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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995
---------------------------------------
Commission File Number 1-9936
EDISON INTERNATIONAL
(Exact name of registrant as specified in its charter)
California 95-4137452
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2244 Walnut Grove Avenue (818) 302-2222
Rosemead, California 91770 (Registrant's telephone
(Address of principal (Zip Code) number, including area code)
executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- ------------------- ----------------------
Common Stock New York and Pacific
(also listed on London
Exchange)
Securities registered pursuant to Section 12(g) of the Act: 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
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. [ ]
The aggregate market value of registrant's voting stock held by
non-affiliates was approximately $7,763,456,313 on or about March 19,
1996, based upon prices reported on the New York Stock Exchange. As of
March 19, 1996, there were 443,626,075 shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents listed below have been incorporated
by reference into the parts of this report so indicated.
(1) Designated portions of the Annual Report
to Shareholders for the year ended
December 31, 1995 . . . . . . . . . . . . . . . . . . . . Parts I, II and IV
(2) Designated portions of the Joint Proxy
Statement relating to registrant's 1996
Annual Meeting of Shareholders. . . . . . . . . . . . . . Part III
TABLE OF CONTENTS
Item Page
- ---- ----
Part I
1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business of Edison International . . . . . . . . . . . . . . . . . . . . 1
Competitive Environment. . . . . . . . . . . . . . . . . . . . . . . 1
Regulation of Edison International . . . . . . . . . . . . . . . . . 3
Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . 4
Business of SCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Regulation of SCE. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Rate Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Fuel Supply and Purchased Power Costs. . . . . . . . . . . . . . . . 11
Business of The Nonutility Companies . . . . . . . . . . . . . . . . . . 12
2. Properties of SCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Existing Utility Generating Facilities . . . . . . . . . . . . . . . 15
El Paso Electric Company ("El Paso") Bankruptcy. . . . . . . . . . . 16
SCE Construction Program and Capital Expenditures. . . . . . . . . . 17
Nuclear Power Matters. . . . . . . . . . . . . . . . . . . . . . . . 17
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
QF Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Environmental Litigation . . . . . . . . . . . . . . . . . . . . . . 20
San Onofre Personal Injury Litigation. . . . . . . . . . . . . . . . 21
Employment Discrimination Litigation . . . . . . . . . . . . . . . . 23
4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . 23
Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . 23
Part II
5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . . . . . . . . . . 31
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . 31
7. Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . . . . . . 31
8. Financial Statements and Supplementary Data. . . . . . . . . . . . . . . 32
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . . . . . . . . . . 32
Part III
10. Directors and Executive Officers of the Registrant . . . . . . . . . . . 32
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 32
12. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13. Certain Relationships and Related Transactions . . . . . . . . . . . . . 32
Part IV
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Report of Independent Public Accountants on Supplemental
Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Supplemental Schedules . . . . . . . . . . . . . . . . . . . . . . . . . 35
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
PAGE
PART I
Item 1. Business
Business of Edison International (formerly SCEcorp)
Edison International was incorporated on April 20, 1987, under the laws
of the State of California for the purpose of becoming the parent holding
company of Southern California Edison Company ("SCE"), a California public
utility corporation. As of December 31, 1995, Edison International owned
all of the issued and outstanding common stock of SCE and of other
subsidiaries engaged in nonutility businesses (the "Nonutility
Companies"). These Nonutility Companies are: Edison Mission Energy,
engaged in developing, owning and operating independent power facilities;
Edison Capital, a provider of capital and financial services for energy
and infrastructure projects; Mission Land, in the business of managing and
selling existing real estate projects; Edison Source, providing energy and
environmental services to businesses; and Edison EV, supporting the
emerging electric vehicle market.
Edison International is engaged in the business of holding for investment
the stock of its subsidiaries. For the year ended December 31, 1995, SCE
and the Nonutility Companies accounted for 87% and 13%, respectively, of
the net income of Edison International. During 1995, SCE had an average
of 15,490 full-time employees. At year-end 1995, Edison International had
5 full-time employees, Edison Mission Energy had 902 full-time employees,
and Edison Capital had 42 full-time employees.
The principal executive offices of Edison International are located at
2244 Walnut Grove Avenue, Rosemead, California 91770, and its telephone
number is (818) 302-2222.
Competitive Environment
SCE currently operates in a highly regulated environment in which it has
an obligation to provide electric service to customers in return for an
exclusive franchise within its service territory. This regulatory
environment is changing. The generation sector has experienced
competition from nonutility power producers, and regulators are
restructuring California's electric utility regulation.
On December 20, 1995, the California Public Utilities Commission ("CPUC")
issued its decision on restructuring California's electric industry, which
it had been considering since April 1994. The new market structure would
provide competition and customer choice. The transition to a competitive
electric market would begin January 1, 1998, with all consumers
participating by 2003. Key elements of the decision are: creation of an
independent power exchange; creation of an independent system operator;
implementation of greater customer choice; transition cost recovery by the
utilities; and CPUC-established incentives to encourage utilities to
voluntarily divest at least 50% of their fossil-fueled units within their
service territory to address market power issues. On March 19, 1996, SCE
filed its voluntary divestiture plans proposing the auction of 50% of its
fossil-fueled units within its service territory, subject to certain
conditions, including assured recovery of various costs. Also, under the
decision the CPUC would regulate the rates, terms and conditions of
utility services not subject to competition using Performance Based
Ratemaking ("PBR") instead of cost-of-service regulation.
The independent power exchange, which would manage supply and demand
through an economic auction, will be under the Federal Energy and
Regulatory Commission ("FERC") jurisdiction. Purchasing from and selling
to the power exchange during the transition period, which runs for five
years from the creation of the independent power exchange, will be
mandatory for California's investor-owned utilities, while others can
PAGE
voluntarily participate. The independent system operator would have
operational control of the utilities' transmission facilities and,
therefore, would control the scheduling and dispatch of all electricity
on the state's power grid.
The new market structure would provide three avenues of customer choice.
The first involves a continuation of utility-tariffed rates with customers
choosing a monthly average rate or hourly time-of-use rates, which allows
customers with specialized meters to access pricing information and alter
their consumption accordingly. The second avenue involves customers
continuing with utility-tariffed rates and entering into "contracts for
differences" which manage risks associated with the market clearing prices
published by the power exchange. The last avenue involves customers
negotiating directly with generation providers and then arranging for
transmission of the power with the transmission system operator (direct
access).
Recovery of costs to transition to a competitive market would be
implemented through a non-bypassable competition transition charge
("CTC"). This charge would apply to all customers who currently use
utility services or begin utility service after the restructuring decision
is effective. SCE estimates its potential transition costs, through 2025
to be approximately $9.3 billion (net present value), based on incurred
costs, and forecasts of future costs and assumed market prices. However,
changes in the assumed market price could require material revisions to
such estimates. The potential transition costs are comprised of $4.9
billion from SCE's qualifying facility ("QF") contracts, which are the
direct result of legislative and regulatory mandates; and $4.4
billion from costs pertaining to certain generating plants and
regulatory commitments consisting of costs incurred (whose recovery has
been deferred by the CPUC) to provide service to customers. Such
commitments include the recovery of income-tax benefits previously flowed-
through to customers, postretirement benefit transition costs, accelerated
recovery of nuclear plants (including San Onofre Nuclear Generating
Station ("San Onofre") Unit 1 and San Onofre Units 2 and 3 as discussed
below under "1995 General Rate Case"), nuclear decommissioning and certain
other costs. The undepreciated book value of a utility's generation plant
will be calculated on the amount in ratebase as of the decision date.
Further, adverse financial consequences could result if an ambiguity in
the CPUC's restructuring decision, as to recovery of capital expenditures
made to SCE's fossil generation units in 1996 and beyond during the
calculation of CTC, is not eliminated. SCE believes that recovery of such
capital expenditures is consistent with the intent of the restructuring
decision and has asked the CPUC to clarify the decision. If these efforts
at clarification, consistent with the decision's intent, are unsuccessful
then SCE estimates the effect would be to reduce 1996 earnings by more
than $50,000,000 (before taxes), based on SCE's 1996 capital budget for
its fossil generation units.
Because the restructuring of California's electric industry has widespread
impact and the market structure requires the participation and oversight
of the FERC, the CPUC has said it will seek to build a California
consensus involving the legislature, governor, public and municipal
utilities, and customers. FERC approval will be sought in a filing to be
made on April 29, 1996, and both agencies would need to move forward to
implement the new market structure. In addition, the CPUC plans to
prepare an environmental impact report, which impacts when the CPUC
proceeds with implementation of its decision. If the CPUC's restructuring
decision is upheld and implemented as outlined in the restructuring
decision, SCE would be allowed to recover its CTC (subject to a lower
return on equity) and would continue to apply accounting standards that
recognize the economic effects of rate regulation. The effect of such an
outcome would not be expected to materially affect SCE's results of
operations or financial condition during the transition period.
page 2
If revisions are made to the CPUC's restructuring decision that result in
SCE no longer meeting the criteria to apply regulatory accounting
standards to its generation operations, SCE may be required to write off
its recorded generation-related regulatory assets. At December 31, 1995,
these amounts totaled $1.4 billion (excluding balancing account
overcollections of $237,000,000 to be refunded to customers in June 1996),
primarily for the recovery of income-tax benefits previously flowed-
through to customers, the Palo Verde Nuclear Generating Station ("Palo
Verde") phase-in plan and unamortized loss on reacquired debt. Although
depreciation-related differences could result from applying a regulatory
prescribed depreciation method (straight-line, remaining-life method)
rather than a method that would have been applied absent the regulatory
process, SCE believes that the depreciable lives of its generation-related
assets would not vary significantly from that of an unregulated
enterprise, as the CPUC bases depreciable lives on periodic studies that
reflect the assets' physical useful life. SCE also believes that any
depreciation-related differences would be recovered through the CTC.
Additionally, if revisions are made to the CPUC's restructuring decision
that result in all or a portion of the CTC not being probable of recovery,
SCE could have additional write-offs associated with these costs if they
are not recovered through another regulatory mechanism. At this time, SCE
cannot predict when, or if, a consensus on restructuring will be reached,
what revisions will ultimately be made in the CPUC's restructuring plan
in subsequent proceedings or implementation phases, or the effect, after
the transition period, that competition will have on its results of
operations or financial condition.
In March 1995, the FERC proposed rules which would require utilities to
provide wholesale open transmission access to the nation's interstate
transmission grid, while allowing them to recover stranded costs
associated with open access. The proposal defines stranded costs as
legitimate, prudent and verifiable costs incurred to provide service to
customers that would subsequently become unbundled wholesale transmission
service customers of the utility. SCE supports the basic principles in
the FERC's proposal and filed comments in August 1995. A final FERC
decision is expected in mid-1996.
Regulation of Edison International
Edison International and its subsidiaries are exempt from all provisions,
except Section 9(a)(2), of the Public Utility Holding Company Act of 1935
("Holding Company Act") on the basis that Edison International and SCE
are incorporated in the same state and their business is predominately
intrastate in character and carried on substantially in the state of
incorporation. It is necessary for Edison International to file an annual
exemption statement with the Securities and Exchange Commission ("SEC"),
and the exemption may be revoked by the SEC upon a finding that the
exemption may be detrimental to the public interest or the interest of
investors or consumers. Edison International has no intention of becoming
a registered holding company under the Holding Company Act.
Edison International is not a public utility under the laws of the State
of California and is not subject to regulation as such by the CPUC. See
"Business of Southern California Edison Company--Regulation of SCE" below
for a description of the regulation of SCE by the CPUC. However, the
CPUC decision authorizing SCE to reorganize into a holding company
structure contains certain conditions, which, among other things, ensure
the CPUC access to books and records of Edison International and its
affiliates which relate to transactions with SCE; require Edison
International and its subsidiaries to employ accounting and other
procedures and controls to ensure full review by the CPUC and to protect
against subsidization of nonutility activities by SCE's customers; require
that all transfers of market, technological or similar data from SCE to
Edison International or its affiliates be made at market value; preclude
page 3
SCE from guaranteeing any obligations of Edison International without
prior written consent from the CPUC; provide for royalty payments to be
paid by Edison International or its subsidiaries in connection with the
transfer of product rights, patents, copyrights or similar legal rights
from SCE; and prevent Edison International and its subsidiaries from
providing certain facilities and equipment to SCE except through
competitive bidding. In addition, the decision provides that SCE shall
maintain a balanced capital structure in accordance with prior CPUC
decisions, that SCE's dividend policy shall continue to be established by
SCE's Board of Directors as though SCE were a comparable stand-alone
utility company, and that the capital requirements of SCE, as determined
to be necessary to meet SCE's service obligations, shall be given first
priority by the Boards of Directors of Edison International and SCE.
Environmental Matters
Legislative and regulatory activities in the areas of air and water
pollution, waste management, hazardous chemical use, noise abatement, land
use, aesthetics and nuclear control continue to result in the imposition
of numerous restrictions on Edison International's operation of existing
facilities, on the timing, cost, location, design, construction and
operation by Edison International of new facilities, and on the cost of
mitigating the effect of past operations on the environment. These
activities substantially affect future planning and will continue to
require modifications of Edison International's existing facilities and
operating procedures. Edison International is unable to predict the
extent to which additional regulations may affect its operations and
capital expenditure requirements.
The Clean Air Act provides the statutory framework to implement a program
for achieving national ambient air quality standards in areas exceeding
such standards and provides for maintenance of air quality in areas
already meeting such standards. The Clean Air Act was amended in 1990,
giving the South Coast Air Quality Management District ("SCAQMD") 20 years
to achieve the federal air quality standards for ozone. The SCAQMD's Air
Quality Management Plan ("AQMP"), adopted in 1994, demonstrates a
commitment to attain the federal ozone air quality standard by 2010.
Consistent with the requirements of the AQMP and the Clean Air Act
Amendments of 1990 ("CAAA"), the SCAQMD adopted rules to reduce emissions
of oxides of nitrogen ("NOx") from combustion turbines, internal
combustion engines, industrial coolers and utility boilers. On October
15, 1993, the SCAQMD adopted the Regional Clean Air Incentives Market
("RECLAIM") which replaces most of the previous rule requirements with a
market mechanism for NOx emission trading (trading credits). RECLAIM
will, however, require SCE to significantly reduce NOx emissions through
retrofit or purchase of trading credits on all basin generation by 2003.
In Ventura County, a NOx rule was adopted requiring more than an 88% NOx
reduction by June 1996 at all utility boilers. SCE expects to spend a
total of approximately $290,000,000 in capital expenditures by 2001 to
meet these requirements.
The CAAA does not require any significant additional emissions control
expenditures that are identifiable at this time. The amendments call for
a five-year study of the sources and causes of regional haze in the
southwestern U.S. Also, the Environmental Protection Agency ("EPA") and
SCE will conclude a cooperative tracer study of SO2 emissions from the
Mohave Coal Generating Station in late 1996 or early 1997. This study is
evaluating potential impact from Mohave emissions on haze within Grand
Canyon National Park. The extent to which these studies may require
sulfur dioxide emissions reductions at the Mohave plant is not known. The
acid rain provisions of the amended Clean Air Act also put an annual limit
on sulfur dioxide emissions allowed from power plants. SCE has received
more sulfur dioxide allowances than it requires for its projected
operations. As a result of a petition by Mohave County in the State of
Arizona, the Nevada Department of Environmental Protection ("NDEP")
studied the impact of the plume from the Mohave plant on the Mohave area
page 4
air quality. The regulatory outcome required SCE to meet a new lower
opacity limit in early 1994. The NDEP reviewed SCE's performance relative
to the opacity limit again in 1995 and determined to retain the current
standard. Until more definitive information on tracer study results are
available, SCE expects to meet all the present regulations through
improved operations at the plant.
The CAAA also requires the EPA to carry out a three-year study of risk to
public health from emissions of toxic air contaminants from power plants,
and to regulate such emissions only if required. The study has not been
completed to date.
Regulations under the Clean Water Act require permits for the discharge
of certain pollutants into waters of the U.S. Under this act, the EPA
issues effluent limitation guidelines, pretreatment standards and new
source performance standards for the control of certain pollutants.
Individual states may impose even more stringent limitations. In order
to comply with guidelines and standards applicable to steam electric power
plants, SCE incurs additional expenses and capital expenditures. SCE
presently has discharge permits for all applicable facilities.
The Safe Drinking Water and Toxic Enforcement Act prohibits the exposure
to individuals of chemicals known to the State of California to cause
cancer or reproductive harm and the discharge of such listed chemicals
into potential sources of drinking water. Additional chemicals are
continuously being put on the state's list, requiring constant monitoring.
The State of California has adopted a policy discouraging the use of fresh
water for plant cooling purposes at inland locations. Such a policy, when
taken in conjunction with existing federal and state water quality
regulations and coastal zone land use restrictions, could substantially
increase the difficulty of setting new generating plants anywhere in
California.
The Resource Conservation and Recovery Act ("RCRA") provides the statutory
authority for the EPA to implement a regulatory program for the safe
treatment, recycling, storage and disposal of solid and hazardous wastes.
There is an unresolved issue regarding the degree to which coal wastes
should be regulated under RCRA. Increased regulation may result in an
increase in expenses related to the operation of Mohave.
The Toxic Substance Control Act and accompanying regulations govern the
manufacturing, processing, distribution in commerce, use and disposal of
polychlorinated biphenyls, a toxic substance used in certain electrical
equipment ("PCB waste"). Current costs for disposal of PCB waste are
immaterial.
Edison International records its environmental liabilities when site
assessments and/or remedial actions are probable and a range of reasonably
likely cleanup costs can be estimated. Edison International reviews its
sites and measures the liability quarterly, by assessing a range of
reasonably likely costs for each identified site using currently available
information, including existing technology, presently enacted laws and
regulations, experience gained at similar sites, and the probable level
of involvement and financial condition of other potentially responsible
parties. These estimates include costs for site investigations,
remediation, operations and maintenance, monitoring and site closure.
Unless there is a probable amount, Edison International records the lower
end of this reasonably likely range of costs (classified as other long-
term liabilities at undiscounted amounts). While Edison International has
numerous insurance policies that it believes may provide coverage for some
of these liabilities, it does not recognize recoveries in its financial
statements until they are realized.
Edison International's recorded estimated minimum liability to remediate
its 62 identified sites (58 at SCE and 4 at Edison Mission Energy) was
page 5
$114,000,000 at December 31, 1995, and 1994. The ultimate costs to clean
up Edison International's identified sites may vary from its recorded
liability due to numerous uncertainties inherent in the estimation
process, such as: the extent and nature of contamination; the scarcity
of reliable data for identified sites; the varying costs of alternative
cleanup methods; developments resulting from investigatory studies; the
possibility of identifying additional sites; and the time periods over
which site remediation is expected to occur. Edison International
believes that, due to these uncertainties, it is reasonably possible that
cleanup costs could exceed its recorded liability by up to $215,000,000.
The upper limit of this range of costs was estimated using assumptions
least favorable to Edison International among a range of reasonably
possible outcomes.
The CPUC allows SCE to recover environmental-cleanup costs at 24 of its
sites, representing $90,000,000 of Edison International's recorded
liability, through an incentive mechanism (SCE may request to include
additional sites). Under this mechanism, SCE will recover 90% of cleanup
costs through customer rates; shareholders fund the remaining 10%, with
the opportunity to recover these costs through insurance and other third-
party recoveries. SCE has settled insurance claims with several carriers,
and is continuing to pursue additional recovery. Costs incurred at SCE's
34 sites are expected to be recovered through customer rates. SCE has
filed a request with the CPUC to add 11 of these sites ($6,000,000 in
estimated minimum liability) to the incentive mechanism. SCE has recorded
a regulatory asset of $104,000,000 for its estimated minimum
environmental-cleanup costs expected to be recovered through customer
rates.
Edison International's identified sites include several sites for which
there is a lack of currently available information, including the nature
and magnitude of contamination and the extent, if any, that Edison
International may be held responsible for contributing to any costs
incurred for remediating these sites. Thus, no reasonable estimate of
cleanup costs can be made for these sites at this time.
Edison International expects to clean up its identified sites over a
period of up to 30 years. Remediation costs in each of the next several
years are expected to range from $4,000,000 to $8,000,000. Recorded costs
for 1995 were $3,000,000.
In 1994, SCE utilized an estimating technique to quantify its potential
liability for environmental cleanup in an effort to obtain a reasonably
possible objective and reliable estimate of environmental cleanup. During
1995, Edison Mission Energy completed a similar review of its sites where
known contamination and potential liability exist, and is currently
undergoing a legal review of the indemnification language of each sites's
contractual agreements, which is expected to be complete in 1996. This
review could result in an increase to Edison International's number of
identified sites and/or its estimated minimum liability in the near term.
Based on currently available information, Edison International believes
it is not likely that it will incur amounts in excess of the upper limit
of the estimated range and, based upon the CPUC's regulatory treatment of
environmental-cleanup costs, Edison International believes that costs
ultimately recorded will not have a material adverse effect on its results
of operations or financial condition. There can be no assurance, however,
that future developments, including additional information about existing
sites or the identification of new sites, will not require material
revisions to such estimates.
Edison International's capital expenditures for environmental protection
for the years 1996 through 2000 are projected to be $1.5 billion. These
expenditures are mainly for placing overhead distribution lines
underground and reducing nitrogen oxides emissions from gas-fired
generators.
page 6
Business of SCE
SCE was incorporated under California law in 1909. SCE is a public
utility primarily engaged in the business of supplying electric energy to
a 50,000 square-mile area of central and southern California, excluding
the City of Los Angeles and certain other cities. This area includes some
800 cities and communities and a population of more than 11 million
people. SCE had an average of 15,490 full-time employees during 1995.
During 1995, 38% of SCE's total operating revenue was derived from
commercial customers, 37% from residential customers, 12% from industrial
customers, 8% from public authorities, 4% from agricultural and other
customers and 1% from resale customers. SCE comprises the major portion
of the assets and revenues of Edison International, its parent holding
company.
On March 22, 1996, SCE announced a voluntary early retirement program for
full-time, non-union employees. SCE will record a charge of approximately
$65,000,000 (pretax) against second quarter earnings to reflect the costs
of this program. SCE expects to offset these costs with savings from the
retirement program within a year. SCE is taking this action in response
to the CPUC's 1995 General Rate Case decision and industry restructuring
order, which make adjustments within its workforce inevitable. SCE
designed the voluntary retirement plan as the best approach for meeting
workforce needs, while maintaining commitments to customer service, system
reliability and employee safety. To meet these staffing requirements, SCE
will determine the number of employees in critical business functions who
can accept the retirement offer. SCE anticipates negotiating a program
for represented employees with its four labor unions later this year.
Regulation of SCE
SCE's retail operations are subject to regulation by the CPUC. The CPUC
has the authority to regulate, among other things, retail rates, issuances
of securities and accounting practices. SCE's wholesale operations are
subject to regulation by the FERC. The FERC has the authority to regulate
wholesale rates as well as other matters, including transmission service
pricing, accounting practices and licensing of hydroelectric projects.
SCE is subject to the jurisdiction of the Nuclear Regulatory Commission
("NRC") with respect to its nuclear power plants. NRC regulations govern
the granting of licenses for the construction and operation of nuclear
power plants and subject those power plants to continuing review and
regulation.
The construction, planning and siting of SCE's power plants within
California are subject to the jurisdiction of the California Energy
Commission and the CPUC. SCE is subject to rules and regulations of the
California Air Resources Board and local air pollution control districts
with respect to the emission of pollutants into the atmosphere, the
regulatory requirements of the California State Water Resources Control
Board and regional boards with respect to the discharge of pollutants into
waters of the state and the requirements of the California Department of
Toxic Substances Control with respect to handling and disposal of
hazardous materials and wastes. SCE is also subject to regulation by the
EPA, which administers certain federal statutes relating to environmental
matters. Other federal, state and local laws and regulations relating to
environmental protection, land use and water rights also affect SCE.
The California Coastal Commission has continuing jurisdiction over the
coastal permit for San Onofre Units 2 and 3. Although the units are
operating, the permit's mitigation requirements have not yet been
fulfilled. California Coastal Commission jurisdiction may continue for
several years due to implementation and oversight of permit mitigation
conditions, including restoration of wetlands and construction of an
artificial reef for kelp.
page 7
The Department of Energy has regulatory authority over certain aspects of
SCE's operations and business relating to energy conservation, solar
energy development, power plant fuel use and disposal, coal conversion,
electric sales for export, public utility regulatory policy and natural
gas pricing.
Rate Matters
CPUC Retail Ratemaking
The rates for electricity provided by SCE to its retail customers comprise
several major components established by the CPUC to compensate SCE for
basic business and operational costs, fuel and purchased power costs, and
the costs of adding major new facilities.
Basic business and operational costs are recovered through base rates,
which are determined in general rate case proceedings held before the CPUC
every three years. CPUC decisions on SCE's PBR proposals (discussed
below) and the ongoing electric industry restructuring (discussed above)
could affect the need for future general rate case proceedings. During
a general rate case, the CPUC critically reviews SCE's operations and
general costs to provide service (excluding energy costs and, in certain
instances, major plant additions). The CPUC then determines the revenue
requirement to cover those costs, including items such as depreciation,
taxes, operation, maintenance, and administrative and general expenses.
The revenue requirement is forecasted on the basis of a specified test
year. Following the revenue requirement phase of a general rate case, SCE
and the CPUC proceed to a rate design phase which allocates revenue
requirements and establishes rate levels for customers.
SCE filed for a PBR mechanism in 1993, requesting a revenue-indexing
formula to combine operating expenses and capital-related costs into a
single index to determine most of its revenue (excluding fuel) from 1996-
2000. The filing was subsequently divided between transmission and
distribution, and power generation. Hearings concluded on the
transmission and distribution phase in December 1994. The CPUC's
restructuring decision, as discussed above, requested comments addressing
whether SCE's transmission and distribution PBR proposal should be amended
or reviewed as filed. On January 19, 1996, SCE requested the CPUC approve
its PBR as filed. SCE expects to file a proposal for the generation PBR
mechanism phase in July 1996 which complies with the restructuring
decision.
SCE's fuel, purchased-power and energy-related costs of providing electric
service are recovered through a balancing account mechanism called the
Energy Cost Adjustment Clause ("ECAC"). Under the ECAC balancing account
procedure, actual fuel, purchased power and energy-related revenue and
costs are compared and the difference is recorded as either an
undercollection or overcollection. The amount recorded in the balancing
account is periodically amortized through rate changes which return
overcollections to customers by reducing rates or collect undercollections
from customers by increasing rates. The costs recorded in the ECAC
balancing account are subject to reasonableness reviews by the CPUC. The
reasonableness of execution and the ongoing administration of all
purchased-power contracts including contracts with QFs is also reviewed
in ECAC proceedings by the CPUC. The CPUC has not yet completed its
review of all of SCE's energy and fuel related costs for the period April
1, 1990, to the present. Certain incentive provisions are included in the
ECAC that can affect the amount of fuel and energy-related costs actually
recovered. SCE is required to make an ECAC filing for each calendar year,
and must also make a second filing for a mid-year adjustment if it would
result in an ECAC rate change exceeding 5% of total annual revenue.
For SCE's interest in the three units of Palo Verde, the CPUC authorized
a 10-year rate phase-in plan which deferred collection of $200,000,000 of
investment-related revenue during the first four years of operation for
page 8
each of the three units, commencing on their respective commercial
operation dates. Revenue collection deferred for each unit under the plan
for years one through four was $80,000,000, $60,000,000, $40,000,000 and
$20,000,000, respectively. The deferrals and related interest are being
recovered evenly over the final six years of each unit's phase-in plan.
The plans end in 1996 for Units 1 and 2, and in 1998 for Unit 3.
The CPUC has also adopted a Nuclear Unit Incentive Procedure ("NUIP")
which provides for a sharing of additional energy costs or savings between
SCE and its ratepayers when operation of any of the units of San Onofre
or Palo Verde Units is outside a specified range (55% to 80% of each
unit's rated capacity). The NUIP ended for San Onofre Units 2 and 3 at
the end of fuel cycle number seven which occurred on May 23, 1995 and
September 26, 1995, respectively.
The Electric Revenue Adjustment Mechanism reflects the difference between
the recorded and authorized level of base rate revenue. The CPUC adopted
this mechanism primarily to minimize the effect on earnings of
fluctuations in retail kilowatt-hour sales.
1995 General Rate Case ("GRC")
On January 10, 1996, the CPUC issued its decision on SCE's 1995 general
rate case. The decision affirmed the CPUC's interim order to reduce 1995
operating revenue by $67,000,000, but decreased 1996 operating revenue by
an additional $9,000,000, which includes a decrease of $44,000,000 for
operating and maintenance expenses. The decision also rejected the
original settlement's proposed new rate mechanism for San Onofre Units 2
and 3. However, the CPUC indicated approval of the general concept of
recovery of SCE's remaining investment (approximately $2.7 billion) and
operating costs of San Onofre Units 2 and 3 under a new rate mechanism.
The decision proposed modifications to the San Onofre Units 2 and 3
portions of the settlement and gave SCE 25 days to accept or reject it.
On February 5, 1996, SCE filed a revised San Onofre Units 2 and 3 proposal
under which it accepted the CPUC's proposed modification. Under that
proposal, SCE's San Onofre Units 2 and 3 investment will be recovered at
a reduced rate of return (7.34% compared to the current 9.55%), over an
eight-year period, beginning in the second quarter of 1996. Future
operating costs and incremental capital expenditures at San Onofre are
subject to an incentive pricing plan, where SCE receives about 4 cents per
kilowatt-hour. Profits or losses resulting from cost differences from the
incentive price will flow through to shareholders. Beginning in 2004,
after SCE's investment is fully recovered, power from San Onofre Units 2
and 3 would be sold at the then-current market prices and ratepayers would
receive 50% of the benefits of post-2003 operation. Final approval of the
revised San Onofre Units 2 and 3 proposal is pending at the CPUC.
Energy Cost Adjustment Clause ("ECAC")
A CPUC decision related to SCE's 1996 authorized revenue for fuel and
purchased power was issued on February 23, 1996. At issue was the
treatment of a $237,000,000 overcollection in ECAC. The CPUC ordered a
one-time credit applied to customer bills in 1996. SCE's 1996
CPUC-authorized revenue, including the effects of other rate actions, will
be reduced by $338,000,000, or 4.4%, and SCE is required to credit
customer bills in June 1996 to refund the $237,000,000 overcollection
referred to above. The reduction in authorized revenue resulting from the
$237,000,000 refund will not impact 1996 earnings as these costs receive
balancing account treatment; however, cash flows in 1996 will be affected.
SCE believes it will have sufficient liquidity for the 1996 refund from
cash provided by operating activities, projected investment balances and
available lines of credit.
page 9
1992 Annual ECAC Application
SCE filed its testimony in the QF reasonableness phase of SCE's 1992 ECAC
proceeding on September 1, 1992. On January 16, 1996, the CPUC's Division
of Ratepayer Advocates ("DRA") released its report on QF reasonableness
for both the 1992 record period and as to issues that had been reserved
from the 1991 ECAC proceeding. The report recommends: (1) disallowances
of $8,678,458 for the 1992 record period and $8,039,177 for the 1991
record period attributable to alleged deficiencies in how SCE administers
the firm capacity payment provisions in its agreements with QFs; and (2)
an as-yet-to-be-determined disallowance regarding QF sales of energy and
as-available capacity that exceed the nameplate ratings specified by the
QF in Interim Standard Offer No. 4 contracts and negotiated contracts
containing similar payment provisions (the DRA indicates it has not yet
received the data necessary to calculate the overpayments). The report
requests that such disallowances be assessed on a continuing basis until
SCE ends its challenged practices in these areas. No schedule has been
set for further testimony or hearings on these issues.
1994 Annual ECAC Application
SCE filed its testimony in the non-QF phase of SCE's 1994 ECAC proceeding
on May 27, 1994. On May 23, 1995, the DRA filed its report on the
reasonableness of SCE's gas supply costs for both the 1993 and 1994 record
periods. The report recommends a disallowance of $13,300,000 for
excessive costs incurred from November 1993 through March 1994 associated
with the SCE's Canadian gas purchase and supply contracts. The report
requests that the CPUC defer finding the SCE Canadian supply and
transportation agreements reasonable for the duration of their terms and
that the costs procured under these contracts be reviewed on a yearly
basis. SCE filed rebuttal testimony in December 1995 and DRA will file
its rebuttal testimony in April 1996. SCE will then file its rebuttal
testimony in May 1996 prior to hearings which are scheduled in June and
July 1996.
CPUC-Mandated Power Contracts
In 1994, the CPUC ordered the California utilities to proceed with an
energy auction to solicit bids for new contracts with unregulated power
producers. This decision would have forced SCE to purchase 686 MW of new
power at fixed prices starting in 1997, costing SCE customers $14 billion
over the lives of the contracts. SCE negotiated agreements, at
substantially lower costs than those mandated by auction, with eight
unregulated power producers, representing 648 MW of the 686 MW mandated.
These agreements, which are subject to CPUC approval, would save SCE
customers about 85% of anticipated overpayments compared with the mandated
contracts. After extensive review by the CPUC and the FERC, the CPUC
issued a ruling supporting resolution of the energy auction through
negotiated settlements and set criteria to be used to evaluate the
settlements. SCE has evaluated the impact of these criteria on its
existing settlement agreements and, upon conclusion of settlement
negotiations with the remaining parties, will file an application
requesting CPUC approval (expected in 1996).
Mohave Order Instituting Investigation
A 1994 CPUC decision stated that SCE was liable for expenditures related
to a 1985 accident at the Mohave Generating Station. The CPUC ordered a
second phase of this proceeding to quantify the disallowance. On December
22, 1995, SCE and the DRA filed a $38,000,000 settlement agreement subject
to CPUC approval. This agreement has been fully reflected in the
financial statements.
page 10
Fuel Supply and Purchased Power Costs
Fuel and purchased-power costs were approximately $3.2 billion in 1995,
a 6% decrease from 1994.
SCE's sources of energy during 1995 were: purchased power 41%; natural
gas 20%; nuclear 18%; coal 13%; and hydro 8%.
Average fuel costs, expressed in cents per kilowatt-hour, for the year
ended December 31, 1995, were: oil, 7.110 cents; natural gas, 2.192
cents; nuclear, 0.460 cents; and coal, 1.235 cents.
Natural Gas Supply
Twelve of SCE's major steam electric generating plants are designed to
burn oil or natural gas as the primary boiler fuel. In 1990, SCE adopted
an all-gas strategy to comply with air quality goals by eliminating
burning oil in all but very extreme conditions. In August 1991, the CPUC
adopted regulations which made SCE fully responsible for all natural gas
procurement activities previously performed by local distribution
companies.
To implement its all-gas strategy, SCE acquired a balanced portfolio of
gas supply and transportation arrangements. Traditionally, natural gas
needs in southern California were met from gas production in the southwest
region of the country. To diversify its gas supply, SCE entered into four
15-year natural gas supply agreements with major producers in western
Canada. These contracts, totaling 200,000,000 cubic feet per day, have
market-sensitive pricing arrangements. This represents about 40% of SCE's
current average annual supply needs. The rest of SCE's gas supply is
acquired under short-term contracts from Texas, New Mexico and the Rocky
Mountain region.
Firm transportation arrangements provide the necessary long-term
reliability for supply deliverability. To transport Canadian supplies,
SCE contracted for 200,000,000 cubic feet per day of firm transportation
arrangements on the Pacific Gas Transmission and Pacific Gas & Electric
Expansion Project connecting southern California to the low-cost gas
producing regions of western Canada. SCE has a 30-year commitment to this
project, construction of which was completed in late 1993. In addition,
SCE has a 15-year commitment with El Paso Natural Gas to transport
200,000,000 cubic feet per day (option to step down to 130,000,000 cubic
feet per day in 1997) from the southwestern U.S.
Nuclear Fuel Supply
SCE has contractual arrangements covering 100% of the projected nuclear
fuel requirements for San Onofre through the years indicated below:
Units
2 & 3
-----
Uranium concentrates(1)(2) . . . . . . . . . . . . . . . . . 1995
Conversion(2). . . . . . . . . . . . . . . . . . . . . . . . 1995
Enrichment(2). . . . . . . . . . . . . . . . . . . . . . . . 1998
Fabrication. . . . . . . . . . . . . . . . . . . . . . . . . 2000
Spent fuel storage(3). . . . . . . . . . . . . . . . . . . . 2006/2006
_______________
(1) Assumes the San Onofre participants meet their supply obligations in
a timely manner.
(2) SCE is in the process of negotiating uranium, conversion, and
enrichment contracts which will cover a majority of the San Onofre
requirements through 2003.
page 11
(3) Assumes full utilization of expanded on-site storage capacity and
normal operation of the units, including interpool transfers and
maintaining full-core reserve. To supplement existing spent fuel
storage, a contingency plan is being developed to construct additional
on-site storage capacity with initial operation scheduled for no later
than 2002. The Nuclear Waste Policy Act of 1982 requires that the DOE
provide for the disposal of utility spent nuclear fuel beginning in
1998. The DOE has stated that it is unlikely that it will be able to
start accepting spent nuclear fuel at its permanent repository before
2010.
Participants in Palo Verde have purchased uranium concentrates sufficient
to meet projected requirements through 1997. Independent of arrangements
made by other participants, SCE will furnish its share of uranium
concentrates requirements through at least 1996 from existing contracts.
Contracts cover requirements to provide conversion and fabrication through
2000, and enrichment through 2002.
Palo Verde on-site spent fuel storage capacity will accommodate needs
through 1999 while maintaining full-core reserve. Planned modifications
will extend storage capacities with full-core reserve through 2005 for
Units 1 and 2 and through 2006 for Unit 3.
Business of The Nonutility Companies
The activities of the Nonutility Companies are described below. For
Edison International's business segment information for each of the years
ended December 31, 1995, 1994 and 1993, see Note 12 of "Notes to
Consolidated Financial Statements" contained in the 1995 Annual Report to
Shareholders incorporated by reference in this report.
Edison Mission Energy. Edison Mission Energy, primarily through its
subsidiary corporations, is engaged in the business of developing, owning,
and operating cogeneration, small power, geothermal, and other principally
energy-related projects. At December 31, 1995, Edison Mission Energy
subsidiaries held interests in 31 domestic and 23 international operating
power production facilities with an aggregate power production capability
of 6,791 MW, of which 4,212 MW are attributable to Edison Mission Energy's
interests. These operating facilities are located in California, Nevada,
New Jersey, Pennsylvania, Virginia, Washington, West Virginia, Australia,
Spain and the United Kingdom. In addition, facilities aggregating more
than 2,132 MW, of which Edison Mission Energy's anticipated share is
approximately, 914 MW, are in construction or advanced permitting stages.
Edison Mission Energy owns interests in oil and gas producing operations
and related facilities in Canada and various U.S. locations. Edison
Mission Energy owns, through an indirect subsidiary, 50% of the Brooklyn
Navy Yard project; however, it is initially funding all of the required
equity and debt ($420,000,000) for the project; about $300,000,000 had
been spent through December 31, 1995. In December 1995, Edison Mission
Energy provided a guarantee as a condition of obtaining a $254,000,000
tax-exempt financing for the project. Consolidated Edison Company of New
York, which has contracted to buy most of the project's power, raised
concerns regarding the timing of certain performance milestones and
whether the plant's configuration and related performance comply with the
terms of the contract. Edison Mission Energy and its project partner are
attempting to resolve these issues in a manner satisfactory to the project
and Consolidated Edison. In addition, Edison Mission Energy, its project
partner and Consolidated Edison are continuing to evaluate various options
with respect to the ongoing development of the project. Edison Mission
Energy believes that its anticipated returns on the project will be
substantially less than it had originally estimated.
Edison Mission Energy's activity in the Asia Pacific region commenced in
December 1992 with the acquisition of the Loy Yang B Power Station,
Australia's first electric privatization effort. The first of two 500 MW
units at Loy Yang B began commercial operations in October 1993. Unit 2
page 12
is currently under construction and is expected to commence operations in
late 1996. An Edison Mission Energy affiliate provides operations and
maintenance services for Loy Yang B Unit 1 and, when completed, will
provide these services for Unit 2. In April 1995, Edison Mission Energy
and its partners, Mitsui & Co. Ltd., General Electric Corporation and P.T.
Batu Hitam Perkasa, an Indonesian limited liability company, completed a
$1.8 billion financing for the Paiton project, a 1,230 MW coal-fired power
plant under construction in East Java, Indonesia. The project will
consist of two units, each of which is expected to have a capacity of 615
MW of electricity. The first unit is expected to commence operation in
late 1998; the second in mid-1999. In January 1996, Edison Mission Energy
purchased an additional 7.5% interest in the Paiton project from General
Electric Corporation, thereby increasing its ownership interest to 40%.
In March 1995, Edison Mission Energy completed a 150 million Australian
dollar (approximately U.S. $107,000,000) financing for the 116 MW Kwinana
gas-fired cogeneration project located at the British Petroleum Kwinana
refinery near Perth, Australia. The project will supply electricity to
Western Power (formerly the State Electricity Commission of Western
Australia) and both electricity and steam to the British Petroleum Kwinana
refinery. The project, which is 100% owned by Edison Mission Energy, is
expected to begin commercial operation in November 1996. Additional
projects under development in the Asia Pacific region include projects
located in China and the Philippines. Asia Pacific regional management
is also considering opportunities in Thailand, Taiwan, South Korea and
Vietnam.
Edison Mission Energy's operating projects in the European region are the
First Hydro project located in North Wales, the Roosecote project in
northwest England and the Iberian Hy-Power projects (which consist of 18
small, hydroelectric facilities) in Spain. Iberian Hy-Power I was
acquired in December 1992, and Iberian Hy-Power II was acquired in August
1993. In February 1996, Edison Mission Energy purchased the remaining
equity stake in Iberian Hy-Power Amsterdam, B.V., increasing its ownership
percentage to 100% (although minority interests are owned in four of the
projects by third parties). In May 1991, Edison Mission Energy became
involved in the development of the Derwent project in Derby, England.
Edison Mission Energy has a 33% ownership interest in the Derwent project,
which has a capacity of 214 MW of electricity and produces approximately
312,000 pounds per hour of steam. Commercial operation of the Derwent
project commenced in May 1995. In December 1995, First Hydro Finance Plc
("First Hydro Finance"), an indirect subsidiary of Edison Mission Energy,
purchased all of the outstanding shares of First Hydro Company ("First
Hydro", formerly First Hydro Limited) for approximately $1 billion (653
million pounds sterling). First Hydro's principal assets consist of two
pumped storage electric power stations located in North Wales at Dinorwig
and Ffestiniog, which have a combined capacity of 2,088 MW. The Dinorwig
station, which was commissioned in 1983, comprises six units totaling
1,728 MW. The Ffestiniog station was commissioned in 1963 and comprises
four units totaling 360 MW. First Hydro is an independent generating
company with three main sources of revenues: (i) selling power into the
electricity trading market or "pool" in England and Wales, (ii) providing
system support services to The National Grid Company Plc, and (iii)
selling its installed capacity forward by entering into "contracts for
differences" with large electricity suppliers. In June 1995, Edison
Mission Energy and its partner, ISAB S.p.A., signed a twenty-year power
purchase contract with ENEL S.p.A., Italy's state electricity corporation,
pursuant to which ENEL S.p.A. will purchase the 507 MW output from the
ISAB power project, which is located near Siracusa in Sicily, Italy. The
project will employ gasification technology to convert heavy oil residues
from the ISAB refinery in Priolo Gargallo into clean-burning syngas that
will be used to generate electricity in a combustion turbine. The project
partners are currently finalizing loan documentation and project
agreements for this $1 billion project. Closing of the financing for the
project is anticipated to occur in the first quarter of 1996. Edison
Mission Energy will own 49% of the project, which is expected to enter
into commercial operation in 1999. In February 1995, Edison Mission
page 13
Energy signed a shareholders agreement to develop the $190,000,000 Doga
Enerji A.S. project in Esenyurt, near Istanbul, Turkey. The project will
be a 180 MW combined cycle gas-fired cogeneration facility, with
operations expected to commence in 1997. Edison Mission Energy's
ownership interest is expected to be 80%.
At December 31, 1995, Edison Mission Energy had total consolidated assets
of $4.4 billion and for the year then ended, had consolidated operating
revenue of $467,346,000 and consolidated net income of $64,008,000.
Currently, most of Edison Mission Energy's domestic operating power
production facilities have QF status under Public Utility Regulatory
Policies Act ("PURPA") and the regulations promulgated thereunder. QF
status exempts the projects from the application of the Holding Company
Act, many provisions of the Federal Power Act, and state laws and
regulations respecting rates and financial or organizational regulation
of electric utilities. Edison Mission Energy, through wholly-owned
subsidiaries, also has ownership interests in two operating power projects
that have received exempt wholesale generator status as defined in the
Holding Company Act. In addition, some Edison Mission Energy subsidiaries
have made fuel-related investments and a limited number of non-energy
related investments.
While QF status entitles projects to the benefits of PURPA, each project
must still comply with other federal, state and local laws, including
those regarding setting, construction, operation, licensing and pollution
abatement.
Edison Capital. Edison Capital participates in investment opportunities
involving leveraged leasing, project financing, affordable housing and
cash management. Its investments include interests in nuclear power,
cogeneration, waste-to-energy, hydroelectric, electric transportation and
affordable housing facilities. Since its inception in 1987, Edison
Capital has invested in over 100 projects.
During 1995, Edison Capital invested $121,000,000 in new affordable
housing projects and has committed to invest nearly $74,000,000 in
projects to be completed in the next two years. In addition, the Company
expanded its participation in this business segment by arranging and
selling an interest in a number of affordable housing projects for
$55,419,521 in November 1995.
At December 31, 1995, Edison Capital had total consolidated assets of $1.1
billion and, for the year then ended, consolidated operating revenue of
$31,500,000 (including interest and other income) and consolidated net
income of $39,500,000.
Mission Land Company. Mission Land Company is engaged, directly and
through its subsidiaries, in the business of developing, owning and
managing industrial parks and other real property investments. Mission
Land owns and manages commercial and industrial buildings in industrial
parks located in California. Mission Land Company and its subsidiaries
also have interests in industrial, residential and commercial real estate
in Texas, Arizona, Indiana and Illinois. Edison International is exiting
the real estate business in an orderly fashion over time.
At December 31, 1995, Mission Land Company had total consolidated assets
of $338,000,000 and for the year then ended, consolidated operating
revenue of $39,000,000 and consolidated net income of $281,000. Since
deciding to exit the real estate business in late 1991, Mission Land
Company has substantially reduced assets through asset sales, reduced debt
significantly, improved operating income through higher occupancy rates
and lowered operating costs and increased real estate reserves. As a
result, Mission Land Company believes it has improved its ability to
systematically exit the real estate business in a self-sustaining way.
page 14
However, Mission Land Company may experience additional losses if the real
estate market deteriorates.
Edison Source. Edison Source, formed in November 1995, is a retail
provider of energy services and energy marketing. Energy services
activities include the development, construction, financing, and operation
and maintenance of energy efficiency, infrastructure, and environmental
technology projects. Edison Source expects to implement and finance
projects through Edison International affiliated companies and a network
of third party service providers. Energy marketing activities will
include the retail and wholesale brokering and marketing of electricity
and natural gas. Edison Source is a start-up company which did not incur
any revenue or expense in 1995.
Edison EV. The goal of Edison EV, formed in December 1995, is to be the
number one provider for safe electric vehicle charging equipment, circuit
installation, warranty, service and repair. As part of this goal, Edison
EV has formed a powerful marketing alliance with GM and Delco Electronics
Corporation, to be the California distributor of the MAGNE CHARGETM
inductive charging system. This new product was specifically designed to
charge GM's electric vehicles including the all new GM EV1, the first
commercially viable electric sports coupe to be sold through Saturn
dealerships in California and Arizona.
Edison EV will pursue alliances with other auto manufacturers as they
enter the electric vehicle market.
Item 2. Properties of SCE
Existing Utility Generating Facilities
SCE owns and operates 12 oil- and gas-fueled electric generating plants,
one diesel-fueled generating plant, 38 hydroelectric plants and an
undivided 75.05% interest (1,614 MW net) in Units 2 and 3 at San Onofre.
These plants are located in central and southern California. Palo Verde
(15.8% SCE-owned, 579 MW net) is located near Phoenix, Arizona. SCE owns
a 48% undivided interest (754 MW) in Units 4 and 5 at the Four Corners
Generating Station ("Four Corners Project"), a coal-fueled steam electric
generating plant in New Mexico. Palo Verde and the Four Corners Project
are operated by other utilities. SCE operates and owns a 56% undivided
interest (885 MW) in Mohave, which consists of two coal-fueled steam
electric generating units in Clark County, Nevada. At year-end 1995, the
existing SCE-owned generating capacity (summer effective rating) was
comprised of approximately 65% gas, 15% nuclear, 11% coal, 8%
hydroelectric and 1% oil.
San Onofre, the Four Corners Project, certain of SCE's substations and
portions of its transmission, distribution and communication systems are
located on lands of the United States or others under (with minor
exceptions) licenses, permits, easements or leases or on public streets
or highways pursuant to franchises. Certain of such documents obligate
SCE, under specified circumstances and at its expense, to relocate
transmission, distribution and communication facilities located on lands
owned or controlled by federal, state or local governments.
With certain exceptions, major and certain minor hydroelectric projects
with related reservoirs, currently having an effective operating capacity
of 1,156 MW and located in whole or in part on lands of the U.S., are
owned and operated by SCE under governmental licenses which expire at
various times between 1996 and 2024. Such licenses impose numerous
restrictions and obligations on SCE, including the right of the United
States to acquire the project upon payment of specified compensation.
When existing licenses expire, FERC has the authority to issue new
licenses to third parties, but only if their license application is
superior to SCE's and then only upon payment of specified compensation to
SCE. Any new licenses issued to SCE are expected to be issued under terms
page 15
and conditions less favorable than those of the expired licenses. SCE's
applications for the relicensing of certain hydroelectric projects
referred to above with an aggregate effective operating capacity of 95.9
MW are pending. Annual licenses issued for all SCE projects, whose
licenses have expired and are undergoing relicensing, will be renewed
until the new licenses are issued.
In 1995, SCE's peak demand was 17,548 MW, set on August 30, 1995. Total
area system operating capacity of 21,603 MW was available to SCE at the
time of the 1995 peak. SCE's record peak demand of 18,413 MW occurred on
August 17, 1992.
Substantially all of SCE's properties are subject to the lien of a trust
indenture securing First and Refunding Mortgage Bonds ("Trust Indenture"),
of which approximately $4.1 billion principal amount was outstanding at
December 31, 1995. Such lien and SCE's title to its properties are
subject to the terms of franchises, licenses, easements, leases, permits,
contracts and other instruments under which properties are held or
operated, certain statutes and governmental regulations, liens for taxes
and assessments, and liens of the trustees under the Trust Indenture. In
addition, such lien and SCE's title to its properties are subject to
certain other liens, prior rights and other encumbrances, none of which,
with minor or unsubstantial exceptions, affects SCE's right to use such
properties in its business, unless the matters with respect to SCE's
interest in the Four Corners Project and the related easement and lease
referred to below may be so considered.
SCE's rights in the Four Corners Project, which is located on land of The
Navajo Nation of Indians under an easement from the United States and a
lease from The Navajo Nation, may be subject to possible defects. These
defects include possible conflicting grants or encumbrances not
ascertainable because of the absence of, or inadequacies in, the
applicable recording law and the record systems of the Bureau of Indian
Affairs and The Navajo Nation, the possible inability of SCE to resort to
legal process to enforce its rights against The Navajo Nation without
Congressional consent, possible impairment or termination under certain
circumstances of the easement and lease by The Navajo Nation, Congress or
the Secretary of the Interior and the possible invalidity of the Trust
Indenture lien against SCE's interest in the easement, lease and
improvements on the Four Corners Project.
El Paso Electric Company ("El Paso") Bankruptcy
El Paso owns and leases a combined 15.8% interest in Palo Verde and owns
a 7% interest in Units 4 and 5 of the Four Corners Project. In January
1992, El Paso filed a voluntary petition to reorganize under Chapter 11
of the Bankruptcy Code in the United States Bankruptcy Court for the
Western District of Texas. Pursuant to an agreement among the Palo Verde
participants and an agreement among the participants in Four Corners Units
4 and 5, each participant is required to fund its proportionate share of
operation and maintenance, capital and fuel costs of Palo Verde and Four
Corners Units 4 and 5, respectively. The participation agreements provide
that if a participant fails to meet its payment obligation, each non-
defaulting participant must pay its proportionate share of the payments
owed by the defaulting participant. In February 1992, the bankruptcy
court approved a stipulation between El Paso and Arizona Public Service
("APS"), as the operating agent of Palo Verde, pursuant to which El Paso
agreed to pay its proportionate share of all Palo Verde invoices delivered
to El Paso after February 6, 1992. El Paso agreed to make these payments
until such time, if ever, the bankruptcy court orders El Paso's rejection
of the participation agreement governing the relations among the Palo
Verde participants. The stipulation also specifies that approximately
$9,200,000 of El Paso's Palo Verde payment obligations invoiced prior to
February 7, 1992, are to be considered "pre-petition" general unsecured
claims of the other Palo Verde participants.
page 16
On August 27, 1993, El Paso filed an Amended Plan of Reorganization and
Disclosure Statement ("Amended Plan") that was contingent on a merger in
which El Paso would have become a wholly-owned subsidiary of Central and
South West Corporation ("CSW").
On November 19, 1993, the bankruptcy court approved a Cure and Assumption
Agreement among El Paso and the Palo Verde Participants, in which El Paso
shall (i) assume the Participation Agreement on the date the Amended Plan
becomes effective, and (ii) cure its pre-petition default on the date the
court approves the Order Confirming El Paso's Amended Plan. On December
8, 1993, the bankruptcy court confirmed El Paso's Amended Plan and
subsequently, El Paso cured its pre-petition default.
On June 9, 1995, CSW notified El Paso and the Bankruptcy Court that the
Merger Agreement by and among El Paso and CSW was terminated and the
Amended Plan is revoked. In its notification, CSW stated as a basis for
its action, the fact that a number of closing conditions were not
fulfilled and certain material breaches had not been cured.
Subsequently, El Paso filed a consensual Fourth Amended Stand Alone Plan
of Reorganization, dated October 27, 1995. This Plan modifies the Fourth
Amended Stand Alone Plan of Reorganization initially filed by El Paso on
September 29, 1995. The Fourth Amended Plan proposes, among other things,
(i) rejection of the El Paso leases and reacquisition by El Paso of the
Palo Verde interests represented by the leases, and (ii) El Paso's
assumption of the Four Corners Operating Agreement and the Arizona Nuclear
Power Project Participation Agreement. The Fourth Amended Plan was
confirmed on January 9, 1996, in the U.S. Bankruptcy Court for the Western
District of Texas. El Paso emerged from bankruptcy when the Fourth
Amended Plan became effective on February 12, 1996.
SCE Construction Program and Capital Expenditures
Cash required by SCE for its capital expenditures totaled $773,000,000 in
1995, $982,000,000 in 1994 and $1.04 billion in 1993. Construction
expenditures for the 1996-2000 period are forecasted at $3.5 billion.
These estimates assume clarification of the ambiguity in the restructuring
decision as to capital expenditures for fossil generation.
In addition to cash required for construction expenditures for the next
five years as discussed above, $1.4 billion is needed to meet requirements
for long-term debt maturities and sinking fund redemption requirements.
SCE's estimates of cash available for operations for the five years
through 2000 assume, among other things, the receipt of adequate and
timely rate relief and the realization of its assumptions regarding cost
increases, including the cost of capital. SCE's estimates and underlying
assumptions are subject to continuous review and periodic revision.
The timing, type and amount of all additional long-term financing are also
influenced by market conditions, rate relief and other factors, including
limitations imposed by SCE's Articles of Incorporation and Trust
Indenture.
Nuclear Power Matters
SCE's nuclear facilities have been reliable sources of inexpensive, non-
polluting power for SCE's customers for more than a decade. Throughout
the operating life of these facilities, SCE's customers have supported
the revenue requirements of SCE's capital investment in these facilities
and for their incremental costs through traditional cost-of-service
ratemaking.
As discussed above, on January 10, 1996, the CPUC issued its decision for
SCE's Test Year 1995 GRC. The CPUC rejected the settlement agreement in
its original form, but proposed modifications to certain terms and granted
page 17
SCE the opportunity to accept the settlement agreement with the proposed
modifications. The CPUC gave SCE 25 days to prepare a detailed proposal
consistent with the policy adopted in its Decision. On February 5, 1996,
SCE filed a revised San Onofre Unit 2 and 3 proposal in which it accepted
the modifications to certain settlement agreement terms as proposed by the
CPUC. Under this Proposal, SCE would recover its remaining investment in
San Onofre Units 2 and 3 at a reduced rate of return (7.34% compared to
the current 9.55%), but on an accelerated basis during the eight-year
period from the effective date in 1996 through December 31, 2003. In
addition, the traditional cost-of-service ratemaking for San Onofre Units
2 and 3 would be superseded by incremental cost incentive pricing, in
which SCE's customers would pay a preset price for each kilowatt-hour of
energy generated at San Onofre during the eight-year period. SCE would
be compensated for the incremental costs required for the continued
operation of San Onofre Units 2 and 3 only with revenues earned through
the incremental cost incentive pricing. However, SCE would also retain
the ability to request recovery of the cost of fuel consumed for
generation of replacement energy for periods in which San Onofre is not
generating power through future ECAC filings. SCE would also continue to
collect funds for decommissioning expenses through traditional ratemaking
treatment. In addition, SCE would continue to receive traditional cost-
of-service ratemaking for its share of Palo Verde Units 1, 2, and 3.
Intervenors filed comments on February 20, 1996, and a final CPUC decision
is expected May 1, 1996.
In the restructuring decision, the CPUC ordered SCE to file an application
by March 29, 1996, requesting a new rate mechanism for its share of the
Palo Verde units to be effective January 1, 1997. On February 29, 1996,
SCE filed its Palo Verde Proposal Application requesting adoption of a new
rate mechanism for Palo Verde consistent with the San Onofre Units 2 and
3 rate mechanism.
SCE cannot predict what other effects, if any, legislative or regulatory
actions may have upon it or upon the future operation of the San Onofre
or Palo Verde units, or the extent of any additional costs it may incur
as a result thereof, except for those that follow.
San Onofre Unit 1
In August 1992, the CPUC approved a settlement agreement between SCE and
the CPUC's DRA to discontinue operation of San Onofre Unit 1 at the end
of its then-current fuel cycle because operation of the unit was no longer
cost-effective. As part of the agreement, SCE will recover its
investment, earning an 8.98% rate of return on rate base, by August 1996.
In November 1992, SCE discontinued operation of San Onofre Unit 1.
Palo Verde Nuclear Generating Station
On March 14, 1993, Arizona Public Service Company ("APS"), the operating
agent for Palo Verde, manually shut down Unit 2 as a result of a steam
generator tube leak. Unit 2 remained shut down and began its scheduled
refueling outage on March 19, 1993.
APS performed an extensive inspection of the Unit 2 steam generators prior
to the unit's return to service on September 1, 1993. APS determined that
intergranular attack/intergranular stress corrosion cracking was a major
contributor to the tube leak. Subsequent inspections have revealed
similar, though less severe, corrosion in the Unit 1 and Unit 3 steam
generators. APS has taken, and indicates it will continue to take,
remedial actions that it believes have slowed the rate of steam generator
tube degradation in all three units.
Based on latest available data, APS estimates that the Unit 1 and Unit 3
steam generators should operate for the 40 year licensed operating life
of those units, although APS continues to monitor the situation. APS has
page 18
disclosed that it believes it will be economically desirable to replace
the Unit 2 steam generators, which have been most affected by tube
cracking, in five to ten years. APS has indicated to the participants
that it believes that replacement of the Unit 2 steam generators would
cost between $100,000,000 and $150,000,000. SCE estimates that this cost
could be higher, such that its share of this cost would be between
$16,000,000 and $30,000,000, plus replacement power costs. Unanimous
approval of the Palo Verde participants is required for capital
improvements, including steam generator replacement. SCE is evaluating
APS' analyses, conducting its own review, and has not yet decided whether
it supports replacement of the steam generators.
Nuclear Facility Decommissioning
SCE plans to decommission its nuclear generating facilities at the end of
each facility's operating license by a prompt removal method authorized
by the NRC. Decommissioning is estimated to cost $1.8 billion in current-
year dollars based on site-specific studies performed in 1993 for San
Onofre and 1992 for Palo Verde. This estimate considers the total cost
of decommissioning and dismantling the plant, including labor, material,
burial and other costs. The site specific studies are updated
approximately every three years. Changes in the estimated costs, timing
of decommissioning, or the assumptions underlying these estimates could
cause material revisions to the estimated total cost to decommission in
the near term. Decommissioning is scheduled to begin in 2013 at San
Onofre and 2024 at Palo Verde. Currently, San Onofre Unit 1, which shut
down in 1992, is expected to be stored until decommissioning begins at the
other San Onofre units.
SCE is currently collecting $104,381,000 annually in rates for its share
of decommissioning costs for San Onofre Units 1, 2, and 3, and Palo Verde
Units 1, 2, and 3. As of December 31, 1995, SCE's decommissioning trust
funds totaled approximately $1.260 billion (market value).
Nuclear Facility Depreciation
In October 1994, the CPUC authorized SCE to accelerate recovery of its
nuclear plant investments by $75,000,000 per year through 2011, with a
corresponding deceleration in recovery of its transmission and
distribution assets through revised depreciation estimates over their
remaining useful lives. Recovery of the San Onofre nuclear plant
investment has been further accelerated by the 1995 GRC decision.
Nuclear Insurance
SCE carries Nuclear Property Insurance well in excess of limits required
by Federal law and in amounts determined adequate to protect against
losses from damage to its nuclear units and to provide some of its
replacement energy costs in the unlikely event of an accident at any of
its nuclear units. A description of this insurance is included in Note
10 of "Notes to Consolidated Financial Statements" incorporated herein.
Although SCE believes an accident at its nuclear units is extremely
unlikely, in the event of an accident, regardless of fault, SCE's
insurance coverage might be inadequate to cover the losses to SCE. In
addition, such an accident could result in NRC action to suspend operation
of the damaged unit. Further, the NRC could suspend operation at SCE's
undamaged nuclear units and the CPUC and FERC could deny rate recovery of
related costs. Such an accident, therefore, could materially and
adversely affect the operations and earnings of SCE.
Item 3. Legal Proceedings
QF Litigation
On May 20, 1993, four geothermal QFs filed a lawsuit against SCE in Los
Angeles County Superior Court, claiming that SCE underpaid, and continues
page 19
to underpay, the plaintiffs for energy. SCE denied the allegations in its
response to the complaint. The action was brought on behalf of Vulcan/BN
Geothermal Power Company, Elmore L.P., Del Ranch L.P., and Leathers L.P.,
each of which is partially owned by a subsidiary of Edison Mission Energy
(a subsidiary of Edison International). In October 1994, plaintiffs
submitted an amended complaint to the court to add causes of action for
unfair competition and restraint of trade. In July 1995, after several
motions to strike had been heard by the court, the plaintiffs served a
fourth amended complaint, which omitted the previous claims based on
alleged restraint of trade. The plaintiffs allege in the fourth amended
complaint that past underpayments have totaled at least $21,000,000. In
other court filings, plaintiffs contend that additional contract payments
owing from the beginning of the alleged underpayments through the end of
the contract term could total approximately $60,000,000. Plaintiffs also
seek unspecified punitive damages and an injunction to enjoin SCE from
"future" unfair competition.
After SCE's motion to strike portions of the fourth amended complaint was
denied, SCE filed an answer to the fourth amended complaint which denies
its material allegations. Trial on the fourth amended complaint is set
for May 15, 1996. The materiality of a judgment in favor of the
plaintiffs would be largely dependent on the extent to which additional
payments resulting from such a judgment are recoverable through SCE's
ECAC.
Between January 1994 and October 1994, SCE was named as a defendant in a
series of eight lawsuits brought by independent power producers of wind
generation. Seven of the lawsuits were filed in Los Angeles County
Superior Court and one was filed in Kern County Superior Court. The
lawsuits allege SCE incorrectly interpreted contracts with the plaintiffs
by limiting fixed energy payments to a single 10-year period rather than
beginning a new 10-year period of fixed energy payments for each stage of
development. In its responses to the complaints, SCE denied the
plaintiffs' allegations. In each of the lawsuits, the plaintiffs seek
declaratory relief regarding the proper interpretation of the contracts.
Plaintiffs allege a combined total of approximately $189,000,000 in
damages, which includes consequential damages claimed in seven of the
eight lawsuits. On March 1, 1995, the court in the lead Los Angeles
Superior Court case granted the plaintiffs' motion seeking summary
adjudication that the contract language in question is not reasonably
susceptible to SCE's position that there is only a single, 10-year period
of fixed payments. Following the March 1 ruling, an eighth lawsuit was
filed in the Los Angeles Superior Court raising claims similar to those
alleged in the first seven. SCE subsequently responded to the complaint
in the new lawsuit by denying its material allegations. On April 5, 1995,
SCE filed a petition for Writ of Mandate, Prohibition of Other Appropriate
Relief, requesting that the Court of Appeal of the State of California,
Second Appellate District issue a writ directing the Los Angeles Superior
Court to vacate its March 1 order granting summary adjudication. In a
decision filed August 9, 1995, the Court of Appeal issued a writ directing
that the order be overturned, and a new order be entered denying the
motion. Trial is currently set in the single Kern County Superior Court
case for April 22, 1996. In the Los Angeles Superior Court cases, the
lead case is set for trial on June 26, 1996, although a motion to
consolidate all of the Los Angeles cases for trial is before the court.
The materiality of final judgments in favor of the plaintiffs would be
largely dependent on the extent to which any damages or additional
payments which might result from such judgments would be recoverable
through SCE's ECAC.
Environmental Litigation
Electric and Magnetic Fields ("EMF")
SCE is involved in three lawsuits alleging that various plaintiffs
developed cancer as a result of exposure to EMF from SCE facilities. SCE
page 20
denied the material allegations in its responses to each of these
lawsuits.
The first lawsuit was filed in Orange County Superior Court and served on
SCE in June 1994. There are five named plaintiffs and six named
defendants, including SCE. Three of the five plaintiffs are presently or
were formerly employed by Grubb & Ellis, a real estate brokerage firm with
offices located in a commercial building known as the Koll Center in
Newport Beach. Two of the named plaintiffs are spouses of the other
plaintiffs. Grubb & Ellis and the owners and developers of the Koll
Center are also named as defendants in the lawsuit. This lawsuit alleges,
among other things, that the three plaintiffs employed by Grubb & Ellis
developed various forms of cancer as a result of exposure to EMF from
electrical facilities owned by SCE and/or the other defendants located on
Koll Center property. No specific damage amounts are alleged in the
complaint, but supplemental documentation prepared by the plaintiffs
indicates that plaintiffs allege compensatory damages of approximately $8
million, plus unspecified punitive damages. In December 1995, the court
granted SCE's motion for summary judgment and dismissed the case.
Plaintiffs have filed a Notice of Appeal.
A second lawsuit was filed in Orange County Superior Court and served on
SCE in January 1995. This lawsuit arises out of the same fact situation
as the June 1994 lawsuit described above and involves the same defendants.
There are four named plaintiffs, two of whom were formerly employed by
Grubb & Ellis and now allegedly have various forms of cancer. The other
two plaintiffs are the spouses of those two individuals. No specific
damage amounts are alleged in the complaint, but supplemental
documentation prepared by the plaintiffs indicates that plaintiffs will
allege compensatory damages of approximately $13,500,000, plus unspecified
punitive damages. On April 18, 1995, Grubb & Ellis filed a cross-
complaint against the other co-defendants, requesting indemnification and
declaratory relief concerning the rights and responsibilities of the
parties. Trial in this case has been set for November 4, 1996.
A third case was filed in Orange County Superior Court and served on SCE
in March 1995. The plaintiff alleges, among other things, that he
developed cancer as a result of EMF emitted from SCE distribution lines
which he alleges were not constructed in accordance with CPUC standards.
No specific damage amounts are alleged in the complaint but supplemental
documentation prepared by the plaintiff indicates that plaintiff will
allege compensatory damages of approximately $5,500,000, plus unspecified
punitive damages. The trial date in this case has been continued to late
1996.
San Onofre Personal Injury Litigation
An engineer for two contractors providing services for San Onofre, was
diagnosed with leukemia. On July 12, 1994, the engineer and his wife sued
SCE and San Diego Gas & Electric Company ("SDG&E"), as well as Combustion
Engineering, the manufacturer of the fuel rods for the plant, in the U.S.
District Court for the Southern District of California. The plaintiffs
alleged that the engineer's illness resulted from contact with the
radioactive fuel particles released from failed fuel rods. Plant records
showed that the engineer's exposure to radiation was well below NRC safety
levels. Plaintiffs sought unspecified compensatory and punitive damages.
SCE's December 23, 1994, answer to the complaint denied all material
allegations. The trial began on August 3, 1995, and on October 12, 1995,
an eight-member jury unanimously decided that radiation exposure at San
Onofre was not the cause of the engineer's leukemia. The court entered
the judgment for the defendants on October 24, 1995. Plaintiffs' motion
for a new trial was denied on December 5, 1995. Plaintiffs have filed an
appeal with the Ninth Circuit Court of Appeals. Oral argument on that
appeal is scheduled for April 11, 1996.
page 21
An SCE engineer employed at San Onofre died in 1991 from cancer of the
abdomen. On February 6, 1995, his children sued SCE and SDG&E, as well
as Combustion Engineering, the manufacturer of the fuel rods for the
plant, in the U.S. District court for the Southern District of California.
Plaintiffs alleged that the former employee's illness resulted from, and
was aggravated by, exposure to radiation at San Onofre, including contact
with radioactive fuel particles released from failed fuel rods.
Plaintiffs sought unspecified compensatory and punitive damages. On April
3, 1995, the court granted the defendants' motion to dismiss 14 of the
plaintiffs' claims. SCE's April 20, 1995, answer to the complaint denied
all material allegations. On October 10, 1995, the court granted
plaintiffs' motion to include the Institute of Nuclear Power Operations
(an organization dedicated to achieving excellence in nuclear power
operations) as a defendant in the suit. On December 7, 1995, the judge
granted SCE's motion for summary judgment on the sole outstanding claim
against it, basing his ruling on the worker's compensation system being
the exclusive remedy for the claim. Plaintiffs will appeal this ruling
to the Ninth Circuit Court of Appeals. Trial of the case will be delayed
pending the ruling of the Court of Appeals. The impact to SCE, if any,
from further proceedings in this case against the remaining defendants
cannot be determined at this time.
On July 5, 1995, a former SCE reactor operator and his wife sued SCE and
SDG&E in the U.S. District court for the Southern District of California.
Plaintiffs also named Combustion Engineering, the manufacturer of the fuel
rods for the plant, and the Institute of Nuclear Power Operations as
defendants. The former employee died of leukemia shortly after the
complaint was filed. Plaintiffs allege that the former operator's illness
resulted from, and was aggravated by, exposure to radiation at San Onofre,
including contact with radioactive fuel particles released from failed
fuel rods. Plaintiffs seek unspecified compensatory and punitive damages.
On November 22, 1995, plaintiffs amended their complaint to allege
wrongful death and added the former employee's two children as plaintiffs.
On December 22, 1995, SCE filed a motion to dismiss or, in the
alternative, for summary judgment based on worker's compensation
exclusivity. This motion was heard on March 18, 1996. The court has not
ruled on the motion. If SCE's motion is unsuccessful, it intends to deny
plaintiffs' material allegations.
On August 31, 1995, the wife and daughter of a former San Onofre security
supervisor sued SCE and SDG&E in the U.S. District court for the Southern
District of California. Plaintiffs also named Combustion Engineering, the
manufacturer of fuel rods for the plant, and the Institute of Nuclear
Power Operations as defendants. The security officer worked for a
contractor in 1982, worked for SCE as a temporary employee (1982-1984),
and later worked as an SCE security supervisor (1984-1994). The officer
died of leukemia in 1994. Plaintiffs allege that the former officer's
illness resulted from, and was aggravated by, his exposure to radiation
at San Onofre, including contact with radioactive fuel particles released
from failed fuel rods. Plaintiffs seek unspecified compensatory and
punitive damages. SCE's November 13, 1995, answer to the complaint denied
all material allegations. A trial date will be set at the pretrial
conference that is scheduled for October 7, 1996.
On November 17, 1995, an SCE employee and his wife sued SCE in the U.S.
District Court for the Southern District of California. Plaintiffs also
named Combustion Engineering, the manufacturer of the fuel rods for the
San Onofre plant. The employee worked for SCE at San Onofre from 1981 to
1990. Plaintiffs allege that the employee transported radioactive
byproducts on his person, clothing and/or tools to his home where his wife
was then exposed to radiation that caused her leukemia. Plaintiffs seek
unspecified compensatory and punitive damages. SCE's December 19, 1995,
partial answer to the complaint denied all material non-employment related
allegations. SCE's motion to dismiss the employment related allegations
was heard March 11, 1996. The court has not ruled on the motion. The
page 22
plaintiffs' motion for an expedited trial date was denied by the court on
January 16, 1996.
On November 28, 1995, a former contract worker at San Onofre, her husband,
and her son, sued SCE in the U.S. District Court for the Southern District
of California. Plaintiffs also named Combustion Engineering, the
manufacturer of the fuel rods for the San Onofre plant. Plaintiffs allege
that the former contract worker transported radioactive byproducts on her
person and clothing to her home where her son was then exposed to
radiation that caused his leukemia. Plaintiffs seek unspecified
compensatory and punitive damages. SCE's January 2, 1996, answer denied
all material allegations.
Employment Discrimination Litigation
On September 21, 1994, nine African-American employees filed a lawsuit
against Edison International and SCE on behalf of an alleged class of
African-American employees, alleging racial discrimination in job
advancement, pay, training and evaluation. The lawsuit was filed in the
United States District Court for the Central District of California. The
plaintiffs seek injunctive relief, as well as an unspecified amount of
compensatory and punitive damages, attorneys' fees, costs and interest.
Edison International and SCE have responded by denying the material
allegations of the complaint and asserting several affirmative defenses.
The parties are engaged in discovery, and no trial date has been set.
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable.
Pursuant to Form 10-K's General Instruction ("General Instruction") G(3),
the following information is included as an additional item in Part I:
Executive Officers(1) of the Registrant
Edison International
Age at December
Executive Officer 31, 1995 Company Position Effective Date
- ----------------- --------------- ---------------- --------------
John E. Bryson 52 Chairman of the Board, October 1, 1990
Chief Executive Officer
Bryant C. Danner 58 Executive Vice President June 1, 1995
and General Counsel
Alan J. Fohrer 45 Executive Vice President, June 1, 1995
Chief Financial Officer and
Treasurer
William J. Heller 39 Senior Vice President, January 1, 1996
Strategic Planning and
New Business Development
Emiko Banfield 49 Vice President, January 1, 1996
Human Resources
Richard K. Bushey 55 Vice President and July 21, 1988
Controller
Robert G. Foster 48 Vice President, January 18, 1996
Public Affairs
Thomas J. Higgins 50 Vice President, January 1, 1996
Corporate Communications
Beverly P. Ryder 45 Corporate Secretary and January 1, 1996
Special Assistant to the
Chairman/CEO
______________
(1) The Executive Officers of Edison International include the Chairman of
the Board and Chief Executive Officer, the elected Vice Presidents and
the Secretary of Edison International and SCE as well as the Chief
Executive Officers and Presidents, Executive Vice Presidents and Senior
Vice Presidents of Edison Mission Energy, Edison Capital, Mission Land
Company, Edison Source and Edison EV (collectively "The Nonutility
Companies") all of whom may be deemed policy makers of Edison
International.
None of Edison International's elected executive officers are related to
each other by blood or marriage. As set forth in Article IV of Edison
International's Bylaws, the elected officers of Edison International are
chosen annually by and serve at the pleasure of Edison International's
Board of Directors and hold their respective offices until their
resignation, removal, other disqualification from service, or until their
respective successors are elected. Each of the elected executive officers
of Edison International holds an identical position at SCE except William
J. Heller, who is not an officer with SCE. Each of the elected executive
officers of Edison International has been actively engaged in the business
of SCE for more than five years except Bryant C. Danner, William J.
Heller, Thomas J. Higgins, and Beverly P. Ryder. Those officers who have
not held their present position with Edison International and/or SCE for
the past five years had the following business experience during that
period:
Bryant C. Danner Senior Vice President and July 1992 to May 1995
General Counsel of Edison
International and SCE
Partner, Law Firm of January 1970 to June 1992
Latham & Watkins(1)(5)
Alan J. Fohrer Executive Vice President and June 1995 to February 1996
Chief Financial Officer of SCE
Senior Vice President, Chief January 1993 to May 1995
Financial Officer and Treasurer
of Edison International
Senior Vice President and Chief January 1993 to May 1995
Financial Officer of SCE
Vice President, Chief Financial April 1991 to January 1993
Officer and Treasurer of Edison
International and SCE
Assistant Treasurer and Manager September 1987 to March 1991
of Cost Control of SCE
William J. Heller Partner, Management Consulting August 1982 to December 1995
firm of McKinsey and Company(2)(5)
Emiko Banfield Manager of Procurement and May 1994 to December 1995
Material Management of SCE
Manager of Transportation Services December 1991 to May 1994
of SCE
Manager of Power Contracts of SCE August 1991 to December 1991
Manager of Transmission of SCE January 1991 to August 1991
Robert G. Foster Vice President, Public Affairs of SCE November 1993 to Present
Regional Vice President of SCE January 1988 to October 1993
Thomas J. Higgins President, The Laurel January 1994 to December 1994
Company(3)(5)
Senior Vice President of Blue October 1990 to December 1993
Cross/Blue Shield of Maryland(5)
page 24
Beverly P. Ryder Special Assistant to the Chairman May 1995 to December 1995
of Edison International and SCE
Director, Strategic Alliances, October 1993 to April 1995
EnvestSCE(4)
General Manager, Customer Solutions June 1992 to September 1993
of SCE
Vice President, Corporate Asset April 1985 to June 1992
Funding, Citibank, N.A.(5)
______________
(1) Prior to leaving the law firm of Latham & Watkins, Bryant C. Danner
was in the firm's environmental department.
