and
interest on this Note are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the Security
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes and of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of the Notes and of like
tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
<PAGE>
Prior to due presentment of this Note for registration of transfer, the
Corporation, the Trustee and any agent of the Corporation or the Trustee may
treat the Person in whose name this Note is registered as the owner hereof for
all purposes, whether or not this Note be overdue, and neither the Corporation,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
The Indenture and the Notes issued thereby shall be governed by and
construed in accordance with the laws of the State of California.
AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT (the "Amendment"), dated as of September 16, 1999 to the
Rights Agreement, dated as of November 21, 1996 (the "Rights Agreement"), by and
between Edison International, a California company (the "Company"), and Harris
Trust Company of California, as Rights Agent (the "Rights Agent").
RECITALS
A. The Company and the Rights Agent have heretofore executed and entered
into the Rights Agreement.
B. Pursuant to Section 26 of the Rights Agreement and subject to the terms
thereof, the Company and the Rights Agent may from time to time supplement and
amend the Rights Agreement.
C. The Board of Directors of the Company has determined that it is in the
best interests of the Company and the Company's shareholders to make certain
amendments to the Rights Agreement, and the Company and the Rights Agent desire
to evidence such amendments in writing.
D. All acts and things necessary to make this Amendment a valid agreement,
enforceable according to its terms, have been done and performed, and the
execution and delivery of this Amendment by the Company and the Rights Agent
have been in all respects duly authorized by the Company and the Rights Agent.
AGREEMENT
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights Agreement, the
definition of "Acquiring Person" is hereby deleted and replaced in its entirety
with the following:
<PAGE>
"Acquiring Person" shall mean any Person who or which, alone or together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of more than 20% of the Common Shares then outstanding, but shall not include
(a) the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any of its Subsidiaries, or any Person holding Common Shares for
or pursuant to the terms of any such employee benefit plan or (b) any such
Person who has become such a Beneficial Owner solely because (i) of a change in
the aggregate number of Common Shares outstanding since the last date on which
such Person acquired Beneficial Ownership of any Common Shares or (ii) (A) it
acquired such Beneficial Ownership in the good faith belief that such
acquisition would not (x) cause such Beneficial Ownership to exceed 20% of the
Common Shares then outstanding and such Person relied in good faith in computing
the percentage of its Beneficial Ownership on publicly filed reports or
documents of the Company which are inaccurate or out-of-date or (y) otherwise
cause a Distribution Date or the adjustment provided for in Section 11(a) to
occur, or (B) it otherwise inadvertently acquired such Beneficial Ownership.
Notwithstanding clause (b) of the prior sentence, if any Person that is not an
Acquiring Person due to such clause (b) does not reduce its percentage of
Beneficial Ownership of Common Shares to 20% or less by the Close of Business on
the fifth Business Day after notice from the Company (the date of notice being
the first day) that such Person's Beneficial Ownership of Common Shares so
exceeds 20%, such Person shall, at the end of such five Business Day period,
become an Acquiring Person (and such clause (b) shall no longer apply to such
Person). For purposes of this definition, the determination whether any Person
acted in "good faith" or "inadvertently" shall be conclusively determined by the
Board of Directors of the Company.
2. Amendment of Section 24(a). Section 24(a) of the Rights Agreement is
deleted and replaced in its entirety with the following:
(a) The Board of Directors of the Company may, at its option, at any time prior
to the earlier of (i) such time as a Person becomes an Acquiring Person and
(ii) the Expiration Date, order the redemption of all, but not fewer than
all, of the then outstanding Rights at the Redemption Price (the date of
such redemption being the "Redemption Date"), if a majority of the
directors then in office determines that such redemption is, in their
judgment, in the best interests of the Company and its stockholders and the
Company, at its option, may pay the Redemption Price either in cash or
Common Shares or other securities of the Company deemed by the Board of
Directors of the Company, in the exercise of its sole discretion, to be at
least equivalent in value to the Redemption Price.
3. Amendment of Section 26. Section 26 of the Rights Agreement is hereby
deleted and replaced in its entirety with the following:
<PAGE>
At any time prior to the Distribution Date and subject to the penultimate
sentence of this Section 26, the Company may, and the Rights Agent shall if
the Company so directs, supplement or amend any provision of this Rights
Agreement without the approval of any holder of the Rights. Without
limiting the foregoing, the Company may, at any time prior to the
Distribution Date and subject to the penultimate sentence of this Section
26, without the approval of any holder of the Rights, change the time
during which the Rights may be redeemed pursuant to Section 24, change any
provision of the Certificate of Determination, and/or lower the threshold
set forth in the definition of Acquiring Person in Section 1 and the
threshold set forth in Section 3(b) to not less than the greater of (i) any
percentage greater than the largest percentage of the Common Shares then
outstanding known by the Company to be beneficially owned by any Person
(other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any of its Subsidiaries, or any Person
holding Common Shares for or pursuant to the terms of any such employee
benefit plan) and (ii) 10%. From and after the Distribution Date and
subject to applicable law, the Company may, and the Rights Agent shall if
the Company so directs, amend this Rights Agreement without the approval of
any holders of Right Certificates (i) to cure any ambiguity or to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provision of this Rights Agreement or (ii) to
make any other provisions in regard to matters or questions arising
hereunder which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Right Certificates
(other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person) or the rights or duties of the Rights Agent. Any
supplement or amendment adopted during any period after any Person has
become an Acquiring Person but prior to the Distribution Date shall be null
and void unless such supplement or amendment could have been adopted under
the prior sentence from and after the Distribution Date. Any supplement or
amendment to this Rights Agreement duly approved by the Company that does
not amend Sections 19, 20, 21 or 22 in a manner adverse to the Rights Agent
shall become effective immediately upon execution by the Company, whether
or not also executed by the Rights Agent. Notwithstanding anything to the
contrary contained in this Rights Agreement, no supplement or amendment to
this Rights Agreement shall be made which (a) reduces the Redemption Price
(except as required by Section 12(a)) or (b) provides for an earlier
Expiration Date. The Rights Agent shall have no duty to inquire into any
amendment or supplement made pursuant to this Section and shall be fully
protected in following the Company's direction to execute the amendment.
4. Amendment of Exhibit B to the Rights Agreement, "Form of Right
Certificate". The sixth paragraph of Exhibit B (not including the introductory
legend) is hereby deleted and replaced in its entirety with the following:
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Right Certificate may be redeemed by the Company at its option at a
redemption price (in cash or shares of Common Stock or other securities of
the Company deemed by the Board of Directors to be at least equivalent in
value) of $.001 per Right (which amount shall be subject to adjustment as
provided in the Rights Agreement) at any time prior to the earlier of (i)
such time as a Person becomes an Acquiring Person and (ii) the Expiration
Date.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and attested, all as of the date and year first above written.
