UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address, and Telephone Number Identification No.
1-11377 CINERGY CORP. 31-1385023
(A Delaware Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
1-1232 THE CINCINNATI GAS & ELECTRIC COMPANY 31-0240030
(An Ohio Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
1-3543 PSI ENERGY, INC. 35-0594457
(An Indiana Corporation)
1000 East Main Street
Plainfield, Indiana 46168
(317) 839-9611
2-7793 THE UNION LIGHT, HEAT AND POWER COMPANY 31-0473080
(A Kentucky Corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
(513) 381-2000
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Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No
This combined Form 10-Q is separately filed by Cinergy Corp., The Cincinnati Gas & Electric Company, PSI Energy, Inc., and The Union Light, Heat and Power Company. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. Each registrant makes no representation as to information relating to the other registrants.
The Union Light, Heat and Power Company meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing its company specific information with the reduced disclosure format.
As of July 31, 1995, shares of Common Stock outstanding for each company were as listed:
Company Shares
Cinergy Corp., par value $.01 per share 156,648,694
The Cincinnati Gas & Electric Company, par value $8.50 per share 89,663,086
PSI Energy, Inc., without par value, stated value $.01 per share 53,913,701
The Union Light, Heat and Power Company, par value $15.00 per share 585,333
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TABLE OF CONTENTS
Item
Number
Glossary of Terms
PART I. FINANCIAL INFORMATION
1 Financial Statements
Cinergy Corp.
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
The Cincinnati Gas & Electric Company
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
PSI Energy, Inc.
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Common
Stock Equity
Consolidated Statements of Cash Flows
Results of Operations
The Union Light, Heat and Power Company
Balance Sheets
Statements of Income
Statements of Changes in Common Stock Equity
Statements of Cash Flows
Results of Operations
Notes to Financial Statements
2 Management`s Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
1 Legal Proceedings
2 Changes in Securities
6 Exhibits and Reports on Form 8-K
Signatures
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GLOSSARY OF TERMS
The following abbreviations or acronyms used in the text of this combined 10-Q
are defined below:
TERM DEFINITION
AFUDC Allowance for funds used during construction
Articles Amended Articles of Incorporation
August 1993 A Public Utilities Commission of Ohio order issued in
Order August 1993
Cayuga Cayuga Generating Station
CERCLA Comprehensive Environmental Response, Compensation and
Liability Act
CG&E The Cincinnati Gas & Electric Company (a subsidiary of
Cinergy Corp.)
CG&E`s 1994 CG&E`s 1994 Annual Report on Form 10-K (Commission File
Form 10-K Number 1-1232)
Cinergy Cinergy Corp.
Cinergy`s 1994 Cinergy`s 1994 Annual Report on Form 10-K, as amended
Form 10-K (Commission File Number 1-11377)
Clean Coal Wabash River Clean Coal Project
Project
CWIP Construction work in progress
Cyprus Amax Cyprus Amax Minerals Company and Amax Coal Company,
collectively
DCR Duff & Phelps Credit Rating Co.
DSM Demand-side Management
FASB Financial Accounting Standards Board
February 1995 An Indiana Utility Regulatory Commission order issued in
Order February 1995
FERC Federal Energy Regulatory Commission
Gibson Gibson Generating Station
IDEM Indiana Department of Environmental Management
IGC Indiana Gas Company
IPALCO IPALCO Enterprises, Inc.
IURC Indiana Utility Regulatory Commission
KPSC Kentucky Public Service Commission
kwh Kilowatt-hour
Lawrenceburg Lawrenceburg Gas Company (a wholly-owned subsidiary of CG&E)
May 1992 Order A Public Utility Commission of Ohio order issued in May
1992
Mcf Thousand cubic feet
MEGA-NOPR FERC Notice of Proposed Rulemaking on Open Access issued on
March 29, 1995
MGP Manufactured Gas Plant
NIPSCO Northern Indiana Public Service Company
PRP Potentially Responsible Party
PSI PSI Energy, Inc. (a subsidiary of Cinergy)
PSI`s 1994 PSI`s 1994 Annual Report on Form 10-K (Commission File
Form 10-K Number 1-3543)
PUCO Public Utilities Commission of Ohio
PUHCA Public Utility Holding Company Act of 1935
S&P Standard & Poor`s
SEC Securities and Exchange Commission
SFAS 121 Statement of Financial Accounting Standards No. 121,
`Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of`
ULH&P The Union Light, Heat and Power Company (a wholly-owned
subsidiary of CG&E)
ULH&P`s Form ULH&P`s 1994 Annual Report on Form 10-K (Commission File
10-K Number 2-7793)
Woodsdale Woodsdale Generating Station
Zimmer William H. Zimmer Generating Station
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CINERGY CORP.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Utility Plant - original cost
In service
Electric $8 393 518 $8 292 625
Gas 664 536 645 602
Common 184 750 185 718
9 242 804 9 123 945
Accumulated depreciation 3 262 715 3 163 802
5 980 089 5 960 143
Construction work in progress 241 987 238 750
Total utility plant 6 222 076 6 198 893
Current Assets
Cash and temporary cash investments 25 206 71 880
Restricted deposits 4 646 11 288
Accounts receivable less accumulated
provision of $10,212,000 at June 30, 1995
and $9,716,000 at December 31, 1994 for
doubtful accounts 251 888 299 509
Materials, supplies, and fuel - at average cost
Fuel for use in electric production 160 363 156 028
Gas stored for current use 21 187 31 284
Other materials and supplies 93 722 92 880
Property taxes applicable to subsequent year 134 729 112 420
Prepayments and other 46 947 36 416
738 688 811 705
Other Assets
Regulatory assets
Post-in-service carrying costs and deferred
operating expenses 188 061 185 280
Phase-in deferred return and depreciation 105 211 100 943
Deferred demand-side management costs 114 768 104 127
Amounts due from customers - income taxes 393 859 408 514
Deferred merger costs 50 067 49 658
Unamortized costs of reacquiring debt 71 778 70 424
Other 81 665 86 017
Other 141 581 134 281
1 146 990 1 139 244
$8 107 754 $8 149 842
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
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CINERGY CORP.
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Common Stock Equity
Common stock - $.01 par value;
authorized shares - 600,000,000;
outstanding shares - 156,567,331
at June 30, 1995 and 155,198,038
at December 31, 1994 $ 1 566 $ 1 552
Paid-in capital 1 570 873 1 535 658
Retained earnings 900 094 877 061
Total common stock equity 2 472 533 2 414 271
Cumulative Preferred Stock of Subsidiaries
Not subject to mandatory redemption 227 915 267 929
Subject to mandatory redemption 160 000 210 000
Long-term Debt 2 652 382 2 715 269
Total capitalization 5 512 830 5 607 469
Current Liabilities
Long-term debt and preferred stock
of subsidiaries due within one year 150 400 60 400
Notes payable 244 000 228 900
Accounts payable 184 400 266 467
Refund due to customers 15 796 15 482
Litigation settlement 80 000 80 000
Accrued taxes 261 787 258 041
Accrued interest 56 740 58 504
Other 39 544 36 610
1 032 667 1 004 404
Other Liabilities
Deferred income taxes 1 074 724 1 071 104
Unamortized investment tax credits 190 804 195 878
Accrued pension and other postretirement
benefit costs 153 753 133 578
Other 142 976 137 409
1 562 257 1 537 969
$8 107 754 $8 149 842
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CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands, except per share amounts)
Operating Revenues
Electric $611 394 $600 736 $1 245 643 $1 222 686 $2 478 494 $2 481 085
Gas 56 975 61 565 232 186 290 716 383 868 497 774
668 369 662 301 1 477 829 1 513 402 2 862 362 2 978 859
Operating Expenses
Fuel used in electric production 169 194 167 561 355 103 344 347 723 749 718 736
Gas purchased 22 587 31 021 117 080 173 046 192 327 293 123
Purchased and exchanged power 11 641 15 443 17 307 35 234 31 155 56 074
Other operation 126 816 125 576 246 704 243 350 567 004 484 177
Maintenance 43 661 49 176 87 983 95 178 193 764 195 473
Depreciation 68 215 72 822 141 671 145 023 291 043 288 214
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Post-in-service deferred operating
expenses - net ( 65) (1 520) (2 069) (2 977) (5 090) (7 969)
Phase-in deferred depreciation - ( 848) - (2 161) - (5 379)
Taxes
Federal and state income 40 371 34 340 102 841 96 071 158 951 193 438
State, local and other 63 858 61 982 127 905 124 740 247 216 238 746
548 551 555 553 1 196 798 1 251 851 2 402 392 2 454 633
Operating Income 119 818 106 748 281 031 261 551 459 970 524 226
Other Income and Expenses - Net
Allowance for equity funds used during
construction 931 801 1 885 4 331 3 755 11 894
Post-in-service carrying costs 13 2 105 2 581 4 306 8 055 12 780
Phase-in deferred return 2 134 3 837 4 268 11 458 8 161 26 294
Write-off of a portion of Zimmer
Station - - - - - (234 844)
Income taxes
Related to write-off of a portion
of Zimmer Station - - - - - 12 085
Other 2 162 2 060 3 207 4 162 9 654 19 904
Other - net (1 105) (2 509) ( 691) (7 526) (21 609) (38 583)
4 135 6 294 11 250 16 731 8 016 (190 470)
Income Before Interest and Other Charges 123 953 113 042 292 281 278 282 467 986 333 756
Interest and Other Charges
Interest on long-term debt 51 439 53 853 106 500 110 000 215 748 223 334
Other interest 5 817 4 515 11 128 7 859 23 639 11 822
Allowance for borrowed funds used
during construction (1 986) (2 896) (4 297) (6 087) (10 542) (11 560)
Preferred dividend requirements of
subsidiaries 8 657 8 657 17 314 18 243 34 630 38 232
63 927 64 129 130 645 130 015 263 475 261 828
Net Income $ 60 026 $ 48 913 $ 161 636 $ 148 267 $ 204 511 $ 71 928
Average Common Shares Outstanding 156 333 146 476 156 009 146 119 152 331 145 432
Earnings Per Common Share $.39 $.33 $1.04 $1.01 $1.33 $.49
Dividends Declared Per Common Share $.43 $.38 $.86 $.76 $1.60 $1.50
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
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CINERGY CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
Quarter Ended June 30, 1995
Balance April 1, 1995 $1 559 $1 553 478 $ 911 857 $2 466 894
Net income 60 026 60 026
Issuance of 646,854 shares of
common stock 7 16 133 16 140
Common stock issuance expenses (5) (5)
Dividends on common stock (67 078) (67 078)
Other 1 267 (4 711) (3 444)
Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533
Quarter Ended June 30, 1994
Balance April 1, 1994 $1 460 $1 329 588 $ 951 553 $2 282 601
Net income 48 913 48 913
Issuance of 685,909 shares of
common stock 6 14 879 14 885
Common stock issuance expenses (3) (3)
Dividends on common stock (55 854) (55 854)
Other 559 (953) (394)
Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
Six Months Ended June 30, 1995
Balance January 1, 1995 $1 552 $1 535 658 $ 877 061 $2 414 271
Net income 161 636 161 636
Issuance of 1,369,293 shares of
common stock 14 34 137 34 151
Common stock issuance expenses (189) (189)
Dividends on common stock (133 892) (133 892)
Other 1 267 (4 711) (3 444)
Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533
Six Months Ended June 30, 1994
Balance January 1, 1994 $1 453 $1 312 426 $ 907 802 $2 221 681
Net income 148 267 148 267
Issuance of 1,409,097 shares of
common stock 13 32 070 32 083
Common stock issuance expenses (26) (26)
Dividends on common stock (111 457) (111 457)
Other 553 (953) (400)
Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
Net income 204 511 204 511
Issuance of 9,790,238 shares of
common stock 100 229 949 230 049
Common stock issuance expenses (5 388) (5 388)
Dividends on common stock (243 797) (243 797)
Other 1 289 (4 279) (2 990)
Balance June 30, 1995 $1 566 $1 570 873 $ 900 094 $2 472 533
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $1 442 $1 285 766 $1 090 529 $2 377 737
Net income 71 928 71 928
Issuance of 2,547,425 shares of
common stock 24 60 503 60 527
Common stock issuance expenses (144) (144)
Dividends on common stock (217 921) (217 921)
Other (1 102) (877) (1 979)
Balance June 30, 1994 $1 466 $1 345 023 $ 943 659 $2 290 148
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
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CINERGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Activities
Net income $ 60 026 $ 48 913 $ 161 636 $ 148 267 $ 204 511 $ 71 928
Items providing (using) cash currently:
Depreciation 68 215 72 822 141 671 145 023 291 043 288 214
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Deferred income taxes and investment tax
credits - net (13 353) 19 975 (11 584) 28 566 (9 224) 56 375
Allowance for equity funds used during
construction (931) (801) (1 885) (4 331) (3 755) (11 894)
Regulatory assets
Post-in-service and phase-in cost
deferrals (2 142) (8 310) (8 815) (20 902) (2 203) (52 422)
Deferred merger costs (2 810) (4 177) (2 569) (13 691) (11 219) (21 388)
Other 1 695 6 540 6 278 8 343 (5 585) 7 342
Write-off of a portion of Zimmer Station - - - - - 234 844
Changes in current assets and current
liabilities
Restricted deposits (1) (82) 14 (126) 10 186 (278)
Accounts receivable 27 370 58 214 47 621 34 025 54 146 (24 626)
Materials, supplies, and fuel (11 910) (45 435) 4 920 (25 610) (15 419) (14 661)
Accounts payable (1 605) 17 903 (82 067) (45 694) (44 564) 42 397
Refund due to customers 195 (9 740) 314 (44 224) (21 812) (112 392)
Advance under accounts receivable
purchase agreement - - - (49 940) - -
Accrued taxes and interest (35 242) (50 940) 1 982 (15 961) 23 696 37 077
Other items - net (774) 12 194 9 887 33 388 60 877 53 718
Net cash provided by (used in)
operating activities 91 006 117 076 269 676 177 133 532 951 554 234
Financing Activities
Issuance of common stock 16 135 14 882 33 962 32 057 224 661 60 383
Issuance of preferred stock of subsidiaries - - - - - 59 475
Issuance of long-term debt 149 025 - 149 025 361 025 208 935 821 041
Funds on deposit from issuance of long-term
debt 899 3 224 6 628 12 401 22 124 34 123
Retirement of preferred stock of
subsidiaries (7) (40 406) (7) (40 410) (23) (100 517)
Redemption of long-term debt (129 734) - (217 251) (313 247) (217 686) (815 569)
Change in short-term debt 13 899 72 944 15 100 141 999 (75 713) 184 736
Dividends on common stock (67 078) (55 854) (133 892) (111 457) (243 797) (217 921)
Net cash provided by (used in)
financing activities (16 861) (5 210) (146 435) 82 368 (81 499) 25 751
Investing Activities
Construction expenditures (less allowance
for equity funds used during
construction) (82 350) (121 054) (160 564) (210 050) (430 199) (508 344)
Deferred demand-side management costs (3 868) (10 374) (9 351) (18 216) (38 403) (40 698)
Net cash provided by (used in)
investing activities (86 218) (131 428) (169 915) (228 266) (468 602) (549 042)
Net increase (decrease) in cash and
temporary cash investments (12 073) (19 562) (46 674) 31 235 (17 150) 30 943
Cash and temporary cash investments at
beginning of period 37 279 61 918 71 880 11 121 42 356 11 413
Cash and temporary cash investments at
end of period $ 25 206 $ 42 356 $ 25 206 $ 42 356 $ 25 206 $ 42 356
The accompanying notes as they relate to Cinergy Corp. are an integral part of these consolidated financial statements.
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CINERGY CORP.
Below is information concerning the consolidated results of operations for Cinergy for the quarter, six months, and twelve months ended June 30, 1995. For information concerning the results of operations for each of the other registrants, see the discussion under the heading RESULTS OF OPERATIONS following the financial statements of each company.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the quarter ended June 30, 1995, decreased 2.3% as compared to the same period last year. Decreased non-firm power sales for resale and reduced sales to domestic customers as a result of the milder weather conditions experienced during the period accounted for most of the decline. Higher sales by both CG&E and PSI to industrial customers, which reflected growth in the primary metals and chemicals sectors, partially offset these decreases.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the second quarter of 1995 increased 8.5% as compared to the second quarter of 1994, reflecting higher sales to domestic customers attributable to an increase in the average number of customers. In addition, the continuing trend of industrial customers electing to purchase directly from suppliers created a significant increase in demand for transportation services. The increased transportation volume, primarily in the primary metals, transportation equipment, and food products sectors, more than offset the decline in industrial sales volumes.
Revenues
Electric Operating Revenues
Electric operating revenues for the quarter ended June 30, 1995, increased $10 million (1.8%) as compared to the same period last year. This increase primarily resulted from PSI`s 4.3% retail rate increase approved in the February 1995 Order and a 1.9% rate increase for carrying costs on CWIP property which was approved by the IURC on March 9, 1995. Also contributing to the increase was the operation of fuel adjustment clauses reflecting increases in the average cost per kwh generated. The previously discussed decrease in kwh sales partially offset these price-related increases.
An analysis of electric operating revenues is shown below:
Quarter
Ended June 30
(in millions)
Electric operating revenues - June 30, 1994 $601
Increase (Decrease) due to change in:
Price per kwh
Retail 17
Sales for resale
Non-firm power transactions (1)
Total change in price per kwh 16
Kwh sales
Retail 1
Sales for resale
Firm power obligations (1)
Non-firm power transactions (6)
Total change in kwh sales (6)
Electric operating revenues - June 30, 1995 $611
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Gas Operating Revenues
Gas operating revenues declined $5 million (7.5%) in the second quarter of 1995 when compared to the same period last year. This decline was primarily the result of a decrease in total retail sales volumes and the operation of fuel adjustment clauses reflecting a lower average cost of gas purchased. An increase in the relative volume of gas transported to gas sold, as previously discussed, also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Gas Purchased
Gas purchased for the quarter declined $8 million (27.2%) when compared to the same period last year. This decrease was attributable to a 9.9% decline in volumes purchased and a 19.2% lower average cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $4 million (24.6%) for the second quarter when compared to the same period last year. Although kwh purchases increased slightly, the price decreased significantly due to the availability of lower cost power from third parties.
Maintenance
The decrease in maintenance expense of $6 million (11.2%) for the second quarter of 1995 as compared to the same period last year was primarily due to improved scheduling of routine maintenance on generating units. Lower maintenance costs on gas and electric distribution facilities also contributed to the decline.
Depreciation
Depreciation expense decreased $5 million (6.3%) for the quarter ended June 30, 1995, as compared to the same period last year. This decrease primarily reflected the adoption of lower depreciation rates for PSI effective in March 1995, pursuant to the February 1995 Order. This decrease was partially offset by additions to utility plant in service.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated by the May 1992 Order.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales decreased 3.1% for the six months ended June 30, 1995, when compared to the same period last year. This decline primarily reflects a decrease in short-term sales to other utilities. A slight decrease in retail sales resulted from lower domestic sales due to milder weather conditions. Partially offsetting these decreases were increased industrial sales resulting from growth in the primary metals and chemicals sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the six months ended June 30, 1995, remained relatively constant when compared to the same period of 1994. Decreases in domestic and commercial sales volumes were attributable to milder weather conditions. A decrease in industrial sales was attributable to the trend of industrial customers electing to purchase directly from suppliers, creating additional demand for transportation services. This increased demand for transportation services more than offset the decrease in industrial sales volumes and resulted from growth in the primary metals, transportation equipment, and food products sectors.
Revenues
Electric Operating Revenues
As compared to the same period last year, electric operating revenues increased $23 million (1.9%) primarily as a result of CG&E`s retail electric rate increase which became effective May 1994, PSI`s electric rate increases which became effective February 1995 and March 1995, and the operation of fuel adjustment clauses reflecting increases in the average cost per kwh generated. Reduced non-firm power sales for resale, as previously discussed, partially offset these increases.
An analysis of electric operating revenues is shown below:
Six Months
Ended June 30
(in millions)
Electric operating revenues - June 30, 1994 $1 223
Increase (Decrease) due to change in:
Price per kwh
Retail 41
Sales for resale
Non-firm power transactions (1)
Total change in price per kwh 40
Kwh sales
Retail (1)
Sales for resale
Firm power obligations (5)
Non-firm power transactions (12)
Total change in kwh sales (18)
Other 1
Electric operating revenues - June 30, 1995 $1 246
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Gas Operating Revenues
Gas operating revenues declined $59 million (20.1%) in the first six months of 1995 when compared to the same period last year. This decrease reflects the decline in total retail volumes sold and the operation of fuel adjustment clauses reflecting a lower average cost of gas purchased. An increase in the relative volume of gas transported to gas sold also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs, Cinergy`s largest operating expense, increased $11 million (3.1%) for the six months ended June 30, 1995, when compared to the same period last year.
