SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
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 1-3375
SOUTH CAROLINA ELECTRIC & GAS COMPANY
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57-0248695
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
1426 MAIN STREET, COLUMBIA, SOUTH CAROLINA 29201
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (803) 748-3000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
5% Cumulative Preferred Stock
par value $50 per share New York Stock Exchange
7.55% Trust Preferred Securities, Series A
liquidation value $25 per Trust
Preferred Security New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
None
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 .
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Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant. The
aggregate market value shall be computed by reference to the price
at which the common equity was sold, or the average bid and asked
prices of such common equity, as of a specified date within 60 days
prior to the date of filing. (See definition of affiliate in Rule
405.)
Note. If a determination as to whether a particular
person or entity is an affiliate cannot be made without
involving unreasonable effort and expense, the aggregate
market value of the common stock held by non-affiliates
may be calculated on the basis of assumptions reasonable
under the circumstances, provided that the assumptions
are set forth in this form.
The aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant as of February 27,
1997 was zero.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes No
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date.
As of February 27, 1998 there were issued and outstanding
40,296,147 shares of the registrant's common stock, $4.50 par
value, all of which were held, beneficially and of record, by SCANA
Corporation.
DOCUMENTS INCORPORATED BY REFERENCE.
List hereunder the following documents if incorporated by
reference and the Part of the Form 10-K (e.g., Part I, Part II,
etc.) into which the document is incorporated: (1) any annual
report to security-holders; (2) any proxy or information statement;
and (3) any prospectus filed pursuant to Rule 424(b) or (c) under
the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to
security-holders for fiscal year ended December 24, 1980).
NONE
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TABLE OF CONTENTS
Page
DEFINITIONS ....................................................... 4
PART I
Item 1. Business ............................................ 5
Item 2. Properties .......................................... 20
Item 3. Legal Proceedings ................................... 22
Item 4. Submission of Matters to a Vote of
Security Holders ................................... 22
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters..................... 22
Item 6. Selected Financial Data ............................. 23
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations ...... 24
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk......................................... 33
Item 8. Financial Statements and Supplementary Data ......... 33
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ................ 60
PART III
Item 10. Directors and Executive Officers of the
Registrant ......................................... 60
Item 11. Executive Compensation .............................. 64
Item 12. Security Ownership of Certain Beneficial
Owners and Management .............................. 71
Item 13. Certain Relationships and Related Transactions ...... 71
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K ............................ 71
SIGNATURES ........................................................ 72
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DEFINITIONS
The following abbreviations used in the text have the meaning set
forth below unless the context requires otherwise:
ABBREVIATION TERM
AFC......................... Allowance for Funds Used During Construction
BTU......................... British Thermal Unit
Circuit Court............... South Carolina Circuit Court
Clean Air Act............... Clean Air Act Amendments of 1990
Company..................... South Carolina Electric & Gas Company
Consumer Advocate........... Consumer Advocate of South Carolina
Dekatherm................... One Million BTUs
DHEC........................ South Carolina Department of Health and
Environmental Control
DOE......................... United States Department of Energy
EPA......................... United States Environmental Protection Agency
FERC........................ United States Federal Energy Regulatory
Commission
Fuel Company................ South Carolina Fuel Company, Inc., an
affiliate
GENCO....................... South Carolina Generating Company, Inc., an
affiliate
KVA......................... Kilovolt-ampere
KW.......................... Kilowatt
KWH......................... Kilowatt-hour
LLC......................... Limited Liability Company
LNG......................... Liquefied Natural Gas
MCF......................... Thousand Cubic Feet
MW.......................... Megawatt
NEPA........................ National Energy Policy Act of 1992
NRC......................... United States Nuclear Regulatory Commission
Pipeline Corporation........ South Carolina Pipeline Corporation, an
affiliate
PRP......................... Potentially Responsible Party
PSA......................... The South Carolina Public Service Authority
PSC......................... The Public Service Commission of South
Carolina
PUHCA....................... Public Utility Holding Company Act of 1935,
as amended
SCANA....................... SCANA Corporation and its subsidiaries
Southern Natural............ Southern Natural Gas Company
Summer Station.............. V. C. Summer Nuclear Station
Supreme Court............... South Carolina Supreme Court
Transco..................... Transcontinental Gas Pipeline Corporation
USEC........................ United States Enrichment Corporation
Westinghouse................ Westinghouse Electric Corporation
Williams Station............ A. M. Williams Coal-Fired, Electric
Generating Station Owned by GENCO
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PART I
ITEM 1. BUSINESS
THE COMPANY
ORGANIZATION
The Company, a wholly owned subsidiary of SCANA, is a South
Carolina corporation organized in 1924 and has its principal
executive office at 1426 Main Street, Columbia, South Carolina
29201, telephone number (803) 748-3000. The Company had 3,774
full-time, permanent employees as of December 31, 1997 as compared
to 3,637 full-time, permanent employees as of December 31, 1996.
SCANA, a South Carolina corporation, was organized in 1984 and
is a public utility holding company within the meaning of PUHCA but
is presently exempt from registration under such Act. SCANA holds
all of the issued and outstanding common stock of the Company.
(See Note 1A of Notes to Consolidated Financial Statements.)
INDUSTRY SEGMENTS
The Company is a regulated public utility engaged in the
generation, transmission, distribution and sale of electricity and
in the purchase and sale, primarily at retail, of natural gas in
South Carolina. The Company also renders urban bus service in the
metropolitan area of Columbia, South Carolina. The Company's
business is subject to seasonal fluctuations. Generally, sales of
electricity are higher during the summer and winter months because
of air-conditioning and heating requirements, and sales of natural
gas are greater in the winter months due to its use for heating
requirements.
The Company's electric service area extends into 24 counties
covering more than 15,000 square miles in the central, southern
and southwestern portions of South Carolina. The service area for
natural gas encompasses all or part of 30 of the 46 counties in
South Carolina and covers more than 21,000 square miles. The total
population of the counties representing the Company's combined
service area is approximately 2.4 million.
The predominant industries in the territories served by the
Company include: synthetic fibers; chemicals and allied products;
fiberglass and fiberglass products; paper and wood products; metal
fabrication; stone, clay and sand mining and processing; and
various textile-related products.
Information with respect to industry segments for the years
ended December 31, 1997, 1996 and 1995 is contained in Note 11 of
Notes to Consolidated Financial Statements and all such information
is incorporated herein by reference.
COMPETITION
The electric utility industry has begun a major transition
that could lead to expanded market competition and less regulation.
Deregulation of electric wholesale and retail markets is creating
opportunities to compete for new and existing customers and
markets. As a result, profit margins and asset values of some
utilities could be adversely affected. Legislative initiatives at
the Federal and state levels are being considered and, if enacted,
could mandate market deregulation. The pace of deregulation,
future prices of electricity, and the regulatory actions which may
be taken by the PSC and the FERC in response to the changing
environment cannot be predicted. However, the FERC, in issuing
Order 888 in April 1996, has accelerated competition among electric
utilities by providing for open access to wholesale transmission
service. Order 888 requires utilities under FERC jurisdiction that
own, control or operate transmission lines to file
nondiscriminatory open access tariffs that offer
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to others the same transmission service they provide themselves.
The FERC has also permitted utilities to seek recovery of wholesale
stranded costs from departing customers by direct assignment.
Approximately two percent of the Company's electric revenue is
under FERC jurisdiction for the purpose of setting rates for
wholesale service. Legislation is pending in South Carolina that
would deregulate the state's retail electric market and enable
customers to choose their supplier of electricity. The Company is
not able to predict whether the legislation will be enacted and, if
it is, the conditions it will impose on utilities that currently
operate in the state and future market participants.
The Company is aggressively pursuing actions to position
itself strategically for the transformed environment. To enhance
its flexibility and responsiveness to change, the Company operates
Strategic Business Units. Maintaining a competitive cost structure
is of paramount importance in the utility's strategic plan. SCE&G
has undertaken a variety of initiatives, including reductions in
operation and maintenance costs, the accelerated recovery of
SCE&G's electric regulatory assets and the shift, for retail
ratemaking purposes only, of depreciation reserves from
transmission and distribution assets to nuclear production assets.
SCE&G has also established open access transmission tariffs and is
selling bulk power to wholesale customers at market-based rates.
Significant new customer and management information systems will be
implemented in 1998. Marketing of services to commercial and
industrial customers has been increased significantly. SCE&G has
obtained long-term power supply contracts with a significant
portion of its industrial customers. The Company believes that
these actions as well as numerous others that have been and will be
taken demonstrate its ability and commitment to succeed in the new
operating environment to come.
Regulated public utilities are allowed to record as assets
some costs that would be expensed by other enterprises. If
deregulation or other changes in the regulatory environment occur,
the Company may no longer be eligible to apply this accounting
treatment and may be required to eliminate such regulatory assets
from its balance sheet. Although the potential effects of
deregulation cannot be determined at present, discontinuation of
the accounting treatment could have a material adverse effect on
the Company's results of operations in the period the write-off
is recorded. It is expected that cash flows and the financial
position of the Company would not be materially affected by the
discontinuation of the accounting treatment. The Company reported
approximately $236 million and $62 million of regulatory assets and
liabilities, respectively, including amounts recorded for deferred
income tax assets and liabilities of approximately $118 million and
$52 million, respectively, on its balance sheet at December 31,
1997.
The Company's generation assets are exposed to considerable
financial risks in a deregulated electric market. If market prices
for electric generation do not produce adequate revenue streams and
the enabling legislation or regulatory actions do not provide for
recovery of the resulting stranded costs, the Company could be
required to write down its investment in these assets. The Company
cannot predict whether any write-downs will be necessary and, if
they are, the extent to which they would adversely affect the
Company's results of operations in the period in which they are
recorded. As of December 31, 1997, the Company's net investment in
fossil/hydroelectric generation and nuclear generation assets was
approximately $977.1 million and $659.1 million, respectively.
CAPITAL REQUIREMENTS AND FINANCING PROGRAM
Capital Requirements
The cash requirements of the Company arise primarily from its
operational needs and its construction program. The ability of the
Company to replace existing plant investments, as well as to expand
to meet future demand for electricity and gas, will depend upon its
ability to attract the necessary financial capital on reasonable
terms. The Company recovers the costs of providing services
through rates charged to customers. Rates for regulated services
are generally based on historical costs. As customer growth and
inflation occur and the Company continues its ongoing construction
program it is necessary to seek increases in rates. As a result
the Company's future financial position and results of operations
will be affected by its ability to obtain adequate and timely rate
and other regulatory relief.
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On January 9, 1996 the PSC issued an order granting the
Company an increase in retail electric rates of 7.34%, which were
designed to produce additional revenues, based on a test year, of
approximately $67.5 million annually. The increase has been
implemented in two phases. The first phase, an increase in
revenues of approximately $59.5 million annually or 6.47%,
commenced in January 1996. The second phase, an increase in
revenues of approximately $8.0 million annually, based on a test
year, or .87%, was implemented in January 1997. The PSC
authorized a return on common equity of 12.0%. The PSC also
approved establishment of a Storm Damage Reserve Account capped at
$50 million to be collected through rates over a ten-year period.
Additionally, the PSC approved accelerated recovery of a
significant portion of the Company's electric regulatory assets
(excluding deferred income tax assets) and the remaining transition
obligation for postretirement benefits other than pensions,
changing the amortization periods to allow recovery by the end of
the year 2000. The Company's request to shift, for ratemaking
purposes, approximately $257 million of depreciation reserves from
transmission and distribution assets to nuclear production assets
was also approved. The Consumer Advocate appealed certain issues
in the order to the South Carolina Circuit Court, which affirmed
the PSC's decisions, and subsequently to the South Carolina Supreme
Court which is expected to hear the case and issue a ruling prior
to the end of 1998. While the outcome of this proceeding is
uncertain, the Company does not believe that any significant
adverse changes in the rate order is likely. The PSC's order does
not apply to wholesale electric revenues under the FERC's
jurisdiction, which constitute approximately two percent of the
Company's electric revenues. The FERC rejected the transfer of
depreciation reserves for rates subject to its jurisdiction.
During 1998 the Company is expected to meet its capital
requirements principally through internally generated funds
(approximately 92%, after payment of dividends), and the issuance
and sale of debt securities and additional equity contributions
from SCANA. Short-term liquidity is expected to be provided
primarily by issuance of commercial paper. The timing and amount
of such sales and the type of securities to be sold will depend
upon market conditions and other factors.
The Company's revised estimates of its cash requirements for
construction and nuclear fuel expenditures, which are subject to
continuing review and adjustment, for 1998 and the two-year period
1999-2000 are as follows:
Type of Facilities 1999-2000 1998
(Millions of Dollars)
Electric Plant:
Generation. . . . . . . . . . . . . . . . $ 93 $ 56
Transmission. . . . . . . . . . . . . . . 31 16
Distribution. . . . . . . . . . . . . . . 126 46
Other . . . . . . . . . . . . . . . . . . 22 13
Nuclear Fuel. . . . . . . . . . . . . . . . 33 23
Gas . . . . . . . . . . . . . . . . . . . . 35 13
Common. . . . . . . . . . . . . . . . . . . 27 29
Other . . . . . . . . . . . . . . . . . . . - 1
Total . . . . . . . . . . . . . . $367 $197
The above estimates exclude AFC.
During 1997 the Company expended approximately $23.1 million
as part of a program to extend the operating lives of certain non-
nuclear generating facilities. Additional improvements to be made
under the program during 1998, included in the table above, are
estimated to cost approximately $57.4 million.
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In addition to the Company's capital requirements for 1998
described above, approximately $47.7 million will be required for
refunding and retiring outstanding securities and obligations. For
the years 1999-2002, the Company has an aggregate of $301.8
million of long-term debt maturing (including approximately $69.2
million for sinking fund requirements, of which $68.7 million may
be satisfied by deposit and cancellation of bonds issued upon the
basis of property additions or bond retirement credits) and $2.2
million of purchase or sinking fund requirements for preferred
stock.
SCANA and Westvaco Corporation have formed a limited liability
company, Cogen South LLC, to build and operate a $170 million
cogeneration facility at Westvaco's Kraft Division Paper Mill in
North Charleston, South Carolina. The facility will provide
industrial process steam for the Westvaco paper mill and shaft
horsepower to enable the Company to generate up to 99 megawatts of
electricity. Construction financing is being provided to Cogen
South LLC by banks. In addition to the cogeneration LLC, Westvaco
has entered into a 20-year contract with the Company for all its
electricity requirements at the North Charleston mill at the
Company's standard industrial rate. Construction of the plant
began in September 1996 and it is expected to be operational in the
fall of 1998.
Financing Program
On April 24, 1997 the Company sold $100 million of 6.52%
cumulative preferred stock, par value $100 per share. Proceeds
from the sale were used to reduce short-term indebtedness incurred
for the Company's construction program, to refinance senior
securities and for general corporate purposes.
On October 28, 1997 SCE&G Trust I (the "Trust"), a Delaware
statutory business trust and a subsidiary of the Company, issued
$50 million of 7.55% Trust Preferred Securities, Series A. The
Trust used the proceeds from the sale to purchase unsecured 7.55%
junior subordinated debentures of the Company. The Company will
use the funds to redeem certain series of its preferred stock. The
financial statements of the Trust will be consolidated with those
of the Company.
The Company's First and Refunding Mortgage Bond Indenture,
dated April 1, 1945 (Old Mortgage), contains provisions prohibiting
the issuance of additional bonds thereunder (Class A Bonds) unless
net earnings (as therein defined) for twelve consecutive months out
of the fifteen months prior to the month of issuance are at least
twice the annual interest requirements on all Class A Bonds to be
outstanding (Bond Ratio). For the year ended December 31, 1997 the
Bond Ratio was 4.32. The issuance of additional Class A Bonds also
is restricted to an additional principal amount equal to (i) 60% of
unfunded net property additions (which unfunded net property
additions totaled approximately $579 million at December 31, 1997),
(ii) retirements of Class A Bonds (which retirement credits totaled
$67.5 million at December 31, 1997), and (iii) cash on deposit with
the Trustee.
The Company has a bond indenture dated April 1, 1993 (New
Mortgage) covering substantially all of its electric properties
under which its future mortgage-backed debt (New Bonds) will be
issued. New Bonds are issued under the New Mortgage on the basis
of a like principal amount of Class A Bonds issued under the Old
Mortgage which have been deposited with the Trustee of the New
Mortgage (of which $185 million were available for such purpose at
December 31, 1997), until such time as all presently outstanding
Class A Bonds are retired. Thereafter, New Bonds will be issuable
on the basis of property additions in a principal amount equal to
70% of the original cost of electric and common plant properties
(compared to 60% of value for Class A Bonds under the Old
Mortgage), cash deposited with the Trustee, and retirement of New
Bonds. New Bonds will be issuable under the New Mortgage only if
adjusted net earnings (as therein defined) for twelve consecutive
months out of the eighteen months immediately preceding the month
of issuance are at least twice the annual interest requirements on
all outstanding bonds (including Class A Bonds) and New Bonds to be
outstanding (New Bond Ratio). For the year ended December 31, 1997
the New Bond Ratio was 5.87.
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Without the consent of at least a majority of the total voting
power of the Company's preferred stock, the Company may not issue
or assume any unsecured indebtedness if, after such issue or
assumption, the total principal amount of all such unsecured
indebtedness would exceed 10% of the aggregate principal amount of
all of the Company's secured indebtedness and capital and surplus;
however, no such consent shall be required to enter into agreements
for payment of principal, interest and premium for securities
issued for pollution control purposes.
Pursuant to Section 204 of the Federal Power Act, the Company
must obtain the FERC authority to issue short-term debt. The FERC
has authorized the Company to issue up to $250 million of unsecured
promissory notes or commercial paper with maturity dates of twelve
months or less, but not later than December 31, 1999. Commercial
paper outstanding at December 31, 1997 was $13.3 million.
The Company had $315 million authorized and unused lines of
credit at December 31, 1997 including a credit agreement for a
maximum of $250 million to support the issuance of commercial
paper. Commercial paper outstanding at December 31, 1997 and
December 31, 1996 was $13.3 million and $66.1 million,
respectively. See "Fuel Financing Agreements" for a discussion of
Fuel Company credit agreements.
The Company's Restated Articles of Incorporation prohibit
issuance of additional shares of preferred stock without consent of
the preferred stockholders unless net earnings (as defined therein)
for the twelve consecutive months immediately preceding the month
of issuance are at least one and one-half times the aggregate of
all interest charges and preferred stock dividend requirements
(Preferred Stock Ratio). For the year ended December 31, 1997 the
Preferred Stock Ratio was 2.69.
The ratios of earnings to fixed charges (SEC Method) were
3.85, 3.80, 3.41, 3.46 and 3.57 for the years ended December 31,
1997, 1996, 1995, 1994 and 1993, respectively.
During 1997 the Company received $12.1 million in equity
contributions from SCANA. These contributions represented proceeds
from the sale of common stock through SCANA's Investor Plus Plan
and Stock Purchase Savings Program which in 1996 raised $4.4
million and $24.5 million, respectively, in equity capital.
Effective February 1, 1997 SCANA converted the Investor Plus Plan
from an original issue plan to a market purchase plan. The SPSP
converted from an original issue plan to a market purchase plan on
July 1, 1997.
The Company expects that it has or can obtain adequate sources
of financing to meet its projected cash requirements for the next
twelve months and for the foreseeable future.
Fuel Financing Agreements
The Company has assigned to Fuel Company all of its rights and
interests in its various contracts relating to the acquisition and
ownership of nuclear and fossil fuels. To finance nuclear and
fossil fuels and sulfur dioxide emission allowances, Fuel Company
issues, from time to time, commercial paper which is supported, up
to $125 million, by an irrevocable revolving credit agreement which
expires December 19, 2000. Accordingly, the amounts outstanding
have been included in long-term debt. This commercial paper and
amounts outstanding under the revolving credit agreement, if any,
are guaranteed by the Company. The full amount of the credit
agreement was available at December 31, 1997.
At December 31, 1997 commercial paper outstanding was
approximately $80.3 million at a weighted average interest rate
of 5.87%. (See Notes 1M and 4 of Notes to Consolidated Financial
Statements.)
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ELECTRIC OPERATIONS
Electric Sales
In 1997 residential sales of electricity accounted for 41% of
electric sales revenues; commercial sales 31%; industrial sales
20%; sales for resale 2%; and all other 6%. KWH sales by
classification for the years ended December 31, 1997 and 1996 are
presented below:
Sales
KWH %
Classification 1997 1996 Change
(thousands)
Residential 5,647,185 5,939,703 (4.92)
Commercial 5,321,738 5,222,517 1.90
Industrial 5,434,231 5,320,515 2.14
Sale for resale 485,206 1,023,211 (52.58)
Other 505,808 505,793 -
Total Territorial 17,394,168 18,011,739 (3.43)
Negotiated Market Share Tariff 1,459,097 895,016 63.02
Total 18,853,265 18,906,755 (0.28)
Sales for resale includes electricity furnished for resale to
three municipalities and two electric cooperatives. One electric
cooperative has notified the Company of its intent to terminate in
the year 2000 its wholesale power contract with the Company and bid
out its electric requirements. Sales under the Negotiated Market
Sales Tariff during 1997 includes sales to 28 investor-owned
utilities, three electric cooperatives, two municipalities and
three federal/state electric agencies. During 1996, sales under
the Negotiated Market Sales Tariff includes sales to thirteen
investor-owned utilities, one electric cooperative and two state
electric agencies.
The electric sales volume for residential sales decreased for
1997 as a result of milder weather. The decrease in sales for
resale and the increase of sales under the Negotiated Market Sales
Tariff was a result of a municipality terminating its wholesale
power contract and transferring to a Negotiated Market Rate. During
1997 the Company recorded a net increase of 10,583 electric
customers, increasing its total customers to 503,929. The all-time
peak demand of 3,734 MW was set on August 13, 1997.
Electric Interconnections
The Company purchases all of the electric generation of
Williams Station, owned by GENCO, under a Unit Power Sales
Agreement which has been approved by the FERC. Williams Station
has a generating capacity of 560 MW.
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The Company's transmission system is part of the
interconnected grid extending over a large part of the southern and
eastern portions of the nation. The Company, Virginia Power
Company, Duke Power Company, Carolina Power & Light Company,
Yadkin, Incorporated and PSA are members of the Virginia-Carolinas
Reliability Group, one of the several geographic divisions within
the Southeastern Electric Reliability Council. This Council
provides for coordinated planning for reliability among bulk power
systems in the Southeast. The Company is also interconnected with
Georgia Power Company, Savannah Electric & Power Company,
Oglethorpe Power Corporation and Southeastern Power
Administration's Clark Hill Project.
Fuel Costs
The following table sets forth the average cost of nuclear
fuel and coal and the weighted average cost of all fuels (including
oil and natural gas) used by the Company and GENCO for the years
1995-1997.
1997 1996 1995
Nuclear:
Per million BTU $ .47 $ .47 $ .48
Coal:
Company:
Per ton $38.22 $39.27 $40.01
Per million BTU 1.54 1.55 1.57
GENCO:
Per ton $44.49 $41.66 $42.21
Per million BTU 1.61 1.62 1.63
Weighted Average Cost
of All Fuels:
Per million BTU $ 1.52 $ 1.52 $ 1.26
The fuel costs for 1995 shown above exclude the effects of a
PSC-approved offsetting of fuel costs through the application of
credits carried on the Company's books as a result of a 1980
settlement of certain litigation.
Fuel Supply
The following table shows the sources and approximate
percentages of total for the Company's KWH generation (including
Williams Station) by each category of fuel for the years 1995-1997
and the estimates for 1998 and 1999.
Percent of Total KWH Generated
Estimated Actual
1999 1998 1997 1996 1995
Coal 73% 69% 63% 71% 65%
Nuclear 22 26 31 24 27
Hydro 5 5 6 5 5
Natural Gas & Oil - - - - 3
100% 100% 100% 100% 100%
Coal is used at all five of the Company's major fossil fuel-
fired plants and GENCO's Williams Station. Unit train deliveries
are used at all of these plants and truck deliveries are used at
three of these plants. On December 31, 1997 the Company had
approximately a 41-day supply of coal in inventory and GENCO had
approximately a 30-day supply.
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The supply of coal is obtained through contracts and purchases
on the spot market. Spot market purchases are expected to continue
for coal requirements in excess of those provided by the Company's
existing contracts. Contracts for the purchase of coal represent
96.1% of estimated requirements for 1998 (approximately 5.8
million tons, including requirements of Williams Station).
The supply of contract coal is purchased from nine suppliers
located in eastern Kentucky, Tennessee and southwest Virginia.
Contract commitments, which expire at various times from 1998-2006,
approximate 5.5 million tons annually. Sulfur restrictions on the
contract coal range from .75% to 2%.
The Company believes that its operations are in substantial
compliance with all existing regulations relating to the discharge
of sulfur dioxide. The Company is unaware that any more stringent
sulfur content requirements for existing plants are contemplated at
the State level by DHEC. However, the Company will be required to
meet the more stringent Federal emissions standards established by
the Clean Air Act (see "Environmental Matters").
The Company has adequate supplies of uranium or enriched
uranium product under contract to manufacture nuclear fuel for
Summer Station through 2005. The following table summarizes all
contract commitments for the stages of nuclear fuel assemblies:
Remaining Expiration
Commitment Contractor Regions(1) Date
Enrichment USEC (2) 13-18 2005
Fabrication Westinghouse 13-21 2009
(1) A region represents approximately one-third to one-half of the
nuclear core in the reactor at any one time. Region no. 13 was
loaded in 1997 and Region no. 14 will be loaded in 1999.
(2) Contract provisions for the delivery of enriched uranium
product encompass uranium supply and conversion and enrichment
services.
The Company has on-site spent nuclear fuel storage capability
until at least 2009 and expects to be able to expand its storage
capacity to accommodate the spent fuel output for the life of the
plant through rod consolidation, dry cask storage or other
technology as it becomes available. In addition, there is
sufficient on-site storage capacity over the life of Summer Station
to permit storage of the entire reactor core in the event that
complete unloading should become desirable or necessary for any
reason. (See "Nuclear Fuel Disposal" under "Environmental Matters"
for information regarding the contract with the DOE for disposal of
spent fuel.)
Decommissioning
Decommissioning of Summer Station is presently scheduled to
commence when the operating license expires in the year 2022.
Based on a 1991 study, the expenditures (on a before-tax basis)
related to the Company's share of decommissioning activities are
estimated, in 2022 dollars assuming a 4.5% annual rate of
inflation, to be $545.3 million including partial reclamation
costs. The Company is providing for its share of estimated
decommissioning costs of Summer Station over the life of Summer
Station. The Company's method of funding decommissioning costs is
referred to as COMReP (Cost of Money Reduction Plan). Under this
plan, funds collected through rates ($3.2 million in 1997 and 1996)
are used to pay premiums on insurance policies on the lives of
certain Company personnel. The Company is the beneficiary of
these policies. Through these insurance contracts, the
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Company is able to take advantage of income tax benefits and accrue
earnings on the fund on a tax-deferred basis at a rate higher than
can be achieved using more traditional funding approaches. Amounts
for decommissioning collected through electric rates, insurance
proceeds, and interest on proceeds less expenses are transferred by
the Company to an external trust fund in compliance with the
financial assurance requirements of the NRC. Management intends
for the fund, including earnings thereon, to provide for all
eventual decommissioning expenditures on an after-tax basis. The
trust's sources of decommissioning funds under the COMReP program
include investment components of life insurance policy proceeds,
return on investment and the cash transfers from the Company
described above. The Company records its liability for
decommissioning costs in deferred credits.
GAS OPERATIONS
Gas Sales
In 1997 residential sales accounted for 43% of gas sales
revenues; commercial sales 31%; industrial sales 26%. Dekatherm
sales by classification for the years ended December 31, 1997 and
1996 are presented below:
Sales
Dekatherms %
Classification 1997 1996 Change
Residential 11,919,843 14,108,058 (15.5)
Commercial 10,904,445 11,027,830 (1.1)
Industrial 15,729,424 13,909,258 13.1
Transportation gas 2,677,448 3,108,058 (13.9)
Total 41,231,160 42,153,204 (2.2)
The gas sales volume decreased for 1997 as a result of milder
weather which was offset by increases in contract prices for
industrial interruptible customers.
During 1997 the Company recorded a net increase of 4,139 gas
customers, increasing its total customers to 252,635.
The Company purchases all of its natural gas from Pipeline
Corporation.
The demand for gas is affected by conservation, the weather,
the price relationship between gas and alternate fuels and other
factors.
The deregulation of natural gas prices at the wellhead and the
changes in the prices of natural gas that have occurred under
Federal regulation have resulted in the development of a spot
market for natural gas in the producing areas of the country.
Pipeline Corporation has been successful in purchasing lower cost
natural gas in the spot market and arranging for its transportation
to South Carolina.
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Gas Cost and Supply
Pipeline Corporation purchases natural gas under contracts
with producers and marketers on a short-term basis at current price
indices and on a long-term basis for reliability assurance at index
prices plus a gas inventory charge. The gas is brought to South
Carolina through transportation agreements with both Southern
Natural and Transco, which expire at various times from 1998 to
2017. The volume of gas which Pipeline Corporation is entitled to
transport under these contracts on a firm basis is shown below:
Maximum Daily
Supplier Contract Demand Capacity (MCF)
Southern Natural Firm Transportation 188,000
Transco Firm Transportation 105,000
Total 293,000
Under a contract with Pipeline Corporation, the Company's
maximum daily contract demand is 224,270 dekatherms. The contract
allows the Company to receive amounts in excess of this demand
based on availability.
The average cost per MCF of natural gas purchased from
Pipeline Corporation was approximately $3.96 in 1997 compared to
$4.30 in 1996.
To meet the requirements of the Company and its other high
priority natural gas customers during periods of maximum demand,
Pipeline Corporation supplements its supplies of natural gas from
two LNG plants. The LNG plants are capable of storing the lique-
fied equivalent of 1,900,000 MCF of natural gas, of which
approximately 1,286,570 MCF were in storage at December 31, 1997.
On peak days the LNG plants can regasify up to 150,000 MCF per
day. Additionally, Pipeline Corporation had contracted for
6,447,214 MCF of natural gas storage space of which 4,197,154 MCF
were in storage on December 31, 1997.
The Company believes that supplies under contract and
available for spot market purchase are adequate to meet existing
customer demands and to accommodate growth.
Curtailment Plans
The FERC has established allocation priorities applicable to
firm and interruptible capacities on interstate pipeline companies
which require Southern Natural and Transco to allocate capacity to
Pipeline Corporation. The FERC allocation priorities are not
applicable to deliveries by the Company to its customers, which are
governed by a separate curtailment plan approved by the PSC.
REGULATION
General
The Company is subject to the jurisdiction of the PSC as to
retail electric, gas and transit rates, service, accounting,
issuance of securities (other than short-term promissory notes) and
other matters. The Company is subject to regulation under the
Federal Power Act, administered by the FERC and the DOE, in the
transmission of electric energy in interstate commerce and in the
sale of electric energy at wholesale for resale, as well as with
respect to licensed hydroelectric projects and certain other
matters, including accounting and the issuance of short-term
promissory notes. (See "Capital Requirements and Financing
Program").
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The Company holds licenses under the Federal Water Power Act
or the Federal Power Act with respect to all its hydroelectric
projects. The expiration dates of the licenses covering the
projects are as follows:
Project Capability (KW) License Expiration Date
Neal Shoals 5,000 2036
Stevens Creek 9,000 2025
Columbia 10,000 2000
Saluda 206,000 2007
Parr Shoals 14,000 2020
Fairfield Pumped Storage 512,000 2020
The Company filed a notice of intent to file an application
for a new license for Columbia on June 29, 1995. The application
for the new license will be filed by June 30, 1998.
At the termination of a license under the Federal Power Act,
the United States government may take over the project covered
thereby, or the FERC may extend the license or issue a license to
another applicant. If the Federal government takes over a project
or the FERC issues a license to another applicant, the original
licensee is entitled to be paid its net investment in the project,
not to exceed fair value, plus severance damages.
In May 1996 the FERC approved the Company's application
establishing open access transmission tariffs and requesting
authorization to sell bulk power to wholesale customers at market-
based rates.
Nuclear Regulatory Commission
The Company is subject to regulation by the NRC with respect
to the ownership and operation of Summer Station. The NRC's
jurisdiction encompasses broad supervisory and regulatory powers
over the construction and operation of nuclear reactors, including
matters of health and safety, antitrust considerations and
environmental impact. In addition, the Federal Emergency
Management Agency is responsible for the review, in conjunction
with the NRC, of certain aspects of emergency planning relating to
the operation of nuclear plants.
Summer Station has received a category one rating from the
Institute of Nuclear Power Operations (INPO) in the last five out
of six evaluations. The category one rating is the highest given
by INPO for a nuclear plant's overall operations.
In 1997 Summer Station successfully completed its refueling
outage ahead of schedule and under budget.
In 1996, the NRC completed the Systematic Assessment of
Licensee Performance (SALP) for Summer Station. The station was
assessed in four functional areas. The results of the assessment
identified superior performance in Plant Operations, Maintenance
and Engineering and good performance in Plant Support. Superior is
the highest assessment given by the NRC.
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National Energy Policy Act of 1992 and FERC Orders 636 and 888
The Company's regulated business operations were impacted by
the NEPA and FERC Orders No. 636 and 888. NEPA was designed to
create a more competitive wholesale power supply market by creating
"exempt wholesale generators" and by potentially requiring
utilities owning transmission facilities to provide transmission
access to wholesalers. See "Competition" for a discussion of FERC
Order 888. Order No. 636 was intended to deregulate the markets
for interstate sales of natural gas by requiring that pipelines
provide transportation services that are equal in quality for all
gas suppliers whether the customer purchases gas from the pipeline
or another supplier. In the opinion of the Company, it continues
to be able to meet successfully the challenges of these altered
business climates and does not anticipate there to be any material
adverse impact on the results of operations, cash flows, financial
position or business prospects.
RATE MATTERS
The following table presents a summary of significant rate
activity for the years 1993-1997 based on test years:
REQUESTED GRANTED
Date of % % of
General Rate Application/ Amount Increase Date of Amount Increase
Applications Hearing (Millions) Requested Order (Millions) Granted
PSC
Electric
Retail 07/10/95 $ 76.7 8.4% 1/09/96 $67.5 88%
Retail 12/07/92 $ 72.0* 11.4% 6/07/93 $60.5 84%
* As modified to reflect lowering of rate of return the Company was
seeking.
On January 9, 1996 the PSC issued an order granting the
Company an increase in retail electric rates of 7.34%, which was
designed to produce additional revenues, based on a test year, of
approximately $67.5 million annually. The increase has been
implemented in two phases. The first phase, an increase in
revenues of approximately $59.5 million annually or 6.47%,
commenced in January 1996. The second phase, an increase in
revenues of approximately $8.0 million annually, or .87%, was
implemented in January 1997. The PSC authorized a return on
common equity of 12.0%. The PSC also approved establishment of a
Storm Damage Reserve Account capped at $50 million to be collected
through rates over a ten-year period. Additionally, the PSC
approved accelerated recovery of a significant portion of the
Company's electric regulatory assets (excluding deferred income tax
assets) and the remaining transition obligation for postretirement
benefits other than pensions, changing the amortization periods to
allow recovery by the end of the year 2000. The Company's request
to shift, for ratemaking purposes, approximately $257 million of
depreciation reserves from transmission and distribution assets to
nuclear production assets was also approved. The Consumer Advocate
appealed certain issues in the order to the South Carolina Circuit
Court, which affirmed the PSC's decisions, and subsequently to the
South Carolina Supreme Court which is expected to hear the case and
issue a ruling prior to the end of 1998. While the outcome of this
proceeding is uncertain, the Company does not believe that any
significant adverse changes in the rate order is likely. The
PSC's order does not apply to wholesale electric revenues under the
FERC's jurisdiction, which constitute approximately two percent of
the Company's electric revenues. The FERC rejected the transfer of
depreciation reserves for rates subject to its jurisdiction.
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In 1994 the PSC issued an order approving the Company's request
to recover through a billing surcharge to its gas customers the
costs of environmental cleanup at the sites of former manufactured
gas plants. The billing surcharge is subject to annual review and
provides for the recovery of substantially all actual and projected
site assessment and cleanup costs and environmental claims
settlements for the Company's gas operations that had previously
been deferred. In October 1997, as a result of the annual review,
the PSC approved the Company's request to increase the billing
surcharge from $.006 per therm to $.011 per therm which should
enable the Company to recover the remaining balance of $29.6
million by December 2002.
In September 1992 the PSC issued an order granting the Company
a $.25 increase in transit fares from $.50 to $.75 in both Columbia
and Charleston, South Carolina; however, the PSC also required $.40
fares for low-income customers and denied the Company's request to
reduce the number of routes and frequency of service. The new
rates were placed into effect in October 1992. The Company
appealed the PSC's order to the Circuit Court, which in May 1995
ordered the case back to the PSC for reconsideration of several
issues including the low income rider program, routing changes, and
the $.75 fare. The Supreme Court declined to review an appeal of
the Circuit Court decision and dismissed the case. The PSC and
other intervenors filed another Petition for Reconsideration, which
the Supreme Court denied. The PSC and other intervenors filed
another appeal to the Circuit Court which the Circuit Court denied
in an Order dated May 9, 1996. In this Order, the Circuit Court
upheld its previous Orders and remanded them back to the PSC.
During August 1996, the PSC heard oral arguments on the Orders on
remand for the Circuit Court. On September 30, 1996, the PSC
issued an order affirming its previous orders and denied the
Company's request for reconsideration. The Company has appealed
these two PSC orders to the Circuit Court where they are awaiting
action.
Fuel Cost Recovery Procedures
The PSC has established a fuel cost recovery procedure which
determines the fuel component in the Company's retail electric base
rates annually based on projected fuel costs for the ensuing
twelve-month period, adjusted for any overcollection or
undercollection from the preceding twelve-month period. The
Company has the right to request a formal proceeding at any time
should circumstances dictate such a review.
In the April 1997 annual review of the fuel cost component of
electric rates, the PSC decreased the rate from 13.10 mills per KWH
to 12.85 mills per KWH, a monthly decrease of $0.25 for an average
customer using 1,000 KWH a month.
The Company's gas rate schedules and contracts include
mechanisms which allow it to recover from its customers changes in
the actual cost of gas. The Company's firm gas rates allow for the
recovery of a fixed cost of gas, based on projections, as
established by the PSC in annual gas cost and gas purchase practice
hearings. Any differences between actual and projected gas costs
are deferred and included when projecting gas costs during the next
annual gas cost recovery hearing.
In the October 1997 review the PSC decreased the base cost of
gas from 51.260 cents per therm to 48.182 cents per therm which
resulted in a monthly decrease of $3.08 (including applicable
taxes) based on an average of 100 therms per month on a residential
bill during the heating season.
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ENVIRONMENTAL MATTERS
General
Federal and state authorities have imposed environmental
regulations and standards requirements relating primarily to air
emissions, wastewater discharges and solid, toxic and hazardous
waste management. Developments in these areas may require that
equipment and facilities be modified, supplemented or replaced.
The ultimate effect of these regulations and standards upon
existing and proposed operations cannot be forecast.
Capital Expenditures
In the years 1995 through 1997, capital expenditures for
environmental control amounted to approximately $48.5 million. In
addition, approximately $17.1 million, $12.2 million and $10.4
million of environmental control expenditures were made during
1997, 1996 and 1995, respectively, which was included in "Other
operation" and "Maintenance" expenses. It is not possible to
estimate all future costs for environmental purposes but forecasts
for capitalized expenditures are $48.0 million for 1997 and $91.2
million for the four-year period 1999 through 2002. These
expenditures are included in the Company's construction program.
Air Quality Control
The Clean Air Act requires electric utilities to reduce
emissions of sulfur dioxide and nitrogen oxide by the year 2000.
These requirements are being phased in over two periods. The first
phase had a compliance date of January 1, 1995 and the second,
January 1, 2000. The Company's facilities did not require
modifications to meet the requirements of Phase I. The Company
will most likely meet the Phase II requirements through the burning
of natural gas and/or lower sulfur coal in its generating units and
the purchase and use of sulfur dioxide emission allowances. Low
nitrogen oxide burners are being installed to reduce nitrogen oxide
emissions to the levels required by Phase II. Air toxicity
regulations for the electric generating industry are likely to be
promulgated around the year 2000.
The Company filed with DHEC compliance plans related to Phase
II sulfur dioxide requirements in 1995, and Phase II nitrogen oxide
requirements in December, 1997. The Company currently estimates
that air emissions control equipment will require capital
expenditures of $90.3 million over the 1998-2002 period to
retrofit existing facilities, with increased operation and
maintenance cost of approximately $1 million per year. To meet
compliance requirements through the year 2007, the Company
anticipates total capital expenditures of approximately $185
million.
Water Quality Control
The Federal Clean Water Act, as amended, provides for the
imposition of effluent limitations that require various levels of
treatment for each wastewater discharge. Under this Act,
compliance with applicable limitations is achieved under a national
permit program. Discharge permits have been issued for all and
renewed for nearly all of the Company's and GENCO's generating
units. Concurrent with renewal of these permits the permitting
agency has implemented a more rigorous program in monitoring and
controlling thermal discharges and strategies for toxicity
reduction in wastewater streams. The Company has been developing
compliance plans to meet these initiatives. Amendments to the
Clean Water Act proposed in Congress include several provisions
which, if passed, could prove costly to the Company. These
include, but are not limited to, limitations to mixing zones and
the implementation of technology-based standards.
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Comprehensive Environmental Recovery, Compensation and Liability
Act (Superfund) and Environmental Assessment Program
The Company has an environmental assessment program to
identify and assess current and former operations sites that could
require environmental cleanup. As site assessments are initiated
an estimate is made of the amount of expenditures, if any,
necessary to investigate and clean up each site. These estimates
are refined as additional information becomes available; therefore,
actual expenditures could differ significantly from the original
estimates. Amounts estimated, accrued and actually expended to
date for site assessments and cleanup relate primarily to regulated
operations; such amounts are deferred and are being amortized and
recovered through rates over a five-year period for electric
operations and an eight-year period for gas operations. The
Company has also recovered portions of its environmental
liabilities through settlements with various insurance carriers.
Deferred amounts, net of amounts recovered through rates and
insurance settlements, totaled $32.4 million and $41.4 million at
December 31, 1997 and 1996, respectively. The deferral includes
the costs estimated to be associated with the matters discussed
below.
In September 1992, the EPA notified the Company, the City of
Charleston and the Charleston Housing Authority of their
potential liability for the investigation and cleanup of the
Calhoun Park area site in Charleston, South Carolina. This
site encompasses approximately 30 acres and includes properties
which were locations for industrial operations, including a
wood preserving (creosote) plant, one of the Company's
decommissioned manufactured gas plants, properties owned by the
National Park Service and the City of Charleston and private
properties. The site has not been placed on the National
Priorities List, but may be added before cleanup is initiated.
The PRPs have agreed with the EPA to participate in an
innovative approach to site investigation and cleanup called
"Superfund Accelerated Cleanup Model," allowing the pre-
cleanup site investigation process to be compressed
significantly. The PRPs have negotiated an administrative
order by consent for the conduct of a Remedial
Investigation/Feasibility Study and a corresponding Scope of
Work. Field work began in November 1993 and the EPA
conditionally approved a Remedial Investigation Report in March
1997. Although the Company is continuing to investigate cost-
effective clean-up methodologies, further work is pending EPA
approval of the final draft of the Remedial Investigation
Report.
In October 1996 the City of Charleston and the Company settled
all environmental claims the City may have had against the
Company involving the Calhoun Park area for a payment of $26
million over four years (1996-1999) by the Company to the City.
The Company is recovering the amount of the settlement, which
does not encompass site assessment and cleanup costs, through
rates in the same manner as other amounts accrued for site
assessments and cleanup as discussed above. As part of the
environmental settlement, the Company has agreed to construct
an 1,100 space parking garage on the Calhoun Park site and to
transfer the facility to the City in exchange for a 20-year
municipal bond backed by revenues from the parking garage and
a mortgage on the parking garage. Construction is expected to
begin in 1998. The total amount of the bond is not to exceed
$16.9 million, the maximum expected project cost.
The Company owns three other decommissioned manufactured gas
plant sites which contain residues of by-product chemicals.
The Company is investigating the sites to monitor the nature
and extent of the residual contamination.
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Solid Waste Control
The South Carolina Solid Waste Policy and Management Act of
1991 directed the DHEC to promulgate regulations for the disposal
of industrial solid waste. DHEC has proposed a regulation, which
if adopted as a final regulation in its present form, would
significantly increase the Company's costs of construction and
operation of existing and future ash management facilities.
Nuclear Fuel Disposal
The Nuclear Waste Policy Act of 1982 requires that the United
States government make available by 1998 a permanent repository
for high-level radioactive waste and spent nuclear fuel and imposes
a fee of 1.0 mil per KWH of net nuclear generation after April 7,
1983. Payments, which began in 1983, are subject to change and will
extend through the operating life of Summer Station. The Company
entered into a contract with the DOE on June 29, 1983, providing
for permanent disposal of its spent nuclear fuel by the DOE. The
DOE presently estimates that the permanent storage facility will
not be available until 2010. The Company has on-site spent nuclear
fuel storage capability until at least 2009 and expects to be able
to expand its storage capacity to accommodate the spent nuclear
fuel output for the life of the plant through rod consolidation,
dry cask storage or other technology as it becomes available. The
Act also imposes on utilities the primary responsibility for
storage of their spent nuclear fuel until the repository is
available.
OTHER MATTERS
With regard to the Company's insurance coverage for Summer
Station, reference is made to Note 10B of Notes to Consolidated
Financial Statements which is incorporated herein by reference.
ITEM 2. PROPERTIES
The Company's bond indentures, securing the First and
Refunding Mortgage Bonds and First Mortgage Bonds issued
thereunder, constitute direct mortgage liens on substantially all
of its property.
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ELECTRIC
The following table gives information with respect to the
Company's electric generating facilities.
Net Generating
Present Year Capability
Facility Fuel Capability Location In-Service (KW)(1)
Steam
Urquhart Coal/Gas Beech Island, SC 1953 250,000
McMeekin Coal/Gas Irmo, SC 1958 252,000
Canadys Coal/Gas Canadys, SC 1962 430,000
Wateree Coal Eastover, SC 1970 700,000
Summer (2) Nuclear Parr, SC 1984 635,000
D-Area (3) Coal DOE Savannah
River Site, SC 1995 35,000
Cope (4) Coal Cope, SC 1996 408,000
Gas Turbines
Burton Gas/Oil Burton, SC 1961 28,500
Faber Place Gas Charleston, SC 1961 9,500
Hardeeville Oil Hardeeville, SC 1968 14,000
Urquhart Gas/Oil Beech Island, SC 1969 38,000
Coit Gas/Oil Columbia, SC 1969 30,000
Parr Gas/Oil Parr, SC 1970 60,000
Williams (5) Gas/Oil Goose Creek, SC 1972 49,000
Hagood Gas/Oil Charleston, SC 1991 95,000
Hydro
Neal Shoals Carlisle, SC 1905 5,000
Parr Shoals Parr, SC 1914 14,000
Stevens Creek Martinez, GA 1914 9,000
Columbia Columbia, SC 1927 10,000
Saluda Irmo, SC 1930 206,000
Pumped Storage
Fairfield Parr, SC 1978 512,000
Total (6) 3,790,000
(1) Summer rating.
(2) Represents the Company's two-thirds portion of the Summer
Station.
(3) This plant is operated under lease from the DOE and is
dispatched to DOE's Savannah River Site steam needs. "Net
Generating Capability" for this plant is expected average
hourly output. The lease expires on October 1, 2005.
(4) Plant began commercial operation in January 1996.
(5) The two gas turbines at Williams were purchased upon
expiration of the lease on June 29, 1997.
(6) Excludes Williams Station.
21<PAGE>
<PAGE>
The Company owns 428 substations having an aggregate
transformer capacity of 21,356,393 KVA. The transmission system
consists of 3,122 miles of lines and the distribution system
consists of 16,129 pole miles of overhead lines and 3,500 trench
miles of underground lines.
GAS
Natural Gas
The Company's gas system consists of approximately 11,728
miles of distribution mains and related service facilities.
Propane
The Company has propane air peak shaving facilities which can
supplement the supply of natural gas by gasifying propane to yield
the equivalent of 102,000 MCF per day of natural gas. These
facilities can store the equivalent of 430,405 MCF of natural gas.
TRANSIT
The Company owns 61 motor coaches used in the operation of the
Columbia transit system. The Columbia system is comprised of
fifteen routes covering 177 miles.
Effective October 1, 1996, the Company transferred ownership
and operation of the Charleston transit system to the City of
Charleston. As part of the transfer, the Company conveyed ownership
to the City of Charleston facilities, equipment and four motor
coaches used in the operation of the transit system. The City and
the Company entered into an interim operating agreement, with
provisions for renewing, whereby the Company will operate the
system for the City until a Regional Transit Authority is
established. The Company and the City have agreed upon a rate
structure designed to allow the Company to recover its costs of
operating the Charleston transit system. The Charleston system is
composed of fourteen routes covering 110 miles.
ITEM 3. LEGAL PROCEEDINGS
For information regarding legal proceedings, see ITEM 1.,
"BUSINESS - RATE MATTERS" and "BUSINESS - ENVIRONMENTAL MATTERS -
Comprehensive Environmental Recovery, Compensation and Liabilities
Act (Superfund) and Environmental Assessment Program" and Note 10
of Notes to Consolidated Financial Statements appearing in Item 8.,
"FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
All of the Company's common stock is owned by SCANA and
therefore there is no market for such stock. During 1997 and 1996
the Company paid $141.4 million and $132.9 million, respectively,
in cash dividends to SCANA.
SECURITIES RATINGS (As of December 31, 1997)
SOUTH CAROLINA ELECTRIC & GAS COMPANY
First First and Trust
Rating Mortgage Refunding Preferred Preferred Commercial
Agency Bonds Mortgage Bonds Stock Securities Paper
Duff &
Phelps A+ A+ A - D-1
Moody's A1 A1 a2 a2 P-1
Standard
& Poor's A A A- A- A-1
Further reference is made to Note 5 of Notes to Consolidated
Financial Statements.
The Restated Articles of Incorporation of the Company and the
Indenture underlying its First and Refunding Mortgage Bonds contain
provisions that may limit the payment of cash dividends on common
stock. In addition, with respect to hydroelectric projects, the
Federal Power Act may require the appropriation of a portion of the
earnings therefrom. At December 31, 1997 approximately $21.5
million of retained earnings were restricted as to payment of cash
dividends on common stock.
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<TABLE>
<S> <C> <C> <C> <C> <C>
ITEM 6. SELECTED FINANCIAL DATA
For the Years Ended December 31, 1997 1996 1995 1994 1993
Statement of Income Data (Millions of dollars, except statistics)
Operating Revenues $1,338 $1,345 $1,211 $1,181 $1,118
Operating Income 282 286 256 230 219
Other Income 9 4 9 7 7
Net Income 195 190 169 152 146
Earnings Available for Common Stock 186 185 163 146 140
Balance Sheet Data
Utility Plant, Net $4,457 $3,197 $3,158 $2,998 $2,687
Total Assets 4,054 3,959 3,802 3,587 3,190
Capitalization:
Common equity 1,447 1,413 1,315 1,133 1,051
Preferred Stock (Not subject
to purchase or sinking funds) 106 26 26 26 26
Preferred Stock, Net (Subject to
purchase or sinking funds) 12 43 46 50 53
Company - Obligated mandatorily
redeemable preferred securities of
the Company's Subsidiary Trust, SCE&G
Trust I, holding solely $50 million,
principal amount of 7.55% of Junior
Subordinated Debentures of the Company,
due 2027 50 - - - -
Long-term debt, net 1,262 1,277 1,279 1,231 1,097
Total Capitalization $2,877 $2,759 $2,666 $2,440 $2,227
Other Statistics
Electric:
Customers (Year-End) 503,929 493,346 484,381 476,438 468,901
Total sales (Million KWH) 17,395 18,012 17,585 16,840 16,889
Residential:
Average annual use per customer (KWH) 13,214 14,149 13,859 13,048 14,077
Average annual rate per KWH $.0799 $.0785 $.0747 $.0743 $.0707
Generating capability - Net MW (Year-End) 4,350 4,316 4,282 3,876 3,864
Territorial peak demand - Net MW 3,734 3,698 3,683 3,444 3,557
Gas:
Customers (Year-End) 252,635 248,496 243,342 238,433 221,278
Sales, excluding transportation
(Thousand Therms) 385,537 390,451 362,384 322,837 267,335
Residential:
Average annual use per customer (Therms) 531 639 570 538 606
Average annual rate per therm $.86 $.74 $.82 $.84 $.76
</TABLE
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Statements included in this discussion and analysis (or
elsewhere in this annual report) which are not statements of
historical fact are intended to be, and are hereby identified as,
"forward looking statements" for purposes of the safe harbor
provided by Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
Readers are cautioned that any such forward-looking statements are
not guarantees of future performance and involve a number of risks
and uncertainties, and that actual results could differ materially
from those indicated by such forward-looking statements. Important
factors that could cause actual results to differ materially from
those indicated by such forward-looking statements include, but are
not limited to, the following: (1) that the information is of a
preliminary nature and may be subject to further and/or continuing
review and adjustment, (2) changes in the utility regulatory
environment, (3) changes in the economy in areas served by the
Company's subsidiaries, (4) the impact of competition from
other energy suppliers, (5) the management of the Company's
operations (6) growth opportunities for the Company's regulated and
diversified subsidiaries, (7) the results of financing efforts, (8)
changes in the Company's accounting policies, (9) weather
conditions in areas served by the Company's utility subsidiaries,
(10) performance of the telecommunications companies in which the
Company has made significant investments, (11) inflation, (12)
changes in environmental regulations and (13) the other risks and
uncertainties described from time to time in the Company's periodic
reports filed with the Securities and Exchange Commission. The
Company disclaims any obligation to update any forward-looking
statements.
COMPETITION
The electric utility industry has begun a major transition
that could lead to expanded market competition and less regulation.
Deregulation of electric wholesale and retail markets is creating
opportunities to compete for new and existing customers and
markets. As a result, profit margins and asset values of some
utilities could be adversely affected. Legislative initiatives at
the Federal and state levels are being considered and, if enacted,
could mandate market deregulation. The pace of deregulation, the
future prices of electricity, and the regulatory actions which may
be taken by the PSC and the FERC in response to the changing
environment cannot be predicted. However, the FERC, in issuing
Order 888 in April 1996, has accelerated competition among electric
utilities by providing for open access to wholesale transmission
service. Order 888 requires utilities under FERC jurisdiction that
own, control or operate transmission lines to file
nondiscriminatory open access tariffs that offer to others the same
transmission service they provide themselves. The FERC has also
permitted utilities to seek recovery of wholesale stranded costs
from departing customers by direct assignment. Approximately two
percent of the Company's electric revenue is under FERC
jurisdiction for the purpose of setting rates for wholesale
service. Legislation is pending in South Carolina that would
deregulate the state's retail electric market and enable customers
to choose their supplier of electricity. The Company is not able
to predict whether the legislation will be enacted and, if it is,
the conditions it will impose on utilities that currently operate
in the state and future market participants.
The Company is aggressively pursuing actions to position
itself strategically for the transformed environment. To enhance
its flexibility and responsiveness to change, the Company operates
Strategic Business Units. Maintaining a competitive cost structure
is of paramount importance in the Company's strategic plan. The
Company has undertaken a variety of initiatives, including
reductions in operation and maintenance costs and in staffing
levels, the accelerated recovery of the Company's electric
regulatory assets and the shift, for retail ratemaking purposes
only, of depreciation reserves from transmission and distribution
assets to nuclear production assets. The Company has also
established open access transmission tariffs and is selling bulk
power to wholesale customers at market-based rates. Significant
new customer and management information systems will be implemented
in 1998. Marketing of services to commercial and industrial
customers has been increased significantly. The Company has
obtained long term power supply contracts with a significant
portion of its industrial customers. The Company believes that
these actions as well as numerous others that have been and will be
taken demonstrate its ability and commitment to succeed in the new
operating environment to come.
24
<PAGE>
Regulated public utilities are allowed to record as assets
some costs that would be expensed by other enterprises. If
deregulation or other changes in the regulatory environment occur,
the Company may no longer be eligible to apply this accounting
treatment and may be required to eliminate such regulatory assets
from its balance sheet. Although the potential effects of
deregulation cannot be determined at present, discontinuation of
the accounting treatment could have a material adverse effect on
the Company's results of operations in the period the write-off is
recorded. It is expected that cash flows and the financial
position of the Company would not be materially affected by the
discontinuation of the accounting treatment. The Company reported
approximately $236 million and $62 million of regulatory assets and
liabilities, respectively, including amounts recorded for deferred
income tax assets and liabilities of approximately $118 million and
$52 million, respectively, on its balance sheet at December 31,
1997.
The Company's generation assets are exposed to considerable
financial risks in a deregulated electric market. If market prices
for electric generation do not produce adequate revenue streams and
the enabling legislation or regulatory actions do not provide for
recovery of the resulting stranded costs, the Company could be
required to write down its investment in these assets. The Company
cannot predict whether any write-downs will be necessary and, if
they are, the extent to which they would adversely affect the
Company's results of operations in the period in which they are
recorded. As of December 31, 1997, the Company net investment in
fossil\hydroelectric generation and nuclear generation assets was
$977.1 million and $659.1 million, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The cash requirements of the Company arise primarily from its
operational needs and its construction program. The ability of the
Company to replace existing plant investment, as well as to expand
to meet future demand for electricity and gas, will depend upon its
ability to attract the necessary financial capital on reasonable
terms. The Company recovers the costs of providing services
through rates charged to customers. Rates for regulated services
are generally based on historical costs. As customer growth and
inflation occur and the Company continues its ongoing construction
program, it is necessary to seek increases in rates. As a result,
the Company's future financial position and results of operations
will be affected by its ability to obtain adequate and timely rate
and other regulatory relief.
SCANA and Westvaco Corporation have formed a limited liability
company, Cogen South LLC, to build and operate a $170 million
cogeneration facility at Westvaco's Kraft Division Paper Mill in
North Charleston, South Carolina. The facility will provide
industrial process steam for the Westvaco paper mill and shaft
horsepower to enable the Company to generate up to 99 megawatts of
electricity. Construction financing is being provided to Cogen
South LLC by banks. In addition to the cogeneration LLC, Westvaco
has entered into a 20-year contract with the Company for all its
electricity requirements at the North Charleston mill at the
Company's standard industrial rate. Construction of the plant
began in September 1996 and it is expected to be operational in the
fall of 1998.
On August 7, 1996 the City of Charleston executed 30-year
electric and gas franchise agreements with the Company. In
consideration for the electric franchise agreement, the Company is
paying the City $25 million over seven years (1996 through 2002)
and has donated to the City the existing transit assets in
Charleston. The $25 million is included in electric plant-in-
service. In settlement of environmental claims the City may have
had against the Company involving the Calhoun Park area, where the
Company and its predecessor companies operated a manufactured gas
plant until the 1960's, the Company is paying the City $26 million
over a four-year period (1996 through 1999). As part of the
environmental settlement, the Company has agreed to construct an
1,100 space parking garage on the Calhoun Park site and to transfer
the facility to the City in exchange for a 20-year municipal bond
backed by revenues from the parking garage and a mortgage on the
parking garage. The total amount of the bond is not to exceed
$16.9 million, the maximum expected project cost.
25
<PAGE>
The revised estimated primary cash requirements for 1998,
excluding requirements for fuel liabilities and short-term
borrowings and including notes payable to affiliated companies, and
the actual primary cash requirements for 1997 are as follows:
1998 1997
(Millions of Dollars)
Property additions and construction
expenditures, net of allowance for
funds used during construction $175 $201
Nuclear fuel expenditures 23 31
Maturing obligations, redemptions and
sinking and purchase fund requirements 48 78
Total $246 $310
Approximately 69% of total cash requirements (after payment of
dividends) was provided from internal sources in 1997 as compared
to 65% in 1996.
The Company's First and Refunding Mortgage Bond Indenture,
dated April 1, 1945 (Old Mortgage), contains provisions prohibiting
the issuance of additional bonds thereunder (Class A Bonds) unless
net earnings (as therein defined) for twelve consecutive months out
of the fifteen months prior to the month of issuance are at least
twice the annual interest requirements on all Class A Bonds to be
outstanding (Bond Ratio). For the year ended December 31, 1997 the
Bond Ratio was 4.32. The issuance of additional Class A Bonds also
is restricted to an additional principal amount equal to (i) 60% of
unfunded net property additions (which unfunded net property
additions totaled approximately $579 million at December 31,
1997), (ii) retirements of Class A Bonds (which retirement credits
totaled $67.5 million at December 31, 1997), and (iii) cash on
deposit with the Trustee.
The Company has a bond indenture dated April 1, 1993 (New
Mortgage) covering substantially all of its electric properties
under which its future mortgage-backed debt (New Bonds) will be
issued. New Bonds are issued under the New Mortgage on the basis
of a like principal amount of Class A Bonds issued under the
Old Mortgage which have been deposited with the Trustee of
the New Mortgage (of which $185 million were available for such
purpose as of December 31, 1997), until such time as all presently
outstanding Class A Bonds are retired. Thereafter, New Bonds will
be issuable on the basis of property additions in a principal
amount equal to 70% of the original cost of electric and common
plant properties (compared to 60% of value for Class A Bonds under
the Old Mortgage), cash deposited with the Trustee, and retirement
of New Bonds. New Bonds will be issuable under the New Mortgage
only if adjusted net earnings (as therein defined) for twelve
consecutive months out of the eighteen months immediately preceding
the month of issuance are at least twice the annual interest
requirements on all outstanding bonds (including Class A Bonds) and
New Bonds to be outstanding (New Bond Ratio). For the year ended
December 31, 1997 the New Bond Ratio was 5.87.
On April 24, 1997, the Company sold $100 million of 6.52%
cumulative preferred stock, par value $100 per share. Proceeds
from the sale were used to reduce short-term indebtedness incurred
for the Company's construction program, to refinance senior
securities and for general corporate purposes.
On October 28, 1997 SCE&G Trust I (the "Trust"), a Delaware
statutory business trust and a subsidiary of the Company, issued
$50 million of 7.55% Trust Preferred Securities, Series A. The
Trust used the proceeds from the sale to purchase unsecured 7.55%
Junior Subordinated Debentures of the Company. The financial
statements of the Trust are consolidated with those of the Company.
Without the consent of at least a majority of the total voting
power of the Company's preferred stock, the Company may not issue
or assume any unsecured indebtedness if, after such issue or
assumption, the total principal amount of all such unsecured
indebtedness would exceed 10% of the aggregate principal amount of
all of the Company's secured indebtedness and capital and surplus;
however, no such consent is required to enter into agreements for
payment of principal, interest and premium for securities issued
for pollution control purposes.
Pursuant to Section 204 of the Federal Power Act, the Company
must obtain the FERC authority to issue short-term debt. The FERC
has authorized the Company to issue up to $250 million of unsecured
promissory notes or commercial paper with maturity dates of
twelve months or less, but not later than December 31, 1999.
26
<PAGE>
At December 31, 1997 the Company had $315 million of
authorized lines of credit which includes a credit agreement for a
maximum of $250 million to support the issuance of commercial
paper. Unused lines of credit at December 31, 1997 totaled $315
million. The Company's commercial paper outstanding at December
31, 1997 and December 31, 1996 was $13.3 million and $90 million,
respectively. In addition, Fuel Company has a credit
agreement for a maximum of $125 million with the full amount
available at December 31, 1997. The credit agreement supports the
issuance of short-term commercial paper for the financing of
nuclear and fossil fuels and sulfur dioxide emission allowances.
Fuel Company commercial paper outstanding at December 31, 1997 was
$80.3 million,
The Company's Restated Articles of Incorporation prohibit
issuance of additional shares of preferred stock without consent of
the preferred stockholders unless net earnings (as defined therein)
for the twelve consecutive months immediately preceding the month
of issuance are at least one and one-half times the aggregate of
all interest charges and preferred stock dividend requirements
(Preferred Stock Ratio). For the year ended December 31, 1997 the
Preferred Stock Ratio was 2.69.
The Company anticipates that its 1998 cash requirements of
$389.6 million will be met through internally generated funds
(approximately 59%, after payment of dividends), the sales of
additional equity securities, additional equity contributions from
SCANA and the incurrence of additional short-term and long-term
indebtedness.
The Company expects that it has or can obtain adequate sources
of financing to meet its projected cash requirements for the next
twelve months and for the foreseeable future.
Environmental Matters
The Clean Air Act requires electric utilities to reduce
substantially emissions of sulfur dioxide and nitrogen oxide by the
year 2000. These requirements are being phased in over two
periods. The first phase had a compliance date of January 1, 1995
and the second, January 1, 2000. The Company's facilities did not
require modifications to meet the requirements of Phase I. The
Company will most likely meet the Phase II requirements through the
burning of natural gas and/or lower sulfur coal in its generating
units and the purchase and use of sulfur dioxide emission
allowances. Low nitrogen oxide burners are being installed to
reduce nitrogen oxide emissions to the levels required by Phase II.