Edison International
By: Alan J. Fohrer
------------------------------------
Name: Alan J. Fohrer
Title: Executive Vice President
and Chief Financial Officer
Harris Trust Company of California,
as Rights Agent
By: Neil Rosso
------------------------------------
Name: Neil Rosso
Title: Assistant Vice President
Southern California Edison Company
EXECUTIVE RETIREMENT PLAN
for Executives of Participating
EDISON INTERNATIONAL
Companies
As Restated Effective
April 1, 1999
<PAGE>
TABLE OF CONTENTS
PREAMBLE 1
I. DEFINITIONS 1
II. PARTICIPATION 3
2.01 Eligibility 3
2.02 Pre-1995 Participation 3
III. BENEFIT DETERMINATION AND VESTING 3
3.01 Overview 3
3.02 Benefit Features 3
3.03 Benefit Computation 4
3.04 Vesting 4
3.05 Benefit of Former Executives 5
IV. RETIREMENT BENEFITS 5
4.01 Forms of Benefit Payment 5
4.02 Interest 5
4.03 Commencement of Payments 6
V. TERMINATION BENEFITS 6
VI. SURVIVOR BENEFITS 6
6.01 Overview 6
6.02 Alternative Forms of Payment 6
VII. PAYMENT TERMS AND CONDITIONS 7
7.01 Benefits Nonassignable 7
7.02 I ncapacity 7
7.03 Hardship 7
7.04 No Fiduciary Relationship 8
VIII. TAXES 8
8.01 Taxes on Benefit Payments 8
8.02 Taxes on Benefit Accrual 8
IX. BENEFICIARY 8
X. PLAN ADMINISTRATION 8
10.01 Plan Interpretation 8
10.02 Day-to-Day Administration 9
10.03 Limited Liability 9
XI. AMENDMENT OR TERMINATION 9
11.01 Authority to Amend or Terminate 9
11.02 Limitations 9
XII. CLAIMS AND REVIEW PROCEDURES 9
12.01 Right To Arbitration 9
12.02 Arbitration Procedures 10
12.03 Enforcement of Award and Fees 10
XIII. MISCELLANEOUS11
13.01 Participation in Other Plans 11
13.02 Relationship to Qualified Plan 11
13.03 No Right to Employment 11
13.04 Forfeiture 11
13.05 Benefits Unsecured 12
13.06 Validity and Applicable Law 12
13.07 Captions 12
<PAGE>
SOUTHERN CALIFORNIA EDISON COMPANY
EXECUTIVE RETIREMENT PLAN
As Amended Effective April 1, 1999
I.
PREAMBLE
The purpose of this Plan is to provide supplemental retirement benefits to
Participants and surviving spouses or other designated beneficiaries of such
Participants.
II.
DEFINITIONS
Capitalized terms in the text of the Plan are defined as follows:
Administrator means the Compensation and Executive Personnel Committee of the
Southern California Edison Company Board of Directors.
Affiliate means Edison International or any corporation or entity which along
with Edison International, is a component member of a "controlled group of
corporations" within the meaning of Section 414(b) of the Code.
Base Salary means the annual basic rate of pay as fixed by the Company
(excluding Incentive Awards, special awards, commissions, severance pay, and
other non-regular forms of compensation).
Beneficiary means the person designated as such in accordance with Article IX of
the Plan.
Benefit Feature means one of the levels of benefit under the Plan as described
in Section 3.02(a).
Code means the Internal Revenue Code of 1986, as amended.
Company means the Affiliate employing the Participant.
Financial Hardship means an unexpected and unforeseen financial disruption
arising from an illness, casualty loss, sudden financial reversal, or other such
unforeseeable occurrence as determined by the Administrator or its designee.
Needs arising from foreseeable events such as the purchase of a residence or
education expenses for children will not, alone, be considered a Financial
Hardship.
1
<PAGE>
Incentive Award means the dollar amount of incentive (bonus) awarded by the
Company to the Participant pursuant to the terms of an annual incentive award
plan.
Participant means a key employee of an Affiliate, who (i) is a U.S. employee or
an expatriate and is based and paid in the U.S., (ii) has been designated as an
executive by the Administrator, the Company Board or the Company CEO for
purposes of the Plan, and (iii) qualifies as a member of the "select group of
management or highly compensated employees" under the Employee Retirement Income
Security Act of 1974, as amended.
Plan means the Southern California Edison Company Executive Retirement Plan.
Qualified Plan means the Southern California Edison Company Retirement Plan, or
a successor plan, intended to qualify under Section 401(a) of the Code.
Retirement means separation from the Company upon attainment of at least age 55
with at least 5 Years of Service.
Senior Officer means (i) the CEO, President, Executive Vice Presidents, Senior
Vice Presidents and elected Vice Presidents of the Sponsor and Edison
International, (ii) any officer of other Affiliates who has been designated as a
Section 16 Officer by the Board of Directors of Edison International, and (iii)
any other Affiliate employee designated by the Administrator to be a Senior
Officer for purposes of the Plan.
Sponsor means the Southern California Edison Company.
Termination of Employment means the voluntary or involuntary cessation of the
Participant's employment with the Company for any reason other than death or
Retirement. Termination of Employment will not be deemed to have occurred for
purposes of this Plan if the Participant is reemployed by another Affiliate
within 30 days of ceasing work with the Company.
Total Compensation means (i) for non-Senior Officer Participants, the annualized
average Base Salary as fixed by the Company based on the Participant's 36
highest months of Base Salary, and (ii) for Senior Officers, the annualized
average of Base Salary plus Incentive Award based on the 36 months in which the
Participant had the highest combination of Base Salary and Incentive Award. The
36 months need not be consecutive. For purposes of determining the highest 36
months for Senior Officers, each of the Participant's annual Incentive Awards
will be spread evenly over the months worked in the years in which the Incentive
Awards were earned. In no event will Total Compensation be less than the dollar
amount determined under the terms of the Plan in effect on March 31, 1999 for
Employees who were Participants on that date.
2
<PAGE>
Year of Service means a calendar year in which the Participant is credited with
1,000 or more hours of service with the Company determined in accordance with
the terms of the Qualified Plan.
II.
PARTICIPATION
2.01 Eligibility
Individuals are eligible to participate in the Plan when they become Senior
Officers or are designated as executives by the Administrator, the Company Board
or the Company CEO for purposes of this Plan. Participation in the Plan will
continue as long as the individual remains a Senior Officer or a designated
executive (subject to any applicable Plan restrictions).
2.02 Pre-1995 Participation
Employees who were Participants in the Plan on December 31, 1994 will continue
to participate in the Plan as long as they remain designated as executives.
III.
BENEFIT DETERMINATION AND VESTING
3.01 Overview
Benefits under the Plan will be payable with respect to any vested Participant
upon Retirement to the extent the benefit payable under this Plan exceeds the
benefit payable under other specified plans as provided under Section 3.03(a).
3.02 Benefit Features
(a) The Plan provides a supplemental retirement benefit calculated in accordance
with Section 3.03 below. The Plan incorporates the following Benefit Features:
(i) Recognition of the amount of Base Salary that is not recognized for
purposes of calculating benefits under the Qualified Plan due to limits
imposed by the Code under Sections 415(b) or 401(a)(17).
(ii)Recognition of deferred salary that is not recognized for purposes of
calculating benefits under the Qualified Plan.
(iii) Recognition of Incentive Awards that are not recognized for purposes
of calculating benefits under the Qualified Plan.
3
<PAGE>
(iv)An additional 0.75% benefit accrual over that provided by the Qualified
Plan is earned for each Year of Service up to ten Years of Service.
Plan eligibility during those years is not required.
(b) Senior Officers are eligible for all four Benefit Features. Other
Participants are eligible for Benefit Features (i) and (ii) only.
(c) Participants in the Plan on December 31, 1994, are eligible for all four
Benefit Features as long as they remain eligible to participate in the Plan,
unless they were participants in the Plan on December 31, 1992 and did not elect
to participate in the Executive Disability and Survivor Benefit Program, in
which case they are not eligible for Benefit Feature (iv).
3.03 Benefit Computation
(a) The Sponsor will calculate the amount of any benefits payable under the Plan
for each Participant at the time of the Participant's Retirement, death, or
termination with a deferred vested benefit. The amount payable under this Plan
will be that dollar amount calculated pursuant to Section 3.03(b), reduced by
(i) the dollar amount payable to the Participant (or spouse or contingent
annuitant) under the terms of the Qualified Plan, or other Affiliate defined
benefit plan, after taking into account any applicable restrictions or
limitations as to such payments required by the Code or other applicable law or
the terms of the Qualified Plan, or other applicable Affiliate defined benefit
plan, and (ii) the actuarial single life annuity value, as defined in the
Qualified Plan, of the Participant's Profit Sharing Account under the Sponsor's
Stock Savings Plus Plan, or successor plan.