An analysis of these fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $344
Increase (Decrease) due to change in:
Price of fuel 12
Kwh generation (1)
Fuel expense - June 30, 1995 $355
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Gas Purchased
Gas purchased for the six month period ended June 30, 1995, decreased $56 million (32.3%) when compared to the same period last year. This decrease was attributable to a 12.9% decline in volumes purchased and a 22.3% lower average cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $18 million (50.9%) for the six months ended June 30, 1995, when compared to the same period last year, as the coordination of CG&E`s and PSI`s electric dispatch systems enabled Cinergy to service more of its native load with its own generating units.
Maintenance
The decrease in maintenance of $7 million (7.6%) for the six months ended June 30, 1995, as compared to the same period last year was primarily due to improved scheduling of routine maintenance on generating units. Lower maintenance costs on gas and electric distribution facilities also contributed to the decline.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated by the May 1992 Order.
Other Income and Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $7 million (62.8%) for the first six months of 1995 from the comparable period of 1994 as a result of implementing the final increase of the three-year rate phase-in plan in May 1994.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales declined 3.3% for the twelve months ended June 30, 1995, when compared to the same period last year. This decline primarily reflects a decrease in short-term sales to other utilities. A decrease in retail sales resulted from lower domestic sales due to milder weather conditions. Partially offsetting these decreases were increased industrial sales resulting from growth in the primary metals and chemicals sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended June 30, 1995, decreased 3.7% when compared to the same period of 1994. Decreases in domestic and commercial sales volumes were attributable to milder weather conditions. A decrease in industrial sales was attributable to the trend of industrial customers electing to purchase directly from suppliers, creating additional demand for transportation services. This increased demand for transportation more than offset the decrease in industrial sales volumes and resulted from growth in the primary metals, food products, chemicals, and paper products sectors.
Revenues
Electric Operating Revenues
Compared to the same period last year, electric operating revenues decreased $3 million (.1%) as the previously discussed decline in kwh sales was partially offset by a number of rate increases.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended June 30
(in millions)
Electric operating revenues - June 30, 1994 $2 481
Increase (Decrease) due to change in:
Price per kwh
Retail 47
Sales for resale
Firm power obligations 2
Non-firm power transactions (4)
Total change in price per kwh 45
Kwh sales
Retail (19)
Sales for resale
Firm power obligations (9)
Non-firm power transactions (22)
Total change in kwh sales (50)
Other 2
Electric operating revenues - June 30, 1995 $2 478
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Gas Operating Revenues
Gas operating revenues declined $114 million (22.9%) for the twelve months ended June 30, 1995, when compared to the same period last year. This decrease was primarily the result of decreases in sales volumes and fuel adjustment clauses reflecting a decline in the average cost of gas purchased. An increase in the relative volume of gas transported to gas sold also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs, Cinergy`s largest operating expense, increased $5 million
(.7%) for the twelve months ended June 30, 1995, when compared to the same
period last year.
An analysis of these fuel costs is shown below:
Twelve Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $719
Increase (Decrease) due to change in:
Price of fuel 11
Kwh generation (6)
Fuel expense - June 30, 1995 $724
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Gas Purchased
Gas purchased for the twelve months ended June 30, 1995, decreased $101 million (34.4%) when compared to the same period last year. This decrease was attributable to a 16.6% decline in volumes purchased and a 21.3% lower average cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power decreased $25 million (44.4%) for the twelve months ended June 30, 1995, when compared to the same period last year, as the coordination of CG&E`s and PSI`s electric dispatch systems enabled Cinergy to service more of its native load through its own generating units.
Other Operation
Other operation expenses for the twelve months ended June 30, 1995, increased $83 million (17.1%) as compared to the same period in 1994. The primary factor contributing to this increase was charges of approximately $62 million for merger-related costs and other expenditures which cannot be recovered from customers under the merger savings sharing mechanisms authorized by regulators. The inclusion of postretirement benefits in rates on an accrual basis, an increase in the level of ongoing DSM expenses, and the amortization of deferred DSM costs, all of which were authorized in the February 1995 Order, also contributed to the increase. The increase was partially offset by reductions in administrative and general expenses and the May 1994 write-off of previously deferred litigation expenses.
Amortization of Phase-in Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from CG&E`s three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated by the May 1992 Order.
Phase-in Deferred Depreciation
Phase-in deferred depreciation resulted from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. The change of $5 million for phase-in deferred depreciation for the twelve months ended June 30, 1995, versus the same period of 1994, reflects discontinuance of the deferral of depreciation when the final increase of the phase-in plan became effective in May 1994.
State, Local and Other Taxes
State, local and other taxes increased $8 million (3.5%) over the same period of 1994 primarily due to increased property taxes resulting from higher property tax rates.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $8 million (68.4%) for the twelve month period ended June 30, 1995, as compared to the same period last year. This decrease was due primarily to an increase in borrowings of short-term debt which resulted in a decrease in the equity component of the AFUDC rate. In addition, a scrubber at Gibson was placed in service in September 1994, which resulted in a large decrease in CWIP for the period.
Post-in-service Carrying Costs
Post-in-service carrying costs decreased $5 million (37.0%) for the twelve months ended June 30, 1995, when compared to the same period last year. Accrual of carrying costs on the first five units of Woodsdale ceased after the August 1993 Order which reflected Woodsdale in retail electric rates. Additional environmental compliance projects completed by PSI which qualified, under IURC authority, for continued accrual of the debt component of AFUDC (post-in-service carrying costs) partially offset this decrease.
Phase-in Deferred Return
Phase-in deferred return decreased $18 million (69.0%) for the twelve month period ended June 30, 1995, from the comparable period of 1994, as a result of implementing the final increase of the three-year rate phase-in plan in May 1994.
Write-off of a Portion of Zimmer
In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May 1992 Order.
Other - net
Other - net is comprised of miscellaneous income and deduction items. The increase of $17 million (44.0%) is primarily due to the write-off in late 1993 and early 1994 of $22 million incurred in defense of the IPALCO takeover attempt.
Interest and Other Charges
Interest on Long-term Debt
Interest on long-term debt decreased $8 million (3.4%) for the twelve months ended June 30, 1995, as compared to the same period in 1994. Cinergy refinanced $215 million and $305 million of long-term debt in 1995 and 1994, respectively.
Other Interest
Other interest increased $12 million over the same period last year. The increase was driven primarily by higher interest rates and an increase in the average short-term debt outstanding
THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Utility Plant - original cost
In service
Electric $4 530 815 $4 502 840
Gas 664 536 645 602
Common 184 750 185 718
5 380 101 5 334 160
Accumulated depreciation 1 665 213 1 613 505
3 714 888 3 720 655
Construction work in progress 74 400 74 989
Total utility plant 3 789 288 3 795 644
Current Assets
Cash and temporary cash investments 3 500 52 516
Restricted deposits 100 98
Accounts receivable less accumulated
provision of $9,053,000 at June 30, 1995
and $8,999,000 at December 31, 1994 for
doubtful accounts 217 774 269 020
Materials, supplies, and fuel - at average
cost
Fuel for use in electric production 40 555 42 167
Gas stored for current use 21 187 31 284
Other materials and supplies 58 150 57 864
Property taxes applicable to subsequent
year 134 729 112 420
Prepayments and other 42 206 31 327
518 201 596 696
Other Assets
Regulatory assets
Post-in-service carrying costs and
deferred operating expenses 151 727 155 138
Phase-in deferred return and
depreciation 105 211 100 943
Deferred demand-side management costs 14 246 10 002
Amounts due from customers -
income taxes 366 924 381 380
Deferred merger costs 12 437 12 013
Unamortized costs of reacquiring debt 36 041 33 426
Other 49 893 55 987
Other 49 969 40 436
786 448 789 325
$5 093 937 $5 181 665
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
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THE CINCINNATI GAS & ELECTRIC COMPANY
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Common Stock Equity
Common stock - $8.50 par value; authorized
shares - 120,000,000; outstanding shares -
89,663,086 at June 30, 1995 and
December 31, 1994 $ 762 136 $ 762 136
Paid-in capital 339 135 337 874
Retained earnings 427 623 432 962
Total common stock equity 1 528 894 1 532 972
Cumulative Preferred Stock
Not subject to mandatory redemption 40 000 80 000
Subject to mandatory redemption 160 000 210 000
Long-term Debt 1 774 404 1 837 757
Total capitalization 3 503 298 3 660 729
Current Liabilities
Preferred stock due within one year 90 000 -
Notes payable 13 500 14 500
Accounts payable 85 830 120 817
Accrued taxes 234 609 227 651
Accrued interest 30 572 31 902
Other 35 709 32 658
490 220 427 528
Other Liabilities
Deferred income taxes 744 678 747 060
Unamortized investment tax credits 132 440 135 417
Accrued pension and other postretirement
benefit costs 110 947 102 254
Other 112 354 108 677
1 100 419 1 093 408
$5 093 937 $5 181 665
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THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Revenues
Electric $336 523 $329 675 $686 479 $663 065 $1 369 201 $1 346 801
Gas 56 975 61 565 232 186 290 716 383 868 497 774
393 498 391 240 918 665 953 781 1 753 069 1 844 575
Operating Expenses
Fuel used in electric production 84 464 79 548 168 537 161 429 332 578 342 781
Gas purchased 22 587 31 021 117 080 173 046 192 327 293 123
Purchased and exchanged power 10 912 4 217 21 417 11 531 30 818 17 731
Other operation 65 801 68 818 134 723 137 453 333 300 277 792
Maintenance 21 446 26 860 44 979 52 802 98 987 110 055
Depreciation 39 687 39 051 79 224 77 820 158 080 155 407
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Post-in-service deferred operating
expenses - net 822 822 1 645 1 645 3 290 785
Phase-in deferred depreciation - ( 848) - (2 161) - (5 379)
Taxes
Federal and state income 24 217 22 225 67 563 64 669 107 022 119 764
State, local and other 50 331 49 204 100 987 99 137 199 231 189 940
322 540 320 918 738 428 777 371 1 457 906 1 501 999
Operating Income 70 958 70 322 180 237 176 410 295 163 342 576
Other Income and Expenses - Net
Allowance for equity funds used during
construction 281 434 877 892 1 956 1 696
Post-in-service carrying costs - - - - - 4 072
Phase-in deferred return 2 134 3 837 4 268 11 458 8 161 26 294
Write-off of a portion of Zimmer
Station - - - - - (234 844)
Income taxes -
Related to write-off of a portion
of Zimmer Station - - - - - 12 085
Other 1 620 1 677 2 827 3 533 5 913 9 937
Other - net ( 560) 119 405 134 (6 455) (7 474)
3 475 6 067 8 377 16 017 9 575 (188 234)
Income Before Interest 74 433 76 389 188 614 192 427 304 738 154 342
Interest
Interest on long-term debt 33 490 36 755 70 601 76 378 144 609 155 338
Other interest 1 421 821 2 247 1 702 3 376 2 989
Allowance for borrowed funds used
during construction ( 900) ( 653) (1 880) (1 310) (3 547) (2 589)
34 011 36 923 70 968 76 770 144 438 155 738
Net Income (Loss) 40 422 39 466 117 646 115 657 160 300 (1 396)
Preferred Dividend Requirement 5 362 5 362 10 724 11 652 21 449 24 233
Net Income (Loss) on Common Shares $ 35 060 $ 34 104 $106 922 $104 005 $ 138 851 $ (25 629)
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
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THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
Quarter Ended June 30, 1995
Balance April 1, 1995 $762 136 $337 874 $ 453 174 $1 553 184
Net income 40 422 40 422
Dividends on preferred stock (5 362) (5 362)
Dividends on common stock (55 900) (55 900)
Other 1 261 (4 711) (3 450)
Balance June 30, 1995 $762 136 $339 135 $ 427 623 $1 528 894
Quarter Ended June 30, 1994
Balance April 1, 1994 $752 236 $321 593 $ 488 513 $1 562 342
Net income 39 466 39 466
Issuance of 570,296 shares of
common stock 4 848 7 565 12 413
Common stock issuance expenses 1 1
Dividends on preferred stock (5 362) (5 362)
Dividends on common stock (38 100) (38 100)
Other 553 (953) (400)
Balance June 30, 1994 $757 084 $329 712 $ 483 564 $1 570 360
Six Months Ended June 30, 1995
Balance January 1, 1995 $762 136 $337 874 $ 432 962 $1 532 972
Net income 117 646 117 646
Dividends on preferred stock (10 724) (10 724)
Dividends on common stock (107 550) (107 550)
Other 1 261 (4 711) (3 450)
Balance June 30, 1995 $762 136 $339 135 $ 427 623 $1,528 894
Six Months Ended June 30, 1994
Balance January 1, 1994 $748 528 $314 218 $ 456 511 $1 519 257
Net income 115 657 115 657
Issuance of 1,006,582 shares of
common stock 8 556 14 949 23 505
Common stock issuance expenses (8) (8)
Dividends on preferred stock (11 652) (11 652)
Dividends on common stock (75 999) (75 999)
Other 553 (953) (400)
Balance June 30, 1994 $757 084 $329 712 $ 483 564 $1 570 360
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $757 084 $329 712 $ 483 564 $1 570 360
Net income 160 300 160 300
Issuance of 594,421 shares of
common stock 5 052 8 193 13 245
Common stock issuance expenses (31) (31)
Dividends on preferred stock (21 449) (21 449)
Dividends on common stock (190 521) (190 521)
Other 1 261 (4 271) (3 010)
Balance June 30, 1995 $762 136 $339 135 $ 427 623 $1 528 894
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $741 765 $299 290 $ 660 110 $1 701 165
Net income (loss) (1 396) (1 396)
Issuance of 1,802,242 shares of
common stock 15 319 29 883 45 202
Common stock issuance expenses (14) (14)
Dividends on preferred stock (24 233) (24 233)
Dividends on common stock (149 964) (149 964)
Other 553 (953) (400)
Balance June 30, 1994 $757 084 $329 712 $ 483 564 $1 570 360
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
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THE CINCINNATI GAS & ELECTRIC COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Activities
Net income $ 40 422 $ 39 466 $ 117 646 $ 115 657 $ 160 300 $ (1 396)
Items providing (using) cash currently:
Depreciation 39 687 39 051 79 224 77 820 158 080 155 407
Amortization of phase-in deferrals 2 273 - 2 273 - 2 273 -
Deferred income taxes and investment tax
credits - net (13 903) 11 918 (15 959) 12 570 (14 849) 21 239
Allowance for equity funds used during
construction (281) (434) (877) (892) (1 956) (1 696)
Regulatory assets
Post-in-service and phase-in cost
deferrals (1 312) (3 863) (2 623) (11 974) (4 871) (34 960)
Deferred merger costs (320) (2 143) (424) (6 513) 7 048 (9 475)
Other 1 494 1 110 6 094 3 796 (5 593) 6 059
Write-off of a portion of Zimmer Station - - - - - 234 844
Changes in current assets and current
liabilities
Restricted deposits (1) (49) (2) 24 (4) 67
Accounts receivable 34 818 63 043 51 246 54 430 39 961 (2 122)
Materials, supplies, and fuel (7 444) (12 940) 11 423 30 208 2 417 21 618
Accounts payable (4 443) 6 389 (34 987) (24 853) (18 227) 16 157
Accrued taxes and interest (21 734) (44 619) 5 628 (20 531) 34 370 1 765
Other items - net (16 244) 6 339 (6 263) 15 688 55 417 44 681
Net cash provided by (used in)
operating activities 53 012 103 268 212 399 245 430 414 366 452 188
Financing Activities
Issuance of common stock - 12 414 - 23 497 13 214 45 188
Issuance of long-term debt 149 025 - 149 025 311 957 149 025 608 957
Retirement of preferred stock - (40 400) - (40 400) - (40 400)
Redemption of long-term debt (129 734) - (217 196) (313 247) (217 471) (607 689)
Change in short-term debt 12 500 (8 000) (1 000) (25 500) 8 000 (46 080)
Dividends on preferred stock (5 362) (6 290) (10 724) (12 580) (20 521) (25 160)
Dividends on common stock (55 900) (38 100) (107 550) (75 999) (190 521) (149 964)
Net cash provided by (used in)
financing activities (29 471) (80 376) (187 445) (132 272) (258 274) (215 148)
Investing Activities
Construction expenditures (less allowance
for equity funds used during
construction) (33 999) (44 055) (69 726) (79 011) (180 669) (197 180)
Deferred demand-side management costs (2 105) (1 279) (4 244) (2 702) (7 938) (4 502)
Net cash provided by (used in)
investing activities (36 104) (45 334) (73 970) (81 713) (188 607) (201 682)
Net increase (decrease) in cash and
temporary cash investments (12 563) (22 442) (49 016) 31 445 (32 515) 35 358
Cash and temporary cash investments at
beginning of period 16 063 58 457 52 516 4 570 36 015 657
Cash and temporary cash investments at
end of period $ 3 500 $ 36 015 $ 3 500 $ 36 015 $ 3 500 $ 36 015
The accompanying notes as they relate to The Cincinnati Gas & Electric Company are an integral part of these consolidated
financial statements.
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THE CINCINNATI GAS & ELECTRIC COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the quarter ended June 30, 1995, increased 9.9% over the same period of 1994, due in large part to non-firm power sales for resale reflecting increased third party short-term power sales to other utilities. Also contributing to the higher total kwh sales levels were increased sales to commercial and industrial customers. Higher commercial sales resulted from an increase in the average number of commercial customers. The increased industrial sales primarily reflect growth in the primary metals and chemical sectors. A slight decrease in retail kwh sales was attributable to lower domestic sales due to milder weather conditions.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the second quarter of 1995 increased 8.5% as compared to the second quarter of 1994, reflecting higher sales to domestic customers attributable to an increase in the average number of customers. In addition, the continuing trend of industrial customers electing to purchase directly from suppliers created a significant increase in demand for transportation services. The increased transportation volume, primarily in the primary metals, transportation equipment, and food products sectors, more than offset a decline in industrial sales volumes.
Revenues
Electric Operating Revenues
Electric operating revenues increased $7 million (2.1%) for the quarter ended June 30, 1995, over the comparable period of 1994. This increase primarily reflects the higher kwh sales associated with non-firm power sales for resale.
An analysis of electric operating revenues is shown below:
Quarter
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $330
Increase (Decrease) due to change in:
Price per kwh
Retail (3)
Sales for resale
Non-firm power transactions (1)
Total change in price per kwh (4)
Kwh sales
Retail (1)
Sales for resale
Non-firm power transactions 12
Total change in kwh sales 11
Operating revenues - June 30, 1995. $337
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Gas Operating Revenues
Gas operating revenues declined $5 million (7.5%) in the second quarter of 1995 when compared to the same period last year. This decline was primarily the result of a decrease in total retail sales volumes and the operation of fuel adjustment clauses reflecting a lower average cost of gas purchased. An increase in the relative volume of gas transported to gas sold, as previously discussed, also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs by CG&E. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs increased $4 million (6.2%) for the quarter as compared to last year.
An analysis of these fuel costs is shown below:
Quarter
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $80
Increase (Decrease) due to change in:
Price of fuel 1
Kwh generation 3
Fuel expense - June 30, 1995 $84
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Gas Purchased
Gas purchased for the quarter declined $8 million (27.2%) when compared to the same period last year. This decrease was attributable to a 9.9% decline in volumes purchased and a 19.2% lower average cost per Mcf of gas purchased.
Purchased & Exchange Power
Purchased and exchanged power for the quarter ended June 30, 1995, increased $7 million over the comparable period of 1994. This primarily reflects increased third party power sales to other utilities.
Other Operation
Other operation expense decreased $3 million (4.4%) for the quarter ended June 30, 1995, as compared to the same period last year due to several factors, including reductions in administrative and general expenses. In addition, lower gas and electric distribution expenses contributed to the decrease.
Maintenance
The decrease in maintenance expense of $5 million (20.2%) for the second quarter of 1995 as compared to the same period last year was primarily due to improved scheduling of routine maintenance on generating units. Lower maintenance costs on gas and electric distribution facilities also contributed to the decline.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated in the May 1992 Order.
Interest
Interest charges decreased $3 million (7.9%) for the quarter ended June 30, 1995, from the same period of 1994. This decrease was due to a reduction in interest on long-term debt resulting from the refinancing of $215 million principal amount of first mortgage bonds, during 1995.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the six months ended June 30, 1995, increased 8.2% over the same period of 1994, due in large part to increases in non-firm power sales for resale reflecting third party short-term power sales to other utilities. Also contributing to the higher total kwh sales levels were increased sales to commercial and industrial customers. Higher commercial sales resulted from an increase in the average number of commercial customers. The increased industrial sales primarily reflects growth in the primary metals and chemical sectors. A slight decrease in retail kwh sales was attributable to lower domestic sales due to milder weather conditions.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the six months ended June 30, 1995, remained relatively constant when compared to the same period of 1994. Decreases in domestic and commercial sales volumes were attributable to milder weather conditions. A decrease in industrial sales was attributable to the trend of industrial customers electing to purchase directly from suppliers, creating additional demand for transportation services. This increased demand for transportation more than offset the decrease in industrial sales volumes and resulted from growth in the primary metals, transportation equipment, and food products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $23 million (3.5%) for the six months ended June 30, 1995, over the comparable period of 1994. This increase primarily reflects the higher kwh sales associated with non-firm power sales for resale to other utilities and the retail electric rate increase which became effective May 1994.