Air toxicity regulations for the electric generating industry are
likely to be promulgated around the year 2000.
The Company filed with DHEC compliance plans related to Phase
II sulfur dioxide requirements in 1995, and Phase II nitrogen oxide
requirements in December, 1997. The Company currently estimates
that air emissions control equipment will require capital
expenditures of $90.3 million over the 1998-2002 period to
retrofit existing facilities, with increased operation and
maintenance cost of approximately $1 million per year. To meet
compliance requirements through the year 2007, the Company
anticipates total capital expenditures of approximately $185
million.
The Federal Clean Water Act, as amended, provides for the
imposition of effluent limitations that require various levels of
treatment for each wastewater discharge. Under this Act,
compliance with applicable limitations is achieved under a national
permit program. Discharge permits have been issued for all and
renewed for nearly all of the Company's and GENCO's generating
units. Concurrent with renewal of these permits, the permitting
agency has implemented a more rigorous program in monitoring and
controlling thermal discharges and strategies for toxicity
reduction in wastewater streams. The Company has been developing
compliance plans for these initiatives. Amendments to the Clean
Water Act proposed in Congress include several provisions which, if
passed, could prove costly to the Company. These include, but are
not limited to, limitations to mixing zones and the implementation
of technology-based standards.
The South Carolina Solid Waste Policy and Management Act of
1991 directed DHEC to promulgate regulations for the disposal of
industrial solid waste. DHEC has promulgated a proposed regulation
which, if adopted as a final regulation in its present form, would
significantly increase the Company's and GENCO's costs of
construction and operation of existing and future ash management
facilities.
27
<PAGE>
The Company has an environmental assessment program to
identify and assess current and former operations sites that could
require environmental cleanup. As site assessments are initiated
an estimate is made of the amounts of expenditures, if any,
necessary to investigate and clean up each site. These estimates
are refined as additional information becomes available; therefore,
actual expenditures could differ significantly from the original
estimates. Amounts estimated, accrued and actually expended to
date for site assessments and cleanup relate primarily to
regulated operations; such amounts are deferred and are being
amortized and recovered through rates over a five-year period for
electric operations and an eight-year period for gas operations.
The Company has also recovered portions of its environmental
liabilities through settlements with various insurance carriers.
Deferred amounts, net of amounts recovered through rates and
insurance settlements, totaled $32.4 million and $41.4 million at
December 31, 1997 and 1996, respectively. The deferral includes
the estimated costs associated with the matters discussed below.
In September 1992, the EPA notified the Company, the City of
Charleston and the Charleston Housing Authority of their
potential liability for the investigation and cleanup of the
Calhoun Park area site in Charleston, South Carolina. This
site encompasses approximately 30 acres and includes properties
which were locations for industrial operations, including a
wood preserving (creosote) plant, one of the Company's
decommissioned manufactured gas plants, properties owned by the
National Park Service and the City of Charleston and private
properties. The site has not been placed on the National
Priorities List, but may be added before cleanup is initiated.
The PRPs have agreed with the EPA to participate in an
innovative approach to site investigation and cleanup called
"Superfund Accelerated Cleanup Model," allowing the pre-
cleanup site investigation process to be compressed
significantly. The PRPs have negotiated an administrative
order by consent for the conduct of a Remedial
Investigation/Feasibility Study and a corresponding Scope of
Work. Field work began in November 1993 and the EPA
conditionally approved a Remedial Investigation Report in March
1997. Although the Company is continuing to investigate cost-
effective clean-up methodologies, further work is pending EPA
approval of the final draft of the Remedial Investigation
Report.
In October 1996 the City of Charleston and the Company settled
all environmental claims the City may have had against the
Company involving the Calhoun Park area for a payment of $26
million over four years (1996 through 1999) by the Company to
the City. The Company is recovering the amount of the
settlement, which does not encompass site assessment and
cleanup costs, through rates in the same manner as other
amounts accrued for site assessments and cleanup as discussed
above. As part of the environmental settlement, the Company
agreed to construct an 1,100 space parking garage on the
Calhoun Park site and to transfer the facility to the City in
exchange for a 20-year municipal bond backed by revenues from
the parking garage and a mortgage on the parking garage.
Construction is expected to begin in 1998. The total amount
of the bond is not to exceed $16.9 million, the maximum
expected project cost.
The Company owns three other decommissioned manufactured gas
plant sites which contain residues of by-product chemicals.
The Company is investigating the sites to monitor the nature
and extent of the residual contamination.
Regulatory Matters
On January 9, 1996 the PSC issued an order granting the
Company an increase in retail electric rates of 7.34%, which was
designed to produce additional revenues, based on a test year, of
approximately $67.5 million annually. The increase has been
implemented in two phases. The first phase, an increase in
revenues of approximately $59.5 million annually or 6.47%,
commenced in January 1996. The second phase, an increase in
revenues of approximately $8.0 million annually, based on a test
year, or .87%, was implemented in January 1997. The PSC
authorized a return on common equity of 12.0%. The PSC also
approved establishment of a Storm Damage Reserve Account capped at
$50 million to be collected through rates over a ten-year period.
Additionally, the PSC approved accelerated recovery of a
significant portion of the Company's electric regulatory assets
(excluding deferred income tax assets) and the remaining transition
obligation for postretirement benefits other than pensions,
changing the amortization periods to allow recovery by the end of
the year 2000. The Company's request to shift, for ratemaking
purposes, approximately $257 million of depreciation reserves from
transmission and distribution assets to nuclear production assets
was also approved. The Consumer Advocate appealed certain issues
in the order to the South Carolina Circuit Court, which affirmed
the PSC's decisions, and subsequently to the South Carolina Supreme
Court which is expected to hear the case and issue a ruling prior
to the end of 1998. While the outcome of this proceeding is
uncertain, the Company does not believe that
28
<PAGE>
any significant adverse changes in the rate order is likely. The
PSC's order does not apply to wholesale electric revenues under the
FERC's jurisdiction, which constitute approximately two percent of
the Company's electric revenues. The FERC rejected the transfer of
depreciation reserves for rates subject to its jurisdiction.
The Company's regulated business operations were impacted by
the NEPA and FERC Orders No. 636 and 888. NEPA was designed to
create a more competitive wholesale power supply market by creating
"exempt wholesale generators" and by potentially requiring
utilities owning transmission facilities to provide transmission
access to wholesalers. See "Competition" for a discussion of FERC
Order 888. Order No. 636 was intended to deregulate the markets
for interstate sales of natural gas by requiring that pipelines
provide transportation services that are equal in quality for all
gas suppliers whether the customer purchases gas from the pipeline
or another supplier. In the opinion of the Company, it continues
to be able to meet successfully the challenges of these altered
business climates and does not anticipate there to be any material
adverse impact on the results of operations, cash flows, financial
position or business prospects.
Other
The year 2000 issue could have a material impact on the
operations of the Company if required modifications and conversions
are not made to ensure that all system software is date code
compliant. The Company has formed a steering committee to direct
the resolution of this major issue. The steering committee, which
reports to the senior officers of the Company and to the board of
directors, is chaired by the chief financial officer of the Company
and is comprised of officers representing all operational areas.
Reporting to the committee are the technical personnel responsible
for the evaluation and remediation of system software.
The Company has evaluated the impact of the year 2000 on its
information systems applications and operating software and is
implementing a plan of remediation expected to be completed during
the first quarter of 1999. The present estimated cost of the plan
of remediation is not material to results of operations, financial
position or cash flows.
The Company also has begun evaluating embedded processors
located in field operations areas for the purpose of identifying
those that will have to be modified or replaced. The initial
inventory has been completed and impact assessment is expected to
be completed by mid-1998. At that time the Company will prepare
and implement a plan designed to complete all substantive required
modifications and replacements in time to prevent problems with
operational systems related to date codes. An estimate of the cost
of the required changes is not available.
In particular, with regard to the evaluation and remediation
of the year 2000 issue at the Company's Summer Station, the Company
is closely cooperating with other utility companies, including
utilities in the southeast, that own nuclear power plants. The
utilities are sharing technical nuclear plant operating and
monitoring systems information to ensure the prompt and effective
resolution of the year 2000 issue.
The Company is communicating with all of its significant
suppliers to determine the extent to which the Company is
vulnerable to those suppliers' failure to remediate their own year
2000 issue. The extent to which significant customers have
resolved the year 2000 issue, and the resulting impact on the
demand for the Company's products, is not determinable. There can
be no guarantee that the systems of other companies on which the
Company's systems rely will be timely converted. A failure to
convert by another company, or a conversion that is incompatible
with the Company's systems, could have material adverse effect on
the results of operations, financial position or cash flows of the
Company.
29
<PAGE>
RESULTS OF OPERATIONS
Net Income
Net income and the percent increase (decrease) from the
previous year for the years 1997, 1996 and 1995 were as follows:
1997 1996 1995
(Millions of Dollars)
Net income $194.7 $190.5 $169.2
Percent increase (decrease) in net
income 2.19% 12.59% 11.27%
1997 Net income increased for the year primarily as a result
of increases in gas sales margins.
1996 Net income increased for the year primarily as a result
of increases in electric and gas sales margins which
more than offset increases in operating expenses.
The Company's financial statements include AFC. AFC is a
utility accounting practice whereby a portion of the cost of both
equity and borrowed funds used to finance construction (which is
shown on the balance sheet as construction work in progress) is
capitalized. An equity portion of AFC is included in nonoperating
income and a debt portion of AFC is included in interest charges
(credits) as noncash items, both of which have the effect of
increasing reported net income. AFC represented approximately 4.0%
of income before income taxes in 1997, 3.2% in 1996 and 7.9% in
1995.
Electric Operations
Electric sales margins for 1997, 1996 and 1995 were as
follows:
1997 1996 1995
(Millions of Dollars)
Electric revenues $1,103.1 $1,106.7 $1,006.6
Less: Fuel used in electric generation 181.0 187.1 177.6
Purchased power 109.2 106.8 98.2
Margin $ 813.0 $ 812.8 $ 730.8
, 1997 The electric sales margin increased slightly due to the
favorable impact of the rate increase placed into
effect in January 1997 and economic growth factors
which were offset by the effect of milder weather.
, 1996 The electric sales margin increased primarily over the
prior year primarily as a result of the rate increase
received by the Company in January 1996 and economic
growth factors.
Increases (decreases) from the prior year in megawatt-hour
(MWH) sales volume by classes were as follows:
Classification 1997 1996
Residential (292,518) 212,888
Commercial 100,324 144,536
Industrial 113,717 110,147
Sales for Resale (excluding interchange) (538,005) (39,853)
Other 15 (1,013)
Total territorial (616,467) 426,705
Negotiated Market Sales Tariff 564,081 699,425
Total (52,386) 1,126,130
30
<PAGE>
The electric sales volume for residential sales decreased for
1997 as a result of milder weather. The decrease in sales for
resale and the increase in sales under the Negotiated Market Sales
Tariff from 1996 to 1997 were the result of a municipality
terminating its wholesale power contract and transferring to a
negotiated market sales tariff.
Gas Operations
Gas sales margins for 1997, 1996 and 1995 were as follows:
1997 1996 1995
(Millions of Dollars)
Gas operating revenues $233.6 $234.8 $200.6
Less: Gas purchased for resale 151.9 157.1 125.0
Margin $ 81.7 $ 77.7 $ 75.6
, 1997 The gas sales margin increased over the prior year as a result of
higher margins and sales tointerruptible customers.
, 1996 The gas sales margin increased over the prior year as a result of
increased firm sales.
Increases (decreases) from the prior year in dekatherm (DT) sales volume
by classes, including transportation gas, were as follows:
Classification 1997 1996
Residential (2,188,215) 1,774,289
Commercial (123,385) 590,843
Industrial 1,820,166 441,571
Transportation gas (430,610) (495,256)
Total (922,044) 2,311,447
The gas sales volume decreased for 1997 as a result of milder
weather which was offset by increases in contract prices for
industrial interruptible customers.
Other Operating Expenses and Taxes
Increases (decreases) in other operating expenses, including
taxes, were as follows:
Classification 1997 1996
(Millions of Dollars)
Other operation and maintenance $ 3.0 $22.3
Depreciation and amortization 4.7 17.4
Income taxes (9.7) 10.8
Other taxes 8.1 3.2
Total $ 6.1 $53.7
, 1997 Other operation and maintenance expenses increased
somewhat from 1996 levels. A decrease in transit operating
costs resulting from the Company's
transfer of the ownership of the Charleston transit
system to the City of Charleston in October 1996 largely
offset increases in costs at electric generating plants
and other operating costs. The increase in depreciation
and amortization expenses for 1997 reflects the additions
to plant-in-service. The change in income tax expense
is primarily due to change in pre-tax operating income
and difference between estimated income taxes accrued and
actual income tax expense per the tax returns as filed.
The increase in other taxes results primarily from the
accrual of additional property taxes, beginning in
January 1997, related to the Cope plant and other
property additions which was partially offset by a
reduction in the 1997 property tax assessment. Recovery
of the Cope plant property taxes is provided for in a
retail electric rate increase that became effective
January 1997.
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<PAGE>
, 1996 Other operation and maintenance expenses increased
primarily as a result of higher production costs
attributable to the Cope plant which
became operational in January 1996. The increase in
depreciation and amortization expenses reflects the
addition of the Cope plant and other additions to plant-
in-service. The increase in income tax expense
corresponds to the increase in operating income. The
increase in other taxes reflects higher property taxes
resulting from property additions and higher millages and
assessments.
Interest Expense
Increases (decreases) in interest expense, excluding the debt
component of AFC, were as follows:
Classification 1997 1996
(Millions of Dollars)
Interest on long-term debt, net $(0.1) $(1.2)
Other interest expense 2.7 (2.0)
Total $ 2.6 $(3.2)
There was no material change in interest expense from 1996 to
1997. The decrease in interest expense from 1995 to 1996 was due
primarily to reductions in outstanding debt throughout most of the
year.
32<PAGE>
PAGE 33
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
All financial instruments held by the Company described below
are held for purposes other than trading.
Interest rate risk - The table below provides information
about the Company's financial instruments that are sensitive to
changes in interest rates. For debt obligations, the table
presents principal cash flows and related weighted average interest
rates by expected maturity dates.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1997
Expected Maturity Date
(Millions of Dollars)
There- Fair
Liabilities 1998 1999 2000 2001 2002 after Total Value
Long-Term Debt:
Fixed Rate ($) 47.7 27.8 201.5 21.3 51.3 1,052.0 1,371.6 1,384.7
Average Interest Rate 6.33 6.00 5.94 6.00 7.10 7.52 7.19
</TABLE>
While a decrease in market interest rates would increase the
fair value of debt, it is unlikely that events which would result
in a realized loss will occur.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
Page
Independent Auditors' Report....................................... 34
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 1997 and 1996... 35
Consolidated Statements of Income and Retained Earnings for
the years ended December 31, 1997, 1996 and 1995............. 37
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995............................. 38
Consolidated Statements of Capitalization as of
December 31, 1997 and 1996................................... 39
Notes to Consolidated Financial Statements..................... 41
Supplemental financial statement schedules are omitted because of the
absence of conditions under which they are required or because the required
information is included in the consolidated financial statements or in the notes
thereto.
33
<PAGE>
INDEPENDENT AUDITORS' REPORT
South Carolina Electric & Gas Company:
We have audited the accompanying Consolidated Balance Sheets and
Statements of Capitalization of South Carolina Electric & Gas
Company (Company) as of December 31, 1997 and 1996 and the related
Consolidated Statements of Income and Retained Earnings and of Cash
Flows for each of the three years in the period ended December 31,
1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on the financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company at December 31, 1997 and 1996 and the results of its
operations and its cash flows for each of the three years in the
period ended December 31, 1997 in conformity with generally
accepted accounting principles.
s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbia, South Carolina
February 9, 1998
34
<PAGE>
<TABLE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
December 31, 1997 1996
(Millions of Dollars)
ASSETS
Utility Plant (Notes 1, 3 and 4):
Electric $4,020 $3,871
Gas 353 338
Other 84 86
Total 4,457 4,295
Less accumulated depreciation and amortization 1,421 1,332
Total 3,036 2,963
Construction work in progress 221 193
Nuclear fuel, net of accumulated amortization 53 41
Utility Plant, Net 3,310 3,197
Nonutility Property and Investments, net of accumulated
depreciation (Note 8) 17 12
Current Assets:
Cash and temporary cash investments (Note 8) 6 5
Receivables - customer and other 165 172
Inventories (At average cost):
Fuel (Notes 1, 3 and 4) 23 33
Materials and supplies 48 45
Prepayments 10 9
Deferred income taxes 21 20
Total Current Assets 273 284
Deferred Debits:
Emission allowances 31 31
Environmental 32 41
Nuclear plant decommissioning fund (Note 1) 49 42
Pension asset, net (Note 1) 82 58
Other (Note 1) 260 294
Total Deferred Debits 454 466
Total $4,054 $3,959
35
<PAGE>
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED BALANCE SHEETS
<S> <C> <C> <C> <C>
December 31, 1997 1996
(Millions of Dollars)
CAPITALIZATION AND LIABILITIES
Stockholders' Investment:
Common equity (Note 5) $1,447 $1,413
Preferred stock (Not subject to purchase or sinking funds) 106 26
Total Stockholders' Investment 1,553 1,439
Preferred Stock, Net (Subject to purchase or sinking
funds)(Notes 6 and 8) 12 43
Company - Obligated Mandatorily Redeemable Preferred
Securities of the Company's Subsidiary Trust, SCE&G Trust I
holding solely $50 million, principal amount of 7.55%
of Junior Subordinated Debentures of the Company, due 2027 50 -
Long-Term Debt, Net (Notes 3, 4 and 8) 1,262 1,277
Total Capitalization 2,877 2,759
Current Liabilities:
Short-term borrowings (Notes 8 and 9) 13 90
Current portion of long-term debt (Note 3) 48 43
Accounts payable 53 67
Accounts payable - affiliated companies (Notes 1 and 3) 32 32
Customer deposits 16 15
Taxes accrued 45 67
Interest accrued 22 21
Dividends declared 58 36
Other 7 7
Total Current Liabilities 294 378
Deferred Credits:
Deferred income taxes (Notes 1 and 7) 539 522
Deferred investment tax credits (Notes 1 and 7) 89 75
Reserve for nuclear plant decommissioning (Note 1) 49 42
Postretirement benefits 61 37
Other (Note 1) 145 146
Total Deferred Credits 883 822
Commitments and Contingencies (Note 10) - -
Total $4,054 $3,959
See Notes to Consolidated Financial Statements.
36
<PAGE>
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
<S> <C> <C> <C>
For the Years Ended December 31, 1997 1996 1995
(Millions of Dollars)
Operating Revenues (Notes 1 and 2):
Electric $1,103 $1,107 $1,006
Gas 234 235 201
Transit 1 3 4
Total Operating Revenues 1,338 1,345 1,211
Operating Expenses:
Fuel used in electric generation 181 187 178
Purchased power (including affiliated
purchases)(Note 1) 109 107 98
Gas purchased from affiliate for resale (Note 1) 152 157 125
Other operation 222 222 211
Maintenance 67 64 53
Depreciation and amortization (Note 1) 140 135 118
Income taxes (Notes 1 and 7) 98 108 97
Other taxes 87 79 75
Total Operating Expenses 1,056 1,059 955
Operating Income 282 286 256
Other Income (Note 1):
Allowance for equity funds used during construction 6 4 9
Other income (loss), net of income taxes 3 - -
Total Other Income 9 4 9
Income Before Interest Charges 291 290 265
Interest Charges (Credits):
Interest on long-term debt, net 96 97 98
Other interest expense (Notes 1 and 3) 5 7 9
Allowance for borrowed funds used
during construction (Note 1) (6) (5) (11)
Total Interest Charges, Net 95 99 96
Income Before Preferred Dividend Requirements on
Mandatorily Redeemable Preferred Securities 196 191 169
Preferred Dividend Requirement of
Company - Obligated Mandatorily Redeemable
Preferred Securities. 1 - -
Net Income 195 191 169
Preferred Stock Cash Dividends (At stated rates) (9) (6) (6)
Earnings Available for Common Stock 186 185 163
Retained Earnings at Beginning of Year 415 366 324
Common Stock Cash Dividends Declared (Note 5) (163) (136) (121)
Retained Earnings at End of Year $ 438 $ 415 $ 366
See Notes to Consolidated Financial Statements.
37
<PAGE>
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<S> <C> <C> <C>
For the Years Ended December 31, 1997 1996 1995
(Millions of Dollars)
Cash Flows From Operating Activities:
Net income $ 195 $ 190 $ 169
Adjustments to reconcile net income to net cash
provided from operating activities:
Depreciation and amortization 140 135 118
Amortization of nuclear fuel 19 19 20
Deferred income taxes, net 16 32 (18)
Pension asset (24) (23) (15)
Postretirement benefits 24 16 8
Allowance for funds used during construction (12) (9) (21)
Over (under) collections, fuel adjustment clause - (8) 19
Changes in certain current assets and liabilities:
(Increase) decrease in receivables 6 (10) (16)
(Increase) decrease in inventories 8 1 (5)
Increase (decrease) in accounts payable (13) - 3
Increase (decrease) in taxes accrued (22) 3 17
Other, net 31 (19) (25)
Net Cash Provided From Operating Activities 368 327 254
Cash Flows From Investing Activities:
Utility property additions and
construction expenditures, net of AFC (232) (209) (273)
(Increase) decrease in nonutility property and investments (5) - -
Net Cash Used For Investing Activities (237) (209) (273)
Cash Flows From Financing Activities:
Proceeds:
Issuance of mortgage bonds and other long-term debt 1 - 103
Issuance of company - obligated mandatorily
redeemable trust preferred securities 49 - -
Equity contributions from parent 12 49 140
Issuance of preferred stock 99 - -
Repayments:
Notes payable - affiliated company - - (19)
Mortgage bonds and other long-term debt (15) (23) (78)
Preferred stock (53) (3) (3)
Repayment of Bank Loans (10) (3) -
Dividend Payments:
Common stock (141) (133) (117)
Preferred stock (9) (5) (6)
Short-term borrowings, net (77) 10 (20)
Fuel and emission allowance financings, net 14 (11) 26
Net Cash Provided From Financing Activities (130) (119) 26
Net Increase (Decrease) in Cash and Temporary Cash Investments 1 (1) 7
Cash and Temporary Cash Investments, January 1 5 6 -
Cash and Temporary Cash Investments, December 31 $ 6 $ 5 $ 7
Supplemental Cash Flows Information:
Cash paid for - Interest (includes capitalized interest
of $6, $5 and $11) $ 100 $ 103 $ 106
- Income taxes (48) 102 96
Noncash Financing Activities:
Charleston Franchise Agreement - 21 -
Charleston Environmental Agreement - 20 -
See Notes to Consolidated Financial Statements.
38
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<S> <C> <C>
December 31, 1997 1996
Common Equity (Note 5): (Millions of Dollars)
Common stock, 4.50 par value, authorized 50,000,000 shares; issued
and outstanding, 40,296,147 shares $ 181 $ 181
Premium on common stock 395 395
Other paid-in capital 438 427
Capital stock expense (5) (5)
Retained earnings 438 415
Total Common Equity 1,447 50% 1,413 51%
Cumulative Preferred Stock (Not subject to purchase or sinking funds):
$100 Par Value - Authorized 1,200,000 shares
$50 Par Value - Authorized 125,209 shares
Shares Outstanding Redemption Price
Eventual
Series 1997 1996 Current Through Minimum
$100 Par 6.52% 1,000,000 - 100.00 - 100.00 100 -
$100 Par 8.40% - 197,668 101.00 - 101.00 - 20
$50 Par 5.00% 125,209 125,209 52.50 - 52.50 6 6
Total Preferred Stock (Not subject to purchase or sinking funds) 106 4% 26 1%
Cumulative Preferred Stock (Subject to purchase or sinking funds)(Notes 6 and 8):
$100 Par Value - Authorized 1,550,000 shares
Shares Outstanding Redemption Price
Eventual
Series 1997 1996 Current Through Minimum
7.70% - 84,000 101.00 - 101.00 - 8
8.12% - 118,812 102.03 - 102.03 - 12
Total 202,812 202,812
$50 Par Value - Authorized 1,591,094 shares
Shares Outstanding Redemption Price
Eventual
Series 1997 1996 Current Through Minimum
4.50% 14,400 16,000 51.00 - 51.00 1 1
4.60% - 87 50.50 - 50.50 - -
4.60%(A) 21,894 24,052 51.00 - 51.00 1 1
4.60%(B) 70,000 71,400 50.50 - 50.50 4 4
5.125% 68,000 71,000 51.00 - 51.00 3 3
6.00% 76,800 80,000 50.50 - 50.50 4 4
8.72% - 64,000 51.00 12-31-98 50.00 - 3
9.40% - 176,751 51.175 - 51.175 - 9
Total 251,094 503,290
$25 Par Value - Authorized 2,000,000 shares; None outstanding in 1997 and 1996
Total Preferred Stock (Subject to purchase or sinking funds) 13 45
Less: Current portion, including sinking fund requirements 1 2
Total Preferred Stock, Net (Subject to purchase or sinking funds) 12 - 43 2%
Company - Obligated Mandatorily Redeemable Preferred
Securities of the Company's Subsidiary Trust, SCE&G Trust I,
holding solely $50 million principal amount of 7.55% of
Junior Subordinated Debentures of the Company, due 2027. 50 2% - -
39
<PAGE>
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<C> <C> <C> <C>
December 31, 1997 1996
(Millions of Dollars)
Long-Term Debt (Notes 3, 4 and 8):
First Mortgage Bonds:
Year of
Series Maturity
6% 2000 100 100
6 1/4% 2003 100 100
7.70% 2004 100 100
7 1/8% 2013 150 150
7 1/2% 2023 150 150
7 5/8% 2023 100 100
7 5/8% 2025 100 100
First and Refunding Mortgage Bonds:
Year of
Series Maturity
6% 1997 - 15
6 1/2% 1998 20 20
7 1/4% 2002 30 30
9% 2006 131 131
8 7/8% 2021 114 114
Pollution Control Facilities Revenue Bonds:
Fairfield County Series 1984, due 2014 (6.50%) 57 57
Orangeburg County Series 1994 due 2024 (5.70%) 30 30
Other 16 10
Commercial Paper 80 66
Charleston Franchise Agreement due 1997-2002 18 22
Charleston Environmental Agreement due 1997-1999 13 20
Other 4 1
Total Long-Term Debt 1,313 1,323
Less: Current maturities, including sinking fund requirements 48 43
Unamortized discount 3 3
Total Long-Term Debt, Net 1,262 44% 1,277 46%
Total Capitalization $2,877 100% $2,759 100%
See Notes to Consolidated Financial Statements.
</TABLE>
40
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
A. Organization and Principles of Consolidation
The Company, a public utility, is a South Carolina
corporation organized in 1924 and a wholly owned subsidiary of
SCANA Corporation (SCANA), a South Carolina holding company. The
Company is engaged predominately in the generation and sale of
electricity to wholesale and retail customers in South Carolina
and in the purchase, sale and transportation of natural gas to
retail customers in South Carolina.
The accompanying Consolidated Financial Statements include
the accounts of the Company, South Carolina Fuel Company, Inc.
(Fuel Company) and SCE&G Trust I. (See Note 1N.) Intercompany
balances and transactions between the Company, Fuel Company and
SCE&G Trust I have been eliminated in consolidation.
Affiliated Transactions
The Company has entered into agreements with certain
affiliates to purchase gas for resale to its distribution
customers and to purchase electric energy. The Company purchases
all of its natural gas requirements from Pipeline Corporation and
at December 31, 1997 and 1996 the Company had approximately $22.1
million and $22.3 million, respectively, payable to Pipeline
Corporation for such gas purchases. The Company purchases all of
the electric generation of Williams Station, which is owned by
GENCO, under a unit power sales agreement. At December 31, 1997
and 1996 the Company had approximately $9.1 million and $8.6
million, respectively, payable to GENCO for unit power purchases.
Such unit power purchases, which are included in "Purchased
power," amounted to approximately $99.8 million, $95.3 million
and $83.5 million in 1997, 1996 and 1995, respectively.
Total interest income, based on market interest rates,
associated with the Company's advances to affiliated companies
was approximately $20,000, $36,000 and $174,000 in 1997, 1996
and 1995, respectively.
In 1997 and 1996 there were no amounts relating to advances
from affiliated companies included in "Other interest expense";
however, for 1995 $114,000 was included. Intercompany interest
is calculated at market rates.
B. Basis of Accounting
The Company accounts for its regulated utility operations,
assets and liabilities in accordance with the provisions of
Statements of Financial Accounting Standards No. 71 (SFAS 71).
The accounting standard requires cost-based rate-regulated
utilities to recognize in their financial statements revenues and
expenses in different time periods than do enterprises that are
not rate-regulated. As a result the Company has recorded,
as of December 31, 1997, approximately $236 million and $62
million of regulatory assets and liabilities, respectively,
including amounts recorded for deferred income tax assets and
liabilities of approximately $118 million and $52 million,
respectively. The electric and gas regulatory assets of
approximately $71 million and $44 million, respectively
(excluding deferred income tax assets) are being recovered
through rates and, as discussed in Note 2A, the Public Service
Commission of South Carolina (PSC) has approved accelerated
recovery of approximately $45 million of the electric regulatory
assets. In the future, as a result of deregulation or other
changes in the regulatory environment, the Company may no longer
meet the criteria for continued application of SFAS 71 and would
be required to write off its regulatory assets and liabilities.
Such an event could have a material adverse effect on the
Company's results of operations in the period the write-off is
recorded, but it is not expected that cash flows or financial
position would be materially affected.
C. System of Accounts
The accounting records of the Company are maintained in
accordance with the Uniform System of Accounts prescribed by the
Federal Energy Regulatory Commission (FERC) and as adopted by the
PSC.
41
<PAGE>
D. Utility Plant
Utility plant is stated substantially at original cost. The
costs of additions, renewals and betterments to utility plant,
including direct labor, material and indirect charges for
engineering, supervision and an allowance for funds used during
construction, are added to utility plant accounts. The original
cost of utility property retired or otherwise disposed of is
removed from utility plant accounts and generally charged, along
with the cost of removal, less salvage, to accumulated
depreciation. The costs of repairs, replacements and renewals of
items of property determined to be less than a unit of property
are charged to maintenance expense.
The Company, operator of the V. C. Summer Nuclear Station
(Summer Station), and the South Carolina Public Service Authority
(PSA) are joint owners of Summer Station in the proportions of
two-thirds and one-third, respectively. The parties share the
operating costs and energy output of the plant in these
proportions. Each party, however, provides its own financing.
Plant-in-service related to the Company's portion of Summer
Station was approximately $978.2 million and $937.2 million as of
December 31, 1997 and 1996, respectively. Accumulated
depreciation associated with the Company's share of Summer
Station was approximately $323.6 million and $313.2 million as of
December 31, 1997 and 1996, respectively. The Company's share of
the direct expenses associated with operating Summer Station is
included in "Other operation" and "Maintenance" expenses.
E. Allowance for Funds Used During Construction
AFC, a noncash item, reflects the period cost of capital
devoted to plant under construction. This accounting practice
results in the inclusion of, as a component of construction cost,
the costs of debt and equity capital dedicated to construction
investment. AFC is included in rate base investment and
depreciated as a component of plant cost in establishing rates
for utility services. The Company has calculated AFC using
composite rates of 8.8%, 8.1% and 8.6% for 1997, 1996 and 1995,
respectively. These rates do not exceed the maximum allowable
rate as calculated under FERC Order No. 561. Interest on nuclear
fuel in process and sulfur dioxide emission allowances is
capitalized at the actual interest amount.
F. Revenue Recognition
Customers' meters are read and bills are rendered on a
monthly cycle basis. Base revenue is recorded during the
accounting period in which the meters are read.
Fuel costs for electric generation are collected through the
fuel cost component in retail electric rates. The fuel cost
component contained in electric rates is established by the PSC
during annual fuel cost hearings. Any difference between actual
fuel costs and that contained in the fuel cost component is
deferred and included when determining the fuel cost component
during the next annual fuel cost hearing. The Company had
undercollected through the electric fuel cost component
approximately $1.3 million and at December 31, 1997 and
overcollected approximately $ 1.9 million December 31, 1996
which are included in "Deferred Debits - Other" and "Deferred
Credits - Other," respectively.
42
<PAGE>
Customers subject to the gas cost adjustment clause are
billed based on a fixed cost of gas determined by the PSC during
annual gas cost recovery hearings. Any difference between actual
gas cost and that contained in the rates is deferred and included
when establishing gas costs during the next annual gas cost
recovery hearing. At December 31, 1997 and 1996 the Company had
undercollected through the gas cost recovery procedure
approximately $7.6 million and $10.9 million, respectively,
which are included in "Deferred Debits - Other."
The Company's gas rate schedules for residential, small
commercial and small industrial customers include a weather
normalization adjustment, which minimizes fluctuations in gas
revenues due to abnormal weather conditions.
G. Depreciation and Amortization
Provisions for depreciation are recorded using the straight-
line method for financial reporting purposes and are based on the
estimated service lives of the various classes of property. The
composite weighted average depreciation rates were 3.09%, 3.13%
and 3.02% for 1997, 1996 and 1995, respectively.
Nuclear fuel amortization, which is included in "Fuel used
in electric generation" and is recovered through the fuel cost
component of the Company's rates, is recorded using the units-of-
production method. Provisions for amortization of nuclear fuel
include amounts necessary to satisfy obligations to the
Department Of Energy (DOE) under a contract for disposal of spent
nuclear fuel.
The acquisition adjustment relating to the purchase of
certain gas properties in 1982 is being amortized over a 40-year
period using the straight-line method.
H. Nuclear Decommissioning
Decommissioning of Summer Station is presently scheduled to
commence when the operating license expires in the year 2022.
Based on a 1991 study, the expenditures (on a before-tax basis)
related to the Company's share of decommissioning activities are
estimated, in 2022 dollars assuming a 4.5% annual rate of
inflation, to be $545.3 million including partial reclamation
costs. The Company is providing for its share of estimated
decommissioning costs of Summer Station over the life of Summer
Station. The Company's method of funding decommissioning cost
is referred to as COMReP (Cost of Money Reduction Plan). Under
this plan, funds collected through rates ($3.2 million in 1997
and 1996) are used to pay premiums on insurance policies on the
lives of certain Company personnel. The Company is the
beneficiary of these policies. Through these insurance
contracts, the Company is able to take advantage of income tax
benefits and accrue earnings on the fund on a tax-deferred basis
at a rate higher than can be achieved using more traditional
funding approaches. Amounts for decommissioning collected
through electric rates, insurance proceeds, and interest on
proceeds less expenses are transferred by the Company to an
external trust fund in compliance with the financial assurance
requirements of the Nuclear Regulatory Commission. Management
intends for the fund, including earnings thereon, to provide for
all eventual decommissioning expenditures on an after-tax basis.
The trust's sources of decommissioning funds under the COMReP
program include investment components of life insurance policy
proceeds, return on investment and the cash transfers from the
Company described above. The Company records its liability for
decommissioning costs in deferred credits.
43
<PAGE>
Pursuant to the National Energy Policy Act passed by
Congress in 1992 and the requirements of the DOE, the Company has
recorded a liability for its estimated share of the DOE's
decontamination and decommissioning obligation. The liability,
approximately $4.0 million at December 31, 1997, has been
included in "Long-Term Debt, Net." The Company is recovering the
cost associated with this liability through the fuel cost
component of its rates; accordingly, this amount has been
deferred and is included in "Deferred Debits - Other."
I. Income Taxes
Deferred tax assets and liabilities are recorded for the tax
effects of temporary differences between the book basis and tax
basis of assets and liabilities at currently enacted tax rates.
Deferred tax assets and liabilities are adjusted for changes in
such rates through charges or credits to regulatory assets or
liabilities if they are expected to be recovered from, or passed
through to, customers; otherwise, they are charged or credited to
income tax expense.
J. Pension Expense
The Company participates in SCANA's noncontributory defined
benefit pension plan, which covers all permanent employees.
Benefits are based on years of accredited service and the
employee's average annual base earnings received during the last
three years of employment. SCANA's policy has been to fund the
plan to the extent permitted by the applicable Federal income tax
regulations as determined by an independent actuary.
Net periodic pension cost for the years ended December 31,
1997, 1996 and 1995 included the following components:
1997 1996 1995
(Millions of Dollars)
Service cost--benefits earned during the period $ 6.8 $ 6.5 $ 5.2
Interest cost on projected benefit obligation 23.5 22.0 19.5
Adjustments:
Return on plan assets (119.5) (78.6) (103.9)
Net amortization and deferral 72.8 40.1 74.8
Amounts contributed by the Company's
affiliates (0.6) (0.3) (0.2)
Net periodic pension (income) expense $(17.0) $(10.3) $ (4.6)
The determination of net periodic pension cost is based upon
the following assumptions:
1997 1996 1995
Annual discount rate 7.5% 7.5% 8.0%
Expected long-term rate of
return on plan assets 8.0% 8.0% 8.0%
Annual rate of salary increases 3.0% 3.0% 2.5%
44
<PAGE>
The following table sets forth the funded status of the plan
at December 31, 1997 and 1996:
1997 1996
(Millions of Dollars)
Actuarial present value of benefit obligations:
Vested benefit obligation $259.7 $243.9
Nonvested benefit obligation 25.4 23.7
Accumulated benefit obligation $285.1 $267.6
Plan assets at fair value
(invested primarily in equity and debt securities) $632.9 $523.5
Projected benefit obligation 344.4 306.9
Plan assets greater than
projected benefit obligation 288.5 216.6
Unrecognized net transition liability 7.4 8.2
Unrecognized prior service costs 13.4 8.2
Unrecognized net gain (227.1) (175.1)
Pension asset recognized in
Consolidated Balance Sheets $ 82.2 $ 57.9
The accumulated benefit obligation is based on the plan's
benefit formulas without considering expected future salary
increases. The following table sets forth the assumptions used
in determining the amounts shown above for the years 1997 and
1996.
1997 1996
Annual discount rate used to determine
benefit obligations 7.5% 7.5%
Assumed annual rate of future salary increases
for projected benefit obligation 4.0% 3.0%
In addition to pension benefits, the Company provides
certain health care and life insurance benefits to active and
retired employees. The costs of postretirement benefits other
than pensions are accrued during the years the employees render
the service necessary to be eligible for the applicable benefits.
The Company expensed approximately $8.1 million, $9.8 million
and $8.5 million, net of payments to current retirees, for the
years ended December 31, 1997, 1996 and 1995, respectively.
Additionally, to accelerate the amortization of the remaining
transition obligation for postretirement benefits other than
pensions, as authorized by the PSC, the Company expensed
approximately $15.6 million and $6.2 million for the years ended
December 31, 1997 and 1996, respectively. (See Note 2A.)
Net periodic postretirement benefit cost for the years ended
December 31, 1997, 1996 and 1995, included the following
components:
1997 1996 1995
(Millions of Dollars)
Service cost--benefits earned during the period $ 2.5 $ 2.6 $ 2.1
Interest cost on accumulated postretirement
benefit obligation 7.8 7.8 7.2
Adjustments:
Return on plan assets - - -
Amortization of unrecognized
transition obligation 18.9 9.5 3.3
Other net amortization and deferral 0.8 1.2 0.7
Amounts contributed by the Company's affiliates (1.1) (0.7) (0.6)
Net periodic postretirement benefit cost $28.9 $20.4 $12.7
45
<PAGE>
The determination of net periodic postretirement benefit
cost is based upon the following assumptions:
1997 1996 1995
Annual discount rate 7.5% 7.5% 8.0%
Health care cost trend rate 9.0% 9.5% 11.0%
Ultimate health care cost trend rate (to be
achieved in 2004) 5.5% 5.5% 6.0%
The following table sets forth the funded status of the plan at
December 31, 1997 and 1996:
1997 1996
(Millions of Dollars)
Accumulated postretirement benefit obligations for:
Retirees $ 76.7 $ 74.2
Other fully eligible participants 5.9 6.6
Other active participants 26.2 29.3
Accumulated postretirement benefit obligation 108.8 110.1
Plan assets at fair value - -
Accumulated postretirement benefit obligation 108.8 110.1
Plan assets less than accumulated postretirement
benefit obligation (108.8) (110.1)
Unrecognized net transition liability 29.8 48.7
Unrecognized prior service costs 5.8 6.2
Unrecognized net loss 12.2 17.8
Postretirement benefit liability recognized
in Consolidated Balance Sheets $ (61.0) $ (37.4)
The accumulated postretirement benefit obligation is based
upon the plan's benefit provisions and the following assumptions:
1997 1996
Assumed health care cost trend rate used to
measure expected costs 9.0% 9.5%
Ultimate health care cost trend rate
(to be achieved in 2004) 5.5% 5.5%
Annual discount rate 7.5% 7.5%
Annual rate of salary increases 4.0% 3.0%
The effect of a one percentage-point increase in the assumed
health care cost trend rate for each future year on the aggregate
of the service and interest cost components of net periodic
postretirement benefit cost for the year ended December 31,
1997 and the accumulated postretirement benefit obligation as of
December 31, 1997 would be to increase such amounts by $0.2
million and $3.2 million, respectively.
K. Debt Premium, Discount and Expense, Unamortized Loss on
Reacquired Debt
For regulatory purposes, long-term debt premium, discount
and expense are being amortized as components of "Interest on
long-term debt, net" over the terms of the respective debt
issues. Gains or losses on reacquired debt that is refinanced
are deferred and amortized over the term of the replacement debt.
46
<PAGE>
L. Environmental
The Company has an environmental assessment program to
identify and assess current and former operating sites that could
require environmental cleanup. As site assessments are initiated
an estimate is made of the amount of expenditures, if any,
necessary to investigate and clean up each site. These estimates
are refined as additional information becomes available;
therefore, actual expenditures could differ significantly from
the original estimates. Amounts estimated, accrued and actually
expended to date for site assessments and cleanup relate
primarily to regulated operations; such amounts are deferred and
are being amortized and recovered through rates over a five-year
period for electric operations and an eight-year period for gas
operations. The Company has also recovered portions of its
environmental liabilities through settlements with various
insurance carriers. Deferred amounts, net of amounts recovered
through rates and insurance settlements, totaled $32.4 million
and $41.4 million at December 31, 1997 and 1996, respectively.
The deferral includes the estimated costs to be associated with
the matters discussed in Note 10C.
M. Fuel Inventories
Nuclear fuel and fossil fuel inventories and sulfur dioxide
emission allowances are purchased and financed by Fuel Company
under a contract which requires the Company to reimburse Fuel
Company for all costs and expenses relating to the ownership and
financing of fuel inventories and sulfur dioxide emission
allowances. Accordingly, such fuel inventories and emission
allowances and fuel-related assets and liabilities are included
in the Company's consolidated financial statements. (See Note 4.)
N. Temporary Cash Investments
The Company considers temporary cash investments having
original maturities of three months or less to be cash
equivalents. Temporary cash investments are generally in the
form of commercial paper, certificates of deposit and repurchase
agreements.
O. Reclassifications
Certain amounts from prior periods have been reclassified to
conform with the 1997 presentation.
P. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
47
<PAGE>
2. RATE MATTERS:
A. On January 9, 1996 the PSC issued an order granting the
Company an increase in retail electric rates of 7.34%, which was
designed to produce additional revenues, based on a test year,
of approximately $67.5 million annually. The increase has been
implemented in two phases. The first phase, an increase in
revenues of approximately $59.5 million annually or 6.47%,
commenced in January 1996. The second phase, an increase in
revenues of approximately $8.0 million annually, or .87%, was
implemented in January 1997. The PSC authorized a return on
common equity of 12.0%. The PSC also approved establishment of a
Storm Damage Reserve Account capped at $50 million to be
collected through rates over a ten-year period. Additionally,
the PSC approved accelerated recovery of a significant portion of
the Company's electric regulatory assets (excluding deferred
income tax assets) and the remaining transition obligation for
postretirement benefits other than pensions, changing the
amortization periods to allow recovery by the end of the year
2000. The Company's request to shift, for ratemaking purposes,
approximately $257 million of depreciation reserves from
transmission and distribution assets to nuclear production assets
was also approved. The Consumer Advocate appealed certain issues
in the order to the South Carolina Circuit Court, which affirmed
the PSC's decisions, and subsequently to the South Carolina
Supreme Court which is expected to hear the case and issue a
ruling prior to the end of 1998. While the outcome of this
proceeding is uncertain, the Company does not believe that any
significant adverse changes in the rate order is likely. The
PSC's order does not apply to wholesale electric revenues under
the FERC's jurisdiction, which constitute approximately two
percent of the Company's electric revenues. The FERC rejected
the transfer of depreciation reserves for rates subject to its
jurisdiction.
B. In 1994 the PSC issued an order approving the Company's
request to recover through a billing surcharge to its gas
customers the costs of environmental cleanup at the sites of
former manufactured gas plants. The billing surcharge is subject
to annual review and provides for the recovery of substantially
all actual and projected site assessment and cleanup costs and
environmental claims settlements for the Company's gas operations
that had previously been deferred. In October 1997, as a result
of the annual review, the PSC approved the Company's request to
increase the billing surcharge from $.006 per therm to $.011 per
therm which should enable the Company to recover the remaining
balance of $29.6 million by December 2002.
C. In September 1992 the PSC issued an order granting the
Company a $.25 increase in transit fares from $.50 to $.75 in
both Columbia and Charleston, South Carolina; however, the PSC
also required $.40 fares for low income customers and denied the
Company's request to reduce the number of routes and frequency of
service. The new rates were placed into effect in October 1992.
The Company appealed the PSC's order to the Circuit Court, which
in May 1995 ordered the case back to the PSC for reconsideration
of several issues including the low income rider program, routing
changes, and the $.75 fare. The Supreme Court declined to review
an appeal of the Circuit Court decision and dismissed the case.
The PSC and other intervenors filed another Petition for
Reconsideration, which the Supreme Court denied. The PSC and
other intervenors filed another appeal to the Circuit Court which
the Circuit Court denied in an order dated May 9, 1996. In this
order, the Circuit Court upheld its previous orders and remanded
them to the PSC. During August 1996, the PSC heard oral
arguments on the orders on remand from the Circuit Court. On
September 30, 1996, the PSC issued an order affirming its
previous orders and denied the Company's request for
reconsideration. The Company has appealed these two PSC orders
to the Circuit Court where they are awaiting action.
48
<PAGE>
3. LONG-TERM DEBT:
The annual amounts of long-term debt maturities, including
amounts due under nuclear and fossil fuel agreements (see Note
4), and sinking fund requirements for the years 1998 through 2002
are summarized as follows:
Year Amount Year Amount
(Millions of Dollars)
1998 $ 47.7 2001 $ 21.3
1999 27.8 2002 51.3
2000 201.5
Approximately $17.2 million of the portion of long-term debt
payable in 1998 may be satisfied by either deposit and
cancellation of bonds issued upon the basis of property additions
or bond retirement credits, or by deposit of cash with the
Trustee.
On August 7, 1996 the City of Charleston executed 30-year
electric and gas franchise agreements with the Company. In
consideration for the electric franchise agreement, the Company
is paying the City $25 million over seven years (1996 through
2002) and has donated to the City the existing transit assets in
Charleston. The $25 million is included in electric plant-in-
service. In settlement of environmental claims the City may have
had against the Company involving the Calhoun Park area, where
the Company and its predecessor companies operated a manufactured
gas plant until the 1960's, the Company is paying the City $26
million over a four-year period (1996 through 1999). Such amount
is deferred (see Note 1L). The unpaid balances of these amounts
are included in "Long-Term Debt."
The Company has three-year revolving lines of credit
totaling $75 million, in addition to other lines of credit, that
provide liquidity for issuance of commercial paper. The three-
year lines of credit provide back-up liquidity when commercial
paper outstanding is in excess of $175 million. The long-term
nature of the lines of credit allow commercial paper in excess of
$175 million to be classified as long-term debt. The Company had
outstanding commercial paper of $13.3 million and $90 million at
December 31, 1997 and 1996, at weighted average interest rates of
5.90% and 5.53%, respectively.
Substantially all utility plant and fuel inventories are
pledged as collateral in connection with long-term debt.
4. FUEL FINANCINGS:
Nuclear and fossil fuel inventories and sulfur dioxide
emission allowances are financed through the issuance by Fuel
Company of short-term commercial paper. These short-term
borrowings are supported by an irrevocable revolving credit
agreement which expires December 19, 2000. Accordingly, the
amounts outstanding have been included in long-term debt. The
credit agreement provides for a maximum amount of $125 million
that may be outstanding at any time.
Commercial paper outstanding totaled $80.3 million and $66.1
million at December 31, 1997 and 1996 at weighted average
interest rates of 5.87% and 5.62%, respectively.
49
<PAGE>
5. COMMON EQUITY:
The changes in "Stockholders' Investment" (Including
Preferred Stock Not Subject to Purchase or Sinking Funds) during
1997, 1996 and 1995 are summarized as follows:
Common Preferred Millions
Shares Shares of Dollars
Balance December 31, 1994 40,296,147 322,877 $1,159.5
Changes in Retained Earnings:
Net Income 169.2
Cash Dividends Declared:
Preferred Stock (at stated rates) (5.7)
Common Stock (121.4)
Equity Contributions from Parent 139.5
Balance December 31, 1995 40,296,147 322,877 1,341.1
Changes in Retained Earnings:
Net Income 190.5
Cash Dividends Declared:
Preferred Stock (at stated rates) (5.4)
Common Stock (135.8)
Equity Contributions from Parent
including transfer of assets 49.1
Balance December 31, 1996 40,296,147 322,877 1,439.5
Changes in Retained Earnings:
Net Income 194.6
Cash Dividends Declared:
Preferred Stock (at stated rates) (9.3)
Common Stock (162.6)
Equity Contributions from Parent 12.1
Issuance of Preferred Stock 1,000,000 100.0
Redemption of Preferred Stock (197,668) (19.8)
Changes in Capital Stock Expense 0.1
Changes in Loss on Resale of
Reacquired Stock (1.6)
Balance December 31, 1997 40,296,147 1,125,209 $1,553.0
The Restated Articles of Incorporation of the Company and
the Indenture underlying its First and Refunding Mortgage Bonds
contain provisions that under certain circumstances could limit
the payment of cash dividends on common stock. In addition, with
respect to hydroelectric projects, the Federal Power Act requires
the appropriation of a portion of the earnings therefrom. At
December 31, 1997 approximately $21.5 million of retained
earnings were restricted by this requirement as to payment of
cash dividends on common stock.
6. PREFERRED STOCK:
The call premium of the respective series of preferred stock
in no case exceeds the amount of the annual dividend.
Retirements under sinking fund requirements are at par values.
The aggregate annual amount of purchase fund or sinking fund
requirements for preferred stock for the years 1998 through 2002
is $0.6 million.
50
<PAGE>
The changes in "Total Preferred Stock (Subject to Purchase
or Sinking Funds)" during 1997, 1996 and 1995 are summarized as
follows:
Number Millions
of Shares of Dollars
Balance December 31, 1994 822,094 $ 51.9
Shares Redeemed:
$100 par value (6,809) (0.7)
$50 par value (51,666) (2.5)
Balance December 31, 1995 763,619 48.7
Shares Redeemed:
$100 par value (7,198) (0.7)
$50 par value (50,319) (2.6)
Balance December 31, 1996 706,102 45.4
Shares Redeemed:
$100 par value (202,812) (20.3)
$50 par value (252,196) (12.6)
Balance December 31, 1997 251,094 $ 12.5
On October 28, 1997 SCE&G Trust I (the "Trust"), a wholly-
owned subsidiary of the Company, issued $50 million (2,000,000
shares) of 7.55% Trust Preferred Securities, Series A (the
"Preferred Securities"). The Company owns all of the Common
Securities of the Trust (the "Common Securities"). The Preferred
Securities and the Common Securities (the "Trust Securities")
represent undivided beneficial ownership interests in the assets
of the Trust. The Trust exists for the sole purpose of issuing
the Trust Securities and using the proceeds thereof to purchase
from the Company its 7.55% Junior Subordinated Debentures due
September 30, 2027. The sole asset of the Trust is $50 million
of Junior Subordinated Debentures of the Company. Accordingly,
no financial statements of the Trust are presented. The
Company's obligations under the Guarantee Agreement entered into
in connection with the Preferred Securities, when taken together
with the Company's obligation to make interest and other payments
on the Junior Subordinated Debentures issued to the Trust and the
Company's obligations under its Indenture pursuant to which the
Junior Subordinated Debentures are issued, provides a full and
unconditional guarantee by the Company of the Trust's obligations
under the Preferred Securities. Proceeds were used to redeem
preferred stock of the Company.
The preferred securities of the Trust are redeemable only in
conjunction with the redemption of the related 7.55% Junior
Subordinated Debentures. The Junior Subordinated Debentures will
mature on September 30, 2027 and may be redeemed, in whole or in
part, at any time on or after September 30, 2002 or upon the
occurrence of a Tax Event. A Tax Event occurs if an opinion is
received from counsel experienced in such matters that there is
more than an insubstantial risk that: (1) the Trust is or will
be subject to Federal income tax, with respect to income received
or accrued on the Junior Subordinated Debentures, (2) interest
payable by the Company on the Junior Subordinated Debentures will
not be deductible, in whole or in part, by the Company for
Federal income tax purposes, and (3) the Trust will be subject to
more than a de minimis amount of other taxes, duties, or other
governmental charges.
Upon the redemption of the Junior Subordinated Debentures,
payment will simultaneously be applied to redeem Preferred
Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Junior Subordinated Debentures.
The Preferred Securities are redeemable at $25 per preferred
security plus accrued distributions.
51
<PAGE>
7. INCOME TAXES:
Total income tax expense for 1997, 1996 and 1995 is as follows:
1997 1996 1995
(Millions of Dollars)
Current taxes:
Federal $ 88.0 $ 88.2 $ 94.1
State (6.9) 13.1 14.3
Total current taxes 81.1 101.3 108.4
Deferred taxes, net:
Federal 3.7 8.3 (7.3)
State 1.5 1.8 (0.6)
Total deferred taxes 5.2 10.1 (7.9)
Investment tax credits:
Deferred - State 19.0 - -
Amortization of amounts
deferred-State (1.5) - -
Amortization of amounts
deferred-Federal (3.2) (3.2) (3.2)
Total Investment Tax credit 14.3 (3.2) (3.2)
Total income tax expense $100.6 $108.2 $ 97.3
The difference in total income tax expense and the amount
calculated from the application of the statutory Federal income
tax rate (35% for 1997, 1996 and 1995) to pre-tax income is
reconciled as follows:
1997 1996 1995
(Millions of Dollars)
Net income $194.7 $190.5 $169.2
Total income tax expense:
Charged to operating expenses 98.1 107.7 97.0
Charged (credited) to other items 2.5 0.5 0.3
Total pre-tax income $295.3 $298.7 $266.5
Income taxes on above at statutory
Federal income tax rate $103.4 $104.5 $ 93.3
Increases (decreases) attributable to:
State income taxes (less Federal
income tax effect) 7.9 9.7 8.9
Deferred income tax reversal at
higher than statutory rates (3.5) (3.4) (3.3)
Amortization of Federal
investment tax credits (3.2) (3.2) (3.2)
Allowance for equity funds
used during construction (2.1) (1.4) (3.3)
Other differences, net (1.9) 2.0 4.9
Total income tax expense $100.6 $108.2 $ 97.3
52
<PAGE>
The tax effects of significant temporary differences
comprising the Company's net deferred tax liability of $518.5
million at December 31, 1997 and $501.7 million at December 31,
1996 are as follows:
1997 1996
(Millions of Dollars)
Deferred tax assets:
Unamortized investment tax credits $ 55.4 $ 46.5
Cycle billing 20.5 19.8
Nuclear operations expenses 3.1 4.7
Deferred compensation 6.7 6.6
Other postretirement benefits 14.6 10.8
Other 8.1 6.6
Total deferred tax assets 108.4 95.0
Deferred tax liabilities:
Property plant and equipment 561.2 540.9
Pension expense 27.5 21.8
Reacquired debt 7.5 8.3
Research and experimentation 19.5 12.5
Deferred fuel 3.6 3.7
Other 7.6 9.5
Total deferred tax liabilities 626.9 596.7
Net deferred tax liability $518.5 $501.7
The Internal Revenue Service has examined and closed
consolidated Federal income tax returns of SCANA Corporation
through 1989, and has examined and proposed adjustments to
SCANA's Federal returns for 1990 through 1995. The Company does
not anticipate that any adjustments which might result from these
examinations will have a significant impact on the results of
operations, cash flows or financial position of the Company.
8. FINANCIAL INSTRUMENTS:
The carrying amounts and estimated fair values of the
Company's financial instruments at December 31, 1997 and 1996 are
as follows:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
1997 1996
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
(Millions of Dollars)
Assets:
Cash and temporary cash
investments $ 6.0 $ 6.0 $ 5.4 $ 5.4
Investments 5.3 5.3 0.6 0.6
Liabilities:
Short-term borrowings 13.3 13.3 90.0 90.0
Long-term debt 1,309.5 1,384.7 1,319.5 1,352.9
Preferred stock (subject
to purchase or sinking funds) 12.5 11.3 45.4 44.3
</TABLE>
53
<PAGE>
The information presented herein is based on pertinent
information available to the Company as of December 31, 1997 and
1996. Although the Company is not aware of any factors that
would significantly affect the estimated fair value amounts, such
financial instruments have not been comprehensively revalued
since December 31, 1997, and the current estimated fair value may
differ significantly from the estimated fair value at that date.
The following methods and assumptions were used to estimate
the fair value of the above classes of financial instruments:
Cash and temporary cash investments, including commercial
paper, repurchase agreements, treasury bills and notes, are
valued at their carrying amount.
Fair values of investments and long-term debt are based on
quoted market prices of the instruments or similar instruments,
or for those instruments for which there are no quoted market
prices available, fair values are based on net present value
calculations. Investments which are not considered to be
financial instruments have been excluded from the carrying amount
and estimated fair value. Settlement of long term debt may not
be possible or may not be a prudent management decision.
Short-term borrowings are valued at their carrying amount.
The fair value of preferred stock (subject to purchase or
sinking funds) is estimated on the basis of market prices.
Potential taxes and other expenses that would be incurred in
an actual sale or settlement have not been taken into
consideration.
9. SHORT-TERM BORROWINGS:
The Company pays fees to banks as compensation for its
committed lines of credit. Commercial paper borrowings are for
270 days or less. Details of lines of credit (including
uncommitted lines of credit) and short-term borrowings, excluding
amounts classified as long-term (Notes 3 and 4), at December 31,
1997 and 1996 and for the years then ended are as follows:
1997 1996
(Millions of dollars)
Authorized lines of credit at year-end $315 $145.0
Unused lines of credit at year-end $315 $145.0
Short-term borrowings outstanding at
year-end:
Commercial paper $13.3 $ 90.0
Weighted average interest rate 5.90% 5.53%
54
<PAGE>
10. COMMITMENTS AND CONTINGENCIES:
A. Construction
SCANA and Westvaco Corporation have formed a limited
liability company, Cogen South LLC, to build and operate a $170
million cogeneration facility at Westvaco's Kraft Division Paper
Mill in North Charleston, South Carolina. SCANA and Westvaco
each own a 50% interest in LLC. The facility will provide
industrial process steam for the Westvaco paper mill and shaft
horsepower to enable the Company to generate up to 99 megawatts
of electricity. In addition to the cogeneration LLC, Westvaco
has entered into a 20-year contract with the Company for all its
electricity requirements at the North Charleston mill at the
Company's standard industrial rate. Construction of the plant
began in September 1996 and it is expected to be operational in
the fall of 1998.
B. Nuclear Insurance
The Price-Anderson Indemnification Act, which deals with
public liability for a nuclear incident, currently establishes
the liability limit for third-party claims associated with any
nuclear incident at $8.9 billion. Each reactor licensee is
currently liable for up to $79.3 million per reactor owned for
each nuclear incident occurring at any reactor in the United
States, provided that not more than $10 million of the liability
per reactor would be assessed per year. The Company's maximum
assessment, based on its two-thirds ownership of Summer Station,
would be approximately $52.9 million per incident, but not more
than $6.7 million per year.
The Company currently maintains policies (for itself and on
behalf of the PSA) with Nuclear Electric Insurance Limited (NEIL)
and American Nuclear Insurers (ANI) providing combined property
and decontamination insurance coverage of $2.0 billion for any
losses at Summer Station. The Company pays annual premiums and,
in addition, could be assessed a retroactive premium not to
exceed five times its annual premium in the event of property
damage loss to any nuclear generating facilities covered under
the NEIL program. Based on the current annual premium, this
retroactive premium would not exceed $5.1 million.
To the extent that insurable claims for property damage,
decontamination, repair and replacement and other costs and
expenses arising from a nuclear incident at Summer Station exceed
the policy limits of insurance, or to the extent such insurance
becomes unavailable in the future, and to the extent that the
Company's rates would not recover the cost of any purchased
replacement power, the Company will retain the risk of loss as a
self-insurer. The Company has no reason to anticipate a serious
nuclear incident at Summer Station. If such an incident were to
occur, it could have a material adverse impact on the Company's
results of operations, cash flows and financial position.
C. Environmental
In September 1992, the EPA notified the Company, the City of
Charleston and the Charleston Housing Authority of their
potential liability for the investigation and cleanup of the
Calhoun Park area site in Charleston, South Carolina. This site
encompasses approximately 30 acres and includes properties which
were locations for industrial operations, including a wood
preserving (creosote) plant, one of the Company's decommissioned
manufactured gas plants, properties owned by the National Park
Service and the City of Charleston and private properties. The
site has not been placed on the National Priorities List, but may
be added before cleanup is initiated. The PRPs have
agreed with the EPA to participate in an
55
<PAGE>
innovative approach to site investigation and cleanup called
"Superfund Accelerated Cleanup Model," allowing the pre-cleanup
site investigation process to be compressed significantly. The
PRPs have negotiated an administrative order by consent for the
conduct of a Remedial Investigation/Feasibility Study and a
corresponding Scope of Work. Field work began in November 1993
and the EPA conditionally approved a Remedial Investigation
Report in March 1997. Although the Company is continuing to
investigate cost-effective clean-up methodologies, further work
is pending EPA approval of the final draft of the Remedial
Investigation Report. See Note 1L.
In October 1996 the City of Charleston and the Company
settled all environmental claims the City may have had against
the Company involving the Calhoun Park area for a payment of $26
million over four years (1996 through 1999) by the Company to the
City. The Company is recovering the amount of the settlement,
which does not encompass site assessment and cleanup costs,
through rates in the same manner as other amounts accrued for
site assessments and cleanup as discussed above. See Note 1L.
As part of the environmental settlement, the Company has agreed
to construct an 1,100 space parking garage on the Calhoun Park
site and to transfer the facility to the City in exchange for a
20-year municipal bond backed by revenues from the parking garage
and a mortgage on the parking garage. Construction is expected
to begin in 1998. The total amount of the bond is not to exceed
$16.9 million, the maximum expected project cost.
The Company owns three other decommissioned manufactured gas
plant sites which contain residues of by-product chemicals. The
Company is investigating the sites to monitor the nature and
extent of the residual contamination.
D. Franchise Agreements
See Note 3 for a discussion of an electric franchise
agreement between the Company and the City of Charleston.
E. Claims and Litigation
The Company is engaged in various claims and litigation
incidental to its business operations which management
anticipates will be resolved without material loss to the
Company. No estimate of the range of loss from these matters can
currently be determined.