(b) The Participant's Total Compensation will be used to calculate benefit
amounts based on the formulas set forth in Section 4.02(a) of the Qualified
Plan, including Subsection (1) but excluding Subsection (2), and Section 4.12(b)
of the Qualified Plan, notwithstanding the Participant's eligibility for such
benefits under the terms of the Qualified Plan. The initial calculation of any
Plan benefits based on Total Compensation including Incentive Awards will assume
a target bonus for the final year of employment subject to adjustment based on
the actual Incentive Award made. If the final Incentive Award is made after
benefits under the Plan are paid or commenced under the Plan, the benefit will
be recalculated from inception, any increase to date will be paid in a one-time
adjustment to true-up payments already made, and future payments, if any, will
be adjusted accordingly. Any benefit decreases will be reflected in a one-time
adjustment in the account balance effective with the payment starting the
following January. Notwithstanding any other provision of the Plan to the
contrary, a maximum of 35 Years of Service will be recognized for purposes of
the benefit determination under Section 4.02(a) of the Qualified Plan for
Participants whose initial eligibility date under the terms of the Plan is after
April 1, 1999.
3.04 Vesting
The right to receive benefits under the Plan will vest when the Participant (i)
has completed five Years of Service with an Affiliate, (ii) is determined by the
Administrator
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<PAGE>
to be permanently and totally disabled while employed with an Affiliate, or
(iii) dies while employed with an Affiliate.
3.05 Benefit of Former Executives
A vested Participant who remains employed with an Affiliate until Retirement but
is no longer a designated executive will retain a benefit in the Plan based on
the Participant's Total Compensation and service determined as of the last date
of the Participant's eligible status and reduced by the amounts specified in
Section 3.03(a) determined upon the Participant's Retirement.
IV.
RETIREMENT BENEFITS
4.01 Forms of Benefit Payment
(a) The normal form of benefit payout under this Plan is a joint and survivor
annuity which will commence upon Retirement of the Participant and be paid
monthly for the lifetime of the Participant. Upon the death of the Participant,
the survivor will be entitled to the benefits payments described in Article VI.
(b) If, at least 90 days prior to his or her Retirement, the Participant elects
an alternative form of payout, upon Retirement by the Participant (either early
or normal Retirement), the value of his or her benefits payable under this Plan
as of the date of Retirement will be paid in the manner elected by the
Participant in (i) a single lump-sum payment calculated using the rate of
interest determined pursuant to Section 4.02, and based upon the 1983 Group
Annuity Mortality actuarial tables, (ii) in monthly installments (of principal,
plus interest) over a period of 60 months, or (iii) in monthly installments (of
principal, plus interest) over a period of 120 months.
(c) If a Participant elects a payout in monthly installments of principal plus
interest over a period of 60 months or 120 months, monthly payments will be
calculated in such a way that equal monthly payments on the first day of each
month for the remainder of the payout period with interest would bring the
balance to zero by the end of that period. The account will be reamortized
annually effective January 1st based on the December 31st account balance and
the revised interest rate as determined pursuant to Section 4.02.
4.02 Interest
The annual reamortization of payments described in Section 4.01(c) will be
determined using a monthly rate of interest that is one-twelfth of the average
Moody's Corporate Bond Yield for Aa Public Utility Bonds for the twelve months
preceding November 1st of the prior year. This interest rate determined on an
annualized basis will also be used to calculate starting balances and lump sums
for purposes of Section 4.01(b).
5
<PAGE>
4.03 Commencement of Payments
Payments under this Plan on account of Retirement will be paid in full if the
lump-sum option is chosen, or will begin to be paid in monthly installments, if
a monthly payment option is chosen, within 30 days of the date on which the
Participant retires, or as soon thereafter as practicable. To the extent
reasonably practicable, monthly payments under this Plan will be made at a time
coincident with the payment of benefits under the Qualified Plan.
V.
TERMINATION BENEFITS
If the Participant terminates his or her employment with the Company prior to
Retirement (either early or normal), but with a deferred vested interest in the
Plan, benefits will be payable under this Plan reduced by the amounts specified
in Section 3.03(a) determined as of the benefit commencement date adjusted to
reflect any distributions from the Participant's Profit Sharing Account under
the Sponsor's Stock Savings Plus Plan, or successor plan, that occurred since
the employment termination date in a manner consistent with the Qualified Plan.
If the vested individual was not a designated executive at the time employment
was terminated, the Plan benefit determined before the Section 3.03(a)
reductions will be based on the Participant's Total Compensation and service
determined as of the last date of the Participant's status as a designated
executive. Notwithstanding any other provision in the Plan to the contrary, any
benefits payable under this Plan due to Termination of Employment will be paid
as an annuity only, beginning at age 55 and calculated as of the Participant's
Normal Retirement Age under the Qualified Plan, reduced by the early retirement
factors applicable to vested terminees under the Qualified Plan. A joint and
survivor annuity will be the normal form of benefit. The Participant may elect
another annuity option available under the Qualified Plan, subject to the same
terms and conditions as would apply to such an election under the Qualified
Plan.
VI.
SURVIVOR BENEFITS
6.01 Overview
In addition to the amount payable hereunder to a retired Participant, this Plan
will pay a benefit, similarly computed, to an eligible surviving spouse or to a
contingent annuitant under the "Spouse's Pension", the "Pre-retirement Survivor
Annuity Option", or the "Contingent Annuitant Option" provisions of the
Qualified Plan if such spouse's pension, survivor annuity or contingent annuity
is reduced or limited as required by currently applicable law or the terms of
the Qualified Plan. 6.02 Alternative Forms of Payment
(a) Upon the death of a Participant who has elected an alternative form of
benefit payment under the Plan prior to the receipt of the full amount credited
to his or her account, the balance of the account will be paid in accordance
with the Participant's previously elected method of payment to the Participant's
designated beneficiary or
6
<PAGE>
beneficiaries, as provided herein, over the remainder of the elected payout
period until the full amount has been paid.
(b) If the 60 or 120 month payout options have been chosen, and if no designated
beneficiary or beneficiaries survive the Participant, or if a designated
beneficiary dies before the balance of the account has been paid, the balance of
the account of the Participant or of the designated beneficiary will be paid in
one lump-sum payment to the estate of the Participant if no designated
beneficiaries survive him or her, or if such designated beneficiaries survive
the Participant, to the estate of whomever was last receiving benefit payments,
as soon as practicable following the Participant's or the designated
beneficiary's death.
(c) If the Participant dies while an active Employee, and a benefit is payable
under the Plan, the designated beneficiary or beneficiaries, or if no designated
beneficiaries survive the Participant, the Participant's estate may select any
of the benefit payout options described in Section 4.01(b).
VII
PAYMENT TERMS AND CONDITIONS
7.01 Benefits Nonassignable
Benefits under this Plan will be binding upon and inure to the benefit of the
heirs, legal representatives, successors and assigns of the parties.
Notwithstanding the foregoing, the right to receive payment hereunder is hereby
expressly declared to be personal, nonassignable and nontransferable, except by
will, intestacy, or as otherwise required by law, and in the event of any
attempted assignment, alienation or transfer of such rights contrary to the
provisions hereof, the Company will have no further liability for payments
hereunder.
7.02 Incapacity
If any person entitled to payments under this Plan is, in the opinion of the
Administrator or its designee, incapacitated and unable to use such payments in
his or her own best interest, the Administrator or its designee may direct that
payments (or any portion) be made to that person's legal guardian or
conservator, or that person's spouse, as an alternative to payment to the person
unable to use the payments. The Administrator or its designee will have no
obligation to supervise the use of such payments, and court-appointed
guardianship or conservatorship may be required.