An analysis of electric operating revenues is shown below:
Six Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $663
Increase (Decrease) due to change in:
Price per kwh
Retail 4
Sales for resale
Firm power obligations 1
Non-firm power transactions (1)
Total change in price per kwh 4
Kwh sales
Retail (4)
Sales for resale
Non-firm power transactions 24
Total change in kwh sales 20
Other (1)
Operating revenues - June 30, 1995. $686
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Gas Operating Revenues
Gas operating revenues declined $59 million (20.1%) in the first six months of 1995 when compared to the same period last year. This decrease reflects the decline in total retail volumes sold and the operation of fuel adjustment clauses reflecting a lower average cost of gas purchased. An increase in the relative volume of gas transported to gas sold also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs increased $8 million (4.4%) for the first six months of 1995 as compared to last year.
An analysis of these fuel costs is shown below:
Six Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $161
Increase (Decrease) due to change in:
Price of fuel (1)
Kwh generation 9
Fuel expense - June 30, 1995 $169
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Gas Purchased
Gas purchased for the first six months ended June 30, 1995, decreased $56 million (32.3%) when compared to the same period last year. This decrease was attributable to a 12.9% decline in volumes purchased and a 22.3% lower average cost per Mcf of gas purchased.
Purchased and Exchange Power
Purchased and exchanged power for the six months ended June 30, 1995, increased $10 million (85.7%) over the comparable period of 1994. This primarily reflects increased third party power sales to other utilities.
Other Operation
Other operation expenses decreased $3 million (2.0%) for the six months ended June 30, 1995, as compared to the same period last year due to several factors, including reductions in administrative and general expenses. In addition, a decrease in gas and electric distribution expenses contributed to the decrease.
Maintenance
The decrease in maintenance expense of $8 million (14.8%) for the six month period ended June 30, 1995, as compared to the same period last year was primarily due to improved scheduling of routine maintenance on generating units. Lower maintenance costs on gas and electric distribution facilities also contributed to the decline.
Depreciation
Depreciation expense increased $1 million (1.8%) for the six month period ended June 30, 1995, as compared to the same period last year. This increase primarily reflects additions to gas utility plant in service.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated in the May 1992 Order.
Other Income And Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $7 million (62.8%) for the first six months of 1995 from the comparable period of 1994, as a result of implementing the final increase of the three-year rate phase-in plan in May 1994.
Interest
Interest decreased $6 million (7.6%) for the six months ended June 30, 1995, from the same period of 1994. This decrease was due to a reduction in interest on long-term debt resulting from the refinancing of $215 million principal amount of first mortgage bonds, during 1995.
Preferred Dividend Requirement
The decrease in CG&E`s preferred dividend requirement of $1 million (8.0%) for the six months ended June 30, 1995, from the same period of 1994 was attributable to the early redemption on April 1, 1994 of 400,000 shares of $100 par value cumulative preferred stock (9.28% Series).
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the twelve months ended June 30, 1995, increased 1.7% when compared to the same period of 1994. This increase was primarily attributable to an increase in non-firm power sales for resale reflecting third party short-term power sales to other utilities. In addition, industrial sales increased due, in large part, to growth in the primary metals and chemicals sectors. Part of this increase was offset by a reduction in domestic sales volume attributable to milder weather conditions.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended June 30, 1995, decreased 3.7% when compared to the same period of 1994. Decreases in domestic and commercial sales volumes were attributable to milder weather conditions. A decrease in industrial sales was attributable to the trend of industrial customers electing to purchase directly from suppliers, creating additional demand for transportation services. This increased demand for transportation more than offset the decrease in industrial sales volumes and resulted from growth in the primary metals, food products, chemicals, and paper products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $22 million (1.7%) for the twelve months ended June 30, 1995, over the comparable period of 1994. This increase primarily reflects two electric retail rate increases granted by the PUCO. An increase in May 1994 was related to the phase-in plan included in the May 1992 Order and the second increase was effective in August 1993 pursuant to the August 1993 Order. Also contributing to the increase were the higher kwh sales associated with non-firm power sales for resale to other utilities.
An analysis of electric operating revenues is shown below:
Twelve Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $1 347
Increase (Decrease) due to change in:
Price per kwh
Retail 22
Sales for Resale
Firm power obligations 1
Non-firm power transactions 1
Total change in price per kwh 24
Kwh sales
Retail (15)
Sales for Resale
Firm power obligations -
Non-firm power transactions 14
Total change in kwh sales (1)
Other (1)
Operating revenues - June 30, 1995. $1 369
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Gas Operating Revenues
Gas operating revenues declined $114 million (22.9%) for the twelve months ended June 30, 1995, when compared to the same period last year. This decrease was primarily the result of decreases in sales volumes and fuel adjustment clauses reflecting a decline in the average cost of gas purchased. An increase in the relative volume of gas transported to gas sold also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Fuel Used in Electric Production
Electric fuel costs decreased $10 million (3.0%) for the twelve months ended as compared to last year.
An analysis of these fuel costs is shown below:
Twelve Months
Ended June 30
(in millions)
Fuel expense - June 30, 1994 $343
Increase (Decrease) due to change in:
Price of fuel (8)
kwh generation (2)
Fuel expense - June 30, 1995 $333
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Gas Purchased
Gas purchased for the twelve months ended June 30, 1995, decreased $101 million (34.4%) when compared to the same period last year. This decrease was attributable to a 16.6% decline in volumes purchased and a 21.3% lower average cost per Mcf of gas purchased.
Purchased and Exchanged Power
Purchased and exchanged power for the twelve months ended June 30, 1995, increased $13 million (73.8%) over the comparable period of 1994. This primarily reflects increased third party power sales to other utilities.
Other Operation
Other operation expenses increased $56 million (20%) for the twelve months ended June 30, 1995, as compared to the same period last year due to several factors. The primary factor contributing to this increase was charges of approximately $52 million for merger-related costs and other expenditures which cannot be recovered from customers under the merger savings sharing mechanisms authorized by regulators.
Maintenance
The decrease in maintenance expense of $11 million (10%) for the twelve months ended June 30, 1995, as compared to the same period last year, was primarily due to improved scheduling of routine maintenance on generating units. Also contributing to the decrease was lower maintenance costs on gas and electric distribution facilities.
Depreciation
Depreciation expense increased $3 million (1.7%) for the twelve months ended June 30, 1995, as compared to the same period last year. This increase primarily reflects additions to gas utility plant in service.
Amortization of Phase-In Deferrals
Amortization of phase-in deferrals, which began in May of 1995, reflects the amortization of previously deferred depreciation and deferred return resulting from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. These deferrals will be recovered over a seven-year period as contemplated by the May 1992 Order.
Phase-in Deferred Depreciation
Phase-in deferred depreciation resulted from the three-year rate phase-in plan for Zimmer included in the May 1992 Order. The change of $5 million for phase-in deferred depreciation for the twelve months ended June 30, 1995, versus the same period of 1994, reflects discontinuance of the deferral of depreciation when the final increase of the three-year rate phase-in plan became effective in May 1994.
State, Local and Other Taxes
State, local and other taxes increased $9 million (4.9%) for the twelve months ended June 30, 1995, over the comparable period of 1994, primarily due to increased property taxes resulting from higher property tax rates. Other Income And Expenses - Net
Phase-in Deferred Return
Phase-in deferred return decreased $18 million (69.0%) for the twelve months ended June 30, 1995, from the comparable period of 1994, as a result of implementing the final increase of the three-year rate phase-in plan in May 1994.
Write-off of a Portion of Zimmer
In November 1993, CG&E wrote off Zimmer costs disallowed from rates in the May 1992 Order.
Interest
Interest charges decreased $11 million (7.3%) for the twelve months ended June 30, 1995, from the same period of 1994. The decrease was due to a reduction in interest on long-term debt resulting from the refinancing of $215 and $305 million principal amount of long-term debt, during 1995 and 1994, respectively.
Preferred Dividend Requirement
The decrease of CG&E`s preferred dividend requirement of $3 million (11.5%) for the twelve months ended June 30, 1995, from the same period of 1994 was attributable to the early redemption on April 1, 1994 of 400,000 shares of $100 par value cumulative preferred stock (9.28% Series).
PSI ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Electric Utility Plant - original cost
In service $3 862 703 $3 789 785
Accumulated depreciation 1 597 502 1 550 297
2 265 201 2 239 488
Construction work in progress 167 587 163 761
Total electric utility plant 2 432 788 2 403 249
Current Assets
Cash and temporary cash investments 5 106 6 341
Restricted deposits 4 546 11 190
Accounts receivable less accumulated provision
of $957,000 at June 30, 1995 and $440,000 at
December 31, 1995 for doubtful accounts 48 112 36 061
Materials, supplies, and fuel - at average cost
Fuel 119 808 113 861
Other materials and supplies 30 195 29 363
Prepayments and other 4 543 4 758
212 310 201 574
Other Assets
Regulatory assets
Post-in-service carrying costs and deferred
depreciation 36 334 30 142
Deferred demand-side management costs 100 522 94 125
Amounts due from customers - income taxes 26 935 27 134
Deferred merger costs 37 630 37 645
Unamortized costs of reacquiring debt 35 737 36 998
Other 31 772 30 030
Other 84 452 84 027
353 382 340 101
$2 998 480 $2 944 924
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
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PSI ENERGY, INC.
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Common Stock Equity
Common stock - without par value; $.01 stated value;
authorized shares - 60,000,000; outstanding shares -
53,913,701 at June 30, 1995 and December 31, 1994 $ 539 $ 539
Paid-in capital 389 316 389 309
Accumulated earnings subsequent to November 30, 1986,
quasi-reorganization 549 202 493 103
Total common stock equity 939 057 882 951
Cumulative Preferred Stock
Not subject to mandatory redemption 187 915 187 929
Long-term Debt 877 978 877 512
Total capitalization 2 004 950 1 948 392
Current Liabilities
Long-term debt due within one year 60 400 60 400
Notes payable 209 500 193 573
Accounts payable 106 800 142 775
Refund due to customers 15 796 15 482
Litigation settlement 80 000 80 000
Accrued taxes 27 876 30 784
Accrued interest 26 012 25 685
Other 3 085 3 202
529 469 551 901
Other Liabilities
Deferred income taxes 332 962 324 738
Unamortized investment tax credits 58 364 60 461
Accrued pension and other postretirement benefit costs 42 806 31 324
Other 29 929 28 108
464 061 444 631
$2 998 480 $2 944 924
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PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Revenues $289 743 $271 652 $588 791 $560 287 $1 142 016 $1 132 947
Operating Expenses
Fuel used in electric production 84 730 88 013 186 566 182 918 391 171 375 955
Purchased and exchanged power 17 971 13 566 29 670 28 226 42 844 45 205
Other operation 57 944 54 119 105 759 100 615 218 266 195 666
Maintenance 22 215 22 316 43 004 42 376 94 777 85 418
Depreciation 28 528 33 771 62 447 67 203 132 963 132 807
Post-in-service deferred operating
expenses - net ( 887) (2 342) (3 714) (4 622) (8 380) (8 754)
Taxes
Federal and state income 16 482 12 347 35 655 32 701 53 320 75 659
State, local and other 13 407 12 689 26 699 25 471 47 563 48 576
240 390 234 479 486 086 474 888 972 524 950 532
Operating Income 49 353 37 173 102 705 85 399 169 492 182 415
Other Income and Expenses - Net
Allowance for equity funds used during
construction 650 367 1 008 3 439 1 799 10 198
Post-in-service carrying costs 13 2 105 2 581 4 306 8 055 8 708
Income taxes 349 136 46 323 (1 589) 2 071
Other - net ( 384) (2 748) (2 296) (5 515) (4 674) (9 269)
628 ( 140) 1 339 2 553 3 591 11 708
Income Before Interest 49 981 37 033 104 044 87 952 173 083 194 123
Interest
Interest on long-term debt 17 949 17 098 35 899 33 622 71 139 67 996
Other interest 3 896 3 286 7 873 5 382 17 783 7 427
Allowance for borrowed funds used during
construction (1 086) (2 243) (2 417) (4 777) (6 995) (8 971)
20 759 18 141 41 355 34 227 81 927 66 452
Net Income 29 222 18 892 62 689 53 725 91 156 127 671
Preferred Dividend Requirement 3 295 3 295 6 590 6 591 13 181 13 999
Net Income on Common Shares $ 25 927 $ 15 597 $ 56 099 $ 47 134 $ 77 975 $ 113 672
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
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PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Accumulated Total Common
Stock Capital Earnings Stock Equity
(dollars in thousands)
Quarter Ended June 30, 1995
Balance April 1, 1995 $539 $389 309 $523 275 $913 123
Net income 29 222 29 222
Dividends on preferred stock (3 295) (3 295)
Other 7 7
Balance June 30, 1995 $539 $389 316 $549 202 $939 057
Quarter Ended June 30, 1994
Balance April 1, 1994 $539 $229 282 $498 809 $728 630
Net income 18 892 18 892
Dividends on preferred stock (3 295) (3 295)
Dividends on common stock (16 622) (16 622)
Other 5 5
Balance June 30, 1994 $539 $229 287 $497 784 $727 610
Six Months Ended June 30, 1995
Balance January 1, 1995 $539 $389 309 $493 103 $882 951
Net income 62 689 62 689
Dividends on preferred stock (6 590) (6 590)
Other 7 7
Balance June 30, 1995 $539 $389 316 $549 202 $939 057
Six Months Ended June 30, 1994
Balance January 1, 1994 $539 $229 288 $483 242 $713 069
Net income 53 725 53 725
Dividends on preferred stock (6 591) (6 591)
Dividends on common stock (32 592) (32 592)
Other (1) (1)
Balance June 30, 1994 $539 $229 287 $497 784 $727 610
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $539 $229 287 $497 784 $727 610
Net income 91 156 91 156
Dividends on preferred stock (13 181) (13 181)
Dividends on common stock (26 550) (26 550)
Capital contribution from parent company 159 999 159 999
Other 30 (7) 23
Balance June 30, 1995 $539 $389 316 $549 202 $939 057
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $539 $230 936 $448 476 $679 951
Net income 127 671 127 671
Dividends on preferred stock (14 081) (14 081)
Dividends on common stock (64 358) (64 358)
Other (1 649) 76 (1 573)
Balance June 30, 1994 $539 $229 287 $497 784 $727 610
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
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PSI ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Activities
Net income $ 29 222 $ 18 892 $ 62 689 $ 53 725 $ 91 156 $ 127 671
Items providing (using) cash currently:
Depreciation 28 528 33 771 62 447 67 203 132 963 132 807
Deferred income taxes and investment tax
credits - net 1 087 12 760 6 597 20 703 10 021 35 002
Allowance for equity funds used during
construction (650) (367) (1 008) (3 439) (1 799) (10 198)
Regulatory assets
Post-in-service carrying costs and deferred
operating expenses (830) (4 447) (6 192) (8 928) (16 332) (17 462)
Deferred merger costs (2 490) (2 034) (2 145) (7 178) (18 267) (11 913)
Other 201 5 430 184 4 547 8 1 283
Changes in current assets and current
liabilities
Restricted deposits - (81) 16 (150) 10 190 (345)
Accounts receivable (14 278) (5 352) (12 051) (19 478) 23 (24 202)
Income tax refunds - 5 500 - 25 100 3 800 14 200
Materials, supplies, and fuel (4 535) (32 205) (6 779) (55 350) (18 126) (35 663)
Accounts payable 7 138 11 294 (35 975) (20 925) (16 368) 25 879
Refund due to customers 195 (9 740) 314 (44 224) (21 812) (112 392)
Advance under accounts receivable
purchase agreement - - - (49 940) - -
Accrued taxes and interest (13 311) (10 468) (2 581) 1 571 (7 080) 31 171
Other items - net 15 146 2 616 13 291 (4 824) 13 143 (3 434)
Net cash provided by (used in)
operating activities 45 423 25 569 78 807 (41 587) 161 520 152 404
Financing Activities
Issuance of preferred stock - - - - - 59 475
Issuance of long-term debt - - - 49 068 59 910 212 084
Funds on deposit from issuance of
long-term debt 899 3 224 6 628 12 401 22 124 34 123
Retirement of preferred stock (7) (6) (7) (10) (23) (60 117)
Redemption of long-term debt - - (55) - (215) (207 880)
Change in short-term debt 1 399 79 744 15 927 166 299 (83 500) 233 199
Dividends on preferred stock (3 295) (3 295) (6 590) (6 591) (13 181) (14 081)
Dividends on common stock - (16 622) - (32 592) (26 550) (64 358)
Contribution from parent company - - - - 159 999 7
Net cash provided by (used in)
financing activities (1 004) 63 045 15 903 188 575 118 564 192 452
Investing Activities
Utility plant additions (49 001) (77 366) (91 846) (134 478) (251 329) (321 362)
Allowance for equity funds used
during construction 650 367 1 008 3 439 1 799 10 198
Deferred demand-side management costs (1 763) (9 095) (5 107) (15 514) (30 465) (36 196)
Net cash provided by (used in)
investing activities (50 114) (86 094) (95 945) (146 553) (279 995) (347 360)
Net increase (decrease) in cash and
temporary cash investments (5 695) 2 520 (1 235) 435 89 (2 504)
Cash and temporary cash investments at
beginning of period 10 801 2 497 6 341 4 582 5 017 7 521
Cash and temporary cash investments at
end of period $ 5 106 $ 5 017 $ 5 106 $ 5 017 $ 5 106 $ 5 017
The accompanying notes as they relate to PSI Energy, Inc. are an integral part of these consolidated financial statements.
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PSI ENERGY, INC.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the quarter ended June 30, 1995, decreased 2.5% when compared to the same period last year. This decrease primarily reflects a decline in short-term sales to other utilities. In addition, milder weather in the period led to a decrease in domestic and commercial sales. These decreases were partially offset by increased industrial sales which reflected growth in the primary metals sector.
Operating Revenues
Total operating revenues increased $18 million (6.7%) in the second quarter of 1995 as compared to the same period last year. This increase primarily reflects the 4.3% retail rate increase approved in the February 1995 Order and a 1.9% rate increase for carrying costs on CWIP property which was approved by the IURC on March 9, 1995. In addition, the operation of fuel clause adjustment factors reflecting a higher average cost of kwh generated during the period led to an increase in operating revenues. These increases were partially offset by the decreased kwh sales previously discussed.
An analysis of operating revenues is shown below:
Quarter
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $272
Increase (Decrease) due to change in:
Price per kwh
Retail 21
Sales for resale
Firm power obligations (1)
Non-firm power transactions 1
Total change in price per kwh 21
Kwh sales
Retail 2
Sales for resale
Firm power obligations (1)
Non-firm power transactions (4)
Total change in kwh sales (3)
Operating revenues - June 30, 1995 $290
Operating Expenses
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Fuel Used in Electric Production
Fuel costs, PSI`s largest operating expense, decreased $3 million (3.7%) for the quarter as compared to the same period last year.
An analysis of fuel costs is shown below:
Quarter Ended June 30
(in millions)
Fuel expense - June 30, 1994 $88 Increase (Decrease) due to change in: Price of fuel 3 Kwh generation (6) Fuel expense - June 30, 1995 $85 |
Purchased and Exchanged Power
For the quarter ended June 30, 1995, purchased and exchanged power increased $4 million (32.5%) as compared to the same period last year, reflecting increased purchases of power to meet PSI`s own load. This increase was partially offset by a decline in third party short-term power sales to other utilities.
Other Operation
Other operation expenses for the quarter ended June 30, 1995, increased $4 million (7.1%) as compared to the same period last year. This increase was primarily due to the inclusion of postretirement benefits in rates on a accrual basis, an increase in the level of ongoing DSM expenses, and the amortization of deferred DSM costs, all of which were authorized in the February 1995 Order. Partially offsetting the increase was the May 1994 write-off of previously deferred litigation expenses.
Depreciation
Depreciation expense decreased $5 million (15.5%) for the quarter ended June 30, 1995, as compared to the same period last year. This decrease primarily reflects the adoption of lower depreciation rates effective in March 1995 pursuant to the February 1995 Order. The decrease was partially offset by additions to utility plant in service.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
For the six months ended June 30, 1995, kwh sales decreased 5.1% when compared to the same period last year. The decrease primarily reflects a decline in short-term sales to other utilities. In addition, milder weather in the period led to a decrease in domestic and commercial sales. Increased industrial sales reflecting growth in the primary metals sector partially offset the decrease.
Operating Revenues
Total operating revenues increased $29 million (5.1%) for the six months ended June 30, 1995, when compared to the same period last year. This increase primarily reflects the 4.3% retail rate increase and 1.9% rate increase for carrying costs on CWIP property as previously discussed. In addition, changes in fuel clause adjustment factors reflecting increases in the average cost of kwh generated led to an increase in operating revenues during the period. These increases were partially offset by the decrease in kwh sales.
An analysis of operating revenues is shown below:
Six Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $ 560
Increase (Decrease) due to change in:
Price per kwh
Retail 38
Sales for resale
Non-firm power transactions 5
Total change in price per kwh 43
Kwh sales
Retail 2
Sales for resale
Firm power obligations (5)
Non-firm power transactions (13)
Total change in kwh sales (16)
Other 2
Operating revenues - June 30, 1995 $ 589
Operating Expenses
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Fuel Used in Electric Production
Fuel costs for the six months ended June 30, 1995, increased $4 million (2.0%) when compared to the same period last year.