(2) Prior to leaving McKinsey and Company, William J. Heller served as
associate/engagement manager in Houston, Texas, senior engagement
manager/principal in London, England and principal/head of McKinsey's
Los Angeles energy practice beginning in 1991.
(3) As President of The Laurel Company, Thomas J. Higgins provided advice
on planning and financing for mergers and acquisitions for clients in
the managed health care business.
(4) This entity is a division of SCE.
(5) This entity is not a parent, subsidiary or other affiliate of Edison
International.
SCE
Age at
December Effective
Executive Officer(1) 31, 1995 Company Position(2) Date
- -------------------- -------- ------------------- ---------
John E. Bryson 52 Chairman of the Board, October 1, 1990
Chief Executive Officer
and Director
Stephen E. Frank 54 President, Chief Operating June 19, 1995
Officer and Director
Bryant C. Danner 58 Executive Vice President June 1, 1995
and General Counsel
Alan J. Fohrer 45 Executive Vice President, February 15, 1996
Chief Financial Officer
and Treasurer
Harold B. Ray 55 Executive Vice President, June 1, 1995
Generation
Vikram S. Budhraja 48 Senior Vice President, June 1, 1995
Power Grid
Owens F. Alexander 46 Vice President, January 1, 1996
Customer Solutions
Emiko Banfield 49 Vice President, January 1, 1996
Human Resources
Pamela Bass 48 Vice President, January 1, 1996
Shared Services
Richard K. Bushey 55 Vice President and January 1, 1984
Controller
Ronald Daniels 56 Vice President, August 10, 1992
Special Projects
John R. Fielder 50 Vice President, Regulatory February 1, 1992
Policy and Affairs
page 25
Bruce C. Foster 43 Vice President, San Francisco January 1, 1995
Regulatory Operations
Robert G. Foster 48 Vice President, Public November 18, 1993
Affairs
Lawrence D. Hamlin 51 Vice President, Power Production February 1, 1992
Thomas J. Higgins 50 Vice President, Corporate April 1, 1995
Communications
R. W. Krieger 47 Vice President, Nuclear June 17, 1993
Generation
J. Michael Mendez 54 Vice President, Regional February 8, 1993
Leadership
Dwight E. Nunn 53 Vice President, Nuclear December 18, 1995
Engineering and Technical
Services
Richard M. Rosenblum 45 Vice President, Distribution January 1, 1996
Beverly P. Ryder 45 Corporate Secretary and January 1, 1996
Special Assistant to the
Chairman/CEO
______________
(1) R. H. Bridenbecker retired from his position as Senior Vice President,
Customer Solutions, on December 31, 1995, and Margaret Jordan resigned
as Vice President, Health Care and Employee Services on February 1,
1996. Georgia Nelson resigned from her position as Senior Vice
President, Performance Support, on January 1, 1996 to become President
of the Americas Division and Senior Vice President of World Wide
Operations for Edison Mission Energy. C. Alex Miller resigned as Vice
President and Treasurer on January 26, 1996, to become President of
Edison Source. Effective January 1, 1996, former Corporate Secretary
Kenneth S. Stewart became Assistant General Counsel and Assistant
Secretary.
(2) Executive officers Bryson, Danner, Fohrer, Banfield, Bushey, Robert
Foster, Higgins, and Ryder hold the same positions with Edison
International. Edison International is the parent holding company of
SCE.
None of SCE's executive officers are related to each other by blood or
marriage. As set forth in Article IV of SCE's Bylaws, the officers of SCE
are chosen annually by and serve at the pleasure of SCE's Board of
Directors and hold their respective offices until their resignation,
removal, other disqualification from service, or until their respective
successors are elected. All of the executive officers have been actively
engaged in the business of SCE for more than five years except for Stephen
E. Frank, Bryant C. Danner, Owens F. Alexander, Bruce C. Foster, Thomas
J. Higgins, Dwight E. Nunn, and Beverly P. Ryder. Those officers who have
not held their present position for the past five years had the following
business experience:
Stephen E. Frank President and Chief Operating Officer, August 1990 to January 1995
Florida Power and Light Company(4)
Bryant C. Danner Senior Vice President and July 1992 to May 1995
General Counsel of Edison
International and SCE
Partner with the Law Firm January 1970 to June 1992
of Latham & Watkins(1)(4)
page 26
Alan J. Fohrer Executive Vice President and June 1995 to February 1996
Chief Financial Officer of SCE
Senior Vice President, Chief January 1993 to May 1995
Financial Officer and Treasurer
of Edison International
Senior Vice President and Chief January 1993 to May 1995
Financial Officer of SCE
Vice President, Chief Financial April 1991 to January 1993
Officer and Treasurer of Edison
International and SCE
Assistant Treasurer and Manager September 1987 to March 1991
of Cost Control of SCE
Harold B. Ray Senior Vice President, Power Systems June 1990 to May 1995
Vikram S. Budhraja Vice President, Planning and June 1993 to May 1995
Technology
Vice President, System Planning and February 1992 to May 1993
Operations
Vice President, System Planning and April 1991 to January 1992
Fuel Supply
Manager, Electric Systems Planning September 1986 to March 1991
Owens F. Alexander Vice President, Marketing April 1994 to December 1995
South Central Bell and BellSouth
Telecommunications in Atlanta, Georgia:(4)
Marketing Group Quality Director September 1991 to February 1994
General Manager Customer Service March 1991 to August 1991
General Manager Business Marketing October 1988 to February 1991
Emiko Banfield Manager of Procurement and Material May 1994 to December 1995
Management
Manager of Transportation Services December 1991 to May 1994
Manager of Power Contracts August 1991 to December 1991
Manager of Transmission January 1991 to August 1991
Pamela Bass Division Vice President, ENvest(3) August 1993 to December 1995
Division Vice President, Customer January 1992 to August 1993
Services
Manager of Customer Services November 1989 to December 1991
Ronald Daniels Vice President, Revenue Requirements August 1989 to July 1992
John R. Fielder Vice President, Information Services January 1989 to January 1992
Bruce C. Foster Regional Vice President (San Francisco January 1992 to December 1994
Office)
Vice President, New England Electric(4) January 1990 to December 1991
Robert G. Foster Regional Vice President (Sacramento January 1988 to October 1993
Office)
Lawrence D. Hamlin Manager, Steam Generation April 1990 to January 1992
Thomas J. Higgins President, The Laurel Company(2)(4) January 1994 to December 1994
Senior Vice President of Blue October 1990 to December 1993
Cross/Blue Shield of Maryland(4)
Russell W. Krieger Station Manager (San Onofre) August 1990 to May 1993
J. Michael Mendez Vice President, Human Resources August 1991 to January 1993
Division Vice President, January 1991 to July 1991
Customer Solutions
Dwight E. Nunn Vice President, Tennessee Valley April 1990 to December 1995
Authority(4)
page 27
Richard M. Rosenblum Vice President, Engineering and June 1993 to December 1995
Technical Services
Manager of Nuclear Regulatory June 1989 to May 1993
Affairs
Beverly P. Ryder Special Assistant to the Chairman May 1995 to December 1995
of Edison International and SCE
Director, Strategic Alliances, October 1993 to April 1995
EnvestSCE(3)
General Manager, Customer Solutions June 1992 to September 1993
Vice President, Corporate Asset April 1985 to June 1992
Funding, Citibank, N.A.(4)
______________
(1) Prior to leaving the law firm of Latham & Watkins, Mr. Danner was in
the firm's environmental department.
(2) As President of The Laurel Company, Thomas J. Higgins provided advice
on planning and financing for mergers and acquisitions for clients in
the managed health care business.
(3) This entity is a division of SCE.
(4) This entity is not a parent, subsidiary or other affiliate of SCE.
The Nonutility Companies
Age at December
Executive Officer 31, 1995 Company Position(1) Effective Date
- ----------------- --------------- ------------------- --------------
John E. Bryson 52 Chairman of the Board, May 20, 1993
Edison Mission Energy
Alan J. Fohrer 45 Vice Chairman of the Board, May 20, 1993
Edison Mission Energy
Edward Muller 43 President and Chief Executive August 23, 1993
Officer, Edison Mission Energy
Robert M. Edgell 48 Executive Vice President, April 1, 1988
Edison Mission Energy
James V. Iaco Jr. 51 Senior Vice President and January 17, 1994
Chief Financial Officer,
Edison Mission Energy
S. Daniel Melita 44 Senior Vice President, November 1, 1993
Edison Mission Energy
Georgia R. Nelson 45 Senior Vice President, January 1, 1996
Edison Mission Energy
S. Linn Williams 49 Senior Vice President and November 11, 1994
General Counsel, Edison
Mission Energy
Thomas R. McDaniel 46 President and Chief Executive March 1, 1992
Officer, Edison Capital and
Mission Land Company
Charles W. Johnson 49 Executive Vice President, August 7, 1992
Mission Land Company
Lawrence W. Yu 42 Executive Vice President, October 15, 1993
Edison Capital
page 28
Ashraf T. Dajani 48 Senior Vice President, September 1, 1995
Edison Capital
Diane O. Wittenberg 50 President and Chief Executive December 29, 1995
Officer, Edison EV
C. Alex Miller 38 President and Chief Executive January 26, 1996
Officer, Edison Source
______________
(1) Effective February 29, 1996, Robert Dietch retired from his position
as Senior Vice President of Edison Mission Energy. Georgia Nelson
became Senior Vice President, Edison Mission Energy, effective
January 1, 1996.
None of the Nonutility Companies' executive officers are related to each
other by blood or marriage. As set forth in Article IV of their
respective Bylaws, the officers of the Nonutility Companies are chosen
annually by and serve at the pleasure of the respective Boards of
Directors and hold their respective offices until their resignation,
removal, other disqualification from service, or until their respective
successors are elected. All of the executive officers have been actively
engaged in the business of the respective Nonutility Companies and/or
Edison International and SCE for more than five years except for Edward
R. Muller, S. Linn Williams, James V. Iaco, Jr., S. Daniel Melita, Charles
W. Johnson and Ashraf T. Dajani. Those officers who have not held their
present position for the past five years had the following business
experience:
Alan J. Fohrer Executive Vice President and June 1995 to February 1996
Chief Financial Officer of SCE
Senior Vice President, Chief January 1993 to May 1995
Financial Officer and Treasurer
of Edison International
Senior Vice President and Chief January 1993 to May 1995
Financial Officer of SCE
Vice President, Chief Financial April 1991 to January 1993
Officer and Treasurer of Edison
International and SCE
Assistant Treasurer and Manager September 1987 to March 1991
of Cost Control of SCE
Edward R. Muller Vice President, Chief October 1992 to August 1993
Financial Officer, General
Counsel and Secretary,
Whittaker Corporation(1)(13)
Vice President, Chief March 1988 to September 1992
Administrative Officer,
General Counsel and Secretary,
Whittaker Corporation(13)
Vice President, Secretary and October 1991 to August 1993
General Counsel of Biowhittaker, Inc.
(2)(13)
James V. Iaco, Jr. President, James V. Iaco, Jr. & October 1993 to January 1994
Associations,(3)(13)
Senior Vice President October 1992 to September 1993
and Chief Financial Officer of
Phoenix Distributors, Inc.,(4)(13)
Independent Business Consultant(5) November 1991 to September 1992
Senior Vice President and November 1990 to October 1991
Chief Financial Officer of
Intermark, Inc.(6)(13)
S. Daniel Melita Vice President, Edison Mission Energy(7) September 1992 to October 1993
Vice President, International Operations October 1989 to August 1992
of EBASCO Constructors, Inc.,
EBASCO Overseas Corporation(8)(13)
page 29
Georgia R. Nelson Senior Vice President, Performance June 1995 to December 1995
Support of SCE
Vice President, Performance Support June 1993 to May 1995
of SCE
Vice President, Human Resources March 1993 to June 1993
of SCE
Special Assistant to the Chairman of SCE February 1992 to March 1993
Manager, Procurement and Material September 1989 to January 1992
Management of SCE
S. Linn Williams Partner of the Law Firm of Jones, October 1993 to October 1994
Day, Reavis & Pogue(13)
Partner of the Law Firm of Gibson, April 1992 to September 1993
Dunn & Crutcher(13)
Deputy U.S. Trade Representative March 1989 to September 1991
Thomas R. McDaniel President and Chief Executive Officer, September 1987 to February 1992
Edison Capital
Charles W. Johnson President, Glenfed Development Corp.(9)(13)September 1990 to June 1992
Executive Vice President/Deputy August 1987 to August 1990
Subsidiary Group Administrator,
Glenfed Service Corporation(10)(13)
Lawrence W. Yu Senior Vice President of July 1991 to September 1993
Edison Capital
Vice President of Edison September 1987 to June 1991
Capital
Ashraf T. Dajani Senior Vice President and Chief November 1992 to August 1995
Operating Officer, Burns & Roe
Enterprises, Inc.(11)(13)
Vice President and General Manager, January 1987 to October 1992
Burns & Roe Enterprises, Inc.
Chief Financial Officer, Burns & Roe June 1991 to August 1992
Enterprises, Inc.
President, Burns & Roe Environmental April 1989 to August 1995
Services, Inc.(12)(13)
Diane O. Wittenberg Division Vice President, October 1994 to December 1995
Electric Transportation of SCE
Manager of Electric Transportation June 1991 to September 1994
of SCE
Manager of Corporate Communications November 1989 to May 1991
of SCE
C. Alex Miller Vice President and Treasurer of SCE January 1995 to January 1996
Treasurer of SCE June 1993 to January 1995
Assistant Treasurer of SCE April 1991 to May 1993
Manager of Financial Planning September 1987 to March 1991
and Regulatory Finance of SCE
______________
(1) During the period Edward R. Muller served as an officer of Whittaker
Corporation, the Company was involved in various aerospace, chemical
and biotechnology businesses.
(2) During the period Edward R. Muller served as an officer of
Biowhittaker, Inc., the company was engaged in the development,
manufacture, and marketing of cell culture, endotoxin detection and
clinical diagnostic testing products.
(3) As President of James V. Iaco & Associates, James V. Iaco, Jr.
provided consultant services specializing in mergers and
acquisitions, restructurings, finance, crisis management and other
management services.
(4) James V. Iaco, Jr. completed the disposition of subsidiaries of
Phoenix Distributors, Inc., one of the largest independent industrial
gas and welding supply distributors in the United States. Mr. Iaco
page 30
acted as the Company's chief financial officer, completing the
refinancing and restructuring of the remaining operations of the
Company.
(5) James V. Iaco, Jr. served as an independent business consultant
primarily engaged as the chief operating officer of a major developer
of time-share resort properties.
(6) As Senior Vice President, Chief Financial Officer, James V. Iaco, Jr.
developed debt reduction and restructuring plans.
(7) As Director of International Business Development, S. Daniel Melita
planned and implemented international marketing and sales strategies
for all business units and was responsible for selecting team
partners and establishing joint venture companies.
(8) As Vice President, International Operations of EBASCO Constructors,
Inc./EBASCO Overseas Corporation, S. Daniel Melita was responsible
for all overseas activities including operations and business
development, consulting construction management and lump sum turn key
construction.
(9) As President of Glenfed, Charles W. Johnson directed all real estate
operations and business combinations which included direct
development, joint ventures and syndications.
(10) As Executive Vice President, Charles W. Johnson directed all real
estate operations where Glenfed had made a direct equity investment.
This included August Financial Corporation, Glenfed Development
Corporation and Glenfed Properties.
(11) During the period Ashraf T. Dajani served as Senior Vice President
and Chief Operating Officer of Burns & Roe Enterprises, Inc., the
company was involved in engineering, procurement and construction
management in the power, infrastructure and defense industries.
(12) During the period Ashraf T. Dajani served as President of Burns & Roe
Environmental Services, Inc., the company was involved in providing
consulting services to the hazardous waste remediation industry both
federal and state.
(13) This entity is not a parent, subsidiary or other affiliate of Edison
International.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Information responding to Item 5 is included in Edison International's
Annual Report to Shareholders for the year ended December 31, 1995,
("Annual Report") under "Quarterly Financial Data" on page 25 and under
"Shareholder Information" on page 45, and is incorporated by reference
pursuant to General Instruction G(2). The number of Common Stock
shareholders of record was 121,727 on March 19, 1996. Additional
information concerning the market for Edison International's Common Stock
is set forth on the cover page hereof.
Item 6. Selected Financial Data
Information responding to Item 6 is included in the Annual Report under
"Selected Financial and Operating Data: 1991-1995" on page 44, and is
incorporated herein by reference pursuant to General Instruction G(2).
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Information responding to Item 7 is included in the Annual Report under
"Management's Discussion and Analysis" on pages 19 through 25 and is
incorporated herein by reference pursuant to General Instruction G(2).
page 31
Item 8. Financial Statements and Supplementary Data
Certain information responding to Item 8 is set forth after Item 14 in
Part IV. Other information responding to Item 8 is included in the Annual
Report on pages 27, 28, 29, 30, and 31 through 41 and is incorporated
herein by reference pursuant to General Instruction G(2).
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
Information concerning executive officers of Edison International is set
forth in Part I in accordance with General Instruction G(3), pursuant to
Instruction 3 to Item 401(b) of Regulation S-K. Other information
responding to Item 10 is included in the Joint Proxy Statement ("Proxy
Statement") filed with the Commission in connection with Edison
International's Annual Meeting to be held on April 18, 1996, under the
heading, "Election of Directors of Edison International and SCE," and is
incorporated herein by reference pursuant to General Instruction G(3).
Item 11. Executive Compensation
Information responding to Item 11 is included in the Proxy Statement under
the heading "Election of Directors of Edison International and SCE," and
is incorporated herein by reference pursuant to General Instruction G(3).
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information responding to Item 12 is included in the Proxy Statement under
the headings "Election of Directors of Edison International and SCE," and
"Stock Ownership of Certain Shareholders" and is incorporated herein by
reference pursuant to General Instruction G(3).
Item 13. Certain Relationships and Related Transactions
Information responding to Item 13 is included in the Proxy Statement under
the heading "Election of Directors of Edison International and SCE," and
is incorporated herein by reference pursuant to General Instruction G(3).
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements
The following items contained in the 1995 Annual Report to Shareholders
are incorporated by reference in this report.
Management's Discussion and Analysis of Results of Operations and
Financial Condition
Responsibility for Financial Reporting
Report of Independent Public Accountants
Consolidated Statements of Income -- Years Ended December 31, 1995, 1994
and 1993
Consolidated Balance Sheets -- December 31, 1995, and 1994
Consolidated Statements of Cash Flows -- Years Ended December 31, 1995,
1994 and 1993
page 32
Consolidated Statements of Retained Earnings -- Years Ended December 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements
(2) Report of Independent Public Accountants and Schedules
Supplementing Financial Statements
The following documents may be found in this report at the indicated page
numbers.
Page
----
Report of Independent Public Accountants on Supplemental
Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Schedule I--Condensed Financial Information of Parent . . . . . . . 35
Schedule II--Valuation and Qualifying Accounts for the
Years Ended December 31, 1995, 1994 and 1993. . . . . . . . . . . 37
Schedules I through V, inclusive, except those referred to above, are
omitted as not required or not applicable.
(3) Exhibits
See Exhibit Index on page 41 of this report.
(b) Reports on Form 8-K
November 22, 1995
Item 5: Other Events: Alternate Proposed General Rate Case
Decision
December 14, 1995
Item 5: Other Events: 1995 General Rate Case Proposal
December 21, 1995
Item 5: Other Events: CPUC Restructuring Decision
January 11, 1996
Item 5: Other Events: CPUC 1995 General Rate Case Decision
January 18, 1996
Item 5: Other Events: Earnings Per Share Announcement
page 33
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULES
To Edison International:
We have audited, in accordance with generally accepted auditing
standards, the consolidated financial statements included in the 1995
Annual Report to Shareholders of Edison International, incorporated by
reference in this Form 10-K, and have issued our report thereon dated
February 2, 1996. Our audits of the consolidated financial statements
were made for the purpose of forming an opinion on those basic
consolidated financial statements taken as a whole. The supplemental
schedules listed in Part IV of this Form 10-K which are the responsibility
of Edison International's management are presented for purposes of
complying with the Securities and Exchange Commission's rules and
regulations, and are not part of the basic consolidated financial
statements. These supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic consolidated
financial statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in relation
to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Los Angeles, California
February 2, 1996
page 34
Edison International
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF PARENT
CONDENSED BALANCE SHEETS
December 31,
---------------------------
1995 1994
---------- ----------
(In thousands)
Assets:
Cash and equivalents . . . . . . . . . . . . . . . . . . . . . . . $ 30,040 $ 88,330
Other current assets . . . . . . . . . . . . . . . . . . . . . . . 137,101 73,259
---------- ----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . 167,141 161,589
Investments in subsidiaries. . . . . . . . . . . . . . . . . . . . 6,630,537 6,104,022
Accumulated deferred income taxes -- net . . . . . . . . . . . . . 950 1,058
Other deferred debits. . . . . . . . . . . . . . . . . . . . . . . 25,056 35,000
---------- ----------
Total assets $6,823,684 $6,301,669
========== ==========
Liabilities and Shareholders' Equity:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,412 $ 6,770
Other current liabilities. . . . . . . . . . . . . . . . . . . . . 455,623 149,547
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 462,035 156,317
Other deferred credits . . . . . . . . . . . . . . . . . . . . . . 1,981 1,936
Common shareholders' equity. . . . . . . . . . . . . . . . . . . . 6,359,668 6,143,416
---------- ----------
Total liabilities and shareholders' equity. . . . . . . . . . . $6,823,684 $6,301,669
========== ==========
CONDENSED STATEMENTS OF INCOME
For the Years Ended December 31, 1995, 1994, and 1993
1995 1994 1993
-------- -------- --------
(In thousands, except per-share amounts)
Operating revenue and other income. . . . . . . . . .. $ 19,408 $ 18,765 $18,914
Operating expenses and interest expense. . . . . . . . 26,741 24,305 20,231
------- -------- -------
Loss before equity in earnings of subsidiaries . . . . (7,333) (5,540) (1,317)
Equity in earnings of subsidiaries . . . . . . . . . . . 746,469 686,227 640,364
-------- -------- --------
Net income. . . . . . . . . . . . . . . . . . . . . 739,136 $680,687 $639,047
======== ======== ========
Weighted-average shares of common stock outstanding. . . 446,159 447,799 447,754
Earnings per share . . . . . . . . . . . . . . . . . . . $ 1.66 $ 1.52 $ 1.43
======== ======== ========
page 35
Edison International
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF PARENT (Continued)
CONDENSED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1995, 1994, and 1993
1995 1994 1993
------- -------- --------
(In thousands)
Cash Flows From Operating Activities . . . . . . . . . . $ (24,935) $ 7,326 $ (46,143)
--------- --------- ---------
Cash Flows From Financing Activities . . . . . . . . . . 299,703 75,000 41,250
--------- --------- ---------
Cash Flows From Investing Activities . . . . . . . . . . (333,058) -- (456)
--------- --------- ---------
Increase (Decrease) in cash and equivalents. . . . . . . (58,290) 82,326 (5,349)
Cash and equivalents at beginning of period. . . . . . . 88,330 6,004 11,353
--------- --------- ---------
Cash and Equivalents at the End of Period. . . . . . . $ 30,040 $ 88,330 $ 6,004
========= ========= =========
Cash dividends received from Southern California
Edison Company . . . . . . . . . . . . . . . . . . . . $521,720 $548,837 $631,325
========= ========= =========
page 36
Edison International
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 1995
Additions
------------------------
Balance at Charged to Charged to Balance
Beginning of Costs and Other at End
Description Period Expenses Accounts Deductions of Period
----------- ----------- ---------- ---------- ---------- ----------
(In thousands)
Group A:
Nonrecognition of
geothermal earnings . . . . $ 40,094 $ -- $34,595(a) $ -- $ 74,689
Geothermal projects. . . . . . 52,400 -- -- -- 52,400
Projects in development stage. 24,114 29,305 -- 1,266(b) 52,153
Uncollectible accounts --
Customers . . . . . . . . . 21,609 22,279 -- 21,176(c) 22,712
All other . . . . . . . . . 34,079 801 -- 21,867(c) 13,013
-------- ------- ------- ------- --------
Total . . . . . . . . . . $172,296 $52,385 $34,595 $44,309 $214,967
======== ======= ======= ======= ========
Group B:
DOE Decontamination
and Decommissioning . . . . $ 56,485 $ -- $ 1,531(d) $ 5,274(e) $ 52,742
Pension and benefits . . . . . 174,851 42,805 23,676(f) 44,670(g) 196,662
Insurance, casualty and
other . . . . . . . . . . . 79,727 74,751 -- 59,690(h) 94,788
-------- -------- ------- -------- --------
Total . . . . . . . . . . $311,063 $117,556 $25,207 $109,634 $344,192
======== ======== ======= ======== ========
________________
(a) Charged to operating revenue.
(b) Accounts written off.
(c) Accounts written off, net.
(d) Represents new estimate based on actual billings.
(e) Represents amounts paid.
(f) Primarily represents transfers from the accrued paid absence allowance
account for required additions to the comprehensive disability plan
accounts.
(g) Includes pension payments to retired employees, amounts paid to active
employees during periods of illness and the funding of certain pension
benefits.
(h) Amounts charged to operations that were not covered by insurance.
page 37
Edison International
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 1994
Additions
------------------------
Balance at Charged to Charged to Balance
Beginning of Costs and Other at End
Description Period Expenses Accounts Deductions of Period
----------- ----------- ---------- ---------- ---------- ----------
(In thousands)
Group A:
Nonrecognition of
geothermal earnings . . . . $ 14,627 $ -- $25,467(a) $ -- $ 40,094
Geothermal projects. . . . . . 52,400 -- -- -- 52,400
Projects in development stage. 18,934 8,548 -- 3,368(b) 24,114
Uncollectible accounts --
Customers . . . . . . . . . 16,391 27,240 -- 22,022(c) 21,609
All other . . . . . . . . . 41,542 1,428 -- 8,891(c) 34,079
-------- --------- ------- -------- --------
Total . . . . . . . . . . $143,894 $ 37,216 $25,467 $ 34,281 $172,296
======== ======== ======= ======== ========
Group B:
DOE Decontamination
and Decommissioning . . . . $ 67,128 $ -- $ (452)(d) $ 10,191(e) 56,485
Pension and benefits . . . . . 131,764 147,037 23,931(f) 127,881(g) 174,851
Insurance, casualty and
other . . . . . . . . . . . 67,703 67,197 -- 55,173(h) 79,727
-------- -------- ------- -------- --------
Total . . . . . . . . . . $266,595 $214,234 $23,479 $193,245 $311,063
======== ======== ======= ======== ========
________________
(a) Charged to operating revenue.
(b) Accounts written off.
(c) Accounts written off, net.
(d) Represents new estimate based on actual billings.
(e) Represents amounts paid.
(f) Primarily represents transfers from the accrued paid absence allowance
account for required additions to the comprehensive disability plan
accounts.
(g) Includes pension payments to retired employees, amounts paid to active
employees during periods of illness and the funding of certain pension
benefits.
(h) Amounts charged to operations that were not covered by insurance.
page 38
Edison International
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
For the Year Ended December 31, 1993
Additions
---------
Balance at Charged to Charged to Balance
Beginning of Costs and Other at End
Description Period Expenses Accounts Deductions of Period
----------- ------------ ---------- -------------- ---------- ---------
(In thousands)
Group A:
Nonrecognition of geothermal
earnings. . . . . . . . . $ -- $ -- $14,627(a) $ -- $ 14,627
Geothermal projects. . . . . -- 52,400 -- -- 52,400
Projects in development stage 3,921 18,000 -- 2,987(b) 18,934
Uncollectible accounts ---
Customers . . . . . . . . 8,970 38,314 481 31,374(c) 16,391
All other . . . . . . . . 32,572 12,772 (481) 3,321(c) 41,542
-------- -------- ------- -------- --------
Total . . . . . . . . . $ 45,463 $121,486 $14,627 $ 37,682 $143,894
======== ======== ======= ======== ========
Group B:
Regulatory settlement . . . $113,380 $ 10,620 $ -- $124,000(d) $ --
DOE Decontamination
and Decommissioning 53,136 -- 19,156(e) 5,164(f) 67,128
Pension and benefits . . . . 111,139 48,692 22,064(g) 50,131(h) 131,764
Insurance, casualty and
other . . . . . . . . . . 64,019 51,843 -- 48,159(i) 67,703
-------- -------- ------- -------- --------
Total . . . . . . . . . $341,674 $111,155 $41,220 $227,454 $266,595
======== ======== ======= ======== ========
____________
(a) Charged to operating revenue.
(b) Accounts written off.
(c) Accounts written off, net.
(d) Represents final settlement with the California Public Utilities
Commission's Division of Ratepayer Advocates regarding affiliated
company power purchases.
(e) Represents new estimate based on actual billings.
(f) Represents amounts paid.
(g) Primarily represents transfers from the accrued paid absence allowance
account for required additions to the comprehensive disability plan
accounts.
(h) Includes pension payments to retired employees, amounts paid to active
employees during periods of illness and the funding of certain pension
benefits.
(i) Amounts charged to operations that were not covered by insurance.
page 39
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.
Edison International
By Kenneth S. Stewart
------------------------------
Kenneth S. Stewart
Assistant General Counsel
Date: March 27, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Principal Executive Officer:
John E. Bryson* Chairman of the Board, March 27, 1996
Chief Executive Officer
and Director
Principal Financial Officer:
Alan J. Fohrer* Executive Vice President,
Chief Financial Officer March 27, 1996
and Treasurer
Controller or Principal
Accounting Officer:
Richard K. Bushey* Vice President and March 27, 1996
Controller
Majority of Board of Directors:
Howard P. Allen* Director March 27, 1996
Stephen E. Frank* Director March 27, 1996
Camilla C. Frost* Director March 27, 1996
Joan C. Hanley* Director March 27, 1996
Carl F. Huntsinger* Director March 27, 1996
Luis G. Nogales* Director March 27, 1996
James M. Rosser* Director March 27, 1996
E. L. Shannon, Jr.* Director March 27, 1996
Robert H. Smith* Director March 27, 1996
Thomas C. Sutton* Director March 27, 1996
James D. Watkins* Director March 27, 1996
Edward Zapanta* Director March 27, 1996
*By Kenneth S. Stewart
----------------------------------
Kenneth S. Stewart, Attorney-in-Fact
page 40
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
3.1 Restated Articles of Incorporation as amended through April
25, 1988 (Registration No. 33-19541)*
3.2 Certificate of Amendment of Restated Articles of
Incorporation of SCEcorp (Registration No 33-37381)*
3.3 Certificate of Ownership
3.4 Bylaws as adopted by the Board of Directors on February 15,
1996
4.1 Trust Indenture, dated as of October 1, 1923 (Registration
No. 2-1369)*
4.2 Supplemental Indenture, dated as of March 1,1927
(Registration No. 2-1369)*
4.3 Second Supplemental Indenture, dated as of April 25, 1935
(Registration No. 2-1472)*
4.4 Third Supplemental Indenture, dated as of June 24, 1935
(Registration No. 2-1602)*
4.5 Fourth Supplemental Indenture, dated as of September 1,
1935 (Registration No. 2-4522)*
4.6 Fifth Supplemental Indenture, dated as of August 15, 1939
(Registration No. 2-4522)*
4.7 Sixth Supplemental Indenture, dated as of September 1, 1940
(Registration No. 2-4522)*
4.8 Seventh Supplemental Indenture, dated as of January 15,
1948 (Registration No. 2-7369)*
4.9 Eighth Supplemental Indenture, dated as of August 15, 1948
(Registration No. 2-7610)*
4.10 Ninth Supplemental Indenture, dated as of February 15, 1951
(Registration No. 2-8781)*
4.11 Tenth Supplemental Indenture, dated as of August 15, 1951
(Registration No. 2-7968)*
4.12 Eleventh Supplemental Indenture, dated as of August 15,
1953 (Registration No. 2-10396)*
4.13 Twelfth Supplemental Indenture, dated as of August 15, 1954
(Registration No. 2-11049)*
4.14 Thirteenth Supplemental Indenture, dated as of April 15,
1956 (Registration No. 2-12341)*
4.15 Fourteenth Supplemental Indenture, dated as of February 15,
1957 (Registration No. 2-13030)*
4.16 Fifteenth Supplemental Indenture, dated as of July 1, 1957
(Registration No. 2-13418)*
4.17 Sixteenth Supplemental Indenture, dated as of August 15,
1957 (Registration No. 2-13516)*
4.18 Seventeenth Supplemental Indenture, dated as of August 15,
1958 (Registration No. 2-14285)*
4.19 Eighteenth Supplemental Indenture, dated as of January 15,
1960 (Registration No. 2-15906)*
4.20 Nineteenth Supplemental Indenture, dated as of August 15,
1960 (Registration No. 2-16820)*
4.21 Twentieth Supplemental Indenture, dated as of April 1, 1961
(Registration No. 2-17668)*
4.22 Twenty-First Supplemental Indenture, dated as of May 1,
1962 (Registration No. 2-20221)*
4.23 Twenty-Second Supplemental Indenture, dated as of
October 15, 1962 (Registration No. 2-20791)*
4.24 Twenty-Third Supplemental Indenture, dated as of May 15,
1963 (Registration No. 2-21346)*
page 41
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
4.25 Twenty-Fourth Supplemental Indenture, dated as of
February 15, 1964 (Registration No. 2-22056)*
4.26 Twenty-Fifth Supplemental Indenture, dated as of
February 1, 1965 (Registration No. 2-23082)*
4.27 Twenty-Sixth Supplemental Indenture, dated as of May 1,
1966 (Registration No. 2-24835)*
4.28 Twenty-Seventh Supplemental Indenture, dated as of
August 15, 1966 (Registration No. 2-25314)*
4.29 Twenty-Eighth Supplemental Indenture, dated as of May 1,
1967 (Registration No. 2-26323)*
4.30 Twenty-Ninth Supplemental Indenture, dated as of
February 1, 1968 (Registration No. 2-28000)*
4.31 Thirtieth Supplemental Indenture, dated as of January 15,
1969 (Registration No. 2-31044)*
4.32 Thirty-First Supplemental Indenture, dated as of October 1,
1969 (Registration No. 2-34839)*
4.33 Thirty-Second Supplemental Indenture, dated as of
December 1, 1970 (Registration No. 2-38713)*
4.34 Thirty-Third Supplemental Indenture, dated as of
September 15, 1971 (Registration No. 2-41527)*
4.35 Thirty-Fourth Supplemental Indenture, dated as of
August 15, 1972 (Registration No. 2-45046)*
4.36 Thirty-Fifth Supplemental Indenture, dated as of
February 1, 1974 (Registration No. 2-50039)*
4.37 Thirty-Sixth Supplemental Indenture, dated as of July 1,
1974 (Registration No. 2-59199)*
4.38 Thirty-Seventh Supplemental Indenture, dated as of
November 1, 1974 (Registration No. 2-52160)*
4.39 Thirty-Eighth Supplemental Indenture, dated as of March 1,
1975 (Registration No. 2-52776)*
4.40 Thirty-Ninth Supplemental Indenture, dated as of March 15,
1976 (Registration No. 2-55463)*
4.41 Fortieth Supplemental Indenture, dated as of July 1, 1977
(Registration No. 2-59199)*
4.42 Forty-First Supplemental Indenture, dated as of November 1,
1978 (Registration No. 2-62609)*
4.43 Forty-Second Supplemental Indenture, dated as of June 15,
1979 (File No.1-2313)*
4.44 Forty-Third Supplemental Indenture, dated as of
September 15, 1979 (File No. 1-2313)*
4.45 Forty-Fourth Supplemental Indenture, dated as of October 1,
1979 (Registration No. 2-65493)*
4.46 Forty-Fifth Supplemental Indenture, dated as of April 1,
1980 (Registration No. 2-66896)*
4.47 Forty-Sixth Supplemental Indenture, dated as of
November 15, 1980 (Registration No. 2-69609)*
4.48 Forty-Seventh Supplemental Indenture, dated as of May 15,
1981 (Registration No. 2-71948)*
4.49 Forty-Eighth Supplemental Indenture, dated as of August 1,
1981 (File No. 1-2313)*
page 42
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
4.50 Forty-Ninth Supplemental Indenture, dated as of December 1,
1981 (Registration No. 2-74339)*
4.51 Fiftieth Supplemental Indenture, dated as of January 16,
1982 (File No. 1-2313)*
4.52 Fifty-First Supplemental Indenture, dated as of April 15,
1982 (Registration No. 2-76626)*
4.53 Fifty-Second Supplemental Indenture, dated as of
November 1, 1982 (Registration No. 2-79672)*
4.54 Fifty-Third Supplemental Indenture, dated as of November 1,
1982 (File No. 1-2313)*
4.55 Fifty-Fourth Supplemental Indenture, dated as of January 1,
1983 (File No. 1-2313)*
4.56 Fifty-Fifth Supplemental Indenture, dated as of May 1, 1983
(File No. 1-2313)*
4.57 Fifty-Sixth Supplemental Indenture, dated as of December 1,
1984 (Registration No. 2-94512)*
4.58 Fifty-Seventh Supplemental Indenture, dated as of March 15,
1985 (Registration No. 2-96181)*
4.59 Fifty-Eighth Supplemental Indenture, dated as of October 1,
1985 (File No. 1-2313)*
4.60 Fifty-Ninth Supplemental Indenture, dated as of October 15,
1985 (File No. 1-2313)*
4.61 Sixtieth Supplemental Indenture, dated as of March 1, 1986
(File No. 1-2313)*
4.62 Sixty-First Supplemental Indenture, dated as of March 15,
1986 (File No. 1-2313)*
4.63 Sixty-Second Supplemental Indenture, dated as of April 15,
1986 (File No. 1-2313)*
4.64 Sixty-Third Supplemental Indenture, dated as of April 15,
1986 (File No. 1-2313)*
4.65 Sixty-Fourth Supplemental Indenture, dated as of July 1,
1986 (File No. 1-2313)*
4.66 Sixty-Fifth Supplemental Indenture, dated as of
September 1, 1986 (File No. 1-2313)*
4.67 Sixty-Sixth Supplemental Indenture, dated as of
September 1, 1986 (File No. 1-2313)*
4.68 Sixty-Seventh Supplemental Indenture, dated as of
December 1, 1986 (File No. 1-2313)*
4.69 Sixty-Eighth Supplemental Indenture, dated as of July 1,
1987 (Registration No. 33-19541)*
4.70 Sixty-Ninth Supplemental Indenture, dated as of October 15,
1987 (Registration No. 33-19541)*
4.71 Seventieth Supplemental Indenture, dated as of November 1,
1987 (File No. 1-2313)*
4.72 Seventy-First Supplemental Indenture, dated as of February
15, 1988 (File No. 1-2313)*
4.73 Seventy-Second Supplemental Indenture, dated as of April
15, 1988 (File No. 1-2313)*
4.74 Seventy-Third Supplemental Indenture, dated as of July 1,
1988 (File No. 1-2313)*
page 43
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
4.75 Seventy-Fourth Supplemental Indenture, dated as of August
15, 1988 (File No. 1-2313)*
4.76 Seventy-Fifth Supplemental Indenture, dated as of September
15, 1988 (File No. 1-2313)*
4.77 Seventy-Sixth Supplemental Indenture, dated as of January
15, 1989 (File No. 1-2313)*
4.78 Seventy-Seventh Supplemental Indenture, dated as of May 1,
1990 (File No. 1-2313)*
4.79 Seventy-Eighth Supplemental Indenture, dated as of June 15,
1990 (File No. 1-2313)*
4.80 Seventy-Ninth Supplemental Indenture, dated as of August
15, 1990 (File No. 1-2313)*
4.81 Eightieth Supplemental Indenture, dated as of December 1,
1990 (File No. 1-2313)*
4.82 Eighty-First Supplemental Indenture, dated as of April 1,
1991 (File No. 1-2313)*
4.83 Eighty-Second Supplemental Indenture, dated as of May 1,
1991 (File No. 1-2313)*
4.84 Eighty-Third Supplemental Indenture, dated as of June 1,
1991 (File No. 1-2313)*
4.85 Eighty-Fourth Supplemental Indenture, dated as of December
1, 1991 (File No. 1-2313)*
4.86 Eighty-Fifth Supplemental Indenture, dated as of February
1, 1992 (File No. 1-2313)*
4.87 Eighty-Sixth Supplemental Indenture, dated as of April 1,
1992 (File No. 1-2313)*
4.88 Eighty-Seventh Supplemental Indenture, dated as of July 1,
1992 (File No. 1-2313)*
4.89 Eighty-Eight Supplemental Indenture, dated as of July 15,
1992 (File No. 1-2313)*
4.90 Eighty-Ninth Supplemental Indenture, dated as of December
1, 1992 (File No. 1-2313)*
4.91 Ninetieth Supplemental Indenture, dated as of January 15,
1993 (File No. 1-2313)*
4.92 Ninety-First Supplemental Indenture, dated as of March 1,
1993 (File No. 1-2313)*
4.93 Ninety-Second Supplemental Indenture, dated as of June 1,
1993*
4.94 Ninety-Third Supplemental Indenture, dated as of June 15,
1993 (File No. 1-2313)*
4.95 Ninety-Fourth Supplemental Indenture, dated as of July 15,
1993 (File No. 1-2313)*
4.96 Ninety-Fifth Supplemental Indenture, dated as of September
1, 1993 (File No. 1-2313)*
4.97 Ninety-Sixth Supplemental Indenture, dated as of October
1, 1993 (File No. 1-2313)*
10.1 1981 Deferred Compensation Agreement (File No. 1-2313)*
10.2 1985 Deferred Compensation Agreement for Executives
(File No. 1-2313)*
10.3 1985 Deferred Compensation Agreement for Directors
(File No. 1-2313)*
10.4 1987 Deferred Compensation Plan for Executives
(File No. 1-2313)*
page 44
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
10.5 1988 Deferred Compensation Plan for Executives
(File No. 1-2313)*
10.6 1989 Deferred Compensation Plan for Executives
(File No. 1-9936)*
10.7 1990 Deferred Compensation Plan for Executives
(File No. 1-9936)*
10.8 Annual Deferred Compensation Plan for Executives
(File No. 1-9936)*
10.9 Director Deferred Compensation Plan
10.10 Director Grantor Trust Agreement
10.11 Executive Deferred Compensation Plan
10.12 Executive Grantor Trust Agreement
10.13 Executive Supplemental Benefit Program (File No. 1-2313)*
10.14 Executive Retirement Plan
10.15 Employment Agreement with Howard P. Allen
(File No. 1-2313)*
10.16 1994 Executive Incentive Compensation Plan (File No. 1-9936)*
10.17 1995 Executive Incentive Compensation Plan
10.18 Executive Disability and Survivor Benefit Program (File No. 1-9936)*
10.19 Retirement Plan for Directors (File No. 1-2313)*
10.20 Director Incentive Compensation Plan
10.21 Officer Long-Term Incentive Compensation Plan (Registration No.
33-19541)*
10.21.1 Form of Agreement for 1989-1995 Awards under the Officer Long-Term
Incentive Compensation Plan
10.22 Estate and Financial Planning Program as amended December 13, 1995
10.23 Consulting Agreement with Howard P. Allen (File No. 1-9936)*
10.24 Employment Agreement with Bryant C. Danner (File No. 1-9936)*
10.25 Employment Agreement with Stephen E. Frank
10.26 Employment Agreement with Charles W. Johnson (File No. 1-9936)*
10.27 Letter Agreement with Edward R. Muller (File No. 1-2313)*
11. Computation of Primary and Fully Diluted Earnings Per Share
12. Computation of Ratios of Earnings to Fixed Charges
13. Selected portions of the Annual Report to Shareholders
for year ended December 31, 1995
22. Subsidiaries of the Registrant
23. Consent of Independent Public Accountants - Arthur Andersen
LLP
24.1 Power of Attorney
24.2 Certified copy of Resolution of Board of Directors
Authorizing Signature
27. Financial Data Schedule
____________
* Incorporated by reference pursuant to Rule 12b-32.
PAGE
EXHIBIT 3.3
CERTIFICATE OF OWNERSHIP
SCEcorp
ALAN J. FOHRER and BEVERLY P. RYDER certify that:
1. They are the duly elected and acting Executive Vice President and
Secretary, respectively, of SCEcorp, a California corporation.
2. SCEcorp owns 100 percent of the outstanding shares of each class
of Edison International, a California corporation ("Subsidiary").
3. The Board of Directors of SCEcorp has duly adopted the following
resolutions:
NOW, THEREFORE, BE IT RESOLVED, that pursuant to Section 1110 of
the California Corporations Code this corporation shall merge
into itself Edison International, its wholly-owned subsidiary
(with this corporation being the surviving corporation), and this
corporation shall assume all the liabilities of such subsidiary.
BE IT FURTHER RESOLVED, that Article First of the Restated
Articles of Incorporation of this corporation be amended to read
in its entirety as follows:
First: Edison International is the name of the
corporation.
BE IT FURTHER RESOLVED, that each officer of this corporation is
authorized and directed to take all further action and to execute
and deliver all further documents as the officer acting shall
determine to be necessary, that determination to be conclusively
evidenced by each officer's actions taken in connection with the
aforementioned merger and amendment.
4. Pursuant to Section 1110 of the California Corporations Code, the
foregoing resolutions have been approved by the Board of Directors of
SCEcorp, the parent corporation, and no approval is required from the
shareholders of SCEcorp or from the Board of Directors or shareholders of
Subsidiary.
Executed at Rosemead, California on this 18th day of January,
1996.
ALAN J. FOHRER
______________________________
ALAN J. FOHRER
Executive Vice President
BEVERLY P. RYDER
______________________________
BEVERLY P. RYDER
Secretary
PAGE
The undersigned, ALAN J. FOHRER and BEVERLY P. RYDER, the
Executive Vice President and Secretary, respectively, of SCEcorp, each
declares under penalty of perjury under the laws of the State of
California that the matters set out in the foregoing certificate are true
of his or her own knowledge.
Executed at Rosemead, California on this 18th day of January,
1996.
ALAN J. FOHRER
______________________________
ALAN J. FOHRER
Executive Vice President
BEVERLY P. RYDER
______________________________
BEVERLY P. RYDER
Secretary
PAGE
EXHIBIT 3.4
To Holders of the Company's Bylaws:
Effective February 15, 1996, Article III, Section 6, was amended to
specify that regular Board meetings will not be held in June, August,
October, and December.
BEVERLY P. RYDER
Corporate Secretary
BYLAWS
OF
EDISON INTERNATIONAL
AS AMENDED TO AND INCLUDING
FEBRUARY 15, 1996
INDEX
Page
ARTICLE I -- PRINCIPAL OFFICE
Section 1. Principal Office 1
ARTICLE II -- SHAREHOLDERS
Section 1. Meeting Locations 1
Section 2. Annual Meetings 1
Section 3. Special Meetings 2
Section 4. Notice of Annual or Special Meeting 2
Section 5. Quorum 3
Section 6. Adjourned Meeting and Notice Thereof 4
Section 7. Voting 4
Section 8. Record Date 6
Section 9. Consent of Absentees 7
Section 10. Action Without Meeting 7
Section 11. Proxies 7
Section 12. Inspectors of Election 8
ARTICLE III -- DIRECTORS
Section 1. Powers 8
Section 2. Number of Directors 9
Section 3. Election and Term of Office 10
Section 4. Vacancies 10
Section 5. Place of Meeting 11
Section 6. Regular Meetings 11
Section 7. Special Meetings 11
Section 8. Quorum 12
Section 9. Participation in Meetings by
Conference Telephone 12
Section 10. Waiver of Notice 12
Section 11. Adjournment 12
Section 12. Fees and Compensation 13
Section 13. Action Without Meeting 13
Section 14. Rights of Inspection 13
Section 15. Committees 13
-i-
ARTICLE IV -- OFFICERS
Section 1. Officers 14
Section 2. Election 14
Section 3. Eligibility of Chairman or President 15
Section 4. Removal and Resignation 15
Section 5. Appointment of Other Officers 15
Section 6. Vacancies 15
Section 7. Salaries 15
Section 8. Furnish Security for Faithfulness 16
Section 9. Chairman's Duties; Succession to
Such Duties in Chairman's Absence
or Disability 16
Section 10. President's Duties 16
Section 11. Chief Financial Officer 16
Section 12. Vice President's Duties 17
Section 13. General Counsel's Duties 17
Section 14. Associate General Counsel's and Assistant
General Counsel's Duties 17
Section 15. Controller's Duties 17
Section 16. Assistant Controllers' Duties 17
Section 17. Treasurer's Duties 17
Section 18. Assistant Treasurers' Duties 18
Section 19. Secretary's Duties 18
Section 20. Assistant Secretaries' Duties 19
Section 21. Secretary Pro Tempore 19
Section 22. Election of Acting Treasurer or
Acting Secretary 19
Section 23. Performance of Duties 19
ARTICLE V -- OTHER PROVISIONS
Section 1. Inspection of Corporate Records 20
Section 2. Inspection of Bylaws 20
Section 3. Contracts and Other Instruments, Loans, Notes
and Deposits of Funds 21
Section 4. Certificates of Stock 21
Section 5. Transfer Agent, Transfer Clerk and Registrar 22
Section 6. Representation of Shares of Other Corporations 22
-ii-
ARTICLE V -- OTHER PROVISIONS (Cont.)
Section 7. Stock Purchase Plans 22
Section 8. Fiscal Year and Subdivisions 23
Section 9. Construction and Definitions 23
ARTICLE VI -- INDEMNIFICATION
Section 1. Indemnification of Directors and Officers 23
Section 2. Indemnification of Employees and Agents 25
Section 3. Right of Directors and Officers to Bring Suit 25
Section 4. Successful Defense 26
Section 5. Non-Exclusivity of Rights 26
Section 6. Insurance 26
Section 7. Expenses as a Witness 26
Section 8. Indemnity Agreements 27
Section 9. Separability 27
Section 10. Effect of Repeal or Modification 27
ARTICLE VII -- EMERGENCY PROVISIONS
Section 1. General 27
Section 2. Unavailable Directors 28
Section 3. Authorized Number of Directors 28
Section 4. Quorum 28
Section 5. Creation of Emergency Committee 28
Section 6. Constitution of Emergency Committee 28
Section 7. Powers of Emergency Committee 29
Section 8. Directors Becoming Available 29
Section 9. Election of Board of Directors 29
Section 10. Termination of Emergency Committee 29
ARTICLE VIII -- AMENDMENTS
Section 1. Amendments 30
-iii-
BYLAWS
Bylaws for the regulation, except as otherwise provided
by statute or its Articles of Incorporation
of
EDISON INTERNATIONAL
AS AMENDED TO AND INCLUDING
FEBRUARY 15, 1996
ARTICLE I -- PRINCIPAL OFFICE
Section 1. Principal Office.
The principal office of the Corporation is hereby fixed and located
at 2244 Walnut Grove Avenue, in the City of Rosemead, County of Los
Angeles, State of California. The Board of Directors is hereby granted
full power and authority to change said principal office from one location
to another.
ARTICLE II -- SHAREHOLDERS
Section 1. Meeting Locations.
All meetings of shareholders shall be held at the principal office
of the corporation or at such other place or places within or without the
State of California as may be designated by the Board of Directors (the
"Board"). In the event such places shall prove inadequate in capacity
for any meeting of shareholders, an adjournment may be taken to and the
meeting held at such other place of adequate capacity as may be designated
by the officer of the corporation presiding at such meeting.
Section 2. Annual Meetings.
The annual meeting of shareholders shall be held on the third
Thursday of the month of April of each year at 10:00 a.m. on said day to
elect directors to hold office for the year next ensuing and until their
successors shall be elected, and to consider and act upon such other
matters as may lawfully be presented to such meeting; provided, however,
that should said day fall upon a legal holiday, then any such annual
meeting of shareholders shall be held at the same time and place on the
next day thereafter ensuing which is not a legal holiday.
ARTICLE II
Section 3. Special Meetings.
Special meetings of the shareholders may be called at any time by
the Board, the Chairman of the Board, the President, or upon written
request of any three members of the Board, or by the holders of shares
entitled to cast not less than ten percent of the votes at such meeting.
Upon request in writing to the Chairman of the Board, the President, any
Vice President or the Secretary by any person (other than the Board)
entitled to call a special meeting of shareholders, the officer forthwith
shall cause notice to be given to the shareholders entitled to vote that
a meeting will be held at a time requested by the person or persons
calling the meeting, not less than thirty-five nor more than sixty days
after the receipt of the request. If the notice is not given within
twenty days after receipt of the request, the persons entitled to call
the meeting may give the notice.
Section 4. Notice of Annual or Special Meeting.
Written notice of each annual or special meeting of shareholders
shall be given not less than ten (or if sent by third-class mail, thirty)
nor more than sixty days before the date of the meeting to each
shareholder entitled to vote thereat. Such notice shall state the place,
date, and hour of the meeting and (i) in the case of a special meeting,
the general nature of the business to be transacted, and no other business
may be transacted, or (ii) in the case of an annual meeting, those matters
which the Board, at the time of the mailing of the notice, intends to
present for action by the shareholders, but, subject to the provisions of
applicable law and these Bylaws, any proper matter may be presented at an
annual meeting for such action. The notice of any special or annual
meeting at which directors are to be elected shall include the names of
nominees intended at the time of the notice to be presented by the Board
for election. For any matter to be presented by a shareholder at an
annual meeting held after December 31, 1993, including the nomination of
any person (other than a person nominated by or at the direction of the
Board) for election to the Board, written notice must be received by the
Secretary of the corporation from the shareholder not less than sixty nor
more than one hundred twenty days prior to the date of the annual meeting
specified in these Bylaws and to which the shareholder's notice relates;
provided however, that in the event the annual meeting to which the
shareholder's written notice relates is to be held on a date which is more
than thirty days earlier than the date of the annual meeting specified in
these Bylaws, the notice from a shareholder must be received by the
Secretary not later than the close of business on the tenth day following
the date on which public disclosure of the date of the annual meeting was
made or given to the shareholders. The shareholder's notice to the
Secretary shall set forth (a) a brief description of each matter to be
presented at the annual meeting by the shareholder; (b) the name and
address, as they appear on the corporation's books, of the shareholder;
(c) the class and number of shares of the corporation
ARTICLE II
which are beneficially owned by the shareholder; and (d) any material
interest of the shareholder in the matters to be presented. Any
shareholder who intends to nominate a candidate for election as a director
shall also set forth in such a notice (i) the name, age, business address
and residence address of each nominee that he or she intends to nominate
at the meeting, (ii) the principal occupation or employment of each
nominee, (iii) the number of shares of capital stock of the corporation
beneficially owned by each nominee, and (iv) any other information
concerning the nominee that would be required under the rules of the
Securities and Exchange Commission in a proxy statement soliciting proxies
for the election of the nominee. The notice shall also include a consent,
signed by the shareholder's nominees, to serve as a director of the
corporation if elected. Notwithstanding anything in these Bylaws to the
contrary, and subject to the provisions of any applicable law, no business
shall be conducted at a special or annual meeting except in accordance
with the procedures set forth in this Section 4.
Notice of a shareholders' meeting shall be given either personally
or by first-class mail (or, if the outstanding shares of the corporation
are held of record by 500 or more persons on the record date for the
meeting, by third-class mail) or by other means of written communication,
addressed to the shareholder at the address of such shareholder appearing
on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice; or, if no such address appears or
is given, at the place where the principal office of the corporation is
located or by publication at least once in a newspaper of general
circulation in the county in which the principal office is located.
Notice by mail shall be deemed to have been given at the time a written
notice is deposited in the United States mails, postage prepaid. Any
other written notice shall be deemed to have been given at the time it is
personally delivered to the recipient or is delivered to a common carrier
for transmission, or actually transmitted by the person giving the notice
by electronic means, to the recipient.
Section 5. Quorum.
A majority of the shares entitled to vote, represented in person or
by proxy, shall constitute a quorum at any meeting of shareholders. The
affirmative vote of a majority of the shares represented and voting at a
duly held meeting at which a quorum is present (which shares voting
affirmatively also constitute at least a majority of the required quorum)
shall be the act of the shareholders, unless the vote of a greater number
or voting by classes is required by law or the Articles; provided,
however, that the shareholders present at a duly called or held meeting
at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to have
less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a
quorum.
ARTICLE II
Section 6. Adjourned Meeting and Notice Thereof.
Any shareholders' meeting, whether or not a quorum is present, may
be adjourned from time to time by the vote of a majority of the shares,
the holders of which are either present in person or represented by proxy
thereat, but in the absence of a quorum (except as provided in Section 5
of this Article) no other business may be transacted at such meeting.
It shall not be necessary to give any notice of the time and place
of the adjourned meeting or of the business to be transacted thereat,
other than by announcement at the meeting at which such adjournment is
taken. At the adjourned meeting, the corporation may transact any
business which might have been transacted at the original meeting.
However, when any shareholders' meeting is adjourned for more than forty-
five days or, if after adjournment a new record date is fixed for the
adjourned meeting, notice of the adjourned meeting shall be given as in
the case of an original meeting.
Section 7. Voting.
The shareholders entitled to notice of any meeting or to vote at
any such meeting shall be only persons in whose name shares stand on the
stock records of the corporation on the record date determined in
accordance with Section 8 of this Article.
Voting shall in all cases be subject to the provisions of Chapter
7 of the California General Corporation Law, and to the following
provisions:
(a) Subject to clause (g), shares held by an administrator,
executor, guardian, conservator or custodian may be voted by such holder
either in person or by proxy, without a transfer of such shares into the
holder's name; and shares standing in the name of a trustee may be voted
by the trustee, either in person or by proxy, but no trustee shall be
entitled to vote shares held by such trustee without a transfer of such
shares into the trustee's name.
(b) Shares standing in the name of a receiver may be voted by
such receiver; and shares held by or under the control of a receiver may
be voted by such receiver without the transfer thereof into the receiver's
name if authority to do so is contained in the order of the court by which
such receiver was appointed.
ARTICLE II
(c) Subject to the provisions of Section 705 of the California
General Corporation Law and except where otherwise agreed in writing
between the parties, a shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been transferred into
the name of the pledgee, and thereafter the pledgee shall be entitled to
vote the shares so transferred.
(d) Shares standing in the name of a minor may be voted and the
corporation may treat all rights incident thereto as exercisable by the
minor, in person or by proxy, whether or not the corporation has notice,
actual or constructive, of the non-age unless a guardian of the minor's
property has been appointed and written notice of such appointment given
to the corporation.
(e) Shares standing in the name of another corporation, domestic
or foreign, may be voted by such officer, agent or proxyholder as the
bylaws of such other corporation may prescribe or, in the absence of such
provision, as the Board of Directors of such other corporation may
determine or, in the absence of such determination, by the chairman
of the board, president or any vice president of such other corporation,
or by any other person authorized to do so by the chairman of the board,
president or any vice president of such other corporation. Shares which
are purported to be voted or any proxy purported to be executed in the
name of a corporation (whether or not any title of the person signing is
indicated) shall be presumed to be voted or the proxy executed in
accordance with the provisions of this subdivision, unless the contrary
is shown.
(f) Shares of the corporation owned by any of its subsidiaries
shall not be entitled to vote on any matter.
(g) Shares of the corporation held by the corporation in a
fiduciary capacity, and shares of the corporation held in a fiduciary
capacity by any of its subsidiaries, shall not be entitled to vote on any
matter, except to the extent that the settlor or beneficial owner
possesses and exercises a right to vote or to give the corporation binding
instructions as to how to vote such shares.
(h) If shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants,
tenants in common, husband and wife as community property, tenants by the
entirety, voting trustees, persons entitled to vote under a shareholder
voting agreement or otherwise, or if two or more persons (including
proxyholders) have the same fiduciary relationship respecting the same
shares, unless the secretary of the corporation is given written notice
to the contrary and is furnished with a copy of the instrument or order
appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect:
ARTICLE II
(i) If only one votes, such act binds all;
(ii) If more than one vote, the act of the majority so voting
binds all;
(iii) If more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in
question proportionately.
If the instrument so filed or the registration of the shares shows that
any such tenancy is held in unequal interests, a majority or even split
for the purpose of this section shall be a majority or even split in
interest.
No shareholder of any class of stock of this corporation shall be
entitled to cumulate votes at any election of directors of this
corporation.
Elections for directors need not be by ballot; provided, however,
that all elections for directors must be by ballot upon demand made by a
shareholder at the meeting and before the voting begins.
In any election of directors, the candidates receiving the highest
number of votes of the shares entitled to be voted for them up to the
number of directors to be elected by such shares are elected.
Section 8. Record Date.
The Board may fix, in advance, a record date for the determination
of the shareholders entitled to notice of any meeting or to vote or
entitled to receive payment of any dividend or other distribution, or any
allotment of rights, or to exercise rights in respect of any other lawful
action. The record date so fixed shall be not more than sixty days nor
less than ten days prior to the date of the meeting nor more than sixty
days prior to any other action. When a record date is so fixed, only
shareholders of record at the close of business on that date are entitled
to notice of and to vote at the meeting or to receive the dividend,
distribution, or allotment of rights, or to exercise the rights, as the
case may be, notwithstanding any transfer of shares on the books of the
corporation after the record date, except as otherwise provided by law or
these Bylaws. A determination of shareholders of record entitled to
notice of or to vote at a meeting of shareholders shall apply to any
adjournment of the meeting unless the Board fixes a new record date for
the adjourned meeting. The Board shall fix a new record date if the
meeting is adjourned for more than forty-five days.
If no record date is fixed by the Board, the record date for
determining shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business on the business day next
preceding the day on which notice is given or, if notice is waived, at the
close of business on the business
ARTICLE II
day next preceding the day on which the meeting is held. The record date
for determining shareholders for any purpose other than as set forth in
this Section 8 or Section 10 of this Article shall be at the close of
business on the day on which the Board adopts the resolution relating
thereto, or the sixtieth day prior to the date of such other action,
whichever is later.
Section 9. Consent of Absentees.
The transactions of any meeting of shareholders, however called and
noticed, and wherever held, are as valid as though had at a meeting duly
held after regular call and notice, if a quorum is present either in
person or by proxy, and if, either before or after the meeting, each of
the persons entitled to vote, not present in person or by proxy, signs a
written waiver of notice or a consent to the holding of the meeting or an
approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes
of the meeting. Neither the business to be transacted at nor the purpose
of any regular or special meeting of shareholders need be specified in any
written waiver of notice, consent to the holding of the meeting or
approval of the minutes thereof, except as provided in Section 601 (f) of
the California General Corporation Law.
Section 10. Action Without Meeting.
Subject to Section 603 of the California General Corporation Law,
any action which, under any provision of the California General
Corporation Law, may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice if
a consent in writing, setting forth the action so taken, shall be signed
by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present
and voted. Unless a record date for voting purposes be fixed as provided
in Section 8 of this Article, the record date for determining shareholders
entitled to give consent pursuant to this Section 10, when no prior action
by the Board has been taken, shall be the day on which the first written
consent is given.
Section 11. Proxies.
Every person entitled to vote shares has the right to do so either
in person or by one or more persons, not to exceed three, authorized by
a written proxy executed by such shareholder and filed with the Secretary.
Subject to the following sentence, any proxy duly executed continues in
full force and effect until revoked by the person executing it prior to
the vote pursuant thereto by a writing delivered to the corporation
stating that the proxy is revoked or by a
ARTICLE III
subsequent proxy executed by the person executing the prior proxy and
presented to the meeting, or by attendance at the meeting and voting in
person by the person executing the proxy; provided, however, that a proxy
is not revoked by the death or incapacity of the maker unless, before the
vote is counted, written notice of such death or incapacity is received
by this corporation. No proxy shall be valid after the expiration of
eleven months from the date of its execution unless otherwise provided in
the proxy.
Section 12. Inspectors of Election.
In advance of any meeting of shareholders, the Board may appoint
any persons other than nominees as inspectors of election to act at such
meeting and any adjournment thereof. If inspectors of election are not
so appointed, or if any persons so appointed fail to appear or refuse to
act, the chairman of any such meeting may, and on the request of any
shareholder or shareholder's proxy shall, make such appointments at the
meeting. The number of inspectors shall be either one or three. If
appointed at a meeting on the request of one or more shareholders or
proxies, the majority of shares present shall determine whether one or
three inspectors are to be appointed.
The duties of such inspectors shall be as prescribed by Section 707
(b) of the California General Corporation Law and shall include:
determining the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum, and the
authenticity, validity and effect of proxies; receiving votes, ballots or
consents; hearing and determining all challenges and questions in any way
arising in connection with the right to vote; counting and tabulating all
votes or consents; determining when the polls shall close; determining the
result; and doing such acts as may be proper to conduct the election or
vote with fairness to all shareholders. If there are three inspectors of
election, the decision, act or certificate of a majority is effective in
all respects as the decision, act or certificate of all. Any report or
certificate made by the inspectors of election is prima facie evidence of
the facts stated therein.
ARTICLE III -- DIRECTORS
Section 1. Powers.
Subject to limitations of the Articles, of these Bylaws and of the
California General Corporation Law relating to action required to be
approved by the shareholders or by the outstanding shares, the business
and affairs of the corporation shall be managed and all corporate
ARTICLE III
powers shall be exercised by or under the direction of the Board. The
Board may delegate the management of the day-to-day operation of the
business of the corporation provided that the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised
under the ultimate direction of the Board. Without prejudice to such
general powers, but subject to the same limitations, it is hereby
expressly declared that the Board shall have the following powers in
addition to the other powers enumerated in these Bylaws:
(a) To select and remove all the other officers, agents and
employees of the corporation, prescribe the powers and duties for them as
may not be inconsistent with law, with the Articles or these Bylaws, fix
their compensation and require from them security for faithful service.
(b) To conduct, manage and control the affairs and business of
the corporation and to make such rules and regulations therefor not
inconsistent with law, or with the Articles or these Bylaws, as they may
deem best.
(c) To adopt, make and use a corporate seal, and to prescribe the
forms of certificates of stock, and to alter the form of such seal and of
such certificates from time to time as in their judgment they may deem
best.
(d) To authorize the issuance of shares of stock of the
corporation from time to time, upon such terms and for such consideration
as may be lawful.
(e) To borrow money and incur indebtedness for the purposes of
the corporation, and to cause to be executed and delivered therefor, in
the corporate name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecations or other evidences of debt and
securities therefor.
Section 2. Number of Directors.
The authorized number of directors shall be not less than fifteen
nor more than twenty until changed by amendment of the Articles or by a
Bylaw duly adopted by the shareholders. The exact number of directors
shall be fixed, within the limits specified, by the Board by adoption of
a resolution or by the shareholders in the same manner provided in these
Bylaws for the amendment thereof.
ARTICLE III
Section 3. Election and Term of Office.
The directors shall be elected at each annual meeting of the
shareholders, but if any such annual meeting is not held or the directors
are not elected thereat, the directors may be elected at any special
meeting of shareholders held for that purpose. Each director shall hold
office until the next annual meeting and until a successor has been
elected and qualified.
Section 4. Vacancies.
Any director may resign effective upon giving written notice to the
Chairman of the Board, the President, the Secretary or the Board, unless
the notice specifies a later time for the effectiveness of such
resignation. If the resignation is effective at a future time, a
successor may be elected to take office when the resignation becomes
effective.
Vacancies in the Board, except those existing as a result of a
removal of a director, may be filled by a majority of the remaining
directors, though less than a quorum, or by a sole remaining director,
and each director so elected shall hold office until the next annual
meeting and until such director's successor has been elected and
qualified. Vacancies existing as a result of a removal of a director may
be filled by the shareholders as provided by law.
A vacancy or vacancies in the Board shall be deemed to exist in case
of the death, resignation or removal of any director, or if the authorized
number of directors be increased, or if the shareholders fail, at any
annual or special meeting of shareholders at which any director or
directors are elected, to elect the full authorized number of directors
to be voted for at that meeting.
The Board may declare vacant the office of a director who has been
declared of unsound mind by an order of court or convicted of a felony.
The shareholders may elect a director or directors at any time to
fill any vacancy or vacancies not filled by the directors. Any such
election by written consent other than to fill a vacancy created by
removal requires the consent of a majority of the outstanding shares
entitled to vote. If the Board accepts the resignation of a director
tendered to take effect at a future time, the Board or the shareholders
shall have power to elect a successor to take office when the resignation
is to become effective.
No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of the director's
term of office.
ARTICLE III
Section 5. Place of Meeting.
Regular or special meetings of the Board shall be held at any place
within or without the State of California which has been designated from
time to time by the Board or as provided in these Bylaws. In the absence
of such designation, regular meetings shall be held at the principal
office of the corporation.
Section 6. Regular Meetings.
Promptly following each annual meeting of shareholders the Board
shall hold a regular meeting for the purpose of organization, election of
officers and the transaction of other business.
Regular meetings of the Board shall be held at the principal office
of the corporation without notice on the third Thursday of each month,
except the months of June, August, October, and December, at the hour of
9:00 a.m. or as soon thereafter as the regular meeting of the Board of
Directors of Southern California Edison Company is adjourned. Call and
notice of all regular meetings of the Board are not required.
Section 7. Special Meetings.
Special meetings of the Board for any purpose or purposes may be
called at any time by the Chairman of the Board, the President, any Vice
President, the Secretary or by any two directors.
Special meetings of the Board shall be held upon four days' written
notice or forty-eight hours' notice given personally or by telephone,
telegraph, telex, facsimile, electronic mail or other similar means of
communication. Any such notice shall be addressed or delivered to each
director at such director's address as it is shown upon the records of
the corporation or as may have been given to the corporation by the
director for purposes of notice or, if such address is not shown on such
records or is not readily ascertainable, at the place in which the
meetings of the directors are regularly held. The notice need not specify
the purpose of such special meeting.
Notice by mail shall be deemed to have been given at the time a
written notice is deposited in the United States mail, postage prepaid.
Any other written notice shall be deemed to have been given at the time
it is personally delivered to the recipient or is delivered to a common
carrier for transmission, or actually
ARTICLE III
transmitted by the person giving the notice by electronic means to the
recipient. Oral notice shall be deemed to have been given at the time it
is communicated, in person or by telephone, radio or other similar means
to the recipient or to a person at the office of the recipient who the
person giving the notice has reason to believe will promptly communicate
it to the recipient.
Section 8. Quorum.
One-third of the number of authorized directors constitutes a quorum
of the Board for the transaction of business, except to adjourn as
provided in Section ll of this Article. Every act or decision done or
made by a majority of the directors present at a meeting duly held at
which a quorum is present shall be regarded as the act of the Board,
unless a greater number is required by law or by the Articles; provided,
however, that a meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors,
if any action taken is approved by at least a majority of the required
quorum for such meeting.
Section 9. Participation in Meetings by Conference Telephone.
Members of the Board may participate in a meeting through use of
conference telephone or similar communications equipment, so long as all
members participating in such meeting can hear one another. Such
participation constitutes presence in person at such meeting.
Section 10. Waiver of Notice.
The transactions of any meeting of the Board, however called and
noticed or wherever held, are as valid as though had at a meeting duly
held after regular call and notice if a quorum is present and if, either
before or after the meeting, each of the directors not present signs a
written waiver of notice, a consent to holding such meeting or an approval
of the minutes thereof. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of the
meeting.
Section 11. Adjournment.
A majority of the directors present, whether or not a quorum is
present, may adjourn any directors' meeting to another time and place.
Notice of the time and place of holding an adjourned meeting need not be
given to absent directors if the time and place is fixed at the meeting
adjourned. If the meeting is adjourned for more than twenty-four hours,
notice of any adjournment to another time or place shall be given prior
to the time of the adjourned meeting to the directors who were not present
at the time of the adjournment.
ARTICLE III
Section 12. Fees and Compensation.
Directors and members of committees may receive such compensation,
if any, for their services, and such reimbursement for expenses, as may
be fixed or determined by the Board.
Section 13. Action Without Meeting.
Any action required or permitted to be taken by the Board may be
taken without a meeting if all members of the Board shall individually or
collectively consent in writing to such action. Such written consent or
consents shall have the same force and effect as a unanimous vote of the
Board and shall be filed with the minutes of the proceedings of the Board.
Section 14. Rights of Inspection.
Every director shall have the absolute right at any reasonable time
to inspect and copy all books, records and documents of every kind and to
inspect the physical properties of the corporation and also of its
subsidiary corporations, domestic or foreign. Such inspection by a
director may be made in person or by agent or attorney and includes the
right to copy and make extracts.
Section 15. Committees.
The Board may appoint one or more committees, each consisting of
two or more directors, to serve at the pleasure of the Board. The Board
may delegate to such committees any or all of the authority of the Board
except with respect to:
(a) The approval of any action for which the California General
Corporation Law also requires shareholders' approval or approval of the
outstanding shares;
(b) The filling of vacancies on the Board or in any committee;
(c) The fixing of compensation of the directors for serving on
the Board or on any committee;
(d) The amendment or repeal of Bylaws or the adoption of new
Bylaws;
(e) The amendment or repeal of any resolution of the Board which
by its express terms is not so amendable or repealable;
ARTICLE IV
(f) A distribution to the shareholders of the corporation except
at a rate or in a periodic amount or within a price range determined by
the Board; or
(g) The appointment of other committees of the Board or the
members thereof.
Any such committee, or any member or alternate member thereof, must
be appointed by resolution adopted by a majority of the exact number of
authorized directors as specified in Section 2 of this Article. The Board
shall have the power to prescribe the manner and timing of giving of
notice of regular or special meetings of any committee and the manner in
which proceedings of any committee shall be conducted. In the absence of
any such prescription, such committee shall have the power to prescribe
the manner in which its proceedings shall be conducted. Unless the Board
or such committee shall otherwise provide, the regular and special
meetings and other actions of any such committee shall be governed by the
provisions of this Article applicable to meetings and actions of the
Board. Minutes shall be kept of each meeting of each committee.
ARTICLE IV -- OFFICERS
Section 1. Officers.
The officers of the corporation shall be a Chairman of the Board,
a President, a Chief Financial Officer, one or more Vice Presidents, a
General Counsel and a Secretary. The corporation may also have, at the
discretion of the Board, one or more Associate General Counsel, one or
more Assistant General Counsel, a Controller, one or more Assistant
Controllers, a Treasurer, one or more Assistant Treasurers and one or more
Assistant Secretaries, and such other officers as may be elected or
appointed in accordance with Section 5 of this Article. The Board, the
Chairman of the Board or the President may confer a special title upon
any Vice President not specified herein.
Section 2. Election.
The officers of the corporation, except such officers as may be
elected or appointed in accordance with the provisions of Section 5 or
Section 6 of this Article, shall be chosen annually by, and shall serve
at the pleasure of the Board, and shall hold their respective offices
until their resignation, removal, or other disqualification from service,
or until their respective successors shall be elected.
ARTICLE IV
Section 3. Eligibility of Chairman or President.
No person shall be eligible for the office of Chairman of the Board
or President unless such person is a member of the Board of the
corporation; any other officer may or may not be a director.
Section 4. Removal and Resignation.
Any officer may be removed, either with or without cause, by the
Board at any time or by any officer upon whom such power or removal may
be conferred by the Board. Any such removal shall be without prejudice
to the rights, if any, of the officer under any contract of employment of
the officer.
Any officer may resign at any time by giving written notice to the
corporation, but without prejudice to the rights, if any, of the
corporation under any contract to which the officer is a party. Any such
resignation shall take effect at the date of the receipt of such notice
or at any later time specified therein and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make
it effective.
Section 5. Appointment of Other Officers.
The Board may appoint such other officers as the business of the
corporation may require, each of whom shall hold office for such period,
have such authority, and perform such duties as are provided in the Bylaws
or as the Board may from time to time determine.
Section 6. Vacancies.
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled at any time deemed
appropriate by the Board in the manner prescribed in these Bylaws for
regular election or appointment to such office.
Section 7. Salaries.
The salaries of the Chairman of the Board, President, Chief
Financial Officer, Vice Presidents, General Counsel, Controller, Treasurer
and Secretary of the corporation shall be fixed by the Board. Salaries
of all other officers shall be as approved from time to time by the chief
executive officer.
ARTICLE IV
Section 8. Furnish Security for Faithfulness.
Any officer or employee shall, if required by the Board, furnish to
the corporation security for faithfulness to the extent and of the
character that may be required.
Section 9. Chairman's Duties; Succession to Such Duties in Chairman's
Absence or Disability.
The Chairman of the Board shall be the chief executive officer of
the corporation and shall preside at all meetings of the shareholders and
of the Board. Subject to the Board, the Chairman of the Board shall have
charge of the business of the corporation. The Chairman of the Board
shall keep the Board fully informed, and shall freely consult them
concerning the business of the corporation.
In the absence or disability of the Chairman of the Board, the
President shall act as the chief executive officer of the corporation; in
the absence or disability of the Chairman of the Board and the President,
the next in order of election by the Board of the Vice Presidents shall
act as chief executive officer of the corporation.
In the absence or disability of the Chairman of the Board, the
President shall act as Chairman of the Board at meetings of the Board; in
the absence or disability of the Chairman of the Board and the President,
the next, in order of election by the Board, of the Vice Presidents who
is a member of the Board shall act as Chairman of the Board at any such
meeting of the Board; in the absence or disability of the Chairman of the
Board, the President, and such Vice Presidents who are members of the
Board, the Board shall designate a temporary Chairman to preside at any
such meeting of the Board.