7.03 Hardship
Upon written application made to the Administrator, the Participant or his or
her designated beneficiary or beneficiaries may request payment in some form
other than the method of payment originally elected. Such request must establish
to the satisfaction of the Administrator or its designee that special
circumstances, such as Financial Hardship, exist which require such a variation
in payment. The Administrator,
7
<PAGE>
or its designee, will exercise sole discretion in allowing or refusing such
requests, and the decision of the Administrator or its designee on such requests
will be final.
7.04 No Fiduciary Relationship
Nothing contained in this Plan, and no action taken pursuant to any of its
provisions, will create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company or Sponsor and the Participant, a
designated beneficiary, or any other beneficiaries of the Participant, or any
other person. To the extent that any person acquires a right to receive payments
from the Company under the provisions hereof, such right will be no greater than
the right of any unsecured general creditor of the Company.
VIII.
TAXES
8.01 Taxes on Benefit Payments
Any amounts paid under this Plan on account of termination, Retirement, death or
hardship (pursuant to Section 11) will be subject to any income tax withholding
or other deductions as may be required by federal, state, or local law.
8.02 Taxes on Benefit Accrual
A Participant's annual benefit accrual may be subject to federal, state or local
payroll taxes. Such taxes will be withheld from the Participant's salary as may
be required by federal, state or local law.
IX.
BENEFICIARY
At the time the Eligible Employee elects his or her payout method under this
Plan, he or she shall designate a beneficiary or beneficiaries. The designation
may be changed at any time by the Eligible Employee; however, the consent of a
spouse may be required.
X.
PLAN ADMINISTRATION
10.01 Plan Interpretation
The Administrator (either directly or through its designees) will have power and
authority to interpret, construe, and administer this Plan; provided that, its
authority to interpret this Plan will not cause its decisions in this regard to
be entitled to a deferential standard of review in the event that an Participant
or beneficiary seeks review of the Administrator's decision as described in
Article XII.
8
<PAGE>
10.02 Day-to-Day Administration
Day to day administration of the Plan has been delegated by the Administrator to
the Sponsor, under the direction of the officer responsible for Human Resources,
or such other individuals as may be authorized by him or her to perform such
duties. Such administration will include the power to interpret the Plan and
make such equitable adjustments as may be necessary to effectuate the purposes
thereof.
10.03 Limited Liability
Neither the Administrator, nor any of its members or designees, will be liable
to any person for any action taken or omitted in connection with the
interpretation and administration of this Plan.
XI.
AMENDMENT OR TERMINATION
11.01 Authority to Amend or Terminate
The Administrator will have full power and authority to prospectively modify or
terminate this Plan, and the Administrator's interpretations, constructions and
actions, including any valuation of the Participant's account or benefits, or
the amount or recipient of the payment to be made, will be binding and
conclusive on all persons for all purposes. Absent the consent of the
Participant, however, the Administrator will in no event have any authority to
modify this section. However, no such amendment or termination will apply to any
person who has then qualified for or is receiving benefits under this Plan.
11.02 Limitations
In the event of Plan amendment or termination which has the effect of
eliminating or reducing a benefit under the Plan, the benefit payable on account
of a retired Participant or survivor or other beneficiary will not be impaired,
and the benefits of other Participants will not be less than the benefit to
which each such Participant would have been entitled if he or she had retired
immediately prior to such amendment or termination.
XII.
CLAIMS AND REVIEW PROCEDURES
12.01 Right To Arbitration
Because it is agreed that time will be of the essence in determining whether any
payments are due to an Participant or his or her beneficiary under this Plan, an
Participant or beneficiary may, if he or she desires, submit any claim for
payment under this Plan to arbitration. This right to select arbitration will be
solely that of the Participant or beneficiary and the Participant or beneficiary
may decide whether or not to arbitrate in his or her discretion. The "right to
select arbitration" is not mandatory on
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the Participant or beneficiary, and the Participant or beneficiary may choose in
lieu thereof to bring an action in an appropriate civil court. Once an
arbitration is commenced, however, it may not be discontinued without the mutual
consent of both parties to the arbitration. During the lifetime of the
Participant only he or she can use the arbitration procedure set forth in this
section.
12.02 Arbitration Procedures
(a) Any claim for arbitration may be submitted as follows: if an Participant or
beneficiary has submitted a request to be paid under this Plan and the claim is
finally denied by the Sponsor in whole or in part, such claim may be filed in
writing with an arbitrator of the Participant's or beneficiary's choice who is
selected by the method described in the next four sentences. The first step of
the selection will consist of the Participant or beneficiary submitting a list
of five potential arbitrators to the Sponsor. Each of the five arbitrators must
be either (1) a member of the National Academy of Arbitrators located in the
State of California or (2) a retired California Superior Court or Appellate
Court judge. Within one week after receipt of the list, the Sponsor will select
one of the five arbitrators as the arbitrator for the dispute in question. If
the Sponsor fails to select an arbitrator within one week after receipt of the
list, the Participant or beneficiary will then designate one of the five
arbitrators for the dispute in question.
(b) The arbitration hearing will be held within seven days (or as soon
thereafter as possible) after the picking of the arbitrator. No continuance of
said hearing will be allowed without the mutual consent of the Participant or
beneficiary and the Sponsor. Absence from or nonparticipation at the hearing by
either party will not prevent the issuance of an award. Hearing procedures which
will expedite the hearing may be ordered at the arbitrator's discretion, and the
arbitrator may close the hearing in his or her sole discretion when he or she
decides he or she has heard sufficient evidence to satisfy issuance of an award.
The arbitrator's award will be rendered as expeditiously as possible and in no
event later than one week after the close of the hearing.
(c) In the event the arbitrator finds that the Sponsor has breached this Plan,
he or she will order the Sponsor to pay to the Participant or beneficiary within
two business days after the decision is rendered the amount then due the
Participant or beneficiary, plus, notwithstanding anything to the contrary in
this Plan, an additional amount equal to 20% of the amount actually in dispute.
This additional amount will constitute an additional benefit under this Plan.
The award of the arbitrator will be final and binding upon the parties.
12.03 Enforcement of Award and Fees
The award may be enforced in any appropriate court as soon as possible after its
rendition. The Sponsor will be considered the prevailing party in a dispute if
the arbitrator determines (1) that the Sponsor has not breached this Plan and
(2) the claim by the Participant or his or her beneficiary was not made in good
faith. Otherwise, the Participant or his or her beneficiary will be considered
the prevailing party. In the event that the Sponsor is the prevailing party, the
fee of the arbitrator and all necessary expenses of the hearing (excluding any
attorneys' fees incurred by the Sponsor)
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including stenographic reporter, if employed, will be paid by the losing party.
In the event that the Participant or his or her beneficiary is the prevailing
party, the fee of the arbitrator and all necessary expenses of the hearing
(including all attorneys' fees incurred by the Participant or his or her
beneficiary in pursuing his or her claim), including the fees of a stenographic
reporter if employed, will be paid by the Sponsor.
XIII.
MISCELLANEOUS
13.01 Participation in Other Plans
The Participant will continue to be entitled to participate in all employee
benefit programs of the Company as may, from time to time, be in effect.
However, Total Compensation includable under this Plan will be deemed salary or
other compensation to the Participant for the purpose of computing benefits
under this Plan only, and will be used only under this Plan to calculate those
benefits to which the Participant would otherwise be entitled under the
Qualified Plan if such Total Compensation could have been included in the
determination of benefits under that Plan.
13.02 Relationship to Qualified Plan
This Plan will to the full extent possible under currently applicable law be
administered in accordance with, and where practicable according to the terms of
the Qualified Plan. Notwithstanding the foregoing, the terms of this Plan shall
control benefits payable under this Plan whenever the terms of the Qualified
Plan differ from this Plan.
