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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
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OR,
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-12859
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CTG Resources, Inc.
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(Exact name of registrant as specified in its charter)
Connecticut 06-1466463
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 Columbus Blvd.
P.O. Box 1500
Hartford, Connecticut 06144-1500
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (860) 727-3010
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
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Common Stock - No Par New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No
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State the aggregate market value of the voting stock held by nonaffiliates
of the registrant. (The aggregate market value shall be computed by
reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to
the date of filing.)
The aggregate market value of the voting stock held by nonaffiliates
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of the Registrant on November 3, 1997 was $263,567,358.
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Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date (applicable only
to corporate registrants).
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Number of shares of Common Stock outstanding as of the close of business
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on December 1, 1997 was 8,652,169.
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DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the
Part of the Form 10-K into which the document is incorporated: (1) Any
annual report to security holders; (2) Any proxy or information statement;
and (3) Any prospectus filed pursuant to rule 424(b) or (c) under the
Securities Act of 1933. The listed documents should be clearly described
for identification purposes.
Definitive Proxy Statement for the Company's January 1998 Annual
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Meeting (Part III)
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<PAGE>
<PAGE>
PART I
ITEM 1. BUSINESS
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General
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CTG Resources, Inc. ("the Company" or "CTG") is a Connecticut corporation
organized as a holding company with two wholly owned subsidiaries:
Connecticut Natural Gas Corporation ("CNG") and The Energy Network, Inc.
("TEN"). CTG was established as a holding company and the parent of CNG
in March of 1997. CTG subsequently became the parent of CNG's wholly
owned subsidiary, TEN, in April of 1997. This reorganization into a
holding company structure effectively separated the Company's regulated
natural gas business, CNG, and the diversified unregulated businesses held
by TEN. Management believes that the holding company structure offers the
best means of providing the Company with the increased flexibility which
will be required to compete in the rapidly deregulated energy marketplace.
CTG's headquarters are in Hartford, Connecticut. At September 30, 1997,
the Company employed 573 people. The Company's no par common stock is
traded on the New York Stock Exchange, under the symbol CTG. Previously
issued preferred stock of CNG is traded on the over-the-counter market.
CTG's principal business is the distribution, transportation and sale of
natural gas through CNG. This business is subject to extensive
regulation. CTG's diversified businesses are unregulated and provide
energy-related products and services, primarily district heating and
cooling.
Segment information for all relevant periods is included in the Notes to
the Financial Statements filed in Part II, Item 8 of this report.
Seasonality
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The Company's operations are seasonal. Most of the Company's gas revenues
and related operating expenses occur during the winter heating season,
October to April. Natural gas usage in the Company's service area is
greater for heating purposes in winter and less for cooling in summer.
Natural gas usage for nonheating purposes remains steady throughout the
year. Accordingly, earnings are highest during the first and second
quarters of the fiscal year, which begins October 1, and the third and
fourth quarters frequently show a net loss. The impact of seasonality on
cash flows is discussed in Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations.
The Company's unregulated district heating and cooling businesses
experience peak loads during the winter heating and summer cooling
seasons.
<PAGE>
Competition
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In recent years, the natural gas industry has undergone structural changes
in response to Federal regulatory policy intended to increase competition.
In 1992, the Federal Energy Regulatory Commission ("FERC") issued Order
636, which required all interstate gas pipelines to provide "unbundled,"
or separate, gas transportation and storage services and to discontinue
their bundled merchant sales operations, which included the gas
acquisition function. Similarly, the Company has offered firm
transportation rate tariffs to nonresidential customers since April 1,
1996. The impact of the FERC Order 636 and the resulting deregulation of
the gas industry has continued to heighten competition and has changed the
nature of the Company's business.
The Company has historically distributed and sold natural gas to its
customers without substantial competition from other gas utilities,
cooperatives or other providers of natural gas. At the local level, as a
result of FERC Order 636 and Connecticut deregulation, the Company faces
increasing competitive pressures as other providers of gas seek
opportunities to make gas sales to the Company's commercial and industrial
customers.
The Company also competes with suppliers of oil, electricity and propane
for cooking, heating, air conditioning and other purposes. Competition is
greatest among the large commercial and industrial customers who have the
capability to use alternative fuels. The volatile effect of this price-
sensitive load is somewhat overcome through the use of flexible rate
schedules which allow gas pricing to meet alternative-fuel competition.
The Company's transportation rate tariffs are designed to recover a margin
on each transaction that is comparable to the margin that the Company
would have received if it were making a system sale of natural gas.
The diversified businesses own and operate district heating and cooling
systems ("DHC"), which distribute and sell steam, hot water and chilled
water to office complexes and other large buildings in the City of
Hartford. Once DHC has been selected, the risk of competition from
alternate fuels is diminished because of the cost of the equipment
necessary to utilize an alternative energy source.
Regulatory Jurisdiction
-----------------------
CNG's principal business is the distribution of natural gas, and this
business is subject to regulation by the Connecticut Department of Public
Utility Control ("DPUC") as a public service company. The scope of this
regulation encompasses rates, standards of service, issuance of certain
securities, safety practices and other matters. Retail sales of gas by
the Company and deliveries of gas owned by others are made pursuant to
rate schedules and contracts filed with and subject to DPUC approval. In
general, the firm rate schedules provide for some reductions in the unit
price of gas as greater quantities are used. The rate schedules contain
purchased gas adjustment provisions as described in Note 1 to the
Financial Statements (included in Part II, Item 8 herein).
<PAGE>
Businesses operated by TEN are not public service companies under state
law, and hence they are not subject to regulation by the DPUC. However,
intercompany transactions between CNG and its affiliates are subject to
review and/or approval by the DPUC.
The regulation of interstate sales of natural gas is under the
jurisdiction of the FERC. The Company is subject to the direct
jurisdiction of the FERC for any off-system sales the Company makes in
interstate commerce. The FERC regulates the Company's pipeline gas
suppliers and transporters, and the Company closely follows and
participates in numerous proceedings before FERC. Through an unregulated
subsidiary, of TEN, TEN Transmission Company ("TEN Transmission"), the
Company is a 4.87% equity partner in the Iroquois Gas Transmission System
Limited Partnership ("Iroquois"), which is subject to regulation by FERC.
Natural Gas Business (Regulated)
-------------------------------
CNG is a Connecticut corporation organized in 1848 and headquartered in
Hartford, Connecticut. CNG is engaged in the distribution, transportation
and sale of natural gas in Hartford and 20 other cities and towns in
central Connecticut and in Greenwich, Connecticut. This business is
subject to extensive regulation. Many aspects of this traditional
business have changed or are expected to change as deregulation of the
industry occurs. Later sections of this document address these changes
(See, for example, the sections entitled "Regulatory Matters" and
"Competition.").
Consolidated gas operating revenues were $283,324,000 for the fiscal year
ended September 30, 1997 and were derived approximately 51% from
residential customers, 21% from commercial firm customers, 1% from
industrial firm customers, 15% from interruptible customers, 10% from off-
system sales and 2% from the aggregate of transportation of customer-owned
gas and other gas-related revenues. There were $2,403,000 of revenues
from sales to affiliated companies. The gas distribution business
contributed 93% of consolidated revenues over the three fiscal years
ending 1997. During the fiscal year ended September 30, 1997, the peak-
day sendout of gas was 263,878 thousands of cubic feet ("mcf") which
occurred on January 18, 1997.
CNG has one wholly owned subsidiary, CNG Realty, Corp. ("CNGR"), which was
formed in 1977. CNGR is a single purpose corporation which owns the
Company's Operating and Administrative Center located on a 7-acre site in
downtown Hartford, Connecticut. This facility is leased to CNG. CNGR
engages in no other business activity.
Gas Supply -
The Company's current gas supply contract portfolio reflects the results
of a continuing supply diversification strategy. The purpose of such a
strategy is to hold a secure, flexible, best-cost gas supply portfolio,
which allows the Company to respond quickly and appropriately as customer
needs change.
<PAGE>
The Company purchases natural gas on a long-term and seasonal basis from
producers and, when economics dictate, on a short-term basis in the spot
market. Pipeline services purchased include firm and interruptible
transportation service. Gas storage service in the northeast and in the
southeast production area is purchased from both pipelines and storage
contractors.
The Company's principal and most economical source of gas is pipeline-
delivered natural gas. Because of limited transportation capacity,
pipelines may be unable to meet all of the Company's needs during the
coldest periods of the year. Therefore, the Company also utilizes
liquefied natural gas ("LNG") and, to a much lesser extent, propane mixed
with air ("LP-Air"). LNG and LP-Air are usually more expensive than
natural gas. Therefore, they are used primarily during the winter months
for peak shaving when the demand for gas is greatest and exceeds
deliverable supplies of natural gas through the pipelines.
The Company currently holds pipeline transportation contracts with
Algonquin Gas Transmission Company ("AGT"), CNG Transmission Corporation
("CNGT"), Iroquois Gas Transmission System ("IGTS"), National Fuel Gas
Supply Corporation ("NFGS"), Tennessee Gas Pipeline Company ("TGP"), Texas
Eastern Gas Transmission Corporation ("TETCO"), and Transcontinental Gas
Pipeline Corporation ("TRANSCO"). The various agreements expire at
different times through 2012 and provide for the delivery of a total
maximum daily quantity of approximately 170,596 mcf and maximum annual
quantity of approximately 48,708,730 mcf. The Company also has signed
supply contracts directly with upstream producers to provide the natural
gas for these transportation arrangements.
The Company has contracted for storage service in various locations and
with diverse expiration dates through 2012. Under these arrangements, gas
available during the warmer months of the year is stored underground in
locations that, although out-of-state, are accessible for use during the
colder winter months of the year and for balancing throughout the year.
The gas supply which feeds into the Company's firm transportation rights
on the interstate pipelines has been contracted for directly with
producers of natural gas ("Direct Producer Contracts"). The Direct
Producer Contracts are diverse in terms of expiration date, supply
location, price, flexibility, etc. as part of the Company's gas supply
diversification strategy.
The Company continues to be very active in the area of purchasing gas
directly from producers both in the spot market and under long-term
arrangements. Currently, the Company purchases all of its gas under such
arrangements. Spot market volumes are those purchased under short-term
arrangements from producers and gas withdrawn from storage which had been
purchased directly from producers for injection to that storage. Spot
market purchases are set by negotiation with the supplier.
<PAGE>
Under FERC Order 636, a pipeline may not terminate service to a long-term
firm transportation customer if that customer elects to exercise a "right
of first refusal" following the initial contract term expiration. This
requires the customer to match the price and length terms of another offer
made to the pipeline to continue to purchase such service. The price for
such continued firm transportation service would be capped at the maximum
price determined as a just and reasonable rate under FERC jurisdiction.
In addition to its pipeline gas supplies, the Company owns an LNG plant in
Rocky Hill, Connecticut. This plant has the design capacity to liquefy
approximately 6,000 MCF per day and store 1,206,000 MCF. The LNG plant is
not a source of additional gas, but it permits the Company to liquefy and
store gas during the summer and to deliver the stored gas during the
following winter. The plant has the design capacity to vaporize 60,000
MCF per day.
LP-Air is a source of peak shaving supply to the Company. The Company has
approximately 720,000 gallons of on-site propane storage which can produce
the equivalent of approximately 8,208 MCF of natural gas per day.
Regulatory Matters -
In August 1997 the DPUC initiated a generic proceeding to investigate firm
transportation and unbundling in Connecticut. The unbundling review
process, which includes collaboration between many industry stakeholders,
will be held in two phases. Phase I, currently in progress, will address
the status of existing firm transportation service for commercial and
industrial customers, primarily focusing on streamlining the local natural
gas distribution companies' ("LDCs") administrative processes.
Phase II will explore the myriad of important issues related to fully
unbundled, competitive gas service for all customers, including
residential. These issues will include recovery of stranded costs, the
LDCs' obligation to serve customers who choose other suppliers, a marketer
code of conduct and consumer protection, use/role of fixed price hedging
tools, future decisions regarding pipeline capacity entitlements, and
public policy programs.
In August 1996, CNG filed an application to expand firm transportation
service to multi-unit residential customers with six or more dwelling
units (i.e., large apartment complexes). Transportation had only been
available to commercial and industrial customers. The Department approved
this proposal in December 1996, allowing CNG to better compete in this
market relative to alternate fuel competition.
In February 1996, the Department initiated a DPUC Review of the Purchased
Gas Adjustment ("PGA") clause. The purpose of the generic review was to
determine the appropriateness of the PGA mechanism in light of emerging
competition and the evolution of "unbundling" of services provided by LDCs
and the pipelines. The PGA allows LDCs to recover gas costs on an
<PAGE>
automatic flow-through basis. The DPUC's April 1997 Decision reaffirmed
the appropriateness of the PGA clause given the continued volatility of
gas prices and significant proportion of gas costs relative to an LDC's
total operating and maintenance expenses.
In August 1996, CNG filed a petition to extend its meter test cycle in an
effort to save costs. Existing regulations required CNG to remove and
test all meters that are in the field for ten years. CNG requested that
the test period be extended to twenty years, noting improved quality and
accuracy in current metering technology. The DPUC approved a performance-
based test plan in September 1997.
In September 1996, CNG and CTG filed and application with the DPUC to
reorganize CNG into a holding company structure under which CNG would
become one of two wholly owned subsidiaries of CTG Resources, Inc. The
new holding company structure, which was approved in November 1997 and
became effective in March 1997, allows CNG to better position its
management, financing vehicles, and energy related products and services
to the distinct regulated and unregulated markets in which it competes.
In August 1995, the DPUC initiated a management audit of CNG which was
performed by an independent management consulting firm. A final report
containing the firm's findings, conclusions and recommendations was issued
in November 1996. CNG issued a response to the recommendations contained
in the report in March 1997, indicating the course of action to be taken
with respect to each recommendation with which it concurred and the
reasons for disagreement with those to which it took exception. In the
opinion of management, the recommendations being implemented will not have
any material adverse effect on the Company's results of operations. The
DPUC has informed CNG that it will initiate a second phase of the
management audit which will focus on several areas of CNG's operations in
which opportunities for improvements were identified by the initial audit.
The second phase is scheduled to begin in December 1997.
Diversified Businesses (Unregulated)
-----------------------------------
At September 30, 1997, the diversified businesses of the Company included
TEN and its wholly owned subsidiaries The Hartford Steam Company ("HSC"),
TEN Transmission Company ("TEN Transmission"), ENI Gas Services, Inc.
("ENI Gas") and ENServe Incorporated ("ENServe").
TEN was incorporated in 1982 and is engaged in the operations described in
the following paragraphs. TEN and HSC together provide DHC services to a
number of large buildings in Hartford, Connecticut. TEN Transmission owns
the Company's share of Iroquois. ENServe offers energy system operating
and maintenance services. ENI Gas owns the Company's one-half interest in
KBC Energy Services ("KBC"). TEN's other operating divisions offer energy
equipment rentals, property rentals and financing services.
<PAGE>
TEN Transmission, which was formed in 1986, owns the Company's 4.87% share
of Iroquois. Iroquois operates a natural gas pipeline which transports
Canadian natural gas into the states of New York, Massachusetts and
Connecticut.
HSC, incorporated in Connecticut in 1961, owns and operates a central
production plant and distribution system for the processing and
distribution of steam for heating and chilled water for cooling to a
number of offices, stores and other large buildings in downtown Hartford,
Connecticut.
HSC chills its own water supply for district cooling and produces its own
steam from its existing boilers. HSC also purchases steam from the
Downtown Cogeneration Associates Limited Partnership ("DCA"), which sells
steam to HSC under a twenty-year contract. TEN is a 50% partner in the
DCA with two unrelated third parties. The DCA owns and operates a four-
megawatt cogeneration facility on the roof of a downtown Hartford building
complex. Electricity generated from this unit is sold to The Connecticut
Light and Power Company under a twenty-year contract expiring in 2007.
During fiscal 1997, TEN provided cogeneration management and consulting
services to DCA.
The Capitol Area System ("CAS") is a district heating and cooling system
serving a section of the City of Hartford, Connecticut. TEN owns the
distribution system and purchases hot and chilled water from a third
party. TEN also provides marketing services to this third party.
TEN's energy equipment rentals division and its financing division were
joined to form TEN's financing operations in fiscal 1997. TEN owns
natural gas water heaters and natural gas conversion burners which it
leases to customers in the residential market.
In October 1997, the Company entered into an agreement to sell the
physical assets and business of ENServe, subject to arrangements
concerning certain uncompleted contracts and commitments. These
arrangements are expected to be completed in fiscal 1998. ENServe
previously had offered energy system management services and energy
conservation services to residential, commercial and industrial customers
throughout Connecticut.
ENI Gas was formed to own the Company's interest in KBC. KBC markets
natural gas supplies, other energy sources and energy management related
services on a nonregulated basis to commercial and industrial end users,
primarily in New England.
<PAGE>
Environmental Considerations
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The Company has not experienced and does not anticipate any significant
problem in complying with laws and regulations pertinent to its business
concerned with protecting the environment. Additional information
regarding environmental considerations is included in the Management's
Discussion and Analysis of Financial Condition and Results of Operations,
filed in Part II, Item 7 of this report, and the Notes to the Financial
Statements, filed in Part II, Item 8 of this report.
Franchises
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CNG holds franchises, granted by the Legislature of the State of
Connecticut, and other consents which it considers to be valid and
adequate to enable it to carry on its operations, substantially as now
carried on, in each of the communities which it serves.
<PAGE>
ITEM 2. PROPERTIES
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At September 30, 1997, CNG owns gas distribution mains, a natural gas
liquefaction plant, propane gas storage tanks, metering stations, gas
service connections, meters, regulators and other equipment necessary for
the operation of a gas distribution system. Substantially all of the
Company's properties are subject to the lien of the Indenture of Mortgage
and Deed of Trust securing its first mortgage bonds. The properties, in
management's opinion, are maintained in good operating condition. The gas
mains are located principally under public streets, roads and highways.
TEN owns a distribution system located in the Capitol area of Hartford,
Connecticut for the distribution of hot water for heating and chilled
water for cooling. This property was financed with industrial revenue
bonds secured by a letter of credit with a bank.
The financing division of TEN owns water heaters and conversion burners
which it leases to its customers in the residential market.
HSC owns a central production plant and distribution system, which
includes a chilled water storage tank, in downtown Hartford, Connecticut
for the processing and distribution of steam for heating and chilled water
for cooling.
CNGR owns the Operating and Administrative Center in Hartford which is
leased by the Company. The center is subject to the lien of the Mortgage
Deed under which the CNGR's first mortgage notes are issued.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
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In November 1995, certain Connecticut plumbers and HVAC contractors filed
a class action suit against CNG and the State's two other LDCs, claiming
that the LDCs engaged in unfair trade practices relating to customer
service work. The action alleged that the LDCs unfairly competed with
licensed plumbers and contractors by performing customer service work
using customer service employees who did not possess State trade licenses.
Previously, the LDCs claimed that the work was performed under a statutory
exemption enacted in 1965 and amended in 1967. In 1996, the Connecticut
Court of Appeals upheld an administrative ruling against the LDCs'
position.
The plumbers and contractors are currently asserting claims for profits
which they allege were lost during prior years. There has not been any
settlement demand or any formal statement of alleged damages. As a
result, management cannot estimate CNG's potential exposure related to
these claims. CNG is vigorously defending this matter.
On July 28, 1997, CNG filed suit in state court against another
Connecticut local gas distribution company seeking to enjoin that company
from serving retail customers in a town in which CNG currently serves
customers. A hearing is scheduled for January 1998, and a decision on the
merits of CNG's claims is expected in a matter of weeks following that
hearing. The outcome of this litigation and its impact cannot be assessed
at this time.
The Company is not a party to any other litigation other than ordinary
routine litigation incident to the operations of the Company or its
subsidiaries. In the opinion of management, the resolution of such
litigation will not have a material adverse effect on the Company's
financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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There were no matters submitted to a vote of security holders during the
last quarter of the fiscal year ending September 30, 1997.
<PAGE>
Executive Officers of the Registrant
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All executive officers' terms of office are one year.
Victor H. Frauenhofer Age - 64
Chairman and Chief Executive Officer and Director
Business experience:
1996 - Present Chairman and Chief Executive Officer
1991 - 1996 Chairman, President and Chief Executive Officer
1987 - 1991 President and Chief Executive Officer
1983 - 1987 President and Chief Operating Officer
Arthur C. Marquardt Age - 50
President and Chief Operating Officer
Business experience:
1996 - Present President and Chief Operating Officer
1992 - 1996 Senior Vice President - Gas Business Unit,
Long Island Lighting Company
1991 - 1992 Vice President - Strategic Business Planning,
Long Island Lighting Company
James P. Bolduc Age - 48
Executive Vice President and Chief Financial Officer
Business experience:
1996 - Present Executive Vice President and Chief Financial Officer
1993 - 1996 Senior Vice President - Financial Services
and Chief Financial Officer
1992 - 1993 Vice President, Consumer Services
1989 - 1991 Vice President, Distribution and Customer Service
1987 - 1989 Vice President Corporate, Regulatory
and Customer Services
1985 - 1987 Vice President Diversified Group
Anthony C. Mirabella, Age - 57
Senior Vice President - Operations and Chief Engineer
Business experience:
1997 - Present Senior Vice President - Operations and Chief Engineer
1993 - 1997 Vice President - Operations and Chief Engineer
1992 - 1993 Vice President, Distribution/Engineering Services
& Chief Engineer
1989 - 1991 Vice President & Chief Engineer
1988 - 1989 Vice President Nonregulated Operations
1987 - 1988 Vice President Affiliated Resources Corporation
1985 - 1987 Vice President Business Development Group
<PAGE>
Executive Officers of the Registrant (Concluded)
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Reginald L. Babcock Age - 46
Vice President, General Counsel and Secretary
Business experience:
1997 - Present Vice President, General Counsel and Secretary
1996 - 1997 Vice President - Administrative Services and General
Counsel and Secretary
1993 - 1996 Vice President - Corporate Services and General Counsel
and Secretary
1989 - 1993 Vice President, General Counsel and Secretary
1985 - 1989 Secretary and Counsel
1983 - 1985 Assistant Secretary and Counsel
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
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SECURITY HOLDER MATTERS
-----------------------
The Company's common stock is listed on the New York Stock Exchange. The
high and low sales prices for each quarterly period during the years ended
September 30, 1997 and 1996 were as presented in the table below. These
prices are based on the New York Stock Exchange NYSENet stock quotation
service.
<TABLE>
<CAPTION>
QUARTERLY COMMON STOCK PRICES
-----------------------------
1997 1996
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<S> <C> <C> <C> <C>
Fiscal Year High Low High Low
--------------- ------ ------ ------ ------
First Quarter 25 1/2 22 5/8 25 1/8 21 5/8
Second Quarter 25 3/8 21 3/8 24 1/2 22 3/4
Third Quarter 22 1/4 20 3/4 24 5/8 21 7/8
Fourth Quarter 23 13/16 21 5/8 24 1/4 22
</TABLE>
There were 8,744 record holders of the Company's common stock at November
3, 1997.
Cash dividends are declared on the Company's common stock on a quarterly
basis out of funds legally available therefor. The total amount of
dividends declared was $1.52 per share in 1997 and $1.50 per share in
1996. Funds utilized by the Company for the payment of dividends are
typically received as dividends from its subsidiaries, CNG and TEN. Under
the most restrictive terms of the open-end indenture securing CNG's first
mortgage bonds, as amended, retained earnings of $23,135,000 were
available for CNG to pay dividends at September 30, 1997. There are also
certain restrictions relating to CNG's classes of preferred stock as to
which dividends and sinking fund obligations must be paid prior to the
payment of common stock dividends.
As a provision of a Forward Equity Purchase Agreement between CTG and TEN,
dated October 1, 1997, the Company is restricted from declaring or paying
any dividends or distributions to holders of its common stock if any
amounts due and payable under this agreement are in arrears (See Note 12
to the Financial Statements in Part II, Item 8). There are no other
restrictions on the Company's present or future ability to pay such
dividends. The Company expects that future cash for dividends will be
available.
<PAGE>
In connection with a stock repurchase plan which occurred in the first
quarter of fiscal 1998 (See Note 12 to the Financial Statements in Part
II, Item 8) the Company reduced its quarterly dividend on common stock
from $0.38 ($1.52 annually) to $0.25 ($1.00 annually) per share, effective
with the first quarterly dividend of fiscal 1998, payable on December 19,
1997 to shareholders of record on December 5, 1997. The Company's Board
of Directors has recently established a target of paying out as dividends
approximately 50% to 55% of the Company's earnings on average. The
declaration and payment of future dividends will be dependent on the
Company's earnings and financial condition, economic and market conditions
and other factors deemed relevant by the Company's Board of Directors.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
--------------------------------
<TABLE>
<CAPTION>
FIVE-YEAR SUMMARY OF CONSOLIDATED OPERATIONS
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
Operating revenues $305,565 $315,363 $275,185 $290,662 $265,337
Net income applicable
to common stock $ 17,013 $ 18,932 $ 16,957 $ 17,637 $ 16,788
Earnings per share $ 1.60 $ 1.87 $ 1.71 $ 1.85 $ 1.76
Total assets $464,287 $466,979 $465,039 $458,554 $444,585
Long-term obligations $126,787 $136,432 $150,390 $154,193 $137,984
Cash dividends declared
per common share $ 1.52 $ 1.50 $ 1.48 $ 1.48 $ 1.46
Dividend payout ratio 95.0% 80.2% 86.6% 80.0% 83.0%
P/E ratio 14 13 13 13 18
Market price as a %
of book value -
year-end 145.9% 152.9% 146.8% 162.0% 225.6%
</TABLE>
(Certain amounts for 1996 and prior years have been reclassified to conform
with 1997 classifications.)
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997
-----------------------------------------
(Thousands of Dollars Except for Per Share Data)
As of the close of business on March 31, 1997, CTG Resources, Inc. ("the
Company" or "CTG") became the holding company and parent of the
Connecticut Natural Gas Corporation ("CNG"). As of the close of
business on April 30, 1997, CNG's unregulated business and wholly owned
subsidiary, The Energy Network, Inc. ("TEN"), became a wholly owned
subsidiary of CTG. Management believes that this is the preferred form
of organization for CTG as the era of deregulation in the natural gas
industry continues. The holding company structure will provide CTG and
its subsidiaries with the increased flexibility that is needed to
compete in a rapidly changing energy marketplace. For financial
reporting purposes, the consolidated statements for CTG are consistent
with those that have been previously presented for CNG.
CNG is an energy provider engaged in the regulated distribution, sale
and transportation of natural gas. CTG's diversified businesses are
unregulated and are held by TEN. The diversified businesses are offered
through operating divisions or wholly owned subsidiaries and include
energy-related products and services, district heating and cooling,
energy equipment rentals and financing, energy system management and
operating services and the Company's equity investments in several
partnerships.
In October 1997, subsequent to year-end, TEN repurchased 2.0 million
shares of CTG common stock for $52,000. TEN financed the purchase with
a combination of revolving bank debt and the issuance of Senior
Subordinated Notes. The shares repurchased by TEN were transferred by
the depositary directly to CTG. In connection with the repurchase, CTG
reduced its quarterly dividend on common stock from $0.38 ($1.52
annually) to $0.25 ($1.00 annually) per share, effective with the first
quarter of fiscal 1998. In future periods the lower shares outstanding
should help to increase overall earnings per share. In the long-term,
the lower dividend will enable CTG to retain more of its earnings to
fund the future growth of the Company.
RESULTS OF OPERATIONS
---------------------
Net income applicable to common stock and earnings per share for the
fiscal years ended September 30, 1997, 1996 and 1995 were $17,013
($1.60), $18,932 ($1.87) and $16,957 ($1.71), respectively. Earnings
for 1996 include a nonrecurring item: the proceeds from the sale of a
building by the diversified businesses, equivalent to $.05 per share.
Earnings in 1995 include two nonrecurring items: a gain of $.24 per
share relating to a negotiated settlement for the termination of a steam
supply contract and a charge of $(.05) per share in connection with the
settlement of legal matters relating to the Company's interest in the
Iroquois Gas Transmission System ("Iroquois").
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
Lower fiscal 1997 earnings are the result of the warmer weather
experienced in the Company's natural gas service area during the winter
heating season. The Company's customers' greatest use of energy during
the year is in the winter, mostly for the purpose of heating their homes
or businesses.
Warmer weather also impacts several other areas of the financial
statements. For example, the cost of energy is lower because the
Company acquired less gas to satisfy customers' requirements. Interest
expense is lower because the Company did not need to borrow as much cash
on a short-term basis to buy equivalent gas volumes. Bad debt expense
is lower because of both smaller customers' bills and overall favorable
collection efforts. Overtime labor is lower because of fewer weather
related calls. The impact of a higher effective income tax rate
somewhat offset these benefits to earnings. Other important
contributing factors to all years include changes in the mix of sales,
customer usage, the cost of natural gas and related profit margins.
An increase in natural gas rates granted to the Company by the
Connecticut Department of Public Utility Control ("DPUC"), effective
October 1995, and a significantly colder winter are the principal
reasons for the higher earnings reported for fiscal 1996. Higher
operating expenses and a higher effective income tax rate somewhat
offset these benefits to earnings.
Earnings from our diversified businesses represent the net effect of
several diverse and offsetting influences.
Gas Operating Margin
Gas operating margin is equal to gas revenues less the cost of gas and
Connecticut gross revenues tax. The following table presents revenues,
gas operating margin and gas commodity and transportation volumes for
fiscal 1997, 1996 and 1995, respectively:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Gas Revenues $283,324 $292,852 $254,006
======== ======== ========
Gas Operating Margin $112,446 $116,104 $103,267
======== ======== ========
Commodity and Transportation
Volumes (mmcf)
Firm Gas Sales 22,354 23,911 21,361
Interruptible Gas Sales 9,573 8,614 8,554
Off-System Gas Sales 10,164 12,435 16,265
Transportation Services 4,131 4,336 7,695
------- ------- -------
Total 46,222 49,296 53,875
======= ======= =======
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
Changes in weather patterns from year to year impact the contribution to
operating margin by the different customer classes, because of required
changes in overall throughput mix among the various customer classes and
the different per-unit margin contributed by each customer class. Firm
sales contribute the highest per-unit operating margin of all customer
classes.
Warmer weather during the fiscal 1997 heating season resulted in lower
use per customer and reduced sales and operating margin, especially from
the firm class of customers. Off-system sales and transportation
services have also shown decreases in fiscal 1997 as a result of the
warmer winter weather.
The reduced firm customers' needs in the 1997 winter made gas available
for sale to interruptible customers and resulted in higher interruptible
sales in fiscal 1997. However, interruptible per-unit margins were
lower in fiscal 1997 because of the cost of gas associated with those
sales. Margin earned above a prescribed target level on interruptible
sales is refunded to firm ratepayers, as required by the DPUC.
New, higher firm rates, approved by the DPUC effective October 1995,
together with significantly colder winter weather, resulted in the
higher gas operating margin earned in fiscal 1996.
Off-system sales permit the Company to market short-term gas supplies
and transportation services by contract with customers nationwide.
However, these sales volumes contribute the smallest per-unit operating
margin. The significance of the off-system sales program is that the
Company acts as an independent marketer of natural gas and
transportation, enabling the Company to generate operating margin from a
source not restricted by the capacity of the Company's own distribution
system or curtailment limitations driven by system demand. A
significant portion of margin earned on off-system sales is refunded to
firm ratepayers, as directed by the DPUC.
Off-system sales were lower in fiscal 1997, as compared to 1996, because
of the warmer winter weather and corresponding reduced need for fuel for
heating purposes and the absence of production area sales that were made
in prior years. Off-system sales are lower in fiscal 1996, as compared
to 1995, for two reasons. During the colder winter the Company chose to
be more conservative and selective in its off-system sales, pursuing
opportunities for better contributions to margin rather than higher
volume sales. In the summer months the Company first used available gas
supplies to fill storage facilities in preparation for the coming winter
before offering available supply for off-system sales.
Transportation services are sold under per-unit operating margins
comparable to those earned on similar gas sales. Therefore the Company
is financially indifferent as to whether it transports gas or sells gas
and transportation together. The decrease in transportation throughput
from 1995 to 1996 reflects the September 30, 1995 closing of the Hacogen
cogeneration facility, which provided steam, under contract, to the
district heating and cooling ("DHC") operations.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
Operating and Maintenance Expenses
Lower operating and maintenance expenses recorded in fiscal 1997
represent the net effect of variations in many different costs. Lower
costs were incurred for labor, reflecting the savings from early
retirements and reduced overtime costs as a result of the warmer winter
and fewer weather related expenses. A reduction in pension costs
reflects the absence of the expenses related to the early retirement
program offered in fiscal 1996 and reduced costs because of those
retirements. Bad debt costs are lower mainly because of the lower
natural gas bills experienced as a result of the warmer winter heating
season. Costs related to workers compensation insurance were lower
because of lower actual and projected claims (used to set the Company's
premiums) as a result of the Company's aggressive monitoring of claims.
Lower costs were also recorded for outside purchased services. Higher
margins generated by service contract work also helped to offset
increases in other expense categories.
The October 1995, rate decision allowed the Company to recover certain
expenses that had been previously deferred pending the outcome of the
rate proceedings. Because of these additional amortizations and
increases in certain other expense categories, higher operations and
maintenance expenses were recorded beginning in fiscal 1996. Increases
were recorded in the categories of wages and salaries, pension costs,
employee benefits, conservation program expenses, insurance-related
costs, regulatory commission and rate proceedings expenses and outside
purchased services. The colder fiscal 1996 winter also resulted in
increased bad debt costs related to the higher bills. These increases
were somewhat offset by lower costs incurred for computer hardware
rentals and maintenance and margins generated from service contract
activity.
The Company announced a voluntary early retirement program ("VERO") in
September 1996, and 16 employees accepted retirement effective December
1, 1996. The VERO resulted in an overall 1.5 percent reduction in the
total workforce.
Year to year increases in depreciation result from annual additions to
depreciable plant and reflect the Company's continued growth.
Income Taxes
The on-going turn around of flow-through tax depreciation differences on
older plant and the absence, in fiscal 1997, of cost of removal
deductions related to prior periods that were recorded during fiscal
1996, have resulted in an overall higher effective income tax rate in
fiscal 1997. Higher taxable income and an increase to the Company's
income tax reserve also added to the increase in income taxes in fiscal
1997.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
The overall effective income tax rate was also higher in fiscal 1996, as
compared to 1995, due to the on-going turn around of flow-through tax
depreciation differences on older plant and the absence of cost of
removal deductions taken during 1995. These higher taxes are being
recovered in CNG's rates.
Other Income/(Deductions)
The Company's equity in partnership earnings is a part of the results of
operations from the CTG's diversified businesses and is explained in
that context under the section "Earnings from Diversified Businesses."
Higher deductions were recorded in fiscal 1997 because of lower interest
income from overnight cash investments, higher promotional and
advertising expenses and higher premiums related to insurance. These
additional costs and reduced income were somewhat offset by the absence
of the 1996 costs associated with converting the Company's regulated
propane service program to natural gas.
Nonrecurring income of $892 in fiscal 1996 relates to the diversified
businesses' sale of land and a building in August 1996. The net after
tax gain was $515, equivalent to $.05 per share. Aside from this item,
more Other Income was recorded in fiscal 1996 from interest income
earned by the investment of available cash balances and lower insurance
costs realized from the reconfiguration of certain plans. This higher
income was partially offset by increased promotional expenses and
additional costs related to the conversion of the Company's regulated
propane service program to natural gas.
Two nonrecurring items were recorded in fiscal 1995: a one-time, after
tax benefit of $2,379, equivalent to $.24 per share, from the
termination of a steam supply agreement by the DHC operations, and a
charge of $500, or $(.05) per share, to reflect the accrual of the
Company's proportionate share of expenses in connection with legal
matters of Iroquois.
Interest and Debt Expense
Interest related to long-term debt continues to decline as the amount of
principal outstanding is reduced by scheduled sinking fund payments and
early repurchases of issues that are near maturity. In fiscal 1996, the
Company also realized the benefit of lower average interest rates on
variable rate long-term debt.
Other interest relates primarily to interest on short-term borrowings
and interest associated with pipeline refunds and deferred gas costs.
Short-term interest fluctuates as a result of changes in interest rates,
short-term cash requirements and conversions to long-term debt.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
Short-term borrowings were needed in both 1997 and 1996 to supplement
the seasonal changes in available cash from operations. In fiscal 1997,
because of the warmer winter, the Company did not need to borrow as much
cash on a short-term basis to support working capital requirements. The
Company also recorded lower interest related to natural gas pipeline
refunds and deferred gas costs. Short-term borrowings in the
diversified businesses have been minimal as they have been able to meet
their working capital needs from cash generated by day to day
operations. In fiscal 1996, cash was available because of the timing of
collections through the purchased gas adjustment ("PGA"), which was
ultimately refunded to customers, and available cash on hand for working
capital from the issue of common stock in June 1996.
Earnings from Diversified Businesses
The Company's diversified businesses are all unregulated and include TEN
and TEN's wholly owned subsidiaries: The Hartford Steam Company
("HSC"), ENI Gas Services, ENServe, and TEN Transmission Company ("TEN
Transmission"). TEN's Capitol Area Systems division and HSC provide DHC
services to a majority of buildings in downtown Hartford, CT. ENServe
offers energy system operating and maintenance services. TEN's other
operating divisions offer energy equipment rentals and financing
services. TEN Transmission owns the Company's share of Iroquois. ENI
Gas Services owns the Company's one-half interest in KBC Energy Services
("KBC"). Refer to Note 1 to the Financial Statements for additional
information regarding these investments.
Earnings from the diversified businesses reflect the measures that have
been taken in the last few years to position this area of the Company
for future growth and development. In fiscal 1996, the property
management business sold its land and building, realizing a gain of $.05
per share, and ceased operations. In April of 1996, the Company's
equity interest in Iroquois was increased from 2.40% to 4.87%, and its
equity in partnership earnings from Iroquois increased accordingly. In
fiscal 1995, the DHC reached a settlement agreement related to steam
supply and recorded a gain of $.24 per share. Earnings per share from
ongoing operations were $.25 in 1997, $.30 in 1996 and $.25 in 1995.