56
<PAGE>
11. SEGMENT OF BUSINESS INFORMATION:
Segment information at December 31, 1997, 1996 and 1995 and
for the years then ended is as follows:
1997
Electric Gas Transit Total
(Millions of Dollars)
Operating revenues $1,103 $234 $ 1 $1,338
Operating expenses,
excluding depreciation
and amortization 710 201 5 916
Depreciation and
amortization 129 11 - 140
Total operating expenses 839 212 5 1,056
Operating income (loss) $ 264 $ 22 $(4) 282
Add - Other income, net 9
Less - Interest charges, net 95
Less - Preferred Dividend Requirements,
including the Company -
Obligated Mandatorily
Redeemable Preferred
Securities 10
Net income $ 186
Capital expenditures:
Identifiable $218 $ 15 $ - $ 233
Utilized for overall Company operations 32
Total $ 265
Identifiable assets at
December 31, 1997:
Utility plant, net $2,951 $221 $ 2 $3,174
Inventories 69 2 - 71
Total $3,020 $223 $ - 3,245
Other assets 809
Total assets $4,054
57
<PAGE>
<PAGE>
1996
Electric Gas Transit Total
(Millions of Dollars)
Operating revenues $1,107 $ 235 $ 3 $1,345
Operating expenses,
excluding depreciation
and amortization 711 204 9 924
Depreciation and
amortization 123 12 - 135
Total operating expenses 834 216 9 1,059
Operating income (loss) $ 273 $ 19 $(6) 286
Add - Other income, net 4
Less - Interest charges, net 9
Less - Preferred stock dividends 6
Net income $ 185
Capital expenditures:
Identifiable $ 197 $ 19 $ - $ 216
Utilized for overall Company operations 24
Total 240
Identifiable assets at
December 31, 1996:
Utility plant, net $2,870 $ 217 $ 2 $3,089
Inventories 76 2 - 78
Total $2,946 $ 219 $ 2 3,167
Other assets 792
Total assets $3,959
1995
Electric Gas Transit Total
(Thousands of Dollars)
Operating revenues $1,006 $ 201 $ 4 $1,211
Operating expenses,
excluding depreciation
and amortization 657 170 10 837
Depreciation and
amortization 104 13 1 118
Total operating expenses 761 183 11 955
Operating income (loss) $ 245 $ 18 $(7) 256
Add - Other income, net 9
Less - Interest charges, net 96
Less - Preferred stock dividends 6
Net income $ 163
Capital expenditures:
Identifiable $ 245 $ 20 $ - $ 265
Utilized for overall Company operations 28
Total $ 293
Identifiable assets at
December 31, 1995:
Utility plant, net $2,851 $ 210 $ 2 $3,063
Inventories 77 2 - 79
Total $2,928 $ 212 $ 2 3,142
Other assets 661
Total assets $3,803
58
<PAGE>
12. QUARTERLY FINANCIAL DATA (UNAUDITED):
1997
(Millions of Dollars)
First Second Third Fourth
Quarter Quarter Quarter Quarter Annual
Total operating
revenues $337 $289 $377 $335 $1,338
Operating income 74 52 93 63 282
Net Income 50 30 73 42 195
1996
(Millions of Dollars)
First Second Third Fourth
Quarter Quarter Quarter Quarter Annual
Total operating
revenues $354 $311 $365 $315 $1,345
Operating income 79 59 90 57 285
Net Income 56 35 66 33 190
59
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The directors listed below were elected April 24, 1997 to hold
office until the next annual meeting of the Company's stockholders on
April 23, 1998.
Name and Year First
Became Director Age Principal Occupation; Directorships
Bill L. Amick 54 For more than five years, Chairman of the
(1990) Board and Chief Executive Officer of Amick
Farms, Inc., Batesburg, SC (vertically
integrated broiler operation).
For more than five years, Chairman and Chief
Executive Officer of Amick Processing,
Inc. and Amick Broilers, Inc.
Director, SCANA Corporation, Columbia,
SC.
James A. Bennett 37 Since December 1994, Senior Vice President
(1997) and Director of Community Banking of First
Citizens Bank, Columbia, SC.
From March 1991 to December 1994,
President of Victory Savings Bank,
Columbia, SC.
Director, SCANA Corporation
William B. Bookhart, Jr. 56 For more than five years, a partner in
(1979) Bookhart Farms, Elloree, SC (general
farming).
Director, SCANA Corporation, Columbia, SC.
William T. Cassels, Jr. 68 For more than five years, Chairman of the
(1990) Board, Southeastern Freight Lines, Inc.,
Columbia, SC (trucking business).
Director, SCANA Corporation, Columbia, SC;
Member, Advisory Board of Liberty Mutual
Insurance Group.
Hugh M. Chapman 65 Since June 30, 1997, retired from
(1988) NationsBank South, Atlanta, GA
(a division of NationsBank Corporation,
bank holding company).
For more than five years prior to June
30, 1997 Chairman of NationsBank South,
Atlanta, GA
Director, SCANA Corporation, Columbia, SC;
West Point-Stevens.
60
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Name and Year First
Became Director Age Principal Occupation; Directorships
Elaine T. Freeman 62 For more than five years, Executive Director
(1992) of ETV Endowment of South Carolina, Inc.
(non-profit organization), Spartanburg,
SC.
Director, National Bank of South Carolina,
Columbia, SC; SCANA Corporation,
Columbia, SC.
Lawrence M. Gressette, Jr. 66 Since February 28, 1997, Chairman Emeritus
(1987) of SCANA Corporation.
For more than five years prior to
February 28, 1997, Chairman of the
Board and Chief Executive Officer
of SCANA Corporation and Chairman
of the Board and Chief Executive
Officer of all SCANA subsidiaries,
including the Company.
For more than five years prior to
December 13, 1995, President of
SCANA Corporation.
Director, Wachovia Corporation, Winston-
Salem, NC; Powertel, Inc., West Point, GA;
SCANA Corporation, Columbia, SC.
W. Hayne Hipp 58 For more than five years, President and
(1983) Chief Executive Officer, The Liberty
Corporation, Greenville, SC (insurance
and broadcasting holding company).
Director, The Liberty Corporation,
Greenville, SC; Wachovia Corporation,
Winston-Salem, NC; SCANA Corporation,
Columbia, SC.
F. Creighton McMaster 68 For more than five years, President and
(1974) Manager, Winnsboro Petroleum Company,
Winnsboro, SC (wholesale distributor
of petroleum products).
Director, First Union South Carolina,
Greenville, SC; SCANA Corporation,
Columbia, SC.
Lynne M. Miller 46 For more than five years, President of
(1997) Environmental Strategies Corporation,
Reston, VA (environmental consulting
and engineering firm).
Director, SCANA Corporation, Columbia, SC.
John B. Rhodes 67 For more than five years, Chairman and
(1967) Chief Executive Officer, Rhodes Oil
Company, Inc., Walterboro, SC
(distributor of petroleum products).
Director, SCANA Corporation, Columbia, SC.
61
<PAGE>
Name and Year First
Became Director Age Principal Occupation; Directorships
Maceo K. Sloan 48 For more than five years, Chairman,
(1997) President and CEO of Sloan Financial
Group, Inc. and Chairman, President
and CEO of NCM Capital
Management Group, Inc.
Director, SCANA Corporation, Columbia, SC.
William B. Timmerman 51 Since March 1, 1997, Chairman and Chief
(1991) Executive Officer of SCANA Corporation.
From August 21, 1996 to March 1, 1997, Chief
Operating Officer of SCANA Corporation.
Since December 13, 1995, President of SCANA
Corporation.
From May 1, 1994 to December 13, 1995,
Executive Vice President of SCANA
Corporation.
Since August 25, 1993, Assistant Secretary
of SCANA Corporation and all of its
subsidiaries, including the Company.
From August 28, 1991 to February 20, 1996,
Chief Financial Officer of the Company.
For more than five years prior to May 1,
1994, Senior Vice President of SCANA
Corporation.
For more than five years prior to February
20, 1996, Controller of SCANA Corporation.
Director, SCANA Corporation, Columbia, SC;
Powertel, Inc., West Point, GA,
ITC^DeltaCom Board Member, West Point, GA.
and Wachovia Bank, N. A., Columbia, S. C.
62
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<TABLE>
<S><C> <C> <S>
EXECUTIVE OFFICERS OF THE COMPANY
The Company's officers are elected at the annual organizational meeting of the
Board of Directors and hold office until the next such organizational meeting,
unless the Board of Directors shall otherwise determine, or unless a resignation is
submitted.
Positions Held During
Name Age Past Five Years Dates
W.B. Timmerman 51 Chairman of the Board and
Chief Executive Officer 1997-present
Chief Operating Officer
of SCANA 1996-1997
President of SCANA 1995-present
President of SCANA
Communications, Inc.,
an affiliate 1996-1997
Executive Vice President, 1994-1995
SCANA
Assistant Secretary 1993-1996
Chief Financial Officer, *-1996
SCANA
Controller, SCANA *-1996
Senior Vice President, *-1994
SCANA
J. L. Skolds 47 SCANA Executive -
Electric Group 1997-present
President and Chief
Operating Officer 1996-present
Senior Vice President -
Generation 1994-1996
Vice President - Nuclear
Operations *-1994
G.J. Bullwinkel, Jr. 49 President of SCANA
Communications, Inc. 1997-present
Senior Vice President-
Retail Electric 1995-present
Senior Vice President-
Fossil & Hydro Production *-1994
W.A. Darby 52 Senior Vice President -
Gas, SCANA Gas Group 1996-present
Vice President-Gas Operations *-1996
President and Treasurer of
ServiceCare 1996-present
General Manager of ServiceCare,
Inc., an affiliate 1994-1996
K. B. Marsh 42 Vice President - Finance,
Chief Financial Officer
and Controller - SCANA 1996-present
Vice President - Finance,
Treasurer and Secretary,
SCANA *-1996
Vice President 1996-present
*Indicates position held at least since March 1, 1993
</TABLE>
63
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
All of the Company's common stock is held by its parent, SCANA
Corporation. The required forms indicate that no equity securities of
the Company are owned by its directors and executive officers. Based
solely on a review of the copies of such forms and amendments
furnished to the Company and written representations from the
executive officers and directors, the Company believes that during
1997 all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than 10% beneficial owners were
complied with.
ITEM 11. EXECUTIVE COMPENSATION
The following table contains information with respect to
compensation paid or accrued during the years 1997, 1996 and 1995 to
the Chief Executive Officer of the Company, to each of the other four
most highly compensated executive officers of the Company during 1997,
who were serving as executive officers of the Company at the end of
1997 and to L. M. Gressette, Jr., the Company's former Chief Executive
Officer, who retired in February 1997.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY COMPENSATION TABLE
Name and Principal Year Annual Compensation Long-Term
Position Compensation
(1) (2) (3) (4)
Salary Bonus Other Payouts
($) ($) Annual LTIP (5)
Compensation Payouts All Other
($) ($) Compensation
($)
W. B. Timmerman
Chairman, President 1997 400,634 318,815 12,220 88,338 24,038
and Chief Executive 1996 335,266 196,832 6,399 109,819 20,116
Officer and Director 1995 254,214 101,588 987 150,353 15,127
- - SCANA Corporation
J. L. Skolds
SCANA Executive - 1997 277,132 161,677 5,777 70,283 16,628
Electric Group, 1996 215,708 114,099 2,453 55,513 12,943
President and Chief 1995 176,156 74,151 54 76,128 10,569
Operating Officer -
South Carolina Electric
and Gas Company
G. J. Bullwinkel 1997 219,273 92,796 7,776 70,283 13,156
Senior Vice President 1996 205,980 90,370 3,710 66,374 12,359
- - Retail Electric 1995 189,097 70,904 487 90,402 11,346
K. B. Marsh 1997 199,845 104,276 2,947 44,491 11,991
Vice President, Chief 1996 166,616 75,667 1,189 46,462 9,997
Financial Officer and 1995 133,768 63,757 51,390 8,026
Controller - SCANA Corp.
W. A. Darby 1997 169,606 73,800 7,025 44,491 10,176
Senior Vice President, 1996 157,659 54,090 3,566 46,462 9,460
Gas Operations and 1995 147,729 44,195 16 63,757 8,864
President of ServiceCare
L. M. Gressette, Jr. 1997 132,584 79,704 167,003 399,950
Chairman Emeritus and 1996 483,952 274,320 5,998 285,408 29,037
Chairman of the Executive 1995 449,246 197,500 65,779 390,156 26,955
Committee - SCANA Corp.
- -----------------
(1) Reflects actual salary paid in 1997 from SCANA and its subsidiaries.
(2) Payments under the Performance Incentive Plan described hereafter.
(3) For 1997, other annual compensation consists of life insurance premiums on policies
owned by named executive officers and payments to cover taxes on benefits of $9,521
and $2,699 for Mr. Timmerman; $4,694 and $1,083 for Mr. Skolds; $7,151 and $625 for
Mr. Bullwinkel; $2,683 and $264 for Mr. Marsh; and $6,886 and $139 for Mr. Darby.
(4) Payments under the Performance Share Plan described hereafter.
(5) All other compensation for all named executive officers except Mr. Gressette, consists
solely of SCANA contributions to defined contribution plans based on the funding
formula applicable to all Company employees. For Mr. Gressette, all other compensation
for 1997 consists of payments under SCANA and its subsidiaries' retirement plans of
$378,681 and Company contributions to defined contribution plans of $21,269.
64
<PAGE>
The following table shows the target awards made in 1997, for potential payment in
2000, under the Performance Share Plan for officers of SCANA and its subsidiaries', and
estimated future payouts under that plan at threshold, target and maximum levels for the
named executive officers named in the Summary Compensation Table on the preceding page.
LONG-TERM INCENTIVE PLANS - AWARDS
IN LAST FISCAL YEAR
TARGET AWARDS FOR 1997 TO BE PAID IN 2000
<S> <C> <C> <C> <C> <C> <C>
Number of Performance Estimated Future Payouts Under
Shares, or Other Non-Stock Price-Based Plans
Units or Period Until
Other Maturation
Name Rights (#) or Payout
Threshold Target Maximum
($ or #) ($ or #) ($ or #)
W. B. Timmerman 11,030 1997-1999 4,412 11,030 16,545
J. L. Skolds 5,560 1997-1999 2,224 5,560 8,340
G. J. Bullwinkel 3,010 1997-1999 1,204 3,010 4,515
K. B. Marsh 3,010 1997-1999 1,204 3,010 4,515
W. A. Darby 2,040 1997-1999 820 2,040 3,060
L. M. Gressette, Jr. 282 1997-1999 112 282 423
</TABLE>
Payouts will occur when SCANA's Total Shareholder Return
("TSR") is in the top two-thirds of a peer group of utilities,
and will vary based on SCANA's ranking against the peer group.
Executives earn threshold payouts at the 33rd percentile of
three-year performance. Target payouts will be made at the 50th
percentile of three-year performance. Maximum payouts will be
made when the TSR is at or above the 75th percentile of the peer
group. Payments will be made on a sliding scale for performance
between threshold and target and target and maximum. No payouts
will be earned if performance is at less than the 33rd
percentile. Awards are denominated in shares of SCANA Common
Stock and may be paid in either stock or cash or a combination of
both.
DEFINED BENEFIT PLANS
In addition to the qualified Retirement Plan for all
employees, SCANA has Supplemental Executive Retirement Plans
("SERPs") for certain eligible employees, including officers of
its subsidiaries. A SERP is an unfunded plan which provides for
benefit payments in addition to those payable under a qualified
retirement plan. It maintains uniform application of the
Retirement Plan benefit formula and would provide, among other
benefits, payment of Retirement Plan formula pension benefits, if
any, which exceed those payable under the Internal Revenue Code
("IRC") maximum benefit limitations.
65
<PAGE>
The following table illustrates the estimated maximum annual
benefits payable upon retirement at normal retirement date under
the Retirement Plan and the SERPs.
Pension Plan Table
Final Service Years
Average Pay 15 20 25 30 35
$150,000 $ 41,965 $ 55,953 $ 69,942 $ 83,930 $ 86,668
200,000 56,965 75,953 94,942 113,930 117,918
250,000 71,965 95,953 119,942 143,930 149,168
300,000 86,965 115,953 144,942 173,930 180,418
350,000 101,965 135,953 169,942 203,930 211,668
400,000 116,965 155,953 194,942 233,930 242,918
450,000 131,965 175,953 219,942 263,930 274,168
500,000 146,965 195,953 244,942 293,930 305,418
550,000 161,965 215,953 269,942 323,930 336,668
600,000 176,965 235,953 294,942 353,930 367,918
650,000 191,965 255,953 319,942 383,930 399,168
700,000 206,965 275,953 344,942 413,930 430,418
750,000 221,965 295,953 369,942 443,930 461,668
800,000 236,965 315,953 394,942 473,930 492,918
For all the executive officers named in the Summary
Compensation Table for 1997, the compensation shown in the column
labeled "Salary" of the Summary Compensation Table is covered by
the Retirement Plan and/or a SERP. As of December 31, 1997,
Messrs. Timmerman, Skolds, Bullwinkel, Marsh and Darby had credited
service under the Retirement Plan (or its equivalent under the
SERP) of 19, 11, 26, 13 and 29 years, respectively. Mr. Gressette
currently is receiving a monthly benefit of $28,380 under the
Retirement Plan and a SERP. Benefits are computed based on a
straight-life annuity with an unreduced 60% surviving spouse
benefit. The amounts in this table assume continuation of the
primary Social Security benefits in effect at January 1, 1998, and
are not subject to any deduction for Social Security or other
offset amounts.
The Company also has a Key Employee Retention Plan (the "Key
Employee Retention Plan") covering officers and certain other
executive employees that provides supplemental retirement and/or
death benefits for participants. Under the plan, each participant
may elect to receive either (i) a monthly retirement benefit for
180 months upon retirement at or after age 65, equal to 25% of the
average monthly salary of the participant over his final 36 months
of employment prior to age 65, or (ii) an optional death benefit
payable monthly to a participant's designated beneficiary for 180
months, in an amount equal to 35% of the average monthly salary of
the participant over his final 36 months of employment prior to age
65. In the event of the participant's death prior to age 65, the
Company will pay to the participant's designated beneficiary for
180 months, a monthly benefit equal to 50% of such participant's
base monthly salary in effect at death.
All of the executive officers named in the Summary Compensation
Table are participating in the plan. Mr. Gressette is receiving an
annual benefit of $113,854 under the Key Employee Retention Plan.
The estimated annual retirement benefits payable at age 65, based
on projected eligible compensation (assuming increases of 4% per
year) to the other persons named in the Summary Compensation Table
are as follows: Mr. Timmerman-$170,199; Mr. Skolds-$135,858; Mr.
Bullwinkel-$96,589 ; Mr. Marsh-$119,695 and Mr. Darby-$67,006.
66
<PAGE>
TERMINATION, SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
Since its approval by the Board on December 18, 1996, SCANA
Corporation has maintained an Executive Benefit Plan Trust (the
"Trust"). The purpose of the Trust and the related plans is to
help retain and attract quality leadership in key company positions
in the current transitional environment of the electric utility
industry. The Trust is used to receive contributions which may be
used to pay the deferred compensation benefits of certain
directors, executives and other key employees of SCANA and its
subsidiaries' in the event of a Change in Control (as defined in
the Trust). All the executive officers named in the Summary
Compensation Table participate in certain of the plans listed below
(the "Plans") which are covered by the Trust.
(1) SCANA Corporation Voluntary Deferral Plan
(2) SCANA Corporation Supplementary Voluntary Deferral Plan
(3) SCANA Corporation Key Employee Retention Plan
(4) SCANA Corporation Supplemental Executive Retirement Plan
(5) SCANA Corporation Performance Share Plan
(6) SCANA Corporation Annual Incentive Plan
(7) SCANA Corporation Key Executive Severance Benefits Plan
(8) SCANA Corporation Supplementary Key Executive Severance
Benefits Plan
The Trust and the Plans provide flexibility to the Company in
responding to a Potential Change in Control (as defined in the
Trust) depending upon whether the Change in Control would be viewed
as being "hostile" or "friendly". This flexibility includes the
ability to deposit and withdraw Company contributions up to the
point of a Change in Control, and to affect the number of plan
participants who may be eligible for benefit distributions upon, or
following, a Change in Control. The Plans listed above at items
(7) and (8) cover all the named executive officers (except Mr.
Gressette).
The Key Executive Severance Benefits Plan is operative as a
"single trigger" plan, meaning that upon the occurrence of a
"hostile" Change in Control, benefits provided under plans (1)
through (6) above would be distributed in a lump sum. Under the
terms of the Trust, in the event of a Change in Control that would
trigger operation of the Key Executive Severance Benefits Plan, Mr.
Gressette would receive immediate payout of all benefits under any
of the Plans in which he is then participating.
In contrast, the Supplementary Key Executive Severance Benefits
Plan (the "Supplementary Plan") is operative for a period of
twenty-four months following a Change in Control which prior to its
occurrence is viewed as being "friendly". In this circumstance,
the Key Executive Severance Benefits Plan is inoperative. The
Supplementary Plan is a "double trigger" plan that would pay
benefits in lieu of those otherwise provided under plans (1)
through (6) in either of two circumstances: (a) the participant's
involuntary termination of employment without "Just Cause", or (b)
the participant's voluntary termination of employment for "Good
Reason" (as these terms are defined in the Supplementary Plan).
Benefit distributions relative to a Change in Control, as to
which either the Key Executive Severance Benefits Plan or the
Supplementary Plan is operative, will be grossed up to include
estimated federal, state and local income taxes and any applicable
excise taxes owed by Plan participants on those benefits, and paid
in a lump sum. The benefit distributions would also be calculated
so as to include, in addition to other benefits:
67
<PAGE>
(a) Three times the sum of: (1) the officer's annual base
salary in effect as of the Change in Control and (2) the larger of
(i) the officer's full targeted annual incentive opportunity in
effect as of the Change in Control under the Annual Incentive Plan,
or (ii) the officer's average of actual annual incentive bonuses
received during the prior three years under the Annual Incentive
Plan; and
(b) an amount equal to the projected cost for coverage for three
full years following the Change in Control as though the officer
had continued to be a Company employee with respect to medical
coverage, long-term disability coverage and either Life Plus (a
special life insurance program combining whole life and term
coverages) or group term life coverage in accordance with the
officer's actual election, in each case so as to provide
substantially the same level of coverage and benefits as the
officer enjoyed as of the date of the Change in Control.
Benefit distributions pertaining to the Voluntary Deferral Plan
would be calculated as of the date of the Change in Control
inclusive of interest provided under the plan through such date,
and benefits pertaining to the Supplementary Voluntary Deferral
Plan would be calculated to include any implied dividends accruable
under the plan through the date of the Change in Control.
Benefit distributions pertaining to the Key Employee Retention
Plan would be calculated inclusive of projected increases to each
participant's base salary using a fixed, market competitive rate as
though the participant had reached the earlier of age 65 or
completed 35 years of service.
Benefit distributions pertaining to the Supplemental Executive
Retirement Plan would be calculated as an actuarial equivalent
through the date of the Change in Control with three additional
years of compensation at the participant's rate then in effect as
though the participant had attained age 65 and completed 35 years
of benefit service as of the date of the Change in Control and
without any early retirement or other actuarial reductions, which
benefit would then be reduced by the actuarial equivalent of the
participant's qualified plan benefit amount under the Retirement
Plan.
Benefit distributions pertaining to the Performance Share Plan
would be equal to 100% of the targeted award as granted for all
performance periods which are not yet completed as of the date of
the Change in Control. Benefit distributions pertaining to the
Annual Incentive Plan would be equal to 100% of the target award.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1997, no officer, employee or former officer of SCANA
or any of its subsidiaries served as a member of the Long-Term
Compensation Committee or the Performance Committee, except Mr.
Gressette who served as an ex-officio, non-voting member of the
Performance Committee until his retirement in February 1997 and as
a member of the Long-Term Compensation Committee following his
retirement, and Mr. Timmerman who has been an ex-officio, non-
voting member of the Performance Committee since March 1, 1997.
Although Mr. Gressette and Mr. Timmerman served as members of the
Performance Committee during 1997, neither participated in any of
its decisions concerning executive officer compensation. As a
member of the Long-Term Compensation Committee following his
retirement, Mr. Gressette participated in the decisions regarding
target awards made in 1997 under the Performance Share Plan.
68
<PAGE>
Since January 1, 1997, SCANA and its subsidiaries including
the Company have engaged in business transactions with entities
with which Mr. Amick (a member of the Performance Committee and the
Long-Term Compensation Committee), Mr. Chapman (Chairman of both
the Performance Committee and the Long-Term Compensation Committee)
and Mr. McMaster (a member of the Long-Term Compensation Committee)
are related.
Mr. Amick is the owner of Team Amick Motor Sports, a business
that owns and operates a NASCAR sanctioned racing car. This car
participates in the Busch Grand National Racing Series. SCANA has
entered into a shared sponsorship agreement with Team Amick Motor
Sports pursuant to which SCANA will receive promotional
considerations associated with NASCAR racing for an annual fee of
$500,000.
Mr. Chapman was Chairman of NationsBank South, a division of
NationsBank Corporation until his retirement on June 30, 1997.
Since January 1, 1997, SCANA has engaged in various transactions in
which affiliates of NationsBank Corporation acted as lender or
provider of lines of credit or credit support to SCANA and its
subsidiaries. The amount paid during 1997, by SCANA and its
subsidiaries to NationsBank Corporation affiliates on account of
such transactions was $361,870. In addition, during 1997, a
NationsBank Corporation affiliate and a SCANA subsidiary have
engaged in options and futures transactions and forward contracts
relating to forecasted natural gas production. The amount paid
during 1997, by a SCANA subsidiary to NationsBank Corporation
affiliates on account of such transactions was $7,602,582. It is
anticipated that similar transactions will continue in the future.
Mr. McMaster is the President and Manager of Winnsboro
Petroleum Company. Purchases from Winnsboro Petroleum Company
totaling $61,819 for petroleum products were made during 1997, by
the Company and its subsidiaries. It is anticipated that similar
transactions will continue.
Compensation of Directors
Fees. During 1997, directors who were not employees of the
Company were paid $17,600 annually for services rendered as
directors of SCANA and its subsidiaries, including the Company,
$1,800 for each Board meeting attended and $850 for attendance at a
committee meeting which is not held on the same day as a regular
meeting of the Board. The fee for attendance at a telephone
conference meeting is $200. The fee for attendance at a conference
is $850. In addition, directors are paid, as part of their
compensation, travel, lodging and incidental expenses related to
attendance at meetings and conferences. The Board of Directors
approved a plan effective January 1, 1997, whereby non-employee
directors receive on a quarterly basis, 41% of their retainer in
shares of SCANA common stock. The purpose of the plan is to
promote the achievement of long-term objectives of SCANA by linking
the personal interests of the non-employee directors to those of
SCANA's shareholders by paying a portion of director compensation
in stock. The Company believes this linkage will further promote
the achievement of its long-term objectives.
Directors who are employees of SCANA or its subsidiaries
receive no compensation for serving as directors or attending
meetings.
In addition to regular director fees which he began to receive
following his retirement, Mr. Gressette, as a Company retiree,
received the retirement benefits described in the Summary
Compensation Table on page 64.
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Deferral Plan. SCANA has a plan (the "Voluntary Deferral
Plan") pursuant to which directors may defer all or a portion of
their fees paid to them in cash for services rendered and meeting
attendance. Interest is earned on the deferred amounts at a rate
set by the Management Development and Corporate Committee (the
Performance Committee). Since January 1, 1997, the rate has been
set at the announced prime rate of Wachovia Bank, N. A. Mr.
Cassels and Mr. Rhodes were the only directors participating in the
plan during 1997. Mr. Cassels became a participant in January
1994, and Mr. Rhodes in July 1987. Interest credited to their
deferral accounts during 1997, was $8,609 and $27,228,
respectively.
Endowment Plan. Upon election to a second term, each director
becomes eligible to participate in the Directors' Endowment Plan,
which provides for the Company to make a tax deductible, charitable
contribution totaling $500,000 to institutions of higher education
designated by the SCANA director. A portion is contributed upon
retirement of the director and the remainder upon the director's
death. The plan is funded in part through insurance on the lives
of the directors. Designated in-state institutions of higher
education must be approved by the Chief Executive Officer. Any
out-of-state designation must be approved by the Performance
Committee. The designated institutions are reviewed on an annual
basis by the Chief Executive Officer to assure compliance with the
intent of the program. The plan is intended to reinforce the
commitment to quality higher education and is intended to enhance
the ability to attract and retain qualified board members.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The table set forth below indicates the shares of SCANA's
common stock beneficially owned as of March 10, 1998 by each
director, each of the persons named in the Summary Compensation
Table on page 64 (the "Named Executive Officer"), the directors and
current executive officers of the Company as a group.
SECURITY OWNERSHIP OF MANAGEMENT
Name of Beneficial Amount and Nature Name of Beneficial Amount and Nature
Owner of Ownership 1 Owner of Ownership 1
B. L. Amick 3,355 W. Hayne Hipp 3,145
J. A. Bennett 669 K. M. Marsh 9,760
W. B. Bookhart, Jr. 17,973 F. C. McMaster 5,975
G. J. Bullwinkel 20,167 L. M. Miller 1,281
W. T. Cassels, Jr. 2,355 J. B. Rhodes 9,052
H. M. Chapman 6,345 J. L. Skolds 9,473
W. A. Darby 23,336 M. K. Sloan 581
E. T. Freeman 4,675 W. B. Timmerman 28,567
L. M. Gressette, Jr. 59,352
All directors and executive officers as a group (17 persons) TOTAL 206,061.
TOTAL PERCENT OF CLASS 0.2%
- ----------
1 Includes shares owned by close relatives, the beneficial
ownership of which is disclaimed by the director, nominee or Named
Executive Officers, as follows:
Mr. Amick - 480; Mr. Bookhart - 5,029; Mr. Gressette -
1,060; and Mr. McMaster - 2,000; and by all directors, nominees and
current executive officers - 8,569 in total.
Includes shares purchased through December 31, 1997, but not
thereafter, by the Trustee under the Company's Stock Purchase-
Savings Plan (the Savings Plan).
The information set forth above as to the security ownership
of common stock has been furnished to the Company by such persons.
70
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For information regarding certain relationships and related
transactions, see Item 11, "Compensation Committee Interlocks and
Insider Participation."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
Financial Statements and Schedules
See Index to Consolidated Financial Statements and
Supplementary Data on page 33.
Exhibits Filed
Exhibits required to be filed with this Annual Report on Form
10-K are listed in the Exhibit Index following the signature page.
Certain of such exhibits which have heretofore been filed with the
Securities and Exchange Commission and which are designated by
reference to their exhibit number in prior filings are hereby
incorporated herein by reference and made a part hereof.
As permitted under Item 601(b)(4)(iii), instruments defining
the rights of holders of long-term debt of less than 10 percent of
the total consolidated assets of the Company and its subsidiaries,
have been omitted and the Company agrees to furnish a copy of such
instruments to the Commission upon request.
Reports on Form 8-K
None
71
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
(REGISTRANT) SOUTH CAROLINA ELECTRIC & GAS COMPANY
BY (SIGNATURE) s/J. L. Skolds
(NAME AND TITLE) J. L. Skolds, President and Chief
Operating Officer
DATE February 17, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
(i) Principal executive officer:
BY (SIGNATURE) s/W. B. Timmerman
(NAME AND TITLE) W. B. Timmerman Chairman of the Board,
Chief Executive Officer and Director
DATE February 17, 1998
(ii) Principal financial officer:
BY (SIGNATURE) s/K. B. Marsh
(NAME AND TITLE) K. B. Marsh, Chief Financial Officer
DATE February 17, 1998
(iii) Principal accounting officer:
BY (SIGNATURE) s/J. E. Addison
(NAME AND TITLE) J. E. Addison, Vice President and Controller
DATE February 17, 1998
BY (SIGNATURE) s/B. L. Amick
(NAME AND TITLE) B. L. Amick, Director
DATE February 17, 1998
BY (SIGNATURE) s/J. A. Bennett
(NAME AND TITLE) J. A. Bennett, Director
DATE February 17, 1998
72
<PAGE>
BY (SIGNATURE) s/W. B. Bookhart, Jr.
(NAME AND TITLE) W. B. Bookhart, Jr., Director
DATE February 17, 1998
BY (SIGNATURE) s/W. T. Cassels, Jr.
(NAME AND TITLE) W. T. Cassels, Jr., Director
DATE February 17, 1998
BY (SIGNATURE) s/H. M. Chapman
(NAME AND TITLE) H. M. Chapman, Director
DATE February 17, 1998
BY (SIGNATURE) s/E. T. Freeman
(NAME AND TITLE) E. T. Freeman, Director
DATE February 17, 1998
BY (SIGNATURE) s/L. M. Gressette, Jr.
(NAME AND TITLE) L. M. Gressette, Jr., Director
DATE February 17, 1998
BY (SIGNATURE) s/W. Hayne Hipp
(NAME AND TITLE) W. Hayne Hipp, Director
DATE February 17, 1998
BY (SIGNATURE) s/F. C. McMaster
(NAME AND TITLE) F. C. McMaster, Director
DATE February 17, 1998
BY (SIGNATURE) s/L. M. Miller
(NAME AND TITLE) L. M. Miller, Director
DATE February 17, 1998
BY (SIGNATURE) s/J. B. Rhodes
(NAME AND TITLE) J. B. Rhodes, Director
DATE February 17, 1998
BY (SIGNATURE) s/M. K. Sloan
(NAME AND TITLE) M. K. Sloan, Director
DATE February 17, 1998
73
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY Sequentially
EXHIBIT INDEX Numbered
Number Pages
2. Plan of Acquisition, Reorganization, Arrangement,
Liquidation or Succession
Not Applicable
3. Articles of Incorporation and By-Laws
A. Restated Articles of Incorporation of the
Company as adopted on December 15, 1993
(Exhibit 3-A to Form 10-Q for the quarter
ended June 30, 1994, File No. 1-3375).................... #
B. Articles of Amendment, dated June 7, 1994,
filed June 9, 1994 (Exhibit 3-B to Form 10-Q
for the quarter ended June 30, 1994, File No. 1-3375).... #
C. Articles of Amendment, dated November 9, 1994
(Exhibit 3-C to Form 10-K for the year ended
December 31, 1994, File No. 1-3375)...................... #
D. Articles of Amendment, dated December 9, 1994
(Exhibit 3-D to Form 10-K for the year ended
December 31, 1994, File No. 1-3375)...................... #
E. Articles of Correction, dated January 17, 1995
(Exhibit 3-E to Form 10-K for the year ended
December 31, 1994, File No. 1-3375)...................... #
F. Articles of Amendment, dated January 13, 1995
and filed January 17, 1995 (Exhibit 3-F to
Form 10-K for the year ended December 31, 1994,
File No. 1-3375)......................................... #
G. Articles of Amendment dated March 31, 1995
(Exhibit 3-G to Form 10-Q for the quarter
ended March 31, 1995, File No. 1-3375)................... #
H. Articles of Correction - Amendment to Statement
filed March 31, 1995, dated December 13, 1995
(Exhibit 3-H to Form 10-K for the year ended
December 31. 1995, File No. 1-3375)...................... #
I. Articles of Amendment dated December 13, 1995
(Exhibit 3-I to Form 10-K for the year ended
December 31, 1995, File No. 1-3375)...................... #
J. Copy of By-Laws of the Company as revised and
amended on December 17, 1997 (Filed herewith)............ 77
K. Articles of Amendment dated February 18, 1997
(Exhibit 3-L to Registration Statement No. 333-24919).... #
L. Articles of Amendment dated February 21, 1997
(Exhibit 3-L to Form 10-Q for the quarter ended
March 31, 1997).......................................... #
M. Articles of Amendment dated April 22, 1997
(Exhibit 3-M to Form 10-Q for the quarter
ended June 30, 1997)..................................... #
4. Instruments Defining the Rights of Security
Holders, Including Indentures
A. Indenture dated as of January 1, 1945, from the
South Carolina Power Company (the "Power Company")
to Central Hanover Bank and Trust Company, as
Trustee, as supplemented by three Supplemental
Indentures dated respectively as of May 1, 1946,
May 1, 1947 and July 1, 1949 (Exhibit 2-B to
Registration No. 2-26459)................................ #
B. Fourth Supplemental Indenture dated as of April 1,
1950, to Indenture referred to in Exhibit 4A,
pursuant to which the Company assumed said
Indenture (Exhibit 2-C to Registration No. 2-26459)...... #
# Incorporated herein by reference as indicated.
74
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
Exhibit Index (Continued)
Sequentially
Numbered
Number Pages
4. (continued)
C. Fifth through Fifty-second Supplemental Indentures
to Indenture referred to in Exhibit 4A dated as
of the dates indicated below and filed as
exhibits to the Registration Statements and
1934 Act reports whose file numbers are set
forth below..................................................... #
December 1, 1950 Exhibit 2-D to Registration No. 2-26459
July 1, 1951 Exhibit 2-E to Registration No. 2-26459
June 1, 1953 Exhibit 2-F to Registration No. 2-26459
June 1, 1955 Exhibit 2-G to Registration No. 2-26459
November 1, 1957 Exhibit 2-H to Registration No. 2-26459
September 1, 1958 Exhibit 2-I to Registration No. 2-26459
September 1, 1960 Exhibit 2-J to Registration No. 2-26459
June 1, 1961 Exhibit 2-K to Registration No. 2-26459
December 1, 1965 Exhibit 2-L to Registration No. 2-26459
June 1, 1966 Exhibit 2-M to Registration No. 2-26459
June 1, 1967 Exhibit 2-N to Registration No. 2-29693
September 1, 1968 Exhibit 4-O to Registration No. 2-31569
June 1, 1969 Exhibit 4-C to Registration No. 33-38580
December 1, 1969 Exhibit 4-Q to Registration No. 2-35388
June 1, 1970 Exhibit 4-R to Registration No. 2-37363
March 1, 1971 Exhibit 2-B-17 to Registration No. 2-40324
January 1, 1972 Exhibit 4-C to Registration No. 33-38580
July 1, 1974 Exhibit 2-A-19 to Registration No. 2-51291
May 1, 1975 Exhibit 4-C to Registration No. 33-38580
July 1, 1975 Exhibit 2-B-21 to Registration No. 2-53908
February 1, 1976 Exhibit 2-B-22 to Registration No. 2-55304
December 1, 1976 Exhibit 2-B-23 to Registration No. 2-57936
March 1, 1977 Exhibit 2-B-24 to Registration No. 2-58662
May 1, 1977 Exhibit 4-C to Registration No. 33-38580
February 1, 1978 Exhibit 4-C to Registration No. 33-38580
June 1, 1978 Exhibit 2-A-3 to Registration No. 2-61653
April 1, 1979 Exhibit 4-C to Registration No. 33-38580
June 1, 1979 Exhibit 4-C to Registration No. 33-38580
April 1, 1980 Exhibit 4-C to Registration No. 33-38580
June 1, 1980 Exhibit 4-C to Registration No. 33-38580
December 1, 1980 Exhibit 4-C to Registration No. 33-38580
April 1, 1981 Exhibit 4-D to Registration No. 33-49421
June 1, 1981 Exhibit 4-D to Registration No. 2-73321
March 1, 1982 Exhibit 4-D to Registration No. 33-49421
April 15, 1982 Exhibit 4-D to Registration No. 33-49421
May 1, 1982 Exhibit 4-D to Registration No. 33-49421
December 1, 1984 Exhibit 4-D to Registration No. 33-49421
December 1, 1985 Exhibit 4-D to Registration No. 33-49421
June 1, 1986 Exhibit 4-D to Registration No. 33-49421
February 1, 1987 Exhibit 4-D to Registration No. 33-49421
September 1, 1987 Exhibit 4-D to Registration No. 33-49421
January 1, 1989 Exhibit 4-D to Registration No. 33-49421
January 1, 1991 Exhibit 4-D to Registration No. 33-49421
February 1, 1991 Exhibit 4-D to Registration No. 33-49421
July 15, 1991 Exhibit 4-D to Registration No. 33-49421
August 15, 1991 Exhibit 4-D to Registration No. 33-49421
April 1, 1993 Exhibit 4-E to Registration No. 33-49421
July 1, 1993 Exhibit 4-D to Registration No. 33-57955
D. Indenture dated as of April 1, 1993 from South Carolina
Electric & Gas Company to NationsBank of Georgia, National
Association (Filed as Exhibit 4-F to Registration
Statement No. 33-49421)......................................... #
E. First Supplemental Indenture to Indenture referred to
in 4-D dated as of June 1, 1993 (Filed as Exhibit 4-G
to Registration Statement No. 33-49421)......................... #
# Incorporated herein by reference as indicated.
75
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
EXHIBIT INDEX
Exhibit Index (Continued)
Sequentially
Numbered
Number Pages
F. Second Supplemental Indenture to Indenture referred to
in 4-D dated as of June 15, 1993 (Filed as Exhibit 4-G
to Registration Statement No. 33-57955)......................... #
G. Trust Agreement for SCE&G Trust I (Filed herewith).............. 93
H. Certificate of Trust for SCE&G Trust I (Filed herewith)......... 96
I. Form of Junior Subordinated Indenture for SCE&G Trust I
(Filed herewith)................................................ 97
J. Form of Guarantee Agreement for SCE&G Trust I (Filed
herewith)....................................................... 177
K. Form of Amended & Restated Trust Agreement for SCE&G
Trust I (Filed herewith)........................................ 198
9. Voting Trust Agreement
Not Applicable
10. Material Contracts
A. Copy of Supplemental Executive Retirement Plan
(Exhibit 10-A to Form 10-K for the year ended
December 31, 1980)............................................ 276
11. Statement Re Computation of Per Share Earnings
Not Applicable
12. Statement re Computation of Ratios (Filed herewith)................ 295
13. Annual Report to Security Holders, Form 10-Q or
Quarterly Report to Security Holders
Not Applicable
16. Letter Re Change in Certifying Accountant
Not Applicable
18. Letter Re Change in Accounting Principles
Not Applicable
21. Subsidiaries of the Registrant
Not Applicable
22. Published Report Regarding Matters Submitted to
Vote of Security Holders
Not Applicable
23. Consents of Experts and Counsel
Consent of Deloitte & Touche LLP................................... 299
24.
<PAGE>
EXHIBIT 3-J
BY-LAWS
OF
SOUTH CAROLINA ELECTRIC & GAS COMPANY
AS AMENDED AND ADOPTED
December 17, 1997
77<PAGE>
<PAGE>
ARTICLE I
OFFICES
Section 1. The principal office of the Corporation, which
shall also be designated as its registered office, shall be
located in the City of Columbia, County of Richland, State of
South Carolina.
Section 2. The Corporation may also have offices and places
of business at such other places, within or without the State of
South Carolina, as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II
SEAL
Section 1. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the
words "South Carolina". If authorized by the Board of Directors,
the corporate seal may be affixed to any certificates of stock,
bonds, debentures, notes or other engraved, lithographed or
printed instruments, by engraving, lithographing or printing
thereon such seal or a facsimile thereof, and such seal or
facsimile thereof so engraved, lithographed or printed thereon
shall have the same force and effect, for all purposes, as if
such corporate seal had been affixed thereto by indentation.
ARTICLE III
STOCKHOLDERS' MEETINGS
Section 1. Written or printed notices for annual or special
meetings of stockholders shall state the place, day and hour of
such meetings and, in case of special meetings, the purpose or
purposes for which the meetings are called.
Section 2. Annual meetings of shareholders shall be held on
a date selected by the Board of Directors at its last regularly
scheduled meeting in a calendar year. The Board will select a date
at said meeting for the following year with the date occurring
between April 16 and April 30 of said year, when they shall elect
members of the Board of Directors in accordance with the provisions
of the Corporation's Articles of Incorporation and transact such
other business as may properly be brought before the meeting.
Section 3. Except as otherwise provided by law, by the
Articles of Incorporation as the same may be amended from time to
time, or by these By-Laws as they may be amended from time to
time, the holders of a majority of the shares of stock of the
Corporation issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a
quorum at any meeting of the stockholders for the transaction of
business.
If, however, such quorum shall not be present or represented
at such meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall
have the power, by a majority vote of those present, to adjourn
the meeting from time to time without notice (unless otherwise
provided in Section 8 of this Article III) other than by
announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall
be present or represented any business may be transacted which
may have been transacted at the meeting as originally noticed
provided notice of such adjourned meeting, when required by
Section 8 of this Article III, shall have been given or waived.
78
<PAGE>
Section 4. At each meeting of the stockholders each
stockholder having the right to vote shall be entitled to vote in
person, or by proxy appointed by written or printed instrument
executed by such stockholder or by his duly authorized attorney
or by telegram or cablegram appearing to have been transmitted by
such stockholder but, except as otherwise provided by statute, no
proxy shall be valid after expiration of eleven months from the
date of its execution. Every proxy shall be dated as of its
execution and no proxy shall be undated or postdated. Every
holder of record of stock having voting power shall be entitled
to one vote for every share of stock standing in his name on the
books of the Corporation. The vote for directors and, upon the
demand of any stockholder or his duly authorized proxy, the vote
upon any question before the meeting shall be by ballot. All
elections shall be decided by a plurality of the votes cast by
the holders of the shares entitled to vote at the meeting of
stockholders and except as otherwise provided by statute or by
the Articles of Incorporation all other questions by a majority
of the votes cast by holders of shares entitled to vote on such
question at such meeting.
Section 5. The Secretary or the agent of the Corporation
having charge of its stock transfer books shall, in advance of
each meeting of stockholders, prepare a complete list of the
stockholders entitled to vote at such meeting of stockholders or
adjournment thereof, which list shall be arranged in alphabetical
order with the address of and the number of shares held by each
stockholder. Unless the record of stockholders kept by the
Secretary or agent of the Corporation having charge of its stock
transfer books readily shows, in alphabetical order or by
alphabetical index, the information required to appear on such a
list of stockholders, such list of stockholders shall, for a
period commencing upon the date when notice of such meeting is
given, and in no event less than 10 days prior to the date of
such meeting, be kept on file at the registered office of the
Corporation or at its principal place of business or at the
office of its transfer agent or registrar, and shall be subject
to inspection by any stockholder at any time during usual
business hours. In any event, such list shall be produced and
kept open at the time and place of such meeting and shall be
subject to the inspection of any stockholder during the whole
time of such meeting.
Section 6. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by statute, may
be called by the Chairman of the Board, by the Vice Chairman of
the Board or by the President, and shall be called by the
President or Secretary at the request in writing of a majority of
the Board of Directors, or at the request in writing of holders
of ten per cent or more of the shares of stock of the Corporation
issued and outstanding and entitled to vote at the proposed
meeting. Such request shall state the purpose or purposes of the
proposed meeting.
Section 7. Business transacted at all special meetings
shall be confined to the objects stated in the call; provided,
however, that if all the stockholders of the Corporation entitled
to vote shall be present in person or by proxy, any business
pertaining to the affairs of the Corporation may be transacted.
79
<PAGE>
Section 8. Notice of annual meetings of stockholders and
notice of any special meeting of stockholders for the election of
directors or for any other purpose, unless otherwise provided by
statute, shall be delivered personally or mailed, not less than
ten nor more than fifty days before the meeting, to each person
who appears on the books of the Corporation as a stockholder
entitled to vote at said meeting. In the event of the
adjournment of any meeting of stockholders, for whatever reason,
for 30 days or more, notice of the adjourned meeting shall be
delivered personally or mailed not less than ten nor more than
fifty days before the date for such adjourned meeting to each
person whose name appears on the books of the Corporation as a
stockholder entitled to vote at said adjourned meeting. Any such
notice may be either written or printed, or partly written and
partly printed, and if mailed it shall be directed to the
stockholder at his address as it appears on the books of the
Corporation. Such notice shall briefly state the business which
it is proposed to present or to submit to such meeting.
ARTICLE IV
DIRECTORS
Section 1. The property and business of the Corporation
shall be managed by its Board of Directors. The number of
directors shall be not more than twenty (20). The directors
shall be elected at the annual meeting of the stockholders or at
a special meeting called for that purpose. Each director shall
be elected to serve until the next annual meeting of stockholders
and thereafter until his successor shall be elected and shall
qualify. Any director may be removed with or without cause, by a
vote of the holders of a majority of the shares then entitled to
vote at an election of directors, provided, however, such removal
shall be subject to the following:
(1) Whenever the shares of a class of stock are
entitled to elect one or more directors, any director so
elected may be removed only by the vote of the holders of
the outstanding shares of that class voting separately as a
class, and
(2) No director who has been elected by cumulative
voting may be removed if the votes cast against his removal
would be sufficient to elect him if then cumulatively voted
at an election of the entire Board of Directors.
Section 2. In addition to the powers and authorities by
these By-Laws expressly conferred upon them, the Board may
exercise all such power of the Corporation and do all such lawful
acts and things as are not by statute or by the Articles of
Incorporation or by these By-Laws directed or required to be
exercised or done by the stockholders. A director or officer of
this Corporation shall not be disqualified by his office from
dealing or contracting with the Corporation either as a vendor,
purchaser or otherwise, nor shall any transaction or contract of
this Corporation be void or voidable solely by reason of the fact
that any director or officer or any firm of which any director or
officer is a member or employee, or any corporation of which any
director or officer is a shareholder, director, officer or
employee, is in any way interested in such transaction or
contract, provided that the material facts as to such interest
and as to such transaction or contract are disclosed or known to
the Board of Directors or the Executive Committee and noted in
their respective minutes, or to the stockholders entitled to vote
with respect thereto, as the case may be, and that such
transaction or contract is or shall be authorized, ratified or
approved either (1) by the vote of a majority of a quorum of the
80
<PAGE>
Board of Directors or of the Executive Committee, or (2) by a
majority of the votes cast by holders of shares of stock entitled
to vote with respect thereto, without counting (except for quorum
purposes) the vote of or shares held or controlled and voted by,
as the case may be, any director so interested or member or
employee of a firm so interested or a shareholder, director,
officer or employee of a corporation so interested; nor shall any
director or officer be liable to account to the Corporation for
any profits realized by and from or through any such transaction,
or contract of this Corporation authorized, ratified or approved
as aforesaid by reason of the fact that he or any firm of which
he is a member or employee, or any corporation of which he is a
shareholder, director, officer or employee was interested in such
transaction or contract.
ARTICLE V
MEETINGS OF THE BOARD
Section 1. The Board of Directors of the Corporation may
hold meetings, both regular and special, either within or without
the State of South Carolina. If so authorized by law, members of
the Board of Directors may participate in a meeting of the Board
by means of telephone conference call or similar communications
by which all persons participating in the meeting may hear each
other at the same time.
Section 2. Regular meetings of the Board may be held
without notice at such time and place as shall from time to time
be designated by the Board.
Section 3. Special meetings of the Board may be called by
the Chairman of the Board, or the Vice Chairman of the Board, if
any, or the President or any two directors and may be held at the
time and place designated in the call and notice of the meeting.
The Secretary or other officer performing his duties shall give
notice either personally or by mail or telegram not less than
twenty-four hours before the meeting. Meetings may be held at any
time and place without notice if all the directors are present or
if those not present sign waivers of notice either before or
after the meeting.
Section 4. At all meetings of the Board a majority of the
total number of directors then in office shall be necessary and
sufficient to constitute a quorum for the transaction of
business, and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the
Board of Directors, except as may be otherwise specifically
provided by statute or by the Articles of Incorporation or by
these By-Laws.
Section 5. Any regular or special meeting of the Board may
be adjourned to any other time at the same or any other place by
a majority of the directors present at the meeting, whether or
not a quorum shall be present at such meeting, and no notice of
the adjourned meeting shall be required other than announcement
at the meeting.
Section 6. Whenever, by any provision of law, the vote of
directors at a meeting thereof is required or permitted to be
taken in connection with any corporate action, the meeting and
vote of directors may be dispensed with, if all the directors
shall consent in writing to such corporate action being taken.
Such consents shall be filed with the minutes of meetings of the
Board of Directors.
81
<PAGE>
Section 7. Directors, as such, shall not receive any stated
salary for their services, but, by resolution of the Board of
Directors, a fixed fee and expenses of attendance, if any, may be
allowed for attendance at each regular or special meeting of the
Board (or of any committee of the Board), provided that nothing
herein contained shall be construed to preclude any Director from
serving the Corporation in any other capacity and receiving
compensation therefor.
Section 8. Directors who are salaried officers or employees
of the Corporation or of any affiliated Company and who are
members of the Executive Committee shall receive no compensation
for their services as such members in addition to such
compensation as may be paid to them as officers or directors, but
shall be reimbursed for their reasonable expenses, if any, in
attending meetings of the Executive Committee, or otherwise
performing their duties as members of the Executive Committee.
ARTICLE VI
EXECUTIVE AND OTHER COMMITTEES
Section 1. The Board of Directors may, by vote of a
majority of the full Board, designate three or more of their
number to constitute an Executive Committee, to hold office for
one year and until their respective successors shall be
designated. Such Executive Committee shall advise with and aid
the officers of the Corporation in all matters concerning its
interests and the management of its business, and shall, between
sessions of the Board, except as otherwise provided by law, have
all the powers of the Board of Directors in the management of the
business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers
which may require it. The taking of any action by the Executive
Committee shall be conclusive evidence that the Board of
Directors was not at the time of such action in session.
The Board of Directors may, by vote of a majority of the
full Board, appoint from among their number, one or more
additional committees, consisting of three or more directors,
which shall have such powers and duties as may be fixed by the
resolution of the Board of Directors appointing such Committee.
Section 2. The Executive Committee shall cause to be kept
regular minutes of its proceedings, which may be transcribed in
the regular minute book of the Corporation, and all such
proceedings shall be reported to the Board of Directors at its
next succeeding meeting, and shall be subject to revision or
alteration by the Board, provided that no rights of third persons
shall be affected by such revision or alteration. A majority of
the Executive Committee shall constitute a quorum at any meeting.
The Executive Committee may take action without a meeting on the
written approval of such action by all the members of the
Committee. The Board of Directors may by vote of a majority of
the full Board fill any vacancies in the Executive Committee.
The Executive Committee may, from time to time, subject to the
approval of the Board of Directors, prescribe rules and
regulations for the calling and conduct of meetings of the
Committee, and other matters relating to its procedure and the
exercise of its powers.
Section 3. Other committees appointed by the Board shall
cause to be kept regular minutes of their proceedings and in
general the provisions as to procedure for such committees shall
be that set forth above with respect to the Executive Committee.
82
<PAGE>
ARTICLE VII
OFFICERS
Section 1. The officers of the Corporation shall be elected
by the Board of Directors. They shall include a President, one
or more Vice Presidents, a Secretary, a Treasurer and a
Controller and may include a Chairman of the Board and a Vice
Chairman of the Board. In the event there shall be a Chairman of
the Board and a Vice Chairman of the Board, the Board of
Directors shall designate which of the Chairman of the Board, the
Vice Chairman of the Board or the President shall be the Chief
Executive Officer of the Corporation. If there shall be no
Chairman of the Board or Vice Chairman of the Board, the
President shall be the Chief Executive Officer of the
Corporation. Any two or more of such offices, except those of
Treasurer and Controller, may be occupied by the same person;
provided, however, the same person may not act in more than one
capacity where action by two or more officers is required.
Section 2. The Board of Directors, at its first meeting
after the election of directors by the stockholders, shall elect
from among its members, if it deems proper, a Chairman of the
Board and a Vice Chairman of the Board. It shall also elect a
President and one or more Vice Presidents, a Secretary, a
Treasurer and a Controller, none of whom need be members of the
Board.
The Board of Directors, at any meeting, may elect such
additional Vice Presidents, and such Assistant Vice Presidents,
Assistant Secretaries, Assistant Treasurers and Assistant
Controllers, as it shall deem necessary, none of whom need be
members of the Board.
Section 3. The Board of Directors, at any meeting, may
elect or appoint such other officers and agents as it shall deem
necessary. The tenure and duties of such officers and agents
shall be fixed by the Board of Directors or, in the absence of
any action by the Board of Directors so fixing such tenure and
duties, the tenure and duties shall be fixed by the Chief
Executive Officer of the Corporation, or by such officers or
department heads to whom he shall delegate such authority.
Section 4. The salaries and compensation of the officers of
the Corporation and of agents of the Corporation appointed by the
Board shall be fixed by the Board of Directors. The salaries and
compensation of all other employees of the Corporation shall, in
the absence of any action by the Board of Directors, be fixed by
the Chief Executive Officer of the Corporation. No officer
receiving compensation from any affiliated company shall at the
same time be compensated by the Corporation.
Section 5. The officers of the Corporation elected pursuant
to Section 2 of this Article VII shall hold office until the
first meeting of the Board of Directors after the next succeeding
annual meeting of stockholders and until their successors are
elected and qualify in their stead. The Chief Executive Officer
may be removed at any time, with or without cause, by the
affirmative vote of a majority of the total number of directors
then in office. Any other officer or employee of the Corporation
may be removed at any time, with or without cause, either (a) by
vote of a majority of the directors present at any meeting of the
Board of Directors at which a quorum is present, or (b) by vote
of a majority of the members of the Executive Committee, or (c)
by the Chief Executive Officer of the Corporation or by any
officer who shall be exercising the powers of the Chief Executive
83
<PAGE>
Officer of the Corporation, or by any superior of such employee
to whom such power of removal shall be delegated by the Chief
Executive Officer of the Corporation or the officer exercising
the powers of the Chief Executive Officers of the Corporation.
ARTICLE VIII
CHIEF EXECUTIVE OFFICER
Section 1. The Chief Executive Officer of the Corporation
shall supervise, direct and control the conduct of the business
of the Corporation subject, however, to the general policies
determined by the Board of Directors and the Executive Committee,
if there be one.
He shall be a member of the Executive Committee and all
committees appointed by the Board of Directors, except the Audit
Committee, shall have the general powers and duties usually
vested in the chief executive officer of a corporation, and shall
have such other powers and perform such other duties as may be
prescribed from time to time by law, by the By-Laws, or by the
Board of Directors.
He shall, whenever it may in his opinion be necessary,
prescribe the duties of officers and employees of the Corporation
whose duties are not otherwise defined.
He shall have power to remove at any time, with or without
cause, any employee or officer of the Corporation. He may, in
accordance with Section 5 of Article VII of these By-Laws, delegate
such power of removal.
ARTICLE IX
CHAIRMAN OF THE BOARD
Section 1. The Chairman of the Board, if there be one,
shall preside at all meetings of the Board of Directors and of
the stockholders, except when by statute the election of a
presiding officer shall be required. He shall, if designated
Chief Executive Officer pursuant to Section 1 of Article VII of
these By-Laws, have all the powers and duties granted and
delegated to the Chief Executive Officer by Section 1 of
Article VIII of these By-Laws. In such event he may sign in the
name of and on behalf of the Corporation any and all contracts,
agreements or other instruments pertaining to matters which arise
in the ordinary course of business of the Corporation and, if
authorized by the Board of Directors or the Executive Committee,
may sign in the name of and on behalf of the Corporation any
other contracts, agreements or instruments of any nature
pertaining to the business of the Corporation. He shall have
such other powers and perform such other duties as may be
prescribed from time to time by law, by the By-Laws or by the
Board of Directors.
ARTICLE X
THE VICE CHAIRMAN OF THE BOARD
The Vice Chairman of the Board, if there be one, shall
perform necessary duties of the Chairman in case of the absence
or temporary incapacity of the Chairman. He shall have such
other powers and perform such other duties as may be prescribed
from time to time by law, by the By-Laws or by the Board of
Directors.
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ARTICLE XI
THE PRESIDENT
Section 1. The President shall, in the absence of the
Chairman and Vice Chairman of the Board, or if there shall be no
Chairman or Vice Chairman of the Board, preside at all meetings
of the Board of Directors and of the stockholders, except when by
statute the election of a presiding officer shall be required.
He shall, if designated Chief Executive Officer of the
Corporation pursuant to Section 1 of Article VII of these By-
Laws, have all the powers and duties granted and delegated to the
Chief Executive Officer by Section 1 of Article VIII of these By-
Laws.
In the event there shall be a Chairman of the Board or a
Vice Chairman of the Board who shall have been designated as
Chief Executive Officer of the Corporation pursuant to Section 1
of Article VII of these By-Laws, then the President shall have
such powers and duties as may be assigned to him by the Chief
Executive Officer. In addition, he shall be a member of the
Executive Committee, and, in the absence or disability of the
Chairman of the Board or the Vice Chairman of the Board, he shall
have all the powers and duties of the Chairman of the Board or
the Vice Chairman of the Board.
He may sign in the name of and on behalf of the Corporation
any and all contracts, agreements or other instruments pertaining
to matters which arise in the ordinary course of business of the
Corporation and, if authorized by the Board of Directors or the
Executive Committee, may sign in the name of and on behalf of the
Corporation any other contracts, agreements or instruments of any
nature pertaining to the business of the Corporation.
He shall have such other powers and perform such other
duties as may be prescribed from time to time by law, by the By-
Laws or by the Board of Directors.
ARTICLE XII
THE VICE PRESIDENT
Section 1. The Vice President shall, in the absence or
disability of the President, perform the duties and exercise the
powers of the President and shall perform such other duties as
the Board of Directors may prescribe.
The Vice President may sign in the name of and on behalf of
the Corporation contracts, agreements, or other instruments
pertaining to matters which arise in the ordinary course of
business of the Corporation, except in cases where the signing
thereof shall be expressly delegated by the Board of Directors or
the Executive Committee to some other officer or agent of the
Corporation. If authorized by the Board of Directors or the
Executive Committee, he may sign in the name of and on behalf of
the Corporation any other contracts, agreements or instruments of
any nature pertaining to the business of the Corporation. He
shall have such other powers and perform such other duties as may
be prescribed from time to time by law, by the By-Laws, or by the
Board of Directors.
If there be more than one Vice President, the Board of
Directors or the Chief Executive Officer of the Corporation shall
assign to such Vice Presidents their respective duties, and the
Board may designate any of such Vice Presidents as Executive Vice
Presidents and Senior Vice Presidents.
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ARTICLE XIII
THE SECRETARY
Section 1. The Secretary shall attend all sessions of the
Board and all meetings of the stockholders and record all votes
and the minutes of all proceedings in a book to be kept for that
purpose; and shall perform like duties for the committees
appointed by the Board of Directors when required. He shall
give, or cause to be given, notice of all meetings of the
stockholders and of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors
or Chief Executive Officer, under whose supervision he shall be.
He shall be sworn to the faithful discharge of his duty. Any
records kept by him shall be the property of the Corporation and
shall be restored to the Corporation in case of his death,
resignation, retirement or removal from office. He or his agent
shall be the custodian of the seal of the Corporation, the stock
ledger, stock certificate book and minute books of the
Corporation, and its committees, and other formal records and
documents relating to the corporate affairs of the Corporation.
Section 2. The Assistant Secretary or Assistant Secretaries
shall assist the Secretary in the performance of his duties,
exercise and perform his powers and duties, in his absence or
disability, and such other powers and duties as may be conferred
or required by the Board.
ARTICLE XIV
THE TREASURER
Section 1. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation, in such
depositories as may be designated by the Board of Directors or as
may be designated by persons to whom the Board of Directors
delegates such authority.
He shall disburse the funds of the Corporation in such
manner as may be ordered by the Board, taking proper vouchers for
such disbursements, and shall render to the Chief Executive
Officer and directors, at the regular meetings of the Board, or
whenever they may require it, an account of all his transactions
as Treasurer and of the financial condition of the Corporation.
He shall give the Corporation a bond if required by the
Board of Directors in a sum, and with one or more sureties
satisfactory to the Board, for the faithful performance of the
duties of his office, and for the restoration to the Corporation,
in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property
of whatever kind in his possession or under his control belonging
to the Corporation.
Section 2. The Assistant Treasurer or Assistant Treasurers
shall assist the Treasurer in the performance of his duties,
exercise and perform his powers and duties, in his absence or
disability, and such other powers and duties as may be conferred
or required by the Board.
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ARTICLE XV
THE CONTROLLER
Section 1. The Controller of the Corporation shall be the
principal accounting officer of the Corporation. He shall have
full control of all the books of the Corporation and keep a true
and accurate record of all property owned by it, of its debts and
of its revenues and expenses, and shall keep all accounting
records of the Corporation other than the record of receipts and
disbursements and those relating to deposit or custody of money
and securities of the Corporation, which shall be kept by the
Treasurer, and shall also make reports to the directors and
others of or relating to the financial condition of the
Corporation. He shall exhibit at all reasonable times his books
of account and records to any director of the Corporation upon
application during business hours at the office of the
Corporation where such books of accounts and records are kept.
He shall perform all duties generally incident to the office
of Controller and shall have such other powers and duties as,
from time to time, may be prescribed by law, by the By-Laws, or
by the Board of Directors.
Section 2. The Assistant Controller or Assistant
Controllers shall assist the Controller in the performance of his
duties, exercise and perform his powers and duties, in his
absence or disability, and such other powers and duties as may be
conferred or required by the Board of Directors.
ARTICLE XVI
VACANCIES
Section 1. If the office of any director becomes vacant by
reason of death, resignation, retirement, disqualification, or
otherwise, the directors then in office, although less than a
quorum, by a majority vote, may elect a successor or successors,
who shall hold office for the unexpired term in respect of which
such vacancy occurred. Notwithstanding anything contained in the
preceding sentence, if a vacancy occurs with respect to a
director elected by the votes of a particular class of stock such
vacancy shall be filled by the remaining director or directors
elected by that class, or by the stockholders of that class, and
any vacancy created by an increase in the number of directors of
the Corporation shall be filled only by election by the
stockholders entitled to vote with respect thereto at an annual
meeting or a special meeting of stockholders called for that
purpose. If the office of any officer of the Company shall
become vacant for any reason, the Board of Directors, by a
majority vote of those present at any meeting at which a quorum
is present, may elect a successor or successors, who shall hold
office for the unexpired term in respect of which such vacancy
occurred.
ARTICLE XVII
RESIGNATIONS
Section 1. Any officer or any director of the Corporation
may resign at any time, such resignation to be made in writing
and to take effect from the time of its receipt by the
Corporation, unless some time be fixed in the resignation, and
then from that time. The acceptance of a resignation shall not
be required to make it effective. A vacancy shall be deemed to
exist upon receipt by the Corporation of such written
resignation, and a successor may, then or thereafter, be elected
to take office when such resignation becomes effective.