Section 10. President's Duties.
The President shall perform such other duties as the Chairman of
the Board shall delegate or assign to such officer.
Section 11. Chief Financial Officer.
The Chief Financial Officer of the corporation shall be the chief
consulting officer in all matters of financial import and shall have
control over all financial matters concerning the corporation. If the
corporation does not have a currently elected and acting Controller, the
Chief Financial Officer shall also be the Chief Accounting Officer of the
corporation.
ARTICLE IV
Section 12. Vice Presidents' Duties.
The Vice Presidents shall perform such other duties as the chief
executive officer shall designate.
Section 13. General Counsel's Duties.
The General Counsel shall be the chief consulting officer of the
corporation in all legal matters and, subject to the chief executive
officer, shall have control over all matters of legal import concerning
the corporation.
Section 14. Associate General Counsel's and Assistant General Counsel's
Duties.
The Associate General Counsel shall perform such of the duties of
the General Counsel as the General Counsel shall designate, and in the
absence or disability of the General Counsel, the Associate General
Counsel, in order of election to that office by the Board at its latest
organizational meeting, shall perform the duties of the General Counsel.
The Assistant General Counsel shall perform such duties as the General
Counsel shall designate.
Section 15. Controller's Duties.
The Controller shall be the chief accounting officer of the
Corporation and, subject to the Chief Financial Officer, shall have
control over all accounting matters concerning the Corporation and shall
perform such other duties as the Chief Executive Officer shall designate.
Section 16. Assistant Controllers' Duties.
The Assistant Controllers shall perform such of the duties of the
Controller as the Controller shall designate, and in the absence or
disability of the Controller, the Assistant Controllers, in order of
election to that office by the Board at its latest organizational meeting,
shall perform the duties of the Controller.
Section 17. Treasurer's Duties.
It shall be the duty of the Treasurer to keep in custody or control
all money, stocks, bonds, evidences of debt, securities and other items
of value that may belong to, or be in the possession or control of, the
corporation, and to dispose of the same in such manner as the Board or
the chief executive officer may direct, and to perform all acts incident
to the position of Treasurer.
ARTICLE IV
Section 18. Assistant Treasurers' Duties.
The Assistant Treasurers shall perform such of the duties of the
Treasurer as the Treasurer shall designate, and in the absence or
disability of the Treasurer, the Assistant Treasurers, in order of
election to that office by the Board at its latest organizational meeting,
shall perform the duties of the Treasurer, unless action is taken by the
Board as contemplated in Article IV, Section 22.
Section 19. Secretary's Duties.
The Secretary shall keep or cause to be kept full and complete
records of the proceedings of shareholders, the Board and its committees
at all meetings, and shall affix the corporate seal and attest by signing
copies of any part thereof when required.
The Secretary shall keep, or cause to be kept, a copy of the Bylaws
of the corporation at the principal office in accordance with Section 213
of the California General Corporation Law.
The Secretary shall be the custodian of the corporate seal and shall
affix it to such instruments as may be required.
The Secretary shall keep on hand a supply of blank stock
certificates of such forms as the Board may adopt.
The Secretary shall serve or cause to be served by publication or
otherwise, as may be required, all notices of meetings and of other
corporate acts that may by law or otherwise be required to be served, and
shall make or cause to be made and filed in the principal office of the
corporation, the necessary certificate or proofs thereof.
An affidavit of mailing of any notice of a shareholders' meeting or
of any report, in accordance with the provisions of Section 60l (b) of the
California General Corporation Law, executed by the Secretary shall be
prima facie evidence of the fact that such notice or report had been duly
given.
The Secretary may, with the Chairman of the Board, the President,
or a Vice President, sign certificates of ownership of stock in the
corporation, and shall cause all certificates so signed to be delivered
to those entitled thereto.
The Secretary shall keep all records required by the California
General Corporation Law.
ARTICLE IV
The Secretary shall generally perform the duties usual to the office
of secretary of corporations, and such other duties as the chief executive
officer shall designate.
Section 20. Assistant Secretaries' Duties.
Assistant Secretaries shall perform such of the duties of the
Secretary as the Secretary shall designate, and in the absence or
disability of the Secretary, the Assistant Secretaries, in the order of
election to that office by the Board at its latest organizational meeting,
shall perform the duties of the Secretary, unless action is taken by the
Board as contemplated in Article IV, Sections 21 and 22 of these Bylaws.
Section 21. Secretary Pro Tempore.
At any meeting of the Board or of the shareholders from which the
Secretary is absent, a Secretary pro tempore may be appointed and act.
Section 22. Election of Acting Treasurer or Acting Secretary.
The Board may elect an Acting Treasurer, who shall perform all the
duties of the Treasurer during the absence or disability of the Treasurer,
and who shall hold office only for such a term as shall be determined by
the Board.
The Board may elect an Acting Secretary, who shall perform all the
duties of the Secretary during the absence or disability of the Secretary,
and who shall hold office only for such a term as shall be determined by
the Board.
Whenever the Board shall elect either an Acting Treasurer or Acting
Secretary, or both, the officers of the corporation as set forth in
Article IV, Section 1 of these Bylaws, shall include as if therein
specifically set out, an Acting Treasurer or an Acting Secretary, or both.
Section 23. Performance of Duties.
Officers shall perform the duties of their respective offices as
stated in these Bylaws, and such additional duties as the Board shall
designate.
ARTICLE V
ARTICLE V -- OTHER PROVISIONS
Section 1. Inspection of Corporate Records.
(a) A shareholder or shareholders holding at least five percent
in the aggregate of the outstanding voting shares of the corporation or
who hold at least one percent of such voting shares and have filed a
Schedule 14B with the United States Securities and Exchange Commission
relating to the election of directors of the corporation shall have an
absolute right to do either or both of the following:
(i) Inspect and copy the record of shareholders' names
and addresses and shareholdings during usual business hours upon five
business days' prior written demand upon the corporation; or
(ii) Obtain from the transfer agent, if any, for the
corporation, upon five business days' prior written demand and upon the
tender of its usual charges for such a list (the amount of which charges
shall be stated to the shareholder by the transfer agent upon request),
a list of the shareholders' names and addresses who are entitled to vote
for the election of directors and their shareholdings, as of the most
recent record date for which it has been compiled or as of a date
specified by the shareholder subsequent to the date of demand.
(b) The record of shareholders shall also be open to inspection
and copying by any shareholder or holder of a voting trust certificate at
any time during usual business hours upon written demand on the
corporation, for a purpose reasonably related to such holder's interest
as a shareholder or holder of a voting trust certificate.
(c) The accounting books and records and minutes of proceedings
of the shareholders and the Board and committees of the Board shall be
open to inspection upon written demand on the corporation of any
shareholder or holder of a voting trust certificate at any reasonable time
during usual business hours, for a purpose reasonably related to such
holder's interests as a shareholder or as a holder of such voting trust
certificate.
(d) Any such inspection and copying under this Article may be
made in person or by agent or attorney.
Section 2. Inspection of Bylaws.
The corporation shall keep in its principle office the original or
a copy of these Bylaws as amended to date, which shall be open to
inspection by shareholders at all reasonable times during office hours.
ARTICLE V
Section 3. Contracts and Other Instruments, Loans, Notes and Deposits
of Funds.
The Chairman of the Board, the President, or a Vice President,
either alone or with the Secretary or an Assistant Secretary, or the
Secretary alone, shall execute in the name of the corporation such written
instruments as may be authorized by the Board and, without special
direction of the Board, such instruments as transactions of the ordinary
business of the corporation may require and, such officers without the
special direction of the Board may authenticate, attest or countersign any
such instruments when deemed appropriate. The Board may authorize any
person, persons, entity, entities, attorney, attorneys, attorney-in-fact,
attorneys-in-fact, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
No loans shall be contracted on behalf of the corporation and no
evidences of such indebtedness shall be issued in its name unless
authorized by the Board as it may direct. Such authority may be general
or confined to specific instances.
All checks, drafts, or other similar orders for the payment of
money, notes, or other such evidences of indebtedness issued in the name
of the corporation shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as the Board or chief
executive officer may direct.
Unless authorized by the Board or these Bylaws, no officer, agent,
employee or any other person or persons shall have any power or authority
to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or amount.
All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in such
banks, trust companies, or other depositories as the Board may direct.
Section 4. Certificates of Stock.
Every holder of shares of the corporation shall be entitled to have
a certificate signed in the name of the corporation by the Chairman of
the Board, the President, or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, certifying
the number of shares and the class or series of shares owned by the
shareholder. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed
ARTICLE V
upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were an officer,
transfer agent or registrar at the date of issue.
Certificates for shares may be used prior to full payment under such
restrictions and for such purposes as the Board may provide; provided,
however, that on any certificate issued to represent any partly paid
shares, the total amount of the consideration to be paid therefor and the
amount paid thereon shall be stated.
Except as provided in this Section, no new certificate for shares
shall be issued in lieu of an old one unless the latter is surrendered
and canceled at the same time. The Board may, however, if any certificate
for shares is alleged to have been lost, stolen or destroyed, authorize
the issuance of a new certificate in lieu thereof, and the corporation may
require that the corporation be given a bond or other adequate security
sufficient to indemnify it against any claim that may be made against it
(including expense or liability) on account of the alleged loss, theft or
destruction of such certificate or the issuance of such new certificate.
Section 5. Transfer Agent, Transfer Clerk and Registrar.
The Board may, from time to time, appoint transfer agents, transfer
clerks, and stock registrars to transfer and register the certificates of
the capital stock of the corporation, and may provide that no certificate
of capital stock shall be valid without the signature of the stock
transfer agent or transfer clerk, and stock registrar.
Section 6. Representation of Shares of Other Corporations.
The chief executive officer or any other officer or officers
authorized by the Board or the chief executive officer are each authorized
to vote, represent and exercise on behalf of the corporation all rights
incident to any and all shares of any other corporation or corporations
standing in the name of the corporation. The authority herein granted may
be exercised either by any such officer in person or by any other person
authorized so to do by proxy or power of attorney duly executed by said
officer.
Section 7. Stock Purchase Plans.
The corporation may adopt and carry out a stock purchase plan or
agreement or stock option plan or agreement providing for the issue and
sale for
ARTICLE VI
such consideration as may be fixed of its unissued shares, or of issued
shares acquired, to one or more of the employees or directors of the
corporation or of a subsidiary or to a trustee on their behalf and for
the payment for such shares in installments or at one time, and may
provide for such shares in installments or at one time, and may provide
for aiding any such persons in paying for such shares by compensation for
services rendered, promissory notes or otherwise.
Any such stock purchase plan or agreement or stock option plan or
agreement may include, among other features, the fixing of eligibility
for participation therein, the class and price of shares to be issued or
sold under the plan or agreement, the number of shares which may be
subscribed for, the method of payment therefor, the reservation of title
until full payment therefor, the effect of the termination of employment
and option or obligation on the part of the corporation to repurchase the
shares upon termination of employment, restrictions upon transfer of the
shares, the time limits of and termination of the plan, and any other
matters, not in violation of applicable law, as may be included in the
plan as approved or authorized by the Board or any committee of the Board.
Section 8. Fiscal Year and Subdivisions.
The calendar year shall be the corporate fiscal year of the
corporation. For the purpose of paying dividends, for making reports and
for the convenient transaction of the business of the corporation, the
Board may divide the fiscal year into appropriate subdivisions.
Section 9. Construction and Definitions.
Unless the context otherwise requires, the general provisions, rules
of construction and definitions contained in the General Provisions of the
California Corporations Code and in the California General Corporation Law
shall govern the construction of these Bylaws.
ARTICLE VI -- INDEMNIFICATION
Section 1. Indemnification of Directors and Officers.
Each person who was or is a party or is threatened to be made a
party to or is involved in any threatened, pending or completed action,
suit or proceeding, formal or informal, whether brought in the name of
the corporation or otherwise and whether of a civil, criminal,
administrative or investigative nature (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the
legal representative, is or was a director or officer of the corporation
or is or was serving at the request of the corporation as a director,
officer,
ARTICLE VI
employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is an alleged
action or inaction in an official capacity or in any other capacity while
serving as a director or officer, shall, subject to the terms of any
agreement between the corporation and such person, be indemnified and held
harmless by the corporation to the fullest extent permissible under
California law and the corporation's Articles of Incorporation, against
all costs, charges, expenses, liabilities and losses (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid
or to be paid in settlement) reasonably incurred or suffered by such
person in connection therewith, and such indemnification shall continue
as to a person who has ceased to be a director or officer and shall inure
to the benefit of his or her heirs, executors and administrators;
provided, however, that (A) the corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part
thereof) was authorized by the Board of the corporation; (B) the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) other than a proceeding by
or in the name of the corporation to procure a judgment in its favor only
if any settlement of such a proceeding is approved in writing by the
corporation; (C) that no such person shall be indemnified (i) except to
the extent that the aggregate of losses to be indemnified exceeds the
amount of such losses for which the director or officer is paid pursuant
to any directors' and officers' liability insurance policy maintained by
the corporation; (ii) on account of any suit in which judgment is rendered
against such person for an accounting of profits made from the purchase
or sale by such person of securities of the corporation pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any federal, state or local
statutory law; (iii) if a court of competent jurisdiction finally
determines that any indemnification hereunder is unlawful; and (iv) as to
circumstances in which indemnity is expressly prohibited by Section 317
of the General Corporation Law of California (the "Law"); and (D) that no
such person shall be indemnified with regard to any action brought by or
in the right of the corporation for breach of duty to the corporation and
its shareholders (a) for acts or omissions involving intentional
misconduct or knowing and culpable violation of law; (b) for acts or
omissions that the director or officer believes to be contrary to the best
interests of the corporation or its shareholders or that involve the
absence of good faith on the part of the director or officer; (c) for any
transaction from which the director or officer derived an improper
personal benefit; (d) for acts or omissions that show a reckless disregard
for the director's or officer's duty to the corporation or its
shareholders in circumstances in which the director or officer was aware,
or should have been aware, in the ordinary course of performing his or her
duties, of a risk of serious injury to the corporation or its
shareholders; (e) for acts or omissions that constitute an unexcused
pattern of
ARTICLE VI
inattention that amounts to an abdication of the director's or officer's
duties to the corporation or its shareholders; and (f) for costs, charges,
expenses, liabilities and losses arising under Section 310 or 316 of the
Law. The right to indemnification conferred in this Article shall include
the right to be paid by the corporation expenses incurred in defending any
proceeding in advance of its final disposition; provided, however, that
if the Law permits the payment of such expenses incurred by a director or
officer in his or her capacity as a director or officer (and not in any
other capacity in which service was or is rendered by such person while
a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a
proceeding, such advances shall be made only upon delivery to the
corporation of an undertaking, by or on behalf of such director or
officer, to repay all amounts to the corporation if it shall be ultimately
determined that such person is not entitled to be indemnified.
Section 2. Indemnification of Employees and Agents.
A person who was or is a party or is threatened to be made a party
to or is involved in any proceeding by reason of the fact that he or she
is or was an employee or agent of the corporation or is or was serving at
the request of the corporation as an employee or agent of another
enterprise, including service with respect to employee benefit plans,
whether the basis of such action is an alleged action or inaction in an
official capacity or in any other capacity while serving as an employee
or agent, may, subject to the terms of any agreement between the
corporation and such person, be indemnified and held harmless by the
corporation to the fullest extent permitted by California law and the
corporation's Articles of Incorporation, against all costs, charges,
expenses, liabilities and losses, (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith.
Section 3. Right of Directors and Officers to Bring Suit.
If a claim under Section 1 of this Article is not paid in full by
the corporation within 30 days after a written claim has been received by
the corporation, the claimant may at any time thereafter bring suit
against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall also be entitled to be
paid the expense of prosecuting such claim. Neither the failure of the
corporation (including its Board, independent legal counsel, or its
shareholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is permissible in the
circumstances because he or she has met the applicable standard of
conduct, if any, nor an actual determination by the corporation (including
its Board, independent legal counsel, or its shareholders) that the
claimant has not met the applicable standard of conduct, shall be a
ARTICLE VI
defense to the action or create a presumption for the purpose of an action
that the claimant has not met the applicable standard of conduct.
Section 4. Successful Defense.
Notwithstanding any other provision of this Article, to the extent
that a director or officer has been successful on the merits or otherwise
(including the dismissal of an action without prejudice or the settlement
of a proceeding or action without admission of liability) in defense of
any proceeding referred to in Section 1 or in defense of any claim, issue
or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred in
connection therewith.
Section 5. Non-Exclusivity of Rights.
The right to indemnification provided by this Article shall not be
exclusive of any other right which any person may have or hereafter
acquire under any statute, bylaw, agreement, vote of shareholders or
disinterested directors or otherwise.
Section 6. Insurance.
The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense,
liability or loss under the Law.
Section 7. Expenses as a Witness.
To the extent that any director, officer, employee or agent of the
corporation is by reason of such position, or a position with another
entity at the request of the corporation, a witness in any action, suit
or proceeding, he or she shall be indemnified against all costs and
expenses actually and reasonably incurred by him or her on his or her
behalf in connection therewith.
ARTICLE VII
Section 8. Indemnity Agreements.
The corporation may enter into agreements with any director,
officer, employee or agent of the corporation providing for
indemnification to the fullest extent permissible under the Law and the
corporation's Articles of Incorporation.
Section 9. Separability.
Each and every paragraph, sentence, term and provision of this
Article is separate and distinct so that if any paragraph, sentence, term
or provision hereof shall be held to be invalid or unenforceable for any
reason, such invalidity or unenforceability shall not affect the validity
or enforceability of any other paragraph, sentence, term or provision
hereof. To the extent required, any paragraph, sentence, term or
provision of this Article may be modified by a court of competent
jurisdiction to preserve its validity and to provide the claimant with,
subject to the limitations set forth in this Article and any agreement
between the corporation and claimant, the broadest possible
indemnification permitted under applicable law.
Section 10. Effect of Repeal or Modification.
Any repeal or modification of this Article shall not adversely
affect any right of indemnification of a director or officer existing at
the time of such repeal or modification with respect to any action or
omission occurring prior to such repeal or modification.
ARTICLE VII -- EMERGENCY PROVISIONS
Section 1. General.
The provisions of this Article shall be operative only during a
national emergency declared by the President of the United States or the
person performing the President's functions, or in the event of a nuclear,
atomic or other attack on the United States or a disaster making it
impossible or impracticable for the corporation to conduct its business
without recourse to the provisions of this Article. Said provisions in
such event shall override all other Bylaws of the corporation in conflict
with any provisions of this Article, and shall remain operative so long
as it remains impossible or impracticable to continue the business of the
corporation otherwise, but thereafter shall be inoperative; provided that
all actions taken in good faith pursuant to such provisions shall
thereafter remain in full force and effect unless and until revoked by
action taken pursuant to the provisions of the Bylaws other than those
contained in this Article.
ARTICLE VII
Section 2. Unavailable Directors.
All directors of the corporation who are not available to perform
their duties as directors by reason of physical or mental incapacity or
for any other reason or who are unwilling to perform their duties or whose
whereabouts are unknown shall automatically cease to be directors, with
like effect as if such persons had resigned as directors, so long as such
unavailability continues.
Section 3. Authorized Number of Directors.
The authorized number of directors shall be the number of directors
remaining after eliminating those who have ceased to be directors pursuant
to Section 2, or the minimum number required by law, whichever number is
greater.
Section 4. Quorum.
The number of directors necessary to constitute a quorum shall be
one-third of the authorized number of directors as specified in the
foregoing Section, or such other minimum number as, pursuant to the law
or lawful decree then in force, it is possible for the Bylaws of a
corporation to specify.
Section 5. Creation of Emergency Committee.
In the event the number of directors remaining after eliminating
those who have ceased to be directors pursuant to Section 2 is less than
the minimum number of authorized directors required by law, then until
the appointment of additional directors to make up such required minimum,
all the powers and authorities which the Board could by law delegate,
including all powers and authorities which the Board could delegate to a
committee, shall be automatically vested in an emergency committee, and
the emergency committee shall thereafter manage the affairs of the
corporation pursuant to such powers and authorities and shall have all
other powers and authorities as may by law or lawful decree be conferred
on any person or body of persons during a period of emergency.
Section 6. Constitution of Emergency Committee.
The emergency committee shall consist of all the directors remaining
after eliminating those who have ceased to be directors pursuant to
Section 2, provided that such remaining directors are not less than three
in number. In the event such remaining directors are less than three in
number the emergency committee shall consist of three persons, who shall
be the remaining director or
ARTICLE VII
directors and either one or two officers or employees of the corporation,
as the remaining director or directors may in writing designate. If there
is no remaining director, the emergency committee shall consist of the
three most senior officers of the corporation who are available to serve,
and if and to the extent that officers are not available, the most senior
employees of the corporation. Seniority shall be determined in accordance
with any designation of seniority in the minutes of the proceedings of the
Board, and in the absence of such designation, shall be determined by rate
of remuneration. In the event that there are no remaining directors and
no officers or employees of the corporation available, the emergency
committee shall consist of three persons designated in writing by the
shareholder owning the largest number of shares of record as of the date
of the last record date.
Section 7. Powers of Emergency Committee.
The emergency committee, once appointed, shall govern its own
procedures and shall have power to increase the number of members thereof
beyond the original number, and in the event of a vacancy or vacancies
therein, arising at any time, the remaining member or members of the
emergency committee shall have the power to fill such vacancy or
vacancies. In the event at any time after its appointment all members of
the emergency committee shall die or resign or become unavailable to act
for any reason whatsoever, a new emergency committee shall be appointed
in accordance with the foregoing provisions of this Article.
Section 8. Directors Becoming Available.
Any person who has ceased to be a director pursuant to the
provisions of Section 2 and who thereafter becomes available to serve as
a director shall automatically become a member of the emergency committee.
Section 9. Election of Board of Directors.
The emergency committee shall, as soon after its appointment as is
practicable, take all requisite action to secure the election of a board
of directors, and upon such election all the powers and authorities of
the emergency committee shall cease.
Section 10. Termination of Emergency Committee.
In the event, after the appointment of an emergency committee, a
sufficient number of persons who ceased to be directors pursuant to
Section 2 become available to serve as directors, so that if they had not
ceased to be directors as aforesaid, there would be enough directors to
constitute the
ARTICLE VIII
minimum number of directors required by law, then all such persons shall
automatically be deemed to be reappointed as directors and the powers and
authorities of the emergency committee shall be at an end.
ARTICLE VIII -- AMENDMENTS
Section 1. Amendments.
These Bylaws may be amended or repealed either by approval of the
outstanding shares or by the approval of the Board; provided, however,
that a Bylaw specifying or changing a fixed number of directors or the
maximum or minimum number or changing from a fixed to a variable Board or
vice versa may only be adopted by approval of the outstanding shares.
The exact number of directors within the maximum and minimum number
specified in these Bylaws may be amended by the Board alone.
PAGE
EXHIBIT 10.9
SCEcorp
Director Deferred Compensation Plan
As Adopted Janury 19, 1995
Effective January 1, 1995
SCEcorp DIRECTOR DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
Section Title Page
- ------- ----- ----
ARTICLE 1 DEFINITIONS 1
ARTICLE 2 PARTICIPATION 4
2.01 Participant Election 4
2.02 Annual Deferral 4
2.03 Continuation of Participation 4
ARTICLE 3 DIRECTOR DEFERRALS 4
3.01 Participation Election 4
3.02 Minimum Annual Deferral 5
3.03 Maximum Annual Deferral 5
3.04 Vesting 5
ARTICLE 4 DEFERRAL ACCOUNTS 5
4.01 Deferral Accounts 5
4.02 Timing of Credits 5
A. Annual Deferrals 5
B. Interest Crediting Dates 5
C. Statement of Accounts 5
ARTICLE 5 RETIREMENT BENEFITS 5
5.01 Amount 5
5.02 Form of Retirement Benefits 6
5.03 Commencement of Benefits 6
5.04 Small Benefit Exception 6
ARTICLE 6 TERMINATION BENEFITS 7
6.01 Amount 7
6.02 Form of Termination Benefits 7
ARTICLE 7 SURVIVOR BENEFITS 7
7.01 Pre-Retirement Survivor Benefit 7
7.02 Post-Retirement Survivor Benefit 7
7.03 Post-Termination Survivor Benefit 7
7.04 Changing Form of Benefit 8
7.05 Small Benefit Exception 8
-i-
SCEcorp DIRECTOR DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS(cont.)
Section Title Page
- ------- ----- ----
ARTICLE 8 CHANGE OF CONTROL 8
ARTICLE 9 SCHEDULED AND UNSCHEDULED WITHDRAWALS 8
9.01 Scheduled Withdrawals 8
A. Election 8
B. Timing and Form of Withdrawal 9
C. Remaining Deferral Account 9
9.02 Unscheduled Withdrawals 9
A. Election 9
B. Withdrawal Penalty 9
C. Small Benefit Exception 9
ARTICLE 10 CONDITIONS RELATED TO BENEFITS 9
10.01 Nonassignability 9
10.02 Financial Hardship Distribution 10
10.03 No Right to Assets 10
10.04 Protective Provisions 10
10.05 Withholding 10
ARTICLE 11 PLAN ADMINISTRATION 11
ARTICLE 12 BENEFICIARY DESIGNATION 11
ARTICLE 13 AMENDMENT OR TERMINATION OF PLAN 11
13.01 Amendment of Plan 11
13.02 Termination of Plan 12
13.03 Amendment or Termination After Change
of Control 12
13.04 Exercise of Power to Amend or Terminate 12
13.05 Constructive Receipt Termination 12
ARTICLE 14 CLAIMS AND REVIEW PROCEDURES 12
14.01 Claims Procedure 12
14.02 Review Procedure 13
14.03 Dispute Arbitration 13
ARTICLE 15 MISCELLANEOUS 15
15.01 Successors 15
-ii-
SCEcorp DIRECTOR DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS(cont.)
Section Title Page
- ------- ----- ----
15.02 Trust 15
15.03 Service Not Guaranteed 15
15.04 Gender, Singular and Plural 15
15.05 Captions 15
15.06 Validity 15
15.07 Waiver of Breach 15
15.08 Applicable Law 15
15.09 Notice 16
-iii-
SCEcorp
DIRECTOR DEFERRED COMPENSATION PLAN
As Adopted January 19, 1995, Effective January 1, 1995
PREAMBLE
Effective January 1, 1995, SCEcorp became the sponsor of the Southern
California Edison Company Annual Deferred Compensation Plan For Directors
with respect to participants in active service as of that date. The plan
has been restated as the SCEcorp Director Deferred Compensation Plan
effective January 1, 1995. Plan benefits are available to eligible
directors of SCEcorp and its participating affiliates. Amounts of
compensation deferred by participants pursuant to this Plan accrue as
liabilities of the participating affiliate at the time of the deferral
under the terms and conditions set forth herein. By electing to defer
compensation under the SCEcorp Director Deferred Compensation Plan,
participants consent to SCEcorp sponsorship of the plan, but acknowledge
that SCEcorp is not a guarantor of the benefit obligations of other
participating affiliates. Each participating affiliate is responsible for
payment of the accrued benefits under the plan with respect to its own
directors subject to the terms and conditions set forth herein.
ARTICLE 1
DEFINITIONS
Capitalized terms in the text of the Plan are defined as follows:
1.01 Administrator shall mean the Compensation and Executive Personnel
Committee of the Board of Directors of the Company.
1.02 Affiliate shall mean SCEcorp or any corporation or entity which (i)
along with SCEcorp, is a component member of a "controlled group of
corporations" within the meaning of Section 414(b) of the Code, and (ii)
has approved the participation of its directors in the Plan.
1.03 Annual Deferral shall mean the amount of Compensation which the
Participant elects to defer for a Plan Year pursuant to Articles 2 and 3
of the Plan.
1.04 Beneficiary shall mean the person or persons or entity designated
as such in accordance with Article 12 of the Plan.
PAGE
1.05 Change of Control shall mean either: (i) the dissolution or
liquidation of SCEcorp or a Company; (ii) a reorganization, merger or
consolidation of SCEcorp or a Company with one or more corporations as a
result of which SCEcorp or a Company is not the surviving corporation;
(iii) approval by the stockholders of SCEcorp or a Company of any sale,
lease, exchange or other transfer (in one or a series of transactions) of
all or substantially all of the assets of SCEcorp or a Company; (iv)
approval by the stockholders of SCEcorp or a Company of any merger or
consolidation of SCEcorp or a Company, in which the holders of voting
stock of SCEcorp or a Company immediately before the merger or
consolidation will not own 50% or more of the outstanding voting shares
of the continuing or surviving corporation immediately after the merger
or consolidation; or (v) a change of at least 51% (rounded to the next
whole person) in the membership of the Board of Directors of SCEcorp or
a Company within a 24-month period, unless the election or nomination for
election by stockholders of each new director within the period was
approved by the vote of at least 85% (rounded to the next whole person)
of the directors then still in office who were in office at the beginning
of the twenty-four-month period, except that any replacement of directors
who are employees of SCEcorp or a Company, with other employees of SCEcorp
or a Company, shall be disregarded and not be considered a change in
membership. Notwithstanding the foregoing, any reorganization, merger or
consolidation of a Company with SCEcorp or another Company shall be
disregarded and not be considered a Change of Control.
1.06 Code shall mean the Internal Revenue Code of 1986, as amended.
1.07 Company shall mean the Affiliate the Participant serves as a
director.
1.08 Compensation shall mean the sum of the all retainers and meeting
fees which would be paid to a Participant as an Eligible Director for the
Plan Year before reductions for deferrals under the Plan.
1.09 Crediting Rate shall mean the rate at which interest will be
credited to Participant Deferral Accounts. The rate will be determined
annually in advance of the Plan Year and will be equal to 120 percent of
the Index Rate. SCEcorp reserves the right to prospectively change the
Crediting Rate or formula.
1.10 Deferral Account shall mean the notional account established for
record keeping purposes for a Participant pursuant to Article 5 of the
Plan.
1.11 Deferral Period shall mean the Plan Year covered by a valid
Participation Election previously submitted by a Participant, or in the
case of a newly eligible Participant, the balance of the Plan Year
following the date of the Participation Election.
1.12 Eligible Director shall mean a non-employee director of an Affiliate
who (i) is a U.S. director or an expatriate who is based and paid in the
U.S., and (ii) is designated by the Company as eligible to participate in
the Plan (subject to the restrictions in Article 8 and Section 10.02 of
the Plan).
page 2
1.13 Financial Hardship shall mean an unexpected and unforeseen financial
disruption arising from an illness, casualty loss, sudden financial
reversal, or other such unforeseeable occurrence as determined by the
Administrator or its designee. Needs arising from foreseeable events such
as the purchase of a residence or education expenses for children shall
not, alone, be considered a Financial Hardship.
1.14 Index Rate shall mean the 120-month average rate of 10-year U.S.
Treasury Notes determined for any Plan Year as of October 15th of the
prior year.
1.15 Participant shall mean an Eligible Director who has elected to
participate and has completed a Participation Election pursuant to Article
2 of the Plan.
1.16 Participation Election shall mean the Participant's written election
to participate in the Plan submitted on the form prescribed by the
Administrator for that purpose.
1.17 Plan shall mean the SCEcorp Director Deferred Compensation Plan.
1.18 Plan Year shall mean the calendar year.
1.19 Retirement shall mean a separation from service under terms which
constitute an eligible resignation or retirement for purposes of the
nonqualified director retirement plan covering the Participant, or a
successor plan.
1.20 Scheduled Withdrawal shall mean a distribution of all or a portion
of the entire amount of Annual Deferrals and earnings credited to the
Participant's Deferral Account as elected by the Participant pursuant to
the provisions of Article 9 of the Plan.
1.21 Termination for Cause shall mean the Termination of Service of the
Participant upon willful failure by the Participant to substantially
perform his or her duties for the Company or the willful engaging by the
Participant in conduct which is injurious to the Company, monetarily or
otherwise.
1.22 Termination of Service shall mean the voluntary or involuntary
cessation of the Participant's service as a member of the Board of
Directors of a Company for any reason other than Retirement or death.
Termination of Service shall not be deemed to have occurred for purposes
of this Plan if the Participant continues to serve on the Board of
Directors of another participating Affiliate, or commences such service
within 30 days.
1.23 Unscheduled Withdrawal shall mean a distribution of all or a portion
of the entire amount of Annual Deferrals and earnings credited to the
Participant's Deferral Account as requested by the Participant pursuant
to the provisions of Article 9 of the Plan.
page 3
1.24 Valuation Date shall mean the last business day of the following
month in which Termination of Service, retirement, death, Scheduled
Withdrawal, or Unscheduled Withdrawal occurs.
1.25 Vesting shall mean the Participant's right to receive any
Compensation deferred and/or earnings thereon as provided in Article 3.
ARTICLE 2
PARTICIPATION
2.01 Participant Election
An Eligible Director shall become a Participant in the Plan on the first
day of the month coincident with or next following the date the director
becomes an Eligible Director, provided the Eligible Director has submitted
to the Administrator a Participation Election prior to that date. Except
for directors who become newly eligible during the Plan Year, the
Participation Election must be submitted to the Administrator during the
enrollment period designated by the Administrator which shall always be
prior to the commencement of the Plan Year.
2.02 Annual Deferral
Subject to the restrictions in Article 3, the Eligible Director shall
designate his or her Annual Deferral for the covered Plan Year on the
Participation Election.
2.03 Continuation of Participation
An Eligible Director who has elected to participate in the Plan by making
an Annual Deferral shall continue as a Participant in the Plan until the
Participant no longer has a Deferral Account balance under the Plan.
ARTICLE 3
DIRECTOR DEFERRALS
3.01 Participation Election
Eligible Directors may elect to make an Annual Deferral under the Plan by
submitting a Participation Election during the applicable enrollment
period. The Participation Election shall designate the percentage of
Compensation, in whole percentage increments, that the Participant wishes
to defer pursuant to the terms of the Plan. Once made, a Participation
Election shall continue to apply for subsequent Deferral Periods unless
the Participant submits a new Participation Election form during a
subsequent enrollment period changing the deferral amount or revoking the
existing election. A Participation Election may be revoked by the
Participant upon 30 days written notice to the Administrator; however,
such Participant will be ineligible to make an Annual Deferral under the
Plan for the following Plan Year.
page 4
3.02 Minimum Annual Deferral
The minimum Annual Deferral for a Plan Year is 10% of the Participant's
Compensation.
3.03 Maximum Annual Deferral
The maximum Annual Deferral for a Plan Year is 100% of the Participant's
Compensation.
3.04 Vesting
The Participant's right to receive Compensation deferred under this
Article 3 and any earnings thereon shall be 100% vested at all times.
ARTICLE 4
DEFERRAL ACCOUNTS
4.01 Deferral Accounts
Solely for record keeping purposes, the Administrator shall maintain a
Deferral Account for each Participant with such subaccounts as the
Administrator or its record keeper find necessary or convenient in the
administration of the Plan.
4.02 Timing of Credits
A. Annual Deferrals
The Administrator shall credit the Annual Deferrals under Article
3 to the Participant's Deferral Account at the time the deferrals
would otherwise have been paid but for the Participation Election.
B. Interest Crediting Dates
The Administrator shall credit interest at the Crediting Rate to the
Participant's Deferral Account on daily basis, compounded annually.
C. Statement of Accounts
The Administrator shall periodically provide to each Participant a
statement setting forth the balance of the Deferral Account
maintained for the Participant.
ARTICLE 5
RETIREMENT BENEFITS
5.01 Amount
Upon Retirement, the Company shall pay to the Participant a retirement
benefit in the form provided in Section 5.02, based on the balance of the
Deferral Account as of the Valuation Date. If paid as a lump sum, the
retirement benefit shall be equal to the
page 5
Deferral Account balance. If paid in installments, the installments shall
be paid in amounts that will amortize the Deferral Account balance with
interest credited at the Crediting Rate over the period of time benefits
are to be paid. For purposes of calculating installments, the Deferral
Account shall be valued as of December 31 each year, and the subsequent
installments will be adjusted for the next Plan Year according to
procedures established by the Administrator to reflect changes in the
Crediting Rate.
5.02 Form of Retirement Benefits
The Participant may elect on the Participation Election form to have the
retirement benefit paid:
(i) In a lump sum,
(ii) In installments paid monthly over a period of 60, 120, or 180
months, or
(iii) In a lump sum of a portion of the Deferral Account upon
Retirement with the balance in installments paid monthly over
a period of 60, 120, or 180 months.
If no valid election is made, the Administrator shall pay the retirement
benefit in installments over a 180 month period. Participants may change
the form of payout by written election filed with the Administrator;
provided, however, that if the Participant files the election less than
13 months prior to the date of Retirement, the payout election in effect
13 months prior to the date of Retirement will govern.
5.03 Commencement of Benefits
Payments will commence within 60 days after the date the Participant
retires, or attains age 55, whichever is later.
5.04 Small Benefit Exception
Notwithstanding the foregoing, the Administrator may, in its sole
discretion:
(i) pay the benefits in a single lump sum if the sum of all
benefits payable to the Participant is less than or equal to
$3,500.00, or
(ii) reduce the number of installments elected by the Participant
to 120 or 60 if necessary to produce a monthly benefit of at
least $300.00.
page 6
ARTICLE 6
TERMINATION BENEFITS
6.01 Amount
No later than 60 days following a Termination of Service, the
Administrator shall pay to the Participant a termination benefit equal to
the vested balance of the Deferral Account as of the Valuation Date, or
shall commence installments, as provided in Section 6.02.
6.02 Form of Termination Benefits
The Administrator shall pay the termination benefits in a single lump sum
unless the Participant has previously elected payment to be made in three
annual installments. Installments paid under this Section 6.02 shall
include interest at the Index Rate and shall be redetermined annually to
reflect adjustments in that rate. Notwithstanding the foregoing, any
Termination for Cause will result in an immediate lump sum payout.
ARTICLE 7
SURVIVOR BENEFITS
7.01 Pre-Retirement Survivor Benefit
If the Participant dies while actively serving on the board of directors
of an Affiliate, the Administrator shall pay a lump sum or commence
monthly installments in accordance with the Participant's prior election
within 60 days after the Participant's death. The payment(s) will be
based on the Participant's Deferral Account balance as of the Valuation
Date; provided however, that if the Participant's death occurs within ten
years of (i) his or her initial Plan participation date, or (ii)
January 1, 1995, whichever is later, then the Beneficiary's payment(s)
will be based on twice the Participant's Deferral Account balance as of
the Valuation Date.
7.02 Post-Retirement Survivor Benefit
If the Participant dies after Retirement, the Administrator shall pay to
the Participant's Beneficiary an amount equal to the remaining benefits
payable to the Participant under the Plan over the same period the
benefits would have been paid to the Participant; provided however, if the
Participant's death occurs within ten years of (i) his or her initial Plan
participation date, or (ii) January 1, 1995, whichever is later, then the
Beneficiary's death benefit will be based on twice the Participant's
Deferral Account balance as of the Valuation Date.
7.03 Post-Termination Survivor Benefit
It the Participant dies following Termination of Service, but prior to the
payment of all benefits under the Plan, the Beneficiary will be paid the
remaining balance in the Participant's account in a lump sum. No double
benefit will apply.
page 7
7.04 Changing Form of Benefit
Beneficiaries may petition the Administrator once, and only after the
death of the Participant, for a change in the form of survivor Benefits.
The Administrator may, in its sole and absolute discretion, choose to
grant or deny such a petition.
7.05 Small Benefit Exception
Notwithstanding the foregoing, the Administrator may, in its sole
discretion:
(i) pay the benefits in a single lump sum if the sum of all
benefits payable to the Beneficiary is less than or equal to
$3,500.00, or
(ii) reduce the number of installments elected by the Participant
to 120 or 60 if necessary to produce a monthly benefit of at
least $300.00.
ARTICLE 8
CHANGE OF CONTROL
Within two years after a Change of Control, any Participant or Beneficiary
in the case of an SCEcorp Change of Control, or the affected Participants
or Beneficiaries in the case of a Company Change of Control, may elect to
receive a distribution of the balance of the Deferral Account. There
shall be a penalty deducted from the Deferral Account prior to
distribution pursuant to this Article 8 equal to 5% of the total balance
of the Deferral Account (instead of the 10% reduction otherwise provided
for in Section 9.02). If a Participant elects such a withdrawal, any on-
going Annual Deferral shall cease, and the Participant may not again be
designated as an Eligible Employee until one entire Plan Year following
the Plan Year in which the withdrawal was made has elapsed.
ARTICLE 9
SCHEDULED AND UNSCHEDULED WITHDRAWALS
9.01 Scheduled Withdrawals
A. Election
When making a Participation Election, a Participant may elect to
receive a distribution of a specific dollar amount or a percentage
of the Annual Deferral that will be made in the following Plan Year
at a specified year in the future when the Participant will still
be an active director. Such an election must be made on an In-
Service Distribution Election Form and submitted concurrently with
the Participation Election. The election of a Scheduled Withdrawal
shall only apply to the Annual Deferral and related earnings for
that Deferral Period, but not to previous or subsequent Annual
Deferrals or related earnings. Elections under this Section shall
be superseded by benefit payments due to the Retirement, Termination
of Service or death of the Participant.
page 8
B. Timing and Form of Withdrawal
The year specified for the Scheduled Withdrawal may not be sooner
than the second Plan Year following the Plan Year in which the
deferral occurs. The Participant will receive a lump sum
distribution of the amount elected on January 1st of the Plan Year
specified.
C. Remaining Deferral Account
The remainder, if any, of the Participant's Deferral Account shall
continue in effect and shall be distributed in the future according
to the terms of the Plan.
9.02 Unscheduled Withdrawals
A. Election
A Participant (or Beneficiary if the Participant is deceased) may
request in writing to the Administrator an Unscheduled Withdrawal
of all or a portion of the entire vested amount credited to the
Participant's Deferral Account, including earnings, which shall be
paid within 30 days in a single lump sum; provided, however, that
(i) the minimum withdrawal shall be 25% of the Deferral Account
balance, (ii) an election to withdraw 75% or more of the balance
shall be deemed to be an election to withdraw the entire balance,
and (iii) such an election may be made only once in a Plan Year.
B. Withdrawal Penalty
There shall be a penalty deducted from the Deferral Account prior
to an Unscheduled Withdrawal equal to 10% of the Unscheduled
Withdrawal. If a Participant elects such a withdrawal, any on-going
Annual Deferral shall cease, and the Participant may not again be
designated as an Eligible Director until one entire Plan Year
following the Plan Year in which the withdrawal was made has
elapsed.
C. Small Benefit Exception
Notwithstanding any of the foregoing, if the sum of all benefits
payable to the Participant or Beneficiary who has requested the
Unscheduled Withdrawal is less than or equal to $3,500.00, the
Administrator may, in its sole discretion, elect to pay out the
entire Deferral Account (reduced by the 10% penalty) in a single
lump sum.
ARTICLE 10
CONDITIONS RELATED TO BENEFITS
10.01 Nonassignability
The benefits provided under the Plan may not be alienated, assigned,
transferred, pledged or hypothecated by or to any person or entity, at any
time or any manner whatsoever. These benefits shall be exempt from the
claims of creditors of any
page 9
Participant or other claimants and from all orders, decrees, levies,
garnishment or executions against any Participant to the fullest extent
allowed by law. Notwithstanding the foregoing, the benefit payable to a
Participant may be assigned in full or in part, pursuant to a domestic
relations order of a court of competent jurisdiction.
10.02 Financial Hardship Distribution
A participant may submit a hardship distribution request to the
Administrator in writing setting forth the reasons for the request. The
Administrator shall have the sole authority to approve or deny such
requests. Upon a finding that the Participant or the Beneficiary has
suffered a Financial Hardship, the Administrator may in its discretion,
permit the Participant to cease any on-going deferrals and accelerate
distributions of benefits under the Plan in the amount reasonably
necessary to alleviate the Financial Hardship. If a distribution is to
be made to a Participant on account of Financial Hardship, the Participant
may not make deferrals under the Plan until one entire Plan Year following
the Plan Year in which a distribution based on Financial Hardship was made
has elapsed.
10.03 No Right To Assets
The benefits paid under the Plan shall be paid from the general funds of
the Company, and the Participant and any Beneficiary shall be no more than
unsecured general creditors of the Company with no special or prior right
to any assets of the Company for payment of any obligations hereunder.
The Participant will have no claim to benefits from any other Affiliate.
10.04 Protective Provisions
The Participant shall cooperate with the Administrator by furnishing any
and all information requested by the Administrator, in order to facilitate
the payment of benefits hereunder, taking such physical examinations as
the Administrator may deem necessary and signing such consents to insure
or taking such other actions as may be requested by the Administrator.
If the Participant refuses to cooperate, the Administrator and the
Employer shall have no further obligation to the Participant under the
Plan.
10.05 Withholding
The Participant or the Beneficiary shall make appropriate arrangements
with the Administrator for satisfaction of any federal, state or local
income tax withholding requirements and Social Security or other director
tax requirements applicable to the payment of benefits under the Plan.
If no other arrangements are made, the Administrator may provide, at its
discretion, for such withholding and tax payments as may be required.
page 10
ARTICLE 11
PLAN ADMINISTRATION
The Administrator shall administer the Plan and interpret, construe and
apply its provisions in accordance with its terms and shall provide
direction and oversight as necessary to management, staff, or contractors
to whom day-to-day Plan operations may be delegated. The Administrator
shall establish, adopt or revise such rules and regulations as it may deem
necessary or advisable for the administration of the Plan. All decisions
of the Administrator shall be final and binding.
ARTICLE 12
BENEFICIARY DESIGNATION
The Participant shall have the right, at any time, to designate any person
or persons as Beneficiary (both primary and contingent) to whom payment
under the Plan shall be made in the event of the Participant's death. The
Beneficiary designation shall be effective when it is submitted in writing
to the Administrator during the Participant's lifetime on a form
prescribed by the Administrator.
The submission of a new Beneficiary designation shall cancel all prior
Beneficiary designations. Any finalized divorce or marriage of a
Participant subsequent to the date of a Beneficiary designation shall
revoke such designation, unless in the case of divorce the previous spouse
was not designated as Beneficiary, and unless in the case of marriage the
Participant's new spouse has previously been designated as Beneficiary.
The spouse of a married Participant must consent in writing to any
designation of a Beneficiary other than the spouse.
If a Participant fails to designate a Beneficiary as provided above, or
if the Beneficiary designation is revoked by marriage, divorce, or
otherwise without execution of a new designation, or if every person
designated as Beneficiary predeceases the Participant or dies prior to
complete distribution of the Participant's benefits, then the
Administrator shall direct the distribution of the benefits to the
Participant's estate. If a Beneficiary dies after commencement of
payments to the Beneficiary, a lump sum of any remaining payments will be
paid to that person's Beneficiary, if one has been designated, or to the
Beneficiary's estate.
ARTICLE 13
AMENDMENT OR TERMINATION OF PLAN
13.01 Amendment of Plan
Subject to the terms of Section 13.03, SCEcorp may at any time amend the
Plan in whole or in part, provided, however, that the amendment (i) shall
not decrease the balance of the Participant's Deferral Account at the time
of the amendment and (ii) shall not retroactively decrease the applicable
Crediting Rates of the Plan prior to the time of
page 11
the amendment. SCEcorp may amend the Crediting Rates of the Plan
prospectively, in which case the Administrator shall notify the
Participant of the amendment in writing within 30 days after the
amendment.
13.02 Termination of Plan
Subject to the terms of Section 13.03, SCEcorp may at any time terminate
the Plan. If SCEcorp terminates the Plan, the date of the termination
shall be treated as the date of Termination of Service for the purpose of
calculating Plan benefits, and the benefits the Participant is entitled
to receive under the Plan shall be paid to the Participant in a lump sum
within 60 days.
13.03 Amendment or Termination After Change of Control
Notwithstanding the foregoing, SCEcorp shall not amend or terminate the
Plan without the prior written consent of affected Participants for a
period of two calendar years following a Change of Control and shall not
thereafter amend or terminate the Plan in any manner which affects any
Participant (or Beneficiary of a deceased Participant) who commences
receiving payment of benefits under the Plan prior to the end of the two-
year period following a Change of Control.
13.04 Exercise of Power to Amend or Terminate
SCEcorp's power to amend or terminate the Plan shall be exercisable by the
SCEcorp Board of Directors.
13.05 Constructive Receipt Termination
Notwithstanding anything to the contrary in this Plan, in the event the
Administrator determines that amounts deferred under the Plan have been
constructively received by Participants and must be recognized as income
for federal income tax purposes, the Plan shall terminate and
distributions shall be made to Participants in accordance with the
provisions of Section 13.02 or as may be determined by the Administrator.
The determination of the Administrator under this Section 13.05 shall be
binding and conclusive.
ARTICLE 14
CLAIMS AND REVIEW PROCEDURES
14.01 Claims Procedure
The Administrator shall notify a Participant in writing, within 90 days
after his or her written application for benefits, of his or her
eligibility or noneligibility for benefits under the Plan. If the
Administrator determines that a Participant is not eligible for benefits
or full benefits, the notice shall set forth (1) the specific reasons for
the denial, (2) a specific reference to the provisions of the Plan on
which the denial is based, (3) a description of any additional information
or material necessary for the claimant to perfect his or her claim, and
a description of why it is needed, and (4) an explanation of the Plan's
claims review procedure and other appropriate information as to the steps
to
page 12
be taken if the Participant wishes to have the claim reviewed. If the
Administrator determines that there are special circumstances requiring
additional time to make a decision, the Administrator shall notify the
Participant of the special circumstances and the date by which a decision
is expected to be made, and may extend the time for up to an additional
90-day period.
14.02 Review Procedure
If a Participant is determined by the Administrator not to be eligible for
benefits, or if the Participant believes that he or she is entitled to
greater or different benefits, the Participant shall have the opportunity
to have the claim reviewed by the Administrator by filing a petition for
review with the Administrator within 60 days after receipt of the notice
issued by the Administrator. Said petition shall state the specific
reasons which the Participant believes entitle him or her to benefits or
to greater or different benefits. Within 60 days after receipt by the
Administrator of the petition, the Administrator shall afford the
Participant (and counsel, if any) an opportunity to present his or her
position to the Administrator orally or in writing, and the Participant
(or counsel) shall have the right to review the pertinent documents. The
Administrator shall notify the Participant of its decision in writing
within the 60-day period, stating specifically the basis of its decision,
written in a manner calculated to be understood by the Participant and the
specific provisions of the Plan on which the decision is based. If,
because of the need for a hearing, the 60-day period is not sufficient,
the decision may be deferred for up to another 60-day period at the
election of the Administrator, but notice of this deferral shall be given
to the Participant. In the event of the death of the Participant, the
same procedures shall apply to the Participant's Beneficiaries.
14.03 Dispute Arbitration
Notwithstanding the foregoing, and because it is agreed that time will be
of the essence in determining whether any payments are due to Participant
or his or her Beneficiary under the Plan, a Participant or Beneficiary
may, if he or she desires, submit any claim for payment under the Plan to
arbitration. This right to select arbitration shall be solely that of the
Participant or Beneficiary and the Participant or Beneficiary may decide
whether or not to arbitrate in his or her discretion. The "right to
select arbitration" is not mandatory on the Participant or Beneficiary,
and the Participant or Beneficiary may choose in lieu thereof to bring an
action in an appropriate civil court. Once an arbitration is commenced,
however, it may not be discontinued without the mutual consent of both
parties to the arbitration. During the lifetime of the Participant only
he or she can use the arbitration procedure set forth in this Section.
Any claim for arbitration may be submitted as follows: if a Participant
or Beneficiary has submitted a request to be paid under the Plan and the
claim is finally denied by the Administrator in whole or in part, the
claim may be filed in writing with an arbitrator of the Participant's or
Beneficiary's choice who is selected by the method described in the next
four sentences. The first step of the selection shall consist of the
Participant or Beneficiary submitting a list of five potential arbitrators
to the Administrator. Each of the five arbitrators must be either (1) a
member of the National Academy of Arbitrators
page 13
located in the State of California or (2) a retired California Superior
Court or Appellate Court judge. Within one week after receipt of the
list, the Administrator shall select one of the five arbitrators as the
arbitrator for the dispute in question. If the Administrator fails to
select an arbitrator within one week after receipt of the list, the
Participant or Beneficiary shall then designate one of the five
arbitrators for the dispute in question.
The arbitration hearing shall be held within seven days (or as soon
thereafter as possible) after the picking of the arbitrator. No
continuance of said hearing shall be allowed without the mutual consent
of Participant or Beneficiary and the Administrator. Absence from or
nonparticipation at the hearing by either party shall not prevent the
issuance of an award. Hearing procedures which will expedite the hearing
may be ordered at the arbitrator's discretion, and the arbitrator may
close the hearing in his or her sole discretion when he or she decides he
or she has heard sufficient evidence to satisfy issuance of an award.
The arbitrator's award shall be rendered as expeditiously as possible and
in no event later than one week after the close of the hearing.
In the event the arbitrator finds that the Administrator or the Company
has breached the terms of the Plan, he or she shall order the Company to
pay to Participant or Beneficiary within two business days after the
decision is rendered the amount then due the Participant or Beneficiary,
plus, notwithstanding anything to the contrary in the Plan, an additional
amount equal to 20% of the amount actually in dispute. This additional
amount shall constitute an additional benefit under the Plan. The award
of the arbitrator shall be final and binding upon the Parties.
The award may be enforced in any appropriate court as soon as possible
after its rendition. The Administrator will be considered the prevailing
party in a dispute if the arbitrator determines (1) that the Administrator
or the Company has not breached the terms of the Plan and (2) the claim
by Participant or his or her Beneficiary was not made in good faith.
Otherwise, the Participant or his or her Beneficiary will be considered
the prevailing party. In the event that the Administrator is the
prevailing party, the fee of the arbitrator and all necessary expenses of
the hearing (excluding any attorneys' fees incurred by the Administrator)
including stenographic reporter, if employed, shall be paid by the losing
party. In the event that the Participant or his or her Beneficiary is the
prevailing party, the fee of the arbitrator and all necessary expenses of
the hearing (including all attorneys' fees incurred by Participant or his
or her Beneficiary in pursuing his or her claim), including the fees of
a stenographic reporter, if employed, shall be paid by the Company.
page 14
ARTICLE 15
MISCELLANEOUS
15.01 Successors
The rights and obligations of SCEcorp and the Companies under the Plan
shall inure to the benefit of, and shall be binding upon, the successors
and assigns of SCEcorp and the Companies, respectively.
15.02 Trust
The Companies shall be responsible for the payment of all benefits under
the Plan. At their discretion, the Companies may establish one or more
grantor trusts for the purpose of providing for payment of benefits under
the Plan. The trust or trusts may be irrevocable, but a Company's share
of the assets thereof shall be subject to the claims of the Company's
creditors. Benefits paid to the Participant from any such trust shall be
considered paid by the Company for purposes of meeting the obligations of
the Company under the Plan.
15.03 Service Not Guaranteed
Nothing contained in the Plan nor any action taken hereunder shall be
construed as a contract of service or as giving any Participant any right
to continue in service as a director of SCEcorp or any other Affiliate.
15.04 Gender, Singular and Plural
All pronouns and variations thereof shall be deemed to refer to the
masculine, feminine, or neuter, as the identity of the person or persons
may require. As the context may require, the singular may be read as the
plural and the plural as the singular.
15.05 Captions
The captions of the articles and sections of the Plan are for convenience
only and shall not control or affect the meaning or construction of any
of its provisions.
15.06 Validity
If any provision of the Plan is held invalid, void or unenforceable, the
same shall not affect, in any respect whatsoever, the validity of any
other provisions of the Plan.
15.07 Waiver of Breach
The waiver by the Administrator of any breach of any provision of the Plan
by the Participant shall not operate or be construed as a waiver of any
subsequent breach by the Participant.
15.08 Applicable Law
The Plan shall be governed and construed in accordance with the laws of
California.
page 15
15.09 Notice
Any notice or filing required or permitted to be given to the
Administrator under the Plan shall be sufficient if in writing and hand-
delivered, or sent by first class mail to the principal office of SCEcorp,
directed to the attention of the Administrator. The notice shall be
deemed given as of the date of delivery, or, if delivery is made by mail,
as of the date shown on the postmark.
IN WITNESS WHEREOF, SCEcorp has adopted this Plan effective the 1st day
of January, 1995.
SCEcorp
Alan J. Fohrer
____________________________________________________
Executive Vice President and Chief Financial Officer
PAGE
EXHIBIT 10.10
SCEcorp
Director Grantor Trust Agreement
August, 1995
SCEcorp DIRECTOR GRANTOR TRUST AGREEMENT
TABLE OF CONTENTS (cont.)
Section Title Page
- ------- ----- ----
PREAMBLE 1
I. EFFECTIVE DATE AND DURATION 3
1.01 Effective Date And Trust Year 3
1.02 Duration 3
1.03 Special Circumstances 4
II. TRUST FUND AND FUNDING POLICY 5
2.01 Contributions 5
2.02 Investment And Valuation 8
2.03 Subtrusts 12
2.04 Recapture Of Excess Assets 13
2.05 Substitution Of Other Property 13
2.06 Administrative Powers Of Trustee 14
III. ADMINISTRATION 17
3.01 Committee; Company Representatives 17
3.02 Payment Of Benefits 17
3.03 Disputed Claims 18
3.04 Records 20
3.05 Accountings 20
3.06 Expenses And Fees 21
IV. LIABILITY 21
4.01 Indemnity 21
4.02 Bonding 21
V. INSOLVENCY 22
5.01 Determination of Insolvency 22
5.02 Insolvency Administration 22
5.03 Termination Of Insolvency Administration 23
5.04 Creditors' Claims During Solvency 23
VI. SUCCESSOR TRUSTEES 23
-i-
PAGE
SCEcorp DIRECTOR GRANTOR TRUST AGREEMENT
TABLE OF CONTENTS (cont.)
Section Title Page
- ------- ----- ----
6.01 Resignation And Removal 23
6.02 Appointment Of Successor 24
6.03 Accountings; Continuity 24
VII. GENERAL PROVISIONS 24
7.01 Interests Not Assignable 24
7.02 Amendment 25
7.03 Applicable Law 25
7.04 Agreement Binding On All Parties 25
7.05 Notices And Directions 25
7.06 No Implied Duties 26
7.07 Gender, Singular And Plural 26
7.08 Validity 27
VIII. INSURER 26
8.01 Insurer Not A Party 27
8.02 Authority Of Trustee 27
8.03 Contract Ownership 27
8.04 Limitation Of Liability 27
8.05 Change Of Trustee 27
-ii-
PAGE
SCEcorp
DIRECTOR GRANTOR TRUST
AGREEMENT
This Director Grantor Trust Agreement ("Trust Agreement") is made and
entered into by SCEcorp, Southern California Edison Company, The Mission
Group, Mission Energy Company, Mission First Financial, Mission Land
Company, all California corporations ("Grantors"), and U.S. Trust Company
of California N. A. ("Trustee").
The Grantors hereby establish with the Trustee a master trust, with
separate subtrusts for the interests of each Grantor, to hold all monies
and other property, together with the income thereon, as shall be paid or
transferred to it hereunder in accordance with the terms and conditions
of this Trust Agreement. The Trustee hereby accepts the trust established
under this Trust Agreement and agrees to hold, IN TRUST, all monies and
other property transferred to it hereunder for the uses and purposes and
upon the terms and conditions set forth herein, and the Trustee further
agrees to discharge and perform fully and faithfully all of the duties
and obligations imposed upon it under this Trust Agreement.
PREAMBLE
On behalf of directors of the Grantors, SCEcorp has adopted the following
plan which shall be subject to this trust and references to the "Plan" in
this Trust Agreement shall refer to such plan:
SCEcorp Director Deferred Compensation Plan
The Plan is administered by the SCEcorp Compensation and Executive
Personnel Committee of the SCEcorp Board of Directors ("Compensation
Committee"). This Trust Agreement shall be administered by the
Compensation Committee, but day-to-day administration is delegated to the
SCE Trust Investment Committee ("Trust Committee").
PAGE
Plan participants and beneficiaries who are covered by this Trust
Agreement ("Participants" and "Beneficiaries") shall be all persons who
are participants or beneficiaries in the Plan. After a person becomes a
Participant or a Beneficiary covered by this Trust Agreement, such status
will continue until all Plan benefits payable to that person have been
paid, that person ceases to be entitled to any Plan benefits, or that
person dies, whichever occurs first.
Prior to a Change in Control, SCEcorp may by written notice to the
Trustee, cause additional plans to become subject to this Trust Agreement
(any reference to the Plan herein also constitutes a reference to any such
additional plans).
SCEcorp shall provide the Trustee with copies of the following items: (i)
the Plan documents; (ii) all Plan amendments promptly upon their adoption;
and (iii) lists and specimen signatures of the members of the Trust
Committee and any SCEcorp representatives authorized to take action in
regard to the administration of the Plan and this trust, including any
changes in the members of the Trust Committee and of such other
representatives promptly following any such change. SCEcorp shall also
provide the Trustee at least annually with a list of all Participants in
each Plan who are covered by this Trust Agreement.
The purpose of this trust is to give Participants greater security by
placing assets in trust for use only to pay Plan benefits to Participants
or if one of the Grantors becomes insolvent, to pay its creditors from its
portion of the trust assets. The Grantors shall continue to be liable to
Participants to make all payments required under the terms of the Plan to
the extent such payments are not made from this trust. Distributions made
from this trust to Participants or their beneficiaries shall, to the
extent of such distributions, satisfy the Grantors' obligations to pay
benefits to Participants and their beneficiaries under the Plan.
The Grantors and the Trustee agree that the trust, comprised of one or
more subtrusts for each Grantor, has been established to pay obligations
of the Grantors pursuant to the Plan and each subtrust is subject to the
rights of general creditors of the respective Grantor, and accordingly the
trust is a grantor trust under the provisions of Sections 671 through 677
of the Internal Revenue Code of 1986, as amended (the "Code"). The
Grantors hereby agree to report their allocable shares of all items of
income, deductions and credits of the trust on their own income tax
returns; and the Grantors shall have no right to any distributions from
the trust or any claim against the trust for funds necessary to pay any
income taxes which the Grantors are required to pay on account of
reporting the income of the trust on their income tax returns. No
contribution to or income of the trust is intended to be taxable to
Participants until benefits are distributed to them.
page 2
I.
EFFECTIVE DATE AND DURATION
1.01 Effective Date And Trust Year
This trust shall become effective when the Trust Agreement has been
executed by the Grantors and the Trustee and one or more of the Grantors
have made a contribution to the trust. For tax purposes the trust year
shall be the calendar year.
1.02 Duration
1.02-1 This trust shall continue in effect until all assets of the trust
fund are exhausted through distribution of benefits to Participants and
their beneficiaries, payment to creditors in the event of insolvency,
payment of fees and expenses of the Trustee, and return of remaining funds
to the Grantors pursuant to 1.02-2. Notwithstanding the foregoing, this
trust shall terminate on the day before twenty-one years after the death
of the last survivor of all present or future Participants who are now
living and those persons now living who are designated as beneficiaries
of any such Participants in accordance with the terms of the Plan.
1.02-2 Except as otherwise provided in 1.02, the trust shall be
irrevocable until all benefits payable under the Plan to Participants and
Beneficiaries who are covered by this Trust Agreement are paid. The
Trustee shall then return to the Grantors any assets remaining in the
trust in accordance with the allocations to their respective subtrusts.
1.02-3 If the existence of this trust or any subtrust is determined to
be Tax Funding (as such term is defined in 1.02-4) by the Compensation
Committee, this trust or such subtrust shall terminate. The Compensation
Committee may also terminate this trust or any subtrust if it determines,
based on an opinion of legal counsel which is satisfactory to the Trustee,
that either (i) judicial authority or the opinion of Treasury Department
or Internal Revenue Service (as expressed in proposed or final
regulations, advisory opinions or rulings, or similar administrative
announcements) creates a significant risk that the trust or any subtrust
will be held to be Tax Funding or (ii) the Code requires the trust or any
subtrust to be amended in a way that creates a significant risk that the
trust or such subtrust will be held to be Tax Funding, and failure to so
amend the trust or such subtrust could subject the Grantors to material
penalties. Upon any such termination, (i) the assets of each terminated
subtrust shall be allocated and distributed to the Participants in
proportion to the vested accrued benefits of Participants under the Plan
and (ii) then, if any assets remain, the unvested (if any) accrued
benefits of Participants under the applicable Plan shall be distributed
to such Participants in lump sums in proportion to the unvested accrued
benefits of the Participants under the Plan . Any assets remaining shall
be distributed to the respective Grantor(s) in accordance with 2.04.
page 3
Notwithstanding the foregoing, the Trustee shall distribute Plan benefits
to a Participant to the extent that a federal court has held that the
interest of the Participant in this trust causes such Plan benefits to be
includable for federal income tax purposes in the gross income of the
Participant prior to actual payment of such Plan benefits to the
Participant and appeals from that holding are no longer timely or have
been exhausted. The Trustee may also distribute Plan benefits to a
Participant, upon direction of the Compensation Committee, based on an
opinion of legal counsel which is satisfactory to the Trustee, that there
is a significant risk that the Participant's interest in the trust fund
will be held to be Tax Funding with respect to such Participant. The
provisions of this paragraph shall also apply to any Beneficiary of a
Participant.
1.02-4 This trust is "Tax Funding" if it causes the interest of a
Participant in this trust to be includable for federal income tax purposes
in the gross income of the Participant prior to actual payment of Plan
benefits to the Participant.
1.02-5 "Written Consent of Participants" means, for the purposes of this
Trust Agreement, consent in writing by Participants who (i) constitute a
majority in number of all participants and (ii) have accrued benefits
(whether vested or unvested) with a present value equal to more than fifty
percent (50%) of the present value of the accrued benefits of all of the
Participants in all of the subtrusts under this Trust Agreement on the
date of such consent.
1.03 Special Circumstances
1.03-1 Upon the occurrence of a Special Circumstance as described in
1.03-2 with respect to any Grantor, the trust assets allocated to the
affected Grantor shall be held for Participants in the Grantor's subtrusts
who had accrued benefits before the Special Circumstance occurred and
shall include those assets accrued for such Participants after the Special
Circumstance.
1.03-2 A "Special Circumstance" shall mean a Potential Change in Control
of any Grantor (as defined in 2.01-7), a Change in Control of any Grantor
(as defined in the Plan) or a Default of any Grantor (as defined in 1.03-
4).
1.03-3 The Trust Committee or the Chief Executive Officer of the affected
Grantor shall furnish written notice to the Trustee when a Change in
Control occurs. For purposes of this Trust Agreement, a Change in Control
of any Grantor shall be deemed to have occurred when the Trustee makes a
determination to that effect on its own initiative or upon receipt by the
Trustee of written notice to that effect from the Trust Committee or the
Chief Executive Officer of the affected Grantor.
1.03-4 A "Default" shall mean a failure by a Grantor to contribute to the
trust, within 30 days of receipt of written notice from the Trustee, any
of the following amounts:
(a) The full amount of any insufficiency in assets of any
subtrust that is required to pay any premiums or loan
interest payments on insurance contracts which are held in
the subtrust;
page 4
(b) The full amount of any insufficiency in assets of any
subtrust that is required to pay any Plan benefit that is
payable upon a direction from the Trust Committee pursuant
to 3.02-3 or upon resolution of a disputed claim pursuant to
3.03-2; or
(c) Any contribution which is then required under 2.01.
If, after the occurrence of a Default, the Grantor at any time cures such
Default by contributing to the trust all amounts which are then required
under subparagraphs (a), (b) and (c) above, it shall then cease to be
deemed that a Default has occurred or that a Special Circumstance has
occurred by reason of such Default.
II.
TRUST FUND AND FUNDING POLICY
2.01 Contributions
2.01-1 All contributions to the trust by the Grantors shall be made
through SCEcorp as agent for the Grantors. Each Grantor shall be liable
to SCEcorp for its allocable share of any contribution made to the trust
by SCEcorp on behalf of the Grantor. Each Grantor, through SCEcorp, shall
contribute to the trust such amounts as are required to purchase or hold
insurance contracts in the trust and to pay premiums and loan interest
payments thereon. Each Grantor, through SCEcorp, shall also contribute
to the trust such additional amounts as are necessary to fund all Plan
benefits accrued by Participants while employed by such Grantor (unless
the Grantor makes such payments directly) whenever the Trust Committee
advises SCEcorp or the Grantor that the assets of the trust or subtrust,
other than insurance contracts or amounts needed to pay future premiums
or loan interest payments on insurance contracts, are, or in the future
are likely to be, insufficient to make such payments. In its discretion,
SCEcorp or any Grantor may contribute to the trust such additional amounts
or assets as the Trust Committee may reasonably decide are necessary to
provide security for all Plan benefits payable to Participants covered by
this trust or any subtrust. SCEcorp or any Grantor may make contributions
to a special reserve for payment of future fees and expenses of the
Trustee and future trust fees and expenses for legal and administrative
proceedings.
2.01-2 Whenever SCEcorp makes a contribution to the trust on behalf of
the Grantors, SCEcorp shall designate the Plan and subtrusts to which such
contribution (or designated portions thereof) shall be allocated. If the
contribution is for a special reserve for payment of future fees and
expenses of the Trustee and future trust fees and expenses for legal and
administrative proceedings, a separate subtrust shall be designated to
receive such contributions, which shall be distinct from any subtrust
established for the Plan or the Grantors.
page 5
2.01-3 Following the occurrence of a Special Circumstance (as defined in
1.03-2) with respect to any Grantor, and at least annually thereafter
while the Special Circumstance remains in effect, the Grantor shall
contribute to the trust the sum of the following:
(a) The amount by which the present value of all "anticipated
benefits" (vested and unvested) payable under the Plan on a
pre-tax basis to Participants or their beneficiaries whose
benefits are funded by the Grantor's subtrust(s) exceeds the
value of all of the Grantor's subtrust assets. For this
purpose, each Participant's "anticipated benefit" under the
Plan shall be the present value of highest benefit the
Participant would have accrued under the Plan by the end of
that year, assuming that the Participant's service continues
at the same rate of compensation and that the Participant
continues to make deferrals under the Plan for the balance
of the year.
(b) A reasonable estimate of the Trustee fees and expenses for
the remaining duration of the trust which should be allocable
to the Grantor's subtrust(s).
2.01-4 The calculations required under 2.01-3 shall be based on the terms
of the Plan.
2.01-5 Whenever SCEcorp makes a contribution to the trust pursuant to
2.01-3 on its own behalf or on behalf of another Grantor, it shall furnish
the Trustee with a written statement setting forth the computation of all
required amounts contributed.
Whenever a Special Circumstance occurs or a contribution is made pursuant
to 2.01-3, SCEcorp or the Trust Committee shall deliver to the Trustee,
contemporaneously with or immediately prior to such event, a schedule (the
"Payment Schedule") indicating the amounts payable under the Plan in
respect of each affected Participant, or providing a formula or
instructions acceptable to the Trustee for determining the amounts so
payable, the form in which such amounts are to be paid (as provided for
or available under the Plan) and the time of commencement for payment of
such amounts. The Payment Schedule shall include any other necessary
instructions with respect to Plan benefits (including legal expenses)
payable under the Plan and any conditions with respect to any
Participant's entitlement to such benefits, and such instructions may be
revised from time to time to the extent so provided under the Plan or this
Trust Agreement.
A modified Payment Schedule shall be delivered by SCEcorp or the Trust
Committee to the Trustee at each time that (i) additional amounts are
required to be paid to the Trustee pursuant to 2.01-3, (ii) Excess Assets
are returned to the Grantors, or (iii) upon the occurrence of any event
requiring a modification of the Payment Schedule. SCEcorp shall also
furnish a Payment Schedule or modified Payment Schedule for any or all
Plan upon request by the Trustee at any other time. Whenever SCEcorp or
the Trust Committee is required to deliver to the Trustee a Payment
Schedule or a modified Payment Schedule, SCEcorp shall also deliver at the
same time to each Participant the respective portion of the Payment
Schedule or modified Payment Schedule that sets forth the amount payable
to that Participant.
page 6
2.01-6 Any contribution to the trust which is made by a Grantor on
account of a Potential Change in Control shall be returned to that Grantor
following one year after delivery of such contribution to the Trustee
unless a Change in Control of the Grantor shall have occurred during such
one-year period, if the Grantor requests such return within 60 days after
such one-year period. If no such request is made within this 60-day
period, the contribution shall become a permanent part of the trust fund
allocated to the Grantor's subtrust(s). The one-year period shall
recommence in the event of and upon the date of any subsequent Potential
Change in Control.
2.01-7 A "Potential Change in Control" shall be deemed to occur with
respect to a Grantor if:
(a) Any person, as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Act"), other than a
trustee or other fiduciary holding securities under an
employee benefit plan of the Grantor, delivers to the Grantor
a statement containing the information required by Schedule
13-D under the Act, or any amendment to any such statement,
that shows that such person has acquired, directly or
indirectly, the beneficial ownership of (i) more than twenty-
five (25%) percent of any class of equity security of the
Grantor entitled to vote as a single class in the election
or removal from office of directors, or (ii) more than
twenty-five (25%) percent of the voting power of any group
of classes of equity securities of the Grantor entitled to
vote as a single class in the election or removal from office
of directors;
(b) The Grantor becomes aware that preliminary or definitive
copies of a proxy statement and information statement or
other information have been filed with the Securities and
Exchange Commission pursuant to Rule 14a-6, Rule 14c-5, or
Rule 14f-1 under the Act relating to a Potential Change in
Control of the Grantor;
(c) Any person delivers to the Grantor pursuant to Rule 14d-3
under the Act a Tender Offer Statement relating to Voting
Securities of the Grantor;
(d) Any person (other than the Grantor or an SCEcorp affiliate)
publicly announces an intention to take actions which if
consummated would constitute a Change in Control;
(e) The Grantor enters into an agreement or arrangement, the
consummation of which would result in the occurrence of a
Change in Control;
(f) The Grantor's Board approves a proposal, or the Grantor
enters into an agreement, which if consummated would
constitute a Change in Control; or
(g) The Grantor's Board adopts a resolution to the effect that,
for purposes of this Trust Agreement, a Potential Change in
Control has occurred.
Notwithstanding the foregoing, a Potential Change in Control shall not be
deemed to occur as a result of any event described in (a) through (g)
above, if directors who were a majority of the members of the Grantor's
Board prior to such event determine that the
page 7
event shall not constitute a Potential Change in Control and furnish
written notice to the Trustee of such determination.
2.01-8 The Trust Committee or the Chief Executive Officer of the affected
Grantor shall furnish written notice to the Trustee when a Potential
Change in Control occurs under 2.01-7. For purposes of this trust, a
Potential Change in Control shall be deemed to have occurred when the
Trustee makes a determination to that effect on its own initiative or upon
receipt by the Trustee of written notice to that effect from the affected
Grantor or the Trust Committee except as may be provided under 2.01-7.
2.01-9 The Trustee shall accept the contributions made by SCEcorp on
behalf of the Grantors and hold them as a trust fund for the payment of
benefits under the Plan. The Trustee shall not be responsible for
determining the required amount of contributions or for collecting any
contribution not voluntarily paid, nor shall the Trustee be responsible
for the adequacy of the trust fund to meet and discharge all liabilities
under the Plan. Contributions may be in cash or in other assets specified
in 2.02.
2.02 Investment And Valuation
2.02-1 The trust fund may be invested primarily in insurance contracts
("Contracts"). Such Contracts may be purchased by SCEcorp on behalf of
the Grantors and transferred to the Trustee as in-kind contributions or
may be purchased by the Trustee with the proceeds of cash contributions
(or may be purchased upon direction by the Trust Committee pursuant to
2.02-2 or an Investment Manager pursuant to 2.02-4). Trust contributions
shall include sufficient cash to make projected premium payments on such
Contracts and payments of interest due on loans secured by the cash value
of such Contracts, unless SCEcorp makes these payments directly on behalf
of the Grantors or the Grantors make the payments directly. The Trustee
shall have the power to exercise all rights, privileges, options and
elections granted by or permitted under any Contract or under the rules
of the insurance company issuing the Contract ("Insurer"), including the
right to obtain policy loans against the cash value of the Contract.
Prior to a Special Circumstance, the exercise by the Trustee of any
incidents of ownership under any Contract shall be subject to the
direction of the Trust Committee. The Trustee shall have no power to
designate a beneficiary other than the trust, to assign a Contract other
than to a successor trustee, or to loan proceeds of any Contract
borrowings to any person other than the Grantors. The Trust Committee may
from time to time direct the Trustee in writing as to the designation of
beneficiary under such Contracts.
Notwithstanding anything contained herein to the contrary, neither
SCEcorp, nor any Grantor nor the Trustee shall be liable for the refusal
of any Insurer to issue or change any Contract or Contracts or to take any
other action requested by the Trustee; nor for the form, genuineness,
validity, sufficiency or effect of any Contract or Contracts held in the
trust; nor for the act of any person (other than itself) or persons that
may render any such Contract or Contracts null and void; nor for failure
of any Insurer to pay the proceeds of any such Contract or Contracts as
and when the same shall become due
page 8
and payable; nor for any delay in payment resulting from any provision
contained in any such Contract or Contracts; nor for the fact that for any
reason whatsoever (other than its own negligence or willful misconduct)
any Contracts shall lapse or otherwise become uncollectable.
2.02-2 Prior to a Special Circumstance, the Trustee shall invest the
trust fund in accordance with written directions by the Trust Committee,
including directions for exercising rights, privileges, options and
elections pertaining to Contracts and for borrowing from Contracts or
other borrowing by the Trustee. The Trustee shall act only as an
administrative agent in carrying out directed investment transactions and
shall not be responsible for the investment decision. If a directed
investment transaction violates any duty to diversify, to maintain
liquidity or to meet any other investment standard under this trust or
applicable law, the entire responsibility shall rest upon the Trust
Committee. The Trustee shall be fully protected in acting upon or
complying with any investment objectives, guidelines, restrictions or
directions provided in accordance with this paragraph.