The reduction in earnings from ongoing operations in fiscal 1997
reflects the impact of two items: additional outside consultant
expenses and losses incurred by ENServe. Subsequent to year-end, the
physical assets of ENServe were sold.
Higher earnings recorded from the Company's equity interest in several
partnerships, as described above, and positive earnings from DHC
activities in fiscal 1997 have offset the majority of the impact of the
items described above. During fiscal 1997, the DHC business implemented
cost-containment measures and upgraded and/or modified the equipment
which produces steam for heating, reducing the cost of company-produced
steam from 1996 levels. DHC operating earnings also benefited from
lower interest expense because ongoing cash from operations eliminated
the need for short-term borrowings for working capital throughout fiscal
1997.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
DHC earnings in fiscal 1997 are also impacted by changes in weather.
Warmer winter weather and cooler summer weather did result in lower
sales volumes, but variable costs of DHC service also declined and
overall sales were not as low as they could have been because customer
usage patterns did not fluctuate as much as the changes in the weather.
In fiscal 1996, DHC activities incurred higher operations and
maintenance expenses. The impact of these costs was somewhat offset by
higher winter season steam and hot water sales, as a result of the
colder weather, and lower average interest rates on variable rate long-
term debt. Initial operating losses related to energy system operating
and maintenance services offered by ENServe also lowered earnings from
ongoing operations in fiscal 1996.
Steam Supply
Through fiscal 1995 one of the DHC operations' suppliers of steam was a
cogeneration facility owned by an unrelated third party, the Hacogen
partnership ("Hacogen"). The steam supply agreement with Hacogen was
terminated, effective September 30, 1995. According to the terms of the
negotiated settlement, the DHC operations received consideration of
$9,519, representing the payment of all past due amounts owed by Hacogen
and certain additional amounts as a result of the contract termination:
$4,967 was received as of September 30, 1995, and the balance was
received in December 1995. The 1995 pretax, nonrecurring income related
to this settlement was $4,124.
In October 1995, the DHC operations resumed steam production from their
own boilers. In fiscal 1996, the DHC operations were reassessed to
determine future cost control and operational options. In response,
equipment was upgraded and/or modified and other cost-containment
measures were implemented, reducing the cost of company-produced steam.
Year 2000 Compliance
Over the last several years the Company has improved and upgraded its
core financial and operating systems. In addition, the Company is
reviewing its other computer and operating systems to assure that they
will be able to process transactions in the year 2000. The Company is
not aware of the need for any significant future expenditures in order
to comply with Year 2000 software requirements.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Natural gas sales in New England are seasonal, and the Company's cash
flows vary accordingly because regulated natural gas operations are the
principal segment of the Company's business. The Company manages its
changes in cash requirements, primarily to fund gas purchases and
customer accounts receivable, by using cash flows generated from
operations supplemented by short-term financing from lines of credit.
Cash flows from operations have generally been sufficient to satisfy the
diversified operations' cash requirements. Existing credit lines are
used to balance seasonal variations in available cash resources.
Cash Flows from Operating Activities
The levels of construction expenditures, dividends, the cost of gas and
volumes of gas sold are the principal factors which influence cash flows
from operations from year to year. The price of natural gas impacts the
amount of purchased gas costs subject to refund or recovery through the
PGA. The volumes of gas sold magnify the impact of changing prices.
During fiscal 1997, a combination of the cash on hand at year-end 1996,
short-term borrowings and cash received from ongoing operations paid for
the expenses related to ongoing operations and for construction,
dividends and principal payments that were due on long-term debt. Cash
flows from operations are lower in fiscal 1997, as compared to 1996,
primarily due to lower sales as a result of this year's warmer winter.
In both fiscal 1996 and 1995, the expenses of operations, construction,
dividends and principal payments were paid for from the cash received
from ongoing operations and proceeds from issues of common stock. Cash
flows from operations were higher in 1995 because of a large amount of
natural gas pipeline refunds that were received in 1995 and later
returned to customers in 1995 and 1996. Such refunds result from
pipeline regulatory activity at the federal level and are beyond the
control of the Company. The proceeds from the issues of Common Stock
were used by the regulated operations and reduced the need for short-
term financing.
Investing Activities
Construction expenditures in 1997, 1996 and 1995 were $24,593, $24,281
and $26,839, respectively. Capital spending for the fiscal year ending
September 30, 1998 is estimated to be $22,600 for the regulated
operations. The diversified businesses are projecting to expend $13,200
in fiscal 1998 primarily to fund the expansion of the DHC system to
serve an additional neighborhood of large building complexes in Hartford
CT. CTG's construction program is subject to continuous review and
modification, and actual expenditures may vary from these estimates.
The Company plans to fund capital expenditures and other commitments
through a combination of sources.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
In May 1997, the Company invested $100 for a 2.15% interest in the AGA
Gas Finance Company ("GasFinCo"). GasFinCo provides loans through
Fannie Mae to finance energy investments in owner-occupied residences.
In June 1997, the Company and Koch Gas Services Company acquired the
partnership interest of Bay State Energy Enterprises in KBC. As a
result of this transaction the Company's interest in KBC has increased
from one third to one half.
Cash flows from investing activities in fiscal 1996 include the proceeds
from the diversified businesses' sale of a building and land and the
receipt of the balance of the settlement amount due from the termination
of a steam supply contract.
Financing Activities
The Company uses short-term debt to finance working capital
requirements. Capital expenditures are also temporarily funded with
short-term debt. The Company raises short-term funds through the use of
available bank lines of credit and revolving credit agreements (See Note
8 to the Financial Statements). Long-term debt and equity issues are
used to reduce outstanding short-term debt and to permanently finance
completed construction.
In February 1997, the Company extended the term of its expiring $9,000
bank line of credit for one year.
In March 1997, the Company exercised its option to extend the term of
its $20,000 revolving credit agreement for one year.
In August 1997, the Company repurchased $10,000 of existing 8.8% long-
term mortgage debt, due in 2001, with available working capital.
Common Stock and Dividend Matters
In March 1997, pursuant to the Agreement and Plan of Exchange approved
by shareholders, each outstanding share of common stock, $3.125 par
value of CNG was exchanged for one new share of common stock, without
par value, of CTG. Each outstanding share of CTG common stock held by
CNG prior to this exchange was cancelled. As a result, CTG became the
sole common stock shareholder of CNG, CNG became a subsidiary of CTG and
all of the common stock of CTG was owned by the former common stock
shareholders of CNG. The consolidated assets, liabilities and equity of
the Company did not change as a result of the reorganization.
During fiscal 1997, 29,145 original issue shares of the Company's no par
common stock were issued through various Company-sponsored plans.
In June 1996, the Company sold 700,000 shares of its $3.125 Par Common
Stock at $23.25 per share. The Company received net proceeds of $15,557
which were added to working capital and used by the regulated operations
to fund the current year's construction program and general operations.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
Under the most restrictive terms of the indenture securing the Company's
First Mortgage Bonds, retained earnings of $23,135 are available for CNG
to pay dividends at September 30, 1997. CTG's ability to pay dividends
is not restricted by these terms. Dividends paid on common and
preferred stock in fiscal 1997 were $16,177. The preferred stock on the
balance sheet is issued by CNG. CNG is prohibited from, among other
things, paying dividends on common stock and purchasing, redeeming or
retiring common stock, if dividends on preferred stock are in arrears.
Environmental Matters
In the ordinary course of business, the Company may incur costs to clean
up environmental contaminants related to natural gas activity. In those
instances the Company expects that the remediation costs will be
recoverable in rates. In the opinion of management, any existing
environmental issues will not be significant to the future financial
condition or results of operations of the Company.
Competitive Environment
In recent years, the natural gas industry has undergone structural
changes in response to Federal regulatory policy intended to increase
competition. In 1992, the Federal Energy Regulatory Commission ("FERC")
issued Order 636, which required all interstate gas pipelines to provide
"unbundled," or separate, gas transportation and storage services and to
discontinue their bundled merchant sales operations, which included the
gas acquisition function. Similarly, the Company has offered firm
transportation rate tariffs to nonresidential customers, effective April
1, 1996. The impact of the FERC Order 636 and the resulting
deregulation of the gas industry has continued to heighten competition
and has changed the nature of the Company's business.
The Company has historically distributed and sold natural gas to
customers within its franchise area without substantial competition
from other providers of natural gas. At the local level, as a result of
FERC Order 636 and Connecticut deregulation, the Company faces
increasing competitive pressures as providers of gas seek to make sales
to the Company's commercial and industrial customers.
The Company also competes with suppliers of oil, electricity and propane
for cooking, heating, air conditioning and other purposes. Competition
is greatest for the Company's large commercial and industrial customers
who have the capability to use alternative fuels. The volatile effect
of this price-sensitive load is somewhat overcome through the use of
flexible rate schedules which allow gas pricing to meet alternative-fuel
competition. The Company's transportation tariffs are designed to
recover a margin on each transaction that is comparable to the margin
that the Company would have received if it were making a system sale of
natural gas.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
The diversified businesses own and operate district heating and cooling
systems, collectively referred to as DHC, which distribute and sell
steam, hot and chilled water to office complexes and other large
buildings in the city of Hartford. Once DHC has been selected, the
competition from alternate energy types is diminished because of the
cost of the equipment necessary to utilize an alternative energy source.
Regulatory Proceedings
Connecticut local gas distribution companies ("LDCs") pass on to firm
customers any increases or decreases in gas costs from those reflected
in tariff charges under PGA provisions. During fiscal 1996, the DPUC
initiated a review of the need to continue or modify PGA accounting for
all Connecticut LDCs. The review was prompted by the offering of
unbundled services by LDCs that began in fiscal 1996. In April 1997,
the DPUC issued a decision affirming the need to continue the PGA.
In October 1995, the DPUC issued a decision which allowed the Company to
increase its rates $8,900 or 3.64%. This decision allowed a rate of
return on equity of 10.76% and provided for recovery of all significant
items that had been deferred pending recovery.
Legal Proceedings
In November 1995, certain Connecticut plumbers and HVAC contractors
filed a class action suit against the Company and the State's two other
LDCs, claiming that the LDCs engaged in unfair trade practices relating
to customer service work. The plumbers and contractors are currently
asserting claims for profits which they allege were lost during prior
years. There has not been any settlement demand or any formal statement
of alleged damages. As a result, management cannot estimate the
Company's potential exposure related to these claims. The Company is
vigorously defending this matter.
On July 28, 1997, the Company filed suit in State court against another
Connecticut LDC seeking to enjoin that company from serving retail
customers in a town in which the Company currently serves customers. A
hearing is scheduled for January 1998, and a decision on the merits of
the Company's claims is expected in a matter of weeks following that
hearing. The outcome of this litigation and its impact cannot be
assessed at this time.
The Company is not a party to any other litigation other than ordinary
routine litigation incident to the operations of the Company or its
subsidiaries. In the opinion of management, the resolution of such
litigation will not have a material adverse effect on the Company's
financial condition or results of operations.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
Effects of Regulation
The Company's natural gas distribution business is subject to cost-of-
service regulation by the DPUC. Based on current regulation and recent
DPUC decisions, the Company believes that its use of regulatory
accounting is appropriate and in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 71 (See Note 1
to the Financial Statements).
Other Tax Matters
A State tax matter that was being reviewed by the State of New York was
settled during fiscal 1997 with no impact to the Company's financial
condition or results of operations.
CNG and other gas marketers, including KBC, may be subject to State
taxation of off-system sales of natural gas. Management is working with
the states involved in order to clarify each state's position on the
taxation of these sales.
The Company is also subject to audit by State and Federal authorities as
it relates to income, sales, use and property tax returns filed. In the
opinion of management, the ultimate resolution of these issues will not
have a material impact on the Company's results of operations.
NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 128, "Earnings Per Share." This statement specifies the
computation, presentation and disclosure requirements for earnings per
share for entities with publicly held common stock. Adoption of SFAS
No. 128 is required in fiscal 1998. Based on current analyses and
assumptions, the Company does not expect that the adoption of SFAS No.
128 will change its computation or presentation of earnings per share.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement establishes standards for reporting and display
of comprehensive income and its components in the financial statements.
Adoption of SFAS No. 130 is required in fiscal 1999. Based on current
analyses and assumptions, the Company does not expect that the adoption
of SFAS No. 130 will have a material impact on its current presentation
of stockholders' equity.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." This statement requires that
public business enterprises report certain information about operating
segments in complete sets of financial statements of the enterprise and
in condensed financial statements of interim periods issued to
shareholders. It also requires that public business enterprises report
certain information about their products and services, the geographic
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (continued)
----------------------------------------------------
areas in which they operate, and their major customers. Adoption of
SFAS No. 131 is required in fiscal 1999. The Company currently
discloses certain financial data by segment (See Note 11 to the
Financial Statements) in accordance with existing accounting and
disclosure requirements. At the appropriate time the Company will
modify its current presentation, if necessary, to meet the requirements
of SFAS No. 131. The adoption of SFAS No. 131 will have no impact on
the Company's financial condition or results of operations.
INFLATION AND CHANGING PRICES
Inflation impacts the prices the Company must pay for operating and
maintenance expenses and construction costs. The Company's rate
schedules for natural gas and DHC sales include provisions that permit
changes in gas costs and service costs, respectively, to be passed on to
customers. The Company attempts to minimize the effects of inflation on
other costs through cost control, productivity improvements and
regulatory actions where appropriate.
SUBSEQUENT EVENTS
Recapitalization Plan
In October 1997, TEN repurchased 2.0 million shares of CTG common stock
for $52,000. The common stock repurchase was financed by TEN primarily
through the issue of $45,000 of Senior Subordinated Notes at 6.99%, due
in 2009. The principal is retired through semi-annual payments of
$2,500 beginning in 2001.
In a Forward Equity Purchase Agreement dated October 1, 1997, CTG has
committed to fund $7,500 per year into TEN from 1998 through 2009 for an
aggregate additional cash infusion into TEN of $90,000. In exchange,
TEN caused all shares of CTG common stock purchased through the October
1997 tender offer to be transferred directly to CTG by the depositary.
As a provision of this agreement, CTG is restricted from declaring or
paying any dividends or distributions to its holders of common stock if
any amounts due and payable under this agreement are in arrears.
On October 1, 1997, TEN entered into a 364-day secured revolving credit
agreement for $10,000 with a bank. This agreement matures on September
29, 1998. Interest is based on a Bank Rate or a LIBOR rate plus a
variable margin. It is determined at the time of each borrowing. There
is a one-time $5 commitment fee and a one-time .375% facility fee upon
renewal.
On October 1, 1997, TEN entered into a three-year revolving credit
agreement for $10,000 with a bank. The maximum borrowing amount is
reduced by $500 on each fiscal quarter, beginning January 1, 1998.
Interest is based on a Bank Rate or a LIBOR rate plus a variable margin
and is determined at the time of each borrowing. There is a one-time $5
commitment fee and an on-going .45% to .6% facility fee on the unused
portion of the agreement.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------------------------------------------------------------------------
RESULTS OF OPERATIONS, SEPTEMBER 30, 1997 (concluded)
----------------------------------------------------
Long-Term Debt
In October 1997, the Company issued a total of $19,000 of Medium Term
Notes ("MTNs") due 2007. These MTNs are unsecured and have no call
provisions or sinking fund requirements. The proceeds were used to
refinance existing short-term debt. The face values and interest rates
of these MTNs are:
<TABLE>
<C> <S>
Face Value Interest Rate
---------- -------------
$ 1,000 6.62%
$ 1,000 6.65%
$17,000 6.69%
</TABLE>
The MTNs are rated at A3 by Moody's and A- by Standard and Poor's.
Sale of Assets
On October 6, 1997, the Company signed an agreement to sell the physical
assets and related contracts of ENServe Corp., a wholly owned
subsidiary of TEN engaged in the HVAC business, for approximately
$1,200. This transaction will be finalized in fiscal 1998. Any gain
or loss is not expected to be significant.
FORWARD LOOKING INFORMATION
This report and other Company reports, including filings with the
Securities and Exchange Commission, press releases and oral statements,
contain forward looking statements. Forward looking statements are
made based upon management's expectations and beliefs concerning future
developments and their potential effect upon the Company. The Company
cautions that, while it believes such statements to be reasonable and
makes them in good faith, they almost always vary from actual results,
and the differences between assumed facts or basis and actual results
can be material, depending upon the circumstances. Investors should be
aware of important factors that could have a material impact on future
results. These factors include, but are not limited to, weather, the
regulatory environment, legislative and judicial developments which
affect the Company or significant groups of its customers, economic
conditions in the Company's service territory, fluctuations in energy-
related commodity prices, customer conservation efforts, financial
market conditions, interest rate fluctuations, customers' preferences,
unforeseen competition, and other uncertainties, all of which are
difficult to predict and beyond the control of the Company.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
----------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Stockholders and The Board of Directors
of CTG Resources, Inc.:
We have audited the accompanying consolidated balance sheets and
consolidated statements of capitalization of CTG Resources, Inc. (a
Connecticut Corporation) and subsidiaries as of September 30, 1997 and 1996,
and the related consolidated statements of income, common stock equity and
cash flows for each of the three years in the period ended September 30,
1997. These financial statements and the schedule referred to below are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CTG
Resources, Inc. and subsidiaries as of September 30, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years
in the period ended September 30, 1997, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the schedule
index is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
S/ Arthur Andersen LLP
-------------------------------
(ARTHUR ANDERSEN LLP)
Hartford, Connecticut
November 6, 1997
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
September 30, 1997 and 1996
(Thousands of Dollars)
<S> <C> <C>
Assets 1997 1996
---- ----
Plant and Equipment:
Plant in service $ 484,250 $ 464,377
Construction work in progress 7,703 6,417
--------- ---------
491,953 470,794
Less-Allowance for depreciation 160,313 145,042
--------- ---------
331,640 325,752
--------- ---------
Investments, at equity 11,530 9,914
--------- ---------
Current Assets:
Cash and cash equivalents 4,458 8,515
Accounts receivable (less allowance for
doubtful accounts of $3,439 in 1997
and $4,819 in 1996) 25,287 25,033
Accrued utility revenue 4,624 4,180
Inventories 17,584 15,968
Prepaid expenses 8,903 10,920
--------- ---------
Total Current Assets 60,856 64,616
--------- ---------
Other Assets:
Unrecovered future taxes 37,177 44,812
Recoverable transition costs 839 2,858
Other assets 22,245 19,027
--------- ---------
Total Other Assets 60,261 66,697
--------- ---------
$ 464,287 $ 466,979
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets (Concluded)
September 30, 1997 and 1996
(Thousands of Dollars)
<S> <C> <C>
1997 1996
---- ----
Capitalization and Liabilities
Capitalization (see accompanying statements):
Common stock equity $ 169,299 $ 168,882
Preferred stock, not subject to
mandatory redemption 884 899
Long-term debt 126,787 136,432
--------- ---------
296,970 306,213
--------- ---------
Current Liabilities:
Current portion of long-term debt 1,487 13,968
Notes payable and commercial paper 27,500 -
Accounts payable and accrued expenses 36,968 40,721
Refundable purchased gas costs 4,714 6,012
Accrued taxes 484 -
Accrued interest 4,047 4,479
--------- ---------
Total Current Liabilities 75,200 65,180
--------- ---------
Deferred Credits:
Deferred income taxes 44,302 40,011
Unfunded deferred income taxes 37,177 44,812
Investment tax credits 2,982 3,203
Refundable taxes 3,491 3,445
Other 4,165 4,115
--------- ---------
Total Deferred Credits 92,117 95,586
--------- ---------
Commitments and Contingencies
--------- ---------
$ 464,287 $ 466,979
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
For the Years Ended September 30, 1997, 1996 and 1995
(Thousands of Dollars Except for Per Share Data)
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Operating Revenues $ 305,565 $ 315,363 $ 275,185
Less: Cost of energy 169,188 175,175 147,764
State gross revenues tax 11,107 11,710 11,296
--------- --------- ---------
Operating Margin 125,270 128,478 116,125
--------- --------- ---------
Operating Expenses:
Operations 45,838 49,640 45,311
Maintenance 8,682 8,615 7,917
Depreciation and amortization 18,184 17,765 16,977
Income taxes 16,959 14,364 9,430
Local property taxes 5,323 5,277 5,148
Other taxes 2,400 2,313 2,183
--------- --------- ---------
97,386 97,974 86,966
--------- --------- ---------
Operating Income 27,884 30,504 29,159
--------- --------- ---------
Other Income/(Deductions),
net of income taxes:
Allowance for equity funds used
during construction 125 144 106
Equity in partnership earnings 2,910 2,037 1,032
Other income/(deductions) (338) 248 (872)
Nonrecurring items - 892 3,624
Income taxes (665) (1,115) (1,839)
--------- --------- ---------
2,032 2,206 2,051
--------- --------- ---------
Income Before Interest Charges 29,916 32,710 31,210
--------- --------- ---------
Interest and Debt Expense, net:
Interest on long-term debt 11,345 11,825 12,158
Other interest 1,200 1,585 1,650
Allowance for borrowed funds used
during construction (84) (96) (70)
Amortization of debt expense 380 401 453
--------- --------- ---------
12,841 13,715 14,191
--------- --------- ---------
Net Income 17,075 18,995 17,019
Less-Dividends on Preferred Stock 62 63 62
--------- --------- ---------
Net Income Applicable to Common Stock $ 17,013 $ 18,932 $ 16,957
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income (Concluded)
For the Years Ended September 30, 1997, 1996 and 1995
(Thousands of Dollars Except for Per Share Data)
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Net Income Applicable to Common Stock $ 17,013 $ 18,932 $ 16,957
========= ========= =========
Average Common Shares Outstanding
During the Period 10,632,001 10,146,932 9,926,980
========== ========== =========
Income Per Average Share of
Common Stock $ 1.60 $ 1.87 $ 1.71
========= ========= =========
Dividend Per Share of Common Stock $ 1.52 $ 1.50 $ 1.48
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
For the Years Ended September 30, 1997, 1996 and 1995
(Thousands of Dollars)
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Cash Flows from Operations: $ 31,315 $ 39,175 $ 53,415
-------- -------- --------
Cash Flows from Investing Activities:
Capital expenditures (24,593) (24,281) (26,839)
Other investing activities 54 (1,338) (395)
-------- -------- --------
Net cash used in investing activities (24,539) (25,619) (27,234)
-------- -------- --------
Cash Flows from Financing Activities:
Dividends paid (16,177) (15,491) (14,761)
Issuance of common stock 622 15,557 8,474
Other stock activity, net (652) (38) (5)
Principal retired on long-term debt (22,126) (3,911) (3,673)
Short-term debt 27,500 (4,200) (14,300)
-------- -------- --------
Net cash provided (used) by
financing activities (10,833) (8,083) (24,265)
-------- -------- --------
Increase (Decrease) in Cash and
Cash Equivalents (4,057) 5,473 1,916
Cash and Cash Equivalents at
Beginning of Year 8,515 3,042 1,126
-------- -------- --------
Cash and Cash Equivalents at
End of Year $ 4,458 $ 8,515 $ 3,042
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows (Concluded)
For the Years Ended September 30, 1997, 1996 and 1995
(Thousands of Dollars)
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Net Income $ 17,075 $ 18,995 $ 17,019
-------- -------- --------
Adjustments to reconcile income
to net cash:
Depreciation and amortization 18,098 17,909 17,216
Provision for uncollectible
accounts 3,855 4,600 4,886
Deferred income taxes, net 4,115 1,886 897
Equity in partnership earnings (2,910) (2,037) (1,032)
Cash distributions received from
investments 1,761 2,061 336
Changes in assets and liabilities:
Accounts receivable (3,873) (1,640) (5,571)
Accrued utility revenue (444) 913 (1,379)
Inventories (1,616) (1,457) 3,815
Purchased gas costs (1,298) 3,712 6,069
Prepaid expenses 2,017 (4,825) 4,012
Accounts payable and accrued expenses (1,682) (5,902) 7,671
Other assets/liabilities (3,783) 4,960 (524)
-------- -------- --------
Total adjustments 14,240 20,180 36,396
-------- -------- --------
Net cash provided by
operations $ 31,315 $ 39,175 $ 53,415
======== ======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Year for:
Interest $ 13,058 $ 12,193 $ 12,446
======== ======== ========
Income taxes $ 8,261 $ 17,633 $ 8,967
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Capitalization
September 30, 1997 and 1996
(Thousands of Dollars)
<S> <C> <C>
1997 1996
---- ----
Common Stock Equity:
Common stock, no par, authorized 20,000,000
shares, issued and outstanding 10,652,169
shares in 1997 and 10,620,439 shares in 1996 $120,409 $120,168
Retained earnings 49,924 49,026
-------- --------
170,333 169,194
-------- --------
Less: Unearned compensation - restricted
stock awards (1,034) (312)
-------- --------
169,299 168,882
-------- --------
Preferred Stock, Not Subject to Mandatory
Redemption:
$3.125 par value, 8%, noncallable, authorized
909,898 shares in 1997 and 913,832 shares
in 1996, issued and outstanding 134,426 shares
in 1997 and 138,360 shares in 1996, entitled to
preference on liquidation at $6.25 per share 420 432
$100 par value, callable, authorized 9,999,602
shares in 1997 and 9,999,631 shares in 1996
6% Series B, issued and outstanding 4,638
shares in 1997 and 4,667 shares in 1996 464 467
-------- --------
884 899
-------- --------
Long-Term Debt:
First Mortgage Bonds -
8.8%, due 2001 - 10,000
9.16%, due 2004 18,000 18,000
Industrial Revenue Demand Bonds -
1986 and 1988 series,
weighted average interest rate of
3.66% in 1997 and 3.589% in 1996, due 2006 11,400 12,100
First Mortgage Notes -
10.5%, due 2010 963 999
Secured Notes -
9.32%, due 1999 6 10
6.89%, due 2010 12,905 13,510
Secured Term Note, 10.72%, due 1997 - 781
Unsecured Medium Term Notes -
6.48%, due 1997 - 10,000
7.61% to 7.82%, due 2002 to 2004 20,000 20,000
6.85% to 9.1%, due 2012 to 2016 40,000 40,000
8.96%, due 2017 20,000 20,000
8.49%, due 2024 5,000 5,000
Less - Current Maturities (1,487) (13,968)
-------- --------
126,787 136,432
-------- --------
$296,970 $306,213
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Common Stock Equity
For the Years Ended September 30, 1997, 1996 and 1995
(Thousands of Dollars Except for Share Data)
Common Stock
-------------------- Unearned Retained
Shares Amount Compensation Earnings
---------- ---------- -------------- ---------
<S> <C> <C> <C> <C>
Balance at September 30, 1994 9,539,079 $ 96,374 $ (157) $ 43,264
Public offering 392,200 8,474 - -
Net income after
preferred dividends - - - 16,957
Amortization and
adjustment of
restricted shares - 112 (214) -
Dividends - - - (14,699)
---------- -------- -------- --------
Balance at September 30, 1995 9,931,279 104,960 (371) 45,522
Public offering 700,000 15,557 - -
Net income after
preferred dividends - - - 18,932
Purchase of restricted
stock awards - - (33) -
Amortization and
adjustment of
restricted shares (10,840) (349) 92 -
Dividends - - - (15,428)
---------- -------- -------- --------
Balance at September 30, 1996 10,620,439 120,168 (312) 49,026
Net income after
preferred dividends - - - 17,013
Purchase of restricted
stock awards 16,078 501 (1,131) -
Issues to dividend
reinvestment and
employee benefit plans 29,145 622 - -
Establish holding company - (508) - -
Amortization and
adjustment of
restricted shares (13,493) (374) 409 -
Dividends - - - (16,115)
---------- -------- -------- --------
Balance at September 30, 1997 10,652,169 $120,409 $ (1,034) $ 49,924
========== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(In thousands of dollars, except per share amounts)
September 30, 1997
1. Summary of Significant Accounting Policies:
Organization-
As of March 31, 1997, CTG Resources, Inc. ("the Company" or "CTG") became
the holding company and parent of the Connecticut Natural Gas Corporation
("CNG") and its unregulated subsidiaries The Energy Network, Inc. ("TEN")
and CNG Realty Corp. ("CNGR"). As of April 30, 1997, TEN was transferred
to and became a wholly owned subsidiary of CTG. The operating divisions
and subsidiaries of TEN represent the Company's unregulated diversified
businesses.
Principles of consolidation-
The consolidated financial statements represent CTG, including its wholly
owned subsidiaries: CNG and TEN. All significant intercompany
transactions and accounts have been eliminated in consolidation. Certain
prior year amounts have been reclassified to conform with current year
presentations.
Use of estimates-
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Revenues-
Revenues are recorded based on deliveries to customers through the end of
the accounting period. Regulated gas operations revenues are based on
rates authorized by the Connecticut Department of Public Utility Control
("DPUC").
The Company is required to provide natural gas service to residential
customers within its defined service territory and is precluded by
Connecticut State law from discontinuing service to hardship residential
customers during a winter moratorium period (November - April).
In compliance with Connecticut law, the Company has an accounts receivable
forgiveness program for qualified hardship natural gas customers. The
total payments made by these customers and the energy assistance funds
received on their behalf are matched by the Company. The DPUC allows the
Company to defer this matched amount and to recover it from ratepayers in a
future period. At September 30, 1997 and 1996, deferred balances of
approximately $4,100 and $2,300, respectively, are included in other assets
pending future amortization and recovery from ratepayers.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
Purchased gas costs-
The Company passes on to its firm customers changes in gas costs from those
reflected in its tariff charges. In accordance with this procedure, any
current under or over-recoveries of gas costs are charged or credited to
the cost of gas and included in current assets or liabilities. Such
amounts are collected or refunded in subsequent periods under purchased gas
adjustment provisions ("PGA").
Allowance for funds used during construction-
In the ordinary course of business an allowance for funds used during
construction ("AFUDC") is calculated on the construction of physical assets
which exceed a minimum cost threshold and are constructed over an extended
period of time.
AFUDC for the regulated operations is computed based on the weighted
average cost of capital used to determine the rates charged to customers,
as allowed by the DPUC. It is computed at current borrowing rates for the
diversified businesses.
Plant-
Plant is stated at original cost, which includes an apportionment of
general and administrative costs, and, for certain long-term construction
projects, AFUDC.
Substantially all of the plant of the regulated operations is subject to
the lien of the Indenture of Mortgage and Deed of Trust securing its First
Mortgage Bonds. Most properties owned by the diversified businesses are
also subject to the liens associated with their term loans or letters of
credit (See Notes 7 and 8).
During the fourth quarter of fiscal 1996, TEN sold land and a building
situated thereon. This resulted in a nonrecurring net gain of $515 or $.05
per share.
In fiscal 1997, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of" ("SFAS No. 121"). This
statement requires that long-lived assets be reviewed for impairment
whenever events indicate that the carrying amount of any asset may not be
recoverable. The adoption of SFAS No. 121 did not have a material impact
on the Company's financial condition or results of operations.
Depreciation-
The Company and its subsidiaries, except CNGR, provide depreciation on a
straight-line basis. The composite rates applied by the regulated
operations were 4.1% in 1997 and 1996 and 4.2% in 1995, as approved by the
DPUC. The operating and administrative center, owned by CNGR, is being
depreciated under a DPUC approved sinking fund method through 2010.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
The average depreciation rates for diversified businesses' depreciable
plant were 3.6% in 1997, 3.8% in 1996 and 3.7% in 1995.
Cash and cash equivalents-
Cash in excess of daily requirements is invested in short-term interest
bearing securities with maturities of three months or less.
Investments-
The Company has investments of $11,530 at September 30, 1997. These
include $10,132 for a 4.87% investment in the Iroquois Gas Transmission
System Partnership ("Iroquois"), $859 for a 50% investment in the Downtown
Cogeneration Associates Limited Partnership ("DCA"), $439 for a 50%
interest in KBC Energy Services ("KBC") and $100 for a 2.15% interest in
the AGA Gas Finance Company ("GasFinCo"). All of the Company's investments
are accounted for on the equity method of accounting.
Iroquois owns and operates a natural gas pipeline which transports Canadian
natural gas into New York State, Massachusetts and Connecticut. DCA owns
and operates a cogeneration facility in Hartford, Connecticut. KBC markets
natural gas supplies, other energy sources and energy management related
services on an unregulated basis primarily to commercial and industrial end
users, mostly in New England. GasFinCo provides loans through Fannie Mae
to finance energy investments in owner-occupied residences.
During fiscal 1997 and 1996, the Company sold gas to KBC which, in total,
was not material to the financial statements. The Company purchases
natural gas transportation service, by contract, from Iroquois.
Inventories-
Gas inventories are stated at their weighted average cost. Other
inventories are accounted for using the first-in, first-out or average cost
method.
Accounting for the effects of regulation-
The Company's natural gas distribution business is subject to regulation by
the DPUC. The Company prepares its financial statements in accordance with
the provisions of SFAS No. 71, "Accounting for the Effects of Certain Types
of Regulation" ("SFAS No. 71"). SFAS No. 71 requires a cost-based, rate-
regulated enterprise such as the Company to reflect the impact of
regulatory decisions in its financial statements. In certain
circumstances, SFAS No. 71 requires that certain costs and/or obligations
(such as incurred costs not currently recovered through rates, but expected
to be so recovered in the future) be reflected in a deferred account in the
balance sheet and not be reflected in the statement of income until
matching revenues and/or expenses are recognized. The Company records
regulatory assets and liabilities based on prior rate orders issued by the
DPUC, which provide a mechanism for recovery in regulated rates, or on
historical rate treatment, which provides evidence as to the probability of
future rate recovery.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
In the application of SFAS No. 71, the Company follows accounting policies
that reflect the impact of the rate treatment of certain events or
transactions that are permitted to differ from generally accepted
accounting principles. The most significant of these policies include the
recording of an unfunded deferred income tax liability, with a
corresponding unrecovered receivable, for temporary differences between
book and tax depreciation previously flowed through to ratepayers,
regulated assets pending future recovery, regulated assets recovered over
time as directed by the DPUC and the method of depreciation utilized for
certain property. The DPUC permits recovery of depreciation on the
operating and administrative center, owned by CNGR, under a sinking fund
method through 2010. The overall impact of annual depreciation expense
under this method, versus straight line depreciation recovery, is not
material to the overall financial statements.
It is the Company's policy to continually assess the recoverability of
costs recognized as regulatory assets and the Company's ability to continue
to account for its regulated activities in accordance with SFAS No. 71,
based on each regulatory action and the criteria set forth in SFAS No. 71.
Based on current regulation and recent DPUC decisions, the Company believes
that its use of regulatory accounting is appropriate and in accordance with
the provisions of SFAS No. 71.
The Company's consolidated balance sheets at September 30, 1997 and 1996
contain the following amounts as a result of the application of SFAS No.
71:
<TABLE>
<S> <C> <C>
Assets/(Liabilities) 1997 1996
-------------------- ---- ----
Unrecovered Future Taxes $ 37,177 $ 44,812
Hardship Arrearage Forgiveness 4,138 2,331
Deferred Income Taxes 3,141 2,897
Other Postretirement Benefits 2,973 2,654
Other Deferred Charges 1,154 1,554
Recoverable Transition Costs 839 2,858
Revenue Sharing Mechanisms (2,184) (2,349)
Refundable Taxes (3,491) (3,445)
Deferred Gas Costs (4,694) (6,002)
Pipeline Refunds, Surcharges and Interest (5,265) (4,518)
-------- --------
$ 33,788 $ 40,792
======== ========
</TABLE>
New accounting standards-
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share" ("SFAS No. 128"). This statement
specifies the computation, presentation and disclosure requirements for
earnings per share for entities with publicly held common stock. Adoption
of SFAS No. 128 is required in fiscal 1998. Based on current analyses and
assumptions, the Company does not expect that the adoption of SFAS No. 128
will change its computation or presentation of earnings per share.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"). This statement establishes standards for
reporting and display of comprehensive income and its components in the
financial statements. Adoption of SFAS No. 130 is required in fiscal 1999.
Based on current analyses and assumptions, the Company does not expect that
the adoption of SFAS No. 130 will have a material impact on its disclosure
of stockholders' equity.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" ("SFAS No. 131"). This statement
requires that public business enterprises report certain information about
operating segments in complete sets of financial statements of the
enterprise and in condensed financial statements of interim periods issued
to shareholders. It also requires that public business enterprises report
certain information about their products and services, the geographic areas
in which they operate, and their major customers. Adoption of SFAS No. 131
is required in fiscal 1999. The Company currently discloses certain
financial data by segment (See Note 11) in accordance with existing
accounting and disclosure requirements. At the appropriate time the
Company will modify its current presentation, if necessary, to meet the
requirements of SFAS No. 131. The adoption of SFAS No. 131 will have no
impact on the Company's financial condition or results of operations.
2. Regulatory Matters:
During fiscal 1996, the DPUC initiated a review of the need to continue PGA
accounting for gas costs for all Connecticut natural gas distribution
companies. The review was prompted by the deregulation at the Connecticut
local gas distribution companies ("LDCs") level and the offering of
unbundled services that began in fiscal 1996. It was conducted to
determine whether PGA accounting should be discontinued or modified. In
April 1997, the DPUC issued a decision affirming the need to continue the
PGA.
In October 1995, the DPUC issued a decision which allowed the Company to
increase its rates for natural gas by $8,900 or 3.64% on an annual basis.
This decision allowed a rate of return on equity of 10.76% and provided for
recovery of all significant items deferred on the balance sheet pending
recovery at September 30, 1994. Rates were effective for service rendered
on or after October 13, 1995. As part of this decision, the DPUC also
approved the Company's Firm Transportation rates for commercial and
industrial natural gas customers, effective April 1, 1996 (See Management's
Discussion and Analysis, "Competitive Environment").