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ARTICLE XVIII
DUTIES OF OFFICERS MAY BE DELEGATED
Section 1. In case of the absence of any officer of the
Corporation, or for any other reason the Board may deem
sufficient, the Board may delegate, for the time being, the
powers or duties, or any of them, of such officers to any other
officer or to any director.
ARTICLE XIX
STOCK OF OTHER CORPORATIONS
Section 1. The Board of Directors shall have the right to
authorize any officer or other person on behalf of the
Corporation to attend, act and vote at meetings, of the
stockholders of any corporation in which the Corporation shall
hold stock, and to exercise thereat any and all the rights and
powers incident to the ownership of such stock and to execute
waivers of notice of such meetings and calls therefor; and
authority may be given to exercise the same either on one or more
designated occasions, or generally on all occasions until revoked
by the Board. In the event that the Board shall fail to give
such authority it may be exercised by the Chief Executive Officer
of the Corporation in person or by proxy appointed by him on
behalf of the Corporation.
ARTICLE XX
CERTIFICATES OF STOCK
Section 1. The certificates of stock of the Corporation
shall be entered in the books of the Corporation as they are
issued. No fractional shares of stock shall be issued.
Certificates of stock shall be signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a Vice
President and by the Secretary, or an Assistant Secretary, and
the seal of the Corporation shall be affixed thereto. Such seal
may be facsimile, engraved or printed. Where any certificate of
stock is signed by a transfer agent or transfer clerk or by a
registrar, the signatures of any such Chairman of the Board, Vice
Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary, upon such stock certificate may be
facsimiles, engraved or printed. In case any such officer who
has signed, or whose facsimile signature has been placed upon,
such certificate of stock, shall have ceased to be such officer
before such certificate of stock is issued, it may be issued by
the Corporation with the same effect as if such officer had not
ceased to be such at the date of its issue.
ARTICLE XXI
TRANSFERS OF STOCK
Section 1. Transfer of stock shall be made on the books of
the Corporation only by the person named in the certificate or by
attorney, lawfully constituted in writing, and upon surrender of
the certificate therefor.
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ARTICLE XXII
FIXING OF RECORD DATE
Section 1. The Board of Directors is hereby authorized to
fix a time, not less than ten (10) days nor more than fifty (50)
days preceding the date of any meeting of stockholders or the
date fixed for the payment of any dividend or the making of any
distribution, or for the delivery of evidences of rights or
evidences of interests arising out of any change, conversion or
exchange of shares of stock, as a record date for the
determination of the stockholders entitled to notice of and to
vote at such meeting or entitled to receive any such dividend,
distribution, rights or interests, as the case may be; and all
persons who are holders of record of shares of stock at the date
so fixed and no others, shall be entitled to notice of and to
vote at such meeting, and only stockholders of record at such
date shall be entitled to receive any such notice, dividend,
distribution, rights or interests; and the stock transfer books
shall not be closed during any such period.
ARTICLE XXIII
REGISTERED STOCKHOLDERS
Section 1. The Corporation shall be entitled to treat the
holders of record of any share or shares of stock as the holder
in fact thereof and accordingly shall not be bound to recognize
any equitable or other claim to, or interest in, such share on
the part of any other person, whether or not it shall have
express or other notice thereof, save as expressly provided by
the statutes of the State of South Carolina.
ARTICLE XXIV
LOST CERTIFICATES
Section 1. Whenever any stockholder shall desire a new
certificate of stock to replace an original certificate of stock
which has been lost, destroyed or wrongfully taken, he shall make
application to the Corporation for the issuance of a new
certificate or certificates in replacement of the certificate or
certificates which were lost, destroyed or wrongfully taken, and
88
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shall file with the Corporation a good and sufficient indemnity
bond, together with an affidavit stating that the applicant is
the bona fide owner of such share(s) of stock and specifying the
number(s) of the certificate or certificates which were lost,
destroyed or wrongfully taken, the particular circumstances of
such loss, destruction or wrongful taking (including a statement
that the share(s) represented by such certificate or certificates
has or have not been transferred or otherwise disposed of by such
applicant in any manner.)
Upon completion by a stockholder of the requirements set
forth in the preceding paragraph, the Corporation shall issue a
certificate or certificates in replacement of the certificate or
certificates referred to in such stockholder's application if
such application is received by the Corporation before it has
notice that such certificate or certificates has or have been
acquired by a bona fide purchaser.
89
ARTICLE XXV
INSPECTION OF BOOKS
Section 1. The Board of Directors shall have power to
determine whether and to what extent, and at what time and places
and under what conditions and regulations, the accounts and books
of the Corporation (other than the books required by statute to
be open to the inspection of stockholders), or any of them, shall
be open to the inspection of stockholders, and no stockholder
shall have any right to inspect any account or book or document
of the Corporation, except as such right may be conferred by the
statutes of the State of South Carolina or by resolution of the
directors or of the stockholders.
ARTICLE XXVI
CHECKS, NOTES, BONDS AND OTHER INSTRUMENTS
Section 1. All checks or demands for money and notes of the
Corporation shall be signed by such person or persons (who may
but need not be an officer or officers of the Corporation) as the
Board of Directors may from time to time designate or as may be
designated by persons to whom the Board of Directors delegates
such authority. The Board of Directors shall have authority to
make provision, with proper safeguards, for the signatures to
appear on all checks, including, but not by way of limitation,
payroll checks, to be made by facsimile, whether engraved or
printed. Whenever the seal of this Corporation is to be affixed
to any instrument being executed on behalf of this Corporation,
such seal shall be affixed thereto by the Secretary or an
Assistant Secretary and the fact of such affixation shall be
attested to by the person so affixing the seal.
ARTICLE XXVII
RECEIPT FOR SECURITIES
Section 1. All receipts for stocks, bonds or other
securities received by the Corporation shall be signed by the
Treasurer or an Assistant Treasurer, or by such other person or
persons as the Board of Directors or Executive Committee shall
designate.
ARTICLE XXVIII
FISCAL YEAR
Section 1. The fiscal year shall begin the first day of
January in each year.
ARTICLE XXIX
RESERVES
Section 1. The Board of Directors shall have power to fix
and determine, and from time to time to vary, the amount to be
reserved as working capital; to determine whether any, or if any,
what part of any, surplus shall be declared and paid as
dividends, to determine the date or dates for the declaration or
payment of dividends and to direct and determine the use and
disposition of any surplus, and before payment of any dividend or
making any distribution of surplus there may be set aside out of
the surplus of the Corporation such sum or sums as the directors
from time to time, in their absolute discretion, think proper as
a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the directors shall
think conducive to the interests of the Corporation.
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ARTICLE XXX
NOTICES
Section 1. In addition to the telegraphic notice permitted
by Section 3 of Article V of these By-Laws, whenever under the
provisions of these By-Laws notice is required to be given to any
director, officer or stockholder, it shall not be construed to
require personal notice, but such notice may be given in writing,
by mail, by depositing a copy of the same in a post office,
letter box or mail chute, maintained by the Post Office
Department, in a postpaid sealed wrapper, addressed to such
stockholder, officer or director, at his address as the same
appears on the books of the Corporation.
A stockholder, director or officer may waive any notice
required to be given to him under these By-Laws.
ARTICLE XXXI
INSPECTORS OF ELECTION
Section 1. Prior to every meeting of the stockholders the
Board of Directors may appoint any odd number of inspectors of
election to act as inspectors at such meeting. In the event that
inspectors shall not be so appointed, they shall be appointed by
the person presiding at such meeting and if any inspector shall
refuse to serve, or neglect to attend such meeting or his office
becomes vacant, the person presiding at the meeting may appoint
another inspector in his place. The inspectors appointed to act
at any meeting of the stockholders shall, before entering upon
the discharge of their duties, be sworn faithfully to execute the
duties of inspector at such meeting with strict impartiality and
according to the best of their ability.
ARTICLE XXXII
DIRECTOR, OFFICER AND EMPLOYEE INDEMNIFICATION
Section 1. The Corporation shall indemnify any and all of
its employees, officers, or directors, or former officers or
directors (including their heirs, executors, and administrators),
or any person who may have served at its request or by its
election, designation, or request as a member, agent, employee,
director or officer of any other corporation or partner, trustee
or otherwise, of any organization against expenses actually and
necessarily incurred by them in connection with the defense or
settlement of any action, suit or proceeding (which shall include
any threatened, pending, or completed action, suit or proceeding,
whether civil, criminal, administrative, investigative or
arbitrative) in which they, or any of them, are made parties, or
a party, by reason of being or having been agents, employees,
directors or officers of the Corporation, or of such other
organization, except in relation to matters as to which any such
agent, employee, director or officer or former employee, director
or officer or person shall be adjudged in such action, suit or
proceeding to be liable for willful misconduct in the performance
of duty and to such matters, as shall be settled by agreement
predicated on the existence of such liability. Such indemnity
shall be in accordance with a written plan adopted by the Board
of Directors, which plan shall be in accordance with the law of
South Carolina. The indemnification provided hereby shall not be
deemed exclusive of any other right to which anyone seeking
indemnification hereunder may be entitled under any By-Law,
agreement, or otherwise. The Corporation may purchase and
maintain insurance on the behalf of any director, officer, agent,
employee or former employee, director or officer or other person,
against any liability asserted against them and incurred by them.
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ARTICLE XXXIII
AMENDMENTS
Section 1. Any of these By-Laws may be altered, amended or
repealed, and/or one or more new By-Laws may be adopted, at a
meeting of the stockholders, by a vote of the holders of a
majority of all shares of stock entitled to vote to elect
directors who are entitled to vote at such meeting, provided that
written notice of such proposed alteration, amendment, repeal
and/or adoption, as the case may be, shall have been given to all
such stockholders at least ten days before such meeting. Any of
these By-Laws may also be altered, amended or repealed, and/or
one or more new By-Laws may be adopted, by the vote of a majority
of all directors then in office, at a meeting of the Board of
Directors, provided that the notice of such meeting includes
therein notice of such alteration, amendment, repeal and/or
adoption, as the case may be. At a meeting thereof, the
stockholders, by the vote of the holders of a majority or by
written consent of all shares of stock entitled to vote to elect
directors who are entitled to vote at such meeting, may repeal
any alteration or amendment of these By-Laws made by the Board of
Directors and/or reinstate any of these By-Laws repealed by the
Board of Directors, and/or repeal any new B
<PAGE>
Exhibit 4-G
TRUST AGREEMENT
TRUST AGREEMENT dated as of October 8, 1997, by and between
South Carolina Electric & Gas Company, a South Carolina
corporation, as "Depositor," and The Bank of New York (Delaware),
as trustee (the "Delaware Trustee"), and M. R. Cannon, as trustee
(the "Administrative Trustee" and together with the Delaware
Trustee, the "Trustees").
The Depositor and the Trustees hereby agree as follows:
Section 1. The Trust. The trust created hereby shall be
known as "SCE&G Trust I" (the "Trust"), in which name the Trustees,
or the Depositor to the extent provided herein, may conduct the
business of the Trust, make and execute contracts, and sue and be
sued.
Section 2. The Trust Estate. The Depositor hereby assigns,
transfers, conveys and sets over to the Trust the sum of $10. Such
amount shall constitute the initial trust estate. It is the
intention of the parties hereto that the Trust created hereby
constitute a business trust under Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801 et seq. (the "Business Trust
Act"), and that this document constitutes the governing instrument
of the Trust. The Trustees are hereby authorized and directed to
execute and file a certificate of trust with the Delaware
Secretary of State in accordance with the provisions of the
Business Trust Act.
Section 3. Amended and Restated Trust Agreement. The
Depositor, the Trustees and certain other parties will enter into
an amended and restated Trust Agreement, satisfactory to each such
party and substantially in the form to be included as an exhibit to
the 1933 Act Registration Statement (as defined below), to provide
for the contemplated operation of the Trust created hereby and the
issuance of the Preferred Securities (as defined below) and common
securities of the Trust to be referred to therein. Prior to the
execution and delivery of such amended and restated Trust
Agreement, the Trustees shall not have any duty or obligation
hereunder or with respect to the trust estate, except as otherwise
required by applicable law or as may be necessary to obtain prior
to such execution and delivery and licenses, consents or approvals
required by applicable law or otherwise.
93
<PAGE>
<PAGE>
Section 4. Certain Authorizations. The Depositor, as the
sponsor of the Trust, is hereby authorized, (i) to file with the
Securities and Exchange Commission (the "Commission") and execute,
in each case on behalf of the Trust (a) the Registration Statement
on Form S-3 (the "1933 Act Registration Statement"), including any
pre-effective or post-effective amendments to such 1933 Act
Registration Statement (including the prospectus and the exhibits
contained therein), relating to the registration under the
Securities Act of 1933, as amended, of the preferred securities of
the Trust (the "Preferred Securities") and certain other
securities of the Depositor and (b) a Registration Statement on
Form 8-A (the "1934 Act Registration Statement") (including all
pre-effective and post-effective amendments thereto) relating to
the registration of the Preferred Securities of the Trust under
Section 12 of the Securities Exchange Act of 1934, as amended; (ii)
to file with one or more national securities exchanges (each, an
"Exchange") or the National Association of Securities Dealers
("NASD") and execute on behalf of the Trust a listing application
or applications and all other applications, statements,
certificates, agreements and other instruments as shall be
necessary or desirable to cause the Preferred Securities to be
listed on any such Exchange or the NASD's Nasdaq National Market;
(iii) to file and execute on behalf of the Trust such applications,
reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents as
the Depositor on behalf of the Trust, may deem necessary or
desirable to register the Preferred Securities under the securities
or "Blue Sky" laws; and (iv) to execute on behalf of the Trust such
Underwriting Agreements with one or more underwriters relating to
the offering of the Preferred Securities as the Depositor, on
behalf of the Trust, may deem necessary or desirable. In the event
that any filing referred to in clauses (i), (ii) or (iii) above is
required by the rules and regulations of the Commission, any
Exchange, the NASD or state securities or "Blue Sky" laws, to be
executed on behalf of the Trust by a Trustee, the Depositor and any
Trustee are hereby authorized to join in any such filing and to
execute on behalf of the Trust any and all of the foregoing; it
being understood that The Bank of New York (Delaware), in its
capacity as a trustee of the Trust, shall not be required to join
in any such filing or execute on behalf of the Trust any such
document unless required by any such law, rule or regulation.
Section 5. Counterparts. This Trust Agreement may be
executed in one or more counterparts, each of which shall be deemed
an original but all of which together shall constitute one and the
same instrument.
94
<PAGE>
<PAGE>
Section 6. Trustees. The number of Trustees initially
shall be two (2) and thereafter the number of Trustees shall be
such number as shall be fixed from time to time by a written
instrument signed by the Depositor, which may increase or decrease
the number of Trustees; provided, however, that to the extent
required by the Business Trust Act, one Trustee shall either be a
natural person who is a resident of the State of Delaware or, if
not a natural person, an entity which has its principal place of
business in the State of Delaware and otherwise meets the
requirements of applicable Delaware law. Subject to the foregoing,
the Depositor is entitled to appoint or remove without cause any
Trustee at any time. Any Trustee may resign upon thirty days'
prior notice to the Depositor, provided, however, such notice shall
not be required if it is waived by the Depositor.
Section 7. Limitation. The Bank of New York (Delaware), in
its capacity as a Trustee, shall not have any of the powers or
duties of the Trustees set forth herein, except as expressly
required by the Business Trust Act, and shall be a trustee of the
Trust for the sole purpose of satisfying the requirements of
Section 3807 of the Business Trust Act.
Section 8. Governing Law. This Trust Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware (without regard to conflicts of law principles).
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above
written.
SOUTH CAROLINA ELECTRIC & GAS
COMPANY, as Depositor
By: s/M. R. Cannon
Name: M. R. Cannon
<PAGE>
Exhibit 4-H
CERTIFICATE OF TRUST
OF
SCE&G TRUST I
This Certificate of Trust of SCE&G Trust I (the "Trust"),
dated October 8, 1997, is being duly executed and filed by the
undersigned, as trustees, to form a business trust under the
Delaware Business Trust Act (12 Del. C. (S) 3801 et seq.)
1. Name. The name of the business trust being formed
hereby is SCE&G Trust I.
2. Delaware Trustee. The name and business address of
the trustee of the Trust with a principal place of business in the
State of Delaware is The Bank of New York (Delaware), whose
business address is White Clay Center, Route 273, Newark, Delaware
19711.
IN WITNESS WHEREOF, the undersigned, being the trustees
of the Trust, have executed this Certificate of Trust as of the
date first above written.
THE BANK OF
<PAGE>
Exhibit 4-I
=======================================
SOUTH CAROLINA ELECTRIC & GAS COMPANY
as Issuer
to
THE BANK OF NEW YORK,
as Trustee
---------------------------
JUNIOR SUBORDINATED INDENTURE
Dated as of October 28, 1997
---------------------------
===========================================
SOUTH CAROLINA ELECTRIC & GAS COMPANY
Reconciliation and tie between the Trust Indenture Act of 1939
(including cross-references to provisions of Sections 310 to and
including 317 which, pursuant to Section 318(c) of the Trust Indenture
Act of 1939, as amended by the Trust Reform Act of 1990, are a part of
and govern the Indenture whether or not physically contained therein)
and the Junior Subordinated Indenture, dated as of October 28, 1997.
97<PAGE>
<PAGE>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
Section 310 (a) (1), (2) and (5) 6.9
(a) (3) Not Applicable
(a) (4) Not Applicable
(b) 6.8, 6.10(d)
(c) Not Applicable
Section 311 (a) 6.13
(b) 6.13
(c) Not Applicable
Section 312 (a) 7.1, 7.2(a)
(b) 7.2(b)
(c) 7.2(c)
Section 313 (a) 7.3(a), (b)
(b) 7.3(a)
(c) 7.3(a)
(d) 7.3(c)
Section 314 (a) (1), (2) and (3) 7.4
(a) (4) 10.4
(b) Not Applicable
(c) (1) 1.2
(c) (2) 1.2
(c) (3) Not Applicable
(d) Not Applicable
(e) 1.2
(f) Not Applicable
Section 315 (a) 6.1(a)
(b) 6.2
(c) 6.1(b)
(d) 6.1(c)
(d) (1) 6.1(c)(i)
(d) (2) 6.1(c)(ii)
(d) (3) 6.1(c) (iii)
(e) 5.14
Section 316 (a) 1.1
(a) (1) (A) 5.12
(a) (1) (B) 5.13
(a) (2) Not Applicable
(b) 5.7, 5.8
(c) 1.4(f)
Section 317 (a) (1) 5.3
(a) (2) 5.4
(b) 10.3
Section 318 (a) 1.7
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Junior Subordinated Indenture.
98<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 8
SECTION 1.1. Definitions 8
SECTION 1.2. Compliance Certificate and Opinions 18
SECTION 1.3. Forms of Documents Delivered to
Trustee 19
SECTION 1.4. Acts of Holders 20
SECTION 1.5. Notices, Etc. to the Trustee and the
Corporation 22
SECTION 1.6. Notice to Holders; Waiver 23
SECTION 1.7. Conflict with Trust Indenture Act 23
SECTION 1.8. Effect of Headings and Table of
Contents 23
SECTION 1.9. Successors and Assigns 23
SECTION 1.10. Separability Clause 24
SECTION 1.11. Benefits of Indenture 24
SECTION 1.12. Governing Law 24
SECTION 1.13. Non-Business Days 24
ARTICLE II
SECURITY FORMS 24
SECTION 2.1. Forms Generally 24
SECTION 2.2. Form of Face of Security 25
SECTION 2.3. Form of Reverse of Security 29
SECTION 2.4. Additional Provisions Required in
Global Security 33
SECTION 2.5. Form of Trustee's Certificate of
Authentication 33
ARTICLE III
THE SECURITIES 33
SECTION 3.1. Title and Terms 33
SECTION 3.2. Denominations 37
SECTION 3.3. Execution, Authentication, Delivery
and Dating 37
SECTION 3.4. Temporary Securities 39
SECTION 3.5. Global Securities 39
SECTION 3.6. Registration, Transfer and Exchange
Generally 41
SECTION 3.7. Mutilated, Destroyed, Lost and
Stolen Securities 42
SECTION 3.8. Payment of Interest and Additional
Interest; Interest Rights Preserved 43
SECTION 3.9. Persons Deemed Owners 45
SECTION 3.10. Cancellation 45
SECTION 3.11. Computation of Interest 45
SECTION 3.12. Deferrals of Interest Payment Dates 46
SECTION 3.13. Right of Setoff 47
SECTION 3.14. Agreed Tax Treatment 47
SECTION 3.15. Shortening or Extension of Stated
Maturity 47
SECTION 3.16. CUSIP Numbers 48
99
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ARTICLE IV
SATISFACTION AND DISCHARGE 48
SECTION 4.1. Satisfaction and Discharge of Indenture 48
SECTION 4.2. Application of Trust Money 49
ARTICLE V
REMEDIES 50
SECTION 5.1. Events of Default 50
SECTION 5.2. Acceleration of Maturity; Rescission
and Annulment 51
SECTION 5.3. Collection of Indebtedness and Suits
for Enforcement by Trustee 53
SECTION 5.4. Trustee May File Proofs of Claim 53
SECTION 5.5. Trustee May Enforce Claim Without
Possession of Securities 55
SECTION 5.6. Application of Money Collected 55
SECTION 5.7. Limitation on Suits 55
SECTION 5.8. Unconditional Right of Holders to
Receive Principal, Premium and
Interest; Direct Action by Holders
of Trust Preferred Securities 56
SECTION 5.9. Restoration of Rights and Remedies 57
SECTION 5.10. Rights and Remedies Cumulative 57
SECTION 5.11. Delay or Omission Not Waiver 57
SECTION 5.12. Control by Holders 58
SECTION 5.13. Waiver of Past Defaults 58
SECTION 5.14. Undertaking for Costs 59
SECTION 5.15. Waiver of Usury, Stay or Extension Laws 59
ARTICLE VI
THE TRUSTEE 60
SECTION 6.1. Certain Duties and Responsibilities 60
SECTION 6.2. Notice of Defaults 61
SECTION 6.3. Certain Rights of Trustee 61
SECTION 6.4. Not Responsible for Recitals or Issuance
of Securities 62
SECTION 6.5. May Hold Securities 63
SECTION 6.6. Money Held in Trust 63
SECTION 6.7. Compensation and Reimbursement 63
SECTION 6.8. Disqualification; Conflicting Interests 64
SECTION 6.9. Corporate Trustee Required; Eligibility 64
SECTION 6.10. Resignation and Removal; Appointment
of Successor 65
SECTION 6.11. Acceptance of Appointment by Successor 66
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business 67
SECTION 6.13. Preferential Collection of Claims
Against Corporation 68
SECTION 6.14. Appointment of Authenticating Agent 68
100
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ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND CORPORATION 70
SECTION 7.1. Corporation to Furnish Trustee Names
and Addresses of Holders 70
SECTION 7.2. Preservation of Information,
Communications to Holders 70
SECTION 7.3. Reports by Trustee 71
SECTION 7.4. Reports by Corporation 71
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE 71
SECTION 8.1. Corporation May Consolidate, Etc.,
Only on Certain Terms 71
SECTION 8.2. Successor Corporation Substituted 72
ARTICLE IX
SUPPLEMENTAL INDENTURES 73
SECTION 9.1. Supplemental Indentures without
Consent of Holders 73
SECTION 9.2. Supplemental Indentures with Consent
of Holders 74
SECTION 9.3. Execution of Supplemental Indentures 76
SECTION 9.4. Effect of Supplemental Indentures 76
SECTION 9.5. Conformity with Trust Indenture Act 76
SECTION 9.6. Reference in Securities to
Supplemental Indentures 76
ARTICLE X
COVENANTS 77
SECTION 10.1. Payment of Principal, Premium and
Interest 77
SECTION 10.2. Maintenance of Office or Agency 77
SECTION 10.3. Money for Security Payments to be
Held in Trust 79
SECTION 10.4. Statement as to Compliance 79
SECTION 10.5. Waiver of Certain Covenants 79
SECTION 10.6. Additional Sums 80
SECTION 10.7. Additional Covenants 80
SECTION 10.8. Original Issue Discount 82
ARTICLE XI
REDEMPTION OF SECURITIES 82
SECTION 11.1 Applicability of This Article 82
SECTION 11.2. Election to Redeem; Notice to Trustee 82
SECTION 11.3. Selection of Securities to be Redeemed 83
SECTION 11.4. Notice of Redemption 83
SECTION 11.5. Deposit of Redemption Price 84
SECTION 11.6. Payment of Securities Called for
Redemption 84
101
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SECTION 11.7. Right of Redemption of Securities
Initially Issued to an Issuer Trust 85
ARTICLE XII
SINKING FUNDS 86
SECTION 12.1. Applicability of Article 86
SECTION 12.2. Satisfaction of Sinking Fund Payments
with Securities 86
SECTION 12.3. Redemption of Securities for Sinking
Fund 86
ARTICLE XIII
SUBORDINATION OF SECURITIES 88
SECTION 13.1. Securities Subordinate to Senior Debt 88
SECTION 13.2. No Payment When Senior Debt in Default;
Payment Over of Proceeds Upon
Dissolution, Etc 88
SECTION 13.3. Payment Permitted If No Default 90
SECTION 13.4. Subrogation to Rights of Holders of
Senior Debt 91
SECTION 13.5. Provisions Solely to Define Relative
Rights 91
SECTION 13.6. Trustee to Effectuate Subordination 92
SECTION 13.7. No Waiver of Subordination Provisions 92
SECTION 13.8. Notice to Trustee 93
SECTION 13.9. Reliance on Judicial Order or
Certificate of Liquidating Agent 93
SECTION 13.10. Trustee Not Fiduciary for Holders of
Senior Debt 94
SECTION 13.11. Rights of Trustee as Holder of Senior
Debt; Preservation of Trustee's
Rights 94
SECTION 13.12. Article Applicable to Paying Agents 94
102
<PAGE>
<PAGE>
JUNIOR SUBORDINATED INDENTURE, dated as of October 28, 1997,
between South Carolina Electric & Gas Company, a South Carolina
corporation (the "Corporation"), and The Bank of New York, a New
York banking corporation, as Trustee (the "Trustee").
RECITALS
WHEREAS, the Corporation has duly authorized the execution and
delivery of this Indenture to provide for the issuance from time to
time of its unsecured junior subordinated debt securities in series
(hereinafter called the "Securities") of substantially the tenor
hereinafter provided, including Securities issued to evidence loans
made to the Corporation of the proceeds from the issuance from time
to time by one or more business trusts (each an "Issuer Trust") of
preferred undivided beneficial interests in the assets of such
Issuer Trusts (the "Trust Preferred Securities") and common
undivided beneficial interests in the assets of such Issuer Trusts
(the "Common Securities" and, collectively with the Trust Preferred
Securities, the "Trust Securities"), and to provide the terms and
conditions upon which the Securities are to be authenticated,
issued and delivered; and
WHEREAS, 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 covenanted
and agreed, for the equal and proportionate benefit of all Holders
of the Securities or of any series thereof, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as
the singular;
(b) All other terms used herein that are defined in the
Trust Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
(c) The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation";
(d) All accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
accepted accounting principles;
(e) Whenever the context may require, any gender shall
be deemed to include the others;
103
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(f) 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
(g) The words "hereby," "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 1.4.
"Additional Interest" means the interest, if any, that shall
accrue on any interest on the Securities of any series the payment
of which has not been made on the applicable Interest Payment Date
and which shall accrue at the rate per annum specified or
determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
"Additional Taxes" means any additional taxes, duties and
other governmental charges to which an Issuer Trust has become
subject from time to time as a result of a Tax Event.
"Administrative Trustees" means, in respect of any Issuer
Trust, each Person identified as an "Administrative Trustee" in the
related Trust Agreement, solely in such Person's capacity as
Administrative Trustee of such Issuer Trust under such Trust
Agreement and not in such Person's individual capacity, or any
successor administrative trustee appointed as therein provided.
"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.
"Agent Member" means any member of, or participant in, the
Depositary.
"Allocable Amounts," when used with respect to any Senior
Subordinated Indebtedness of the Corporation means the amount
necessary to pay all principal of (and premium, if any) and
interest, if any, on such Senior Subordinated Indebtedness of the
Corporation, in full less, if applicable, any portion of such
amounts which would have been paid to, and retained by, the holders
of such Senior Subordinated Indebtedness (whether as a result of
the receipt of payments by the holders of such Senior Subordinated
Indebtedness from the Corporation or any other obligor thereon or
from any holders of, or trustee in respect of, other indebtedness
that is subordinate and junior in right of payment to such Senior
Subordinated Indebtedness pursuant to any provision of such
indebtedness for the payment over of amounts received on account of
such indebtedness to the holders of such Senior Subordinated
Indebtedness) but for the fact that such Senior Subordinated
Indebtedness is subordinate or junior in right of payment to trade
accounts payable or accrued liabilities arising in the ordinary
course of business.
104
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"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest
therein, the rules and procedures of the Depositary for such
Security, in each case to the extent applicable to such transaction
and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 6.14 to act on behalf of the Trustee to
authenticate Securities of one or more series.
"Bankruptcy Code" means Title 11 of the United States Code or
any successor statute thereto, in each case as amended from time to
time.
"Board of Directors" means the board of directors of the
Corporation or the Executive Committee of the board of directors of
the Corporation (or any other committee of the board of directors
of the Corporation performing similar functions) or a committee
designated by the board of directors of the Corporation (or such
committee), comprised of two or more members of the board of
directors or officers, or both, of the Corporation in each case as
the context requires.
"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, or officers of the
Corporation to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or
Sunday, (ii) a day on which banking institutions in the City of New
York are authorized or required by law or executive order to remain
closed or (c) a day on which the Corporate Trust Office of the
Trustee, or, with respect to the Securities of a series initially
issued to an Issuer Trust for so long as such Securities are held
by such Issuer Trust, the "Corporate Trust Office" (as defined in
the related Trust Agreement) of the Property Trustee under the
related Trust Agreement, is closed for business.
"Commission" means the Securities and Exchange Commission, as
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 on such date.
"Common Securities" has the meaning specified in the first
recital of this Indenture.
"Common Stock" means the common stock of the Corporation.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust
business shall be administered.
"Corporation" includes a corporation, association, company,
limited liability company, joint-stock company or business trust.
105
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"Corporation" means the Person named as the "Corporation" in
the first paragraph of this Indenture until a successor corporation
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Corporation" shall mean such
successor corporation.
"Corporation Request" and "Corporation Order" mean,
respectively, the written request or order signed in the name of
the Corporation by the Chairman of the Board of Directors, its
Chief Executive Officer, its President, its Chief Financial
Officer, a Vice President or its Treasurer, and by its Secretary or
an Assistant Secretary, and delivered to the Trustee.
"Debt" means, with respect to any Person, whether recourse is
to all or a portion of the assets of such Person and whether or not
contingent and without duplication, (i) every obligation of such
Person for money borrowed; (ii) every obligation of such Person
evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition
of property, assets or businesses; (iii) every reimbursement
obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account
of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but
excluding trade accounts payable or accrued liabilities arising in
the ordinary course of business); (v) every capital lease
obligation of such Person; (vi) all indebtedness of the
Corporation, whether incurred on or prior to the date of this
Indenture or thereafter incurred, for claims in respect of
derivative products, including interest rate, foreign exchange rate
and commodity forward contracts, options and swaps and similar
arrangements; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another Person and all dividends of
another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or
indirectly, as obligor or otherwise.
"Defaulted Interest" has the meaning specified in Section 3.8.
"Delaware Trustee" means, with respect to any Issuer Trust,
the Person identified as the "Delaware Trustee" in the related
Trust Agreement, solely in its capacity as Delaware Trustee of such
Issuer Trust under such Trust Agreement and not in its individual
capacity, or its successor in interest in such capacity, or any
successor Delaware trustee appointed as therein provided.
"Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in the form of one or
more Global Securities, the Person designated as Depositary by the
Corporation pursuant to Section 3.1 with respect to such series (or
any successor thereto).
"Discount Security" means any security that 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 5.2.
106
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"Distributions," with respect to the Trust Securities issued
by an Issuer Trust, means amounts payable in respect of such Trust
Securities as provided in the related Trust Agreement and referred
to therein as "Distributions."
"Dollar" or "$" means the currency of the United States of
America that, as at the time of payment, is legal tender for the
payment of public and private debts.
"Event of Default," unless otherwise specified with respect to
a series of Securities as contemplated by Section 3.1, has the
meaning specified in Article V.
"Exchange Act" means the Securities Exchange Act of 1934 or
any statute successor thereto, in each case as amended from time to
time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.12.
"Global Security" means a Security in the form prescribed in
Section 2.4 evidencing all or part of a series of Securities,
issued to the Depositary or its nominee for such series, and
registered in the name of such Depositary or its nominee.
"Guarantee Agreement" means, with respect to any Issuer Trust,
the Guarantee Agreement executed by the Corporation for the benefit
of the Holders of the Trust Preferred Securities issued by such
Issuer Trust as modified, amended or supplemented from time to
time.
"Holder" means a Person in whose name a Security is registered
in the Securities Register.
"Indenture" means this instrument as originally executed or 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 and shall include the terms of each
particular series of Securities established as contemplated by
Section 3.1.
"Interest Payment Date" means, as to each series of
Securities, the Stated Maturity of an installment of interest on
such Securities.
"Investment Company Act" means the Investment Company Act of
1940 or any successor statute thereto, in each case as amended from
time to time.
"Issuer Trust" has the meaning specified in the first recital
of this Indenture.
"Maturity" when used with respect to any Security means the
date on which the principal of such Security or any installment of
principal becomes due and 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 6.2.
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"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the Chief Executive Officer, the President,
the Chief Financial Officer, a Vice President, the Chief Financial
Officer or the Treasurer, and by the Secretary or an Assistant
Secretary, of the Corporation and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for or an employee of the Corporation or any
Affiliate of the Corporation.
"Original Issue Date" means the date of issuance specified as
such in each Security.
"Outstanding" means, when used in reference to the Securities,
as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities for whose payment money in the necessary
amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Securities; and
(c) Securities in substitution for or in lieu of which
other Securities have been authenticated and delivered or that have
been paid pursuant to Section 3.7, unless proof satisfactory to the
Trustee is presented that any such Securities are held by Holders
in whose hands such Securities are valid, binding and legal
obligations of the Corporation;
provided, however, that in determining whether the Holders of the
requisite principal amount of Outstanding Securities have given any
request, demand, authorization, direction, notice, consent or
waiver hereunder, Securities owned by the Corporation or any other
obligor upon the Securities or any Affiliate of the Corporation or
such other obligor 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 or waiver, only
Securities that the Trustee knows to be so owned shall be so
disregarded. Securities so owned that 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 such other obligor. Upon the
written request of the Trustee, the Corporation shall furnish to
the Trustee promptly an Officers' Certificate listing and
identifying all Securities, if any, known by the Corporation to be
owned or held by or for the account of the Corporation, or any
other obligor on the Securities or any Affiliate of the Corporation
or such obligor, and subject to the provisions of Section 6.1, the
Trustee shall be entitled to accept such Officers' Certificate as
conclusive evidence of the facts therein set forth and of the fact
that all Securities not listed therein are Outstanding for the
purpose of any such determination. Notwithstanding anything herein
to the contrary, Securities of any series initially issued to an
Issuer Trust that are owned by such Issuer Trust shall be deemed to
be Outstanding notwithstanding the ownership by the Corporation or
an Affiliate of any beneficial interest in such Issuer Trust.
108
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"Paying Agent" means the Trustee or any Person authorized by
the Corporation to pay the principal of (or premium, if any) or
interest on, or other amounts in respect of, any Securities on
behalf of the Corporation.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, trust,
unincorporated association or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"Place of Payment" means, with respect to the Securities of
any series, the place or places where the principal of (and
premium, if any) and interest on the Securities of such series are
payable pursuant to Section 3.1.
"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. For the purposes of
this definition, any security authenticated and delivered under
Section 3.7 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.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, with respect to any Issuer Trust,
the Person identified as the "Property Trustee" in the related
Trust Agreement, solely in its capacity as Property Trustee of such
Issuer Trust under such Trust Agreement and not in its individual
capacity, or its successor in interest in such capacity, or any
successor Property Trustee appointed as therein provided.
"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 or the terms of such Security.
"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 with respect to the Securities of a series means,
unless otherwise provided pursuant to Section 3.1 with respect to
Securities of such series, the date that is 15 days next preceding
such Interest Payment Date (whether or not a Business Day).
"Responsible Officer," when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors,
the chairman or any vice-chairman of the executive committee of the
board of directors, the chairman of the trust committee, the
president, any vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer 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 his knowledge of
and familiarity with the particular subject.
109
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"Rights Plan" means a plan of the Corporation providing for
the issuance by the Corporation to all holders of its Common Stock
of rights entitling the holders thereof to subscribe for or
purchase shares of any class or series of capital stock of the
Corporation which rights (i) are deemed to be transferred with such
shares of such Common Stock and (ii) are also issued in respect of
future issuances of such Common Stock, in each case until the
occurrence of a specified event or events.
"Securities" or "Security" means any debt securities or debt
security, as the case may be, authenticated and delivered under
this Indenture.
"Securities Act" means the Securities Act of 1933 or any
successor statute thereto, in each case as amended from time to
time.
"Securities Register" and "Securities Registrar" have the
respective meanings specified in Section 3.6.
"Senior Debt" of the Corporation means (i) Senior Indebtedness
of the Corporation (but excluding trade accounts payable and
accrued liabilities arising in the ordinary course of business) and
(ii) the Allocable Amounts of Senior Subordinated Indebtedness of
the Corporation.
"Senior Indebtedness" means any obligation of the Corporation
to its creditors, whether now outstanding or subsequently incurred,
other than any obligation as to which, in the instrument creating
or evidencing the obligation or pursuant to which the obligation is
outstanding, it is provided that such obligation is not Senior
Indebtedness. Senior Indebtedness does not include Senior
Subordinated Indebtedness or the Securities.
"Senior Subordinated Indebtedness" means any obligation of the
Corporation to its creditors, whether now outstanding or
subsequently incurred, where the instrument creating or evidencing
the obligation or pursuant to which the obligation is outstanding
provides that it is subordinate and junior in right of payment to
Senior Indebtedness.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section
3.7.
"Stated Maturity," when used with respect to any Security or
any installment of principal thereof (or premium, if any) or
interest (including any Additional Interest) thereon, means the
date specified pursuant to the terms of such Security as the fixed
date on which the principal of such Security or such installment of
principal (or premium, if any) or interest (including any
Additional Interest) is due and payable, as such date may, in the
case of the stated maturity of the principal on any security, be
shortened or extended as provided pursuant to the terms of such
Security and this Indenture and, in the case of any installment of
interest, subject to the deferral of any such date in the case of
any Extension Period.
110
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"Subsidiary" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or indirectly,
by the Corporation or by one or more other Subsidiaries, or by the
Corporation and one or more other Subsidiaries. For purposes of
this definition, "voting stock" means stock that ordinarily has
voting power for the election of directors, whether at all times or
only so long as no senior class of stock has such voting power by
reason of any contingency.
"Successor Security" of any particular Security means every
Security issued after, and 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 3.7 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.
"Tax Event" means the receipt by an Issuer Trust of an Opinion
of Counsel (as defined in the relevant Trust Agreement) experienced
in such matters to the effect that, as a result of any amendment
to, or change (including any announced proposed change) in, the
laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as
a result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement or decision
is announced on or after the date of issuance of the Trust
Preferred Securities of such Issuer Trust, there is more than an
insubstantial risk that (i) such Issuer Trust is, or will be within
90 days of the delivery of such Opinion of Counsel, subject to
United States federal income tax with respect to income received or
accrued on the corresponding series of Securities issued by the
Corporation to such Issuer Trust, (ii) interest payable by the
Corporation on such corresponding series of Securities is not, or
within 90 days of the delivery of such Opinion of Counsel will not
be, deductible by the Corporation, in whole or in part, for United
States federal income tax purposes or (iii) such Issuer Trust is,
or will be within 90 days of the delivery of such Opinion of
Counsel, subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"Trust Agreement" means, with respect to any Issuer Trust, the
trust agreement or other governing instrument of such Issuer Trust.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture, solely in its capacity as such and not
in its individual capacity, 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.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended and as in effect on the date as of this Indenture,
except as provided in Section 9.5.
"Trust Preferred Securities" has the meaning specified in the
first recital of this Indenture.
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"Trust Securities" has the meaning specified in the first
recital of this Indenture.
"Vice President" means any duly appointed vice president,
whether or not designated by a number or a word or words added
before or after the title "vice president," of the Corporation.
SECTION 1.2. Compliance Certificate 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 an Officers'
Certificate stating that all conditions precedent (including
covenants compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent
(including covenants compliance with which constitutes a condition
precedent), if any, have been complied with, except that in the
case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this
Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture (other than
the certificates provided pursuant to Section 10.4) shall include:
(a) a statement by each individual signing such
certificate or opinion that such individual has read such covenant
or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
of such individual contained in such certificate or opinion are
based;
(c) a statement that, in the opinion of such individual,
he or she has made such examination or investigation as is
necessary to enable him or her to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and
(d) a statement as to whether, in the opinion of such
individual, such condition or covenant has been complied with.
SECTION 1.3. Forms 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.
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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 matters upon which his or her 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 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.
SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given to or taken by Holders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by
such Holders in person or by an agent duly appointed in writing;
and, except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments is or
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 6.1) conclusive in favor of the Trustee and the Corporation
if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a
witness of such execution or by the certificate of any 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 or her the execution thereof. Where
such execution is by a Person acting in other than his or her
individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his or her authority.
(c) The fact and date of the execution by any Person of any
such instrument or writing, or the authority of the Person
executing the same, may also be proved in any other manner that the
Trustee deems sufficient and in accordance with such reasonable
rules as the Trustee may determine.
(d) The ownership of Securities shall be proved by the
Securities Register.
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(e) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Security shall
bind every future Holder of the same Security and the Holder of
every Security issued upon the transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done 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.
(f) 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 succeeding 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 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 (as defined below) 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
cancelled 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 1.6.
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 5.2, (iii) any request to institute proceedings referred to
in Section 5.7(b) or (iv) any direction referred to in Section
5.12, 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, 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
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 cancelled and
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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 given to
the Corporation in writing and to each Holder of Securities of the
relevant series in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section,
the party that 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 1.6, on or prior to the existing Expiration Date. If an
Expiration Date is not designated with respect to any record date
set pursuant to this Section, the party hereto that 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.
(g) 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 1.5. Notices, Etc. to the Trustee and the
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,
(a) the Trustee by any Holder, any holder of Trust
Preferred Securities or the Corporation shall be sufficient for
every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee at its Corporate Trust Office, or
(b) the Corporation by the Trustee, any Holder or any
holder of Trust Preferred Securities shall be sufficient for every
purpose (except as otherwise provided in Section 6.2) hereunder if
in writing and mailed, first class, postage prepaid, to the
Corporation addressed to it at the address of its principal office
specified adjacent to the Corporation's signature to this
instrument or at any other address previously furnished in writing
to the Trustee by the Corporation.
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SECTION 1.6. 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 the
address of such Holder as it appears in the Securities Register,
not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of
the suspension of or irregularities in regular mail service or for
any other reason, it shall be impossible or impracticable to mail
notice of any event to Holders when said notice is required to be
given pursuant to any provision of this Indenture or of the
relevant Securities, then any manner of giving such notice as shall
be satisfactory to the Trustee shall be deemed to be a sufficient
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.
SECTION 1.7. Conflict with Trust Indenture Act.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by any of Sections 310 to and
including 317 of the Trust Indenture Act through operation of
Section 318(c) thereof, such imposed duties 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 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the
construction hereof.
SECTION 1.9. 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 1.10. Separability Clause.
If 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.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto
and their successors and assigns, the holders of Senior Debt, the
Holders of the Securities and, to the extent expressly provided in
Sections 5.1, 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and 9.2, the holders
of Trust Preferred Securities, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
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SECTION 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.13. Non-Business Days.
If 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 the
Securities) payment of interest or principal (and premium, if any)
or other amounts in respect of such Security need not be made on
such date, but may be made on the next succeeding Business Day (and
no interest shall accrue in respect of the amounts whose payment is
so delayed for the period from and after such Interest Payment
Date, Redemption Date or Stated Maturity, as the case may be, until
such next succeeding Business Day) except that, if such Business
Day falls 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 Interest Payment
Date or Redemption Date or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities of each series and the Trustee's certificate of
authentication shall be in substantially the forms set forth in
this Article, or in such other form or forms as shall be
established by or pursuant to a Board Resolution 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
applicable tax laws or the rules of any securities exchange or as
may, consistently herewith, be determined by the officers executing
such securities, as evidenced by their execution of the Securities.
If the form of Securities of any series is 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 Corporation Order contemplated
by Section 3.3 with respect to the authentication and delivery of
such Securities.
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods, if
required by any securities exchange on which the Securities may be
listed, on a steel engraved border or steel engraved borders or may
be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced
by their execution of such Securities.
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SECTION 2.2. Form of Face of Security.
SOUTH CAROLINA ELECTRIC & GAS COMPANY
[TITLE OF SECURITY]
CUSIP NO.
No. $
SOUTH CAROLINA ELECTRIC & GAS COMPANY, a corporation organized
and existing under the laws of South Carolina (hereinafter 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 a Global Security, then insert, if applicable--, or
such other principal amount represented hereby as may be set forth
in the records of the Securities Registrar hereinafter referred to
in accordance with the Indenture]. The Corporation further
promises to pay interest on said principal sum from
_______________________, or from the most recent Interest Payment
Date to which interest has been paid or duly provided for,
[monthly] [quarterly] [semi-annually] [if applicable, insert--
(subject to deferral as set forth herein)] in arrears on [insert
applicable Interest Payment Dates] of each year, commencing
, at the rate of % per annum, [if
applicable insert--together with Additional Sums, if any, as
provided in Section 10.6 of the Indenture] until the principal
hereof is paid or duly provided for or made available for payment
[if applicable, insert-- ; provided that any overdue principal,
premium or Additional Sums and any overdue installment of interest
shall bear Additional Interest at the rate of ________% per annum
(to the extent that the payment of such interest shall be legally
enforceable), compounded [monthly] [quarterly] [semi-annually],
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 amount of interest payable for any period less than a
full interest period shall be computed on the basis of a 360- day
year of twelve 30-day months and the actual days elapsed in a
partial month in such period. The amount of interest payable for
any full interest period shall be computed by dividing the
applicable rate per annum by [twelve/four/two]. The interest so
payable, and punctually paid or duly provided for, on any Interest
Payment Date will, as provided in the 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 (the "Regular Record Date") for such interest
installment [if applicable insert--, which shall be the
[____________ or ____________] (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 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 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 ten 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 applicable, insert--So long as no Event of Default has
occurred and is continuing, the Corporation shall have the right,
at any time during the term of this Security, from time to time to
defer the payment of interest on this Security for up to [_______]
consecutive [monthly] [quarterly] [semi-annual] interest payment
periods with respect to each deferral period (each an "Extension
Period") [If applicable, insert--, during which Extension Periods
the Corporation shall have the right to make partial payments of
interest on any Interest Payment Date, and] at the end of which the
Corporation shall pay all interest then accrued and unpaid
including any Additional Interest, as provided below; provided,
however, that no Extension Period shall extend beyond the Stated
Maturity of the principal of this Security [If Stated Maturity can
be shortened or extended, insert--, as then in effect,] and no such
Extension Period may end on a date other than an Interest Payment
Date. Prior to the termination of any such Extension Period, the
Corporation may further defer the payment of interest, provided
that no Extension Period shall exceed -- consecutive [monthly]
[quarterly] [semi-annual] interest payment periods, extend beyond
the Stated Maturity of the principal of this Security or end on a
date other than an Interest Payment Date. Upon the termination of
any such Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Interest then due on any
Interest Payment Date, the Corporation may elect to begin a new
Extension Period, subject to the above conditions. No interest
shall be due and payable during an Extension Period, except at the
end thereof, but each installment of interest that would otherwise
have been due and payable during such Extension shall bear
Additional Interest (to the extent that the payment of such
interest shall be legally enforceable) at the rate of ____% per
annum, compounded [monthly] [quarterly] [semi-annually] and
calculated as set forth in the first paragraph of this Security,
from the dates on which amounts would otherwise have been due and
payable until paid or made available for payment. The Corporation
shall give the Holder of this Security and the Trustee notice of
its election to begin any Extension Period at least one Business
Day prior to the next succeeding Interest Payment Date on which
interest on this Security would be payable but for such deferral
[if applicable, insert--or so long as such Securities are held by
[insert name of applicable Issuer Trust], at least one Business Day
prior to the earlier of (i) the next succeeding date on which
Distributions on the Trust Preferred Securities of such Issuer
Trust would be payable but for such deferral and (ii) the date on
which the Property Trustee of such Issuer Trust is required to give
notice to any securities exchange or other applicable self-
regulatory organization or to holders of such Trust Preferred
Securities of the record date or the date such Distributions are
payable].
Payment of the principal of (and premium, if any) and interest
on this Security will be made at the office or agency of the
Corporation maintained for that purpose in the [insert Place of
Payment], 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 (i)
by check mailed to the address of the Person entitled thereto as
such address shall appear in the Securities Register or (ii) by
wire transfer in immediately available funds at such place and to
such account as may be designated by the Person entitled thereto as
specified in the Securities Register].
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The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Debt, and this
Security is issued subject to the provisions of the Indenture with
respect thereto. Each Holder of this Security, by accepting the
same, (i) agrees to and shall be bound by such provisions, (ii)
authorizes and directs the Trustee on his or her behalf to take
such actions as may be necessary or appropriate to effectuate the
subordination so provided and (iii) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof,
by his or her acceptance hereof, waives all notice of the
acceptance of the subordination provisions contained herein and in
the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such
holder upon said provisions.
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.
SOUTH CAROLINA ELECTRIC & GAS COMPANY
By:
Name:
Title:
Attest:
- ----------------------------------
[Secretary or Assistant Secretary]
SECTION 2.3. 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 the Junior Subordinated
Indenture, dated as of October 28, 1997 (herein called the
"Indenture"), between the Corporation and
, as Trustee (herein called the "Trustee," which
term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Corporation, the
Trustee, the holders of Senior Debt 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 $ ].
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All terms used in this Security that are defined in the
Indenture [if applicable, insert--or in the Amended and Restated
Trust Agreement, dated as of October 28, 1997 (as modified, amended
or supplemented from time to time, the "Trust Agreement"), relating
to [insert name of Issuer Trust] (the "Issuer Trust") among the
Corporation, as Depositor, the Trustees named therein and the
Holders from time to time of the Trust Securities issued pursuant
thereto, shall have the meanings assigned to them in the Indenture
[if applicable, insert--or the Trust Agreement, as the case may
be].
[If applicable, insert--The Corporation may at any time, at
its option, on or after _________, ____, and subject to the terms
and conditions of Article XI of the Indenture, redeem this Security
in whole at any time or in part from time to time, at the following
Redemption Prices (expressed as percentages of the principal amount
hereof): If redeemed during the 12-month period beginning
_____________,
Redemption
Year Price
and thereafter at a Redemption Price equal to 100% of the principal
amount hereof, together, in the case of any such redemption, with
accrued interest [if applicable, insert--, including any Additional
Interest,] to but excluding the date fixed for redemption.]
[If applicable, insert--In addition, upon the occurrence and
during the continuation of a Tax Event in respect of the Issuer
Trust, the Corporation may, at its option, at any time within 90
days of the occurrence and during the continuation of such Tax
Event redeem this Security, in whole but not in part, subject to
the terms and conditions of Article XI of the Indenture, at a
redemption price equal to [insert formula]].
[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 for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon the
cancellation hereof.]
The Indenture contains provisions for satisfaction and
discharge of the entire indebtedness of this Security upon
compliance by the Corporation with certain conditions set forth in
the Indenture.
The Indenture permits, with certain exceptions as therein
provided, the Corporation and the Trustee at any time to enter into
a supplemental indenture or indentures for the purpose of modifying
in any manner the rights and obligations of the Corporation and of
the Holders of the Securities, with the consent of the Holders of
not less than a majority in principal amount of the Outstanding
Securities of each series to be affected by such supplemental
indenture. The Indenture also contains provisions permitting
Holders of specified percentages 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 and
certain past defaults under the Indenture and their consequences.
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 herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this
Security.
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[If the Security is not a Discount Security, insert--As
provided in and subject to the provisions of the Indenture, if an
Event of Default with respect to the Securities of this series at
the time Outstanding occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Outstanding Securities of this
series may declare the principal amount of all the Securities of
this series to be due and payable immediately, by a notice in
writing to the Corporation (and to the Trustee if given by Holders)
[if applicable, insert--, provided that, if upon an Event of
Default, the Trustee or such Holders fail to declare the principal
of all the Outstanding Securities of this series to be immediately
due and payable, the holders of at least 25% in aggregate
Liquidation Amount of the Trust Preferred Securities then
Outstanding shall have the right to make such declaration by a
notice in writing to the Corporation and the Trustee]; and upon any
such declaration the principal amount of and the accrued interest
(including any Additional Interest) on all the Securities of this
series shall become immediately due and payable, provided that the
payment of principal and interest (including any Additional
Interest) on such Securities shall remain subordinated to the
extent provided in Article XIII of the Indenture.]
[If the Security is a Discount Security, insert--As provided
in and subject to the provisions of the Indenture, if an Event of
Default with respect to the Securities of this series at the time
Outstanding occurs and is continuing, then and in every such case
the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities of this series may
declare an amount of principal of the Securities of this series to
be due and payable immediately, by a notice in writing to the
Corporation (and to the Trustee if given by Holders) [if
applicable, insert--, provided that, if upon an Event of Default,
the Trustee or such Holders fail to declare such principal amount
of the Outstanding Securities of this series to be immediately due
and payable, the holders of at least 25% in aggregate Liquidation
Amount of the Trust Preferred Securities then Outstanding shall
have the right to make such declaration by a notice in writing to
the Corporation and the Trustee]. The principal amount payable upon
such acceleration shall be equal to--insert formula for determining
the amount]. Upon any such declaration, such amount of the
principal of and the accrued interest (including any Additional
Interest) on all the Securities of this series shall become
immediately due and payable, provided that the payment of such
principal and interest (including any Additional Interest) on all
the Securities of this series shall remain subordinated to the
extent provided in Article XIII of the Indenture. 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 this Security shall terminate.]
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 premium, if any) and interest [insert if
applicable--including any Additional Interest)] on this Security at
the times, place and rate, and in the coin or currency, herein
prescribed.
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As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable in the Securities Register, upon surrender of this
Security for registration of transfer at the office or agency of
the Corporation maintained under Section 10.2 of the Indenture for
such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and
the Securities Registrar duly executed by, the Holder hereof or
such Holder's attorney duly authorized in writing, and thereupon
one or more new Securities of this series, 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 $25 and any integral
multiple of $25 in excess 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.
The Corporation and, by its acceptance of this Security or a
beneficial interest herein, the Holder of, and any Person that
acquires a beneficial interest in, this Security agree that for
United States federal, state and local tax purposes it is intended
that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 2.4. Additional Provisions Required in Global
Security.
Unless otherwise specified as contemplated by Section 3.1, any
Global Security issued hereunder shall, in addition to the
provisions contained in Sections 2.2 and 2.3, 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 OF A DEPOSITARY. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME
OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND MAY
NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY, EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
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SECTION 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificates 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.
Dated:
THE BANK OF NEW YORK,
as Trustee
By: ___________________________________
Authorized Signatory
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities that 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 3.3, set forth or determined in the manner
provided in an Officers' Certificate or established in one or more
indentures supplemental hereto, prior to the issuance of Securities
of a series:
(a) the title of the securities of such series, which
shall distinguish the Securities of the series from all other
Securities;
(b) the limit, if any, upon the aggregate principal
amount of the Securities of such series that 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 3.4, 3.6, 3.7, 9.6 or 11.6 and except for any
Securities that, pursuant to Section 3.3, are deemed never to have
been authenticated and delivered hereunder); provided, however,
that the authorized aggregate principal amount of such series may
be increased above such amount by a Board Resolution to such
effect;
(c) 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;
(d) the Stated Maturity or Maturities on which the
principal of the Securities of such series is payable or the method
of determination thereof and any dates on which or circumstances
under which, the Corporation shall have the right to extend or
shorten such Stated Maturity or Maturities;
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(e) the rate or rates, if any, at which the Securities
of such series shall bear interest, if any, the rate or rates and
extent to which Additional Interest, if any, shall be payable in
respect of any Securities of such series, the date or dates from
which any such interest or Additional Interest shall accrue, the
Interest Payment Dates on which such interest shall be payable, the
right, pursuant to Section 3.12 or as otherwise set forth therein,
of the Corporation to defer or extend an Interest Payment Date and
the Regular Record Date for the interest payable on any Interest
Payment Date or the method by which any of the foregoing shall be
determined;
(f) the place or places where the principal of (and
premium, if any) and interest (including any Additional Interest)
on the Securities of such series shall be payable, the place or
places where the Securities of such series may be presented for
registration of transfer or exchange, any restrictions that may be
applicable to any such transfer or exchange in addition to or in
lieu of those set forth herein and, if other than set forth in this
Indenture, the place or places where notices and demands to or upon
the Corporation in respect of the Securities of such series may be
made;
(g) the period or periods within or the date or dates on
which, if any, the price or prices at which and the terms and
conditions upon which the Securities of such 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 such Securities shall be
evidenced;
(h) the obligation or the right, if any, of the
Corporation to redeem, repay or purchase the Securities of such
series pursuant to any sinking fund, amortization or analogous
provisions, or at the option of a Holder thereof, and the period or
periods within which, the price or prices at which, the currency or
currencies (including currency unit or units) in which and the
other terms and conditions upon which Securities of the series
shall be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation;
(i) the denominations in which any Securities of such
series shall be issuable, if other than denominations of $25 and
any integral multiple thereof;
(j) if other than Dollars, the currency or currencies
(including any currency unit or units) in which the principal of
(and premium, if any) and interest and Additional Interest, if any,
on the Securities of the series shall be payable, or in which the
Securities of the series shall be denominated and the manner of
determining the equivalent thereof in Dollars for purposes of the
definition of Outstanding;
(k) the additions, modifications or deletions, if any, in
the Events of Default or covenants of the Corporation set forth
herein with respect to the Securities of such series;
(l) if other than the principal amount thereof, the
portion of the principal amount of Securities of such series that
shall be payable upon declaration of acceleration of the Maturity
thereof;
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(m) 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);
(n) the additions or changes, if any, to this Indenture
with respect to the Securities of such series as shall be necessary
to permit or facilitate the issuance of the Securities of such
series in bearer form, registrable or not registrable as to
principal, and with or without interest coupons;
(o) any index or indices used to determine the amount of
payments of principal of and premium, if any, on the Securities of
such series or the manner in which such amounts will be determined;
(p) 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 Depositaries
for such Global Securities, the form of any legend or legends that
shall be borne by any such Global Security in addition to or in
lieu of that set forth in Section 2.4 and any circumstances in
addition to or in lieu of those set forth in Section 3.6 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;
(q) the appointment of any Paying Agent or agents for
the Securities of such series;
(r) the terms of any right to convert or exchange
Securities of such series into any other securities or property of
the Corporation, and the additions or changes, if any, to this
Indenture with respect to the Securities of such series to permit
or facilitate such conversion or exchange;
(s) if such Securities are to be issued to an Issuer
Trust, the form or forms of the Trust Agreement and Guarantee
Agreement relating thereto;
(t) if other than as set forth herein, the relative
degree, if any, to which the Securities of the series shall be
senior to or be subordinated to other series of Securities in right
of payment, whether such other series of Securities are Outstanding
or not;
(u) any addition to or change in the Events of Default
which applies 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 5.2;
(v) any addition to or change in the covenants set forth
in Article X which applies to Securities of the series; and
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(w) any other terms of the Securities of such series
(which terms shall not be inconsistent with the provisions of this
Indenture, except as permitted by Section 9.1(f)).
All Securities of any one series shall be substantially
identical except as to denomination and except as may otherwise be
provided herein or in or pursuant to such Board Resolution and set
forth, or determined in the manner provided, in such Officers'
Certificate or in any 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 Officers' Certificate setting
forth the terms of the series.
The Securities shall be subordinated in right of payment to
Senior Debt as provided in Article XIII.
SECTION 3.2. Denominations.
The Securities of each series shall be in registered form
without coupons and shall be issuable in denominations of $25 and
any integral multiple thereof, unless otherwise specified as
contemplated by Section 3.1.
SECTION 3.3. 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, its Chief Financial Officer, one of its Vice Presidents
or its Treasurer, under its corporate seal reproduced or impressed
thereon and 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. 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 Corporation Order for the authentication and
delivery of such Securities and the Trustee in accordance with the
Corporation Order shall authenticate and make available for
delivery such Securities. 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 2.1 and 3.1, 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 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating:
(a) if the form of such Securities has been established
by or pursuant to Board Resolution as permitted by Section 2.1,
that such form has been established in conformity with the
provisions of this Indenture;
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(b) if the terms of such Securities have been
established by or pursuant to Board Resolution as permitted by
Section 3.1, that such terms have been established in conformity
with the provisions of this Indenture; and
(c) that such Securities, when authenticated and made
available for deliverey by the Trustee and issued by the
Corporation in the manner and subject to any conditions specified
in such Opinion of Counsel, will constitute valid and legally
binding obligations of the Corporation, 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 that is not reasonably
acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 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 Officers' Certificate otherwise required pursuant to Section
3.1 or the Corporation 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.
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 the manual signature of one of its authorized officers,
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 3.10, then 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 3.4. Temporary Securities.
Pending the preparation of definitive Securities of any
series, the Corporation may execute, and upon Corporation Order the
Trustee shall authenticate and make available for delivery,
temporary Securities that are printed, lithographed, typewritten,
mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Securities of such
series 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.
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If temporary Securities of any series are issued, the
Corporation will cause definitive Securities of such series to be
prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the
temporary Securities at the office or agency of the Corporation
designated for that purpose without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities,
the Corporation shall execute and the Trustee shall authenticate
and make available for delivery in exchange therefor one or more
definitive Securities of the same series of any authorized
denominations having the same Original Issue Date and Stated
Maturity and having the same terms as such temporary Securities.
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.
SECTION 3.5. Global Securities.
(a) Each Global Security issued under this Indenture shall be
registered in the name of the Depositary designated by the
Corporation 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.
(b) 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 (i)
such Depositary advises the Trustee in writing that such Depositary
is no longer willing or able to properly discharge its
responsibilities as Depositary with respect to such Global Security
and the Corporation is unable to locate a qualified successor, (ii)
the Corporation executes and delivers to the Trustee a Corporation
Order stating that the Corporation elects to terminate the book-
entry system through the Depositary or (iii) there shall have
occurred and be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other
Securities or cancelled in whole, it shall be surrendered by or on
behalf of the Depositary or its nominee to the Securities Registrar
for exchange or cancellation as provided in this Article III. If
any Global Security is to be exchanged for other Securities or
cancelled in part, or if another Security is to be exchanged in
whole or in part for a beneficial interest in any Global Security,
then either (i) such Global Security shall be so surrendered for
exchange or cancellation as provided in this Article III or (ii)
the principal amount thereof shall be reduced, subject to Section
3.5(b), or increased by an amount equal to the portion thereof to
be so exchanged or cancelled, or equal to the principal amount of
such other Security to be so exchanged for a beneficial interest
therein, as the case may be, by means of an appropriate adjustment
made on the records of the Securities Registrar, whereupon the
Trustee, in accordance with the Applicable Procedures, shall
instruct the Depositary or its authorized representative to make a
corresponding adjustment to its records. Upon any such surrender or
adjustment of a Global Security by the Depositary, accompanied by
registration instructions, the Trustee shall, subject to Section
3.5(b) and as otherwise provided in this Article III, authenticate
and deliver
any Securities issuable in exchange for such Global Security (or
any portion thereof) in accordance with the instructions of the
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Depositary. The Trustee shall not be liable for any delay in
delivery of such instructions and may conclusively rely on, and
shall be fully protected in relying on, such instructions.
(d) 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
Article III, Section 9.6 or 11.6 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.
(e) Securities distributed to holders of Book-Entry Trust
Preferred Securities (as defined in the applicable Trust Agreement)
upon the dissolution of an Issuer Trust shall be distributed in the
form of one or more Global Securities registered in the name of a
Depositary or its nominee, and deposited with the Securities
Registrar, as custodian for such Depositary, or with such
Depositary, for credit by the Depositary to the respective accounts
of the beneficial owners of the Securities represented thereby (or
such other accounts as they may direct). Securities distributed to
holders of Trust Preferred Securities other than Book-Entry Trust
Preferred Securities upon the dissolution of an Issuer Trust shall
not be issued in the form of a Global Security or any other form
intended to facilitate book-entry trading in beneficial interests
in such Securities.