After a Special Circumstance with respect to a Grantor, the Trust
Committee shall no longer be entitled to direct the Trustee with respect
to the investment of that portion of the trust fund allocated to that
Grantor's subtrust(s), unless the Written Consent of Participants of the
affected subtrust(s) is obtained for the Trust Committee to continue to
have this right pursuant to 2.02-2. If such Written Consent of
Participants is not obtained, that portion of the trust fund shall be
invested by the Trustee pursuant to 2.02-3 or by an Investment Manager
pursuant to 2.02-4. The Trustee or Investment Manager shall have the
right to invest the Trust Fund primarily in insurance contracts pursuant
to 2.02-1.
Notwithstanding the foregoing, after a Special Circumstance no new
investments shall be made at any time in any securities, instruments,
accounts or real property of the affected Grantor, and the Trustee may not
loan trust fund assets to the affected Grantor, or permit the affected
Grantor to pledge trust fund assets as collateral for loans to the
affected Grantor without the Written Consent of all of the Participants.
The Trust Committee may not direct the Trustee to make any investments,
and the Grantors may not make any contributions of property to the trust
fund, which are not permissible investments under 2.02-1 and 2.02-3.
2.02-3 If the Trustee does not receive instructions from the Trust
Committee for the investment of part or all of the trust fund for a period
of at least 60 days, the Trustee shall invest and reinvest the assets of
the trust fund as the Trustee, in its sole discretion, may deem
appropriate, in accordance with applicable law.
Permissible investments shall be limited to the following:
(a) Insurance or annuity contracts;
page 9
(b) Preferred or common stocks, bonds, notes, debentures,
commercial paper, certificates of deposit, money market
funds, obligations of governmental bodies, or other
securities;
(c) Interest-bearing savings or deposit accounts with any
federally-insured bank or savings and loan association
(including the Trustee or an affiliate of the Trustee);
(d) Shares or certificates of participation issued by investment
companies, investment trusts, mutual funds, or common or
pooled investment funds (including any common or pooled
investment fund now or hereafter maintained by the Trustee
or an affiliate of the Trustee); or
(e) Real property, mortgages, deeds of trust, or notes secured
by mortgages or deeds of trust.
2.02-4 Prior to a Change in Control, the Trust Committee may appoint one
or more investment managers ("Investment Manager") subject to the
following provisions:
(a) The Trust Committee may appoint one or more Investment
Managers to manage (including the power to acquire and
dispose of) a specified portion of the assets of the trust
(hereinafter referred to as that Investment Manager's
"Segregated Fund"). Any Investment Manager so appointed must
be either (i) an investment adviser registered as such under
the Investment Advisers Act of 1940, (ii) a bank, as defined
in that Act, or (iii) an insurance company qualified to
perform services in the management, acquisition or
disposition of the assets of trusts under the laws of more
than one state; and any Investment Manager so appointed must
acknowledge in writing to the Trust Committee and to the
Trustee that it is a fiduciary with respect to the trust
assets. The Trustee, until notified in writing to the
contrary, shall be fully protected in relying upon any
written notice of the appointment of an Investment Manager
furnished to it by the Trust Committee. In the event of any
vacancy in the office of Investment Manager, the Trustee,
upon seven days prior written notice of the vacancy in the
office of Investment Manager shall be deemed to be the
Investment Manager of that Investment Manager's Segregated
Fund until an Investment Manager thereof shall have been duly
appointed; and in such event, until an Investment Manager
shall have been so appointed and qualified, references herein
to the Trustee's acting in respect of that Segregated Fund
pursuant to direction from the Investment Manager shall be
deemed to authorize the Trustee to act in its own discretion
in managing and controlling the assets of that Segregated
Fund, and subparagraphs (b) and (c) below shall have no
effect with respect thereto and shall be disregarded.
(b) Each Investment Manager appointed pursuant to subparagraph
(a) above shall have exclusive authority and discretion to
manage and control the assets of its Segregated Fund and may
invest and reinvest the assets of the
page 10
Segregated Fund in any investments in which the Trustee is
authorized to invest under 2.02-3, subject to the terms and
limitations of any written instruments pertaining to its
appointment as Investment Manager. Copies of any such
written instruments shall be furnished to the Trustee. In
addition, each Investment Manager from time to time and at
any time may delegate to the Trustee (or in the event of any
vacancy in the office of Investment Manager, the Trustee,
upon seven days prior written notice of the vacancy in the
office of Investment Manager, may, until an Investment
Manager thereof shall have been duly appointed, exercise in
respect of that Investment Manager's Segregated Fund)
discretionary authority to invest and reinvest otherwise
uninvested cash held in its Segregated Fund temporarily in
bonds, notes or other evidences of indebtedness issued or
fully guaranteed by the United States of America or any
agency or instrumentality thereof, or in other obligations
of a short-term nature, including prime commercial
obligations or part interests therein.
(c) Unless the Trustee knowingly participates in, or knowingly
undertakes to conceal, an act or omission of an Investment
Manager, knowing such act or omission to be a breach of the
fiduciary responsibility of the Investment Manager with
respect to the trust assets, the Trustee shall not be liable
for any act or omission of any Investment Manager and shall
not be under any obligation to invest or otherwise manage the
assets of the Plan that are subject to the management of any
Investment Manager. Without limiting the generality of the
foregoing, the Trustee shall not be liable by reason of its
taking or refraining from taking at the direction of an
Investment Manager any action in respect of that Investment
Manager's Segregated Fund. The Trustee shall be under no
duty to question or to make inquiries as to any direction or
order or failure to give direction or order by any Investment
Manager; and the Trustee shall be under no duty to make any
review of investments acquired for the trust at the direction
or order of any Investment Manager and shall be under no duty
at any time to make any recommendation with respect to
disposing of or continuing to retain any such investment.
2.02-5 The values of all assets in the trust fund shall be reasonably
determined by the Trustee and may be based on the determination of
qualified independent parties or Experts (as described in 2.06-2). At any
time before or after a Special Circumstance, the Trustee shall have the
right to secure confirmation of value by a qualified independent party or
Expert for all property of the trust fund, as well as any property to be
substituted for other property of the trust fund pursuant to 2.05. Before
a Special Circumstance the Trust Committee may designate one or more
independent parties, who are acceptable to the Trustee, to determine the
fair market value of any notes, securities, real property or other assets.
Any insurance or annuity contracts held in the trust fund shall be valued
at their cash surrender value, except for purposes of substituting other
property for such Contracts
page 11
pursuant to 2.05-2. All securities shall be valued net of costs to sell,
or register for sale, such securities. All real property shall be valued
net of costs to sell such real property. All other assets of the trust
fund shall be valued at their fair market value.
SCEcorp shall pay on behalf of the Grantors all costs incurred in valuing
the assets of the trust fund including any assets to be substituted for
other assets of the trust fund pursuant to 2.05. If not so paid, these
costs shall be paid from the trust fund. SCEcorp shall reimburse the
trust fund within 30 days after receipt of a bill from the Trustee for any
such costs paid out of the trust fund.
2.02-6 Following a Change in Control of a Grantor, the Trustee shall be
the Investment Manager of the assets of the affected subtrust(s). While
the Trustee is the Investment Manager, any requirements in the Plan or
Trust Agreement that the Investment Manager or the Trustee provide the
other with prior written notice or other communication shall not apply.
2.03 Subtrusts
2.03-1 The Trustee shall establish a Grantor subtrust for each Plan in
which a Grantor participates to which it shall credit contributions it
receives which are earmarked for that Grantor. The Trustee shall also
establish a separate subtrust to which it shall credit contributions it
receives which are earmarked to the special reserve for payment of future
fees and expenses of the Trustee. Each subtrust shall reflect an
undivided interest in assets of the trust fund and shall not require any
segregation of particular assets, except that an insurance contract
covering benefits of a particular Plan shall be held in the subtrust for
the Plan. All contributions shall be designated by SCEcorp for a
particular subtrust. However, any contribution received by the Trustee
which is not earmarked for a particular subtrust shall be allocated among
the subtrusts as the Trustee may determine in its sole discretion.
The Trust Committee may direct the Trustee, or the Trustee may determine
on its own initiative, to maintain a separate sub-account within each
subtrust for a Plan for each Participant who is covered by the subtrust.
Each sub-account in a subtrust shall reflect an individual interest in
assets of the subtrust and, as much as possible, shall operate in the same
manner as if it were a separate subtrust.
2.03-2 The Trustee shall allocate investment earnings and losses and
expenses of the trust fund among the subtrusts in proportion to their
balances, except that changes in the value of an insurance contract
(including premiums and interest on loans on an insurance contract) shall
be allocated to the subtrust for which it is held. Payments to creditors
during Insolvency Administration under 5.02 shall be charged against the
affected Grantor's subtrusts in proportion to their balances, except that
payment of Plan benefits to a Participant as a general creditor shall be
charged against the subtrust for that Plan.
2.03-3 Assets allocated to a subtrust for one Plan may not be utilized
to provide benefits under any other Plan until all benefits under such
Plan have been paid in full,
page 12
except that Excess Assets (as defined in 2.04-2) of a subtrust may be
transferred to other subtrusts pursuant to 2.04-5.
2.04 Recapture Of Excess Assets
2.04-1 In the event the trust shall hold Excess Assets, the Trust
Committee, at its option, may direct the Trustee to return part or all of
such Excess Assets to the Grantors.
2.04-2 "Excess Assets" are assets of the trust or a subtrust exceeding
one hundred twenty-five percent (125%) of the amounts described in 2.01-3.
2.04-3 The calculation required by 2.04-2 shall be based on the terms of
the Plan. Before a Special Circumstance, the calculation shall be made
by the Trust Committee or a qualified actuary or consultant selected by
the Trust Committee. After a Special Circumstance, the calculation shall
be made by a qualified actuary or consultant selected by the Trustee,
provided the Trust Committee may select a qualified actuary or consultant
with the Written Consent of Participants.
2.04-4 Excess Assets shall be returned to the Grantors in any order of
priority directed by the Trust Committee, unless the Trustee determines
otherwise to protect the Participants.
2.04-5 If any subtrust for a Grantor holds Excess Assets, the Trust
Committee may direct the Trustee to transfer such Excess Assets to other
subtrusts of the Grantor. After a Special Circumstance, the Trustee may
also transfer Excess Assets of a subtrust for a Grantor to other subtrusts
for that Grantor upon its own initiative in such amounts as it may
determine in its sole discretion.
Excess Assets of a subtrust for a Plan shall be determined in the same
manner as Excess Assets of the trust are determined pursuant to 2.04-2 and
2.04-3. In making this determination, each subtrust for a Plan shall bear
its allocable share of the amounts described in 2.01-3 which relate to
that Plan. The Trustee, in its sole discretion, shall determine whether
there are Excess Assets in the separate subtrust which constitutes the
reserve for payment of future fees and expenses of the Trustee. Excess
Assets for this subtrust shall be any amounts which the Trustee reasonably
determines will not be needed in the future for payment of such fees and
expenses.
2.05 Substitution Of Other Property
2.05-1 SCEcorp shall have the power to re-acquire on behalf of the
Grantors part or all of the assets or collateral held in the trust fund
at any time, by simultaneously substituting for it other readily
marketable property of equivalent value, net of any costs of disposition;
provided that, if the trust holds Excess Assets, the property which is
substituted shall not be required to be of equivalent value, but only of
sufficient value so that the trust will retain Excess Assets of not less
than $10,000 after such substitution. The property which is substituted
must be among the types of investments authorized under 2.02 and may not
be less liquid or marketable or less well secured
page 13
than the property for which it is substituted, as determined by the Trust
Committee. Such power is exercisable in a nonfiduciary capacity and may
be exercised without the approval or consent of Participants or any other
person.
2.05-2 Except for insurance contracts, the value of any assets re-
acquired under 2.05-1 shall be determined as provided in 2.02-5. The
value of any insurance contract re-acquired under 2.05-1 shall be the
present value of future projected cash flow or benefits payable under the
Contract, but not less than the cash surrender value. The projection
shall include death benefits based on reasonable mortality assumptions,
including known facts specifically relating to the health of the insured
and the terms of the Contract to be re-acquired. Values shall be
reasonably determined by the Trustee and may be based on the determination
of qualified independent parties and Experts, as described in 2.02-5 and
2.06-2. The Trustee shall have the right to secure confirmation of value
by a qualified independent party or Expert for all property to be
substituted for other property.
2.05-3 SCEcorp shall pay on behalf of the Grantors all costs incurred in
valuing the assets of the trust fund, including any assets to be
substituted for other assets of the trust fund pursuant to 2.05. If not
so paid, these costs shall be paid from the trust fund. SCEcorp shall
reimburse the trust fund within 30 days after receipt of a bill from the
Trustee for any such costs paid out of the trust fund.
2.06 Administrative Powers Of Trustee
2.06-1 Subject in all respects to applicable provisions of this Trust
Agreement, including limitations on investment of the trust fund, the
Trustee shall have the rights, powers and privileges of an absolute owner
when dealing with property of the trust, including (without limiting the
generality of the foregoing) the powers listed below:
(a) To sell, convey, transfer, exchange, partition, lease, and
otherwise dispose of any of the assets of the trust at any
time held by the Trustee under this Trust Agreement;
(b) To exercise any option, conversion privilege or subscription
right given the Trustee as the owner of any security held in
the trust; to vote any corporate stock either in person or
by proxy, with or without power of substitution; to consent
to or oppose any reorganization, consolidation, merger,
readjustment of financial structure, sale, lease or other
disposition of the assets of any corporation or other
organization, the securities of which may be an asset of the
trust; and to take any action in connection therewith and
receive and retain any securities resulting therefrom;
(c) To deposit any security with any protective or reorganization
committee, and to delegate to such committee such power and
authority with respect thereto as the Trustee may deem
proper, and to agree to pay out of the trust such portion of
the expenses and compensation of such committee as the
Trustee, in its discretion, shall deem appropriate;
page 14
(d) To cause any property of the trust to be issued, held or
registered in the name of the Trustee as trustee, or in the
name of one or more of its nominees, or one or more nominees
of any system for the central handling of securities, or in
such form that title will pass by delivery, provided that the
records of the Trustee shall in all events indicate the true
ownership of such property, or to deposit any securities held
in the trust with a securities depository;
(e) To renew or extend the time of payment of any obligation due
or to become due;
(f) To commence or defend lawsuits or legal or administrative
proceedings; to compromise, arbitrate or settle claims, debts
or damages in favor of or against the trust; to deliver or
accept, in either total or partial satisfaction of any
indebtedness or other obligation, any property; to continue
to hold for such period of time as the Trustee may deem
appropriate any property so received; and to pay all costs
and reasonable attorneys' fees in connection therewith out
of the assets of the trust;
(g) To foreclose any obligation by judicial proceeding or
otherwise;
(h) Subject to 2.02, to borrow money from any person in such
amounts, upon such terms and for such purposes as the
Trustee, in its discretion, may deem appropriate; and in
connection therewith, to execute promissory notes, mortgages
or other obligations and to pledge or mortgage any trust
assets as security; and to lend money on a secured or
unsecured basis to any person other than a party in interest;
(I) To manage any real property in the trust in the same manner
as if the Trustee were the absolute owner thereof, including
the power to lease the same for such term or terms within or
beyond the existence of the trust and upon such conditions
as the Trustee may deem proper; and to grant options to
purchase or acquire options to purchase any real property;
(j) To appoint one or more persons or entities as ancillary
trustee for the purpose of investing in and holding title to
real or personal property or any interest therein; provided
that any such ancillary trustee shall act with such power,
authority, discretion, duties, and functions of the Trustee
as shall be specified in the instrument establishing such
ancillary trust, including (without limitation) the power to
receive, hold and manage property, real or personal, or
undivided interests therein; and the Trustee may pay the
reasonable expenses and compensation of such ancillary
trustees out of the trust;
(k) To hold such part of the assets of the trust uninvested for
such limited periods of time as may be necessary for purposes
of orderly trust administration or pending required
directions, without liability for payment of interest;
page 15
(l) To determine how all receipts and disbursements shall be
credited, charged or apportioned as between income and
principal, and the decision of the Trustee shall be final and
not subject to question by any Participant or Beneficiary of
the trust;
(m) To dispose of any property in the trust fund and to foreclose
on any notes from a Grantor (and dispose of any collateral
securing such notes, subject to the terms of any pledge
agreement) upon any Default (as defined in 1.03-4), after 60
days written notice to the Grantor to permit the Grantor to
cure any Default; and
(n) Generally to do all acts, whether or not expressly
authorized, which the Trustee may deem necessary or desirable
for the orderly administration or protection of the trust
fund.
2.06-2 The Trustee may engage one or more qualified independent
attorneys, accountants, actuaries, appraisers, consultants or other
experts (an "Expert") with respect to its determination under the Trust,
including the determination of Excess Assets pursuant to 2.04 or disputed
claims pursuant to 3.03. The Trustee shall have no duty to oversee or
independently evaluate the determination of the Expert. The Trustee shall
be authorized to pay the fees and expenses of any Expert out of the assets
of the trust fund.
2.06-3 The Grantors shall from time to time pay taxes (references in this
Trust Agreement to the payment of taxes shall include interest and
applicable penalties) of any and all kinds whatsoever which at any time
are lawfully levied or assessed upon or become payable in respect of their
pro rata shares of the trust fund, the income or any property forming a
part thereof, or any security transaction pertaining thereto. To the
extent that any taxes levied or assessed upon the trust fund are not paid
by the Grantors or contested by the Grantors pursuant to the last sentence
of this paragraph, the Trustee shall pay such taxes out of the trust fund,
and the Grantors shall upon demand by the Trustee, deposit into the trust
fund, through their agent, SCEcorp, an amount equal to the amount paid
from the trust fund to satisfy such tax liability. If requested by
SCEcorp, the Trustee shall contest the validity of such taxes in any
manner deemed appropriate by SCEcorp or its counsel, but only if it has
received an indemnity bond or other security satisfactory to it to pay any
expenses of such contest. Alternatively, SCEcorp may itself contest the
validity of any such taxes, but any such contest shall not affect the
Grantors' obligation to reimburse the trust fund for taxes paid from the
trust fund.
2.06-4 Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power
that could give this Trust the objective of carrying on a business and
dividing the gains therefrom, within the meaning of section 301.7701-2 of
the Procedure and Administrative Regulations promulgated pursuant to the
Code.
page 16
III.
ADMINISTRATION
3.01 Committee; Company Representatives
3.01-1 The Compensation Committee is the administrator of the Plan and
has general responsibility to interpret the Plan and determine the rights
of Participants and beneficiaries. Day-to-day administration of the Plan
has been delegated to SCEcorp management. The Compensation Committee is
the administrator of this Trust Agreement and shall act on behalf of all
Grantors with respect to the Administration of this Trust Agreement;
however, day-to-day administration of the Plan has been delegated to the
Trust Committee. Notwithstanding any other provision of this Trust
Agreement, each Grantor is responsible for contributions to fund benefits
accrued by Participants while employed by the Grantor and for its pro rata
share of expenses of the trust (based on the amount of assets allocated
to the Grantor's subtrust(s)) and shall reimburse SCEcorp for payments
advanced by SCEcorp on its behalf.
3.01-2 The Trustee shall be given the names and specimen signatures of
the members of the Trust Committee and any other SCEcorp representatives
authorized to take action in regard to the administration of the Plan and
this trust. The Trustee shall accept and rely upon the names and
signatures until notified of any change. Instructions to the Trustee
shall be signed for the Trust Committee by the chairman or such other
person as the Trust Committee may designate.
3.02 Payment Of Benefits
3.02-1 The Trustee shall pay benefits to Participants and beneficiaries
on behalf of the Grantors in satisfaction of their obligations under the
Plan. Each Grantor shall contribute to the trust such amounts as are
necessary to fund benefits accrued by Participants while in the active
service of the Grantor and to enable the Trustee to make all such Plan
benefit payments to Participants when due, whenever the Trustee advises
the Trust Committee that the assets of the relevant subtrust, other than
insurance contracts or amounts needed to pay future premiums or loan
interest payments on insurance contracts, are insufficient to make such
payments. Benefit payments from a subtrust shall be made in full until
the assets of the subtrust are exhausted. Payments due on the date the
subtrust is exhausted shall be covered pro rata. A Grantor's benefit
payment obligation shall not be limited to the portion of the trust fund
allocated to the Grantor's subtrust(s), and a Participant or Beneficiary
shall have a claim against a Grantor for any payment not made by the
Trustee.
Notwithstanding the foregoing, and in the discretion of the Grantors,
benefits payments may be paid directly to Participants at any time.
Grantors shall pay benefits directly to Participants and beneficiaries in
satisfaction of their obligations under a Plan whenever either (i) the
assets of the subtrust are not then sufficient to satisfy any then
applicable contribution or funding requirements imposed under 2.01, or
(ii) there are no assets in
page 17
the subtrust other than insurance contracts. If a Grantor fails to make
any such required payments when due, after 60 days' written notice to the
Grantor to permit the Grantor to make any such payments, the Trustee shall
pay benefits to Participants and beneficiaries under any Plan from the
assets of the subtrust for that Plan.
3.02-2 A Participant's entitlement to benefits under the Plan shall be
determined by the Compensation Committee. Any benefit enhancement or
right with respect to the Plan which is provided under employment or
severance agreements of Participants shall be taken into account in making
the foregoing determination. Any claim for such benefits shall be
considered and reviewed under the claims procedures established for that
Plan.
3.02-3 The Trustee shall make payments in accordance with written
directions from the Trust Committee or its designee, except as provided
in 3.03. The Trustee may request such directions from the Trust Committee
or its designee. If the Trust Committee or its designee fails to furnish
written directions to the Trustee within 60 days after receiving a written
request for directions from the Trustee, the Trustee may make payments
determined by the amounts due under the terms of the Plan in reliance upon
the most recent Payment Schedule furnished to it by the Trust Committee.
The Trustee shall make provision for the reporting and withholding of any
federal, state or local taxes that may be required prior to or coincident
with making any benefit payments hereunder and shall pay amounts withheld
to taxing authorities on the Grantor's behalf or determine that such
amounts have been reported, withheld and paid by the Grantor.
3.02-4 The Trustee shall use the assets of the trust or any subtrust to
make benefit payments or other payments in such order of priority as the
Trustee may determine, or as may be directed by the Trust Committee.
3.03 Disputed Claims
3.03-1 A Participant covered by this Trust whose claim has been denied
by the Trust Committee, or who has received no response to the claim
within 60 days after submission, may submit the claim to the Trustee. The
Trustee shall give written notice of the claim to the Trust Committee.
If the Trustee receives no written response from the Trust Committee
within 60 days after the date the Trust Committee is given written notice
of the claim, the Trustee shall pay the Participant the amount claimed,
unless it determines in its sole discretion that a lesser amount is due
under the terms of the Plan. If a written response is received within
such 60 days, the Trustee shall consider the claim in its sole and
absolute discretion, including the Trust Committee's response. If the
merits of the claim depend on compensation, service or other data in the
possession of SCEcorp or a Grantor and it is not provided, the Trustee may
rely upon information provided by the Participant. Any benefit
enhancement or right with respect to the Plan which is provided under
employment or severance agreements of Participants shall be taken into
account in making the foregoing determination.
page 18
3.03-2 The Trustee shall give written notice to the Participant and the
Trust Committee of its decision on the claim. If the decision is to grant
the claim, the Trustee shall make payment to the Participant. The Trustee
may decline to decide a claim and may file suit to have the matter
resolved by a court of competent jurisdiction. All of the Trustee's
expenses in the court proceeding, including attorneys fees, shall be
allowed as administrative expenses of the trust.
The Participant, SCEcorp or the Grantor may challenge the Trustee's
decision by filing suit in a court of competent jurisdiction. If no such
suit is filed within 60 days after delivery of written notice of the
Trustee's decision, the decision shall become final and binding on all
parties.
Notwithstanding the two preceding paragraphs, and because it is agreed
that time will be of the essence in determining whether any payments are
due a Participant or Beneficiary under the Trust, a Participant or
Beneficiary may, if he or she desires, submit any claim for payment under
the Trust to arbitration. This right to select arbitration shall be
solely that of the Participant or Beneficiary and the Participant or
Beneficiary may decide whether or not to arbitrate in his or her
discretion. The "right to select arbitration" is not mandatory on the
Participant or Beneficiary, and the Participant or Beneficiary may choose
in lieu thereof to bring an action in an appropriate civil court. Once
an arbitration is commenced, however, it may not be discontinued without
the mutual consent of the parties to the arbitration. During the lifetime
of the Participant only he or she can use the arbitration procedure set
forth in this section.
Any claim for arbitration may be submitted as follows: if a Participant
or Beneficiary has submitted a request to be paid under the Trust and the
claim is finally denied by the Trustee in whole or in part, the claim may
be filed in writing with an arbitrator of the Participant's or
Beneficiary's choice who is selected by the method described in the next
four sentences. The first step of the selection shall consist of the
Participant or Beneficiary submitting a list of five potential arbitrators
to the Trust Committee. Each of the five arbitrators must be either (1)
a member of the National Academy of Arbitrators located in the State of
California or (2) a retired California Superior Court or Appellate Court
judge. Within one week after receipt of the list, the Trust Committee
shall select one of the five arbitrators as the arbitrator for the dispute
in question. If the Trust Committee fails to select an arbitrator within
one week after receipt of the list, the Participant or Beneficiary shall
then designate one of the five arbitrators for the dispute in question.
The arbitration hearing shall be held within seven days (or as soon
thereafter as possible) after the picking of the arbitrator. No
continuance of said hearing shall be allowed without the mutual consent
of the Participant or Beneficiary, the Trust Committee and the affected
Grantor. Absence from or nonparticipation at the hearing by any party
shall not prevent the issuance of an award. Hearing procedures which will
expedite the hearing may be ordered at the arbitrator's discretion, and
the arbitrator
page 19
may close the hearing in his or her sole discretion when he or she decides
he or she has heard sufficient evidence to satisfy issuance of an award.
The arbitrator's award shall be rendered as expeditiously as possible and
in no event later than one week after the close of the hearing.
In the event the arbitrator finds that the Trust Committee or the Grantor
has breached the terms of the Trust, he or she shall order the Trustee to
pay to the Participant or Beneficiary within two business days after the
decision is rendered the amount then due the Participant or Beneficiary.
The award of the arbitrator shall be final and binding upon the parties.
The award may be enforced in any appropriate court as soon as possible
after its rendition. The Trust Committee or the Grantor will be
considered the prevailing party in a dispute if the arbitrator determines
(1) that the Trust Committee or the affected Grantor has not breached the
terms of the Trust and (2) the claim by the Participant or Beneficiary was
not made in good faith. Otherwise, the Participant or Beneficiary will
be considered the prevailing party. In the event that the Trust Committee
or the Grantor is the prevailing party, the fee of the arbitrator and all
necessary expenses of the hearing (excluding any attorneys' fees incurred
by Trust Committee or the Grantor) including stenographic reporter, if
employed, shall be paid by the losing party. In the event that the
Participant or Beneficiary is the prevailing party, the fee of the
arbitrator and all necessary expenses of the hearing (including all
attorneys' fees incurred by the Participant or Beneficiary in pursuing
his or her claim), including the fees of a stenographic reporter, if
employed, shall be paid from trust assets. The affected Grantor shall
reimburse the trust fund within 30 days after receipt of a bill from the
Trustee for any such Participant's expenses which are reimbursed by the
Trustee.
3.04 Records
3.04-1 The Trustee shall keep complete records on the trust fund open to
inspection by the Grantors, the Compensation Committee and the Trust at
all reasonable times. In addition to accountings required below, the
Trustee shall furnish to the Grantors, the Compensation and Trust
Committees any information reasonably requested about the trust fund.
3.05 Accountings
3.05-1 The Trustee shall furnish the Trust Committee with a complete
statement of accounts annually within 60 days after the end of the trust
year showing assets and liabilities and income and expense for the year
of the trust and each subtrust. The Trustee shall also furnish the Trust
Committee with accounting statements at such other times as the Trust
Committee may reasonably request. The form and content of the statement
of accounts shall be sufficient for each Grantor to include in computing
its taxable income and credits the income, deductions and credits against
tax that are attributable to the portion of the trust fund allocated to
its subtrust(s).
page 20
3.05-2 The Trust Committee may object to an accounting within 180 days
after it is furnished and require that it be settled by audit by a
qualified, independent certified public accountant. The auditor shall be
chosen by the Trustee from a list of at least five such accountants
furnished by the Trust Committee at the time the audit is requested.
Either the Trust Committee or the Trustee may require that the account be
settled by a court of competent jurisdiction, in lieu of or in conjunction
with the audit. All expenses of any audit or court proceedings, including
reasonable attorneys' fees, shall be allowed as administrative expenses
of the trust.
3.05-3 If the Trust Committee does not object to an accounting within the
time provided, the account shall be settled for the period covered by it.
3.05-4 When an account is settled, it shall be final and binding on all
parties, including all Participants and persons claiming through them.
3.06 Expenses And Fees
3.06-1 The Trustee shall be reimbursed for all reasonable expenses and
shall be paid a reasonable fee fixed by agreement with the Trust Committee
from time to time. No increase in the fee shall be effective before 60
days after the Trustee gives written notice to the Trust Committee of the
increase. The Trustee shall notify the Trust Committee periodically of
expenses and fees.
3.06-2 SCEcorp shall pay Trustee and other administrative and valuation
fees and expenses on behalf of the Grantors. If not so paid, these fees
and expenses shall be paid from the trust fund.
IV.
LIABILITY
4.01 Indemnity
The Trustee will have the duty to discharge its responsibilities under
this Trust Agreement with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and aims. Subject to such limitations as
may be imposed by applicable law, the Grantors shall indemnify and hold
harmless the Trustee from any claim, loss, liability or expense arising
from any action or inaction in administration of this trust based on
direction or information from either SCEcorp, another Grantor, the
Compensation or Trust Committees, any Investment Manager or any Expert,
absent willful misconduct, negligence or bad faith.
4.02 Bonding
The Trustee need not give any bond or other security for performance of
its duties under this trust.
page 21
V.
INSOLVENCY
5.01 Determination of Insolvency
5.01-1 A Grantor is Insolvent for purposes of this trust if:
(a) A Grantor is unable to pay its debts as they come due; or
(b) A Grantor is the subject of a pending proceeding as a debtor
under the federal Bankruptcy Code (or any successor federal
statute).
5.01-2 The Grantor shall promptly give notice to the Trustee when a
Grantor becomes Insolvent. The Chief Executive Officer of the Grantor
shall be obligated to give such notice. If the Trustee receives such
notice or receives from any other person claiming to be a creditor of the
Grantor a written allegation that the Grantor is Insolvent, the Trustee
shall independently determine whether such insolvency exists. The Trustee
may rely on such evidence concerning the Grantor's solvency as may be
furnished to Trustee and that provides the Trustee with a reasonable basis
for making a determination concerning the Grantor's solvency. The
expenses of such determination shall be allowed as administrative expenses
of the trust.
5.01-3 Upon receipt of the notice or allegation described in 5.01-2, the
Trustee shall discontinue making payments to Participants and
beneficiaries under the Plan from the portion of the trust fund allocable
to the affected Grantor's subtrusts and shall commence Insolvency
Administration under 5.02.
5.01-4 The Trustee shall have no obligation to investigate the financial
condition of the Grantor prior to receiving a notice or allegation of
insolvency under 5.01-2.
5.02 Insolvency Administration
5.02-1 During Insolvency Administration, the Trustee shall hold the
Grantor's subtrust funds for the benefit of the creditors of the Grantor
and make payments only in accordance with 5.02-2. The Trustee shall
continue the investment of the trust fund in accordance with 2.02.
5.02-2 The Trustee shall make payments out of the trust fund in
accordance with instructions from a court, or a person appointed by a
court, having jurisdiction over the Grantor's condition of insolvency to:
(a) Creditors;
(b) Participants and beneficiaries; or
(c) The Trustee in payment of its fees or expenses.
5.02-3 During Insolvency Administration, the Participants and
beneficiaries shall have no greater rights than general creditors of the
Grantor. Nothing in this Trust Agreement shall in any way diminish any
rights of Plan Participants or their beneficiaries to pursue
page 22
their rights as general creditors of the Grantor with respect to benefits
due under the Plan or otherwise.
5.03 Termination Of Insolvency Administration
5.03-1 Insolvency Administration shall terminate when the Trustee
determines that the Grantor:
(a) Is not Insolvent, in response to a notice or allegation of
insolvency under 5.01-2;
(b) Has ceased to be Insolvent; or
(c) Has been determined by a court of competent jurisdiction not
to be Insolvent or to have ceased to be Insolvent.
5.03-2 Upon termination of Insolvency Administration under 5.03-1, the
affected subtrust(s) shall again be held for the benefit of the
Participants and beneficiaries under the Plan. Benefit payments due
during the period of Insolvency Administration shall be made as soon as
practicable, together with interest from the due dates at the rate
credited on the Participant's account under the Plan.
5.04 Creditors' Claims During Solvency
5.04.1 During periods of a Grantor's Solvency, the Trustee shall hold the
Grantor's subtrust(s) exclusively to pay Plan benefits and the allocable
fees and expenses of the trust until all benefits have been paid.
Creditors of the Grantor shall not be paid during a Grantor's Solvency
from the trust fund, which may not be seized by or subjected to the claims
of such creditors in any way.
5.04-2 A period of Solvency for a Grantor is any period not covered by
5.02.
VI.
SUCCESSOR TRUSTEES
6.01 Resignation And Removal
6.01-1 The Trustee may resign at any time by notice to the Trust
Committee, which shall be effective in 60 days unless the Trust Committee
and the Trustee agree otherwise.
6.01-2 The Trustee may be removed by the Trust Committee on 60 days'
written notice or shorter notice accepted by the Trustee.
After a Special Circumstance, the Trustee may be removed only with the
Written Consent of the Participants.
page 23
6.01-3 When resignation or removal is effective, the Trustee shall begin
transfer of assets to the successor Trustee immediately. The transfer
shall be completed within 60 days, unless the Trust Committee extends the
time limit.
6.02 Appointment Of Successor
6.02-1 If the Trustee resigns or is removed, the Trust Committee shall
appoint a successor by the effective date of resignation or removal under
6.01-1 or 6.01-2. The Trust Committee may appoint any national or state
bank or trust company that is unrelated to the Trust Committee as a
successor to replace the Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new
Trustee, which shall have all of the rights and powers of the former
Trustee, including ownership rights in the trust assets. The former
Trustee shall execute any instruments necessary or reasonably requested
by the Trust Committee or the successor Trustee to evidence the transfer.
After a Special Circumstance, a successor Trustee may be appointed only
with the Written Consent of Participants. If no such appointment has been
made, the Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of the
Trustee in connection with the proceeding shall be allowed as
administrative expenses of the trust.
6.02-2 The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing trust assets, subject
to Article II. The successor Trustee shall not be responsible for, and
the Grantors shall indemnify and hold harmless the successor Trustee from
any claim or liability because of, any action or inaction of any prior
Trustee.
6.03 Accountings; Continuity
6.03-1 A Trustee who resigns or is removed shall submit a final
accounting to the Trust Committee as soon as practicable. The accounting
shall be received and settled as provided in 3.05 for regular accountings.
6.03-2 No resignation or removal of the Trustee or change in identity of
the Trustee for any reason shall cause a termination of the Plan or this
trust.
VII.
GENERAL PROVISIONS
7.01 Interests Not Assignable
7.01-1 The interest of a Participant in the trust fund may not be
anticipated, assigned, pledged or otherwise encumbered, seized by legal
process, transferred or subjected to the claims of the Participant's
creditors in any way. Notwithstanding the foregoing, the benefit payable
to a Participant may be assigned in full or in part, pursuant to a
domestic relations order of a court of competent jurisdiction.
page 24
7.01-2 No Grantor may create a security interest in the trust fund in
favor of any of its creditors. The Trustee shall not make payments from
the trust fund of any amount to creditors of any Grantor, other than
Participants, except as provided in 5.02.
7.01-3 The Participants shall have no interest in the assets of the trust
fund beyond the right to receive payment of Plan benefits subject to the
restrictions during Insolvency referred to in 5.02. During Insolvency
Administration, the Participants' rights to trust assets shall not be
superior to those of any other general creditors of the affected Grantor.
7.02 Amendment
The Grantors and the Trustee may amend this Trust Agreement at any time
by a written instrument executed by the parties. Except as provided
below, any such amendment may be made only with the Written Consent of
Participants after a Special Circumstance. Notwithstanding the foregoing,
any such amendment may be made by written agreement of the Grantors and
the Trustee without the Written Consent of Participants if such amendment
will not have a material adverse effect on the rights of any Participant
hereunder or is necessary to comply with any laws, regulations or other
legal requirements. No amendment will conflict with the terms of the Plan
or make the trust revocable.
7.03 Applicable Law
This trust shall be governed, construed and administered according to the
laws of California.
7.04 Agreement Binding On All Parties
This Trust Agreement shall be binding upon the heirs, personal
representatives, successors and assigns of any and all present and future
parties.
7.05 Notices And Directions
Any notice or direction under this Trust Agreement shall be in writing and
shall be effective when actually delivered or, if mailed, when deposited
postpaid as first-class mail. Mail to a party shall be directed to the
address stated below or to such other address as any party may specify by
notice to the other parties. Notices to the Trust Committee shall be sent
to the address of SCEcorp. Notices to Participants who have submitted
claims under 3.03 shall be mailed to the address shown in the claim
submission. Until notice is given to the contrary, notices to the
Grantors and the Trustee shall be addressed as follows:
page 25
Grantors
SCEcorp Southern California Edison Company
Attention: Chief Financial Officer Attention: Chief Financial Officer
2244 Walnut Grove Avenue 2244 Walnut Grove Avenue
Rosemead, CA 91770 Rosemead, CA 91770
The Mission Group Mission Energy Company
Attention: Office of the President Attention: President
18101 Von Karman Avenue, Suite 1700 18101 Von Karman Avenue, Suite 1700
Irvine, CA 92715-1007 Irvine, CA 92715-1007
Mission First Financial Mission Land Company
Attention: President Attention: President
18101 Von Karman Avenue, Suite 1700 18101 Von Karman Avenue, Suite 1700
Irvine, CA 92715-1007 Irvine, CA 92715-1007
Trustee
U.S. Trust Company of California N. A.
Attention: Charles Wert
555 South Flower Street
Los Angeles, CA 90071-2429
7.06 No Implied Duties
The duties of the Trustee shall be those stated in this trust, and no
other duties shall be implied.
7.07 Gender, Singular And Plural
All pronouns and any variations thereof shall be deemed to refer to the
masculine or feminine, as the identity of the person or persons may
require. As the context may require, the singular may be read as the
plural and the plural as the singular.
page 26
7.08 Validity
If any provision of this Trust Agreement is held invalid, void or
unenforceable, the same shall not affect the validity of any other
provision.
VIII.
INSURER
8.01 Insurer Not A Party
The Insurer shall not be deemed to be a party to this Trust Agreement, and
its obligations shall be measured and determined solely by the terms of
its Contracts and other agreements executed by it.
8.02 Authority Of Trustee
The Insurer shall accept the signature of the Trustee on any documents or
papers executed in connection with such Contracts. The signature of the
Trustee shall be conclusive proof to the Insurer that the person on whose
life an application is being made is eligible to have such Contract issued
on his life and is eligible for a Contract of the type and amount
requested.
8.03 Contract Ownership
The Insurer shall deal with the Trustee as the sole and absolute owner of
the trust's interests in such Contracts and shall have no obligation to
inquire whether any action or failure to act on the part of the Trustee
is in accordance with or authorized by the terms of the Plan or this Trust
Agreement.
8.04 Limitation Of Liability
The Insurer shall be fully discharged from any and all liability for any
action taken or any amount paid in accordance with the direction of the
Trustee and shall have no obligation to see to the proper application of
the amounts so paid. The Insurer shall have no liability for the
operation of this Trust Agreement or the Plan, whether or not in
accordance with their terms and provisions.
8.05 Change Of Trustee
The Insurer shall be fully discharged from any and all liability for
dealing with a party or parties indicated on its records to be the Trustee
until such time as it shall receive at its home office written notice of
the appointment and qualification of a successor Trustee.
///
///
///
page 27
IN WITNESS WHEREOF, the parties have caused this Trust Agreement to be
executed by their respective duly authorized officers on the dates set
forth below.
GRANTORS:
SCEcorp Southern California Edison Company
By Alan J. Fohrer By Alan J. Fohrer
------------------------------ ----------------------------
Title: Executive Vice President Title: Executive Vice President
and Chief Financial Officer and Chief Financial Officer
------------------------------ ----------------------------
Date: August 7, 1995 Date: August 7, 1995
------------------------------ ----------------------------
Mission Energy Company Mission First Financial
By Edward R. Muller By Thomas R. McDaniel
------------------------------ ----------------------------
Title: President and Chief Title: President and Chief
Executive Officer Financial Officer
------------------------------ ----------------------------
Date: August 22, 1995 Date: August 10, 1995
------------------------------ ----------------------------
Mission Land Company The Mission Group
By Thomas R. McDaniel By Thomas R. McDaniel
------------------------------ ----------------------------
Title: President and Chief Title: Office of the President
Financial Officer
------------------------------ ----------------------------
Date: August 10, 1995 Date: August 10, 1995
------------------------------ ----------------------------
TRUSTEE:
U.S. Trust Company of California N.A.
By Dennis M. Kunisaki
------------------------------
Title: Vice President
------------------------------
Date: August 27, 1995
------------------------------
PAGE
EXHIBIT 10.11
SCEcorp
Executive Deferred Compensation Plan
As Adopted December 14, 1994
Effective January 1, 1995
PAGE
SCEcorp EXECUTIVE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
Section Title Page
- ------- ----- ----
ARTICLE 1 DEFINITIONS 1
ARTICLE 2 PARTICIPATION 4
2.01 Participant Election 4
2.02 Annual Deferral 4
2.03 Continuation of Participation 5
ARTICLE 3 EMPLOYEE DEFERRALS 5
3.01 Participation Election 5
3.02 Minimum Annual Deferral 5
3.03 Maximum Annual Deferral 5
3.04 Deferral of Special Awards 5
3.05 Benefit Adjustment 6
3.06 Vesting 6
ARTICLE 4 MATCHING CREDITS 6
4.01 Amount 6
4.02 Vesting 6
ARTICLE 5 DEFERRAL ACCOUNTS 6
5.01 Deferral Accounts 6
5.02 Timing of Credits 7
A. Annual Deferrals 7
B. Matching Credits 7
C. Interest Crediting Dates 7
D. Statement of Accounts 7
ARTICLE 6 RETIREMENT BENEFITS 7
6.01 Amount 7
6.02 Form of Retirement Benefits 7
6.03 Commencement of Benefits 8
6.04 Small Benefit Exception 8
ARTICLE 7 TERMINATION BENEFITS 8
7.01 Amount 8
-i-
PAGE
SCEcorp EXECUTIVE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS (cont.)
Section Title Page
- ------- ----- ----
7.02 Form of Termination Benefits 8
ARTICLE 8 SURVIVOR BENEFITS 8
8.01 Pre-Retirement Survivor Benefit 8
8.02 Post-Retirement Survivor Benefit 9
8.03 Post-Termination Survivor Benefit 9
8.04 Changing Form of Benefit 9
8.05 Small Benefit Exception 9
ARTICLE 9 DISABILITY 9
ARTICLE 10 CHANGE OF CONTROL 10
ARTICLE 11 SCHEDULED AND UNSCHEDULED WITHDRAWALS 10
11.01 Scheduled Withdrawals 10
A. Election 10
B. Timing and Form of Withdrawal 10
C. Remaining Deferral Account 10
11.02 Unscheduled Withdrawals 11
A. Election 11
B. Withdrawal Penalty 11
C. Small Benefit Exception 11
ARTICLE 12 CONDITIONS RELATED TO BENEFITS 11
12.01 Nonassignability 11
12.02 Financial Hardship Distribution 11
12.03 No Right to Assets 12
12.04 Protective Provisions 12
12.05 Withholding 12
ARTICLE 13 PLAN ADMINISTRATION 12
ARTICLE 14 BENEFICIARY DESIGNATION 13
ARTICLE 15 AMENDMENT OR TERMINATION OF PLAN 13
15.01 Amendment of Plan 13
15.02 Termination of Plan 13
-ii-
PAGE
SCEcorp EXECUTIVE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS (cont.)
Section Title Page
- ------- ----- ----
15.03 Amendment or Termination After Change of Control 14
15.04 Exercise of Power to Amend or Terminate 14
15.05 Constructive Receipt Termination 14
ARTICLE 16 CLAIMS AND REVIEW PROCEDURES 14
16.01 Claims Procedure 14
16.02 Review Procedure 14
16.03 Dispute Arbitration 15
ARTICLE 17 MISCELLANEOUS 16
17.01 Successors 16
17.02 ERISA Plan 16
17.03 Trust 17
17.04 Employment Not Guaranteed 17
17.05 Gender, Singular and Plural 17
17.06 Captions 17
17.07 Validity 17
17.08 Waiver of Breach 17
17.09 Applicable Law 17
17.10 Notice 17
-iii-
PAGE
SCEcorp
EXECUTIVE DEFERRED COMPENSATION PLAN
As Adopted December 14, 1994, Effective January 1, 1995
PREAMBLE
Effective January 1, 1995, SCEcorp became the sponsor of the executive
annual deferred compensation plans of SCEcorp affiliates with respect to
participants in active service as of that date. The plans have been
consolidated and restated as the SCEcorp Executive Deferred Compensation
Plan effective January 1, 1995. Plan benefits are available to eligible
executives of SCEcorp and its participating affiliates. Amounts of
compensation deferred by participants pursuant to this Plan accrue as
liabilities of the participating affiliate at the time of the deferral
under the terms and conditions set forth herein. By electing to defer
compensation under the SCEcorp Executive Deferred Compensation Plan,
eligible executives consent to SCEcorp sponsorship of the Plan, but
acknowledge that SCEcorp is not a guarantor of the benefit obligations of
other participating affiliates. Each participating SCEcorp affiliate is
responsible for payment of the accrued benefits under the Plan with
respect to its own executives subject to the terms and conditions set
forth herein.
ARTICLE I
DEFINITIONS
Capitalized terms in the text of the Plan are defined as follows:
1.01 Administrator shall mean the Compensation and Executive Personnel
Committee of the Board of Directors of SCEcorp.
1.02 Affiliate shall mean SCEcorp or any corporation or entity which (i)
along with SCEcorp, is a component member of a "controlled group of
corporations" within the meaning of Section 414(b) of the Code, and (ii)
has approved the participation of its executives in the Plan.
1.03 Annual Deferral shall mean the amount of Compensation which the
Participant elects to defer for a Plan Year pursuant to Articles 2 and 3
of the Plan.
1.04 Base Salary shall mean the Participant's annual basic rate of pay
from the Employer (excluding Incentive Awards, special awards,
commissions, severance pay,
page 1
and other non-regular forms of compensation) before reductions for
deferrals under the Plan or the SSPP.
1.05 Beneficiary shall mean the person or persons or entity designated
as such in accordance with Article 14 of the Plan.
1.06 Change of Control shall mean either: (i) the dissolution or
liquidation of SCEcorp or an Employer; (ii) a reorganization, merger or
consolidation of SCEcorp or an Employer with one or more corporations as
a result of which SCEcorp or an Employer is not the surviving corporation;
(iii) approval by the stockholders of SCEcorp or an Employer of any sale,
lease, exchange or other transfer (in one or a series of transactions) of
all or substantially all of the assets of SCEcorp or an Employer; (iv)
approval by the stockholders of SCEcorp or an Employer of any merger or
consolidation of SCEcorp or an Employer, in which the holders of voting
stock of SCEcorp or an Employer immediately before the merger or
consolidation will not own 50% or more of the outstanding voting shares
of the continuing or surviving corporation immediately after the merger
or consolidation; or (v) a change of at least 51% (rounded to the next
whole person) in the membership of the Board of Directors of SCEcorp or
an Employer within a 24-month period, unless the election or nomination
for election by stockholders of each new director within the period was
approved by the vote of at least 85% (rounded to the next whole person)
of the directors then still in office who were in office at the beginning
of the twenty-four-month period, except that any replacement of directors
who are employees of SCEcorp or an Employer, with other employees of
SCEcorp or an Employer, shall be disregarded and not be considered a
change in membership. Notwithstanding the foregoing, any reorganization,
merger or consolidation of an Employer with SCEcorp or another Employer
shall be disregarded and not be considered a Change of Control.
1.07 Code shall mean the Internal Revenue Code of 1986, as amended.
1.08 Compensation shall mean the sum of the Participant's Base Salary and
Incentive Awards for a Plan Year before deferral under this Plan or the
SSPP.
1.09 Crediting Rate shall mean the rate at which interest will be
credited to Participant Deferral Accounts. The rate will be determined
annually in advance of the Plan Year and will be equal to 120 percent of
the Index Rate. SCEcorp reserves the right to prospectively change the
Crediting Rate or formula.
1.10 Deferral Account shall mean the notional account established for
record keeping purposes for a Participant pursuant to Article 5 of the
Plan.
1.11 Deferral Period shall mean the Plan Year covered by a valid
Participation Election previously submitted by a Participant, or in the
case of a newly eligible Participant, the balance of the Plan Year
following the date of the Participation Election.
page 2
1.12 Disability shall mean the permanent and total disability of the
Participant as determined by the Employer.
1.13 Eligible Employee shall mean a key employee of an Affiliate, who (i)
is a U.S. employee or an expatriate who is based and paid in the U.S.,
(ii) is designated by the Administrator as eligible to participate in the
Plan (subject to the restriction in Sections 10.02 and 12.02 of the Plan),
and (iii) qualifies as a member of the "select group of management or
highly compensated employees" under ERISA.
1.14 Employer shall mean the Affiliate employing the Participant.
1.15 ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.16 Financial Hardship shall mean an unexpected and unforeseen financial
disruption arising from an illness, casualty loss, sudden financial
reversal, or other such unforeseeable occurrence as determined by the
Administrator or its designee. Needs arising from foreseeable events such
as the purchase of a residence or education expenses for children shall
not, alone, be considered a Financial Hardship.
1.17 Incentive Award shall mean the amount paid in cash to the
Participant by the Employer in the form of an annual incentive bonus
before reductions for deferrals under the Plan.
1.18 Index Rate shall mean the 120-month average rate of 10-year U.S.
Treasury Notes determined for any Plan Year as of October 15th of the
prior year.
1.19 Matching Credit shall mean the credit added to the Participant's
Deferral Account under Article 4.
1.20 Participant shall mean an Eligible Employee who has elected to
participate and has completed a Participation Election pursuant to Article
2 of the Plan.
1.21 Participation Election shall mean the Participant's written election
to participate in the Plan submitted on the form prescribed by the
Administrator for that purpose.
1.22 Plan shall mean the SCEcorp Executive Deferred Compensation Plan.
1.23 Plan Year shall mean the calendar year.
1.24 Retirement shall mean a separation from service under terms
constituting a retirement for purposes of the nonqualified executive
retirement plan covering the Participant.
page 3
1.25 Scheduled Withdrawal shall mean a distribution of all or a portion
of the vested amount of Annual Deferrals and earnings credited to the
Participant's Deferral Account as elected by the Participant pursuant to
the provisions of Article 11 of the Plan.
1.26 SSPP shall mean the Southern California Edison Company Stock Savings
Plus Plan as amended from time-to-time.
1.27 Termination for Cause shall mean the Termination of Employment of
the Participant upon willful failure by the Participant to substantially
perform his or her duties for the Employer or the willful engaging by the
Participant in conduct which is injurious to the Employer, monetarily or
otherwise.
1.28 Termination of Employment shall mean the voluntary or involuntary
cessation of the Participant's employment with the Employer for any reason
other than death or Retirement. Termination of Employment shall not be
deemed to have occurred for purposes of this Plan if the Participant is
reemployed by an Affiliate within 30 days of ceasing work with the
Employer.
1.29 Unscheduled Withdrawal shall mean a distribution of all or a portion
of the vested amount and earnings credited to the Participant's Deferral
Account as requested by the Participant pursuant to the provisions of
Article 11 of the Plan.
1.30 Valuation Date shall mean the last business day of the following
month in which Termination of Employment, Retirement, death, Scheduled
Withdrawal, or Unscheduled Withdrawal occurs.
1.31 Vesting shall mean the Participant's right to receive any
Compensation deferred, Matching Credits, and/or earnings thereon as
provided in Article 4.
ARTICLE 2
PARTICIPATION
2.01 Participant Election
An Eligible Employee shall become a Participant in the Plan on the first
day of the month coincident with or next following the date the employee
became an Eligible Employee, provided the Eligible Employee has submitted
to the Administrator a Participation Election prior to that date. Except
for employees who become newly eligible during the Plan Year, the
Participation Election must be submitted to the Administrator during the
enrollment period designated by the Administrator which shall always be
prior to the commencement of the Plan Year.
page 4
2.02 Annual Deferral
Subject to the restrictions in Article 3, the Eligible Employee shall
designate his or her Annual Deferral for the covered Plan Year on the
Participation Election.
2.03 Continuation of Participation
An Eligible Employee who has elected to participate in the Plan by making
an Annual Deferral shall continue as a Participant in the Plan until the
Participant no longer has a Deferral Account balance under the Plan. A
Participant may not elect to defer Compensation under the Plan unless the
Participant is an Eligible Employee for the Plan Year for which the
election is made. In the event a Participant is later employed by an
affiliated company that does not participate in the Plan, the
Participant's Annual Deferral shall cease, and the Participant's Deferral
Account shall remain in effect until such time as the benefits are
distributed as elected on the Participant's last valid Participation
Election.
ARTICLE 3
EMPLOYEE DEFERRALS
3.01 Participation Election
Eligible Employees may elect to make an Annual Deferral under the Plan by
submitting a Participation Election during the applicable enrollment
period. The Participant may designate a specified amount in $1,000
increments or a whole percentage of Base Salary to be deferred. The
Participant may also designate a specified amount in $1,000 increments,
a whole percentage, or a whole percentage in excess of a specified amount
of Incentive Award to be deferred. Once made, this Participation Election
shall continue to apply for subsequent Deferral Periods unless the
Participant submits a new Participation Election form during a subsequent
enrollment period changing the deferral amount or revoking the existing
election. A Participation Election may be revoked by the Participant upon
30 days written notice to the Administrator; however, such Participant
will be ineligible to make an Annual Deferral under the Plan for the
following Plan Year.
3.02 Minimum Annual Deferral
The minimum amount of Base Salary that may be designated for deferral is
$2,000. The minimum amount of Incentive Award that may be designated for
deferral is $2,000. There is no minimum percentage.
3.03 Maximum Annual Deferral
The maximum Annual Deferral from Base Salary for a Plan Year is 75% of
Base Salary. The maximum Annual Deferral from Incentive Award for a Plan
Year is 100% of the Incentive Award.
page 5
3.04 Deferral of Special Awards
At the discretion of the Employer, up to 100% of any special award made
to an Employee for employment, retention, recognition, achievement,
retirement, or severance may be deferred under this Plan subject to any
additional terms and conditions the Employer may impose.
3.05 Benefit Adjustment
Notwithstanding the above maximum deferral limits, the Participant may
elect to defer the receipt of additional amounts of Base Salary and
Incentive Award calculated by the Administrator that would have been
contributed to the SSPP but for the limits upon SSPP contributions and
benefits established by Sections 401(a)(17), 402(g) and 415 of the Code.
Such amounts will continue to be credited to the Participant's Deferral
Account as long as the Participant's SSPP contributions are affected by
the limitations.
3.06 Vesting
The Participant's right to receive Compensation deferred under this
Article 3 and any earnings thereon shall be 100% vested at all times.
Notwithstanding the foregoing, any special award deferred under Section
3.04 and any earnings thereon may be subject to vesting terms.
ARTICLE 4
MATCHING CREDITS
4.01 Amount
A Matching Credit will be added by the Employer to the Participant's
Deferral Account under this Plan equal to 3 percent of the amount of Base
Salary and Incentive Award deferred under the Plan by the Participant.
4.02 Vesting
The Participant's Matching Credits and earnings thereon for any Plan Year
shall vest when the Participant has completed five years of service with
an Affiliate, or upon the death, Retirement or Disability of the
Participant.
ARTICLE 5
DEFERRAL ACCOUNTS
5.01 Deferral Accounts
Solely for record keeping purposes, the Administrator shall maintain a
Deferral Account for each Participant with such subaccounts as the
Administrator or its record keeper find necessary or convenient in the
administration of the Plan.
page 6
5.02 Timing of Credits
A. Annual Deferrals
The Administrator shall credit to the Deferral Account the Annual
Deferrals under Article 3 at the time the deferrals would otherwise have
been paid to the Participant but for the Participation Election.
B. Matching Credits
Until vested, Matching Credits under Article 4 shall be conditionally
credited to the Deferral Account at the same time the related deferrals
are credited to the Deferral Account.
C. Interest Crediting Dates
The Administrator shall credit interest at the Crediting Rate to the
Participant's Deferral Account on a daily basis, compounded annually.
D. Statement of Accounts
The Administrator shall periodically provide to each Participant a
statement setting forth the balance of the Deferral Account maintained for
the Participant.
ARTICLE 6
RETIREMENT BENEFITS
6.01 Amount
Upon Retirement, the Employer shall pay to the Participant a retirement
benefit in the form provided in Section 6.02, based on the balance of the
Deferral Account as of the Valuation Date. If paid as a lump sum, the
retirement benefit shall be equal to the Deferral Account balance. If
paid in installments, the installments shall be paid in amounts that will
amortize the Deferral Account balance with interest credited at the
Crediting Rate over the period of time benefits are to be paid. For
purposes of calculating installments, the Deferral Account shall be valued
as of December 31 each year, and the subsequent installments will be
adjusted for the next Plan Year according to procedures established by the
Administrator.
6.02 Form of Retirement Benefits
The Participant may elect on the Participation Election to have the
retirement benefit paid:
(i) In a lump sum,
(ii) In installments paid monthly over a period of 60, 120, or 180
months, or
page 7
(iii) In a lump sum of a portion of the Deferral Account upon
Retirement with the balance in installments paid monthly over
a period of 60, 120, or 180 months.
If no valid election is made, the Administrator shall pay the retirement
benefit in installments over a 180-month period. Participants may change
the form of payout by written election filed with the Administrator;
provided, however, that if the Participant files the election less than
13 months prior to the date of Retirement, the payout election in effect
13 months prior to the date of Retirement will govern.
6.03 Commencement of Benefits
Payments will commence within 60 days after the date of Retirement.
6.04 Small Benefit Exception
Notwithstanding the foregoing, the Administrator may, in its sole
discretion:
(i) pay the benefits in a single lump sum if the sum of all benefits
payable to the Participant is less than or equal to $3,500.00,
or
(ii) reduce the number of installments elected by the Participant to
120 or 60 if necessary to produce a monthly benefit of at least
$300.00.
ARTICLE 7
TERMINATION BENEFITS
7.01 Amount
No later than 60 days after Termination of Employment, the Administrator
shall pay to the Participant a termination benefit equal to the vested
balance of the Deferral Account as of the Valuation Date, or shall
commence installments, as provided in Section 7.02.
page 8
7.02 Form of Termination Benefits
The Administrator shall pay the termination benefits in a single lump sum
unless the Participant has previously elected payment to be made in three
annual installments. Installments paid under this Section 7.02 shall
include interest at the Index Rate and shall be redetermined annually to
reflect adjustments in that rate. Notwithstanding the foregoing, any
Termination for Cause will result in an immediate lump sum payout.
ARTICLE 8
SURVIVOR BENEFITS
8.01 Pre-Retirement Survivor Benefit
If the Participant dies while actively employed by an Affiliate, the
Administrator shall pay a lump sum or commence monthly installments in
accordance with the Participant's prior election within 60 days after the
Participant's death. The payment(s) will be based on the Participant's
Deferral Account balance as of the Valuation Date; provided however, that
if the Participant's death occurs within ten years of (i) his or her
initial Plan participation date, or (ii) January 1, 1995, whichever is
later, then the Beneficiary's payment(s) will be based on twice the
Participant's Deferral Account balance as of the Valuation Date.
8.02 Post-Retirement Survivor Benefit
If the Participant dies after Retirement, the Administrator shall pay to
the Participant's Beneficiary an amount equal to the remaining benefits
payable to the Participant under the Plan over the same period the
benefits would have been paid to the Participant; provided however, if the
Participant's death occurs within ten years of (i) his or her initial Plan
participation date, or (ii) January 1, 1995, whichever is later, then the
Beneficiary's death benefit will be based on twice the Participant's
Deferral Account balance as of the Valuation Date.
8.03 Post-Termination Survivor Benefit
It the Participant dies following Termination of Employment, but prior to
the payment of all benefits under the Plan, the Beneficiary will be paid
the remaining balance in the Participant's account in a lump sum. No
double benefit will apply.
8.04 Changing Form of Benefit
Beneficiaries may petition the Administrator once, and only after the
death of the Participant, for a change in the form of survivor benefits.
The Administrator may, in its sole and absolute discretion, choose to
grant or deny such a petition.
8.05 Small Benefit Exception
Notwithstanding the foregoing, the Administrator may, in its sole
discretion:
page 9
(i) pay the benefits in a single lump sum if the sum of all benefits
payable to the Beneficiary is less than or equal to $3,500.00,
or
(ii) reduce the number of installments elected by the Participant to
120 or 60 if necessary to produce a monthly benefit of at least
$300.00.
ARTICLE 9
DISABILITY
Upon determination that a Participant has suffered a Disability, deferrals
under the Plan shall cease. The Administrator shall pay Plan benefits
upon the Participant's Retirement or death according to the Participant's
prior election.
ARTICLE 10
CHANGE OF CONTROL
Within two years after a Change of Control, any Participant or Beneficiary
in the case of an SCEcorp Change of Control, or the affected Participants
or Beneficiaries in the case of an Employer Change of Control, may elect
to receive a distribution of the balance of the Deferral Account. There
shall be a penalty deducted from the Deferral Account prior to
distribution pursuant to this Article 10 equal to 5% of the total balance
of the Deferral Account (instead of the 10% reduction otherwise provided
for in Section 11.02). If a Participant elects such a withdrawal, any on-
going Annual Deferral shall cease, and the Participant may not again be
designated as an Eligible Employee until one entire Plan Year following
the Plan Year in which the withdrawal was made has elapsed.
ARTICLE 11
SCHEDULED AND UNSCHEDULED WITHDRAWALS
11.01 Scheduled Withdrawals
A. Election
When making a Participation Election, a Participant may elect to
receive a distribution of a specific dollar amount or a percentage
of the Annual Deferral that will be made in the following Plan Year
at a specified year in the future when the Participant will still
be an active employee. Such an election must be made on an In-
Service Distribution Election Form and submitted concurrently with
the Participation Election. The election of a Scheduled Withdrawal
shall only apply to the Annual Deferral, Matching Credits and
related earnings for that Deferral Period, but not to previous or
subsequent Annual Deferrals, Matching Credits or related earnings.
Elections under this Section shall be superseded by benefit
page 10
payments due to the Retirement, Termination of Employment or death
of the Participant.
B. Timing and Form of Withdrawal
The year specified for the Scheduled Withdrawal may not be sooner
than the second Plan Year following the Plan Year in which the
deferral occurs. The Participant will receive a lump sum
distribution of the amount elected on January 1st of the Plan Year
specified.
C. Remaining Deferral Account
The remainder, if any, of the Participant's Deferral Account shall
continue in effect and shall be distributed in the future according
to the terms of the Plan.
11.02 Unscheduled Withdrawals
A. Election
A Participant (or Beneficiary if the Participant is deceased) may
request in writing to the Administrator an Unscheduled Withdrawal
of all or a portion of the entire vested amount credited to the
Participant's Deferral Account, including earnings, which shall be
paid within 30 days in a single lump sum; provided, however, that
(i) the minimum withdrawal shall be 25% of the Deferral Account
balance, (ii) an election to withdraw 75% or more of the balance
shall be deemed to be an election to withdraw the entire balance,
and (iii) such an election may be made only once in a Plan Year.
B. Withdrawal Penalty
There shall be a penalty deducted from the Deferral Account prior
to an Unscheduled Withdrawal equal to 10% of the Unscheduled
Withdrawal. If a Participant elects such a withdrawal, any on-
going Annual Deferral shall cease, and the Participant may not
again be designated as an Eligible Employee until one entire Plan
Year following the Plan Year in which the withdrawal was made has
elapsed.
C. Small Benefit Exception
Notwithstanding any of the foregoing, if the sum of all benefits
payable to the Participant or Beneficiary who has requested the
Unscheduled Withdrawal is less than or equal to $3,500.00, the
Administrator may, in its sole discretion, elect to pay out the
entire Deferral Account (reduced by the 10% penalty) in a single
lump sum.
page 11
ARTICLE 12
CONDITIONS RELATED TO BENEFITS
12.01 Nonassignability
The benefits provided under the Plan may not be alienated, assigned,
transferred, pledged or hypothecated by or to any person or entity, at any
time or any manner whatsoever. These benefits shall be exempt from the
claims of creditors of any Participant or other claimants and from all
orders, decrees, levies, garnishment or executions against any Participant
to the fullest extent allowed by law. Notwithstanding the foregoing, the
benefit payable to a Participant may be assigned in full or in part,
pursuant to a domestic relations order of a court of competent
jurisdiction.
12.02 Financial Hardship Distribution
A participant may submit a hardship distribution request to the
Administrator in writing setting forth the reasons for the request. The
Administrator shall have the sole authority to approve or deny such
requests. Upon a finding that the Participant or the Beneficiary has
suffered a Financial Hardship, the Administrator may in its discretion,
permit the Participant to cease any on-going deferrals and accelerate
distributions of benefits under the Plan in the amount reasonably
necessary to alleviate the Financial Hardship. If a distribution is to
be made to a Participant on account of Financial Hardship, the Participant
may not make deferrals under the Plan until one entire Plan Year following
the Plan Year in which a distribution based on Financial Hardship was made
has elapsed.
12.03 No Right to Assets
The benefits paid under the Plan shall be paid from the general funds of
the Employer, and the Participant and any Beneficiary shall be no more
than unsecured general creditors of the Employer with no special or prior
right to any assets of the Employer for payment of any obligations
hereunder. The Participant will have no claim to benefits from any other
Affiliate.
12.04 Protective Provisions
The Participant shall cooperate with the Administrator by furnishing any
and all information requested by the Administrator, in order to facilitate
the payment of benefits hereunder, taking such physical examinations as
the Administrator may deem necessary and signing such consents to insure
or taking such other actions as may be requested by the Administrator.
If the Participant refuses to cooperate, the Administrator and the
Employer shall have no further obligation to the Participant under the
Plan.
12.05 Withholding
The Participant or the Beneficiary shall make appropriate arrangements
with the Administrator for satisfaction of any federal, state or local
income tax withholding requirements and Social Security or other employee
tax requirements applicable to the
page 12
payment of benefits under the Plan. If no other arrangements are made,
the Administrator may provide, at its discretion, for such withholding and
tax payments as may be required.
ARTICLE 13
PLAN ADMINISTRATION
The Administrator shall administer the Plan and interpret, construe and
apply its provisions in accordance with its terms and shall provide
direction and oversight as necessary to management, staff, or contractors
to whom day-to-day Plan operations may be delegated. The Administrator
shall establish, adopt or revise such rules and regulations as it may deem
necessary or advisable for the administration of the Plan. All decisions
of the Administrator shall be final and binding.
ARTICLE 14
BENEFICIARY DESIGNATION
The Participant shall have the right, at any time, to designate any person
or persons as Beneficiary (both primary and contingent) to whom payment
under the Plan shall be made in the event of the Participant's death. The
Beneficiary designation shall be effective when it is submitted in writing
to the Administrator during the Participant's lifetime on a form
prescribed by the Administrator.
The submission of a new Beneficiary designation shall cancel all prior
Beneficiary designations. Any finalized divorce or marriage of a
Participant subsequent to the date of a Beneficiary designation shall
revoke such designation, unless in the case of divorce the previous spouse
was not designated as Beneficiary, and unless in the case of marriage the
Participant's new spouse has previously been designated as Beneficiary.
The spouse of a married Participant must consent in writing to any
designation of a Beneficiary other than the spouse.
If a Participant fails to designate a Beneficiary as provided above, or
if the Beneficiary designation is revoked by marriage, divorce, or
otherwise without execution of a new designation, or if every person
designated as Beneficiary predeceases the Participant or dies prior to
complete distribution of the Participant's benefits, then the
Administrator shall direct the distribution of the benefits to the
Participant's estate. If a Beneficiary dies after commencement of
payments to the Beneficiary, a lump sum of any remaining payments will be
paid to that person's Beneficiary, if one has been designated, or to the
Beneficiary's estate.
page 13
ARTICLE 15
AMENDMENT OR TERMINATION OF PLAN
15.01 Amendment of Plan
Subject to the terms of Section 15.03, SCEcorp may amend the Plan at any
time in whole or in part, provided, however, that the amendment (i) shall
not decrease the balance of the Participant's Deferral Account at the time
of the amendment and (ii) shall not retroactively decrease the applicable
Crediting Rates of the Plan prior to the time of the amendment. SCEcorp
may amend the Crediting Rates of the Plan prospectively, in which case the
Administrator shall notify the Participant of the amendment in writing
within 30 days after the amendment.
15.02 Termination of Plan
Subject to the terms of Section 15.03, SCEcorp may terminate the Plan at
any time. If SCEcorp terminates the Plan, the date of the Termination of
Employment shall be treated as the date of Termination of Employment for
the purpose of calculating Plan benefits, and the benefits the Participant
is entitled to receive under the Plan shall be paid to the Participant in
a lump sum within 60 days.
15.03 Amendment or Termination After Change of Control
Notwithstanding the foregoing, SCEcorp shall not amend or terminate the
Plan without the prior written consent of affected Participants for a
period of two calendar years following a Change of Control and shall not
thereafter amend or terminate the Plan in any manner which affects any
Participant (or Beneficiary of a deceased Participant) who commences
receiving payment of benefits under the Plan prior to the end of the two
year period following a Change of Control.
15.04 Exercise of Power to Amend or Terminate
Except as provided in Section 15.03, SCEcorp's power to amend or terminate
the Plan shall be exercisable by the Compensation and Executive Personnel
Committee of the SCEcorp Board of Directors.
15.05 Constructive Receipt Termination
Notwithstanding anything to the contrary in this Plan, in the event the
Administrator determines that amounts deferred under the Plan have been
constructively received by Participants and must be recognized as income
for federal income tax purposes, the Plan shall terminate and
distributions shall be made to Participants in accordance with the
provisions of Section 15.02 or as may be determined by the Administrator.
The determination of the Administrator under this Section 15.05 shall be
binding and conclusive.
page 14
ARTICLE 16
CLAIMS AND REVIEW PROCEDURES
16.01 Claims Procedure
The Administrator shall notify a Participant in writing, within 90 days
after his or her written application for benefits, of his or her
eligibility or noneligibility for benefits under the Plan. If the
Administrator determines that a Participant is not eligible for benefits
or full benefits, the notice shall set forth (1) the specific reasons for
the denial, (2) a specific reference to the provisions of the Plan on
which the denial is based, (3) a description of any additional information
or material necessary for the claimant to perfect his or her claim, and
a description of why it is needed, and (4) an explanation of the Plan's
claims review procedure and other appropriate information as to the steps
to be taken if the Participant wishes to have the claim reviewed. If the
Administrator determines that there are special circumstances requiring
additional time to make a decision, the Administrator shall notify the
Participant of the special circumstances and the date by which a decision
is expected to be made, and may extend the time for up to an additional
90-day period.
16.02 Review Procedure
If a Participant is determined by the Administrator not to be eligible for
benefits, or if the Participant believes that he or she is entitled to
greater or different benefits, the Participant shall have the opportunity
to have the claim reviewed by the Administrator by filing a petition for
review with the Administrator within 60 days after receipt of the notice
issued by the Administrator. Said petition shall state the specific
reasons which the Participant believes entitle him or her to benefits or
to greater or different benefits. Within 60 days after receipt by the
Administrator of the petition, the Administrator shall afford the
Participant (and counsel, if any) an opportunity to present his or her
position to the Administrator orally or in writing, and the Participant
(or counsel) shall have the right to review the pertinent documents. The
Administrator shall notify the Participant of its decision in writing
within the 60-day period, stating specifically the basis of its decision,
written in a manner calculated to be understood by the Participant and the
specific provisions of the Plan on which the decision is based. If,
because of the need for a hearing, the 60-day period is not sufficient,
the decision may be deferred for up to another 60-day period at the
election of the Administrator, but notice of this deferral shall be given
to the Participant. In the event of the death of the Participant, the
same procedures shall apply to the Participant's Beneficiaries.
16.03 Dispute Arbitration
Notwithstanding the foregoing, and because it is agreed that time will be
of the essence in determining whether any payments are due to Participant
or his or her Beneficiary under the Plan, a Participant or Beneficiary
may, if he or she desires, submit any claim for payment under the Plan to
arbitration. This right to select arbitration shall be solely that of the
Participant or Beneficiary and the Participant or Beneficiary may decide
whether or not to arbitrate in his or her discretion. The "right to
select arbitration" is not
page 15
mandatory on the Participant or Beneficiary, and the Participant or
Beneficiary may choose in lieu thereof to bring an action in an
appropriate civil court. Once an arbitration is commenced, however, it
may not be discontinued without the mutual consent of both parties to the
arbitration. During the lifetime of the Participant only he or she can
use the arbitration procedure set forth in this Section.
Any claim for arbitration may be submitted as follows: if a Participant
or Beneficiary has submitted a request to be paid under the Plan and the
claim is finally denied by the Administrator in whole or in part, the
claim may be filed in writing with an arbitrator of the Participant's or
Beneficiary's choice who is selected by the method described in the next
four sentences. The first step of the selection shall consist of the
Participant or Beneficiary submitting a list of five potential arbitrators
to the Administrator. Each of the five arbitrators must be either (1) a
member of the National Academy of Arbitrators located in the State of
California or (2) a retired California Superior Court or Appellate Court
judge. Within one week after receipt of the list, the Administrator shall
select one of the five arbitrators as the arbitrator for the dispute in
question. If the Administrator fails to select an arbitrator within one
week after receipt of the list, the Participant or Beneficiary shall then
designate one of the five arbitrators for the dispute in question.
The arbitration hearing shall be held within seven days (or as soon
thereafter as possible) after the picking of the arbitrator. No
continuance of said hearing shall be allowed without the mutual consent
of Participant or Beneficiary and the Administrator. Absence from or
nonparticipation at the hearing by either party shall not prevent the
issuance of an award. Hearing procedures which will expedite the hearing
may be ordered at the arbitrator's discretion, and the arbitrator may
close the hearing in his or her sole discretion when he or she decides he
or she has heard sufficient evidence to satisfy issuance of an award.
The arbitrator's award shall be rendered as expeditiously as possible and
in no event later than one week after the close of the hearing.
In the event the arbitrator finds that the Administrator or the Employer
has breached the terms of the Plan, he or she shall order the Employer to
pay to Participant or Beneficiary within two business days after the
decision is rendered the amount then due the Participant or Beneficiary,
plus, notwithstanding anything to the contrary in the Plan, an additional
amount equal to 20% of the amount actually in dispute. This additional
amount shall constitute an additional benefit under the Plan. The award
of the arbitrator shall be final and binding upon the Parties.
The award may be enforced in any appropriate court as soon as possible
after its rendition. The Administrator will be considered the prevailing
party in a dispute if the arbitrator determines (1) that the Administrator
or the Employer has not breached the terms of the Plan and (2) the claim
by Participant or his or her Beneficiary was not made in good faith.
Otherwise, the Participant or his or her Beneficiary will be considered
the prevailing party. In the event that the Administrator is the
prevailing
page 16
party, the fee of the arbitrator and all necessary expenses of the hearing
(excluding any attorneys' fees incurred by the Administrator) including
stenographic reporter, if employed, shall be paid by the losing party.
In the event that the Participant or his or her Beneficiary is the
prevailing party, the fee of the arbitrator and all necessary expenses of
the hearing (including all attorneys' fees incurred by Participant or his
or her Beneficiary in pursuing his or her claim), including the fees of
a stenographic reporter, if employed, shall be paid by the Employer.
ARTICLE 17
MISCELLANEOUS
17.01 Successors
The rights and obligations of each Employer under the Plan shall inure to
the benefit of, and shall be binding upon, the successors and assigns of
the Employer.
17.02 ERISA Plan
The Plan is intended to be an unfunded plan maintained primarily to
provide deferred compensation benefits for "a select group of management
or highly compensated employees" within the meaning of Sections 201, 301
and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title
I of ERISA. SCEcorp is the named fiduciary.
17.03 Trust
The Employers shall be responsible for the payment of all benefits under
the Plan. At their discretion, the Employers may establish one or more
grantor trusts for the purpose of providing for payment of benefits under
the Plan. The trust or trusts may be irrevocable, but an Employer's share
of the assets thereof shall be subject to the claims of the Employer's
creditors. Benefits paid to the Participant from any such trust shall be
considered paid by the Employer for purposes of meeting the obligations
of the Employer under the Plan.
17.04 Employment Not Guaranteed
Nothing contained in the Plan nor any action taken hereunder shall be
construed as a contract of employment or as giving any Participant any
right to continued employment with the Employer or any other Affiliate.
17.05 Gender, Singular and Plural
All pronouns and variations thereof shall be deemed to refer to the
masculine, feminine, or neuter, as the identity of the person or persons
may require. As the context may require, the singular may be read as the
plural and the plural as the singular.
17.06 Captions
The captions of the articles and sections of the Plan are for convenience
only and shall not control or affect the meaning or construction of any
of its provisions.
page 17
17.07 Validity
If any provision of the Plan is held invalid, void or unenforceable, the
same shall not affect, in any respect whatsoever, the validity of any
other provisions of the Plan.