3. Pension and Employee Benefit Plans:
The Company has noncontributory retirement plans ("Plans") covering
substantially all employees. Pension benefits are based on years of
credited service and employees' average annual earnings, as defined in the
Plans. The Company's funding policy is to contribute, annually, an amount
at least equal to that which will satisfy the minimum funding requirements
of the Employee Retirement Income Security Act.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
The assumptions used in determining the pension obligations were:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Weighted Average Discount Rate 7.50% 8.25% 8.25%
Rate of Increase in Future Compensation Levels 4.00% 4.40% 4.50%
Expected Long-term Rate of Return on Assets 9.00% 8.75% 8.95%
</TABLE>
The following table represents the Plans' funded status and amounts
included in the balance sheets at September 30, 1997 and 1996:
<TABLE>
<C> <C> <C>
1997 1996
---- ----
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $76,545 in 1997 and of $65,411 in
1996 $ 78,882 $ 67,900
======== ========
Projected benefit obligation for service rendered
to date $ 93,472 $ 79,645
Assets at fair value, primarily publicly traded stocks
and bonds 113,331 97,697
-------- --------
Value of assets over the projected benefit obligation
19,859 18,052
Unrecognized net gain from past experience different
from that assumed (18,294) (18,421)
Prior service cost not yet recognized in net periodic
pension cost 874 981
Unrecognized net asset at January 1, 1986 being
recognized over 15 years (1,087) (1,398)
-------- --------
Accrued/(prepaid) pension liability $ 1,352 $ (786)
======== ========
</TABLE>
Net pension costs included in the statements of income for the years ending
September 30, include the following components:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Service cost $ 2,113 $ 2,095 $ 2,059
Interest cost 6,373 6,183 6,056
Return on plan assets (18,616) (11,503) (12,474)
Net amortization and deferral 10,139 3,653 4,919
-------- -------- --------
Net cost $ 9 $ 428 $ 560
======== ======== ========
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
The Company also provides its officers with a supplemental retirement plan.
The actuarially determined accumulated benefit obligation was approximately
$4,454 at September 30, 1997 and $3,685 at September 30, 1996. The cost of
this plan is being accrued over the service lives of the individual
officers. Net expense related to this plan was $548 for 1997, $540 for
1996 and $607 for 1995. The Company contributes to a trust to fund the
liability for these supplemental retirement plan benefits. The trust
balance included in other assets at September 30, 1997 and 1996, was $4,953
and $3,708, respectively.
In September 1996, the Company announced an early retirement program for
union employees which resulted in the reduction of approximately 1.5% of
the total workforce through voluntary early retirement. The approximately
$400 cost of this program included pension enhancements and other benefits
and was fully accrued by the Company in the fourth quarter of fiscal 1996.
The Company may provide certain health care, life insurance or income
benefits to former or inactive employees after employment but before
retirement. The Company accounts for these costs on the accrual basis
under SFAS No. 112, "Employers' Accounting for Postemployment Benefits".
4. Postretirement Benefits Other Than Pensions:
The Company provides certain health care and life insurance benefits to
retirees through a benefit plan. These benefits are available for
employees leaving the Company who are otherwise eligible to retire and have
met specific service requirements. The Company accounts for these costs
under SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" ("SFAS No. 106") on a prospective basis. SFAS No. 106
requires the expected cost of postretirement benefits, primarily health
care and life insurance benefits, to be charged to expense during the years
that eligible employees render service.
In fiscal 1994, the Company adopted SFAS No. 106 and began amortizing its
postretirement accumulated benefit obligation over a twenty-year period.
Total health care and life insurance costs under SFAS No. 106 were $3,074
in 1997, $3,293 in 1996 and $3,274 in 1995. Actual costs charged to
expense were $2,755 in 1997 and 1996 and $2,143 in 1995. The DPUC has
approved a five-year phase-in of SFAS No. 106 expenses with an allowed
annual recovery of $2,755 and deferral of additional SFAS No. 106 expenses
for future recovery. At September 30, 1997 and 1996, $2,973 and $2,654,
respectively, were deferred pending future amortization and recovery.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
The following table represents the plan's funded status reconciled to the
consolidated balance sheets at September 30, 1997 and 1996:
<TABLE>
<S> <C> <C>
1997 1996
---- ----
Accumulated postretirement benefit obligation of:
Retirees $ 19,120 $ 18,577
Active employees fully eligible
to retire 3,015 2,074
Active employees not eligible to retire 6,325 5,977
-------- --------
Total accumulated postretirement benefit obligation
28,460 26,628
Less: Market value of plan assets 8,504 5,695
-------- --------
Accumulated postretirement benefit obligation in
excess of plan assets 19,956 20,933
Unrecognized transition amount (15,693) (16,616)
Unrecognized net loss (1,746) (1,912)
-------- --------
Accrued postretirement benefit
obligation $ 2,517 $ 2,405
======== ========
</TABLE>
The components of SFAS No. 106 health care and life insurance costs for the
fiscal years ended September 30, 1997, 1996 and 1995 were:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Service cost $ 425 $ 435 $ 398
Interest cost 2,131 2,164 2,054
Return on plan assets (1,436) (578) (290)
Net amortization 1,954 1,272 1,112
-------- -------- --------
Net health care and life insurance costs $ 3,074 $ 3,293 $ 3,274
======== ======== ========
</TABLE>
For measurement purposes annual rates of increase of 11% and 9% are assumed
for nonmedicare and medicare eligible retirees, respectively, in the per
capita cost of covered health care benefits. The rate is assumed to
decrease to 6% for both groups in 2003. The effect of increasing the
assumed health care cost trend rates by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of
September 30, 1997 and 1996 by $1,402 and $1,530, respectively, and the
aggregate of the service and interest cost for the years ended September
30, 1997, 1996 and 1995 by $134, $133 and $134, respectively. The weighted
average discount rate used in determining the accumulated post retirement
benefit obligation was 7.50% in 1997 and 8.25% in 1996 and 1995 and was
determined by analyzing the interest rates, as of September 30, of each
year, of long-term, high quality corporate debt securities having a
duration comparable to the plan. The expected long-term rate of return on
plan assets was 7.50% in 1997 and 1996.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
The Company has established two Employee Benefit Trusts ("VEBA") to pay
current retiree health care and life insurance benefits and to fund the
Company's retirement benefit liability. In fiscal 1997, 1996 and 1995 the
Company funded $2,459, $2,896 and $5,105, respectively, for SFAS No. 106
costs. The VEBA balances are primarily invested in life insurance policies
and commingled fixed income and equity mutual funds.
5. Taxes:
Income Taxes-
The following is an analysis of the provision for federal and state income
taxes:
<TABLE>
<CAPTION>
September 30,
------------------------
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Charged to operations:
Federal:
Current $10,330 $ 9,842 $ 6,717
Deferred 3,069 1,082 778
------- ------- -------
13,399 10,924 7,495
------- ------- -------
State:
Current 2,816 3,118 1,751
Deferred 965 543 405
------- ------- -------
3,781 3,661 2,156
------- ------- -------
Deferred investment tax credits (221) (221) (221)
------- ------- -------
Total charged to operations 16,959 14,364 9,430
------- ------- -------
Charged to other income/(deductions):
Federal:
Current 531 552 1,478
Deferred (34) 232 (87)
------- ------- -------
497 784 1,391
------- ------- -------
State:
Current 179 245 480
Deferred (11) 86 (32)
------- ------- -------
168 331 448
------- ------- -------
Total charged to other income/(deductions)
665 1,115 1,839
------- ------- -------
Total $17,624 $15,479 $11,269
======= ======= =======
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
Depreciation for federal income tax purposes is computed using accelerated
cost recovery methods and different lives as permitted under the Internal
Revenue Code ("Code"). The DPUC has allowed the Company to normalize taxes
on accelerated depreciation, as required under the Code, for depreciable
property additions made by the regulated operations subsequent to 1980.
For certain other temporary differences, tax reductions are accounted for
as a reduction of federal income tax expense in accordance with the flow-
through method of accounting as required by the DPUC. Under the
established ratemaking practices followed by the DPUC, deferred income
taxes not previously provided for will be collected in customer rates when
such taxes become payable.
Deferred income taxes result from temporary differences between the
financial statement carrying amounts and the tax basis of existing assets
and liabilities. Deferred income taxes are primarily a result of normalized
plant items and temporary differences related to gas costs. For the
regulated operations, deferred investment tax credits are amortized to
income over the average life of the related property. The diversified
businesses provide deferred taxes on all temporary differences, including
depreciation.
The tax effects of the temporary differences which resulted in the deferred
income taxes on the balance sheets at September 30, 1997 and 1996 were:
<TABLE>
<S> <C> <C>
1997 1996
---- ----
Property, Plant and Equipment $ 47,067 $ 43,562
Other, net (2,765) (3,551)
-------- --------
Deferred Income Taxes $ 44,302 $ 40,011
======== ========
</TABLE>
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes" ("SFAS No. 109"). Under the caption
"Refundable Taxes" the balance sheet reflects refundable taxes to
ratepayers for reductions in the statutory federal income tax rate on
normalized plant related temporary differences. The regulated operations
also recognize the cumulative deferred income taxes on temporary
differences which were previously flowed through to ratepayers. At
September 30, 1997 and 1996, the Company had $37,177 and $44,812,
respectively, on the balance sheets as an unfunded deferred income tax
liability, with a corresponding unrecovered receivable, for temporary
differences previously flowed through to ratepayers. These amounts have
been adjusted for the tax effect of future revenue requirements and will be
amortized over the life of the related depreciable assets concurrent with
their recovery in rates.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
A reconciliation of the consolidated federal income tax expense, at the
statutory tax rate of 35%, to the reported consolidated federal income tax
expense is as follows:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
Consolidated statutory federal income tax expense $10,762 $10,669 $ 8,989
Change in consolidated federal income tax expense
resulting from:
Excess book over tax depreciation 2,253 1,724 1,456
Investment tax credits (221) (221) (221)
Bad debts 175 175 175
Tax reserves 714 (500) 200
Computer software 175 175 (499)
Cost of removal (324) (507) (1,951)
Nondeductible reserves - (200) 397
Other 141 172 119
------- ------- -------
Consolidated reported federal income tax expense $13,675 $11,487 $ 8,665
======= ======= =======
</TABLE>
Outstanding tax issues-
CNG and other gas marketers, including KBC, may be subject to state
taxation of off-system sales of gas. Management is working to clarify each
state's position on the taxation of these sales.
The Company is subject to audit by state and federal tax authorities as it
relates to income, sales, use and property tax returns filed. In the
opinion of management, the ultimate resolution of these issues will not
have a material impact on the Company's results of operations.
6. Capital Stock:
Common stock-
In March 1997, pursuant to the Agreement and Plan of Exchange approved by
shareholders, each outstanding share of common stock, $3.125 par value of
CNG was exchanged for one new share of common stock, without par value, of
CTG. Each outstanding share of CTG common stock held by CNG prior to this
exchange was cancelled. As a result, CTG became the sole common stock
shareholder of CNG, CNG became a subsidiary of CTG and all of the common
stock of CTG was owned by the former common stock shareholders of CNG.
In June 1996, the Company issued 700,000 shares of its $3.125 Par Common
Stock at $23.25 per share. The Company received net proceeds of $15,557
which were added to working capital and used by the regulated operations to
fund the current year's construction program and general operations.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
Dividend reinvestment plan and employee savings plans-
The Company maintains a Dividend Reinvestment Plan ("DRIP") which provides
the Company's holders of common stock and preferred stock the opportunity
to receive shares of the Company's common stock in lieu of some or all of
their cash dividends. In addition, the Company has Employee Savings Plans
("ESP"), which are designed to encourage and assist employees to save and
invest for long-term financial security. The Company's common stock is one
of the investment options offered to employees under the ESP. At September
30, 1997, there were 560,476 shares of the Company's common stock reserved
for issuance under the DRIP and ESP. In the fiscal years ended September
30, 1997, 1996 and 1995, the Company's contribution to the ESP on behalf of
employees was $960, $965 and $958, respectively.
Restricted stock plan-
In 1990, the Company adopted a restricted stock performance plan. The plan
terminates in the year 2000 and is authorized to issue up to 200,000
shares. On October 1, 1990, October 1, 1993 and October 1, 1996, key
employees were granted 22,146, 24,040 and 41,800, respectively, of
restricted shares of the Company's common stock under this plan.
Restrictions lapse and the shares vest over a one to five year period
beginning October 1, 1990, 1993 and 1996, respectively, as certain
performance goals are achieved. In October 1995, 5,770 of the restricted
shares became fully vested and were awarded to qualifying employees.
The market value of the shares awarded under this plan has been recorded as
unearned compensation and is a separate component of common equity. The
unearned compensation is being charged to expense over the vesting period
based on achievement of the performance criteria.
In fiscal 1995, the Company adopted the provisions of FASB Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." The impact of the adoption of this standard was not
significant to the results of operations or financial condition of the
Company.
Preferred stock-
The preferred stock on the balance sheet was issued by CNG. CNG is
prohibited from, among other things, paying dividends on common stock and
purchasing, redeeming or retiring common stock, if dividends on preferred
stock are in arrears.
The following table sets forth the changes in the number of shares
outstanding for each class of the Company's preferred stock not subject to
mandatory redemption, for the years ended September 30, 1997, 1996 and
1995:
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
---- ---- ----
$3.125 par value (3,934) (1,372) (1,748)
======= ======= =======
$100 par value (29) (3) (1)
======= ======= =======
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
7. Long-term Debt:
The Company has various issues of first mortgage bonds and first mortgage
notes outstanding with maturities from 2004 to 2010. Under the most
restrictive terms of the indenture securing the bonds, retained earnings of
$23,135 are available for CNG to pay dividends at September 30, 1997.
Dividends paid on common and preferred stock in fiscal 1997 were $16,177.
Sinking fund requirements for outstanding bonds were paid in cash.
Long-term debt amounts which are due during each of the five years ending
September 30, 1998 through 2002, are as follows:
<TABLE>
<CAPTION>
Sinking Fund Requirements and Maturities
----------------------------------------
<C> <C>
Year Total
---- -------
1998 $ 1,487
1999 4,136
2000 4,183
2001 4,343
2002 14,504
-------
$28,653
=======
</TABLE>
8. Short-term Borrowings and Lines of Credit:
The Company maintains a line of credit under a revolving credit agreement
with a bank. Under this agreement the Company can borrow up to $20,000 at
a Eurodollar, Certificate of Deposit or Base Rate of interest plus a
variable margin through March of 1998. There is a .1% facility fee and a
.075% commitment fee on the unused portion of the agreement. At September
30, 1997 there were $20,000 outstanding under this agreement.
The Company also maintains a one-year line of credit with a bank for $9,000
through February 1998. The Company pays a 1/5 of 1% commitment fee on this
line of credit. The interest rate varies according to market conditions.
At September 30, 1997 there were $7,500 outstanding under this line of
credit.
TEN has a $5,000 unsecured revolving credit facility that expires on
December 15, 1997. There is a 1/5 of 1% annual facility fee. The interest
rate is based upon the Certificate of Deposit, Eurodollar or Cost of Funds
rate plus a variable margin and is determined at the time of each
borrowing. At September 30, 1997 there were no borrowings outstanding
under this arrangement.
The weighted average interest rate on short-term borrowings outstanding was
6.26% at September 30, 1997. No short-term borrowings were outstanding at
September 30, 1996.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
9. Fair Value of Financial Instruments:
The fair value amounts disclosed below have been reported to meet the
disclosure requirements of SFAS No. 107, "Disclosures About Fair Values of
Financial Instruments" and are not necessarily indicative of the amounts
that the Company could realize in a current market exchange.
The carrying amount of cash and cash equivalents; accounts receivable;
notes payable and commercial paper; accounts payable and accrued expenses;
and unrecovered or refundable purchased gas costs approximates fair value.
At September 30, 1997 and 1996, the fair value of the Company's long-term
debt, including current maturities, is estimated to be $139,810 and
$155,108, respectively. The fair value at year-end 1997 and 1996, of
$116,875 and $138,299 of fixed-rate long-term debt, based on the market
value of similar instruments, is estimated at $128,410 in 1997 and $143,008
in 1996. The carrying amount of the variable-rate long-term debt of
$11,400 in 1997 and $12,100 in 1996 approximates fair value.
The Company has committed to support 4.87% of a letter of credit for
Iroquois, equivalent to approximately $1,568 at September 30, 1997, which
approximates fair value. The letter of credit is used to satisfy Iroquois'
cash retention requirements with respect to agreements between Iroquois and
its lenders.
10. Commitments and Contingencies:
Construction expenditures-
Construction expenditures for the fiscal year ending September 30, 1998 are
estimated at $22,600 for the regulated operations and $13,200 for the
diversified businesses.
Gas supply-
The Company is party to short-term and long-term contracts for the purchase
of natural gas and transportation and storage services.
FERC Order No. 636 transition costs-
The Company began to be billed for transition costs associated with Federal
Energy Regulatory Commission ("FERC") Order No. 636 from its pipeline
suppliers in June 1993. Through September 30, 1997, the Company has paid
and recovered from ratepayers $15,000 of an estimated $15,800 of transition
costs.
In the opinion of management the DPUC has allowed the Company a sufficient
number of recovery mechanisms to provide for the full recovery of all
transition costs. For this reason, management believes that these
transition costs will not have a material impact on the Company's financial
condition or results of operations. The unpaid estimated liability of $800
at September 30, 1997 is included in Accounts Payable and Accrued Expenses.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
Steam supply-
Along with generating steam from their own internal boilers, the district
heating and cooling ("DHC") operations are party to long-term contracts for
the purchase of steam.
Through fiscal 1995, one of the DHC operations' suppliers of steam was a
cogeneration facility owned by an unrelated third party, the Hacogen
partnership ("Hacogen"). This agreement was terminated, effective
September 30, 1995. According to the terms of the negotiated settlement,
the DHC received consideration of $9,519, representing the payment of all
past due amounts owed by Hacogen and certain additional amounts as a result
of the contract termination. The fiscal 1995 pretax, nonrecurring income
related to this settlement was $4,124.
Letters of credit-
The Company has outstanding letters of credit amounting to $1,500 for
workers' compensation claims and $2,000 for a purchasing credit line. As a
condition of its ownership in the DCA, TEN is contingently liable under a
letter of credit amounting to $6,000. As a condition to its variable rate
long-term debt, TEN holds a long-term letter of credit amounting to the
principal outstanding: $11,400 at September 30, 1997 and $12,100 at
September 30, 1996.
Environmental matters-
In the ordinary course of business, the Company may incur costs to clean up
environmental contaminants related to natural gas activity. In those
instances the Company expects that the remediation costs will be
recoverable in rates. In the opinion of management, any existing
environmental matters will not be significant to the future financial
condition or results of operations of the Company.
Leases-
The Company has entered into operating lease agreements for the use of
computer and office equipment. For fiscal 1997, 1996 and 1995, these lease
payments were $1,378, $1,092 and $1,561, respectively. Future lease
payments are not expected to change significantly from those shown above.
Legal proceedings-
In November 1995, certain Connecticut plumbers and HVAC contractors filed a
class action suit against the Company and the State's two other LDCs,
claiming that the LDCs unfairly competed with licensed plumbers and
contractors by performing customer service work using customer service
employees who did not possess State trade licenses. Previously, the LDCs
have claimed that the work was performed under a statutory exemption
enacted in 1965 and amended in 1967. The Connecticut courts have upheld an
administrative ruling against the LDCs' position.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
The plumbers and contractors are currently asserting claims for profits
which they allege were lost during prior years. There has not been any
settlement demand or any formal statement of alleged damages. As a result,
management cannot estimate the potential exposure related to these claims.
The Company is vigorously defending this matter.
On July 28, 1997, the Company filed suit in state court against another
Connecticut LDC seeking to enjoin that company from serving retail
customers in a town in which the Company currently serves customers. A
hearing is scheduled for January 1998, and a decision on the merits of the
Company's claims is expected in a matter of weeks following that hearing.
The outcome of this litigation and its impact cannot be assessed at this
time.
The Company is not a party to any other litigation other than ordinary
routine litigation incident to the operations of the Company or its
subsidiaries. In the opinion of management, the resolution of such
litigation will not have a material adverse effect on the Company's
financial condition or results of operations.
11. Segment Information:
The Company operates in two segments: regulated gas related activities and
unregulated diversified businesses. Gas related activities consist
primarily of natural gas distribution to residential, commercial and
industrial customers. Diversified businesses consist primarily of district
heating and cooling services.
Intersegment sales are priced in accordance with terms of existing tariffs
and contracts. Information about the Company's operations, by business
segment, is presented below:
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
<TABLE>
<S> <C> <C> <C>
1997 1996 1995
-------- -------- --------
Revenues:
Gas related activities $287,401 $297,016 $255,680
Diversified businesses 22,906 23,628 22,306
Intersegment revenues (4,742) (5,281) (2,801)
-------- -------- --------
Total $305,565 $315,363 $275,185
======== ======== ========
Pre-Tax Operating Income:
Gas related activities $ 42,839 $ 41,130 $ 33,309
Diversified businesses 2,004 3,739 5,280
-------- -------- --------
Total 44,843 44,869 38,589
Income taxes 16,959 14,365 9,430
-------- -------- --------
Consolidated Operating Income $ 27,884 $ 30,504 $ 29,159
======== ======== ========
Depreciation and Amortization:
Gas related activities $ 16,019 $ 15,399 $ 14,655
Diversified businesses 2,165 2,366 2,322
-------- -------- --------
Total $ 18,184 $ 17,765 $ 16,977
======== ======== ========
Property Additions:
Gas related activities $ 23,726 $ 23,894 $ 25,311
Diversified businesses 867 387 1,528
-------- -------- --------
Total $ 24,593 $ 24,281 $ 26,839
======== ======== ========
Identifiable Assets:
Gas related activities $402,203 $404,210 $400,064
Diversified businesses 62,084 62,769 64,975
-------- -------- --------
Consolidated Identifiable Assets $464,287 $466,979 $465,039
======== ======== ========
</TABLE>
12. Subsequent Events:
Recapitalization plan-
In October 1997, TEN repurchased 2.0 million shares of CTG common stock for
$52,000. The purchase was the result of a "dutch auction" tender offer
that was completed on October 30, 1997. TEN financed the purchase with a
combination of revolving bank debt and the issue of $45,000 of Senior
Subordinated Notes at 6.99%, due 2009. The Senior Subordinated Notes will
be repaid in semi-annual principal payments of $2,500 beginning in 2001.
The shares repurchased by TEN were transferred directly to CTG by the
depositary. In connection with the repurchase, the Company reduced its
quarterly dividend on common stock from $0.38 ($1.52 annually) to $0.25
($1.00 annually) per share, effective with the first quarter of fiscal
1998.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
The following summary of pro forma financial information gives effect to
the repurchase of the shares as if the transaction had occurred at the
beginning of each year presented, in the case of income statement data, or
at year-end in the case of balance sheet data. This summary pro forma
financial information is for comparison purposes only and does not purport
to be indicative of the results that would actually have been obtained had
the repurchase of the shares been completed at the dates indicated.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
September 30, 1997 September 30, 1996 September 30, 1995
------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Pro Forma Pro Forma Pro Forma
$26.00 per $26.00 per $26.00 per
Share Share Share
As Purchase As Purchase As Purchase
Reported Price Reported Price Reported Price
-------- --------- -------- --------- -------- ---------
Income Statement Data:
---------------------
Net Income Applicable to
Common Stock $ 17,013 $ 14,855 $ 18,932 $ 16,780 $ 16,957 $ 14,818
======== ======== ======== ======== ======== ========
Income Per Average Share of
Common Stock (1)
$ 1.60 $ 1.72 $ 1.87 $ 2.06 $ 1.71 $ 1.87
====== ====== ====== ====== ====== ======
Average Common Shares
Outstanding During the
Period (2) 10,632 8,632 10,147 8,147 9,927 7,927
====== ====== ====== ====== ===== =====
Dividends per Share of
Common Stock (3) $ 1.52 $ 1.00 $ 1.50 $ 1.00 $ 1.48 $ 1.00
====== ====== ====== ====== ====== ======
Balance Sheet Data:
------------------
Total Assets $464,287 $464,287 $466,979 $466,979 $465,039 $465,039
======== ======== ======== ======== ======== ========
Long-term Debt (Less
Current Maturities) (4) $126,787 $177,254 $136,432 $186,899 $150,390 $200,857
======== ======== ======== ======== ======== ========
Total Common Equity $169,299 $116,599 $168,882 $116,182 $150,111 $ 97,411
======== ======== ======== ======== ======== ========
----------------------------------------------------------------------------
<FN>
(1) Represents earnings per share based on pro forma net income divided
by the pro forma shares outstanding. Lower pro forma earnings
reflect additional after tax interest due to the higher debt
outstanding.
(2) Represents shares outstanding less the 2,000 shares purchased pursuant
to the tender offer.
(3) Pro Forma represents dividends at $0.25 per share per quarter.
(4) Represents long-term debt outstanding plus $45,000 of pro forma debt
from the Senior Subordinated Notes at 6.99% and $8,200 of pro forma
debt at a rate of 6.37% under the revolving credit facilities.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
(In thousands of dollars, except per share amounts)
September 30, 1997
In a Forward Equity Purchase Agreement dated October 1, 1997, CTG has
committed to fund $7,500 per year into TEN from 1998 through 2009 for an
aggregate additional cash infusion in TEN of $90,000. In exchange, TEN
caused all shares of CTG common stock purchased through the October 1997
tender offer to be transferred directly to CTG by the depositary. As a
provision of this agreement CTG is restricted from declaring or paying any
dividends or distributions to its holders of common stock if any amounts
due and payable under this agreement are in arrears.
Long-term debt-
In October 1997, the Company issued a total of $19,000 of Medium Term Notes
("MTNs") due 2007. These MTNs are unsecured and have no call provisions or
sinking fund requirements. The proceeds were used to refinance existing
short-term debt. The face values and interest rates of these MTNs are:
<TABLE>
<S> <C>
Face Value Interest Rate
---------- -------------
$ 1,000 6.62%
$ 1,000 6.65%
$17,000 6.69%
</TABLE>
Sale of assets-
In October 1997, the Company entered into an agreement to sell the physical
assets and contracts of ENServe Corp., a wholly owned subsidiary of TEN
engaged in the HVAC business, for approximately $1,200. The transaction
will be completed in fiscal 1998.
13. Quarterly Results (Unaudited):
The following table sets forth information with respect to the consolidated
quarterly results of operations for the fiscal years 1997 and 1996. The
amounts are unaudited but, in the opinion of management, present fairly the
results of operations.
The quarterly results of operations reflect the seasonal nature of the
Company's operations. The results of any one quarter during the year are
not indicative of the results of future quarters or the results of the
Company's fiscal year.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Concluded)
(In thousands of dollars, except per share amounts)
September 30, 1997
<TABLE>
<CAPTION>
Consolidated Results of Operations
----------------------------------
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, March 31, June 30, September 30,
Quarter Ended 1996 1997 1997 1997
--------------------------------------------------------------------------------------------
Operating Revenues $ 89,269 $124,681 $ 53,234 $ 38,381
Operating Income (Loss) $ 9,421 $ 16,050 $ 3,342 $ (929)
Net Income (Loss) $ 6,716 $ 12,689 $ 658 $ (2,988)
Net Income (Loss) Per Common
Share* $ .63 $ 1.19 $ .06 $ (.28)
--------------------------------------------------------------------------------------------
December 31, March 31, June 30, September 30,
Quarter Ended 1995 1996 1996 1996
--------------------------------------------------------------------------------------------
Operating Revenues $ 90,462 $130,606 $ 53,954 $ 40,341
Operating Income (Loss) $ 11,367 $ 17,233 $ 2,407 $ (503)
Net Income (Loss) $ 8,174 $ 13,888 $ (562) $ (2,505)
Net Income (Loss) Per Common
Share* $ .82 $ 1.40 $ (.06) $ (.24)
</TABLE>
* The sum of quarterly earnings per share does not equal annual earnings
per share as reported on the statements of income because of quarterly
changes in weighted average shares outstanding.
<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
------------------------------------------------------------
There have been no disagreements required to be disclosed under this item.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-----------------------------------------------------------
The information required by this item regarding directors of the
registrant and the disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is contained in the section entitled "Biographical
Information" in the Company's proxy statement for its January 1998
Annual Meeting, which the Company files with the Securities and Exchange
Commission pursuant to Regulation 14A of the Securities Exchange Act of
1934. This information is hereby incorporated by reference. The
information required by this item regarding executive officers of the
registrant is included in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
-------------------------------
The information required by this item is contained in the sections
entitled "Compensation of Directors","Compensation Committee Report on
Executive Compensation", "Compensation Committee Interlocks and Insider
Participation", "Summary Executive Compensation", "Change of Control",
"Long Term Incentive Plan", "Retirement Plans" and "Corporate
Performance Graph" in the Company's proxy statement for its January 1998
Annual Meeting, which the Company files with the Securities and Exchange
Commission pursuant to Regulation 14A. This information is hereby
incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-----------------------------------------------------------------------
The information required by this item is contained in the section
entitled "Ownership of Company Stock" in the Company's proxy statement
for its January 1998 Annual Meeting, which the Company files with the
Securities and Exchange Commission pursuant to Regulation 14A. This
information is hereby incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------------------------------------------------------
The information required by this item is contained in the section
entitled "Certain Relationships and Related Transactions" in the
Company's proxy statement for its January 1998 Annual Meeting, which the
Company files with the Securities and Exchange Commission pursuant to
Regulation 14A. This information is hereby incorporated by reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
-------------------------------------------------------------------------
(a) 1. Financial Statements:
--------------------
The consolidated balance sheets, statements of income, statements of
cash flows, statements of capitalization and statements of common
stock equity, together with the notes to the financial statements
and report thereon of Arthur Andersen LLP dated November 6, 1997,
are included in Part II, Item 8 herein.
2. Financial Statement Schedules:
-----------------------------
The following financial statement schedules included herein under
Item 14(d) are filed as part of this report.
II Valuation and Qualifying Accounts and Reserves for the fiscal
years ended September 30, 1997, 1996 and 1995
Schedules I, III, IV, and V are not submitted because they are not
applicable or the information required to be included therein is
contained in the financial statements and footnotes.
3. Exhibits
--------
Exhibit
Number
------------
3 Articles of Incorporation and By-Laws
(1) Amended and Restated Certificate of Incorporation of the
Company, filed as Exhibit 3.2 to the Company's Registration
Statement on Form S-4, Amendment No. 1, filed with the
Commission on December 27, 1996 (Commission File No. 333-
16297)
(2) Amended and Restated By-Laws of the Company, filed as Exhibit
No. 3.4 to the Company's Registration Statement on Form S-4,
Amendment No. 1, filed with the Commission on December 27,
1996 (Commission File No. 333-16297)
4 Instruments Defining Rights of Security Holders, Including Indentures
(1) Indenture of Mortgage and Deed of Trust between The Hartford
Gas Company and The First National Bank of Hartford, Trustee
dated February 1, 1947, filed as Exhibit No. 2.2 to the
Connecticut Natural Gas Corporation's Registration Statement
on Form S-7 filed with the Commission on December 8, 1970
(Commission File No. 2-38993)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
(2) In addition to the Indenture of Mortgage and Deed of Trust
referred to in 4(1) above, there have been sixteen
supplemental indentures thereto, all of which have been filed
with the Commission as follows:
(a) Supplemental indentures 1-9 filed as Exhibit No. 2.2 to
the Connecticut Natural Gas Corporation's Registration
Statement on Form S-7 filed with the Commission on
December 8, 1970 (Commission File No. 2-38993)
(b) Tenth Supplemental Indenture filed as Exhibit No. 2.3 to
the Connecticut Natural Gas Corporation's Registration
Statement on Form S-7 filed with the Commission on March
3, 1972 (Commission File No. 2-43286)
(c) Eleventh Supplemental Indenture filed as Exhibit No. V
to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended December
31, 1974, filed with the Commission in March, 1975
(Commission File No. 1-7727)
(d) Twelfth Supplemental Indenture filed as Exhibit No. 4(h)
to the Connecticut Natural Gas Corporation's
Registration Statement on Form S-7 filed with the
Commission on December 23, 1981 (Commission File No. 2-
75457)
(e) Thirteenth Supplemental Indenture filed as Exhibit No. 4
to the Connecticut Natural Gas Corporation's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1982,
filed with the Commission in August, 1982 (Commission
File No. 1-7727)
(f) Fourteenth Supplemental Indenture filed as Exhibit No.
4(iii) to the Connecticut Natural Gas Corporation's
Current Report on Form 8-K, dated August 28, 1986, filed
with the Commission in September, 1986 (Commission File
No. 1-7727)
(g) Fifteenth Supplemental Indenture filed as Exhibit No.
4(iii) to the Connecticut Natural Gas Corporation's
Current Report on Form 8-K, dated December 8, 1987,
filed with the Commission in December, 1987 (Commission
File No. 1-7727)
(h) Sixteenth Supplemental Indenture filed as Exhibit No.
4(ii)(h) to the Connecticut Natural Gas Corporation's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1989, filed with the Commission in
November, 1989 (Commission File No. 1-7727)
9 Voting Trust Agreement
Not applicable
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 Material Contracts
(1) Canadian gas transportation contract (rate schedule CGT-NE)
between the Connecticut Natural Gas Corporation and
Tennessee, dated December 1, 1987, filed as Exhibit No.
10(xxiii) to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31,
1987, filed with the Commission on March 29, 1988 (Commission
File No. 1-7727)
(2) Gas purchase contract between the Connecticut Natural Gas
Corporation and TransCanada Pipelines Limited, dated
September 14, 1987, filed as Exhibit No. 10(xxiv) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1987, filed with
the Commission on March 29, 1988 (Commission File No. 1-7727)
(3) Gas sales agreement between the Connecticut Natural Gas
Corporation and Boundary Gas, Inc., dated September 14, 1987,
filed as Exhibit No. 10(xxv) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987, filed with the Commission on March
29, 1988 (Commission File No. 1-7727)
(4) Steam Supply Agreement between The Hartford Steam Company and
Independent Energy Operations, Inc., dated December 3, 1987,
filed as Exhibit No. 10(xxv) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989, filed with the Commission on March
28, 1990 (Commission File No. 1-7727)
(5) Open-End Mortgage and Security Agreement between Energy
Networks, Inc. and The Connecticut National Bank, dated March
1, 1989, filed as Exhibit No. 10(xxviii) to the Connecticut
Natural Gas Corporation's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, filed with the
Commission on March 28, 1990 (Commission File No. 1-7727)
(6) Collateral Assignment of Lease and Rentals, dated March 1,
1989, to the Open-End Mortgage and Security Agreement between
Energy Networks, Inc. and The Connecticut National Bank,
dated March 1, 1989 (filed as Exhibit 10(5) herein), filed as
Exhibit No. 10(xxix) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989, filed with the Commission on March
28, 1990 (Commission File No. 1-7727)
(7) Precedent Agreement to First Amendment, dated September 14,
1988, to the Gas Sales Agreement between the Connecticut
Natural Gas Corporation and Boundary Gas, Inc., dated
September 14, 1987, filed as Exhibit No. 10(xxxi) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1989, filed with
the Commission March 28, 1990 (Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (8) First Amendment, dated January 1, 1990, to the Gas Sales
Agreement between the Connecticut Natural Gas Corporation and
Boundary Gas, Inc., dated September 14, 1987, filed as
Exhibit 10(xxxii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989, filed with the Commission on March
28, 1990 (Commission File No. 1-7727)
(9) Medium Term Notes, Series A, Placement Agency Agreement among
Connecticut Natural Gas Corporation, PaineWebber Incorporated
and Smith Barney, Harris Upham & Co. Incorporated, dated
November 1, 1991, filed as Exhibit No. 10(xxxix) to the
Connecticut Natural Gas Corporation's Transition Report on
Form 10-K for the period October 1, 1990 to September 30,
1991, filed with the Commission on December 23, 1991,
(Commission File No. 1-7727)
(10) Issuing and Paying Agency Agreement between The Connecticut
National Bank and Connecticut Natural Gas Corporation, for
the Medium Term Notes, Series A, dated November 1, 1991,
filed as Exhibit No. 10(xl) to the Connecticut Natural Gas
Corporation's Transition Report on Form 10-K for the period
October 1, 1990 to September 30, 1991, filed with the
Commission on December 23, 1991, (Commission File No. 1-7727)
(11) Connecticut Natural Gas Corporation Executive Restricted
Stock Plan, filed as Exhibit A to the Connecticut Natural Gas
Corporation's definitive proxy statement dated March 26,
1991, filed with the Commission on March 26, 1991 (Commission
File No. 1-7727)
(12) Gas Transportation Contract for Firm Reserved Service, dated
February 7, 1991, between the Connecticut Natural Gas
Corporation and the Iroquois Gas Transmission System, L.P.,
filed as Exhibit No. 10(xxxvii) to the Connecticut Natural
Gas Corporation's Annual Report on Form 10-K for the fiscal
year ended September 30, 1992, filed with the Commission on
December 23, 1992, (Commission File No. 1-7727)
(13) Gas Sales Agreement No. 1, dated February 7, 1991, between
the Connecticut Natural Gas Corporation and Alberta Northeast
Gas Limited, filed as Exhibit No. 10(xxxviii) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1992, filed with
the Commission on December 23, 1992, (Commission File No. 1-
7727)
(14) Gas Sales Agreement No. 2, dated February 7, 1991, between
the Connecticut Natural Gas Corporation and Alberta Northeast
Gas Limited, filed as Exhibit No. 10(xxxix) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1992, filed with
the Commission on December 23, 1992, (Commission File No. 1-
7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (15) Gas Sales Agreement (ProGas), dated February 7, 1991, between
the Connecticut Natural Gas Corporation and Alberta Northeast
Gas Limited, filed as Exhibit No. 10(xl) to the Connecticut
Natural Gas Corporation's Annual Report on Form 10-K for the
fiscal year ended September 30, 1992, filed with the
Commission on December 23, 1992, (Commission File No. 1-7727)
(16) Gas Sales Agreement (ATCOR), dated February 7, 1991, between
the Connecticut Natural Gas Corporation and Alberta Northeast
Limited, filed as Exhibit No. 10(xli) to the Connecticut
Natural Gas Corporation's Annual Report on Form 10-K for the
fiscal year ended September 30, 1992, filed with the
Commission on December 23, 1992, (Commission File No. 1-7727)
(17) Gas Sales Agreement (AEC), dated February 7, 1991, between
the Connecticut Natural Gas Corporation and Alberta Northeast
Gas Limited, filed as Exhibit No. 10(xlii) to the Connecticut
Natural Gas Corporation's Annual Report on Form 10-K for the
fiscal year ended September 30, 1992, filed with the
Commission on December 23, 1992, (Commission File No. 1-7727)
(18) Gas Transportation Contract for Firm Reserved Service, dated
October 20, 1992, between the Connecticut Natural Gas
Corporation and the Iroquois Gas Transmission System, L.P.,
filed as Exhibit No. 10(xlvii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1992, filed with the Commission on
December 23, 1992, (Commission File No. 1-7727)
(19) Revolving Credit Agreement, dated March 30, 1993, between the
Connecticut Natural Gas Corporation and The First National
Bank of Boston, filed as Exhibit No. 10(xlviii) to the
Connecticut Natural Gas Corporation's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1993, filed with
the Commission on May 3, 1993 (Commission File No. 1-7727)
(20) Secured Note Purchase Agreement, dated July 15, 1993, between
the CNG Realty Corp. and the Aid Association for Lutherans,
filed as Exhibit No. 10(xlix) to the Connecticut Natural Gas
Corporation's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1993, filed with the Commission on August 3,
1993 (Commission File No. 1-7727)
(21) Capital Contribution Support Agreement, dated April 15, 1993,
among Connecticut Natural Gas Corporation, ENI Transmission
Company and Bank of Montreal, filed as Exhibit No. 10(l) to
the Connecticut Natural Gas Corporation's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993, filed with the
Commission on August 3, 1993 (Commission File No. 1-7727)
(22) Steam and Chilled Water Supply Agreement, dated May 28, 1986,
between Capitol District Energy Center Cogeneration
Associates and Energy Networks, Incorporated, filed as
Exhibit No. 10(xxxvii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1993, filed with the Commission December
28, 1993 (Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (23) Service Agreement #89102 (Rate Schedule AFT-1), dated June 1,
1993, between the Connecticut Natural Gas Corporation and
Algonquin Gas Transmission Company, filed as Exhibit No.