(f) The Depositary or its nominee, as the registered owner of
a Global Security, shall be the Holder of such Global Security for
all purposes under this Indenture and the Securities, and owners of
beneficial interests in a Global Security shall hold such interests
pursuant to the Applicable Procedures. Accordingly, any such
owner's beneficial interest in a Global Security shall be shown
only on, and the transfer of such interest shall be effected only
through, records maintained by the Depositary or its nominee or its
Agent Members. Neither the Trustee nor the Securities Registrar
shall have any liability in respect of any transfers effected by
the Depositary.
(g) The rights of owners of beneficial interests in a Global
Security shall be exercised only through the Depositary and shall
be limited to those established by law and agreements between such
owners and the Depositary and/or its Agent Members.
SECTION 3.6. Registration, Transfer and Exchange Generally.
The Corporation shall cause to be kept at the Corporate Trust
Office of the Trustee a 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. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities
Registrar" for the purpose of registering Securities and transfers
of Securities as herein provided.
Upon surrender for registration of transfer of any Security at
the offices or agencies of the Corporation designated for that
purpose the Corporation shall execute, and the Trustee shall
authenticate and make available for delivery, in the name of the
designated transferee or transferees, one or more new Securities of
the same series of any authorized denominations of like tenor and
aggregate principal amount.
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At the option of the Holder, Securities may be exchanged for
other Securities of the same series of any authorized
denominations, 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 that the Holder making the exchange is
entitled to receive.
All Securities issued upon any transfer or exchange of
Securities shall be the valid obligations of the Corporation
evidencing the same debt and guarantee thereon, and entitled to the
same benefits under this Indenture, as the Securities surrendered
upon such transfer or exchange.
Every Security presented or surrendered for transfer or
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 Securities
Registrar, duly executed by the Holder thereof or such Holder's
attorney duly authorized in writing.
No service charge shall be made to a Holder for any 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 transfer or exchange of
Securities.
Neither the Corporation nor the Trustee shall be required,
pursuant to the provisions of this Section, (i) to issue, register
the transfer of or exchange any Security of any series during a
period beginning at the opening of business 15 days before the day
of selection for redemption of Securities of that series pursuant
to Article XI and ending at the close of business on the day of
mailing of the notice of redemption or (ii) to register the
transfer of or exchange any Security so selected for redemption in
whole or in part, except, in the case of any such Security to be
redeemed in part, any portion thereof not to be redeemed.
SECTION 3.7. Mutilated, Destroyed, Lost and Stolen
Securities.
If any mutilated Security is surrendered to the Trustee
together with such security or indemnity as may be required by the
Corporation or the Trustee to save each of them harmless, the
Corporation shall execute and the Trustee shall authenticate and
make available for delivery in exchange therefor a new Security of
the same series of like tenor and aggregate principal amount, and
bearing a number not contemporaneously outstanding.
If there shall be delivered to the Corporation and to 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 any 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 upon its request the
Trustee shall authenticate and make available for delivery, in lieu
of any such destroyed, lost or stolen Security, a new Security of
the same series of like tenor and aggregate principal amount as
such destroyed, lost or stolen Security, and bearing a number not
contemporaneously outstanding.
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If 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 or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every new Security 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 the same 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 3.8. Payment of Interest and Additional Interest;
Interest Rights Preserved.
Interest and Additional Interest on any Security of any series
that 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 in respect of Securities of such series, except that,
unless otherwise provided in the Securities of such series,
interest and any Additional Interest payable on the Stated Maturity
of the principal of a Security shall be paid to the Person to whom
principal is paid. The initial payment of interest on any Security
of any series that is issued between a Regular Record Date and the
related Interest Payment Date shall be payable as provided in such
Security or in the Board Resolution pursuant to Section 3.1 with
respect to the related series of Securities.
Any interest on any Security that is due and payable, but is
not timely paid or duly provided for, on any Interest Payment Date
for Securities of such series (herein called "Defaulted Interest"),
shall forthwith cease to be payable to the registered 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 (a) or (b) below:
(a) The Corporation may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities of
such series in respect of which interest is in default (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 in writing of the amount of
Defaulted Interest proposed to be paid on each Security 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
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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 ten days
prior to the date of the proposed payment and not less than ten
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
mailed, first class, postage prepaid, to each Holder of a Security
of such series at the address of such Holder as it appears in the
Securities Register not less than ten days prior to such Special
Record Date. The Trustee may, in its discretion, in the name and at
the expense of the Corporation, cause a similar notice to be
published at least once in a newspaper, customarily published in
the English language on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, but
such publication shall not be a condition precedent to the
establishment of such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered
on such Special Record Date and shall no longer be payable pursuant
to the following Clause (b).
(b) The Corporation may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities of
the series in respect of which interest is in default may be listed
and, upon such notice as may be required by such exchange (or by
the Trustee if the Securities are not listed), if, after notice
given by the Corporation to the Trustee of the proposed payment
pursuant to this Clause, such payment shall be deemed practicable
by the Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon 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, that were
carried by such other Security.
SECTION 3.9. Persons Deemed Owners.
The Corporation, the Trustee and any agent of the Corporation
or the Trustee shall treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of
receiving payment of principal of and (subject to Section 3.8) any
interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the
Corporation or the Trustee nor any agent of the Corporation or the
Trustee shall be affected by notice to the contrary.
No holder of any beneficial interest in any Global Security
held on its behalf by a Depositary shall have any rights under this
Indenture with respect to such Global Security, and such Depositary
may be treated by the Corporation, the Trustee and any agent of the
Corporation or the Trustee as the owner of such Global Security for
all purposes whatsoever. Notwithstanding the
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foregoing, nothing herein shall prevent the Corporation, the
Trustee or any agent of the Corporation or the Trustee from giving
effect to any written certification, proxy or other authorization
furnished by a Depositary or impair, as between a Depositary and
such holders of beneficial interests, the operation of customary
practices governing the exercise of the rights of the Depositary
(or its nominee) as Holder of any Security.
SECTION 3.10. Cancellation.
All Securities surrendered for payment, redemption, transfer
or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee, and any such Securities and
Securities surrendered directly to the Trustee for any such purpose
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 that the Corporation may have
acquired in any manner whatsoever, 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 shall be destroyed by the
Trustee and the Trustee shall deliver to the Corporation a
certificate of such destruction.
SECTION 3.11. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1
for Securities of any series, interest on the Securities of each
series for any partial period shall be computed on the basis of a
360-day year of twelve 30-day months and the actual number of days
elapsed in any partial month in such period, and interest on the
Securities of each series for a full period shall be computed by
dividing the rate per annum by the number of interest periods that
together constitute a full twelve months.
SECTION 3.12. Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1
with respect to the Securities of a particular series, so long as
no Event of Default has occurred and is continuing, the Corporation
shall have the right, at any time during the term of such series,
from time to time to defer the payment of interest on such
Securities for such period or periods as may be specified as
contemplated by Section 3.1 (each, an "Extension Period"), during
which Extension Periods the Corporation shall, if so specified as
contemplated by Section 3.1, have the right to make partial
payments of interest on any Interest Payment Date. No Extension
Period shall end on a date other than an Interest Payment Date. At
the end of any such Extension Period the Corporation shall pay all
interest then accrued and unpaid on the Securities (together with
Additional Interest thereon, if any, at the rate specified for the
Securities of such series to the extent permitted by applicable
law); provided, however, that no Extension Period shall extend
beyond the Stated Maturity of the principal of the Securities of
such series. Prior to the termination of any such Extension
Period, the Corporation may further defer the payment of interest,
provided that no Extension Period shall exceed the period or
periods specified in such Securities, extend beyond the Stated
Maturity of the principal of such Securities or end on a date other
than an Interest Payment Date. Upon the termination of any such
Extension Period and upon the payment of all accrued and unpaid
interest and any Additional
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Interest then due on any Interest Payment Date, the Corporation may
elect to begin a new Extension Period, subject to the above
conditions. No interest or Additional Interest shall be due and
payable during an Extension Period, except at the end thereof, but
each installment of interest that would otherwise have been due and
payable during such Extension Period shall bear Additional Interest
as and to the extent as may be specified as contemplated by Section
3.1. The Corporation shall give the Holders of the Securities of
such series and the Trustee notice of its election to begin any
such Extension Period at least one Business Day prior to the next
succeeding Interest Payment Date on which interest on Securities of
such series would be payable but for such deferral or, with respect
to any Securities of a series issued to an Issuer Trust, so long as
any such Securities are held by such Issuer Trust, at least one
Business Day prior to the earlier of (i) the next succeeding date
on which Distributions on the Trust Preferred Securities of such
Issuer Trust would be payable but for such deferral and (ii) the
date on which the Property Trustee of such Issuer Trust is required
to give notice to any securities exchange or other applicable self-
regulatory organization or to holders of such Trust Preferred
Securities of the record date or the date such Distributions are
payable.
The Trustee shall promptly give notice of the Corporation's
election to begin any such Extension Period to the Holders of the
Outstanding Securities of such series.
SECTION 3.13. Right of Setoff.
With respect to the Securities of a series initially issued to
an Issuer Trust, notwithstanding anything to the contrary herein,
the Corporation shall have the right to setoff any payment it is
otherwise required to make in respect of any such Security to the
extent the Corporation has theretofore made,or is concurrently on
the date of such payment making, a payment under the Guarantee
Agreement relating to such Security or to a holder of Trust
Preferred Securities pursuant to an action undertaken under Section
5.8 of this Indenture.
SECTION 3.14. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the
Corporation and, by its acceptance of a Security or a beneficial
interest therein, the Holder of, and any Person that acquires a
beneficial interest in, such Security agree that for United States
federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
SECTION 3.15. Shortening or Extension of Stated Maturity.
If specified as contemplated by Section 2.1 or Section 3.1
with respect to the Securities of a particular series, the
Corporation shall have the right to (i) shorten the Stated Maturity
of the principal of the Securities of such series at any time to
any date not earlier than the first date on which the Company has
the right to redeem the Securities of such series and (ii) extend
the Stated Maturity of the principal of the Securities of such
series at any time at its election for one or more periods, but in
no event to a date later than the 49th anniversary of the first
Interest Payment Date following the Original Issue Date of the
Securities of such series; provided that, if the Company elects to
exercise its right to extend the Stated Maturity of the principal
of the Securities of such series pursuant to clause (ii), above, at
the time such election is made
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and at the time of extension (A) the Company is not in bankruptcy,
otherwise insolvent or in liquidation, (B) the Company is not in
default in the payment of any interest or principal on such
Securities, (C) if the Issuer Trust has not been liquidated, such
Issuer Trust is not in arrears on payments of Distributions on the
Trust Preferred Securities issued by such Issuer Trust and no
deferred Distributions are accumulated, (D) such Securities are
rated not less than BBB- by S&P or Baa3 by Moody's or the
equivalent by any other nationally recognized statistical rating
organization and (E) after such extension, the Securities shall not
have a remaining term to maturity of more than 30 years. In the
event the Company elects to shorten or extend the Stated Maturity
of the Securities of such series, it shall give notice to the
Trustee, and the Trustee shall give notice of such shortening or
extension to the Holders, not less than 30 and not more than 60
days prior to the effectiveness thereof.
SECTION 3.16. 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 and other similar or
related materials as a convenience to Holders; provided that any
such notice or other materials 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 redemption or other
materials 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.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Corporation 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 as otherwise provided in this Section 4.1) and the Trustee, on
demand of and at the expense of the Corporation, shall execute
proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(a) either
(i) all Securities theretofore authenticated and
delivered (other than (i) Securities that have been
destroyed, lost or stolen and that have been replaced or
paid as provided in Section 3.7 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 10.3) have been
delivered to the Trustee for cancellation; or
(ii) all such Securities not theretofore delivered
to the Trustee for cancellation
(A) have become due and payable, or
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(B) will become due and payable at their Stated
Maturity within one year of the date of deposit, or
(C) 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
subclause (ii)(A), (B) or (C) above, has deposited
or caused to be deposited with the Trustee as trust
funds in trust for such purpose an amount in the
currency or currencies in which the Securities of
such series are payable sufficient to pay and
discharge the entire indebtedness on such
Securities not theretofore delivered to the Trustee
for cancellation, for principal (and premium, if
any) and interest (including any Additional
Interest) to the date of such deposit (in the case
of Securities that have become due and payable) or
to the Stated Maturity or Redemption Date, as the
case may be;
(b) the Corporation has paid or caused to be paid, or made
provision satisfactory to the Trustee for the payment of, all other
sums payable hereunder by the Corporation; and
(c) the Corporation has delivered to the Trustee an Officers'
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
6.7, the obligations of the Trustee to any Authenticating Agent
under Section 6.14 and, if money shall have been deposited with the
Trustee pursuant to subclause (ii) of Clause (a) of this Section,
the obligations of the Trustee under Sections 3.10 and 4.2 and the
last paragraph of Section 10.3, and the obligations of the
Corporation and the Trustee under Sections 3.5, 3.6, 3.10 and 9.6,
shall survive.
SECTION 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
10.3, all money deposited with the Trustee pursuant to Section 4.1
shall be held in trust and applied by the Trustee, 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
premium, if any) and interest (including any Additional Interest)
for the payment of which such money or obligations have been
deposited with or received by the Trustee.
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ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default," wherever used herein with respect to the
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) except as may be specified pursuant to Section 3.1:
(a) default in the payment of any interest upon any
Security of that series, including any Additional Interest in
respect thereof, when it becomes due and payable, and continuance
of such default for a period of 30 days (subject to the deferral of
any due date in the case of an Extension Period); or
(b) default in the payment of the principal of (or
premium, if any, on) any Security of that series at its Maturity;
or
(c) failure on the part of the Corporation duly to
observe or perform any other of the covenants or agreements on the
part of the Corporation in the Securities of that series or in this
Indenture for a period of 90 days after the date on which written
notice of such failure, requiring the Corporation to remedy the
same, shall have been give to the Corporation by the Trustee by
registered or certified mail or to the Corporation and the Trustee
by the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series; or
(d) the entry of a decree or order by a court having
jurisdiction in the premises adjudging the Corporation a bankrupt
or insolvent, or approving as properly filed a petition seeking
reorganization of the Corporation under the Bankruptcy Code or any
other similar applicable federal or state law, which decree or
order shall have continued undischarged and unstayed for a period
of 60 days; or the entry of a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of
the Corporation or of its property, or for the winding up or
liquidation of its affairs, which decree or order shall have
continued undischarged and unstayed for a period of 60 days; or
(e) the commencement by the Corporation of voluntary
proceedings to be adjudicated a bankrupt, or consent by the
Corporation to the filing of a bankruptcy proceeding against it, or
the filing by the Corporation of a petition or answer or consent
seeking reorganization under the Bankruptcy Code or any other
similar federal or state law, or consent by the Corporation to the
filing of any such petition, or the consent by the Corporation to
the appointment of a receiver or liquidator or trustee or assignee
in bankruptcy or insolvency of it or of its property, or the making
by the Corporation of an assignment for the benefit of creditors,
or the admission by the Corporation in writing of its inability to
pay its debts generally as they become due; or
(f) any other Event of Default provided with respect to
Securities of that series.
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SECTION 5.2. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default (other than an Event of Default
specified in Section 5.1(d) or 5.1(e)) with respect to Securities
of any series at the time Outstanding occurs and is continuing,
then and in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding
Securities of that series may declare the principal amount (or, if
the Securities of that series are Discount Securities, such portion
of the principal amount as may be specified in the terms of that
series) of all the Securities of that series to be due and payable
immediately, by a notice in writing to the Corporation (and to the
Trustee if given by Holders), provided that, in the case of the
Securities of a series issued to an Issuer Trust, if, upon an Event
of Default, the Trustee or the Holders of not less than 25% in
principal amount of the Outstanding Securities of such series fail
to declare the principal of all the Outstanding Securities of such
series to be immediately due and payable, the holders of at least
25% in aggregate Liquidation Amount (as defined in the related
Trust Agreement) of the related series of Trust Preferred
Securities issued by such Issuer Trust then outstanding shall have
the right to make such declaration by a notice in writing to the
Corporation and the Trustee; and upon any such declaration such
principal amount (or specified portion thereof) of and the accrued
interest (including any Additional Interest) on all the Securities
of such series shall become immediately due and payable. If an
Event of Default specified in Section 5.1(d) or 5.1(e) with respect
to Securities of any series at the time Outstanding occurs, the
principal amount of all the Securities of such series (or, if the
Securities of such series are Discount Securities, such portion of
the principal amount of such Securities as may be specified by the
terms of that series) shall automatically, and without any
declaration or other action on the part of the Trustee or any
Holder, become immediately due and payable. Payment of principal
and interest (including any Additional Interest) on such Securities
shall remain subordinated to the extent provided in Article XIII
notwithstanding that such amount shall become immediately due and
payable as herein provided.
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 aggregate principal amount of the Outstanding
Securities of that series, by written notice to the Corporation and
the Trustee, may rescind and annul such declaration and its
consequences if:
(a) the Corporation has paid or deposited with the
Trustee a sum sufficient to pay:
(i) all overdue installments of interest on all
Securities of such series,
(ii) any accrued Additional Interest on all
Securities of such series,
(iii) the principal of (and premium, if any, on)
any Securities of such series that have become due
otherwise than by such declaration of acceleration and
interest and Additional Interest thereon at the rate
borne by the Securities, and
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(iv) 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
(b) all Events of Default with respect to Securities of
that series, other than the non-payment of the principal of
Securities of that series that has become due solely by such
acceleration, have been cured or waived as provided in Section
5.13.
In the case of Securities of a series initially issued to an
Issuer Trust, if the Holders of such Securities fail to annul such
declaration and waive such default, the holders of a majority in
aggregate Liquidation Amount (as defined in the related Trust
Agreement) of the related series of Trust Preferred Securities
issued by such Issuer Trust then outstanding shall also have the
right to rescind and annul such declaration and its consequences by
written notice to the Corporation and the Trustee, subject to the
satisfaction of the conditions set forth in Clauses (a) and (b)
above of this Section 5.2.
No such rescission shall affect any subsequent default or
impair any right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Corporation covenants that if:
(a) default is made in the payment of any installment of
interest (including any Additional Interest) on any Security of any
series when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of
(and premium, if any, on) any Security at the Maturity thereof, the
Corporation will, upon demand of the Trustee, pay to the Trustee,
for the benefit of the Holders of such Securities, the whole amount
then due and payable on such Securities for principal, including
any sinking fund payment or analogous obligations (and premium, if
any) and interest (including any Additional Interest), and, in
addition thereto, all amounts owing the Trustee under Section 6.7.
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 the 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.
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SECTION 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Corporation (or any other
obligor upon the Securities), or the property of the Corporation or
of such other obligor or their creditors,
(a) the Trustee (irrespective of whether the principal
of the Securities of any series shall then be due and payable as
therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the
Corporation for the payment of overdue principal (and premium, if
any) or interest (including any Additional Interest)) shall be
entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount
of principal (and premium, if any) and interest
(including any Additional Interest) owing and unpaid in
respect to the Securities and to file such other papers
or documents as may be necessary or advisable and to take
any and all actions as are authorized under the Trust
Indenture Act in order to have the claims of the Holders
and any predecessor to the Trustee under Section 6.7
allowed in any such judicial proceedings; and
(ii) 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 in accordance with Section 5.6; and
(b) 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 for distribution in accordance with
Section 5.6, 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 to it and any predecessor Trustee under
Section 6.7.
Nothing herein contained 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 5.5. Trustee May Enforce Claim 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,
subject to Article XIII and after provision for the payment of all
the amounts owing the Trustee and any predecessor Trustee
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under Section 6.7, 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 5.6. Application of Money Collected.
Any money or property collected or to be applied by the
Trustee with respect to a series of Securities 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 or property on account of principal (or premium, if any) or
interest (including any Additional 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 and
any predecessor Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the
amounts then due and unpaid upon Securities of such series for
principal (and premium, if any) and interest (including any
Additional Interest) 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 series of Securities for principal
(and premium, if any) and interest (including any Additional
Interest), respectively;
THIRD: The balance, if any, to the Person or Persons
(other than the Company) entitled thereto; and
FOURTH: To the Company
SECTION 5.7. Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities 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, assignee, trustee, liquidator, sequestrator (or
other similar official) or for any other remedy hereunder, unless:
(a) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the
Securities of that series;
(b) the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities of 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;
(c) 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;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
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(e) 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 aggregate principal amount of the
Outstanding Securities of 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 itself of, any provision of this Indenture to
affect, disturb or prejudice the rights of any other Holders of
Securities, 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 such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest; Direct Action by Holders of Trust
Preferred Securities.
Notwithstanding any other provision in this Indenture, the
Holder of any Security of any series shall have the right, which is
absolute and unconditional, to receive payment of the principal of
(and premium, if any) and (subject to Sections 3.8 and 3.12)
interest (including any Additional 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 right shall
not be impaired without the consent of such Holder. In the case of
Securities of a series issued to an Issuer Trust, any registered
holder of the series of Trust Preferred Securities issued by such
Issuer Trust shall have the right, upon the occurrence of an Event
of Default described in Section 5.1(a) or 5.1(b), to institute a
suit directly against the Corporation for enforcement of payment to
such holder of principal of (premium, if any) and (subject to
Sections 3.8 and 3.12) interest (including any Additional Interest)
on the Securities having a principal amount equal to the aggregate
Liquidation Amount (as defined in the related Trust Agreement) of
such Trust Preferred Securities held by such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Trust Preferred
Securities issued by any Issuer Trust 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, such Holder or such
holder of Trust Preferred Securities, then and in every such case
the Corporation, Trustee, such Holders and such holder of Trust
Preferred Securities shall, subject to any determination in such
proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the
Trustee, such Holder and such holder of Trust Preferred Securities
shall continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section
3.7, no right or remedy herein conferred upon or reserved to the
Trustee or 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
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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 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any
Security with respect to the Securities of the related series or
any holder of any Trust Preferred Security to exercise any right or
remedy accruing upon any Event of Default with respect to the
Securities of the related series 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 and the right and remedy given to the
holders of Trust Preferred Securities by Section 5.8 may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee, the Holders or the holders of Trust
Preferred Securities, as the case may be.
SECTION 5.12. Control by Holders.
The Holders of not less than a majority in aggregate 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:
(a) such direction shall not be in conflict with any
rule of law or with this Indenture,
(b) the Trustee may take any other action deemed proper
by the Trustee that is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the
Trustee shall have the right to decline to follow such direction if
a Responsible Officer or Officers of the Trustee shall, in good
faith, determine that the proceeding so directed would be unjustly
prejudicial to the Holders not joining in any such direction or
would involve the Trustee in personal liability.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities of any series affected thereby
and, in the case of any Securities of a series initially issued to
an Issuer Trust, the holders of a majority in aggregate Liquidation
Amount (as defined in the related Trust Agreement) of the Trust
Preferred Securities issued by such Issuer Trust may waive any past
default hereunder and its consequences with respect to such series
except a default:
(a) in the payment of the principal of (or premium, if
any) or interest (including any Additional Interest) on any
Security of such series (unless such default has been cured and the
Corporation has paid to or deposited with the Trustee a sum
sufficient to pay all matured installments of interest (including
any Additional Interest) and all principal of (and premium, if any,
on) all Securities of that series due otherwise than by
acceleration), or
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(b) in respect of a covenant or provision hereof that
under Article IX cannot be modified or amended without the consent
of each Holder of any Outstanding Security of such series affected.
Any such waiver shall be deemed to be on behalf of the Holders
of all the Securities of such series or, in the case of a waiver by
holders of Trust Preferred Securities issued by such Issuer Trust,
by all holders of Trust Preferred Securities issued by such Issuer
Trust.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been
cured, 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 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, 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 or omitted by it as
Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section
shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the
aggregate more than ten percent in aggregate principal amount of
the Outstanding Securities of any series, or to any suit instituted
by any Holder for the enforcement of the payment of the principal
of (or premium, if any) or interest (including any Additional
Interest) on any Security on or after the respective Stated
Maturities expressed in such Security.
SECTION 5.15. Waiver of Usury, 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 usury, 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, 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.
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ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of
Default,
(i) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in
this Indenture, and no implied covenants or obligations
shall be read into this Indenture against the Trustee;
and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions that by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this
Indenture.
(b) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree
of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his
or her own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful
misconduct except that
(i) this Subsection shall not be construed to limit
the effect of Subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer,
unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good
faith in accordance with the direction of Holders
pursuant to Section 5.12 relating to the time, method and
place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture
with respect to the Securities of a series.
(d) 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
there shall be reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
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(e) 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 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer
of the Trustee of the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit
by mail to all Holders of Securities of such series, as their names
and addresses appear in the Securities Register, notice of such
default, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the
payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security of such series,
the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Trustee
in good faith determines that the withholding of such notice is in
the interests of the Holders of Securities of such series; and
provided, further, that, in the case of any default of the
character specified in Section 5.1(c), no such notice to Holders of
Securities of such series shall be given until at least 30 days
after the occurrence thereof. For the purpose of this Section, the
term "default" means any event that is, or after notice or lapse of
time or both would become, an Event of Default with respect to
Securities of such series.
SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, Security or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Corporation
mentioned herein shall be sufficiently evidenced by a Corporation
Request or Corporation Order and any resolution of the Board of
Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering 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 Officers' Certificate;
(d) the Trustee may consult with counsel of its
selection and the advice of such counsel or any Opinion of Counsel
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;
(e) 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 that might be incurred by it in compliance with such
request or direction;
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(f) 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, indenture, Security or
other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such inquiry
or investigation, it shall be entitled to examine the books,
records and premises of the Corporation, personally or by agent or
attorney; and
(g) 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 6.4. 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 the
Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Securities 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 6.8 and 6.13, may otherwise
deal with the Corporation with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, Securities
Registrar or such other agent.
SECTION 6.6. 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 with the
Corporation.
SECTION 6.7. Compensation and Reimbursement.
The Corporation agrees
(a) to pay to the Trustee from time to time compensation
for all services rendered by it hereunder in such amounts as the
Corporation and the Trustee shall agree from time to time (which
compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust);
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(b) to reimburse the Trustee upon its request for all
reasonable 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 or
bad faith; and
(c) to indemnify the Trustee for, and to hold it
harmless against, any loss, liability or expense (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel) incurred without negligence or bad faith,
arising out of or in connection with the acceptance or
administration of this trust or the performance of its duties
hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. This
indemnification shall survive the termination of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 5.1(d) or 5.1(e) occurs, the
expenses and the compensation for the services are intended to
constitute expenses of administration under the Bankruptcy Reform
Act of 1978 or any successor statute.
SECTION 6.8. Disqualification; Conflicting Interests.
(a) The Trustee for the Securities of any series issued
hereunder shall be subject to the provisions of Section 310(b) of
the Trust Indenture Act. Nothing herein shall prevent the Trustee
from filing with the Commission the application referred to in the
second to last paragraph of said Section 310(b).
(b) The Trust Agreement and the Guarantee Agreement with
respect to each Issuer Trust shall be deemed to be specifically
described in this Indenture for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture
Act.
SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall
be:
(a) a corporation organized and doing business under the
laws of the United States of America or of any State or Territory
or the District of Columbia, authorized under such laws to exercise
corporate trust powers and subject to supervision or examination by
federal, state, territorial or District of Columbia authority, or
(b) a corporation or other Person organized and doing
business under the laws of a foreign government that is permitted
to act as Trustee pursuant to a rule, regulation or order of the
Commission, authorized under such laws to exercise corporate trust
powers, and subject to supervision or examination by authority of
such foreign government or a political subdivision thereof
substantially equivalent to supervision or examination applicable
to United States institutional trustees, in either case having a
combined capital and surplus of at least $50,000,000, subject to
supervision or examination by federal or state authority. If such
corporation or other Person publishes reports of condition at least
annually, pursuant to law or to the
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requirements of the aforesaid supervising or examining authority,
then, for the purposes of this Section 6.9, the combined capital
and surplus of such corporation or other 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 shall
cease to be eligible in accordance with the provisions of this
Section 6.9, it shall resign immediately in the manner and with the
effect hereinafter specified in this Article VI. Neither the
Corporation nor any Person directly or indirectly controlling,
controlled by or under common control with the Corporation shall
serve as Trustee for the Securities of any series issued hereunder.
SECTION 6.10. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article VI
shall become effective until the acceptance of appointment by the
successor Trustee under Section 6.11.
(b) 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 an instrument of acceptance by a
successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) 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 aggregate principal amount of the Outstanding Securities of such
series, delivered to the Trustee and to the Corporation. If an
instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within 30 days after such Act of the
Holders, the Trustee to be removed may petition any court of
competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(d) If at any time:
(i) the Trustee shall fail to comply with Section
6.8 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
(ii) the Trustee shall cease to be eligible under
Section 6.9 and shall fail to resign after written
request therefor by the Corporation or by any such
Holder, or
(iii) 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, any such case, (A) the Corporation,
acting pursuant to the authority of a Board Resolution,
may remove the Trustee with respect to the Securities of
all series issued hereunder or (B) subject to Section
5.14, any Holder who has been a bona fide
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Holder of a Security for at least six months may, on
behalf of such Holder and all others similarly situated,
petition any court of competent jurisdiction for the
removal of the Trustee with respect to the Securities of
all series issued hereunder and the appointment of a
successor Trustee or Trustees.
(e) 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 with respect to the Securities of that
or those series. 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 aggregate
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, become the successor Trustee with respect to
the Securities of such series and 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
hereinafter provided, any Holder who has been a bona fide Holder of
a Security of such series for at least six months may, subject to
Section 5.14, on behalf of such Holder 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.
(f) 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 by mailing
written notice of such event by first-class mail, postage prepaid,
to the Holders of Securities of such series as their names and
addresses appear in the Securities Register. 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 6.11. Acceptance of Appointment by Successor.
(a) 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 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.
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(b) 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 (i) 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, (ii) 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 (iii) 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.
(c) Upon request of any such successor Trustee and the
Corporation shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor Trustee
all rights, powers and trusts referred to in Clause (a) or (b) of
this Section, as the case may be.
(d) 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 6.12. 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 of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided 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
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deliver the Securities so authenticated, and in case any Securities
shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor
Trustee or in the name of such successor Trustee, and in all cases
the certificate of authentication shall have the full force which
it is provided anywhere in the Securities or in this Indenture that
the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against
Corporation.
If and when the Trustee shall be or shall become a creditor,
directly or indirectly, secured or unsecured, of the Corporation
(or any other obligor upon the Securities), the Trustee shall be
subject to the provisions of Sections 311(a) and 311(b) of the
Trust Indenture Act.
SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents 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 original issue and upon
exchange, registration of transfer or partial redemption thereof or
pursuant to Section 3.6, 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. 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 or of any state or territory 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 of the corporate
trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, provided 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 1.6 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 provision of this Section.
The Trustee agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services under this
Section, and the Trustee shall be entitled to be reimbursed for
such payments, subject to the provisions of Section 6.7.
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.
Dated:
As Trustee
By: ____________________________________
As Authenticating Agent
By:_____________________________________
Authorized Officer
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE AND CORPORATION
SECTION 7.1. Corporation to Furnish Trustee Names and
Addresses of Holders.
The Corporation will furnish or cause to be furnished to the
Trustee:
(a) semi-annually, on or before June 30 and December 31
of each year, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of a date not
more than 15 days prior to the delivery thereof, and
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(b) 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, in each
case to the extent such information is in the possession or control
of the Corporation and has not otherwise been received by the
Trustee in its capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to
Holders.
(a) 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 7.1 and the names and addresses of Holders
received by the Trustee in its capacity as Securities Registrar.
(b) 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 in Section 312(b) of the Trust
Indenture Act.
(c) Every Holder of Securities, by receiving and holding
the same, agrees with the Corporation and the Trustee that none of
the Corporation nor the Trustee nor any agent of any of them shall
be held accountable by reason of the disclosure of information as
to the names and addresses of the Holders made pursuant to the
Trust Indenture Act.
SECTION 7.3. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may
be required pursuant to Section 313 of the Trust Indenture Act, at
the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated
intervals of not more than 12 months shall be transmitted no later
than January 31 in each calendar year.
(c) A copy of each such report shall, at the time of
such transmission to Holders, be filed by the Trustee with each
securities exchange upon which any Securities are listed and also
with the Commission. The Corporation will notify the Trustee when
any Securities are listed on any securities exchange.
SECTION 7.4. Reports by Corporation.
The Corporation shall file with the Trustee and with 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 in the Trust Indenture Act; provided that any such
information, documents or reports required to be filed with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act shall be filed with the Trustee within 15 days after the same
is required to be filed with the Commission. The Corporation also
shall comply with the other provisions of Trust Indenture Act
Section 314(a).
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ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. 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:
(a) if 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 Corporation
formed by such consolidation or into which the corporation is
merged or the Person that acquires by conveyance or transfer, or
that leases, the properties and assets of the Corporation
substantially as an entirety shall be a corporation, partnership or
trust organized and existing under the laws of the United States of
America or any State or Territory 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, expressly assume the due and punctual payment of
the principal of (and premium, if any) and interest (including any
Additional Interest) on all the Securities of every series and the
performance of every covenant of this Indenture on the part of the
Corporation to be performed or observed;
(b) immediately after giving effect to such transaction,
no Event of Default, and no event that, after notice or lapse of
time, or both, would constitute an Event of Default, shall have
happened and be continuing; and
(c) the Corporation has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger, conveyance, transfer or lease and any
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 6.1, may rely upon such Officers' Certificate and Opinion
of Counsel as conclusive evidence that such transaction complies
with this Section 8.1.
SECTION 8.2. Successor Corporation Substituted.
Upon any consolidation or merger by the Corporation, as the
case may be, with or into any other Person, or any conveyance,
transfer or lease by the Corporation of its properties and assets
substantially as an entirety to any Person in accordance with
Section 8.1, the successor corporation formed by such consolidation
or into which the Corporation is merged or to which such
conveyance, transfer or lease 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 in
the event of any such conveyance, transfer or lease the Corporation
shall be discharged from all obligations and covenants under this
Indenture and the Securities.
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Such successor Person may cause to be executed, and may issue
either in its own name or in the name of the Corporation, any or
all of the Securities issuable hereunder that 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 make available for delivery any Securities
that 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 that such successor
Person thereafter shall cause to be executed 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.
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.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures without Consent of
Holders.
Without the consent of any Holders, the Corporation, when
authorized by Board Resolutions, and the Trustee, at any time and
from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any
of the following purposes:
(a) 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
contained; or
(b) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee or to surrender any right or power
herein conferred upon the Corporation; or
(c) to provide for the issuance of and establish the
form or terms of Securities of any series as permitted by Sections
2.1 or 3.1; or
(d) 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 the series specified) or to
surrender any right or power herein conferred upon the Corporation;
or
(e) 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
the series specified); or
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(f) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall (i)
become effective only when there is no Security Outstanding of any
series created prior to the execution of such supplemental
indenture that is entitled to the benefit of such provision or (ii)
not apply to any Outstanding Securities; or
(g) to cure any ambiguity, to correct or supplement any
provision herein that 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 (g) shall not
adversely affect the interest of the Holders of Securities of any
series in any material respect or, in the case of the Securities of
a series issued to an Issuer Trust and for so long as any of the
corresponding series of Trust Preferred Securities issued by such
Issuer Trust shall remain outstanding, the holders of such Trust
Preferred Securities; or
(h) 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 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 6.11(b);
or
(i) to comply with the requirements of the Commission in
order to effect or maintain qualification of this Indenture under
the Trust Indenture Act.
SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of each
series affected by such supplemental indenture, 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
modifying in any manner the rights of the Holders of Securities of
such series under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of
each Outstanding Security of each series affected thereby,
(a) change the Stated Maturity of the principal of, or
any installment of interest (including any Additional Interest) on,
any 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 principal of a Discount Security
that would be due and payable upon a declaration of acceleration of
the Maturity thereof pursuant to Section 5.2, or change the place
of payment where, or the coin or currency in which, any Security 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
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(b) reduce the percentage in aggregate 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
(c) modify any of the provisions of this Section,
Section 5.13 or Section 10.5, 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 Security affected thereby; provided, further, that,
in the case of the Securities of a series issued to an Issuer
Trust, so long as any of the corresponding series of Trust
Preferred Securities issued by such Issuer Trust remains
outstanding, (i) no such amendment shall be made that adversely
affects the holders of such Trust Preferred Securities in any
material respect, and no termination of this Indenture shall occur,
and no waiver of any Event of Default or compliance with any
covenant under this Indenture shall be effective, without the prior
consent of the holders of at least a majority of the aggregate
Liquidation Amount (as defined in the related Trust Agreement) of
such Trust Preferred Securities then outstanding unless and until
the principal of (and premium, if any, on) the Securities of such
series and all accrued and (subject to Section 3.8) unpaid interest
(including any Additional Interest) thereon have been paid in full
and (ii) no amendment shall be made to Section 5.8 of this
Indenture that would impair the rights of the holders of Trust
Preferred Securities issued by any Issuer Trust provided therein
without the prior consent of the holders of each such Trust
Preferred Security then outstanding unless and until the principal
of (and premium, if any, on) the Securities of such series and all
accrued and (subject to Section 3.12) unpaid interest (including
any Additional Interest) thereon have been paid in full.
A supplemental indenture that changes or eliminates any
covenant or other provision of this Indenture that has expressly
been included solely for the benefit of one or more particular
series of Securities or any corresponding series of Trust Preferred
Securities of an Issuer Trust that holds the Securities of any
series, or that modifies the rights of the Holders of Securities of
such series or holders of such Trust Preferred Securities of such
corresponding 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 or
holders of Trust Preferred Securities of any other such
corresponding 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 9.3. 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 6.1)
shall be fully protected in relying upon, an Officers' Certificate
and an Opinion of Counsel stating that the execution
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of such supplemental indenture is authorized or permitted by this
Indenture, and that all conditions precedent herein provided for
relating to such action have been complied with. The Trustee may,
but shall not be obligated to, enter into any such supplemental
indenture that affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.4. 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 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as
then in effect.
SECTION 9.6. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article may, and shall
if required by the Corporation, bear a notation in form approved by
the Corporation 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
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.
ARTICLE X
COVENANTS
SECTION 10.1. 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 premium, if any) and interest (including any
Additional Interest) on the Securities of that series in accordance
with the terms of such Securities and this Indenture.
SECTION 10.2. 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 initially appoints the
Trustee, acting through its Corporate Trust Office, as its agent
for said purposes. The Corporation will give prompt written notice
to the Trustee of any change in the location of any such office or
agency. If at any time the Corporation shall fail to maintain such
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.
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The Corporation may also from time to time designate one or
more other offices or agencies where the Securities may be
presented or surrendered for any or all of 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 and any change in the location of
any such office or agency.
SECTION 10.3. Money for Security 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 (and premium, if any, on)
or interest on any of the Securities of such series, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal (and premium, if any) or 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 failure so to act.
Whenever the Corporation shall have one or more Paying Agents,
it will, prior to 10:00 a.m., New York City time, on each due date
of the principal of (or premium, if any) or interest (including any
Additional Interest) on any Securities, deposit with a Paying Agent
a sum sufficient to pay the principal (and premium, if any) or
interest (including any Additional Interest) so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to
such principal (and premium, if any) or interest (including any
Additional Interest), and (unless such Paying Agent is the Trustee)
the Corporation will promptly notify the Trustee of its failure so
to act.
The Corporation will cause each Paying Agent 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:
(a) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest (including any
Additional Interest) on the Securities of a series 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;
(b) give the Trustee notice of any default by the
Corporation (or any other obligor upon such Securities) in the
making of any payment of principal (and premium, if any) or
interest (including any Additional Interest) in respect of any
Security of any Series;
(c) at any time during the continuance of any default
with respect to a series of Securities, upon the written request of
the Trustee, forthwith pay to the Trustee all sums so held in trust
by such Paying Agent with respect to such series; and
(d) comply with the provisions of the Trust Indenture
Act applicable to it as a Paying Agent.
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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 Corporation Order direct any Paying Agent to
pay, to the Trustee all sums held in trust 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 (and premium, if any) or interest (including any
Additional Interest) on any Security and remaining unclaimed for
two years after such principal (and premium, if any) or interest
has become due and payable shall (unless otherwise required by
mandatory provision of applicable escheat or abandoned or unclaimed
property law) be paid on Corporation Request to the Corporation, or
(if then held by the Corporation) shall (unless otherwise required
by mandatory provision of applicable escheat or abandoned or
unclaimed property law) 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,
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 10.4. Statement as to Compliance.
The Corporation shall deliver to the Trustee, within 120 days
after the end of each fiscal year of the Corporation ending after
the date hereof, an Officers' Certificate covering the preceding
calendar year, stating whether or not to the best knowledge of the
signers thereof the Corporation is in default in the performance,
observance or fulfillment of or compliance with any of the terms,
provisions, covenants and conditions of this Indenture, and if the
Corporation shall be in default, specifying all such defaults and
the nature and status thereof of which they may have knowledge. For
the purpose of this Section 10.4, compliance shall be determined
without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
SECTION 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Trust Preferred Securities
specified in Section 9.2, if any, the Corporation may omit in any
particular instance to comply with any covenant or condition
provided pursuant to Section 3.1, 9.1(d) or 9.1(e) with respect to
the Securities of any series, if before or after the time for such
compliance the Holders of at least a majority in aggregate
principal amount of the Outstanding Securities of such series
shall, by Act of such Holders, either waive such
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compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect
such covenant or condition except to the extent so expressly
waived, and, until such waiver shall become effective, the
obligations of the Corporation in respect of any such covenant or
condition shall remain in full force and effect.
SECTION 10.6. Additional Sums.
In the case of the Securities of a series initially issued to
an Issuer Trust, so long as no Event of Default has occurred and is
continuing and except as otherwise specified as contemplated by
Section 2.1 or Section 3.1, if (i) an Issuer Trust is the Holder of
all of the Outstanding Securities of such series and (ii) a Tax
Event has occurred and is continuing in respect of such Issuer
Trust, the Corporation shall pay to such Issuer Trust (and its
permitted successors or assigns under the related Trust Agreement)
for so long as such Issuer Trust (or its permitted successor or
assignee) is the registered holder of the Outstanding Securities of
such series, such additional sums as may be necessary in order that
the amount of Distributions (including any Additional Amounts (as
defined in such Trust Agreement)) then due and payable by such
Issuer Trust on the related Trust Preferred Securities and Common
Securities that at any time remain outstanding in accordance with
the terms thereof shall not be reduced as a result of any
Additional Taxes arising from such Tax Event (the "Additional
Sums"). Whenever in this Indenture or the Securities there is a
reference in any context to the payment of principal of or interest
on the Securities, such mention shall be deemed to include mention
of the payments of the Additional Sums provided for in this
paragraph to the extent that, in such context, Additional Sums are,
were or would be payable in respect thereof pursuant to the
provisions of this paragraph and express mention of the payment of
Additional Sums (if applicable) in any provisions hereof shall not
be construed as excluding Additional Sums in those provisions
hereof where such express mention is not made; provided, however,
that the deferral of the payment of interest pursuant to Section
3.12 or the Securities shall not defer the payment of any
Additional Sums that may be due and payable.
SECTION 10.7. Additional Covenants.
The Corporation covenants and agrees with each Holder of
Securities of each series that it shall not (i) declare or pay any
dividends or distributions on, or redeem purchase, acquire or make
a liquidation payment with respect to, any shares of the
Corporation's capital stock or (ii) make any payment of principal
of or interest or premium, if any, on or repay, repurchase or
redeem any debt securities of the Corporation (including other
Securities) that rank pari passu in all respects with or junior in
interest to the Securities of such series (other than (a)
repurchases, redemptions or other acquisitions of shares of capital
stock of the Corporation in connection with any employment
contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or
consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance
of capital stock of the Corporation (or securities convertible into
or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable
Extension Period, (b) as a result of an exchange or conversion of
any class or series of the Corporation's capital stock (or any
capital stock of a Subsidiary of the Corporation for any class or
series of the Corporation's
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capital stock or of any class or series of the Corporation's
indebtedness for any class or series of the Corporation's capital
stock, (c) the purchase of fractional interests in shares of the
Corporation's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted
or exchanged, (d) any declaration of a dividend in connection with
any Rights Plan, or the issuance of rights, stock or other property
under any Rights Plan, or the redemption or repurchase of rights
pursuant thereto or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other
rights is the same stock as that on which the dividend is being
paid or ranks pari passu with or junior to such stock) if at such
time (1) there shall have occurred any event of which the
Corporation has actual knowledge that with the giving of notice or
the lapse of time, or both, would constitute an Event of Default
with respect to the Securities of such series, and which the
Corporation shall not have taken reasonable steps to cure, (2) if
the Securities of such series are held by an Issuer Trust or the
Corporation shall be in default with respect to its payment of any
obligations under the Guarantee Agreement relating to the Trust
Preferred Securities issued by such Issuer Trust or (3) the
Corporation shall have given notice of its election to begin an
Extension Period with respect to the Securities of such series as
provided herein and shall not have rescinded such notice, or such
Extension Period, or any extension thereof, shall be continuing.
The Corporation also covenants with each Holder of Securities
of a series issued to an Issuer Trust (i) to hold, directly or
indirectly, 100% of the Common Securities of such Issuer Trust,
provided that any permitted successor of the Corporation hereunder
may succeed to the Corporation's ownership of such Common
Securities, (ii) as holder of such Common Securities, not to
voluntarily terminate, wind-up or liquidate such Issuer Trust,
other than (a) in connection with a distribution of the Securities
of such series to the holders of the related Trust Preferred
Securities in liquidation of such Issuer Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by
the related Trust Agreement and (iii) to use its reasonable
efforts, consistent with the terms and provisions of such Trust
Agreement, to cause such Issuer Trust to continue not to be taxable
as a corporation for United States federal income tax purposes.
SECTION 10.8. Original Issue Discount.
For each year during which any Securities that were issued
with original issue discount are Outstanding, the Corporation shall
furnish to each Paying Agent in a timely fashion such information
as may be reasonably requested by each Paying Agent in order that
each Paying Agent may prepare the information which it is required
to report for such year on Internal Revenue Service Forms 1096 and
1099 pursuant to Section 6049 of the Internal Revenue Code of 1986,
as amended. Such information shall include the amount of original
issue discount includible in income for each increment of principal
amount at Stated Maturity of outstanding Securities during such
year.
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ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1 Applicability of This Article.
Redemption of Securities of any series (whether by operation
of a sinking fund or otherwise) as permitted or required by any
form of Security issued pursuant to this Indenture shall be made in
accordance with such form of Security and this Article; provided,
however, that if any provision of any such form of Security shall
conflict with any provision of this Article, the provision of such
form of Security shall govern. Except as otherwise set forth in the
form of Security for such series, each Security of a series shall
be subject to partial redemption only in the minimum specified
denomination for the Securities of such series or any integral
multiples thereof.
SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Corporation to redeem any Securities shall
be evidenced by or pursuant to a Board Resolution. In case of any
redemption at the election of the Corporation, the Corporation
shall, at least 45 days prior to the Redemption Date (unless a
shorter notice shall be satisfactory to the Trustee), notify the
Trustee and, in the case of Securities of a series held by an
Issuer Trust, the Property Trustee under the related Trust
Agreement, of such date and of the principal amount of Securities
of the applicable series to be redeemed and provide the additional
information required to be included in the notice or notices
contemplated by Section 11.4; provided that in the case of any
series of Securities initially issued to an Issuer Trust, for so
long as such Securities are held by such Issuer Trust, such notice
shall be given not less than 45 nor more than 75 days prior to such
Redemption Date (unless a shorter notice shall be satisfactory to
the Property Trustee under the related Trust Agreement). In the
case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such
Securities, the Corporation shall furnish the Trustee with an
Officers' Certificate and an Opinion of Counsel evidencing
compliance with such restriction.
SECTION 11.3. Selection of Securities to be Redeemed.
If less than all the Securities of any series are to be
redeemed, 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.
The Trustee shall promptly notify the Corporation in writing
of the Securities selected for partial redemption and the principal
amount thereof to be redeemed. 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
Security redeemed or to be redeemed only in part, to the portion of
the principal amount of such Security that has been or is to be
redeemed.
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SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not later than the thirtieth day, and not
earlier than the sixtieth day, prior to the Redemption Date, to
each Holder of Securities to be redeemed, at the address of such
Holder as it appears in the Securities Register, provided that in
the case of any series of Securities initially issued to an Issuer
Trust, for so long as such Securities are held by such Issuer
Trust, such notice shall be given not less than 45 nor more than 75
days prior to such Redemption Date (unless a shorter notice shall
be satisfactory to the Property Trustee under the related Trust
Agreement).
With respect to Securities of each series to be redeemed, each
notice of redemption shall include the CUSIP number of Securities
to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price
cannot be calculated prior to the time the notice is required to be
sent, the estimate of the Redemption Price together with a
statement that it is an estimate and that the actual Redemption
Price will be calculated on the third Business Day prior to the
Redemption Date (and if an estimate is provided, a further notice
shall be sent of the actual Redemption Price on the date that such
Redemption Price is calculated);
(c) if less than all Outstanding Securities of such
particular series are to be redeemed, the identification (and, in
the case of partial redemption, the respective principal amounts)
of the particular Securities to be redeemed;
(d) that on the Redemption Date, the Redemption Price
will become due and payable upon each such Security or portion
thereof, and that interest (including any Additional Interest)
thereon, if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price;
(f) that the redemption is for a sinking fund, if such
is the case;
(g) such other provisions as may be required in respect
of the terms of a particular series of Securities.
Notice of redemption of Securities to be redeemed at the
election of the Corporation 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 and shall be irrevocable. The notice if
mailed in the manner provided above shall be conclusively presumed
to have been duly given, whether or not the Holder receives such
notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Security designated for
redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Security.
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SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption
Date specified in the notice of redemption given as provided in
Section 11.4, 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 10.3) an amount of money sufficient to pay
the Redemption Price of, and any accrued interest (including any
Additional Interest) on, all the Securities (or portions thereof)
that are to be redeemed on that date.
SECTION 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in
Section 11.4, the Securities or portion of Securities with respect
to which such notice has been given shall become due and payable on
the date and at the place or places stated in such notice at the
applicable Redemption Price, together with accrued interest
(including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment
in said notice specified, the said Securities or the specified
portions thereof shall be paid and redeemed by the Corporation at
the applicable Redemption Price, together with accrued interest
(including any Additional Interest) to the Redemption Date;
provided, however, that, unless otherwise specified as contemplated
by Section 3.1, installments of interest (including any Additional
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 3.8.
Upon presentation of any Security redeemed in part only, the
Corporation shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Corporation,
a new Security or Securities of the same series, of authorized
denominations, in aggregate principal amount equal to the
unredeemed portion of the Security so presented and having the same
Original Issue Date, Stated Maturity and terms.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal of and
premium, if any, on such Security shall, until paid, bear interest
from the Redemption Date at the rate prescribed therefor in the
Security.
SECTION 11.7. Right of Redemption of Securities Initially
Issued to an Issuer Trust.
In the case of the Securities of a series initially issued to
an Issuer Trust, except as otherwise specified as contemplated by
Section 3.1, the Corporation, at its option, may redeem such
Securities (i) on or after the date specified in such Security, in
whole at any time or in part from time to time or (ii) upon the
occurrence and during the continuation of a Tax Event at any time
within 90 days following the occurrence and during the continuation
of such Tax Event, in whole (but not in part), in each case at a
Redemption Price of 100% unless specified in such Security,
together with accrued interest (including any Additional Interest)
to the Redemption Date.
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If less than all the Securities of any such series are to be
redeemed, the aggregate principal amount of such Securities
remaining Outstanding after giving effect to such redemption shall
be sufficient to satisfy any provisions of the Trust Agreement
related to the Issuer Trust to which such Securities were issued,
including any requirement in such Trust Agreement as to the minimum
Liquidation Amount (as defined in such Trust Agreement) of Trust
Preferred Securities that may be held by a holder of Trust
Preferred Securities thereunder.
ARTICLE XII
SINKING FUNDS
SECTION 12.1. 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 3.1 for such
Securities.
The minimum amount of any sinking fund payment provided for by
the terms of any Securities of any series is herein referred to as
a "mandatory sinking fund payment," and any sinking fund payment in
excess of such minimum amount that is permitted to be made by the
terms of such Securities of any series is herein referred to as an
"optional sinking fund payment." If provided for by the terms of
any Securities of any series, the cash amount of any sinking fund
payment may be subject to reduction as provided in Section 12.2.
Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of such
Securities.
SECTION 12.2. Satisfaction of Sinking Fund Payments with
Securities.
In lieu of making all or any part of a mandatory sinking fund
payment with respect to any Securities of a series in cash, the
Corporation may at its option, at any time no more than 16 months
and no less than 45 days prior to the date on which such sinking
fund payment is due, deliver to the Trustee Securities of such
series (together with the unmatured coupons, if any, appertaining
thereto) theretofore purchased or otherwise acquired by the
Corporation, except Securities of such series that have been
redeemed through the application of mandatory or optional sinking
fund payments pursuant to the terms of the Securities of such
series, accompanied by a Corporation Order instructing the Trustee
to credit such obligations and stating that the Securities of such
series were originally issued by the Corporation by way of bona
fide sale or other negotiation for value; 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 for such
Securities, 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 12.3. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date
for any series of Securities, the Corporation will deliver to the
Trustee an Officers' Certificate specifying the amount of
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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 in the currency in which the
Securities of such series are payable (except as provided pursuant
to Section 3.1) and the portion thereof, if any, that is to be
satisfied by delivering and crediting Securities pursuant to
Section 12.2 and will also deliver (to the extent not previously
delivered) to the Trustee any Securities to be so delivered. Such
Officers' Certificate shall be irrevocable and upon its delivery
the Corporation shall be obligated to make the cash payment or
payments therein referred to, if any, on or before the succeeding
sinking fund payment date. In the case of the failure of the
Corporation to deliver such Officers' Certificate (or, as required
by this Indenture, the Securities and coupons, if any, specified in
such Officers' Certificate) by the due date therefor, the sinking
fund payment due on the succeeding sinking fund payment date for
such series shall be paid entirely in cash and shall be sufficient
to redeem the principal amount of the Securities of such series
subject to a mandatory sinking fund payment without the right to
deliver or credit securities as provided in Section 12.2 and
without the right to make the optional sinking fund payment with
respect to such series at such time.
Any sinking fund payment or payments (mandatory or optional)
made in cash plus any unused balance of any preceding sinking fund
payments made with respect to the Securities of any particular
series shall be applied by the Trustee (or by the Corporation if
the Corporation is acting as its own Paying Agent) on the sinking
fund payment date on which such payment is made (or, if such
payment is made before a sinking fund payment date, on the sinking
fund payment date immediately following the date of such payment)
to the redemption of Securities of such series at the Redemption
Price specified in such Securities with respect to the sinking
fund. Any and all sinking fund moneys with respect to the
Securities of any particular series held by the Trustee (or if the
Corporation is acting as its own Paying Agent, segregated and held
in trust as provided in Section 10.3) on the last sinking fund
payment date with respect to Securities of such series and not held
for the payment or redemption of particular Securities of such
series shall be applied by the Trustee (or by the Corporation if
the Corporation is acting as its own Paying Agent), together with
other moneys, if necessary, to be deposited (or segregated)
sufficient for the purpose, to the payment of the principal of the
Securities of such series at Maturity. The Trustee shall select the
Securities to be redeemed upon such sinking fund payment date in
the manner specified in Section 11.3 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 11.4. Such notice
having been duly given, the redemption of such Securities shall be
made upon the terms and in the manner stated in Section 11.6. On or
before each sinking fund payment date, the Corporation shall pay to
the Trustee (or, if the Corporation is acting as its own Paying
Agent, the Corporation shall segregate and hold in trust as
provided in Section 10.3) in cash a sum in the currency in which
Securities of such series are payable (except as provided pursuant
to Section 3.1) equal to the principal (and premium, if any) and
any interest (including any Additional Interest) accrued to the
Redemption Date for Securities or portions thereof to be redeemed
on such sinking fund payment date pursuant to this Section 12.3.
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Neither the Trustee nor the Corporation shall redeem any
Securities of a series with sinking fund moneys or mail any notice
of redemption of Securities of such series by operation of the
sinking fund for such series during the continuance of a default in
payment of interest, if any, on any Securities of such series or of
any Event of Default (other than an Event of Default occurring as
a consequence of this paragraph) with respect to the Securities of
such series, except that if the notice of redemption shall have
been provided in accordance with the provisions hereof, the Trustee
(or the Corporation, if the Corporation is then acting as its own
Paying Agent) shall redeem such Securities if cash sufficient for
that purpose shall be deposited with the Trustee (or segregated by
the Corporation) for that purpose in accordance with the terms of
this Article XII. Except as aforesaid, any moneys in the sinking
fund for such series at the time when any such default or Event of
Default shall occur and any moneys thereafter paid into such
sinking fund shall, during the continuance of such default or Event
of Default, be held as security for the payment of the Securities
and coupons, if any, of such series; provided, however, that in
case such default or Event of Default shall have been cured or
waived herein, such moneys shall thereafter be applied on the next
sinking fund payment date for the Securities of such series on
which such moneys may be applied pursuant to the provisions of this
Section 12.3.
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior Debt.
The Corporation covenants and agrees, and each Holder of a
Security, by its acceptance thereof, likewise covenants and agrees,
that, to the extent and in the manner hereinafter set forth in this
Article, the payment of the principal of (and premium, if any) and
interest (including any Additional Interest) on each and all of the
Securities of each and every series are hereby expressly made
subordinate and subject in right of payment to the prior payment in
full of all Senior Debt of the Corporation.
SECTION 13.2. No Payment When Senior Debt in Default; Payment
Over of Proceeds Upon Dissolution, Etc.
If the Corporation shall default in the payment of any
principal of (or premium, if any) or interest on any of its Senior
Debt when the same becomes due and payable, whether at maturity or
at a date fixed for prepayment or by declaration of acceleration or
otherwise, then, upon written notice of such default to the
Corporation by the holders of Senior Debt or any trustee therefor,
unless and until such default shall have been cured or waived or
shall have ceased to exist, no direct or indirect payment (in cash,
property, securities, by set off or otherwise) shall be made or
agreed to be made on account of the principal of (or premium, if
any) or interest (including any Additional Interest) on any of the
Securities or in respect of any redemption, repayment, retirement,
purchase or other acquisition of any of the Securities.
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In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other
similar proceedings relating to the Corporation, its creditors or
its property, (ii) any proceeding for the liquidation, dissolution
or other winding up of the Corporation, voluntary or involuntary,
whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Corporation for the benefit of
creditors or (iv) any other marshalling of the assets of the
Corporation (each such event, if any, herein sometimes referred to
as a "Proceeding"), all Senior Debt of the Corporation (including
any interest thereon accruing after the commencement of any such
proceedings), shall first be paid in full before any payment or
distribution, whether in cash, securities or other property, shall
be made to any Holder of any of the Securities on account thereof.
Any payment or distribution, whether in cash, securities or other
property (other than securities of the Corporation or any other
corporation provided for by a plan of reorganization or
readjustment the payment of which is subordinate, at least to the
extent provided in these subordination provisions with respect to
the indebtedness evidenced by the Securities to the payment of all
Senior Debt of the Corporation at the time outstanding and to any
securities issued in respect thereof under any such plan of
reorganization or readjustment), which would otherwise (but for
these subordination provisions) be payable or deliverable in
respect of the Securities of any series shall be paid or delivered
directly to the holders of Senior Debt of the Corporation in
accordance with the priorities then existing among such holders
until all such Senior Debt (including any interest thereon accruing
after the commencement of any Proceeding) shall have been paid in
full.
In the event of any Proceeding, after payment in full of all
sums owing with respect to the Corporation's Senior Debt the
Holders of the Securities together with the holders of any
obligations of the Corporation ranking on a parity with the
Securities (which for this purpose only shall include the Allocable
Amounts of Senior Subordinated Indebtedness), shall be entitled to
be paid from the remaining assets of the Corporation the amounts at
the time due and owing on account of unpaid principal of (and
premium, if any) and interest on the Securities and such other
obligations before any payment or other distribution, whether in
cash, property or otherwise, shall be made on account of any
capital stock or any obligations of the Corporation ranking junior
to the Securities and such other obligations. If, notwithstanding
the foregoing, any payment or distribution of any character or any
security, whether in cash, securities or other property (other than
securities of the Corporation or any other corporation provided for
by a plan of reorganization or readjustment the payment of which is
subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the
Securities to the payment of all Senior Debt of the Corporation at
the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment),
shall be received by the Trustee or any Holder in contravention of
any of the terms hereof and before all Senior Debt of the
Corporation shall have been paid in full, such payment or
distribution or security shall be received in trust for the benefit
of, and shall be paid over or delivered and transferred to, the
holders of the Senior Debt of the Corporation at the time
outstanding in accordance with the priorities then existing among
such holders for application to the payment of all Senior Debt of
the Corporation remaining unpaid, to the extent necessary to pay
all such Senior Debt of the Corporation
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remaining unpaid, to the extent necessary to pay all such Senior
Debt of the Corporation in full. In the event of the failure of
the Trustee or any Holder to endorse or assign any such payment,
distribution or security, each holder of Senior Debt of the
Corporation is hereby irrevocably authorized to endorse or assign
the same.
The Trustee and the Holders shall take such action (including,
without limitation, the delivery of this Indenture to an agent for
the holders of Senior Debt of the Corporation or consent to the
filing of a financing statement with respect hereto) as may, in the
opinion of counsel designated by the holders of a majority in
principal amount of the Senior Debt of the Corporation at the time
outstanding, be necessary or appropriate to assure the
effectiveness of the subordination effected by these provisions.
The provisions of this Section 13.2 shall not impair any
rights, interests, remedies or powers of any secured creditor of
the Corporation in respect of any security interest the creation of
which is not prohibited by the provisions of this Indenture.
The securing of any obligations of the Corporation otherwise
ranking on a parity with the Securities or ranking junior to the
Securities shall not be deemed to prevent such obligations from
constituting, respectively, obligations ranking on a parity with
the Securities or ranking junior to the Securities.
SECTION 13.3. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent (i) the
Corporation at any time, except during the pendency of the
conditions described in the first paragraph of Section 13.2 or of
any Proceeding referred to in Section 13.2, from making payments at
any time of principal of (and premium, if any) or interest
(including any Additional Interest) on the Securities or (ii) the
application by the Trustee of any moneys deposited with it
hereunder to the payment of or on account of the principal of (and
premium, if any) or interest (including any Additional Interest) on
the Securities or the retention of such payment by the Holders, if,
at the time of such application by the Trustee, it did not have
knowledge that such payment would have been prohibited by the
provisions of this Article.
SECTION 13.4. Subrogation to Rights of Holders of Senior
Debt.
Subject to the payment in full of all amounts due or to become
due on all Senior Debt of the Corporation or the provision for such
payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt of the Corporation as
the case may be, the Holders of the Securities shall be subrogated
to the extent of the payments or distributions made to the holders
of such Senior Debt pursuant to the provisions of this Article
(equally and ratably with the holders of all indebtedness of the
Corporation that by its express terms is subordinated to Senior
Debt of the Corporation to substantially the same extent as the
Securities are subordinated to the Senior Debt of the Corporation
and is entitled to like rights of subrogation by reason of any
payments or distributions made to holders of such Senior Debt) to
the rights of the holders of such Senior Debt to receive payments
and
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distributions of cash, property and securities applicable to the
Senior Debt of the Corporation until the principal of (and
premium, if any) and interest (including any Additional Interest)
on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the
Senior Debt of the Corporation of any cash, property or securities
to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article, and no payments
over pursuant to the provisions of this Article to the holders of
Senior Debt of the Corporation by Holders of the Securities or the
Trustee, shall, as among the Corporation, its creditors other than
holders of its Senior Debt and the Holders of the Securities be
deemed to be a payment or distribution by the Corporation to or on
account of its Senior Debt.
SECTION 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for
the purpose of defining the relative rights of the Holders of the
Securities on the one hand and the holders of Senior Debt of the
Corporation on the other hand. Nothing contained in this Article or
elsewhere in this Indenture or in the Securities is intended to or
shall (i) impair, as between the Corporation and the Holders of the
Securities the obligations of the Corporation which are absolute
and unconditional, to pay to the Holders of the Securities the
principal of (and premium, if any) and interest (including any
Additional Interest) on the Securities as and when the same shall
become due and payable in accordance with their terms, (ii) affect
the relative rights against the Corporation of the Holders of the
Securities and creditors of the Corporation other than their rights
in relation to the holders of Senior Debt of the Corporation or
(iii) prevent the Trustee or the Holder of any Security (or to the
extent expressly provided herein, the holder of any Trust Preferred
Security) from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, including filing
and voting claims in any Proceeding, subject to the rights, if any,
under this Article of the holders of Senior Debt of the Corporation
to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
SECTION 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof
authorizes and directs the Trustee on his or her behalf to take
such action as may be necessary or appropriate to acknowledge or
effectuate the subordination provided in this Article and appoints
the Trustee his or her attorney-in-fact for any and all such
purposes.