13.03 No Right to Employment
Nothing contained herein will be construed as conferring upon the Participant
the right to continue in the employ of the Company, in any particular salary
grade, or in any other capacity. If the Participant ceases to be an Participant
in the Plan but remains in the employ of the Company, any benefits due the
Participant under the Plan will not be payable until such time as he or she
retires, or ceases to be an employee of the Company, and then only subject to
the terms and conditions contained in this Plan.
13.04 Forfeiture
The payments to be made pursuant to the Plan require the Participant, for so
long as the Participant remains in the active employ of the Company, to devote
substantially all of his or her time, skill, diligence and attention to the
business of the Company, and not to actively engage, either directly or
indirectly, in any business or other activity adverse to the best interests of
the business of the Company. In addition, the Participant will remain available
during Retirement for consultation in any matter related to the affairs of the
Company. Any breach of these conditions will result in complete forfeiture of
any further benefits under the Plan. If the Participant will fail to observe any
of the above conditions, or if he or she will be discharged by the Company for
malfeasance or willful neglect of duty, then in any of said events, the payments
under this Plan will not be paid, and the Sponsor and the Company will have no
further liability therefor.
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13.05 Benefits Unsecured
All Plan benefits will be unsecured and will be paid in cash from the general
funds of the Company. No special or separate fund will be established and no
other segregation of assets will be made to assure the payment of any benefits
hereunder. No person will have by virtue of the provisions of this Plan, any
interest in such assets. In the event that, in its discretion, the Company
purchases an insurance policy or policies insuring the life of the Participant
to allow the Company to recover, in whole, or in part, the cost of providing the
benefits hereunder, neither the Participant, the survivor or other designated
beneficiary(ies) nor any other beneficiary will have any rights whatsoever
therein; the Company will be the sole owner and beneficiary thereof and will
possess and may exercise all incidents of ownership therein.
13.06 Validity and Applicable Law
f any of the provisions of this Plan will be held invalid, or be held to violate
any law, the remainder of this Plan will not be affected thereby and will remain
in full force and effect. This Plan will be governed by the laws of the State of
California.
13.07 Captions
The captions of the articles and sections of the Plan are for convenience only
and shall not control or affect the meaning or construction of any of its
provisions.
SOUTHERN CALIFORNIA EDISON COMPANY
Lillian R. Gorman
-----------------------------------------------------
Lillian R. Gorman, Senior Vice President
SOUTHERN CALIFORNIA EDISON COMPANY
EXECUTIVE SUPPLEMENTAL BENEFIT PROGRAM
As Amended January 30, 1990
This Executive Supplemental Benefit Program ("Program") was originally effective
March 15, 1978, and as thereafter amended consists of several parts or plans,
each paid for by the Company: Part (A) "Survivor Income Continuation", Part (B)
"Supplemental Survivor Income", Part (C) "Supplemental Survivor
Income/Retirement Income", and Part (D) "Supplemental Long-Term Disability".
Eligible members (hereinafter referred to as "Participants") are automatically
provided coverage under the "Survivor Income Continuation" and the "Supplemental
Long-Term Disability" parts of the Program. The "Supplemental Survivor Income"
and the "Supplemental Survivor Income/Retirement Income" parts are in the
alternative and an employee who becomes eligible to participate may irrevocably
elect coverage under one or the other, but not both. It is the intention of the
Company to continue these plans indefinitely, but they are subject to
cancellation or amendment as may be required by law or as deemed appropriate by
the Board of Directors except with respect to rights which have matured by
reason of death, disability, or retirement of a Participant.
Individual eligibility and participation in these plans are subject to the terms
and conditions set forth below and are only available to those employees who are
in salary grade 13 or above who are members of the executive payroll of the
Company and whose participation in the plans has been approved by the Chairman
of the Board and Chief Executive Officer, or such other employees as may be
designated as eligible to participate by the Chairman of the Board and Chief
Executive Officer. An employee shall be deemed to be in a salary grade as of the
date he or she commences accruing salary in such salary grade. No benefits will
be paid with respect to any employee who terminates his or her employment with
the Company prior to retirement. Further, an employee shall be removed from
participation in the Program if, for any reason other than death, disability, or
retirement, he or she ceases to be in salary grade 13 or above.
Part A.
Survivor Income Continuation Plan
1. The basic Survivor Income Continuation benefit for Participants prior to
retirement shall be an annual amount equal to 63% of the Participant's total
compensation, including final annual base salary and any Executive Incentive
Compensation Awards. For purposes of the Executive Supplemental Benefit Program,
the dollar amount of any Executive Incentive Compensation Awards shall be
determined by applying the average percentage awards received in the three (3)
highest years out of the last five (5) years (except for periods of less than
three (3) years, in which case the highest percentage award received will be
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used). This percentage will then be applied to the Participant's final annual
base salary to arrive at a dollar amount which will be added to the
Participant's final annual base salary. This total dollar amount, rounded to the
next highest thousand dollars, will be the Participant's "Total Compensation"
for purposes of the Executive Supplemental Benefit Program.
Survivor Income Continuation payments shall continue for ten (10) years
following the Participant's death unless a shorter alternate payout method is
elected. Payments shall be made in equal monthly installments commencing with
the first day of the month following the month of death, or as soon thereafter
as practicable, and such payments shall be made to the Participant's then living
spouse or other designated beneficiary, if any. If, under this Survivor Income
Continuation Plan, a Participant or beneficiary dies under circumstances in
which benefits are payable but there is no beneficiary designation, or all other
beneficiaries predeceased such Participant or designated beneficiary, the
commuted value of any remaining payments shall be made to the estate of whomever
was last receiving benefit payments, as a single lump sum.
As an alternative form of payment to the ten year payout described above, the
Participant's surviving spouse or other designated beneficiary may elect to have
the basic benefit payments made (i) over a five (5) year period, or (ii) as a
single lump sum payable at the time of the Participant's death.
In determining the basic benefit of 63% of total compensation payable for 10
years, the Company has initially assumed a 10% nominal interest rate and a 50%
marginal federal income tax rate. The basic benefit percentage of 63% (or 31.5%
in the case of retired participants as described below) may be increased or
decreased at the sole discretion of the Company because of changes in the
interest rate assumption or in the tax rate assumption. However, any such
changes in the basic benefit percentage will be made by the Company so that the
after-tax dollar amount payable to the survivor(s) under this Part A will, as
much as possible, approximate the after-tax dollar benefits which would have
been paid under the prior plan before the Plan Amendment is made on December 20,
1984.
In the event either of the alternative payout methods are chosen, the total
payments will be adjusted to an equivalent dollar amount of the basic ten year
payout benefit (which recognizes the shorter payout period so elected), using
the interest rate assumption set forth above, in effect at the time of the
Participant's death.
2. For those employees who retire and are participating in this Part A, the
basic post-retirement Survivor Income Continuation benefit shall be an amount
equal to 31.5% of the employee's total compensation, including final annual base
salary and any Executive Incentive Compensation Award (determined pursuant to
Section 1 hereof) and shall become payable upon the death of the Participant.
Any such post-retirement payments shall be made over 10 years unless a 5 year or
lump-sum payout is elected, as described in Section 1, above.
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3. In addition to the basic benefit described in Section 1 above, a death
benefit may also be available (in addition to any other benefits) if death
occurs prior to retirement under circumstances which qualify as "accidental
death" as defined in any master accidental death and dismemberment insurance
policy which may be maintained by the Company. This accidental death benefit
will be in an amount equal to a basic benefit coverage of two times the sum of
the Participant's annual base salary, plus any awards under the Executive
Incentive Compensation Plan, determined according to Section 1 hereof.
Part B.