10(xxxviii) to the Connecticut Natural Gas Corporation's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1993, filed with the Commission December 28,
1993 (Commission File No. 1-7727)
(24) Service Agreement #93205 (Rate Schedule AFT-1), dated June 1,
1993, between the Connecticut Natural Gas Corporation and
Algonquin Gas Transmission Company, filed as Exhibit No.
10(xl) to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended September 30,
1993, filed with the Commission December 28, 1993 (Commission
File No. 1-7727)
(25) Service Agreement #.6426, dated June 1, 1993, between the
Connecticut Natural Gas Corporation and Transcontinental Gas
Pipe Line Corporation, filed as Exhibit No. 10(xlv) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1993, filed with
the Commission December 28, 1993 (Commission File No. 1-7727)
(26) Service Agreement #800294 (Rate Schedule FT-1), dated June 1,
1993, between the Connecticut Natural Gas Corporation and
Texas Eastern Transmission Corporation, filed as Exhibit No.
10(xlviii) to the Connecticut Natural Gas Corporation's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1993, filed with the Commission December 28,
1993 (Commission File No. 1-7727)
(27) Service Agreement #800295 (Rate Schedule FT-1), dated June 1,
1993, between the Connecticut Natural Gas Corporation and
Texas Eastern Transmission Corporation, filed as Exhibit No.
10(xlix) to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended September 30,
1993, filed with the Commission December 28, 1993 (Commission
File No. 1-7727)
(28) Service Agreement (Rate Schedule FTNN), dated October 1,
1993, between the Connecticut Natural Gas Corporation and CNG
Transmission Corporation, filed as Exhibit No. 10(liii) to
the Connecticut Natural Gas Corporation's Annual Report on
Form 10-K for the fiscal year ended September 30, 1993, filed
with the Commission December 28, 1993 (Commission File No. 1-
7727)
(29) Service Agreement (Rate Schedule GSS), dated November 1,
1993, between the Connecticut Natural Gas Corporation and CNG
Transmission Corporation, filed as Exhibit No. 10(liv) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1993, filed with
the Commission December 28, 1993 (Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (30) Amended and Restated CNG Officers' Retirement Plan, dated
June 28, 1994, filed as Exhibit No. 10(liii) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1994, filed with
the Commission December 27, 1994 (Commission File No. 1-7727)
(31) The Connecticut Natural Gas Corporation Officers' Retirement
Plan Trust Agreement, dated January 9, 1989, filed as Exhibit
No. 10(liv) to the Connecticut Natural Gas Corporation's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1994, filed with the Commission December 27,
1994 (Commission File No. 1-7727)
(32) First Amendment to the Connecticut Natural Gas Corporation
Officers' Retirement Plan and Deferred Compensation Plan
Trust Agreement, dated August 5, 1993, filed as Exhibit No.
10(lv) to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended September 30,
1994, filed with the Commission December 27, 1994 (Commission
File No. 1-7727)
(33) The Connecticut Natural Gas Corporation Deferred Compensation
Plan, as amended, dated January 1, 1993, filed as Exhibit No.
10(lvi) to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended September 30,
1994, filed with the Commission December 27, 1994 (Commission
File No. 1-7727)
(34) First Amendment to the Connecticut Natural Gas Corporation
Deferred Compensation Plan, dated December 2, 1993, filed as
Exhibit No. 10(lvii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1994, filed with the Commission December
27, 1994 (Commission File No. 1-7727)
(35) Second Amendment to the Connecticut Natural Gas Corporation
Deferred Compensation Plan, dated June 28, 1994, filed as
Exhibit No. 10(lviii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1994, filed with the Commission December
27, 1994 (Commission File No. 1-7727)
(36) Agreement and Declaration of Trust, Connecticut Natural Gas
Corporation Employee Benefit Trust, dated December 28, 1987,
filed as Exhibit No. 10(lix) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1994, filed with the Commission December
27, 1994 (Commission File No. 1-7727)
(37) First Amendment to Agreement and Declaration of Trust,
Connecticut Natural Gas Corporation Employee Benefit Trust,
Dated December 2, 1993, filed as Exhibit No. 10(lx) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1994, filed with
the Commission December 27, 1994 (Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (38) Agreement and Declaration of Trust, Connecticut Natural Gas
Corporation Union Employee Benefit Trust, dated December 2,
1993, filed as Exhibit No. 10(lxi) to the Connecticut Natural
Gas Corporation's Annual Report on Form 10-K for the fiscal
year ended September 30, 1994, filed with the Commission
December 27, 1994 (Commission File No. 1-7727)
(39) CNG Annual Incentive Plan, 1994, filed as Exhibit No.
10(lxii) to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended September 30,
1994, filed with the Commission December 27, 1994 (Commission
File No. 1-7727)
(40) Letter of Credit and Reimbursement Agreement by and between
Energy Networks, Inc. and The Bank of Nova Scotia, dated
October 14, 1994, filed as Exhibit No. 10(lxiv) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1994, filed with
the Commission December 27, 1994 (Commission File No. 1-7727)
(41) Medium Term Notes, Series B, Placement Agency Agreement among
Connecticut Natural Gas Corporation, Smith Barney Inc., and
A.G. Edwards & Sons, Inc., dated June 14, 1994, filed as
Exhibit No. 10(lxvi) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1994, filed with the Commission December
27, 1994 (Commission File No. 1-7727)
(42) Issuing and Paying Agency Agreement between Shawmut Bank
Connecticut, National Association, and Connecticut Natural
Gas Corporation, for Medium Term Notes, Series B, dated June
14, 1994, filed as Exhibit No. 10(lxvii) to the Connecticut
Natural Gas Corporation's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994, filed with the
Commission December 27, 1994 (Commission File No. 1-7727)
(43) Gas Storage Contract, dated February 16, 1990, between the
Connecticut Natural Gas Corporation and ENDEVCO Industrial
Gas Sales Company, filed as Exhibit No. 10(lxix) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1994, filed with
the Commission December 27, 1994 (Commission File No. 1-7727)
(44) Commercial Revolving Credit Agreement by and between Fleet
Bank, National Association, and Energy Networks, Inc., dated
December 21, 1994, filed as Exhibit No. 10(lxx) to the
Connecticut Natural Gas Corporation's Quarterly Report on
Form 10-Q for the quarter ended December 31, 1994, filed with
the Commission January 31, 1995 (Commission File No. 1-7727)
(45) Service Agreement #86006 (Rate Schedule AFT-1), dated
September 1, 1994, between the Connecticut Natural Gas
Corporation and Algonquin Gas Transmission Company, filed as
Exhibit No. 10(lxxi) to the Connecticut Natural Gas
Corporation's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, filed with the Commission August 2, 1995
(Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (46) Service Agreement #93005 (Rate Schedule AFT-1), dated
September 1, 1994, between the Connecticut Natural Gas
Corporation and Algonquin Gas Transmission Company, filed as
Exhibit No. 10(lxxii) to the Connecticut Natural Gas
Corporation's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, filed with the Commission August 2, 1995
(Commission File No. 1-7727)
(47) Service Agreement #9B103 (Rate Schedule AFT-1), dated
September 1, 1994, between the Connecticut Natural Gas
Corporation and Algonquin Gas Transmission Company, filed as
Exhibit No. 10(lxxiii) to the Connecticut Natural Gas
Corporation's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, filed with the Commission August 2, 1995
(Commission File No. 1-7727)
(48) Service Agreement #9W005 (Rate Schedule AFT-1), dated
September 1, 1994, between the Connecticut Natural Gas
Corporation and Algonquin Gas Transmission Company, filed as
Exhibit No. 10(lxxiv) to the Connecticut Natural Gas
Corporation's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, filed with the Commission August 2, 1995
(Commission File No. 1-7727)
(49) KBC Energy Services Partnership Agreement, dated June 19,
1995, By and Among Bay State Energy Enterprises, Inc., ENI
Gas Services, Inc., and Koch Energy Alliance Company, filed
as Exhibit No. 10(lxxv) to the Connecticut Natural Gas
Corporation's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, filed with the Commission August 2, 1995
(Commission File No. 1-7727)
(50) Gas Storage Agreement No. 1626 (Rate Schedule FS), dated
September 1, 1993, by and between the Connecticut Natural Gas
Corporation and Tennessee Gas Pipeline Company, filed as
Exhibit No. 10(lxix) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995, filed with the Commission December
18, 1995 (Commission File No. 1-7727)
(51) Gas Transportation Agreement No. 2498 (Rate Schedule FT-A),
dated September 1, 1993, by and between the Connecticut
Natural Gas Corporation and Tennessee Gas Pipeline Company,
filed as Exhibit No. 10(lxx) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995, filed with the Commission December
18, 1995 (Commission File No. 1-7727)
(52) Gas Transportation Agreement No. 3900 (Rate Schedule FT-A),
dated October 1, 1993, by and between the Connecticut Natural
Gas Corporation and Tennessee Gas Pipeline Company, filed as
Exhibit No. 10(lxxi) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995, filed with the Commission December
18, 1995 (Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (53) Gas Transportation Agreement No. 3901 (Rate Schedule FT-A),
dated October 1, 1993, by and between the Connecticut Natural
Gas Corporation and Tennessee Gas Pipeline Company, filed as
Exhibit No. 10(lxxii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995, filed with the Commission December
18, 1995 (Commission File No. 1-7727)
(54) Gas Transportation Agreement No. 2075 (Rate Schedule FT-A),
dated September 1, 1993, by and between the Connecticut
Natural Gas Corporation and Tennessee Gas Pipeline Company,
filed as Exhibit No. 10(lxxiii) to the Connecticut Natural
Gas Corporation's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995, filed with the Commission
December 18, 1995 (Commission File No. 1-7727)
(55) Second Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan, dated June 27, 1995, filed as Exhibit
No. 10(lxxvi) to the Connecticut Natural Gas Corporation's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, filed with the Commission December 18,
1995 (Commission File No. 1-7727)
(56) Second Amendment to Connecticut Natural Gas Corporation Union
Employee Savings Plan, dated January 24, 1995, filed as
Exhibit No. 10(lxxvii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995, filed with the Commission December
18, 1995 (Commission File No. 1-7727)
(57) Third Amendment to Connecticut Natural Gas Corporation Union
Employee Savings Plan, dated June 27, 1995, filed as Exhibit
No. 10(lxxviii) to the Connecticut Natural Gas Corporation's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, filed with the Commission December 18,
1995 (Commission File No. 1-7727)
(58) Amendment to Connecticut Natural Gas Corporation Officers'
Retirement Plan, dated June 27, 1995, filed as Exhibit No.
10(lxxix) to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended September 30,
1995, filed with the Commission December 18, 1995 (Commission
File No. 1-7727)
(59) Third Amendment to Connecticut Natural Gas Corporation
Deferred Compensation Plan, dated June 27, 1995, filed as
Exhibit No. 10(lxxx) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995, filed with the Commission December
18, 1995 (Commission File No. 1-7727)
(60) Third Amendment to The Connecticut Natural Gas Corporation
Officers' Retirement Plan and Deferred Compensation Plan
Trust Agreement, dated September 12, 1995, filed as Exhibit
No. 10(lxxxi) to the Connecticut Natural Gas Corporation's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, filed with the Commission December 18,
1995 (Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (61) Second Amendment to Restricted Stock Agreement (Under the
Connecticut Natural Gas Corporation Executive Restricted
Stock plan), dated June 27, 1995, filed as Exhibit No.
10(lxxxii) to the Connecticut Natural Gas Corporation's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, filed with the Commission December 18,
1995 (Commission File No. 1-7727)
(62) Third Amendment to Restricted Stock Agreement (Under the
Connecticut Natural Gas Corporation Executive Restricted
Stock plan), dated June 27, 1995, filed as Exhibit No.
10(lxxxiii) to the Connecticut Natural Gas Corporation's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, filed with the Commission December 18,
1995 (Commission File No. 1-7727)
(63) Amended and Restated CNG Nonemployee Directors' Fee Plan,
dated September 29, 1995, filed as Exhibit No. 10(lxxxiv) to
the Connecticut Natural Gas Corporation's Annual Report on
Form 10-K for the fiscal year ended September 30, 1995, filed
with the Commission December 18, 1995 (Commission File No. 1-
7727)
(64) CNG Nonemployee Directors' Fee Plan Trust Agreement, by and
between the Connecticut Natural Gas Corporation and Fleet
Bank, N.A., dated September 28, 1995, filed as Exhibit No.
10(lxxxv) to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended September 30,
1995, filed with the Commission December 18, 1995 (Commission
File No. 1-7727)
(65) Irrevocable Standby Letter of Credit by and between Energy
Networks, Inc. and The Bank of Nova Scotia, dated March 20,
1996, filed as Exhibit No. 10(lxxxvii) to the Connecticut
Natural Gas Corporation's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, filed with the Commission
May 1, 1996 (Commission File No. 1-7727)
(66) Gas Transportation Agreement (FT-A Rate Schedule, Service
Package No. 86) dated September 1, 1993, between the
Connecticut Natural Gas Corporation and Tennessee Gas
Pipeline Company, filed as Exhibit No. 10(lxxxviii) to the
Connecticut Natural Gas Corporation's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996, filed with the
Commission July 29, 1996 (Commission File No. 1-7727)
(67) Gas Transportation Agreement (FT-A Rate Schedule, Service
Package No. 1625) dated September 1, 1993, between the
Connecticut Natural Gas Corporation and Tennessee Gas
Pipeline Company, filed as Exhibit No. 10(lxxxix) to the
Connecticut Natural Gas Corporation's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996, filed with the
Commission July 29, 1996 (Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (68) Gas Transportation Agreement (FT-A Rate Schedule, Service
Package No. 2655) dated September 1, 1993, between the
Connecticut Natural Gas Corporation and Tennessee Gas
Pipeline Company, filed as Exhibit No. 10(xc) to the
Connecticut Natural Gas Corporation's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996, filed with the
Commission July 29, 1996 (Commission File No. 1-7727)
(69) Gas Storage Contract (Rate Schedule FS, Service Package No.
1626) dated December 1, 1994, between the Connecticut Natural
Gas Corporation and Tennessee Gas Pipeline Company, filed as
Exhibit No. 10(xciii) to the Connecticut Natural Gas
Corporation's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996, filed with the Commission July 29, 1996
(Commission File No. 1-7727)
(70) Amendment No.1-A to Gas Storage Contract (Rate Schedule FS,
Service Package No. 1626) dated July 1, 1995 between the
Connecticut Natural Gas Corporation and Tennessee Gas
Pipeline Company, filed as Exhibit No. 10(xciv) to the
Connecticut Natural Gas Corporation's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996, filed with the
Commission July 29, 1996 (Commission File No. 1-7727)
(71) Service Agreement (#N01719, FST Service) dated March 28, 1996
between the Connecticut Natural Gas Corporation and National
Fuel Gas Supply Corporation, filed as Exhibit No. 10(xcv) to
the Connecticut Natural Gas Corporation's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996, filed with the
Commission July 29, 1996 (Commission File No. 1-7727)
(72) Amendment No. 1 to Service Agreement (#N01719, FST Service)
dated April 1, 1996, between the Connecticut Natural Gas
Corporation and National Fuel Gas Supply Corporation, filed
as Exhibit No. 10(xcvi) to the Connecticut Natural Gas
Corporation's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996, filed with the Commission July 29, 1996
(Commission File No. 1-7727)
(73) Service Agreement (#O01718, FSS Service) dated March 28, 1996
between the Connecticut Natural Gas Corporation and National
Fuel Gas Supply Corporation, filed as Exhibit No. 10(xcvii)
to the Connecticut Natural Gas Corporation's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1996, filed with
the Commission July 29, 1996 (Commission File No. 1-7727)
(74) Amendment No. 1 to Service Agreement (#O01718, FSS Service)
dated April 1, 1996, between the Connecticut Natural Gas
Corporation and National Fuel Gas Supply Corporation, filed
as Exhibit No. 10(xcviii) to the Connecticut Natural Gas
Corporation's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996, filed with the Commission July 29, 1996
(Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (75) First Amendment to Agreement and Declaration of Trust,
Connecticut Natural Gas Corporation Union Employee Benefit
Trust, dated January 24, 1995, between the Connecticut
Natural Gas Corporation and Fleet Bank, N.A., filed as
Exhibit No. 10(xcii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
(76) CNG Nonemployee Directors' Fee Plan, dated October 1, 1996,
filed as Exhibit No. 10(xciii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
(77) First Amendment to CNG Nonemployee Directors' Fee Plan Trust
Agreement, dated October 1, 1996, between the Connecticut
Natural Gas Corporation and Putnam Fiduciary Trust Company,
filed as Exhibit No. 10(xciv) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
(78) Second Amendment to CNG Nonemployee Directors' Fee Plan Trust
Agreement, dated October 1, 1996, between the Connecticut
Natural Gas Corporation and Putnam Fiduciary Trust Company,
filed as Exhibit No. 10(xcv) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
(79) Third Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan, dated October 31, 1995, filed as
Exhibit No. 10(xcvi) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
(80) Fourth Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan, dated December 19, 1995, filed as
Exhibit No. 10(xcvii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
(81) Fifth Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan, dated February 27, 1996, filed as
Exhibit No. 10(xcviii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (82) Fourth Amendment to Connecticut Natural Gas Corporation Union
Employee Savings Plan, dated October 31, 1995, filed as
Exhibit No. 10(xcix) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
(83) Fifth Amendment to Connecticut Natural Gas Corporation Union
Employee Savings Plan, dated December 19, 1995, filed as
Exhibit No. 10(c) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
(84) Sixth Amendment to Connecticut Natural Gas Corporation Union
Employee Savings Plan, dated February 27, 1996, filed as
Exhibit No. 10(ci) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
(85) Settlement Agreement and Release of All Claims between
Connecticut Natural Gas Corporation and Harry Kraiza, Jr.,
dated September 25, 1996, filed as Exhibit No. 10(cii) to the
Connecticut Natural Gas Corporation's Annual Report on Form
10-K for the fiscal year ended September 30, 1996, filed with
the Commission on December 19, 1996 (Commission File No. 1-
7727)
(86) Service Agreement (#93305, Rate Schedule AFT-1), dated June
1, 1993, between the Connecticut Natural Gas Corporation and
Algonquin Gas Transmission Company, filed as Exhibit No.
10(ciii) to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended September 30,
1996, filed with the Commission on December 19, 1996
(Commission File No. 1-7727)
(87) Service Agreement (#400507, Rate Schedule FSS-1), dated
November 15,1996, between the Connecticut Natural Gas
Corporation and Texas Eastern Transmission Corporation, filed
as Exhibit No. 10(civ) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
(88) Service Agreement (#800424, Rate Schedule CDS), dated
November 15, 1996, between the Connecticut Natural Gas
Corporation and Texas Eastern Transmission Corporation, filed
as Exhibit No. 10(cvii) to the Connecticut Natural Gas
Corporation's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, filed with the Commission on
December 19, 1996 (Commission File No. 1-7727)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (89) Connecticut Natural Gas Corporation Employee Savings Plan
Trust Agreement, including amendments thereto, filed as
exhibit 4(ii) to the Connecticut Natural Gas Corporation
Employee Savings Plan Registration Statement on Form S-8,
filed with the Commission on July 20, 1994 (Commission File
No. 33-54643)
(90) Connecticut Natural Gas Corporation Union Employee Savings
Plan Trust Agreement, including amendments thereto, filed as
exhibit 4(ii) to the Connecticut Natural Gas Corporation
Union Employee Savings Plan Registration Statement on Form S-
8, filed with the Commission on July 20, 1994 (Commission
File No. 33-54653)
(91) First Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan Trust Agreement, dated March 25, 1997,
filed as Exhibit No. 10(cx) to the CTG Resources, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, filed with the Commission on August 14, 1997
(Commission File No. 1-12859)
(92) First Amendment to Connecticut Natural Gas Corporation Union
Employee Savings Plan Trust Agreement, dated March 25, 1997,
filed as Exhibit No. 10(cxi) to the CTG Resources, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, filed with the Commission on August 14, 1997
(Commission File No. 1-12859)
(93) Amendment to Connecticut Natural Gas Corporation Officers'
Retirement Plan, dated March 25, 1997, filed as Exhibit No.
10(cxii) to the CTG Resources, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997, filed with the
Commission on August 14, 1997 (Commission File No. 1-12859)
(94) Fourth Amendment to Connecticut Natural Gas Corporation
Deferred Compensation Plan, dated March 25, 1997, filed as
Exhibit No. 10(cxiii) to the CTG Resources, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997,
filed with the Commission on August 14, 1997 (Commission File
No. 1-12859)
(95) First Amendment to Connecticut Natural Gas Corporation
Executive Restricted Stock Plan, dated March 25, 1997, filed
as Exhibit No. 10(cxiv) to the CTG Resources, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, filed with the Commission on August 14, 1997
(Commission File No. 1-12859)
(96) Third Amendment to CNG Nonemployee Directors' Fee Plan Trust
Agreement, dated March 25, 1997, filed as Exhibit No. 10(cxv)
to the CTG Resources, Inc.'s Quarterly Report on Form 10-Q
for the quarter ended June 30, 1997, filed with the
Commission on August 14, 1997 (Commission File No. 1-12859)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (97) Fourth Amendment to The Connecticut Natural Gas Corporation
Officers Retirement Plan and Deferred Compensation Plan Trust
Agreement, dated March 25, 1997, filed as Exhibit No.
10(cxvi) to the CTG Resources, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997, filed with the
Commission on August 14, 1997 (Commission File No. 1-12859)
(98) Second Amendment to Agreement and Declaration of Trust,
Connecticut Natural Gas Corporation Employee Benefit Trust,
dated March 25, 1997, filed as Exhibit No. 10(cxvii) to the
CTG Resources, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, filed with the Commission on
August 14, 1997 (Commission File No. 1-12859)
(99) Sixth Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan (As Amended and Restated, Effective as
of January 1, 1989), dated May 2, 1997, filed as Exhibit No.
10(cxviii) to the CTG Resources, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997, filed with the
Commission on August 14, 1997 (Commission File No. 1-12859)
(100) Seventh Amendment to Connecticut Natural Gas Corporation
Union Employee Savings Plan (As Amended and Restated,
Effective as of January 1, 1989), dated May 2, 1997, filed as
Exhibit No. 10(cxix) to the CTG Resources, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997,
filed with the Commission on August 14, 1997 (Commission File
No. 1-12859)
(101) First Amendment to CNG Nonemployee Directors' Fee Plan, dated
May 2, 1997, filed as Exhibit No. 10(cxxx) to the CTG
Resources, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997, filed with the Commission on
August 14, 1997 (Commission File No. 1-12859)
(102) Three-year Revolving Credit Agreement between TEN and Fleet
National Bank, filed as Exhibit No. 99(B)(2) to the CTG
Resources, Inc.'s Issuer Tender Offer Statement on Schedule
13E-4, filed with the Commission on October 2, 1997
(Commission File No. 5-51659)
(103) 364-Day Revolving Credit Agreement between and TEN and Fleet
National Bank, filed as Exhibit No. 99(B)(3) to the CTG
Resources, Inc.'s Issuer Tender Offer Statement on Schedule
13E-4, filed with the Commission on October 2, 1997
(Commission File No. 5-51659)
(104) Note Purchase Agreement among TEN, Metropolitan Life
Insurance Company and Texas Life Insurance Company, filed as
Exhibit No. 99(B)(4) to the CTG Resources, Inc.'s Issuer
Tender Offer Statement on Schedule 13E-4, filed with the
Commission on October 2, 1997 (Commission File No. 5-51659)
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (105) Forward Equity Purchase Agreement, dated October 1, 1997,
between CTG and TEN, filed as Exhibit No. 99(C) to the CTG
Resources, Inc.'s Issuer Tender Offer Statement on Schedule
13E-4, filed with the Commission on October 2, 1997
(Commission File No. 5-51659)
(106)* Amendment to ANE Gas Sales Agreement No. 1, dated August 19,
1997, between the Connecticut Natural Gas Corporation and
Alberta Northeast Gas Limited
(107)* Amendment to ANE Gas Sales Agreement No. 2, dated August 19,
1997, between the Connecticut Natural Gas Corporation and
Alberta Northeast Gas Limited
(108)* Amendment to Phase 2 Gas Sales Agreement, dated August 20,
1997, between the Connecticut Natural Gas Corporation and
Boundary Gas, Inc.
(109)* Storage Service Agreement (#300094, Rate Schedule GSS), dated
April 1, 1997, between the Connecticut Natural Gas
Corporation and CNG Transmission Corporation
(110)* Seasonal Transportation Service Agreement (#200106, Rate
Schedule FT), dated April 1, 1997, between the Connecticut
Natural Gas Corporation and CNG Transmission Corporation
(111)* Storage Service Agreement (#1623, Rate Schedule SS-NE), dated
September 1, 1993, between the Connecticut Natural Gas
Corporation and Tennessee Gas Pipeline Company
(112)* Transportation Service Agreement (#1627, Rate Schedule FT-A),
dated September 1, 1993, between the Connecticut Natural Gas
Corporation and Tennessee Gas Pipeline Company
(113)* Transportation Service Agreement (#10781, Rate Schedule FT-
A), dated June 1, 1995, between the Connecticut Natural Gas
Corporation and Tennessee Gas Pipeline Company
(114)* Amended Transportation Service Agreement (#10781, Rate
Schedule FT-A), dated November 21, 1996, between the
Connecticut Natural Gas Corporation and Tennessee Gas
Pipeline Company
(115)* Service Agreement (#820009, Rate Schedule CDS), dated
November 15, 1996, between the Connecticut Natural Gas
Corporation and Texas Eastern Transmission Corporation
(116)* Service Agreement (#830035, Rate Schedule FT-1), dated
November 15, 1996, between the Connecticut Natural Gas
Corporation and Texas Eastern Transmission Corporation
(117)* Service Agreement (#400223, Rate Schedule SS-1), dated
November 15, 1996, between the Connecticut Natural Gas
Corporation and Texas Eastern Transmission Corporation
<PAGE>
(a) 3. Exhibits (continued)
--------
Exhibit
Number
------------
10 (118)* First Amendment to Issuing and Paying Agency Agreement, dated
August 13, 1997, by and among State Street Bank and Trust
Company, Fleet National Bank and Connecticut Natural Gas
Corporation
(119)* Medium Term Notes, Series B, Amended and Restated Placement
Agency Agreement, dated August 13, 1997, among Connecticut
Natural Gas Corporation, PaineWebber Incorporated and A.G.
Edwards & Sons, Inc.
11* Computation of Consolidated Primary and Fully Diluted Earnings Per
Share
12 Computation of Ratios
Not applicable
13 Annual Report to Stockholders for the Fiscal Year Ended September 30,
1997
Not applicable
16 Letter Regarding Change in Certifying Accountant
Not applicable
18 Letter Regarding Change in Accounting Principles
Not applicable
21* Subsidiaries of the Registrant
22 Published Report Regarding Matters Submitted to Vote of Security
Holders
None
23* Consent of Independent Public Accountants
24* Power of Attorney
27* Financial Data Schedule
28 Information from Reports Furnished to State Insurance Regulatory
Authorities
Not applicable
99 Additional Exhibits
(1)* Exhibit Index
<PAGE>
(a) 3. Exhibits (concluded)
--------
99 (2) Information required by Form 11-K with respect to the
Connecticut Natural Gas Corporation Employee Savings Plan for
the fiscal year ending December 31, 1996, filed as Exhibit
99(ii) to the Connecticut Natural Gas Corporation's Annual
Report on Form 10-K for the fiscal year ended September 30,
1996, filed with the Commission on December 19, 1996, as
amended by Form 10-K Amendment No. 1, filed with the
Commission on June 5, 1997 (Commission File No. 1-7727)
(3) Information required by Form 11-K with respect to the
Connecticut Natural Gas Corporation Union Employee Savings
Plan for the fiscal year ending December 31, 1996, filed as
Exhibit 99(iii) to the Connecticut Natural Gas Corporation's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1996, filed with the Commission on December 19,
1996, as amended by Form 10-K Amendment No. 1, filed with the
Commission on June 5, 1997 (Commission File No. 1-7727)
* All exhibits listed above which have an asterisk (*) next to the
exhibit number are filed herewith. All other exhibits listed above which
have previously been filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933 and the Securities Exchange Act of
1934, and which were designated as noted above and have not been amended,
are hereby incorporated by reference.
(b) Reports on Form 8-K
-------------------
There were no current reports filed on Form 8-K during the last quarter
of fiscal 1997.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CTG RESOURCES, INC.
-----------------------------------
(Registrant)
S/ Victor H. Frauenhofer
------------------------------------
(Victor H. Frauenhofer)
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
S/ Victor H. Frauenhofer Chairman, Chief Executive December 17, 1997
------------------------------- Officer and Director
(Victor H. Frauenhofer)
S/ Arthur C. Marquardt President, Chief December 17, 1997
------------------------------- Operating Officer and
(Arthur C. Marquardt) Director
S/ James P. Bolduc Executive Vice President December 17, 1997
------------------------------- and Chief Financial
(James P. Bolduc) Officer
S/ Andrew H. Johnson Treasurer and Chief December 17, 1997
------------------------------- Accounting Officer
(Andrew H. Johnson)
S/ R. L. Babcock December 17, 1997
-------------------------------
(R. L. Babcock)
as Attorney-in-fact for:
Bessye W. Bennett, Esq. Director
James F. English, Jr. Director
Herman J. Fonteyne Director
Beverly L. Hamilton Director
Harvey S. Levenson Director
Denis F. Mullane Director
Richard J. Shima Director
Laurence A. Tanner Director
Michael W. Tomasso Director
</TABLE>
<PAGE>
CTG RESOURCES, INC.
Annual Report on Form 10-K
Schedule Index
Fiscal Year Ended September 30, 1997
Item Description
---------- -----------
II Financial Statement Schedule II; Valuation and
Qualifying Accounts and Reserves for the fiscal years
ended September 30, 1997, 1996 and 1995
<PAGE>
<TABLE>
<CAPTION>
(d) Financial Statement Schedules
----------------------------- Page 1 of 1
CTG RESOURCES, INC. AND SUBSIDIARIES
-------------------------------------
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
--------------------------------------------------------------
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
-----------------------------------------------------
(THOUSANDS OF DOLLARS)
Column A Column B Column C Column D Column E
Additions
--------------------------
<S> <C> <C> <C> <C> <C>
Balance At Charged Charged Deductions Balance
Beginning To Costs To Other From At End
Description of Period And Expenses Accounts Reserves (1) of Period
----------- ---------- ------------ -------- ----------- ---------
YEAR ENDED SEPTEMBER 30, 1997
-----------------------------
RESERVE DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSET TO WHICH IT APPLIES:
Allowance for doubtful
accounts -
Gas $ 4,425 $ 3,689 $ - $ 5,148 $ 2,966
Other 394 166 - 87 473
-------- -------- -------- -------- --------
$ 4,819 $ 3,855 $ - $ 5,235 $ 3,439
======== ======== ======== ======== ========
YEAR ENDED SEPTEMBER 30, 1996
-----------------------------
RESERVE DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSET TO WHICH IT APPLIES:
Allowance for doubtful
accounts -
Gas $ 4,066 $ 4,959 $ - $ 4,600 $ 4,425
Other 524 82 - 212 394
-------- -------- -------- -------- --------
$ 4,590 $ 5,041 $ - $ 4,812 $ 4,819
======== ======== ======== ======== ========
YEAR ENDED SEPTEMBER 30, 1995
-----------------------------
RESERVE DEDUCTED IN THE
BALANCE SHEET FROM THE
ASSET TO WHICH IT APPLIES:
Allowance for doubtful
accounts -
Gas $ 3,273 $ 4,653 $ - $ 3,860 $ 4,066
Other (2) 744 233 24 477 524
-------- -------- -------- -------- --------
$ 4,017 $ 4,886 $ 24 $ 4,337 $ 4,590
======== ======== ======== ======== ========
</TABLE>
[FN]
Note: (1) Deductions From Reserves include the write-off of uncollectible
accounts, net of recoveries of accounts previously written off.
(2) $24 Charged to Other Accounts represents recognition of trade
receivables acquired with the purchase of certain assets by the
unregulated operations.
Exhibit 99(1)
Page 1 of 2
CTG RESOURCES, INC.
Annual Report on Form 10-K
Exhibit Index
Fiscal Year Ended September 30, 1997
Document
Item Description Description
------------ ----------- ------------
99(1) Exhibit Index Ex-99.1
10(106) Amendment to ANE Gas Sales Agreement No. 1 Ex-10.106
between the Connecticut Natural Gas
Corporation and Alberta Northeast Gas
Limited
10(107) Amendment to ANE Gas Sales Agreement No. 2 Ex-10.107
between the Connecticut Natural Gas
Corporation and Alberta Northeast Gas
Limited
10(108) Amendment to Phase 2 Gas Sales Agreement Ex-10.108
between the Connecticut Natural Gas
Corporation and Boundary Gas, Inc.
10(109) Storage Service Agreement (#300094, Rate Ex-10.109
Schedule GSS) between the Connecticut
Natural Gas Corporation and CNG
Transmission Corporation
10(110) Seasonal Transportation Service Agreement Ex-10.110
(#200106, Rate Schedule FT) between the
Connecticut Natural Gas Corporation and
CNG Transmission Corporation
10(111) Storage Service Agreement (#1623, Rate Ex-10.111
Schedule SS-NE) between the Connecticut
Natural Gas Corporation and Tennessee Gas
Pipeline Company
10(112) Transportation Service Agreement (#1627, Ex-10.112
Rate Schedule FT-A) between the
Connecticut Natural Gas Corporation and
Tennessee Gas Pipeline Company
10(113) Transportation Service Agreement (#10781, Ex-10.113
Rate Schedule FT-A) between the
Connecticut Natural Gas Corporation and
Tennessee Gas Pipeline Company
10(114) Amended Transportation Service Agreement Ex-10.114
(#10781, Rate Schedule FT-A) between the
Connecticut Natural Gas Corporation and
Tennessee Gas Pipeline Company
10(115) Service Agreement (#820009, Rate Schedule Ex-10.115
CDS) between the Connecticut Natural Gas
Corporation and Texas Eastern Transmission
Corporation
10(116) Service Agreement (#830035, Rate Schedule Ex-10.116
FT-1) between the Connecticut Natural Gas
Corporation and Texas Eastern Transmission
Corporation<PAGE>
Exhibit 99(1)
Page 2 of 2
CTG RESOURCES, INC.
Annual Report on Form 10-K
Exhibit Index (concluded)
Fiscal Year Ended September 30, 1997
Document
Item Description Description
------------ ----------- ------------
10(117) Service Agreement (#400223, Rate Schedule Ex-10.117
SS-1) between the Connecticut Natural Gas
Corporation and Texas Eastern Transmission
Corporation
10(118) First Amendment to Issuing and Paying Ex-10.118
Agency Agreement by and among State Street
Bank and Trust Company, Fleet National
Bank and Connecticut Natural Gas
Corporation
10(119) Medium Term Notes, Series B, Amended and Ex-10.119
Restated Placement Agency Agreement among
Connecticut Natural Gas Corporation,
PaineWebber Incorporated and A.G. Edwards
& Sons, Inc.
11 Computation of Consolidated Primary and Ex-11
Fully Diluted Earnings Per Share
21 Subsidiaries of the Registrant Ex-21
23 Consent of Independent Public Accountants Ex-23
24 Power of Attorney Ex-24
27 Financial Data Schedule Ex-27
<PAGE>
August 19, 1997
Edna Karanian
Connecticut Natural Gas Corp.
100 Columbus Boulevard
Hartford, CT 06103
Amendment to ANE Gas Sales Agreement No. 1
------------------------------------------
Dear Ms. Karanian:
The Gas Purchase Contract No. 1 between Alberta Northeast
Limited ("ANE") and TransCanada Gas Services, a division of
TransCanada Energy Ltd. ("TCGS") (formerly TransCanada Gas
Marketing Limited and Western Gas Marketing Limited), as agent
for TransCanada PipeLines Limited ("TransCanada"), dated
February 7, 1991, as amended ("Purchase Contract No. 1"), has
been amended, in pertinent part, to reflect changes agreed upon
in the recently-concluded negotiations to settle the pending
arbitration between TCGS and ANE pursuant to Article VII,
Section 7 of Purchase Contract No. 1. A copy of the Amending
Agreement is appended hereto. The amendments include: certain
adjustments to the price of the gas purchased by ANE from TCGS
pursuant to Purchase Contract No. 1; an increase in the Annual
Triggering Quantity; and, a time limitation for adjusting
overcharges and undercharges.