SECTION 13.7. No Waiver of Subordination Provisions.
No right of any present or future holder of any of the
Corporation's Senior Debt to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Corporation or by any
act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Corporation with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof
that any such holder may have or be otherwise charged with.
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Without in any way limiting the generality of the immediately
preceding paragraph, the holders of the Corporation's Senior Debt
may, at any time and from to time, without the consent of or notice
to the Trustee or the Holders of the
Securities of any series without incurring responsibility to such
Holders of the Securities and without impairing or releasing the
subordination provided in this Article or the obligations hereunder
of such Holders of the Securities to the holders of the
Corporation's Senior Debt do any one or more of the following: (i)
change the manner, place or terms of payment or extend the time of
payment of, or renew or alter, Senior Debt of the Corporation or
otherwise amend or supplement in any manner such Senior Debt or any
instrument evidencing the same or any agreement under which such
Senior Debt is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Debt of the Corporation; (iii) release any Person
liable in any manner for the collection of Senior Debt of the
Corporation; and (iv) exercise or refrain from exercising any
rights against the Corporation and any other Person.
SECTION 13.8. Notice to Trustee.
The Corporation shall give prompt written notice to the
Trustee of any fact known to the Corporation that would prohibit
the making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article or any
other provision of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts that would prohibit
the making of any payment to or by the Trustee in respect of the
Securities unless and until the Trustee shall have received written
notice thereof from the Corporation or a holder of the
Corporation's Senior Debt, as the case may be, or from any trustee,
agent or representative therefor; provided, however, that if the
Trustee shall not have received the notice provided for in this
Section at least two Business Days prior to the date upon which by
the terms hereof any moneys may become payable for any purpose
(including, the payment of the principal of (and premium, if any,
on) or interest (including any Additional Interest) on any
Security) then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to
receive such moneys and to apply the same to the purpose for which
they were received and shall not be affected by any notice to the
contrary that may be received by it within two Business Days prior
to such date.
Subject to the provisions of Section 6.1, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a
Person representing himself or herself to be a holder of Senior
Debt of the Corporation (or a trustee or attorney-in-fact
therefor), to establish that such notice has been given by a holder
of Senior Debt of the Corporation (or a trustee or attorney-in-fact
therefor). In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any
Person as a holder of Senior Debt of the Corporation to participate
in any payment or distribution pursuant to this Article, the
Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior
Debt of the Corporation held by such Person, the extent to which
such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such
Person under this Article, and if
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such evidence is not furnished, the Trustee may defer any payment
to such Person pending judicial determination as to the right of
such Person to receive such payment.
SECTION 13.9. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Corporation
referred to in this Article, the Trustee, subject to the provisions
of Section 6.1, and the Holders of the Securities shall be entitled
to rely upon any order or decree entered by any court of competent
jurisdiction in which such Proceeding is pending, or a certificate
of the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee for the benefit of creditors, agent or other
Person making such payment or distribution, delivered to the
Trustee or to the Holders of Securities for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other indebtedness
of the Corporation the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior
Debt.
The Trustee, in its capacity as trustee under this Indenture,
shall not be deemed to owe any fiduciary duty to the holders of the
Corporation's Senior Debt and shall not be liable to any such
holders if it shall in good faith mistakenly pay over or distribute
to Holders of Securities or to the Corporation or to any other
Person cash, property or securities to which any holders of
Corporation's Senior Debt shall be entitled by virtue of this
Article or otherwise.
SECTION 13.11. Rights of Trustee as Holder of Senior Debt;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article with respect to any Senior
Debt of the Corporation that may at any time be held by it, to the
same extent as any other holder of Senior Debt of the Corporation
and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
SECTION 13.12. Article Applicable to Paying Agents.
If at any time any Paying Agent other than the Trustee shall
have been appointed by the Corporation and be then acting
hereunder, the term "Trustee" as used in this Article shall in such
case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning as
fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.
* * * *
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.
175
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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.
SOUTH CAROLINA ELECTRIC & GAS COMPANY
By: s/ M. R. Cannon
Name: M. R. Cannon
Title: Treasurer
Address: South Carolina Electric & Gas Company
<PAGE>
Exhibit 4-J
GUARANTEE AGREEMENT
BY AND BETWEEN
SOUTH CAROLINA ELECTRIC & GAS COMPANY
as Guarantor
and
THE BANK OF NEW YORK,
as Guarantee Trustee
RELATING TO
SCE&G TRUST I
---------------------------
Dated as of October 28, 1997
---------------------------
177<PAGE>
<PAGE>
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Guarantee Agreement
310(a) 4.1(a)
310(b) 4.1(c), 2.8
310(c) Inapplicable
311(a) 2.2(b)
311(b) 2.2(b)
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
312(c) Inapplicable
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(e) 1.1, 2.5, 3.2(a)
314(f) 2.1, 3.2
315(a) 3.1(d)(i)
315(b) 2.7
315(c) 3.1(c)
315(d) 3.1(d)
315(e) Inapplicable
316(a) 1.1, 2.6, 5.4
316(b) 5.5
316(c) 8.3
317(a) 2.7(c)
317(b) Inapplicable
318(a) 2.1
318(b) 2.1
318(c) 2.1
____________________
* This Cross-Reference Table does not constitute part of the
Guarantee Agreement and shall not affect the interpretation of any
of its terms or provisions.
178<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS 6
SECTION 1.1. Definitions 6
ARTICLE II
TRUST INDENTURE ACT 9
SECTION 2.1. Trust Indenture Act; Application 9
SECTION 2.2. List of Holders 10
SECTION 2.3. Reports by the Guarantee Trustee 10
SECTION 2.4. Periodic Reports to the Guarantee Trustee 10
SECTION 2.5. Evidence of Compliance with Conditions
Precedent 10
SECTION 2.6. Events of Default; Waiver 11
SECTION 2.7. Event of Default; Notice 11
SECTION 2.8. Conflicting Interests 12
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE 12
SECTION 3.1. Powers and Duties of the Guarantee Trustee 12
SECTION 3.2. Certain Rights of Guarantee Trustee 14
SECTION 3.3. Compensation; Indemnity; Fees 15
ARTICLE IV
GUARANTEE TRUSTEE 16
SECTION 4.1. Guarantee Trustee; Eligibility 16
SECTION 4.2. Appointment, Removal and Resignation
of the Guarantee Trustee 17
ARTICLE V
GUARANTEE 18
SECTION 5.1. Guarantee 18
SECTION 5.2. Waiver of Notice and Demand 18
SECTION 5.3. Obligations Not Affected 18
SECTION 5.4. Rights of Holders 19
SECTION 5.5. Unconditional Right of Holders to Payment 20
SECTION 5.6. Guarantee of Payment 20
SECTION 5.7. Subrogation 20
SECTION 5.8. Independent Obligations 20
ARTICLE VI
COVENANTS AND SUBORDINATION 21
SECTION 6.1. Subordination 21
SECTION 6.2. Pari Passu Guarantees 21
179
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ARTICLE VII
TERMINATION 21
SECTION 7.1. Termination 21
ARTICLE VIII
MISCELLANEOUS 22
SECTION 8.1. Successors and Assigns 22
SECTION 8.2. Amendments 22
SECTION 8.3. Record Date 22
SECTION 8.4. Notices 22
SECTION 8.5. Benefit 23
SECTION 8.6. Governing Law 23
SECTION 8.7. Counterparts 23
180<PAGE>
<PAGE>
GUARANTEE AGREEMENT, dated as of October 28, 1997, by and
between South Carolina Electric & Gas Company, a South Carolina
corporation (the "Guarantor"), and The Bank of New York, a New York
banking corporation, as trustee (the "Guarantee Trustee"), for the
benefit of the Holders (as defined herein) from time to time of the
Trust Preferred Securities (as defined herein) of SCE&G TRUST I, a
Delaware statutory business trust (the "Issuer Trust").
RECITALS OF THE CORPORATION
WHEREAS, pursuant to an Amended and Restated Trust Agreement,
dated as of October 28, 1997 (the "Trust Agreement," as more
particularly defined herein), among South Carolina Electric & Gas
Company, as Depositor, the Property Trustee, the Delaware Trustee,
the Administrative Trustees (as such terms are defined in the Trust
Agreement), the Holders and the holders of the Common Securities
the Issuer Trust is issuing $50,000,000 aggregate Liquidation
Amount (as defined in the Trust Agreement) of its 7.55% Trust
Preferred Securities, Series A (liquidation amount $25 per Trust
Preferred Security) (the "Trust Preferred Securities"),
representing preferred undivided beneficial interests in the assets
of the Issuer Trust and having the terms set forth in the Trust
Agreement; and
WHEREAS, the Trust Preferred Securities will be issued by the
Issuer Trust and the proceeds thereof, together with the proceeds
from the issuance of the Issuer Trust's Common Securities (as
defined herein), will be used to purchase the Debentures (as
defined in the Trust Agreement) of the Guarantor, which Debentures
will be deposited with the Property Trustee under the Trust
Agreement, as trust assets; and
WHEREAS, as an incentive for the Holders to purchase Trust
Preferred Securities, the Guarantor desires irrevocably and
unconditionally to agree, to the extent set forth herein, to pay to
the Holders of the Trust Preferred Securities the Guarantee
Payments (as defined herein), as the case may be, and to make
certain other payments on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the purchase of Trust
Preferred Securities by each Holder, which purchase the Guarantor
hereby acknowledges shall benefit the Guarantor, the Guarantor
executes and delivers this Guarantee Agreement for the benefit of
the Holders from time to time.
181
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ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
For all purposes of this Guarantee Agreement, except as
otherwise expressly provided or unless the context otherwise
requires:
(a) The terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as
the singular;
(b) All other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(c) The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the
meanings assigned to them in accordance with United States
generally accepted accounting principles;
(e) 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 Guarantee Agreement; and
(f) The words "hereby," "herein," "hereof" and "hereunder" and
other words of similar import refer to this Guarantee Agreement as
a whole and not to any particular Article, Section or other
subdivision.
"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.
"Board of Directors" means, as the context requires, the board
of directors of the Guarantor or the Executive Committee of the
board of directors of the Guarantor (or any other committee of the
board of directors of the Guarantor performing similar functions)
or a committee designated by the board of directors of the
Guarantor (or such committee), comprised of two or more members of
the board of directors of the Guarantor or officers of the
Guarantor, or both.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer Trust.
"Event of Default" means (i) a default by the Guarantor in any
of its payment obligations under this Guarantee Agreement or (ii)
a default by the Guarantor in any other obligation hereunder that
remains unremedied for 30 days.
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"Guarantee Agreement" means this Guarantee Agreement, as
modified, amended or supplemented from time to time.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the Trust
Preferred Securities, to the extent not paid or made by or on
behalf of the Issuer Trust: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required to be
paid on the Trust Preferred Securities, to the extent the Issuer
Trust shall have funds on hand available therefor at such time;
(ii) the Redemption Price (as defined in the Trust Agreement) with
respect to any Trust Preferred Securities called for redemption by
the Issuer Trust, to the extent the Issuer Trust shall have funds
on hand available therefor at such time; and (iii) upon a voluntary
or involuntary termination, winding-up or liquidation of the Issuer
Trust, unless Debentures are distributed to the Holders, the lesser
of (a) the Liquidation Distribution (as defined in the Trust
Agreement) with respect to the Trust Preferred Securities, to the
extent that the Issuer Trust shall have funds on hand available
therefor at such time, and (b) the amount of assets of the Issuer
Trust remaining available for distribution to Holders on
liquidation of the Issuer.
"Guarantee Trustee" means The Bank of New York, solely in its
capacity as Guarantee Trustee and not in its individual capacity,
until a Successor Guarantee Trustee has been appointed and has
accepted such appointment pursuant to the terms of this Guarantee
Agreement, and thereafter means each such Successor Guarantee
Trustee.
"Guarantor" has the meaning specified in the preamble of this
Guarantee Agreement.
"Holder" means any Holder (as defined in the Trust Agreement)
of any Trust Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of
Trust Preferred Securities have given any request, notice, consent
or waiver hereunder, "Holder" shall not include the Guarantor, the
Guarantee Trustee or any Affiliate of the Guarantor or the
Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture, dated as
of October 28, 1997, among the Guarantor and The Bank of New York,
as trustee, as the same may be modified, amended or supplemented
from time to time.
"Issuer Trust" has the meaning specified in the preamble of
this Guarantee Agreement.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount of the Trust Preferred
Securities" means, except as provided by the Trust Indenture Act,
Trust Preferred Securities representing more than 50% of the
aggregate Liquidation Amount (as defined in the Trust Agreement) of
all Trust Preferred Securities then Outstanding (as defined in the
Trust Agreement).
183
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"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board of Directors of
such Person or the Chief Executive Officer, the President, the
Chief Financial Officer, a Vice President or the Treasurer of such
Person, and by the Secretary or an Assistant Secretary of such
Person, and delivered to the Guarantee Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition
or covenant provided for in this Guarantee Agreement shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition
and the definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in
rendering the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association,
joint-stock company, company, limited liability company, trust,
business trust, unincorporated association or government or any
agency or political subdivision thereof, or any other entity of
whatever nature.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any Senior Vice President, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary,
the Treasurer, any Assistant Treasurer, any Trust Officer or
Assistant Trust Officer or any other officer of the Corporate Trust
Department of the Guarantee Trustee and also means, with respect to
a particular matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity
with the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee
under Section 4.1.
"Trust Agreement" means the Amended and Restated Trust
Agreement of the Issuer Trust referred to in the recitals to this
Guarantee Agreement, as modified, amended or supplemented from time
to time.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this Guarantee Agreement was
executed; provided, however, that in the event the Trust Indenture
Act of 1939 is amended after such date, "Trust Indenture Act"
means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Preferred Securities" has the meaning specified in the
recitals to this Guarantee Agreement.
184
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"Vice President," when used with respect to the Guarantor,
means any duly appointed vice president, whether or not designated
by a number or a word or words added before or after the title
"vice president."
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions
of the Trust Indenture Act that are required to be part of this
Guarantee Agreement and shall, to the extent applicable, be
governed by such provisions.
(b) If and to the extent that any provision of this
Guarantee Agreement limits, qualifies or conflicts with the duties
imposed by Sections 310 to and including 317, of the Trust
Indenture Act through operation of Section 318(c) thereof, such
imposed duties shall control. If any provision of this Guarantee
Agreement 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 Guarantee Agreement as so modified
or to be excluded, as the case may be.
SECTION 2.2. List of Holders.
(a) The Guarantor shall furnish or cause to be furnished
to the Guarantee Trustee (a) semi-annually, on or before March 31
and September 30 of each year, a list, in such form as the
Guarantee Trustee may reasonably require, of the names and
addresses of the Holders (a "List of Holders") as of a date not
more than 15 days prior to the delivery thereof, and (b) at such
other times as the Guarantee Trustee may request in writing, within
30 days after the receipt by the Guarantors of any such request, a
List of Holders as of a date not more than 15 days prior to the
time such list is furnished, in each case to the extent such
information is in the possession or control of the Guarantor and
has not otherwise been received by the Guarantee Trustee in its
capacity as such. The Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with the
requirements of Section 311(a), Section 311(b) and Section 312(b)
of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than January 31 of each year, the Guarantee Trustee
shall provide to the Holders such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by Section 313 of the Trust Indenture Act. The
Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the
Securities and Exchange Commission and the Holders such documents,
reports and information, if any, as required by Section 314 of the
Trust Indenture Act and the compliance
185
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certificate required by Section 314 of the Trust Indenture Act, in
the form, in the manner and at the times required by Section 314 of
the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions
Precedent.
The Guarantor shall provide to the Guarantee Trustee such
evidence of compliance with such conditions precedent, if any,
provided for in this Guarantee Agreement that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer of the
Guarantor pursuant to Section 314(c)(1) may be given in the form of
an Officers' Certificate.
SECTION 2.6. Events of Default; Waiver.
The Holders of at least a Majority in Liquidation Amount of
the Trust Preferred Securities may, by vote, on behalf of the
Holders of all the Trust Preferred Securities, waive any past
default or Event of Default and its consequences. Upon such waiver,
any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Guarantee Agreement, but
no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders, notice of any such Event of
Default known to the Guarantee Trustee, unless such Event of
Default has been cured before the giving of such notice, provided
that, except in the case of a default in the payment of a Guarantee
Payment, the Guarantee Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive
committee or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee
shall have received written notice, or a Responsible Officer
charged with the administration of this Guarantee Agreement shall
have obtained actual knowledge, of such Event of Default.
(c) Subject to the provisions of Section 5.4 hereof, in
the case of a default by the Guarantor in any of its payment
obligations under this Guarantee Agreement, when and as the same
shall become due and payable, the Guarantee Trustee shall have the
right, subject to the rights of the Holders hereunder, to recover
judgment against the Guarantor for the whole amount of such
payments remaining unpaid.
SECTION 2.8. Conflicting Interests.
The Trust Agreement and the Indenture shall be deemed to be
specifically described in this Guarantee Agreement for the purposes
of clause (i) of the first proviso contained in Section 310(b) of
the Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the
Guarantee Trustee for the benefit of the Holders, and the Guarantee
Trustee shall not transfer this Guarantee Agreement to any Person
except to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Guarantee
Trustee hereunder. The right, title and interest of the Guarantee
Trustee, as such, hereunder shall automatically vest in any
Successor Guarantee Trustee, upon acceptance by such Successor
Guarantee Trustee of its appointment hereunder, and such vesting of
title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing,
the Guarantee Trustee shall enforce this Guarantee Agreement for
the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that
may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Guarantee Agreement, and no
implied covenants shall be read into this Guarantee Agreement
against the Guarantee Trustee. The Guarantee Trustee shall exercise
such of the rights and powers vested in it by this Guarantee
Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act or its own
wilful misconduct, except that:
(i) Prior to the occurrence of any Event of
Default and after the curing or waiving of all such Events
of Default that may have occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express
provisions of this Guarantee Agreement (including
pursuant to Section 2.1), and the Guarantee Trustee shall
not be liable except for the performance of such duties
and obligations as are specifically set forth in this
Guarantee Agreement; and
(B) in the absence of bad faith on the part of
the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Guarantee
Trustee and conforming to the requirements of this
Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof or
of the Trust Indenture Act are specifically required to
be furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Guarantee Agreement.
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(ii) The Guarantee Trustee shall not be liable
for any error of judgment made in good faith by a Responsible
Officer of the Guarantee Trustee, unless it shall be proved
that the Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made.
(iii) The Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of
not less than a Majority in Liquidation Amount of the Trust
Preferred Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement.
(iv) No provision of this Guarantee Agreement shall
require the Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to
it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may 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, other evidence of indebtedness or other paper
or document reasonably believed by it to be genuine and to
have been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of either of the
Guarantors contemplated by this Guarantee Agreement shall be
sufficiently evidenced by an Officers' Certificate unless
otherwise prescribed herein.
(iii) Whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before
taking, suffering or omitting to take any action hereunder,
the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate
which, upon receipt of such request from the Guarantee
Trustee, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with
legal counsel of its selection, and the written advice or
opinion of such legal counsel with respect to legal matters
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken
by it hereunder in good faith and in accordance with such
advice or opinion. Such legal counsel may be legal counsel
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to the Guarantor or any of its Affiliates and may be one of
its employees. The Guarantee Trustee shall have the right at
any time to seek instructions concerning the administration of
this Guarantee Agreement from any court of competent
jurisdiction.
(v) The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Guarantee Agreement at the request or direction of
any Holder unless such Holder shall have provided to the
Guarantee Trustee such adequate security and indemnity as
would satisfy a reasonable person in the position of the
Guarantee Trustee against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Guarantee Trustee; provided that nothing contained in this
Section 3.2(a)(v) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Guarantee Agreement.
(vi) The Guarantee 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 Guarantee Trustee, in its discretion, may
make such further inquiry or investigation into such facts or
matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through its agents or attorneys, and
the Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or
attorney appointed by it with due care hereunder.
(viii) Whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Guarantee Trustee (A) may request instructions from the
Holders, (B) may refrain from enforcing such remedy or right
or taking such other action until such instructions are
received and (C) shall be protected in acting in accordance
with such instructions.
(b) No provision of this Guarantee Agreement shall be
deemed to impose any duty or obligation on the Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or
obligation conferred or imposed on it in any jurisdiction in which
it shall be illegal, or in which the Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to
the Guarantee Trustee shall be construed to be a duty to act in
accordance with such power and authority.
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SECTION 3.3. Compensation; Indemnity; Fees.
The Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time
such compensation for all services rendered by it hereunder as
may be agreed by the Guarantor and the Guarantee Trustee from
time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of
an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon request for all
reasonable expenses, disbursements and advances incurred or
made by the Guarantee Trustee in accordance with any provision
of this Guarantee Agreement (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 or bad faith; and
(c) to indemnify the Guarantee Trustee for, and to
hold it harmless against, any loss, liability or expense
incurred without negligence, wilful misconduct or bad faith on
the part of the Guarantee Trustee, arising out of or in
connection with the acceptance or administration of this
Guarantee Agreement, including the costs and expenses of
defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or
duties hereunder.
The Guarantee Trustee will not claim or exact any lien or charge on
any Guarantee Payments as a result of any amount due to it under
this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) 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, and shall be a corporation meeting
the requirements of Section 310(a) of the Trust Indenture Act. If
such corporation 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 4.1 and
to the extent permitted by the Trust Indenture Act, the combined
capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report
of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee
shall immediately resign in the manner and with the effect set out
in Section 4.2.
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(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee Trustee and the Guarantor shall
in all respects comply with the provisions of Section 310(b) of the
Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the
Guarantee Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a
Successor Guarantee Trustee has been appointed and has accepted
such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold
office until a Successor Guarantee Trustee shall have been
appointed or until its removal or resignation. The Guarantee
Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by instrument in
writing executed by such Successor Guarantee Trustee and delivered
to the Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of
resignation, the resigning Guarantee Trustee may petition, at the
expense of the Guarantor, any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by or on behalf of the Issuer Trust), as
and when due, regardless of any defense, right of setoff or
counterclaim that the Issuer Trust may have or assert, except the
defense of payment. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts
by the Guarantor to the Holders or by causing the Issuer Trust to
pay such amounts to the Holders.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this
Guarantee Agreement and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a
proceeding first against the Guarantee Trustee, the Issuer Trust or
any other Person before proceeding against either of the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
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SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the
Guarantor under this Guarantee Agreement shall in no way be
affected or impaired by reason of the happening from time to time
of any of the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Issuer Trust of
any express or implied agreement, covenant, term or condition
relating to the Trust Preferred Securities to be performed or
observed by the Issuer Trust;
(b) the extension of time for the payment by the
Issuer Trust of all or any portion of the Distributions (other than
an extension of time for payment of Distributions that results from
the extension of any interest payment period on the Debentures as
provided in the Indenture), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Trust
Preferred Securities or the extension of time for the performance
of any other obligation under, arising out of, or in connection
with, the Trust Preferred Securities;
(c) any failure, omission, delay or lack of diligence
on the part of the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Holders pursuant
to the terms of the Trust Preferred Securities, or any action on
the part of the Issuer Trust granting indulgence or extension of
any kind;
(d) the voluntary or involuntary liquidation,
dissolution, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition
or readjustment of debt of, or other similar proceedings affecting,
the Issuer Trust or any of the assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in,
the Trust Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might
otherwise constitute a legal or equitable discharge or defense of
a guarantor (other than payment of the underlying obligation), it
being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any
and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the happening
of any of the foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee
Agreement will be deposited with the Guarantee Trustee to be held
for the benefit of the Holders; (ii) the Guarantee Trustee has the
right to enforce this Guarantee Agreement on behalf of the Holders;
(iii) the Holders of a Majority in Liquidation Amount of the Trust
Preferred Securities have the right to direct the time, method and
place of conducting any
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proceeding for any remedy available to the Guarantee Trustee in
respect of this Guarantee Agreement or exercising any trust or
power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding
directly against the Guarantor to enforce its rights under this
Guarantee Agreement without first instituting a legal proceeding
against the Guarantee Trustee, the Issuer Trust or any other
Person.
SECTION 5.5. Unconditional Right of Holders to Payment.
Notwithstanding any other provision of this Guarantee
Agreement, each Holder shall have the right, which is absolute and
unconditional, to receive Guarantee Payments when due, and to
institute suit for the enforcement of any such payment, and such
right shall not be impaired without the consent of such Holder.
SECTION 5.6. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and
not of collection. This Guarantee Agreement will not be discharged
except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer Trust) or
upon the distribution of Debentures to Holders as provided in the
Trust Agreement.
SECTION 5.7. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of
the Holders against the Issuer Trust in respect of any amounts paid
to the Holders by the Guarantor under this Guarantee Agreement;
provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in
all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid
under this Guarantee Agreement. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold the amount in trust for the Holders and to pay over
such amount to the Holders.
SECTION 5.8. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to
the Trust Preferred Securities and that it be liable as principal
and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of
any event referred to in subsections (a) through (g), inclusive, of
Section 5.3 hereof.
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ARTICLE VI
COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
The obligations of the Guarantor under this Guarantee
Agreement will constitute unsecured obligations of the Guarantor
and will rank subordinate and junior in right of payment to all
Senior Indebtedness (as defined in the Indenture) of the Guarantor,
to the extent and in the manner set forth in the Indenture with
respect to the Debentures, and the provisions of Article XIII of
the Indenture will apply, mutatis mutandis, to the obligations of
the Guarantor hereunder. The obligations of the Guarantor hereunder
do not constitute Senior Indebtedness (as defined in the Indenture)
of the Guarantor.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee
Agreement rank pari passu with the obligations of the Guarantor
under (i) any similar guarantee agreements issued by the Guarantor
on behalf of the holders of preferred or capital securities issued
by any Issuer Trust (as defined in the Indenture), (ii) the
Indenture and the Securities (as defined therein) issued thereunder
and (iii) any other security, guarantee or other agreement or
obligation that is expressly stated to rank pari passu with the
obligations of the Guarantor under this Guarantee Agreement or with
any obligation that ranks pari passu with the obligations of the
Guarantor under this Guarantee Agreement.
ARTICLE VII
TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further
force and effect upon (i) full payment of the Redemption Price (as
defined in the Trust Agreement) of all Trust Preferred Securities,
(ii) the distribution of Debentures to the Holders in exchange for
all of the Trust Preferred Securities or (iii) full payment of the
amounts payable in accordance with Article IX of the Trust
Agreement upon liquidation of the Issuer Trust. Notwithstanding the
foregoing, this Guarantee Agreement will continue to be effective
or will be reinstated, as the case may be, if at any time any
Holder is required to repay any sums paid with respect to Trust
Preferred Securities or this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee
Agreement shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor, and shall inure to the
benefit of the Holders of the Trust Preferred Securities then
outstanding. Except in connection with a consolidation, merger or
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sale involving the Guarantor that is permitted under Article VIII
of the Indenture and pursuant to which the successor or assignee
agrees in writing to perform the Guarantor's obligations hereunder,
the Guarantor shall not assign its obligations hereunder, and any
purported assignment other than in accordance with this provision
shall be void.
SECTION 8.2. Amendments.
Except with respect to any changes that do not adversely
affect the rights of the Holders in any material respect (in which
case no consent of the Holders will be required), this Guarantee
Agreement may only be amended with the prior approval of the
Holders of not less than a Majority in Liquidation Amount of the
Trust Preferred Securities.
SECTION 8.3. Record Date.
For purposes of any action to be taken by Holders pursuant to
Sections 2.6, 5.4 or 8.2 hereof, the provisions of Article VI of
the Trust Agreement concerning meetings of the Holders shall apply.
SECTION 8.4. Notices.
Any notice, request or other communication required or
permitted to be given hereunder be in writing, duly signed by the
party giving such notice, and delivered, telecopied or mailed by
first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy
number set forth below or such other address or telecopy number as
the Guarantor may give notice to the Guarantee Trustee and the
Holders:
South Carolina Electric & Gas Company
1426 Main Street
Columbia, South Carolina 29201
Attention: Treasurer
Telecopy: (803) 933-7037
(b) if given to the Guarantee Trustee, at the address or
telecopy number set forth below or such other address or telecopy
number as the Guarantee Trustee may give notice to the Guarantor
and Holders:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Telecopy: (212) 815-5915
with a copy to:
SCE&G Trust I
c/o South Carolina Electric & Gas Company
1426 Main Street
Columbia, South Carolina 29201
Attention: Treasurer
Telecopy: (803) 933-7037
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(c) if given to any Holder, at the address set forth on
the books and records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by
first class mail, postage prepaid, except that if a notice or other
document is refused delivery or cannot be delivered because of a
changed address of which no notice was given, such notice or other
document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 8.5. Benefit.
This Guarantee Agreement is solely for the benefit of the
Holders and is not separately transferable from the Trust Preferred
Securities.
SECTION 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.7. Counterparts.
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 together shall constitute but one and the
same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Guarantee Agreement as of the day and year first above written.
SOUTH CAROLINA ELECTRIC & GAS COMPANY
By: s/M. R. Cannon
Name: M. R. Cannon
Title: Treasurer
<PAGE>
Exhibit 4-K
==========================================
AMENDED AND RESTATED TRUST AGREEMENT
AMONG
SOUTH CAROLINA ELECTRIC & GAS COMPANY,
as Depositor
THE BANK OF NEW YORK,
as Property Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
and
THE SEVERAL HOLDERS (as defined herein)
---------------------
Dated as of October 28, 1997
---------------------
SCE&G TRUST I
==========================================
198
<PAGE>
<PAGE>
SCE&G TRUST I
Certain Sections of this Trust Agreement relating
to Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Trust Agreement
Act Section Section
Section 310 (a)(1) 8.7
(a)(2) 8.7
(a)(3) 8.9
(a)(4) 2.7(a)(ii)
(a)(5) 8.7(a)(5)
(b) 8.8
(c) Not Applicable
Section 311 (a) 8.13
(b) 8.13
(c) Not Applicable
Section 312 (a) 5.8
(b) 5.8
(c) 5.8
Section 313 (a) 8.15(a)
(b) 8.15(b)
(c) 10.8
(d) 8.15(c)
Section 314 (a) 8.16
(b) Not Applicable
(c)(1) 8.17
(c)(2) 8.17
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.1, 8.17
Section 315 (a) 8.1(d)(i)
(b) 8.2, 10.8
(c) 8.1(c)
(d) 8.1, 8.3
(e) Not Applicable
Section 316 (a) Not Applicable
(a)(1)(A) Not Applicable
(a)(1)(B) Not Applicable
(a)(2) Not Applicable
(b) 5.13(c)
(c) 6.7
Section 317 (a)(1)Not Applicable
(a)(2)Not Applicable
(b)5.10
Section 318 (a)10.10
Note: This reconciliation and tie sheet shall not, for any purpose,
be deemed to be a part of the Trust Agreement.
199<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINED TERMS 8
SECTION 1.1. Definitions. 8
ARTICLE II
CONTINUATION OF THE ISSUER TRUST 18
SECTION 2.1. Name. 18
SECTION 2.2. Office of the Delaware Trustee; Principal
Place of Business 18
SECTION 2.3. Initial Contribution of Trust Property;
Organizational Expenses 18
SECTION 2.4. Issuance of the Trust Preferred Securities 19
SECTION 2.5. Issuance of the Common Securities;
Subscription and Purchase of Debentures 19
SECTION 2.6. Continuation of Trust 19
SECTION 2.7. Authorization to Enter into Certain
Transactions 20
SECTION 2.8. Assets of Trust 24
SECTION 2.9. Title to Trust Property 24
ARTICLE III
PAYMENT ACCOUNT 24
SECTION 3.1. Payment Account 24
ARTICLE IV
REDEMPTION 25
SECTION 4.1. Distributions 25
SECTION 4.2. Redemption 26
SECTION 4.3. Subordination of Common Securities 28
SECTION 4.4. Payment Procedures 29
SECTION 4.5. Tax Returns and Reports 29
SECTION 4.6. Payment of Taxes, Duties, Etc. of
the Issuer Trust 29
SECTION 4.7. Payments under Indenture or Pursuant
to Direct Actions 30
ARTICLE V
TRUST SECURITIES CERTIFICATES 30
SECTION 5.1. Initial Ownership 30
SECTION 5.2. The Trust Securities Certificates 30
SECTION 5.3. Execution and Delivery of Trust Securities
Certificates 31
SECTION 5.4. Book-Entry Trust Preferred Securities 31
SECTION 5.5. Registration of Transfer and Exchange of
Trust Preferred Securities Certificates 33
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates 35
SECTION 5.7. Persons Deemed Holders 36
SECTION 5.8. Access to List of Holders' Names
and Addresses 36
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SECTION 5.9. Maintenance of Office or Agency 36
SECTION 5.10. Appointment of Paying Agent 36
SECTION 5.11. Ownership of Common Securities by Depositor 37
SECTION 5.12. Notices to Clearing Agency 37
SECTION 5.13. Rights of Holders; Waivers of Past Defaults 38
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING 40
SECTION 6.1. Limitations on Voting Rights 40
SECTION 6.2. Notice of Meetings 42
SECTION 6.3. Meetings of Holders of the Trust Preferred
Securities 42
SECTION 6.4. Voting Rights 42
SECTION 6.5. Proxies, etc 43
SECTION 6.6. Holder Action by Written Consent 43
SECTION 6.7. Record Date for Voting and Other Purposes 43
SECTION 6.8. Acts of Holders 44
SECTION 6.9. Inspection of Records 45
ARTICLE VII
REPRESENTATIONS AND WARRANTIES 45
SECTION 7.1. Representations and Warranties of the
Property Trustee and the Delaware Trustee 45
SECTION 7.2. Representations and Warranties of Depositor 46
ARTICLE VIII
THE ISSUER TRUSTEES 47
SECTION 8.1. Certain Duties and Responsibilities 47
SECTION 8.2. Certain Notices 50
SECTION 8.3. Certain Rights of Property Trustee 50
SECTION 8.4. Not Responsible for Recitals or Issuance
of Securities 52
SECTION 8.5. May Hold Securities 53
SECTION 8.6. Compensation; Indemnity; Fees 53
SECTION 8.7. Corporate Property Trustee Required;
Eligibility of Issuer Trustees 54
SECTION 8.8. Conflicting Interests 54
SECTION 8.9. Co-Trustees and Separate Trustee 55
SECTION 8.10. Resignation and Removal; Appointment of
Successor 56
SECTION 8.11. Acceptance of Appointment by Successor 58
SECTION 8.12. Merger, Conversion, Consolidation or
Succession to Business 59
SECTION 8.13. Preferential Collection of Claims Against
Depositor or Issuer Trust 59
SECTION 8.14. Property Trustee May File Proofs of Claim 59
SECTION 8.15. Reports by Property Trustee 60
SECTION 8.16. Reports to the Property Trustee 61
SECTION 8.17. Evidence of Compliance with Conditions
Precedent 61
SECTION 8.18. Number of Issuer Trustees 61
SECTION 8.19. Delegation of Power 61
SECTION 8.20. Appointment of Administrative Trustees 62
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ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER 63
SECTION 9.1. Dissolution Upon Expiration Date 63
SECTION 9.2. Early Dissolution 63
SECTION 9.3. Termination 63
SECTION 9.4. Liquidation 64
SECTION 9.5. Mergers, Consolidations, Amalgamations
or Replacements of Issuer Trust 65
ARTICLE X
MISCELLANEOUS PROVISIONS 67
SECTION 10.1. Limitation of Rights of Holders 67
SECTION 10.2. Amendment 67
SECTION 10.3. Separability 68
SECTION 10.4. Governing Law 68
SECTION 10.5. Payments Due on Non-Business Day 69
SECTION 10.6. Successors 69
SECTION 10.7. Headings 69
SECTION 10.8. Reports, Notices and Demands 69
SECTION 10.9. Agreement Not to Petition 70
SECTION 10.10. Trust Indenture Act; Conflict with Trust
Indenture Act 70
SECTION 10.11. Acceptance of Terms of Trust Agreement,
Guarantee Agreement and Indenture 71
Exhibit A Certificate of Trust
Exhibit B Form of Letter of Representations
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Trust Preferred Securities Certificate
202
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<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of October 28, 1997,
among (i) South Carolina Electric & Gas Company, a South Carolina
corporation (including any successors or assigns, the "Depositor"), (ii)
The Bank of New York, a New York banking corporation, as property
trustee (in such capacity, the "Property Trustee" and, in its separate
corporate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) The Bank of New York (Delaware), a Delaware banking
corporation, as Delaware trustee (in such capacity, the "Delaware
Trustee"), (iv) M. R. Cannon, an individual, K. B. Marsh, an individual,
and H. T. Arthur, an individual, each of whose address is c/o South
Carolina Electric & Gas Company, 1426 Main Street, Columbia, South
Carolina 29201 (each an "Administrative Trustee" and collectively the
"Administrative Trustees") (the Property Trustee, the Delaware Trustee
and the Administrative Trustees being referred to collectively as the
"Issuer Trustees") and (iv) the several Holders, as hereinafter defined.
WITNESSETH
WHEREAS, the Depositor, Delaware Trustee and an Administrative
Trustee have heretofore duly declared and established a business trust
pursuant to the Delaware Business Trust Act (as defined herein) by
entering into the Trust Agreement, dated as of October 8, 1997 (the
"Original Trust Agreement") and by the execution and filing with the
Secretary of State of the State of Delaware of the Certificate of Trust,
filed on October 8, 1997, attached as Exhibit A; and
WHEREAS, the Depositor and the Issuer Trustees desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein
to provide for, among other things, (i) the issuance of the Common
Securities (as defined herein) by the Issuer Trust to the Depositor,
(ii) the issuance and sale of the Trust Preferred Securities (as defined
herein) by the Issuer Trust pursuant to the Underwriting Agreement (as
defined herein), (iii) the acquisition by the Issuer Trust from the
Depositor of all of the right, title and interest in the Debentures (as
defined herein) and (iv) the appointment of the Property Trustee and the
Administrative Trustees;
NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each party, for
the benefit of the other parties and for the benefit of the Holders,
hereby amends and restates the Original Trust Agreement in its entirety
and agrees as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.
For all purposes of this Trust Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned
to them in this Article, and include the plural as well as the
singular;
(b) All other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
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(c) The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the
meanings assigned to them in accordance with United States
generally accepted accounting principles;
(e) Unless the context otherwise requires, any reference to an
"Article," a "Section" or an "Exhibit" refers to an Article,
a Section or an Exhibit, as the case may be, of or to this
Trust Agreement; and
(f) The words "hereby," "herein," "hereof" and "hereunder" and
other words of similar import refer to this Trust Agreement as
a whole and not to any particular Article, Section or other
subdivision.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a
given Liquidation Amount and/or a given period, the amount of Additional
Interest (as defined in the Indenture) paid by the Depositor on a Like
Amount of Debentures for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
"Administrative Trustee" means each of the Persons appointed in
accordance with Section 8.20 solely in such Person's capacity as
Administrative Trustee of the Issuer Trust heretofore formed and
continued hereunder and not in such Person's individual capacity, or any
successor Administrative Trustee appointed as herein provided.
"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.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Book-Entry Trust Preferred Security, the rules
and procedures of the Clearing Agency for such Book-Entry Trust
Preferred Security, in each case to the extent applicable to such
transaction and as in effect from time to time.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
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(a) the entry of a decree or order by a court having jurisdiction
in the premises judging such Person a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjudication or composition of or in respect of such Person
under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official)
of such Person 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 unstayed and in effect for a period of 60
consecutive days; or
(b) the institution by such Person of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law, or the consent by it to the filing
of any such petition or to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or similar official) of such Person 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
and its willingness to be adjudicated a bankrupt, or the taking of
corporate action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor
or the Executive Committee of the board of directors of the Depositor
(or any other committee of the board of directors of the Depositor
performing similar functions) or a committee designated by the board of
directors of the Depositor (or any such committee), comprised of two or
more members of the board of directors of the Depositor or officers of
the Depositor, or both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly
adopted by the Depositor's Board of Directors, or officers of the
Depositor to which authority to act on behalf of the Board of Directors
has been delegated and to be in full force and effect on the date of
such certification, and delivered to the Issuer Trustees.
"Book-Entry Trust Preferred Securities Certificate" means a Trust
Preferred Securities Certificate evidencing ownership of Book-Entry
Trust Preferred Securities.
"Book-Entry Trust Preferred Security" means a Trust Preferred
Security, the ownership and transfers of which shall be made through
book entries by a Clearing Agency as described in Section 5.4.
"Business Day" means a day other than (i) a Saturday or Sunday,
(ii) a day on which banking institutions in The City of New York are
authorized or required by law or executive order to remain closed or
(iii) a day on which the Property Trustee's Corporate Trust Office or
the Corporate Trust Office of the Debenture Trustee is closed for
business.
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"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. DTC will be the
initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" means the date of execution and delivery of this
Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as 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.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as
Exhibit C.
"Common Security" means a common undivided beneficial interest in
the assets of the Issuer Trust, having a Liquidation Amount of $25 and
having the rights provided therefor in this Trust Agreement, including
the right to receive Distributions and a Liquidation Distribution to the
extent provided herein.
"Corporate Trust Office" means (i) when used with respect to the
Property Trustee, the principal office of the Property Trustee located
in New York, New York, and (ii) when used with respect to the Debenture
Trustee, the principal office of the Debenture Trustee located in
Wilmington, Delaware.
"Debenture Event of Default" means any "Event of Default" specified
in Section 5.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures
to be redeemed under the Indenture, the date fixed for redemption of
such Debentures under the Indenture.
"Debenture Tax Event" means a "Tax Event" as defined in the
Indenture.
"Debenture Trustee" means the Person identified as the "Trustee" in
the Indenture, solely in its capacity as Trustee pursuant to the
Indenture and not in its individual capacity, or its successor in
interest in such capacity, or any successor Trustee appointed as
provided in the Indenture.
"Debentures" means the Depositor's 7.55% Junior Subordinated
Deferrable Interest Debentures, Series A, issued pursuant to the
Indenture.
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"Definitive Trust Preferred Securities Certificates" means either
or both (as the context requires) of (i) Trust Preferred Securities
Certificates issued as Book-Entry Trust Preferred Securities
Certificates as provided in Section 5.2 or 5.4 and (ii) Trust Preferred
Securities Certificates issued in certificated, fully registered form as
provided in Section 5.2, 5.4 or 5.5.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended
from time to time.
"Delaware Trustee" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement, solely in its capacity
as Delaware Trustee of the trust heretofore formed and continued
hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor Delaware Trustee appointed
as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"DTC" means The Depository Trust Company.
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever
the reason for such event 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):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Issuer Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(c) default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trustees in this
Trust Agreement (other than those specified in clause (b) or (c) above)
and continuation of such default or breach for a period of 60 days after
there has been given, by registered or certified mail, to the Issuer
Trustees and to the Depositor by the Holders of at least 25% in
aggregate Liquidation Amount of the Outstanding Trust Preferred
Securities 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; or
(e) the occurrence of a Bankruptcy Event with respect to the
Property Trustee if a successor Property Trustee has not been appointed
within 90 days thereof.
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"Exchange Act" means the Securities Exchange Act of 1934, and any
successor statute thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Guarantee Agreement" means the Guarantee Agreement executed and
delivered by the Depositor and The Bank of New York, as guarantee
trustee, contemporaneously with the execution and delivery of this Trust
Agreement, for the benefit of the holders of the Trust Preferred
Securities, as amended from time to time.
"Holder" means a Person in whose name a Trust Security or Trust
Securities are registered in the Securities Register; any such Person
shall be a beneficial owner within the meaning of the Delaware Business
Trust Act.
"Indenture" means the Junior Subordinated Indenture, dated as of
October 28, 1997, between the Depositor and the Debenture Trustee, as
trustee, as amended or supplemented from time to time.
"Investment Company Act" means the Investment Company Act of 1940,
or any successor statute thereto, in each case as amended from time to
time.
"Issuer Trust" means the Delaware business trust known as "SCE&G
Trust I" which was formed on October 8, 1997 under the Delaware Business
Trust Act pursuant to the Original Trust Agreement and the filing of the
Certificate of Trust, and continued pursuant to this Trust Agreement.
"Issuer Trustees" has the meaning specified in the preamble to this
Trust Agreement.
"Letter of Representations" means the agreement among the Issuer
Trust, the Property Trustee and DTC, as the initial Clearing Agency,
dated as of the Closing Date, substantially in the form attached as
Exhibit B, as the same may be amended and supplemented from time to
time.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed
of trust, adverse ownership interest, hypothecation, assignment,
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever.
"Like Amount" means (i) with respect to a redemption of any Trust
Securities, Trust Securities having a Liquidation Amount equal to the
principal amount of Debentures to be contemporaneously redeemed in
accordance with the Indenture, the proceeds of which will be used to pay
the Redemption Price of such Trust Securities, (ii) with respect to a
distribution of Debentures to Holders of Trust Securities in connection
with a dissolution or liquidation of the Issuer Trust, Debentures having
a principal amount equal to the Liquidation Amount of the Trust
Securities of the Holder to whom such Debentures are distributed and
(iii) with respect to any distribution of Additional Amounts to Holders
of Trust Securities, Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities in respect of which such
distribution is made.
"Liquidation Amount" means the stated amount of $25 per Trust
Security.
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"Liquidation Date" means the date of the dissolution, winding-up or
termination of the Issuer Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section
9.4(d).
"Majority in Liquidation Amount of the Trust Preferred Securities"
or "Majority in Liquidation Amount of the Common Securities" means,
except as provided by the Trust Indenture Act, Trust Preferred
Securities or Common Securities, as the case may be, representing more
than 50% of the aggregate Liquidation Amount of all then Outstanding
Trust Preferred Securities or Common Securities, as the case may be.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, the President, the Chief Executive Officer, the Chief
Financial Officer, any Vice President or the Treasurer and by the
Secretary or an Assistant Secretary of the Depositor and delivered to
the Issuer Trustees. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust
Agreement shall include:
(a) a statement by each officer signing the Officers'
Certificate that such officer has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by such officer in rendering the
Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Depositor or any Affiliate of the
Depositor.
"Original Trust Agreement" has the meaning specified in the
recitals to this Trust Agreement.
"Outstanding," when used with respect to Trust Securities, means,
as of the date of determination, all Trust Securities theretofore
executed and delivered under this Trust Agreement, except:
(a) Trust Securities theretofore cancelled by the Property
Trustee or delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent; provided that, if such Trust Securities are
to be redeemed, notice of such redemption has been duly given pursuant
to this Trust Agreement; and
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(c) Trust Securities that have been paid or in exchange for or
in lieu of which other Trust Securities have been executed and delivered
pursuant to Sections 5.4, 5.5, 5.6 and 5.11; provided, however, that in
determining whether the Holders of the requisite Liquidation Amount of
the Outstanding Trust Preferred Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Trust Preferred Securities owned by the Depositor, any Issuer Trustee or
any Affiliate of the Depositor or of any Issuer Trustee shall be
disregarded and deemed not to be Outstanding, except that (a) in
determining whether any Issuer Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent
or waiver, only Trust Preferred Securities that such Issuer Trustee
knows to be so owned shall be so disregarded and (b) the foregoing shall
not apply at any time when all of the outstanding Trust Preferred
Securities are owned by the Depositor, one or more of the Issuer
Trustees and/or any such Affiliate. Trust Preferred Securities so owned
that have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Administrative
Trustees the pledgee's right so to act with respect to such Trust
Preferred Securities and that the pledgee is not the Depositor or any
Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of Book-Entry
Trust Preferred Securities as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as
reflected in the records of a Person maintaining an account with such
Clearing Agency (directly or indirectly, in accordance with the rules of
such Clearing Agency).
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.10 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee for the benefit of the
Holders in which all amounts paid in respect of the Debentures will be
held and from which the Property Trustee, through the Paying Agent,
shall make payments to the Holders in accordance with Sections 4.1 and
4.2.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint
stock company, company, limited liability company, trust, unincorporated
association or government or any agency or political subdivision
thereof, or any other entity of whatever nature.
"Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement, solely in its capacity
as Property Trustee of the trust heretofore formed and continued
hereunder and not in its individual capacity, and its successor in
interest in such capacity, or any successor Property Trustee appointed
as herein provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this
Trust Agreement; provided that each Debenture Redemption Date and the
stated maturity of the Debentures shall be a Redemption Date for a Like
Amount of Trust Securities.
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"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the
premium, if any, paid by the Depositor upon the concurrent redemption of
a Like Amount of Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Responsible Officer," when used with respect to the Property
Trustee or the Delaware Trustee, means the chairman or any vice-chairman
of the board of directors, the chairman or any vice-chairman of the
executive committee of the board of directors, the chairman of the trust
committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust
officer, the controller or any assistant controller or any other officer
of the Property Trustee or the Delaware 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 his
knowledge of and familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, and any
successor statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the
respective meanings specified in Section 5.5.
"Successor Trust Preferred Securities" of any particular Trust
Preferred Securities Certificate means every Trust Preferred Securities
Certificate issued after, and evidencing all or a portion of the same
beneficial interest in the Issuer Trust as that evidenced by, such
particular Trust Preferred Securities Certificate; and, for the purposes
of this definition, any Trust Preferred Securities Certificate executed
and delivered under Section 5.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Trust Preferred Securities
Certificate shall be deemed to evidence the same beneficial interest in
the Issuer Trust as the mutilated, destroyed, lost or stolen Trust
Preferred Securities Certificate.
"Trust Agreement" means this Amended and Restated Trust Agreement,
as the same may be modified, amended or supplemented in accordance with
the applicable provisions hereof, including (i) all exhibits and (ii)
for all purposes of this Trust Agreement and any such modification,
amendment or supplement, the provisions of the Trust Indenture Act that
are deemed to be a part of and govern this Trust Agreement and any such
modification, amendment or supplement, respectively.
"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" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Preferred Securities Certificate" means a certificate
evidencing ownership of Trust Preferred Securities, substantially in the
form attached as Exhibit D.
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"Trust Preferred Security" means a preferred undivided beneficial
interest in the assets of the Issuer Trust, having a Liquidation Amount
of $25 and having the rights provided therefor in this Trust Agreement,
including the right to receive Distributions and a Liquidation
Distribution to the extent provided herein.
"Trust Property" means (i) the Debentures, (ii) any cash on deposit
in, or owing to, the Payment Account, and (iii) all proceeds and rights
in respect of the foregoing and any other property and assets for the
time being held or deemed to be held by the Property Trustee pursuant to
the trusts of this Trust Agreement.
"Trust Security" means any one of the Common Securities or the
Trust Preferred Securities.
"Trust Securities Certificate" means any one of the Common
Securities Certificates or the Trust Preferred Securities Certificates.
"Underwriters" means Credit Suisse First Boston and PaineWebber
Incorporated as the underwriters under the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated
October 22, 1997, among the Issuer Trust, the Depositor and the
underwriter or underwriters named therein, as the same may be amended
from time to time.
"Vice President," when used with respect to the Depositor, means
any duly appointed vice president, whether or not designated by a number
or a word or words added before or after the title "vice president."
ARTICLE II
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name.
The trust continued hereby shall be known as "SCE&G Trust I," as
such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders of Trust Securities and
the other Issuer Trustees, in which name the Issuer Trustees may conduct
the business of the Issuer Trust, make and execute contracts and other
instruments on behalf of the Issuer Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of
Business.
The address of the Delaware Trustee in the State of Delaware is
White Clay Center, Rte 273, Newark, Delaware 19711, Attention:
Corporate Trust Administration, or such other address in the State of
Delaware as the Delaware Trustee may designate by written notice to the
Holders, the Depositor, the Property Trustee and the Administrative
Trustees. The principal executive office of the Issuer Trust is South
Carolina Electric & Gas Company, 1426 Main Street, Columbia, South
Carolina 29201, Attention: Chief Financial Officer.
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SECTION 2.3. Initial Contribution of Trust Property;
Organizational Expenses.
The Property Trustee acknowledges receipt in trust from the
Depositor in connection with the Original Trust Agreement of the sum of
$10, which constituted the initial Trust Property. The Depositor shall
pay organizational expenses of the Issuer Trust as they arise or shall,
upon request of any Issuer Trustee, promptly reimburse such Issuer
Trustee for any such expenses paid by such Issuer Trustee. The Depositor
shall make no claim upon the Trust Property for the payment of such
expenses.
SECTION 2.4. Issuance of the Trust Preferred Securities.
The Depositor, both on its own behalf and on behalf of the Issuer
Trust pursuant to the Original Trust Agreement, executed and delivered
the Underwriting Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrative Trustee, on behalf
of the Issuer Trust, shall manually execute in accordance with Sections
5.2, 5.3 and 8.9(a) and the Property Trustee shall deliver to the
Underwriters, Trust Preferred Securities Certificates, registered in the
names requested by the Underwriters, evidencing an aggregate of
2,000,000 Trust Preferred Securities having an aggregate Liquidation
Amount of $50,000,000, against receipt of the aggregate purchase price
of such Trust Preferred Securities of $50,000,000, by the Property
Trustee.
SECTION 2.5. Issuance of the Common Securities; Subscription
and Purchase of Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Issuer Trust,
shall execute in accordance with Sections 5.2, 5.3 and 8.9(a) and the
Property Trustee shall deliver to the Depositor, Common Securities
Certificates, registered in the name of the Depositor, evidencing an
aggregate of 61,856 Common Securities having an aggregate Liquidation
Amount of $1,546,400, against receipt of the aggregate purchase price of
such Common Securities of $1,546,400, to the Property Trustee.
Contemporaneously therewith, an Administrative Trustee, on behalf of the
Issuer Trust, shall subscribe for and purchase from the Depositor the
Debentures, registered in the name of the Property Trustee on behalf of
the Issuer Trust and having an aggregate principal amount equal to
$51,546,400, and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Issuer Trust, shall
deliver to the Depositor the sum of $51,546,400 (being the sum of the
amounts delivered to the Property Trustee pursuant to (i) the second
sentence of Section 2.4 and (ii) the first sentence of this Section
2.5).
SECTION 2.6. Continuation of Trust.
The exclusive purposes and functions of the Issuer Trust are (a) to
issue and sell Trust Securities and use the proceeds from such sale to
acquire the Debentures and (b) to engage in those activities necessary
or incidental thereto. The Depositor hereby reaffirms the appointment of
the Delaware Trustee and appoints and reaffirms the appointment of, as
the case may be, the Administrative Trustees as trustees of the Issuer
Trust, to have all the rights, powers and duties to the extent set forth
herein, and the respective Issuer Trustees hereby accept such
appointment. The Property Trustee hereby
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declares that it will hold the Trust Property in trust upon and subject
to the conditions set forth herein for the benefit of the Issuer Trust
and the Holders. The Administrative Trustees shall have all rights,
powers and duties set forth herein and in accordance with applicable law
with respect to accomplishing the purposes of the Issuer Trust. The
Delaware Trustee shall not be entitled to exercise any powers, nor shall
the Delaware Trustee have any of the duties and responsibilities, of the
Property Trustee or the Administrative Trustees set forth herein. The
Delaware Trustee shall be one of the trustees of the Issuer Trust for
the sole and limited purpose of fulfilling the requirements of Section
3807 of the Delaware Business Trust Act and for taking such actions as
are required to be taken by a Delaware trustee under the Delaware
Business Trust Act.
SECTION 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees shall conduct the affairs of the Issuer
Trust in accordance with the terms of this Trust Agreement. Subject to
the limitations set forth in paragraph (b) of this Section and in
accordance with the following provisions (i) and (ii), the Issuer
Trustees shall have the authority to enter into all transactions and
agreements determined by the Issuer Trustees to be appropriate in
exercising the authority, express or implied, otherwise granted to the
Issuer Trustees, as the case may be, under this Trust Agreement and to
perform all acts in furtherance thereof, including, without limitation,
the following:
(i) As among the Issuer Trustees, each Administrative
Trustee, acting singly or collectively, shall have the power and
authority to act on behalf of the Issuer Trust with respect to the
following matters:
(A) effecting the issuance and sale of the Trust
Securities;
(B) causing the Issuer Trust to enter into, and to
execute, deliver and perform, the Letter of Representations
and such other agreements as may be necessary or desirable in
connection with the purposes and function of the Issuer Trust;
(C) assisting in the registration of the Trust
Preferred Securities under the Securities Act, and under
applicable state securities or blue sky laws and the
qualification of this Trust Agreement as a trust indenture
under the Trust Indenture Act;
(D) assisting in the listing of the Trust Preferred
Securities upon such securities exchange or exchanges as shall
be determined by the Depositor, with the registration of the
Trust Preferred Securities under the Exchange Act and with the
preparation and filing of all periodic and other reports and
other documents pursuant to the foregoing;
(E) assisting in the sending of notices (other than
notices of default) and other information regarding the Trust
Securities and the Debentures to the Holders in accordance
with this Trust Agreement;
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(F) consenting to the appointment of a Paying Agent,
authenticating agent and Securities Registrar in accordance
with this Trust Agreement (which consent shall not be
unreasonably withheld);
(G) executing the Trust Securities on behalf of the
Issuer Trust in accordance with this Trust Agreement;
(H) executing and delivering closing certificates, if
any, pursuant to the Underwriting Agreement and applying for
a taxpayer identification number for the Issuer Trust; and
(I) taking any action incidental to the foregoing as
the Issuer Trustees may from time to time determine to be
necessary or advisable to give effect to the terms of this
Trust Agreement.
(ii) As among the Issuer Trustees, the Property Trustee
shall have the power, duty and authority to act on behalf of
the Issuer Trust with respect to the following matters:
(A) establishing the Payment Account;
(B) receiving the Debentures;
(C) collecting interest, principal and any other
payments made in respect of the Debentures and
holding such amounts in the Payment Account;
(D) distributing through the Paying Agent of amounts
distributable to the Holders in respect of the Trust
Securities;
(E) exercising all of the rights, powers and
privileges of a holder of the Debentures;
(F) sending notices of default and other information
regarding the Trust Securities and the Debentures
to theHolders in accordance with this Trust Agreement;
(G) distributing the Trust Property in accordance
with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement,
winding up the affairs of and liquidation of the
Issuer Trust and the preparing, executing and filing
of the certificate of cancellation with the Secretary
of State of the State of Delaware;
(I) performing the duties of the Property Trustee
set forth in this Trust Agreement;
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(J) after an Event of Default (other than under
paragraph (b), (c), (d) or (e) of the definition of such term
if such Event of Default is by or with respect to the Property
Trustee) taking any action incidental to the foregoing as the
Property Trustee may from time to time determine is necessary
or advisable to give effect to the terms of this Trust
Agreement and protect and conserve the Trust Property for the
benefit of the Holders (without consideration of the effect of
any such action on any particular Holder); and
(K) exercising any of the duties, liabilities,
powers or the authority of the Administrative Trustees set
forth in Section 2.7(a)(i)(E) and (I) herein; and in the event
of a conflict between the action of the Administrative
Trustees and the action of the Property Trustee, the action of
the Property Trustee shall prevail.
(b) So long as this Trust Agreement remains in effect, the
Issuer Trust (or the Issuer Trustees acting on behalf of the Issuer
Trust) shall not undertake any business, activities or transaction
except as expressly provided herein or contemplated hereby. In
particular, the Issuer Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement, (ii)
sell, assign, transfer, exchange, mortgage, pledge, setoff or otherwise
dispose of any of the Trust Property or interests therein, including to
Holders, except as expressly provided herein, (iii) take any action that
would reasonably be expected to cause the Issuer Trust to become taxable
as a corporation or classified as other than a grantor trust for United
States federal income tax purposes, (iv) incur any indebtedness for
borrowed money or issue any other debt or (v) take or consent to any
action that would result in the placement of a Lien on any of the Trust
Property. The Administrative Trustees shall defend all claims and
demands of all Persons at any time claiming any Lien on any of the Trust
Property adverse to the interest of the Issuer Trust or the Holders in
their capacity as Holders.
(c) In connection with the issue and sale of the Trust
Preferred Securities, the Depositor shall have the right and
responsibility to assist the Issuer Trust with respect to, or effect on
behalf of, the Issuer Trust, the following (and any actions taken by the
Depositor in furtherance of the following prior to the date of this
Trust Agreement are hereby ratified and confirmed in all respects):
(i) the preparation and filing by the Issuer Trust with
the Commission and the execution on behalf of the Issuer Trust of
a registration statement on the appropriate form in relation to the
Trust Preferred Securities, including any amendments thereto and
the taking of any action necessary or desirable to sell the Trust
Preferred Securities in a transaction or a series of transactions
pursuant thereto;
(ii) the determination of the jurisdictions in which to
take appropriate action to qualify or register for sale all or part
of the Trust Preferred Securities and the taking of any and all
such acts, other than actions that must be taken by or on behalf of
the Issuer Trust, and advice to the Issuer Trust of
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actions that must be taken by or on behalf of the Issuer Trust, and
the preparation for execution and filing of any documents to be
executed and filed by the Issuer Trust or on behalf of the Issuer
Trust, as the Depositor deems necessary or advisable in order to
comply with the applicable laws of any such states in connection
with the sale of the Trust Preferred Securities;
(iii) the preparation for filing by the Issuer Trust
and execution on behalf of the Issuer Trust of an application or
applications to such securities exchange or exchanges as shall be
determined by Depositor for listing upon notice of issuance of
any Trust Preferred Securities;
(iv) the preparation for filing by the Issuer Trust
with the Commission and the execution on behalf of the Issuer
Trust of a registration statement on Form 8-A relating to the
registration of the Trust Preferred Securities under Section
12(b) or 12(g) of the Exchange Act, including any amendments
thereto;
(v) the negotiation of the terms of, and the execution
and delivery of, the Underwriting Agreement providing for the
sale of the Trust Preferred Securities; and
(vi) the taking of any other actions necessary or
desirable to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Property Trustee and the Administrative Trustees are authorized and
directed to conduct the affairs of the Issuer Trust and to operate the
Issuer Trust so that the Issuer Trust will not be deemed to be an
"investment company" required to be registered under the Investment
Company Act, and will not be taxable as a corporation or classified as
other than a grantor trust for United States federal income tax purposes
and so that the Debentures will be treated as indebtedness of the
Depositor for United States federal income tax purposes. In this
connection, each Administrative Trustee, the Property Trustee and the
Holders of at least a Majority in Liquidation Amount of the Common
Securities are authorized to take any action, not inconsistent with
applicable law, the Certificate of Trust or this Trust Agreement, that
such Administrative Trustee, the Property Trustee or Holders of Common
Securities determine in their discretion to be necessary or desirable
for such purposes, as long as such action does not adversely affect in
any material respect the interests of the Holders of the Outstanding
Trust Preferred Securities. In no event shall the Issuer Trustees be
liable to the Issuer Trust or the Holders for any failure to comply with
this section that results from a change in law or regulation or in the
interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist of the Trust Property.
SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in
the Property Trustee (in its capacity as such) and shall be held and
administered by the Property Trustee in trust for the benefit of the
Issuer Trust and the Holders in accordance with this Trust Agreement.
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ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall
have exclusive control and sole right of withdrawal with respect to the
Payment Account for the purpose of making deposits in and withdrawals
from the Payment Account in accordance with this Trust Agreement. All
moneys and other property deposited or held from time to time in the
Payment Account shall be held by the Property Trustee in the Payment
Account for the exclusive benefit of the Holders and for distribution as
herein provided, including (and subject to) any priority of payments
provided for herein.
(b) The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and
any other payments or proceeds with respect to, the Debentures. Amounts
held in the Payment Account shall not be invested by the Property
Trustee pending distribution thereof.
ARTICLE IV
REDEMPTION
SECTION 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial
interests in the Trust Property, and Distributions (including of
Additional Amounts) will be made on the Trust Securities at the rate and
on the dates that payments of interest (including of Additional
Interest, as defined in the Indenture) are made on the Debentures.
Accordingly:
(i) Distributions on the Trust Securities shall be
cumulative, and will accumulate whether or not there are funds of
the Issuer Trust available for the payment of Distributions.
Distributions shall accumulate from October 28, 1997, and, except
in the event (and to the extent) that the Depositor exercises its
right to defer the payment of interest on the Debentures pursuant
to the Indenture, shall be payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year, commencing
on December 31, 1997. If any date on which a Distribution is
otherwise payable on the Trust Securities is not a Business Day,
then the payment of such Distribution shall be made on the next
succeeding day that 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, the payment
of such Distribution shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if
made on the date on which such payment was originally payable
(each date on which distributions are payable in accordance with
this Section 4.1(a), a "Distribution Date").
(ii) The Trust Securities shall be entitled to
Distributions payable at a rate of 7.55% per annum of the
Liquidation Amount of the Trust Securities. The amount of
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Distributions payable for any period less than a full Distribution
period shall be computed on the basis of a 360-day year of twelve
30-day months and the actual number of days elapsed in a partial
month in a period. Distributions payable for each full Distribution
period will be computed by dividing the rate per annum by four. The
amount of Distributions payable for any period shall include any
Additional Amounts in respect of such period.
(iii) Distributions on the Trust Securities shall be made
by the Property Trustee from the Payment Account and shall be
payable on each Distribution Date only to the extent that the
Issuer Trust has funds then on hand and available in the Payment
Account for the payment of such Distributions.