Supplemental Survivor Income Plan
1. Eligibility
Participation in this Part shall be available to employees who (i) are in salary
grade 13 or above, whose participation has been approved by the Chairman of the
Board and Chief Executive Officer, (ii) execute, on a form provided pursuant
hereto within the prescribed time limit, an election to be covered hereunder,
and (iii) have never elected to participate in Part C., the Supplemental
Survivor Income/Retirement Income Plan. An employee shall be deemed to be in the
above class as of the date he or she commences accruing salary in the applicable
grade. An eligible employee who is in salary grade 13 or above shall become a
Participant if he or she has elected coverage within fifteen days of the
effective date of his or her eligibility. Beneficiary designations shall be made
on a form provided pursuant hereto and may be modified at any time unless the
designation is specified as irrevocable, in which case, no subsequent
beneficiary designation shall be valid.
2. Preretirement Benefit
Upon the death prior to retirement of a Participant, an annuity shall be payable
as follows:
(a) If the designated beneficiary is the surviving spouse of the Participant (or
a spouse at the time of beneficiary designation, but not at death), the amount
of this benefit will be a lifetime monthly annuity payment. The monthly amount
of this benefit will be equal to one twelfth (1/12) of 25% of the sum of the
Participant's annual base salary at the time of death plus the amount of any
Executive Incentive Compensation awards (determined according to Section 1 of
Part A hereof). This monthly benefit shall be paid in equal monthly installments
commencing on the first of the month next following the date of death, or as
soon thereafter as practicable. Such payments will be for a minimum of ten years
and, should the surviving spouse die less than ten years after the Participant,
any remaining benefits will be payable to the successor beneficiary designated
by the Participant or, if there be none, to the spouse's designated beneficiary
in the same manner as the payments had been made to the spouse for the remainder
of any such ten year period. If the surviving spouse (or designated former
spouse) is more than three years younger than the Participant, the lifetime
monthly annuity benefit shall be calculated as follows: (i) the present value of
the benefit payable shall be calculated as if such spouse were three years
younger than the Participant; (ii) such present value shall be converted to a
monthly benefit amount based on the actuarial life expectancy of the actual
surviving spouse (or surviving designated former spouse) and shall be determined
using (i) the interest rate assumption determined pursuant to Section 1 of Part
A hereof, and (ii) 1983 Group Annuity Mortality table.
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(b) If the Participant designates a beneficiary or beneficiaries other than his
or her spouse (or a former spouse eligible for benefits under the preceding
paragraph) such beneficiary or beneficiaries will receive a monthly benefit to
be determined as follows. The amount of this monthly benefit will be equal to
one-twelfth (1/12) of 25% of the sum of the Participant's annual base salary at
the time of death plus the amount of any Executive Incentive Compensation awards
(determined according to Section 1 of Part A hereof). This monthly benefit shall
be paid in equal monthly installments commencing on the first of the month next
following the date of death, or as soon thereafter as practicable. Such payments
shall continue for a period equal to the assumed life expectancy of a spouse
three years younger than the Participant at the time of the Participant's death,
using the 1983 Group Annuity Mortality table. This benefit shall be payable for
a minimum of ten years, and should a beneficiary die less than ten years after
the death of the Participant, any unpaid benefits remaining for this ten-year
period shall be payable to the successor beneficiary designated by the
Participant or, if there be none, to whomever his or her beneficiary designates.
(c) If, under this Supplemental Survivor Income Plan, a Participant or
beneficiary dies under circumstances in which benefits are payable but there is
no beneficiary designation, or all other beneficiaries predeceased such
Participant or designated beneficiary, the commuted value of any remaining
payments shall be made to the estate of whomever was last receiving benefit
payments as a single lump sum using that rate of interest determined according
to Section 1 of Part A hereof.
3. Post-retirement Benefit
Upon the death after retirement of a Participant, his or her beneficiary shall
be paid a monthly benefit in an amount equal to one-twelfth (1/12) of 25% of the
sum of the Participant's annual base salary (immediately prior to retirement)
plus the amount of any Executive Incentive Compensation Awards (determined
according to Section 1 of Part A hereof). This monthly benefit shall be paid in
equal monthly installments commencing on the first of the month next following
the date of death, or as soon thereafter as practicable. This benefit will be
payable for ten years only and, should the designated beneficiary (or subsequent
beneficiary) die prior to the expiration of such ten year period, any remaining
payments will be continued, until exhausted, to the successor beneficiary
designated by the Participant or, if there be none, to whomever the beneficiary
designates.
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If, under this Supplemental Survivor Income Plan, a Participant or designated
beneficiary dies under circumstances in which benefits are payable but there is
no beneficiary designation, or all other beneficiaries have predeceased such
Participant or beneficiary, the commuted value of any remaining payments shall
be paid to the estate of whomever was last receiving benefit payments, as a
single lump sum calculated using the interest rate determined under Section 1 of
Part A.
Part C.
Supplemental Survivor Income/Retirement Income Plan
1. Eligibility
Participation in this part shall be available to employees who (i) are in salary
grade 13 or above, whose participation has been approved by the Chairman of the
Board and Chief Executive Officer, (ii) execute, on a form provided pursuant
hereto within the prescribed time limit, an election to be covered hereunder,
and (iii) have never elected to participate in Part B., the Supplemental
Survivor Income Plan. An Eligible Employee shall be deemed to be in the above
class as of the date he or she commences accruing salary in the applicable
class. An Eligible Employee who is in salary grade 13 or above shall become a
Participant if he or she has elected coverage within fifteen days of the
effective date of his or her eligibility. Beneficiary designations shall be made
on a form provided pursuant hereto and may be modified at any time unless the
designation is specified as irrevocable, in which case, no subsequent
beneficiary designation shall be valid.
2. Preretirement Benefit
Upon the death, prior to retirement of a Participant, an annuity shall be
payable as follows:
(a) If the designated beneficiary is the surviving spouse of the Participant (or
a spouse at the time of beneficiary designation, but not at death), the amount
of this benefit will be a lifetime monthly annuity payment. The monthly amount
of this benefit will be equal to one-twelfth (1/12) of 25% of the sum of the
Participant's annual base salary at the time of death plus the amount of any
Executive Incentive Compensation Awards (determined according to Section 1 of
Part A hereof). This monthly benefit shall be paid in equal monthly installments
commencing on the first of the month next following the date of death, or as
soon thereafter as practicable. Such payments will be for a minimum of ten years
and, should the surviving spouse die less than ten years after the Participant,
any remaining unpaid benefits will be payable to the successor beneficiary
designated by the Participant or, if there be none, to the spouse's designated
beneficiary in the same manner as the payments had been made to the spouse for
the remainder of such ten-year period. If the surviving spouse (or designated
former spouse) is more than three years younger than the Participant, the
lifetime monthly benefit shall be calculated as follows: (i) the present value
of the benefit payable shall be calculated as if such spouse were three years
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younger than the Participant; (ii) such present value shall be converted to a
monthly benefit amount based on the actuarial life expectancy of the actual
surviving spouse (or surviving designated former spouse) and shall be determined
using (i) the interest rate assumption determined pursuant to Section 1 of Part
A hereof, and (ii) the 1983 Group Annuity Mortality table.
(b) If the Participant designates a beneficiary or beneficiaries other than his
or her spouse (or a former spouse eligible for benefits under the preceding
paragraph) such beneficiary or beneficiaries will receive a monthly benefit to
be determined as follows. The amount of this monthly benefit will be equal to
one-twelfth (1/12) of 25% of the sum of the Participant's annual base salary at
the time of death plus the amount of any Executive Incentive Compensation Awards
(determined according to Section 1 of Part A hereof). This monthly benefit shall
be paid in equal monthly installments commencing on the first of the month next
following the date of death, or as soon thereafter as practicable. Such payments
shall continue for a period equal to the assumed life expectancy of a spouse
three years younger than the Participant at the time of the Participant's death
using the 1983 Group Annuity Mortality table. This benefit shall be payable for
a minimum of ten years, and should a beneficiary die less than ten years after
the death of a Participant, any unpaid benefits remaining for this ten year
period shall be payable to the successor beneficiary designated by the
Participant or, if there be none, to whomever his or her beneficiary designates.