An analysis of fuel costs is shown below:
Six Months Ended June 30
(in millions)
Fuel expense - June 30, 1994 $183 Increase (Decrease) due to change in: Price of fuel 13 Kwh generation (9) Fuel expense - June 30, 1995 $187 |
Other Operation
Other operation expenses increased $5 million (5.1%) for the six months ended June 30, 1995, as compared to the same period last year. This increase was primarily the result of the inclusion of postretirement benefits in rates on an accrual basis, an increase in the level of ongoing DSM expenses, and the amortization of deferred DSM costs, all of which were authorized in the February 1995 Order. Partially offsetting the increase was the May 1994 write-off of previously deferred litigation expenses. Depreciation
Depreciation expense for the six months ended June 30, 1995, decreased $5 million (7.1%) when compared to the same period last year. This decrease, which was primarily driven by the adoption of lower depreciation rates effective March 1995 pursuant the February 1995 Order, was partially offset by additions to utility plant in service.
RESULTS OF OPERATIONS FOR TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the twelve months ended June 30, 1995, decreased 2.6% when compared to the same period last year. The decrease primarily reflects the milder weather conditions experienced in the period as compared to the same period last year. In addition, short-term sales to other utilities also decreased during the period. These decreases were partially offset by an increase in industrial sales reflecting growth in the primary metals and transportation equipment sectors.
Operating Revenues
Total operating revenues increased $9 million (.8%) for the twelve months ended June 30, 1995, as compared to the same period last year. This increase was driven by the 4.3% retail rate increase and the 1.9% rate increase for carrying costs on CWIP property as previously discussed. In addition, the operation of fuel clause adjustment factors reflecting increases in the average cost of kwh generated led to an increase in operating revenues for the period. These increases were partially offset by lower sales due to the milder weather conditions.
An analysis of operating revenues is shown below:
Twelve Months
Ended June 30
(in millions)
Operating revenues - June 30, 1994 $1 133
Increase (Decrease) due to change in:
Price per kwh
Retail 26
Sales for resale
Firm power obligations 1
Non-firm power transactions 2
Total change in price per kwh 29
Kwh sales
Retail (5)
Sales for resale
Firm power obligations (9)
Non-firm power transactions (7)
Total change in kwh sales (21)
Other 1
Operating revenues - June 30, 1995 $1 142
Operating Expenses
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Fuel Used in Electric Production
Fuel costs for the twelve months ended June 30, 1995, increased $15 million (4.0%) as compared to the same period last year.
An analysis of fuel costs is shown below:
Twelve Months Ended June 30
(in millions)
Fuel expense - June 30, 1994 $376 Increase (Decrease) due to change in: Price of fuel 19 Kwh generation (4) Fuel expense - June 30, 1995 $391 |
Purchased and Exchanged Power
For the twelve months ended June 30, 1995, purchased and exchanged power decreased $2 million (5.2%) when compared to the same period last year. The decrease primarily resulted from a decline in third party short-term power sales to other utilities.
Other Operation
Other operation expenses for the twelve months ended June 30, 1995, increased $23 million (11.6%) as compared to the same period last year. This increase reflects the inclusion of postretirement benefits in rates on an accrual basis, an increase in the level of ongoing DSM expenses, and the amortization of deferred DSM costs, all of which were authorized in the February 1995 Order. In addition, charges for severance benefits to former officers of approximately $10 million were expensed in December 1994. These increases were partially offset by the May 1994 write-off of previously deferred litigation expenses.
Maintenance
Maintenance expenses for the twelve months ended June 30, 1995, as compared to the same period last year increased $9 million (11.0%). This increase was primarily driven by increased maintenance on a number of generating units.
Other Income and Expenses - Net
Allowance for Equity Funds Used During Construction
The equity component of AFUDC decreased $8 million (82.4%) for the twelve month period ended June 30, 1995, as compared to the same period last year. This decrease was due primarily to an increase in borrowings of short-term debt which resulted in a decrease in the equity component of the AFUDC rate. In addition, a scrubber at Gibson was placed in service in September 1994 which resulted in a large decrease in CWIP for the period.
Interest
Other Interest
Other interest increased $10 million over the same period last year. The increase was driven primarily by higher interest rates and an increase in the average short-term debt outstanding.
THE UNION LIGHT, HEAT AND POWER COMPANY
BALANCE SHEETS
ASSETS
June 30 December 31
1995 1994
(unaudited)
(dollars in thousands)
Utility Plant - original cost
In service
Electric $184 035 $179 098
Gas 137 949 134 103
Common 19 082 19 122
341 066 332 323
Accumulated depreciation 107 847 104 113
233 219 228 210
Construction work in progress 7 266 8 638
Total utility plant 240 485 236 848
Current Assets
Cash and temporary cash investments 3 248 1 071
Accounts receivable less accumulated
provision of $863,000 at June 30, 1995,
and $457,000 at December 31, 1995,
for doubtful accounts 25 801 33 892
Materials, supplies, and fuel - at average cost
Gas stored for current use 4 268 6 216
Other materials and supplies 1 270 1 406
Property taxes applicable to subsequent year 2 258 2 200
Prepayments and other 520 593
37 365 45 378
Other Assets
Regulatory assets
Deferred merger costs 1 785 1 785
Unamortized costs of reacquiring debt 971 -
Other 2 633 2 718
Other 542 399
5 931 4 902
$283 781 $287 128
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
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THE UNION LIGHT, HEAT AND POWER COMPANY
CAPITALIZATION AND LIABILITIES
June 30 December 31
1995 1994
(unaudited)
Common Stock Equity
Common stock - $15.00 par value; authorized
shares - 1,000,000; outstanding shares - 585,333
at June 30, 1995 and December 31, 1994 $ 8 780 $ 8 780
Paid-in capital 18 839 18 839
Retained earnings 80 002 74 203
Total common stock equity 107 621 101 822
Long-term Debt 74 438 89 238
Total capitalization 182 059 191 060
Current Liabilities
Notes payable 13 500 14 500
Accounts payable 22 895 21 655
Accrued taxes 5 126 2 876
Accrued interest 2 032 2 123
Other 4 605 4 123
48 158 45 277
Other Liabilities
Deferred income taxes 22 120 23 226
Unamortized investment tax credits 5 222 5 364
Accrued pension and other postretirement benefit costs 11 399 10 356
Income taxes refundable through rates 5 188 4 282
Other 9 635 7 563
53 564 50 791
$283 781 $287 128
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<CAPTION
THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF INCOME
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Revenues
Electric $ 47 823 $43 736 $ 87 382 $ 88 926 $176 020 $181 006
Gas 9 372 9 587 39 875 46 387 65 459 78 964
57 195 53 323 127 257 135 313 241 479 259 970
Operating Expenses
Electricity purchased from parent
company for resale 36 936 32 552 66 975 68 107 133 755 138 310
Gas purchased 4 156 4 800 21 716 27 209 35 015 45 007
Other operation 7 258 7 721 15 053 15 341 32 001 31 349
Maintenance 984 1 489 2 137 2 742 4 868 6 268
Depreciation 2 871 2 633 5 646 5 249 11 041 10 592
Taxes
Federal and state income 873 446 3 961 4 227 5 076 6 381
State, local and other 971 990 1 979 2 015 3 966 3 712
54 049 50 631 117 467 124 890 225 722 241 619
Operating Income 3 146 2 692 9 790 10 423 15 757 18 351
Other Income And Expenses - Net
Allowance for equity funds used
during construction 67 13 56 11 123 32
Income taxes (34) 14 (38) 44 (26) 79
Other - net 71 (34) 67 335 (32) 49
104 (7) 85 390 65 160
Income Before Interest 3 250 2 685 9 875 10 813 15 822 18 511
Interest
Interest on long-term debt 1 914 2 039 3 953 4 082 8 032 8 159
Other interest 54 64 219 217 397 487
Allowance for borrowed funds used
during construction (31) (45) (96) (75) (204) (143)
1 937 2 058 4 076 4 224 8 225 8 503
Net Income $ 1 313 $ 627 $ 5 799 $ 6 589 $ 7 597 $ 10 008
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
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THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF CHANGES IN COMMON STOCK EQUITY
(unaudited)
Common Paid-in Retained Total Common
Stock Capital Earnings Stock Equity
(in thousands)
Quarter Ended June 30, 1995
Balance April 1, 1995 $8 780 $18 839 $78 689 $106 308
Net income 1 313 1 313
Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621
Quarter Ended June 30, 1994
Balance April 1, 1994 $8 780 $18 839 $75 289 $102 908
Net income 627 627
Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535
Six Months Ended June 30, 1995
Balance January 1, 1995 $8 780 $18 839 $74 203 $101 822
Net income 5 799 5 799
Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621
Six Months Ended June 30, 1994
Balance January 1, 1994 $8 780 $18 839 $69 327 $ 96 946
Net income 6 589 6 589
Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535
Twelve Months Ended June 30, 1995
Balance July 1, 1994 $8 780 $18 839 $75 916 $103 535
Net income 7 597 7 597
Dividends on common stock (3 511) (3 511)
Balance June 30, 1995 $8 780 $18 839 $80 002 $107 621
Twelve Months Ended June 30, 1994
Balance July 1, 1993 $8 780 $18 839 $68 835 $ 96 454
Net income 10 008 10 008
Dividends on common stock (2 927) (2 927)
Balance June 30, 1994 $8 780 $18 839 $75 916 $103 535
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
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THE UNION LIGHT, HEAT AND POWER COMPANY
STATEMENTS OF CASH FLOWS
(unaudited)
Quarter Ended Six Months Ended Twelve Months Ended
June 30 June 30 June 30
1995 1994 1995 1994 1995 1994
(in thousands)
Operating Activities
Net income $ 1 313 $ 627 $ 5 799 $ 6 589 $ 7 597 $ 10 008
Items providing (using) cash currently:
Depreciation 2 871 2 633 5 646 5 249 11 041 10 592
Deferred income taxes and investment tax
credits - net 506 1 111 (342) 210 1 490 1 168
Allowance for equity funds used during
construction (67) (13) (56) (11) (123) (32)
Regulatory assets
Deferred merger costs - - - - (1 785) -
Other 43 43 85 85 170 201
Changes in current assets and current
liabilities
Accounts receivable 2 996 9 983 8 091 8 385 8 507 (1 778)
Materials, supplies, and fuel (1 391) (2 220) 2 084 2 410 717 476
Accounts payable 5 248 539 1 240 (3 922) 2 785 2 132
Accrued taxes and interest (1 634) (1 453) 2 159 3 604 1 862 (178)
Other items - net (409) (54) 3 973 3 588 3 165 5 506
Net cash provided by (used in)
operating activities 9 476 11 196 28 679 26 187 35 426 28 095
Financing Activities
Redemption of long-term debt (15 734) - (15 734) - (15 734) (6 500)
Change in short-term debt 12 500 (8 000) (1 000) (19 500) 8 000 2 000
Dividends on common stock - - - - (3 511) (2 927)
Net cash provided by (used in)
financing activities (3 234) (8 000) (16 734) (19 500) (11 245) (7 427)
Investing Activities
Construction expenditures (less allowance
for equity funds used during construction) (4 535) (4 458) (9 768) (8 494) (21 603) (21 716)
Net cash provided by (used in)
investing activities (4 535) (4 458) (9 768) (8 494) (21 603) (21 716)
Net increase (decrease) in cash and
temporary cash investments 1 707 (1 262) 2 177 (1 807) 2 578 (1 048)
Cash and temporary cash investments at
beginning of period 1 541 1 932 1 071 2 477 670 1 718
Cash and temporary cash investments at
end of period $ 3 248 $ 670 $ 3 248 $ 670 $ 3 248 $ 670
The accompanying notes as they relate to The Union Light, Heat and Power Company are an integral part of these financial
statements.
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THE UNION LIGHT, HEAT AND POWER COMPANY
RESULTS OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 1995
Kwh Sales
Kwh sales increased for the quarter ended June 30, 1995, as a result of increased sales to commercial and industrial customers. The increase in commercial sales partly resulted from an increase in the average number of customers. The increased industrial sales reflect growth in the primary metals and paper and allied products sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the second quarter of 1995 increased 9.3% as compared to the second quarter of 1994, reflecting higher sales to domestic customers attributable to an increase in the average number of customers. In addition, the continuing trend of industrial customers electing to purchase directly from suppliers created an increase in demand for transportation services. The increased transportation volumes were primarily due to growth in the primary metals, paper and allied products, and food products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues increased $4.1 million (9.3%) for the quarter ended June 30, 1995, over the comparable period of 1994. This increase primarily reflects the previously discussed increases in kwh sales.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P`s largest operating expense, increased $4.4 million (13.5%) for the quarter as compared to the same period last year.
An analysis of these costs is shown below:
Quarter
Ended June 30
(in thousands)
Electricity purchased expense - June 30, 1994 $32 552
Increase (Decrease) due to change in:
Price of electricity (2 944)
Kwh purchased 7 328
Electricity purchased expense - June 30, 1995 $36 936
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Gas Purchased
Gas purchased for the quarter decreased $.6 million (13.4%) when compared to the same period last year. This decrease was attributable to a 16.1% decline in the average cost per Mcf purchased which was partially offset by an increase of 3.2% in volumes purchased.
Other Operation
Other operation expense decreased $.5 million (6.0%) for the quarter ended June 30, 1995, as compared to the same period last year due to several factors, including reductions in administrative and general expenses and decreased gas and electric distribution expenses.
Maintenance
The decrease in maintenance expense of $.5 million (33.9%) for the second quarter of 1995 as compared to the same period last year was primarily due to lower maintenance costs on gas and electric distribution facilities.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the six months ended June 30, 1995, increased 1.5% over the same period of 1994, primarily as a result of increased commercial and industrial sales volumes. A decline in domestic sales volumes due to milder weather partially offset the increase. The higher commercial sales resulted from an increase in the average number of customers. The increased industrial sales reflect continued growth in the primary metals sector.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the six months ended June 30, 1995, decreased 2.6% as compared to the same period of 1994, as a result of decreased sales volumes to domestic, commercial and industrial customers. Milder weather contributed to the decrease in domestic and commercial sales. A decrease in industrial sales was attributable to the trend of industrial customers electing to purchase directly from suppliers, creating additional demand for transportation services provided by ULH&P. The significant increase in transportation volumes more than offset the decline in industrial sales, and was primarily attributable to growth in the paper and allied products and primary metals sectors.
Revenues
Electric Operating Revenues
Electric operating revenues decreased $1.5 million (1.7%) for the six months ended June 30, 1995, over the comparable period of 1994. This decrease was due to the operation of fuel adjustment clauses reflecting a lower average cost of electricity purchased.
Gas Operating Revenues
Gas operating revenues declined $6.5 million (14.0%) in the first six months of 1995 when compared to the same period last year. This decrease was the result of the previously discussed decline in total volumes sold and the operation of fuel adjustment clauses reflecting a decline in the average cost of gas purchased. An increase in the relative volume of gas transported to gas sold, also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P`s largest expense, decreased $1.1 million (1.7%) for the first six months of 1995 as compared to last year.
An analysis of these costs is shown below:
Six Months
Ended June 30
(in thousands)
Electricity purchased expense - June 30, 1994 $68 107
Increase (Decrease) due to change in:
Price of electricity (5 561)
Kwh purchased 4 429
Electricity purchased expense - June 30, 1995 $66 975
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Gas Purchased
Gas purchased expense for the first six months decreased $5.5 million (20.2%) when compared to the same period last year. The decrease was attributable to a 7.9% decline in volumes purchased and a 13.3% decrease in the average cost per Mcf of gas purchased.
Maintenance
The decrease in maintenance expense of $.6 million (22.1%) for the six months ended June 30, 1995, as compared the same period last year was due primarily to lower maintenance costs on gas and electric distribution facilities.
RESULTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 1995
Kwh Sales
Kwh sales for the twelve months ended June 30, 1995, remained relatively constant when compared to the same period of 1994, increasing only .9%. A decline in domestic sales volumes due to milder weather was offset by increases in commercial and industrial sales. The higher commercial sales resulted from an increase in the average number of customers. The increased industrial sales reflect growth in the primary metals and paper and allied products sectors.
Mcf Sales and Transportation
Mcf gas sales and transportation volumes for the twelve months ended June 30, 1995, decreased 6.8% when compared to the same period of 1994, as a result of lower domestic, commercial, and industrial sales. Milder weather contributed to the decrease in domestic and commercial sales, while industrial sales decreased as customers elected to purchase directly from suppliers, creating additional demand for transportation services provided by ULH&P. The increase in transportation volumes more than offset the lower industrial sales, and was primarily attributable to growth in the primary metals, paper and allied products, and food products sectors.
Revenues
Electric Operating Revenues
Electric operating revenues decreased $5.0 million (2.8%) for the twelve months ended June 30, 1995, over the comparable period of 1994. This decrease was attributable to the operation of adjustment clauses reflecting a decline in the average cost of electricity purchased.
Gas Operating Revenues
Gas operating revenues declined $13.5 million (17.1%) for the twelve months ended June 30, 1995, when compared to the same period last year. This decrease was the result of the aforementioned decline in volumes sold and transported and the operation of fuel adjustment clauses reflecting a lower average cost of gas purchased. An increase in the relative volume of gas transported to gas sold, also contributed to the decrease. Providing transportation services does not necessitate the recovery of gas purchased costs. Consequently, the revenue per Mcf transported is below the revenue per Mcf sold.
Operating Expenses
Electricity Purchased from Parent Company for Resale
Electricity purchased expense, ULH&P`s largest expense, decreased $4.6 million (3.3%) for the twelve months ended June 30, 1995, as compared to last year.
An analysis of these costs is shown below:
Twelve Months
Ended June 30
(in thousands)
Electricity purchased expense - June 30, 1994 $138,310
Increase (Decrease) due to change in:
Price of electricity (9,333)
Kwh purchased 4,778
Electricity purchased expense - June 30, 1995 $133,755
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Gas Purchased
Gas purchased expense for the twelve months ended June 30, 1995, decreased $10.0 million (22.2%) when compared to the same period last year. This decrease was attributable to an 11.3% decline in volumes purchased and a 12.3% decrease in the average cost per Mcf of gas purchased.
Other Operation
Other operation expenses increased $.6 million (2.1%) for the twelve months ended June 30, 1995, as compared to the same period last year, primarily due to recognition of nonrecurring charges for merger-related costs and other costs ULH&P does not expect to recover from customers, and increased electric and gas distribution expenses.
Maintenance
The decrease in maintenance expense of $1.4 million (22.3%) for the twelve months ended June 30, 1995, as compared the same period last year was due primarily to lower maintenance costs on gas and electric distribution facilities.
NOTES TO FINANCIAL STATEMENTS
Cinergy, CG&E, PSI, and ULH&P
1. These Financial Statements reflect all adjustments (which include only normal, recurring adjustments) necessary in the opinion of these companies for a fair presentation of the interim results. These statements should be read in conjunction with the financial statements and the notes thereto included in each registrant`s Annual Report on Form 10-K for the year ended December 31, 1994. Certain amounts in the 1994 Financial Statements have been reclassified to conform to the 1995 presentation.
Cinergy and PSI
2. As discussed in Cinergy`s and PSI`s 1994 Forms 10-K, in July 1994, PSI filed a petition with the IURC for a retail rate increase. On May 15, 1995, PSI filed testimony with the IURC supporting a 12.8% ($127.9 million) rate increase request. Major components of the increase include, among other things, the costs of the Clean Coal Project and a scrubber at Gibson. An order is anticipated in the second quarter of 1996. PSI cannot predict what action the IURC may take with respect to this proposed rate increase.
Cinergy and CG&E
3. On July 17, 1995, CG&E filed a request with the PUCO to begin settlement discussions on a gas rate increase with intervenors who have participated in previous rate applications and represent the various classes of gas customers served by CG&E. The proposed increase, estimated to be $25 million, is expected to increase annual revenues approximately 7%. The proposed increase, to be effective in late 1996, is requested, in part, to recover capital investment made since the last gas rate increase in 1993. Also, the request includes a proposal to initiate a pilot program that would allow residential customers to choose their gas supplier and have CG&E transport the gas for them. A full rate application is expected to be filed with the PUCO on December 1, 1995. CG&E cannot predict the outcome of these settlement discussions nor what actions the PUCO may take with respect to the proposed rate increase.
Cinergy, CG&E, PSI, and ULH&P
4. In March 1995, the FASB issued SFAS 121 which will be effective for Cinergy in January 1996. The new accounting standard requires impairment losses on long-lived assets be recognized when an asset`s book value exceeds its expected future cash flows. Based on the regulatory environment in which Cinergy currently operates, SFAS 121 is not expected to have an adverse impact on financial condition or results of operations upon adoption. However, this conclusion may change in the future as deregulation, competitive factors, and potential restructuring influence the electric utility industry.