(b) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear
on the Securities Register for the Trust Securities at the close of
business on the relevant record date, which shall be at the close of
business on the fifteenth day (whether or not a Business Day) next
preceding the relevant Distribution Date.
SECTION 4.2. Redemption.
(a) On each Debenture Redemption Date and on the stated
maturity of the Debentures, the Issuer Trust will be required to redeem
a Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee
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 Trust
Securities to be redeemed, at such Holder's address appearing in the
Security Register. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price or if the Redemption Price
cannot be calculated prior to the time the notice is required to be
sent, an estimate of the Redemption Price together with a statement
that it is an estimate and that the actual Redemption Price will be
calculated on the third Business Day prior to the Redemption Date
(and if an estimate is provided, a further notice shall be sent of
the actual Redemption Price on the date that such Redemption Price
is calculated);
(iii) the CUSIP number or CUSIP numbers of the Trust
Preferred Securities affected (if applicable);
(iv) if less than all the Outstanding Trust Securities are
to be redeemed, the identification and the aggregate Liquidation
Amount of the particular Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed
and that Distributions thereon will cease to accumulate on and
after said date, except as provided in Section 4.2(d) below; and
(vi) the place or places where the Trust Securities are to
be surrendered for the payment of the Redemption Price.
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The Issuer Trust in issuing the Trust Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee
shall indicate the "CUSIP" numbers of the Trust Securities in notices of
redemption and related materials 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 Trust Securities or
as contained in any notice of redemption and related materials.
(c) The Trust Securities redeemed on each Redemption Date shall
be redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption of Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on
each Redemption Date only to the extent that the Issuer Trust has funds
then on hand and available in the Payment Account for the payment of
such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in
respect of any Trust Preferred Securities, then, by 12:00 noon, New York
City time, on the Redemption Date, subject to Section 4.2(c), the
Property Trustee will, with respect to Book-Entry Trust Preferred
Securities, irrevocably deposit with the Clearing Agency for such Book-
Entry Trust Preferred Securities, to the extent available therefor,
funds sufficient to pay the applicable Redemption Price and will give
such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Trust Preferred Securities. With
respect to Trust Preferred Securities that are not Book-Entry Trust
Preferred Securities, the Property Trustee, subject to Section 4.2(c),
will irrevocably deposit with the Paying Agent, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and
will give the Paying Agent irrevocable instructions and authority to pay
the Redemption Price to the Holders of the Trust Preferred Securities
upon surrender of their Trust Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Trust Securities called for redemption shall be
payable to the Holders of such Trust Securities as they appear on the
Securities Register for the Trust Securities on the relevant record
dates for the related Distribution Dates. If notice of redemption shall
have been given and funds deposited as required, then upon the date of
such deposit, all rights of Holders holding Trust Securities so called
for redemption will cease, except the right of such Holders to receive
the Redemption Price and any Distribution payable in respect of the
Trust Securities on or prior to the Redemption Date, but without
interest, and such Securities will cease to be outstanding. In the event
that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (without any
interest or other payment in respect of any such delay), except that, if
such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in each case, with the
same force and effect as if made on such date. In the event that payment
of the Redemption Price in respect of any Trust Securities called for
redemption is improperly withheld or refused and not paid either by the
Issuer Trust or by the Depositor pursuant to the Guarantee Agreement,
Distributions on such Trust Securities will continue to accumulate, as
set forth in Section 4.1, from the Redemption Date originally
established by the Issuer Trust for such
Trust Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption
for purposes of calculating the Redemption Price.
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(e) Subject to the priority provisions of Section 4.3(a), if
less than all the Outstanding Trust Securities are to be redeemed on a
Redemption Date, then the aggregate Liquidation Amount of Trust
Securities to be redeemed shall be allocated pro rata to the Common
Securities and the Trust Preferred Securities based upon the relative
Liquidation Amounts of such classes. The particular Trust Preferred
Securities to be redeemed shall be selected on a pro rata basis based
upon their respective Liquidation Amounts not more than 60 days prior to
the Redemption Date by the Property Trustee from the Outstanding Trust
Preferred Securities not previously called for redemption, provided that
so long as the Trust Preferred Securities are in book-entry-only form,
such selection shall be made in accordance with the customary procedures
for the Clearing Agency for the Trust Preferred Securities. The Property
Trustee shall promptly notify the Securities Registrar in writing of the
Trust Preferred Securities selected for redemption and, in the case of
any Trust Preferred Securities selected for partial redemption, the
Liquidation Amount thereof to be redeemed. For all purposes of this
Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Trust Preferred Securities shall relate,
in the case of any Trust Preferred Securities redeemed or to be redeemed
only in part, to the portion of the aggregate Liquidation Amount of
Trust Preferred Securities that has been or is to be redeemed.
SECTION 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including any Additional Amounts)
on, the Redemption Price of, and the Liquidation Distribution in respect
of the Trust Securities, as applicable, shall be made, subject to the
allocation provisions of Section 4.2(e), pro rata among the Common
Securities and the Trust Preferred Securities based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any
Distribution Date, Redemption Date or Liquidation Date any Event of
Default resulting from a Debenture Event of Default specified in Section
5.1(a) or 5.1(b) of the Indenture shall have occurred and be continuing,
no payment of any Distribution (including any Additional Amounts) on,
Redemption Price of, or Liquidation Distribution in respect of any
Common Security, and no other payment on account of the redemption,
liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid
Distributions (including any Additional Amounts) on all Outstanding
Trust Preferred Securities for all Distribution periods terminating on
or prior thereto, or in the case of payment of the Redemption Price the
full amount of such Redemption Price on all Outstanding Trust Preferred
Securities then called for redemption, or in the case of payment of the
Liquidation Distribution the full amount of such Liquidation
Distribution on all Outstanding Trust Preferred Securities, shall have
been made or provided for, and all funds immediately available to the
Property Trustee shall first be applied to the payment in full in cash
of all Distributions (including any Additional Amounts) on, or the
Redemption Price of, the Trust Preferred Securities then due and
payable.
(b) In the case of the occurrence of any Event of Default
resulting from any Debenture Event of Default, the Holders of the Common
Securities shall have no right to act with respect to any such Event of
Default under this Trust Agreement until the effect of all such Events
of Default with respect to the Trust Preferred Securities have been
cured, waived or otherwise eliminated. Until all such Events
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of Default under this Trust Agreement with respect to the Trust
Preferred Securities have been so cured, waived or otherwise eliminated,
the Property Trustee shall act solely on behalf of the Holders of the
Trust Preferred Securities and not on behalf of the Holders of the
Common Securities, and only the Holders of the Trust Preferred
Securities will have the right to direct the Property Trustee to act on
their behalf.
SECTION 4.4. Payment Procedures.
Payments of Distributions (including any Additional Amounts) in
respect of the Trust Preferred Securities shall be made by check mailed
to the address of the Person entitled thereto as such address shall
appear on the Securities Register or, if the Trust Preferred Securities
are held by a Clearing Agency, such Distributions shall be made to the
Clearing Agency in immediately available funds. Payments in respect of
the Common Securities shall be made in such manner as shall be mutually
agreed between the Property Trustee and the Holders of the Common
Securities.
SECTION 4.5. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be
prepared), at the Depositor's expense, and file all United States
federal, state and local tax and information returns and reports
required to be filed by or in respect of the Issuer Trust. In this
regard, the Administrative Trustees shall (i) prepare and file (or cause
to be prepared and filed) all Internal Revenue Service forms required to
be filed in respect of the Issuer Trust in each taxable year of the
Issuer Trust and (ii) prepare and furnish (or cause to be prepared and
furnished) to each Holder all Internal Revenue Service forms required to
be provided by the Issuer Trust. The Administrative Trustees shall
provide the Depositor and the Property Trustee with a copy of all such
returns and reports promptly after such filing or furnishing. The
Issuer Trustees shall comply with United States federal withholding and
backup withholding tax laws and information reporting requirements with
respect to any payments to Holders under the Trust Securities.
SECTION 4.6. Payment of Taxes, Duties, Etc. of the Issuer
Trust.
Upon receipt under the Debentures of Additional Sums, the Property
Trustee shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Issuer
Trust by the United States or any other taxing authority, which were
included in such Additional Sums.
SECTION 4.7. Payments under Indenture or Pursuant to Direct
Actions.
Any amount payable hereunder to any Holder of Trust Preferred
Securities with respect thereto shall be reduced by the amount of any
corresponding payment such Holder (or any Owner) has directly received
pursuant to Section 5.8 of the Indenture or Section 5.13 of this Trust
Agreement.
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ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Upon the creation of the Issuer Trust and the contribution by the
Depositor pursuant to Section 2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are
outstanding, the Depositor shall be the sole beneficial owner of the
Issuer Trust.
SECTION 5.2. The Trust Securities Certificates.
(a) The Trust Preferred Securities Certificates shall be issued
in minimum denominations of $25 Liquidation Amount and integral
multiples of $25 in excess thereof and the Common Securities
Certificates shall be issued in denominations of $25 Liquidation Amount
and integral multiples thereof. The Trust Securities Certificates shall
be executed on behalf of the Issuer Trust by manual signature of at
least one Administrative Trustee. Trust Securities Certificates bearing
the manual signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the
Issuer Trust, shall be validly issued and entitled to the benefits of
this Trust Agreement, notwithstanding that such individuals or any of
them shall have ceased to be so authorized prior to the delivery of such
Trust Securities Certificates or did not hold such offices at the date
of delivery of such Trust Securities Certificates. A transferee of a
Trust Securities Certificate shall become a Holder and shall be entitled
to the rights and subject to the obligations of a Holder hereunder upon
due registration of such Trust Securities Certificate in such
transferee's name pursuant to Section 5.5.
(b) Upon their original issuance, Trust Preferred Securities
Certificates shall be issued in the form of one or more Book-Entry Trust
Preferred Securities Certificates registered in the name of DTC, as
Clearing Agency, or its nominee and deposited with DTC or a custodian
for DTC for credit by DTC to the respective accounts of the Owners
thereof (or such other accounts as they may direct).
(c) A single Common Securities Certificate representing the
Common Securities shall be issued to the Depositor in the form of a
definitive Common Securities Certificate.
SECTION 5.3. Execution and Delivery of Trust Securities
Certificates.
On the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided
in Sections 2.4 and 2.5, to be executed on behalf of the Issuer Trust
and delivered to or upon the written order of the Depositor, executed by
one authorized officer thereof, without further corporate action by the
Depositor, in authorized denominations.
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SECTION 5.4. Book-Entry Trust Preferred Securities.
(a) Each Book-Entry Trust Preferred Securities Certificate
issued under this Trust Agreement shall be registered in the name of the
Clearing Agency or a nominee thereof and delivered to such Clearing
Agency or a nominee thereof or custodian therefor and each such Book-
Entry Trust Preferred Securities Certificate shall constitute a single
Trust Preferred Securities Certificate for all purposes of this
Agreement.
(b) Notwithstanding any other provision in this Trust
Agreement, no Book-Entry Trust Preferred Securities Certificate may be
exchanged in whole or in part for Trust Preferred Securities
Certificates registered, and no transfer of a Book-Entry Trust Preferred
Securities Certificate in whole or in part may be registered, in the
name of any Person other than the Clearing Agency for such Book-Entry
Trust Preferred Securities Certificates or a nominee thereof unless (i)
the Clearing Agency advises the Issuer Trust in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book-Entry Trust Preferred
Securities Certificates, and is unable to locate a qualified successor
or a qualified successor shall not have been appointed, or the Clearing
Agency ceases to be a clearing agency registered under the Exchange Act
at a time when it is required to be so registered to act as such
clearing agent, (ii) the Issuer Trust at its option determines that a
Book Entry Trust Preferred Securities Certificate shall be so
exchangeable or (iii) a Debenture Event of Default has occurred and is
continuing. Upon the occurrence of any event specified in clause (i),
(ii) or (iii) above, the Property Trustee shall notify the Clearing
Agency and instruct the Clearing Agency to notify all Owners of Book-
Entry Trust Preferred Securities, the Delaware Trustee and the
Administrative Trustees of the occurrence of such event and of the
availability of the Definitive Trust Preferred Securities Certificates
to Owners of such class or classes, as applicable, requesting the same.
(c) If any Book-Entry Trust Preferred Securities Certificate is
to be exchanged for other Trust Preferred Securities Certificates or
cancelled in part, or if any other Trust Preferred Securities
Certificate is to be exchanged in whole or in part for Book-Entry Trust
Preferred Securities represented by a Book-Entry Trust Preferred
Securities Certificate, then either (i) such Book-Entry Trust Preferred
Securities Certificate shall be so surrendered for exchange or
cancellation as provided in this Article V or (ii) the aggregate
Liquidation Amount represented by such Book-Entry Trust Preferred
Securities Certificate shall be reduced, subject to Section 5.2, or
increased by an amount equal to the Liquidation Amount represented by
that portion of the Book-Entry Trust Preferred Securities Certificate to
be so exchanged or cancelled, or equal to the Liquidation Amount
represented by such other Trust Preferred Securities Certificates to be
so exchanged for Book-Entry Trust Preferred Securities represented
thereby, as the case may be, by means of an appropriate adjustment made
on the records of the Securities Registrar, whereupon the Property
Trustee, in accordance with the Applicable Procedures, shall instruct
the Clearing Agency or its authorized representative to make a
corresponding adjustment to its records. Upon surrender to the
Administrative Trustees or the Securities Registrar of the Book-Entry
Trust Preferred Securities Certificate or Certificates by the Clearing
Agency, accompanied by registration instructions, the Administrative
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Trustees, or any one of them, shall execute the Definitive Trust
Preferred Securities Certificates in accordance with the instructions of
the Clearing Agency. None of the Securities Registrar, the Issuer
Trustees or the Administrative Trustees shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of
Definitive Trust Preferred Securities Certificates, the Issuer Trustees
shall recognize the Holders of the Definitive Trust Preferred Securities
Certificates as Holders. The Definitive Trust Preferred Securities
Certificates shall be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
(d) Every Trust Preferred Securities Certificate executed and
delivered upon registration of transfer of, or in exchange for or in
lieu of, a Book-Entry Trust Preferred Securities Certificate or any
portion thereof, whether pursuant to this Article V or Article IV or
otherwise, shall be executed and delivered in the form of, and shall be,
a Book-Entry Trust Preferred Securities Certificate, unless such Trust
Preferred Securities Certificate is registered in the name of a Person
other than the Clearing Agency for such Book-Entry Trust Preferred
Securities Certificate or a nominee thereof.
(e) The Clearing Agency or its nominee, as registered owner of
a Book-Entry Trust Preferred Securities Certificate, shall be the Holder
of such Book-Entry Trust Preferred Securities Certificate for all
purposes under this Agreement and the Book-Entry Trust Preferred
Securities Certificate and Owners with respect to a Book-Entry Trust
Preferred Securities Certificate shall hold such interests pursuant to
the Applicable Procedures. The Securities Registrar and the Issuer
Trustees shall be entitled to deal with the Clearing Agency for all
purposes of this Trust Agreement relating to the Book-Entry Trust
Preferred Securities Certificates (including the payment of the
Liquidation Amount of and Distributions on the Book-Entry Trust
Preferred Securities represented thereby and the giving of instructions
or directions by Owners of Book-Entry Trust Preferred Securities
represented thereby) as the sole Holder of the Book-Entry Trust
Preferred Securities represented thereby and shall have no obligations
to the Owners thereof. None of the Issuer Trustees nor the Securities
Registrar shall have any liability in respect of any transfers effected
by the Clearing Agency.
The rights of the Owners of the Book-Entry Trust Preferred
Securities shall be exercised only through the Clearing Agency and shall
be limited to those established by law, the Applicable Procedures and
agreements between such Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Letter of Representations,
unless and until Definitive Trust Preferred Securities Certificates are
issued pursuant to Section 5.4(b), the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit payments on the Trust Preferred Securities to such Clearing
Agency Participants and none of the Depositor or the Issuer Trustees
shall have any responsibility or obligation with respect thereto.
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SECTION 5.5. Registration of Transfer and Exchange of Trust
Preferred Securities Certificates.
(a) The Property Trustee shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 5.9, a register or
registers for the purpose of registering Trust Securities Certificates
and transfers and exchanges of Trust Securities Certificates (the
"Securities Register") in which the registrar and transfer agent with
respect to the Trust Securities (the "Securities Registrar"), subject to
such reasonable regulations as it may prescribe, shall provide for the
registration of Trust Preferred Securities Certificates and Common
Securities Certificates (subject to Section 5.11 in the case of the
Common Securities Certificates) and registration of transfers and
exchanges of Trust Preferred Securities Certificates as herein provided.
The Person acting as the Property Trustee shall at all times also be the
Securities Registrar.
Upon surrender for registration of transfer of any Trust Preferred
Securities Certificate at the office or agency maintained pursuant to
Section 5.9, the Administrative Trustees or any one of them shall
execute and deliver to the Property Trustee, and the Property Trustee
shall deliver, in the name of the designated transferee or transferees,
one or more new Trust Preferred Securities Certificates in authorized
denominations of a like aggregate Liquidation Amount dated the date of
execution by such Administrative Trustee or Trustees.
The Securities Registrar shall not be required (i) to issue,
register the transfer of or exchange any Trust Preferred Security during
a period beginning at the opening of business 15 days before the day of
selection for redemption of such Trust Preferred Securities pursuant to
Article IV and ending at the close of business on the day of mailing of
the notice of redemption or (ii) to register the transfer of or exchange
any Trust Preferred Security so selected for redemption in whole or in
part, except, in the case of any such Trust Preferred Security to be
redeemed in part, any portion thereof not to be redeemed.
Every Trust Preferred Securities Certificate presented or
surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in form satisfactory to
an Administrative Trustee and the Securities Registrar duly executed by
the Holder or its attorney duly authorized in writing. Each Trust
Preferred Securities Certificate surrendered for registration of
transfer or exchange shall be cancelled and subsequently disposed of by
the Property Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Preferred Securities Certificates, but the Securities
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer
or exchange of Trust Preferred Securities Certificates.
(b) Notwithstanding any other provision of this Agreement,
transfers and exchanges of Trust Preferred Securities Certificates and
beneficial interests in a Book-Entry Trust Preferred Securities
Certificate of the kinds specified in this Section 5.5(b) shall be made
only in accordance with this Section 5.5(b).
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(i) Non-Book-Entry Trust Preferred Securities Certificate
to Book-Entry Trust Preferred Securities Certificate. If the Holder
of a Trust Preferred Securities Certificate (other than a Book-
Entry Trust Preferred Securities Certificate) wishes at any time to
transfer all or any portion of such Trust Preferred Securities
Certificate to a Person who wishes to take delivery thereof in the
form of a beneficial interest in a Book-Entry Trust Preferred
Securities Certificate, such transfer may be effected only in
accordance with the provisions of this Clause (b)(i) and subject to
the Applicable Procedures. Upon receipt by the Securities Registrar
of such Trust Preferred Securities Certificate as provided in
Section 5.5(a) and instructions satisfactory to the Securities
Registrar directing that a beneficial interest in the Book-Entry
Trust Preferred Securities Certificate of a specified number of
Trust Preferred Securities not greater than the number of Trust
Preferred Securities represented by such Trust Preferred Securities
Certificate be credited to a specified Clearing Agency
Participant's account, then the Securities Registrar shall cancel
such Trust Preferred Securities Certificate (and issue a new Trust
Preferred Securities Certificate in respect of any untransferred
portion thereof) as provided in Section 5.5(a) and increase the
aggregate Liquidation Amount of the Book-Entry Trust Preferred
Securities Certificate by the Liquidation Amount represented by
such Trust Preferred Securities so transferred as provided in
Section 5.4(c).
(ii) Non-Book-Entry Trust Preferred Securities Certificate
to Non-Book-Entry Trust Preferred Securities Certificate. A Trust
Preferred Securities Certificate that is not a Book-Entry Trust
Preferred Securities Certificate may be transferred, in whole or in
part, to a Person who takes delivery in the form of another Trust
Preferred Securities Certificate that is not a Book-Entry Trust
Preferred Securities Certificate as provided in Section 5.5(a).
(iii) Exchanges between Book-Entry Trust Preferred
Securities Certificate and Non-Book-Entry Trust Preferred
Securities Certificate. A beneficial interest in a Book-Entry Trust
Preferred Securities Certificate may be exchanged for a Trust
Preferred Securities Certificate that is not a Book-Entry Trust
Preferred Securities Certificate as provided in Section 5.4.
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates.
If (i) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar
shall receive evidence to its satisfaction of the destruction, loss or
theft of any Trust Securities Certificate and (ii) there shall be
delivered to the Securities Registrar and the Administrative Trustees
such security or indemnity as may be required by them to save each of
them harmless, then in the absence of notice that such Trust Securities
Certificate shall have been acquired by a bona fide purchaser, the
Administrative Trustees, or any one of them, on behalf of the Issuer
Trust shall execute and make available for delivery, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities
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Certificate of like class, tenor and denomination. In connection with
the issuance of any new Trust Securities Certificate under this
Section 5.6, the Administrative Trustees or the Securities Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any
duplicate Trust Securities Certificate issued pursuant to this Section
shall constitute conclusive evidence of an undivided beneficial
interest in the assets of the Issuer Trust corresponding to that
evidenced by the lost, stolen or destroyed Trust Securities
Certificate, as if originally issued, whether or not the lost, stolen
or destroyed Trust Securities Certificate shall be found at any time.
SECTION 5.7. Persons Deemed Holders.
The Issuer Trustees and the Securities Registrar shall each treat
the Person in whose name any Trust Securities Certificate shall be
registered in the Securities Register as the owner of such Trust
Securities Certificate for the purpose of receiving Distributions and
for all other purposes whatsoever, and none of the Issuer Trustees and
the Securities Registrar shall be bound by any notice to the contrary.
SECTION 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to
hold the Depositor, the Property Trustee, the Delaware Trustee or the
Administrative Trustees accountable by reason of the disclosure of its
name and address, regardless of the source from which such information
was derived.
SECTION 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrative Trustees, which consent shall not be unreasonably
withheld, an office or offices or agency or agencies where Trust
Preferred Securities Certificates may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the
Issuer Trustees in respect of the Trust Securities Certificates may
be served. The Administrative Trustees initially designate South
Carolina Electric & Gas Company, 1426 Main Street, Columbia, South
Carolina 29201 Attention: Treasurer, as its office and agency for
such purposes. The Property Trustee shall give prompt written notice
to the Depositor, the Administrative Trustees and to the Holders of
any change in the location of the Securities Register or any such
office or agency.
SECTION 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the
Payment Account and shall report the amounts of such Distributions to
the Property Trustee and the Administrative Trustees. Any Paying Agent
shall have the revocable power to withdraw funds from the Payment
Account solely for the purpose of making the Distributions referred
to above. The Administrative Trustees may revoke such power and
remove the Paying Agent in their sole discretion. The Paying Agent
shall initially be the Bank. Any Person acting as Paying Agent shall
be permitted to resign as Paying Agent upon 30 days' written notice
to the Administrative Trustees and the Property Trustee. If the Bank
shall no longer be the Paying Agent or a successor Paying Agent shall
resign or its authority to act be revoked, the Administrative Trustees
shall appoint a successor (which shall be a bank or trust company) to
act as Paying Agent.
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Such successor Paying Agent or any additional Paying Agent appointed
by the Administrative Trustees shall execute and deliver to the Issuer
Trustees an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Issuer Trustees that as
Paying Agent, such successor Paying Agent or additional Paying Agent
will hold all sums, if any, held by it for payment to the Holders in
trust for the benefit of the Holders entitled thereto until such sums
shall be paid to such Holders. The Paying Agent shall return all
unclaimed funds to the Property Trustee and upon removal of a Paying
Agent such Paying Agent shall also return all funds in its possession
to the Property Trustee. The provisions of Sections 8.1, 8.3 and 8.6
herein shall apply to the Bank also in its role as Paying Agent, for
so long as the Bank shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any
reference in this Agreement to the Paying Agent shall include any co-
paying agent unless the context requires otherwise.
SECTION 5.11. Ownership of Common Securities by Depositor.
On the Closing Date, the Depositor shall acquire, and thereafter
shall retain, beneficial and record ownership of the Common
Securities. The Depositor may not transfer the Common Securities
except (i) in connection with a consolidation or merger of the
Depositor into another Person or any conveyance, transfer or lease by
the Depositor of its properties and assets substantially as an
entirety to any Person pursuant to Section 8.1 of the Indenture or
(ii) to the Depositor or an Affiliate thereof in compliance with
applicable law (including the Securities Act, and applicable state
securities and blue sky laws). To the fullest extent permitted by law,
any attempted transfer of the Common Securities other than as set
forth in the next proceeding sentence shall be void. The
Administrative Trustees shall cause each Common Securities Certificate
issued to the Depositor to contain a legend stating substantially
"THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN
AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND
SECTION 5.11 OF THE TRUST AGREEMENT."
SECTION 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders
is required under this Trust Agreement, for so long as Trust Preferred
Securities are represented by a Book-Entry Trust Preferred Securities
Certificate, the Issuer Trustees shall give all such notices and
communications specified herein to be given to the Clearing Agency and
shall have no obligations to the Owners.
SECTION 5.13. Rights of Holders; Waivers of Past Defaults.
(a) The legal title to the Trust Property is vested
exclusively in the Property Trustee (in its capacity as such) in
accordance with Section 2.9 and the Holders shall not have any right
or title therein other than the undivided beneficial interest in the
assets of the Issuer Trust conferred by their Trust Securities and
they shall have no right to call for any partition or division of
property, profits or rights of the Issuer Trust except as described
below. The Trust Securities shall be personal property giving only the
rights specifically set forth therein and in this Trust Agreement. The
Trust Securities shall have no preemptive or similar rights and when
issued and delivered to Holders against payment of the purchase price
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therefor will be fully paid and nonassessable by the Issuer Trust.
The Holders of the Trust Securities, in their capacities as such,
shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
(b) For so long as any Trust Preferred Securities remain
Outstanding, if, upon a Debenture Event of Default, the Debenture
Trustee fails or the holders of not less than 25% in principal amount
of the outstanding Debentures fail to declare the principal of all of
the Debentures to be immediately due and payable, the Holders of at
least 25% in Liquidation Amount of the Trust Preferred Securities then
Outstanding shall have the right to make such declaration by a notice
in writing to the Property Trustee, the Depositor and the Debenture
Trustee.
At any time after a declaration of acceleration with respect to
the Debentures has been made and before a judgment or decree for
payment of the money due has been obtained by the Debenture Trustee
as in the Indenture provided, if the Property Trustee fails to annul
any such declaration and waive such default, the Holders of at least
a Majority in Liquidation Amount of the Trust Preferred Securities,
by written notice to the Property Trustee, the Depositor and the
Debenture Trustee, may rescind and annul such declaration and its
consequences if:
(i) the Depositor has paid or deposited with the
Debenture Trustee a sum sufficient to pay
(A) all overdue installments of interest on all of
the Debentures,
(B) any accrued Additional Interest on all of the
Debentures,
(C) the principal of (and premium, if any, on) any
Debentures that have become due otherwise than by such
declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Debentures, and
(D) all sums paid or advanced by the Debenture
Trustee under the Indenture and the reasonable
compensation, expenses, disbursements and advances of the
Debenture Trustee and the Property Trustee, their agents
and counsel; and
(ii) all Events of Default with respect to the
Debentures, other than the non-payment of the principal of the
Debentures that has become due solely by such acceleration, have
been cured or waived as provided in Section 5.13 of the
Indenture.
The Holders of at least a Majority in Liquidation Amount of the
Trust Preferred Securities may, on behalf of the Holders of all the
Trust Preferred Securities, waive any past default under the
Indenture, except a default in the payment of principal or interest
(unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a
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default in respect of a covenant or provision that under the Indenture
cannot be modified or amended without the consent of the holder of
each outstanding Debenture. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
Upon receipt by the Property Trustee of written notice declaring
such an acceleration, or rescission and annulment thereof, by Holders
of any part of the Trust Preferred Securities a record date shall be
established for determining Holders of Outstanding Trust Preferred
Securities entitled to join in such notice, which record date shall
be at the close of business on the day the Property Trustee receives
such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such
notice, whether or not such Holders remain Holders after such record
date; provided, that, unless such declaration of acceleration, or
rescission and annulment, as the case may be, shall have become
effective by virtue of the requisite percentage having joined in such
notice prior to the day that is 90 days after such record date, such
notice of declaration of acceleration, or rescission and annulment,
as the case may be, shall automatically and without further action by
any Holder be canceled and of no further effect. Nothing in this
paragraph shall prevent a Holder or a proxy of a Holder from giving,
after expiration of such 90-day period, a new written notice of
declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice that has been
canceled pursuant to the proviso to the preceding sentence, in which
event a new record date shall be established pursuant to the
provisions of this Section 5.13(b).
(c) For so long as any Trust Preferred Securities remain
Outstanding, to the fullest extent permitted by law and subject to the
terms of this Trust Agreement and the Indenture, upon a Debenture
Event of Default specified in Section 5.1(a) or 5.1(b) of the
Indenture, any Holder of Trust Preferred Securities shall have the
right to institute a proceeding directly against the Depositor,
pursuant to Section 5.8 of the Indenture, for enforcement of payment
to such Holder of any amounts payable in respect of Debentures having
an aggregate principal amount equal to the aggregate Liquidation
Amount of the Trust Preferred Securities of such Holder (a "Direct
Action"). Except as set forth in Section 5.13(b) and this Section
5.13(c), the Holders of Trust Preferred Securities shall have no right
to exercise directly any right or remedy available to the holders of,
or in respect of, the Debentures.
(d) Except as otherwise provided in clauses (a), (b) and (c)
of this Section 5.13, the Holders of at least a Majority in
Liquidation Amount of the Trust Preferred Securities may, on behalf
of the Holders of all the Trust Preferred Securities, waive any past
default or Event of Default and its consequences. Upon such waiver,
any such default or Event of Default shall cease to exist and any
default or Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Trust Agreement, but no such
waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.
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ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Voting Rights.
(a) Except as expressly provided in this Trust Agreement and
in the Indenture and as otherwise required by law, no Holder of Trust
Preferred Securities shall have any right to vote or in any manner
otherwise control the administration, operation and management of the
Issuer Trust or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Trust
Securities Certificates, be construed so as to constitute the Holders
from time to time as partners or members of an association.
(b) So long as any Debentures are held by the Property
Trustee on behalf of the Issuer Trust, the Property Trustee shall not
(i) direct the time, method and place of conducting any proceeding for
any remedy available to the Debenture Trustee, or execute any trust
or power conferred on the Property Trustee with respect to the
Debentures, (ii) waive any past default that may be waived under
Section 5.13 of the Indenture, (iii) exercise any right to rescind or
annul a declaration that the principal of all the Debentures shall be
due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or the Debentures, where such consent
shall be required, without, in each case, obtaining the prior approval
of the Holders of at least a Majority in Liquidation Amount of the
Trust Preferred Securities; provided, however, that where a consent
under the Indenture would require the consent of each Holder of
Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior written consent of each Holder of
Trust Preferred Securities. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of
the Trust Preferred Securities, except by a subsequent vote of the
Holders of the Trust Preferred Securities. The Property Trustee shall
notify all Holders of the Trust Preferred Securities of any notice of
default received with respect to the Debentures. In addition to
obtaining the foregoing approvals of the Holders of the Trust
Preferred Securities, prior to taking any of the foregoing actions,
the Property Trustee shall, at the expense of the Depositor, obtain
an Opinion of Counsel experienced in such matters to the effect that
such action shall not cause the Issuer Trust to be taxable as a
corporation or classified as other than a grantor trust for United
States federal income tax purposes.
(c) If any proposed amendment to the Trust Agreement provides
for, or the Issuer Trustees otherwise propose to effect, (i) any
action that would adversely affect in any material respect the powers,
preferences or special rights of the Trust Preferred Securities,
whether by way of amendment to this Trust Agreement or otherwise or
(ii) the dissolution, winding-up or termination of the Issuer Trust,
other than pursuant to the terms of this Trust Agreement, then the
Holders of Outstanding Trust Preferred Securities as a class will be
entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of the
Holders of at least a Majority in Liquidation Amount of the Trust
Preferred Securities. Notwithstanding any other provision of this
Trust Agreement, no amendment to this Trust Agreement may be made if,
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as a result of such amendment, it would cause the Issuer Trust to be
taxable as a corporation or classified as other than a grantor trust
for United States federal income tax purposes.
SECTION 6.2. Notice of Meetings.
Notice of all meetings of the Holders of the Trust Preferred
Securities, stating the time, place and purpose of the meeting, shall
be given by the Property Trustee pursuant to Section 10.8 to each
Holder of Trust Preferred Securities, at such Holder's registered
address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting
may be so considered whether or not stated in the notice of the
meeting. Any adjourned meeting may be held as adjourned without
further notice.
SECTION 6.3. Meetings of Holders of the Trust Preferred
Securities.
No annual meeting of Holders is required to be held. The
Administrative Trustees, however, shall call a meeting of the Holders
of the Trust Preferred Securities to vote on any matter upon the
written request of the Holders of at least 25% in aggregate
Liquidation Amount of the Outstanding Trust Preferred Securities and
the Administrative Trustees or the Property Trustee may, at any time
in their discretion, call a meeting of the Holders of the Trust
Preferred Securities to vote on any matters as to which such Holders
are entitled to vote.
The Holders of at least a Majority in Liquidation Amount of the
Trust Preferred Securities, present in person or by proxy, shall
constitute a quorum at any meeting of the Holders of the Trust
Preferred Securities.
If a quorum is present at a meeting, an affirmative vote by the
Holders present, in person or by proxy, holding Trust Preferred
Securities representing at least a Majority in aggregate Liquidation
Amount of the Trust Preferred Securities held by the Holders present,
either in person or by proxy, at such meeting shall constitute the
action of the Holders of the Trust Preferred Securities, unless this
Trust Agreement requires a greater number of affirmative votes.
SECTION 6.4. Voting Rights.
Holders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Outstanding Trust Securities in respect
of any matter as to which such Holders are entitled to vote.
SECTION 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat
may vote by proxy, provided that no proxy shall be voted at any
meeting unless it shall have been placed on file with the
Administrative Trustees, or with such other officer or agent of the
Issuer Trust as the Administrative Trustees may direct, for
verification prior to the time at which such vote shall be taken.
Pursuant to a resolution of the Property Trustee, proxies may be
solicited in the name of the Property Trustee or one or more officers
of the Property Trustee. Only Holders of record shall be
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entitled to vote. When Trust Securities are held jointly by several
persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them
shall be present at such meeting in person or by proxy and such joint
owners or their proxies so present disagree as to any vote to be cast,
such vote shall not be received in respect of such Trust Securities.
A proxy purporting to be executed by or on behalf of a Holder shall
be deemed valid unless challenged at or prior to its exercise, and the
burden of proving invalidity shall rest on the challenger. No proxy
shall be valid more than three years after its date of execution.
SECTION 6.6. Holder Action by Written Consent.
Any action that may be taken by Holders at a meeting may be taken
without a meeting if Holders holding at least a Majority in
Liquidation Amount of all Trust Preferred Securities entitled to vote
in respect of such action (or such larger proportion thereof as shall
be required by any other provision of this Trust Agreement) shall
consent to the action in writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to
notice of and to vote at any meeting or by written consent, or to
participate in any distribution on the Trust Securities in respect of
which a record date is not otherwise provided for in this Trust
Agreement, or for the purpose of any other action, the Administrative
Trustees or Property Trustee may from time to time fix a date, not
more than 90 days prior to the date of any meeting of Holders or the
payment of a distribution or other action, as the case may be, as a
record date for the determination of the identity of the Holders of
record for such purposes.
SECTION 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Trust Agreement
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 an agent duly appointed in writing; and,
except as otherwise expressly provided herein, such action shall
become effective when such instrument or instruments are delivered to
an Administrative Trustee. 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 Trust Agreement and (subject to Section 8.1) conclusive in
favor of the Issuer Trustees, 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 his individual capacity, such certificate or
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affidavit shall also constitute sufficient proof of his 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 that any Issuer Trustee receiving the same deems
sufficient.
The ownership of Trust Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Trust Security shall bind
every future Holder of the same Trust Security and the Holder of every
Trust 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 Issuer Trustees or the Issuer
Trust in reliance thereon, whether or not notation of such action is
made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Trust Security
may do so with regard to all or any part of the Liquidation Amount of
such Trust 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 Liquidation Amount.
If any dispute shall arise among the Holders or the Issuer
Trustees with respect to the authenticity, validity or binding nature
of any request, demand, authorization, direction, consent, waiver or
other Act of such Holder or Issuer Trustee under this Article VI, then
the determination of such matter by the Property Trustee shall be
conclusive with respect to such matter.
SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the
Property Trustee, the records of the Issuer Trust shall be open to
inspection by Holders during normal business hours for any purpose
reasonably related to such Holder's interest as a Holder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property
Trustee and the Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on
behalf of and as to itself, hereby represents and warrants for the
benefit of the Depositor and the Holders that:
(a) the Property Trustee is a corporation, duly organized,
validly existing and in good standing under the laws of the State of
New York;
(b) the Property Trustee has full corporate power, authority
and legal right to execute, deliver and perform its obligations under
this Trust Agreement and has taken all necessary action to authorize
the execution, delivery and performance by it of this Trust Agreement;
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(c) the Delaware Trustee is a Delaware banking corporation;
(d) the Delaware Trustee has full corporate power, authority
and legal right to execute, deliver and perform its obligations under
this Trust Agreement and has taken all necessary action to authorize
the execution, delivery and performance by it of this Trust Agreement;
(e) this Trust Agreement has been duly authorized, executed
and delivered by the Property Trustee and the Delaware Trustee and
constitutes the valid and legally binding agreement of each of the
Property Trustee and the Delaware Trustee enforceable against each of
them in accordance with its 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;
(f) the execution, delivery and performance of this Trust
Agreement has been duly authorized by all necessary corporate or other
action on the part of the Property Trustee and the Delaware Trustee
and does not require any approval of stockholders of the Property
Trustee or the Delaware Trustee and such execution, delivery and
performance will not (i) violate the Charter or By-laws of the
Property Trustee or the Delaware Trustee, (ii) violate any provision
of, or constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of, any Lien on any
properties included in the Trust Property pursuant to the provisions
of, any indenture, mortgage, credit agreement, license or other
agreement or instrument to which the Property Trustee or the Delaware
Trustee is a party or by which it is bound or (iii) violate any law,
governmental rule or regulation of the United States or the State of
Delaware, as the case may be, governing the banking, trust or general
powers of the Property Trustee or the Delaware Trustee (as appropriate
in context) or any order, judgment or decree applicable to the
Property Trustee or the Delaware Trustee;
(g) neither the authorization, execution or delivery by the
Property Trustee or the Delaware Trustee of this Trust Agreement nor
the consummation of any of the transactions by the Property Trustee
or the Delaware Trustee (as appropriate in context) contemplated
herein requires the consent or approval of, the giving of notice to,
the registration with or the taking of any other action with respect
to any governmental authority or agency under any existing law of the
United States or the State of Delaware governing the banking, trust
or general powers of the Property Trustee or the Delaware Trustee, as
the case may be; and
(h) there are no proceedings pending or, to the best of each
of the Property Trustee's and the Delaware Trustee's knowledge,
threatened against or affecting the Property Trustee or the Delaware
Trustee in any court or before any governmental authority, agency or
arbitration board or tribunal that, individually or in the aggregate,
would materially and adversely affect the Issuer Trust or would
question the right, power and authority of the Property Trustee or the
Delaware Trustee, as the case may be, to enter into or perform its
obligations as one of the Issuer Trustees under this Trust Agreement.
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SECTION 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of
the Holders that:
(a) the Trust Securities Certificates issued on behalf of the
Issuer Trust have been duly authorized and will have been duly and
validly executed, issued and delivered by the Issuer Trustees pursuant
to the terms and provisions of, and in accordance with the
requirements of, this Trust Agreement and the Holders will be, as of
each such date, entitled to the benefits of this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges
payable by the Issuer Trust (or the Issuer Trustees on behalf of the
Issuer Trust) under the laws of the State of Delaware or any political
subdivision thereof in connection with the execution, delivery and
performance by the Property Trustee or the Delaware Trustee, as the
case may be, of this Trust Agreement.
ARTICLE VIII
THE ISSUER TRUSTEES
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees
shall be as provided by this Trust Agreement and, in the case of the
Property Trustee, by the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require any of
the Issuer Trustees 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 Trust Agreement relating to the
conduct or affecting the liability of or affording protection to the
Issuer Trustees shall be subject to the provisions of this Section
8.1. Nothing in this Trust Agreement shall be construed to release
an Administrative Trustee from liability for his or her own grossly
negligent action, his or her own negligent failure to act, or his or
her own willful misconduct. To the extent that, at law or in equity,
an Issuer Trustee has duties and liabilities relating to the Issuer
Trust or to the Holders, such Issuer Trustee shall not be liable to
the Issuer Trust or to any Holder for such Issuer Trustee's good faith
reliance on the provisions of this Trust Agreement. The provisions
of this Trust Agreement, to the extent that they restrict the duties
and liabilities of the Issuer Trustees otherwise existing at law or
in equity, are agreed by the Depositor and the Holders to replace such
other duties and liabilities of the Issuer Trustees.
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(b) All payments made by the Property Trustee or a Paying
Agent in respect of the Trust Securities shall be made only from the
revenue and proceeds from the Trust Property and only to the extent
that there shall be sufficient revenue or proceeds from the Trust
Property to enable the Property Trustee or a Paying Agent to make
payments in accordance with the terms hereof. Each Holder, by its
acceptance of a Trust Security, agrees that it will look solely to the
revenue and proceeds from the Trust Property to the extent legally
available for distribution to it as herein provided and that the
Issuer Trustees are not personally liable to it for any amount
distributable in respect of any Trust Security or for any other
liability in respect of any Trust Security. This Section 8.1(b) does
not limit the liability of the Issuer Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property
Trustee, in the Trust Indenture Act.
(c) The Property Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are
specifically set forth in this Trust Agreement (including pursuant to
Section 10.10), and no implied covenants shall be read into this Trust
Agreement against the Property Trustee. If an Event of Default has
occurred (that has not been cured or waived pursuant to Section 5.13,
the Property Trustee shall exercise such of the rights and powers
vested in it by this Trust Agreement, and use the same degree of care
and skill in its exercise thereof, as a prudent person would exercise
or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Trust Agreement shall be construed
to relieve the Property Trustee or the Delaware Trustee from liability
for its own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all such Events of Default that
may have occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express
provisions of this Trust Agreement (including pursuant to
Section 10.10), and the Property Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Trust
Agreement (including pursuant to Section 10.10); and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively
rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or
opinions furnished to the Property Trustee and conforming
to the requirements of this Trust Agreement; but in the
case of any such certificates or opinions that by any
provision hereof or of the Trust Indenture Act are
specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to
examine the same to determine whether or not they conform
to the requirements of this Trust Agreement.
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(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by an authorized officer of
the Property Trustee, unless it shall be proved that the
Property Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Property Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of at
least a Majority in Liquidation Amount of the Trust Preferred
Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property
Trustee under this Trust Agreement;
(iv) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the
Debentures and the Payment Account shall be to deal with such
property in a similar manner as the Property Trustee deals with
similar property for its own account, subject to the protections
and limitations on liability afforded to the Property Trustee
under this Trust Agreement and the Trust Indenture Act;
(v) the Property Trustee shall not be liable for any
interest on any money received by it except as it may otherwise
agree with the Depositor; and money held by the Property Trustee
need not be segregated from other funds held by it except in
relation to the Payment Account maintained by the Property
Trustee pursuant to Section 3.1 and except to the extent
otherwise required by law;
(vi) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Depositor with their respective duties under this Trust
Agreement, nor shall the Property Trustee be liable for the
default or misconduct of any other Issuer Trustee or the
Depositor; and
(vii) No provision of this Trust Agreement shall
require the Property Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance
of any of its duties or in the exercise of any of its rights or
powers, if the Property Trustee shall have reasonable grounds
for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Trust
Agreement or adequate indemnity against such risk or liability
is not reasonably assured to it.
(e) The Administrative Trustees shall not be responsible for
monitoring the compliance by the other Issuer Trustees or the
Depositor with their respective duties under this Trust Agreement, nor
shall either Administrative Trustee be liable for the default or
misconduct of any other Administrative Trustee, the other Issuer
Trustees or the Depositor.
SECTION 8.2. Certain Notices.
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Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee
shall transmit, in the manner and to the extent provided in Section
10.8, notice of such Event of Default to the Holders, the
Administrative Trustees and the Depositor, unless such Event of
Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on
the Debentures pursuant to the Indenture, the Administrative Trustees
shall transmit, in the manner and to the extent provided in Section
10.8, notice of such exercise to the Holders, unless such exercise
shall have been revoked.
The Property Trustee shall not be deemed to have knowledge of any
Event of Default unless the Property Trustee shall have received
written notice or a Responsible Officer of the Property Trustee
charged with the administration of this Trust Agreement shall have
obtained actual knowledge of such Event of Default.
SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be protected in
acting or refraining from acting in good faith upon any resolution,
Opinion of Counsel, certificate, written representation of a Holder
or transferee, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if (i) in performing its duties under this Trust
Agreement the Property Trustee is required to decide between
alternative courses of action, (ii) in construing any of the
provisions of this Trust Agreement the Property Trustee finds the same
ambiguous or inconsistent with any other provisions contained herein
or (iii) the Property Trustee is unsure of the application of any
provision of this Trust Agreement, then, except as to any matter as
to which the Holders of the Trust Preferred Securities are entitled
to vote under the terms of this Trust Agreement, the Property Trustee
shall deliver a notice to the Depositor requesting the Depositor's
opinion as to the course of action to be taken and the Property
Trustee shall take such action, or refrain from taking such action,
as the Property Trustee shall be instructed in writing to take, or to
refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor
within ten Business Days after it has delivered such notice, or such
reasonably shorter period of time set forth in such notice (which to
the extent practicable shall not be less than two Business Days), it
may, but shall be under no duty to, take or refrain from taking such
action not inconsistent with this Trust Agreement as it shall deem
advisable and in the best interests of the Holders, in which event the
Property Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;
(c) any direction or act of the Depositor contemplated by
this Trust Agreement shall be sufficiently evidenced by an Officers'
Certificate;
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(d) any direction or act of an Administrative Trustee
contemplated by this Trust Agreement shall be sufficiently evidenced
by a certificate executed by such Administrative Trustee and setting
forth such direction or act;
(e) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or re-registration
thereof;
(f) the Property Trustee may consult with counsel of its
selection (which counsel may be counsel to the Depositor or any of its
Affiliates, and may include any of its employees) and the advice of
such counsel 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 and in accordance with such
advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement
from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust
Agreement at the request or direction of any of the Holders pursuant
to this Trust Agreement, unless such Holders shall have offered to the
Property Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance
with such request or direction; provided that, nothing contained in
this Section 8.3(g) shall be taken to relieve the Property Trustee,
upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Agreement;
(h) the Property 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,
consent, order, approval, bond, debenture, note or other evidence of
indebtedness or other paper or document, unless requested in writing
to do so by one or more Holders, but the Property Trustee may make
such further inquiry or investigation into such facts or matters as
it may see fit;
(i) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or
by or through its agents or attorneys, provided that the Property
Trustee shall be responsible for its own negligence or misconduct with
respect to selection of any agent or attorney appointed by it
hereunder;
(j) whenever in the administration of this Trust Agreement
the Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Property Trustee (i) may request instructions
from the Holders (which instructions may only be given by the Holders
of the same proportion in Liquidation Amount of the Trust Securities
as would be entitled to direct the Property Trustee under the terms
of the Trust Securities in respect of such remedy, right or action),
(ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received and (iii) shall be
protected in acting in accordance with such instructions; and
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(k) except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose
any duty or obligation on any Issuer Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or
imposed on it, in any jurisdiction in which it shall be illegal or in
which such Person shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or
authority available to any Issuer Trustee shall be construed to be a
duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Trust Securities
Certificates shall be taken as the statements of the Issuer Trust and
the Depositor, and the Issuer Trustees do not assume any
responsibility for their correctness. The Issuer Trustees shall not
be accountable for the use or application by the Depositor of the
proceeds of the Debentures.
The Property Trustee may conclusively assume that any funds held
by it hereunder are legally available unless an officer of the
Property Trustee assigned to its Corporate Trust Administration
department shall have received written notice from the Depositor, any
Holder or any other Issuer Trustee that such funds are not legally
available.
SECTION 8.5. May Hold Securities.
Any Issuer Trustee or any other agent of any Issuer Trustee or
the Issuer Trust, in its individual or any other capacity, may become
the owner or pledgee of Trust Securities and, subject to Sections 8.8
and 8.13 and except as provided in the definition of the term
"Outstanding" in Article I, may otherwise deal with the Issuer Trust
with the same rights it would have if it were not an Issuer Trustee
or such other agent.
SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Issuer Trustees from time to time such
compensation as the parties shall agree from time to time for all
services rendered by them hereunder as may be agreed by the Depositor
and the Issuer Trustees from time to time (which compensation shall
not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
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(b) except as otherwise expressly provided herein, to
reimburse the Issuer Trustees upon request for all reasonable
expenses, disbursements and advances incurred or made by the Issuer
Trustees in accordance with any provision of this Trust Agreement
(including the reasonable compensation and the expenses and
disbursements of their agents and counsel), except any such expense,
disbursement or advance as may be attributable to their negligence,
bad faith or wilful misconduct; and
(c) to the fullest extent permitted by applicable law, to
indemnify and hold harmless (i) each Issuer Trustee, (ii) any
Affiliate of any Issuer Trustee, (iii) any officer, director,
shareholder, employee, representative or agent of any Issuer Trustee
and (iv) any employee or agent of the Issuer Trust (referred to herein
as an "Indemnified Person") from and against any loss, damage,
liability, tax, penalty, expense or claim of any kind or nature
whatsoever incurred by such Indemnified Person by reason of the
creation, operation or termination of the Issuer Trust or any act or
omission performed or omitted by such Indemnified Person on behalf of
the Issuer Trust, except that no Indemnified Person shall be entitled
to be indemnified in respect of any loss, damage or claim incurred by
such Indemnified Person by reason of negligence, bad faith or wilful
misconduct with respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination
of this Trust Agreement and the removal or resignation of any Issuer
Trustee.
No Issuer Trustee may claim any Lien on any Trust Property as a
result of any amount due pursuant to this Section 8.6.
SECTION 8.7. Corporate Property Trustee Required; Eligibility
of Issuer Trustees.
(a) There shall at all times be a Property Trustee hereunder
with respect to the Trust Securities. The Property Trustee shall be
a Person that is a national or state chartered bank and eligible
pursuant to Section 310 of the Trust Indenture Act to act as such and
that 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 Property Trustee with respect to the Trust Securities
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. At the time of appointment,
the Property Trustee must have securities rated in one of the three
highest rating categories by a nationally recognized statistical
rating organization.
(b) There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each
Administrative Trustee shall be either a natural person who is at
least 21 years of age or a legal entity that shall act through one or
more persons authorized to bind that entity.
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(c) There shall at all times be a Delaware Trustee with
respect to the Trust Securities. The Delaware Trustee shall either
be (i) a natural person who is at least 21 years of age and a resident
of the State of Delaware, or (ii) a legal entity with its principal
place of business in the State of Delaware and that otherwise meets
the requirements of applicable Delaware law and that shall act through
one or more persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a
conflicting interest within the meaning of the Trust Indenture Act,
the Property Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the
provisions of, the Trust Indenture Act and this Trust Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to
be specifically described in this Trust Agreement for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
SECTION 8.9. Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing,
at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in
which any part of the Trust Property may at the time be located, the
Depositor and the Administrative Trustees, by agreed action of the
majority of such Trustees, shall have power to appoint, and upon the
written request of the Administrative Trustees, the Depositor shall
for such purpose join with the Administrative Trustees in the
execution, delivery and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the
Property Trustee either to act as co-trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or to the
extent required by law to act as separate trustee of any such
property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in
the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this
Section. Any co-trustee or separate trustee appointed pursuant to
this Section shall either be (i) a natural person who is at least 21
years of age and a resident of the United States, or (ii) a legal
entity with its principal place of business in the United States that
shall act through one or more persons authorized to bind such entity.
In case an Event of Default under the Indenture shall have occurred
and be continuing, the Property Trustee alone shall have the power to
make such appointment.
Should any written instrument from the Depositor be required by
any co-trustee or separate trustee so appointed for more fully
confirming to such co-trustee or separate trustee such property,
title, right or power, any and all such instruments shall, on request,
be executed, acknowledged and delivered by the Depositor.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms, namely:
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(a) The Trust Securities shall be executed by one or more
Administrative Trustees and delivered by the Property Trustee and all
rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Property Trustee
specified hereunder shall be exercised solely by the Property Trustee
and not by such co-trustee or separate trustee.
(b) The rights, powers, duties and obligations hereby conferred
or imposed upon the Property Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon and
exercised or performed by the Property Trustee or by the Property
Trustee and such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that under any law of any jurisdiction
in which any particular act is to be performed, the Property Trustee
shall be incompetent or unqualified to perform such act, in which
event such rights, powers, duties and obligations shall be exercised
and performed by such co-trustee or separate trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may
accept the resignation of or remove any co-trustee or separate trustee
appointed under this Section and, in case a Debenture Event of Default
has occurred and is continuing, the Property Trustee shall have power
to accept the resignation of, or remove, any such co-trustee or
separate trustee without the concurrence of the Depositor. Upon the
written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate
trustee so resigning or removed may be appointed in the manner
provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property
Trustee or any other trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any act
of a co-trustee or separate trustee.
(f) Any Act of Holders delivered to the Property Trustee shall
be deemed to have been delivered to each such co-trustee and separate
trustee.
SECTION 8.10. Resignation and Removal; Appointment of
Successor.
No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Issuer Trustee pursuant
to this Article shall become effective until the acceptance of
appointment by the successor Issuer Trustee in accordance with the
applicable requirements of Section 8.11.
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Subject to the immediately preceding paragraph, the Relevant
Trustee may resign at any time by giving written notice thereof to the
Holders. If the instrument of acceptance by the successor Trustee
required by Section 8.11 shall not have been delivered to the Relevant
Trustee within 30 days after the giving of such notice of resignation,
the Relevant Trustee may petition, at the expense of the Trust, any
court of competent jurisdiction for the appointment of a successor
Relevant Trustee.
Unless a Debenture Event of Default shall have occurred and be
continuing, any Issuer Trustee may be removed at any time by Act of
the Holders of Common Securities. If a Debenture Event of Default
shall have occurred and be continuing, the Property Trustee or the
Delaware Trustee, or both of them, may be removed at such time by Act
of the Holders of a majority in Liquidation Amount of the Trust
Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative
Trustee may be removed by the Holders of Common Securities at any
time. In no event will the Holders of the Trust Preferred Securities
have a right to vote to appoint, remove or replace the Administrative
Trustees.
If any Issuer Trustee shall resign, be removed or become
incapable of acting as Issuer Trustee, or if a vacancy shall occur in
the office of any Issuer Trustee for any reason, at a time when no
Debenture Event of Default shall have occurred and be continuing, the
Holders of Common Securities, by Act of the Holders of Common
Securities, shall promptly appoint a successor Issuer Trustee or
Issuer Trustees and the retiring Issuer Trustee shall comply with the
applicable requirements of Section 8.11. If the Property Trustee or
the Delaware Trustee shall resign, be removed or become incapable of
continuing to act as the Property Trustee or the Delaware Trustee, as
the case may be, at a time when a Debenture Event of Default shall
have occurred and be continuing, the Holders of Trust Preferred
Securities, by Act of the Holders of a majority in Liquidation Amount
of the Trust Preferred Securities then Outstanding, shall promptly
appoint a successor Relevant Trustee or Trustees and such successor
Trustee shall comply with the applicable requirements of Section 8.11.
If an Administrative Trustee shall resign, be removed or become
incapable of acting as Administrative Trustee, at a time when a
Debenture Event of Default shall have occurred and be continuing, the
Holders of Common Securities by Act of the Holders of Common
Securities shall promptly appoint a successor Administrative Trustee
or Administrative Trustees and such successor Administrative Trustee
or Trustees shall comply with the applicable requirements of Section
8.11. If no successor Relevant Trustee shall have been so appointed
by the Holders of Common Securities or the Holders of Trust Preferred
Securities and accepted appointment in the manner required by Section
8.11, any Holder who has been a Holder of Trust Securities 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 Relevant Trustee.
The Property Trustee shall give notice of each resignation and
each removal of an Issuer Trustee and each appointment of a successor
Issuer Trustee to all Holders in the manner provided in Section 10.8
and shall give notice to the Depositor. Each notice shall include the
name of the successor Relevant Trustee and the address of its
Corporate Trust Office if it is the Property Trustee.
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Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Administrative Trustee or a Delaware
Trustee who is a natural person dies or becomes, in the opinion of the
Depositor, incompetent or incapacitated, the vacancy created by such
death, incompetence or incapacity may be filled by (a) the unanimous
act of the remaining Administrative Trustees if there are at least two
of them or (b) otherwise by the Depositor (with the successor in each
case being a Person who satisfies the eligibility requirement for
Administrative Trustees or Delaware Trustee, as the case may be, set
forth in Section 8.7).
SECTION 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Relevant
Trustee, the retiring Relevant Trustee and each successor Relevant
Trustee with respect to the Trust Securities shall execute and deliver
an amendment hereto wherein each successor Relevant Trustee shall
accept such appointment and which (a) shall contain such provisions
as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Relevant Trustee all the rights, powers,
trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Issuer Trust and (b) shall add to or change
any of the provisions of this Trust Agreement as shall be necessary
to provide for or facilitate the administration of the Issuer Trust
by more than one Relevant Trustee, it being understood that nothing
herein or in such amendment shall constitute such Relevant Trustees
co-trustees and upon the execution and delivery of such amendment the
resignation or removal of the retiring Relevant Trustee shall become
effective to the extent provided therein and each such successor
Relevant Trustee, without any further act, deed or conveyance, shall
become vested with all the rights, powers, trusts and duties of the
retiring Relevant Trustee; but, on request of the Issuer Trust or any
successor Relevant Trustee such retiring Relevant Trustee shall duly
assign, transfer and deliver to such successor Relevant Trustee all
Trust Property, all proceeds thereof and money held by such retiring
Relevant Trustee hereunder with respect to the Trust Securities and
the Issuer Trust.
Upon request of any such successor Relevant Trustee, the Issuer
Trust shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Relevant Trustee
all such rights, powers and trusts referred to in the first or second
preceding paragraph, as the case may be.
No successor Relevant Trustee shall accept its appointment unless
at the time of such acceptance such successor Relevant Trustee shall
be qualified and eligible under this Article.
SECTION 8.12. Merger, Conversion, Consolidation or Succession
to Business.
Any Person into which the Property Trustee, the Delaware Trustee
or any Administrative Trustee that is not a natural Person may be
merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which
such Relevant Trustee shall be a party, or any Person succeeding to
all or substantially all the corporate trust business of such Relevant
Trustee, shall be the successor of such Relevant Trustee hereunder,
provided that such Person 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.
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SECTION 8.13. Preferential Collection of Claims Against
Depositor or Issuer Trust.
If and when the Property Trustee shall be or shall become a
creditor, directly or indirectly, secured or unsecured, of the
Depositor or the Issuer Trust (or any other obligor upon the Trust
Preferred Securities), the Property Trustee shall be subject to the
provisions of Section 311 of the Trust Indenture Act regarding the
collection of claims against the Depositor or the Issuer Trust (or any
such other obligor).
SECTION 8.14. Property Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar
judicial proceeding relative to the Issuer Trust or any other obligor
upon the Trust Securities or the property of the Issuer Trust or of
such other obligor or their creditors, the Property Trustee
(irrespective of whether any Distributions on the Trust Securities
shall then be due and payable and irrespective of whether the Property
Trustee shall have made any demand on the Issuer Trust for the payment
of any past due Distributions) shall be entitled and empowered, to the
fullest extent permitted by law, by intervention in such proceeding
or otherwise:
(a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and
to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Property Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(b) 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
Property Trustee and, in the event the Property Trustee shall consent
to the making of such payments directly to the Holders, to pay to the
Property Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the
Property Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or compensation affecting the Trust Securities or the
rights of any Holder thereof or to authorize the Property Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 8.15. Reports by Property Trustee.
(a) Not later than January 31 of each year, the Property
Trustee shall transmit to all Holders in accordance with Section 10.8
and to the Depositor a brief report dated as of the immediately
preceding December 31 with respect to:
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(i) its eligibility under Section 8.7 or, in lieu
thereof, if to the best of its knowledge it has continued to be
eligible under said Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied
with all of its obligations under this Trust Agreement during
the 12-month period (or, in the case of the initial report, the
period since the Closing Date) ending with such December 31 or,
if the Property Trustee has not complied in any material respect
with such obligations, a description of such noncompliance; and
(iii) any change in the property and funds in its
possession as Property Trustee since the date of its last report
and any action taken by the Property Trustee in the performance
of its duties hereunder which it has not previously reported and
which in its opinion materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to
Holders such reports concerning the Property Trustee and its actions
under this Trust Agreement as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant
thereto.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each
national stock exchange, the Nasdaq National Market or such other
interdealer quotation system or self-regulatory organization upon
which the Trust Securities are listed or traded, with the Commission
and with the Depositor.
SECTION 8.16. Reports to the Property Trustee.
Each of the Depositor and the Administrative Trustees shall
provide to the Property Trustee, the Commission and the Holders such
documents, reports and information as required by Section 314 of the
Trust Indenture Act (if any) and the compliance certificate required
by Section 314(a) of the Trust Indenture Act in the form, in the
manner and at the times required by Section 314 of the Trust Indenture
Act. The Depositor and the Administrative Trustees shall annually
file with the Property Trustee a certificate specifying whether such
Person is in compliance with all of the terms and covenants applicable
to such Person hereunder.
SECTION 8.17. Evidence of Compliance with Conditions
Precedent.
Each of the Depositor and the Administrative Trustees shall
provide to the Property Trustee such evidence of compliance with the
conditions precedent, if any, provided for in this Trust Agreement
that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given
by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act
shall be given in the form of an Officers' Certificate.
SECTION 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be five, provided
that the Property Trustee and the Delaware Trustee may be the same
Person.
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(b) If an Issuer Trustee ceases to hold office for any
reason, a vacancy shall occur. The vacancy shall be filled with an
Issuer Trustee appointed in accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee
shall not operate to annul, dissolve or terminate the Issuer Trust.
SECTION 8.19. Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person
over the age of 21 his or her power for the purpose of executing any
documents contemplated in Section 2.7(a), including any registration
statement or amendment thereto filed with the Commission, or making
any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate
from time to time to such of their number or to the Depositor the
doing of such things and the execution of such instruments either in
the name of the Issuer Trust or the names of the Administrative
Trustees or otherwise as the Administrative Trustees may deem
expedient to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of this Trust Agreement.
SECTION 8.20. Appointment of Administrative Trustees.
(a) The Administrative Trustees shall initially be K. B.
Marsh, an individual, M. R. Cannon, an individual, and H. T. Arthur,
an individual, and their successors shall be appointed by the Holders
of a Majority in Liquidation Amount of the Common Securities and may
resign or may be removed by the Holders of a Majority in Liquidation
Amount of the Common Securities at any time. Upon any resignation or
removal, the Depositor shall appoint a successor Administrative
Trustee. Each Administrative Trustee shall sign an agreement agreeing
to comply with the terms of this Trust Agreement. If at any time
there is no Administrative Trustee, the Property Trustee or any Holder
who has been a Holder of Trust Securities for at least six months may
petition any court of competent jurisdiction for the appointment of
one or more Administrative Trustees.
(b) Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment
of an Administrative Trustee in accordance with this Section 8.20, the
Administrative Trustees in office, regardless of their number (and not
withstanding any other provision of this Agreement), shall have all
the powers granted to the Administrative Trustees and shall discharge
all the duties imposed upon the Administrative Trustees by this Trust
Agreement.
(c) Notwithstanding the foregoing or any other provision of
this Trust Agreement, if any Administrative Trustee who is a natural
person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or
incapacity may be filled by the unanimous acts of the remaining
Administrative Trustees, if there were at least two of them prior to
such vacancy, and by the Depositor, if there were not two such
Administrative Trustees immediately prior to such vacancy (with the
successor being a Person who satisfies the eligibility requirement for
Administrative Trustees set forth in Section 8.7).
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ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.
Unless earlier dissolved, the Issuer Trust shall automatically
dissolve on October 1, 2052 (the "Expiration Date").
SECTION 9.2. Early Dissolution.