If, under this Supplemental Survivor Income/Retirement Income Plan, a
Participant or beneficiary dies under circumstances in which benefits are
payable but there is no beneficiary designation, or all other beneficiaries
predeceased such Participant or designated beneficiary, the commuted value of
any remaining payments shall be made to the estate of whomever was last
receiving benefit payments, as a single lump sum using that rate of interest
determined according to Section 1 of Part A hereof.
3. Post-retirement Benefit
Upon the death, after retirement, of a Participant, his or her beneficiary shall
be paid a monthly benefit in an amount equal to one-twelfth (1/12) of 25% of the
sum of the Participant's final annual base salary (immediately prior to
retirement) plus the amount of any Executive Incentive Compensation Awards
(determined according to Section 1 of Part A hereof). This monthly benefit shall
be paid in equal monthly installments commencing on the first of the month next
following the date of death, or as soon thereafter as practicable.
This benefit will be payable for ten years only and, should the designated
beneficiary (or subsequent beneficiary) die prior to the expiration of such ten
year period, any remaining payments will be continued, until exhausted, to the
successor beneficiary designated by the Participant or, if there be none, to
whomever his or her beneficiary designates.
If, under this Supplemental Survivor Income/Retirement Income Plan, a
Participant or designated beneficiary dies under circumstances in which benefits
are payable but there is no beneficiary designation, or all other beneficiaries
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predeceased such Participant or designated beneficiary, the commuted value of
any remaining payments shall be made to the estate of whomever was last
receiving benefit payments, as a single lump sum calculated using the interest
rate determined under Section 1 of Part A.
4. Supplemental Retirement Income Benefit
(a) At least 15 days prior to retirement, a Participant may apply for a
supplemental retirement annuity in lieu of the benefit which otherwise would be
made available to a beneficiary under Section 3 of this Part C. Such application
shall be in writing, directed to the Chairman of the Board and Chief Executive
Officer, or, in the case of the Chairman of the Board and Chief Executive
Officer, directed to the Chairman of the Compensation Committee of the Board of
Directors, and shall include a statement of the reasons for such application.
(b) Upon approval of the application by the Chairman of the Board Chief
Executive Officer, or the Board of Directors if the application is by the
Chairman of the Board and Chief Executive Officer, the Participant, if he or she
retires at or after age 61, shall receive a supplemental retirement annuity in a
monthly amount equal to one-twelfth (1/12) of 10% of the sum of the retired
Participant's final annual base salary plus the amount of any Executive
Incentive Compensation Awards (determined according to Section 1 of Part A,
hereof), payable monthly for ten years only, to the Participant or his or her
designated beneficiary (or subsequent beneficiary) should he or she die prior to
the exhaustion of benefits available under this option.
(c) Effective for eligible Participants retiring on or after September 1, 1983,
if the Participant's application for this optional benefit is approved and he or
she retires prior to age 61 but not earlier than age 60, the benefit described
under (b) shall be reduced by an amount equal to one-quarter of one percent
(1/4%) for each month between his or her early retirement date and the first day
of the month nearest his or her 61st birthday. For each month retirement
precedes age 60, the Participant's benefit amount shall be reduced an additional
one-third of one percent (1/3%). However, no such reduction shall be applied if
he or she elects to defer the commencement of the annuity to age 61 or later.
(d) Any Participant in this Supplemental Survivor Income/Retirement Income Plan
may at any time irrevocably waive the right to apply for the supplemental
retirement annuity benefit under this Section 4 of this Part C.
(e) If, under this Supplemental Survivor Income/Retirement Income Plan, a
Participant or beneficiary dies under circumstances in which benefits are
payable but there is no beneficiary designation, or all other beneficiaries have
predeceased such Participant or beneficiary(ies), the commuted value of any
remaining payments shall be made to the estate of whomever was last receiving
benefit payments, as a single lump sum. This lump sum shall be determined using
the interest rate calculated pursuant to Section 1 of Part A, hereof.
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Part D.
Supplemental Long-Term Disability Plan
1. To qualify for benefits under this Part D., a Participant must be (i)
eligible for and (ii) must qualify to receive monthly disability benefits under
the Company's Long-Term Disability Plan for Management Employees.
Eligibility for benefits under this Part D. will be determined according to the
eligibility standards and requirements set forth in the Company's Long-Term
Disability Plan for Management Employees.
2. The monthly income benefit payable under this Part D. to an eligible and
qualified participant shall be an amount equal to one-twelfth (1/12) of 60% of
the amount of any Executive Incentive Compensation Awards. For purposes of this
Part D., the dollar amount of any Executive Incentive Compensation Awards shall
be determined by applying the average percentage awards received in the three
(3) highest years out of the last five years (except for periods of less than
three (3) years, in which case the highest percentage award received will be
used). This percentage will then be applied to the Participant's final annual
base salary (before his or her disability) to arrive at a dollar amount of any
Executive Incentive Compensation Awards to which the 60% factor will be applied.
This monthly disability benefit will be calculated as of the first of the month
in which the total disability began.
3. Payment of benefits shall commence at the same time, or as soon thereafter as
practicable, as monthly income benefit payments begin under the Company's
Long-Term Disability Plan for Management Employees.
4. Payment of benefits under this Part D. shall continue until such time as
monthly benefits end under the Company's Long-Term Disability Plan for
Management Employees.
5. To the fullest extent possible, the Company intends to administer this Part
D. according to the provisions of its Long-Term Disability Plan for Management
Employees.
Part E.
Administration
1. The Executive Supplemental Benefit Program described herein (comprised of
Parts A, B, C and D) shall be administered by the Company, under the direction
of the Vice President, Human Resources, or such other individuals as may be
authorized by him to perform such duties. Such administration shall include the
power to interpret the various Parts of the Program, and make such equitable
adjustments as may be necessary to effectuate the purposes thereof.
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2. The payments to be made by the Company pursuant hereto require the
Participant, for so long as the Participant remains in the active employ of the
Company, to devote substantially all of his or her time, skill, diligence and
attention to the business of the Company, and not to actively engage, either
directly or indirectly, in any business or other activity adverse to the best
interests of the business of the Company.
3. In the event that the employment of the Participant by the Company is
terminated for any reason other than death, disability, or retirement, any
benefits under this Program shall thereupon terminate, and the Company shall
have no further obligation hereunder. Nothing contained herein shall be
construed to be a contract of employment for any term of years, nor as
conferring upon the Participant the right to continue in the employ of the
Company as a Management employee or in any other capacity. This Program relates
exclusively to Executive Supplemental Benefits and is not intended to be an
employment contract.
4. All payments hereunder shall be paid in cash from the general funds of the
Company, and no special or separate fund shall be established and no other
segregation of assets shall be made to assure the payment of any benefits
hereunder. Nothing contained in this Program, and no action taken pursuant to
any of its provisions, shall create or be construed to create a trust of any
kind, or a fiduciary relationship, between the Company and the Participant, a
designated beneficiary, or any other beneficiaries of the Participant, or any
other person. Payments to the Participant or the Participant's survivor or other
designated beneficiary(ies) or any other beneficiary hereunder shall be made
from assets which shall continue, for all purposes, to be a part of the general
assets of the Company, and no person shall have by virtue of the provisions of
this Program, any interest in such assets. To the extent that any person
acquires a right to receive payments from the Company under the provisions
hereof, such right shall be no greater than the right of any unsecured general
creditor of the Company.
5. In the event that, in its discretion, the Company purchases an insurance
policy or policies insuring the life of the Participant to allow the Company to
recover, in whole, or in part, the cost of providing the benefits hereunder,
neither the Participant, the survivor or other designated beneficiary(ies), nor
any other beneficiary shall have any rights whatsoever therein; the Company
shall be the sole owner and beneficiary thereof and shall possess and may
exercise all incidents of ownership therein.