Cinergy and CG&E
5. All outstanding shares of CG&E`s Cumulative Preferred Stock, 7.44% Series and 9.15% Series, totaling $90 million, were redeemed at a per share price of $101 and $106.10, respectively, on July 1, 1995.
Cinergy and CG&E
6. (a) As previously discussed in CG&E`s 1994 Form 10-K, CG&E redeemed $59 million principal amount of its 9.70% first mortgage bonds (due June 15, 2019) on April 30, 1995, and $55 million principal amount of its 10 1/8% first mortgage bonds (due May 1, 2020) on May 1, 1995. Additionally, $41 million principal amount of the 9.70% first mortgage bonds and $45 million principal amount of the 10 1/8% first mortgage bonds were retired on March 31, 1995.
Cinergy, CG&E, and ULH&P
(b) ULH&P redeemed $5 million principal amount of its 10.25% first mortgage bonds (due June 1, 2020) at par with cash deposited in the Maintenance and Replacement Fund, and the remaining amount of such bonds at the redemption price of 107.34% on June 1, 1995.
On September 1, 1995, ULH&P will redeem all of its 9.70% Series first mortgage bonds due 2019 at a redemption price of 106.51%.
Cinergy and CG&E
7. (a) CG&E received authority from the SEC in May 1995, for a shelf registration statement which permits CG&E to sell up to $500 million of unsecured debt securities. The PUCO has authorized CG&E, through March 31, 1996, to issue $500 million of first mortgage bonds, secured medium-term notes, unsecured debt, or any combination thereof. CG&E issued $150 million of 6.90% debentures due June 1, 2025 on June 14, 1995. Additionally, on July 6, 1995, CG&E issued $100 million in junior subordinated deferrable interest debentures, due June 30, 2025, which carry an interest rate of 8.28%. CG&E also has PUCO authority through July 19, 1996, to borrow from the Ohio Air Quality Development Authority up to $84 million from the issuance of pollution control revenue refunding bonds.
Cinergy, CG&E, and ULH&P
(b) The SEC authorized ULH&P`s shelf registration statement, permitting it to sell up to $55 million of unsecured debt securities. The KPSC authorized ULH&P to issue up to $55 million of first mortgage bonds, unsecured debt, or a combination of both through March 31, 1997. ULH&P issued $15 million of 7.65% debentures, due July 15, 2025 on July 25, 1995.
Cinergy, CG&E, PSI, and ULH&P
8. The operating subsidiary companies of Cinergy have the following short- term debt authorizations and lines of credits:
Committed Unused
Authorized Lines Lines
Cinergy & Subsidiaries $783 $343 $186
CG&E & Subsidiaries 435 112 98
PSI 338 230 86
ULH&P 35 30 17
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Additionally, Cinergy has a $100 million credit facility, which expires September 27, 1997, of which $79 million remained unused at June 30, 1995.
Cinergy and PSI
9. (a) Coal tar residues and other substances associated with MGP sites have been found at former MGP sites in Indiana, including, but not limited to, several sites previously owned by PSI. PSI has identified at least 21 MGP sites which it previously owned, including 19 it sold in 1945 to Indiana Gas and Water Company, Inc. (now IGC). IGC has informed PSI of the basis for its position that PSI, as a PRP under the CERCLA, should contribute to IGC`s response costs related to investigating and remediating contamination at MGP sites which PSI sold to IGC.
In February 1995, PSI received notification from NIPSCO alleging PSI is a PRP under the CERCLA with respect to contamination associated with MGP sites previously owned and/or operated by both PSI and NIPSCO (or their predecessors). The notification included seven sites, five of which PSI acquired from NIPSCO and subsequently sold to IGC.
PSI has placed its insurance carriers on notice of IGC`s and NIPSCO`s claims.
On May 3, 1995, the IURC denied IGC`s request for recovery of costs incurred in complying with Federal, state, and local environmental regulations related to MGP sites in which IGC has an interest, including sites acquired from PSI. IGC has announced it will appeal this decision, which IGC contends is contrary to decisions made by other state utility commissions with respect to this issue. In light of this decision, PSI is evaluating its options with respect to rate recovery of any MGP site-related costs it may incur.
At this time, PSI is unable to predict the nature, extent, and costs of, or PSI`s responsibility for, any future environmental investigations and remediations which may be required at MGP sites owned or previously owned by PSI; however, any costs that ultimately are incurred may be material.
Cinergy and CG&E
(b) Lawrenceburg also has an MGP site which is under investigation to determine a remediation strategy. Lawrenceburg had applied to have the site included in the IDEM`s voluntary cleanup program. On May 22, 1995, Lawrenceburg and the IDEM reached an agreement to include the Lawrenceburg MGP site in such voluntary cleanup program. A proposed remediation plan will be submitted in the near future.
Cinergy and CG&E
10. On August 9, 1995, CG&E filed a Declaration on Form U-1 with the SEC under the PUHCA seeking authorization to solicit proxies from the holders of preferred stock and from Cinergy as the holder of all outstanding shares of common stock for a special meeting of shareholders to be held in the fall of 1995 for the purpose of proposing to amend CG&E`s Articles. The proposed amendment would, if adopted, eliminate a restriction on the amount of unsecured debt that CG&E can issue, or, in the alternative, if such proposal is not adopted, proposing to amend such Articles by suspending, for a ten year period, the restriction on the amount of unsecured debt CG&E can issue. CG&E is also requesting that the SEC authorize such amendment to CG&E`s Articles.
MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Senior Security Ratings
Cinergy, CG&E, PSI, and ULH&P
In July 1995, S&P Ratings Group raised its ratings of Cinergy`s operating units` senior secured debt to A- from BBB+, removing the companies from the financial agency`s credit watch. The companies had been on watch since October 31, 1994. S&P also raised the ratings of the senior unsecured debt and preferred stock from BBB to BBB+. The ratings group indicated these actions are a result of lower combined power production costs, reduced operation and maintenance expenses, and deferral of capital expenditures brought about as a result of the merger.
In addition, in August 1995, DCR raised Cinergy`s operating units` credit ratings. The ratings of CG&E`s first mortgage bonds and collateralized pollution control revenue bonds were raised to A- from BBB+ while the ratings of CG&E`s debentures were raised to BBB+ from BBB. PSI`s first mortgage bonds and medium term notes were upgraded to A- from BBB+. The preferred stock ratings of both companies were reaffirmed at BBB. ULH&P`s first mortgage bonds were assigned a new rating of A-. DCR stated the merger will result in lower new capacity needs and electric production costs and enhanced transmission capabilities.
Regulatory Matters
Cinergy, CG&E, PSI, and ULH&P
PUHCA Reform
On June 20, 1995, after a year-long review of its continuing regulation of
public utility holding companies under the PUHCA, the SEC endorsed
recommendations for reform of the PUHCA. The recommendations call for repeal
and, pending repeal, significant administrative reform of the 60 year old
statute. While the report offers three alternative approaches to repeal and
legislative reform, the report`s preferred option is repeal coupled with a
transition period of one year or longer and a transfer of certain consumer-
protection provisions of PUHCA to the FERC. The report further recommends
that, pending consideration of legislative options, the SEC take prompt
administrative action, by rulemaking and on a case-by-case basis, to modernize
and simplify regulation under PUHCA, with particular reference to financing
transactions, diversification into nonutility businesses, utility mergers and
acquisitions and PUHCA`s `integration` standards. In the latter regard, the
report recommends a changed interpretation of PUHCA to permit registered
holding companies to own combination electric and gas utility companies
provided the affected states agree. Subsequent to the report`s issuance, the
SEC adopted rule changes exempting various types of financing transactions by
utility and nonutility subsidiaries of registered holding companies. The SEC
also proposed a rule that would exempt investments by registered systems in
specified `energy-related companies` subject to certain conditions.
Cinergy and PSI
PSI`s July 1994 Retail Rate Petition
As discussed in Cinergy`s and PSI`s 1994 Forms 10-K, in July 1994, PSI filed a
petition with the IURC for a retail rate increase. On May 15, 1995, PSI filed
testimony with the IURC supporting a 12.8% ($127.9 million) rate increase
request. Major components of the increase include, among other things, the
costs of the Clean Coal Project and a scrubber at Gibson. An order is
anticipated in the second quarter of 1996. Assuming this petition is
satisfactorily addressed by the IURC, Cinergy`s objective is to manage costs
in order to delay the need for additional rate relief by PSI. PSI cannot
predict what action the IURC may take with respect to this proposed rate
increase.
Cinergy and CG&E
CG&E Rate Matters
On July 17, 1995, CG&E filed a request with the PUCO to begin settlement
discussions on a gas rate increase involving intervenors who have participated
in previous rate applications and represent the various classes of gas
customers served by CG&E. The proposed increase, estimated to be $25 million,
is expected to increase annual revenues approximately 7%. The proposed
increase, anticipated to be effective in late 1996, is requested, in part, to
recover capital investment made since the last gas rate increase in 1993.
Also, the request includes a proposal to initiate a pilot program that would
allow residential customers to choose their gas supplier and have CG&E
transport the gas for them. A full rate application is expected to be filed
with the PUCO on December 1, 1995. CG&E cannot predict the outcome of these
settlement discussions nor what actions the PUCO may take with respect to the
proposed rate increase.
Cinergy, CG&E, PSI, and ULH&P
MEGA-NOPR
On March 29, 1995, the FERC issued a MEGA-NOPR on Open Access, which is
another step in the transition towards potentially full-scale competition in
the electric utility industry. The MEGA-NOPR is essentially the electric
industry`s equivalent of the FERC`s Order 636 applicable to the natural gas
industry. The MEGA-NOPR as proposed would, among other things, provide for
mandatory filing of open access/comparability transmission tariffs, provide
for functional unbundling of all services, require utilities to use the
tariffs for their own bulk power transactions, establish an electronic
bulletin board, and establish a contract-based approach to stranded costs.
Cinergy filed comments on June 6, 1995, in response to the FERC`s MEGA-NOPR on Open Access. In the filing, Cinergy reaffirmed support for FERC`s authority to order utilities owning transmission systems to provide open access at rates and terms comparable to their own. On August 7, 1995, Cinergy filed additional comments concerning the transmission pricing aspects of the MEGA- NOPR. A final order could be issued by the end of 1995.
Environmental Issues
Cinergy, CG&E, and PSI
Manufactured Gas Plants
Coal tar residues and other substances associated with MGP sites have been
found at former MGP sites in Indiana, including, but not limited to, several
sites previously owned by PSI. PSI has identified at least 21 MGP sites which
it previously owned, including 19 it sold in 1945 to Indiana Gas and Water
Company, Inc. (now IGC). IGC has informed PSI of the basis for its position
that PSI, as a PRP under the CERCLA, should contribute to IGC`s response costs
related to investigating and remediating contamination at MGP sites which PSI
sold to IGC.
In February 1995, PSI received notification from NIPSCO alleging PSI is a PRP under the CERCLA with respect to contamination associated with MGP sites previously owned and/or operated by both PSI and NIPSCO (or their predecessors). The notification included seven sites, five of which PSI acquired from NIPSCO and subsequently sold to IGC.
PSI has placed its insurance carriers on notice of IGC`s and NIPSCO`s claims.
On May 3, 1995, the IURC denied IGC`s request for recovery of costs incurred in complying with Federal, state, and local environmental regulations related to MGP sites in which IGC has an interest, including sites acquired from PSI. IGC has announced it will appeal this decision, which IGC contends is contrary to decisions made by other state utility commissions with respect to this issue. In light of this decision, PSI is evaluating its options with respect to rate recovery of any MGP site-related costs it may incur.
At this time, PSI is unable to predict the nature, extent, and costs of, or PSI`s responsibility for, any future environmental investigations and remediations which may be required at MGP sites owned or previously owned by PSI; however, any costs that ultimately are incurred may be material.
Lawrenceburg also has an MGP site which is under investigation to determine a remediation strategy. Lawrenceburg had applied to have the site included in the IDEM`s voluntary cleanup program. On May 22, 1995, Lawrenceburg and the IDEM reached an agreement to include the Lawrenceburg MGP site in such voluntary cleanup program. A proposed remediation plan will be submitted in the near future.
Accounting Issues
Cinergy, CG&E, PSI, and ULH&P
New Accounting Standard
In March 1995, the FASB issued SFAS 121 which will be effective for Cinergy in
January 1996. The new accounting standard requires impairment losses on long-
lived assets be recognized when an asset`s book value exceeds its expected
future cash flows. Based on the regulatory environment in which Cinergy
currently operates, SFAS 121 is not expected to have an adverse impact on
financial condition or results of operations upon adoption. However, this
conclusion may change in the future as deregulation, competitive factors, and
potential restructuring influence the electric utility industry.
CAPITAL REQUIREMENTS
Cinergy and CG&E
On August 9, 1995, CG&E filed a Declaration on Form U-1 with the SEC under the PUHCA, seeking authorization to solicit proxies form the holders of preferred stock and from Cinergy as the holder of all outstanding shares of common stock for a special meeting of shareholders to be held in the fall of 1995 for the purpose of proposing to amend CG&E`s Articles. The proposed amendment would, if adopted, eliminate a restriction on the amount of unsecured debt that CG&E can issue, or, in the alternative, if such proposal is not adopted, proposing to amend such articles by suspending, for a ten year period, the restriction on the amount of unsecured debt CG&E can issue. CG&E is also requesting that the SEC authorize such amendment to CG&E`s Articles.
Cinergy, CG&E, and ULH&P
During May and July 1995, CG&E and ULH&P, issued $265 million of debt (see Note 7 of the `Notes to Financial Statements`).
CAPITAL RESOURCES
Cinergy, CG&E, and ULH&P
Long-term Debt
See Note 7 of the `Notes to Financial Statements`.
Cinergy, CG&E, PSI, and ULH&P
Short-term Debt
See Note 8 of the `Notes to Financial Statements`.
RESULTS OF OPERATIONS
Cinergy, CG&E, PSI, and ULH&P
Reference is made to `PART I. Financial Information` - `ITEM 1. FINANCIAL
STATEMENTS.`
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Cinergy and PSI
As discussed in Cinergy and PSI Forms 10-K, PSI has been arbitration for several years with Cyprus Amax regarding various disputes, including disputes related to price, tonnage, and coal quality arising out of a long- term contract for the supply of 3.6 million tons of coal per year from the Wabash Mine to Gibson. On August 9, 1995, PSI and Cyprus Amax executed a Settlement Agreement, which fully resolves all outstanding disputes, and a new coal supply agreement, which replaces the old contract. The new contract requires a reduction in the price effective July 1, 1995, followed by further price reductions through 1999. Beginning in the year 2000, the price will be adjusted each year based upon market conditions. The new contract also extends the term for deliveries from Wabash Mine.
Also, see Notes 2, 3, and 9 of the `Notes to Financial Statements` in `Part I - Financial Information`.
ITEM 2. CHANGES IN SECURITIES
Cinergy and CG&E
On July 6, 1995, CG&E issued $100 million principal amount of 8.28% Junior Subordinated Deferrable Interest Debentures due June 30, 2025. CG&E has the right, under the applicable indenture, to extend the interest payment period from time to time on the debentures to a period not exceeding 20 consecutive quarters and not extending beyond the maturity date. In the event that this right is exercised, CG&E may not declare or pay dividends on, or purchase, acquire, or make a liquidation payment with respect to, any of its capital stock, or make any guarantee payments with respect to the foregoing. It is believed that the extension of an interest payment period on the debentures is unlikely.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Copies of the documents listed below which are identified with an asterisk (*) have heretofore been filed with the SEC and are incorporated herein by reference and made a part hereof. Exhibits not so identified are filed herewith.
Exhibit
Designation Nature of Exhibit
PSI
3-a Amended Articles of Consolidation of PSI, as
amended to April 20, 1995.
ULH&P
3-b By-laws of ULH&P as amended, adopted by
shareholders June 16, 1995.
Cinergy
4-a *Original Indenture (Unsecured Debt Securities)
between CG&E and The Fifth Third Bank dated as
of May 15, 1995. (Exhibit to CG&E Form 8-A dated
July 24, 1995, file number 1-1232.)
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Cinergy and CG&E
4-b First Supplemental Indenture between CG&E and
The Fifth Third Bank dated as of June 1, 1995.
Cinergy
4-c *Second Supplemental Indenture between CG&E and
The Fifth Third Bank dated as of June 30, 1995.
(Exhibit to CG&E Form 8-A dated July 24, 1995,
file number 1-1232.)
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Cinergy, CG&E and ULH&P
4-d Original Indenture (Unsecured Debt Securities)
between ULH&P and The Fifth Third Bank dated as
of July 1, 1995.
4-e First Supplemental Indenture between ULH&P and
The Fifth Third Bank dated as of July 15, 1995.
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Cinergy, CG&E, PSI, and ULH&P
27 Financial Data Schedules (included in electronic submission only).
Cinergy, CG&E, PSI, and ULH&P
(b) No reports on Form 8-K were filed during the quarter ended June 30, 1995.
SIGNATURES
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although Cinergy, CG&E, PSI, and ULH&P believe that the disclosures are adequate to make the information presented not misleading. In the opinion of Cinergy, CG&E, PSI, and ULH&P, these statements reflect all adjustments (which include only normal, recurring adjustments) necessary to reflect the results of operations for the respective periods. The unaudited statements are subject to such adjustments as the annual audit by independent public accountants may disclose to be necessary.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed by an officer and the chief accounting officer on their behalf by the undersigned thereunto duly authorized.
CINERGY CORP.
THE CINCINNATI GAS & ELECTRIC COMPANY
PSI ENERGY, INC.
THE UNION LIGHT, HEAT AND POWER COMPANY
Registrants
Date: August 10, 1995 /S/ J. Wayne Leonard
J. Wayne Leonard
Duly Authorized Officer
Date: August 10, 1995 /S/ Charles J. Winger
Charles J. Winger
Chief Accounting Officer
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THE CINCINNATI GAS & ELECTRIC COMPANY
AND
THE FIFTH THIRD BANK,
Trustee
First Supplemental Indenture
Dated as of June 1, 1995
To
Indenture
6.90% Debentures Due 2025
FIRST SUPPLEMENTAL INDENTURE, dated as of June 1, 1995, between The Cincinnati Gas & Electric Company, a corporation duly organized and existing under the laws of the State of Ohio (herein called the "Company"), having its principal office at 139 East Fourth Street, Cincinnati, Ohio 45202, and The Fifth Third Bank, an Ohio banking corporation, as Trustee (herein called the "Trustee") under the Indenture dated as of May 15, 1995 between the Company and the Trustee (the "Indenture").
Recitals of the Company
The Company has executed and delivered the Indenture to the Trustee to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (the "Securities"), to be issued in one or more series as in the Indenture provided.
Pursuant to the terms of the Indenture, the Company desires to provide for the establishment of a new series of its Securities to be known as its 6.90% Debentures Due 2025 (herein called the "Debentures"), in this First Supplemental Indenture.
All things necessary to make this First Supplemental Indenture a valid agreement of the Company have been done.
Now, Therefore, This First Supplemental Indenture Witnesseth:
For and in consideration of the premises and the purchase of the Debentures by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Debentures, as follows:
ARTICLE ONE
Terms of the Debentures
Section 101. There is hereby authorized a series of Securities designated the "6.90% Debentures Due 2025", limited in aggregate principal amount to $150,000,000 (except as provided in Section 301(2) of the Indenture). The Debentures shall mature and the principal shall be due and payable together with all accrued and unpaid interest thereon on June 1, 2025 and shall be issued in the form of a registered Global Security without coupons, registered in the name of Cede & Co.
Section 102. The provisions of Section 305 of the Indenture applicable to Global Securities shall apply to the Debentures.
Section 103. Interest on each of the Debentures shall be payable semiannually on June 1 and December 1 in each year (each an "Interest Payment Date"), commencing on December 1, 1995, at the rate per annum specified in the designation of the Debentures from June 1, 1995, or from the most recent Interest Payment Date to which interest has been paid or duly provided for. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will be paid to the Person in whose name such Debenture (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the May 15 or November 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months.
Section 104. Subject to agreements with or the rules of The Depository Trust Company or any successor book-entry security system or similar system with respect to Global Securities, payments of interest will be made by check mailed to the Holder of each Debenture at the address shown in the Security Register, and payments of the principal amount of each Debenture will be made at maturity by check against presentation of the Debenture at the office or agency of the Trustee.
Section 105. The Debentures shall be issued in denominations of $1,000 or any integral multiple of $1,000.
Section 106. Principal and interest on the Debentures shall be payable in the coin or currency of the United States of America, which, at the time of payment, is legal tender for public and private debts.
Section 107. The Debentures shall be subject to defeasance, at the Company's option, as provided for in Sections 1302 and 1303 of the Indenture.
Section 108. The Debentures will not be redeemable at the option of the Company prior to maturity and will not be subject to any sinking fund.
Section 109. Each Holder shall have the right, at such Holder's option,
exercisable on April 1, 2005 and thereafter until May 1, 2005, to require the
Company to redeem, and upon the exercise of such right in the manner set forth
hereinafter the Company shall redeem, all or any part of such Holder's
Debentures that is $1,000 or any integral multiple thereof, on June 1, 2005
(the "Redemption Date") at a redemption price in cash equal to 100% of the
principal amount of such Debenture (the "Redemption Price"), together with
accrued and unpaid interest to the Redemption Date.