17.08 Waiver of Breach
The waiver by SCEcorp of any breach of any provision of the Plan by the
Participant shall not operate or be construed as a waiver of any
subsequent breach by the Participant.
17.09 Applicable Law
The Plan shall be governed and construed in accordance with the laws of
California except where the laws of California are preempted by ERISA.
17.10 Notice
Any notice or filing required or permitted to be given to SCEcorp under
the Plan shall be sufficient if in writing and hand-delivered, or sent by
first class mail to the principal office of SCEcorp, directed to the
attention of the Administrator. The notice shall be deemed given as of
the date of delivery, or, if delivery is made by mail, as of the date
shown on the postmark.
IN WITNESS WHEREOF, SCEcorp has adopted this Plan effective the 1st day
of January, 1995.
SCEcorp
Alan J. Fohrer
____________________________________________________
Executive Vice President and Chief Financial Officer
PAGE
EXHIBIT 10.12
SCEcorp
EXECUTIVE GRANTOR TRUST AGREEMENT
August, 1995
PAGE
SCEcorp EXECUTIVE GRANTOR TRUST AGREEMENT
TABLE OF CONTENTS
Section Title Page
- ------- ----- ----
PREAMBLE 1
I. EFFECTIVE DATE AND DURATION 3
1.01 Effective Date And Trust Year 3
1.02 Duration 3
1.03 Special Circumstances 4
II. TRUST FUND AND FUNDING POLICY 5
2.01 Contributions 5
2.02 Investment And Valuation 8
2.03 Subtrusts 12
2.04 Recapture Of Excess Assets 13
2.05 Substitution Of Other Property 14
2.06 Administrative Powers Of Trustee 14
III. ADMINISTRATION 17
3.01 Committee; Company Representatives 17
3.02 Payment Of Benefits 17
3.03 Disputed Claims 18
3.04 Records 20
3.05 Accountings 21
3.06 Expenses And Fees 21
IV. LIABILITY 21
4.01 Indemnity 21
4.02 Bonding 22
V. INSOLVENCY 22
5.01 Determination of Insolvency 22
5.02 Insolvency Administration 22
5.03 Termination Of Insolvency Administration 23
5.04 Creditors' Claims During Solvency 23
VI. SUCCESSOR TRUSTEES 24
-i-
PAGE
6.01 Resignation And Removal 24
6.02 Appointment Of Successor 24
6.03 Accountings; Continuity 24
VII. GENERAL PROVISIONS 25
7.01 Interests Not Assignable 25
7.02 Amendment 25
7.03 Applicable Law 25
7.04 Agreement Binding On All Parties 25
7.05 Notices And Directions 26
7.06 No Implied Duties 26
7.07 Gender, Singular And Plural 27
7.08 Validity 27
VIII. INSURER 26
8.01 Insurer Not A Party 27
8.02 Authority Of Trustee 27
8.03 Contract Ownership 27
8.04 Limitation Of Liability 27
8.05 Change Of Trustee 28
-ii-
PAGE
SCEcorp
EXECUTIVE GRANTOR TRUST
AGREEMENT
This Executive Grantor Trust Agreement ("Trust Agreement") is made and
entered into by SCEcorp, Southern California Edison Company, The Mission
Group, Mission Energy Company, Mission First Financial, Mission Land
Company, all California corporations ("Grantors"), and U.S. Trust Company
of California N. A. ("Trustee").
The Grantors hereby establish with the Trustee a master trust, with
separate subtrusts for the interests of each Grantor, to hold all monies
and other property, together with the income thereon, as shall be paid or
transferred to it hereunder in accordance with the terms and conditions
of this Trust Agreement. The Trustee hereby accepts the trust established
under this Trust Agreement and agrees to hold, IN TRUST, all monies and
other property transferred to it hereunder for the uses and purposes and
upon the terms and conditions set forth herein, and the Trustee further
agrees to discharge and perform fully and faithfully all of the duties and
obligations imposed upon it under this Trust Agreement.
PREAMBLE
On behalf of executives of the Grantors, SCEcorp has adopted the following
plan which shall be subject to this trust and references to the "Plan" in
this Trust Agreement shall refer to such plan:
SCEcorp Executive Deferred Compensation Plan
page 1
The Plan is administered by the SCEcorp Compensation and Executive
Personnel Committee of the SCEcorp Board of Directors ("Compensation
Committee"). This Trust Agreement shall be administered by the
Compensation Committee, but day-to-day administration is delegated to the
SCE Trust Investment Committee ("Trust Committee").
Plan participants and beneficiaries who are covered by this Trust
Agreement ("Participants" and "Beneficiaries") shall be all persons who
are participants or beneficiaries in the Plan. After a person becomes a
Participant or a Beneficiary covered by this Trust Agreement, such status
will continue until all Plan benefits payable to that person have been
paid, that person ceases to be entitled to any Plan benefits, or that
person dies, whichever occurs first.
Prior to a Change in Control, SCEcorp may by written notice to the
Trustee, cause additional plan to become subject to this Trust Agreement
(any reference to the Plan herein also constitutes a reference to any such
additional plan).
SCEcorp shall provide the Trustee with copies of the following items: (i)
the Plan documents; (ii) all Plan amendments promptly upon their adoption;
and (iii) lists and specimen signatures of the members of the Trust
Committee and any SCEcorp representatives authorized to take action in
regard to the administration of the Plans and this trust, including any
changes in the members of the Trust Committee and of such other
representatives promptly following any such change. SCEcorp shall also
provide the Trustee at least annually with a list of all Participants in
each Plan who are covered by this Trust Agreement.
The purpose of this trust is to give Participants greater security by
placing assets in trust for use only to pay Plan benefits to Participants
or if one of the Grantors becomes insolvent, to pay its creditors from its
portion of the trust assets. The Grantors shall continue to be liable to
Participants to make all payments required under the terms of the Plans
to the extent such payments are not made from this trust. Distributions
made from this trust to Participants or their beneficiaries shall, to the
extent of such distributions, satisfy the Grantors' obligations to pay
benefits to Participants and their beneficiaries under the Plans.
The Grantors and the Trustee agree that the trust, comprised of one or
more subtrusts for each Grantor, has been established to pay obligations
of the Grantors pursuant to the Plans and each subtrust is subject to the
rights of general creditors of the respective Grantor, and accordingly the
trust is a grantor trust under the provisions of Sections 671 through 677
of the Internal Revenue Code of 1986, as amended (the "Code"). The
Grantors hereby agree to report their allocable shares of all items of
income, deductions and credits of the trust on their own income tax
returns; and the Grantors shall have no right to any distributions from
the trust or any claim against the trust for funds necessary to pay any
income taxes which the Grantors are required to pay on account of
reporting the income of the trust on their income tax returns. No
contribution to or income of the trust is intended to be taxable to
Participants until benefits are distributed to them.
page 2
The Plans are intended to be "unfunded" and maintained primarily for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees. As such, the Plan is not
intended to be covered by Parts 2 through 4 of Subtitle B of Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
which relate to participation and vesting, funding and fiduciary
responsibility. The existence of this trust is not intended to alter this
characterization of the Plan.
I.
EFFECTIVE DATE AND DURATION
1.01 Effective Date And Trust Year
This trust shall become effective when the Trust Agreement has been
executed by the Grantors and the Trustee and one or more of the Grantors
have made a contribution to the trust. For tax purposes the trust year
shall be the calendar year.
1.02 Duration
1.02-1 This trust shall continue in effect until all assets of the trust
fund are exhausted through distribution of benefits to Participants and
their beneficiaries, payment to creditors in the event of insolvency,
payment of fees and expenses of the Trustee, and return of remaining funds
to the Grantors pursuant to 1.02-2. Notwithstanding the foregoing, this
trust shall terminate on the day before twenty-one years after the death
of the last survivor of all present or future Participants who are now
living and those persons now living who are designated as beneficiaries
of any such Participants in accordance with the terms of the Plan.
1.02-2 Except as otherwise provided in 1.02, the trust shall be
irrevocable until all benefits payable under the Plan to Participants and
Beneficiaries who are covered by this Trust Agreement are paid. The
Trustee shall then return to the Grantors any assets remaining in the
trust in accordance with the allocations to their respective subtrusts.
1.02-3 If the existence of this trust or any subtrust is determined to
be ERISA Funding or Tax Funding (as such terms are defined in 1.02-4) by
the Compensation Committee, this trust or such subtrust shall terminate.
The Compensation Committee may also terminate this trust or any subtrust
if it determines, based on an opinion of legal counsel which is
satisfactory to the Trustee, that either (i) judicial authority or the
opinion of the U.S. Department of Labor, Treasury Department or Internal
Revenue Service (as expressed in proposed or final regulations, advisory
opinions or rulings, or similar administrative announcements) creates a
significant risk that the trust or any subtrust will be held to be ERISA
Funding or Tax Funding or (ii) ERISA or the Code requires the trust or any
subtrust to be amended in a way that creates a significant risk that the
trust or such subtrust will be held to be ERISA Funding or Tax Funding,
and
page 3
failure to so amend the trust or such subtrust could subject the Grantors
to material penalties. Upon any such termination, (i) the assets of each
terminated subtrust shall be allocated and distributed to the Participants
in proportion to the vested accrued benefits of Participants under the
Plan and (ii) then, if any assets remain, the unvested (if any) accrued
benefits of Participants under the applicable Plan shall be distributed
to such Participants in lump sums in proportion to the unvested accrued
benefits of the Participants under the Plan . Any assets remaining shall
be distributed to the respective Grantor(s) in accordance with 2.04.
Notwithstanding the foregoing, the Trustee shall distribute Plan benefits
to a Participant to the extent that a federal court has held that the
interest of the Participant in this trust causes such Plan benefits to be
includable for federal income tax purposes in the gross income of the
Participant prior to actual payment of such Plan benefits to the
Participant and appeals from that holding are no longer timely or have
been exhausted. The Trustee may also distribute Plan benefits to a
Participant, upon direction of the Compensation Committee, based on an
opinion of legal counsel which is satisfactory to the Trustee, that there
is a significant risk that the Participant's interest in the trust fund
will be held to be ERISA Funding or Tax Funding with respect to such
Participant or that a Participant will be determined not to be a
"management or highly compensated employee" for purposes of ERISA. The
provisions of this paragraph shall also apply to any Beneficiary of a
Participant.
1.02-4 This trust is "Tax Funding" if it causes the interest of a
Participant in this trust to be includable for federal income tax purposes
in the gross income of the Participant prior to actual payment of Plan
benefits to the Participant.
This trust is "ERISA Funding" if it prevents the Plan from meeting the
"unfunded" criterion of the exceptions to application of the provisions
of Parts 2 through 4 of Subtitle B of Title I of ERISA for plan that are
unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees.
1.02-5 "Written Consent of Participants" means, for the purposes of this
Trust Agreement, consent in writing by Participants who (i) constitute a
majority in number of all participants and (ii) have accrued benefits
(whether vested or unvested) with a present value equal to more than fifty
percent (50%) of the present value of the accrued benefits of all of the
Participants in all of the subtrusts under this Trust Agreement on the
date of such consent.
1.03 Special Circumstances
1.03-1 Upon the occurrence of a Special Circumstance as described in
1.03-2 with respect to any Grantor, the trust assets allocated to the
affected Grantor shall be held for Participants in the Grantor's subtrusts
who had accrued benefits before the Special Circumstance occurred and
shall include those assets accrued for such Participants after the Special
Circumstance.
page 4
1.03-2 A "Special Circumstance" shall mean a Potential Change in Control
of any Grantor (as defined in 2.01-7), a Change in Control of any Grantor
(as defined in the Plan) or a Default of any Grantor (as defined in 1.03-
4).
1.03-3 The Trust Committee or the Chief Executive Officer of the affected
Grantor shall furnish written notice to the Trustee when a Change in
Control occurs. For purposes of this Trust Agreement, a Change in Control
of any Grantor shall be deemed to have occurred when the Trustee makes a
determination to that effect on its own initiative or upon receipt by the
Trustee of written notice to that effect from the Trust Committee or the
Chief Executive Officer of the affected Grantor.
1.03-4 A "Default" shall mean a failure by a Grantor to contribute to the
trust, within 30 days of receipt of written notice from the Trustee, any
of the following amounts:
(a) The full amount of any insufficiency in assets of any subtrust
that is required to pay any premiums or loan interest payments on
insurance contracts which are held in the subtrust;
(b) The full amount of any insufficiency in assets of any subtrust
that is required to pay any Plan benefit that is payable upon a direction
from the Trust Committee pursuant to 3.02-3 or upon resolution of a
disputed claim pursuant to 3.03-2; or
(c) Any contribution which is then required under 2.01.
If, after the occurrence of a Default, the Grantor at any time cures such
Default by contributing to the trust all amounts which are then required
under subparagraphs (a), (b) and (c) above, it shall then cease to be
deemed that a Default has occurred or that a Special Circumstance has
occurred by reason of such Default.
II.
TRUST FUND AND FUNDING POLICY
2.01 Contributions
2.01-1 All contributions to the trust by the Grantors shall be made
through SCEcorp as agent for the Grantors. Each Grantor shall be liable
to SCEcorp for its allocable share of any contribution made to the trust
by SCEcorp on behalf of the Grantor. Each Grantor, through SCEcorp shall
contribute to the trust such amounts as are required to purchase or hold
insurance contracts in the trust and to pay premiums and loan interest
payments thereon. Each Grantor shall also contribute to the trust such
additional amounts as are necessary to fund all Plan benefits accrued by
Participants while employed by such Grantor (unless the Grantor makes such
payments directly) whenever the Trust Committee advises SCEcorp or the
Grantor that the assets of the trust or subtrust, other than insurance
contracts or amounts needed to pay future premiums or loan interest
payments on insurance contracts, are, or in the future are likely to be,
insufficient to make such payments. In its discretion, SCEcorp or any
page 5
Grantor may contribute to the trust such additional amounts or assets as
the Trust Committee may reasonably decide are necessary to provide
security for all Plan benefits payable to Participants covered by this
trust or any subtrust. SCEcorp or any Grantor may make contributions to
a special reserve for payment of future fees and expenses of the Trustee
and future trust fees and expenses for legal and administrative
proceedings.
2.01-2 Whenever SCEcorp makes a contribution to the trust on behalf of
the Grantors, SCEcorp shall designate the Plan and subtrusts to which such
contribution (or designated portions thereof) shall be allocated. If the
contribution is for a special reserve for payment of future fees and
expenses of the Trustee and future trust fees and expenses for legal and
administrative proceedings, a separate subtrust shall be designated to
receive such contributions, which shall be distinct from any subtrust
established for the Plan or the Grantors.
2.01-3 Following the occurrence of a Special Circumstance (as defined in
1.03-2) with respect to any Grantor, and at least annually thereafter
while the Special Circumstance remains in effect, the Grantor shall
contribute to the trust the sum of the following:
(a) The amount by which the present value of all "anticipated
benefits" (vested and unvested) payable under the Plans on a
pre-tax basis to Participants or their beneficiaries whose
benefits are funded by the Grantor's subtrust(s) exceeds the
value of all of the Grantor's subtrust assets in this trust.
For this purpose, each Participant's "anticipated benefit" under
the Plan shall be the present value of highest benefit the
Participant would have accrued under the Plan by the end of that
year, assuming that the Participant's service continues at the
same rate of compensation and that the Participant continues to
make deferrals under the Plan for the balance of the year.
(b) A reasonable estimate of the Trustee fees and expenses for the
remaining duration of the trust which should be allocable to the
Grantor's subtrust(s).
2.01-4 The calculations required under 2.01-3 shall be based on the terms
of the Plans.
2.01-5 Whenever SCEcorp makes a contribution to the trust pursuant to
2.01-3 on its own behalf or on behalf of another Grantor, it shall furnish
the Trustee with a written statement setting forth the computation of all
required amounts contributed.
Whenever a Special Circumstance occurs or a contribution is made pursuant
to 2.01-3, SCEcorp or the Trust Committee shall deliver to the Trustee,
contemporaneously with or immediately prior to such event, a schedule (the
"Payment Schedule") indicating the amounts payable under the Plans in
respect of each affected Participant, or providing a formula or
instructions acceptable to the Trustee for determining the amounts so
payable, the form in which such amounts are to be paid (as provided for
or available under the Plans) and the time of commencement for payment of
such amounts. The Payment Schedule shall include any other necessary
instructions with respect to Plan benefits (including legal expenses)
payable under the Plans and any conditions with
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respect to any Participant's entitlement to such benefits, and such
instructions may be revised from time to time to the extent so provided
under the Plans or this Trust Agreement.
A modified Payment Schedule shall be delivered by SCEcorp or the Trust
Committee to the Trustee at each time that (i) additional amounts are
required to be paid to the Trustee pursuant to 2.01-3, (ii) Excess Assets
are returned to the Grantors, or (iii) upon the occurrence of any event
requiring a modification of the Payment Schedule. SCEcorp shall also
furnish a Payment Schedule or modified Payment Schedule for any or all
Plans upon request by the Trustee at any other time. Whenever SCEcorp or
the Trust Committee is required to deliver to the Trustee a Payment
Schedule or a modified Payment Schedule, SCEcorp shall also deliver at the
same time to each Participant the respective portion of the Payment
Schedule or modified Payment Schedule that sets forth the amount payable
to that Participant.
2.01-6 Any contribution to the trust which is made by a Grantor on
account of a Potential Change in Control shall be returned to that Grantor
following one year after delivery of such contribution to the Trustee
unless a Change in Control of the Grantor shall have occurred during such
one-year period, if the Grantor requests such return within 60 days after
such one-year period. If no such request is made within this 60-day
period, the contribution shall become a permanent part of the trust fund
allocated to the Grantor's subtrust(s). The one-year period shall
recommence in the event of and upon the date of any subsequent Potential
Change in Control.
2.01-7 A "Potential Change in Control" shall be deemed to occur with
respect to a Grantor if:
(a) Any person, as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Act"), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of the Grantor, delivers to the Grantor a statement
containing the information required by Schedule 13-D under the
Act, or any amendment to any such statement, that shows that
such person has acquired, directly or indirectly, the beneficial
ownership of (i) more than twenty-five (25%) percent of any
class of equity security of the Grantor entitled to vote as a
single class in the election or removal from office of
directors, or (ii) more than twenty-five (25%) percent of the
voting power of any group of classes of equity securities of the
Grantor entitled to vote as a single class in the election or
removal from office of directors;
(b) The Grantor becomes aware that preliminary or definitive copies
of a proxy statement and information statement or other
information have been filed with the Securities and Exchange
Commission pursuant to Rule 14a-6, Rule 14c-5, or Rule 14f-1
under the Act relating to a Potential Change in Control of the
Grantor;
(c) Any person delivers to the Grantor pursuant to Rule 14d-3 under
the Act a Tender Offer Statement relating to Voting Securities
of the Grantor;
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(d) Any person (other than the Grantor or an SCEcorp affiliate)
publicly announces an intention to take actions which if
consummated would constitute a Change in Control;
(e) The Grantor enters into an agreement or arrangement, the
consummation of which would result in the occurrence of a Change
in Control;
(f) The Grantor's Board approves a proposal, or the Grantor enters
into an agreement, which if consummated would constitute a
Change in Control; or
(g) The Grantor's Board adopts a resolution to the effect that, for
purposes of this Trust Agreement, a Potential Change in Control
has occurred.
Notwithstanding the foregoing, a Potential Change in Control shall not be
deemed to occur as a result of any event described in (a) through (g)
above, if directors who were a majority of the members of the Grantor's
Board prior to such event determine that the event shall not constitute
a Potential Change in Control and furnish written notice to the Trustee
of such determination.
2.01-8 The Trust Committee or the Chief Executive Officer of the affected
Grantor shall furnish written notice to the Trustee when a Potential
Change in Control occurs under 2.01-7. For purposes of this trust, a
Potential Change in Control shall be deemed to have occurred when the
Trustee makes a determination to that effect on its own initiative or upon
receipt by the Trustee of written notice to that effect from the affected
Grantor or the Trust Committee except as may be provided under 2.01-7.
2.01-9 The Trustee shall accept the contributions made by SCEcorp on
behalf of the Grantors and hold them as a trust fund for the payment of
benefits under the Plans. The Trustee shall not be responsible for
determining the required amount of contributions or for collecting any
contribution not voluntarily paid, nor shall the Trustee be responsible
for the adequacy of the trust fund to meet and discharge all liabilities
under the Plans. Contributions may be in cash or in other assets
specified in 2.02.
2.02 Investment And Valuation
2.02-1 The trust fund may be invested primarily in insurance contracts
("Contracts"). Such Contracts may be purchased by SCEcorp on behalf of
the Grantors and transferred to the Trustee as in-kind contributions or
may be purchased by the Trustee with the proceeds of cash contributions
(or may be purchased upon direction by the Trust Committee pursuant to
2.02-2 or an Investment Manager pursuant to 2.02-4). Trust contributions
shall include sufficient cash to make projected premium payments on such
Contracts and payments of interest due on loans secured by the cash value
of such Contracts, unless SCEcorp makes these payments directly on behalf
of the Grantors or the Grantors make the payments directly. The Trustee
shall have the power to exercise all rights, privileges, options and
elections granted by or permitted under any Contract or under the rules
of the insurance company issuing the Contract ("Insurer"), including the
right to obtain policy loans against the cash value of the Contract.
Prior to a Special Circumstance, the exercise by the Trustee of any
incidents
page 8
of ownership under any Contract shall be subject to the direction of the
Trust Committee. The Trustee shall have no power to designate a
beneficiary other than the trust, to assign a Contract other than to a
successor trustee, or to loan proceeds of any Contract borrowings to any
person other than the Grantors. The Trust Committee may from time to time
direct the Trustee in writing as to the designation of beneficiary under
such Contracts.
Notwithstanding anything contained herein to the contrary, neither
SCEcorp, nor any Grantor nor the Trustee shall be liable for the refusal
of any Insurer to issue or change any Contract or Contracts or to take any
other action requested by the Trustee; nor for the form, genuineness,
validity, sufficiency or effect of any Contract or Contracts held in the
trust; nor for the act of any person (other than itself) or persons that
may render any such Contract or Contracts null and void; nor for failure
of any Insurer to pay the proceeds of any such Contract or Contracts as
and when the same shall become due and payable; nor for any delay in
payment resulting from any provision contained in any such Contract or
Contracts; nor for the fact that for any reason whatsoever (other than its
own negligence or willful misconduct) any Contracts shall lapse or
otherwise become uncollectable.
2.02-2 Prior to a Special Circumstance, the Trustee shall invest the
trust fund in accordance with written directions by the Trust Committee,
including directions for exercising rights, privileges, options and
elections pertaining to Contracts and for borrowing from Contracts or
other borrowing by the Trustee. The Trustee shall act only as an
administrative agent in carrying out directed investment transactions and
shall not be responsible for the investment decision. If a directed
investment transaction violates any duty to diversify, to maintain
liquidity or to meet any other investment standard under this trust or
applicable law, the entire responsibility shall rest upon the Trust
Committee. The Trustee shall be fully protected in acting upon or
complying with any investment objectives, guidelines, restrictions or
directions provided in accordance with this paragraph.
After a Special Circumstance with respect to a Grantor, the Trust
Committee shall no longer be entitled to direct the Trustee with respect
to the investment of that portion of the trust fund allocated to that
Grantor's subtrust(s), unless the Written Consent of Participants of the
affected subtrust(s) is obtained for the Trust Committee to continue to
have this right pursuant to 2.02-2. If such Written Consent of
Participants is not obtained, that portion of the trust fund shall be
invested by the Trustee pursuant to 2.02-3 or by an Investment Manager
pursuant to 2.02-4. The Trustee or Investment Manager shall have the
right to invest the Trust Fund primarily in insurance contracts pursuant
to 2.02-1.
Notwithstanding the foregoing, after a Special Circumstance no new
investments shall be made at any time in any securities, instruments,
accounts or real property of the affected Grantor, and the Trustee may not
loan trust fund assets to the affected Grantor, or permit the affected
Grantor to pledge trust fund assets as collateral for loans to the
affected Grantor without the Written Consent of all of the Participants.
page 9
The Trust Committee may not direct the Trustee to make any investments,
and the Grantors may not make any contributions of property to the trust
fund, which are not permissible investments under 2.02-1 and 2.02-3.
2.02-3 If the Trustee does not receive instructions from the Trust
Committee for the investment of part or all of the trust fund for a period
of at least 60 days, the Trustee shall invest and reinvest the assets of
the trust fund as the Trustee, in its sole discretion, may deem
appropriate, in accordance with applicable law.
Permissible investments shall be limited to the following:
(a) Insurance or annuity contracts;
(b) Preferred or common stocks, bonds, notes, debentures, commercial
paper, certificates of deposit, money market funds, obligations
of governmental bodies, or other securities;
(c) Interest-bearing savings or deposit accounts with any federally-
insured bank or savings and loan association (including the
Trustee or an affiliate of the Trustee);
(d) Shares or certificates of participation issued by investment
companies, investment trusts, mutual funds, or common or pooled
investment funds (including any common or pooled investment fund
now or hereafter maintained by the Trustee or an affiliate of
the Trustee); or
(e) Real property, mortgages, deeds of trust, or notes secured by
mortgages or deeds of trust.
2.02-4 Prior to a Change in Control, the Trust Committee may appoint one
or more investment managers ("Investment Manager") subject to the
following provisions:
(a) The Trust Committee may appoint one or more Investment Managers
to manage (including the power to acquire and dispose of) a
specified portion of the assets of the trust (hereinafter
referred to as that Investment Manager's "Segregated Fund").
Any Investment Manager so appointed must be either (i) an
investment adviser registered as such under the Investment
Advisers Act of 1940, (ii) a bank, as defined in that Act, or
(iii) an insurance company qualified to perform services in the
management, acquisition or disposition of the assets of trusts
under the laws of more than one state; and any Investment
Manager so appointed must acknowledge in writing to the Trust
Committee and to the Trustee that it is a fiduciary with respect
to the trust assets. The Trustee, until notified in writing to
the contrary, shall be fully protected in relying upon any
written notice of the appointment of an Investment Manager
furnished to it by the Trust Committee. In the event of any
vacancy in the office of Investment Manager, the Trustee, upon
seven days prior written notice of the vacancy in the office of
Investment Manager shall be deemed to be the Investment Manager
of that Investment Manager's Segregated Fund until an Investment
page 10
Manager thereof shall have been duly appointed; and in such
event, until an Investment Manager shall have been so appointed
and qualified, references herein to the Trustee's acting in
respect of that Segregated Fund pursuant to direction from the
Investment Manager shall be deemed to authorize the Trustee to
act in its own discretion in managing and controlling the assets
of that Segregated Fund, and subparagraphs (b) and (c) below
shall have no effect with respect thereto and shall be
disregarded.
(b) Each Investment Manager appointed pursuant to subparagraph (a)
above shall have exclusive authority and discretion to manage
and control the assets of its Segregated Fund and may invest and
reinvest the assets of the Segregated Fund in any investments
in which the Trustee is authorized to invest under 2.02-3,
subject to the terms and limitations of any written instruments
pertaining to its appointment as Investment Manager. Copies of
any such written instruments shall be furnished to the Trustee.
In addition, each Investment Manager from time to time and at
any time may delegate to the Trustee (or in the event of any
vacancy in the office of Investment Manager, the Trustee, upon
seven days prior written notice of the vacancy in the office of
Investment Manager, may, until an Investment Manager thereof
shall have been duly appointed, exercise in respect of that
Investment Manager's Segregated Fund) discretionary authority
to invest and reinvest otherwise uninvested cash held in its
Segregated Fund temporarily in bonds, notes or other evidences
of indebtedness issued or fully guaranteed by the United States
of America or any agency or instrumentality thereof, or in other
obligations of a short-term nature, including prime commercial
obligations or part interests therein.
(c) Unless the Trustee knowingly participates in, or knowingly
undertakes to conceal, an act or omission of an Investment
Manager, knowing such act or omission to be a breach of the
fiduciary responsibility of the Investment Manager with respect
to the trust assets, the Trustee shall not be liable for any act
or omission of any Investment Manager and shall not be under any
obligation to invest or otherwise manage the assets of the Plans
that are subject to the management of any Investment Manager.
Without limiting the generality of the foregoing, the Trustee
shall not be liable by reason of its taking or refraining from
taking at the direction of an Investment Manager any action in
respect of that Investment Manager's Segregated Fund. The
Trustee shall be under no duty to question or to make inquiries
as to any direction or order or failure to give direction or
order by any Investment Manager; and the Trustee shall be under
no duty to make any review of investments acquired for the trust
at the direction or order of any Investment Manager and shall
be under no duty at any time to make any recommendation with
respect to disposing of or continuing to retain any such
investment.
page 11
2.02-5 The values of all assets in the trust fund shall be reasonably
determined by the Trustee and may be based on the determination of
qualified independent parties or Experts (as described in 2.06-2). At any
time before or after a Special Circumstance, the Trustee shall have the
right to secure confirmation of value by a qualified independent party or
Expert for all property of the trust fund, as well as any property to be
substituted for other property of the trust fund pursuant to 2.05. Before
a Special Circumstance the Trust Committee may designate one or more
independent parties, who are acceptable to the Trustee, to determine the
fair market value of any notes, securities, real property or other assets.
Any insurance or annuity contracts held in the trust fund shall be valued
at their cash surrender value, except for purposes of substituting other
property for such Contracts pursuant to 2.05-2. All securities shall be
valued net of costs to sell, or register for sale, such securities. All
real property shall be valued net of costs to sell such real property.
All other assets of the trust fund shall be valued at their fair market
value.
SCEcorp shall pay on behalf of the Grantors all costs incurred in valuing
the assets of the trust fund including any assets to be substituted for
other assets of the trust fund pursuant to 2.05. If not so paid, these
costs shall be paid from the trust fund. SCEcorp shall reimburse the
trust fund within 30 days after receipt of a bill from the Trustee for any
such costs paid out of the trust fund.
2.02-6 Following a Change in Control of a Grantor, the Trustee shall be
the Investment Manager of the assets of the affected subtrust(s). While
the Trustee is the Investment Manager, any requirements in the Plans or
Trust Agreement that the Investment Manager or the Trustee provide the
other with prior written notice or other communication shall not apply.
2.03 Subtrusts
2.03-1 The Trustee shall establish a Grantor subtrust for each Plan in
which a Grantor participates to which it shall credit contributions it
receives which are earmarked for that Grantor. The Trustee shall also
establish a separate subtrust to which it shall credit contributions it
receives which are earmarked to the special reserve for payment of future
fees and expenses of the Trustee. Each subtrust shall reflect an
undivided interest in assets of the trust fund and shall not require any
segregation of particular assets, except that an insurance contract
covering benefits of a particular Plan shall be held in the subtrust for
the Plan. All contributions shall be designated by SCEcorp for a
particular subtrust. However, any contribution received by the Trustee
which is not earmarked for a particular subtrust shall be allocated among
the subtrusts as the Trustee may determine in its sole discretion.
The Trust Committee may direct the Trustee, or the Trustee may determine
on its own initiative, to maintain a separate sub-account within each
subtrust for a Plan for each Participant who is covered by the subtrust.
Each sub-account in a subtrust shall reflect an individual interest in
assets of the subtrust and, as much as possible, shall operate in the same
manner as if it were a separate subtrust.
page 12
2.03-2 The Trustee shall allocate investment earnings and losses and
expenses of the trust fund among the subtrusts in proportion to their
balances, except that changes in the value of an insurance contract
(including premiums and interest on loans on an insurance contract) shall
be allocated to the subtrust for which it is held. Payments to creditors
during Insolvency Administration under 5.02 shall be charged against the
affected Grantor's subtrusts in proportion to their balances, except that
payment of Plan benefits to a Participant as a general creditor shall be
charged against the subtrust for that Plan.
2.03-3 Assets allocated to a subtrust for one Plan may not be utilized
to provide benefits under any other Plans until all benefits under such
Plan have been paid in full, except that Excess Assets (as defined in
2.04-2) of a subtrust may be transferred to other subtrusts pursuant to
2.04-5.
2.04 Recapture Of Excess Assets
2.04-1 In the event the trust shall hold Excess Assets, the Trust
Committee, at its option, may direct the Trustee to return part or all of
such Excess Assets to the Grantors.
2.04-2 "Excess Assets" are assets of the trust or a subtrust exceeding
one hundred twenty-five percent (125%) of the amounts described in 2.01-3.
2.04-3 The calculation required by 2.04-2 shall be based on the terms of
the Plans. Before a Special Circumstance, the calculation shall be made
by the Trust Committee or a qualified actuary or consultant selected by
the Trust Committee. After a Special Circumstance, the calculation shall
be made by a qualified actuary or consultant selected by the Trustee,
provided the Trust Committee may select a qualified actuary or consultant
with the Written Consent of Participants.
2.04-4 Excess Assets shall be returned to the Grantors in any order of
priority directed by the Trust Committee, unless the Trustee determines
otherwise to protect the Participants.
2.04-5 If any subtrust for a Grantor holds Excess Assets, the Trust
Committee may direct the Trustee to transfer such Excess Assets to other
subtrusts of the Grantor. After a Special Circumstance, the Trustee may
also transfer Excess Assets of a subtrust for a Grantor to other subtrusts
for that Grantor upon its own initiative in such amounts as it may
determine in its sole discretion.
Excess Assets of a subtrust for a Plan shall be determined in the same
manner as Excess Assets of the trust are determined pursuant to 2.04-2 and
2.04-3. In making this determination, each subtrust for a Plan shall bear
its allocable share of the amounts described in 2.01-3 which relate to
that Plan. The Trustee, in its sole discretion, shall determine whether
there are Excess Assets in the separate subtrust which constitutes the
reserve for payment of future fees and expenses of the Trustee. Excess
Assets for this subtrust shall be any amounts which the Trustee reasonably
determines will not be needed in the future for payment of such fees and
expenses.
page 13
2.05 Substitution Of Other Property
2.05-1 SCEcorp shall have the power to re-acquire on behalf of the
Grantors part or all of the assets or collateral held in the trust fund
at any time, by simultaneously substituting for it other readily
marketable property of equivalent value, net of any costs of disposition;
provided that, if the trust holds Excess Assets, the property which is
substituted shall not be required to be of equivalent value, but only of
sufficient value so that the trust will retain Excess Assets of not less
than $10,000 after such substitution. The property which is substituted
must be among the types of investments authorized under 2.02 and may not
be less liquid or marketable or less well secured than the property for
which it is substituted, as determined by the Trust Committee. Such power
is exercisable in a nonfiduciary capacity and may be exercised without the
approval or consent of Participants or any other person.
2.05-2 Except for insurance contracts, the value of any assets re-
acquired under 2.05-1 shall be determined as provided in 2.02-5. The
value of any insurance contract re-acquired under 2.05-1 shall be the
present value of future projected cash flow or benefits payable under the
Contract, but not less than the cash surrender value. The projection
shall include death benefits based on reasonable mortality assumptions,
including known facts specifically relating to the health of the insured
and the terms of the Contract to be re-acquired. Values shall be
reasonably determined by the Trustee and may be based on the determination
of qualified independent parties and Experts, as described in 2.02-5 and
2.06-2. The Trustee shall have the right to secure confirmation of value
by a qualified independent party or Expert for all property to be
substituted for other property.
2.05-3 SCEcorp shall pay on behalf of the Grantors all costs incurred in
valuing the assets of the trust fund, including any assets to be
substituted for other assets of the trust fund pursuant to 2.05. If not
so paid, these costs shall be paid from the trust fund. SCEcorp shall
reimburse the trust fund within 30 days after receipt of a bill from the
Trustee for any such costs paid out of the trust fund.
2.06 Administrative Powers Of Trustee
2.06-1 Subject in all respects to applicable provisions of this Trust
Agreement, including limitations on investment of the trust fund, the
Trustee shall have the rights, powers and privileges of an absolute owner
when dealing with property of the trust, including (without limiting the
generality of the foregoing) the powers listed below:
(a) To sell, convey, transfer, exchange, partition, lease, and
otherwise dispose of any of the assets of the trust at any time
held by the Trustee under this Trust Agreement;
(b) To exercise any option, conversion privilege or subscription
right given the Trustee as the owner of any security held in the
trust; to vote any corporate stock either in person or by proxy,
with or without power of substitution; to consent to or oppose
any reorganization, consolidation, merger,
page 14
readjustment of financial structure, sale, lease or other
disposition of the assets of any corporation or other
organization, the securities of which may be an asset of the
trust; and to take any action in connection therewith and
receive and retain any securities resulting therefrom;
(c) To deposit any security with any protective or reorganization
committee, and to delegate to such committee such power and
authority with respect thereto as the Trustee may deem proper,
and to agree to pay out of the trust such portion of the
expenses and compensation of such committee as the Trustee, in
its discretion, shall deem appropriate;
(d) To cause any property of the trust to be issued, held or
registered in the name of the Trustee as trustee, or in the name
of one or more of its nominees, or one or more nominees of any
system for the central handling of securities, or in such form
that title will pass by delivery, provided that the records of
the Trustee shall in all events indicate the true ownership of
such property, or to deposit any securities held in the trust
with a securities depository;
(e) To renew or extend the time of payment of any obligation due or
to become due;
(f) To commence or defend lawsuits or legal or administrative
proceedings; to compromise, arbitrate or settle claims, debts
or damages in favor of or against the trust; to deliver or
accept, in either total or partial satisfaction of any
indebtedness or other obligation, any property; to continue to
hold for such period of time as the Trustee may deem appropriate
any property so received; and to pay all costs and reasonable
attorneys' fees in connection therewith out of the assets of the
trust;
(g) To foreclose any obligation by judicial proceeding or otherwise;
(h) Subject to 2.02, to borrow money from any person in such
amounts, upon such terms and for such purposes as the Trustee,
in its discretion, may deem appropriate; and in connection
therewith, to execute promissory notes, mortgages or other
obligations and to pledge or mortgage any trust assets as
security; and to lend money on a secured or unsecured basis to
any person other than a party in interest;
(I) To manage any real property in the trust in the same manner as
if the Trustee were the absolute owner thereof, including the
power to lease the same for such term or terms within or beyond
the existence of the trust and upon such conditions as the
Trustee may deem proper; and to grant options to purchase or
acquire options to purchase any real property;
(j) To appoint one or more persons or entities as ancillary trustee
for the purpose of investing in and holding title to real or
personal property or any interest therein; provided that any
such ancillary trustee shall act with such power, authority,
discretion, duties, and functions of the Trustee as shall be
page 15
specified in the instrument establishing such ancillary trust,
including (without limitation) the power to receive, hold and
manage property, real or personal, or undivided interests
therein; and the Trustee may pay the reasonable expenses and
compensation of such ancillary trustees out of the trust;
(k) To hold such part of the assets of the trust uninvested for such
limited periods of time as may be necessary for purposes of
orderly trust administration or pending required directions,
without liability for payment of interest;
(l) To determine how all receipts and disbursements shall be
credited, charged or apportioned as between income and
principal, and the decision of the Trustee shall be final and
not subject to question by any Participant or Beneficiary of the
trust;
(m) To dispose of any property in the trust fund and to foreclose
on any notes from a Grantor (and dispose of any collateral
securing such notes, subject to the terms of any pledge
agreement) upon any Default (as defined in 1.03-4), after 60
days written notice to the Grantor to permit the Grantor to cure
any Default; and
(n) Generally to do all acts, whether or not expressly authorized,
which the Trustee may deem necessary or desirable for the
orderly administration or protection of the trust fund.
2.06-2 The Trustee may engage one or more qualified independent
attorneys, accountants, actuaries, appraisers, consultants or other
experts (an "Expert") with respect to its determination under the Trust,
including the determination of Excess Assets pursuant to 2.04 or disputed
claims pursuant to 3.03. The Trustee shall have no duty to oversee or
independently evaluate the determination of the Expert. The Trustee shall
be authorized to pay the fees and expenses of any Expert out of the assets
of the trust fund.
2.06-3 The Grantors shall from time to time pay taxes (references in this
Trust Agreement to the payment of taxes shall include interest and
applicable penalties) of any and all kinds whatsoever which at any time
are lawfully levied or assessed upon or become payable in respect of their
pro rata shares of the trust fund, the income or any property forming a
part thereof, or any security transaction pertaining thereto. To the
extent that any taxes levied or assessed upon the trust fund are not paid
by the Grantors or contested by the Grantors pursuant to the last sentence
of this paragraph, the Trustee shall pay such taxes out of the trust fund,
and the Grantors shall upon demand by the Trustee, deposit into the trust
fund, through their agent, SCEcorp, an amount equal to the amount paid
from the trust fund to satisfy such tax liability. If requested by
SCEcorp, the Trustee shall contest the validity of such taxes in any
manner deemed appropriate by SCEcorp or its counsel, but only if it has
received an indemnity bond or other security satisfactory to it to pay any
expenses of such contest.
page 16
Alternatively, SCEcorp may itself contest the validity of any such taxes,
but any such contest shall not affect the Grantors' obligation to
reimburse the trust fund for taxes paid from the trust fund.
2.06-4 Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power
that could give this Trust the objective of carrying on a business and
dividing the gains therefrom, within the meaning of section 301.7701-2 of
the Procedure and Administrative Regulations promulgated pursuant to the
Code.
III.
ADMINISTRATION
3.01 Committee; Company Representatives
3.01-1 The Compensation Committee is the administrator of the Plans and
has general responsibility to interpret the Plans and determine the rights
of Participants and beneficiaries. Day-to-day administration of the Plans
has been delegated to SCEcorp management. The Compensation Committee is
the administrator of this Trust Agreement and shall act on behalf of all
Grantors with respect to the Administration of this Trust Agreement;
however, day-to-day administration of the Plans has been delegated to the
Trust Committee. Notwithstanding any other provision of this Trust
Agreement, each Grantor is responsible for contributions to fund benefits
accrued by Participants while employed by the Grantor and for its pro rata
share of expenses of the trust (based on the amount of assets allocated
to the Grantor's subtrust(s)) and shall reimburse SCEcorp for payments
advanced by SCEcorp on its behalf.
3.01-2 The Trustee shall be given the names and specimen signatures of
the members of the Trust Committee and any other SCEcorp representatives
authorized to take action in regard to the administration of the Plans and
this trust. The Trustee shall accept and rely upon the names and
signatures until notified of any change. Instructions to the Trustee
shall be signed for the Trust Committee by the chairman or such other
person as the Trust Committee may designate.
3.02 Payment Of Benefits
3.02-1 The Trustee shall pay benefits to Participants and beneficiaries
on behalf of the Grantors in satisfaction of their obligations under the
Plans. Each Grantor shall contribute to the trust such amounts as are
necessary to fund benefits accrued by Participants while employed by the
Grantor and to enable the Trustee to make all such Plan benefit payments
to Participants when due, whenever the Trustee advises the Trust Committee
that the assets of the relevant subtrust, other than insurance contracts
or amounts needed to pay future premiums or loan interest payments on
insurance contracts, are insufficient to make such payments. Benefit
payments from a subtrust shall be made in full until the assets of the
subtrust are exhausted. Payments due on
page 17
the date the subtrust is exhausted shall be covered pro rata. A Grantor's
benefit payment obligation shall not be limited to the portion of the
trust fund allocated to the Grantor's subtrust(s), and a Participant or
Beneficiary shall have a claim against a Grantor for any payment not made
by the Trustee.
Notwithstanding the foregoing, and in the discretion of the Grantors,
benefits payments may be paid directly to Participants at any time.
Grantors shall pay benefits directly to Participants and beneficiaries in
satisfaction of their obligations under a Plan whenever either (i) the
assets of the subtrust are not then sufficient to satisfy any then
applicable contribution or funding requirements imposed under 2.01, or
(ii) there are no assets in the subtrust other than insurance contracts.
If a Grantor fails to make any such required payments when due, after 60
days' written notice to the Grantor to permit the Grantor to make any such
payments, the Trustee shall pay benefits to Participants and beneficiaries
under any Plan from the assets of the subtrust for that Plan.
3.02-2 A Participant's entitlement to benefits under the Plans shall be
determined by the Compensation Committee. Any benefit enhancement or
right with respect to the Plans which is provided under employment or
severance agreements of Participants shall be taken into account in making
the foregoing determination. Any claim for such benefits shall be
considered and reviewed under the claims procedures established for that
Plan.
3.02-3 The Trustee shall make payments in accordance with written
directions from the Trust Committee or its designee, except as provided
in 3.03. The Trustee may request such directions from the Trust Committee
or its designee. If the Trust Committee or its designee fails to furnish
written directions to the Trustee within 60 days after receiving a written
request for directions from the Trustee, the Trustee may make payments
determined by the amounts due under the terms of the Plans in reliance
upon the most recent Payment Schedule furnished to it by the Trust
Committee.
The Trustee shall make provision for the reporting and withholding of any
federal, state or local taxes that may be required prior to or coincident
with making any benefit payments hereunder and shall pay amounts withheld
to taxing authorities on the Grantor's behalf or determine that such
amounts have been reported, withheld and paid by the Grantor.
3.02-4 The Trustee shall use the assets of the trust or any subtrust to
make benefit payments or other payments in such order of priority as the
Trustee may determine, or as may be directed by the Trust Committee.
3.03 Disputed Claims
3.03-1 A Participant covered by this Trust whose claim has been denied
by the Trust Committee, or who has received no response to the claim
within 60 days after submission, may submit the claim to the Trustee. The
Trustee shall give written
page 18
notice of the claim to the Trust Committee. If the Trustee receives no
written response from the Trust Committee within 60 days after the date
the Trust Committee is given written notice of the claim, the Trustee
shall pay the Participant the amount claimed, unless it determines in its
sole discretion that a lesser amount is due under the terms of the Plans.
If a written response is received within such 60 days, the Trustee shall
consider the claim in its sole and absolute discretion, including the
Trust Committee's response. If the merits of the claim depend on
compensation, service or other data in the possession of SCEcorp or a
Grantor and it is not provided, the Trustee may rely upon information
provided by the Participant. Any benefit enhancement or right with
respect to the Plans which is provided under employment or severance
agreements of Participants shall be taken into account in making the
foregoing determination.
3.03-2 The Trustee shall give written notice to the Participant and the
Trust Committee of its decision on the claim. If the decision is to grant
the claim, the Trustee shall make payment to the Participant. The Trustee
may decline to decide a claim and may file suit to have the matter
resolved by a court of competent jurisdiction. All of the Trustee's
expenses in the court proceeding, including attorneys fees, shall be
allowed as administrative expenses of the trust.
The Participant, SCEcorp or the Grantor may challenge the Trustee's
decision by filing suit in a court of competent jurisdiction. If no such
suit is filed within 60 days after delivery of written notice of the
Trustee's decision, the decision shall become final and binding on all
parties.
Notwithstanding the two preceding paragraphs, and because it is agreed
that time will be of the essence in determining whether any payments are
due a Participant or Beneficiary under the Trust, a Participant or
Beneficiary may, if he or she desires, submit any claim for payment under
the Trust to arbitration. This right to select arbitration shall be
solely that of the Participant or Beneficiary and the Participant or
Beneficiary may decide whether or not to arbitrate in his or her
discretion. The "right to select arbitration" is not mandatory on the
Participant or Beneficiary, and the Participant or Beneficiary may choose
in lieu thereof to bring an action in an appropriate civil court. Once
an arbitration is commenced, however, it may not be discontinued without
the mutual consent of the parties to the arbitration. During the lifetime
of the Participant only he or she can use the arbitration procedure set
forth in this section.
Any claim for arbitration may be submitted as follows: if a Participant
or Beneficiary has submitted a request to be paid under the Trust and the
claim is finally denied by the Trustee in whole or in part, the claim may
be filed in writing with an arbitrator of the Participant's or
Beneficiary's choice who is selected by the method described in the next
four sentences. The first step of the selection shall consist of the
Participant or Beneficiary submitting a list of five potential arbitrators
to the Trust Committee. Each of the five arbitrators must be either (1)
a member of the National Academy of Arbitrators located in the State of
California or (2) a retired California Superior Court or Appellate Court
judge. Within one week after receipt of the list, the Trust Committee
shall select one of the five arbitrators as the arbitrator for the dispute
in question. If the Trust Committee fails to select an arbitrator within
one week after receipt of the list, the
page 19
Participant or Beneficiary shall then designate one of the five
arbitrators for the dispute in question.
The arbitration hearing shall be held within seven days (or as soon
thereafter as possible) after the picking of the arbitrator. No
continuance of said hearing shall be allowed without the mutual consent
of the Participant or Beneficiary, the Trust Committee and the affected
Grantor. Absence from or nonparticipation at the hearing by any party
shall not prevent the issuance of an award. Hearing procedures which will
expedite the hearing may be ordered at the arbitrator's discretion, and
the arbitrator may close the hearing in his or her sole discretion when
he or she decides he or she has heard sufficient evidence to satisfy
issuance of an award.
The arbitrator's award shall be rendered as expeditiously as possible and
in no event later than one week after the close of the hearing.
In the event the arbitrator finds that the Trust Committee or the Grantor
has breached the terms of the Trust, he or she shall order the Trustee to
pay to the Participant or Beneficiary within two business days after the
decision is rendered the amount then due the Participant or Beneficiary.
The award of the arbitrator shall be final and binding upon the parties.
The award may be enforced in any appropriate court as soon as possible
after its rendition. The Trust Committee or the Grantor will be
considered the prevailing party in a dispute if the arbitrator determines
(1) that the Trust Committee or the affected Grantor has not breached the
terms of the Trust and (2) the claim by the Participant or Beneficiary was
not made in good faith. Otherwise, the Participant or Beneficiary will
be considered the prevailing party. In the event that the Trust Committee
or the Grantor is the prevailing party, the fee of the arbitrator and all
necessary expenses of the hearing (excluding any attorneys' fees incurred
by Trust Committee or the Grantor) including stenographic reporter, if
employed, shall be paid by the losing party. In the event that the
Participant or Beneficiary is the prevailing party, the fee of the
arbitrator and all necessary expenses of the hearing (including all
attorneys' fees incurred by the Participant or Beneficiary in pursuing
his or her claim), including the fees of a stenographic reporter, if
employed, shall be paid from trust assets. The affected Grantor shall
reimburse the trust fund within 30 days after receipt of a bill from the
Trustee for any such Participant's expenses which are reimbursed by the
Trustee.
3.04 Records
3.04-1 The Trustee shall keep complete records on the trust fund open to
inspection by the Grantors, the Compensation Committee and the Trust at
all reasonable times. In addition to accountings required below, the
Trustee shall furnish to the Grantors, the Compensation and Trust
Committees any information reasonably requested about the trust fund.
page 20
3.05 Accountings
3.05-1 The Trustee shall furnish the Trust Committee with a complete
statement of accounts annually within 60 days after the end of the trust
year showing assets and liabilities and income and expense for the year
of the trust and each subtrust. The Trustee shall also furnish the Trust
Committee with accounting statements at such other times as the Trust
Committee may reasonably request. The form and content of the statement
of accounts shall be sufficient for each Grantor to include in computing
its taxable income and credits the income, deductions and credits against
tax that are attributable to the portion of the trust fund allocated to
its subtrust(s).
3.05-2 The Trust Committee may object to an accounting within 180 days
after it is furnished and require that it be settled by audit by a
qualified, independent certified public accountant. The auditor shall be
chosen by the Trustee from a list of at least five such accountants
furnished by the Trust Committee at the time the audit is requested.
Either the Trust Committee or the Trustee may require that the account be
settled by a court of competent jurisdiction, in lieu of or in conjunction
with the audit. All expenses of any audit or court proceedings, including
reasonable attorneys' fees, shall be allowed as administrative expenses
of the trust.
3.05-3 If the Trust Committee does not object to an accounting within the
time provided, the account shall be settled for the period covered by it.
3.05-4 When an account is settled, it shall be final and binding on all
parties, including all Participants and persons claiming through them.
3.06 Expenses And Fees
3.06-1 The Trustee shall be reimbursed for all reasonable expenses and
shall be paid a reasonable fee fixed by agreement with the Trust Committee
from time to time. No increase in the fee shall be effective before 60
days after the Trustee gives written notice to the Trust Committee of the
increase. The Trustee shall notify the Trust Committee periodically of
expenses and fees.
3.06-2 SCEcorp shall pay Trustee and other administrative and valuation
fees and expenses on behalf of the Grantors. If not so paid, these fees
and expenses shall be paid from the trust fund.
IV.
LIABILITY
4.01 Indemnity
The Trustee will have the duty to discharge its responsibilities under
this Trust Agreement with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and aims. Subject to such
page 21
limitations as may be imposed by applicable law, the Grantors shall
indemnify and hold harmless the Trustee from any claim, loss, liability
or expense arising from any action or inaction in administration of this
trust based on direction or information from either SCEcorp, another
Grantor, the Compensation or Trust Committees, any Investment Manager or
any Expert, absent willful misconduct, negligence or bad faith.
4.02 Bonding
The Trustee need not give any bond or other security for performance of
its duties under this trust.
V.
INSOLVENCY
5.01 Determination of Insolvency
5.01-1 A Grantor is Insolvent for purposes of this trust if:
(a) A Grantor is unable to pay its debts as they come due; or
(b) A Grantor is the subject of a pending proceeding as a debtor
under the federal Bankruptcy Code (or any successor federal
statute).
5.01-2 The Grantor shall promptly give notice to the Trustee when a
Grantor becomes Insolvent. The Chief Executive Officer of the Grantor
shall be obligated to give such notice. If the Trustee receives such
notice or receives from any other person claiming to be a creditor of the
Grantor a written allegation that the Grantor is Insolvent, the Trustee
shall independently determine whether such insolvency exists. The Trustee
may rely on such evidence concerning the Grantor's solvency as may be
furnished to Trustee and that provides the Trustee with a reasonable basis
for making a determination concerning the Grantor's solvency. The
expenses of such determination shall be allowed as administrative expenses
of the trust.
5.01-3 Upon receipt of the notice or allegation described in 5.01-2, the
Trustee shall discontinue making payments to Participants and
beneficiaries under the Plans from the portion of the trust fund allocable
to the affected Grantor's subtrusts and shall commence Insolvency
Administration under 5.02.
5.01-4 The Trustee shall have no obligation to investigate the financial
condition of the Grantor prior to receiving a notice or allegation of
insolvency under 5.01-2.
5.02 Insolvency Administration
5.02-1 During Insolvency Administration, the Trustee shall hold the
Grantor's subtrust funds for the benefit of the creditors of the Grantor
and make payments only in accordance with 5.02-2. The Trustee shall
continue the investment of the trust fund in accordance with 2.02.
page 22
5.02-2 The Trustee shall make payments out of the trust fund in
accordance with instructions from a court, or a person appointed by a
court, having jurisdiction over the Grantor's condition of insolvency to:
(a) Creditors;
(b) Participants and beneficiaries; or
(c) The Trustee in payment of its fees or expenses.
5.02-3 During Insolvency Administration, the Participants and
beneficiaries shall have no greater rights than general creditors of the
Grantor. Nothing in this Trust Agreement shall in any way diminish any
rights of Plan Participants or their beneficiaries to pursue their rights
as general creditors of the Grantor with respect to benefits due under the
Plans or otherwise.
5.03 Termination Of Insolvency Administration
5.03-1 Insolvency Administration shall terminate when the Trustee
determines that the Grantor:
(a) Is not Insolvent, in response to a notice or allegation of
insolvency under 5.01-2;
(b) Has ceased to be Insolvent; or
(c) Has been determined by a court of competent jurisdiction not to
be Insolvent or to have ceased to be Insolvent.
5.03-2 Upon termination of Insolvency Administration under 5.03-1, the
affected subtrust(s) shall again be held for the benefit of the
Participants and beneficiaries under the Plans. Benefit payments due
during the period of Insolvency Administration shall be made as soon as
practicable, together with interest from the due dates at the rate
credited on the Participant's account under the Plan.
5.04 Creditors' Claims During Solvency
5.04.1 During periods of a Grantor's Solvency, the Trustee shall hold the
Grantor's subtrust(s) exclusively to pay Plan benefits and the allocable
fees and expenses of the trust until all benefits have been paid.
Creditors of the Grantor shall not be paid during a Grantor's Solvency
from the trust fund, which may not be seized by or subjected to the claims
of such creditors in any way.
5.04-2 A period of Solvency for a Grantor is any period not covered by
5.02.
page 23
VI.
SUCCESSOR TRUSTEES
6.01 Resignation And Removal
6.01-1 The Trustee may resign at any time by notice to the Trust
Committee, which shall be effective in 60 days unless the Trust Committee
and the Trustee agree otherwise.
6.01-2 The Trustee may be removed by the Trust Committee on 60 days'
written notice or shorter notice accepted by the Trustee.
After a Special Circumstance, the Trustee may be removed only with the
Written Consent of the Participants.
6.01-3 When resignation or removal is effective, the Trustee shall begin
transfer of assets to the successor Trustee immediately. The transfer
shall be completed within 60 days, unless the Trust Committee extends the
time limit.
6.02 Appointment Of Successor
6.02-1 If the Trustee resigns or is removed, the Trust Committee shall
appoint a successor by the effective date of resignation or removal under
6.01-1 or 6.01-2. The Trust Committee may appoint any national or state
bank or trust company that is unrelated to the Trust Committee as a
successor to replace the Trustee upon resignation or removal. The
appointment shall be effective when accepted in writing by the new
Trustee, which shall have all of the rights and powers of the former
Trustee, including ownership rights in the trust assets. The former
Trustee shall execute any instruments necessary or reasonably requested
by the Trust Committee or the successor Trustee to evidence the transfer.
After a Special Circumstance, a successor Trustee may be appointed only
with the Written Consent of Participants. If no such appointment has been
made, the Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of the
Trustee in connection with the proceeding shall be allowed as
administrative expenses of the trust.
6.02-2 The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing trust assets, subject
to Article II. The successor Trustee shall not be responsible for, and
the Grantors shall indemnify and hold harmless the successor Trustee from
any claim or liability because of, any action or inaction of any prior
Trustee.
6.03 Accountings; Continuity
6.03-1 A Trustee who resigns or is removed shall submit a final
accounting to the Trust Committee as soon as practicable. The accounting
shall be received and settled as provided in 3.05 for regular accountings.
page 24
6.03-2 No resignation or removal of the Trustee or change in identity of
the Trustee for any reason shall cause a termination of the Plans or this
trust.
VII.
GENERAL PROVISIONS
7.01 Interests Not Assignable
7.01-1 The interest of a Participant in the trust fund may not be
anticipated, assigned, pledged or otherwise encumbered, seized by legal
process, transferred or subjected to the claims of the Participant's
creditors in any way. Notwithstanding the foregoing, the benefit payable
to a Participant may be assigned in full or in part, pursuant to a
domestic relations order of a court of competent jurisdiction.
7.01-2 No Grantor may create a security interest in the trust fund in
favor of any of its creditors. The Trustee shall not make payments from
the trust fund of any amount to creditors of any Grantor, other than
Participants, except as provided in 5.02.
7.01-3 The Participants shall have no interest in the assets of the trust
fund beyond the right to receive payment of Plan benefits subject to the
restrictions during Insolvency referred to in 5.02. During Insolvency
Administration, the Participants' rights to trust assets shall not be
superior to those of any other general creditors of the affected Grantor.
7.02 Amendment
The Grantors and the Trustee may amend this Trust Agreement at any time
by a written instrument executed by the parties. Except as provided
below, any such amendment may be made only with the Written Consent of
Participants after a Special Circumstance. Notwithstanding the foregoing,
any such amendment may be made by written agreement of the Grantors and
the Trustee without the Written Consent of Participants if such amendment
will not have a material adverse effect on the rights of any Participant
hereunder or is necessary to comply with any laws, regulations or other
legal requirements. No amendment will conflict with the terms of the
Plans or make the trust revocable.
7.03 Applicable Law
This trust shall be governed, construed and administered according to the
laws of California except as preempted by ERISA or other Federal law.
7.04 Agreement Binding On All Parties
This Trust Agreement shall be binding upon the heirs, personal
representatives, successors and assigns of any and all present and future
parties.
page 25
7.05 Notices And Directions
Any notice or direction under this Trust Agreement shall be in writing and
shall be effective when actually delivered or, if mailed, when deposited
postpaid as first-class mail. Mail to a party shall be directed to the
address stated below or to such other address as any party may specify by
notice to the other parties. Notices to the Trust Committee shall be sent
to the address of SCEcorp. Notices to Participants who have submitted
claims under 3.03 shall be mailed to the address shown in the claim
submission. Until notice is given to the contrary, notices to the
Grantors and the Trustee shall be addressed as follows:
Grantors
SCEcorp Southern California Edison Company
Attention: Chief Financial Officer Attention: Chief Financial Officer
2244 Walnut Grove Avenue 2244 Walnut Grove Avenue
Rosemead, CA 91770 Rosemead, CA 91770
The Mission Group Mission Energy Company
Attention: Office of the President Attention: President
18101 Von Karman Avenue, Suite 1700 18101 Von Karman Avenue, Suite 1700
Irvine, CA 92715-1007 Irvine, CA 92715-1007
Mission First Financial Mission Land Company
Attention: President Attention: President
18101 Von Karman Avenue, Suite 1700 18101 Von Karman Avenue, Suite 1700
Irvine, CA 92715-1007 Irvine, CA 92715-1007
Trustee
U.S. Trust Company of California N. A.
Attention: Charles Wert
555 South Flower Street
Los Angeles, CA 90071-2429
page 26
7.06 No Implied Duties
The duties of the Trustee shall be those stated in this trust, and no
other duties shall be implied.
7.07 Gender, Singular And Plural
All pronouns and any variations thereof shall be deemed to refer to the
masculine or feminine, as the identity of the person or persons may
require. As the context may require, the singular may be read as the
plural and the plural as the singular.
7.08 Validity
If any provision of this Trust Agreement is held invalid, void or
unenforceable, the same shall not affect the validity of any other
provision.
VIII.
INSURER
8.01 Insurer Not A Party
The Insurer shall not be deemed to be a party to this Trust Agreement, and
its obligations shall be measured and determined solely by the terms of
its Contracts and other agreements executed by it.
8.02 Authority Of Trustee
The Insurer shall accept the signature of the Trustee on any documents or
papers executed in connection with such Contracts. The signature of the
Trustee shall be conclusive proof to the Insurer that the person on whose
life an application is being made is eligible to have such Contract issued
on his life and is eligible for a Contract of the type and amount
requested.
8.03 Contract Ownership
The Insurer shall deal with the Trustee as the sole and absolute owner of
the trust's interests in such Contracts and shall have no obligation to
inquire whether any action or failure to act on the part of the Trustee
is in accordance with or authorized by the terms of the Plans or this
Trust Agreement.
8.04 Limitation Of Liability
The Insurer shall be fully discharged from any and all liability for any
action taken or any amount paid in accordance with the direction of the
Trustee and shall have no obligation to see to the proper application of
the amounts so paid. The Insurer shall have no liability for the
operation of this Trust Agreement or the Plans, whether or not in
accordance with their terms and provisions.
page 27
8.05 Change Of Trustee
The Insurer shall be fully discharged from any and all liability for
dealing with a party or parties indicated on its records to be the Trustee
until such time as it shall receive at its home office written notice of
the appointment and qualification of a successor Trustee.
IN WITNESS WHEREOF, the parties have caused this Trust Agreement to be
executed by their respective duly authorized officers on the dates set
forth below.
GRANTORS:
SCEcorp Southern California Edison Company
By Alan J. Fohrer By Alan J. Fohrer
----------------------------- -----------------------------
Title: Executive Vice President Title: Executive Vice President
and Chief Financial Officer and Chief Financial Officer
----------------------------- -----------------------------
Date: August 7, 1995 Date: August 7, 1995
----------------------------- -----------------------------
Mission Energy Company Mission First Financial
By Edward R. Muller By Thomas R. McDaniel
----------------------------- -----------------------------
Title: President and Chief Title: President and Chief
Executive Officer Executive Officer
----------------------------- -----------------------------
Date: August 22, 1995 Date: August 10, 1995
----------------------------- -----------------------------
Mission Land Company The Mission Group
By Thomas R. McDaniel By Thomas R. McDaniel
----------------------------- -----------------------------
Title: President and Chief Title: Office of the President
Executive Officer
----------------------------- -----------------------------
Date: August 10, 1995 Date: August 10, 1995
----------------------------- -----------------------------
TRUSTEE:
U.S. Trust Company of California N.A.
By Dennis M. Kunisaki
------------------------------
Title: Vice President
------------------------------
Date: August 27, 1995
------------------------------
PAGE
EXHIBIT 10.14
SOUTHERN CALIFORNIA EDISON COMPANY
EXECUTIVE RETIREMENT PLAN
As Amended Effective January 1, 1995
PREAMBLE
The purpose of this Plan is to provide supplemental retirement benefits
to Participants and surviving spouses or other designated beneficiaries
of such Participants, whose retirement benefits under the Qualified Plan
are reduced or limited on account of certain restrictions or limitations
identified in this Plan that are imposed by (i) Section 415 or other
sections of the Code, or (ii) the terms of the Qualified Plan.
I.
DEFINITIONS
Capitalized terms in the text of the Plan are defined as follows:
1.01 Administrator means the Compensation and Executive Personnel
Committee of the Edison Board of Directors.
1.02 Affiliate means SCEcorp or any corporation or entity which (i)
along with SCEcorp, is a component member of a "controlled group of
corporations" within the meaning of Section 414(b) of the Code, and (ii)
has had its executives approved by the Administrator for participation in
the Plan.
1.03 Base Salary Component means the average of the Participant's
annual basic rate of pay as fixed by the Employer (excluding Incentive
Awards, deferred compensation under nonqualified plans, special awards,
commissions, severance pay, and other non-regular forms of compensation)
for his or her highest thirty-six consecutive months determined as of the
last day of employment or the last day of eligibility under the Plan,
whichever occurs earlier.
1.04 Beneficiary means the person designated as such in accordance with
Article IX of the Plan.
1.05 Benefit Feature means one of the levels of benefit under the Plan
as described in Section 3.02(a).
1.06 Code means the Internal Revenue Code of 1986, as amended.
1.07 Company means the Southern California Edison Company.
1.08 Deferred Compensation Component means the Participant's average
annual amount of base salary deferred under an Employer's nonqualified
deferred compensation plan for the same 36-month period used to determine
the Base Salary Component.
1.09 ELP Level means the executive's classification under the Company's
Executive Leadership Program as a Level 1, 2, 3, or 4, or an Employer's
equivalent classification as determined by the Administrator.
1.10 Employer means the Affiliate employing the Participant.
1.11 ERISA means the Employee Retirement Income Security Act of 1974,
as amended.
PAGE
1.12 Financial Hardship means an unexpected and unforeseen financial
disruption arising from an illness, casualty loss, sudden financial
reversal, or other such unforeseeable occurrence as determined by the
Administrator or its designee. Needs arising from foreseeable events such
as the purchase of a residence or education expenses for children will
not, alone, be considered a Financial Hardship.
1.13 Incentive Award Component means the dollar amount determined by
multiplying the Participant's final annual salary by a factor calculated
to be the average incentive award (expressed as a percentage of salary in
the three highest years out of the last five years prior to retirement,
death, or termination (except for periods of less than three years of
eligibility, in which case the highest percentage incentive award received
during that period will be used).
1.14 Participant means a key employee of an Affiliate, who (i) is a
U.S. employee or an expatriate who is based and paid in the U.S., (ii) is
designated by the Administrator as eligible to participate in the Plan
(subject to any applicable Plan restrictions), and (iii) qualifies as a
member of the "select group of management or highly compensated employees"
under ERISA.
1.15 Plan means the Southern California Edison Company Executive
Retirement Plan.
1.16 Plan Year means the calendar year.
1.17 Qualified Plan means the Southern California Edison Company
Retirement Plan, or a successor plan, intended to qualify under Section
401(a) of the Code.
1.18 SET means the Senior Executive Team of the Company.
1.19 Termination of Employment means the voluntary or involuntary
cessation of the Participant's employment with the Employer for any reason
other than death or Retirement. Termination of Employment will not be
deemed to have occurred for purposes of this Plan if the Participant is
reemployed by an Affiliate within 30 days of ceasing work with the
Employer.
1.20 Total Compensation means the Base Salary Component for ELP Level
4 Participants. For ELP Level 3 Participants, Total Compensation means
the Participant's Base Salary and Deferred Compensation Components. For
ELP Level 1 and 2 Participants, Total Compensation means the Participant's
Base Salary, Incentive Award and Deferred Compensation Components.
II.
PARTICIPATION
2.01 Eligibility
Individuals are eligible to participate in the Plan when they become key
management employees, are classified as ELP Level 1, 2, 3 or 4 by the
Administrator or the SET and are designated by the Administrator as
eligible to participate in the Plan . Participation in the Plan will
continue as long as the individual remains classified as ELP Level 1, 2,
3, 4 (subject to any applicable Plan restrictions).
page 2
2.02 Pre-1993 Participation
Employees who were Participants in the Plan on December 31, 1992, will
continue to participate in the Plan as long as they remain classified as
a salary grade 12 or higher employee, or the equivalent as determined by
the Administrator.
III.
BENEFIT DETERMINATION
3.01 Overview
Benefits under this Plan will be payable with respect to any Participant
to whom, or on whose account, retirement benefits become payable under the
Qualified Plan but are reduced or limited by virtue of provisions in that
plan limiting benefits in accordance with currently applicable law or by
the terms of the Qualified Plan. The amount payable under this Plan at
retirement will be equal to the difference between the amount that would
have been payable under the Qualified Plan were it not for such
restrictions and limitations, and the amount that is actually payable
under the Qualified Plan.
3.02 Benefit Features
(a) The Plan provides four Benefit Features for which Participants are
eligible based on their ELP Level. The four Benefit Features are:
(i) Recognition by the Plan of the amount of base salary that
is not recognized for purposes of calculating benefits
under the Qualified Plan due to limits imposed by the
Code under Sections 415(b) or 401(a)(17).
(ii) Recognition by the Plan of deferred salary that is not
recognized for purposes of calculating benefits under the
Qualified Plan.
(iii) Recognition by the Plan of incentive awards that are not
recognized for purposes of calculating benefits under the
Qualified Plan.
(iv) An additional 0.75% benefit accrual each year for the
first ten years of service over that provided by the
Qualified Plan.
(b) ELP Levels 1 and 2 are eligible for all four Benefit Features. ELP
Level 3 is eligible for Benefit Features (i) and (ii) only. ELP Level 4
is eligible for Benefit Feature (i) only.
(c) Participants in the Plan on December 31, 1992, who elected to
participate in the Executive Disability and Survivor Benefit Program, are
eligible for all four Benefit Features regardless of their ELP Level
unless and until they are reclassified as a Salary Grade 11 or lower level
employee, or the equivalent as determined by the Administrator.
Participants in the Plan on December 31, 1992 who did not elect to
participate in the Executive Disability and Survivor Benefit Program are
not eligible for Benefit Feature 4.
3.03 Benefit Computation
(a) The Company will calculate the amount of any benefits payable under
the Plan for each Participant at the time of the Participant's retirement,
death, or termination with a deferred vested benefit under the Qualified
Plan. The amount payable under this Plan will be that dollar amount
calculated pursuant to Section 3.03(b), reduced by the dollar amount that
may be paid to the Participant (or spouse or contingent annuitant) under
page 3
the terms of the Qualified Plan after taking into account any applicable
restrictions or limitations as to such payments required by the Code or
other applicable law or the terms of the Qualified Plan.
(b) The Participant's Total Compensation will be applied to the
applicable benefit formula for the Participant (or spouse or contingent
annuitant) set forth in the Qualified Plan to calculate total benefits
payable taking into consideration the Participant's ELP Level and the
applicable Plan features for which the Participant is eligible under
Section 3.02.
IV.
RETIREMENT BENEFITS
4.01 Forms of Benefit Payment
(a) The normal form of benefit payout under this Plan will be a joint and
survivor annuity which will commence upon retirement of the Participant
and be paid monthly concurrent with benefit payments under the Qualified
Plan for the lifetime of the Participant. Upon the death of the
Participant, the surviving spouse will be entitled to the benefits
payments described in Article VI.
(b) If, at least 90 days prior to his or her retirement, the Participant
elects an alternative form of payout, upon retirement by the Participant
(either early or normal retirement), the value of his or her benefits
payable under this Plan as of the date of retirement will be paid in the
manner elected by the Participant in (i) a single lump-sum payment
calculated using the rate of interest determined pursuant to Section 4.02,
and based upon the 1983 Group Annuity Mortality actuarial tables, (ii) in
monthly installments (of principal, plus interest) over a period of 60
months, or (iii) in monthly installments (of principal, plus interest)
over a period of 120 months.
(c) If an Participant elects a payout in monthly installments of
principal plus interest over a period of 60 months or 120 months, the
value of the Participant's benefits will be calculated pursuant to Section
4.01(b), and an account balance established at the earlier of the
Participant's retirement or death. Principal and interest will be paid
in equal monthly installments during the year, and will be recomputed
annually to reflect interest accrued in the prior year.
4.02 Interest
(a) Interest will be credited to account balances at the end of each
calendar year. The Participant's average monthly closing balance for the
year will be calculated. Interest will be applied to this average closing
balance at a rate based on Moody's Corporate Bond Yield Average for Aa
Public Utility Bonds. Each February 1st and August 1st, the Plan interest
rate will be adjusted to reflect the average of Moody's bond yield for the
prior six months. A ratable amount of interest will be credited for
periods shorter than a calendar year.
(b) Interest will continue to accrue on any remaining unpaid account
balance during the payout period elected pursuant to Section 4.01(b) until
all amounts credited to the account have been paid. Interest will be
credited annually to the Participant's account at the end of each year,
after giving effect to any reduction in the account as a result of benefit
payments.
page 4
4.03 Commencement of Payments
Payments under this Plan on account of retirement will be paid in full if
the lump-sum option is chosen, or will begin to be paid in monthly
installments, if a monthly payment option is chosen, within 30 days of the
date on which the Participant retires, or as soon thereafter as
practicable. To the extent reasonably practicable, monthly payments under
this Plan will be made at a time coincident with the payment of benefits
under the Qualified Plan.
V.
TERMINATION BENEFITS
If the Participant terminates his or her employment with the Company prior
to retirement (either early or normal), but with a deferred vested
interest in the Qualified Plan, benefits will be payable under this Plan
if the Qualified Plan benefit is reduced or limited as required by
currently applicable law or by the terms of the Qualified Plan.
Notwithstanding any other provision in the Plan to the contrary, any
benefits payable under this Plan due to termination of employment will be
paid as a joint and survivor annuity only, beginning at age 55 and
calculated as of the Participant's Normal Retirement Age under the
Qualified Plan, reduced by the early retirement factors applicable to
vested terminees under the Qualified Plan.
VI.
SURVIVOR BENEFITS
6.01 Overview
In addition to the amount payable hereunder to a retired Participant, this
Plan will pay a benefit, similarly computed, to an eligible surviving
spouse or to a contingent annuitant under the "Spouse's Pension", the
"Pre-retirement Survivor Annuity Option", or the "Contingent Annuitant
Option" provisions of the Qualified Plan if such spouse's pension,
survivor annuity or contingent annuity is reduced or limited as required
by currently applicable law or the terms of the Qualified Plan.
6.02 Alternative Forms of Payment
(a) Upon the death of a Participant who has elected an alternative form
of benefit payment under the Plan prior to the receipt of the full amount
credited to his or her account, the balance of the account will be paid
in accordance with the Participant's previously elected method of payment
to the Participant's designated beneficiary or beneficiaries, as provided
herein, over the remainder of the elected payout period until the full
amount has been paid.
(b) If the 60 or 120 month payout options have been chosen, and if no
designated beneficiary or beneficiaries survive the Participant, or if a
designated beneficiary dies before the balance of the account has been
paid, the balance of the account of the Participant or of the designated
beneficiary will be paid in one lump-sum payment to the estate of the
Participant if no designated beneficiaries survive him or her, or if such
designated beneficiaries survive the Participant, to the estate of
whomever was last receiving benefit payments, as soon as practicable
following the Participant's or the designated beneficiary's death.
page 5
VII.
PAYMENT TERMS AND CONDITIONS
7.01 Benefits Nonassignable
Benefits under this Plan will be binding upon and inure to the benefit of
the heirs, legal representatives, successors and assigns of the parties.
Notwithstanding the foregoing, the right to receive payment hereunder is
hereby expressly declared to be personal, nonassignable and
nontransferable, except by will, intestacy, or as otherwise required by
law, and in the event of any attempted assignment, alienation or transfer
of such rights contrary to the provisions hereof, the Company will have
no further liability for payments hereunder.
7.02 Incapacity
If any person entitled to payments under this Plan is, in the opinion of
the Administrator or its designee, incapacitated and unable to use such
payments in his or her own best interest, the Administrator or its
designee may direct that payments (or any portion) be made to that
person's legal guardian or conservator, or that person's spouse, as an
alternative to payment to the person unable to use the payments. The
Administrator or its designee will have no obligation to supervise the use
of such payments, and court-appointed guardianship or conservatorship may
be required.
7.03 Hardship
Upon written application made to the Administrator, the Participant or his
or her designated beneficiary or beneficiaries may request payment in some
form other than the method of payment originally elected. Such request
must establish to the satisfaction of the Administrator or its designee
that special circumstances, such as financial hardship, exist which
require such a variation in payment. The Administrator, or its designee,
will exercise sole discretion in allowing or refusing such requests, and
the decision of the Administrator or its designee on such requests will
be final.
7.04 No Fiduciary Relationship
Nothing contained in this Plan, and no action taken pursuant to any of its
provisions, will create or be construed to create a trust of any kind, or
a fiduciary relationship, between the Company and the Participant, a
designated beneficiary, or any other beneficiaries of the Participant, or
any other person. To the extent that any person acquires a right to
receive payments from the Company under the provisions hereof, such right
will be no greater than the right of any unsecured general creditor of the
Company.