6. Benefits under this Program shall be binding upon and inure to the benefit of
the heirs, legal representatives, successors and assigns of the parties.
Notwithstanding the foregoing, the right to receive payment hereunder is hereby
expressly declared to be personal, nonassignable and nontransferrable, except by
will, intestacy, or as otherwise required by law, and in the event of any
attempted assignment, alienation or transfer of such rights contrary to the
provisions hereof, the Company shall have no further liability for payments
hereunder.
7. Subject to Section 8 of Part E, the Company shall make all determinations as
to rights to benefits under this Program. Any decision by the Company denying a
9
<PAGE>
claim by the Employee or his or her beneficiary for benefits under this Plan
shall be stated in writing and delivered or mailed to the Participant or such
beneficiary hereof. Such notice shall set forth the specific reasons for the
denial, written in a manner that may be understood without legal or actuarial
counsel. In addition, the Company shall afford a reasonable opportunity to the
Participant or such beneficiary for a full and fair review of the decision
denying such claim.
8. The Board (either directly or through its designees) will have power and
authority to interpret, construe, and administer this Program; provided that,
the Board's authority to interpret this Program shall not cause the Board's
decisions in this regard to be entitled to a deferential standard of review in
the event that a Participant or beneficiary seeks review of the Board's decision
as described below. In addition, the Board shall have the power to prospectively
modify or terminate this Program, provided that any such modification or
termination does not result in the elimination of any rights that the
Participant or beneficiary may have under this Program. Absent the consent of
the Participant, however, the Board shall in no event have any authority to
modify this section.
No member of the Board, nor its designee, shall be liable to any person for any
action taken or omitted in connection with the interpretation and administration
of this Program.
In the event of an amendment or termination of any Part of this Program, the
benefits payable on account of a retired or deceased Participant shall not be
impaired, and the benefits of other Participants shall not be less than the
benefits to which each such Participant would have been entitled immediately
prior to such amendment or termination of any Part (or Parts) of the Program.
Because it is agreed that time will be of the essence in determining whether any
payments are due to Participant or his or her beneficiary under this Program, a
Participant or beneficiary may, if he or she desires, submit any claim for
payment under this Program to arbitration. This right to select arbitration
shall be solely that of the Participant or beneficiary and the Participant or
beneficiary may decide whether or not to arbitrate in his or her discretion. The
"right to select arbitration" is not mandatory on the Participant or
beneficiary, and the Participant or beneficiary may choose in lieu thereof to
bring an action in an appropriate civil court. Once an arbitration is commenced,
however, it may not be discontinued without the mutual consent of both parties
to the arbitration. During the lifetime of the Participant only he or she can
use the arbitration procedure set forth in this section.
Any claim for arbitration may be submitted as follows: if Participant or
beneficiary has submitted a request to be paid under this Program and the claim
is finally denied by the Company in whole or in part, such claim may be filed in
writing with an arbitrator of Participant's or beneficiary's choice who is
selected by the method described in the next three sentences. The first step of
the selection shall consist of the Participant or beneficiary submitting a list
of five potential arbitrators to the Company. Each of the five arbitrators must
10
<PAGE>
be either (1) a member of the National Academy of Arbitrators located in the
State of California or (2) a retired California Superior Court or Appellate
Court judge. Within one week after receipt of the list, the Company shall select
one of the five arbitrators as the arbitrator for the dispute in question. If
the Company fails to select an arbitrator within one week after receipt of the
list, the Participant or beneficiary shall then designate one of the five
arbitrators for the dispute in question.
The arbitration hearing shall be held within seven days (or as soon thereafter
as possible) after the picking of the arbitrator. No continuance of said hearing
shall be allowed without the mutual consent of Participant or beneficiary and
the Company. Absence from or nonparticipation at the hearing by either party
shall not prevent the issuance of an award. Hearing procedures which will
expedite the hearing may be ordered at the arbitrator's discretion, and the
arbitrator may close the hearing in his or her sole discretion when he or she
decides he or she has heard sufficient evidence to satisfy issuance of an award.
The arbitrator's award shall be rendered as expeditiously as possible and in no
event later than one week after the close of the hearing.
In the event the arbitrator finds that the Company has breached this Program, he
or she shall order the Company to pay to Participant or beneficiary within two
business days after the decision is rendered the amount then due the Participant
or beneficiary, plus, notwithstanding anything to the contrary in this Program,
an additional amount equal to 20% of the amount actually in dispute. This
additional amount shall constitute an additional benefit under this Program. The
award of the arbitrator shall be final and binding upon the parties.
The award may be enforced in any appropriate court as soon as possible after its
rendition. The Company will be considered the prevailing party in a dispute if
the arbitrator determines (1) that the Company has not breached this Program and
(2) the claim by Participant or his or her beneficiary was not made in good
faith. Otherwise, the Participant or his or her beneficiary will be considered
the prevailing party. In the event that the Company is the prevailing party, the
fee of the arbitrator and all necessary expenses of the hearing (excluding any
attorneys' fees incurred by the Company) including stenographic reporter, if
employed, shall be paid by the losing party. In the event that the Participant
or his or her beneficiary is the prevailing party, the fee of the arbitrator and
all necessary expenses of the hearing (including all attorneys' fees incurred by
Participant or his or her beneficiary in pursuing his or her claim), including
the fees of a stenographic reporter if employed, shall be paid by the Company.
9. If any person entitled to payments under this Program is, in the opinion of
the Board or its designee, incapacitated and unable to use such payments in his
or her own best interest, the Board or its designee may direct that payments (or
any portion thereof) be made to that person's legal guardian or conservator, or
that person's spouse, as an alternative to payment to the person unable to use
11
<PAGE>
the payments. The Board or its designee shall have no obligation to supervise
the use of such payments, and court-appointed guardianship or conservatorship
may be required.
10. Upon written application made to the Board or to its designee, Participant
or his or her designated beneficiary or beneficiaries may request payment in
some form other than the method of payment originally elected. Such request must
establish to the Board's satisfaction that special circumstances, such as
financial hardship, exist which require such a variation in payment. The Board,
or its designee, shall exercise sole discretion in allowing or refusing such
requests, and the decision of the Board or its designee on such requests shall
be final.
Exhibit 11
EDISON INTERNATIONAL
COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE
For the Quarter ended
September 30,
----------------------------
1999 1998
(in thousands, except per-share amounts)
Consolidated net income $255,337 $353,285
Basic weighted average shares 347,207 353,285
Diluted weighted average shares 348,202 357,736
Basic earnings per share $0.74 $0.61
Diluted earnings per share $0.73 $0.60
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,218,637
<SECURITIES> 0
<RECEIVABLES> 1,636,162
<ALLOWANCES> (32,066)
<INVENTORY> 361,947
<CURRENT-ASSETS> 3,636,340
<PP&E> 23,226,735
<DEPRECIATION> 7,672,267
<TOTAL-ASSETS> 32,142,822
<CURRENT-LIABILITIES> 6,182,067
<BONDS> 11,257,272
255,700
1,037,737
<COMMON> 2,090,188
<OTHER-SE> 3,139,518
<TOTAL-LIABILITY-AND-EQUITY> 32,142,822
<SALES> 6,777,758
<TOTAL-REVENUES> 7,160,704
<CGS> 2,794,989
<TOTAL-COSTS> 5,740,744
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 18,787
<INTEREST-EXPENSE> 619,447
<INCOME-PRETAX> 840,877
<INCOME-TAX> 313,907
<INCOME-CONTINUING> 526,970
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 526,970
<EPS-BASIC> 1.52
<EPS-DILUTED> 1.51
</TABLE>