To exercise a redemption right, a Holder of the Debentures shall deliver
(i) to the Company and to the Trustee irrevocable written notice of the
Holder's election to exercise such right (the "Holder's Notice") which shall
set forth the name of the Holder, the amount of Debentures to be redeemed and
a statement that an election to exercise the redemption right is being made
thereby, and (ii) to the Trustee the Debentures with respect to which the
redemption right is being exercised, duly endorsed for transfer to the Company
if required by the Trustee or the Company. The Debentures held by a
securities depositary may be delivered in such other manner as may be agreed
to by such securities depositary and the Company and the Trustee. Such
written notice shall be irrevocable. The Debentures as to which the
redemption right has been so exercised shall, on the Redemption Date, become
due and payable at the Redemption Price, together with accrued and unpaid
interest to the Redemption Date.
On or before the Redemption Date, the Company shall deposit with the
Trustee an amount of money sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued
interest on, all the Debentures which are to be redeemed on that date.
If any Debentures surrendered for redemption shall not be so paid on the
Redemption Date, such Debenture shall, until paid, continue to bear interest
from the Redemption Date at the same rate as the rate borne by such
Debenture. The Company shall pay to the Holder of such Debenture the
additional amounts of interest arising from this paragraph at the same time
that it pays the Redemption Price.
If any Debenture which is to be redeemed only in part shall be
surrendered at any office or agency of the Company (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing), the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Debenture, of any authorized
denomination as requested by such Holder, in an aggregate principal amount
equal to and in exchange for the unredeemed portion of the Debenture so
surrendered.
ARTICLE TWO
Form of the Debentures
Section 201. The Debentures are to be substantially in the following form and shall include substantially the legend shown so long as the Debentures are Global Securities:
(FORM OF FACE OF DEBENTURE)
No. R-1
$150,000,000
CUSIP No. 172070BT0
THE CINCINNATI GAS & ELECTRIC COMPANY
6.90% DEBENTURE DUE 2025
Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC") to issuer or its agent for registration of transfer, exchange, or payment and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
THE CINCINNATI GAS & ELECTRIC COMPANY, a corporation duly organized and existing under the laws of the State of Ohio (herein called the "Company", which term includes any successor Person under the Indenture hereafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of One Hundred Fifty Million and No/100 Dollars ($150,000,000) on June 1, 2025, and to pay interest thereon from June 1, 1995 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on June 1 and December 1 in each year, commencing December 1, 1995, at the rate of 6.90% per annum, until the principal hereof is paid or made available for payment. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the May 15 or November 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the City of Cincinnati, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register.
Any payment on this Security due on any day which is not a Business Day in the City of New York need not be made on such day, but may be made on the next succeeding Business Day with the same force and effect as if made on the due date and no interest shall accrue for the period from and after such date.
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
In Witness Whereof, the Company has caused this instrument to be duly executed.
THE CINCINNATI GAS & ELECTRIC COMPANY
By..............................
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE FIFTH THIRD BANK,
as Trustee
By.............................
Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of May 15, 1995 (herein called the "Indenture", which term shall have the meaning assigned to it in such instrument), between the Company and The Fifth Third Bank, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to $150,000,000.
The Securities will not be redeemable at the option of the Company prior to maturity and will not be subject to any sinking fund.
The Holder of this Security shall have the right, at such Holder's option, exercisable on April 1, 2005 and thereafter until May 1, 2005, to require the Company to redeem, and upon the exercise of such right in the manner set forth hereinafter the Company shall redeem, all or any part of this Security that is $1,000 or any integral multiple thereof, on June 1, 2005 (the "Redemption Date") at a redemption price in cash equal to 100% of the principal amount of this Security (the "Redemption Price"), together with accrued and unpaid interest to the Redemption Date. To exercise this redemption right, the Holder hereof shall deliver (i) to the Company and to the Trustee irrevocable written notice of the Holder's election to exercise such right (the "Holder's Notice") which shall set forth the name of the Holder, the amount hereof to be redeemed and a statement that an election to exercise the redemption right is being made thereby and (ii) to the Trustee this Security duly endorsed for transfer to the Company if required by the Trustee or the Company. Securities held by a securities depositary may be delivered in such other manner as may be agreed to by such securities depositary and the Company and the Trustee. Such written notice shall be irrevocable. If this Security is so surrendered for redemption it shall, on the Redemption Date, become due and payable at the Redemption Price, together with accrued and unpaid interest to the Redemption Date.
If this Security is to be so redeemed only in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder hereof without service charge, a new Security of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion hereof so surrendered.
The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect to this Security upon compliance with certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 35% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonably satisfactory indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
ARTICLE THREE
Original Issue of Debentures
Section 301. Debentures in the aggregate principal amount of $150,000,000, may, upon execution of this First Supplemental Indenture, or from time to time thereafter, be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Debentures upon a Company Order without any further action by the Company.
ARTICLE FOUR
Paying Agent and Security Registrar
Section 401. The Fifth Third Bank will be the Paying Agent and Security Registrar for the Debentures.
ARTICLE FIVE
Sundry Provisions
Section 501. Except as otherwise expressly provided in this First Supplemental Indenture or in the form of Debenture or otherwise clearly required by the context hereof or thereof, all terms used herein or in said form of Debenture that are defined in the Indenture shall have the several meanings respectively assigned to them thereby.
Section 502. The Indenture, as supplemented by this First Supplemental Indenture, is in all respects ratified and confirmed, and this First Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this First Supplemental Indenture to be duly executed, and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.
THE CINCINNATI GAS & ELECTRIC COMPANY
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
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THE FIFTH THIRD BANK, as Trustee
By /s/ Brian J. Gardner
Brian J. Gardner
Assistant Vice President
|
THE UNION LIGHT, HEAT AND POWER COMPANY
and
THE FIFTH THIRD BANK, Trustee
Indenture
Dated as of July 1, 1995
INDENTURE, dated as of July 1, 1995, between The Union Light, Heat and Power Company, a corporation duly organized and existing under the laws of the Commonwealth of Kentucky (herein called the "Company"), having its principal office at 139 East Fourth Street, Cincinnati, Ohio 45202, and The Fifth Third Bank, an Ohio banking corporation, as Trustee (herein called the "Trustee").
Recitals of the Company
The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.
Now, Therefore, This Indenture Witnesseth:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed, subject to Article Fourteen, if applicable, for the equal and proportionate benefit of the Holders of the Securities of each series thereof, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles;
(4) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Indenture; and
(5) the words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant to
Section 614 to act on behalf of the Trustee to authenticate Securities of one
or more series.
"Board of Directors" means the board of directors of the Company, or any duly authorized committee of that board, or any Person duly authorized to act on behalf of that board.
"Board Resolution" means a copy of a resolution or resolutions certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment are authorized or obligated by law or executive order to close.
"Commission" means the Securities and Exchange Commission, from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order signed in the name of the Company either by (i) its Chairman of the Board, its Vice Chairman, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee, or (ii) any two Persons designated in a Board Resolution, or in a Company Order previously delivered to the Trustee signed by any two of the foregoing, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee for Securities of any series at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution of this Indenture is located at 38 Fountain Square Plaza, Cincinnati, Ohio.
"corporation" means a corporation, association, company, joint-stock company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1302.
"Depositary" means, with respect to Securities of any series issuable in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 301.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Global Security" means a Security that evidences all or part of the Securities of any series and bears the legend set forth in Section 204 (or such legend as may be specified as contemplated by Section 301 for such Securities).
"Holder" means a Person in whose name a Security is registered in the Security Register.
"Indenture" means this instrument as originally executed and as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. The term "Indenture" shall also include the terms of particular series of Securities established as contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.
"Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an instalment of interest on such Security.
"Investment Company Act" means the Investment Company Act of 1940 and any statute successor thereto, in each case as amended from time to time.
"Junior Subordinated Securities" shall have the meaning specified in Section 1401.
"Maturity", when used with respect to any Security, means the date on which the principal of such Security or an instalment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in Section 501(4).
"Officers' Certificate" means a certificate signed in the same manner and by Persons as provided for in a Company Request or a Company Order, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an employee of or counsel for the Company.
"Original Issue Discount Security" means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
(1) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
(2) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;
(3) Securities as to which Defeasance has been effected pursuant to Section 1302; and
(4) Securities which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action hereunder as of any date, (A) the principal amount of an Original Issue Discount Security which shall be deemed to be Outstanding shall be the amount of the principal thereof which would be due and payable as of such date upon acceleration of the Maturity thereof to such date pursuant to Section 502, (B) if, as of such date, the principal amount payable at the Stated Maturity of a Security is not determinable, the principal amount of such Security which shall be deemed to be Outstanding shall be the amount as specified or determined as contemplated by Section 301, (C) the principal amount of a Security denominated in one or more foreign currencies or currency units which shall be deemed to be Outstanding shall be the U.S. dollar equivalent, determined as of such date in the manner provided as contemplated by Section 301, of the principal amount of such Security (or, in the case of a Security described in Clause (A) or (B) above, of the amount determined as provided in such Clause), and (D) Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Securities which the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.
"Paying Agent" means, if not the Company, then any Person authorized by the Company to pay the principal of or any premium or interest on any Securities on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any series,
means the place or places where the principal of and any premium and interest
on the Securities of that series are payable as specified as contemplated by
Section 301.
"Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 301.
"Responsible Officer", when used with respect to the Trustee, means any vice president, any assistant vice-president, any trust officer or assistant trust officer of the Trustee assigned to the Trustee's corporate trust department and customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.
"Securities" has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the respective meanings specified in Section 305.
"Senior Debt" of the Company means the principal of, premium, if any, interest on and any other payment due pursuant to any of the following, whether outstanding at the date of execution of this Indenture or thereafter incurred, created or assumed: (a) all indebtedness of the Company evidenced by notes, debentures, bonds or other securities sold by the Company for money, excluding Junior Subordinated Securities, but including all first mortgage bonds of the Company outstanding from time to time; (b) all indebtedness of others of the kinds described in the preceding clause (a) assumed by or guaranteed in any manner by the Company, including through an agreement to purchase, contingent or otherwise; and (c) all renewals, extensions or refundings of indebtedness of the kinds described in any of the preceding clauses (a) and (b); unless, in the case of any particular indebtedness, renewal, extension or refunding, the instrument creating or evidencing the same or the assumption or guarantee of the same expressly provides that such indebtedness, renewal, extension or refunding is not superior in right of payment to or is pari passu with the Junior Subordinated Securities.
"Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any instalment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such instalment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For the purposes of this definition, "voting stock" means stock which ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed, except as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, "Trustee" as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.
"U.S. Government Obligation" has the meaning specified in Section 1304.
"Vice President", when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president".
Section 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirements set forth in this Indenture.
Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;
(2) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(3) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Section 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security Register.
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.
The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities of such series, provided that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities of such series on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite principal amount of Outstanding Securities of the relevant series on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities of the relevant series in the manner set forth in Section 106.
The Trustee may set any day as a record date for the purpose of determining
the Holders of Outstanding Securities of any series entitled to join in the
giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 502, (iii) any request to institute
proceedings referred to in Section 507(2) or (iv) any direction referred to in
Section 512, in each case with respect to Securities of such series. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities of such series on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Securities of such series on such record date. Nothing in this paragraph shall
be construed to prevent the Trustee from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken by
Holders of the requisite principal amount of Outstanding Securities of the
relevant series on the date such action is taken. Promptly after any record
date is set pursuant to this paragraph, the Trustee, at the Company's expense,
shall cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Company in writing and to each
Holder of Securities of the relevant series in the manner set forth in Section
106.
With respect to any record date set pursuant to this Section, the party hereto which sets such record date may designate any day as the "Expiration Date" and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities of the relevant series in the manner set forth in Section 106, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.
Section 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the first paragraph of this instrument or at any other address previously furnished in writing to the Trustee by the Company.
Section 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Any notice when mailed to a Holder in the aforesaid manner shall be conclusively deemed to have been received by such Holder whether or not actually received by such Holder. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.
Section 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act which is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.
Section 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.
Section 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto, their successors hereunder, the Holders, and the holders of any Senior Debt, any benefit or any legal or equitable right, remedy or claim under this Indenture.
Section 112. Governing Law.
This Indenture and the Securities shall be governed by and construed in accordance with the law of the State of New York.
Section 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities (other than a provision of any Security which specifically states that such provision shall apply in lieu of this Section)) payment of interest or principal (and premium, if any) need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, and no interest shall accrue with respect to such payment for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, to such next succeeding Business Day.
Section 114. Certain Matters Relating to Currencies.
Whenever any action or Act is to be taken hereunder by the Holders of Securities denominated in different currencies or currency units, then for purposes of determining the principal amount of Securities held by such Holders, the aggregate principal amount of the Securities denominated in a foreign currency or currency unit shall be deemed to be that amount of Dollars that could be obtained for such principal amount on the basis of a spot exchange rate specified to the Trustee for such series in an Officers' Certificate for exchanging such foreign currency or currency unit into Dollars as of the date of the taking of such action or Act by the Holders of the requisite percentage in principal amount of the Securities.
The Trustee shall segregate moneys, funds and accounts held by the Trustee in one currency or currency unit from any moneys, funds or accounts held in any other currencies or currency units, notwithstanding any provision herein that would otherwise permit the Trustee to commingle such amounts.
Section 115. Immunity of Incorporators, Stockholders, Officers and Directors.
No recourse shall be had for the payment of the principal of (and premium, if any), or the interest, if any, on any Securities of any series, or for any claim based thereon, or upon any obligation, covenant or agreement of this Indenture, against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or indirectly through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment of penalty or otherwise; it being expressly agreed and understood that this Indenture and all the Securities of each series are solely corporate obligations, and that no personal liability whatever shall attach to, or is incurred by, any incorporator, stockholder, officer or director, past, present or future, of the Company or of any successor corporation, either directly or indirectly through the Company or any successor corporation, because of the incurring of the indebtedness hereby authorized or under or by reason of any of the obligations, covenants or agreements contained in this Indenture or in any of the Securities of any series, or to be implied herefrom or therefrom; and that all such personal liability is hereby expressly released and waived as a condition of, and as part of the consideration for, the execution of this Indenture and the issuance of the Securities of each series.
Section 116. Counterparts.
This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument.
Section 117. Assignment to Affiliate.
The Company will have the right at all times to assign by indenture supplemental hereto any of its rights or obligations under the Indenture to a direct, indirect, or wholly owned Affiliate of the Company; provided that, in the event of any such assignment, the Company will remain liable for all such obligations.
ARTICLE TWO
Security Forms
Section 201. Forms Generally.
The Securities of each series shall be in substantially the form set forth in this Article, or in such other form as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or Depositary therefor or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution thereof. If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 303 for the authentication and delivery of such Securities.
The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.
Section 202. Form of Face of Security.
[Insert any legend required by the Internal Revenue Code and the regulations thereunder.]
THE UNION LIGHT, HEAT AND POWER COMPANY
..........................................................................
No. ......... $ ........
CUSIP NO. ________
The Union Light, Heat and Power Company, a corporation duly organized and existing under the laws of the Commonwealth of Kentucky (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to
..............................................., or registered assigns, the principal sum of ...................................... Dollars on ........................................................ [if the Security is to bear interest prior to Maturity, insert: , and to pay interest thereon from ............. or from the most recent Interest Payment Date to which interest has been paid or duly provided for, ................... on |
............ and ............ in each year, commencing ........., at the rate of ....% per annum, until the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the ....... or ....... (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture].
[If the Security is not to bear interest prior to Maturity, insert: The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal and any overdue premium shall bear interest at the rate of ....% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or made available for payment. Interest on any overdue principal or premium shall be payable on demand. Any such interest on overdue principal or premium which is not paid on demand shall bear interest at the rate of ......% per annum (to the extent that the payment of such interest on interest shall be legally enforceable), from the date of such demand until the amount so demanded is paid or made available for payment. Interest on any overdue interest shall be payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable, insert:
any such] interest on this Security will be made at the office or agency of
the Company maintained for that purpose in ............, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts [if applicable, insert:
;provided, however, that at the option of the Company payment of interest may
be made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Security Register].
Any payment on this Security due on any day which is not a Business Day in the City of New York need not be made on such day, but may be made on the next succeeding Business Day with the same force and effect as if made on the due date and no interest shall accrue for the period from and after such date.
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, [if subordinated, insert: including, without limitation, provisions subordinating the payment of the principal hereof and any premium and interest hereon to the payment in full of all Senior Debt as defined in the Indenture] which such further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
In Witness Whereof, the Company has caused this instrument to be duly executed.
THE UNION LIGHT, HEAT AND POWER COMPANY
By...................................................
Section 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of July 1, 1995 (herein called the "Indenture", which term shall have the meaning assigned to it in such instrument), between the Company and The Fifth Third Bank, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof [if applicable, insert: , limited in aggregate principal amount to $...........].
[If applicable, insert: The Securities of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable, insert:
(1) on ........... in any year commencing with the year ...... and ending
with the year ...... through operation of the sinking fund for this series at
a Redemption Price equal to 100% of the principal amount, and (2)] at any time
[if applicable, insert: on or after .........., ..], as a whole or in
part, at the election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount): If redeemed [if
applicable, insert: on or before ..............., ...%, and if redeemed]
during the 12-month period beginning ............. of the years indicated,
Redemption
Redemptio
n
Year
Price
Year
Price
and thereafter at a Redemption Price equal to .....% of the principal amount, together in the case of any such redemption [if applicable, insert: (whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert: The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, (1) on ............ in any year commencing with the year .... and ending with the year .... through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [if applicable, insert: on or after ............], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below: If redeemed during the 12-month period beginning ............ of the years indicated,
Year
Redemption Price For
Redemption Through
Operation of the
Sinking Fund
Redemption Price For
Redemption Otherwise
Than Through
Operation of the
Sinking Fund
and thereafter at a Redemption Price equal to .....% of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.] [If applicable, insert: Notwithstanding the foregoing, the Company may not, prior to ............., redeem any Securities of this series as |
contemplated by [if applicable, insert: Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than .....% per annum.]
[If applicable, insert: The sinking fund for this series provides for the
redemption on ............ in each year beginning with the year ....... and
ending with the year ...... of [if applicable, insert: not less than
$.......... ("mandatory sinking fund") and not more than] $......... aggregate
principal amount of Securities of this series. Securities of this series
acquired or redeemed by the Company otherwise than through [if applicable,
insert: mandatory] sinking fund payments may be credited against subsequent
[if applicable, insert: mandatory] sinking fund payments otherwise required
to be made [if applicable, insert: , in the inverse order in which they
become due].]
[If the Security is subject to redemption of any kind, insert: In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]
[If subordinated, insert: The indebtedness evidenced by the Securities of this series is, to the extent and in the manner provided in the Indenture, expressly subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Company (as defined in the Indenture) whether outstanding at the date of the Indenture or thereafter incurred, and this Security is issued subject to the provisions of the Indenture with respect to such subordination. Each holder and owner of this Security, by accepting the same, agrees to and shall be bound by such provisions and authorizes the Trustee in his behalf to take such action as may be necessary or appropriate to effectuate the subordination so provided and appoints the Trustee his attorney-in-fact for such purpose.]
[If applicable, insert: The Indenture contains provisions for defeasance at any time of [the entire indebtedness of this Security] [or] [certain restrictive covenants and Events of Default with respect to this Security] [, in each case] upon compliance with certain conditions set forth in the Indenture.]
[If the Security is not an Original Issue Discount Security, insert: If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security, insert: If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. Such amount shall be equal to insert: formula for determining the amount. Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal, premium and interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company's obligations in respect of the payment of the principal of and premium and interest, if any, on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 35% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity reasonably satisfactory to the Trustee, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in denominations of $....... and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
Section 204. Form of Legend for Global Securities.
Unless otherwise specified as contemplated by Section 301 for the Securities evidenced thereby, every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form (or such other form as a securities exchange or Depositary may request or require):
This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a Depositary or a nominee thereof. This Security may not be exchanged in whole or in part for a Security registered, and no transfer of this Security in whole or in part may be registered, in the name of any Person other than such Depositary or a nominee thereof, except in the limited circumstances described in the Indenture.
Section 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially the following form:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE FIFTH THIRD BANK,
As Trustee
By.........................................
