FORM OF INCOME TAX ALLOCATION AGREEMENT
THIS AGREEMENT, made as of the 1st day of October, 1999, by and
between SCANA Corporation ("SCANA") and each of its wholly owned
subsidiaries, namely SCANA Services Corporation, South Carolina Electric &
Gas Company, South Carolina Pipeline Corporation, South Carolina Fuel
Company, Inc., S.C. Generating Company, Inc., SCANA Communications, Inc.,
Primesouth, Inc., SCANA Development Corporation, SCANA Energy Marketing,
Inc., SCANA Petroleum Resources, Inc., SCANA Propane Gas, Inc., SCANA
Propane Storage, Inc., and ServiceCare, Inc., and SCANA Propane Supply,
Inc. and USA Cylinder Exchange, Inc., each wholly owned subsidiaries of
SCANA Propane Gas, Inc., and Palmark, Inc., a wholly owned subsidiary of
Primesouth, Inc., and SPR Gas Services, Inc., a wholly owned subsidiary of
SCANA Petroleum Resources, Inc., (all of the forementioned corporations
hereinafter referred to individually as the "Company" and collectively
referred to as the "Companies"), each Company being a South Carolina
corporation, is effective for the Consolidated Tax reflected on the
Consolidated Tax Return for calendar year end 1999 and subsequent years.
In the event that the merger between SCANA and Public Service Company
of North Carolina, Inc. ("PSNC") is approved by all required governmental
authorities -- which is fully anticipated, the shareholders of both SCANA
and PSNC having on July 1st, 1999 approved of said merger -- PSNC will
become a wholly owned subsidiary of SCANA and will likewise participate in
this Agreement beginning with the first calendar year end Consolidate Tax
Return for which it is able. Subject to this condition precedent, PSNC,
which although presently a North Carolina corporation will at the
conclusion of the merger be incorporated instead in South Carolina, is also
a signatory to this Agreement. PSNC shall also be referred to as "Company"
in accordance with the preceding paragraph.
WITNESSETH:
WHEREAS, the Companies file a consolidated federal income tax return
and the consolidated federal income tax liability has been allocated among
the Companies included in the consolidated return in accordance with the
provisions of subparagraph (a)(1) of Section 1552 of the Internal Revenue
Code of 1986 and other applicable requirements of Rule 45(c) under the
Public Utility Holding Company Act of 1935.
WHEREAS, Rule 45(c) sets forth the method by which Companies filing a
consolidated federal income tax return (hereinafter referred to as the
"consolidated tax return") may use to allocate the consolidated federal
income tax liability among the members of the group; however, in order to
utilize such method, a written agreement must be executed by the Company
setting forth the allocation method for each taxable year.
WHEREAS, the Companies desire to allocate their federal income tax
liability in accordance with the following procedures;
NOW THEREFORE, the Companies do agree as follows:
ARTICLE I
Definitions
1.1 "Consolidated Tax" is the aggregate tax liability for a tax year, being the
tax shown on the consolidated return and any adjustments thereto thereafter
determined. The consolidated tax will be the refund if the consolidated
return shows a negative tax.
1.2 "Corporate Tax Credit" is a negative separate return tax of a Company for a
tax year, equal to the amount by which the consolidated tax is reduced by
including a net corporate taxable loss or other net tax benefit of such
Company in the consolidated tax return.
1.3 "Corporate Taxable Income" is the income or loss of a Company for a tax
year, computed as though such Company had filed a separate return on the
same basis as used in the consolidated return, except that dividend income
from the Companies shall be disregarded, and other intercompany
transactions eliminated in the consolidated return shall be given
appropriate effect. It shall further be adjusted to allow for applicable
rights accrued to a Company for the recognition of negative corporate
taxable income consistent with the provisions of Article II herein, but
carryovers and carrybacks shall not be taken into account as loss Companies
are to receive current payment of their Corporate Tax Credits. If a Company
is a member of the registered system's consolidated tax group for only part
of a tax year, that period will be deemed to be its tax year for all
purposes for that year under this Agreement.