These amendments require corresponding amendments to the Gas
Sales Agreement between ANE and Connecticut Natural Gas Corp.
("Connecticut Natural Gas") respecting the Purchase Contract No.
1, dated February 7, 1991, as amended ("Gas Sales Agreement No.
1").
Effective upon the effectiveness of the Amending Agreement and
as provided therein, Gas Sales Agreement No. 1 is amended as
follows:
1. Article VII, Section 4 is amended by deleting the reference to
Article III, Section 5. in the second line thereof and
substituting "Article III, Section 3." therefor.
2. Article VIII, Section 2 is amended by deleting "70%" at both
places that it appears therein and substituting "75%" therefor.
3. Article IX, Section 1 is amended by:<PAGE>
(a) deleting the entire first sentence and substituting the
following therefor: "It is understood that, pursuant to Article
VII of Purchase Contract No. 1, the price to be paid by ANE to
TransCanada for each 1,000,000 Btu's contained in the gas
delivered to ANE by TransCanada under Purchase Contract No. 1
shall consist of a monthly Canadian transportation charge and a
commodity charge."; and,
(b) deleting the reference to Article VII, Section 1. in the
thirteenth line thereof and substituting "Article VII, Section
2." therefor; and
(c) deleting the reference to Article VII, Section 2. in the
fifteenth and sixteenth lines thereof and substituting "Article
VII, Section 3." therefor.
4. Article X, Section 1 is amended by deleting "70%" in the last
sentence thereof and substituting "75%" therefor.
5. Article X, Section 3 is amended by inserting after the words "by
ANE" in the last sentence thereof the words "and claimed within
twelve (12) months of the due date for such invoice".
6. Article XI, Section 1 is amended by deleting "70%" in the last
sentence thereof and substituting "75%" therefor.
Please acknowledge these amendments by signing in the space
provided below and returning an executed copy to me.
Sincerely,
Alberta Northeast Gas Limited
Michael S. Lucy
President
ACKNOWLEDGED AND ACCEPTED THIS
26TH DAY OF AUGUST, 1997
CONNECTICUT NATURAL GAS CORP.<PAGE>
By: Edna M. Karanian
Title: Vice President
<PAGE>
August 19, 1997
Edna Karanian
Connecticut Natural Gas Corp.
100 Columbus Boulevard
Hartford, CT 06103
Re: Amendment to ANE Gas Sales Agreement No. 2
------------------------------------------
Dear Ms. Karanian:
The Gas Purchase Contract No. 2 between Alberta Northeast
Limited ("ANE") and TransCanada Gas Services, a division of
TransCanada Energy Ltd. ("TCGS") (formerly TransCanada Gas
Marketing Limited and Western Gas Marketing Limited), as agent
for TransCanada PipeLines Limited ("TransCanada"), dated
February 7, 1991, as amended ("Purchase Contract No. 2"), has
been amended, in pertinent part, to reflect changes agreed upon
in the recently-concluded negotiations to settle the pending
arbitration between TCGS and ANE pursuant to Article VII,
Section 7 of Purchase Contract No. 2. A copy of the Amending
Agreement is appended hereto. The amendments include: certain
adjustments to the price of the gas purchased by ANE from TCGS
pursuant to Purchase Contract No. 2; an increase in the Annual
Triggering Quantity; and, a time limitation for adjusting
overcharges and undercharges.
These amendments require corresponding amendments to the Gas
Sales Agreement between ANE and Connecticut Natural Gas Corp.
("Connecticut Natural Gas") respecting the Purchase Contract No.
2, dated February 7, 1991, as amended ("Gas Sales Agreement No.
2").
Effective upon the effectiveness of the Amending Agreement and
as provided therein, Gas Sales Agreement No. 2 is amended as
follows:
1. Article VII, Section 4 is amended by deleting the reference to
Article III, Section 5. in the second line thereof and
substituting "Article III, Section 3." therefor.
2. Article VIII, Section 2 is amended by deleting "70%" at both
places that it appears therein and substituting "75%" therefor.
3. Article IX, Section 1 is amended by:
(a) deleting the entire first sentence and substituting the
following therefor: "It is understood that, pursuant to Article
VII of Purchase Contract No. 2, the price to be paid by ANE to
TransCanada for each 1,000,000 Btu's contained in the gas
delivered to ANE by TransCanada under Purchase Contract No. 2
shall consist of a monthly Canadian transportation charge and a
commodity charge."; and,<PAGE>
(b) deleting the reference to Article VII, Section 1. in the
thirteenth line thereof and substituting "Article VII, Section
2." therefor; and
(c) deleting the reference to Article VII, Section 2. in the
fifteenth and sixteenth lines thereof and substituting "Article
VII, Section 3." therefor.
4. Article X, Section 1 is amended by deleting "70%" in the last
sentence thereof and substituting "75%" therefor.
5. Article X, Section 3 is amended by inserting after the words "by
ANE" in the last sentence thereof the words "and claimed within
twelve (12) months of the due date for such invoice".
6. Article XI, Section 1 is amended by deleting "70%" in the last
sentence thereof and substituting "75%" therefor.
Please acknowledge these amendments by signing in the space
provided below and returning an executed copy to me.
Sincerely,
Alberta Northeast Gas Limited
Michael S. Lucy
President
ACKNOWLEDGED AND ACCEPTED THIS
26th DAY OF AUGUST, 1997
CONNECTICUT NATURAL GAS CORP.
By: Edna M. Karanian
Title: Vice President
<PAGE>
AMENDMENT TO
PHASE 2 GAS SALES AGREEMENT
This Contract, to be called Amendment to Phase 2 Gas Sales
Agreement, is made as of this 20th day of August, 1997 by and
between Boundary Gas, Inc., a Delaware corporation (herein
called "Boundary") and the following fifteen (15) United States
companies signatory hereto (which collectively own all of the
stock of Boundary): The Brooklyn Union Gas Company, Bay State
Gas Company, Northern Utilities, Inc., New Jersey Natural Gas
Company, Boston Gas Company, Yankee Gas Services Company,
Consolidated Edison Company of New York, Inc., National Fuel Gas
Distribution Corporation, Long Island Lighting Company,
Connecticut Natural Gas Corporation, Essex County Gas Company,
EnergyNorth Natural Gas, Inc., Valley Gas Company, Berkshire Gas
Company, and Fitchburg Gas and Electric Light Company (herein
collectively called "Repurchasers").
W I T N E S S E T H:
WHEREAS, the Gas Purchase Contract between Boundary and
TransCanada PipeLines Limited ("TransCanada") dated September
14, 1987, as amended ("Gas Purchase Contract"), has been
amended, in pertinent part, to reflect changes agreed upon in
the resolution of certain pricing disputes between Boundary and
TransCanada (a copy of which amendment is attached hereto);
WHEREAS, the amendments to the Gas Purchase Contract involve the
implementation of a U.S. pipeline rate refund protocol and
impose a time limitation for adjusting overcharges and
undercharges under the Gas Purchase Contract;
WHEREAS, these amendments require corresponding amendments to
the Gas Sales Agreement among Boundary and the Repurchasers
dated September 14, 1987, as amended ("Gas Sales Agreement");
NOW THEREFORE, the parties hereto agree to amend the Gas Sales
Agreement, effective as of the date of the amendments to the Gas
Purchase Contract, as follows:
Article X, Section 5 shall be amended by inserting the phrase
"and claimed within twelve (12) months of the date payment is
due under the invoice containing such error" immediately after
the word "Boundary," on the penultimate line thereof.
Effective as of November 1, 1995, the Gas Sales Agreement is
deemed amended as necessary to permit the implementation of the
protocol entitled "Treatment of Increases in U.S. Pipeline Rates
in the Calculation of the Price of Gas Pursuant to Article VII"
and attached to an amending agreement between Alberta Northeast
Gas Limited and TransCanada dated November 17, 1995.<PAGE>
IN WITNESS WHEREOF, this Amendment to the Phase 2 Gas Sales
Agreement is executed as of the date written above.
ATTEST: __________________________________ (Seal)
BOUNDARY GAS, INC.
By______________________________________
ATTEST: __________________________________ (Seal)
THE BROOKLYN UNION GAS COMPANY
By______________________________________
ATTEST: __________________________________ (Seal)
NEW JERSEY NATURAL GAS COMPANY
By______________________________________
ATTEST: __________________________________ (Seal)
YANKEE GAS SERVICES COMPANY
By______________________________________
ATTEST: __________________________________ (Seal)
CONSOLIDATED EDISON COMPANY OF NEW YORK, INC.
By______________________________________
ATTEST: __________________________________ (Seal)
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
By______________________________________
ATTEST: __________________________________ (Seal)
LONG ISLAND LIGHTING COMPANY
By______________________________________
ATTEST: __________________________________ (Seal)
CONNECTICUT NATURAL GAS CORPORATION
By______________________________________
ATTEST: __________________________________ (Seal)
ESSEX COUNTY GAS COMPANY
By______________________________________
ATTEST: __________________________________ (Seal)
ENERGYNORTH NATURAL GAS, INC.
By______________________________________
ATTEST: __________________________________ (Seal)
VALLEY GAS COMPANY
By______________________________________
ATTEST: __________________________________ (Seal)
BERKSHIRE GAS COMPANY
By______________________________________
ATTEST: __________________________________ (Seal)
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY
By______________________________________
ATTEST: __________________________________ (Seal) <PAGE>
BAY STATE GAS COMPANY
By______________________________________
ATTEST: __________________________________ (Seal)
NORTHERN UTILITIES, INC.
By______________________________________
ATTEST: __________________________________ (Seal)
BOSTON GAS COMPANY
By______________________________________ <PAGE>
AGREEMENT APPLICABLE TO THE STORAGE
OF NATURAL GAS
UNDER RATE SCHEDULE GSS
AGREEMENT made and entered into as of this first day of April,
1997, by and between CNG TRANSMISSION CORPORATION, a Delaware
corporation, hereinafter referred to as "Pipeline," and
CONNECTICUT NATURAL GAS CORPORATION, a Connecticut corporation,
hereinafter referred to as "Customer."
WHEREAS, Pipeline and Customer desire to enter into a service
agreement to provide for Pipeline to render to Customer natural
gas storage service as contemplated in the Precedent Agreement
between Pipeline and Customer dated April 10, 1996; and
WHEREAS, as contemplated by said Precedent Agreement, such
services are to be implemented in two phases, the first
commencing in 1997, and the second in 1999; and
WHEREAS, Pipeline desires to sell such a storage service to
Customer pursuant to the terms and conditions of Pipeline's Rate
Schedule GSS; and
WHEREAS, Pipeline and Customer have agreed that the costs
associated with the development of the proposed storage service
should be reflected in rates under Rate Schedule GSS on a
rolled-in basis; and
WHEREAS, in order to effect the eventual delivery of natural
gas to Customer, Customer will arrange for the firm
transportation of the natural gas to be injected and withdrawn
from storage pursuant to this Agreement.
NOW, THEREFORE, WITNESSETH: That in consideration of the
mutual covenants herein contained, the parties hereto agree that
Pipeline will store natural gas for Customer during the term, at
the rates and on the terms and conditions hereinafter provided:
ARTICLE I<PAGE>
Quantities
----------
Beginning as of April 1, 1997, and thereafter for the
remaining term of this agreement, Customer agrees to deliver to
Pipeline and Pipeline agrees to receive for storage in
Pipeline's underground storage properties, and Pipeline agrees
to inject or cause to be injected into storage for Customer's
account, store, withdraw from storage, and deliver to Customer
and Customer agrees to receive, quantities of natural gas as set
forth on Exhibit A, attached hereto.
ARTICLE II
Rate
----
A. For storage service rendered by Pipeline to Customer
hereunder, Customer shall pay Pipeline the maximum rates and
charges provided under Rate Schedule GSS contained in Pipeline's
effective FERC Gas Tariff or any effective superseding rate
schedule.
B. Pipeline shall have the right to propose, file and make
effective with the FERC or any other body having jurisdiction,
revisions to any applicable rate schedule, or to propose, file,
and make effective superseding rate schedules for the purpose of
changing the rate, charges, and other provisions thereof
effective as to Customer; provided, however, that (i) Section 2
of Rate Schedule GSS "Applicability and Character of Service,"
(ii) term, (iii) quantities, and (iv) points of receipt and
points of delivery shall not be subject to unilateral change
under this Article. Said rate schedule or superseding rate
schedule and any revisions thereof which shall be filed and made
effective shall apply to and become a part of this Service
Agreement. The filing of such changes and revisions to any
applicable rate schedule shall be without prejudice to the right
of Customer to contest or oppose such filing and its
effectiveness.
C. The Storage Demand Charge and the Storage Capacity Charge
provided in the aforesaid rate schedule shall commence on April
1, 1997.
ARTICLE III
Term of Agreement<PAGE>
-----------------
Subject to all the terms and conditions herein, this Agreement
shall be effective as of April 1, 1997, and shall continue for a
primary term as follows:
A. Phase 1 Services. Commencing April 1, 1997, and continuing
in effect for a primary term through and including March 31,
2007, and from year to year thereafter, until either party
terminates this Agreement by giving written notice to the other
at least twenty-four months prior to the start of the next
contract year.
B. Phase 2 Services. Commencing April 1, 1999, and continuing
in effect for a primary term through and including March 31,
2009, and from year to year thereafter, until either party
terminates this Agreement by giving written notice to the other
at least twenty-four months prior to the start of the next
contract year.
ARTICLE IV
Points of Receipt and Delivery
------------------------------
The Points of Receipt for Customer's tender of storage
injection quantities, and the Point(s) of Delivery for
withdrawals from storage shall be specified on Exhibit A,
attached hereto.
ARTICLE V
Incorporation By Reference of Tariff Provisions
-----------------------------------------------
To the extent not inconsistent with the terms and conditions of
this Agreement, the following provisions of Seller's effective
FERC Gas Tariff, and any revisions thereof that may be made
effective hereafter are hereby made applicable to and a part
hereof by reference:
1. All of the provisions of Rate Schedule GSS, or any
effective superseding rate schedule or otherwise applicable rate
schedule; and<PAGE>
2. All of the provisions of the General Terms and Conditions,
as they may be revised or superseded from time to time.
ARTICLE VI
Miscellaneous
-------------
A. No change, modification or alteration of this Agreement
shall be or become effective until executed in writing by the
parties hereto; provided, however, that the parties do not
intend that this Article VI.A. requires a further written
agreement either prior to the making of any request or filing
permitted under Article II hereof or prior to the effectiveness
of such request or filing after Commission approval, provided
further, however, that nothing in this Agreement shall be deemed
to prejudice any position the parties may take as to whether the
request, filing or revision permitted under Article II must be
made under Section 7 or Section 4 of the Natural Gas Act.
B. Any notice, request or demand provided for in this
Agreement, or any notice which either party may desire to give
the other, shall be in writing and sent to the following
addresses:
Pipeline: CNG Transmission Corporation
445 West Main Street
Clarksburg, West Virginia 26301
Attention: Vice President, Marketing and Customer Services
Customer: Connecticut Natural Gas Corporation
100 Columbus Boulevard, P.O. Box 1500
Hartford, Connecticut 06144-1500
Attention: Director of Energy Procurement
or at such other address as either party shall designate by
formal written notice.
C. No presumption shall operate in favor of or against either
party hereto as a result of any responsibility either party may
have had for drafting this Agreement.<PAGE>
D. The subject headings of the provisions of this Agreement are
inserted for the purpose of convenient reference and are not
intended to become a part of or to be considered in any
interpretation of such provisions.
ARTICLE VII
Prior Contract
--------------
Upon its execution by Pipeline and by Customer, this Service
Agreement shall supersede and cancel, as of its effective date,
the "Precedent Agreement For Firm CNG Storage Service Under Rate
Schedule GSS" between Customer and Pipeline dated April 10,
1996; and that certain "Letter Agreement Related to Seasonal
Service Expansion Project Precedent Agreements" between Pipeline
and Customer dated April 9, 1996.<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their duly authorized officials as of
the day and year first above written.
CNG TRANSMISSION CORPORATION
(Pipeline)
By:__________________________
Its: Vice President
CONNECTICUT NATURAL GAS
CORPORATION (Customer)
By: Edna M. Karanian
--------------------------
Its: V.P.
-------------------------
(Title)<PAGE>
EXHIBIT A
To The Storage Service Agreement
Dated April 1, 1997
Between CNG Transmission Corporation and
Connecticut Natural Gas Corporation
A. Quantities
The quantities of natural gas storage service which Customer
may utilize under this Service Agreement, as well as Customer's
applicable Billing Determinants, are as follows:
1. Phase 1. For the period commencing April 1, 1997, and
continuing in effect for a primary term through and including
March 31, 2007, and from year to year thereafter until either
party gives written notice in accordance with Article III of the
Storage Service Agreement:
a. A Storage Capacity of 1,305,000 Dekatherms ("Dt"); and
b. A Storage Demand of 14,658 Dt per Day.
2. Phase 2. For the period commencing April 1, 1999, and
continuing in effect for a primary term through and including
March 31, 2009, and from year to year thereafter until either
party gives written notice in accordance with Article III of the
Storage Service Agreement:
a. An additional Storage Capacity of 495,000 Dt (resulting in
a total MATQ of 1,800,000 Dt commencing as of April 1, 1999; and
b. An additional Storage Demand of 5,000 Dt per Day (resulting
in a total Storage Demand of 19,658 Dt per Day commencing as of
April 1, 1999).
B. Points of Receipt
The primary Points of Receipt for Customer's tender of storage
injection quantities, and the maximum quantities and character<PAGE>
of service for each point shall be as set forth below. Pipeline
will use due care and diligence to assure, and Customer will use
due care and diligence to cause its transporter to assure, that
uniform pressures will be maintained at the Receipt Points as
reasonably may be required to render service hereunder, but
Pipeline will not be required to accept gas at less than the
minimum pressures specified herein.<PAGE>
EXHIBIT A
To The Storage Service Agreement
Dated April 1, 1997
Between CNG Transmission Corporation and
Connecticut Natural Gas Corporation
Page 2 of 3
1. At the interconnection of facilities of Transcontinental Gas
Pipe Line Corporation or Texas Eastern Transmission Corporation
and Pipeline in Clinton County, Pennsylvania, known as the Leidy
Interconnection, at a pressure of not less than one thousand
(1,000) pounds per square inch gauge ("psig"); or
2. At the interconnection of facilities of Texas Eastern
Transmission Corporation and Pipeline in Westmoreland County,
Pennsylvania, known as the Oakford interconnection, at a
pressure of not less than five hundred seventy-five (575) psig;
or
3. At the following points of interconnection between the
facilities of Pipeline and Tennessee Gas Pipeline Company:
a. the Gilmore interconnection, located in Tuscarawas County,
Ohio;
b. the Augusta interconnection, located in Carroll County,
Ohio;
c. the Petersburg interconnection, located in Mahoning County,
Ohio;
d. the Cochranton interconnection, located in Crawford County,
Pennsylvania; and
e. the Ellisburg interconnection, located in Potter County,
Pennsylvania;
with the specific allocation of quantities among these points
to be determined by mutual agreement between Pipeline and
Customer.
4. In the event that Customer does not utilize the Primary
Receipt Points listed in paragraphs B.1, B.2, or B.3, above,
then the Point of Receipt under this GSS Agreement for firm
storage injection quantities shall be the points of injection
into Pipeline's storage pool(s). Customer shall either utilize
the receipt point rights under its Service Agreement with
Pipeline under Rate Schedule FT-GSS, or shall utilize some other
transportation service agreement with appropriate receipt point
entitlements, to nominate gas for subsequent injection into
storage under this GSS Agreement.<PAGE>
<PAGE>
EXHIBIT A
To The Storage Service Agreement
Dated April 1, 1997
Between CNG Transmission Corporation and
Connecticut Natural Gas Corporation
Page 3 of 3
C. Point of Delivery
1. The Point of Delivery for subsequent transportation to
Customer of all firm storage withdrawal quantities shall be the
point(s) of withdrawal from Pipeline's storage pool(s).
2. This Point of Delivery shall only be Primary, as defined in
Pipeline's FERC Gas Tariff, to the extent that corresponding
transportation from the points of withdrawal from Pipeline's
storage pool(s) is provided under the "Service Agreement
Applicable to Transportation Of Natural Gas Under Section 9 of
Rate Schedule FT (FT-GSS Service)" between Pipeline and
Connecticut Natural Gas Corporation, dated April 1, 1997.<PAGE>
SERVICE AGREEMENT
APPLICABLE TO TRANSPORTATION OF NATURAL GAS
UNDER SECTION 9 OF RATE SCHEDULE FT (FT-GSS Service)
AGREEMENT made as of this first day of April, 1997, by and
between CNG TRANSMISSION CORPORATION, a Delaware corporation,
hereinafter referred to as "Pipeline," and CONNECTICUT NATURAL
CORPORATION, a Connecticut corporation, hereinafter referred to
as "Customer."
WHEREAS, Customer desires to purchase transportation services
from Pipeline, to transport natural gas from Pipeline's storage
to points of interconnection between the facilities of Pipeline
and of Tennessee Gas Pipeline Company, as contemplated in the
Precedent Agreement between Pipeline and Customer dated April
10, 1996; and
WHEREAS, as contemplated by said Precedent Agreement, such
services are to be implemented in two phases, the first
commencing in 1997, and the second in 1999; and
WHEREAS, Pipeline desires to provide such transportation
services to Customer, pursuant to the terms and conditions of
Pipeline's Rate Schedule FT.
NOW, THEREFORE, WITNESSETH: That, in consideration of the
mutual covenants herein contained, and intending to be legally
bound, the parties hereto agree as follows:
ARTICLE I
Quantities
----------
A. During the term of this Agreement, Pipeline will transport
for Customer, on a firm basis, and Customer may furnish, or
cause to be furnished, to Pipeline natural gas for such
transportation, and Customer will accept, or cause to be
accepted, delivery from Pipeline of the quantities Customer has
tendered for transportation.
B. The maximum quantities of gas which Pipeline shall deliver
and which Customer may tender shall be as set forth on Exhibit
A, attached hereto.
ARTICLE II<PAGE>
Rate
----
A. Unless otherwise mutually agreed in a written amendment to
this Agreement, beginning on November 1, 1997, Customer shall
pay Pipeline for transportation services rendered pursuant to
this Agreement, the maximum rates and charges provided under
Section 9 of Rate Schedule FT set forth in Pipeline's effective
FERC Gas Tariff, including applicable surcharges and the Fuel
Retention Percentage. Section 9 of Rate Schedule FT provides
that the Reservation Charge will be billed only during the
Winter Period (the period of five consecutive months beginning
on November 1 of any calendar year and ending on March 31 of the
next succeeding calendar year).
B. Pipeline shall have the right to propose, file and make
effective with the FERC or any other body having jurisdiction,
revisions to any applicable rate schedule, or to propose, file,
and make effective superseding rate schedules for the purpose of
changing the rates, charges, and other provisions thereof
effective as to Customer; provided, however, that (i) Section 2
of Rate Schedule FT "Applicability and Character of Service,"
(ii) term, (iii) quantities, and (iv) points of receipt and
points of delivery shall not be subject to unilateral change
under this Article. Said rate schedule or superseding rate
schedule and any revisions thereof which shall be filed and made
effective shall apply to and become a part of this Service
Agreement. The filing of such changes and revisions to any
applicable rate schedule shall be without prejudice to the right
of Customer to contest or oppose such filing and its
effectiveness.
ARTICLE III
Term of Agreement
-----------------
Subject to all the terms and conditions herein, this Agreement
shall be effective as of November 1, 1997, and shall continue
for a primary term as follows:
A. Phase 1 Services. Commencing November 1, 1997, and
continuing in effect for a primary term through and including
October 31, 2007, and from year to year thereafter, until either
party terminates this Agreement by giving written notice to the
other at least twenty-four months prior to the start of the next
contract year.
B. Phase 2 Services. Commencing November 1, 1999, and
continuing in effect for a primary term through and including
October 31, 2009, and from year to year thereafter, until either<PAGE>
party terminates this Agreement by giving written notice to the
other at least twenty-four months prior to the start of the next
contract year.
ARTICLE IV
Points of Receipt and Delivery
------------------------------
The Points of Receipt and Delivery and the maximum quantities
for each point for all gas that may be received for Customer's
account for Transportation by Pipeline shall be as set forth on
Exhibit A.
ARTICLE V
Incorporation By Reference of Tariff Provisions
-----------------------------------------------
A. To the extent not inconsistent with the terms and conditions
of this Agreement, the following provisions of Pipeline's
effective FERC Gas Tariff, and any revisions thereof that may be
made effective hereafter are hereby made applicable to and a
part hereof by reference:
1. All of the provisions of Rate Schedule FT, or any effective
superseding rate schedule or otherwise applicable rate schedule;
and
2. All of the provisions of the General Terms and Conditions,
as they may be revised or superseded from time to time.
ARTICLE VI
Miscellaneous
-------------
A. No change, modification or alteration of this Agreement
shall be or become effective until executed in writing by the
parties hereto; provided, however, that the parties do not
intend that this Article VI.A. requires a further written
agreement either prior to the making of any request or filing
permitted under Article II hereof or prior to the effectiveness
of such request or filing after Commission approval, provided
further, however, that nothing in this Agreement shall be deemed<PAGE>
to prejudice any position the parties may take as to whether the
request, filing or revision permitted under Article II must be
made under Section 7 or Section 4 of the Natural Gas Act.
B. Any notice, request or demand provided for in this
Agreement, or any notice which either party may desire to give
the other, shall be in writing and sent to the following
addresses:
Pipeline: CNG Transmission Corporation
445 West Main Street
Clarksburg, West Virginia 26301
Attention: Vice President, Marketing and Customer Services
Customer: Connecticut Natural Gas Corporation
100 Columbus Boulevard, P.O. Box 1500
Hartford, Connecticut 06144-1500
Attention: Director of Energy Procurement
or at such other address as either party shall designate by
formal written notice.<PAGE>
C. No presumption shall operate in favor of or against either
party hereto as a result of any responsibility either party may
have had for drafting this Agreement.
D. The subject headings of the provisions of this Agreement are
inserted for the purpose of convenient reference and are not
intended to become a part of or to be considered in any
interpretation of such provisions.
ARTICLE VII
Prior Contract
--------------
Upon its execution by Pipeline and by Customer, this Service
Agreement shall supersede and cancel, as of its effective date,
the "Precedent Agreement For Firm Transportation Service For GSS
Storage Expansion" between Customer and Pipeline dated April 10,
1996, and that certain "Letter Agreement Related to Seasonal
Service Expansion Project Precedent Agreements" between Customer
and Pipeline dated April 9, 1996.
IN WITNESS WHEREOF, the parties hereto intending to be legally
bound, have caused this Agreement to be signed by their duly
authorized officials as of the day and year first written above.
CNG TRANSMISSION CORPORATION
(Pipeline)
By: __________________________
Its: Vice President
CONNECTICUT NATURAL GAS CORPORATION (Customer)
By: Edna M. Karanian
-----------------------------
Its: V.P.
----------------------------
(Title)<PAGE>
<PAGE>
EXHIBIT A
To The FT-GSS Agreement
Dated April 1, 1997
Between CNG Transmission Corporation
And Connecticut Natural Gas Corporation
A. Quantities
The maximum quantities of gas that Pipeline shall deliver and
that Customer may tender shall be as follows:
1. Phase 1. For the period commencing November 1, 1997, and
continuing in effect for a primary term through and including
October 31, 2007, and from year to year thereafter until either
party gives written notice in accordance with Article III of the
Transportation Service Agreement:
a. A Maximum Daily Transportation Quantity ("MDTQ") of 14,658
Dekatherms ("Dt") per Day; and
b. A Maximum Annual Transportation Quantity ("MATQ") of
2,213,358 Dt.
2. Phase 2. For the period commencing November 1, 1999, and
continuing in effect for a primary term through and including
October 31, 2009, and from year to year thereafter until either
party gives written notice in accordance with Article III of the
Transportation Service Agreement:
a. An additional MDTQ of 5,000 Dt per Day (resulting in a
total MDTQ of 19,658 Dt per Day commencing as of November 1,
1999); and
b. An additional MATQ of 755,000 Dt (resulting in a total MATQ
of 2,968,358 Dt commencing as of November 1, 1999).
B. Point of Receipt
1. The Point of Receipt for subsequent transportation to
Customer for all storage withdrawal quantities shall be the
point(s) of withdrawal from Pipeline's storage pools.
2. This Point of Receipt shall only be Primary, as defined
in Pipeline's FERC Gas Tariff, to the extent that a
corresponding nomination for withdrawal from storage is provided
under the "Storage Service Agreement Applicable to the Storage
of Natural Gas Under Rate Schedule GSS" between Pipeline and
Connecticut Natural Gas Corporation, dated April 1, 1997.
C. Primary Points of Delivery
Each of the parties will use due care and diligence to assure
that uniform pressures will be maintained at the Primary Points of<PAGE>
Delivery as reasonably may be required to render service
hereunder, but Pipeline shall not be required to deliver gas (or
cause gas to be delivered) at greater than the maximum
pressures specified herein. The Points of Delivery shall be the points of
interconnection between the facilities of Pipeline and Tennessee
Gas Pipeline Company at the Ellisburg interconnection, located in Potter
County, Pennsylvania or such other points of interconnect that are mutually
agreed between Pipeline and customer.<PAGE>
SERVICE PACKAGE NO. 1623
AMENDMENT NO. 0
GAS STORAGE CONTRACT
(For Use Under Rate Schedule FS)
This Contract is made as of the 1st day of September 1993, by and between
TENNESSEE GAS PIPELINE COMPANY, a Delaware corporation herein called
"Transporter," and CONNECTICUT NATURAL GAS CORP a CONNECTICUT Corporation,
herein called "Shipper." Transporter and Shipper collectively shall be
referred to herein as the "Parties."
ARTICLE I - SCOPE OF CONTRACT
Following the commencement of service hereunder, in accordance with the
terms of Transporter's Rate Schedule FS, and of this Agreement, Transporter
shall receive for injection for Shipper's account a daily quantity of gas
up to Shipper's Maximum Injection Quantity of 3,704 (Dth) and Maximum
Storage Quantity (MSQ) of 555,702 dekatherms(Dth) (on a cumulative basis)
and on demand shall withdraw from Shipper's storage account and deliver to
Shipper a daily quantity of gas up to Shipper's Maximum Daily Withdrawal
Quantity (MDWQ) of 6,174 Dth; provided however, that when Shipper's storage
balance is equal to or less than 30 percent of the MSQ but greater than 20
percent of the MSQ, the Maximum Daily Withdrawal Quantity shall be ____
Dth; and provided further, that when Shipper's storage balance is less than
or equal to 20 percent of the MSQ, the Maximum Daily Withdrawal Quantity
shall be _____ Dth. For demand charge purposes, the MDWQ for balance
greater than 30 percent of the MSQ shall be used.
ARTICLE II - SERVICE POINT
The point or points at which the gas is to be tendered for delivery by
Transporter to Shipper under this Contract shall be at the storage service
point at Transporter's Compressor Station 313 - NORTHERN Storage.
ARTICLE III - PRICE
3.1 Shipper agrees to pay Transporter for all natural gas storage service
furnished to Shipper hereunder, including compensation for system
fuel and losses, at Transporter's legally effective rate or at any
effective superseding rate applicable to the type of service
specified herein. Transporter's present legally effective rate for
said service is contained in Transporter's FERC Gas Tariff as filed
with the Federal Energy Regulatory Commission.
3.2 Shipper agrees to reimburse Transporter for any filing or similar
fees, which have not been previously paid by Shipper, which
Transporter incurs in rendering service hereunder.
3.3 Shipper agrees that Transporter shall have the unilateral right to<PAGE>
SERVICE PACKAGE NO. 1623
AMENDMENT NO. 0
GAS STORAGE CONTRACT
(For Use Under Rate Schedule FS)
file with the appropriate regulatory authority and make changes
effective in (a) the rates and charges applicable to service pursuant
to Transporter's Rate Schedule FS, (b) the rate schedule(s) pursuant
to which service hereunder is rendered, or (c) any provision of the
General Terms and Conditions applicable to those rate schedules.
Transporter agrees that Shipper may protest or contest the
aforementioned filings, or may seek authorization from duly
constituted regulatory authorities for such adjustment of
Transporter's existing FERC Gas Tariff as may be found necessary to
assure Transporter just and reasonable rates.
ARTICLE IV - INCORPORATION OF RATE SCHEDULE AND TARIFF PROVISIONS
This agreement shall be subject to the terms of Transporter's Rate Schedule
FS, as filed with the Federal Energy Regulatory Commission, together with
the General Terms and Conditions applicable thereto (including any changes
in said Rate Schedule or General Terms and Conditions as may from time to
time be filed and made effective by Transporter).
ARTICLE V - TERM OF CONTRACT
This Agreement shall be effective as of the 1st day of September 1993, and
shall remain in force and effect until 1st November, 2000 ("Primary Term")
and on a month-to-month basis thereafter unless terminated by either Party
upon at least thirty (30) days prior written notice to the other Party;
provided, however, that if the Primary Term is one year or more, then
unless Shipper elects upon one year's prior written notice to Transporter
to request a lesser extension term, the Agreement shall automatically
extend upon the expiration of the Primary Term for a term of five years;
and shall automatically extend for successive five year terms thereafter
unless Shipper provides notice described above in advance of the expiration
of a succeeding term; provided further, if the FERC or other governmental
body having jurisdiction over the service rendered pursuant to this
Agreement authorizes abandonment of such service, this Agreement shall
terminate on the abandonment date permitted by the FERC or such other
governmental body.
This Agreement will terminate upon notice from Transporter in the event
Shipper fails to pay all of the amount of any bill for service rendered by
Transporter hereunder in accordance with the terms and conditions of
2<PAGE>
SERVICE PACKAGE NO. 1623
AMENDMENT NO. 0
GAS STORAGE CONTRACT
(For Use Under Rate Schedule FS)
Article VI of the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE VI - NOTICES
Except as otherwise provided in the General Terms and Conditions applicable
to this Agreement, any notice under this Agreement shall be in writing and
mailed to the post office address of the Party intended to receive the
same, as follows:
TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY
P. O. Box 2511
Houston, Texas 77252-2511
Attention: Director of Transportation Control
SHIPPER:
NOTICES: CONNECTICUT NATURAL GAS CORP
100 COLUMBUS BLVD
HARTFORD, CT 06144
Attention: JOHN P. RUDIAK
BILLING: CONNECTICUT NATURAL GAS CORP
100 COLUMBUS BLVD
HARTFORD, CT 06144
Attention: JULIA A. SCHIAVI
or to such other address as either Party shall designate by formal written
notice to the other.
ARTICLE VII - ASSIGNMENT
Any company which shall succeed by purchase, merger or consolidation to the
3<PAGE>
SERVICE PACKAGE NO. 1623
AMENDMENT NO. 0
GAS STORAGE CONTRACT
(For Use Under Rate Schedule FS)
properties, substantially as an entirety, of Transporter or of Shipper, as
the case may be, shall be entitled to the rights and shall be subject to
the obligations of its predecessor in title under this Contract. Otherwise
no assignment of the Contract or any of the rights or obligations
thereunder shall be made by Shipper, except pursuant to the General Terms
and Conditions of Transporter's FERC Gas Tariff.
It is agreed, however, that the restrictions on assignment contained in
this Article shall not in any way prevent either Party to the Agreement
from pledging or mortgaging its rights thereunder as security for its
indebtedness.
ARTICLE VIII - MISCELLANEOUS
8.1 THE INTERPRETATION AND PERFORMANCE OF THIS CONTRACT SHALL BE IN
ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO DOCTRINES GOVERNING CHOICE OF LAW.
8.2 If any provision of this Agreement is declared null and void, or
voidable, by a court of competent jurisdiction, then that provision
will be considered severable at either Party's option; and if the
severability option is exercised, the remaining provisions of the
Agreement shall remain in full force and effect.
8.3 Unless otherwise expressly provided in this Agreement or
Transporter's FERC Gas Tariff, no modification of or supplement to
the terms and provisions stated in this Agreement shall be or become
effective until Shipper has submitted a request for change through
the Electronic Bulletin Board and Shipper has been notified through
the Electronic Bulletin Board of Transporter's agreement to such
change.
ARTICLE IX - PRIOR AGREEMENTS CANCELLED
Transporter and Shipper agree that this Contract, as of the date hereof,
shall supersede and cancel the following Contract(s) between the Parties
hereto:
Contract for Storage Service dated ____________, 19__.
4<PAGE>
SERVICE PACKAGE NO. 1623
AMENDMENT NO. 0
GAS STORAGE CONTRACT
(For Use Under Rate Schedule FS)
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed by their authorized agents.
TENNESSEE GAS PIPELINE COMPANY
BY:___________________________
Agent and Attorney-in-Fact
DATE:_________________________
CONNECTICUT NATURAL GAS CORP
BY ___________________________
TITLE ___________________________
5<PAGE>
<TABLE>
<CAPTION>
GAS STORAGE SERVICE AGREEMENT
EXHIBIT "A"
TO FIRM GAS STORAGE SERVICE AGREEMENT
DATED September 1, 1993
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
CONNECTICUT NATURAL GAS CORP
CONNECTICUT NATURAL GAS CORP
AMENDMENT: 0
SERVICE PACKAGE MSQ: 555,702
MAXIMUM DAILY WITHDRAWAL QUANTITY: 6,174
MAXIMUM DAILY INJECTION QUANTITY: 3,704
SERVICE POINT: Compressor Station 313 - NORTHERN Storage
INJECTION METER: 060018 TGP - NORTHERN STORAGE INJECTION
WITHDRAWAL METER: 070018 TGP - NORTHERN STORAGE WITHDRAWAL
<C> <S> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME COUNTY ST ZONE I/W LEG TOTAL-TQ BILLABLE-TQ
-----------------------------------------------------------------------------------------------------------------
060018 TGP - NORTHERN STORAGE INJECTION POTTER PA 04 I 300 3,704 3,704
Total Injection TQ: 3,704 3,704
070018 TGP - NORTHERN STORAGE WITHDRAWAL POTTER PA 04 W 300 6,174 6,174
Total Withdrawal TQ: 6,174 6,174
</TABLE>
NUMBER OF INJECTION POINTS AFFECTED: 2
6<PAGE>
SERVICE PACKAGE NO. 1623
AMENDMENT NO. 0
GAS STORAGE CONTRACT
(For Use Under Rate Schedule FS)
NUMBER OF WITHDRAWAL POINTS AFFECTED: 2
Note: Exhibit "A" is a reflection of the contract and all
amendments as of the amendment effective date.