VIII.
TAXES
8.01 Taxes on Benefit Payments
Any amounts paid under this Plan on account of termination, retirement,
death or hardship (pursuant to Section 11) will be subject to any income
tax withholding or other deductions as may be required by federal, state,
or local law.
8.02 Taxes on Benefit Accrual
A Participant's annual benefit accrual may be subject to federal, state
or local payroll taxes. Such taxes will be withheld from the
Participant's salary as may be required by federal, state or local law.
page 6
IX.
BENEFICIARY
At the time the Eligible Employee elects his or her payout method under
this Plan, he or she shall designate a beneficiary or beneficiaries. The
designation may be changed at any time by the Eligible Employee; however,
the consent of a spouse may be required.
X.
PLAN ADMINISTRATION
10.01 Plan Interpretation
The Administrator (either directly or through its designees) will have
power and authority to interpret, construe, and administer this Plan;
provided that, its authority to interpret this Plan will not cause its
decisions in this regard to be entitled to a deferential standard of
review in the event that an Participant or beneficiary seeks review of the
Administrator's decision as described in Article XII.
10.02 Day-to-Day Administration
Day to day administration of the Plan has been delegated by the
Administrator to the Company, under the direction of the officer
responsible for Human Resources, or such other individuals as may be
authorized by him or her to perform such duties. Such administration will
include the power to interpret the Plan and make such equitable
adjustments as may be necessary to effectuate the purposes thereof.
10.03 Limited Liability
Neither the Administrator, nor any of its members or designees, will be
liable to any person for any action taken or omitted in connection with
the interpretation and administration of this Plan.
XI.
AMENDMENT OR TERMINATION
11.01 Authority to Amend or Terminate
The Administrator will have full power and authority to prospectively
modify or terminate this Plan, and the Administrator's interpretations,
constructions and actions, including any valuation of the Participant's
account or benefits, or the amount or recipient of the payment to be made,
will be binding and conclusive on all persons for all purposes. Absent
the consent of the Participant, however, the Administrator will in no
event have any authority to modify this section. However, no such
amendment or termination will apply to any person who has then qualified
for or is receiving benefits under this Plan.
11.02 Limitations
In the event of Plan amendment or termination which has the effect of
eliminating or reducing a benefit under the Plan, the benefit payable on
account of a retired Participant or survivor or other beneficiary will not
be impaired, and the benefits of other Participants will not be less than
the benefit to which each such Participant would have been entitled if he
or she had retired immediately prior to such amendment or termination.
XII.
CLAIMS AND REVIEW PROCEDURES
12.01 Right To Arbitration
Because it is agreed that time will be of the essence in determining
whether any payments are due to an Participant or his or her beneficiary
under this Plan, an Participant or beneficiary may, if he or she desires,
submit any claim for payment under this Plan to arbitration. This right
page 7
to select arbitration will be solely that of the Participant or
beneficiary and the Participant or beneficiary may decide whether or not
to arbitrate in his or her discretion. The "right to select arbitration"
is not mandatory on the Participant or beneficiary, and the Participant
or beneficiary may choose in lieu thereof to bring an action in an
appropriate civil court. Once an arbitration is commenced, however, it
may not be discontinued without the mutual consent of both parties to the
arbitration. During the lifetime of the Participant only he or she can
use the arbitration procedure set forth in this section.
12.02 Arbitration Procedures
(a) Any claim for arbitration may be submitted as follows: if an
Participant or beneficiary has submitted a request to be paid under this
Plan and the claim is finally denied by the Company in whole or in part,
such claim may be filed in writing with an arbitrator of the Participant's
or beneficiary's choice who is selected by the method described in the
next four sentences. The first step of the selection will consist of the
Participant or beneficiary submitting a list of five potential arbitrators
to the Company. Each of the five arbitrators must be either (1) a member
of the National Academy of Arbitrators located in the State of California
or (2) a retired California Superior Court or Appellate Court judge.
Within one week after receipt of the list, the Company will select one of
the five arbitrators as the arbitrator for the dispute in question. If
the Company fails to select an arbitrator within one week after receipt
of the list, the Participant or beneficiary will then designate one of the
five arbitrators for the dispute in question.
(b) The arbitration hearing will be held within seven days (or as soon
thereafter as possible) after the picking of the arbitrator. No
continuance of said hearing will be allowed without the mutual consent of
the Participant or beneficiary and the Company. Absence from or
nonparticipation at the hearing by either party will not prevent the
issuance of an award. Hearing procedures which will expedite the hearing
may be ordered at the arbitrator's discretion, and the arbitrator may
close the hearing in his or her sole discretion when he or she decides he
or she has heard sufficient evidence to satisfy issuance of an award. The
arbitrator's award will be rendered as expeditiously as possible and in
no event later than one week after the close of the hearing.
(c) In the event the arbitrator finds that the Company has breached this
Plan, he or she will order the Company to pay to the Participant or
beneficiary within two business days after the decision is rendered the
amount then due the Participant or beneficiary, plus, notwithstanding
anything to the contrary in this Plan, an additional amount equal to 20%
of the amount actually in dispute. This additional amount will constitute
an additional benefit under this Plan. The award of the arbitrator will
be final and binding upon the parties.
12.03 Enforcement of Award and Fees
The award may be enforced in any appropriate court as soon as possible
after its rendition. The Company will be considered the prevailing party
in a dispute if the arbitrator determines (1) that the Company has not
breached this Plan and (2) the claim by the Participant or his or her
beneficiary was not made in good faith. Otherwise, the Participant or his
or her beneficiary will be considered the prevailing party. In the event
that the Company is the prevailing party, the fee of the arbitrator and
all necessary expenses of the hearing (excluding any attorneys' fees
incurred by the Company) including stenographic reporter, if employed,
will be paid by the losing party. In the event that the Participant or
his or her beneficiary is the prevailing party, the fee of the arbitrator
and all necessary expenses of the hearing (including all attorneys' fees
page 8
incurred by the Participant or his or her beneficiary in pursuing his or
her claim), including the fees of a stenographic reporter if employed,
will be paid by the Company.
XIII.
MISCELLANEOUS
13.01 Participation in Other Plans
The Participant will continue to be entitled to participate in all
employee benefit programs of the Company as may, from time to time, be in
effect. However, total compensation includable under this Plan will be
deemed salary or other compensation to the Participant for the purpose of
computing benefits under this Plan only, and will be used only under this
Plan to calculate those benefits to which the Participant would otherwise
be entitled under the Qualified Plan if such total compensation could have
been included in the determination of benefits under that Plan.
13.02 Relationship to Qualified Plan
This Plan will to the full extent possible under currently applicable law
be administered in accordance with, and where practicable according to the
terms of the Qualified Plan. Notwithstanding the foregoing, the terms of
this Plan shall control benefits payable under this Plan whenever the
terms of the Qualified Plan differ from this Plan.
13.03 No Right to Employment
Nothing contained herein will be construed as conferring upon the
Participant the right to continue in the employ of the Company or an
Affiliate, in any particular salary grade or ELP Level, or in any other
capacity. If the Participant ceases to be an Participant in the Plan but
remains in the employ of the Company, any benefits due the Participant
under the Plan will not be payable until such time as he or she retires,
or ceases to be an employee of the Company, and then only subject to the
terms and conditions contained in this Plan.
13.04 Forfeiture
The payments to be made by the Company pursuant hereto require the
Participant, for so long as the Participant remains in the active employ
of the Company, to devote substantially all of his or her time, skill,
diligence and attention to the business of the Company, and not to
actively engage, either directly or indirectly, in any business or other
activity adverse to the best interests of the business of the Company.
In addition, the Participant will remain available during retirement for
consultation in any matter related to the affairs of the Company. Any
breach of these conditions will result in complete forfeiture of any
further benefits under the Plan. If the Participant will fail to observe
any of the above conditions, or if he or she will be discharged by the
Company for malfeasance or willful neglect of duty, then in any of said
events, the payments under this Plan will not be paid, and the Company
will have no further liability therefor.
13.05 Benefits Unsecured
All Plan benefits will be unsecured and will be paid in cash from the
general funds of the Company. No special or separate fund will be
established and no other segregation of assets will be made to assure the
payment of any benefits hereunder. No person will have by virtue of the
provisions of this Plan, any interest in such assets. In the event that,
in its discretion, the Company purchases an insurance policy or policies
insuring the life of the Participant to allow the Company to recover, in
whole, or in part, the cost of providing the benefits hereunder, neither
the Participant, the survivor or other designated beneficiary(ies) nor any
page 9
other beneficiary will have any rights whatsoever therein; the Company
will be the sole owner and beneficiary thereof and will possess and may
exercise all incidents of ownership therein.
13.06 Validity and Applicable Law
If any of the provisions of this Plan will be held invalid, or be held to
violate any law, the remainder of this Plan will not be affected thereby
and will remain in full force and effect. This Plan will be governed by
the laws of the State of California.
13.07 Captions
The captions of the articles and sections of the Plan are for convenience
only and shall not control or affect the meaning or construction of any
of its provisions.
SOUTHERN CALIFORNIA EDISON COMPANY
Georgia R. Nelson
_____________________________________
Georgia R. Nelson
PAGE
EXHIBIT 10.17
SOUTHERN CALIFORNIA EDISON COMPANY
1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
As Adopted December 14, 1994
WHEREAS, it has been determined that it is in the best interest
of the Southern California Edison Company to offer and maintain
competitive executive compensation programs designed to attract and retain
qualified executives; and
WHEREAS, it has been determined that providing financial
incentives to executives that reinforce and recognize Company,
organizational and individual performance and accomplishments will enhance
the financial and operational performance of the Company; and
WHEREAS, it has been determined that an incentive compensation
program would encourage the attainment of short-term corporate goals and
objectives;
NOW, THEREFORE, the Southern California Edison Company 1995
Executive Incentive Compensation Plan has been established by the
Compensation and Executive Personnel Committee of the Board of Directors
effective January 1, 1995, and made available to eligible executives of
the Company subject to the following terms and conditions:
1. Definitions. When capitalized herein, the following terms are
defined as indicated:
"Base Salary" is defined to be the annual salary of the Participant
on the last day of the year worked by the Participant.
"Board" means the Board of Directors of the Company.
"Chairman" means the Chairman of the Board and Chief Executive
Officer of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the Southern California Edison Company.
"Committee" means the Compensation and Executive Personnel
Committee of the Board.
"Participant" means the Chairman, officers serving on the SET,
elected vice presidents, and senior managers whose participation
in this Plan has been approved by the Chairman.
"Plan" means the Southern California Edison Company 1995 Executive
Incentive Compensation Plan.
"SET" means the Senior Executive Team of the Company.
PAGE
2. Eligibility. To be eligible for the full amount of any
incentive award, an individual must have been a participant for the entire
calendar year. Pro-rata awards may be distributed to participants who are
discharged for reasons other than incompetence, misconduct or fraud, or
who resigned, retired or became disabled during the calendar year, or who
were participants for less than the full year. A pro-rata award may be
made to a participant's designated beneficiary in the event of death of
a participant during a calendar year prior to an award being made.
3. Company Performance Goals. The Chairman will furnish
recommended Company achievement areas to the Committee, out of which the
Committee will, in consultation with the Chairman, select those areas of
achievement upon which they wish the Company to focus particular attention
and identify performance goals for the year.
The performance goals must represent relatively optimistic, but
reasonably attainable goals the accomplishment of which will contribute
significantly to the attainment of Company objectives.
4. Individual Incentive Award Levels. Company, organizational and
individual performance relative to the pre-established goals will
determine the award a Participant can receive.
Although most performance goals will be stated in terms of results
to be achieved during the calendar year, it is important that long-range
goals and objectives be included. These long-range goals and objectives
will have payoffs later than the year in question, but short-term sub-
goals may be established for the calendar year.
If the Committee determines individual and Company performance
goals have been substantially met, Participants will be eligible for
individual incentive awards at the following target award percentages:
70% of Base Salary for the Chairman;
60% of Base Salary for each officer of SCEcorp serving on the SET,
other than the Chairman;
45% of Base Salary for each officer of the Company serving on the
SET;
35% of Base Salary for each elected vice president of the Company;
and
25-30% of Base Salary for each senior manager of the Company, as
authorized by the SET.
Stretch-maximum awards of up to 150% of target may be earned on the
basis of performance in excess of targets. All awards shall be made in
the discretion of the Committee on the basis of its assessment of
corporate and individual performance.
page 2
5. Approval and Payment of Individual Awards. During the first
quarter of the year following the completion of the calendar year, the
Chairman will assess the degree to which individual and corporate goals
and objectives have been achieved and will develop suggested incentive
awards for eligible Participants other than the Chairman. The Committee
will receive a report from the Chairman as to overall Company performance,
will deliberate on the Chairman's recommendations, will develop an
incentive award for the Chairman, and make its determination as to the
approval of the recommended awards for officers. Awards to non-officers
shall be determined and approved by the SET. All decisions of the
Committee and the SET regarding individual incentive awards will be final
and conclusive.
Incentive award payments will be made as soon as practical
following the Committee's approval. Payment will be made in cash except
to the extent the Participant has previously elected to defer payment of
some or all of the award pursuant to the terms of a deferred compensation
plan of the Company or to the extent the Committee elects to defer some
or all of the award. Awards (cash or deferred) made will be subject to
any income or payroll tax withholding or other deductions as may required
by Federal, State or local law.
Awards under this Plan will not be considered to be salary or other
compensation for the purpose of computing benefits to which the
Participant may be entitled under any pension plan, stock bonus plan,
including but not limited to the Southern California Edison Company
Retirement Plan, Stock Savings Plus Plan, or other plan or arrangement of
the Company for the benefit of its employees if such plan or arrangement
is a plan qualified under Section 401(a) of the Code and is a trust exempt
from Federal income tax under Section 501(a) of the Code.
Awards owed to participants under this Plan shall constitute an
unsecured general obligation of the Company, and no special fund or trust
shall be created, nor shall any notes or securities be issued with respect
to any awards.
6. Plan Modifications and Adjustments. In order to ensure the
incentive features of the Plan, avoid distortion in its operation and
compensate for or reflect extraordinary changes which may have occurred
during the calendar year, the Committee may make adjustments to the Plan's
performance goals and percentage allocations before, during or after the
end of the calendar year to the extent it determines appropriate in its
sole discretion. Adjustments to the Plan shall be conclusive and binding
upon all parties concerned. The Plan may be modified or terminated by the
Committee at any time.
7. Plan Administration. This Plan and any officer awards under
it are to be approved by the Committee. The SET shall approve any non-
officer awards. Administration of the Plan is otherwise delegated to
management under the direction of the Chairman. The responsible vice
president is authorized to approve ministerial amendments to the Plan, to
interpret Plan provisions, and to approve changes as may be required by
law or regulation. Neither the Company nor any member of the Committee
or the Board shall be liable to any person for any action taken or omitted
in connection with the interpretation and administration of the Plan.
page 3
8. Successors and Assigns. This Plan shall be binding upon and
inure to the benefit of the heirs, legal representatives, successors and
assigns of the Company and Participant. Notwithstanding the foregoing,
any right to receive payment hereunder is hereby expressly declared to be
personal, nonassignable and nontransferable, except by will, intestacy,
or as otherwise required by law, and in the event of any attempted
assignment, alienation or transfer of such rights contrary to the
provisions hereof, the Company shall have no further liability for
payments hereunder.
9. Beneficiaries. In the event of the death of a Participant
during a calendar year prior to the making of any individual incentive
award, a pro-rata award may be made at the discretion of the Committee.
Any such payment will be made to the Participant's most recently
designated beneficiary or beneficiaries under the Long-Term Incentive
Compensation Plan of the Company. If no such designated beneficiary or
beneficiaries survive the Participant, or if a designated beneficiary
should die before the award has been paid, any award will be paid in one
lump-sum payment to his or her estate as soon as practicable following the
Participant's or the designated beneficiary's death.
10. Capacity. If any person entitled to payments under this Plan
is incapacitated and unable to use such payments in his or her own best
interest, the Company may direct that payments (or any portion) be made
to that person's legal guardian or conservator, or that person's spouse,
as an alternative to the payment to the person unable to use the payments.
Court-appointed guardianship or conservatorship may be required by the
Company before payment is made. The Company shall have no obligation to
supervise the use of such payments.
11. No Right of Employment. Nothing contained herein shall be
construed as conferring upon the Participant the right to continue in the
employ of the Company as an Officer or Manager of the Company or in any
other capacity.
12. Severability and Controlling Law. The various provisions of
this Plan are severable in their entirety. Any determination of
invalidity or unenforceability of any one provision will have no effect
on the continuing force and effect of the remaining provisions. This Plan
shall be governed by the laws of the State of California.
SOUTHERN CALIFORNIA EDISON COMPANY
Georgia R. Nelson, Vice President
_________________________________
Georgia R. Nelson, Vice President
PAGE
EXHIBIT 10.20
AMENDMENT NO. 1
SCEcorp
DIRECTOR INCENTIVE COMPENSATION PLAN
Effective June 2, 1993
WHEREAS, the Director Incentive Compensation Plan ("Plan"), approved
by the shareholders of SCEcorp on April 16, 1992, provides that the
maximum amount of SCEcorp Common Stock ("Stock") that may be issued under
the Plan is 100,000 shares;
WHEREAS, the award formula of the Plan currently provides for
individual annual awards of 100 shares of Stock, which may be increased
by the Board of Directors of SCEcorp ("Board") up to the award limitation
of 500 shares of Stock;
WHEREAS, SCEcorp has elected to split its Stock on a two-for-one
basis effective with the close of business on June 1, 1992;
WHEREAS, 3,200 shares of Stock have been issued under the Plan prior
to the Stock split;
WHEREAS, the Board has directed the Plan be amended to reflect the
Stock split pursuant to its authority under the terms of the Plan and it
is deemed desirable to restate;
NOW, THEREFORE, the Plan is amended as follows:
o Section 1.3 is amended by substituting 196,800 in place of
100,000.
o Section 2.1 is amended by substituting 200 in place of 100.
o Section 2.2 is amended by substituting 1,000 in place of 500.
SCEcorp
Kenneth S. Stewart
_____________________________________
Kenneth S. Stewart
Secretary
PAGE
SCEcorp
DIRECTOR INCENTIVE COMPENSATION PLAN
Effective (April 16, 1992)
I. GENERAL
1.1 PURPOSE
The purpose of the Director Incentive Compensation Plan
("Plan") is to foster and promote the long-term financial success of
SCEcorp and its affiliates by attracting and retaining outstanding
nonemployee directors by enabling them to participate in the corporation's
growth through automatic, nondiscretionary awards of stock ("Awards").
1.2 ELIGIBILITY
Eligibility in this Plan shall be limited to members of the
Board of Directors of SCEcorp or, an SCEcorp affiliate, who at the time
the Award is made are not employees or officers of SCEcorp or an SCEcorp
affiliate.
1.3 SHARES SUBJECT TO THE PLAN
Shares of stock covered by Awards under the Plan may be, in
whole or in part, authorized and unissued shares of SCEcorp's common
stock, or previously issued shares of common stock reacquired by SCEcorp
including shares purchased on the open market, or such other shares as
may be substituted pursuant to Section 3.3 ("Common Stock"). The maximum
number of shares of Common Stock which may be issued for all purposes
under the Plan shall be 100,000 (subject to adjustment pursuant to Section
3.3).
II. STOCK AWARDS
2.1 AWARD FORMULA
Effective with a Director's election on April 16, 1992, and
on each subsequent date a Director is elected or reelected to the Board
of Directors of SCEcorp at an annual meeting of the stockholders, such
Director will automatically be granted 100 shares of fully vested Common
Stock, at no cost to the Director. Each stock certificate evidencing an
Award shall be registered in the name of the Director and delivered to him
or her on that date, or as soon thereafter as practicable. Directors
serving on more than one Board will receive only one Award per year under
the Plan.
2.2 AWARD LIMITATION
Subject to the limitations of Section 3.2, the award formula
may be modified from time to time by the Board of Directors, with respect
to pricing, timing and amount, but such formula will not be modified to
provide an Award in excess of 500 shares of Common Stock per Director per
year.
PAGE
III. ADMINISTRATION
3.1 ADMINISTRATION OF THE PLAN
The Plan shall be self-effectuating. Administrative
determinations necessary or advisable for the administration or
interpretation of the Plan in order to carry out its provisions and
purposes shall be made by SCEcorp.
3.2 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN
The Board of Directors may suspend or terminate the Plan or
any portion thereof at any time and may amend the Plan from time to time
in such respects as the Board of Directors may deem advisable; provided,
however, the Plan shall not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code of 1986,
as amended, or the rules promulgated thereunder; and provided further, the
Plan shall not be amended, without shareholder approval to the extent
required by law or the rules of any exchange upon which the Common Stock
is listed, (a) to materially increase the number of shares of Common Stock
which may be issued under the Plan, except as provided in Section 3.3, (b)
to materially modify the requirements as to eligibility for participation
in the Plan, or (c) to materially increase the benefits accruing to
Directors under the Plan. No such amendment, suspension or termination
shall make any change that would disqualify the Plan, or any other Plan
of SCEcorp intended to be so qualified, from the exemption provided by
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended.
3.3 CAPITAL ADJUSTMENTS
In the event of a stock dividend or stock split, combination
or other reduction in the number of issued shares of Common Stock, a
merger, consolidation, reorganization, recapitalization, sale or exchange
of substantially all assets or dissolution of SCEcorp, the Board of
Directors shall, in order to prevent the dilution or enlargement of rights
under the Plan, make such adjustments in the number and type of shares
authorized and the number and type of shares that may be awarded under
this Plan as may be determined to be appropriate and equitable.
IV. MISCELLANEOUS
4.1 RIGHTS OF DIRECTORS
Nothing in the Plan shall confer upon any Director any right
to serve as a Director for any period of time or to continue his or her
present or any other rate of compensation.
4.2 PLAN NOT EXCLUSIVE
The adoption of the Plan shall not preclude the adoption by
appropriate means of a stock option or other incentive plan for Directors.
4.3 REQUIREMENTS OF LAW; GOVERNING LAW
The granting of Awards and issuance of shares of Common Stock
shall be subject to all applicable rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges
as may be required. The Plan shall be construed in accordance with and
governed by the laws of the State of California.
page 2
4.4 TERM OF PLAN
This Plan shall become effective upon its approval by the
stockholders of SCEcorp at their annual meeting on April 16, 1992, and
shall continue in effect until terminated by the SCEcorp Board of
Directors or the SCEcorp stockholders.
PAGE
EXHIBIT 10.21.1
FORM OF AGREEMENTS FOR 1995 AWARDS UNDER OFFICER LONG-TERM INCENTIVE
COMPENSATION PLAN:
SCEcorp
OFFICER LONG-TERM INCENTIVE COMPENSATION PLAN
1995 AWARD GRANT
This award is made by SCEcorp to -------------NAME----------------,
("Employee") as of January 3, 1995 pursuant to the Officer Long-Term
Incentive Compensation Plan ("OLTICP") and subject to the conditions
contained in the 1995 Statement of Terms and Conditions which is
incorporated herein by reference and receipt of which is acknowledged by
Employee. SCEcorp hereby grants to Employee, as a matter of separate
agreement and not in lieu of salary or any other compensation for
services, the right and option to purchase the following:
xxxxxxx shares of authorized SCEcorp Stock, coupled with dividend
equivalents, at an exercise price of $14.5625 per share.
IN WITNESS WHEREOF, SCEcorp and Employee have caused this instrument to
be executed as of the day and year first written above .
SCEcorp
By:_______________________________
Employee
_______________________________
PAGE
SCEcorp
OFFICER LONG-TERM INCENTIVE COMPENSATION PLAN
1995 AWARD GRANT
This award is made by SCEcorp to NAME , ("Employee") as of
January 3, 1995 pursuant to the Officer Long-Term Incentive Compensation
Plan and subject to the conditions contained in the 1995 Statement of
Terms and Conditions which is incorporated herein by reference and receipt
of which is acknowledged by Employee. SCEcorp hereby grants to Employee,
as a matter of separate agreement and not in lieu of salary or any other
compensation for services, the right and option to purchase the following:
xxxxxxx shares of Mission Energy Company phantom stock having a base
price of $52.70 per share and the following exercise prices:
Period Price $ Period Price $
------ ------- ------ -------
1996 59.024 2001 104.021
1997 66.107 2002 116.503
1998 74.040 2003 130.483
1999 82.925 2004 146.141
2000 92.875 2005 163.678
IN WITNESS WHEREOF, SCEcorp and Employee have caused this instrument to
be executed as of the day and year first written above .
SCEcorp Employee
By:_______________________________ _______________________________
PAGE
SCEcorp
OFFICER LONG-TERM INCENTIVE COMPENSATION PLAN
1995 AWARD GRANT
This award is made by SCEcorp to NAME , ("Employee") as of
January 3, 1995 pursuant to the Officer Long-Term Incentive Compensation
Plan and subject to the conditions contained in the 1995 Statement of
Terms and Conditions which is incorporated herein by reference and receipt
of which is acknowledged by Employee. SCEcorp hereby grants to Employee,
as a matter of separate agreement and not in lieu of salary or any other
compensation for services, the right and option to purchase the following:
xxxxxxx shares of Mission First Financial phantom stock having a
base price of $76.40 per share and the following exercise
prices:
Period Price $ Period Price $
------ ------- ------ -------
1996 84.040 2001 135.347
1997 92.444 2002 148.882
1998 101.688 2003 163.770
1999 111.857 2004 180.147
2000 123.043 2005 198.162
IN WITNESS WHEREOF, SCEcorp and Employee have caused this instrument to
be executed as of the day and year first written above .
SCEcorp Employee
By:_______________________________ _______________________________
SCEcorp Officer and Management Long-Term Incentive Compensation Plans
1995 Statement of Terms and Conditions
1995 Award Grants made under the SCEcorp Officer and Management Long-Term
Incentive Compensation Plans are subject to the following terms and
conditions:
1. PRICE
(a) The exercise price for the option to purchase SCEcorp Common Stock
("SCEcorp Stock") stated in the Award Grant is the average of the high and
low sales prices of SCEcorp Stock as reported in the Western Edition of
The Wall Street Journal for the New York Stock Exchange Composite
Transactions for the date of grant.
(b) The exercise price for the Mission Energy Company ("MEC") Option will
be the base price stated in the Award Grant escalated at a 12% rate,
compounded annually.
(c) The exercise price for the Mission First Financial ("MFF") Option will
be the base price stated in the Award Grant escalated at a 10% rate,
compounded annually.
2. VESTING
(a) Subject to the provisions of Section 3, options may only be exercised
to the extent vested. The initial vesting date will be January 2nd of the
year following the date of the Award Grant, or six months after the date
of the Award Grant, whichever date is later. The options will vest as
follows:
o On the initial vesting date, the options will vest as to 33-1/3% of
the covered shares.
o On January 2nd of the following year, the options will vest as to an
additional 33-1/3% of the covered shares.
o On January 2nd of the third year following the date of the Award
Grant, the options will be fully vested.
(b) The vested portions of the options will accumulate to the extent not
exercised, and be exercisable by the Employee subject to the provisions
of Section 3, in whole or in part, in any subsequent period but not later
than the first business day of the 10th year following the date of the
Award Grant, or, in the case of MEC or MFF Options, not later than the end
of the final 60-day exercise period.
(c) If an Employee is removed from a position entitling him/her to
benefits under the Plan, retires, dies or is permanently and totally
disabled during the three-year vesting period, the options will vest and
be exercisable to the extent of 1/36th of the aggregate number of shares
originally covered by the options for each full month of service during
the vesting period. Notwithstanding the foregoing, the options of an
officer who has served as a member of the Southern California Edison
Company Management Committee will be fully vested and exercisable upon
his/her retirement, death or permanent and total disability.
(d) Upon termination of an Employee for any reason other than those
specified in Subsection (c), only that portion of the options which has
vested on or before the anniversary date of the Award Grant preceding the
date of termination may be exercised, and that portion, together with any
earned dividend equivalents, will be forfeited unless exercised within 180
days following the date of termination, or in the case of MEC or MFF
Options, the first 60-day exercise period following the date of
termination.
PAGE
(e) Notwithstanding the foregoing, the options and earned dividend
equivalents may vest in accordance with Section 15 of the Plan as a result
of certain events, including liquidation of SCEcorp or merger,
reorganization or consolidation of SCEcorp as a result of which SCEcorp
is not the surviving corporation.
3. OPTION EXERCISE
(a) The Employee may exercise an option by providing written notice to
SCEcorp on the form prescribed by SCEcorp for this purpose specifying the
number of shares to be purchased, and accompanied by full payment of the
exercise price for the shares. A sample notice is attached as Exhibit 1.
Payment must be in cash, or its equivalent, such as SCEcorp Stock,
acceptable to SCEcorp. A "cashless" exercise will be accommodated for all
MEC and MFF Options, and may be accommodated for SCEcorp Options at the
discretion of SCEcorp. Until payment is accepted, the Employee will have
no rights in the optioned stock. If an SCEcorp Options are exercised, the
Employee may elect to apply any earned dividend equivalents related to the
shares for which the options are being exercised to the exercise price for
such shares.
(b) SCEcorp Options may be exercised at any time after they have vested
through the first business day of the 10th year following the date of the
Award Grant. MEC and MFF Options may be exercised after they have vested,
but only during an annually specified 60-day period following the fiscal
year end and the completion of an independently reviewed valuation report
which indicates a share value for the fiscal year higher than the
applicable MEC or MFF Option exercise price for that period. The final
60-day MEC or MFF exercise period will commence no later than the end of
the second quarter of the 10th year following the date of the Award Grant.
MEC and MFF Options are payable in cash upon exercise to the extent the
actual value of an MEC or MFF share exceeds the applicable exercise price.
(c) The Employee agrees that any securities acquired by him/her hereunder
are being acquired for his/her own account for investment and not with a
view to or for sale in connection with any distribution thereof and that
he/she understands that such securities may not be sold, transferred,
pledged, hypothecated, alienated, or otherwise assigned or disposed of
without either registration under the Securities Act of 1933 or compliance
with the exemption provided by Rule 144 or another applicable exemption
under such act.
(d) In accordance with Section 17(d) of the Plan, the Employee will have
no right or claim to any specific funds, property or assets of SCEcorp as
a result of the Award Grant.
4. SCEcorp OPTION DIVIDEND EQUIVALENTS
(a) An SCEcorp Dividend Equivalent Account will be established on behalf
of the Employee if SCEcorp Options have been granted pursuant to the Award
Grant. This account may be credited with all or a portion of the
dividends payable after the date of grant on the number of shares of stock
covered by such SCEcorp Options depending upon SCEcorp's performance
during the first three years of the option period as provided in
Subsection (b). No amount will be credited prior to January 2nd of the
third year following the date of grant. No dividend equivalent will
accrue to any option exercised during that period regardless of SCEcorp
performance. Dividend equivalents credited after that date, if any, will
accumulate in this account without interest and will vest and become
payable upon the exercise of the option to purchase the corresponding
shares of SCEcorp Stock.
page 2
(b) Dividend equivalents related to SCEcorp Options are subject to a
performance measure based on the percentile ranking of SCEcorp's total
shareholder return ("TSR") compared to the TSR for each stock in the Dow
Jones Electric Utilities Group Index. The percentile ranking will be
measured at the completion of the three-year period following the date of
grant. If SCEcorp's average ranking is in the 60th percentile or higher
for the 3-year period, 100% of the dividend equivalents will be earned
from the date of grant through the date the options are exercised. If
SCEcorp's average ranking is in the 25th percentile, 25% of the dividend
equivalents will be earned. No dividend equivalents will be earned for
performance below the 25th percentile, and a pro rata amount will be
earned for performance between the 25th and 60th percentiles.
Dividend equivalents related to unexercised SCEcorp Options that were not
earned due to the limitations of this Subsection (b) may be earned back
as of the end of each of the last five years of the option period if it
is determined at that point that the SCEcorp cumulative average TSR
percentile ranking equals or exceeds the 60th percentile.
5. MEC and MFF OPTION PERFORMANCE UNITS
(a) The MEC Options are performance units under the Plan based on 100
million shares of artificial or "phantom" MEC stock created for this
purpose only. The MEC Option exercise prices in the Award Grant were
derived from the base price of a share of MEC stock by applying a 12%
appreciation factor, compounded annually for the term of the Award Grant.
Following the end of each calendar year during the term of the Award
Grant, the actual MEC share value will be computed. If the actual MEC
share value exceeds the MEC Option exercise price for that period, any
portion of the vested MEC Option may be exercised by the Employee in
accordance with Section 3 and the difference will be paid in cash to the
Employee.
(b) The MFF Options are performance units under the Plan based on 50
million shares of artificial or "phantom" MFF stock created for this
purpose only. The MFF Option exercise prices in Section 1 were derived
from the base price of a share of MFF stock by applying a 10% appreciation
factor, compounded annually for the term of the Award Grant. Following
the end of each calendar year during the term of the Award Grant, the
actual MFF share value will be computed. If the actual MFF share value
exceeds the MFF Option exercise price for that period, any portion of the
vested MFF Option may be exercised by the Employee in accordance with
Section 3 and the difference will be paid in cash to the Employee.
6. TRANSFER AND BENEFICIARY
The options will not be transferable by the Employee. During the lifetime
of the Employee, the options will be exercisable only by him/her. The
Employee may designate a beneficiary who, upon the death of the Employee,
will be entitled to exercise the then vested portion of the options during
the remaining term of the Award Grant subject to the conditions of the
Plan and the Award Grant.
7. TERMINATION OF OPTIONS
As set forth in Section 2(d), in the event of termination of the
employment of the Employee for any cause, other than retirement, permanent
and total disability or death of the Employee, the options will terminate
180 days from the date on which such employment terminated, or in the case
of MEC or MFF Options, at the end of the first 60-day exercise period
following the employment termination date. In addition, the options may
be terminated if SCEcorp elects to substitute cash awards as provided
under Section 11.
page 3
8. TAXES
SCEcorp will have the right to retain and withhold the amount of taxes
required by any government to be withheld or otherwise deducted and
remitted with respect to the exercise of any SCEcorp, MEC or MFF option,
the receipt of cash, or the receipt or application by the Employee of any
dividend equivalents under the Award Grant. In its discretion, SCEcorp
may require the Employee to reimburse SCEcorp for any such taxes required
to be withheld by SCEcorp and may withhold any distribution in whole or
in part until SCEcorp is so reimbursed. In lieu thereof, SCEcorp will
have the right to withhold from any other cash amounts due from SCEcorp
to the Employee an amount equal to such taxes required to be withheld by
SCEcorp to reimburse SCEcorp for any such taxes or to retain and withhold
a number of shares of SCEcorp Stock having a market value equal to the
taxes and cancel (in whole or in part) the shares in order to reimburse
SCEcorp for the taxes.
Each recipient of an SCEcorp Option must attach a statement to his/her
federal and state tax returns for the year in which the SCEcorp Option was
granted containing certain information about the option. A sample
statement is attached as Exhibit 2.
9. CONTINUED EMPLOYMENT
(a) In consideration of the granting of such options to him/her, the
Employee agrees that he/she will remain in the continuous service of
SCEcorp or an SCEcorp affiliate as an officer or employee during the term
of the Award Grant. In the event employment is terminated, except as a
result of death, disability, or retirement under the Southern California
Edison Company Retirement Plan, or a successor plan, whether voluntarily
or otherwise, the restrictions of Section 2(d) will apply.
(b) Nothing in the Award Grant or this Statement of Terms and Conditions
will be deemed to confer on the Employee any right to continue in the
employ of SCEcorp or an SCEcorp affiliate or interfere in any way with the
right of the employer to terminate his/her employment at any time.
10. NOTICE OF DISPOSITION OF SHARES
Employee agrees that if he/she should dispose of any shares of stock
acquired on the exercise of the SCEcorp Options, including a disposition
by sale, exchange, gift or transfer of legal title within six months from
the date such shares are transferred to the Employee, the Employee will
notify SCEcorp promptly of such disposition.
11. AMENDMENT
The Award Grant will be subject to the terms of the Plan as amended.
SCEcorp reserves the right to substitute cash awards substantially
equivalent in value to the options and dividend equivalents. The options
and dividend equivalents which are the subject of the Award Grant may not
otherwise be restricted or limited by any Plan amendment or termination
approved after the date of the Award Grant without the Employee's written
consent.
12. FORCE AND EFFECT
The various provisions of the Award Grant are severable in their entirety.
Any determination of invalidity or unenforceability of any one provision
will have no effect on the continuing force and effect of the remaining
provisions.
13. GOVERNING LAW
This Award Grant will be construed under the laws of the State of
California.
page 4
14. NOTICE.
Unless waived by SCEcorp, any notice required under or relating to the
Award Grant will be in writing, with postage prepaid, addressed to:
SCEcorp, Attn: Corporate Secretary, P.O. Box 800, Rosemead, CA 91770
The preceding 1995 Statement of Terms and Conditions is approved by the
undersigned under authority of the SCEcorp Compensation Committee.
___________________________________________________
G. R. Nelson, Vice President of Performance Support
Southern California Edison Company
PAGE
FORM OF AGREEMENTS FOR 1994 AWARDS UNDER OFFICER LONG-TERM INCENTIVE
COMPENSATION PLAN:
1994 LONG-TERM INCENTIVE AWARD AGREEMENT
UNDER THE
SCEcorp OFFICER LONG-TERM INCENTIVE COMPENSATION PLAN
This AGREEMENT is made as of January 4, 1994 by and between SCEcorp and
- ------------------------------------------ ("Employee").
WHEREAS, SCEcorp maintains the Officer Long-Term Incentive Compensation
Plan (the "Plan") under which the Compensation Committee of the Board of
Directors of SCEcorp (the "Committee") may make Incentive Awards to such
officers of SCEcorp or its affiliates as the Committee may determine,
subject to any terms, conditions, or restrictions as it may deem
appropriate; and
WHEREAS, the Committee has determined that nonqualified stock options for
SCEcorp Common Stock ("SCEcorp Stock") with corresponding dividend
equivalents linked to either SCEcorp or Mission First Financial ("MFF")
performance and/or Mission Energy Company ("MEC") phantom stock option
performance units will be the form of awards to be made under the Plan for
1994;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, it is hereby agreed as follows:
1. GRANT
SCEcorp hereby grants to the Employee, as a matter of separate agreement
and not in lieu of salary or any other compensation for services, the
right and option to purchase, on the terms and conditions herein set
forth, the following:
XXXXXX shares of authorized SCEcorp Stock coupled with dividend
equivalents subject to the SCEcorp performance incentives
described in Section 5(b).
XXXXXX shares of authorized SCEcorp Stock coupled with dividend
equivalents subject to the MFF performance incentives
described in Section 5(c).
XXXXXX shares of MEC phantom stock as described in Section 6.
2. PRICE
(a) The exercise price of the option to purchase SCEcorp Stock will be
$20.1875 per share, such price being the average of the high and low sales
prices of SCEcorp Stock as reported in the Western Edition of The Wall
Street Journal for the New York Stock Exchange Composite Transactions for
the date of grant.
(b) The base price for the MEC Option is $5.51 per share. The exercise
price of an MEC option will be the base price escalated at a 12% rate,
compounded annually. This results in the following exercise prices during
the term of the Agreement:
PAGE
MEC SHARE EXERCISE PRICES
Period Price $ Period Price $
------ ------- ------ -------
1995 6.1712 2000 10.8758
1996 6.9117 2001 12.1809
1997 7.7412 2002 13.6426
1998 8.6701 2003 15.2797
1999 9.7105
3. VESTING
(a) Subject to the provisions of Section 4, options may only be exercised
to the extent vested. The initial vesting date will be January 2nd of the
year following the date of this Agreement, or six months after the date
of this Agreement, whichever date is later. The options will vest as
follows:
o On the initial vesting date, the options will vest as to 33-1/3% of
the covered shares.
o On January 2nd of the following year, the options will vest as to an
additional 33-1/3% of the covered shares.
o On January 2nd of the third year following the date of this Agreement,
the options will be fully vested.
(b) The vested portions of the options will accumulate to the extent not
exercised, and be exercisable by the Employee subject to the provisions
of Section 4, in whole or in part, in any subsequent period but not later
than the first business day of the 10th year following the date of this
Agreement, or, in the case of MEC Options, not later than the end of the
final 60-day exercise period under this Agreement.
(c) If an Employee is removed from a position entitling him/her to
benefits under the Plan, retires, dies or is permanently and totally
disabled during the three-year vesting period, the options will vest and
be exercisable to the extent of 1/36th of the aggregate number of shares
originally covered by the options for each full month of service during
the vesting period. Notwithstanding the foregoing, the options of an
officer who has served as a member of the Edison Management Committee will
be fully vested and exercisable upon his/her retirement, death or
permanent and total disability.
(d) Upon termination of an Employee for any reason other than those
specified in Subsection (c), only that portion of the options which has
vested on or before the anniversary date of this Agreement preceding the
date of termination may be exercised, and that portion, together with any
earned dividend equivalents, will be forfeited unless exercised within 180
days following the date of termination, or in the case of MEC Options, the
first 60-day exercise period following the date of termination.
(e) Notwithstanding the foregoing, the options and earned dividend
equivalents may vest in accordance with Section 16 of the Plan as a result
of certain events, including liquidation of SCEcorp or merger,
reorganization or consolidation of SCEcorp as a result of which SCEcorp
is not the surviving corporation.
4. OPTION EXERCISE
(a) The Employee may exercise an option by providing written notice to
SCEcorp on the form prescribed by SCEcorp for this purpose specifying the
number of shares to be purchased, and accompanied by full payment of the
page 2
exercise price for the shares. A sample notice is attached as Exhibit 1.
Payment must be in cash, or its equivalent, such as SCEcorp Stock,
acceptable to SCEcorp. A "cashless" exercise will be accommodated for all
MEC Options, and may be accommodated for SCEcorp Options at the discretion
of SCEcorp. Until payment is accepted, the Employee will have no rights
in the optioned stock. If an SCEcorp Option is exercised, the Employee
may elect to apply any earned dividend equivalents related to the shares
for which the option is being exercised to the exercise price for such
shares.
(b) SCEcorp Options may be exercised at any time after they have vested
through the first business day of the 10th year following the date of this
Agreement. MEC Options may be exercised after they have vested, but only
during an annually specified 60-day period following MEC's fiscal year end
and the completion of an audited valuation report which indicates an MEC
share value for the fiscal year higher than the MEC Option exercise price
for that period. The final 60-day MEC exercise period will commence
during the second quarter of the 10th year following the date of this
Agreement. The MEC Option is payable in cash upon exercise to the extent
the actual value of an MEC share exceeds the applicable exercise price.
(c) The Employee agrees that any securities acquired by him/her hereunder
are being acquired for his/her own account for investment and not with a
view to or for sale in connection with any distribution thereof and that
he/she understands that such securities may not be sold, transferred,
pledged, hypothecated, alienated, or otherwise assigned or disposed of
without either registration under the Securities Act of 1933 or compliance
with the exemption provided by Rule 144 or another applicable exemption
under such act.
(d) In accordance with Section 17(d) of the Plan, the Employee will have
no right or claim to any specific funds, property or assets of SCEcorp as
a result of this Agreement.
5. SCEcorp OPTION DIVIDEND EQUIVALENTS
(a) An SCEcorp Dividend Equivalent Account will be established on behalf
of the Employee if SCEcorp Options have been granted pursuant to this
Agreement. Subject to the limitations of this Section 5, the account will
be credited with amounts equivalent to the dividends payable after the
date of grant on the number of shares of stock covered by such SCEcorp
Options. Dividend equivalents subject to the SCEcorp performance measures
will be credited quarterly, and those subject to the MFF performance
measures will be credited annually. Amounts credited will accumulate in
this account without interest and will vest and become payable upon the
exercise of the option to purchase the corresponding shares of SCEcorp
Stock.
(b) Dividend equivalents related to SCEcorp Options subject to the SCEcorp
performance measure are subject to the limitation determined pursuant to
this Subsection (b). The SCEcorp performance measure is the percentile
ranking of SCEcorp's total shareholder return ("TSR") compared to the TSR
for each stock in the Dow Jones Electric Utilities Group Index. The
percentile ranking will be measured quarterly, and these quarterly
rankings will be averaged over a rolling 3-year period. If SCEcorp's
average ranking is in the 60th percentile or higher for the 3-year period
ending with the then current quarter, 100% of the dividend equivalents
will be earned for that quarter. If SCEcorp's average ranking is in the
25th percentile, 25% of the dividend equivalents will be earned. No
dividend equivalents will be earned for performance below the 25th
percentile, and a pro rata amount will be earned for performance between
the 25th and 60th percentiles.
page 3
Performance prior to the year of grant will not be measured for purposes
of this Agreement. The average TSR percentile ranking from January 1st
of the year of grant through the then current quarter will be used as the
performance measure during the first three calendar years. Thereafter,
the average TSR percentile ranking will be determined based on a rolling
three-year period. Any limitations determined to apply under this
Subsection (b), will apply to dividends declared during the quarter.
Dividend equivalents related to unexercised SCEcorp Options that were not
earned due to the limitations of this Subsection (b) may be earned back
as of the end of each of the last five years of the option period if it
is determined at that point that the SCEcorp cumulative average TSR
percentile ranking equals or exceeds the 60th percentile.
(c) Dividend equivalents related to SCEcorp Options subject to the MFF
performance measure are subject to the limitation determined pursuant to
this Subsection (c). The MFF performance measure will be MFF's 3-year
compounded growth in economic value ("GEV"). Following receipt of audited
MFF financial data for each calendar year during the option term, if it
is determined that MFF's GEV equals or exceeds its cost of equity plus 200
basis points for the 3-year period ending with the most recent calendar
year, then 100% of the dividend equivalents will be earned for that year.
If the GEV is equal to MFF's cost of equity, 25% of the dividend
equivalents will be earned for that year. No dividend equivalents will
be earned if the GEV is less than MFF's cost of equity, and a pro rata
amount will be earned if the GEV is between MFF's cost of equity and its
cost of equity plus 200 basis points. For the first year of the option
period, only performance data for that year will be measured. For the
second year, performance data for the first two years will be measured.
Dividend equivalents related to unexercised SCEcorp Options that were not
earned due to the limitations of this Subsection (c) may be earned back
as of the end of each of the last five years of the option period if MFF's
cumulative compounded annual GEV is determined at that point to equal or
exceed MFF's cost of equity plus 200 basis points for the corresponding
period.
Dividend equivalents subject to the limitations of this Subsection (c)
related to that portion of the year preceding the exercise of the option
will be paid following completion of the year if they are earned in
accordance with the provisions of this Subsection (c).
(d) Except as provided in Subsection (c), when the Employee exercises any
portion of the SCEcorp Options granted by this Agreement, the earned
dividend equivalents corresponding to the stock covered by the exercised
options will be paid to the Employee in cash at the time the stock
certificates are delivered to the Employee. The Employee may elect to
apply this amount to the exercise price. If the SCEcorp Options granted
hereby are not fully exercised by the first business day of the 10th year
following the date of this Agreement, the dividend equivalents
corresponding to the shares covered by the unexercised portion of the
options will be forfeited.
6. MEC OPTION PERFORMANCE UNITS
The MEC Options are performance units under the Plan based on 100 million
shares of artificial or "phantom" MEC stock created for this purpose only.
The base value of one share of MEC stock as of the grant date was approved
by the Committee. The MEC Option exercise prices in Section 2 were
derived from the base price of a share of MEC stock by applying a 12%
appreciation factor, compounded annually for the term of this Agreement.
Following the end of each calendar year during the term of this Agreement,
page 4
the actual MEC share value will be computed. If the actual MEC share
value exceeds the MEC Option exercise price for that period, any portion
of the vested MEC Option may be exercised by the Employee in accordance
with Section 4 and the difference will be paid in cash to the Employee.
7. TRANSFER AND BENEFICIARY
The options will not be transferable by the Employee. During the lifetime
of the Employee, the options will be exercisable only by him/her. The
Employee may designate a beneficiary who, upon the death of the Employee,
will be entitled to exercise the then vested portion of the options during
the remaining term of this Agreement subject to the conditions of the Plan
and this Agreement.
8. TERMINATION OF OPTIONS
As set forth in Section 3(d) of this Agreement, in the event of
termination of the employment of the Employee for any cause, other than
retirement, disability or death of the Employee, the options will
terminate 180 days from the date on which such employment terminated, or
in the case of MEC Options, at the end of the first 60-day exercise period
following the employment termination date. In addition, the options may
be terminated if SCEcorp elects to substitute cash awards as provided
under Section 12 of this Agreement.
9. TAXES
SCEcorp will have the right to retain and withhold the amount of taxes
required by any government to be withheld or otherwise deducted and
remitted with respect to the exercise of any option or the receipt or
application by the Employee of any dividend equivalent under this
Agreement. In its discretion, SCEcorp may require the Employee to
reimburse SCEcorp for any such taxes required to be withheld by SCEcorp
and may withhold any distribution in whole or in part until SCEcorp is so
reimbursed. In lieu thereof, SCEcorp will have the right to withhold from
any other cash amounts due from SCEcorp to the Employee an amount equal
to such taxes required to be withheld by SCEcorp to reimburse SCEcorp for
any such taxes or to retain and withhold a number of shares of SCEcorp
Stock having a market value equal to the taxes and cancel (in whole or in
part) the shares in order to reimburse SCEcorp for the taxes.
Each recipient of an SCEcorp Option must attach a statement to his/her
federal and state tax returns for the year in which the SCEcorp Option was
granted containing certain information about the option. A sample
statement is attached to this Agreement as Exhibit 2.
10. CONTINUED EMPLOYMENT
(a) In consideration of the granting of such options to him/her, the
Employee agrees that he/she will remain in the continuous service of
SCEcorp or an SCEcorp affiliate as an officer or employee during the term
of this agreement except as he/she may be prevented from doing so by
death, permanent and total disability, or retirement under the Southern
California Edison Company Retirement Plan, or a successor plan. In the
event employment is terminated, voluntarily or otherwise, for reasons
other than the foregoing, the restrictions of section 3(d) of this
Agreement will apply.
(b) Nothing in this option Agreement will be deemed to confer on the
Employee any right to continue in the employ of SCEcorp or an SCEcorp
affiliate or interfere in any way with the right of the employer to
terminate his/her employment at any time.
page 5
11. NOTICE OF DISPOSITION OF SHARES
Employee agrees that if he/she should dispose of any shares of stock
acquired on the exercise of the SCEcorp Options, including a disposition
by sale, exchange, gift or transfer of legal title within six months from
the date such shares are transferred to the Employee, the Employee will
notify SCEcorp promptly of such disposition.
12. AMENDMENT
This Agreement will be subject to the terms of the Plan as amended.
SCEcorp reserves the right to substitute cash awards substantially
equivalent in value to the options and dividend equivalents. The options
and dividend equivalents which are the subject of this Agreement may not
otherwise be restricted or limited by any Plan amendment or termination
approved after the date of this Agreement without the Employee's written
consent.
13. FORCE AND EFFECT
The various provisions of this Agreement are severable in their entirety.
Any determination of invalidity or unenforceability of any one provision
will have no effect on the continuing force and effect of the remaining
provisions.
14. GOVERNING LAW
This option Agreement will be construed under the laws of the State of
California.
page 6
15. NOTICE
Unless waived by SCEcorp, any notice required under or relating to this
Agreement will be in writing, with postage prepaid, addressed to:
SCEcorp
Attn: Corporate Secretary
P.O. Box 800
Rosemead, CA 91770
//
//
//
//
//
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SCEcorp
By:_______________________________
Employee
_______________________________
Attest:
_____________________________
page 7
FORM OF AGREEMENTS FOR 1993 AWARDS UNDER OFFICER LONG-TERM INCENTIVE
COMPENSATION PLAN:
1993 NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE
SCEcorp OFFICER LONG-TERM INCENTIVE COMPENSATION PLAN
This AGREEMENT is made as of January 4, 1993 by and between
SCEcorp and ------------------------------------------ ("Employee").
WHEREAS, SCEcorp maintains the Long-Term Incentive Compensation
Plan (the "Plan") under which the Compensation Committee of the Board of
Directors of SCEcorp (the "Committee") may make Incentive Awards to such
officers of SCEcorp or its affiliates as the Committee may determine,
subject to any terms, conditions, or restrictions as it may deem
appropriate; and
WHEREAS, pursuant to the Plan, the Committee has elected to
award nonqualified stock options of SCEcorp Common Stock ("Common Stock")
with corresponding dividend equivalents to certain corporate officers of
SCEcorp and its affiliates;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, it is hereby agreed as follows:
1. GRANT
SCEcorp hereby grants to the Employee, as a matter of separate
agreement and not in lieu of salary or any other compensation for
services, the right and option, hereafter called the option, to purchase
full shares of authorized Common Stock together with corresponding
dividend equivalents on the terms and conditions herein set forth.
2. PRICE
The purchase price of said shares of Common Stock subject to the
option shall be $43.875 DOLLARS per share, such price being the average
of the high and low sales prices of the Common Stock as reported in the
western edition of The Wall Street Journal for the New York Stock Exchange
Composite Transactions for the date of grant.
3. WHEN EXERCISABLE
The option may only be exercised to the extent it has vested.
The initial vesting date shall be January 2nd of the year following the
date of this Agreement, or six months after the date of this Agreement,
whichever date is later. Thereafter, the option shall be exercisable only
as follows:
(a) During the period between the initial vesting date and
January 1st of the following year, the option may be exercised to the
extent of 33-1/3% of the aggregate number of shares originally covered by
the option.
(b) During the next twelve-months, the option may be exercised
to the extent of an additional 33-1/3% of the aggregate number of shares
originally covered by the option, and to the extent the right to exercise
the option has earlier vested and has not been exercised.
(c) At any time on or after January 2nd of the third year
following the date of this Agreement, the option shall be exercisable in
full except to the extent it has been exercised earlier.
(d) The vested portions of the option shall accumulate to the
extent not exercised, and be exercisable by the Employee, in whole or in
part, in any subsequent period but not later than January 2nd of the 10th
year following the date of this Agreement.
PAGE
(e) If an Employee is removed from a position entitling him/her
to benefits under the Plan, retires, dies or is permanently and totally
disabled during the three-year vesting period, the option shall vest and
be exercisable to the extent of 1/36th of the aggregate number of shares
originally covered by the option for each full month of service during the
vesting period. Notwithstanding the foregoing, the option of a member of
the Edison Management Committee shall be fully vested and exercisable upon
his/her retirement, death or permanent and total disability regardless of
whether or not he/she was a member of that committee on the date of this
Agreement.
(f) Upon termination of an Employee for any reason other than
those specified in subsection (e), only that portion of the option which
has vested on or before the anniversary date of this Agreement prior to
the date of termination may be exercised, and that portion, together with
any accumulated dividend equivalents, will be forfeited unless exercised
within 180 days following the date of termination.
(g) Notwithstanding the foregoing, the option and dividend
equivalents may vest in accordance with section 16 of the Plan as a result
of certain events, including liquidation of SCEcorp or merger,
reorganization or consolidation of SCEcorp as a result of which SCEcorp
is not the surviving corporation.
4. HOW EXERCISABLE
(a) The Employee shall exercise the option by written notice to
SCEcorp, on the form prescribed by SCEcorp for this purpose, which shall
specify the number of shares to be purchased, and which shall be
accompanied by full payment of the option price for such shares. Payment
shall be in cash, or its equivalent, such as Common Stock, acceptable to
SCEcorp. Until such payment, the Employee shall have no rights in the
optioned stock. The Employee may elect to apply the accumulated dividend
equivalents related to the shares for which the option is being exercised
to the option price for such shares.
(b) The Employee agrees that any securities acquired by him/her
hereunder are being acquired for his/her own account for investment and
not with a view to or for sale in connection with any distribution thereof
and that he/she understands that such securities may not be sold,
transferred, pledged, hypothecated, alienated, or otherwise assigned or
disposed of without either registration under the Securities Act of 1933
or compliance with the exemption provided by Rule 144 or another
applicable exemption under such act.
5. TRANSFER AND BENEFICIARY
The option shall not be transferable by the Employee. During
the lifetime of the Employee, the option shall be exercisable only by
him/her. The Employee may designate a beneficiary who, upon the death of
the Employee, will be entitled to exercise the then vested portion of the
option at any time up to 10 years following the date of this Agreement
subject to the terms and conditions of the Plan and this Agreement.
6. TERMINATION OF OPTION
As set forth in Section 3(f) of this Agreement, in the event of
termination of the employment of the Employee for any cause, other than
retirement, disability or death of the Employee, the option shall
terminate 180 days from the date on which such employment terminated. In
addition, the option may be terminated if SCEcorp elects to substitute
cash awards as provided under Section 11 of this Agreement.
7. DIVIDEND EQUIVALENTS
A Dividend Equivalent Account shall be established on behalf of
the Employee which will be credited with amounts corresponding to the
dividends which would be payable on the number of shares of Common Stock
covered by the option granted to the Employee under this Agreement. Such
page 2
amounts will accumulate in this account without interest. Dividend
equivalents will vest and become payable upon the exercise of the option
to purchase the corresponding shares of Common Stock. When the Employee
exercises any portion of the option granted by this Agreement, the
accumulated dividend equivalents corresponding to the stock covered by the
exercised option will be paid to the Employee in cash at the time the
stock certificates are delivered to the Employee. The Employee may elect
to apply this amount to the option price. If the option granted hereby
is not fully exercised by January 2nd of the 10th year following the date
of this Agreement, the dividend equivalents corresponding to the shares
covered by the unexercised portion of the option will be forfeited. In
accordance with Section 17(d) of the Plan, the Employee shall have no
right or claim to any specific funds, property or assets of SCEcorp as a
result of this Agreement.
8. TAXES
SCEcorp shall have the right to retain and withhold the amount
of taxes required by any government to be withheld or otherwise deducted
and remitted with respect to the exercise of any option or the receipt or
application by the Employee of any dividend equivalent under this
Agreement. In its discretion, SCEcorp may require the Employee to
reimburse SCEcorp for any such taxes required to be withheld by SCEcorp
and may withhold any distribution in whole or in part until SCEcorp is so
reimbursed. In lieu thereof, SCEcorp shall have the right to withhold
from any other cash amounts due from SCEcorp to the Employee an amount
equal to such taxes required to be withheld by SCEcorp to reimburse
SCEcorp for any such taxes or retain and withhold a number of shares of
Common Stock having a market value not less than the amount of such taxes
and cancel (in whole or in part) any such shares so withheld in order to
reimburse SCEcorp for such taxes.
9. AGREEMENT TO CONTINUE IN EMPLOYMENT
In consideration of the granting of such option to him/her, the
Employee agrees that he/she will remain in the continuous service of
SCEcorp or an SCEcorp affiliate as an officer or employee except as he/she
may be prevented from doing so by death, permanent and total disability,
or retirement under the Southern California Edison Company Retirement
Plan, or a successor plan. The restrictions of Section 3(f) of this
Agreement shall apply upon termination of service for reasons other than
the foregoing.
Nothing in this option Agreement shall be deemed to confer on
the Employee any right to continue in the employ of SCEcorp or an SCEcorp
affiliate or interfere in any way with the right of the employer to
terminate his/her employment at any time.
10. NOTICE OF DISPOSITION OF SHARES
Employee agrees that if he/she should dispose of any shares of
stock acquired on the exercise of this option, including a disposition by
sale, exchange, gift or transfer of legal title within six months from the
date such shares are transferred to the Employee, the Employee will notify
SCEcorp promptly of such disposition.
11. AMENDMENT
This Agreement shall be subject to the terms of the Plan as
amended. SCEcorp reserves the right to substitute cash awards
substantially equivalent in value to the option and dividend equivalents.
The option and dividend equivalents which are the subject of this
Agreement may not otherwise be restricted or limited by any Plan amendment
or termination approved after the date of this Agreement without the
Employee's written consent.
page 3
12. FORCE AND EFFECT
The various provisions of this Agreement are severable in their
entirety. Any determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.
13. GOVERNING LAW
This option Agreement shall be construed under the laws of the
State of California.
14. NOTICE
Unless waived by SCEcorp, any notice required under or relating
to this Agreement shall be in writing, with postage prepaid, addressed to:
SCEcorp
Attn: Corporate Secretary
P.O. Box 800
Rosemead, CA 91770
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day and year first above written.
SCEcorp
By:_______________________________
Employee
_______________________________
Attest:
_____________________________
page 4
FORM OF AGREEMENTS FOR 1989-92 AWARDS UNDER OFFICER LONG-TERM INCENTIVE
COMPENSATION PLAN:
NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE
SOUTHERN CALIFORNIA EDISON COMPANY
LONG-TERM INCENTIVE COMPENSATION PLAN
This AGREEMENT is made as of January 2, ____ by and between
SOUTHERN CALIFORNIA EDISON COMPANY ("Company") and ("Employee") .
WHEREAS, the Company maintains the Long-Term Incentive
Compensation Plan (the "Plan") under which the Compensation Committee of
the Board of Directors of the Company (the "Committee") may make Incentive
Awards to such members of the Company's management team as the Committee
may determine, subject to any terms, conditions, or restrictions as it may
deem appropriate; and
WHEREAS, pursuant to the Plan, the Committee has elected to
award nonqualified stock options of SCEcorp Common Stock ("Common Stock")
with corresponding dividend equivalents to certain corporate officers of
the Company and its affiliates;
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, it is hereby agreed as follows:
1. GRANT
The Company hereby grants to the Employee, as a matter of
separate agreement and not in lieu of salary or any other compensation for
services, the right and option, hereafter called the option, to purchase
full shares of authorized Common Stock together with corresponding
dividend equivalents on the terms and conditions herein set forth.
2. PRICE
The purchase price of said shares of Common Stock subject to the
option shall be $_______ per share, such price being the average of the
highest and lowest sale prices of the Common Stock as 'reported in the
western edition of The Wall Street Journal for the New York Stock Exchange
Composite Transactions on January 2, _____, the date of grant.
3. WHEN EXERCISABLE
The option is subject to a three-year vesting period commencing
on the date of this Agreement. The option may not be exercised prior to
one year from the date of this Agreement. Thereafter, the option shall
be exercisable only as follows:
(a) During the twelve-month period beginning one year from
the date of this Agreement, the option may be exercised to the extent of
33-1/3% of the aggregate number of shares originally covered by the
option.
(b) During the following twelve-month period, the option may
be exercised to the extent of an additional 33-1/3% of the aggregate
number of shares originally covered by the option, and to the extent the
right to exercise the option theretofore has vested and has not been
exercised.
(c) At any time after three years from the date of this
Agreement, the option shall be exercisable in full except to the extent
it theretofore shall have been exercised.
(d) The vested portions of the option shall accumulate to the
extent not exercised, and be exercisable by the Employee, in whole or in
part, in any subsequent period but not later than ten years from the date
of this Agreement.
PAGE
(e) If an Employee is removed from a position entitling him
to benefits under the Plan, retires, dies or is permanently and totally
disabled during the three-year vesting period, the option shall vest and
be exercisable to the extent of 1/36th of the grant for each full month
of service during the vesting period. Notwithstanding the foregoing, the
option shall be fully vested and exercisable upon the retirement, death
or permanent and total disability of a member of the Management Committee
of the Company regardless of whether or not he was a member of the
Management Committee on the date of this Agreement.
(f) Upon termination of an Employee for any reason other than
those specified in subsection (e), only that portion of the option which
has vested on or before the anniversary date of this Agreement prior to
the date of termination may be exercised, and that portion, together with
any accumulated dividend equivalents, will be forfeited unless exercised
within 180 days following the date of termination.
(g) Notwithstanding the foregoing, the option and dividend
equivalents may vest in accordance with section 15(b) of the Plan as a
result of certain events, including liquidation of the Company or merger,
reorganization or consolidation of the Company as a result of which the
Company is not the surviving corporation.
4. HOW EXERCISABLE
(a) The Employee shall exercise the option by written notice
to the Company, on the form prescribed by the Company for this purpose,
which shall specify the number of shares to be purchased, and which shall
be accompanied by full payment of the option price for such shares.
Payment shall be in cash, or its equivalent, such as Common Stock,
acceptable to the Company. Until such payment, the Employee shall have
no rights in the optioned stock. The Employee may elect to apply the
accumulated dividend equivalents related to the shares for which the
option is being exercised to the option price for such shares.
(b) The Employee hereby acknowledges that the Securities being acquired
by him hereunder may not be sold, transferred, pledged, hypothecated,
alienated, or otherwise assigned or disposed of by him without either
registration under the Securities Act of 1933 or compliance with the
exemption provided by Rule 144 or another applicable exemption under such
act.
5. TRANSFER AND BENEFICIARY
The option shall not be transferable by the Employee. During
the lifetime of the Employee, the option shall be exercisable only by him.
The Employee may designate a beneficiary who, upon the death of the
Employee, will be entitled to exercise the then vested portion of the
option at any time up to 10 years following the date of this Agreement
subject to the terms and conditions of the Plan and this Agreement.
6. TERMINATION OF OPTION
As set forth in Section 3(f) of this Agreement, in the event of
termination of the employment of the Employee for any cause, other than
retirement, disability or death of the Employee, the option shall
terminate 180 days from the date on which such employment terminated. In
addition, the option may be terminated if the Company elects to substitute
cash awards as provided under Section 11 of this Agreement.
7. DIVIDEND EQUIVALENTS
A Dividend Equivalent Account shall be established on behalf of
the Employee which will be credited with amounts corresponding to the
dividends which would be payable on the number of shares of Common Stock
covered by the option granted to the Employee under this Agreement. Such
amounts will accumulate in this account without interest. Dividend
equivalents will vest and become payable upon the exercise of the option
to purchase the corresponding shares of Common Stock. When the Employee
page 2
exercises any portion of the option granted by this Agreement, the
accumulated dividend equivalents corresponding to the stock covered by the
exercised option will be paid to the Employee at the time the stock
certificates are delivered to the Employee. Dividend equivalents are
payable only in cash, although the Employee may elect to apply this amount
to the option price. If the option granted hereby is not fully exercised
within ten years of the date of this Agreement, the dividend equivalents
corresponding to the shares covered by the unexercised portion of the
option will be forfeited. In accordance with Section 16(d) of the Plan,
the Employee shall have no right or claim to any specific funds, property
or assets of the Company as a result of this Agreement.
8. TAXES
The Company shall have the right to retain and withhold the
amount of taxes required by any government to be withheld or otherwise
deducted and remitted with respect to the exercise of any option or the
receipt or application by the Employee of any dividend equivalent under
this Agreement. In its discretion, the Company may require the Employee
to reimburse the Company for any such taxes required to be withheld by the
Company and may withhold any distribution in whole or in part until the
Company is so reimbursed. In lieu thereof, the Company shall have the
right to withhold from any other cash amounts due from the Company to the
Employee an amount equal to such taxes required to be withheld by the
Company to reimburse the Company for any such taxes or retain and withhold
a number of shares of Common Stock having a market value not less than the
amount of such taxes and cancel (in whole or in part) any such shares so
withheld in order to reimburse the Company for such taxes.
9. AGREEMENT TO CONTINUE IN EMPLOYMENT
In consideration of the granting of such option to him, the
Employee to whom this option is granted agrees that he will remain in the
continuous service of the Company as an officer or employee except as he
may be prevented from doing so by death, permanent and total disability,
or retirement under the Company's Retirement Plan. The restrictions of
Section 3(f) of this Agreement shall apply upon termination of service for
reasons other than the foregoing.
Nothing in this option Agreement shall be deemed to confer on
the Employee any right to continue in the employ of the Company or
interfere in any way with the right of the Company to terminate his
employment at any time.
10. NOTICE OF DISPOSITION OF SHARES
Employee agrees that if he should dispose of any shares of stock
acquired on the exercise of this option, including a disposition by sale,
exchange, gift or transfer of legal title within six months from the date
such shares are transferred to the Employee, the Employee will notify the
Company promptly of such disposition.
11. AMENDMENT
This Agreement shall be subject to the terms of the Plan as
amended. The Company reserves the right to substitute cash awards
substantially equivalent in value to the option and dividend equivalents.
The option and dividend equivalents which are the subject of this
Agreement may not otherwise be restricted or limited by any Plan amendment
or termination approved after the date of this Agreement without the
Employee's written consent.
12. FORCE AND EFFECT
The various provisions of this Agreement are severable in their
entirety. Any determination of invalidity or unenforceability of any one
provision shall have no effect on the continuing force and effect of the
remaining provisions.
page 3
13. GOVERNING LAW
This option Agreement shall be construed under the laws of the
State of California.
14. NOTICE
Unless waived by the Company, any notice required under or
relating to this Agreement shall be in writing, with postage prepaid,
addressed to:
Southern California Edison Company
Attn: Corporate Secretary
P.O. Box 800
Rosemead, CA 91770
IN WITNESS WHEREOF, parties hereto have caused the Agreement to
be executed on the day and year first above written.
SOUTHERN CALIFORNIA EDISON COMPANY
By: _______________________________
_______________________________
Attest:
_______________________________
EXHIBIT 10.22
EDISON INTERNATIONAL
ESTATE AND FINANCIAL PLANNING PROGRAM
As Amended December 13, 1995
I. PURPOSE
The purpose of this Estate and Financial Planning Program (the "Program")
is to provide independent professional estate planning, financial planning
and income tax preparation services to executives of Edison International
and certain affiliates of Edison International.
II. PARTICIPATION
Participation in the Program is voluntary. Participants may elect to
participate in the estate planning, the financial planning and/or the
income tax preparation portions of the Program.
III. ELIGIBILITY
1. Eligibility for this Program is limited to the Executive Officers of
Edison International, the Presidents of Edison International affiliates
whose participation has been approved by the Chief Executive Officer of
Edison International or the Administrator, and such other executives whose
participation has been approved by the Chairman of the Board and Chief
Executive Officer of Edison International. For purposes of this Program,
"Executive Officer" means the Chairman of the Board and Chief Executive
Officer, President, Executive Vice Presidents, Senior Vice Presidents,
Corporate Vice Presidents and the Corporate Secretary of Edison
International and eligible Presidents of an Edison International
affiliate. The spouse (other than the surviving spouse of a deceased
retired Participant) of a Participant will receive services under this
Program only to the extent that his/her estate plan, financial plan, or
tax plan or tax return is directly related to that of the Participant.
2. Eligibility will continue as long as the Participant is an Executive
Officer of Edison International, or an otherwise qualified and approved
Participant, and for five years after retirement as such.
3. Eligibility for this Program will end and benefits will cease upon
termination of employment with Edison International or the affiliate, or
resignation from Edison International or the affiliate. If a Participant
becomes disabled, and because of such disability is unable to continue to
work as an executive of Edison International or the affiliate, eligibility
for this Program will continue throughout the period of disability.
IV. SERVICES PROVIDED
1. Services provided under this Program are paid for by Edison
International, including any start-up fees and expenses. Services provided
will include, but not be limited to, all requested and necessary estate
planning, preparation and implementation of will and trust plans,
financial planning and counseling, and income tax and retirement tax
planning and return preparation. The income tax returns of all Eligible
Participants shall be reviewed by a provider designated by Edison
International regardless of who prepares the return.
2. Services provided under this Program are the only services of this type
paid for by Edison International. Edison International will not pay for
any services in lieu of the services of this Program. A Participant may
PAGE
not elect to receive a cash payment in lieu of services under this
Program. Services provided are only those services directly related to the
estate planning, financial planning and income tax needs of the
Participant and his/her spouse as set forth in Section III, Paragraph 1
(above).
3. Invoices for services performed under this Program must be submitted
with an authorization for payment or reimbursement to the Edison
International Controller.
V. SERVICE PROVIDERS
1. The Chairman of the Board and Chief Executive Officer of Edison
International will (a) designate the professional providers of services
for the Program and/or (b) establish the qualification requirements of
professional providers for those instances when Edison International gives
Participants discretion to select their own.
2. Edison International will periodically inform Participants who the
approved professional providers are under the Program. In addition,
Edison International will specify the qualification requirements which
must be met by professional providers when Participants have selection
discretion.
VI. SERVICES FOLLOWING RETIREMENT
Services under this Program to the Participant and his/her surviving
spouse will continue for five years after the retirement of the
Participant, provided however, that the surviving spouse and the
Participant must have been married on the date of the Participant's
retirement. In the event of the re-marriage of the surviving spouse of the
Participant during the five-year period following retirement, any benefits
under this Program will cease as of the date of the re-marriage. All
benefits under this Program will cease on the anniversary of the fifth
year following the Participant's retirement from the Company.
VII. TAXES
1. Amounts paid on behalf of a Participant under this Program may be
subject to income tax withholding or other deductions as may be required
from time-to-time by federal, state or local law.
2. Any taxes which may result because of the services provided under this
Program are the sole responsibility of the Participant.
VIII. CONFIDENTIALITY
Information obtained in the course of this Program will be held
confidential between the professional service providers and their
individual clients, and such information will not be made available to
Edison International or the affiliate unless required by a court of
competent jurisdiction, or unless such information is required to be
disclosed by law, or by the professional service provider's ethical
standards of conduct.
IX. ADMINISTRATION
1. This Program is administered by the Compensation and Executive
Personnel Committee of the Board of Directors or its designee. Day-to-day
administration of the Program has been delegated to the Executive
Compensation Division of Southern California Edison Company. The Committee
will at all times have full power and authority to interpret, construe,
PAGE
administer, and prospectively to modify, amend, or terminate this Program.
The Committee's interpretations, constructions and actions shall be
binding and conclusive on all persons for all purposes. No member of the
Committee, nor its designee, shall be liable to any person for any action
taken or omitted in connection with this Program.
2. Questions as to the extent of covered services or other routine
administrative matters, and questions regarding the scope of this Program
will be decided by the Edison International General Counsel in
consultation with the Edison International Controller, and as they deem
necessary, with the Chairman of the Board and Chief Executive Officer.
X. NO RIGHT TO CONTINUED EMPLOYMENT
Nothing contained in this document or the Program shall be construed as
conferring upon a Participant the right to continue in the employ of
Edison International or an Edison International affiliate as an Executive
Officer or in any other capacity. A Participant's eligibility to
participate in this Program will continue only so long as the Participant
remains an Executive Officer of the Company, an otherwise qualified and
approved Participant, or a retired Participant subject to the limitations
of the Program.
XI. MISCELLANEOUS
1. If any of the provisions of this Program are held invalid, or held to
violate any law, the remainder of the Program may remain in full force and
effect.
2. Any right to receive services under this Program is hereby expressly
declared to be a personal, nonassignable and nontransferable benefit of
employment related to the Participant's status as an Executive Officer or
other executive of Edison International or an affiliate. In the event of
any attempted assignment, alienation or transfer of such rights contrary
to the provisions of this Program, or upon determination by the Chairman
of the Board and Chief Executive Officer after consultation with the
General Counsel and the Controller that in their good faith opinion the
Participant has abused his/her services under the Program, and after
written notice of such determination has been given to the Participant,
Edison International shall have no further liability for the provision of
or payment for services hereunder.
3. This Program will be governed by the laws of the State of California.
4. This Program is effective on September 21, 1989.
Edison International
Emiko Banfield
______________________________________
PAGE
EXHIBIT 10.25
May 16, 1995
Mr. Stephen E. Frank
164 Spyglass Lane
Jupiter, FL 33477
Dear Steve:
I am pleased to offer you the position of President and Chief Operating
Officer and member of the Board of Directors of Southern California Edison
Company.
Specifically, the offer of employment includes:
1. You will have the title of President and Chief Operating Officer
with a base salary of $500,000 per year for the first year of
employment. Subsequent levels based on periodic performance
reviews.
2. For 1995, as President and Chief Operating Officer you will be
eligible for a target annual incentive award of 60% of your annual
salary, paid in February of the following year. You will receive
$150,000. Annual incentive awards for subsequent years will be
determined by the Compensation Committee. Target award level for
1996: 60% of base compensation. Under consideration for 1996:
maximum award at 90% of base comp (1.5 times the target level).
Actual awards to be based on meeting defined performance objectives.
3. You will receive an initial Long-Term Incentive Award of 60,000
SCEcorp non-qualified stock options with dividend equivalents earned
on a corporate performance basis. The current economic value of
this grant is $300,000. For grants in early 1996 the target total
option value would be 85% of base pay. For example, 85% of $500,000
equals $425,000. Options are valued using the Black-Scholes'
method.
In the future, your annual salary, annual incentive awards, and
long-term incentives will be reviewed on a regular basis at the same
time and in the same manner as all other officers.
4. As an offset to expenses incurred as a result of joining Southern
California Edison, you will receive a one-time lump sum after-tax
payment of $115,000. If you elect, you may defer the full value of
this payment (including the gross-up for current taxes) to your
Deferred Compensation Plan account, with immediate vesting.
5. You will be credited with $250,000 in your Deferred Compensation
Plan account effective on your date of employment, which will vest
upon completion of five years of service. Interest will be credited
according to the terms of the Plan. For 1995, interest will be
credited at 9.72%.
6. You will be credited with one-and-one-quarter additional years of
service credit in the Executive Retirement Plan ("ERP") for each
year of actual service -- up to ten years.
7. You will be immediately credited with 15 days of vacation upon
employment. You will continue to accrue 15 days per year until such
time as service warrants additional vacation based on years of
service.
PAGE
8. To assist you in establishing residence within reasonable commuting
distance, you will receive our full relocation and moving expense
package, including a Miscellaneous Expense Allowance of $20,000 paid
upon completion of your move. We will purchase your home in Florida
at appraised, fair market value of $1,315,000.
9. As an employee of Edison you will be eligible for all programs
offered to employees, subject to the eligibility rules of each
program. In addition, you will receive all executive benefits,
including the Executive Retirement Plan, Deferred Compensation Plan,
Benefit Adjustment Account, Executive Supplemental Survivor Income
Continuation Plan, Executive Supplemental Short-Term Disability
Plan, and Estate and Financial Planning Program, and other executive
perquisites as described.