Authorized Signatory
ARTICLE THREE
The Securities
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be established in or pursuant to a Board Resolution and, subject to Section 303, set forth, or determined in the manner provided, in an Officers' Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate principal amount of the Securities of the
series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Securities of the series pursuant to
Section 304, 305, 306, 906 or 1107 and except for any Securities which,
pursuant to Section 303, are deemed never to have been authenticated and
delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;
(4) the date or dates on which the principal of any Securities of the series is payable;
(5) the rate or rates at which any Securities of the series shall bear interest, if any, the date or dates from which any such interest shall accrue, the Interest Payment Dates on which any such interest shall be payable, the manner of determination of such Interest Payment Dates and the Regular Record Date for any such interest payable on any Interest Payment Date;
(6) the right, if any, to extend the interest payment periods and the duration of such extension;
(7) the place or places where the principal of and any premium and interest on any Securities of the series shall be payable;
(8) the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series may be redeemed, in whole or in part, at the option of the Company and, if other than by a Board Resolution, the manner in which any election by the Company to redeem the Securities shall be evidenced;
(9) the obligation, if any, of the Company to redeem or purchase any Securities of the series pursuant to any sinking fund or analogous provisions or at the option of the Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which any Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;
(10) the denominations in which any Securities of the series shall be issuable;
(11) if the amount of principal of or any premium or interest on any Securities of the series may be determined with reference to an index or pursuant to a formula, the manner in which such amounts shall be determined;
(12) if other than the currency of the United States of America, the currency, currencies or currency units in which the principal of or any premium or interest on any Securities of the series shall be payable and the manner of determining the equivalent thereof in the currency of the United States of America for any purpose, including for purposes of the definition of "Outstanding" in Section 101;
(13) if the principal of or any premium or interest on any Securities of the series is to be payable, at the election of the Company or the Holder thereof, in one or more currencies or currency units other than that or those in which such Securities are stated to be payable, the currency, currencies or currency units in which the principal of or any premium or interest on such Securities as to which such election is made shall be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which such amount shall be determined);
(14) if other than the entire principal amount thereof, the portion of the principal amount of any Securities of the series which shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 502;
(15) if the principal amount payable at the Stated Maturity of any Securities of the series will not be determinable as of any one or more dates prior to the Stated Maturity, the amount which shall be deemed to be the principal amount of such Securities as of any such date for any purpose thereunder or hereunder, including the principal amount thereof which shall be due and payable upon any Maturity other than the Stated Maturity or which shall be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in any such case, the manner in which such amount deemed to be the principal amount shall be determined);
(16) if applicable, that the Securities of the series, in whole or any specified part, shall be defeasible pursuant to Section 1302 or Section 1303 or both such Sections;
(17) if applicable, that any Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the respective Depositaries for such Global Securities, the form of any legend or legends which shall be borne by any such Global Security in addition to or in lieu of that set forth in Section 204 and any circumstances in addition to or in lieu of those set forth in Clause (2) of the last paragraph of Section 305 in which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the name or names of Persons other than the Depositary for such Global Security or a nominee thereof;
(18) any addition to or change in the Events of Default which applies to any Securities of the series and any change in the right of the Trustee or the requisite Holders of such Securities to declare the principal amount thereof due and payable pursuant to Section 502;
(19) any addition to or change in the covenants set forth in Article Ten which applies to Securities of the series;
(20) the applicability of, or any addition to or change in, Article Fourteen with respect to the Securities of a series;
(21) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture.
All Securities of any one series shall be substantially identical except as to date and principal amount and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and (subject to Section 303) set forth, or determined in the manner provided, in the Officers' Certificate referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by the Secretary or an Assistant Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of the series.
Section 302. Denominations.
The Securities of each series shall be issuable only in registered form without coupons and only in such denominations as shall be specified as contemplated by Section 301. In the absence of any such specified denomination with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman, its President, one of its Vice Presidents, or its Treasurer. The signature of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. If the form or terms of the Securities of the series have been established by or pursuant to a Board Resolution as permitted by Sections 201 and 301, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating,
(1) if the form of such Securities has been established by or pursuant to Board Resolution as permitted by Section 201, that such form has been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or pursuant to Board Resolution as permitted by Section 301, that such terms have been established in conformity with the provisions of this Indenture; and
(3) that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights to general equity principles and to such other matters as such counsel shall set forth therein.
If such form or terms have been so established, the Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officers' Certificate otherwise required pursuant to Section 301 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the authentication of each Security of such series if such documents (with appropriate variations to reflect such future issuance) are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 309, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause definitive Securities of that series to be prepared without unreasonable delay. After the preparation of definitive Securities of such series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities of any series, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount. Until so exchanged, the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series and tenor.
Section 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency of the Company in a Place of Payment being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security of a series at the office or agency of the Company in a Place of Payment for that series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount.
At the option of the Holder, Securities of any series may be exchanged for other Securities of the same series, of any authorized denominations and of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
If the Securities of any series (or of any series and specified tenor) are to be redeemed in part, the Company shall not be required (A) to issue, register the transfer of or exchange any Securities of that series (or of that series and specified tenor, as the case may be) during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of any such Securities selected for redemption under Section 1103 and ending at the close of business on the day of such mailing, or (B) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to Global Securities:
(1) Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary designated for such Global Security or a nominee thereof and delivered to such Depositary or nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) such Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (ii) has ceased to be a clearing agency registered under the Exchange Act, (B) there shall have occurred and be continuing an Event of Default with respect to such Global Security or (C) there shall exist such circumstances, if any, in addition to or in lieu of the foregoing as have been specified for this purpose as contemplated by Section 301.
(3) Subject to Clause (2) above, any exchange of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depositary for such Global Security shall direct.
(4) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof, whether pursuant to this Section, Section 304, 306, 906 or 1107 or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect to any series of Securities, interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.
Any interest on any Security of any series which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given to each Holder of Securities of such series in the manner set forth in Section 106, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 307) any interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
None of the Company, the Trustee, any Paying Agent (if not the Company) or the Security Registrar shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
Section 309. Cancellation.
All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of as directed by a Company Order; provided, however, that the Trustee shall not be required to destroy such cancelled Securities.
Section 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months.
Section 311. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee may use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A)all Securities theretofore authenticated and delivered (other than(i)
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii) Securities for whose
payment money has theretofore been deposited in trust or segregated and held
in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1003) have been delivered to the
Trustee for cancellation; or
(B)all such Securities not theretofore delivered to the Trustee for cancellation
(i)have become due and payable, or
(ii)will become due and payable at their Stated Maturity within one year, or
(iii)are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose, money in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations
of the Company to any Authenticating Agent under Section 614 and, if money
shall have been deposited with the Trustee pursuant to subclause (B) of Clause
(1) of this Section, the obligations of the Trustee under Section 402 and the
last paragraph of Section 1003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003 and to Article
Fourteen, if applicable, all money deposited with the Trustee pursuant to
Section 401 shall be held in trust and applied by it, in accordance with the
provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal and any premium and interest for whose payment such money has
been deposited with the Trustee.
ARTICLE FIVE
Remedies
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of or any premium on any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment, when and as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of a series of Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 35% in principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or
(5) the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days; or
(6) the commencement by the Company of a voluntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state law, or the consent by it to the filing of such petition or to the appointment of, or taking possession of the Company or of any substantial part of its property by, a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official or the making by the Company of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company in furtherance of any such action; or
(7) any other Event of Default established pursuant to Section 301 with respect to Securities of that series.
Section 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section 501(5) or 501(6)) with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of not less than 35% in principal amount of the Outstanding Securities of that series may declare the principal amount of all the Securities of that series (or, if any Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms thereof) to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable. If an Event of Default specified in Section 501(5) or 501(6) with respect to Securities of any series at the time Outstanding occurs, the principal amount of all the Securities of that series (or, if any Securities of that series are Original Issue Discount Securities, such portion of the principal amount of such Securities as may be specified by the terms thereof) shall automatically, and without any declaration or other action on the part of the Trustee or any Holder, become immediately due and payable.
At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if,
(1) the Company has paid or deposited with the Trustee a sum sufficient to
pay (A) all overdue interest on all Securities of that series, (B) the
principal of (and premium, if any, on) any Securities of that series which
have become due otherwise than by such declaration of acceleration and any
interest thereon at the rate or rates prescribed therefor in such Securities,
(C) all sums paid or advanced by the Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel; and
(2) all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series which have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right consequent thereon.
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article, subject to Article Fourteen, if applicable, shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section 607; and
Second: To the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and any premium and interest, respectively
Third: The balance, if any, to the Company.
Section 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 35% in principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Holders, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Holders.
Section 508. Unconditional Right of Holders to Receive Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium and (subject to Section 307) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
Section 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series, provided that
(1) such direction shall not be in conflict with any rule of law or with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except a default
(1) in the payment of the principal of or any premium or interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit, and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided that this Section shall not apply to any suit instituted by the Trustee or to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of Outstanding Securities (of any series), or to any suit instituted by a Holder for the enforcement of the payment of the principal of or any premium or interest on any Security on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date).
Section 515. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
Section 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.
Section 602. Notice of Defaults.
If a default occurs hereunder with respect to Securities of any series, the Trustee shall give the Holders of Securities of such series notice of such default as and to the extent provided by the Trust Indenture Act, unless such default shall have been cured or waived; provided, however, that in the case of any default of the character specified in Section 501(4) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series.
Section 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order, and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.
(7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.
Section 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of Securities or the proceeds thereof.
Section 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.
Section 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company.
Section 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as shall be agreed to in writing between the Company and the Trustee for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
The Trustee shall have a lien prior to the Securities as to all property and funds held by it hereunder for any amount owing it or any predecessor Trustee pursuant to this Section 607, except with respect to funds held in trust for the benefit of the Holders of particular Securities.
When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 501(5) or Section 501(6), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Federal or State bankruptcy, insolvency or other similar law.
The provisions of this Section shall survive the termination of this Indenture.
Section 608. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture with respect to Securities of more than one series.
Section 609. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with respect to the Securities of each series, which may be Trustee hereunder for Securities of one or more other series. Each Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $50,000,000. If any such Person publishes reports of condition at least annually, pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee with respect to the Securities of any series shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 611.
The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company. If the instrument of acceptance by a successor Trustee required by Section 611 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (B) subject to Section 514, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 611. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 611, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 611, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.
The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 106. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with respect to all Securities, every such successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company or any successor Trustee, such retiring Trustee shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or any
other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor). For purposes of Section
311(b) (4) and (6) of the Trust Indenture Act, the following terms shall mean:
(a) "cash transaction" means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the creditor relationship with the Company arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.
Section 614. Appointment of Authenticating Agent.
From time to time the Trustee may appoint one or more Authenticating Agents with respect to one or more series of Securities, which may include the Company or any of its Affiliates, with power to act on behalf of the Trustee to authenticate Securities of such series issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 306, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE FIFTH THIRD BANK
As Trustee
By......................................,
As Authenticating Agent
By.......................................
Authorized Officer
Section 615. Indemnification.
The Company agrees to indemnify the Trustee for, and hold it harmless against, any loss, liability or expense incurred by it, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder or the performance of its duties hereunder or under any related document, including the reasonable costs and expenses of defending itself against or investigating any claim or liability with respect to the Securities, except to the extent that any such loss, liability or expense was due to its own negligence or bad faith. The Company need not pay for any settlement made without its consent. The obligations of the Company to the Trustee under this Section shall survive the satisfaction and discharge of this Indenture and payment in full and/or retirement of the Securities.
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
Section 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(1) on each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of each series as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;
provided, however, that if and so long as the Trustee shall be the Security Registrar, no such list need be furnished.
Section 702. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar. The Trustee may destroy any list furnished to it as provided in Section 701 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided by the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to the Trust Indenture Act.
Section 703. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. If required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within sixty days after each May 15 following the date of this Indenture deliver to Holders a brief report, dated as of such May 15, which complies with the provisions of such Section 313(a).
A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company.
Section 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission.
ARTICLE EIGHT
Consolidation, Merger and Sale
Section 801. Consolidations and Mergers Permitted.
Nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of the Company with or into any other corporation or corporations (whether or not affiliated with the Company), or successive consolidations or mergers in which the Company or its successor or successors shall be a party or parties, or shall prevent any sale, conveyance, transfer or other disposition of the property of the Company or its successor or successors as an entirety, or substantially as an entirety, to any other corporation (whether or not affiliated with the Company or its successor or successors) authorized to acquire and operate the same; provided, however, the Company hereby covenants and agrees that, upon any such consolidation, merger, sale, conveyance, transfer or other disposition, the due and punctual payment of the principal of (premium, if any) and interest on all of the Securities of all series in accordance with the terms of each series, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of this Indenture with respect to each series or established with respect to such series to be kept or performed by the Company, shall be expressly assumed, by supplemental indenture (which shall conform to the provisions of the Trust Indenture Act as then in effect) satisfactory in form to the Trustee executed and delivered to the Trustee by the entity formed by such consolidation, or into which the Company shall have been merged, or by the entity which shall have acquired such property.
Section 802. Rights and Duties of Successor Company.
In case of any such consolidation, merger, sale, conveyance, transfer or other disposition and upon the assumption by the successor corporation, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of, premium, if any, and interest on all of the Securities of all series outstanding and the due and punctual performance of all of the covenants and conditions of this Indenture or established with respect to each series of the Securities to be performed by the Company with respect to each series, such successor corporation shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the party of the first part, and thereupon the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of the Company or any other predecessor obligor on the Securities, any or all of the Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor company, instead of the Company, and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities which previously shall have been signed and delivered by the officers of the predecessor Company to the Trustee for authentication, and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof.
Nothing contained in this Indenture or in any of the Securities shall prevent the Company from merging into itself or acquiring by purchase or otherwise all or any part of the property of any other corporation (whether or not affiliated with the Company).
Section 803. Opinion of Counsel.
The Trustee may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other disposition, and any such assumption, comply with the provisions of this Article.
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and in the Securities pursuant to Article Eight or Section 117; or
(2) to add to the covenants of the Company for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company; provided, however, that in respect of any such additional covenant, such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such default;
(3) to add any additional Events of Default for the benefit of the Holders of all or any series of Securities (and if such additional Events of Default are to be for the benefit of less than all series of Securities, stating that such additional Events of Default are expressly being included solely for the benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of Securities in uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this Indenture in respect of one or more series of Securities, provided that any such addition, change or elimination (A) shall neither (i) apply to any Security of any series created prior to the execution of such supplemental indenture and entitled to the benefit of such provision nor (ii) modify the rights of the Holder of any such Security with respect to such provision or (B) shall become effective only when there is no such Security Outstanding; or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by one or more successor Trustees, pursuant to the requirements of Section 611; or
(9) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture, provided that such action pursuant to this Clause (9) shall not adversely affect the interests of the Holders of Securities of any series in any material respect.
The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, and to make any further appropriate agreements and stipulations which may be therein contained.
Any supplemental indenture authorized by the provisions of this Section may be executed by the Company and the Trustee without the consent of the holders of any of the Securities at the time outstanding, notwithstanding any of the provisions of Section 902.
Section 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security or any other Security which would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 502, or change any Place of Payment where, or the coin or currency in which, any Security or any premium or interest thereon is payable, affect the applicability of Article Fourteen to any Security, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 513 or Section 1007, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; provided, however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to "the Trustee" and concomitant changes in this Section and Section 1007, or the deletion of this proviso, in accordance with the requirements of Sections 611 and 901(8).
A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which has expressly been included solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series; provided that no such supplemental indenture shall modify any provision of this Indenture so as to adversely affect the rights of any holder of outstanding Senior Debt to the benefits of Article Fourteen.
It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 601) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of Securities an office or agency where Securities of that series may be presented or surrendered for payment, where Securities of that series may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices or agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in each Place of Payment for Securities of any series for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
Section 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it will, on or before each due date of the principal of or any premium or interest on any of the Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, on or before each due date of the principal of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will (1) comply with the provisions of the Trust Indenture Act applicable to it as a Paying Agent and (2) during the continuance of any default by the Company (or any other obligor upon the Securities of that series) in the making of any payment in respect of the Securities of that series, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or any premium or interest on any Security of any series and remaining unclaimed for 18 months after such principal, premium or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
Section 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officers' Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and, if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
Section 1005. Maintenance of Properties.
The Company will cause all properties used or useful in the conduct of its business or the business of any Subsidiary to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company from discontinuing the operation or maintenance of any of such properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business or the business of any Subsidiary.
Section 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (2) all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.
Section 1007. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301 for Securities of such series, the Company may, with respect to the Securities of any series, omit in any particular instance to comply with any term, provision or condition set forth in any covenant provided pursuant to Section 301(18), 901(2) or 901(7) for the benefit of the Holders of such series if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.
Section 1008. Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of each calendar year a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on Outstanding Securities as of the end of such year.
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 301 for such Securities) in accordance with this Article.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by a Board Resolution or in another manner specified as contemplated by Section 301 for such Securities. In case of any redemption at the election of the Company the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed. In the case of any redemption of Securities prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with such restriction.
Section 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless all the Securities of such series and of a specified tenor are to be redeemed or unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security of such series, provided that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security. If less than all the Securities of such series are to be redeemed (unless such redemption affects only a single Security), the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee, from the Outstanding Securities of such series not previously called for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Securities selected for redemption as aforesaid and, in case of any Securities selected for partial redemption as aforesaid, the principal amount thereof to be redeemed.
The provisions of the two preceding paragraphs shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.
Section 1104. Notice of the Redemption.
Notice of redemption shall be given by mail not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register.
All notices of redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any series consisting of more than a single Security are to be redeemed, the identification (and, in the case of partial redemption of any such Securities, the principal amounts) of the particular Securities to be redeemed and, if less than all the Outstanding Securities of any series consisting of a single Security are to be redeemed, the principal amount of the particular Security to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date,
(5) the place or places where each such Security is to be surrendered for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice if mailed in the manner herein provided shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.
Section 1105. Deposit of Redemption Price.
On or before any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that, unless otherwise specified as contemplated by Section 301, installments of interest whose Stated Maturity is on or prior to the Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant Record Dates according to their terms and the provisions of Section 307.
Section 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and of like tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered; provided, however, that a Depositary need not surrender a Global Security for a partial redemption and may be authorized to make a notation on such Global Security of such partial redemption. In the case of a partial redemption of a Global Security, the Depositary, and in turn, the participants in the Depositary, shall have the responsibility to select any Securities to be redeemed by random lot.
ARTICLE TWELVE
Sinking Funds
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of any series except as otherwise specified as contemplated by Section 301 for such Securities.
The minimum amount of any sinking fund payment provided for by the terms of
any Securities is herein referred to as a "mandatory sinking fund payment",
and any payment in excess of such minimum amount provided for by the terms of
such Securities is herein referred to as an "optional sinking fund payment".
If provided for by the terms of any Securities, the cash
amount of any sinking fund payment may be subject to reduction as provided in
Section 1202. Each sinking fund payment shall be applied to the redemption of
Securities as provided for by the terms of such Securities.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
The Company (1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (2) may apply as a credit Securities of a series which have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to any Securities of such series required to be made pursuant to the terms of such Securities as and to the extent provided for by the terms of such Securities; provided that the Securities to be so credited have not been previously so credited. The Securities to be so credited shall be received and credited for such purpose by the Trustee at the Redemption Price, as specified in the Securities so to be redeemed, for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any Securities, the Company will deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing sinking fund payment for such Securities pursuant to the terms of such Securities, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities pursuant to Section 1202 and will also deliver to the Trustee any Securities to be so delivered. Not less than 30 days prior to each such sinking fund payment date, the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 1103 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 1104. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
Section 1301. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at its option at any time, to have Section 1302 or
Section 1303 applied to any Securities or any series of Securities, as the
case may be, designated pursuant to Section 301 as being defeasible pursuant
to such Section 1302 or 1303, in accordance with any applicable requirements
provided pursuant to Section 301 and upon compliance with the conditions set
forth below in this Article. Any such election shall be evidenced by a Board
Resolution or in another manner specified as contemplated by Section 301 for
such Securities.
Section 1302. Defeasance and Discharge.
Upon the Company's exercise of its option (if any) to have this Section applied to any Securities or any series of Securities, as the case may be, the Company shall be deemed to have been discharged from its obligations with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 1304 are satisfied (hereinafter called "Defeasance"). For this purpose, such Defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by such Securities and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), subject to the following which shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of such Securities to receive, solely from the trust fund described in Section 1304 and as more fully set forth in such Section, payments in respect of the principal of and any premium and interest on such Securities when payments are due, (2) the Company's obligations with respect to such Securities under Sections 304, 305, 306, 1002 and 1003, (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (4) this Article. Subject to compliance with this Article, the Company may exercise its option (if any) to have this Section applied to any Securities notwithstanding the prior exercise of its option (if any) to have Section 1303 applied to such Securities.