7<PAGE>
SERVICE PACKAGE NO. 1627
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
THIS AGREEMENT is made and entered into as of the 1st day of September,
1993, by and between TENNESSEE GAS PIPELINE COMPANY, a Delaware
Corporation, hereinafter referred to as "Transporter" and CONNECTICUT
NATURAL GAS CORP, a CONNECTICUT Corporation, hereinafter referred to as
"Shipper." Transporter and Shipper shall collectively be referred to
herein as the "Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily
quantity of gas which Transporter agrees to receive and transport
on a firm basis, subject to Article II herein, for the account of
Shipper hereunder on each day during each year during the term
hereof, which shall be 32,652 dekatherms. Any limitations of the
quantities to be received from each Point of Receipt and/or
delivered to each Point of Delivery shall be as specified on
Exhibit "A" attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of the
General Terms and Conditions of Transporter's FERC Gas Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive daily
on a firm basis, at the Point(s) of Receipt from Shipper or for
Shipper's account such quantity of gas as Shipper makes available up to
the Transportation Quantity, and to deliver to or for the account of
Shipper to the Point(s) of Delivery an Equivalent Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those points
specified on Exhibit "A" attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in this
<PAGE>
SERVICE PACKAGE NO. 1627
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
Agreement.
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENT
For all gas received, transported and delivered hereunder the Parties
agree to the Quality Specifications and Standards for Measurement as
specified in the General Terms and Conditions of Transporter's FERC Gas
Tariff Volume No. 1. To the extent that no new measurement facilities
are installed to provide service hereunder, measurement operations will
continue in the manner in which they have previously been handled. In
the event that such facilities are not operated by Transporter or a
downstream pipeline, then responsibility for operations shall be deemed
to be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing upon the effective date hereof,
the rates, charges, and surcharges to be paid by Shipper to
Transporter for the transportation service provided herein shall
be in accordance with Transporter's Rate Schedule FT-A and the
General Terms and Conditions of Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter for
any filing or similar fees, which have not been previously paid
for by Shipper, which Transporter incurs in rendering service
hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that Transporter
shall have the unilateral right to file with the appropriate
regulatory authority and make effective changes in (a) the rates
and charges applicable to service pursuant to Transporter's Rate
Schedule FT-A, (b) the rate schedule(s) pursuant to which service
hereunder is rendered, or (c) any provision of the General Terms
and Conditions applicable to those rate schedules. Transporter
agrees that Shipper may protest or contest the aforementioned
filings, or may seek authorization from duly constituted
regulatory authorities for such adjustment of Transporter's
existing FERC Gas Tariff as may be found necessary to assure
Transporter just and reasonable rates.
2<PAGE>
SERVICE PACKAGE NO. 1627
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and charges in
accordance with Articles V and VI, respectively, of the General Terms
and Conditions of the FERC Gas Tariff.
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and Conditions
incorporated therein, as the same may be changed or superseded from time
to time in accordance with the rules and regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules and regulations and is
contingent upon the receipt and continuation of all necessary
regulatory approvals or authorizations upon terms acceptable to
Transporter. This Agreement shall be void and of no force and
effect if any necessary regulatory approval is not so obtained or
continued. All Parties hereto shall cooperate to obtain or
continue all necessary approvals or authorizations, but no Party
shall be liable to any other Party for failure to obtain or
continue such approvals or authorizations.
9.2 The transportation service described herein shall be provided
subject to Subpart G, Part 284, of the FERC Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified, the responsibility for gas during
transportation shall be as stated in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1.
3<PAGE>
SERVICE PACKAGE NO. 1627
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas Tariff,
Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in place
as of the requested effective date of service, and that it
has advised the upstream and downstream transporters of the
receipt and delivery points under this Agreement and any
quantity limitations for each point as specified on Exhibit
"A" attached hereto. Shipper agrees to indemnify and hold
Transporter harmless for refusal to transport gas hereunder
in the event any upstream or downstream transporter fails to
receive or deliver gas as contemplated by this Agreement.
(b) Shipper agrees to indemnify and hold Transporter harmless
from all suits, actions, debts, accounts, damages, costs,
losses and expenses (including reasonable attorneys fees)
arising from or out of breach of any warranty by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue service
hereunder in the event of any breach of warranty.
4<PAGE>
SERVICE PACKAGE NO. 1627
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE XII
TERM
12.1 This Agreement shall be effective as of the 1st day of September,
1993, and shall remain in force and effect until the 1st day of
November, 2000,("Primary Term") and on a month to month basis
thereafter unless terminated by either Party upon at least thirty
(30) days prior written notice to the other Party; provided,
however, that if the Primary Term is one year or more, then
unless Shipper elects upon one year's prior written notice to
Transporter to request a lesser extension term, the Agreement
shall automatically extend upon the expiration of the Primary
Term for a term of five years and shall automatically extend for
successive five year terms thereafter unless Shipper provides
notice described above in advance of the expiration of a
succeeding term; provided further, if the FERC or other
governmental body having jurisdiction over the service rendered
pursuant to this Agreement authorizes abandonment of such
service, this Agreement shall terminate on the abandonment date
permitted by the FERC or such other governmental body.
12.2 Any portions of this Agreement necessary to resolve or cash out
imbalances under this Agreement as required by the General Terms
and Conditions of Transporter's Tariff, shall survive the other
parts of this Agreement until such time as such balancing has
been accomplished; provided, however, that Transporter notifies
Shipper of such imbalance not later than twelve months after the
termination of this Agreement.
12.3 This Agreement will terminate automatically upon written notice
from Transporter in the event Shipper fails to pay all of the
amount of any bill for service rendered by Transporter hereunder
in accord with the terms and conditions of Article VI of the
General Terms and Conditions of Transporter's FERC Gas Tariff.
ARTICLE XIII
NOTICE
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement shall be
in writing and mailed to the post office address of the Party intended
to receive the same, as follows:
5<PAGE>
SERVICE PACKAGE NO. 1627
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Director, Transportation Control
6<PAGE>
SERVICE PACKAGE NO. 1627
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
SHIPPER:
NOTICES: CONNECTICUT NATURAL GAS CORP
100 COLUMBUS BLVD
HARTFORD, CT 06144
Attention: JOHN P. RUDIAK
BILLING: CONNECTICUT NATURAL GAS CORP
100 COLUMBUS BLVD
HARTFORD, CT 06144
Attention: JULIA A. SCHIAVI
or to such other address as either Party shall designate by formal
written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all rights
and obligations hereunder under the provisions of any mortgage,
deed of trust, indenture, or other instrument which it has
executed or may execute hereafter as security for indebtedness.
Either Party may, without relieving itself of its obligation
under this Agreement, assign any of its rights hereunder to a
company with which it is affiliated. Otherwise, Shipper shall
not assign this Agreement or any of its rights hereunder, except
in accord with Article III, Section 11 of the General Terms and
Conditions of Transporter's FERC Gas Tariff.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
either Party hereto shall be entitled to the rights and shall be
subject to the obligations of its predecessor in interest under
this Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 THE INTERPRETATION AND PERFORMANCE OF THIS CONTRACT SHALL BE IN
ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO THE DOCTRINES GOVERNING CHOICE OF LAW.
15.2 If any provision of this Agreement is declared null and void, or
7<PAGE>
SERVICE PACKAGE NO. 1627
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
voidable, by a court of competent jurisdiction, then that
provision will be considered severable at either Party's option;
and if the severability option is exercised, the remaining
provisions of the Agreement shall remain in full force and
effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement to the
terms and provisions stated in this agreement shall be or become
effective until Shipper has submitted a request for change
through the Electronic Bulletin Board and Shipper has been
notified through the Electronic Bulletin Board of Transporter's
agreement to such change.
15.4 Exhibit "A" attached hereto is incorporated herein by reference
and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the date first hereinabove written.
TENNESSEE GAS PIPELINE COMPANY
BY:____________________________
Agent and Attorney-in-Fact
DATE:__________________________
CONNECTICUT NATURAL GAS CORP
BY:____________________________
TITLE: ________________________
DATE: _________________________
8<PAGE>
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED September 1, 1993
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
CONNECTICUT NATURAL GAS CORP
CONNECTICUT NATURAL GAS CORP
EFFECTIVE DATE OF AMENDMENT: September 1, 1993
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 1627
SERVICE PACKAGE TQ: 32,652 Dth
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
- ---------------------------------------------------------------------------------------------------------------------------------
001366 TRANSCONTINENTAL - UTOS EXCHAN TRANSCONTINENTAL GAS PIPE LINE CAMERON LA 0L R 800 4,757 4,757
010008 UNION- WARDNER COASTAL PLT DEH UNION PACIFIC FUELS INC NUECES TX 00 R 100 8,000 8,000
010031 UNION- E TEXAS PLT DEHYD EAST TEXAS GAS SYSTEMS PANOLA TX 00 R 100 3,110 3,110
010173 VALERO-SUN PLANT DEHYD VALERO TRANSMISSION LP STARR TX 00 R 100 6,341 6,341
010831 MERIDIAN-GRAND ISLE BLK 24&25 BURLINGTON RESOURCES TRADING I LAFOURCHE LA 0L R 500 2,315 2,315
011936 CONOCO - SOUTH PASS BLK 75A/55 CONOCO INC OFFSHFED OL 0L R 500 5,338 5,338
012032 MERIDIAN - GRAND ISLE BLK 25 ( BURLINGTON RESOURCES TRADING I OFFSHFED OL 0L R 500 2,315 2,315
012035 LIBERTY HILL TRANSOK GAS TRANSMISSION BIENVILLE LA 01 R 100 476 476
Total Receipt TQ: 32,652 32,652
020123 CONNECTICUT-GREENWICH CONN CONNECTICUT NATURAL GAS CORP FAIRFIELD CT 06 D 300 11,286 11,286
020129 CONNECTICUT-NEW BRITAIN CONN CONNECTICUT NATURAL GAS CORP HARTFORD CT 06 D 300 19,494 19,494
020205 CONNECTICUT-BLOOMFIELD CONN CONNECTICUT NATURAL GAS CORP HARTFORD CT 06 D 300 14,364 14,364
020217 CONNECTICUT-PUTNAM LAKE CONN CONNECTICUT NATURAL GAS CORP FAIRFIELD CT 06 D 300 15,903 15,903
020453 CONNECTICUT-NORTH BLOOMFIELD C CONNECTICUT NATURAL GAS CORP HARTFORD CT 06 D 300 8,208 8,208
020487 CONNECTICUT-FARMINGTON CONN CONNECTICUT NATURAL GAS CORP HARTFORD CT 06 D 300 7,695 7,695
020578 ANDREWS SETTLEMENT SALES (Bi NATIONAL FUEL GAS SUPPLY CORP POTTER PA 04 D 300 8,882 8,882
020702 PETAL MISS STG TRANS (Bi 1-20 HATTIESBURG GAS STORAGE COMPAN FORREST MS 01 D 500 9,968 9,968
060018 TGP - NORTHERN STORAGE INJECTI POTTER PA 04 D 300 18,881 18,881
</TABLE>
NUMBER OF RECEIPT POINTS AFFECTED: 8
NUMBER OF DELIVERY POINTS AFFECTED: 9
Note: Exhibit "A" is a reflection of the contract and all amendments
as of the amendment effective date.
SERVICE PACKAGE NO. 10781
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
THIS AGREEMENT is made and entered into as of the 1st day of June, 1995,
by and between TENNESSEE GAS PIPELINE COMPANY, a Delaware Corporation,
hereinafter referred to as "Transporter" and CONNECTICUT NATURAL GAS
CORP, a CONNECTICUT Corporation, hereinafter referred to as "Shipper."
Transporter and Shipper shall collectively be referred to herein as the
"Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY (TQ) - shall mean the maximum daily
quantity of gas which Transporter agrees to receive and transport
on a firm basis, subject to Article II herein, for the account of
Shipper hereunder on each day during each year during the term
hereof, which shall be 13,884 dekatherms. Any limitations of the
quantities to be received from each Point of Receipt and/or
delivered to each Point of Delivery shall be as specified on
Exhibit "A" attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of the
General Terms and Conditions of Transporter's FERC Gas Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and receive daily
on a firm basis, at the Point(s) of Receipt from Shipper or for
Shipper's account such quantity of gas as Shipper makes available up to
the Transportation Quantity, and to deliver to or for the account of
Shipper to the Point(s) of Delivery an Equivalent Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those points
specified on Exhibit "A" attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in this
<PAGE>
SERVICE PACKAGE NO. 10781
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
Agreement.
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENT
For all gas received, transported and delivered hereunder the Parties
agree to the Quality Specifications and Standards for Measurement as
specified in the General Terms and Conditions of Transporter's FERC Gas
Tariff Volume No. 1. To the extent that no new measurement facilities
are installed to provide service hereunder, measurement operations will
continue in the manner in which they have previously been handled. In
the event that such facilities are not operated by Transporter or a
downstream pipeline, then responsibility for operations shall be deemed
to be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing upon the effective date hereof,
the rates, charges, and surcharges to be paid by Shipper to
Transporter for the transportation service provided herein shall
be in accordance with Transporter's Rate Schedule FT-A and the
General Terms and Conditions of Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter for
any filing or similar fees, which have not been previously paid
for by Shipper, which Transporter incurs in rendering service
hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that Transporter
shall have the unilateral right to file with the appropriate
regulatory authority and make effective changes in (a) the rates
and charges applicable to service pursuant to Transporter's Rate
Schedule FT-A, (b) the rate schedule(s) pursuant to which service
hereunder is rendered, or (c) any provision of the General Terms
and Conditions applicable to those rate schedules. Transporter
agrees that Shipper may protest or contest the aforementioned
filings, or may seek authorization from duly constituted
regulatory authorities for such adjustment of Transporter's
existing FERC Gas Tariff as may be found necessary to assure
Transporter just and reasonable rates.
2<PAGE>
SERVICE PACKAGE NO. 10781
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and charges in
accordance with Articles V and VI, respectively, of the General Terms
and Conditions of the FERC Gas Tariff.
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and Conditions
incorporated therein, as the same may be changed or superseded from time
to time in accordance with the rules and regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules and regulations and is
contingent upon the receipt and continuation of all necessary
regulatory approvals or authorizations upon terms acceptable to
Transporter. This Agreement shall be void and of no force and
effect if any necessary regulatory approval is not so obtained or
continued. All Parties hereto shall cooperate to obtain or
continue all necessary approvals or authorizations, but no Party
shall be liable to any other Party for failure to obtain or
continue such approvals or authorizations.
9.2 The transportation service described herein shall be provided
subject to Subpart G, Part 284, of the FERC Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified, the responsibility for gas during
transportation shall be as stated in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1.
3<PAGE>
SERVICE PACKAGE NO. 10781
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas Tariff,
Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in place
as of the requested effective date of service, and that it
has advised the upstream and downstream transporters of the
receipt and delivery points under this Agreement and any
quantity limitations for each point as specified on Exhibit
"A" attached hereto. Shipper agrees to indemnify and hold
Transporter harmless for refusal to transport gas hereunder
in the event any upstream or downstream transporter fails to
receive or deliver gas as contemplated by this Agreement.
(b) Shipper agrees to indemnify and hold Transporter harmless
from all suits, actions, debts, accounts, damages, costs,
losses and expenses (including reasonable attorneys fees)
arising from or out of breach of any warranty by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue service
hereunder in the event of any breach of warranty.
4<PAGE>
SERVICE PACKAGE NO. 10781
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
ARTICLE XII
TERM
12.1 This Agreement shall be effective as of the 1st day of June,
1995, and shall remain in force and effect until the 31st day of
May, 2002,("Primary Term") and on a month to month basis
thereafter unless terminated by either Party upon at least thirty
(30) days prior written notice to the other Party; provided,
however, that if the Primary Term is one year or more, then
unless Shipper elects upon one year's prior written notice to
Transporter to request a lesser extension term, the Agreement
shall automatically extend upon the expiration of the Primary
Term for a term of five years and shall automatically extend for
successive five year terms thereafter unless Shipper provides
notice described above in advance of the expiration of a
succeeding term; provided further, if the FERC or other
governmental body having jurisdiction over the service rendered
pursuant to this Agreement authorizes abandonment of such
service, this Agreement shall terminate on the abandonment date
permitted by the FERC or such other governmental body.
12.2 Any portions of this Agreement necessary to resolve or cash out
imbalances under this Agreement as required by the General Terms
and Conditions of Transporter's Tariff, shall survive the other
parts of this Agreement until such time as such balancing has
been accomplished; provided, however, that Transporter notifies
Shipper of such imbalance not later than twelve months after the
termination of this Agreement.
12.3 This Agreement will terminate automatically upon written notice
from Transporter in the event Shipper fails to pay all of the
amount of any bill for service rendered by Transporter hereunder
in accord with the terms and conditions of Article VI of the
General Terms and Conditions of Transporter's FERC Gas Tariff.
ARTICLE XIII
NOTICE
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement shall be
in writing and mailed to the post office address of the Party intended
to receive the same, as follows:
5<PAGE>
SERVICE PACKAGE NO. 10781
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
TRANSPORTER: TENNESSEE GAS PIPELINE COMPANY
P.O. Box 2511
Houston, Texas 77252-2511
Attention: Director, Transportation Control
6<PAGE>
SERVICE PACKAGE NO. 10781
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
SHIPPER:
NOTICES: CONNECTICUT NATURAL GAS CORP
100 COLUMBUS BLVD
HARTFORD, CT 06144
Attention: JOHN P. RUDIAK
BILLING: CONNECTICUT NATURAL GAS CORP
100 COLUMBUS BLVD
HARTFORD, CT 06144
Attention: JULIA A. SCHIAVI
or to such other address as either Party shall designate by formal
written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all rights
and obligations hereunder under the provisions of any mortgage,
deed of trust, indenture, or other instrument which it has
executed or may execute hereafter as security for indebtedness.
Either Party may, without relieving itself of its obligation
under this Agreement, assign any of its rights hereunder to a
company with which it is affiliated. Otherwise, Shipper shall
not assign this Agreement or any of its rights hereunder, except
in accord with Article III, Section 11 of the General Terms and
Conditions of Transporter's FERC Gas Tariff.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
either Party hereto shall be entitled to the rights and shall be
subject to the obligations of its predecessor in interest under
this Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 THE INTERPRETATION AND PERFORMANCE OF THIS CONTRACT SHALL BE IN
ACCORDANCE WITH AND CONTROLLED BY THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO THE DOCTRINES GOVERNING CHOICE OF LAW.
15.2 If any provision of this Agreement is declared null and void, or
7<PAGE>
SERVICE PACKAGE NO. 10781
AMENDMENT NO. 0
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
voidable, by a court of competent jurisdiction, then that
provision will be considered severable at either Party's option;
and if the severability option is exercised, the remaining
provisions of the Agreement shall remain in full force and
effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement to the
terms and provisions stated in this agreement shall be or become
effective until Shipper has submitted a request for change
through the Electronic Bulletin Board and Shipper has been
notified through the Electronic Bulletin Board of Transporter's
agreement to such change.
15.4 Exhibit "A" attached hereto is incorporated herein by reference
and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed as of the date first hereinabove written.
TENNESSEE GAS PIPELINE COMPANY
BY:____________________________
Agent and Attorney-in-Fact
DATE:__________________________
CONNECTICUT NATURAL GAS CORP
BY:____________________________
TITLE: ________________________
DATE: _________________________
8<PAGE>
<TABLE>
<CAPTION>
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
EXHIBIT "A"
AMENDMENT #0 TO GAS TRANSPORTATION AGREEMENT
DATED June 1, 1995
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
CONNECTICUT NATURAL GAS CORP
CONNECTICUT NATURAL GAS CORP
EFFECTIVE DATE OF AMENDMENT: June 1, 1995
RATE SCHEDULE: FT-A
SERVICE PACKAGE: 10781
SERVICE PACKAGE TQ: 13,884 Dth
<C> <S> <C> <C> <C> <C> <C> <C> <C> <C>
METER METER NAME INTERCONNECT PARTY NAME COUNTY ST ZONE R/D LEG METER-TQ BILLABLE-TQ
----------------------------------------------------------------------------------------------------------------------------
020578 ANDREWS SETTLEMENT SALES (Bi NATIONAL FUEL GAS SUPPLY CORP POTTER PA 04 R 300 13,278 13,278
070012 ELLISBURG WITHDRAWAL (CNG) B CNG TRANSMISSION CORP POTTER PA 04 R 300 606 606
Total Receipt TQ: 13,884 3,884
020123 CONNECTICUT-GREENWICH CONN CONNECTICUT NATURAL GAS CORP FAIRFIELCT 06 D 300 3,588 3,588
020217 CONNECTICUT-PUTNAM LAKE CONN CONNECTICUT NATURAL GAS CORP FAIRFIELCT 06 D 300 9,241 9,241
020453 CONNECTICUT-NORTH BLOOMFIELD C CONNECTICUT NATURAL GAS CORP HARTFORDCT 06 D 300 1,055 1,055
</TABLE>
NUMBER OF RECEIPT POINTS AFFECTED: 2
NUMBER OF DELIVERY POINTS AFFECTED: 3
Note: Exhibit "A" is a reflection of the contract and all amendments
as of the amendment effective date.
Tenneco Energy
1010 Milam Street
PO Box 2511
Houston, Texas 77252 2511
Tel 713 757 2131
TENNECO
ENERGY
November 21, 1996
CONNECTICUT NATURAL GAS CORPORATION
100 Columbus Boulevard
P.O. Box 1500
Hartford, CT 06144-1500
Attention: John Rudiak
Director, Energy Procurement
Dear John:
Re: Gas Transportation Agreement
Between Tennessee Gas Pipeline and
Connecticut Natural Gas Corporation
Dated June 1, 1995
Service Package 10781
TENNESSEE GAS PIPELINE COMPANY and CONNECTICUT NATURAL GAS CORPORATION
hereby agree to extend the term of the referenced contract for an
additional two (2) years, until May 31, 2002. By this Letter Agreement,
Article XII, Section 12.1 of the referenced agreement shall state:
"This Agreement shall be effective as of the 1st day of June, 1995,
and shall remain in force and effect until the 31st day of May, 2002,
("Primary Term") and on a month to month basis thereafter unless
terminated by either Party upon at least thirty (30) days prior
written notice to the other Party; provided, however, that if the
Primary Term is one year or more, then unless Shipper elects upon one
year's prior written notice to Transporter to request a lesser
extension term, the Agreement shall automatically extend upon the
expiration of the Primary Term for a term of five years and shall
automatically extend for successive five year terms thereafter unless
Shipper provides notice described above in advance of the expiration
of a succeeding term; provided further, if the FERC or other
governmental body having jurisdiction over the service rendered
pursuant to this Agreement authorizes abandonment of such service,
this Agreement shall terminate on the abandonment date permitted by
the FERC or such other governmental body."
Except as stated herein, the remaining language under terms of the contract
and provisions of the referenced agreement will remain in full force and
effect as written.
<PAGE>
CONNECTICUT NATURAL GAS CORPORATION
Service Package No. 10781
November 21, 1996
Page 2
If the foregoing is in accordance with your understanding of the Agreement,
please indicate by signing and returning to my attention both originals of
this letter. Upon Tennessee's execution, an original will be forwarded to
you for your files.
If you have any questions, please do not hesitate to contact me at
(713)757-2828.
Sincerely,
S/ Alan D. Cook
Alan D. Cook
Customer Service Manager
ADC/egg
ACCEPTED AND AGREED TO this 2nd day
of December, 1996.
CONNECTICUT NATURAL GAS CORPORATION
BY: Edna M. Karanian
------------------------------
TITLE: VP
---------------------------
ACCEPTED AND AGREED TO this 20th day
of June, 1997.
TENNESSEE GAS PIPELINE COMPANY
BY: J. P. Dickens
---------------------------------
Agent and Attorney-in-fact<PAGE>
Contract #: 820009
------
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
This Service Agreement, made and entered into this day of
November, 1996, by and between TEXAS EASTERN TRANSMISSION CORPORATION, a
Delaware Corporation (herein called "Pipeline") and CONNECTICUT NATURAL GAS
CORPORATION (herein called "Customer", whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline currently are parties to two service
agreements under Pipeline's Rate Schedule CDS (Pipeline Contract Nos. 800380
and 800423) which specify an MDQ of 30,000 dth and 644 dth, respectively;
and
WHEREAS, Customer and Pipeline desire to enter into this service
agreement to supersede and combine Customer's existing Rate Schedule CDS
service agreements (Pipeline Contract Nos. 800380 and 800423);
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties do covenant and agree
as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of Pipeline's
Rate Schedule CDS, and of the General Terms and Conditions, transportation
service hereunder will be firm. Subject to the terms, conditions and
limitations hereof and of Sections 2.3 and 2.4 of Pipeline's Rate Schedule
CDS, Pipeline shall deliver to those points on Pipeline's system as
specified in Article IV herein or available to Customer pursuant to Section
14 of the General Terms and Conditions (hereinafter referred to as Point(s)
of Delivery), for Customer's account, as requested for any day, natural gas
quantities up to Customer's MDQ. Customer's MDQ is as follows:
Maximum Daily Quantity (MDQ) 30,644 dth
provided, however, that Customer and Pipeline shall have
six (6) options to reduce the MDQ under this Service
Agreement as set forth below. Such options to reduce
the MDQ under this Service Agreement require two (2)
years prior written notice. Such options to reduce the
MDQ under this Service Agreement: (1) shall not be
cumulative; (2) must be exercised sequentially; and (3)
are available to reduce the MDQ by any amount not in
excess of the following quantities: (i) First Option--up
to 7,355 Dth with such reduction becoming effective on
November 1, 1999, or any November 1 thereafter but prior
to and including November 1, 2004; (ii) Second Option--
up to 4,290 Dth with such reduction becoming effective
on November 1, 2000, or any November 1 thereafter but
prior to and including November 1, 2004; (iii) Third
Option--up to 4,290 Dth with such reduction becoming
effective on November 1, 2001, or any November 1
thereafter but prior to and including November 1, 2004;<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
(iv) Fourth Option--up to 4,290 Dth with such reduction
becoming effective on November 1, 2002, or any November
1 thereafter but prior to and including November 1,
2004; (v) Fifth Option--up to 4,290 Dth with such
reduction becoming effective on November 1, 2003, or any
November 1 thereafter but prior to and including
November 1, 2004; and (vi) Sixth Option--up to 6,129 Dth
with such reduction becoming effective on November 1,
2004. In the event either Customer or Pipeline exercises
its right to reduce the MDQ of this Service Agreement as
set forth in this ARTICLE I, any such reduction(s) will
be subject to Pipeline's right of pregranted abandonment
or Customer's right of first refusal, as applicable, as
set forth in ARTICLE II of this Service Agreement.
Subject to variances as may be permitted by Sections 2.4 of Rate
Schedule CDS or the General Terms and Conditions, Customer shall deliver to
Pipeline and Pipeline shall receive, for Customer's account, at those points
on Pipeline's system as specified in Article IV herein or available to
Customer pursuant to Section 14 of the General Terms and Conditions
(hereinafter referred to as Point(s) of Receipt) daily quantities of gas
equal to the daily quantities delivered to Customer pursuant to this Service
Agreement up to Customer's MDQ, plus Applicable Shrinkage as specified in
the General Terms and Conditions.
Pipeline shall not be obligated to, but may at its discretion, receive
at any Point of Receipt on any day a quantity of gas in excess of the
applicable Maximum Daily Receipt Obligation (MDRO), plus Applicable
Shrinkage, but shall not receive in the aggregate at all Points of Receipt
on any day a quantity of gas in excess of the applicable MDQ, plus
Applicable Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a quantity of gas in
excess of the applicable Maximum Daily Delivery Obligation (MDDO), but shall
not deliver in the aggregate at all Points of Delivery on any day a quantity
of gas in excess of the MDQ.
2
820009
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
In addition to the MDQ and subject to the terms, conditions and
limitations hereof, Rate Schedule CDS and the General Terms and Conditions,
Pipeline shall deliver within the Access Area under this and all other
service agreements under Rate Schedules CDS, FT-1, and/or SCT, quantities up
to Customer's Operational Segment Capacity Entitlements, excluding those
Operational Segment Capacity Entitlements scheduled to meet Customer's MDQ,
for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on November 1,
1996 and, subject to the provisions of ARTICLE I of this Service Agreement,
shall continue in force and effect until October 31, 2004 and year to year
thereafter unless this Service Agreement is terminated as hereinafter
provided. This Service Agreement may be terminated by either Pipeline or
Customer upon two (2) years prior written notice to the other specifying a
termination date of October 31, 2004, or any October 31 thereafter. Subject
to Section 22 of Pipeline's General Terms and Conditions and without
prejudice to such rights, this Service Agreement may be terminated at any
time by Pipeline in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure continues for
thirty (30) days after payment is due; provided, Pipeline gives thirty (30)
days prior written notice to Customer of such termination and provided
further such termination shall not be effective if, prior to the date of
termination, Customer either pays such outstanding bill or furnishes a good
and sufficient surety bond guaranteeing payment to Pipeline of such
outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT TERM OR
THE PROVISION OF A TERMINATION NOTICE BY CUSTOMER TRIGGERS PREGRANTED
ABANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT AS OF THE EFFECTIVE DATE
OF THE TERMINATION. PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO
TRIGGERS CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE TERMINATION.
Any portions of this Service Agreement necessary to correct or cash-out
imbalances under this Service Agreement as required by the General Terms and
Conditions of Pipeline's FERC Gas Tariff, Volume No. 1, shall survive the
other parts of this Service Agreement until such time as such balancing has
been accomplished.
3
820009
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain subject to
the applicable provisions of Rate Schedule CDS and of the General Terms and
Conditions of Pipeline's FERC Gas Tariff on file with the Federal Energy
Regulatory Commission, all of which are by this reference made a part
hereof.
Customer shall pay Pipeline, for all services rendered hereunder and
for the availability of such service in the period stated, the applicable
prices established under Pipeline's Rate Schedule CDS as filed with the
Federal Energy Regulatory Commission, and as same may hereafter be legally
amended or superseded.
Customer agrees that Pipeline shall have the unilateral right to file
with the appropriate regulatory authority and make changes effective in (a)
the rates and charges applicable to service pursuant to Pipeline's Rate
Schedule CDS, (b) Pipeline's Rate Schedule CDS pursuant to which service
hereunder is rendered or (c) any provision of the General Terms and
Conditions applicable to Rate Schedule CDS. Notwithstanding the foregoing,
Customer does not agree that Pipeline shall have the unilateral right
without the consent of Customer subsequent to the execution of this Service
Agreement and Pipeline shall not have the right during the effectiveness of
this Service Agreement to make any filings pursuant to Section 4 of the
Natural Gas Act to change the MDQ specified in Article I, to change the term
of the agreement as specified in Article II, to change Point(s) of Receipt
specified in Article IV, to change the Point(s) of Delivery specified in
Article IV, or to change the firm character of the service hereunder.
Pipeline agrees that Customer may protest or contest the aforementioned
filings, and Customer does not waive any rights it may have with respect to
such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which Pipeline
shall receive and deliver gas, respectively, shall be specified in
Exhibit(s) A and B of the executed service agreement. Customer's Zone
Boundary Entry Quantity and Zone Boundary Exit Quantity for each of
Pipeline's zones shall be specified in Exhibit C of the executed service
agreement.
Exhibit(s) A, B and C are hereby incorporated as part of this Service
Agreement for all intents and purposes as if fully copied and set forth
4
820009
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
herein at length.
5
820009
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account shall
conform to the quality specifications set forth in Section 5 of Pipeline's
General Terms and Conditions. Customer agrees that in the event Customer
tenders for service hereunder and Pipeline agrees to accept natural gas
which does not comply with Pipeline's quality specifications, as expressly
provided for in Section 5 of Pipeline's General Terms and Conditions,
Customer shall pay all costs associated with processing of such gas as
necessary to comply with such quality specifications. Customer shall
execute or cause its supplier to execute, if such supplier has retained
processing rights to the gas delivered to Customer, the appropriate
agreements prior to the commencement of service for the transportation and
processing of any liquefiable hydrocarbons and any PVR quantities associated
with the processing of gas received by Pipeline at the Point(s) of Receipt
under such Customer's service agreement. In addition, subject to the
execution of appropriate agreements, Pipeline is willing to transport
liquids associated with the gas produced and tendered for transportation
hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms
and Conditions of Pipeline's FERC Gas Tariff, any notice, request, demand,
statement, bill or payment provided for in this Service Agreement, or any
notice which any party may desire to give to the other, shall be in writing
and shall be considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: CONNECTICUT NATURAL GAS CORPORATION
P.O. BOX 1500
100 Columbus Boulevard
Hartford, CT 06144
or such other address as either party shall designate by formal written
notice.
6
820009
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or consolidation
to the properties, substantially as an entirety, of Customer, or of
Pipeline, as the case may be, shall be entitled to the rights and shall be
subject to the obligations of its predecessor in title under this Service
Agreement; and either Customer or Pipeline may assign or pledge this Service
Agreement under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar instrument
which it has executed or may execute hereafter; otherwise, neither Customer
nor Pipeline shall assign this Service Agreement or any of its rights
hereunder unless it first shall have obtained the consent thereto in writing
of the other; provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the consent of the
other. In addition, Customer may assign its rights to capacity pursuant to
Section 3.14 of the General Terms and Conditions. To the extent Customer so
desires, when it releases capacity pursuant to Section 3.14 of the General
Terms and Conditions, Customer may require privity between Customer and the
Replacement Customer, as further provided in the applicable Capacity Release
Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement shall be
in accordance with the laws of the State of Texas without recourse to the
law governing conflict of laws.
This Service Agreement and the obligations of the parties are subject
to all present and future valid laws with respect to the subject matter,
State and Federal, and to all valid present and future orders, rules, and
regulations of duly constituted authorities having jurisdiction.
7
820009
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the effective date
of this Service Agreement, the contract(s) between the parties hereto as
described below:
Service Agreements dated, November 17, 1993 and 11/15/96 between
Pipeline and Customer under Pipeline's Rate Schedule CDS (Pipeline's
Contract Nos. 800380 and 800423.
8
820009
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
(Continued)
IN WITNESS WHEREOF, the parties hereto have caused this Service
Agreement to be signed by their respective Presidents, Vice Presidents or
other duly authorized agents and their respective corporate seals to be
hereto affixed and attested by their respective Secretaries or Assistant
Secretaries, the day and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By Robert B. Evans
-----------------------------------
Vice President
ATTEST:
Robert W. Reed
------------------
Robert W. Reed
Corporate Secretary
CONNECTICUT NATURAL GAS CORPORATION
By Edna M. Karanian
---------------------------------
Vice Pres.
ATTEST:
R.L. Babcock
-------------------
9
820009
<PAGE>
Contract #: 830035
-----
-
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
This Service Agreement, made and entered into this 15th day of November,
1996, by and between TEXAS EASTERN TRANSMISSION CORPORATION, a Delaware
Corporation (herein called "Pipeline") and CONNECTICUT NATURAL GAS
CORPORATION (herein called "Customer", whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline currently are parties to a service
agreement under Pipeline's Rate Schedule FT-1 (Pipeline Contract No. 800341)
which specifies an MDQ of 16,970 dth; and
WHEREAS, Customer and Pipeline desire to enter into this service agreement
to supersede Customer's existing Rate Schedule FT-1 service agreement
(Pipeline Contract No. 800341);
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties do covenant and agree
as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of Pipeline's
Rate Schedule FT-1, and of the General Terms and Conditions, transportation
service hereunder will be firm. Subject to the terms, conditions and
limitations hereof and of Pipeline's Rate Schedule FT-1, Pipeline agrees to
deliver for Customer's account quantities of natural gas up to the following
quantity:
Maximum Daily Quantity (MDQ) 16,970 dth
provided, however, that Customer and Pipeline shall have
six (6) options to reduce the MDQ under this Service
Agreement as set forth below. Such options to reduce the
MDQ under this Service Agreement require two (2) years
prior written notice. Such options to reduce the MDQ
under this Service Agreement: (1) shall not be cumulative;
(2) must be exercised sequentially; and (3) are available
to reduce the MDQ by any amount not in excess of the
following quantities: (i) First Option--up to 4,073 Dth
with such reduction becoming effective on November 1,
1999, or any November 1 thereafter but prior to and
including November 1, 2004; (ii) Second Option--up to
2,376 Dth with such reduction becoming effective on
November 1, 2000, or any November 1 thereafter but prior
to and including November 1, 2004; (iii) Third Option--up<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
to 2,376 Dth with such reduction becoming effective on
November 1, 2001, or any November 1 thereafter but prior
to and including November 1, 2004; (iv) Fourth Option--up
to 2,376 Dth with such reduction becoming effective on
November 1, 2002, or any November 1 thereafter but prior
to and including November 1, 2004; (v) Fifth Option--up to
2,376 Dth with such reduction becoming effective on
November 1, 2003, or any November 1 thereafter but prior
to and including November 1, 2004; and (vi) Sixth Option--
up to 3,393 Dth with such reduction becoming effective on
November 1, 2004. In the event either Customer or Pipeline
exercises its right to reduce the MDQ of this Service
Agreement as set forth in this ARTICLE I, any such
reduction(s) will be subject to Pipeline's right of
pregranted abandonment or Customer's right of first
refusal, as applicable, as set forth in ARTICLE II of this
Service Agreement.
Pipeline shall receive for Customer's account, at those points on
Pipeline's system as specified in Article IV herein or available to Customer
pursuant to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Receipt) for transportation hereunder daily
quantities of gas up to Customer's MDQ, plus Applicable Shrinkage. Pipeline
shall transport and deliver for Customer's account, at those points on
Pipeline's system as specified in Article IV herein or available to Customer
pursuant to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Delivery), such daily quantities tendered up to
such Customer's MDQ.