10. If service is terminated involuntarily (not for cause), you would
receive severance payment equal to 100% of your then current annual
base salary and an annual incentive award. No other severance
payments or benefits except (a) the one-time Deferred Payment Plan
credit ($250,000) would vest pro rata, i.e., 2/5 vested if
involuntary termination at end of second year, (b) the initial
option on 60,000 shares would become fully exercisable if the
involuntary termination takes place after one year of service, and
(c) the additional "service credit years" that have been earned will
count under the ERP in determining whether you have the necessary
five years of service to be eligible to receive retirement benefits.
11. To assist you with transition of your financial planning, tax and
estate planning affairs you will receive a one-time lump sum payment
of $10,000.
12. Two club memberships will be included as an executive benefit.
This offer is contingent upon completion of a physical/drug screen
examination by a qualified medical facility, and completion of a
background verification. This offer is subject to final approval by the
SCE Board of Directors.
I am personally delighted to have the opportunity to work closely with
you, and look forward to our future together. Please feel free to call
me at the office or my home to discuss this further.
Sincerely,
John E. Bryson
John E. Bryson
Accepted: S. E. Frank
--------------------
Date: 5/24/95
------------------------
PAGE
EXHIBIT 11
Edison International
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
(UNAUDITED)
Year Ended December 31,
----------------------------------------------
1995 1994 1993
-------- -------- --------
(In thousands, except per-share amounts)
Consolidated net income. . . . . . . . . . . . . . . $739,136 $680,687 $639,047
Primary and fully diluted weighted average shares. . 446,159 447,799 447,754
======== ======== ========
Primary and fully diluted earnings per share . . . . $1.66 $1.52 $1.43
EXHIBIT 12
EDISON INTERNATIONAL
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(Unaudited)
Year Ended December 31,
----------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
----------------------------------------------------------------------
(In thousands)
EARNINGS BEFORE INCOME TAXES
AND FIXED CHARGES:
Income before interest expense (1) $1,426,257 $1,326,008 $1,325,569 $1,203,577 $1,282,776 $1,346,636
Add:
Taxes on income (2) 506,252 435,853 466,006 353,706 444,635 491,477
Rentals (3) 8,840 7,539 4,460 3,463 3,512 4,018
Allocable portion of interest
on long-term contracts for
the purchase of power (4) 10,600 1,925 1,908 1,890 1,870 1,848
Spent nuclear fuel interest (7) 1,994 1,683 1,339 487 68 0
Interest on partnership indebtness (5 47,054 45,996 38,070 41,091 30,591 34,681
Amortization of previously capitalized
fixed charges 35,399 32,845 24,170 6,760 3,414 2,417
Total earnings before income taxes ---------- ---------- ---------- ---------- ---------- ----------
and fixed charges (A) $2,036,396 $1,851,849 $1,861,522 $1,610,974 $1,766,866 $1,881,077
FIXED CHARGES:
Interest and amortization $ 595,771 $ 581,165 $ 544,593 $ 523,808 $ 561,265 $ 560,641
Rentals (3) 8,840 7,539 4,460 3,463 3,512 4,018
Capitalized interest (6) 21,069 24,053 35,115 73,808 48,996 59,885
Allocable portion of interest on
long-term contracts for
the purchase of power (4) 10,600 1,925 1,908 1,890 1,870 1,848
Spent nuclear fuel interest (7) 1,994 1,683 1,339 487 68 0
Interest on partnership indebtness (5 47,054 45,996 38,070 41,091 30,591 34,681
Subsidiary preferred and preference
stock dividend requirements -
pre-tax basis 72,528 68,435 68,911 63,261 67,480 78,017
---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges (B) $ 757,856 $ 730,796 $ 694,396 $ 707,808 $ 713,782 $ 739,090
RATIO OF EARNINGS TO
FIXED CHARGES (A)/(B): 2.69 * 2.53 * 2.68 2.28 2.48 2.55
========== ========== ========== ========== ========== ==========
(1) Includes allowance for funds used during construction and accrual
of unbilled revenue.
(2) Includes allocation of federal income and state franchise taxes to
other income.
(3) Rentals include the interest factor relating to certain significant
rentals plus one-third of all remaining annual rentals.
(4) Allocable portion of interest included in annual minimum debt
service requirement of supplier.
(5) Includes the allocable portion of interest on project indebtness of
fifty-percent partnership investments by other wholly-owned
subsidiaries of Edison International.
(6) Includes fixed charges associated with the Nuclear Fuel and
capitalized interest of fifty-percent owned partnerships.
(7) Represents interest on spent nuclear fuel disposal obligation.
* Reflects restatement of Mission Group financial statements.
PAGE
EXHIBIT 13
EDISON INTERNATIONAL
(Formerly SCEcorp)
1995
Annual Report
PAGE
Management's Discussion and Analysis of 19
Results of Operations and Financial Condition
Edison International and Subsidiaries
Results of Operations
Earnings
Edison International's (formerly SCEcorp) 1995 earnings per share were
$1.66, compared with $1.52 in 1994, and $1.43 in 1993.
1995 vs. 1994
Southern California Edison Company's (SCE) 1995 earnings were $1.44, up
10 cents from 1994, primarily due to a higher authorized return on common
equity for 1995, partially offset by the financial effect of the 1995
general rate case settlement. SCE also recorded employee severance costs
of 3 cents per share in 1995, compared with 4 cents in 1994. Edison
Mission Energy's (formerly Mission Energy Company) 1995 earnings were 14
cents per share, up 2 cents from 1994, reflecting improved results from
its energy projects. Edison Capital's (formerly Mission First Financial)
1995 earnings were 9 cents per share, up 2 cents from 1994, due to
increased investment activity. The holding company incurred expenses of
1 cent per share in both 1995 and 1994.
1994 vs. 1993
SCE's 1994 earnings were $1.34, down 8 cents from 1993, due to employee
severance expenses and a lower authorized return on common equity,
partially offset by lower maintenance expenses at the San Onofre Nuclear
Generating Station. Edison Mission Energy's (EME) 1994 earnings were 12
cents per share, an 11 cent increase over 1993, as it recorded special
charges of 13 cents per share in 1993, including: 4 cents per share for
costs (unreimbursed development expenses and capitalized interest)
associated with the termination of its investment in the Carbon II project
in Mexico; 2 cents per share for additional reserves for project
development and other costs; and 7 cents per share to recognize the
reduced value of its investment in five geothermal projects. These
geothermal projects have 30-year power-sales contracts that are based on
the market price of natural gas after an initial 10-year fixed-price
period. The market price of natural gas is not expected to escalate as
originally projected, thus EME discontinued recording earnings from these
projects. This decision negatively affected earnings by 5 cents per share
in 1995 and 3 cents per share in 1994, and is expected to continue to
affect earnings in 1996 and possibly beyond. Edison Capital's 1994
earnings were 7 cents per share, up 1 cent from 1993, due to increased
investment activity.
In 1993, Mission Land Company recorded special charges of 2 cents per
share to reflect the reduced value of several real estate projects and
joint venture project restructuring costs and Mission Power Engineering
Company, which ceased operations in 1990, recorded a 3-cent-per-share
charge to settle all remaining litigation for its Coso geothermal project.
Operating Revenue
Electric utility revenue increased slightly over 1994, as a 2.6%
California Public Utilities Commission (CPUC)-authorized rate increase was
partially offset by a decrease in the volume of sales to resale cities and
milder weather in 1995, compared with 1994. Electric utility revenue
increased in 1994, mainly due to a 3.2% CPUC-authorized rate increase and
a 6% increase in sales volume. Retail sales volume increased from warmer
weather in the third quarter of 1994, compared with 1993. Wholesale
volume increased, as SCE's power was priced lower than many other sources
(see Operating Expenses). In 1995, over 98% of electric utility revenue
was from retail sales. Retail rates are regulated by the CPUC and
wholesale rates are regulated by the Federal Energy Regulatory Commission
(FERC).
Due to warm weather during the summer months, electric utility revenue
during the third quarter of each year is materially higher than other
quarters of the year.
The changes in electric utility revenue resulted from:
In millions Year ended December 31, 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
Electric utility revenue -
Rate changes $ 168 $ 112 $ (251)
Sales volume changes (129) 308 (124)
Other 35 (18) 50
------ ------ ------
Total $ 74 $ 402 $ (325)
====== ====== ======
In March 1995, SCE announced that it intends to freeze average rates for
residential, small business and agricultural customers through 1996, and
announced a five-year goal to reduce system average rates by 25% (from
10.7 cents per kilowatt-hour to below 10 cents per kilowatt-hour), after
adjusting for inflation, subject to CPUC approval. In July 1995, SCE
filed expanded rate options and requested the CPUC expedite the filing in
order to offer these services by 1996. SCE does not anticipate that these
proposals will have a material effect on future earnings trends.
Revenue from diversified operations decreased 3% in 1995 and increased 24%
in 1994. The 1995 decline was due to a $124 million decrease at Mission
Land, offset by an $87 million increase at EME. In 1994, Mission Land
sold several of its real estate holdings in its continued effort to exit
the real estate business; no comparable sales were made in 1995. EME's
increase was primarily due to its acquisition of First Hydro Limited in
December 1995 (see Edison Mission Energy's Acquisition of First Hydro
Limited) and an increase in electric revenue from its Roosecote project,
which was out of service for about four months in 1994 due to a
transformer failure and scheduled maintenance. The 1994 increase was
mainly due to an $86 million net increase in EME's electric revenue from
international projects, primarily Loy Yang B and a $17 million increase
in Mission Land's real estate sales revenue.
Operating Expenses
Fuel expense decreased 23% in 1995, primarily reflecting a change in SCE's
fuel mix from 1994. Hydro generation was up significantly in 1995, due
to greater rainfall, resulting in lower gas purchases compared with 1994.
In addition, the San Onofre units were out of service a total of five
months in 1995 for refueling and maintenance, causing a decrease in
nuclear fuel expense. Lower overall gas prices also contributed to the
decrease in SCE's energy costs. The decline at SCE was partially offset
by an increase at EME, as its Roosecote project was out of service for
about four months in 1994 due to the transformer failure and
PAGE
Management's Discussion and Analysis of 20
Results of Operations and Financial Condition
scheduled maintenance. Fuel expense increased 7% in 1994. Although the
overall cost per kilowatt-hour of gas decreased 16% in 1994, gas-powered
generation increased 21% from higher demand for SCE's lower-priced energy.
The cost per kilowatt-hour of nuclear fuel decreased 4% in 1994, while
nuclear generation increased 20% due to a higher than average operating
capacity factor at San Onofre.
Purchased-power expense increased slightly in 1995 and 1994. SCE makes
federally required power purchases from nonutility generators based on
contracts with CPUC-mandated pricing. Energy prices under these contracts
are generally higher than other energy sources, and for 1995, SCE paid
about $1.8 billion (including energy and capacity payments) more for these
power purchases than the cost of power available from other sources.
Provisions for regulatory adjustment clauses increased in 1995 and 1994,
as CPUC-authorized fuel and purchased-power cost estimates exceeded SCE's
actual energy costs. SCE's actual energy costs were lower than estimated
in 1995 due to the increase in hydro generation and lower gas prices. In
1994, SCE's actual energy costs were lower than estimated due to lower
overall gas prices and a higher than average operating capacity factor at
San Onofre.
Other operating expenses include employee severance charges at SCE of $25
million in 1995 and $30 million in 1994. As SCE positions itself for a
more competitive operating environment, it is anticipated that workforce
reductions will continue to occur. In 1995, SCE severed 567 employees
representing total annualized labor costs of about $42 million. SCE
expects a substantial portion of these labor cost savings to reduce other
operating expenses in 1996. Severance costs are comprised of cash
payments for services and a non-cash benefit component. Excluding
severance charges, other operating expenses decreased in 1995 and 1994,
primarily due to operating efficiencies at SCE. In addition, the 1995
decline includes a $103 million decrease at Mission Land as it sold
several of its real estate holdings in 1994 in its continued effort to
exit the real estate business, partially offset by an increase at EME from
its acquisition of First Hydro (see Edison Mission Energy's Acquisition
of First Hydro Limited).
Maintenance expense increased 8% in 1995, due to the scheduled refueling
and maintenance outages at San Onofre in 1995. Maintenance expense
decreased 9% in 1994, primarily from the San Onofre units operating at a
higher than average capacity factor in 1994.
Other Income and Deductions
The provision for rate phase-in plan reflects a CPUC-authorized, 10-year
rate phase-in plan for Palo Verde Nuclear Generating Station, as further
discussed in Note 1 to the Consolidated Financial Statements. The
provision is a non-cash offset to the collection of deferred revenue.
Interest income increased 59% in 1995, primarily from higher interest
rates; higher investment balances reflecting the decline in dividend
payments, which began in June 1994; and an increase in EME's loans to
projects. Interest income increased 14% in 1994, mainly due to higher
interest rates.
Minority interest increased in 1994 as EME began reporting its 51%
interest in Loy Yang B Unit 1 under the full consolidation method; prior-
year financial statements have been restated.
Other nonoperating income decreased 58% in 1995 and more than doubled in
1994. In 1994, SCE received CPUC-authorized incentive awards of $5
million for nuclear plant performance and $11 million for energy
conservation programs, and an environmental insurance settlement. In
addition, SCE realized a 1994 benefit resulting from the effect of a drop
in Edison International's stock price on its stock option plan. In 1994,
EME received a $19 million settlement for a business interruption
insurance claim related to the Roosecote transformer failure. In 1993,
Mission Power Engineering took a 3-cent-per-share charge to settle all
remaining litigation related to its Coso project.
Interest and Other Expenses
Other interest expense increased 22% in 1994, mainly due to rising
interest rates and increased short-term borrowings.
Capitalized interest increased in 1995, primarily due to an increase in
construction activity and debt levels at EME's Loy Yang B Unit 2, Brooklyn
Navy Yard and Paiton projects. In 1994, capitalized interest decreased
mostly due to EME's Loy Yang B Unit I project, which began commercial
operation in October 1993.
Dividends on subsidiary preferred securities increased 15% in 1995, due
to EME's issuance of $87 million in preferred securities in late 1994 and
$63 million in August of 1995, partially offset by SCE's $75 million
preferred stock redemption in 1995.
Financial Condition
Edison International's liquidity is primarily affected by debt maturities,
dividend payments, capital expenditures and, in 1995, EME's acquisition
of First Hydro Limited. Capital resources include cash from operations
and external financings.
In June 1994, Edison International lowered its quarterly common stock
dividend by 30%, as the result of uncertainty of future earnings levels
arising from the changing nature of California's electric utility
regulation. Edison International's dividends to earnings ratio (payout
ratio) for 1995 was 60%, compared with the utility industry average of
about 75%. The cash flow coverage of dividends for 1995 increased to 4.8
times from 3.8 times in 1994 and 3.2 times in 1993, primarily from the
lower dividend rate.
In January 1995, Edison International authorized the repurchase of up to
$150 million of its common stock; repurchases of 4.2 million shares ($70
million) through February 2, 1996, were funded by dividends from Edison
International subsidiaries.
Cash Flows from Operating Activities
Net cash provided by operating activities totaled approximately $2.1
billion in both 1995 and 1994, and $2.0 billion in 1993. Cash from
operations exceeded capital requirements for all years presented.
PAGE
21
Edison International and Subsidiaries
Cash Flows from Financing Activities
At December 31, 1995, Edison International and its subsidiaries had $1.8
billion of borrowing capacity available under lines of credit totaling
$2.3 billion. SCE had available lines of credit of $1.4 billion, with
$900 million for short-term debt and $500 million for the long-term
refinancing of its variable-rate pollution-control bonds. The holding
company had a $350 million, one-year term, line of credit for short-term
debt, which was fully utilized in December 1995 to assist in the financing
of EME's acquisition of First Hydro (see Edison Mission Energy's
Acquisition of First Hydro Limited). The nonutility companies had lines
of credit of $600 million, with $419 million of borrowing capacity
available to finance general cash requirements. Edison International's
unsecured revolving lines of credit are at negotiated or bank index rates
with various expiration dates; the majority have five-year terms.
SCE's short-term debt was used mainly to finance fuel inventories and
general cash requirements. EME uses short-term debt and available credit
lines mainly for construction projects until long-term construction or
project loans are secured. Long-term debt is used mainly to finance
capital expenditures. SCE's external financings are influenced by market
conditions and other factors, including limitations imposed by its
articles of incorporation and trust indenture. As of December 31, 1995,
SCE could issue approximately $7.9 billion of additional first and
refunding mortgage bonds and $4.2 billion of preferred stock at current
interest and dividend rates.
EME owns, through an indirect subsidiary, 50% of the Brooklyn Navy Yard
project; however, it is initially funding all of the required equity and
debt ($420 million) for the project; about $300 million had been spent
through December 31, 1995. In December 1995, EME provided a guarantee as
a condition of obtaining a $254 million tax-exempt financing for the
project. Consolidated Edison Company of New York, which has contracted
to buy most of the project's power, raised concerns regarding the timing
of certain performance milestones and whether the plant's configuration
and related performance comply with the terms of the contract. EME and
its project partner are attempting to resolve these issues in a manner
satisfactory to the project and Consolidated Edison. In addition, EME,
its project partner and Consolidated Edison are continuing to evaluate
various options with respect to the ongoing development of the project.
EME believes that its anticipated returns on the project may be
substantially less than it had originally estimated.
In April 1995, EME and its partners completed a $1.8 billion financing
for the Paiton power project in Indonesia. EME has firm commitments to
make equity and other contributions to its projects of $303 million and
contingent obligations to make additional contributions to its projects
of $552 million. Included in EME's contingent obligations is its
guarantee related to the Brooklyn Navy Yard project (discussed above); the
majority of the remaining amounts are for the expected four-year
construction period of the Paiton project. EME may incur additional
obligations to make equity and other contributions to projects in the
future. EME believes it will have sufficient liquidity to meet these
equity requirements from cash provided by operating activities, proceeds
from the repayment of loans to energy projects, funds available from EME's
revolving line of credit and additional corporate borrowings.
California law prohibits SCE from incurring or guaranteeing debt for its
nonutility affiliates. Additionally, the CPUC regulates SCE's capital
structure, limiting the dividends it may pay Edison International. At
December 31, 1995, SCE had the capacity to pay $528 million in additional
dividends and continue to maintain its authorized capital structure.
These restrictions are not expected to affect Edison International's
ability to meet its cash obligations.
Cash Flows from Investing Activities
The primary uses of cash for investing activities were additions to
property and plant, EME's acquisition of First Hydro Limited, EME's
investments in partnerships and unconsolidated subsidiaries, and funding
of nuclear decommissioning trusts. As further discussed in Note 9 to the
Consolidated Financial Statements, decommissioning costs are accrued and
recovered in rates over the term of each nuclear generating facility's
operating license through charges to depreciation expense. SCE estimates
that it will spend approximately $12.7 billion to decommission its nuclear
facilities, primarily between 2013-2070. This estimate is based on SCE's
current-dollar decommissioning costs ($1.8 billion), escalated using a
6.65% rate and an earnings assumption on trust funds ranging from 5.5% to
5.75%. These amounts are expected to be funded from independent
decommissioning trusts, which receive SCE contributions of approximately
$100 million per year (until decommissioning begins). The Financial
Accounting Standards Board has issued an exposure draft related to
accounting practices for removal costs, including decommissioning of
nuclear power plants. SCE does not expect that the accounting changes
proposed in the exposure draft would have an adverse effect on its results
of operations due to its current and expected future ability to recover
these costs through customer rates.
Cash used for the nonutility companies' investing activities was $1.2
billion in 1995, $291 million in 1994 and $289 million in 1993. The 1995
increase was due to EME's acquisition of First Hydro (see Edison Mission
Energy's Acquisition of First Hydro Limited).
Edison International's risk management policy allows the use of derivative
financial instruments to mitigate risk. EME has attempted to mitigate
the risk of interest rate fluctuations by arranging for fixed rate or
variable rate financing with interest rate swaps or other hedging
mechanisms for the majority of its corporate and project financings. As
a result of interest rate hedging mechanisms, interest expense increased
$7 million in 1995 and $8 million in both 1994 and 1993. The maturity
date of several of EME's interest rate swap agreements do not correspond
to the term of the underlying debt. EME will continuously examine
interest rate shifts to determine whether or not the swap positions will
be modified based on current and foreseeable market conditions. EME does
not anticipate a material adverse effect on financial position, results
of operations or liquidity as a result of interest rate fluctuations.
PAGE
Management's Discussion and Analysis of 22
Results of Operations and Financial Condition
As EME continues to expand into foreign markets, fluctuations in foreign
currency exchange rates will continue to affect the amount of its equity
contributions to, distributions from, and results of operations for its
foreign projects. Projects in the United Kingdom (U.K.) sell their energy
and capacity production through a centralized electricity pool, which
establishes a half-hourly clearing price for electrical energy and
capacity. The pool price is extremely volatile, and can vary by a factor
of ten or more over the course of a few hours due to the large
differentials in demand according to the time of day. EME attempts to
mitigate the market risk of the pool for the First Hydro project by
entering into contracts for differences (electricity rate swap
agreements), where payments are made when pool selling prices rise above
the price specified in the contract. These contracts act as a means of
stabilizing production revenue by removing net exposure to pool price
volatility. The Roosecote project has avoided the pool price volatility
by entering into a long-term power-sales contract which provides for
contract pricing. First Hydro, at a minimum, issues sufficient contracts
to cover annual fixed costs of the project. First Hydro's electric
revenue was decreased by $29 million in 1995, as a result of electricity
rate swap agreements.
EME has hedged its exposure to fluctuations in foreign exchange rates,
where it deems appropriate, through offsetting obligations denominated in
foreign currencies, and indexing underlying project agreements to U.S.
dollars or other indices reasonably expected to correlate with foreign
exchange movements, as discussed below.
Both First Hydro and the Roosecote projects are expected to have certain
levels of "self-hedging" characteristics. First Hydro's principal sources
of revenue include pool trading income, electricity rate swap agreements
income and ancillary services income. Both the ancillary service
contracts (negotiated annually) and capacity contracts for differences
(mostly one to three years) provide for some escalation of payments
according to the inflation index for the U.K. In addition, EME's exposure
to currency fluctuations is limited to its equity investment return, as
First Hydro's revenue and corresponding operating costs are incurred in
the local currency. Based on historical currency data and present
forecasts, EME believes the exchange rate for pounds sterling will not
significantly decrease below the exchange rate at the acquisition date of
the project. EME will reevaluate its position, if there is weakening in
the exchange rate for pound sterling which would result in significant
exposure for EME's results of operations.
The Roosecote project's power-sales contract provides for escalation of
capacity payments according to an inflation index for the U.K. According
to the theory of purchasing power parity, long-term movements in foreign
exchange rates can be explained in substantial part by differences in
inflation between the two countries. Thus, the exchange rate for the
pound sterling is expected to move inversely to the inflation rate. There
can be no assurance, however, that any weakening in the exchange rate for
the pound sterling would be fully offset by increased revenue under the
power-sales agreements.
The Loy Yang B project in Australia has been hedged on a medium-term basis
with a 200 million Australian dollar loan. The seven-year amortization
period for the loan was structured to coincide with the estimated
Australian dollar cash distributions from the project, resulting in an
approximate matching of the cash inflows and outflows in the Australian
currency to minimize exchange rate risk.
Projected Capital Requirements
Edison International's projected capital requirements for the next five
years are: 1996-$895 million; 1997-$754 million; 1998-$647 million; 1999-
$689 million; and 2000-$673 million.
Long-term debt maturities and sinking fund requirements for the next five
years are: 1996-$25 million; 1997-$551 million; 1998-$599 million; 1999-
$408 million; and 2000-$391 million.
Regulatory Matters
On January 10, 1996, the CPUC issued its decision on SCE's 1995 general
rate case. The decision affirmed the CPUC's interim order to reduce 1995
operating revenue by $67 million, but decreased 1996 operating revenue by
an additional $9 million, which includes a $44 million decrease for
operating and maintenance expenses. The decision also authorized recovery
of SCE's remaining investment (approximately $2.7 billion) in San Onofre
Units 2 and 3 at a reduced rate of return (7.34% compared to the current
9.55%), over an eight-year period, beginning in the second quarter of
1996. Future operating costs and incremental capital expenditures at San
Onofre are subject to an incentive pricing plan, where SCE receives about
4 cents per kilowatt-hour. Profits or losses resulting from cost
differences from the incentive price will flow through to shareholders.
Beginning in 2004, after SCE's investment is fully recovered, it would be
required to share equally with ratepayers the benefits received from
operation of the units.
The CPUC's 1996 cost-of-capital proceeding authorized an increase to SCE's
equity ratio from 47.75% to 48% and authorized SCE an 11.6% return on
common equity, compared with 12.1% for 1995 and 11% for 1994. This
decision, excluding the effects of other rate actions, would reduce 1996
earnings by approximately 4 cents per share.
A CPUC decision related to SCE's 1996 authorized revenue for fuel and
purchased power is pending. At issue is the treatment of a $237 million
overcollection in the energy cost adjustment clause (ECAC). In SCE's May
1995 ECAC filing, it requested that refund of the overcollection be
deferred until 1997 for rate-stabilization purposes. The CPUC's Division
of Ratepayer Advocates (DRA) filed testimony requesting the overcollection
be refunded over 12 months. Subsequent to its original filing, the DRA
filed comments supporting refund of the overcollection by a one-time
credit applied to customer bills in 1996. In January 1996, an
administrative law judge (ALJ) proposed decision recommended that the ECAC
overcollection be refunded over 12 months in 1996; however, a CPUC
commissioner submitted an alternate proposal requesting adoption of the
one-time credit. On February 6, 1996, SCE filed comments supporting the
alternate proposal. If the CPUC adopts the alternate proposal, SCE's 1996
CPUC-authorized revenue, including the effects of other rate actions,
would be re-
PAGE
23
Edison International and Subsidiaries
duced by $338 million, or 4.4%, and SCE would be required to credit
customer bills in the second quarter of 1996. If the CPUC adopts the ALJ
proposed decision, SCE's 1996 CPUC-authorized revenue would decrease by
$575 million, or 7.5%. The reduction in authorized revenue resulting from
this matter will not impact 1996 earnings as these costs receive balancing
account treatment; however, cash flows in 1996 will be affected. SCE
believes it will have sufficient liquidity for the 1996 refund from cash
provided by operating activities, projected investment balances and
available lines of credit. A final CPUC decision is expected in February
1996.
A 1994 CPUC decision stated that SCE was liable for expenditures related
to a 1985 accident at the Mohave Generating Station. The CPUC ordered a
second phase of this proceeding to quantify the disallowance. On December
22, 1995, SCE and the DRA filed a $38 million settlement agreement,
subject to CPUC approval. This agreement has been fully reflected in the
financial statements.
In October 1994, the CPUC authorized SCE to accelerate recovery of its
nuclear plant investments by $75 million per year. The rate impact of
this accelerated cost recovery is offset by a corresponding deceleration
in recovery of transmission and distribution facilities through revised
depreciation estimates over their remaining useful lives. The 1995
general rate case decision authorized further accelerated recovery of San
Onofre.
In 1994, the CPUC ordered the California utilities to proceed with an
energy auction to solicit bids for new contracts with unregulated power
producers. This decision would have forced SCE to purchase 686 MW of new
power at fixed prices starting in 1997, costing SCE customers $14 billion
more than other sources over the lives of the contracts. SCE negotiated
agreements, at substantially lower costs than those mandated by auction,
with eight unregulated power producers, representing 648 MW of the 686 MW
mandated. These agreements, which are subject to CPUC approval, would
save SCE customers about 85% of anticipated overpayments compared with the
mandated contracts. After extensive review by the CPUC and the FERC, the
CPUC issued a ruling supporting resolution of the energy auction through
negotiated settlements and set criteria to be used to evaluate the
settlements. SCE has evaluated the impact of these criteria on its
existing settlement agreements and, upon conclusion of settlement
negotiations with the remaining parties, will file an application
requesting CPUC approval (expected in 1996).
Competitive Environment
SCE currently operates in a highly regulated environment in which it has
an obligation to provide electric service to customers in return for an
exclusive franchise within its service territory. This regulatory
environment is changing. The generation sector has experienced
competition from nonutility power producers and regulators are
restructuring California's electric utility regulation.
As further discussed in Note 2 to the Consolidated Financial Statements,
on December 20, 1995, the CPUC issued its restructuring decision, which
it had been considering since April 1994. The decision reforms
California's electric utility regulation by creating a market structure
that, over a transition period, would open the electric generation market
to competition and offer customer choice. The transition period would
begin January 1, 1998, with all consumers participating by 2003. Key
elements of the decision include:
o Creation of an independent power exchange to manage electric supply and
demand. California's investor-owned utilities would be required to
purchase from and sell to the exchange, all of their power during the
transition period, while other generators could voluntarily participate.
o Creation of an independent system operator to control intrastate
transmission access.
o Availability of customer choice through time-of-use rates, direct
customer access to generation providers with transmission arrangements
through the system operator, and customer arranged "contracts for
differences" to manage price fluctuations from the power exchange.
o Recovery of costs to transition to a competitive market (utility
investments and obligations incurred to serve customers under the existing
regulatory framework) through a non-bypassable charge, applied to all
customers, called the competition transition charge (CTC).
o CPUC-established incentives to encourage voluntary divestiture (through
spin-off or sale to an unaffiliated entity) of at least 50% of utilities'
gas-fueled generation to address market power issues. SCE must file
within 90 days its plan to address these issues.
o Performance-based ratemaking (PBR) for those utility services not
subject to competition. SCE had originally filed for a PBR mechanism in
1993, requesting a revenue-indexing formula to combine operating expenses
and capital-related costs into a single index to determine most of its
revenue (excluding fuel) from 1996-2000. The filing was subsequently
divided between transmission and distribution, and power generation.
Hearings concluded on the transmission and distribution phase in December
1994. The CPUC's restructuring decision requested comments addressing
whether SCE's transmission and distribution PBR proposal should be amended
or reviewed as filed. On January 19, 1996, SCE requested the CPUC approve
its PBR as filed. SCE expects to file its proposal for the power
generation phase in July 1996.
SCE estimates its potential costs to transition to a competitive market
(CTC) at approximately $9.3 billion (net present value), based on incurred
costs, and forecasts of future costs and assumed market prices. These
costs are mainly for qualifying facility contracts, regulatory assets and
other costs incurred (whose recovery has been deferred by the CPUC) to
provide service to customers, and costs pertaining to certain generating
plants. Changes in the assumed market price could require material
revisions to SCE's estimated CTC.
Since restructuring California's electric service industry will have
widespread impact, federal participation and oversight will be required.
The CPUC is seeking to build a California consensus involving the
legislature, governor, public and municipal utilities, and customers, and
to have this consensus in place when approval is sought from the FERC.
In addition, the CPUC will prepare an environmental impact report. If the
CPUC's restructuring
PAGE
Management's Discussion and Analysis of
Results of Operations and Financial Condition 24
decision is upheld and implemented as outlined, SCE would be allowed to
recover its CTC (subject to a lower return on equity) and would continue
to apply accounting standards that recognize the economic effects of rate
regulation. The effect of such an outcome would not be expected to
materially affect SCE's results of operations or financial condition
during the transition period.
If revisions are made to the CPUC's restructuring decision that result in
SCE no longer meeting the criteria to apply regulatory accounting
standards to its generation operations, SCE may be required to write off
its recorded generation-related regulatory assets. At December 31, 1995,
these amounts totaled $1.4 billion, excluding balancing account
overcollections of $237 million, which are expected to be refunded to
customers in the near term. Although depreciation-related differences
could result from applying a regulatory prescribed depreciation method
(straight-line, remaining-life method) rather than a method that would
have been applied absent the regulatory process, SCE believes that the
depreciable lives of its generation-related assets would not vary
significantly from that of an unregulated enterprise, as the CPUC bases
depreciable lives on periodic studies that reflect the assets' physical
useful life. SCE also believes that any depreciation-related differences
would be recovered through the CTC.
Additionally, if revisions are made to the CPUC's restructuring decision
that result in all or a portion of the CTC not being probable of recovery,
SCE could have additional write-offs associated with these costs if they
are not recovered through another regulatory mechanism. At this time,
Edison International cannot predict when, or if, a consensus on
restructuring will be reached, what revisions will ultimately be made in
the CPUC's restructuring plan in subsequent proceedings or implementation
phases, or the effect, after the transition period, that competition will
have on its results of operations or financial condition.
FERC Restructuring Proposal
In March 1995, the FERC proposed rules which would require utilities to
provide wholesale open transmission access to the nation's interstate
transmission grid, while allowing them to recover stranded costs
associated with open access. The proposal defines stranded costs as
legitimate, prudent and verifiable costs incurred to provide service to
customers that would subsequently become unbundled wholesale transmission
service customers of the utility. SCE supports the basic principles in
the FERC's proposal and filed comments in August 1995. A final FERC
decision is expected in mid-1996.
Edison Mission Energy's Acquisition of First Hydro Limited
In December 1995, EME acquired, through an indirect subsidiary, all of the
issued shares of First Hydro Limited. First Hydro is an independent power
company located in the U.K. First Hydro's principal assets consist of two
pumped storage electric power stations with a combined capacity of 2,088
megawatts. This $1 billion acquisition was financed through a 400 million
pound sterling ($600 million) credit facility, a $350 million capital
contribution from Edison International, and the remainder from EME's
working capital and credit lines. On January 17, 1996, EME replaced the
400 million pound sterling credit facility with 9% guaranteed pound
sterling secured bonds, due 2021. The consolidated statements of income
include operating results of First Hydro for the month of December 1995.
Environmental Protection
Edison International is subject to numerous environmental laws and
regulations, which require it to incur substantial costs to operate
existing facilities, construct and operate new facilities, and mitigate
or remove the effect of past operations on the environment.
As further discussed in Note 10 to the Consolidated Financial Statements,
Edison International records its environmental liabilities when site
assessments and/or remedial actions are probable and a range of reasonably
likely cleanup costs can be estimated. Edison International reviews its
sites and measures the liability quarterly, by assessing a range of
reasonably likely costs for each identified site. Unless there is a
probable amount, Edison International records the lower end of this
reasonably likely range of costs.
Edison International's recorded estimated minimum liability to remediate
its 62 identified sites (58 at SCE and 4 at EME) was $114 million at
December 31, 1995, and 1994. One of SCE's sites, a former pole-treating
facility, is considered a federal Superfund site and represents 71% of
Edison International's recorded liability. The ultimate costs to clean
up Edison International's identified sites may vary from its recorded
liability due to numerous uncertainties inherent in the estimation
process. Edison International believes that due to these uncertainties,
it is reasonably possible that cleanup costs could exceed its recorded
liability by up to $215 million. The upper limit of this range of costs
was estimated using assumptions least favorable to Edison International
among a range of reasonably possible outcomes.
The CPUC allows SCE to recover environmental-cleanup costs at 24 of its
sites, representing $90 million of Edison International's recorded
liability, through an incentive mechanism. Under this mechanism, SCE will
recover 90% of cleanup costs through customer rates; shareholders fund the
remaining 10%, with the opportunity to recover these costs through
insurance and other third-party recoveries. SCE has settled insurance
claims with several carriers, and is continuing to pursue additional
recovery. Costs incurred at SCE's remaining 34 sites are expected to be
recovered through customer rates. SCE has recorded regulatory assets of
$104 million for its estimated minimum environmental-cleanup cots expected
to be recovered through customer rates.
Edison International's identified sites include several sites for which
there is a lack of currently available information, including the nature
and magnitude of contamination and the extent, if any, that Edison
International may be held responsible for contributing to any costs
incurred for remediating these sites. Thus, no reasonable estimate of
cleanup costs can be made for these sites at this time.
Edison International expects to clean up its identified sites over a
period of up to 30 years. Remediation costs in each of the next several
years are expected to range from $4 million to $8 million. Recorded costs
for 1995 were $3 million.
PAGE
25
Edison International and Subsidiaries
In 1994, SCE utilized an estimating technique to quantify its potential
liability for environmental cleanup in an effort to obtain a reasonably
possible objective and reliable estimate of environmental cleanup. During
1995, EME completed a similar review of its sites where known
contamination and potential liability exist, and is currently undergoing
a legal review of the indemnification language of each site's contractual
agreements, which is expected to be complete in early 1996. This review
could result in an increase to Edison International's number of identified
sites and/or its estimated minimum liability in the near term.
Based on currently available information, Edison International believes
it is not likely that it will incur amounts in excess of the upper limit
of the estimated range and, based upon the CPUC's regulatory treatment of
environmental-cleanup costs, Edison International believes that costs
ultimately recorded will not have a material adverse effect on its results
of operations or financial condition. There can be no assurance, however,
that future developments, including additional information about existing
sites or the identification of new sites, will not require material
revisions to such estimates.
The 1990 federal Clean Air Act requires power producers to have emissions
allowances to emit sulfur dioxide. Power companies receive emissions
allowances from the federal government and may bank or sell excess
allowances. SCE expects to have excess allowances under Phase II of the
Clean Air Act (2000 and later). The act also calls for a study to
determine if additional regulations are needed to reduce regional haze in
the southwestern U.S. In addition, another study is underway to determine
the specific impact of the effect of air contaminant emissions from the
Mohave Coal Generating Station on visibility in Grand Canyon National
Park. The potential effect of these studies on sulfur dioxide emissions
regulations for Mohave is unknown.
Edison International's projected capital expenditures to protect the
environment are $1.5 billion for the 1996-2000 period, mainly for
aesthetics treatment, including undergrounding certain transmission and
distribution lines.
The possibility that exposure to electric and magnetic fields (EMF)
emanating from power lines, household appliances and other electric
sources may result in adverse health effects is receiving increased
attention. The scientific community has not yet reached a consensus on
the nature of any health effects of EMF. However, the CPUC has issued a
decision which provides for a rate-recoverable research and public
education program conducted by California electric utilities, and
authorizes these utilities to take no-cost or low-cost steps to reduce EMF
in new electric facilities. SCE is unable to predict when or if the
scientific community will be able to reach a consensus on any health
effects of EMF, or the effect that such a consensus, if reached, could
have on future electric operations.
New Accounting Standard
Effective January 1996, Edison International adopted a new accounting
standard that requires impairment losses to be recognized when the book
value of an asset exceeds its future cash flows (undiscounted). The
standard also imposes stricter criteria for the retention of regulatory-
created assets, requiring that they continue to be probable of recovery,
rather than concluding they are not probable of loss. Adoption of this
standard did not materially affect Edison International's results of
operations or financial condition.
Quarterly Financial Data
Unaudited
1995
In millions, -----------------------------------------------------------
except per-share amounts Total Fourth Third Second First
- ------------------------ ----- ------ ----- ------ -----
Operating revenue $8,405 $2,052 $2,670 $1,861 $1,822
Operating income 1,377 301 448 310 318
Net income 739 138 288 160 153
Per share:
Earnings 1.66 .31 .65 .36 .34
Dividends declared 1.00 .25 .25 .25 .25
Common stock prices:
High $ 18 $ 18 $ 18 $ 18 $16-7/8
Low 14-3/8 14-7/8 16-3/8 15-3/8 14-3/8
Close 17-5/8 17-5/8 17-3/4 17-1/8 15-5/8
1994
In millions, -----------------------------------------------------------
except per-share amounts Total Fourth Third Second First
- ------------------------ ----- ------ ----- ------ -----
Operating revenue $8,345 $2,042 $2,678 $1,878 $1,747
Operating income 1,299 291 430 300 278
Net income 681 134 273 142 132
Per share:
Earnings 1.52 .30 .61 .32 .30
Dividends declared 1.105 .25 .25 .25 .355
Common stock prices:
High $20-3/8 $15-5/8 $14-1/4 $16-3/4 $20-3/8
Low 12-1/2 12-7/8 12-1/2 12-5/8 16-1/8
Close 14-5/8 14-5/8 12-7/8 12-7/8 16-1/2
PAGE
26
Responsibility for Financial Reporting
The management of Edison International is responsible for the integrity
and objectivity of the accompanying financial statements. The statements
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis and are based, in part, on
management estimates and judgment.
Edison International and its subsidiaries maintain systems of internal
control to provide reasonable, but not absolute, assurance that assets are
safeguarded, transactions are executed in accordance with management's
authorization and the accounting records may be relied upon for the
preparation of the financial statements. There are limits inherent in all
systems of internal control, the design of which involves management's
judgment and the recognition that the costs of such systems should not
exceed the benefits to be derived. Edison International believes its
systems of internal control achieve this appropriate balance. These
systems are augmented by internal audit programs through which the
adequacy and effectiveness of internal controls, policies and procedures
are monitored, evaluated and reported to management. Actions are taken
to correct deficiencies as they are identified.
Edison International's independent public accountants, Arthur Andersen
LLP, are engaged to audit the financial statements in accordance with
generally accepted auditing standards and to express an informed opinion
on the fairness, in all material respects, of Edison International's
reported results of operations, cash flows and financial position.
As a further measure to assure the ongoing objectivity of financial
information, the audit committee of the board of directors, which is
composed of outside directors, meets periodically, both jointly and
separately, with management, the independent public accountants and
internal auditors, who have unrestricted access to the committee. The
committee recommends annually to the board of directors the appointment
of a firm of independent public accountants to conduct audits of its
financial statements; considers the independence of such firm and the
overall adequacy of the audit scope and Edison International's systems of
internal control; reviews financial reporting issues; and is advised of
management's actions regarding financial reporting and internal control
matters.
Edison International and its subsidiaries maintain high standards in
selecting, training and developing personnel to assure that their
operations are conducted in conformity with applicable laws and are
committed to maintaining the highest standards of personal and corporate
conduct. Management maintains programs to encourage and assess compliance
with these standards.
Richard K. Bushey John E. Bryson
Richard K. Bushey John E. Bryson
Vice President Chairman of the Board
and Controller and Chief Executive Officer
February 2, 1996
Report of Independent Public Accountants
To the Shareholders and the Board of Directors, Edison International:
We have audited the accompanying consolidated balance sheets of Edison
International (a California corporation) and its subsidiaries as of
December 31, 1995, and 1994, and the related consolidated statements of
income, retained earnings and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are the
responsibility of Edison International's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Edison International
and its subsidiaries as of December 31, 1995, and 1994, and the results
of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in Notes 5 and 6 to the financial statements, and as required
by generally accepted accounting principles, Edison International changed
its methods of accounting for income taxes and postretirement benefits
other than pensions in 1993.
ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Los Angeles, California
February 2, 1996
PAGE
27
Consolidated Statements of Income
Edison International and Subsidiaries
In millions, except per-share amounts Year ended December 31, 1995 1994 1993
- ------------------------------------- ----------------------- ---- ---- ----
Electric utility revenue $7,873 $7,799 $7,397
Diversified operations 532 546 442
------ ------ ------
Total operating revenue 8,405 8,345 7,839
------ ------ ------
Fuel 694 896 837
Purchased power 2,582 2,563 2,499
Provisions for regulatory adjustment clauses -- net 230 55 (287)
Other operating expenses 1,411 1,563 1,590
Maintenance 359 332 363
Depreciation and decommissioning 1,014 945 924
Income taxes 528 481 465
Property and other taxes 210 211 220
------ ------ ------
Total operating expenses 7,028 7,046 6,611
------ ------ ------
Operating income 1,377 1,299 1,228
------ ------ ------
Provision for rate phase-in plan (122) (137) (137)
Allowance for equity funds used during construction 19 14 20
Interest income 65 41 36
Minority interest (48) (46) (4)
Other nonoperating income -- net 41 97 44
------ ------ ------
Total other income (deductions) -- net (45) (31) (41)
------ ------ ------
Income before interest and other expenses 1,332 1,268 1,187
------ ------ ------
Interest on long-term debt 539 527 528
Other interest expense 81 79 65
Allowance for borrowed funds used during construction (14) (14) (16)
Capitalized interest (60) (46) (70)
Dividends on subsidiary preferred securities 47 41 41
------ ------ ------
Total interest and other expenses -- net 593 587 548
------ ------ ------
Net income $ 739 $ 681 $ 639
====== ====== ======
Weighted-average shares of common stock outstanding 446 448 448
Earnings per share $ 1.66 $1.52 $1.43
Consolidated Statements of Retained Earnings
In millions, except per-share amounts Year ended December 31, 1995 1994 1993
- ------------------------------------- ----------------------- ---- ---- ----
Balance at beginning of year $3,452 $3,266 $3,263
Net income 739 681 639
Dividends declared on common stock (446) (495) (636)
Stock repurchase and retirement (45) -- --
------ ------ ------
Balance at end of year $3,700 $3,452 $3,266
====== ====== ======
Dividends declared per common share $ 1.00 $1.105 $1.415
The accompanying notes are an integral part of these financial statements.
PAGE
28
Consolidated Balance Sheets
In millions December 31, 1995 1994
- ----------- ------------ ---- ----
ASSETS
Utility plant, at original cost $19,850 $19,122
Less -- accumulated provision for depreciation and decommissioning 8,569 7,710
------- -------
11,281 11,412
Construction work in progress 728 907
Nuclear fuel, at amortized cost 139 98
------- -------
Total utility plant 12,148 12,417
------- -------
Nonutility property -- less accumulated provision for depreciation
of $134 and $101 at respective dates 3,141 1,977
Nuclear decommissioning trusts 1,260 919
Investments in partnerships and unconsolidated subsidiaries 1,190 1,201
Investments in leveraged leases 574 555
Other investments 66 40
------- -------
Total other property and investments 6,231 4,692
------- -------
Cash and equivalents 507 534
Receivables, including unbilled revenue, less allowances of $24
for uncollectible accounts at each date 1,055 975
Fuel inventory 115 117
Materials and supplies, at average cost 151 129
Accumulated deferred income taxes -- net 477 271
Prepayments and other current assets 126 108
------- -------
Total current assets 2,431 2,134
------- -------
Unamortized debt issuance and reacquisition expense 350 357
Rate phase-in plan 130 241
Unamortized nuclear plant -- net 67 171
Income tax-related deferred charges 1,724 1,816
Other deferred charges 865 562
------- -------
Total deferred charges 3,136 3,147
------- -------
Total assets $23,946 $22,390
======= =======
The accompanying notes are an integral part of these financial statements.
PAGE
29
Edison International and Subsidiaries
In millions, except share amounts December 31, 1995 1994
- --------------------------------- ------------ ---- ----
Capitalization and Liabilities
Common shareholders' equity:
Common stock (443,607,674 and 447,799,172
shares outstanding at respective dates)
Retained earnings $2,660 $2,692
3,700 3,452
------- -------
6,360 6,144
Preferred securities of subsidiaries:
Not subject to mandatory redemption 284 359
Subject to mandatory redemption 425 362
Long-term debt 7,195 6,347
------- -------
Total capitalization 14,264 13,212
------- -------
Other long-term liabilities 344 311
------- -------
Current portion of long-term debt 40 231
Short-term debt 710 846
Accounts payable 420 413
Accrued taxes 557 530
Accrued interest 101 100
Dividends payable 113 116
Regulatory balancing accounts -- net 338 56
Deferred unbilled revenue and other current liabilities 1,005 865
------- -------
Total current liabilities 3,284 3,157
------- -------
Accumulated deferred income taxes -- net 4,339 4,059
Accumulated deferred investment tax credits 405 432
Customer advances and other deferred credits 680 617
------- -------
Total deferred credits 5,424 5,108
------- -------
Minority interest 630 602
------- -------
Commitments and contingencies (Notes 2, 8, 9 and 10)
Total capitalization and liabilities $23,946 $22,390
======= =======
The accompanying notes are an integral part of these financial statements.
PAGE
30
Consolidated Statements of Cash Flows
Edison International and Subsidiaries
In millions Year ended December 31, 1995 1994 1993
- ----------- ----------------------- ---- ---- ----
Cash flows from operating activities:
Net income $ 739 $ 681 $ 639
Adjustments for non-cash items:
Depreciation and decommissioning 1,014 945 924
Amortization 73 134 107
Rate phase-in plan 111 123 123
Deferred income taxes and investment tax credits (172) 16 95
Equity in income from partnerships and
unconsolidated subsidiaries (115) (130) (135)
Other long-term liabilities 33 44 (75)
Nonrecurring charges -- -- 99
Other -- net 5 (79) 8
Changes in working capital:
Receivables (27) (98) (4)
Regulatory balancing accounts 282 (2) (30)
Fuel inventory, materials and supplies (19) (21) (7)
Prepayments and other current assets (17) 14 115
Accrued interest and taxes 19 121 (160)
Accounts payable and other current liabilities 28 113 25
Distributions from partnerships and
unconsolidated subsidiaries 177 205 271
------- ------- -------
Net cash provided by operating activities 2,131 2,066 1,995
------- ------- -------
Cash flows from financing activities:
Long-term debt issued 1,496 314 2,496
Preferred stock issued 63 88 75
Long-term debt repayments (960) (507) (2,291)
Preferred stock redemptions (75) -- (86)
Common stock repurchases (70) -- --
Short-term debt financing -- net (46) 141 (167)
Dividends paid (447) (549) (625)
Other -- net 26 (31) 9
------- ------- -------
Net cash used by financing activities (13) (544) (589)
------- ------- -------
Cash flows from investing activities:
Additions to property and plant (969) (1,137) (1,259)
Purchase of nonutility power stations (1,015) -- --
Funding of nuclear decommissioning trusts (151) (130) (141)
Investments in partnerships and
unconsolidated subsidiaries (45) (201) (14)
Other -- net 35 59 (67)
------- ------- -------
Net cash used by investing activities (2,145) (1,409) (1,481)
------- ------- -------
Net increase (decrease) in cash and equivalents (27) 113 (75)
Cash and equivalents, beginning of year 534 421 496
------- ------- -------
Cash and equivalents, end of year $ 507 $ 534 $ 421
======= ======= =======
Cash payments for interest and taxes:
Interest $ 463 $ 470 $ 468
Taxes 642 320 415
Non-cash investing and financing activities:
Obligation to fund investments in partnerships
and unconsolidated subsidiaries 466 29 118
Additions to property and plant funded by the
minority owner of consolidated subsidiaries 77 95 96
Goodwill related to purchase of nonutility
power stations 312 -- --
The accompanying notes are an integral part of these financial statements.
PAGE
31
Notes to Consolidated Financial Statements
Edison International and Subsidiaries
Note 1. Summary of Significant Accounting Policies
The consolidated financial statements include Edison International
(formerly SCEcorp) and its wholly owned subsidiaries: Southern California
Edison Company, a rate-regulated electric utility which produces and
supplies electric energy for its 4.2 million customers in Central and
Southern California; Edison Mission Energy (formerly Mission Energy
Company), a market leader in the development, ownership and operation of
independent power facilities; and Edison Capital (formerly Mission First
Financial), a leading provider of capital and financial services. The
latter two, who have domestic and international projects (primarily in
Europe), are Edison International's nonutility subsidiaries. Edison
International's subsidiaries use the equity method to account for
significant investments in partnerships and subsidiaries in which they own
50% or less. In 1994, Edison Mission Energy (EME) began reporting its
share in the Loy Yang B project under the full consolidation method (with
minority interest), previously reported under the proportional
consolidation method. Intercompany transactions have been eliminated,
except EME's profits from energy sales to SCE, which are allowed in
utility rates.
SCE's accounting policies conform with generally accepted accounting
principles (GAAP) including the accounting principles for rate-regulated
enterprises which reflect the rate-making policies of the California
Public Utilities Commission (CPUC) and the Federal Energy Regulatory
Commission (FERC).
SCE currently operates in a highly regulated environment in which it has
an obligation to provide electric service to customers in return for an
exclusive franchise within its service territory. This regulatory
environment is changing, as further discussed in Note 2 to Consolidated
Financial Statements. EME operates predominantly in one industry segment:
independent, electric power generation. EME's projects generally sell
power to a limited number of electric utilities pursuant to long-term (15
to 30 years) contracts. EME's plants are located in different geographic
areas in order to mitigate the effects of regional markets, economic
downturns or unusual weather conditions. Financial statements prepared
in compliance with GAAP require management to make estimates and
assumptions that affect the amounts reported in the financial statements
and disclosure of contingencies. Actual results could differ from those
estimates. Certain significant estimates related to the CPUC
restructuring decision, decommissioning and contingencies, are further
discussed in Notes 2, 9 and 10, respectively.
Certain prior-year amounts have been reclassified to conform to the
December 31, 1995, financial statement presentation.
Debt Issuance and Reacquisition Expense
Debt premium, discount and issuance expenses are amortized over the life
of each issue. Under CPUC rate-making procedures, debt reacquisition
expenses are amortized over the remaining life of the reacquired debt or,
if refinanced, the life of the new debt.
Financial Instruments
Edison International enters into interest rate swap and cap agreements to
manage its interest rate exposure. Interest rate differentials and
premiums for interest rate caps to be paid or received are recorded as
adjustments to interest expense. EME enters into electricity rate swap
agreements to manage its exposure to market (pool) price volatility.
Related price differentials to be paid or received are currently recorded
as adjustments to diversified revenue.
Fuel Inventory
Fuel inventory is valued under the last-in, first-out method for fuel oil
and natural gas, and under the first-in, first-out method for coal.
Investments
Cash equivalents include tax-exempt investments ($313 million at December
31, 1995, and $327 million at December 31, 1994), and time deposits and
other investments ($134 million at December 31, 1995, and $142 million at
December 31, 1994) with maturities of three months or less.
Unrealized gains (losses) on equity investments are recorded as regulatory
liabilities (assets). Unrealized gains and losses on decommissioning
trust funds are recorded in the accumulated provision for decommissioning.
All investments are classified as available-for-sale.
Nuclear
A CPUC-authorized rate phase-in plan deferred the collection of $200
million in revenue for each unit at Palo Verde Nuclear Generating Station
during the first four years of operation. The deferred revenue (including
interest) is being collected evenly over the final six years of each
unit's plan. The plans end in February and September 1996, respectively,
for Units 1 and 2, and in 1998 for Unit 3.
The cost of nuclear fuel, including disposal, is amortized to fuel expense
on the basis of generation. Under CPUC rate-making procedures, nuclear-
fuel financing costs are capitalized until the fuel is placed into
production.
Decommissioning costs are accrued and recovered in rates over the term of
each nuclear facility's operating license through charges to depreciation
expense (see Note 9).
Under the Energy Policy Act of 1992, SCE is liable for its share of the
estimated costs to decommission three federal nuclear enrichment
facilities (based on purchases). These costs, which will be paid over 15
years, are recorded as a fuel cost and recovered through customer rates.
In August 1992, the CPUC approved a settlement agreement between SCE and
the CPUC'S Division of Ratepayer Advocates (DRA) to discontinue operation
of San Onofre Nuclear Generating Station Unit 1 at the end of its then-
current fuel cycle because operation of the unit was no longer cost-
effective. As part of the agreement, SCE will recover its remaining
investment, earning an 8.98% rate of return on rate base, by August 1996.
In November 1992, SCE discontinued operation of Unit 1.
In October 1994, the CPUC authorized accelerated recovery of SCE's nuclear
plant investments by $75 million per year, with a corresponding
deceleration in recovery of its transmission and distribution assets
through revised depreciation estimates over their remaining useful lives.
Recovery of the San Onofre nuclear
PAGE
32
Notes to Consolidated Financial Statements
plant investment has been further accelerated by the 1995 general rate
case decision (see Note 2).
Property and Plant
Utility plant additions, including replacements and betterments, are
capitalized. Such costs include direct material and labor, construction
overhead and an allowance for funds used during construction (AFUDC).
AFUDC represents the estimated cost of debt and equity funds that finance
utility-plant construction. AFUDC is capitalized during plant
construction and reported in current earnings. AFUDC is recovered in
rates through depreciation expense over the useful life of the related
asset. Depreciation of utility plant is computed on a straight-line,
remaining-life basis. Replaced or retired property and removal costs
less salvage are charged to the accumulated provision for depreciation.
Depreciation expense stated as a percent of average original cost of
depreciable utility plant was 3.6% for 1995, 1994 and 1993.
Nonutility property is capitalized at cost, including interest incurred
on borrowed funds that finance construction. Depreciation of nonutility
properties is primarily computed on a straight-line basis over their
estimated useful lives. Depreciation expense stated as a percent of
average original cost of depreciable nonutility property was, on a
composite basis, 3.8% for 1995, 5.2% for 1994 and 4.6% for 1993.
Regulatory Balancing Accounts
The differences between CPUC-authorized and actual base-rate revenue from
kilowatt-hour sales and CPUC-authorized and actual energy costs are
accumulated in balancing accounts until they are refunded to, or recovered
from, utility customers through authorized rate adjustments (with
interest). Income tax effects on balancing account changes are deferred.
CPUC-established target generation levels act as performance incentives
for SCE's nuclear generating stations. Fuel savings or costs above or
below these targets are shared equally by SCE and its customers through
balancing account adjustments. With the implementation of San Onofre's
incentive pricing plan (see Note 2) in the second quarter of 1996, these
performance incentives were discontinued upon completion of the refueling
outages in 1995.
Research, Development and Demonstration (RD&D)
SCE capitalizes RD&D costs that are expected to result in plant
construction. If construction does not result, these costs are charged
to expense. RD&D expenses are recorded in a balancing account, and at the
end of the rate-case cycle, any authorized but unspent RD&D funds are
refunded to customers. RD&D expenses were $28 million in 1995, $63
million in 1994 and $49 million in 1993.
Revenue
Electric utility revenue includes amounts for services rendered but
unbilled at the end of each year.
Note 2. Regulatory Matters
1995 General Rate Case
On January 10, 1996, the CPUC issued its decision on SCE's 1995 general
rate case. The decision affirmed the CPUC's interim order to reduce 1995
operating revenue by $67 million, but decreased 1996 operating revenue by
an additional $9 million, which includes a decrease of $44 million for
operation and maintenance expenses. The decision also authorized recovery
of SCE's remaining investment (approximately $2.7 billion) in San Onofre
Units 2 and 3 at a reduced rate of return (7.34% compared to the current
9.55%), over an eight-year period, beginning in the second quarter of
1996. Future operating costs and incremental capital expenditures at San
Onofre are subject to an incentive pricing plan, where SCE receives about
4 cents per kilowatt-hour. Profits or losses resulting from cost
differences from the incentive price will flow through to shareholders.
Beginning in 2004, after SCE's investment is fully recovered, it would be
required to share equally with ratepayers the benefits received from
operation of the units.
Performance-Based Ratemaking (PBR)
SCE originally filed for a PBR mechanism in 1993, requesting a revenue-
indexing formula to combine operating expenses and capital-related costs
into a single index to determine most of its revenue (excluding fuel) from
1996-2000. The filing was subsequently divided between transmission and
distribution, and power generation. Hearings concluded on the
transmission and distribution phase in December 1994. The CPUC's
restructuring decision, as further discussed below, requested comments
addressing whether SCE's transmission and distribution PBR proposal should
be amended or reviewed as filed. On January 19, 1996, SCE requested the
CPUC approve its PBR as filed. SCE expects to file its proposal for the
power generation phase in July 1996.
CPUC Restructuring Decision
On December 20, 1995, the CPUC issued its decision on restructuring
California's electric industry, which it had been considering since April
1994. The new market structure would provide competition and customer
choice. The transition to a competitive electric market would begin
January 1, 1998, with all consumers participating by 2003. Key elements
of the decision are: creation of an independent power exchange; creation
of an independent system operator; implementation of greater customer
choice; transition cost recovery by the utilities; and CPUC-established
incentives to encourage utilities to voluntarily divest at least 50% of
their gas-fueled units to address market power issues. Within 90 days of
the decision's effective date, SCE must file its plans to address
divestiture issues. Also, under the decision the CPUC would regulate the
rates, terms and conditions of utility services not subject to competition
using PBR instead of cost-of-service regulation.
The independent power exchange, which would manage supply and demand
through an economic auction, will be under FERC jurisdiction. Purchasing
from and selling to the power exchange during the transition period will
be mandatory for California's
PAGE
33
Edison International and Subsidiaries
investor-owned utilities, while others can voluntarily participate. The
independent system operator would have operational control of the
utilities' transmission facilities and, therefore, would control the
scheduling and dispatch of all electricity on the state's power grid.
The new market structure would provide three avenues of customer choice.
The first involves a continuation of utility-tariffed rates with customers
choosing a monthly average rate or hourly time-of-use rates, which allows
customers with specialized meters to access pricing information and alter
their consumption accordingly. The second avenue involves customers
continuing with utility-tariffed rates and entering into "contracts for
differences" which manage risks associated with the market clearing prices
published by the power exchange. The last avenue involves customers
negotiating directly with generation providers and then arranging for
transmission of the power with the transmission system operator (direct
access).
Recovery of costs to transition to a competitive market would be
implemented through a non-bypassable competition transition charge (CTC).
This charge would apply to all customers who currently use utility
services or begin utility service after this decision is effective. SCE
estimates its potential transition costs (CTC) through 2025 to be
approximately $9.3 billion (net present value), based on incurred costs,
and forecasts of future costs and assumed market prices. However, changes
in the assumed market price could require material revisions to such
estimates. The potential transition costs are comprised of: $4.9 billion
from SCE's qualifying facility contracts, which are the direct result of
legislative and regulatory mandates; and $4.4 billion from costs
pertaining to certain generating plants and regulatory commitments
consisting of costs incurred (whose recovery has been deferred by the
CPUC) to provide service to customers. Such commitments include the
recovery of income-tax benefits previously flowed-through to customers,
postretirement benefit transition costs, accelerated recovery of nuclear
plants (including San Onofre Unit 1 as discussed in Note 1 and San Onofre
Units 2 and 3 as discussed above), nuclear decommissioning and certain
other costs.
Because the restructuring of California's electric industry has widespread
impact and the market structure requires the participation and oversight
of the FERC, the CPUC will seek to build a California consensus involving
the legislature, governor, public and municipal utilities, and customers.
Once the consensus is in place, FERC approval will be sought and together
both agencies would move forward to implement the new market structure.
In addition, the CPUC will prepare an environmental impact report. As a
result, the CPUC will not proceed with implementation of its decision
until March 1996. If the CPUC's restructuring decision is upheld and
implemented as outlined, SCE would be allowed to recover its CTC (subject
to a lower return on equity) and would continue to apply accounting
standards that recognize the economic effects of rate regulation. The
effect of such an outcome would not be expected to materially affect SCE's
results of operations or financial condition during the transition period.
If revisions are made to the CPUC's restructuring decision that result in
SCE no longer meeting the criteria to apply regulatory accounting
standards to its generation operations, SCE may be required to write off
its recorded generation-related regulatory assets. At December 31, 1995,
these amounts totaled $1.4 billion (excluding balancing account
overcollections of $237 million expected to be refunded to customers in
the near term), primarily for the recovery of income-tax benefits
previously flowed-through to customers, the Palo Verde phase-in plan and
unamortized loss on reacquired debt. Although depreciation-related
differences could result from applying a regulatory prescribed
depreciation method (straight-line, remaining-life method) rather than a
method that would have been applied absent the regulatory process, SCE
believes that the depreciable lives of its generation-related assets would
not vary significantly from that of an unregulated enterprise, as the CPUC
bases depreciable lives on periodic studies that reflect the assets'
physical useful life. SCE also believes that any depreciation-related
differences would be recovered through the CTC.
Additionally, if revisions are made to the CPUC's restructuring decision
that result in all or a portion of the CTC not being probable of recovery,
SCE could have additional write-offs associated with these costs if they
are not recovered through another regulatory mechanism. At this time,
Edison International cannot predict when, or if, a consensus on
restructuring will be reached, what revisions will ultimately be made in
the CPUC's restructuring plan in subsequent proceedings or implementation
phases, or the effect, after the transition period, that competition will
have on its results of operations or financial condition.
FERC Restructuring Proposal
In March 1995, the FERC proposed rules which would require utilities to
provide wholesale open transmission access to the nation's interstate
transmission grid, while allowing them to recover stranded costs
associated with open access. The proposal defines stranded costs as
legitimate, prudent and verifiable costs incurred to provide service to
customers that would subsequently become unbundled wholesale transmission
service customers of the utility. SCE supports the basic principles in
the FERC's proposal and filed comments in August 1995. A final FERC
decision is expected in mid-1996.
Mohave Generating Station
A 1994 CPUC decision stated that SCE was liable for expenditures related
to a 1985 accident at the Mohave Generating Station. The CPUC ordered a
second phase of this proceeding to quantify the disallowance. On December
22, 1995, SCE and the DRA filed a $38 million settlement agreement subject
to CPUC approval. This agreement has been fully reflected in the
financial statements.
Note 3. Financial Instruments
Long-Term Debt
California law prohibits SCE from incurring or guaranteeing debt for its
nonutility affiliates.
Almost all SCE properties are subject to a trust indenture lien.
SCE has pledged first and refunding mortgage bonds as security for
borrowed funds obtained from pollution-control bonds is-
PAGE
34
Notes to Consolidated Financial Statements
sued by government agencies. SCE uses these proceeds to finance
construction of pollution-control facilities. Bondholders have limited
discretion in redeeming certain pollution-control bonds, and SCE has
arranged with securities dealers to remarket or purchase them if
necessary.
Long-term debt maturities and sinking-fund requirements for the next five
years are: 1996--$25 million; 1997--$551 million; 1998--$599 million;
1999--$408 million; and 2000--$391 million.
Long-term debt consisted of:
In millions December 31, 1995 1994
- ----------- ------------ ---- ----
First and refunding mortgage bonds:
1997--1999 (5.45% to 7.5%) $ 800 $1,000
2000--2004 (5.625% to 6.75%) 675 675
2017--2026 (6.9% to 9.25%) 1,637 1,850
Pollution-control bonds:
1999--2027 (5.4% to 7.2% and variable) 1,205 1,206
Funds held by trustee (2) (2)
Debentures and notes:
1996--2020 (5.6% to 20% and variable) 2,717 1,770
Subordinated debentures:
2044 (8.375%) 100 --
Commercial paper for nuclear fuel 70 39
Capital lease obligations 97 114
Current portion of capital lease obligation (15) (15)
Long-term debt due within one year (25) (216)
Unamortized debt discount--net (64) (74)
------ ------
Total $7,195 $6,347
====== ======
On January 16, 1996, SCE issued $200 million of 5.875% notes, due 2001 and
$200 million of 6.375% notes, due 2006. On January 17, 1996, Edison
Funding Company, an affiliate of Edison Capital, issued $15 million of
6.79% notes, due 2006.
Short-Term Debt
Short-term debt consisted of:
In millions December 31, 1995 1994
- ----------- ------------ ---- ----
Commercial paper $ 508 $ 989
Other short-term debt 350 80
Amount reclassified as long-term (145) (221)
Unamortized discount (3) (2)
----- -----
Total $ 710 $ 846
===== =====
Weighted-average interest rate 5.9% 6.5%
At December 31, 1995, Edison International and its subsidiaries had $1.8
billion of borrowing capacity available under lines of credit totaling
$2.3 billion. SCE had available lines of credit of $1.4 billion, with
$900 million for short-term debt and $500 million for the long-term
refinancing of its variable-rate pollution-control bonds. The nonutility
subsidiaries had lines of credit of $600 million, with $419 million of
borrowing capacity available to finance general cash requirements. The
holding company had a $350 million, one-year term, line of credit for
short-term debt, which was fully utilized in December 1995 to assist in
the financing of EME's $1 billion acquisition of First Hydro Limited in
the United Kingdom (U.K.). Edison International's unsecured revolving
lines of credit are at negotiated or bank index rates with various
expiration dates; the majority have five-year terms.
Other Financial Instruments
Edison International's risk management policy allows the use of derivative
financial instruments to manage financial exposure on its investments,
fluctuations in interest rates, foreign exchange rates and energy prices,
but prohibits the use of these instruments for speculative or trading
purposes.
Projects in the U.K. sell their energy and capacity production through a
centralized electricity pool which establishes a half-hourly clearing
price. The half-hourly price is extremely volatile, and can vary by a
factor of ten or more over the course of a few hours due to large
differentials in demand according to the time of day. EME attempts to
mitigate the market risk of the pool by entering into electricity rate
swap agreements, whereby payments are made when pool selling prices rise
above the price specified in the contract. These contracts attempt to
stabilize production revenue by removing net exposure to pool price
volatility. The Roosecote project has avoided the pool price volatility
by entering into a long-term power-sales contract which provides for
contract pricing.
Interest rate swaps and caps are used to reduce the potential impact of
interest rate fluctuations on floating rate long-term debt. SCE's
interest rate swap agreement requires the parties to pledge collateral
according to bond rating and market interest rate changes. At December
31, 1995, SCE had pledged $13 million as collateral due to a downgrade of
its bond rating and a decline in market interest rates. SCE is exposed
to credit loss in the event of nonperformance by counterparties to these
agreements, but does not expect the counterparties to fail to meet their
obligations.
Edison International is subject to concentrations of credit risk as the
result of elements involved in EME's financial instruments and power-sales
contracts. Credit risk relates to the risk of loss that EME would incur
as a result of nonperformance by counterparties (major financial
institutions and domestic and foreign utilities) pursuant to the terms of
their contractual obligations. EME attempts to mitigate this risk by
contracting with counterparties that have a strong capacity to meet their
contractual obligations and by monitoring their credit quality. In
addition, EME attempts to secure long-term power-sales contracts for its
projects that are expected to result in adequate cash flow under a wide
range of economic and operating circumstances. To accomplish this, EME
attempts to structure its long-term contracts so that fluctuations in fuel
costs will produce similar fluctuations in electric energy and/or steam
revenue by entering into long-term fuel supply and transportation
agreements. Accordingly, EME does not anticipate a material impact to its
financial condition or results of operations as a result of counterparty
nonperformance.
PAGE
35
Edison International and Subsidiaries
Edison International had the following derivative financial instruments
at December 31, 1995, and 1994, except where noted:
Contract Amount/Terms Purpose
- --------------------- ------------------------------
Interest rate swaps:
$196 million due 2008 fix interest rate exposure at 5.585%
$75 million due 1996 fix interest rate exposure at 7.98%
30 million pounds sterling (12/31/94) converting floating-rate debt
($47 million) to a fixed rate of 12%
51 million pounds sterling (12/31/95)
($79 million)
expires 1997 debt due 2005
$100 million due 1999 convert fixed-rate debt of 7.75% and
$100 million due 2002 8.125% to a floating rate
$45 million expires 1999 convert fixed rate of 9.875%
securities due 2024 to a floating rate
$75 million (12/31/94) fix interest rate exposure at 8.095%
$50 million (12/31/95) due 1999
A$34 million (12/31/95) fix interest rate exposure at 10.98%
($25 million) due 2007
Interest rate caps:
$30 million expires 1997 fix interest rate exposure at 6%, over the
debt due 2027 variable term of the debt
A$58 million (12/31/95) fix interest rate exposure at 11.25%
($43 million) expires 1996
U.K. electricity rate swaps:
1,500 MW (12/31/95) fix market electricity sales rates
various expirations through 2000
Fair values of financial instruments were:
December 31,
---------------------------------------------------
1995 1994
--------------------- ----------------------
Cost Fair Cost Fair
Instrument (in millions) Basis Value Basis Value
- ------------------------ -------- ----- -------- -----
Financial assets:
Decommissioning trusts $1,069 $1,260 $ 920 $ 919
Equity investments 9 41 9 26
Financial liabilities:
DOE decommissioning and
decontamination fees 58 49 62 45
Electricity rate swaps -- 22 -- --
Interest rate swaps and caps -- 28 -- 26
Long-term debt 7,195 7,531 6,347 6,068
Preferred stock subject
to mandatory redemption 425 448 362 344
Financial assets are carried at their fair value based on quoted market
prices. Financial liabilities are recorded at cost. Financial
liabilities' fair values were based on: termination costs for interest
rate swaps; brokers' quotes for long-term debt, preferred stock and caps;
discounted future cash flows for U.S. Department of Energy (DOE)
decommissioning and decontamination fees; and discounted future cash flows
for the difference between contract prices and forecasted market prices
for electricity rate swaps. Amounts reported for cash equivalents and
short-term debt approximate fair value, due to their short maturities.
Note 4. Equity
The CPUC regulates SCE's capital structure, limiting the dividends it may
pay Edison International. At December 31, 1995, SCE had the capacity to
pay $528 million in additional dividends and continue to maintain its
authorized capital structure. These restrictions are not expected to
affect Edison International's ability to meet its cash obligations.
Edison International's authorized common stock is 800 million shares with
no par value.
During 1995, Edison International purchased on the open market and retired
4,212,398 shares ($70 million) of common stock.
Under Edison International's long-term incentive compensation plan, it
issued 63,118 shares ($1 million) and 20,900 shares ($0.4 million) in 1993
and 1995, respectively.
SCE's authorized shares of preferred and preference stock are: $25
cumulative preferred--24 million; $100 cumulative preferred--12 million;
and preference--50 million. All cumulative preferred stocks are
redeemable. Mandatorily redeemable preferred stocks are subject to
sinking-fund provisions. When preferred shares are redeemed, the premiums
paid are charged to common equity.
EME is a general partner and also owns, indirectly, the limited partner's
share of Mission Capital L.P., which was formed solely for the purpose of
holding parent company debentures. Mission Capital has 6 million
authorized shares of cumulative preferred securities with a liquidation
preference that obligates EME.
There are no preferred stock redemption requirements for the next five
years.
Edison International subsidiaries' cumulative preferred securities
consisted of:
Dollars in millions, December 31, 1995
except per-share ---------------------------- December 31,
amounts Shares Redemption ------------------
- -------------------- Outstanding Price 1995 1994
------------ ----------- ---- ----
Not subject to mandatory redemption:
$25 par value preferred stock:
4.08% Series 1,000,000 $25.50 $ 25 $ 25
4.24 1,200,000 25.80 30 30
4.32 1,653,429 28.75 41 41
4.78 1,296,769 25.80 33 33
5.80 2,200,000 25.25 55 55
7.36 4,000,000 25.00 100 100
$100 par value preferred stock:
7.58% Series -- -- -- 75
---- ----
Total $284 $359
==== ====
Subject to mandatory redemption:
$25 par value preferred securities:
8.50% Series 2,500,000 $ 25.00 $ 63 $ --
9.875 3,500,000 25.00 87 87
$100 par value preferred stock:
6.05% Series 750,000 100.00 75 75
6.45 1,000,000 100.00 100 100
7.23 1,000,000 100.00 100 100
---- ----
Total $425 $362
==== ====
PAGE
36
Notes to Consolidated Financial Statements
Changes in preferred securities were:
Shares in thousands Year ended December 31, 1995 1994 1993
- ------------------- ----------------------- ---- ---- ----
Series:
6.05% -- -- 750
7.325 -- -- (427)
7.58 (750) -- --
7.80 -- -- (411)
8.50 2,500 -- --
9.875 -- 3,500 --
----- ----- -----
Net issuances (redemptions) 1,750 3,500 (88)
===== ===== =====
Options on Common Stock
Under Edison International's long-term incentive compensation plan, 8.2
million shares of its common stock were reserved at December 31, 1995, and
1994 for issue to key employees in various forms, including the exercise
of stock options. There were 5.4 million shares and 6.3 million shares
reserved for future grants at December 31, 1995, and 1994, respectively.
Under Edison International's stock option plan, share options granted
prior to December 31, 1993, accrue dividend equivalents at the same rate
as outstanding common stock. Share options granted after January 1, 1994,
accrue dividend equivalents based upon a competitive performance
measurement of Edison International's common stock price. The dividend
equivalents may be applied against the grant price at the time of
exercise.
Activity in the stock option plan was:
Share Options Share Price
------------- -----------
Outstanding, December 31, 1992 1,095,404 $16.00-$23.28
Granted 402,600 21.94- 24.44
Canceled (44,252) 18.75- 23.28
Exercised (63,118) 16.19- 23.28
--------- -------------
Outstanding, December 31, 1993 1,390,634 16.00- 24.44
Granted 408,800 20.19- 21.94
Canceled (33,343) 20.19- 23.28
Exercised -- --
--------- -------------
Outstanding, December 31, 1994 1,766,091 16.00- 24.44
Granted 910,100 14.57- 17.44
Canceled (19,050) 14.57- 23.28
Exercised (20,900) 16.19- 19.85
--------- -------------
Outstanding, December 31, 1995 2,636,241 $14.57-$24.44
--------- -------------
Exercisable, December 31, 1995 1,240,425 $14.57-$24.44
--------- -------------
Note 5. Income Taxes
Edison International's subsidiaries will be included in its consolidated
federal income tax and combined state franchise tax returns. Under income
tax allocation agreements, each subsidiary calculates its own tax
liability.
Edison International adopted an income tax accounting standard in 1993
that requires the balance sheet method to account for income taxes. The
cumulative effect of adoption increased Edison International's 1993
earnings by $16 million and total assets and liabilities by about $2
billion.
Current and Deferred Taxes
Income tax expense includes the current tax liability from operations and
the change in deferred income taxes during the year. Investment tax
credits are amortized over the lives of the related properties.
The components of the net accumulated deferred income tax liability were:
In millions December 31, 1995 1994
- ----------- ------------ ------------ ------------
Deferred tax assets:
Property-related $ 276 $ 260
Investment tax credits 222 237
Regulatory balancing accounts 166 85
Other 675 523
------ ------
Total $1,339 $1,105
------ ------
Deferred tax liabilities:
Property-related $4,346 $4,019
Leveraged leases 508 470
Other 347 404
------ ------
Total $5,201 $4,893
------ ------
Accumulated deferred income taxes -- net $3,862 $3,788
====== ======
Classification of accumulated deferred income taxes:
Included in deferred credits $4,339 $4,059
Included in current assets 477 271
The current and deferred components of income tax expense were:
In millions Year ended December 31, 1995 1994 1993
- ----------- ----------------------- ---- ---- ----
Current:
Federal $ 514 $ 319 $ 183
State 150 110 76
----- ---- ----
664 429 259
----- ---- ----
Deferred -- federal and state:
Accrued charges 1 (25) (38)
Deferred alternative minimum tax credit -- 45 (46)
Depreciation 72 93 78
Investment and energy tax credits -- net (26) (23) (31)
Leveraged leases 38 72 63
Nonutility special charges (21) (14) (49)
Prior year state tax (9) (12) 12
Rate phase-in plan (46) (51) (51)
Regulatory balancing accounts (118) (7) 118
Resale revenue -- 8 26
Retirement of debt (10) (9) 33
Unbilled revenue (7) (3) 1
Other (46) (58) (21)
----- ---- ----
(172) 16 95
----- ---- ----
Total income tax expense $ 492 $ 445 $ 354
===== ==== ====
Classification of income taxes:
Included in operating income $ 528 $ 481 $ 465
Included in other income (36) (36) (111)
PAGE
37
Edison International and Subsidiaries
The composite federal and state statutory income tax rate was 41.045% for
all years presented.