Section 1303. Covenant Defeasance.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Securities or any series of Securities, as the case may be, (1)
the Company shall be released from its obligations under Section 801(3),
Sections 1005 through 1006, inclusive, and any covenants provided pursuant to
Section 301(19), 901(2) or 901(7) for the benefit of the Holders of such
Securities and (2) the occurrence of any event specified in Sections 501(4)
(with respect to any of Section 801(3), Sections 1005 through 1006, inclusive,
and any such covenants provided pursuant to Section 301(19), 901(2) or
901(7)), and 501(7) shall be deemed not to be or result in an Event of Default
in each case with respect to such Securities as provided in this Section on
and after the date the conditions set forth in Section 1304 are satisfied
(hereinafter called "Covenant Defeasance"). For this purpose, such Covenant
Defeasance means that, with respect to such Securities, the Company may omit
to comply with and shall have no liability in respect of any term, condition
or limitation set forth in any such specified Section (to the extent so
specified in the case of Section 501(4)) or Article Fourteen, whether directly
or indirectly by reason of any reference elsewhere herein to any such Section
or Article or by reason of any reference in any such Section or Article to any
other provision herein or in any other document, but the remainder of this
Indenture and such Securities shall be unaffected thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 1302 or
Section 1303 to any Securities or any series of Securities, as the case may
be:
(1) The Company shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee which satisfies the requirements
contemplated by Section 609 and agrees to comply with the provisions of this
Article applicable to it) as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (A) money in an
amount, or (B) U.S. Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment, money
in an amount, or (C) a combination thereof, in each case sufficient, in the
opinion of a firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge, and
which shall be applied by the Trustee (or any such other qualifying trustee)
to pay and discharge, the principal of and any premium and interest on such
Securities on the respective Stated Maturities, in accordance with the terms
of this Indenture and such Securities. As used herein, "U.S. Government
Obligation" means (x) any security which is (i) a direct obligation of the
United States of America for the payment of which the full faith and credit of
the United States of America is pledged or (ii) an obligation of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the payment of which is unconditionally guaranteed
as a full faith and credit obligation by the United States of America, which,
in either case (i) or (ii), is not callable or redeemable at the option of the
issuer thereof, and (y) any depositary receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act) as custodian with respect to any U.S.
Government Obligation which is specified in Clause (x) above and held by such
bank for the account of the holder of such depositary receipt, or with respect
to any specific payment of principal of or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by
the custodian in respect of the U.S. Government Obligation or the specific
payment of principal or interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1302 apply to any Securities or any series of Securities, as the case may be, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this instrument, there has been a change in the applicable Federal income tax law, in either case (A) or (B) to the effect that, and based thereon such opinion shall confirm that, the Holders of such Securities will not recognize gain or loss for Federal income tax purposes as a result of the deposit, Defeasance and discharge to be effected with respect to such Securities and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit, Defeasance and discharge were not to occur.
(3) In the event of an election to have Section 1303 apply to any Securities or any series of Securities, as the case may be, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Securities will not recognize gain or loss for Federal income tax purposes as a result of the deposit and Covenant Defeasance to be effected with respect to such Securities and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit and Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an Officers' Certificate to the effect that neither such Securities nor any other Securities of the same series, if then listed on any securities exchange, will be delisted as a result of such deposit.
(5) No event which is, or after notice or lapse of time or both would become, an Event of Default with respect to such Securities or any other Securities shall have occurred and be continuing at the time of such deposit or, with regard to any such event specified in Sections 501(5) and (6), at any time on or prior to the 90th day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a conflicting interest within the meaning of the Trust Indenture Act (assuming all Securities are in default within the meaning of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any other agreement or instrument to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the trust arising from such deposit constituting an investment company within the meaning of the Investment Company Act unless such trust shall be registered under such Act or exempt from registration thereunder.
(9) At the time of such deposit, (A) no default in the payment of any principal of or premium or interest on any Senior Debt shall have occurred and be continuing, (B) no event of default with respect to any Senior Debt shall have resulted in such Senior Debt becoming, and continuing to be, due and payable prior to the date on which it would otherwise have become due and payable (unless payment of such Senior Debt has been made or duly provided for), and (C) no other event of default with respect to any Senior Debt shall have occurred and be continuing permitting (after notice or lapse of time or both) the holders of such Senior Debt (or a trustee on behalf of such holders) to declare such Senior Debt due and payable prior to the date on which it would otherwise have become due and payable.
(10) The Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent with respect to such Defeasance or Covenant Defeasance have been complied with.
Section 1305. Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee or other qualifying trustee (solely for purposes of this
Section and Section 1306, the Trustee and any such other trustee are referred
to collectively as the "Trustee") pursuant to Section 1304 in respect of any
Securities shall be held in trust and applied by the Trustee, in accordance
with the provisions of such Securities and this Indenture, to the payment,
either directly or through any such Paying Agent (including the Company acting
as its own Paying Agent) as the Trustee may determine, to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but money so held in trust need not be
segregated from other funds except to the extent required by law.
Money and U.S. Government Obligations so held in trust shall not be subject to the provisions of Article Fourteen.
The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 1304 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of Outstanding Securities.
Anything in this Article to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 1304 with respect to any Securities which, in the opinion of a firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect the Defeasance or Covenant Defeasance, as the case may be, with respect to such Securities.
Section 1306. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in accordance with this Article with respect to any Securities by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the obligations under this Indenture and such Securities from which the Company has been discharged or released pursuant to Section 1302 or 1303 shall be revived and reinstated as though no deposit had occurred pursuant to this Article with respect to such Securities, until such time as the Trustee or Paying Agent is permitted to apply all money held in trust pursuant to Section 1305 with respect to such Securities in accordance with this Article; provided, however, that if the Company makes any payment of principal of or any premium or interest on any such Security following such reinstatement of its obligations, the Company shall be subrogated to the rights (if any) of the Holders of such Securities to receive such payment from the money so held in trust.
ARTICLE FOURTEEN
Junior Subordinated Securities
Section 1401. Certain Securities Subordinate to Senior Debt.
As provided pursuant to Section 301 or in a supplemental indenture, the Company may issue one or more series of Securities subject to the provisions of this Article Fourteen, and each Holder of a Security of a series so issued ("Junior Subordinated Securities"), whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions.
The payment of the principal of, premium, if any, and interest on all Junior Subordinated Securities issued with respect to which this Article Fourteen applies shall, to the extent and in the manner hereinafter set forth, be subordinate and subject in right of payment to the prior payment in full of all Senior Debt, whether outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article Fourteen shall prevent the occurrence of any default or Event of Default hereunder.
Section 1402. Payment Over of Proceeds Upon Default.
In the event and during the continuation of any default in the payment of principal, premium, interest or any other payment due on any Senior Debt continuing beyond the period of grace, if any, specified in the instrument evidencing such Senior Debt, unless and until such default shall have been cured or waived or shall have ceased to exist, or in the event that the maturity of any Senior Debt has been accelerated because of a default, then no payment shall be made by the Company with respect to the principal (including redemption and sinking fund payments) of, or premium, if any, or interest on the Junior Subordinated Securities.
In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any holder when such payment is prohibited by the preceding paragraph of this Section 1402, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Debt or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Debt (or their representative or representatives or a trustee) notify the Trustee within 90 days of such payment of the amounts then due and owing on the Senior Debt and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Debt.
Section 1403. Payment Over of Proceeds Upon Dissolution, Etc.
Upon any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due or to become due upon all Senior Debt shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment is made on account of the principal (and premium, if any) or interest on the Junior Subordinated Securities; and upon any such dissolution or winding-up or liquidation or reorganization any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders of the Junior Subordinated Securities or the Trustee would be entitled, except for the provisions of this Article Fourteen, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, or by the Holders of the Junior Subordinated Securities or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Debt (pro rata to such holders on the basis of the respective amounts of Senior Debt held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Debt may have been issued, as their respective interests may appear, to the extent necessary to pay all Senior Debt in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of Senior Debt, before any payment or distribution is made to the holders of Junior Subordinated Securities or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee or the holders of the Junior Subordinated Securities before all Senior Debt is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of Senior Debt or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing any Senior Debt may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Debt remaining unpaid to the extent necessary to pay all Senior Debt in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the holders of such Senior Debt.
For purposes of this Article Fourteen, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinated at least to the extent provided in this
Article Fourteen with respect to the Junior Subordinated Securities to the
payment of all Senior Debt which may at the time be outstanding; provided that
(i) the Senior Debt is assumed by the new corporation, if any, resulting from
any such reorganization or readjustment, and (ii) the rights of the holders of
the Senior Debt are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its
property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article Eight hereof
shall not be deemed a dissolution, winding-up, liquidation or reorganization
for the proposes of this Section 1403 if such other corporation shall, as a
part of such consolidation, merger, conveyance or transfer, comply with the
conditions stated in Article Eight hereof. Nothing in Section 1402 or in this
Section 1403 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 607.
Section 1404. Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all Senior Debt, the rights of the holders of the Junior Subordinated Securities shall be subrogated to the rights of the holders of Senior Debt to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Debt; and, for the purposes of such subrogation, no payment or distributions to the holders of the Senior Debt of any cash, property or securities to which the holders of the Junior Subordinated Securities or the Trustee would be entitled except for the provisions of this Article Fourteen, and no payment over pursuant to the provisions of this Article Fourteen, to or for the benefit of the holders of Senior Debt by holders of the Junior Subordinated Securities or the Trustee, shall, as between the Company, its creditors other than holders of Senior Debt, and the Holders of the Junior Subordinated Securities, be deemed to be a payment by the Company to or on account of the Senior Debt. It is understood that the provisions of this Article Fourteen are and are intended solely for the purposes of defining the relative rights of the holders of the Junior Subordinated Securities, on the one hand, and the holders of the Senior Debt on the other hand.
Nothing contained in this Article Fourteen or elsewhere in this Indenture or in the Junior Subordinated Securities is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Debt, and the holders of the Junior Subordinated Securities, the obligation of the Company, which is absolute and unconditional, to pay to the holders of the Junior Subordinated Securities the principal of (and premium, if any) and interest on the Junior Subordinated Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the holders of the Junior Subordinated Securities and creditors of the Company other than the holders of the Senior Debt, nor shall anything herein or therein prevent the Trustee or the holder of any Junior Subordinated Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Fourteen of the holders of Senior Debt in respect of cash, property or securities of the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to in this Article Fourteen, the Trustee, subject to the provision of Article Six, and the Holders of the Junior Subordinated Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding-up, liquidation or reorganization, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other person making such payment or distribution, delivered to the Trustee or to the Holders of the Junior Subordinated Securities, for the purposes of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount hereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Fourteen.
Section 1405. Trustee to Effectuate Subordination.
Each Holder of a Junior Subordinated Security by his acceptance thereof authorizes and directs the Trustee in his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article Fourteen and appoints the Trustee his attorney-in-fact for any and all such purposes.
Section 1406. Notice to Trustee.
The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company which would prohibit the making of any payment of monies to or by the Trustee in respect of the Junior Subordinated Securities pursuant to the provisions of this Article Fourteen. Notwithstanding the provisions of this Article Fourteen or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of monies to or by the Trustee in respect of the Junior Subordinated Securities pursuant to the provisions of this Article Fourteen, unless and until a Responsible Officer of the Trustee shall have received written notice thereof at the Principal Office of the Trustee from the Company or a holder or holders of Senior Debt or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Article Six, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice provided for in this Section 1406 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of (or premium, if any) or interest on any Junior Subordinated Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which they were received, and shall not be affected by any notice to the contrary which may be received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Article Six, shall be entitled to rely on the delivery to it of a written notice by a person representing himself to be a holder of Senior Debt (or a trustee on behalf of such holder) to establish that such notice has been given by a holder of Senior Debt or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article Fourteen, the Trustee may request such person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such person under this Article Fourteen, and if such evidence is not furnished the Trustee may defer any payment to such person pending judicial determination as to the right of such person to receive such payment.
Section 1407. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article Fourteen in respect of any Senior Debt at any time held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.
Nothing in this Article Fourteen shall apply to claims of, or payments to, the Trustee under or pursuant to Section 607.
Section 1408. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof which any such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Debt may, at any time and from time to time, without the consent of or notice to the Trustee or the holders of the Junior Subordinated Securities, without incurring responsibility to the holders of the Junior Subordinated Securities and without impairing or releasing the subordination provided in this Article or the obligations hereunder of the holders of the Junior Subordinated Securities to the holders of Senior Debt, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (iii) release any person liable in any manner for the collection of Senior Debt; and (iv) exercise or refrain from exercising any rights against the Company and any other person.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
THE UNION LIGHT, HEAT AND POWER COMPANY
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
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THE FIFTH THIRD BANK
as Trustee
By /s/ Kerry Byrne
Kerry Byrne
Vice President
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THE UNION LIGHT, HEAT AND POWER COMPANY
AND
THE FIFTH THIRD BANK,
Trustee
First Supplemental Indenture
Dated as of July 15, 1995
To
Indenture
7.65% Debentures Due 2025
FIRST SUPPLEMENTAL INDENTURE, dated as of July 15, 1995, between The Union Light, Heat and Power Company, a corporation duly organized and existing under the laws of the Commonwealth of Kentucky (herein called the "Company"), having its principal office at 139 East Fourth Street, Cincinnati, Ohio 45202, and The Fifth Third Bank, an Ohio banking corporation, as Trustee (herein called the "Trustee") under the Indenture dated as of July 1, 1995 between the Company and the Trustee (the "Indenture").
Recitals of the Company
The Company has executed and delivered the Indenture to the Trustee to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness (the "Securities"), to be issued in one or more series as in the Indenture provided.
Pursuant to the terms of the Indenture, the Company desires to provide for the establishment of a new series of its Securities to be known as its 7.65% Debentures Due 2025 (herein called the "Debentures"), in this First Supplemental Indenture.
All things necessary to make this First Supplemental Indenture a valid agreement of the Company have been done.
Now, Therefore, This First Supplemental Indenture Witnesseth:
For and in consideration of the premises and the purchase of the Debentures by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Debentures, as follows:
ARTICLE ONE
Terms of the Debentures
Section 101. There is hereby authorized a series of Securities
designated the "7.65% Debentures Due 2025", limited in aggregate principal
amount to $15,000,000 (except as provided in Section 301(2) of the Indenture).
The Debentures shall mature and the principal shall be due and payable
together with all accrued and unpaid interest thereon on July 15, 2025 and
shall be issued in the form of a registered Global Security without coupons,
registered initially in the name of Cede & Co.
Section 102. The provisions of Section 305 of the Indenture applicable to Global Securities shall apply to the Debentures.
Section 103. Interest on each of the Debentures shall be payable semiannually on January 15 and July 15 in each year (each an "Interest Payment Date"), commencing on January 15, 1996, at the rate per annum specified in the designation of the Debentures from July 15, 1995, or from the most recent Interest Payment Date to which interest has been paid or duly provided for. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will be paid to the Person in whose name such Debenture (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the July 1 or January 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months.
Section 104. Subject to agreements with or the rules of The Depository Trust Company or any successor book-entry security system or similar system with respect to Global Securities, payments of interest will be made by check mailed to the Holder of each Debenture at the address shown in the Security Register, and payments of the principal amount of each Debenture will be made at maturity by check against presentation of the Debenture at the office or agency of the Trustee.
Section 105. The Debentures shall be issued in denominations of $1,000 or any integral multiple of $1,000.
Section 106. Principal and interest on the Debentures shall be payable in the coin or currency of the United States of America, which, at the time of payment, is legal tender for public and private debts.
Section 107. The Debentures shall be subject to defeasance, at the Company's option, as provided for in Sections 1302 and 1303 of the Indenture.
Section 108. Subject to the terms of Article Eleven of the Indenture, the Company shall have the right to redeem the Debentures, in whole or in part, from time to time, at the time and redemption price set forth in the form of Debenture contained in Article Two herein.
ARTICLE TWO
Form of the Debentures
Section 201. The Debentures are to be substantially in the following form and shall include substantially the legend shown so long as the Debentures are Global Securities:
(FORM OF FACE OF DEBENTURE)
No. R-1
$15,000,000
CUSIP No. 906888 AL 6
THE UNION LIGHT, HEAT AND POWER COMPANY
7.65% DEBENTURE DUE 2025
Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC") to issuer or its agent for registration of transfer, exchange, or payment and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
THE UNION LIGHT, HEAT AND POWER COMPANY, a corporation duly organized and existing under the laws of the Commonwealth of Kentucky (herein called the "Company", which term includes any successor Person under the Indenture hereafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of Fifteen Million and No/100 Dollars ($15,000,000) on July 15, 2025, and to pay interest thereon from July 15, 1995 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on January 15 and July 15 in each year, commencing January 15, 1996, at the rate of 7.65% per annum, until the principal hereof is paid or made available for payment. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the January 1 or July 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the City of Cincinnati, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register.
Any payment on this Security due on any day which is not a Business Day in the City of New York need not be made on such day, but may be made on the next succeeding Business Day with the same force and effect as if made on the due date and no interest shall accrue for the period from and after such date.
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
In Witness Whereof, the Company has caused this instrument to be duly executed.
THE UNION LIGHT, HEAT AND POWER COMPANY
By..............................
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
THE FIFTH THIRD BANK, as Trustee
By.............................
Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
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This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of July 1, 1995 (herein called the "Indenture", which term shall have the meaning assigned to it in such instrument), between the Company and The Fifth Third Bank, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Security is one of the series designated on the face hereof, limited in aggregate principal amount to $15,000,000.
The Securities of this series are subject to redemption upon not less than 30 days' notice by mail, at any time on or after July 15, 2005, as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount) if redeemed during the 12-month period beginning July 15 of the years indicated,
Redemption
Year Price
2005 103.04%
2006 102.74%
2007 102.44%
2008 102.13%
2009 101.83%
2010 101.52%
2011 101.22%
2012 100.92%
2013 100.61%
2014 100.31%
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and thereafter at a Redemption Price equal to 100% of the principal amount, together in the case of any such redemption with accrued interest to the Redemption Date, but interest installments whose Stated Maturity is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant Record Dates referred to on the face hereof, all as provided in the Indenture.
If this Security is to be so redeemed only in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder hereof without service charge, a new Security of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unredeemed portion hereof so surrendered.
The Securities do not provide for any sinking fund.
The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect to this Security upon compliance with certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in principal amount of the Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of a majority in principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less than 35% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonably satisfactory indemnity, and the Trustee shall not have received from the Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture.
ARTICLE THREE
Original Issue of Debentures
Section 301. Debentures in the aggregate principal amount of $15,000,000 may, upon execution of this First Supplemental Indenture, or from time to time thereafter, be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver said Debentures upon a Company Order without any further action by the Company.
ARTICLE FOUR
Paying Agent and Security Registrar
Section 401. The Fifth Third Bank will be the Paying Agent and Security Registrar for the Debentures.
ARTICLE FIVE
Sundry Provisions
Section 501. Except as otherwise expressly provided in this First Supplemental Indenture or in the form of Debenture or otherwise clearly required by the context hereof or thereof, all terms used herein or in said form of Debenture that are defined in the Indenture shall have the several meanings respectively assigned to them thereby.
Section 502. The Indenture, as supplemented by this First Supplemental Indenture, is in all respects ratified and confirmed, and this First Supplemental Indenture shall be deemed part of the Indenture in the manner and to the extent herein and therein provided.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
In Witness Whereof, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the day and year first above written.
THE UNION LIGHT, HEAT AND POWER COMPANY
By /s/ William L. Sheafer
William L. Sheafer
Treasurer
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THE FIFTH THIRD BANK, as Trustee
By /s/ Kerry Byrne
Kerry Byrne
Vice President
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| ARTICLE UT |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| MULTIPLIER: 1,000 |
| FISCAL YEAR END: DEC 31 1995 |
| PERIOD START: JAN 01 1995 |
| PERIOD END: JUN 30 1995 |
| PERIOD TYPE: 6 MOS |
| BOOK VALUE: PER BOOK |
| TOTAL NET UTILITY PLANT: 3,789,288 |
| OTHER PROPERTY AND INVEST: 0 |
| TOTAL CURRENT ASSETS: 518,201 |
| TOTAL DEFERRED CHARGES: 736,479 |
| OTHER ASSETS: 49,969 |
| TOTAL ASSETS: 5,093,937 |
| COMMON: 762,136 |
| CAPITAL SURPLUS PAID IN: 339,135 |
| RETAINED EARNINGS: 427,623 |
| TOTAL COMMON STOCKHOLDERS EQ: 1,528,894 |
| PREFERRED MANDATORY: 160,000 |
| PREFERRED: 40,000 |
| LONG TERM DEBT NET: 1,774,404 |
| SHORT TERM NOTES: 13,500 |
| LONG TERM NOTES PAYABLE: 0 |
| COMMERCIAL PAPER OBLIGATIONS: 0 |
| LONG TERM DEBT CURRENT PORT: 0 |
| PREFERRED STOCK CURRENT: 90,000 |
| CAPITAL LEASE OBLIGATIONS: 0 |
| LEASES CURRENT: 0 |
| OTHER ITEMS CAPITAL AND LIAB: 1,487,139 |
| TOT CAPITALIZATION AND LIAB: 5,093,937 |
| GROSS OPERATING REVENUE: 918,665 |
| INCOME TAX EXPENSE: 67,563 |
| OTHER OPERATING EXPENSES: 670,865 |
| TOTAL OPERATING EXPENSES: 738,428 |
| OPERATING INCOME LOSS: 180,237 |
| OTHER INCOME NET: 8,377 |
| INCOME BEFORE INTEREST EXPEN: 188,614 |
| TOTAL INTEREST EXPENSE: 70,968 |
| NET INCOME: 117,646 |
| PREFERRED STOCK DIVIDENDS: 10,724 |
| EARNINGS AVAILABLE FOR COMM: 106,922 |
| COMMON STOCK DIVIDENDS: 107,550 |
| TOTAL INTEREST ON BONDS: 70,601 |
| CASH FLOW OPERATIONS: 212,399 |
| EPS PRIMARY: 0.00 |
| EPS DILUTED: 0.00 |