Pipeline shall not be obligated to, but may at its discretion, receive at
any Point of Receipt on any day a quantity of gas in excess of the
applicable Maximum Daily Receipt Obligation (MDRO), plus Applicable
Shrinkage, but shall not receive in the aggregate at all Points of Receipt
on any day a quantity of gas in excess of the applicable MDQ, plus
Applicable Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a quantity of gas in
excess of the applicable Maximum Daily Delivery Obligation (MDDO), but shall
not deliver in the aggregate at all Points of Delivery on any day a quantity
of gas in excess of the applicable MDQ.
In addition to the MDQ and subject to the terms, conditions and
limitations hereof, Rate Schedule FT-1 and the General Terms and Conditions,
Pipeline shall deliver within the Access Area under this and all other
service agreements under Rate Schedules CDS, FT-1, and/or SCT, quantities up
to Customer's Operational Segment Capacity Entitlements, excluding those
Operational Segment Capacity Entitlements scheduled to meet Customer's MDQ,
2
830035
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on November 1, 1996
and, subject to the provisions of ARTICLE I of this Service Agreement, shall
continue in force and effect until October 31, 2004 and year to year
thereafter unless this Service Agreement is terminated as hereinafter
provided. This Service Agreement may be terminated by either Pipeline or
Customer upon two (2) years prior written notice to the other specifying a
termination date of October 31, 2004, or any October 31 therafter. Subject
to Section 22 of Pipeline's General Terms and Conditions and without
prejudice to such rights, this Service Agreement may be terminated at any
time by Pipeline in the event Customer fails to pay part or all of the
amount of any bill for service hereunder and such failure continues for
thirty (30) days after payment is due; provided, Pipeline gives thirty (30)
days prior written notice to Customer of such termination and provided
further such termination shall not be effective if, prior to the date of
termination, Customer either pays such outstanding bill or furnishes a good
and sufficient surety bond guaranteeing payment to Pipeline of such
outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT TERM OR
THE PROVISION OF A TERMINATION NOTICE BY CUSTOMER TRIGGERS PREGRANTED
ABANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT AS OF THE EFFECTIVE DATE
OF THE TERMINATION. PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO
TRIGGERS CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE TERMINATION.
Any portions of this Service Agreement necessary to correct or cash-out
imbalances under this Service Agreement as required by the General Terms and
Conditions of Pipeline's FERC Gas Tariff, Volume No. 1, shall survive the
other parts of this Service Agreement until such time as such balancing has
been accomplished.
3
830035
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain subject to the
applicable provisions of Rate Schedule FT-1 and of the General Terms and
Conditions of Pipeline's FERC Gas Tariff on file with the Federal Energy
Regulatory Commission, all of which are by this reference made a part
hereof.
Customer shall pay Pipeline, for all services rendered hereunder and for
the availability of such service in the period stated, the applicable prices
established under Pipeline's Rate Schedule FT-1 as filed with the Federal
Energy Regulatory Commission, and as same may hereafter be legally amended
or superseded.
Customer agrees that Pipeline shall have the unilateral right to file with
the appropriate regulatory authority and make changes effective in (a) the
rates and charges applicable to service pursuant to Pipeline's Rate Schedule
FT-1, (b) Pipeline's Rate Schedule FT-1 pursuant to which service hereunder
is rendered or (c) any provision of the General Terms and Conditions
applicable to Rate Schedule FT-1. Notwithstanding the foregoing, Customer
does not agree that Pipeline shall have the unilateral right without the
consent of Customer subsequent to the execution of this Service Agreement
and Pipeline shall not have the right during the effectiveness of this
Service Agreement to make any filings pursuant to Section 4 of the Natural
Gas Act to change the MDQ specified in Article I, to change the term of
theagreement as specified in Article II, to change Point(s) of Receipt
specified in Article IV, to change the Point(s) of Delivery specified in
Article IV, or to change the firm character of the service hereunder.
Pipeline agrees that Customer may protest or contest the aforementioned
filings, and Customer does not waive any rights it may have with respect to
such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which Pipeline shall
receive and deliver gas, respectively, shall be specified in Exhibit(s) A
and B of the executed service agreement. Customer's Zone Boundary Entry
Quantity and Zone Boundary Exit Quantity for each of Pipeline's zones shall
be specified in Exhibit C of the executed service agreement.
Exhibit(s) A, B and C are hereby incorporated as part of this Service
Agreement for all intents and purposes as if fully copied and set forth
herein at length.
4
830035
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account shall conform
to the quality specifications set forth in Section 5 of Pipeline's General
Terms and Conditions. Customer agrees that in the event Customer tenders
for service hereunder and Pipeline agrees to accept natural gas which does
not comply with Pipeline's quality specifications, as expressly provided for
in Section 5 of Pipeline's General Terms and Conditions, Customer shall pay
all costs associated with processing of such gas as necessary to comply with
such quality specifications. Customer shall execute or cause its supplier
to execute, if such supplier has retained processing rights to the gas
delivered to Customer, the appropriate agreements prior to the commencement
of service for the transportation and processing of any liquefiable
hydrocarbons and any PVR quantities associated with the processing of gas
received by Pipeline at the Point(s) of Receipt under such Customer's
service agreement. In addition, subject to the execution of appropriate
agreements, Pipeline is willing to transport liquids associated with the gas
produced and tendered for transportation hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms
and Conditions of Pipeline's FERC Gas Tariff, any notice, request, demand,
statement, bill or payment provided for in this Service Agreement, or any
notice which any party may desire to give to the other, shall be in writing
and shall be considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: CONNECTICUT NATURAL GAS CORPORATION
P.O. BOX 1500
100 COLUMBUS BOULEVARD
HARTFORD, CT 06144
or such other address as either party shall designate by formal written
notice.
5
830035
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or consolidation to
the properties, substantially as an entirety, of Customer, or of Pipeline,
as the case may be, shall be entitled to the rights and shall be subject to
the obligations of its predecessor in title under this Service Agreement;
and either Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture, bank credit
agreement, assignment, receivable sale, or similar instrument which it has
executed or may execute hereafter; otherwise, neither Customer nor Pipeline
shall assign this Service Agreement or any of its rights hereunder unless it
first shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline shall be
released from its obligations hereunder without the consent of the other.
In addition, Customer may assign its rights to capacity pursuant to Section
3.14 of the General Terms and Conditions. To the extent Customer so
desires, when it releases capacity pursuant to Section 3.14 of the General
Terms and Conditions, Customer may require privity between Customer and the
Replacement Customer, as further provided in the applicable Capacity Release
Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement shall be in
accordance with the laws of the State of Texas without recourse to the law
governing conflict of laws.
This Service Agreement and the obligations of the parties are subject to
all present and future valid laws with respect to the subject matter, State
and Federal, and to all valid present and future orders, rules, and
regulations of duly constituted authorities having jurisdiction.
6
830035
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the effective date of
this Service Agreement, the contract(s) between the parties hereto as
described below:
Service Agreement dated November 17, 1993, between Pipeline and
Customer under Pipeline's Rate
Schedule FT-1 (Pipeline's
Contract No. 800341).
7
830035
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
(Continued)
IN WITNESS WHEREOF, the parties hereto have caused this Service Agreement
to be signed by their respective Presidents, Vice Presidents or other duly
authorized agents and their respective corporate seals to be hereto affixed
and attested by their respective Secretaries or Assistant Secretaries, the
day and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By Robert B. Evans
-----------------------------------
Vice President
ATTEST:
Robert W. Reed
--------------------
CONNECTICUT NATURAL GAS CORPORATION
By Edna M. Karanian
---------------------------------
Vice Pres.
ATTEST:
R. L. Babcock
--------------------
8
830035
<PAGE>
Contract #: 400223
------
SERVICE AGREEMENT
FOR RATE SCHEDULE SS-1
This Service Agreement, made and entered into this 15th day of
November, 1996, by and between TEXAS EASTERN TRANSMISSION CORPORATION, a
Delaware Corporation (herein called "Pipeline") and CONNECTICUT NATURAL GAS
CORPORATION (herein called "Customer," whether one or more),
W I T N E S S E T H:
WHEREAS, Pipeline and Customer are currently parties to service
agreements under Pipeline's Rate Schedule SS-1 (Pipeline's Contract Nos.
400148, 400149, 400150 and 412008) which specify an MDWQ of 2,216 dth and an
MSQ of 261,719 dth, an MDWQ of 3,521 dth and an MSQ of 246,470 dth, an MDWQ
of 21,263 and an MSQ of 1,275,780 and an MDWQ of 207 and an MSQ of 14,490
respectively; and
WHEREAS, Pipeline and Customer desire to enter into this Service
Agreement to supersede Customer's existing Rate Schedule SS-1 service
agreements referenced above; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties do covenant and agree
as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof and of
Pipeline's Rate Schedule SS-1, Pipeline agrees to provide firm service for
Customer under Rate Schedule SS-1 and to receive and store for Customer's
account quantities of natural gas up to the following quantity:
Maximum Daily Injection Quantity (MDIQ) 9,244 dth
Maximum Storage Quantity (MSQ) 1,798,459 dth
Pipeline agrees to withdraw from storage for Customer, at Customer's
request, quantities of gas up to Customer's Maximum Daily Withdrawal
Quantity (MDWQ) of 27,207 dekatherms, or such lesser quantity as determined
pursuant to Rate Schedule SS-1, from Customer's Storage Inventory, plus
Applicable Shrinkage, and to deliver for Customer's account such quantities.
Pipeline's obligation to withdraw gas on any day is governed by the
provisions of Rate Schedule SS-1, including but not limited to Section 6.<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE SS-1
(Continued)
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on the later of (i)
June 1, 1996 or (ii) the first day of the first month after Customer fully
executes this Service Agreement and shall continue in force and effect until
April 30, 2004 and year to year thereafter unless this Service Agreement is
terminated as hereinafter provided. This Service Agreement may be
terminated by either Pipeline or Customer upon five (5) years prior written
notice to the other specifying a termination date of any April 30th
occurring on or after the expiration of the primary term. Subject to
Section 22 of Pipeline's General Terms and Conditions and without prejudice
to such rights, this Service Agreement may be terminated at any time by
Pipeline in the event Customer fails to pay part or all of the amount of any
bill for service hereunder and such failure continues for thirty (30) days
after payment is due; provided, Pipeline gives thirty (30) days prior
written notice to Customer of such termination and provided further such
termination shall not be effective if, prior to the date of termination,
Customer either pays such outstanding bill or furnishes a good and
sufficient surety bond guaranteeing payment to Pipeline of such outstanding
bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT TERM OR
THE PROVISION OF A TERMINATION NOTICE BY CUSTOMER TRIGGERS PREGRANTED
ABANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT AS OF THE EFFECTIVE DATE
OF THE TERMINATION. PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO
TRIGGERS CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE TERMINATION.
In the event there is gas in storage for Customer's account on April 30
of the year of termination of this Service Agreement, this Service Agreement
shall continue in force and effect for the sole purpose of withdrawal and
delivery of said gas to Customer for an additional one-hundred and twenty
(120) days.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain subject to
the applicable provisions of Rate Schedule SS-1 and of the General Terms and
Conditions of Pipeline's FERC Gas Tariff on file with the Federal Energy
Regulatory Commission, all of which are by this reference made a part
hereof.
2 400223
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE SS-1
(Continued)
Customer shall pay Pipeline, for all services rendered hereunder and
for the availability of such service in the period stated, the applicable
prices established under Pipeline's Rate Schedule SS-1 as filed with the
Federal Energy Regulatory Commission and as the same may be hereafter
revised or changed.
Customer agrees that Pipeline shall have the unilateral right to file
with the appropriate regulatory authority and make changes effective in (a)
the rates and charges applicable to service pursuant to Pipeline's Rate
Schedule SS-1, (b) Pipeline's Rate Schedule SS-1, pursuant to which service
hereunder is rendered or (c) any provision of the General Terms and Condi-
tions applicable to Rate Schedule SS-1. Notwithstanding the foregoing,
Customer does not agree that Pipeline shall have the unilateral right
without the consent of Customer subsequent to the execution of this Service
Agreement and Pipeline shall not have the right during the effectiveness of
this Service Agreement to make any filings pursuant to Section 4 of the
Natural Gas Act to change the MDIQ, MSQ and MDWQ specified in Article I, to
change the term of the service agreement as specified in Article II, to
change Point(s) of Receipt specified in Article IV, to change the Point(s)
of Delivery specified in Article IV, or to change the firm character of the
service hereunder. Pipeline agrees that Customer may protest or contest the
aforementioned filings, and Customer does not waive any rights it may have
with respect to such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The natural gas received by Pipeline for Customer's account for storage
injection pursuant to this Service Agreement shall be those quantities
scheduled for delivery pursuant to Service Agreements between Pipeline and
Customer under Rate Schedules CDS, FT-1, SCT, PTI or IT-1 which specify as a
Point of Delivery the "SS-1 Storage Point". For purposes of billing of
Usage Charges under Rate Schedules CDS, FT-1, SCT, PTI or IT-1, deliveries
under Rate Schedules CDS, FT-1, SCT, PTI or IT-1 for injection into storage
scheduled directly to the "SS-1 Storage Point" shall be deemed to have been
delivered 60% in Market Zone 2 and 40% in Market Zone 3. In addition, at
Customer's request any positive or negative variance between scheduled
deliveries and actual deliveries on any day at Customer's Points of
Delivery under Rate Schedules CDS, FT-1, SCT, or IT-1 shall be deemed for
billing purposes delivered at the Point of Delivery and shall be injected
into or withdrawn from storage for Customer's account. In addition to
accepting gas for storage injection at the SS-1 Storage Point, Pipeline will
accept gas tendered at points of interconnection between Pipeline and third
party facilities at Oakford and Leidy Storage Fields provided that such
receipt does not result in Customer tendering aggregate quantities for
3 400223
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE SS-1
(Continued)
storage in excess of the Customer MDIQ.
4 400223
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE SS-1
(Continued)
The Point(s) of Delivery at which Pipeline shall deliver gas shall be
specified in Exhibit A of the executed service agreement.
Exhibit A and B are hereby incorporated as part of this Service
Agreement for all intents and purposes as if fully copied and set forth
herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account shall
conform and be subject to the provisions of Section 5 of the General Terms
and Conditions. Customer agrees that in the event Customer tenders for
service hereunder and Pipeline agrees to accept natural gas which does not
comply with Pipeline's quality specifications, as expressly provided for in
Section 5 of Pipeline's General Terms and Conditions, Customer shall pay all
costs associated with processing of such gas as necessary to comply with
such quality specifications.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms
and Conditions of Pipeline's FERC Gas Tariff, any notice, request, demand,
statement, bill or payment provided for in this Service Agreement, or any
notice which any party may desire to give to the other, shall be in writing
and shall be considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties hereto, as
the case may be, as follows:
(a) Pipeline: Texas Eastern Transmission Corporation
5400 Westheimer Court
Houston, Texas 77056-5310
(b) Customer: CONNECTICUT NATURAL GAS CORPORATION
P O BOX 1500
100 COLUMBUS BOULEVARD
HARTFORD, CT 06144
or such other address as either party shall designate by formal written
notice.
5 400223
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE SS-1
(Continued)
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or consolidation
to the properties, substantially as an entirety, of Customer, or of
Pipeline, as the case may be, shall be entitled to the rights and shall be
subject to the obligations of its predecessor in title under this Service
Agreement; and either Customer or Pipeline may assign or pledge this Service
Agreement under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar instrument
which it has executed or may execute hereafter; otherwise, neither Customer
nor Pipeline shall assign this Service Agreement or any of its rights
hereunder unless it first shall have obtained the consent thereto in writing
of the other; provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the consent of the
other. In addition, Customer may assign its rights to capacity pursuant to
Section 3.14 of the General Terms and Conditions. To the extent Customer so
desires, when it releases capacity pursuant to Section 3.14 of the General
Terms and Conditions, Customer may require privity between Customer and the
Replacement Customer, as further provided in the applicable Capacity Release
Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement shall be
in accordance with the laws of the State of Texas without recourse to the
law governing conflict of laws.
This Service Agreement and the obligations of the parties are subject
to all present and future valid laws with respect to the subject matter,
State and Federal, and to all valid present and future orders, rules, and
regulations of duly constituted authorities having jurisdiction.
6 400223
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE SS-1
(Continued)
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the effective date
of this Service Agreement, the contract(s) between the parties hereto as
described below:
Service Agreement(s) dated, November 17, 1993 and
between Pipeline and Customer under Pipeline's Rate Schedule SS-1
(Pipeline's Contract Nos. 400148, 400149, 400150 and 412008).
7 400223
<PAGE>
SERVICE AGREEMENT
FOR RATE SCHEDULE SS-1
(Continued)
IN WITNESS WHEREOF, the Parties hereto have caused this Service
Agreement to be signed by their respective Presidents, Vice Presidents, or
other duly authorized agents and their respective corporate seals to be
hereto affixed and attested by their respective Secretaries or Assistant
Secretaries, the day and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By Robert B. Evans
-----------------------------------
Vice President
ATTEST:
Robert W. Reed
-----------------
CONNECTICUT NATURAL GAS CORPORATION
By Edna M. Karanian
--------------------------------
Vice President
ATTEST:
R. L. Babcock
------------------
8 400223
<PAGE>
FIRST AMENDMENT TO ISSUING AND PAYING AGENCY AGREEMENT
-------------------------------------------------------
This First Amendment to Issuing and Paying Agency Agreement
is made this August 13, 1997 by and among State Street Bank and
Trust Company ("State Street"), a Massachusetts trust company
maintaining an office for purposes of this agreement at 225
Asylum Street, Hartford, Connecticut 06103, Fleet National Bank
("Fleet"), a national banking association maintaining an office
at 777 Main Street, Hartford, Connecticut 06115, and Connecticut
Natural Gas Corporation (the "Company"), a Connecticut corpora-
tion having its principal place of business at 100 Columbus
Boulevard, Hartford, Connecticut 06103.
RECITALS:
A. Fleet, formerly known as Shawmut Bank Connecticut,
National Association, and the Company are parties to an Issuing
and Paying Agency Agreement dated as of June 14, 1994 (the
"Agreement") concerning the Company's Medium-Term Notes,
Series B, in an aggregate principal amount not exceeding U.S.
$75,000,000 (the "Notes").
B. Fleet has sold substantially all of its corporate trust
operations to State Street, effective June 30, 1997.
C. In connection with such sale, Fleet wishes to document
its resignation as Issuing and Paying Agent under the Agreement,
and State Street wishes to be appointed by the Company as the
successor Issuing and Paying Agent under the Agreement.
1<PAGE>
D. The Company wishes to accept the resignation of Fleet
and appoint State Street in its stead.
E. The Company, PaineWebber Incorporated and
A.G. Edwards & Sons, Inc. have this date entered into an Amended
and Restated Placement Agency Agreement (the "Amended Placement
Agency Agreement") modifying and replacing the Placement Agency
Agreement concerning (the "Placement Agency Agreement") the Notes
among Smith Barney Inc., A.G. Edwards & Sons, Inc. and the
Company dated June 14, 1994.
F. State Street and the Company wish to amend the Agree-
ment to reflect the substitution of PaineWebber Incorporated for
Smith Barney Inc. and amend the form of the Notes annexed to the
Agreement as Exhibit I to reflect the changes referred to in
these recitals.
G. The parties hereto acknowledge and agree that each
amendment of the Agreement and the Notes set forth below does not
adversely affect the interests of any Holder of any of the Notes.
H. Any capitalized terms not defined herein shall have the
meanings attributed to them in the Agreement and the Notes.
In consideration of the mutual promises hereinafter
contained, Fleet, State Street and the Company hereby covenant
and agree as follows:
1. Fleet hereby resigns as Issuing and Paying Agent under
the Agreement.
2. The Company hereby accepts such resignation and
appoints State Street as the successor Issuing and Paying Agent
under the Agreement.
2<PAGE>
3. Fleet and the Company waive any notice requirements
under the Agreement with respect to the matters referred to in
Paragraphs 1 and 2 above.
4. All references in the Agreement to the Placement Agency
Agreement shall be deemed references to the Amended Agency
Agreement.
5. Paragraph 2 of Article V of the Agreement is deleted
and the following new paragraph 2 of Article V is substituted in
its place:
2. In order to preserve the exemption from
registration under the Securities Act, the Notes will
be issued and sold on the condition that no resale or
other transfer of a Note or any interest therein will
be made prior to the date that is two (2) years after
the later of (a) the Original Issue Date or (b) the
last date the Company or any of its affiliates was the
beneficial owner of such Note unless the Note is
transferred: (i) to an Agent or the Company; or
(ii) through an Agent or by an Agent acting as
principal to an institutional investor approved as an
Accredited Investor or a Qualified Institutional Buyer
by such Agent; or (iii) directly to an institutional
investor approved as an Accredited Investor or a
Qualified Institutional Buyer by the Company in a
transaction approved by the Company; or (iv) through a
dealer other than the Agents to an institutional
investor approved as an Accredited Investor or a
Qualified Institutional Buyer by the Company in a
transaction approved by the Company; (v) directly to a
Qualified Institutional Buyer in a transaction that
meets the requirements of Rule 144A under the
Securities Act, (vi) pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act, (vii) to an institutional accredited
investor acquiring the Notes pursuant to an exemption
form registration provided by Regulation S under the
Securities Act and (viii) pursuant to an effective
registration statement under the Securities Act,
subject in each case to the disposition of the
purchaser's property being at all times within its
control. Approval by an Agent or the Company of a
transfer of a Note, to the extent required as described
above, will be granted only if the transfer is made to
a Qualified Institutional Buyer or an Accredited
Investor and is in accordance with the other
requirements applicable to an initial sale or the
3<PAGE>
requirements of Rule 144A under the Securities Act.
Any transfer described in clause (iii), (iv), (v) or
(vii) above including a transaction effectuated by or
through the Depository's book-entry system requires the
submission to the Issuing and Paying Agent of the
certificate of transfer on the Note duly completed or a
duly completed transfer instrument substantially in the
form attached as Exhibit II to this Agreement. In
connection with any transfer of the Notes within two
years after the original issuance of the Notes, if the
proposed transferee is an Accredited Investor, the
holder must, prior to such transfer, furnish to the
Issuing and Paying Agent and the Company such
certifications, legal opinions or other information as
either of them may reasonably require to confirm that
such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the
registration requirements of the Securities Act.
Notwithstanding the preceding sentence, the Issuing and
Paying Agent shall not effect any transfer requested in
such certificate of transfer or transfer instrument
unless first receiving approval from the Company or the
Company's counsel. The Issuing and Paying Agent shall
provide a copy of such certificate of transfer or
transfer instrument to the Company and to each Agent as
soon as practicable following its receipt of such
certificate of transfer or transfer instrument. The
Company or the Company's counsel shall approve or
disapprove (stating the reasons for any disapproval) of
such transfer within one (1) Business Day after
receiving such certificate of transfer or transfer
instrument. In the event the Issuing and Paying Agent
shall not receive such approval or disapproval within
such one (1) Business Day, it shall as soon as
practicable on the next succeeding Business Day request
such approval or disapproval from the Company. In the
further event that such approval or disapproval is not
received by the Issuing and Paying Agent within two (2)
Business Days after receiving such certificate of
transfer or transfer instrument, then the Issuing and
Paying Agent shall return the certificate of transfer
or transfer instrument and any related Note or Notes
for the reason that no approval of the requested
transfer was received and refer the person submitting
such request to the Company. If the requested transfer
shall be disapproved by the Company or its counsel, the
Issuing and Paying Agent shall return the certificate
of transfer or transfer instrument and any related Note
or Notes to the person requesting such transfer for the
reason that the requested transfer has been disapproved
and provide the reasons therefor.
4<PAGE>
6. The form of the Notes annexed to the Agreement as
Exhibit I is deleted and a new Exhibit I is substituted in its
place in the form annexed to this First Amendment.
7. The substitution of State Street Bank and Trust Company
for Shawmut Bank Connecticut, National Association, as the
Issuing and Paying Agent under the Agreement, as modified hereby,
shall, for all purposes, be deemed as effective as of June 30,
1997.
8. Except as modified hereby, the Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
First Amendment to be executed by their respective corporate
officers, thereunto duly authorized, as of the day and year first
above written.
STATE STREET BANK AND TRUST COMPANY
By:_______________________________
FLEET NATIONAL BANK
By:_______________________________
Its Agent, acting pursuant to a Power of
Attorney of Fleet National Bank, dated
June 30, 1997
CONNECTICUT NATURAL GAS CORPORATION
By:________________________________
Its
5<PAGE>
=================================================================
MEDIUM-TERM NOTES, SERIES B
Up to U.S. $75,000,000
Maturities from One Year to Thirty Years
AMENDED AND RESTATED
PLACEMENT AGENCY AGREEMENT
among
CONNECTICUT NATURAL GAS CORPORATION,
as Issuer,
and
PAINEWEBBER INCORPORATED
and
A.G. EDWARDS & SONS, INC.,
as Agents.
Dated August 13, 1997
=================================================================<PAGE>
CONNECTICUT NATURAL GAS CORPORATION
U.S. $75,000,000
Medium-Term Notes, Series B
with Maturities from One Year
to Thirty Years from Date of Issue
Amended and Restated
Placement Agency Agreement
--------------------------
New York, New York
August 13, 1997
PaineWebber Incorporated
1285 Avenue of the Americas
New York, NY 10019
A.G. Edwards & Sons, Inc.
One North Jefferson
St. Louis, MO 63103
Dear Sirs:
Connecticut Natural Gas Corporation, a Connecticut
corporation (the "Issuer"), confirms its agreement with you, with
respect to the issue and sale by the Issuer of its Medium-Term
Notes, Series B (the "Notes"). This Amended and Restated
Placement Agency Agreement (the "Agreement") amends and restates
the Placement Agency Agreement dated June 14, 1994 among the
Issuer, Smith Barney Inc. and A.G. Edwards & Sons, Inc. pursuant
to which $ 20,000,000 in aggregate principal amount of the Notes
is currently outstanding. The Notes may be sold by the Issuer in
an aggregate principal amount at any time outstanding of up to
$75,000,000. It is understood, however, that the Issuer may from
time to time authorize the issuance of additional Notes and that
such additional Notes may be sold through or to the Agents
pursuant to the terms of the Agreement, all as though the
issuance of such Notes were authorized as of the date hereof.
The Notes will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), in
reliance upon the exemption therefrom provided by Section 4(2) of
the Securities Act including in reliance upon the exemption
therefrom provided by Regulation D promulgated thereunder
("Regulation D") and without qualification of an indenture under
the Trust Indenture Act of 1939 (the "Trust Indenture Act"), in
reliance upon the exemption therefrom provided by Section 304(b)<PAGE>
2
thereof. Notes may be resold or otherwise transferred by the
holders thereof only if they are registered under the Securities
Act or if an exemption (including the exemption afforded by Rule
144A ("Rule 144A") of the rules and regulations promulgated under
the Securities Act (the "Rules and Regulations")) from the
registration requirements of the Securities Act is available.
The Notes will be issued under an Issuing and Paying Agency
Agreement dated as of June 14, 1994 (as amended by the First
Amendment thereto dated as of August 13, 1997, the "Issuing and
Paying Agency Agreement"), between the Issuer and State Street
Bank and Trust Company, as successor to Shawmut Bank Connecticut,
National Association, as issuing and paying agent (the "Issuing
and Paying Agent"). All Notes having a common issue date,
maturity date, interest rate and otherwise identical terms are
referred to herein as a "Tranche". The Notes will be issued, and
the terms thereof established, in accordance with the Issuing and
Paying Agency Agreement and, in the case of Notes sold pursuant
to Section 2(a), the Medium-Term Notes Administrative Procedures
attached hereto as Exhibit A (the "Procedures"). The Procedures
set forth in Exhibit A shall remain in effect with respect to
sales solicited by Agents until changed by the Issuer and the
applicable Agent or Agents and the Issuing and Paying Agent. For
the purposes of this Agreement: the term "Agents" shall refer to
any of you acting solely in the capacity as agent for the Issuer
pursuant to Section 2(a) and not as principal; the term
"Purchaser" shall refer to any of you acting solely as principal
pursuant to Section 2(b) and not as agent; and the term "you"
shall refer to any of the firms which are addressees named above,
acting in both such capacities or in either such capacity.
1. REPRESENTATIONS AND WARRANTIES. The Issuer
represents and warrants to each of you as of the date hereof, and
shall be deemed to represent and warrant to each of you at and as
of each time the Issuer gives a notice requesting any of you to
solicit offers as Agent, at and as of each acceptance of an offer
by the Issuer, at and as of the date of each Terms Agreement (as
defined in Section 2(b)), and upon the delivery to the purchaser
(or its agent) pursuant to such offer or to any Purchaser of any
Note pursuant to such Terms Agreement and as of any time that the
Offering Memorandum (as defined below) shall be amended or
supplemented, as the case may be, that:
(a) The Offering Memorandum, as defined below, does
not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; PROVIDED, HOWEVER, that the
foregoing representations and warranties shall not apply to
statements in the Offering Memorandum made in reliance upon
and in conformity with information furnished to the Issuer<PAGE>
3
in writing by any of you, or on behalf of any of you which
has been furnished by a person authorized to do so,
specifically for use therein; provided, however, that the
information set forth in Schedule III hereto constitutes the
only information furnished to the Issuer by or on behalf of
the Agents expressly for use in the Offering Memorandum (or
any amendment or supplement thereto). As used in this
Agreement, the term "Offering Memorandum" means the
confidential offering memorandum dated the same date as this
Agreement relating to the Notes, as it may be amended or
supplemented from time to time, including any documents
incorporated by reference therein and any quarterly,
semiannual or annual report of the Issuer delivered to any
of you for delivery together with the Offering Memorandum,
which amendment or supplement may be in the form of a
separate document that does not state that it is a
supplement to the Offering Memorandum, and any reference to
the terms "amend", "amendment" or "supplement" with respect
to the Offering Memorandum shall refer to and include the
filing with the Securities and Exchange Commission (the
"Commission") of any documents incorporated by reference
into the Offering Memorandum after the date hereof.
(b) The financial statements of the Issuer included or
incorporated by reference in, or as an exhibit, attachment
or appendix to, the Offering Memorandum present fairly the
financial position of the Issuer as of the dates indicated
and the results of its operations for the periods specified,
and, except as disclosed in the Offering Memorandum, the
audited financial statements of the Issuer therein have been
prepared in accordance with generally accepted accounting
principles in the United States consistently applied and any
interim financial statements therein have been prepared on a
basis substantially consistent with that of the audited
year-end financial statements, except as otherwise required
or permitted by generally accepted accounting principles for
interim periods in the United States.
(c) Since the respective dates as of which information
is given in the Offering Memorandum, except as otherwise set
forth therein, (i) there has been no material adverse
change, or to the knowledge of the Issuer any development
involving a prospective change, in the financial condition,
earnings, results of operations, business or business
prospects or properties of the Issuer and its subsidiaries
considered as a single enterprise, whether or not arising in
the ordinary course of business and (ii) no rating of any of
the debt securities of the Issuer has been lowered by
Moody's Investors Service, Inc., or Standard & Poor's
Ratings Group (each a "Rating Agency"), nor has there been<PAGE>
4
any public announcement that any Rating Agency has under
surveillance or review its rating of any such debt
securities (other than an announcement with positive
implications of a possible upgrading, and no implication of
a possible downgrading, of such rating).
(d) The Issuer and each of its subsidiaries have been
duly incorporated and are validly existing as corporations
in good standing under the laws of the State of Connecticut;
the Issuer has full power, authority and legal right to
execute and deliver this Agreement and the Issuing and
Paying Agency Agreement, to issue the Notes, and to perform
its obligations under this Agreement, the Issuing and Paying
Agency Agreement and the Notes; the execution and delivery
of this Agreement, the Issuing and Paying Agency Agreement
and the Notes have been duly authorized by all necessary
corporate action on the part of the Issuer; each Note, when
completed, executed, authenticated and delivered in
accordance with the Issuing and Paying Agency Agreement
against payment of the consideration therefor will
constitute a legal, valid and binding obligation of the
Issuer, enforceable against the Issuer in accordance with
the terms of such Note, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally or by general
equity principles, and will entitle its holder to the
benefits of the Issuing and Paying Agency Agreement; and the
Issuing and Paying Agency Agreement conforms and each Note
will conform in all material respects to the descriptions
thereof in the Offering Memorandum.
(e) The execution and delivery of this Agreement and
the Issuing and Paying Agency Agreement, the issuance of any
Note and the consummation of the transactions contemplated
hereunder or thereunder will not conflict with, constitute a
breach of, constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance
(in each case material to the Issuer and its subsidiaries
considered as a single enterprise) upon any property or
assets of the Issuer or any of the Issuer's subsidiaries
pursuant to, the charter or by-laws of the Issuer or any of
the Issuer's subsidiaries, or any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Issuer or any of the Issuer's subsidiaries is a
party or to which any of the property or assets of the
Issuer or any of the Issuer's subsidiaries is subject. No
such action will result in any violation, material to the
Issuer and its subsidiaries considered as a single
enterprise or to the power, authority or ability of the<PAGE>
5
Issuer to perform its obligations under this Agreement, the
Issuing and Paying Agency Agreement and the Notes, of the
provisions of any law, decree, regulation, order or judgment
of any court, arbitrator, government, governmental authority
or agency to which the Issuer or any of the Issuer's
subsidiaries or any of their respective properties or assets
is subject.
(f) Since the respective dates as of which information
is given in the Offering Memorandum, except as otherwise set
forth therein, (i) there are no legal or governmental
actions, suits or proceedings before or by any court or
governmental agency or body of any jurisdiction now pending
or, to the knowledge of the Issuer, threatened against the
Issuer or any of the Issuer's subsidiaries or to which any
property of the Issuer or any of the Issuer's subsidiaries
is the subject, other than such actions, suits or
proceedings which in each case will not have a material
adverse effect on the financial condition, earnings, results
of operations, business or business prospects or properties
of the Issuer and its subsidiaries considered as a single
enterprise or the ability of the Issuer to perform its
obligations under this Agreement, the Issuing and Paying
Agent Agreement and the Notes and (ii) there are no such
actions, suits or proceedings pending or, to the knowledge
of the Issuer, threatened, relating to the Notes, their
offering or the Offering Memorandum.
(g) No approval, authorization, consent or other order
of, or any filing with, any government, governmental or
other administrative agency or body is required in
connection with the execution and delivery by the Issuer of
this Agreement and the Issuing and Paying Agency Agreement,
the solicitation of offers to purchase Notes, the issuance
of any Note or the performance by the Issuer of any of its
obligations hereunder or thereunder, except such as may be
required under the blue sky laws of any jurisdiction in
connection with the issue and sale of the Notes. All neces-
sary approvals, if any, have been obtained from the
Connecticut Department of Public Utility Control to
authorize the issuance and sale of the Notes and such
approvals, if any, remain in full force and effect on the
date hereof.
(h) This Agreement and the Issuing and Paying Agency
Agreement have been duly executed and delivered by the
Issuer and constitute the legal, valid and binding
agreements of the Issuer, and are enforceable against the
Issuer in accordance with their terms, except as enforcement
thereof may be limited by bankruptcy, insolvency,<PAGE>
6
reorganization, moratorium or other laws relating to or
affecting creditors' rights generally or by general equity
principles.
(i) The Notes satisfy the requirements set forth in
paragraph (d)(3) of Rule 144A.
(j) Neither the Issuer nor any affiliate (which, for
purposes of this Agreement, shall have the meaning given in
Rule 501(b) of Regulation D of the Rules and Regulations) of
the Issuer has directly or indirectly, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in
respect of, any of the Notes or any other security (as
defined in the Securities Act) which is or will be
integrated with any sale of the Notes in a manner that would
require the registration of the Notes under the Securities
Act or (ii) engaged in any form of general solicitation or
general advertising (within the meaning of Rule 502(c) of
Regulation D of the Rules and Regulations) in connection
with the offering of the Notes.
(k) Neither the registration of the Notes under the
Securities Act nor the qualification of the Issuing and
Paying Agency Agreement under the Trust Indenture Act is
required for the offer and sale of the Notes in the manner
contemplated by the Offering Memorandum and this Agreement.
(l) The Issuer and its subsidiaries have statutory
authority, franchises, permits, easements and consents free
from unduly burdensome restrictions and adequate for the
conduct of the respective businesses in which they are
engaged.
(m) The Issuer is a subsidiary of CTG Resources, Inc.,
a Connecticut corporation ("CTG"), and is exempt from any
provisions imposed upon it as a "subsidiary company" of a
"holding company" under the Public Utility Holding Company
Act of 1935, as amended, except Section 9(a)(2) thereof.
(n) The Issuer is not subject to regulation by the
Federal Energy Regulatory Commission ("FERC") under the
Natural Gas Act, except with respect to certain interstate
sales for resale as to which the Issuer has a blanket
certificate of public convenience and authority from FERC.
(o) All of the issued shares of capital stock of the
Issuer have been duly and validly authorized and issued, and
are fully paid and nonassessable and are owned by CTG. All
of the issued shares of capital stock of each subsidiary of<PAGE>
7
the Issuer are owned by the Issuer free and clear of all
liens, encumbrances, equities or claims.
(p) Except as set forth or arising out of facts
disclosed in the Offering Memorandum or incorporated by
reference therein, neither the Issuer nor its subsidiaries
to the best of its knowledge (a) is in violation of any
laws, ordinances, governmental rules and regulations to
which it is subject or (b) has failed to obtain any
licenses, permits, franchises or other governmental
authorizations, necessary to the ownership of its property
or to the conduct of its business, which violation or such
failure to obtain could reasonably be expected to materially
adversely affect the business, business prospects, profits,
properties or condition (financial or otherwise) of the
Issuer and its subsidiaries considered as one enterprise.
(q) Neither the Issuer nor any of its subsidiaries has
sustained since the date of the latest audited financial
statements included or incorporated by reference in the
Offering Memorandum any material loss or interference with
its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering
Memorandum as amended or supplemented.
(r) Each Note will be an unconditional and direct debt
obligation of the Issuer and will rank PARI PASSU with other
unsecured and unsubordinated existing and future obligations
of the Issuer.
(s) The Issuer is not required to register as an
"investment company" under the Investment Company Act of
1940, as amended and will not be required to so register as
a result of the transactions contemplated herein.