1.4 "Separate Return Tax" is the tax on the Corporate Taxable Income of a
Company computed as though such Company was not a member of a consolidated
group.
ARTICLE II
Tax Allocation Procedures
2.1 The Consolidated Tax shall be apportioned among the Companies in proportion
to the Corporate Taxable Income of each member of the affiliated group.
Each Company which incurs a tax loss for the year shall be included in the
allocation of Consolidated Tax and shall receive a Corporate Tax Credit,
the amount of which shall be currently paid to the Company by SCANA
increased by
any amounts previously assessed by SCANA and remitted by the Company to
SCANA for estimated tax payment purposes attributable to the subject
taxable year. Companies with a positive allocation of the Consolidated Tax
shall currently pay the amount so allocated, decreased by any amounts
previously assessed by SCANA and remitted by the Company to SCANA for
estimated tax payment purposes attributable to the subject taxable year.
2.2 SCANA shall pay to the Internal Revenue Service the group's Consolidated
Tax liability from the net of the receipts and payments.
2.3 No Company shall be allocated any income tax greater than the Separate
Return Tax of such Company
2.4 To the extent that the Consolidated and Corporate Taxable Incomes include
material items taxed at rates other than the statutory rate (such as
capital gains and preference items), the portion of the Consolidated Tax
attributable to these items shall be apportioned directly to the members of
the group giving rise to such items.
2.5 Should the Companies generate a net consolidated tax loss for a tax year
that is too large to be used in full for that year, with result that there
are uncompensated Corporate Tax Credit benefits for that year, the
carryover of uncompensated benefits related to the carryforward of tax
losses applied to reduce Consolidated Taxable Income in future tax years
shall be apportioned in accordance with the respective Companies'
contributions to such loss. The tax benefits of any resultant carryback
shall be allocated proportionally to the Companies that generated corporate
tax losses in the year the consolidated net operating tax loss was
generated. Any related loss of credits, including investment tax credit
reversals, shall be allocated to the member Company that utilized the
credits in the prior year in the same proportion that the credit lost is to
the total credit utilized in the prior year. Investment tax credit
reversals allocated to a member Company will be added to that Company's
available corporate investment tax credit for future allocations. A prior
year consolidated net operating tax loss carryforward applied to reduce
current year Consolidated Taxable Income shall be allocated proportionally
to member Companies that generated a corporate tax loss in the year the
consolidated net operating loss was generated.
2.6 Adjustments to or revisions of the Consolidated Tax as a result of
subsequent events such as amended returns, revenue agents' reports,
litigation or negotiated settlements shall be allocated in accordance with
the principles established in this Agreement.
ARTICLE III
Amendment
This Agreement is subject to revision as a result of changes in income
tax law and changes in relevant facts and circumstances.
IN WITNESS WHEREOF, this Agreement has been executed by an officer of
each company as of the day and year first above written by the Companies.
ATTEST: SCANA Corporation
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇. ▇. ▇▇▇▇▇▇▇▇▇
President and C.E.O
ATTEST: SCANA Services Corporation
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇. ▇. ▇▇▇▇▇▇▇▇▇, President
ATTEST: South Carolina Electric & Gas Company
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: South Carolina Pipeline Corporation
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: South Carolina Fuel Company, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: South Carolina Generating Company, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: SCANA Communications, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇., President
ATTEST: Primesouth, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: SCANA Development Corporation
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: SCANA Energy Marketing, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: SCANA Petroleum Resources, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: SCANA Propane Gas, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
ATTEST: SCANA Propane Storage, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
ATTEST: ServiceCare, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
ATTEST: SCANA Propane Supply, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President
ATTEST: USA Cylinder Exchange, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President
ATTEST: Palmark, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: SPR Gas Services, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST: Public Service Company of North Carolina, Inc.
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▇. ▇. ▇▇▇▇▇▇▇▇, Secretary ▇. ▇. ▇▇▇▇▇▇▇, ▇▇., President