The first to occur of any of the following events is an "Early
Dissolution Event":
(a) the occurrence of a Bankruptcy Event in respect of, or
the dissolution or liquidation of, the Depositor;
(b) the written direction to the Property Trustee from all
of the Holders of the Common Securities at any time to dissolve the
Issuer Trust and to distribute the Debentures to Holders in exchange
for the Trust Preferred Securities (which direction is optional and
wholly within the discretion of the Holders of the Common Securities);
(c) the redemption of all of the Trust Preferred Securities
in connection with the redemption of all the Debentures;
(d) the entry of an order for dissolution of the Issuer Trust
by a court of competent jurisdiction; and
(e) the expiration of the term as provided in Section 9.1.
SECTION 9.3. Termination.
The respective obligations and responsibilities of the Issuer
Trustees and the Issuer Trust created and continued hereby shall
terminate upon the latest to occur of the following: (a) the
distribution by the Property Trustee to Holders of all amounts
required to be distributed hereunder upon the liquidation of the
Issuer Trust pursuant to Section 9.4, or upon the redemption of all
of the Trust Securities pursuant to Section 4.2; (b) the payment of
any expenses owed by the Issuer Trust; and (c) the discharge of all
administrative duties of the Administrative Trustees, including the
performance of any tax reporting obligations with respect to the
Issuer Trust or the Holders.
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SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a),
(b) or (d) of Section 9.2 occurs or upon the Expiration Date, the
Issuer Trust shall be liquidated by the Issuer Trustees as
expeditiously as the Issuer Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the
Issuer Trust as provided by applicable law, to each Holder a Like
Amount of Debentures, subject to Section 9.4(d). Notice of
liquidation shall be given by the Property Trustee by first-class
mail, postage prepaid mailed not less than 30 nor more than 60 days
prior to the Liquidation Date to each Holder of Trust Securities at
such Holder's address appearing in the Securities Register. All such
notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date,
the Trust Securities will no longer be deemed to be Outstanding
and any Trust Securities Certificates not surrendered for
exchange will be deemed to represent a Like Amount of
Debentures; and
(iii) provide such information with respect to the
procedures by which Holders may exchange Trust Securities
Certificates for Debentures, or if Section 9.4(d) applies
receive a Liquidation Distribution, as Administrative Trustees
or the Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order
to effect the liquidation of the Issuer Trust and distribution of the
Debentures to Holders, the Property Trustee, either itself acting as
exchange agent or through the appointment of a separate exchange
agent, shall establish a record date for such distribution (which
shall be not more than 30 days prior to the Liquidation Date) and,
establish such procedures as it shall deem appropriate to effect the
distribution of Debentures in exchange for the Outstanding Trust
Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the
Liquidation Date, (i) the Trust Securities will no longer be deemed
to be Outstanding, (ii) certificates representing a Like Amount of
Debentures will be issued to Holders of Trust Securities Certificates,
upon surrender of such Certificates to the exchange agent for
exchange, (iii) the Depositor shall use its best efforts to have the
Debentures listed on the national stock exchange, the Nasdaq National
Market or on such other exchange, interdealer quotation system or
self-regulatory organization as the Trust Preferred Securities are
then listed, (iv) any Trust Securities Certificates not so surrendered
for exchange will be deemed to represent a Like Amount of Debentures
bearing accrued and unpaid interest in an amount equal to the
accumulated and unpaid Distributions on such Trust Securities
Certificates until such certificates are so surrendered (and until
such certificates are so surrendered, no payments of interest or
principal will be made to Holders of Trust Securities Certificates
with respect to such Debentures) and (v) all rights of Holders holding
Trust Securities will cease, except the right of such Holders to
receive Debentures upon surrender of Trust Securities Certificates.
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(d) If, notwithstanding the other provisions of this Section
9.4, whether because of an order for dissolution entered by a court
of competent jurisdiction or otherwise, distribution of the Debentures
in the manner provided herein is determined by the Property Trustee
not to be practical, or if an Early Termination Event specified in
Section 9.2(c) occurs, the Trust Property shall be liquidated and the
Issuer Trust shall be wound-up or terminated by the Property Trustee
in such manner as the Property Trustee determines. In such event,
Holders will be entitled to receive out of the assets of the Issuer
Trust available for distribution to Holders, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable
law, an amount equal to the Liquidation Amount per Trust Security plus
accumulated and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"). If, upon any such
winding up or termination, the Liquidation Distribution can be paid
only in part because the Issuer Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then,
subject to the next succeeding sentence, the amounts payable by the
Issuer Trust on the Trust Securities shall be paid on a pro rata basis
(based upon Liquidation Amounts). The Holders of the Common
Securities will be entitled to receive Liquidation Distributions upon
any such winding-up or termination pro rata (determined as aforesaid)
with Holders of Trust Preferred Securities, except that, if a
Debenture Event of Default specified in Section 5.1(a) or 5.1(b) of
the Indenture has occurred and is continuing, the Trust Preferred
Securities shall have a priority over the Common Securities as
provided in Section 4.3.
SECTION 9.5. Mergers, Consolidations, Amalgamations or
Replacements of Issuer Trust.
The Issuer Trust may not merge with or into, consolidate,
amalgamate or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any corporation
or other body, except pursuant to this Sections 9.4 or 9.5. At the
request of the Holders of the Common Securities, with the consent of
the Administrative Trustees, the Issuer Trust may merge with or into,
consolidate, amalgamate or be replaced by or convey, transfer or lease
its properties and assets substantially as an entirety to a trust
organized as such under the laws of any state; provided, that (i) such
successor entity either (a) expressly assumes all of the obligations
of the Issuer Trust with respect to the Trust Preferred Securities or
(b) substitutes for the Trust Preferred Securities other securities
having substantially the same terms as the Trust Preferred Securities
(the "Successor Securities") so long as the Successor Securities have
the same priority as the Trust Preferred Securities with respect to
distributions and payments upon liquidation, redemption and otherwise,
(ii) a trustee of such successor entity possessing the same powers and
duties as the Property Trustee is appointed to hold the Debentures,
(iii) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Trust Preferred
Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization which
assigns ratings to the Trust Preferred Securities, (iv) the Successor
Securities are listed, or any Successor Securities will be listed upon
notice of issuance, on the national securities exchange, the Nasdaq
National Market or on such other exchange, interdealer quotation
system or self-regulatory organization as the Trust Preferred
Securities are then listed, if any, (v) such merger, consolidation,
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amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders
of the Trust Preferred Securities (including any Successor Securities)
in any material respect, (vi) such successor entity has a purpose
substantially identical to that of the Issuer Trust, (vii) prior to
such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, the Depositor has received an Opinion of Counsel
to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the Holders of the Trust
Preferred Securities (including any Successor Securities) in any
material respect and (b) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the
Issuer Trust nor such successor entity will be required to register
as an "investment company" under the Investment Company Act and (viii)
the Depositor or its permitted transferee owns all of the common
securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the
extent provided by the Guarantee Agreement. Notwithstanding the
foregoing, the Issuer Trust shall not, except with the consent of
Holders of all of the Trust Preferred Securities, consolidate,
amalgamate, merge with or into, or be replaced by or convey, transfer
or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it if such consolidation, amalgamation,
merger, replacement, conveyance, transfer or lease would cause the
Issuer Trust or the successor entity to be taxable as a corporation
or classified as other than a grantor trust for United States federal
income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the death, incapacity,
bankruptcy, dissolution or termination of any Person having an
interest, beneficial or otherwise, in Trust Securities shall not
operate to terminate this Trust Agreement, or dissolve, terminate or
annul the Issuer Trust, nor entitle the legal representatives or heirs
of such Person or any Holder for such Person, to claim an accounting,
take any action or bring any proceeding in any court for a partition
or winding up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto
or any of them.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by
the Property Trustee, the Administrative Trustees and the Holders of
all of the Common Securities, without the consent of any Holder of the
Trust Preferred Securities, (i) to cure any ambiguity, correct or
supplement any provision herein that may be inconsistent with any
other provision herein or to make any other provisions with respect
to matters or questions arising under this Trust Agreement which shall
not be inconsistent with the other provisions of this Trust Agreement
or (ii) to modify, eliminate or add to any provisions of this Trust
Agreement to such extent as shall be necessary to ensure that the
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Issuer Trust will not be taxable as a corporation or classified as
other than a grantor trust for United States federal income tax
purposes at all times that any Trust Securities are outstanding or to
ensure that the Issuer Trust will not be required to register as an
"investment company" under the Investment Company Act, provided,
however, that in the case of either clause (i) or clause (ii) such
action shall not adversely affect in any material respect the
interests of any Holder, and any such amendment of this Trust
Agreement shall become effective when notice thereof is given to the
Holders.
(b) Except as provided in Section 10.2(c), any provision of
this Trust Agreement may be amended by the Issuer Trustees and the
Holders of all of the Common Securities and with (i) the consent of
Holders of at least a Majority in Liquidation Amount of the Trust
Securities and (ii) receipt by the Issuer Trustees of an Opinion of
Counsel to the effect that such amendment or the exercise of any power
granted to the Issuer Trustees in accordance with such amendment will
not cause the Issuer Trust to be taxable as a corporation or as other
than a grantor trust for United States federal income tax purposes or
affect the Issuer Trust's exemption from status as an "investment
company" under the Investment Company Act.
(c) In addition to and notwithstanding any other provision
in this Trust Agreement, without the consent of each affected Holder
(such consent being obtained in accordance with Section 6.3 or 6.6),
this Trust Agreement may not be amended to (i) change the amount or
timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made
in respect of the Trust Securities as of a specified date or (ii)
restrict the right of a Holder to institute suit for the enforcement
of any such payment on or after such date; and notwithstanding any
other provision herein, without the unanimous consent of the Holders
(such consent being obtained in accordance with Section 6.3 or 6.6),
this Section 10.2(e) may not be amended.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Issuer Trustee shall enter into or consent to any
amendment to this Trust Agreement that would cause the Issuer Trust
to fail or cease to qualify for the exemption from status as an
"investment company" under the Investment Company Act or to be taxable
as a corporation or to be classified as other than a grantor trust for
United States federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor and the Administrative
Trustees, this Trust Agreement may not be amended in a manner that
imposes any additional obligation on the Depositor or the
Administrative Trustees.
(f) In the event that any amendment to this Trust Agreement
is made, the Administrative Trustees or the Property Trustee shall
promptly provide to the Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee
shall be required to enter into any amendment to this Trust Agreement
that affects its own rights, duties or immunities under this Trust
Agreement. The Property Trustee shall be entitled to receive an
Opinion of Counsel and an Officers' Certificate stating that any
amendment to this Trust Agreement is in compliance with this Trust
Agreement.
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SECTION 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF
THE HOLDERS, THE ISSUER TRUST, THE DEPOSITOR, AND THE ISSUER TRUSTEES
WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF DELAWARE WITHOUT REFERENCE TO ITS CONFLICTS OF LAWS PROVISIONS.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be
a day that is not a Business Day, then such payment need not be made
on such date but may be made on the next succeeding day that is a
Business Day (except as otherwise provided in Sections 4.1(a) and
4.2(d)), with the same force and effect as though made on the date
fixed for such payment, and no Distributions shall accumulate on such
unpaid amount for the period after such date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust and any
Issuer Trustee, including any successor by operation of law. Except
in connection with a consolidation, merger or sale involving the
Depositor that is permitted under Article Eight of the Indenture and
pursuant to which the assignee agrees in writing to perform the
Depositor's obligations hereunder, the Depositor shall not assign its
obligations hereunder.
SECTION 10.7. Headings.
The Article and Section headings are for convenience only and
shall not affect the construction of this Trust Agreement.
SECTION 10.8. Reports, Notices and Demands.
Any report, notice, demand or other communication that by any
provision of this Trust Agreement is required or permitted to be given
or served to or upon any Holder or the Depositor may be given or
served in writing by deposit thereof, first-class postage prepaid, in
the United States mail, hand delivery or facsimile transmission, in
each case, addressed (i) in the case of a Holder of Trust Preferred
Securities to such Holder as such Holder's name and address may appear
on the Securities Register and (ii) in the case of the Holder of the
Common Securities, the Depositor, to South Carolina Electric & Gas
Company, 1426 Main Street, Columbia, South Carolina, 29201, Attention:
Treasurer, facsimile no.: (803) 933-7037, or to such other address as
may be specified in a written notice by the Holder of the Common
Securities or the Depositor, as the case may be to the Property
Trustee. Such notice, demand or other communication to or upon a
Holder shall be deemed to have been sufficiently given or made, for
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all purposes, upon hand delivery, mailing or transmission. Such
notice, demand or other communication to or upon the Depositor shall
be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Depositor.
Any notice, demand or other communication that by any provision
of this Trust Agreement is required or permitted to be given or served
to or upon the Property Trustee, the Delaware Trustee, the
Administrative Trustees or the Issuer Trust shall be given in writing
addressed to such Person as follows: (i) with respect to the Property
Trustee to The Bank of New York, 101 Barclay Street, Floor 21 West,
New York, New York 10286, Attention: Corporate Trust Administration;
(ii) with respect to the Delaware Trustee, The Bank of New York
(Delaware), White Clay Center, Rte 273, Newark, Delaware 19711,
Attention: Corporate Trust Administration; (iii) with respect to the
Administrative Trustees, to them at the address above for notices to
the Depositor, marked "Attention: Administrative Trustees of SCE&G
Trust I"; and (iv) with respect to the Issuer Trust, to its principal
office specified in Section 2.1, with a copy to the Property Trustee.
Such notice, demand or other communication to or upon the Issuer
Trust, the Property Trustee or the Administrative Trustees shall be
deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Issuer Trust, the Property Trustee or
such Administrative Trustee.
SECTION 10.9. Agreement Not to Petition.
Each of the Issuer Trustees and the Depositor agree for the
benefit of the Holders that, until at least one year and one day after
the Issuer Trust has been terminated in accordance with Article IX,
they shall not file, or join in the filing of, a petition against the
Issuer Trust under any bankruptcy, insolvency, reorganization or other
similar law (including the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the
commencement of any proceeding against the Issuer Trust under any
Bankruptcy Law. If the Depositor takes action in violation of this
Section 10.9, the Property Trustee agrees, for the benefit of Holders,
that at the expense of the Depositor, it shall file an answer with the
bankruptcy court or otherwise properly contest the filing of such
petition by the Depositor against the Issuer Trust or the commencement
of such action and raise the defense that the Depositor has agreed in
writing not to take such action and should be stopped and precluded
therefrom and such other defenses, if any, as counsel for the Issuer
Trustees or the Issuer Trust may assert.
SECTION 10.10. Trust Indenture Act; Conflict with Trust
Indenture Act.
(a) This Trust Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Trust
Agreement and shall, to the extent applicable, be governed by such
provisions.
(b) The Property Trustee shall be the only Issuer Trustee
that is a trustee for the purposes of the Trust Indenture Act.
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(c) If any provision hereof limits, qualifies or conflicts
with the duties imposed by Sections 310 to and including 317 of the
Trust Indenture Act through operation of Section 318(c) thereof, such
imposed duties shall control. If any provision of this Trust
Agreement 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 Trust Agreement as so modified or excluded,
as the case may be.
(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Trust Securities as
equity securities representing undivided beneficial interests in the
assets of the Issuer Trust.
SECTION 10.11. Acceptance of Terms of Trust Agreement,
Guarantee Agreement and Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT
ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE
UNCONDITIONAL ACCEPTANCE BY THE HOLDER AND ALL OTHERS HAVING A
BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND
PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT AND THE
INDENTURE, AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER
TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL
CONSTITUTE THE AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH
OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE
BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE ISSUER TRUST AND SUCH
HOLDER AND SUCH OTHERS.
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IN WITNESS WHEREOF, the parties hereto have executed this Amended
and Restated Trust Agreement.
SOUTH CAROLINA ELECTRIC & GAS COMPANY, as Depositor
By: s/M. R. Cannon
Name: M. R. Cannon
Title: Treasurer
THE BANK OF NEW YORK,
as Property Trustee
By: s/Van K. Brown
Name: Van K. Brown
Title: Assistant Vice President
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: s/Betty A. Cocozza
Name: Betty A. Cocozza
Title:
s/K. B. Marsh
Name: K. B. Marsh, as Administrative Trustee
s/M. R. Cannon
Name: M. R. Cannon, as Administrative Trustee
s/ H. T. Arthur
Name: H. T. Arthur, as Administrative Trustee
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Exhibit A
CERTIFICATE OF TRUST
OF
SCE&G TRUST I
This Certificate of Trust of SCE&G Trust I (the
"Trust"), dated October 8, 1997, is being duly executed and
filed by the undersigned, as trustees, to form a business trust
under the Delaware Business Trust Act (12 Del. C. (S) 3801 et
seq.)
1. Name. The name of the business trust being
formed hereby is SCE&G Trust I.
2. Delaware Trustee. The name and business address
of the trustee of the Trust with a principal place of business
in the State of Delaware is The Bank of New York (Delaware),
whose business address is White Clay Center, Route 273, Newark,
Delaware 19711.
IN WITNESS WHEREOF, the undersigned, being the trustees
of the Trust, have executed this Certificate of Trust as of the
date first above written.
THE BANK OF NEW YORK (Delaware), as Delaware Trustee
By: s/WALTER N. GITLIN
Name: WALTER N. GITLIN
Title: Authorized Signatory
s/M. R. Cannon
M. R. Cannon, as Administrative Trustee
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Exhibit B
BOOK-ENTRY-ONLY CORPORATE EQUITY ISSUES
Letter of Representations
[To be Completed by Issuer and Agent]
SCE&G TRUST I
[Name of Issuer]
The Bank of New York
[Name of Agent]
OCTOBER 23, 1997
[Date]
Attention: General Counsel's Office
The Depository Trust Company
55 Water Street; 49th Floor
New York, NY 10041-0099
Re: 7.55% Trust Preferred Securities, Series A
(Liquidation Amount $25 per Trust Preferred
Security)
CUSIP No. 78389A203
[Issue Description, including CUSIP number]
Ladies and Gentlemen:
This letter sets forth our understanding with respect to
certain matters relating to the above-referenced issue (the
"Securities"). Issuer is selling the Securities to Credit Suisse
First Boston Corporation and PaineWebber Incorporated (the
"Initial Purchaser") pursuant to a Underwriting Agreement dated
October 22 , 1997 (the "Document"). Initial Purchaser will take
delivery of the Securities through The Depository Trust Company
("DTC"). The Bank of New York is acting as transfer agent,
paying agent, and registrar with respect to the Securities (the
"Agent").
To induce DTC to accept the Securities as eligible for
deposit at DTC, and to act in accordance with its Rules with
respect to the Securities, Issuer and Agent make the following
representations to DTC.
1. Prior to closing on the Securities on October 28 , 1997
, there shall be deposited with DTC one Security certificate
registered in the name of DTC's nominee, Cede & Co., for each of
the Securities with the offering value set forth on Schedule A
hereto, the total of which represents 100% of the offering value
of such Securities. If, however, the offering value of any
Security exceeds $200 million, one certificate will be issued
with respect to each $200 million of offering value and an
additional certificate will be issued with respect to any
remaining offering value. Each Security certificate shall bear
the following legend:
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Unless this certificate is presented by an
authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to Issuer
or its agent for registration of transfer,
exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such
other name as is requested by an authorized
representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested
by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch
as the registered owner hereof, Cede & Co., has an
interest herein.
If the Securities will be held by Agent, as custodian for DTC,
such Security certificate shall remain in Agent's custody
pursuant to the provisions of the FAST Balance Certificate
Agreement currently in effect between Agent and DTC.
2. Issuer: (a) understands that DTC has no obligation to,
and will not, communicate to its Participants or to any person
having an interest in the Securities any information contained in
the Security certificate(s); and (b) acknowledges that neither
DTC's Participants nor any person having an interest in the
Securities shall be deemed to have notice of the provisions of
the Security certificate(s) by virtue of submission of such
certificate(s) to DTC.
3. In the event of any solicitation of consents from or
voting by holders of the Securities, Issuer or Agent shall
establish a record date for such purposes (with no provision for
revocation of consents or votes by subsequent holders) and shall
send notice of such record date to DTC not less shall 15 calendar
days in advance of such record date. Notices to DTC pursuant to
this Paragraph by telecopy shall be sent to DTC's Reorganization
Department at (212) 709-6896 or (212) 709-6897, and receipt of
such notices shall be confirmed by telephoning (212) 709-6870.
Notices to DTC pursuant to this Paragraph by mail or by any other
means shall be sent to DTC's Reorganization Department as
indicated in Paragraph 7.
4. In the event of a stock split, recapitalization,
conversion, or any similar transaction resulting in the
cancellation of all or any part of the Securities represented
thereby, the Agent shall send DTC a notice of such event as soon
as practicable, but in no event less than five business days
prior to the effective date of such transaction.
5. In the event of a full or partial redemption, Issuer or
Agent shall send a notice to DTC specifying: (a) the amount of
the redemption or refunding; (b) in the case of a refunding, the
maturity date(s) established under the refunding; and (c) the
date such notice is to be distributed to Security holders or
published (the "Publication Date"). Such notice shall be sent to
DTC by a secure means (e.g., legible telecopy, registered or
certified mail, overnight delivery) in a timely manner designed
to assure that such notice is in DTC's possession no later than
the close of business on the business day before or, if possible,
two business days before the
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Publication Date. Issuer or Agent shall forward such notice
either in a separate secure transmission for each CUSIP number or
in a secure transmission for multiple CUSIP numbers (if
applicable) which includes a manifest or list of each CUSIP
number submitted in that transmission. (The party sending such
notice shall have a method to verify subsequently the use of such
means and the timeliness of such notice.) The Publication Date
shall be not less than 30 days nor more than 60 days prior to the
redemption date or, in the case of an advance refunding, the date
that the proceeds are deposited in escrow. Notices to DTC
pursuant to this Paragraph by telecopy shall be sent to DTC's
Call Notification Department at (516) 227-4039 or (516) 227-4190.
If the party sending the notice does not receive a telecopy
receipt from DTC confining that the notice has been received,
such party shall telephone (516) 227-4070. Notices to DTC
pursuant to this Paragraph by mail or by any other means shall be
sent to:
Manager; Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, NY 11530-4719
6. In the event of an offering or issuance of rights with
respect to the Securities outstanding, Agent shall send DTC's
Dividend and Reorganization Departments a notice specifying: (a)
the amount of and conditions, if any, applicable to such rights
offering or issuance; (b) any applicable expiration or deadline
date, or any date by which any action on the part of holders of
such Securities is required; and (c) the Publication Date of such
notice.
The Publication Date will be as soon as practicable after
the announcement by the Company of any such offering or issuance
of rights with respect to the Securities represented thereby.
DTC requires that the Publication Date be not less than 30 days
nor more than 60 days prior to the related payment date,
distribution date, or issuance date, respectively.
Notices to DTC pursuant to this Paragraph by telecopy shall
be sent to DTC's Dividend Department at (212) 709-1623, and
receipt of such notices shall be confirmed by telephoning (212)
709-1282. Notices to DTC pursuant to the above by mail or any
other means shall be sent to:
Supervisor; Stock Dividends
Dividend Department
7 Hanover Square; 24th Floor
New York, NY 10004-2695
Notices to DTC pursuant to this Paragraph by telecopy shall
be sent to DTC's Reorganization Department at (212) 709-1093, and
receipt of such fax shall be confirmed by telephoning (2l2) 709--
1063. Notices to DTC pursuant to the above by mail or any other
means shall be sent to
Supervisor; Rights Offerings
Reorganization Department
7 Hanover Square; 23rd Floor
New York, NY 10004-2695
263
<PAGE>
7. In the event of an invitation to tender the Securities
(including mandatory tenders, exchanges, and capital changes),
notice by Issuer or Agent to Security holders specifying the
terms of the tender and the Publication Date of such notice shall
be sent to DTC by a secure means in the manner set forth in
Paragraph 5. Notices to DTC pursuant to this Paragraph and
notices of other corporate actions by telecopy shall be sent to
DTC's Reorganization Department at (212) 709-1093 or (212)
709-1094, and receipt of such notices shall be confirmed by
telephoning (212) 709-6884. Notices to DTC pursuant to the above
by mail or by any other means shall be sent to:
Manager; Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square; 23rd Floor
New York NY 10004-2695
8. All notices and payment advices sent to DTC shall contain
the CUSIP number of the Securities (listed on Schedule A hereto)
and the accompanying description of such Securities, which, as of
the date of this letter, is " 78389A203 ."
9. Issuer or Agent shall provide written notice of dividend
payment information to a standard dividend announcement service
subscribed to by DTC as soon as the information is available. In
the event that no such service exists, Issuer or Agent shall
provide such notice directly to DTC electronically, as previously
arranged by Issuer or Agent and DTC, as soon as the payment
information is available. If electronic transmission has not been
arranged, absent any other arrangements between Issuer or Agent
and DTC, such information should be sent by telecopy to DTC's
Dividend Department at (212) 709-1723 or (212) 709-1686, and
receipt of such notices shall be confirmed by telephoning (212)
709-1270. Notices to DTC pursuant to the above by mail or by any
other means shall be sent to:
Manager; Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square; 22nd Floor
New York NY 10004-2695
After establishing the amount of payment to be made on the
Securities in question, Issuer or Agent will notify DTC's
Dividend Department of the payment and payment date preferably
five, but not less than two, business days prior to the effective
date for such transaction.
10. Issuer or Agent shall provide CUSIP-level detail for
dividend payments to DTC no later than noon (Eastern Time) on the
payment date.
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<PAGE>
11. Dividend payments and cash distributions shall be
received by Cede & Co. as nominee of DTC, or its registered
assigns, in same-day funds no later shall 2:30 p.m. (Eastern
Time) on each payment date. Absent any other arrangements between
Issuer or Agent and DTC, such funds shall be wired as follows:
The Chase Manhattan Bank
ABA # 021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company
Dividend Deposit Account # O66-026776
12. Redemption payments shall be received by Cede & Co., as
nominee of DTC, or its registered assigns; in same-day funds no
later than 2:30 p.m. (Eastern Time) on payment date. Absent any
other arrangements between Agent and DTC, such funds shall be
wired as follows:
The Chase Manhattan Bank
ABA # 021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company
Redemption Deposit Account # 066-027306
13. Reorganization payments resulting from corporate actions
(such as tender offers or mergers) shall be received by Cede &
Co., as nominee of DTC, or its registered assigns, in same-day
funds no later shall 2:30 p.m. (Eastern Time) on payment date.
Absent any other arrangements between Agent and DTC, such funds
shall be wired as follows:
The Chase Manhattan Bank
ABA # 021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company
Reorganization Deposit Account # O66-0276O8
14. DTC may direct Issuer or Agent to use any other number
or address as the number
or address to which notices or payments of dividends,
distributions, or redemption proceeds may be sent.
15. In the event of a redemption, acceleration, or any other
similar transaction (e.g., tender made and accepted in response
to Issuer's or Agent's invitation) necessitating a reduction in
the aggregate principal amount of Securities outstanding or an
advance refunding of part of the Securities outstanding, DTC, in
its discretion: (a) may request Issuer or Agent to issue and
authenticate a new Security certificate; or (b) may make an
appropriate notation on the Security certificate indicating the
date and amount of such reduction in the number of Securities
outstanding, except in the case of final redemption, in which
case the certificate will be presented to Issuer or Agent prior
to payment, if required.
16. In the event that Issuer determines that beneficial owners
of Securities shall be able to obtain certificated Securities,
Issuer or Agent shall notify DTC of the
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availability of certificates. In such event, Issuer or Agent
shall transfer and exchange certificates in appropriate amounts,
as required by DTC and others.
17. DTC may discontinue providing its services as securities
depository with respect to the Securities at any time by giving
reasonable notice to Issuer or Agent (at which time DTC will
confirm with Issuer or Agent the aggregate principal amount of
Securities outstanding). Under such circumstances, at DTC's
request Issuer and Agent shall cooperate fully with DTC by taking
appropriate action to make available one or more separate
certificates evidencing Securities to any DTC Participant having
Securities credited to its DTC accounts.
18. Nothing herein shall be deemed to require Agent to
advance funds on behalf of Issuer.
19. This Letter of Representations may be executed in any
number of counterparts, each of which when so executed shall be
deemed to be an original, but all such counterparts together
shall constitute but one and the same instrument.
20. This Letter of Representations is governed by, and shall
be construed in accordance with, the laws of the State of New
York without giving effect to principles of conflicts of Law.
21. The following riders, attached hereto, are hereby
incorporated into this Letter of Representations:
Notes:
A. If there is an Agent (as defined in this Letter of Representations), Agent
as well as Issuer must sign this Letter. If there is no Agent, in signing this
Letter Issuer itself undertakes to perform all of the obligations set forth
herein Very truly yours,
B. Schedule B contains statements that DTC believes accurately describe DTC,
the method of effecting book-entry transfers of securities distributed through
DTC, and certain related matters.
SCE&G Trust I
(Issuer)
By: s/M. R. Cannon
(Authorized Officer's Signature)
M. R. Cannon
Administrative Trustee
The Bank of New York
(Agent)
By:
(Authorized Office's Signature)
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By:
CC: Underwriter
Underwriter's Counsel
266<PAGE>
<PAGE>
SCHEDULE A
2,000,000 Trust Preferred Securities. Series A
(Liquidation
Amount $25 per Trust Preferred Security)
(Describe Issue)
CUSIP Number Share Total Offering ($) Value
78389A 203 2,000,000 50,000,000
267<PAGE>
<PAGE>
SCHEDULE B
SAMPLE OFFERING DOCUMENT LANGUAGE
DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
(Prepared by DTC--bracketed material may be
applicable only to certain issues)
1. The Depository Trust Company ("DTC"), New York, NY, will
act as securities depository for the securities (the
"Securities"). The Securities will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC's
partnership nominee). One fully-registered Security certificate
will be issued for [each issue of] the Securities, [each] in the
aggregate principal amount of such issue, and will be deposited
with DTC. [If, however, the aggregate principal amount of [any]
issue exceeds $200 million, one certificate will be issued with
respect to each $200 million of principal amount and an
additional certificate will be issued with respect to any
remaining principal amount of such issue.]
2. DTC is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The
Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
3. Purchases of Securities under the DTC system must be made
by or through Direct Participants, which will receive a credit
for the Securities on DTC's records. The ownership interest of
each actual purchaser of each Security ("Beneficial Owner") is in
turn to be recorded on the Direct and Indirect Participants'
records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the
Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Securities are to be
268
<PAGE>
accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in
Securities, except in the event that use of the book-entry system
for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities
deposited by Participants with DTC are registered in the name of
DTC's partnership nominee, Cede & Co. The deposit of Securities
with DTC and their registration in the name of Cede & Co. effect
no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Securities; DTC's records reflect
only the identity of the Direct Participants to whose accounts
such Securities are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
[6. Redemption notices shall be sent to DTC. If less than
all of the Securities within an issue are being redeemed, DTC's
practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.]
7. Neither DTC nor Cede & Co. will consent or vote with
respect to Securities. Under its usual procedures, DTC mails an
Omnibus Proxy to Issuer as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the
Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments
on the Securities will be made to Cede & Co., as nominee of DTC.
DTC's practice is to credit Direct Participants' accounts, upon
DTC's receipt of funds and corresponding detail information from
Issuer or Agent on payable date in accordance with their
respective holdings shown on DTC's records. Payments by
Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of
such Participant and not of DTC, Agent, or Issuer, subject to any
statutory or regulatory requirements as may be in effect from
time to time. Payment of redemption proceeds, distributions, and
dividends to Cede & Co. is the responsibility of Issuer or Agent,
disbursement of such payments to Direct Participants shall be the
responsibility of Cede & Co., and disbursement of such payments
to the Beneficial Owners shall be the responsibility of Direct
and Indirect Participants.
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<PAGE>
[9. A Beneficial Owner shall give notice to elect to have
its Securities purchased or tendered, through its Participant, to
[Tender/Remarketing] Agent, and shall effect delivery of such
Securities by causing the Direct Participant to transfer the
Participant's interest in the Securities, on DTC's records, to
[Tender/Remarketing] Agent. The requirement for physical delivery
of Securities in connection with an optional tender or a
mandatory purchase will be deemed satisfied when the ownership
rights in the Securities are transferred by Direct Participants
on DTC's records and followed by a book-entry credit of tendered
securities to [Tender/Remarketing] Agents DTC account.]
10. DTC may discontinue providing its services as securities
depository with respect to the Securities at any time by giving
reasonable notice to Issuer or Agent. Under such circumstances,
in the event that a successor securities depository is not
obtained, Security certificates are required to be printed and
delivered.
11. Issuer may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities
depository). In that event, Security certificates will be printed
and delivered.
12. The information in this section concerning DTC and DTC's
book-entry system has been obtaine
<PAGE>
Exhibit 10-A
SCANA CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
as amended and restated
effective as of
October 21, 1997
276<PAGE>
<PAGE>
SCANA CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
TABLE OF CONTENTS
Page
SECTION 1. ESTABLISHMENT OF THE PLAN 1
1.1 Establishment of the Plan 1
1.2 Description of the Plan 1
1.3 Purpose of the Plan 1
SECTION 2. DEFINITIONS 2
2.1 Definitions 2
2.2 Gender and Number 4
SECTION 3. ELIGIBILITY AND PARTICIPATION 5
3.1 Eligibility 5
3.2 Termination of Participation 5
3.3 Reemployment of Former Participant 5
SECTION 4. BENEFITS 6
4.1 Eligibility for Benefits 6
4.2 Amount of Retirement Benefit 6
4.3 Commencement, Form and Duration of Payment 6
4.4 Pre-retirement Spouse Benefit 7
4.5 Documentation 7
SECTION 5. FINANCING 8
5.1 Financing of Benefits 8
5.2 "Rabbi" Trust 8
277<PAGE>
<PAGE>
SECTION 6. GENERAL PROVISIONS 9
6.1 Employment/Participation Rights 9
6.2 Nonalienation of Benefits 9
6.3 Severability 9
6.4 No Individual Liability 10
6.5 Applicable Law 10
SECTION 7. PLAN ADMINISTRATION, AMENDMENT
AND TERMINATION 11
7.1 In General 11
7.2 Claims Procedure 11
7.3 Finality of Determination 11
7.4 Delegation of Authority 11
7.5 Expenses 11
7.6 Tax Withholding 11
7.7 Incompetency 11
7.8 Action by Corporation 12
7.9 Notice of Address 12
7.10 Amendment and Termination 12
SECTION 8. CHANGE IN CONTROL PROVISIONS 13
8.1 Accelerated Distributions Upon Change
in Control 13
8.2 Tax Computation 13
8.3 No Subsequent Recalculation of Tax Liability 13
8.4 Successors 14
8.5 Amendment and Termination after Change
in Control 14
SECTION 10 EXECUTION 15
278
<PAGE>
<PAGE>
SCANA CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
SECTION 1. ESTABLISHMENT OF THE PLAN
1.1 Establishment of the Plan. SCANA CORPORATION (the "Corporation")
established the SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (the
"Supplemental Plan") effective as of January 1, 1994. The
Supplemental Plan was amended and restated, effective December 18,
1996, and is hereby further amended and restated effective as of
October 21, 1997.
1.2 Description of the Plan. This Supplemental Plan is intended to
constitute a nonqualified deferred compensation plan which, in
accordance with ERISA Sections 201(2), 301(a)(3) and 401(a)(1), is
unfunded and established primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees.
1.3 Purpose of the Plan. In addition to the description of the
Supplemental Plan as set forth in subsection 1.2 above, the primary
objective of the Corporation in establishing this Supplemental Plan is
to provide supplemental retirement income to certain employees of the
Company whose benefits under the SCANA Corporation Retirement Plan are
limited in accordance with the limitations imposed by Code Section 415
on the amount of annual retirement benefits payable to employees from
qualified pension plans, by Code Section 401(a)(17) on the amount of
annual compensation that may be taken into account for all qualified
plan purposes, or by certain other design limitations on determining
compensation under the Qualified Plan.
279<PAGE>
<PAGE>
SECTION 2. DEFINITIONS
2.1 Definitions. Whenever used in the Supplemental Plan, the
following terms shall have the respective meanings set forth below,
unless otherwise expressly provided herein or unless a different
meaning is plainly required by the context, and when the defined
meaning is intended, the term is capitalized. Capitalized terms not
defined herein shall have the respective meanings set forth in the
Qualified Plan.
(a) "Actuarial Equivalent" shall mean the actuarial equivalent
factors applied under the Qualified Plan. In applying Actuarial
Equivalent factors under this Supplemental Plan, the same procedures
shall apply as would apply under the Qualified Plan under similar
circumstances.
(b) "Agreement" means a contract between an Eligible Employee
and the Company permitting the Eligible Employee to participate in the
Supplemental Plan and delineating the benefits (if any) that are to be
provided to the Eligible Employee in lieu of or in addition to the
benefits described under the terms of this Supplemental Plan.
(c) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.
(d) "Beneficiary" means the individual designated by the
Participant (on such form as prescribed by the Committee) to receive
the Participant's benefits under Section 8 if the Participant shall
have died prior to receipt thereof. In the absence of an effective
Beneficiary designation, such amounts shall be paid to the
Participant's Beneficiary determined under the Qualified Plan.
(e) "Board" means the Board of Directors of the Corporation.
(f) "Change in Control" means a change in control of the
Corporation of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Exchange Act, whether or not the Corporation is then subject
to such reporting requirements; provided that, without limitation,
such a Change in Control shall be deemed to have occurred if:
i) Any Person (as defined in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
"group" as defined in Section 13(d)) is or becomes the Beneficial
Owner, directly or indirectly, of twenty five percent (25%) or more of
the combined voting power of the outstanding shares of capital stock
of the Corporation;
280
<PAGE>
ii) During any period of two (2) consecutive years (not
including any period prior to December 18, 1996) there shall cease to
be a majority of the Board comprised as follows: individuals who at
the beginning of such period constitute the Board and any new
director(s) whose election by the Board or nomination for election by
the Corporation's stockholders was approved by a vote of at least two-
thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved;
iii) The issuance of an Order by the Securities and Exchange
Commission (SEC), under Section 9(a)(2) of the Public Utility Holding
Company Act of 1935 as amended (the "1935 Act"), authorizing a third
party to acquire five percent (5%) or more of the Corporation's voting
shares of capital stock;
iv) The shareholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other
than a merger or consolidation which would result in the voting shares
of capital stock of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting shares of capital stock of the surviving
entity) at least eighty percent (80%) of the combined voting power of
the voting shares of capital stock of the Corporation or such
surviving entity outstanding immediately after such merger or
consolidation; or the shareholders of the Corporation approve a plan
of complete liquidation of the Corporation or an agreement for the
sale or disposition by the Corporation of all or substantially all of
the Corporation's assets; or
v) The shareholders of the Corporation approve a plan of
complete liquidation, or the sale or disposition of South Carolina
Electric & Gas Company (hereinafter SCE&G), South Carolina Pipeline
Corporation, or any subsidiary of SCANA designated by the Board as a
"Material Subsidiary," but such event shall represent a Change in
Control only with respect to a Participant who has been exclusively
assigned to SCE&G, South Carolina Pipeline Corporation, or the
affected Material Subsidiary.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Code Limitations" means the limitations imposed by Code
Section 415 on the amount of annual retirement benefits payable to
employees from qualified pension plans and by Code Section 401(a)(17)
on the amount of annual compensation that may be taken into account
for all qualified plan purposes.
(i) "Committee" means the Management Development and Corporate
Performance Committee of the Board.
281
<PAGE>
(j) "Company" means the Corporation and any subsidiaries of the
Corporation and their successor(s) or assign(s) that adopt this
Supplemental Plan through execution of Agreements with any of their
Employees or otherwise.
(k) "Compensation" means "Compensation" as determined under the
Qualified Plan, without regard to the limitation under Section
401(a)(17) of the Code and including any amounts deferred under any
non-qualified deferred compensation plan of the Corporation (excluding
the Supplemental Plan).
(l) "Corporation" means SCANA Corporation, a South Carolina
corporation, or any successor thereto.
(m) "Effective Date" means December 18, 1996.
(n) "Eligible Employee" means an Employee who is employed by the
Company in a high-level management or administrative position,
including employees who also serve as officers and/or directors of the
Company.
(o) "Employee" means a person who is actively employed by the
Company and who falls under the usual common law rules applicable in
determining the employer-employee relationship.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(q) "Participant" means any Eligible Employee who is
participating in the Supplemental Plan in accordance with the
provisions herein set forth.
(r) "Qualified Plan" means the SCANA Corporation Retirement
Plan, as in effect on the Effective Date, and as may be further
amended and in effect from time to time.
(s) "Supplemental Plan" means this plan, the SCANA Corporation
Supplemental Executive Retirement Plan.
2.2 Gender and Number. Except when otherwise indicated by the
context, any masculine terminology used herein shall also include the
feminine and the feminine shall include the masculine, and the use of
any term herein in the singular may also include the plural and the
plural shall include the singular.
282
<PAGE>
<PAGE>
SECTION 3. ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. An Eligible Employee shall become a Participant in
the Supplemental Plan on the first day on which:
(a) his accrued benefit calculated under the Qualified Plan is
limited in accordance with either of the Code Limitations or due to
his participation in a non-qualified deferred compensation plan of the
Corporation (other than this Supplemental Plan); and
(b) he enters into an Agreement with the Company regarding his
participation in the Supplemental Plan.
3.2 Termination of Participation. An Eligible Employee who is
eligible to participate in this Supplemental Plan under subsection 3.1
above shall remain covered hereunder until the date upon which his
employment terminates for any reason and, thereafter, so long as any
benefits are payable from this Supplemental Plan. Unless the terms of
the Participant's Agreement provide to the contrary, if the
Participant is not eligible for benefits in accordance with the
provisions of Section 4.1 at the time his employment terminates, the
Participant shall terminate his participation in the Supplemental Plan
when his employment with the Company terminates.
3.3 Reemployment of Former Participant. Notwithstanding any
provision of the Supplemental Plan or an Agreement to the contrary,
any person reemployed as an Employee who previously participated in
and received benefits under the Supplemental Plan shall not be
eligible to participate again in the Supplemental Plan, and any
payments or future rights to payments under the Supplemental Plan made
or to be made with respect to such Participant shall not be
discontinued on account of such reemployment.
283<PAGE>
<PAGE>
SECTION 4. BENEFITS
4.1 Eligibility for Benefits. A Participant shall be eligible to
commence receipt of a benefit under the Supplemental Plan in
accordance with and subject to the provisions of the Supplemental
Plan, upon the later of the Participant's termination of employment
with the Company or the Participant's Earliest Retirement Date or in
an Agreement; provided, however, that, except as provided in the
following sentence or as may otherwise be provided by an Agreement, no
benefit shall be payable under this Supplemental Plan with respect to
a Participant who terminates employment with the Company prior to
becoming vested in his accrued benefit under the Qualified Plan.
Notwithstanding the foregoing, if a Participant is involuntarily
terminated following or incident to a Change in Control and prior to
becoming fully vested in his accrued benefit under the Qualified Plan,
a benefit will be paid under this Supplemental Plan, based on the
Participant's Compensation and Years of Benefit Service at the time of
the Participant's termination of employment.
4.2 Amount of Retirement Benefit. Unless otherwise provided in an
Agreement, the amount of any retirement benefit payable to a
Participant pursuant to this Supplemental Plan shall be determined at
the time the Participant first becomes eligible to receive benefits
under the Supplemental Plan and shall be equal to the excess, if any,
of:
i) The monthly pension amount that would have been payable at
Normal Retirement Age or, if applicable, Delayed Retirement Age under
the Qualified Plan to the Participant determined based on Compensation
as defined under this Supplemental Plan and disregarding the Code
Limitations and any reductions due to the Participant's deferral of
compensation under any nonqualified deferred compensation plan of the
Company (other than this Supplemental Plan); over
ii) The monthly pension amount payable at Normal Retirement Age
or, if applicable, Delayed Retirement Age under the Qualified Plan to
the Participant.
If such benefit is scheduled to commence prior to a Participant's
Normal Retirement Date, the benefit to be paid under this Plan shall
be reduced in accordance with the Early Retirement reduction factors
and Actuarial Equivalent factors under the Qualified Plan as of the
date of determination.
4.3 Commencement, Form and Duration of Payment. Unless the terms of
the Participant's Agreement provide to the contrary:
284
<PAGE>
(a) Participant's Benefit. Monthly benefit payments for a
Participant shall begin as of the first day of the calendar month next
following the later of the date the Participant's employment with the
Company terminates or the Participant's Earliest Retirement Date under
the Qualified Plan and shall be paid under the normal form of benefit
payment under the Qualified Plan; and
(b) Post-Retirement Spouse Benefit. If the Participant dies
after benefit payments have commenced, and he has an eligible Spouse,
such Spouse will then receive monthly benefits equal to 60 percent of
the Participant's benefit for the rest of the Spouse's lifetime.
4.4 Pre-retirement Spouse Benefit. Unless the terms of the
Participant's Agreement provide to the contrary, if a Participant dies
on or after the Effective Date, and satisfies the following
conditions:
(a) on the date of his death, he was legally married and had
been so married to the same spouse for at least one year; and
(b) on the date of his death, he was entitled to a benefit
pursuant to Section 4.1; and
(c) he had not begun to receive payments under this Supplemental
Plan,
his Spouse shall be eligible for a pre-retirement Spouse benefit
under this Supplemental Plan. The Participant's surviving Spouse
shall be entitled to receive monthly benefits beginning on the first
of the month next following the Participant's death and continuing for
the remainder of the Spouse's lifetime. The surviving Spouse's Pre-
retirement Spouse Benefit shall be equal to the excess, if any, of:
i)The monthly pension amount that would have been payable
under the Qualified Plan to the surviving Spouse (as a 60 percent
survivor annuity) determined based on the Participant's Compensation
as defined under this Supplemental Plan and disregarding the Code
Limitations and any reductions due to the Participant's deferral of
compensation under any nonqualified deferred compensation plan of the
Company (other than this Supplemental Plan); over
ii)The actual monthly pension amount payable to the
surviving Spouse under the Qualified Plan.
4.5 Documentation. Each person eligible for a benefit under the
Supplemental Plan shall furnish the Corporation with such documents,
evidence, data or information in support of such application as the
Corporation considers necessary or desirabl
285
<PAGE>
SECTION 5. FINANCING
5.1 Financing of Benefits. Participants shall not be required or
permitted to make any contribution under the Supplemental Plan.
Benefits shall be payable, when due, by the Corporation, out of its
current operating revenue to the extent not paid from a trust created
pursuant to Section 5.2. The Corporation's obligation to make
payments to the recipient when due shall be contractual in nature
only, and participation in the Supplemental Plan will not create in
favor of any Participant any right or lien against the assets of the
Corporation. No benefits under the Supplemental Plan shall be
required to be funded by a trust fund or insurance contracts or
otherwise. Prior to benefits becoming due, the Corporation shall
expense the calculated liabilities in accordance with policies
determined appropriate by the Corporation and its auditors.
5.2 "Rabbi" Trust. In connection with this Plan, the Board shall
establish a grantor trust (known as the "SCANA Corporation Executive
Benefit Plan Trust") for the purpose of accumulating funds to satisfy
the obligations incurred by the Corporation under this Plan (and such
other plans and arrangements as determined from time to time by the
Corporation). At any time prior to a Change in Control, as that term
is defined in such Trust, the Corporation may transfer assets to the
Trust to satisfy all or part of the obligations incurred by the
Corporation under this Plan, as determined in the sole discretion of
the Committee or its designee, subject to the return of such assets to
the Corporation at such time as determined in accordance with the
terms of such Trust. Any assets of such Trust shall remain at all
times subject to the claims of creditors of the Corporation in the
event of the Corporation's insolvency; and no asset or other funding
medium used to pay benefits accrued under the Plan shall result in the
Plan being considered as other than "unfunded" under ERISA.
Notwithstanding the establishment of the Trust, the right of any
Participant to receive future payments under the Plan shall remain an
unsecured claim against the general assets of the Corporation.
286
<PAGE>
<PAGE>
SECTION 6. GENERAL PROVISIONS
6.1 Employment/Participation Rights.
(a) Nothing in the Plan shall interfere with or limit in any way
the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the
employ of the Company.
(b) Nothing in the Plan shall be construed to be evidence of any
agreement or understanding, express or implied, that the Company will
continue to employ a Participant in any particular position or at any
particular rate of remuneration.
(c) No employee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a
Participant.
(d) Nothing in this Supplemental Plan shall affect the right of
a recipient to participate in and receive benefits under and in
accordance with any pension, profit-sharing, deferred compensation or
other benefit plan or program of the Company.
6.2 Nonalienation of Benefits.
(a) No right or benefit under this Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or
change, and any attempt to anticipate, alienate, sell, assign, pledge,
encumber or change the same shall be void; nor shall any such
disposition be compelled by operation of law, except as may be
applicable in the circumstance of death of a Participant under South
Carolina law.
(b) No right or benefit hereunder shall in any manner be liable
for or subject to the debts, contracts, liabilities, or torts of the
person entitled to benefits under the Plan.
(c) If any Participant or Beneficiary hereunder should become
bankrupt or attempt to anticipate, alienate, sell, assign, pledge,
encumber, or change any right or benefit hereunder, then such right or
benefit shall, in the discretion of the Committee, cease, and the
Committee shall direct in such event that the Corporation hold or
apply the same or any part thereof for the benefit of the Participant
or Beneficiary in such manner and in such proportion as the Committee
may deem proper.
287
<PAGE>
6.3 Severability. If any particular provision of the Supplemental
Plan shall be found to be illegal or unenforceable for any reason, the
illegality or lack of enforceability of such provision shall not
affect the remaining provisions of the Supplemental Plan, and the
Supplemental Plan shall be construed and enforced as if the illegal or
unenforceable provision had not been included.
6.4 No Individual Liability. It is declared to be the express
purpose and intention of the Supplemental Plan that no liability
whatsoever shall attach to or be incurred by the shareholders,
officers, or directors of the Corporation or any representative
appointed hereunder by the Corporation, under or by reason of any of
the terms or conditions of the Supplemental Plan.
6.5 Applicable Law. The Supplemental Plan shall be governed by and
construed in accordance with the laws of the State of South Carolina
except to the extent governed by applicable Federal law.
288<PAGE>
<PAGE>
SECTION 7. PLAN ADMINISTRATION, AMENDMENT AND TERMINATION
7.1 In General. The Supplemental Plan shall be administered by the
Committee, which shall have the sole authority to construe and
interpret the terms and provisions of the Supplemental Plan and
determine the amount, manner and time of payment of any benefits
hereunder. The Committee shall maintain records, make the requisite
calculations and disburse payments hereunder, and its interpretations,
determinations, regulations and calculations shall be final and
binding on all persons and parties concerned. The Committee may adopt
such rules as it deems necessary, desirable or appropriate in
administering the Supplemental Plan and the Committee may act at a
meeting, in a writing without a meeting, or by having actions
otherwise taken by a member of the Committee pursuant to a delegation
of duties from the Committee.
7.2 Claims Procedure. Any person dissatisfied with the Committee's
determination of a claim for benefits hereunder must file a written
request for reconsideration with the Committee. This request must
include a written explanation setting forth the specific reasons for
such reconsideration. The Committee shall review its determination
promptly and render a written decision with respect to the claim,
setting forth the specific reasons for such denial written in a manner
calculated to be understood by the claimant. Such claimant shall be
given a reasonable time within which to comment, in writing, to the
Committee with respect to such explanation. The Committee shall
review its determination promptly and render a written decision with
respect to the claim. Such decision upon matters within the scope of
the authority of the Committee shall be conclusive, binding, and final
upon all claimants under this Plan.
7.3 Finality of Determination. The determination of the Committee as
to any disputed questions arising under this Plan, including questions
of construction and interpretation, shall be final, binding, and
conclusive upon all persons.
7.4 Delegation of Authority. The Committee may, in its discretion,
delegate its duties to an officer or other employee of the Company, or
to a committee composed of officers or employees of the Company.
7.5 Expenses. The cost of payment from this Plan and the expenses of
administering the Supplemental Plan shall be borne by the Corporation.
7.6 Tax Withholding. The Corporation shall have the right to deduct
from all payments made from the Supplemental Plan any federal, state,
or local taxes required by law to be withheld
with respect to such payments.
289
<PAGE>
7.7 Incompetency. Any person receiving or claiming benefits under
the Supplemental Plan shall be conclusively presumed to be mentally
competent and of age until the Corporation receives written notice, in
a form and manner acceptable to it, that such person is incompetent or
a minor, and that a guardian, conservator, statutory committee under
the South Carolina Code of Laws, or other person legally vested with
the care of his estate has been appointed. In the event that the
Corporation finds that any person to whom a benefit is payable under
the Supplemental Plan is unable to properly care for his affairs, or
is a minor, then any payment due (unless a prior claim therefor shall
have been made by a duly appointed legal representative) may be paid
to the spouse, a child, a parent, or a brother or sister, or to any
person deemed by the Corporation to have incurred expense for the care
of such person otherwise entitled to payment.
In the event a guardian or conservator or statutory committee of
the estate of any person receiving or claiming benefits under the
Supplemental Plan shall be appointed by a court of competent
jurisdiction, payments shall be made to such guardian or conservator
or statutory committee provided that proper proof of appointment is
furnished in a form and manner suitable to the Corporation. Any
payment made under the provisions of this Section 7.7 shall be a
complete discharge of liability therefor under the Supplemental Plan.
7.8 Action by Corporation. Any action required or permitted to be
taken hereunder by the Corporation or its Board shall be taken by the
Board, or by any person or persons authorized by the Board.
7.9 Notice of Address. Any payment made to a Participant or to his
surviving Spouse at the last known post office address of the
distributee on file with the Corporation, shall constitute a complete
acquittance and discharge to the Corporation and any director or
officer with respect thereto, unless the Corporation shall have
received prior written notice of any change in the condition or status
of the distributee. Neither the Corporation nor any director or
officer shall have any duty or obligation to search for or ascertain
the whereabouts of the Participant or his Spouse.
7.10 Amendment and Termination. The Corporation expects the
Supplemental Plan to be permanent, but since future conditions
affecting the Corporation cannot be anticipated or foreseen, the
Corporation reserves the right to amend, modify, or terminate the
Supplemental Plan at any time by action of its Board; provided,
however, that if the Supplemental Plan is amended to discontinue or
reduce the amount of Supplemental Plan benefit payments (except as may
be required pursuant to any plan arising from insolvency or bankruptcy
proceedings): (a) Participants who have retired under the
Supplemental Plan or their surviving Spouses shall continue to be paid
in the amount and manner (as provided under Section 4 hereof) as they
290
<PAGE>
were being paid at the time of the amendment or discontinuance of the
Supplemental Plan, and (b) the accrued benefits under the Supplemental
Plan of any future retirees shall not be reduced below the level
accrued as of the date of amendment. If the Board amends the
Supplemental Plan to cease future accruals hereunder or terminates the
Supplemental Plan, the Board may, in its sole discretion, direct that
the actuarial equivalent present value of each Participant's accrued
benefits be paid to each Participant (or surviving Spouse, if
applicable) in an immediate lump sum payment (with such Actuarial
Equivalent present value being determined in the manner indicated in
Section 4); in the absence of any such direction from the Board, the
Supplemental Plan shall continue as a "frozen" plan under which no
future accruals will be recognized and each Participant's benefits
shall be paid in accordance with Section 4.
SECTION 8. CHANGE IN CONTROL PROVISIONS
8.1 Accelerated Distributions Upon Change in Control.
Notwithstanding anything in this Supplemental Plan to the contrary,
and subject to the terms of any Agreement, upon the occurrence of a
Change in Control where there has not been a termination of the SCANA
Corporation Key Employee Severance Benefits Plan prior thereto, the
Present Value of all amounts (or remaining amounts) owed under this
Supplemental Plan and each underlying Agreement as of the date of such
Change in Control (referred to as each Participant's "SERP Benefit")
shall become immediately due and payable. All SERP Benefits payable
under this Section 8.1 shall be paid to each Participant (and his or
her Beneficiary) in the form of a single lump sum payment of the
Actuarial Equivalent present value of all such amounts owed, together
with an amount (the "Gross-Up Payment") such that the net amount
retained by each Participant after deduction of any excise tax imposed
by Section 4999 of the Code (or any similar tax that may hereafter be
imposed) on such benefits (the "Excise Tax") and any Federal, state,
and local income tax and Excise Tax upon the SERP Benefit and the
Gross-Up Payment provided for by this Section 8 shall be equal to the
Actuarial Equivalent present value of the Participant's SERP Benefit.
Such payment shall be made by the Corporation (or to the extent assets
are transferred to a "rabbi trust" for such purpose, by the trustee of
such trust in accordance with the trust's terms) to the Participant
(or his or her Beneficiary) as soon as practicable following the
Change in Control, but in no event later than the date specified by
the terms of the SCANA Corporation Executive Benefit Plan Trust. In
all events, if the Key Employee Severance Benefits Plan was terminated
prior to such Change in Control, then the provisions of this Section
shall not apply and Participants' benefits shall be determined under
the other applicable provisions of this Supplemental Plan and/or any
Agreement.
291
<PAGE>
8.2 Tax Computation. For purposes of determining the amount of the
Gross-Up Payment referred to in Section 8.1, whether any of a
Participant's SERP Benefit will be subject to the Excise Tax, and the
amounts of such Excise Tax: (i) there shall be taken into account all
other payments or benefits received or to be received by a Participant
in connection with a Change in Control of the Corporation (whether
pursuant to the terms of this Supplemental Plan or any other plan,
arrangement, or agreement with the Corporation, any person whose
actions result in a Change in Control of the Corporation or any person
affiliated with the Corporation or such person); and (ii) the amount
of any Gross-Up Payment payable with respect to any Participant (or
his or her Beneficiary) by reason of such payment shall be determined
in accordance with a customary "gross-up formula," as determined by
the Committee it its sole discretion.
8.3 No Subsequent Recalculation of Tax Liability. The Gross-Up
Payments described in the foregoing provisions of this Section 8 are
intended and hereby deemed to be a reasonably accurate calculation of
each Participant's actual income tax and Excise Tax liability under
the circumstances (or such tax liability of his or her Beneficiary),
the payment of which is to be made by the Corporation or any "rabbi
trust" established by the Corporation for such purposes. All such
calculations of tax liability shall not be subject to subsequent
recalculation or adjustment in either an underpayment or overpayment
context with respect to the actual tax liability of the Participant
(or his or her Beneficiary) ultimately determined as owed.
8.4 Successors. Notwithstanding anything in this Supplemental Plan
to the contrary, and subject to the terms of an Agreement, upon the
occurrence of a Change in Control, and only if the SCANA Corporation
Key Employee Severance Benefits Plan ("KESBP") was terminated prior to
such Change in Control, the Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or
otherwise) of all or substantially all of the business and/or assets
of the Company or of any division or subsidiary thereof to expressly
assume and agree to perform this Supplemental Plan in the same manner
and to the same extent that the Company would be required to perform
it if no such succession had taken place, subject to the remaining
provisions of this Section 8.4. In the event of such a Change in
Control where the KESBP is terminated, Participants shall become
entitled to benefits hereunder in accordance with the terms of this
Supplemental Plan, and/or any Agreement, based on benefits earned to
the date of such Change in Control, with no requirement for a
successor to provide for accruals of benefits beyond the date of such
Change in Control. In addition, and notwithstanding Section 8.5 to
the contrary, if there is a Change in Control and the KESBP is
292
<PAGE>
terminated prior to such Change in Control, a successor to the Company
may amend this Supplemental Plan to provide for an automatic lump sum
distribution of the Actuarial Equivalent of Participants' benefits
hereunder without such amendment being treated as an amendment
reducing any benefits earned.
8.5 Amendment and Termination After Change in Control.
Notwithstanding the foregoing, and subject to Section 8, no amendment,
modification or termination of the Supplemental Plan may be made, and
no Participants may be added to the Supplemental Plan, upon or
following a Change in Control if it would have the effect of reducing
any benefits earned (including optional forms of distribution) prior
to such Change in Control without the written consent of all of the
Supplemental Plan's Participants covered by the Supplemental Plan at
such time. In all events, however, the Corporation reserves the right
to amend, modify or delete the provisions of this Section 8 at any
time prior to a Change in Control, pursuant to a Board resolution
adopted by a vote of two-thirds (2/3) of the Board members then
serving on the Board.
293<PAGE>
<PAGE>
IN WITNESS WHEREOF, SCANA Corporation has caused this instrument
to be executed by its duly authorized officers and its corporate seal
to be hereunto affixed, this 11th day of December, 1997, effective as
of October 21, 1997.
SCANA CORPORATION
By: s/William B. Timmerman
William B. Timmerman
Title: Chairman, President
and Chief Executive
Officer
ATTEST:
By: s/Lynn M. Williams
Lynn M. Williams
Secretary
294
<PAGE>
Exhibit 12
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CALCULATION OF BOND RATIO
FOR THE YEAR ENDED DECEMBER 31, 1997
(Millions of Dollars)
Net earnings(1) $399.8
Divide by annualized interest charges on:
Bonds authenticated under the Company's
First and Refunding Mortgage Bond
Indenture $35.4
Other indebtedness(1) $57.2
Total annualized interest charges $92.6
Bond ratio 4.32
(1) As defined under the Company's First and Refunding Mortgage Bond
Indenture (Old Mortgage).
295
<PAGE>
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CALCULATION OF NEW BOND RATIO
FOR THE YEAR ENDED DECEMBER 31, 1997
(Millions of Dollars)
Net earnings(1) $543.6
Divide by annualized interest charges on:
Bonds authenticated under the Company's
First Mortgage Bond Indenture $57.2
Other indebtedness(1) $35.4
Total annualized interest charges $92.6
New Bond Ratio 5.87
(1) As defined under the Company's Collateral Trust Mortgage Indenture (New
Mortgage).
296
<PAGE>
<PAGE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
CALCULATION OF PREFERRED STOCK RATIO
FOR THE YEAR ENDED DECEMBER 31, 1997
(Millions of Dollars)
Net Earnings (1) $285.2
Divide by annualized interest charges on:
Bonds authenticated under the Company's
mortgage bond indentures $92.6
Other indebtedness(1) $ 2.0
Preferred Dividend Requirements $11.3
Total annualized interest charges $105.9
Preferred stock ratio 2.69
(1) As defined under the Company's Restated Articles of Incorporation.
297
<PAGE>
<TABLE>
SOUTH CAROLINA ELECTRIC & GAS COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For Each of the Five Years Ended December 31, 1997
(Millions of Dollars)
<S> <C> <C> <C> <C> <C> <C>
Year Ended December 31,
1997 1996 1995 1994 1993
Fixed Charges as defined:
Interest on long-term debt.................. $ 94.7 $ 94.8 $ 96.2 $ 85.4 $ 78.0
Amortization of debt premium, discount and
expense (net).............................. 2.3 2.3 2.2 2.0 1.5
Interest on debt to affiliate............... - - - - -
Other interest expense...................... 4.9 7.4 9.2 5.1 5.8
Interest component of rentals............... 1.8 2.3 2.8 2.7 2.8
Total Fixed Charges (A)................. $103.7 $106.8 $110.4 $ 95.2 $ 88.1
Earnings, as defined:
Income...................................... $194.7 $190.5 $169.2 $152.0 $146.0
Income taxes................................ 100.6 108.1 97.3 82.7 80.7
Total fixed charges above................... 103.7 106.8 110.4 95.2 88.1
Total Earnings (B)...................... $399.0 $405.4 $376.9 $329.9 $314.8
Ratio of Earnings to fixed charges (B/A)...... 3.85 3.80 3.41 3.46 3.57
</TABLE>
298
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 33-57955 of South Carolina Electric & Gas Company on
Form S-3 of our report dated February 9, 1998 appearing in this
Annual Report on Form 10-K of South Carolina Electric & Gas Company
for the year ended December 31, 1997.
s/Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Columbia, South Carolina
March 13, 1998
299
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 AND THE CONSOLIDATED
STATEMENTS OF INCOME AND RETAINED EARNINGS AND OF CASH FLOWS FOR THE TWELVE
MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,310
<OTHER-PROPERTY-AND-INVEST> 17
<TOTAL-CURRENT-ASSETS> 273
<TOTAL-DEFERRED-CHARGES> 454
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 4,054
<COMMON> 181
<CAPITAL-SURPLUS-PAID-IN> 828
<RETAINED-EARNINGS> 438
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,447
62
106
<LONG-TERM-DEBT-NET> 1,262
<SHORT-TERM-NOTES> 13
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 48
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,116
<TOT-CAPITALIZATION-AND-LIAB> 4,054
<GROSS-OPERATING-REVENUE> 1,338
<INCOME-TAX-EXPENSE> 98
<OTHER-OPERATING-EXPENSES> 958
<TOTAL-OPERATING-EXPENSES> 1,056
<OPERATING-INCOME-LOSS> 282
<OTHER-INCOME-NET> 9
<INCOME-BEFORE-INTEREST-EXPEN> 291
<TOTAL-INTEREST-EXPENSE> 95
<NET-INCOME> 195
9
<EARNINGS-AVAILABLE-FOR-COMM> 186
<COMMON-STOCK-DIVIDENDS> 163
<TOTAL-INTEREST-ON-BONDS> 93
<CASH-FLOW-OPERATIONS> 368
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