The federal statutory income tax rate is reconciled to the effective tax
rate below:
Year ended December 31, 1995 1994 1993
- ----------------------- ---- ---- ----
Federal statutory rate 35.0% 35.0% 35.0%
Capitalized software (0.8) (2.0) (2.0)
Housing credits (2.7) (2.2) (1.8)
Investment and energy tax credits (2.3) (2.2) (3.1)
New accounting standard -- -- (1.9)
State tax -- net of federal deduction 5.6 5.3 5.4
Depreciation and other 5.1 5.6 4.0
----- ----- -----
Effective tax rate 39.9% 39.5% 35.6%
===== ===== =====
Note 6. Employee Benefit Plans
Pension Plan
Edison International has a noncontributory, defined-benefit pension plan
that covers employees meeting minimum service requirements. Benefits are
based on years of accredited service and average base pay. Edison
International funds the plan on a level-premium actuarial method. These
funds are accumulated in an independent trust. Annual contributions meet
minimum legal funding requirements and do not exceed the maximum amounts
deductible for income taxes. Prior service costs from pension plan
amendments are funded over 30 years. Plan assets are primarily common
stocks, corporate and government bonds, and short-term investments.
The plan's funded status was:
In millions December 31, 1995 1994
- ----------- ------------ ---- ----
Actuarial present value of benefit obligation:
Vested benefits $1,703 $1,264
Nonvested benefits 214 149
------ ------
Accumulated benefit obligation 1,917 1,413
Value of projected future compensation levels 487 457
------ ------
Projected benefit obligation $2,404 $1,870
====== ======
Fair value of plan assets $2,636 $2,205
====== ======
Plan assets greater than projected
benefit obligation $ (232) $ (335)
Unrecognized net gain 327 453
Unrecognized prior service cost (6) (5)
Unrecognized net obligation
(17-year amortization) (51) (56)
------ ------
Pension liability $ 38 $ 57
====== ======
Discount rate 7.25% 8.5%
Rate of increase in future compensation 5.0% 5.0%
Expected long-term rate of return on assets 8.0% 8.0%
Edison International's utility operations recognize pension expense
calculated under the actuarial method used for ratemaking.
The components of pension expense were:
In millions Year ended December 31, 1995 1994 1993
- ----------- ----------------------- ---- ---- ----
Service cost for benefits earned $ 59 $ 69 $ 70
Interest cost on projected benefit obligation 157 149 139
Actual return on plan assets (457) (28) (291)
Net amortization and deferral 270 (141) 142
----- ----- -----
Pension expense under accounting standards 29 49 60
Special termination benefits 3 15 --
Regulatory adjustment--deferred 23 2 (11)
----- ----- -----
Net pension expense recognized $ 55 $ 66 $ 49
===== ===== =====
Postretirement Benefits Other Than Pensions
Employees retiring at or after age 55, with at least 10 years of service,
are eligible for postretirement health care, dental, life insurance and
other benefits. Health care benefits are subject to deductibles,
copayment provisions and other limitations.
In 1993, Edison International adopted a new accounting standard for these
benefits, which requires their expected cost to be expensed during
employees' years of service. Edison International is amortizing its
obligation related to prior service over 20 years. SCE funds it share of
these benefits (by contributions to independent trusts) up to tax-
deductible limits, in accordance with rate-making practices. SCE began
funding its liability for these benefits in 1991. Amounts funded prior
to 1993 were amortized and recovered in rates over 12 months. Any
difference between recognized expense and amounts authorized for rate
recovery is not expected to be material and will be charged to earnings.
Trust assets are primarily common stocks, corporate and government bonds,
and short-term investments.
The components of postretirement benefits other than pensions expense
were:
In millions Year ended December 31, 1995 1994 1993
- ----------- ----------------------- ---- ---- -----
Service cost for benefits earned $ 36 $ 30 $ 27
Interest cost on benefit obligation 79 73 66
Actual return on plan assets (28) (20) (12)
Amortization of transition obligation 27 36 36
----- ---- ----
Net expense 114 119 117
Amortization of prior funding -- 2 48
----- ---- ----
Total expense $ 114 $ 121 $165
===== ===== ====
PAGE
38
Notes to Consolidated Financial Statements
The funded status of these benefits is reconciled to the recorded
liability below:
In millions December 31, 1995 1994
- ----------- ------------- ------------- -----------
Actuarial present value of benefit obligation:
Retirees $ 403 $ 530
Employees eligible to retire 103 47
Other employees 564 299
------ -----
Accumulated benefit obligation $1,070 $ 876
====== =====
Fair value of plan assets $ 400 $ 303
====== =====
Plan assets less than accumulated benefit
obligation $ 670 $ 573
Unrecognized transition obligation (460) (625)
Unrecognized net gain (loss) (203) 52
------ -----
Recorded liability $ 7 $ --
====== =====
Discount rate 7.5% 8.75%
Expected long-term rate of return on assets 8.5% 8.5%
The assumed rate of future increases in the per-capita cost of health care
benefits is 10% for 1996, gradually decreasing to 5% for 2003 and beyond.
Increasing the health care cost trend rate by one percentage point would
increase the accumulated obligation as of December 31, 1995, by $166
million and annual aggregate service and interest costs by $20 million.
Employee Savings Plan
Edison International has a 401(k) stock plan designed to supplement
employees' retirement income. The plan received employer contributions
of $20 million in 1995, and $22 million in both 1994 and 1993.
Note 7. Jointly Owned Utility Projects
SCE owns interests in several generating stations and transmission systems
for which each participant provides its own financing. SCE's share of
expenses for each project is included in the consolidated statements of
income.
The investment in each project, as included in the consolidated balance
sheet as of December 31, 1995, was:
Plant in Accumulated Under Ownership
In millions Service Depreciation Construction Interest
- ----------- --------- ------------ ------------ ---------
Transmission systems:
Eldorado $ 28 $ 8 $ -- 60%
Pacific Intertie 221 69 13 50
Generating stations:
Four Corners (coal)
Units 4 and 5 456 230 5 48
Mohave (coal) 289 142 16 56
Palo Verde (nuclear) 1,576 358 17 16
San Onofre (nuclear) 4,203 1,578 22 75
------ ------ ----
Total $6,773 $2,385 $ 73
====== ====== ====
Note 8. Leases
Investments in Leveraged Leases
Edison Capital is the lessor in several leveraged-lease agreements with
terms of 13 to 30 years. All operating, maintenance, insurance and
decommissioning costs are the responsibility of the lessees. The total
cost of these facilities was $1.9 billion and $1.8 billion at December 31,
1995, and 1994, respectively.
The equity investment in these facilities is 20% of the purchase price.
The remainder is nonrecourse debt secured by first liens on the leased
property. The lenders have accepted their security interests as their
only remedy if the lessee defaults.
The net investment in leveraged leases consisted of:
In millions December 31, 1995 1994
- ----------- ------------ ---- ----
Rentals receivable (net of principal and
interest on nonrecourse debt) $ 833 $ 842
Unearned income (317) (335)
----- -----
Investment in leveraged leases 516 507
Estimated residual value 58 58
Deferred income taxes (508) (470)
----- -----
Net investment in leveraged leases $ 66 $ 95
===== =====
Lease Commitments
Edison International has operating leases, primarily for vehicles (with
varying terms, provisions and expiration dates) and a capital lease ($97
million) for a nonutility power-production facility.
Estimated remaining commitments for noncancelable leases at December 31,
1995, were:
Operating Capital
In millions Leases Lease
- ----------- --------- -------
Year ended December 31,
1996 $ 25 $ 26
1997 22 26
1998 19 26
1999 13 26
2000 11 26
Thereafter 16 --
---- ----
Total future commitments $106 130
----
Amount representing interest (9.65%) (33)
----
Net commitments $ 97
====
Note 9. Commitments
Nuclear Decommissioning
SCE plans to decommission its nuclear generating facilities at the end of
each facility's operating license by a prompt removal method authorized
by the Nuclear Regulatory Commission. Decommissioning is estimated to
cost $1.8 billion in current-year dollars, based on site-specific studies
performed in 1993 for San Onofre and 1992 for Palo Verde. This estimate
considers the total cost of decommissioning and dismantling the plant,
including labor, material, burial and other costs. The site specific
studies are updated approximately every three years. Changes in the esti-
PAGE
39
Edison International and Subsidiaries
mated costs, timing of decommissioning, or the assumptions underlying
these estimates could cause material revisions to the estimated total cost
to decommission in the near term. Decommissioning is scheduled to begin
in 2013 at San Onofre and 2024 at Palo Verde. Currently, San Onofre Unit
1, which shut down in 1992, is expected to be stored until decommissioning
begins at the other San Onofre units.
Decommissioning costs, which are recovered through customer rates, are
recorded as a component of depreciation expense. Decommissioning expense
was $151 million in 1995, $122 million in 1994 and $141 million in 1993.
The accumulated provision for decommissioning was $823 million at December
31, 1995, and $692 million at December 31, 1994. The estimated costs to
decommission San Onofre Unit 1 ($247 million) are recorded as a liability.
Decommissioning funds collected in rates are placed in independent trusts,
which, together with accumulated earnings, will be utilized solely for
decommissioning.
Trust investments (in millions) include:
Gross Unrealized Holding
----------------------------------
Gains Losses
-------------- --------------
December 31, 1995 1994 1995 1994 1995 1994
- ------------ ---- ---- ---- ---- ---- ----
Municipal bonds $ 348 $ 447 $ 48 $ -- $ -- $ (10)
Stocks 390 258 127 9 -- --
U.S. government issues 145 98 10 -- -- --
Short-term and other 186 117 6 -- -- --
------ ------ ------ ------ ------ -----
Total $1,069 $ 920 $ 191 $ 9 $ -- $ (10)
====== ====== ====== ====== ====== =====
Maturities by class of security are: municipal bonds -- 1998-2002; U.S.
government issues -- 1997-2025; and other -- 1997-2045. Trust fund
earnings (based on specific identification) increase the trust fund
balance and the accumulated provision for decommissioning. Net earnings
were $51 million in 1995, $26 million in 1994 and $45 million in 1993.
Proceeds from sales of securities (which are reinvested) were $1.0 billion
in 1995, $1.1 billion in 1994 and $372 million in 1993. Approximately 88%
of the trust fund contributions were tax-deductible.
The Financial Accounting Standards Board has issued an exposure draft
related to accounting practices for removal costs, including
decommissioning of nuclear power plants. The exposure draft would require
SCE to report its estimated decommissioning costs as a liability, rather
than recognizing these costs over the term of each facility's operating
license (current industry practice). SCE does not believe that the
changes proposed in the exposure draft would have an adverse effect on its
results of operations due to its current and expected future ability to
recover these costs through customer rates.
Other Commitments
SCE and EME have fuel supply contracts which require payment only if the
fuel is made available for purchase.
SCE has power-purchase contracts with certain qualifying facilities
(cogenerators and small power producers) and other utilities. The
qualifying facility contracts provide for capacity payments if a facility
meets certain performance obligations and energy payments based on actual
power supplied to SCE. There are no requirements to make debt-service
payments.
SCE has unconditional purchase obligations for part of a power plant's
generating output, as well as firm transmission service from another
utility. Minimum payments are based, in part, on the debt-service
requirements of the provider, whether or not the plant or transmission
line is operable. The purchased-power contract is not expected to provide
more than 5% of current or estimated future operating capacity. SCE's
minimum commitment under both contracts is approximately $225 million
through 2017.
Certain commitments for the years 1996 through 2000 are estimated below:
In millions 1996 1997 1998 1999 2000
- ----------- ---- ---- ---- ---- ----
Projected construction expenditures $ 895 $ 754 $ 647 $ 689 $ 673
Fuel supply contracts 329 353 341 341 397
Purchased-power capacity payments 722 727 731 735 736
Unconditional purchase obligations 12 12 12 12 12
EME has firm commitments to make equity and other contributions to its
projects of $303 million, primarily for the Paiton project in Indonesia.
EME also has contingent obligations to make additional contributions of
$552 million, primarily for equity support guarantees related to Paiton;
additional equity support ($80 million) for Loy Yang B; and a guarantee
as a condition of obtaining a $254 million tax-exempt financing for the
Brooklyn Navy Yard project (further discussed in Note 10).
Note 10. Contingencies
In addition to the matters disclosed in these notes, Edison International
is involved in legal, tax and regulatory proceedings before various courts
and governmental agencies regarding matters arising in the ordinary course
of business. Edison International believes the outcome of these
proceedings will not materially affect its results of operations or
liquidity.
Brooklyn Navy Yard Project
EME owns, through an indirect subsidiary, 50% of the Brooklyn Navy Yard
project; however, it is initially funding all of the required equity and
debt ($420 million) for the project and has provided a guarantee as a
condition of obtaining financing for the project. Consolidated Edison
Company of New York, which has contracted to buy most of the project's
power, raised concerns regarding the timing of certain performance
milestones and whether the plant's configuration and related performance
comply with the terms of the contract. EME and its project partner are
attempting to resolve these issues in a manner satisfactory to the project
and Consolidated Edison. EME believes the anticipated returns on the
project may be substantially less than originally estimated.
PAGE
40
Notes to Consolidated Financial Statements
Environmental Protection
Edison International is subject to numerous environmental laws and
regulations, which require it to incur substantial costs to operate
existing facilities, construct and operate new facilities, and mitigate
or remove the effect of past operations on the environment.
Edison International records its environmental liabilities when site
assessments and/or remedial actions are probable and a range of reasonably
likely cleanup costs can be estimated. Edison International reviews its
sites and measures the liability quarterly, by assessing a range of
reasonably likely costs for each identified site using currently available
information, including existing technology, presently enacted laws and
regulations, experience gained at similar sites, and the probable level
of involvement and financial condition of other potentially responsible
parties. These estimates include costs for site investigations,
remediation, operations and maintenance, monitoring and site closure.
Unless there is a probable amount, Edison International records the lower
end of this reasonably likely range of costs (classified as other long-
term liabilities at undiscounted amounts). While Edison International has
numerous insurance policies that it believes may provide coverage for some
of these liabilities, it does not recognize recoveries in its financial
statements until they are realized.
Edison International's recorded estimated minimum liability to remediate
its 62 identified sites (58 at SCE and 4 at EME) was $114 million at
December 31, 1995, and 1994. The ultimate costs to clean up Edison
International's identified sites may vary from its recorded liability due
to numerous uncertainties inherent in the estimation process, such as: the
extent and nature of contamination; the scarcity of reliable data for
identified sites; the varying costs of alternative cleanup methods;
developments resulting from investigatory studies; the possibility of
identifying additional sites; and the time periods over which site
remediation is expected to occur. Edison International believes that, due
to these uncertainties, it is reasonably possible that cleanup costs could
exceed its recorded liability by up to $215 million. The upper limit of
this range of costs was estimated using assumptions least favorable to
Edison International among a range of reasonably possible outcomes.
The CPUC allows SCE to recover environmental-cleanup costs at 24 of its
sites, representing $90 million of Edison International's recorded
liability, through an incentive mechanism (SCE may request to include
additional sites). Under this mechanism, SCE will recover 90% of cleanup
costs through customer rates; shareholders fund the remaining 10%, with
the opportunity to recover these costs through insurance and other third-
party recoveries. SCE has settled insurance claims with several carriers,
and is continuing to pursue additional recovery. Costs incurred at SCE's
34 sites are expected to be recovered through customer rates. SCE has
filed a request with the CPUC to add 11 of these sites ($6 million in
estimated minimum liability) to the incentive mechanism. SCE has recorded
a regulatory asset of $104 million for its estimated minimum
environmental-cleanup costs expected to be recovered through customer
rates.
Edison International's identified sites include several sites for which
there is a lack of currently available information, including the nature
and magnitude of contamination and the extent, if any, that Edison
International may be held responsible for contributing to any costs
incurred for remediating these sites. Thus, no reasonable estimate of
cleanup costs can be made for these sites at this time.
Edison International expects to clean up its identified sites over a
period of up to 30 years. Remediation costs in each of the next several
years are expected to range from $4 million to $8 million. Recorded costs
for 1995 were $3 million.
In 1994, SCE utilized an estimating technique to quantify its potential
liability for environmental cleanup in an effort to obtain a reasonably
possible objective and reliable estimate of environmental cleanup. During
1995, EME completed a similar review of its sites where known
contamination and potential liability exist, and is currently undergoing
a legal review of the indemnification language of each site's contractual
agreements, which is expected to be complete in 1996. This review could
result in an increase to Edison International's number of identified sites
and/or its estimated minimum liability in the near term.
Based on currently available information, Edison International believes
it is not likely that it will incur amounts in excess of the upper limit
of the estimated range and, based upon the CPUC's regulatory treatment of
environmental-cleanup costs, Edison International believes that costs
ultimately recorded will not have a material adverse effect on its results
of operations or financial condition. There can be no assurance, however,
that future developments, including additional information about existing
sites or the identification of new sites, will not require material
revisions to such estimates.
Nuclear Insurance
Federal law limits public liability claims from a nuclear incident to $8.9
billion. SCE and other owners of San Onofre and Palo Verde have purchased
the maximum private primary insurance available ($200 million). The
balance is covered by the industry's retrospective rating plan that uses
deferred premium charges to every reactor licensee in the event that a
nuclear incident at any licensed reactor in the U.S. results in
claims/costs which exceed the primary insurance at that plant site.
Federal regulations require this secondary level of financial protection.
The Nuclear Regulatory Commission exempted San Onofre Unit 1 from this
secondary level, effective June 1994. The maximum deferred premium for
each nuclear incident is $79 million per reactor, but not more than $10
million per reactor may be charged in any one year for each incident.
Based on its ownership interests, SCE could be required to pay a maximum
of $158 million per nuclear incident. However, it would have to pay no
more than $20 million per incident in any one year. Such amounts include
a 5% surcharge if additional funds are needed to satisfy public liability
claims and are subject to adjustment for inflation. In the event the
public liability limit above is insufficient, federal regulations will
impose further revenue raising measures to pay claims, including a
possible additional assessment upon all licensed reactor operators.
PAGE
41
Edison International and Subsidiaries
Property damage insurance covers losses up to $500 million, including
decontamination costs, at San Onofre and Palo Verde. Decontamination
liability and property damage coverage exceeding the primary $500 million
also has been purchased in amounts greater than federal requirements.
Additional insurance covers part of replacement power expenses during an
accident-related nuclear unit outage. These policies are issued primarily
by mutual insurance companies owned by utilities with nuclear facilities.
If losses at any nuclear facility covered by the arrangement were to
exceed the accumulated funds for these insurance programs, SCE could be
assessed retrospective premium adjustments of up to $44 million per year.
Insurance premiums are charged to operating expense.
Note 11. Investments in Partnerships and
Unconsolidated Subsidiaries
Edison International's nonutility subsidiaries have equity interests in
energy generation projects and real estate investment partnerships.
Summarized financial information of these investments was:
In millions Year ended December 31, 1995 1994 1993
- ----------- ----------------------- ---- ---- ----
Revenue $1,400 $1,256 $1,678
Expenses 1,121 969 1,323
------ ------ ------
Net income $ 279 $ 287 $ 355
====== ====== ======
In millions December 31, 1995 1994
- ----------- ------------ ---- ----
Current assets $ 643 $ 641
Other assets 4,818 4,121
------ ------
Total assets $5,461 $4,762
====== ======
Current liabilities $ 490 $ 453
Other liabilities 3,164 2,796
Equity 1,807 1,513
------ ------
Total liabilities and equity $5,461 $4,762
====== ======
Note 12. Business Segments
Edison International's business segments include electric utility
operations (SCE) and three nonutility segments: unregulated power
generation (EME); financial investments (Edison Capital); and real estate
holdings (Mission Land Company). The financial investment and real estate
holding segments are not individually significant and are combined for
reporting purposes.
Edison International's business segment information was:
Unregulated
Power Generation Edison
Electric ------------------- Inter-
In millions Utility Domestic Foreign Other national
- ----------- --------- -------- ------- -------- --------
1995
Operating revenue $ 7,873 $ 177 $ 290 $ 65 $ 8,405
Operating income 1,709 73 131 (8)(1) 1,905(2)
Depreciation and decommissioning 954 10 36 14 1,014
Assets 18,155 848 3,526 1,417 23,946
Additions to property and plant 773 4 1,231(3) 3 2,011
1994
Operating revenue $ 7,799 $ 170 $ 211 $ 165 $ 8,345
Operating income 1,602 96 85 (3)(1) 1,780(2)
Depreciation and decommissioning 891 9 31 14 945
Assets 18,076 974 1,869 1,471 22,390
Additions to property and plant 982 11 136 8 1,137
1993
Operating revenue $ 7,397 $ 164 $ 127 $ 151 $ 7,839
Operating income 1,670 26(4) 7(5) (10)(1) 1,693(2)
Depreciation and decommissioning 893 7 12 12 924
Assets 18,098 854 1,433 1,446 21,831
Additions to property and plant 1,040 5 203 11 1,259
Corporate items and eliminations are not material.
(1) Excludes reported tax benefits of $47 million in 1995, $34 million in
1994 and $33 million in 1993.
(2) Excludes income taxes of $528 million in 1995, $481 million in 1994 and
$465 million in 1993.
(3) Includes $1,042 million from EME's acquisition of First Hydro.
(4) Includes a $70 million charge for the reduced value of investments in
geothermal power plants, and additional reserves for project
development and other costs.
(5) Includes a $28 million charge for termination of investments in the
Carbon II project in Mexico.
PAGE
44
Selected Financial and Operating Data: 1991 -- 1995
Edison International and Subsidiaries
Dollars in millions, except per-share amounts* 1995 1994 1993 1992 1991
- ---------------------------------------------- ---- ---- ---- ---- ----
Edison International and Subsidiaries
Operating revenue $ 8,405 $ 8,345 $ 7,839 $ 7,984 $ 7,556
Operating expenses $ 7,028 $ 7,046 $ 6,611 $ 6,641 $ 6,317
Net income $ 739 $ 681 $ 639 $ 739 $ 703
Weighted-average shares of common
stock outstanding (in millions) 446 448 448 445 437
Per-share data:
Earnings $ 1.66 $ 1.52 $ 1.43 $ 1.66 $ 1.61
Dividends paid $ 1.00 $ 1.21 $ 1.41 $ 1.38 $ 1.34
Dividends declared $ 1.00 $ 1.105 $ 1.415 $ 1.39 $ 1.35
Book value at year-end $ 14.34 $ 13.72 $ 13.30 $ 13.30 $ 12.91
Market value at year-end $17-5/8 $14-5/8 $ 20 $ 22 $23-3/8
Dividend payout ratio (paid) 60.2% 79.6% 98.6% 83.1% 83.2%
Rate of return on common equity 11.80% 11.26% 10.65% 12.54% 12.51%
Price/earnings ratio 10.6 9.6 14.0 13.3 14.5
Ratio of earnings to fixed charges 2.55 2.48 2.28 2.68 2.53
Assets $23,946 $22,390 $21,831 $19,311 $18,343
Retained earnings $ 3,700 $ 3,452 $ 3,266 $ 3,263 $ 3,150
Common shareholders' equity $ 6,360 $ 6,144 $ 5,958 $ 5,954 $ 5,681
Preferred securities:
Not subject to mandatory redemption $ 284 $ 359 $ 359 $ 359 $ 359
Subject to mandatory redemption $ 425 $ 362 $ 275 $ 278 $ 199
Long-term debt $ 7,195 $ 6,347 $ 6,459 $ 6,320 $ 5,940
Southern California Edison Company
Operating revenue $ 7,873 $ 7,799 $ 7,397 $ 7,722 $ 7,298
Earnings $ 643 $ 599 $ 637 $ 631 $ 587
Earnings per Edison International
common share $ 1.44 $ 1.34 $ 1.42 $ 1.42 $ 1.34
Rate of return on common equity 12.64% 12.0% 12.9% 13.2% 12.6%
Internal generation of funds 89% 76% 78% 83% 70%
Peak demand in megawatts (MW) 17,548 18,044 16,475 18,413 16,709
Generation capacity at peak (MW) 21,603 20,615 20,606 20,712 20,875
Kilowatt-hour sales (in millions) 74,296 77,986 73,308 74,186 71,146
Customers (in millions) 4.18 4.15 4.12 4.11 4.08
Full-time employees** 15,490 16,351 16,585 16,922 17,110
Edison Mission Energy
Revenue $ 467 $ 381 $ 291 $ 183 $ 154
Net income $ 64 $ 55 $ 2 $ 89 $ 83
Earnings per Edison International
common share $ .14 $ .12 $ .01 $ .20 $ .38
Assets $ 4,374 $ 2,843 $ 2,286 $ 2,388 $ 1,171
Rate of return on common equity 9.7% 9.6% 0.3% 13.7% 11.8%
Ownership in operating projects (MW) 4,212 2,048 1,862 1,521 1,160
Full-time employees 902 690 673 488 371
Edison Capital
Revenue $ 26 $ 12 $ 16 $ 37 $ 29
Net income $ 39 $ 33 $ 29 $ 29 $ 25
Assets $ 1,063 $ 1,008 $ 972 $ 826 $ 690
Rate of return on common equity 18.5% 16.8% 14.5% 17.3% 17.2%
Full-time employees 42 33 20 18 13
* Per-share figures reflect the two-for-one split of Edison International
common stock effective June 1, 1993.
** 1992-1995 are based on 12-month averages.
PAGE
EXHIBIT 22
EDISON INTERNATIONAL SUBSIDIARIES
[00 through 10 are Dun & Bradstreet hierarchy (tier level) indicators]
HOLDING COMPANY
00 EDISON INTERNATIONAL (formerly SCEcorp) is a corporation organized
under the laws of the State of California and having its principal
place of business at 2244 Walnut Grove Avenue (P.O. Box 999),
Rosemead, California 91770. It was organized principally to acquire
and hold securities of other corporations for investment purposes.
Edison International has the following subsidiaries:
UTILITY SUBSIDIARIES
01 SOUTHERN CALIFORNIA EDISON COMPANY ("SCE") is a California
corporation having its principal place of business at 2244 Walnut
Grove Avenue (P.O. Box 800), Rosemead, California 91770. SCE is a
public utility primarily engaged in the business of supplying
electric energy to portions of central and southern California,
excluding the City of Los Angeles and certain other cities. Its
subsidiaries have the same principal place of business as Southern
California Edison Company:
02 CALIFORNIA ELECTRIC POWER COMPANY is an inactive California
corporation that remains from a 1964 merger with SCE.
02 CONSERVATION FINANCING CORPORATION is an inactive California
corporation that was originally formed to carry out residential
conservation financing programs.
02 ENERGY SERVICES, INC. is a California corporation engaged in the
business of assisting SCE in optimizing the use of its resources
for the benefit of its ratepayers by marketing SCE's
capabilities, facilities, products, information, and copyrighted
materials to third parties. Energy Services, Inc. does not
engage in any activities that would constitute owning or
operating facilities used for the generation, transmission, or
distribution of electric energy for sale.
02 MONO POWER COMPANY is an inactive California corporation that has
been engaged in the business of exploring for and developing fuel
resources.
03 THE BEAR CREEK URANIUM COMPANY is an inactive California
partnership between Mono Power Company (50%) and Union Pacific
Resources (50%) that has been engaged in reclamation of an
integrated uranium mining and milling complex in Wyoming.
02 SCE CAPITAL COMPANY is a Delaware corporation that acts as a
funding vehicle for financing of fuels, balancing accounts and
other corporate purposes of SCE.
02 SOUTHERN STATES REALTY is a California corporation engaged in
providing real estate brokerage and consulting services to SCE
and third parties.
PAGE
NON-UTILITY SUBSIDIARIES
01 THE MISSION GROUP is a California corporation having its principal
place of business at 18101 Von Karman Avenue, Suite 1700, Irvine,
California 92715, which was organized to own the stock and
coordinate the activities of nonutility companies. The subsidiaries
of The Mission Group are as follows:
02 EDISON EV is a California corporation having its principal place
of business at 515 South Figueroa Street, Suite 950, Los Angeles,
California 90071. It is engaged in the business of providing
services related to electric vehicle charging equipment.
02 EDISON SOURCE is a California corporation having its principal
place of business at 2244 Walnut Grove Avenue, Rosemead,
California 91770. It is engaged in the business of providing
services related to energy efficient systems for home and
industry.
02 EDISON CAPITAL (formerly MISSION FIRST FINANCIAL) is a California
corporation having its principal place of business at 18101 Von
Karman Avenue, Suite 1700, Irvine, California 92715. It is
engaged in the business of leveraged-leasing transactions and
other project financings, either directly or through
subsidiaries. Edison Capital owns a group of subsidiaries and
has interests in various partnerships through its subsidiaries.
The subsidiaries and partnerships of Edison Capital are listed
below. Unless otherwise indicated, all entities are
corporations, are organized under the laws of the State of
California, and have the same principal place of business as
Edison Capital.
03 Burlington Apartments, Inc.
04 Burlington Arboretum L.P. (partnership) 94.6%
03 Edison Funding Company (formerly Mission Funding Company)
04 Edison Integrated Energy Services (formerly Mission Integrated
Energy Services)
04 Edison Housing Investments (formerly Mission Housing Investments)
05 AE Associates L.P. (Avenida Espana) (partnership) 99%
05 Argyle Redevelopment Partnership, Ltd. (Colorado partnership) 99%
05 Bartlett Hill Associates L.P. (partnership) 70%; 100% w/ MBHCo.
05 Centertown Associates Ltd. (partnership) 99%
05 Centro Partners L.P. (El Centro) (partnership) 99%
05 Coyote Springs Apartments Associates L.P. (partnership) 99%
05 Cypress Cove Associates (partnership) 99%
05 Delta Plaza Apartments (partnership) 99%
05 EAH Larkspur Creekside Associates L.P. (partnership) 99%
05 East Cotati Avenue Partners L.P. (partnership) 99%
05 Edmundson Associates L.P. (Willows) (partnership) 99%
05 EHI Development Fund (formerly MHI Development Fund)
05 EHI Development Company (formerly MHI Development Company)
06 Santa Alicia Partnership (partnership) 1% of 99%
05 Farm (The) Associates L.P. (partnership) 99%
05 Gardens (The) Townhomes L.P. (commitment) 99%
05 Gilroy Redwood Associates L.P. (Redwoods) (partnership) 99%
05 Ginzton Associates L.P. (partnership) 99%
05 Grossman Apartments Investors L.P. (partnership) 99%
05 Heather Glen Associates L.P. (partnership) 99%
05 Holy Family Associates L.P. (partnership) 99%
05 Kennedy Court Partners L.P. (commitment) 100%
05 Kennedy Lofts Associates L.P. (Massachusetts partnership) 97%
05 Mar Associates L.P. (partnership) 99%
05 Merrill Road Associates L.P. (commitment) 99%
05 Metro Senior Associates L.P. (commitment) 99%
05 MH I L.P. (partnership) 1%
06 California Park Apartments L.P. (partnership) 1% of 99%
page 2
05 MH II L.P. (partnership) 1%
06 5363 Dent Avenue Associates L.P. (partnership) 1% of 99%
05 MH III L.P. (partnership) 1%
06 DeRose Housing Associates L.P. (partnership) 1% of 99%
05 MH IV L.P. (partnership) 1%
06 MPT Apartments L.P. (MacArthur Park) (partnership) 1% of 99%
05 MH V L.P. (partnership) 1%
06 Centennial Place L.P. (partnership) 1% of 99%
05 MHIFED 94 Company
05 MHIFED 94 L.P. (Delaware partnership) 1%GP; 99%LP to NYNEX
06 Berry Avenue Associates L.P. (partnership) 1% of 99%
06 Carlton Way Apartments L.P. (partnership) 1% of 99%
06 CDR Senior Housing Associates (Casa del Rio) (partnership) 1%
of 99%
06 Corona Ely/Ranch Associates L.P. (partnership) 1% of 99%
06 Fairview Village Associates L.P. (partnership) 1% of 99%
06 Fell Street Housing Associates L.P. (partnership) 1% of 99%
06 Hope West Apartments L.P. (partnership) 1% of 99%
06 Morrone Gardens Associates L.P. (partnership) 1% of 99%
06 Pajaro Court Associates L.P. (partnership) 1% of 99%
06 Tierra Linda Associates L.P. (partnership) 1% of 99%
06 Tlaquepaque Housing Associates L.P. (partnership) 1% of 99%
05 MHIFED 95 Company
05 MHIFED 95 L.P. (Delaware partnership) 1%GP; 99%LP to NYNEX
06 Avalon Courtyard L.P. (Carson Senior Housing) (partnership) 1%
of 95%
06 Hollywood El Centro L.P. (partnership) 1% of 99%
06 La Brea/Franklin L.P. (partnership) 1% of 99%
06 Larkin Pine L.P. (partnership) 1% of 99%
06 Mercy Housing California III L.P. (3rd & Reed) (partnership)
1% of 99%
06 Pinole Grove Associates L.P. (partnership) 1% of 99%
06 Second Street Center L.P. (Santa Monica) (partnership) 1% of
99%
06 Solinas Village Partners L.P. (partnership) 1% of 99%
06 Three Oaks Housing L.P. (partnership) 1% of 99%
06 1101 Howard Street Associates L.P. (partnership) 1% of 99%
05 MHIFED 95C Company
06 MHIFED 95C L.P. (Delaware partnership) 99%LP
07 Oceanside Gardens L.P. (commitment) 99% of 99%
07 Park Place Terrace L.P. (partnership) 99% of 99%
05 MHIFED 95C L.P. (Delaware partnership) 1%GP
06 Oceanside Gardens L.P. (commitment) 1% of 99%
06 Park Place Terrace L.P. (partnership) 1% of 99%
05 MHIFED 96 Company
06 MHIFED 96 L.P. (Delaware partnership) 95%LP
07 Lavell Village Associates L.P. (partnership) 95% of 99%
07 North Town Housing Partners L.P. (Villa del Norte Village)
(partnership) 95% of 99%
07 Poco Way Associates L.P. (partnership) 95% of 99%
07 Seasons Affordable Senior Housing L.P. (partnership) 95% of
99%
05 MHIFED 96 L.P. (Delaware partnership) 5%GP
06 Lavell Village Associates L.P. (partnership) 5% of 99%
06 North Town Housing Partners L.P. (Villa del Norte Village)
(partnership) 5% of 99%
06 Poco Way Associates L.P. (partnership) 5% of 99%
06 Seasons Affordable Senior Housing L.P. (partnership) 5% of 99%
05 MHIFED 96A Company
06 MHIFED 96A L.P. (Delaware partnership) 99%LP
07 Altamont Hotel Associates L.P. (partnership) 99% of 99%
07 Good Samaritan Associates L.P. (partnership) 99% of 99%
07 Mercy Housing California VI L.P. (205 Jones) (partnership)
99% of 99%
07 North Park Village LLC (commitment) 99% of 99%
page 3
07 Reseda Village L.P. (partnership) 99% of 99%
07 Oxnard Housing Associates L.P. (partnership) 99% of 99%
07 Mercy Housing California IV L.P. (Vista Grande) (commitment)
99% of 99%
05 MHIFED 96A L.P. (Delaware partnership) 1%GP
06 Altamont Hotel Associates L.P. (partnership) 1% of 99%
06 Good Samaritan Associates L.P. (partnership) 1% of 99%
06 Mercy Housing California VI L.P. (205 Jones) (partnership) 1%
of 99%
06 North Park Village LLC (commitment) 1% of 99%
06 Reseda Village L.P. (partnership) 1% of 99%
06 Oxnard Housing Associates L.P. (partnership) 1% of 99%
06 Mercy Housing California IV L.P. (Vista Grande) (commitment)
1% of 99%
05 MHICAL 94 Company
06 MHICAL 94 L.P. (Delaware partnership) 99%LP
07 Mayacamas Village Associates L.P. (partnership) 99% of 99%
07 Rincon De Los Esteros Associates L.P. (partnership) 99% of
99%
07 West Capital Courtyard L.P. (partnership) 99% of 99%
07 Winfield Hill Associates L.P. (partnership) 99% of 99%
05 MHICAL 94 L.P. (Delaware partnership) 1%GP
06 Mayacamas Village Associates L.P. (partnership) 1% of 99%
06 Rincon De Los Esteros Associates L.P. (partnership) 1% of 99%
06 West Capital Courtyard L.P. (partnership) 1% of 99%
06 Winfield Hill Associates L.P. (partnership) 1% of 99%
05 MHICAL 95 Company
06 MHICAL 95 L.P. (Delaware partnership) 99%LP
07 Abby Associates L.P. (Windmere) (partnership) 99% of 99%
07 Antelope Associates L.P. (partnership) 99% of 99%
07 Baker Park Associates L.P. (partnership) 99% of 99%
07 Bracher Associates L.P. (partnership) 99% of 99%
07 Catalonia Associates L.P. (partnership) 99% of 99%
07 Colina Vista L.P. (partnership) 99% of 99%
07 Florin Woods Associates L.P. (partnership) 99% of 99%
07 Pinmore Associates L.P. (partnership) 99% of 99%
07 Sunset Creek Partners L.P. (partnership) 99% of 99%
05 MHICAL 95 L.P. (Delaware partnership) 1%GP
06 Abby Associates L.P. (Windmere) (partnership) 1% of 99%
06 Antelope Associates L.P. (partnership) 1% of 99%
06 Baker Park Associates L.P. (partnership) 1% of 99%
06 Bracher Associates L.P. (partnership) 1% of 99%
06 Catalonia Associates L.P. (partnership) 1% of 99%
06 Colina Vista L.P. (partnership) 1% of 99%
06 Florin Woods Associates L.P. (partnership) 1% of 99%
06 Pinmore Associates L.P. (partnership) 1% of 99%
06 Sunset Creek Partners L.P. (partnership) 1% of 99%
05 MHICAL 96 Company
06 MHICAL 96 L.P. (Delaware partnership) 99%LP
07 Huff Avenue Associates L.P. (commitment) 99% of 99%
07 Klamath Associates L.P. (commitment) 99% of 99%
05 MHICAL 96 L.P. (Delaware partnership) 1%GP
06 Huff Avenue Associates L.P. (commitment) 1% of 99%
06 Klamath Associates L.P. (commitment) 1% of 99%
05 Mid-Peninsula Century Village Associates L.P. (Century Village)
(commitment) 99%
05 Mid-Peninsula Sharmon Palms Associates L.P. (Sharmon Palms)
(partnership) 99%
05 Mission Capp L.P. (partnership) 99%
05 Mission Housing Alpha
06 Lee Park Investors L.P. (Pennsylvania partnership) 99%
05 Mission Housing Beta
06 Richmond City Center Associates L.P. (partnership) 99%
05 Mission Housing Delta
06 MH I (partnership) 99%
page 4
07 California Park Apartments L.P. (partnership) 99% of 99%
06 MH II (partnership) 99%
07 5363 Dent Avenue Associates L.P. (partnership) 99% of 99%
06 MH III (partnership) 99%
07 DeRose Housing Associates L.P. (partnership) 99% of 99%
06 MH IV (partnership) 99%
07 MPT Apartments L.P. (MacArthur Park) (partnership) 99% of 99%
06 MH V (partnership) 99%
07 Centennial Place L.P. (partnership) 99% of 99%
05 Mission Housing Denver
06 Mercantile Square L.P. (partnership) 99%
05 Mission Housing Epsilon
06 Riverside/Liebrandt Partners L.P. (La Playa) (partnership) 99%
05 Mission Housing Gamma
06 Del Carlo Court Associates L.P. (partnership) 99%
05 Mission Housing Holdings (formerly MHIFED 95B Company)
06 Mission Housing Partnership 1996 L.P. 99%LP
(formerly MHIFED 95B L.P.) (Delaware partnership)
07 La Terraza Associates L.P. (Carlsbad Villas at Camino Real)
(partnership) 99% of 99%
05 Mission Housing Partnership 1996 L.P. 1%GP
(formerly MHIFED 95B L.P.) (Delaware partnership)
06 La Terraza Associates L.P. (Carlsbad Villas at Camino Real)
(partnership) 1% of 99%
05 Mission Housing Theta
06 Mission Housing Investors Partnership 5%GP; 95%LP to GECC
07 Forest Winds Associates L.P. (partnership) 5% of 99%
07 Glen Eden Associates L.P. (partnership) 5% of 99%
07 Gray's Meadows Investors L.P. (partnership) 5% of 99%
07 Prince Bozzuto L.P. (Fairground Commons) (Maryland
partnership) 5% of 99%
07 Rancho Park Associates L.P. (partnership) 5% of 99%
07 Rustic Gardens Associates L.P. (partnership) 5% of 99%
07 Sea Ranch Apartments L.P. (partnership) 5% of 99%
07 Springdale Kresson Associates L.P. (Jewish Federation) (New
Jersey partnership) 5% of 99%
07 1028 Howard Street Associates L.P. (partnership) 5% of 99%
05 Mission Housing Zeta
06 Fremont Building L.P. (Crescent Arms) (partnership) 99%
05 Mission SA Company
06 Santa Alicia Partnership (partnership) 99% of 99%
05 Neary Lagoon Partners L.P. (partnership) 99%
05 Open Doors Associates L.P. (West Valley) (partnership) 99%
05 Palmer House L.P. (partnership) 99%
05 Pilot Grove L.P. (Massachusetts partnership) 99%
05 Post Office Plaza L.P. (Ohio partnership) 99%
05 Rosebloom Associates L.P. (Oakshade) (partnership) 99%
05 Round Walk Village Apartments L.P. (commitment) 99%
05 San Pablo Senior Housing Associates L.P. (partnership) 99%
05 San Pedro Gardens Associates L.P. (partnership) 99%
05 Santa Paulan Senior Apartments Associates L.P.(partnership) 99%
05 Sky Parkway Housing Associates L.P. (commitment) 99%
05 South Beach Housing Associates L.P. (Steamboat) (partnership) 99%
05 Stoney Creek Associates L.P. (partnership) 99%
05 Studebaker Building L.P. (partnership) 99%
05 Sultana Acres Associates L.P. (partnership) 99%
05 Tabor Grand L.P. (Colorado partnership) 99%
05 The Josephinum Associates L.P. (Washington partnership) 99%
05 Tuscany Associates L.P. (Tuscany Villa) (partnership) 99%
05 Vista Properties LLC (commitment) 99%
05 Washington Creek Associates L.P. (partnership) 99%
05 Westgate Townhomes Associates L.P. (commitment) 99%
05 Westport Village Homes Associates L.P. (partnership) 99%
05 Wheeler Manor Associates L.P. (partnership) 99%
05 YWCA Villa Nueva Partners L.P. (partnership) 99%
page 5
05 16th & Church Street Associates L.P. (partnership) 99%
05 210 Washington Avenue Associates (Renaissance Plaza) (Connecticut
partnership) 99%
04 Mission First Asset Investment
04 Mission Funding Beta
04 Mission Funding Epsilon
05 GEM Energy Company (New York partnership)
05 Mission Funding Alpha
06 Mission Funding Mu
07 EPZ Mission Funding Mu Trust (interest in foreign utility
company) [see 4.01, was 4.18]
05 Mission Funding Delta
06 Mission Funding Nu
07 EPZ Mission Funding Nu Trust (interest in foreign utility
company) [see 4.02, was 4.19]
05 Mission Investments, Inc. (U.S. Virgin Islands corporation)
Address: ABN Trustcompany, Guardian Building, Havensight,
2nd Floor, St. Thomas, U.S. Virgin Islands
05 Mission (Bermuda) Investments, Ltd. (Bermuda corporation)
Address: Clarendon House, 2 Church Street,
Hamilton HM CX, Bermuda
05 Mission (Bermuda) Investments Pi, Ltd. (Bermuda corporation)
Address: Clarendon House, 2 Church Street,
Hamilton HM CX, Bermuda
04 Mission Funding Gamma
04 Mission Funding Kappa
05 ABB Funding Partners, L.P. (partnership)
04 Mission Funding Theta
04 Mission Funding Zeta
05 Huntington L.P. (New York partnership) 50%
03 Mission Bartlett Hill Company
04 Bartlett Hill Associates L.P. (partnership) 30% [29%LP, 1%GP]; 100%
w/ EHI
03 Mission International Capital, Inc.
03 Renewable Energy Capital Company
page 6
02 MISSION LAND COMPANY is a California corporation having its
principal place of business at 3281 East Guasti Road, Suite 550,
Ontario, California 91761. It is engaged, directly and through
its subsidiaries, in the business of developing, owning and
managing industrial parks and other real property investments.
The subsidiaries and partnerships of Mission Land Company are
listed below. Unless otherwise indicated, all entities are
corporations, are organized under the laws of the State of
California, and have the same principal place of business as
Mission Land Company.
03 Associated Southern Investment Company
04 Calabasas Park Company (partnership) (inactive) 89.5%GP
05 Central Valley/Calabasas L.P. (partnership) [in dissolution] 50%LP
03 Calabasas Palatino, Inc.
04 Central Valley/Calabasas L.P. (partnership) [in dissolution] 50%GP
03 Carol Stream Developers G.P. (Illinois partnership) 60%GP
03 Centrelake Partners, L.P. (limited partnership) 98%GP
03 Corona Partners L.P. (limited partnership) 99%LP
03 Irwindale Land Company
04 Mission-Koll I (limited partnership) 4%GP
03 Mission Airport Park Development Co.
04 Carol Stream Developers G.P. (Illinois partnership) 40%GP
04 Centrelake Partners, L.P. (limited partnership) 2%LP
04 Corona Partners L.P. (limited partnership) 1%GP
04 Mission-Nexus II, L.P. (limited partnership) 50%GP
04 Mission Vacaville L.P. (limited partnership) (formerly Mission-
Messenger Vacaville G.P.) 1%GP
04 Ontario Airport Industrial Park (partnership) 51%GP
03 Mission-DAI I, L.P. (limited partnership) (inactive) (equity) 60%LP
03 Mission-Dominion Partners I, L.P. (limited partnership) (equity) 60%LP
03 Mission Industrial Constructors, Inc. (inactive)
03 Mission-Koll I (limited partnership) 96%LP
03 Mission-Nexus II, L.P. (limited partnership) 50%LP
03 Mission-Oceangate (partnership) (formerly Mission Comstock Crosser
Hickey) 75%GP
03 Mission/Ontario, Inc.
03 Mission Shea I, L.P. (limited partnership) (equity) 50%LP
03 Mission South Bay Company (inactive)
04 Mission-Oceangate (partnership) (formerly Mission Comstock, Crosser
Hickey G.P.) 25%GP
03 Mission Texas Property Holdings, Inc.
03 Mission Vacaville L.P. (limited partnership) (formerly Mission-
Messenger Vacaville G.P.) 99%LP
03 Mission-701 Minnesota (limited partnership) (equity) 71.2%LP
02 MISSION POWER ENGINEERING COMPANY is a California corporation
having its principal place of business at 18101 Von Karman
Avenue, Suite 1700, Irvine, California 92715. It is currently
an inactive company. The subsidiaries of Mission Power
Engineering Company are listed below. Unless otherwise
indicated, all entities are corporations, are organized under the
laws of the State of California, and have the same principal
place of business as Mission Power Engineering Company.
03 Associated Southern Engineering Company (inactive)
page 7
02 EDISON MISSION ENERGY (formerly MISSION ENERGY COMPANY) is a
California corporation having its principal place of business at
18101 Von Karman Avenue, Suite 1700, Irvine, California 92715.
Edison Mission Energy owns the stock of a group of corporations
which, primarily through partnerships with non-affiliated
entities, are engaged in the business of developing, owning
and/or operating cogeneration, geothermal and other energy or
energy-related projects pursuant to the Public Utility Regulatory
Policies Act of 1978. Edison Mission Energy, through wholly
owned subsidiaries, also has ownership interests in a number of
independent power projects in operation or under development that
either have been reviewed by the Commission's staff for
compliance with the Act or are or will be exempt wholesale
generators under the Energy Policy Act of 1992. In addition,
some Edison Mission Energy subsidiaries have made fuel-related
investments and a limited number of non-energy related
investments. The subsidiaries and partnerships of Edison Mission
Energy are listed below. Unless otherwise indicated, all
entities are corporations, are organized under the laws of the
State of California and have the same principal place of business
as Edison Mission Energy.
DOMESTIC:
03 Aguila Energy Company (LP)
04 American Bituminous Power Partners, L.P. (Delaware limited
partnership) 49.5%; 50% with Pleasant Valley
05 American Kiln Partners, L.P. (Delaware limited partnership)
03 Anacapa Energy Company (GP)
04 Salinas River Cogeneration Company (partnership) 50%
03 Anacostia Energy Company (D.C. corporation) (inactive)
03 Arrowhead Energy Company
04 Crown Energy, L.P. (New Jersey partnership) [was 4.3; delete in
1997] 50%LP; 100% w/ Mission/Eagle and Thorofare
05 Crown Vista Urban Renewal Corporation (New Jersey corporation)
50%; 100% with Vista Energy
03 Balboa Energy Company (GP)
04 Smithtown Cogeneration, L.P. (Delaware partnership) 50%; 100%
w/Kingspark
03 Bergen Point Energy Company (GP)
04 TEVCO/Mission Bayonne Partnership (Delaware G.P.) 50%
03 Blue Ridge Energy Company (GP)
04 Bretton Woods Cogeneration, L.P. (Delaware limited partnership) 50%;
100% w/Bretton Woods
03 BN Geothermal Inc. (Delaware corporation)
04 Vulcan/BN Geothermal Power Company (Nevada G.P.) 50%
03 Bretton Woods Energy Company (GP & LP)
04 Bretton Woods Cogeneration, L.P. (Delaware L.P.) 50%; 100% w/Blue
Ridge
03 Camino Energy Company (GP)
04 Watson Cogeneration Company (general partnership) 49%
03 Capistrano Cogeneration Company (GP)
04 James River Cogeneration Company (North Carolina partnership) 50%
03 Capitol Energy Company (D.C. corporation) (inactive)
03 Centerport Energy Company (GP & LP)
04 Riverhead Cogeneration I, L.P. (Delaware partnership) 50%; 100%
w/Ridgecrest
03 Chesapeake Bay Energy Company (formerly Woodland Energy Company) (GP)
04 Delaware Clean Energy Project (Delaware general partnership) 50%
03 Chester Energy Company (no partners; option Chesapeake,VA)
03 Clayville Energy Company
04 Oconee Energy, L.P. (Delaware L.P.) 50%; 100% w/Coronado
03 Colonial Energy Company (formerly Hentland Energy Company) (inactive)
03 Conejo Energy Company (GP & LP)
04 Del Ranch (Andy Hoch), L.P. (partnership) 50%
03 Coronado Energy Company
page 8
04 Oconee Energy, L.P. (Delaware L.P.) 50%; 100% w/Clayville
03 Crescent Valley Energy Company (GP)
04 Beowawe Geothermal Power Company (general partnership) 50%
03 Del Mar Energy Company (GP)
04 Mid-Set Cogeneration Company (partnership) 50%
03 Delaware Energy Conservers, Inc. (Delaware corporation) (inactive)
03 Desert Sunrise Energy Company (Nevada corporation) (inactive)
03 Devereaux Energy Company (LP)
04 Auburndale Power Partners, L.P. (Delaware L.P.) 49%; 50% w/El Dorado
03 Eastern Sierra Energy Company (GP & LP)
04 Saguaro Power Company, L.P. (partnership) 50%
03 East Maine Energy Company (inactive) [dissolving]
03 Edison Mission Operation and Maintenance, Inc. (formerly Mission
Operation and Maintenance, Incorporated) (no partnership)
04 Mission Operations de Mexico, S.A. de C.V. 95%
03 El Dorado Energy Company (GP)
04 Auburndale Power Partners, L.P. (Delaware L.P.) 1%; 50% w/ Devereaux
03 EMP, Inc. (Oregon corporation) (GP & LP)
04 GEO East Mesa Limited Partnership (partnership) 50%
05 GEO East Mesa Electric Co. (Nevada corp.) (McCabe Plant) 100%
03 Four Counties Gas Company (inactive)
03 Hanover Energy Company
04 Chickahominy River Energy Corp. (Virginia corporation) (GP & LP)
05 Commonwealth Atlantic L.P. (Delaware partnership) [see 4.03, was
4.1] 50%
03 Holtsville Energy Company (GP & LP) (formerly Brookhaven Energy
Company)
04 Brookhaven Cogeneration, L.P. (Delaware partnership) 50%; 100%
w/Madera
03 Indian Bay Energy Company (GP & LP)
04 Riverhead Cogeneration III, L.P. (Delaware partnership) 50%; 100%
w/Santa Ana
03 Jefferson Energy Company (GP & LP) (inactive)
03 Kings Canyon Energy Company (inactive)
03 Kingspark Energy Company (GP & LP)
04 Smithtown Cogeneration, L.P. (Delaware partnership) 50%; 100%
w/Balboa
03 Laguna Energy Company (inactive) (former interest in Ambit)
03 La Jolla Energy Company (inactive) (used for Belridge)
03 Lake Grove Energy Company (former Mid-County subsidiary) (inactive)
03 Lakeview Energy Company
04 Georgia Peaker, L.P. (Delaware L.P.) 50%; 100% w/Silver Springs
03 Lehigh River Energy Company (GP)
04 TEVCO/Mission Assets Partnership (Delaware G.P.) 50%
05 Continental Energy Associates, L.P. (Mass. partnership) 22.5%
03 Longview Cogeneration Company (formerly Columbia River Cogeneration
Company, formerly Cabrillo Energy Company) (held for Weyerhauser)
03 Madera Energy Company (GP)
04 Brookhaven Cogeneration, L.P. (Delaware partnership) 50%; 100%
w/Holtsville
03 Madison Energy Company (formerly Sunshine Generators, Inc.) (LP)
04 Gordonsville Energy, L.P. (Delaware partnership) [see 4.04, was 4.5]
49%; 50% w/Rapidan
03 Mission Capital (Delaware L.P.) 3%; MIPS partnership
03 Mission/Eagle Energy Company
04 Crown Energy, L.P. (New Jersey partnership) [was 4.3; delete in
1997] 2%GP; 100% w/ Arrowhead and Thorofare
05 Crown Vista Urban Renewal Corporation (New Jersey corporation)
50%; 100% with Vista Energy
03 Mission Energy Canada Corporation (British Columbia company)
04 B.C. Star Partners (British Columbia partnership) 50%
04 The Mission Interface Partnership (Province of Ontario G.P.) 50%
03 Mission Energy Construction Services, Inc. (formerly Glenwood Springs
Property, Inc.)
03 Mission Energy Fuel Company
page 9
04 Mission Energy Oil and Gas Company
05 Four Star Oil & Gas Company (partnership) 47.32% (owns Lost Hills
Cogeneration Facility)
04 Mission Energy Petroleum Company (Gas contracts w/ Tex. Gas Mktg)
04 Pocono Fuels Company (inactive)
04 Southern Sierra Gas Company
05 TM Star Fuel Company (general partnership) 50%
03 Mission Energy Holdings, Inc.
04 Mission Capital (Delaware L.P.) 97%; MIPS ptnrshp
03 Mission Energy Holdings International, Inc. (formerly Patapsco Energy
Company) [holds all the issued and outstanding stock of MEC
International B.V.--see INTERNATIONAL section]
03 Mission Energy Indonesia (formerly Chula Energy Company)
03 Mission Energy Mexico (inactive) formerly the branch office in Mexico
(no partnership)
03 Mission Energy New York, Inc. (formerly Allegheny Energy Company) (GP
& LP)
04 Brooklyn Navy Yard Cogeneration Partners, L.P. (Delaware
partnership) [see 4.05, was 4.21] 50%
03 Mission Energy Wales Company (formerly San Jacinto Energy Company)
04 Mission Hydro L.P. (UK limited partnership) 30%
05 First Hydro Holdings Company 99%
06 First Hydro Finance plc
07 First Hydro Limited [see 4.18, was 4.20]
03 Mission Energy Westside, Inc. (formerly Sun Coast Energy Company)
03 Mission Operations de Mexico, S.A. de C.V. 5%
03 Mission Triple Cycle Systems Company (GP)
04 Triple Cycle Partnership (Texas G.P.) 50%
03 Niguel Energy Company (GP & LP)
04 Elmore, Ltd. (partnership) 50%
03 North Jackson Energy Company (inactive) [held for Akso Salt Proj]
03 Northern Sierra Energy Company (GP)
04 Sobel Cogeneration Company (general partnership) 50%
03 Ortega Energy Company (Mid-County Cogen gas contracts)
03 Panther Timber Company (GP)
04 American Kiln Partners, L.P. (Delaware limited partnership) 2%
03 Paradise Energy Company
04 Vista Energy, L.P. (New Jersey limited partnership) [was 4.4; delete
in 1997] 50%LP; 100% with Vista Energy Company
05 Crown Vista Urban Renewal Corporation (New Jersey corporation)
50%; 100% w/Crown Energy
03 Pleasant Valley Energy Company (GP)
04 American Bituminous Power Partners, L.P. (Delaware limited
partnership) 0.5%; 50% w/Aguila
05 American Kiln Partners, L.P. (Delaware Limited Partnership)
03 Prince George Energy Company (LP)
04 Hopewell Cogeneration L.P. (Delaware limited partnership) 24.75%
04 Hopewell Cogeneration Inc. (Delaware corporation) 25%
05 Hopewell Cogeneration L.P. (Delaware limited partnership) 1%
03 Quartz Peak Energy Company (LP)
04 Nevada Sun-Peak L.P. (Nevada partnership) [see 4.06, was 4.2] 50%
03 Rapidan Energy Company (GP)
04 Gordonsville Energy, L.P. (Delaware partnership) [see 4.04, was 4.5]
1%; 50% w/Madison
03 Reeves Bay Energy Company (GP & LP)
04 North Shore Energy L.P. (Delaware partnership) 50%; 100% w/Santa
Clara
05 Northville Energy Corporation (New York corporation) 100%
03 Ridgecrest Energy Company (GP)
04 Riverhead Cogeneration I, L.P. (Delaware partnership) 50%; 100%
w/Centerport
03 Rio Escondido Energy Company
04 Energia Del Norte, S.A. de C.V. (limited liability company) 49%
03 Riverport Energy Company (GP & LP)
page 10
04 Riverhead Cogeneration II, L.P. (Delaware partnership) 50%; 100%
w/San Pedro
03 San Felipe Energy Company (GP & LP)
04 Leathers, L.P. (partnership) 50%
03 San Gabriel Energy Company (inactive) (McKenzie gas contracts)
03 San Joaquin Energy Company (GP)
04 Midway-Sunset Cogeneration Company, L.P. (partnership) 50%
03 San Juan Energy Company (GP)
04 March Point Cogeneration Company (partnership) 50%
03 San Pedro Energy Company (GP)
04 Riverhead Cogeneration II, L.P. (Delaware partnership) 50%; 100%
w/Riverport
03 Santa Ana Energy Company (GP)
04 Riverhead Cogeneration III, L.P. (Delaware partnership) 50%; 100%
w/Indian Bay
03 Santa Clara Energy Company (GP)
04 North Shore Energy, L.P. (Delaware partnership) 50%; 100% w/Reeves
Bay
05 Northville Energy Corporation (New York corporation) 100%
03 Silverado Energy Company (GP)
04 Coalinga Cogeneration Company (partnership) 50%
03 Silver Springs Energy Company
04 Georgia Peaker, L.P. (Delaware limited partnership) 50%; 100%
w/Lakeview
03 Sonoma Geothermal Company (GP & LP)
04 Geothermal Energy Partners Ltd. (partnership) (Aidlin) 5%LP
03 South Coast Energy Company (GP)
04 Harbor Cogeneration Company (partnership) 30%
03 Southern Sierra Energy Company (GP)
04 Kern River Cogeneration Company (general partnership) 50%
03 Thorofare Energy Company
04 Crown Energy, L.P. (New Jersey partnership) [was 4.3; delete in
1997] 48%; 100% w/ Arrowhead and Mission/Eagle
05 Crown Vista Urban Renewal Corporation (New Jersey corporation)
50%; 100% w/ Vista Energy
03 Viejo Energy Company (GP)
04 Sargent Canyon Cogeneration Company (partnership) 50%
03 Vista Energy Company (New Jersey corporation) (GP & LP)
04 Vista Energy, L.P. (New Jersey limited partnership) [was 4.4; delete
in 1997] 50%GP; 100% w/ Paradise
05 Crown Vista Urban Renewal Corporation (New Jersey corporation)
50%; 100% w/Crown Energy
03 Western Sierra Energy Company (GP)
04 Sycamore Cogeneration Company (general partnership) 50%
page 11
INTERNATIONAL:
04 MEC International B.V. (Netherlands corporation) (Holding Company)
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
05 Edison Mission Energy Asia Company (formerly Asia Power
Development Company) (Cayman Island) (Meizhou Wan, Ningbo and
Nanhai Projects) 99%SH
Address: 391-B Orchard Road, Ngee Ann City, Tower B,
14th Floor, #14-08/10, Singapore 0923
06 Mission China Holdings Company (Cayman Island) (Meizhou Wan
Project) 99%
Address: 391-B Orchard Road, Ngee Ann City, Tower B,
14th Floor, #14-08/10, Singapore 0923
07 Fujian Electric (Hong Kong) LDC 20%SH
Address: c/o Caledonian Bank & Trust Limited, Ground Floor,
Caledonian House, Mary Street, P.O. Box 1043,
George Town, Grand Cayman, Cayman Islands
06 Mission Ningbo Holdings Company (Cayman Island) (Ningbo Project)
100%
Address: 391-B Orchard Road, Ngee Ann City, Tower B,
14th Floor, #14-08/10, Singapore 0923
05 Edison Mission Energy Asia Pte Ltd. (formerly Mission Energy Asia
Pte Ltd.) (Singapore private company limited by shares) 100%
(Branch Office in Singapore)
Address: 391-B Orchard Road, Ngee Ann City, Tower B,
14th Floor, #14-08/10, Singapore 0923
06 P.T. Mission Operation and Maintenance Indonesia (Indonesian
company) 99%
Address: Jl. Gen. A Yani No. 54
Probolinggo, East Java, Indonesia
05 Edison Mission Energy Holdings Pty Ltd (formerly Mission Energy
Holdings Pty. Ltd.) (Australian corporation) 100%
Address: Southgate Complex, Level 20, Tower East,
40 City Road, South Melbourne, Victoria 3205
06 Edison Mission Operation & Maintenance Kwinana Pty Ltd (formerly
Mission Operations (Kwinana) Pty Ltd) (Australia) 100% (Operator
of Kwinana Project)
Address: Southgate Complex, Level 20, Tower East,
40 City Road, South Melbourne, Victoria 3205
06 Edison Mission Operation & Maintenance Loy Yang Pty Ltd
(formerly Mission Energy Management Australia Pty. Ltd.)
(Australian corporation) 100%
Address: P.O. Box 1792, Traralgon, Victoria 3844, Australia
06 Mission Energy Development Australia Pty. Ltd. (Australian
corporation) 100%
Address: Southgate Complex, Level 20, Tower East,
40 City Road, South Melbourne, Victoria 3205
06 Mission Energy Holdings Superannuation Fund Pty Ltd. (retirement
fund required by Australia law) 100%
06 Mission Energy (Kwinana) Pty Ltd (Australia) 100%
Address: Southgate Complex, Level 20, Tower East,
40 City Road, South Melbourne, Victoria 3205
07 Kwinana Power Partnership (Australian G.P.) 1%
Address: Level 23, St. Martins Tower
44 St George's Terrace, Perth WA 6000
05 Edison Mission Energy International B.V. (formerly MEC Mission
B.V.) (Netherlands company) 99%SH
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
05 Hydro Energy B.V. (Netherlands limited liability company)
(formerly Continfin Management B.V.) (equity) 10%SH
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
06 Compania Mediterranea de Energias, S.A. (Spain corporation)
(equity) [see 4.07, was 4.7]
Address: Paseo de Gracia, 18, 4a, Barcelona, Spain
06 Energias Hidraulicas, S.A. (Spain corporation) (equity)
Address: Princesa 3, Madrid, Spain
page 12
06 Iberica de Energias, S.A. (Spain corp) (equity) [see 4.08, was
4.15]
Address: c/ Concha Espina, 8, 1o, Madrid, Spain
05 Iberian Hy-Power Amsterdam B.V. (Netherlands limited liability
company) (equity) 34%SH
Address: Strawinskylaan 1725, Amsterdam, NOORD-HOLL 1077 XX
06 Electra La Mella, S.A. (Spain corporation) (equity) [was 4.8;
delete in 1997] 70% [This entity was merged into Cadagua in
December 1995.]
Address: Ercilla, 26-6o Centro, 48011 Bilbao, Spain
06 Electrometalurgica del Ebro, S.A. ("Emesa") (Spain corporation)
(equity) [see 4.09, was 4.9] 92.3%
Address: Paseo de Gracia, 18, 4a, Barcelona, Spain
07 Monasterio de Rueda, S.L. (inactive)
06 Hidroelectrica del Cadagua, S.A. (Spain corporation) (equity)
[see 4.10, was 4.10] 75%
Address: Ercilla, 26-6o Centro, 48011 Bilbao, Spain
06 Hidroelectrica de Casillas, S.A. (Spain corporation) (equity)
[see 4.11, was 4.11] 51%
Address: Av. Ramon & Cajal, 10-B, Sevilla, Spain
06 Hidroelectrica de Olvera, S.A. (Spain corporation) (equity) [see
4.12, was 4.12] 66%
Address: Urbanizacion Las Canteras II, Camas, Sevilla, Spain
06 Hidroelectrica de Posadas, S.A. (Spain corporation) (equity)
[see 4.13, was 4.13] 100%
Address: Urbanizacion Las Canteras II, Camas, Sevilla, Spain
06 Hidroelectrica del Sossis, S.A. (Spain corporation) (equity)
[see 4.14, was 4.14] 100%
Address: Ercilla, 26-6o Centro, 48011 Bilbao, Spain
07 Saltos del Porma, S.A. 0.1%
06 Hidro Holdings 2 (equity) 100%
06 Hydro Energy B.V. (Netherlands company) (equity) 34% of 90%SH
07 Compania Mediterranea de Energias, S.A. (Spain corporation)
(equity) [see 4.07, was 4.7]
07 Energias Hidraulicas, S.A. (Spain corporation) (equity)
07 Iberica de Energias, S.A. (Spain corporation) (equity) [see
4.08, was 4.15]
07 Saltos del Porma, S.A. 0.1%
06 Saltos del Porma, S.A. 98%
05 Latrobe Power Pty. Ltd. (Australian corporation) 50%
Address: Southgate Complex, Level 20, Tower East,
40 City Road, South Melbourne, Victoria 3205
06 Mission Victoria Partnership (Australian partnership) 52.31%
(100% w/ Traralgon PPL 46.69% and MEVALP 1%)
07 Latrobe Power Partnership (Australian partnership) 99%
08 Loy Yang B Joint Venture (Australian joint venture) [see
4.15, was 4.6] 51%; 49% to outside partner
05 Loy Yang Holdings Pty. Ltd. (Australian corporation) 100%
Address: Southgate Complex, Level 20, Tower East,
40 City Road, South Melbourne, Victoria 3205
06 Edison Mission Energy Australia Ltd. (formerly Mission Energy
Australia Ltd.) (Australian public company) 100%
Address: Southgate Complex, Level 20, Tower East,
40 City Road, South Melbourne, Victoria 3205
07 Latrobe Power Partnership (Australian partnership) 1%
08 Loy Yang B Joint Venture (Australian J.V.) [see 4.15, was
4.6]
06 Latrobe Power Pty. Ltd. (Australian corporation) 50%
07 Mission Victoria Partnership (Australian partnership)
08 Latrobe Power Partnership (Australian partnership)
09 Loy Yang B Joint Venture (Australian J.V.) [see 4.15,
was 4.6]
06 Mission Energy Ventures Australia Pty. Ltd. (Australian company)
100%
Address: Southgate Complex, Level 20, Tower East,
40 City Road, South Melbourne, Victoria 3205
page 13
07 Mission Victoria Partnership (Australian partnership) 1%
08 Latrobe Power Partnership (Australian partnership)
09 Loy Yang B Joint Venture (Australian J.V.) [see 4.15,
was 4.6]
06 Traralgon Power Pty. Ltd. (Australian corporation) 50%
Address: Southgate Complex, Level 20, Tower East,
40 City Road, South Melbourne, Victoria 3205
07 Mission Victoria Partnership (Australian partnership) 46.69%
08 Latrobe Power Partnership (Australian partnership)
09 Loy Yang B Joint Venture (Australian J.V.) [see 4.15,
was 4.6]
05 MEC Colombia B.V. (Netherlands company) 99%
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
05 MEC Esenyurt B.V. (Netherlands company) (Doga Project) 99%SH
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
06 Doga Enerji Uretim Sanayi ve Ticaret A.S. (Turkish corporation)
80%
Address: Merkez Man, Birlik Caddesi 11/8,
Esenyurt, Istanbul, Turkey
05 MEC IES B.V. (formerly MEC ESA B.V.) (Netherlands company) (ISAB
Project) 99%
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
06 ISAB Energy Services s.r.l. 49% (services co ISAB Project)
05 MEC India B.V. (Netherlands company) (Jojobera Project) 99%SH
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
06 Edison Mission Energy Power (Mauritius corporation) (formerly
Mission Energy, formerly Mission Energy Jojobera) (Branch office
in India)
Address: Louis Leconte Street, Curepipe, Mauritius
05 MEC Indo Coal B.V. (Netherlands company) (Adaro Project) 99%
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
06 P. T. Adaro Indonesia 10%
Address: Suite 704, World Trade Centre, Jl. Jend.
Sudirman Kav. 31, Jakarta 12920 Indonesia
05 MEC Indonesia B.V. (Netherlands company) 99%
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
06 P. T. Paiton Energy Company (Indonesia company) (equity) (Paiton
Project) [see 4.16, was 4.22] 32.5%SH
Address: Mid Plaza 2, 15th Floor, Jl. Jend.
Sudirman Kav. 10-11, Jakarta 10220 Indonesia
04 MEC International Holdings B.V. (Netherlands corp) 100%SH
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
06 Edison Mission Energy Asia Company (formerly Asia Power
Development Company) (Cayman Island) (Meizhou Wan, Ningbo and
Nanhai Projects) 1%SH
07 Mission China Holdings Company (Cayman Island) (Meizhou Wan
Project)
08 Fujian Electric (Hong Kong) LDC 20%SH
07 Mission Ningbo Holdings Company (Cayman Island) (inactive)
06 Edison Mission Energy International B.V. (formerly MEC Mission
B.V.) (Netherlands company) 1%
06 MEC Colombia B.V. (Netherlands company) 1%
06 MEC Esenyurt B.V. (Netherlands company) (Doga Project) 1%SH
07 Doga Enerji Uretim Sanayi ve Ticaret A.S. (Turkish
corporation)
06 MEC IES B.V. (Netherlands company) (ISAB Project) 1%SH
07 ISAB Energy Services s.r.l.
06 MEC India B.V. (Netherlands company) (Jojobera Project) 1%SH
07 Edison Mission Energy Power (Mauritius corporation) (formerly
Mission Energy, formerly Mission Energy Jojobera)
06 MEC Indo Coal B.V. (Netherlands company) (Adaro Project) 1%SH
07 P. T. Adaro Indonesia 10%
06 MEC Indonesia B.V. (Netherlands company) 1%
07 P. T. Paiton Energy Company (Indonesia company) (equity)
(Paiton Project) [see 4.16, was 4.22] 32.5%SH
page 14
06 MEC Laguna Power B.V. (Netherlands company) (Malaya Project)
1%SH
06 MEC Perth B.V. (Netherlands company) (Kwinana Project) 1%SH
07 Kwinana Power Partnership (Australian G.P.)
06 MEC Priolo B.V. (Netherlands company) (ISAB Project) 1%SH
07 ISAB Energy, S.r.l. (Italian J.V. company) (equity) [see 4.17,
was 4.23] 1% of 49%SH
06 MEC San Pascual B.V. (Netherlands company) 1%SH
07 San Pascual Cogeneration Company International B.V.
06 MEC Turkey B.V. (Netherlands company) 1%
06 MEC Wales B.V. (formerly MEC Global Services B.V.) (Netherlands
Company) 1%
07 Mission Hydro Limited Partnership (UK limited partnership)
08 First Hydro Holdings Company
09 First Hydro Finance plc
10 First Hydro Limited [see 4.18, was 4.20]
06 Mission Energy Italia s.r.l. 1% (Office in Italy)
06 Mission China Holdings Company (Cayman Island) (Meizhou Wan
Project) 1%
07 Fujian Electric (Hong Kong) LDC 20%SH
06 P.T. Mission Operation and Maintenance Indonesia (Indonesian
company) 1%
05 MEC Laguna Power B.V. (Netherlands co) (Malaya Project) 99%SH
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
06 MEC Perth B.V. (Netherlands company) (Kwinana Project) 99%
06 Kwinana Power Partnership (Australian G.P.) 99%
Address: Level 23, St. Martins Tower
44 St George's Terrace, Perth WA 6000
05 MEC Priolo B.V. (Netherlands company) (ISAB Project) 99%SH
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
06 ISAB Energy, S.r.l. (Italian J.V. company) (equity) [see 4.17,
was 4.23] 99% of 49%SH
Address: Corso Gelone No. 103, Siracusa, Sicily, Italy
05 MEC San Pascual B.V. (Netherlands company) 99%SH
Address: Croeselaan 18, 3521 GT Utrecht, The Netherlands
06 San Pascual Cogeneration Company International B.V. 45%
Address: Croeselaan 18, 3521 GT Utrecht, The Netherlands
05 MEC Turkey B.V. (Netherlands company) 99%
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
05 MEC Wales B.V. (formerly MEC Global Services, B.V.)(Netherlands
company) 99%
Address: Croeselaan 18, 3500 GT Utrecht, The Netherlands
06 Mission Hydro Limited Partnership 69%LP
Address: Lansdowne Hse, Berkeley Sq, London W1X5DH England
07 First Hydro Holdings Company 99%
Address: Lansdowne Hse, Berkeley Sq, London W1X5DH England
08 First Hydro Finance plc 99%
Address: Lansdowne Hse,Berkeley Sq, London W1X5DH England
09 First Hydro Limited [see 4.18, was 4.20]
Address: Bala House, St. David's House
Ewloe, Dlwyd, Wales CH5 3XJ
05 Mission Energy Company (UK) Limited (United Kingdom private
limited company) 100%
Address: Lansdowne Hse, Berkeley Sq, London W1X5DH England
06 Derwent Cogeneration Limited (United Kingdom private limited
liability company) (equity) [see 4.19, was 4.17] 33%
Address: Lansdowne Hse, Berkeley Sq,London W1X5DH England
06 Edison Mission Energy Limited (formerly Mission Energy Limited)
(UK private limited company)
Address: Lansdowne Hse, Berkeley Sq,London W1X5DH England
06 Mission Energy Services Limited (UK private limited company)
Address: Lansdowne Hse, Berkeley Sq,London W1X5DH England
06 Mission Hydro (UK) Limited
Address: Lansdowne Hse, Berkeley Sq,London W1X5DH England
07 First Hydro Holdings Company 1%
page 15
08 First Hydro Finance plc 1%
09 First Hydro Limited [see 4.18, was 4.20]
07 Mission Hydro Limited Partnership 1%GP
08 First Hydro Holdings Company 99%
09 First Hydro Finance plc
10 First Hydro Limited [see 4.18, was 4.20]
06 Mission (No. 2) Limited (UK private limited company) (formerly
Mowlem Power Ltd.)
Address: Lansdowne Hse, Berkeley Sq,London W1X5DH England
06 Pride Hold Limited (United Kingdom corporation) 99%
Address: Lansdowne Hse, Berkeley Sq,London W1X5DH England
07 Lakeland Power Limited (UK private company) [see 4.20, was
4.16] 80%SH
Address: Roosecote Power Station, Barrow-In-Furness,
Cumbria LA13 OPR England
07 Lakeland Power Development Company (UK corporation) 100%
Address: Lansdowne Hse, Berkeley Sq,London W1X5DH England
05 Mission Energy Italia s.r.l. 90% Representative Office in Italy
Address: Villa Brasini, Via Flaminia 497, 00191 Rome Italy
05 Pride Hold Limited (United Kingdom corporation) 1%
Address: Lansdowne Hse, Berkeley Sq,London W1X5DH England
06 Lakeland Power Limited (United Kingdom private limited liability
company) [see 4.20, was 4.16]
Address: Roosecote Power Station, Barrow-In-Furness,
Cumbria LA13 OPR England
06 Lakeland Power Development Company (UK corporation)
Address: Lansdowne Hse, Berkeley Sq,London W1X5DH England
05 Traralgon Power Pty. Ltd. (Australian corporation) 50%
Address: Southgate Complex, Level 20, Tower East,
40 City Road, South Melbourne, Victoria 3205
06 Mission Victoria Partnership (Australian partnership) 46.69%
07 Latrobe Power Partnership (Australian partnership)
08 Loy Yang B Joint Venture (Australian J.V.) [see 4.15, was
4.6]