(t) No labor dispute with the employees of the Issuer
or its subsidiaries exists or, to the knowledge of the
Issuer, is imminent that could reasonably be expected to
result in any material adverse change in the condition,
financial or otherwise, earnings, results of operations,
properties, business affairs or business prospects of the
Issuer and its subsidiaries considered as a single
enterprise; and the Issuer is not aware of any existing or
imminent labor disturbance by the employees of any of its
principal suppliers, manufacturers or contractors that could
reasonably be expected to result in any material adverse
change in the financial condition, earnings, results of
operations, business or business prospects or properties of<PAGE>
8
the Issuer and its subsidiaries considered as a single
enterprise.
(u) (i) Neither the Issuer nor any of its
subsidiaries is in violation of any federal, state, local or
foreign laws or regulations relating to pollution or
protection of human health, the environment (including,
without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively,
"Materials of Environmental Concern") or to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern
(collectively, "Environmental Laws"), except such violations
which, singly or in the aggregate, could not reasonably be
expected to have a material adverse effect on the financial
condition, earnings, results of operations, business or
business prospects or properties of the Issuer and its
subsidiaries considered as a single enterprise, and (ii) to
the best of the Issuer's knowledge, there are no events or
circumstances that could form the basis of an order for
clean-up or remediation, or any action, suit or proceeding
by any private property or governmental body or agency,
against or affecting the Issuer or any of its subsidiaries
relating to any Materials of Environmental Concern or the
violation of any Environmental Law, which, singly or in the
aggregate, could not reasonably be expected to have a
material adverse effect on the financial condition,
earnings, results of operations, business or business
prospects or properties of the Issuer and its subsidiaries
considered as a single enterprise.
(v) The Issuer and its subsidiaries have filed all
federal, state and local tax returns that are required to be
filed or have duly requested extensions thereof and have
paid all taxes required to be paid by any of them and any
related assessments, fines or penalties, except for any such
tax, assessment, fine or penalty that is being contested in
good faith and by appropriate proceedings; and adequate
charges, accruals and reserves have been provided for in the
financial statements of the Issuer in respect of all
federal, state or local taxes for all periods as to which
the tax liability of the Issuer or any of its subsidiaries
has not been finally determined or remains open to
examination by applicable taxing authorities, except such
failures to file, pay or reserve as would not, singly or in
the aggregate, have a material adverse effect on the
financial condition, earnings, results of operations,<PAGE>
9
business or business prospects or properties of the Issuer
and its subsidiaries considered as a single enterprise.
2. APPOINTMENT OF AGENTS; SOLICITATION BY THE AGENTS
OF OFFERS TO PURCHASE; SALES OF NOTES TO A PURCHASER.
(a) (i) Subject to the terms and conditions set forth herein,
the Issuer hereby appoints and authorizes each of the Agents to
act as its agent to solicit offers for the Purchase of Notes from
the Issuer.
(ii) On the basis of the representations and
warranties, and subject to the terms and conditions, set forth
herein, each Agent agrees, severally and not jointly, as agent of
the Issuer, to use its reasonable efforts to solicit offers to
purchase Notes from the Issuer upon the terms and conditions
described in the Offering Memorandum and in the Procedures. In
soliciting offers as agents, each Agent is acting individually,
and not jointly, solely as agent of the Issuer and not as
principal. Each Agent shall use its reasonable efforts to assist
the Issuer in obtaining performance by each purchaser whose offer
to purchase Notes has been solicited by such Agent and accepted
by the Issuer, but such Agent shall not, except as otherwise
provided in this Agreement, be obligated to disclose the identity
of any purchaser and shall not have any liability to the Issuer
in the event any such purchase is not consummated for any reason;
PROVIDED that the foregoing shall not operate to release any
Agent from any liability it may otherwise have as a result of its
failure to perform its obligations under this Agreement. Except
as provided in Section 2(b), under no circumstances will any
Agent be obligated to purchase any Notes for its own account. It
is understood and agreed, however, that any Agent may purchase
Notes for its own account as Purchaser pursuant to Section 2(b)
or otherwise as may be agreed or permitted by the Issuer and such
Agent.
(iii) The Issuer reserves the right, in its sole
discretion, to instruct the Agents to suspend at any time, for
any period of time or permanently, the solicitation of offers to
purchase Notes. Within one business day of receipt of
instructions to that effect from the Issuer, each Agent will
forthwith suspend solicitation of offers to purchase Notes from
the Issuer until such time as the Issuer has advised it that such
solicitation may be resumed.
(iv) The Issuer agrees to pay each Agent a commission,
upon closing, with respect to each sale of Notes by the Issuer as
a result of a solicitation made by such Agent, including any sale
for the account of any affiliate of the Agent, in an amount equal
to that percentage of the aggregate principal amount of the Notes
sold by the Issuer specified on Schedule I hereto for Notes with<PAGE>
10
the relevant term. Such commission shall be payable as specified
in the Procedures.
(v) Subject to the provisions of this Section 2(a) and
to the Procedures, offers for the purchase of Notes may be
solicited by the Agents, as agents for the Issuer, at such time
and in such amounts as the Agents and the Issuer deem advisable.
The Issuer may from time to time offer Notes for sale otherwise
than through an Agent (but subject to Section 4(a)(v)); PROVIDED,
HOWEVER, that so long as this Agreement shall be in effect the
Issuer shall not solicit or accept offers to purchase Notes
through any agent other than an Agent without giving the Agents
prior notice of such appointment and appointing such agent as an
additional Agent hereunder on the same terms and conditions as
provided herein for the Agents. Each such additional Agent shall
execute this Agreement and shall become an Agent for all purposes
hereof.
(vi) Each Agent may, in the exercise of its reasonable
discretion, reject any offer to purchase Notes received by it as
agent of the Issuer and not communicate such offer to the Issuer.
Each Agent shall communicate to the Issuer, orally or in writing,
each such offer that it does not reject and, if such Agent or any
of its affiliates shall be the offeror, shall advise the Issuer
of that fact. The Issuer shall have full discretion to reject
any offer to purchase Notes in whole or, if permitted by the
terms of such offer, in part.
(vii) If the Issuer shall default in its obligations to
deliver Notes to a purchaser whose offer it has accepted, or, in
the event that the Notes are to be issued in book-entry form, to
deliver a book-entry Note to The Depository Trust Company or such
other depository as may be mutually agreed upon by the parties
hereto, the Issuer shall hold each of you harmless against any
loss, claim or damage arising from or as a result of such default
by the Issuer (except to the extent that such default by the
Issuer shall result from the failure of you yourself to perform
your obligations hereunder).
(b) (i) Subject to the terms and conditions stated
herein, whenever the Issuer and any one (or more) of you
determine that the Issuer shall sell Notes directly to any one
(or more) of you as the Purchaser, each such sale of Notes shall
be made in accordance with the terms of this Agreement and,
unless specifically waived by the Purchaser, a supplemental
agreement relating thereto between the Issuer and the Purchaser.
Each such supplemental agreement (which shall be substantially in
the form of Exhibit B) is herein referred to as a "Terms
Agreement". A Purchaser's commitment to purchase Notes pursuant
to any Terms Agreement shall be deemed to have been made on the<PAGE>
11
basis of the representations and warranties of the Issuer
contained herein or therein (if any) and shall be subject to the
terms and conditions set forth herein and in such Terms
Agreement. Each Terms Agreement shall describe the Notes to be
purchased by the Purchaser pursuant thereto, specify the
principal amount of such Notes, the price to be paid to the
Issuer for such Notes specified by reference to the principal
amount of the Notes and the discount to the Purchaser from the
principal amount thereof, the rate at which interest will be paid
on such Notes, the date of issuance of such Notes (the "Closing
Date"), the place of delivery of the Notes and payment therefor,
the method of payment, any modification of, or addition to, the
requirements for the delivery of the opinions of counsel set
forth in Section 6(a)(ii), the certificates from the Issuer or
its officers and the letter from the Issuer's independent public
accountants, and such other terms and conditions as may be
specified therein from time to time. The discount to the
Purchaser with respect to any Notes sold pursuant to this Section
2(b) shall be equal to that percentage of the principal amount
thereof specified in Schedule I hereto for Notes with the
relevant term, unless a higher percentage is specified in the
applicable Terms Agreement.
(ii) The settlement details for Notes sold to a
Purchaser pursuant to any Terms Agreement shall be agreed to
between the Issuer and such Purchaser in the respective Terms
Agreement. If there is no such Terms Agreement, the settlement
details specified in the Procedures shall apply with the
Purchaser filling the roles specified therein of the Agent and
the beneficial owner.
(iii) Nothing contained in this Agreement shall obligate
an Agent to enter into a Terms Agreement with the Issuer or to
otherwise agree to purchase Notes for its own account
3. OFFERING AND SALE OF NOTES. Each party hereto
agrees to perform the respective duties and obligations
specifically provided to be performed by it in the Procedures.
4. AGREEMENTS. (a) The Issuer agrees with each of
you that:
(i) If reasonably necessary to set forth information
that is material to an investment in a Note and not
otherwise contained in the Offering Memorandum, the Issuer
shall prepare a supplement to the Offering Memorandum with
respect to such Note. The Issuer will give each of you
advance notice of its intention to prepare any additional
offering memorandum with respect to the Notes or any
amendment or supplement to the Offering Memorandum (other<PAGE>
12
than a Terms Agreement), and will furnish each of you with
copies of any such additional offering memorandum or any
such amendment or supplement proposed to be prepared a
reasonable time in advance of such preparation, and will not
prepare any additional offering memorandum or make any
amendment or supplement to the Offering Memorandum in a form
to which either of you or counsel for the Agents shall
reasonably object. Furthermore, if the Issuer is subject to
the reporting requirements of the Exchange Act, the Issuer
will furnish each Agent with copies of any documents filed
by it with the Commission as soon as possible after such
filing.
(ii) The Issuer shall furnish to each of you such
information and documents relating to the business,
operations and affairs of the Issuer, the Offering Mem-
orandum and any amendments thereof or supplements thereto,
the Issuing and Paying Agency Agreement, the Notes, this
Agreement, any Terms Agreement, the Procedures and the
performance by the parties hereto of their respective
obligations hereunder and thereunder as you may from time to
time and at any time prior to the termination of this
Agreement reasonably request in connection with soliciting
offers to purchase Notes. The Issuer shall notify each of
you promptly (1) if at any time any event occurs which
constitutes (or after notice or lapse of time or both would
constitute) a default or an event of default under the
Notes, the Issuing and Paying Agency Agreement or this
Agreement or (2) of any material adverse change, or to the
knowledge of the Issuer any development involving a
prospective change, in the financial condition, earnings,
results of operations, business or business prospects or
properties of the Issuer and its subsidiaries considered as
a single enterprise.
(iii) The Issuer shall, whether or not any sale of Notes
is consummated, (1) pay all expenses incident to the
performance of its obligations under this Agreement and any
Terms Agreement, including the fees and disbursements of its
accountants and counsel, the cost of printing or other
production and delivery of the Offering Memorandum, all
amendments thereof and supplements thereto, the Issuing and
Paying Agency Agreement, this Agreement, any Terms Agreement
and all other documents relating to the offering of Notes
pursuant hereto and thereto, the cost of preparing,
printing, packaging and delivering the Notes, the fees and
disbursements of the Issuing and Paying Agent and any paying
or other agents under the Issuing and Paying Agency
Agreement and the fees of any agency that rates the Notes,
(2) reimburse each of you on a quarterly basis for all<PAGE>
13
reasonable out-of-pocket expenses incurred by you in
connection with this Agreement and the transactions
contemplated hereby and (3) pay the reasonable fees and
expenses of Jones, Day, Reavis & Pogue incurred in
connection with this Agreement and the transactions
contemplated hereby.
(iv) Each time that the Offering Memorandum is amended
or supplemented (other than solely (1) to provide updated
financial information, (2) to specify additional or revised
terms of the Notes, (3) as a result of the incorporation by
reference of a document filed by the Issuer with the
Securities and Exchange Commission and/or (4) to revise the
plan of distribution), the Issuer shall deliver or cause to
be delivered promptly to each of you an officer's
certificate and an opinion of counsel for the Issuer, dated
the date of such amendment or of such supplement, in form
reasonably satisfactory to each of you, of the same tenor as
the certificate and opinion referred to in Sections 5(a)(ii)
and (iii) but modified to relate to the Offering Memorandum,
this Agreement and the Issuing and Paying Agency Agreement
as then in effect. At the request of either Agent, the
Issuer shall furnish to each of you an officer's certificate
and an opinion of counsel for the Issuer, each dated not
more than five days prior to the date of delivery and in a
form reasonably satisfactory to each of you, of the same
tenor as the certificate and opinion referred to in Sections
5(a)(ii) and (iii) but modified to relate to the Offering
Memorandum, this Agreement and the Issuing and Paying Agency
Agreement as then in effect. At the request of either
Agent, the Issuer shall furnish to you a letter of the
independent accountants for the Issuer of the same tenor as
the letter referred to in Section 5(a)(v), but modified to
relate to the most recent annual and quarterly financial
statements of the Issuer included in the Offering Memorandum
as then in effect pursuant to Section 4(a)(ix).
(v) Unless otherwise specified in any Terms Agreement,
the Issuer shall not, without the prior consent of the
Purchaser thereunder, issue or announce the proposed
issuance of any of its debt securities (including Notes),
which are denominated in the same currency as, and have
similar maturities, similar interest rates and other terms
(including in respect of the method of computing interest)
substantially similar to those of, the Notes being purchased
pursuant to such Terms Agreement, during the period
commencing on the date on which the Issuer accepts an offer
to purchase any Note in accordance with such Terms Agreement
and terminating on the Closing Date for the sale of such
Note.<PAGE>
14
(vi) The Issuer shall deliver to each of you, from time
to time, as many copies of the Offering Memorandum and of
any amendment or supplement that has been prepared with
respect thereto, and as many copies of any financial
statements and other periodic reports that the Issuer may
furnish generally to holders of its debt securities, as each
of you may reasonably request.
(vii) Except as otherwise provided in Section 4(b), if at
any time during the term of this Agreement the Issuer has
been advised that any event shall have occurred or condition
exist as a result of which it is necessary, in the
reasonable opinion of counsel for the Agents or counsel for
the Company, to further amend or supplement the Offering
Memorandum in order that the Offering Memorandum will not
include an untrue statement of material fact or omit to
state a material fact necessary in order to make the
statements therein not misleading in the light of the
circumstances existing at the time the Offering Memorandum
is delivered to a purchaser, immediate telephone notice
shall be given by the Issuer, and confirmed in writing, to
each of you to cease the solicitation of offers to purchase
the Notes in each of your capacity as agent and to promptly
prepare and deliver to each of you such amendment or
supplement (in form and substance satisfactory to counsel
for the Agents) as may be necessary to correct such untrue
statement or omission.
(viii) The Issuer shall furnish to each of you in written
form all interim financial statement information updating
the financial statement information included in, or as an
exhibit, attachment or appendix to, the Offering Memorandum
promptly upon publication of such interim information and,
within 45 days of the end of each such interim period, cause
the Offering Memorandum to be supplemented to include such
financial information and corresponding information for the
comparable period of the preceding fiscal year and financial
information showing year-to-date results for such current
fiscal year together with comparative prior information for
the preceding fiscal year, as well as such other information
and explanations as shall be necessary for an understanding
of such financial information, which supplement may be in
the form of a separate quarterly or semiannual report or
report attached to the Offering Memorandum.
(ix) The Issuer shall furnish to each of you the audited
consolidated financial statements updating the audited
consolidated financial statements and the financial
information included in the Offering Memorandum for each
corresponding fiscal year as promptly as practicable after<PAGE>
15
the publication of such financial statements but in any
event not later than 90 days after the end of such fiscal
year and cause the Offering Memorandum to be supplemented to
include such audited financial statements and the
accountants' report with respect thereto, as well as such
other information and explanations as shall be necessary for
an understanding of such financial statements, which
supplement may be in the form of a separate annual report
attached to the Offering Memorandum.
(x) The Issuer shall (1) furnish to each of you copies
of any proposed supplement or amendment to the Offering
Memorandum (other than any document incorporated by
reference therein) two business days in advance of using
such supplement or amendment and (2) permit each of you to
review and comment as to the form and content thereof;
PROVIDED, HOWEVER, that an amendment or supplement prepared
to set forth terms and conditions of any Notes need not be
furnished to or reviewed by those of you who are not named
therein, who shall not have solicited offers for such Notes
and who are not to be Purchasers of such Notes. Any of you
who shall have an objection to such proposed amendment or
supplement may immediately terminate this Agreement as to
such of you by notice to the Issuer. At the request of any
of you so terminating, the Issuer shall promptly amend or
supplement the Offering Memorandum to indicate those firms
that remain Agents.
(xi) The Issuer shall not offer or sell any securities
under circumstances which would require the registration of
any of the Notes under the Securities Act.
(xii) The Issuer will take appropriate steps to ensure
that the aggregate principal amount of Notes at any time
outstanding does not exceed U.S. $75,000,000, will not issue
any Notes if such issuance would cause such limit to be
exceeded, will promptly notify each of you in the event that
at any time such limit has been reached and will promptly
notify each of you if such limit is increased pursuant to
this Agreement.
(xiii) The Issuer shall not, without having given prior
written notice to each of you, consent to any amendment of
the Issuing and Paying Agency Agreement. The Issuer shall
promptly notify each of you of any resignation or removal of
the Issuing and Paying Agent and the appointment of any
successor thereto.
(xiv) For so long as any of the Notes are outstanding,
the Issuer will make available, upon request, and such<PAGE>
16
quantities as are reasonably requested, to any holder of a
Note and any prospective purchaser to whom such Note may be
offered or sold by such holder of the information (the "Rule
144A Information") required to allow the resale of such Note
pursuant to Rule 144A and shall further amend or supplement
the Offering Memorandum as required to satisfy Rule
144A(d)(4);
If at any time an event occurs or conditions exist
as a result of which any Rule 144A Information or any
amendment or supplement thereto would not comply with the
requirements of Rule 144A or would include an untrue
statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made
not misleading, the Issuer will promptly notify each of you
by telephone (with confirmation in writing) and will
promptly prepare an amendment or supplement to such Rule
144A Information that will correct such non-compliance,
untrue statement or omission. Notwithstanding the
foregoing, the Issuer shall not be required to provide more
information than is required to be delivered pursuant to
Rule 144A as in effect as of the date the Notes of the
corresponding Tranche shall have been first issued, to the
extent that such information cannot be provided without
unreasonable additional expense to the Issuer.
(xv) None of you shall be liable or responsible to the
Issuer for any losses, damages or liabilities suffered or
incurred by the Issuer, including any losses, damages or
liabilities under the Securities Act, arising from or
relating to any resale or transfer of a Note by a holder in
any manner that does not comply with the applicable
restrictions on resale and transfer or the procedures
required for resale and transfer set forth herein, in the
Issuing and Paying Agency Agreement and in the Notes;
provided that each of you, severally and not jointly, shall
remain liable for the performance of your own obligations
under this Agreement.
(xvi) The Issuer will at all times ensure that all
approvals, authorizations, consents or other orders of, and
all filings with, any governmental or other administrative
agency or body will be, prior to the time required, obtained
or made (1) so that the Issuer may lawfully perform its
obligations under the Notes, this Agreement and the Issuing
and Paying Agency Agreement and (2) so that performance of
such obligations will, in all respects material to the
Issuer and its subsidiaries considered as a single
enterprise or material to the Issuer's ability to perform<PAGE>
17
its obligations under this Agreement, the Issuing and Paying
Agency Agreement or the Notes, comply with any laws,
decrees, regulations, judgments or orders of any court,
government, governmental authority or agency to which the
Issuer or any of its subsidiaries or any of their respective
properties or assets is subject.
(xvii) The Issuer will send to each of you a copy of every
notice of a meeting of the holders of the Notes (or any of
them) that is sent by the Issuer to such holders at the same
time it is sent to such holders and will promptly notify
each of you immediately upon its becoming aware that a
meeting of the holders of the Notes (or any of them) has
been convened by any of such holders.
(xviii) The Issuer shall promptly notify each of you of any
lowering in the ratings of any of the Issuer's debt
securities by any Rating Agency, or any public announcement
that any Rating Agency has under surveillance or review its
ratings of any such debt securities (other than an
announcement with positive implications of a possible
upgrading, and no implication of a possible downgrading, of
such rating).
(xix) During the six-month period following the issue
date of any Note, neither the Issuer nor any affiliate of
the Issuer will directly or indirectly, sell, offer for
sale, solicit offers to buy or otherwise negotiate in
respect of, any of the Notes or any other security (as
defined in the Securities Act) which will be integrated with
such sale of Notes in a manner that would require the
registration of the Notes under the Securities Act.
(xx) The Issuer will immediately notify each Agent by
telephone, promptly confirmed in writing, of any change, or
any development that the Company has reasonable cause to
believe will involve a prospective change in the financial
condition, earnings, results of operations, business or
business prospects or properties of the Issuer and its
subsidiaries considered as a single enterprise, that if not
disclosed in the Offering Memorandum would cause the
Offering Memorandum to include an untrue statement of fact
or to omit to state a material fact necessary in order to
make the statements therein, in the light of the
circumstances under which they were made or existing at the
time of the Offering Memorandum is delivered to a
prospective purchaser of Notes, not misleading. In such
event, each Agent shall not thereafter attempt to offer or
place any of the Notes until the Issuer shall have prepared
and furnished to each Agent, in such numbers as may be<PAGE>
18
required, supplements to or amendments of the Offering
Memorandum reflecting any such material change.
(xxi) If required by the Rules and Regulations, the
Issuer will file five copies of a notice on Form D with the
Commission no later than fifteen days after the first sale
of a Note hereunder.
(xxii) In the event that any Note being offered or to
be offered by an Agent would be ineligible for resale under
Rule 144A (because such Note is of the same class (within
the meaning of Rule 144A) as any other securities of the
Issuer that are at such time listed on a national securities
exchange registered under Section 6 of the Exchange Act, or
quoted in a U.S. automated inter-dealer quotation system),
the Issuer shall immediately notify each Agent (by
telephone, confirmed in writing) of such fact and will
promptly prepare and deliver to the Agents an amendment or
supplement to the Offering Memorandum describing the Notes
that are ineligible, the reason for such ineligibility and
any other relevant information relating thereto.
(xxiii) As of the date of delivery of any Notes sold
hereunder, the Issuer will not have any securities of the
same class as such Notes listed on a national securities
exchange registered under Section 6 of the Exchange Act or
quoted in a U.S. automated inter-dealer quotation system.
(xxiv) The Issuer and its subsidiaries possess such
certificates, authorities, permits, licenses and approvals
issued by the appropriate federal, state or local regulatory
agencies or bodies necessary to conduct the business now
operated by them except where failure to so possess would
not have a material adverse effect on the financial
condition, earnings, results of operations, business or
business prospects or properties of the Issuer and its
subsidiaries considered as a single enterprise; the Issuer
and its subsidiaries are in compliance with the terms and
conditions of all such certificates, authorities, permits,
licenses and approvals, except where the failure so to
comply would not have a material adverse effect on the
financial condition, earnings, results of operations,
business or business prospects or properties of the Issuer
and its subsidiaries considered as a single enterprise; and
neither the Issuer nor any of its subsidiaries has received
any notice of proceedings relating to the revocation or
modification of any such certificate, authority, permit,
license or approval that, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would
have a material adverse effect on the financial condition,<PAGE>
19
earnings, results of operations, business or business
prospects or properties of the Issuer and its subsidiaries
considered as a single enterprise.
(b) The obligations of the Issuer under Sections
4(a)(i), (ii), (vi), (vii), (viii) and (ix) shall be suspended
during any period of time during which the Issuer shall have
suspended the solicitation of offers to purchase Notes by written
notice to each Agent; PROVIDED, HOWEVER, such obligations of the
Issuer shall remain in effect with respect to an Agent (i) for a
period of two years following the date of notice of such
suspension if such Agent shall own any Notes with the intention
of reselling them as contemplated by Section 2(b) or (ii) if the
Issuer has accepted an offer to purchase Notes solicited by such
Agent pursuant to this Agreement and the settlement for such sale
shall not have occurred. At least one week prior to end of any
such period during which solicitations shall have been suspended,
the Issuer shall notify each of you of any event or change
contemplated by the last sentence of Section 4(a)(ii) or by
Section 4(a)(vii) of which the Issuer would have been obligated
to notify each of you, and shall provide each of you all written
information and supplements referred to in Sections 4(a)(viii)
and (ix) that the Issuer would have been obligated to deliver to
each of you, had the Issuer not so suspended the solicitation of
offers.
5. CONDITIONS TO THE OBLIGATIONS OF THE AGENTS.
(a) The obligations of each Agent to solicit offers to purchase
any Notes shall be subject to the accuracy of the representations
and warranties on the part of the Issuer contained herein as of
each time the Issuer gives a notice requesting any of you to
solicit offers as agents, at and as of each acceptance of an
offer by the Issuer and upon delivery of any Note to the
purchaser (or its agent) pursuant to such offer, to the accuracy
of the statements of the Issuer made in any certificates
delivered pursuant to the provisions hereof as of the respective
dates of such certificates, to the performance and observance by
the Issuer of all covenants and agreements herein contained on
its part to be performed and observed and to the following
additional conditions precedent:
(i) The Issuer shall have obtained all authorizations,
consents and approvals of any court or governmental or other
regulatory agency or body required in connection with the
issuance and sale of the Notes and the performance of its
obligations hereunder and under the Notes and the Issuing
and Paying Agency Agreement.
(ii) The Issuer shall have furnished to each Agent a
certificate of the Issuer signed by the principal financial<PAGE>
20
or accounting officer of the Issuer, dated as of the date
hereof, to the effect that, to the best of his knowledge
after reasonable inquiry:
(1) the representations and warranties of the
Issuer in this Agreement are true and correct in all
material respects on and as of the date of the
certificate and the Issuer has performed in all
material respects all its obligations and satisfied all
the conditions on its part to be satisfied at or prior
to the date of the certificate;
(2) since the date of the most recent financial
statements included in the current Offering Memorandum,
there has been no material adverse change, or to the
knowledge of the Issuer any development involving a
prospective change, in the financial condition,
earnings, business or business prospects or properties
of the Issuer and its subsidiaries considered as a
single enterprise, except as set forth or contemplated
in the Offering Memorandum; and
(3) the Offering Memorandum (other than
statements made therein in reliance upon and in
conformity with information furnished to the Issuer in
writing by any of you, or on behalf of any of you which
has been furnished by a person authorized to do so,
specifically for use therein, as to which no
representation shall be made) does not contain any
untrue statement of a material fact or omit to state
any material fact necessary to make the statements
therein, in light of the circumstances under which they
were made, not misleading.
(iii) The Issuer shall have furnished to each Agent the
opinion of Murtha, Cullina, Richter and Pinney, counsel to
the Issuer, substantially in the form of Exhibit C hereto.
(iv) Each Agent shall have received from Jones, Day,
Reavis & Pogue, your counsel, such opinion with respect to
the proposed issue and sale of the Notes and other related
matters as such Agent may reasonably require.
(v) Arthur Andersen LLP, independent accountants for
the Issuer, shall have furnished to each Agent an executed
copy of a letter in the form heretofore agreed to by each
Agent.
(b) The documents required to be delivered by this
Section 5 shall be delivered at, or transmitted by telecopy (with<PAGE>
21
an undertaking promptly to forward the original copies thereof)
to, the offices of Jones, Day, Reavis & Pogue, counsel for the
Agents, at 77 West Wacker, Chicago, Illinois 60601-1692 Attn:
Timothy J. Melton, at 9:30 A.M., New York City time, on the date
hereof, and an original of each such document will be sent to
each of you.
6. CONDITIONS TO THE OBLIGATIONS OF A PURCHASER.
(a) The obligations of any Purchaser to purchase any Notes shall
be subject to the accuracy of the representations and warranties
on the part of the Issuer contained herein or in the
corresponding Terms Agreement, if any, at and as of the date of
the corresponding Terms Agreement and upon the delivery to any
Purchaser of any Note pursuant to such Terms Agreement, to the
performance and observance by the Issuer of all covenants and
agreements herein or therein contained on its part to be
performed and observed and to the following additional conditions
precedent:
(i) The Issuer shall have obtained all authorizations,
consents and approvals of any court or governmental or other
regulatory agency or body required in connection with the
issuance and sale of the Notes and the performance of its
obligations hereunder and under the Notes and the Issuing
and Paying Agency Agreement.
(ii) To the extent provided by such Terms Agreement, the
Purchaser shall have received, appropriately updated, (1) a
certificate of the Issuer dated as of the Closing Date to
the effect set forth in Section 5(a)(ii), (2) the opinion of
Murtha, Cullina, Richter and Pinney dated the Closing Date
to the effect set forth in Section 5(a)(iii), (3) the
opinion of Jones, Day, Reavis & Pogue dated the Closing Date
to the effect set forth in Section 5(a)(iv) and (4) the
letter of Arthur Andersen LLP dated the Closing Date to the
effect set forth in Section 5(a)(v).
(iii) Prior to the Closing Date, the Issuer shall have
furnished to the Purchaser such further information,
certificates and documents as the Purchaser may reasonably
request.
(b) If any of the conditions specified in this Section
6 shall not have been fulfilled in all material respects when and
as provided in this Agreement and any Terms Agreement, or if any
other event occurs which permits cancellation under this
Agreement, such Terms Agreement and all obligations of the
Purchaser thereunder and with respect to the Notes subject
thereto may be canceled at, or at any time prior to, the
respective Closing Date by the Purchaser. Notice of such<PAGE>
22
cancellation shall be given to the Issuer in writing or by
telephone confirmed in writing, which confirmation may be made by
telex or telecopy.
7. CONDITIONS TO ALL PURHCASES. The consummation of
the sale of any Note pursuant to this Agreement shall be subject
to the further condition that, at the date of issuance thereof,
in the judgment of the Purchaser or the Agent that obtained the
offer, (a) each condition set forth in Section 5 or 6, as
applicable, shall be satisfied and (b) subsequent to the
respective dates as of which information is given in the Offering
Memorandum (current as of the date of such agreement to purchase
a Note), except as set forth therein or contemplated thereby,
there shall not have occurred any change, or to the knowledge of
the Issuer any development involving a prospective change, in or
affecting the business or business prospects or properties of the
Issuer and its subsidiaries, the effect of which makes it
impracticable or inadvisable to market the Notes or to proceed
with completion of the sale and payment for such Notes.
8. RESTRICTIONS ON OFFERS AND SALES OF THE NOTES.
Each party hereto represents, warrants and agrees, severally and
not jointly, as follows:
(a) It will solicit offers to purchase Notes only
from, and it will offer and sell Notes only to, (i)
institutional purchasers that qualify, or that it reasonably
believes qualify, as "accredited investors" as such term is
defined in paragraphs (1), (2) and (3) of Rule 501(a) under
the Securities Act ("Institutional Accredited Investors"),
(ii) institutional purchasers that are, or that it
reasonably believes are, "qualified institutional buyers" as
such term is defined in paragraph (a)(1) of Rule 144A
("QIBs") or (iii) any of you. If it is an Agent, any
resales or transfers of Notes through, or arranged by, it
similarly will be made only to Institutional Accredited
Investors or QIBs. It will solicit such offers and offer to
sell Notes to Institutional Accredited Investors that are
not QIBs only by approaching such Institutional Accredited
Investors on an individual basis. Neither it, its
affiliates, nor any person acting on its or their behalf
(except that no representation is made with respect to any
other party to this Agreement) has engaged or will engage in
any form of general solicitation or general advertising
(within the meaning of Rule 502(c) under the Securities Act)
in the United States with respect to the Notes.
(b) It will make reasonable inquiry to determine
whether a purchaser is purchasing for such purchaser's own
account as an Institutional Accredited Investor or QIB or<PAGE>
23
for the account of others and not with a view to, or for
sale in connection with, the public distribution thereof in
any transaction that would be in violation of Federal or
state securities laws and, in the case of any purchaser
acting on behalf of one or more third parties, it shall make
reasonable inquiry to determine that each such third party
is an Institutional Accredited Investor or QIB and that the
amount being purchased on behalf of each such third party is
not less than the authorized minimum denomination of such
Notes; PROVIDED that the Issuer shall have no duty to make
any such inquiry in connection with sales to any of you or
pursuant to offers transmitted to it by any of you.
9. INDEMNIFICATION AND CONTRIBUTION. (a) The Issuer
agrees to indemnify and hold harmless each of you and each person
who controls one or more of you within the meaning of either the
Securities Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which any
such person may become subject under the law of any jurisdiction
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Offering Memorandum, in any amendment thereof or
supplement thereto or in any information provided by the Issuer
and furnished to any purchaser of the Notes pursuant to Section
4(a)(xiv), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party,
as incurred, for any legal or other expenses reasonably incurred
by it in connection with investigating or defending any such
loss, claim, damage, liability or action; PROVIDED, HOWEVER, that
(i) the Issuer will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or
is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made in the Offering
Memorandum or in any amendment thereof or supplement thereto in
reliance upon and in conformity with written information
furnished to the Issuer by the person seeking indemnification, or
on behalf of such person by another person authorized to do so,
specifically for use in connection with the preparation thereof
and identified on Schedule III hereto and (ii) the Issuer will
not be liable to those of you (or any person controlling those of
you) who sold to the person asserting any such loss, claim,
damage or liability the Notes which are the subject thereof to
the extent that (1) such loss, claim, damage or liability arises
out of or is based upon the fact that such person did not receive
a copy of the Offering Memorandum, as amended or supplemented,
excluding documents incorporated by reference therein, at or
prior to the confirmation of the sale of such Notes to such<PAGE>
24
person in any case where delivery of the Offering Memorandum by
such of you is required by this Agreement, unless such failure to
deliver the Offering Memorandum was a result of noncompliance by
the Issuer with Section 4(a)(vi) of this Agreement, and (2) such
loss, claim, damage or liability would have been avoided by
delivery of the Offering Memorandum to such person as so
required. This indemnity will be in addition to any liability
which the Issuer may otherwise have.
(b) Each of you, severally and not jointly, agrees to
indemnify and hold harmless the Issuer and each person who
controls the Issuer within the meaning of either the Securities
Act or the Exchange Act, to the same extent as the foregoing
indemnity from the Issuer, but only with reference to written
information relating to the indemnifying party furnished to the
Issuer by it, or on its behalf by another person authorized to do
so, specifically for use in the preparation of the Offering
Memorandum or any amendment thereof (or supplement thereto) and
identified on Schedule III hereto. This indemnity will be in
addition to any liability which any of you may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 9 of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 9,
notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any
indemnified party otherwise than under this Section 9. In case
any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and
to the extent that it may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense
thereof, with counsel satisfactory to such indemnified party;
PROVIDED, HOWEVER, that if the defendants in any such action
include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there
may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available
to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assert such legal
defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and
approval by the indemnified party of counsel (which approval
shall not be unreasonably withheld), the indemnifying party will
not be liable to such indemnified party under this Section 9 for<PAGE>
25
any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless
(i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance
with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel (in
addition to any local counsel), approved by a majority of the
indemnified parties in the case of paragraph (a) of this Section
9, representing the indemnified parties under such paragraph (a)
who are parties to such action), (ii) the indemnifying party
shall not have employed counsel satisfactory to the indemnified
party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying party;
and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in
such clause (i) or (iii). The indemnifying party shall not be
liable for any settlement of any action or claim effected without
its consent, which consent shall not be unreasonably withheld.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification
provided for in this Section 9 is due in accordance with its
terms but if for any reason held by a court to be unavailable on
grounds of policy or otherwise, the Issuer and each of you shall
contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) to
which the Issuer and any of you may be subject in such proportion
so that each of you, severally and not jointly, is responsible
only for that portion represented by the percentage that the
aggregate commissions received by you yourself pursuant to
Section 2 in connection with the Notes from which such losses,
claims, damages and liabilities arise (or, in the case of Notes
sold to a Purchaser, the discount to the Purchaser), bears to the
aggregate principal amount of such Notes sold and the Issuer is
responsible for the balance; PROVIDED, HOWEVER, that in no case
shall any of you be responsible for any amount in excess of the
commissions received by you yourself in connection with the Notes
from which such losses, claims, damages and liabilities arise
(or, in the case of Notes sold to a Purchaser, the discount to
the Purchaser). For purposes of this Section 9, each person who
controls any of you within the meaning of either the Securities
Act or the Exchange Act shall have the same rights to
contribution as such of you and each person who controls the
Issuer within the meaning of either the Securities Act or the
Exchange Act shall have the same rights to contribution as the
Issuer, subject in each case to the proviso to the preceding<PAGE>
26
sentence. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall
be entitled to contribution hereunder from any person who was not
guilty of such fraudulent misrepresentation. Any party entitled
to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against
another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought (which
obligation to give notice shall be deemed to be satisfied by the
delivery of notice pursuant to paragraph (c) of this Section 9),
but the omission so to notify such party or parties shall not
relieve the party or parties from whom contribution may be sought
from any other obligation it or they may have hereunder or
otherwise than under this paragraph (d).
10. TERMINATION. (a) This Agreement will continue in
effect until terminated as provided in this Section 10 or
Section 4(a)(x). This Agreement may be terminated by the Issuer
as to any Agent or, in the case of any Agent, by such Agent
insofar as this Agreement relates to such Agent, by giving at
least 30 days' written notice of such termination to the other
parties hereto. Notwithstanding any such termination, the
rights and liabilities of each party under Sections 2(a)(iv) and
(vii), Sections 4(a)(iii), (xv) and (xvii), Sections 8(a) and (b)
(with respect to resales and transfers of Notes), Section 9,
Section 11 and any Terms Agreement executed prior to the date of
termination hereof shall survive any termination of this
Agreement, in whole or in part. In addition, if any termination
shall occur either (i) at a time when any Purchaser shall own any
Notes, purchased under this Agreement from the Issuer, with the
intention of reselling them or (ii) after the Issuer has accepted
an offer to purchase Notes and prior to the related settlement,
all agreements, terms and conditions relating to the purchase and
sale of such Notes shall also remain in effect.
(b) Each agreement to purchase Notes pursuant to a
solicitation by an Agent hereunder, and each agreement by a
Purchaser to purchase Notes hereunder, shall be subject to
termination in the absolute discretion of such Agent or the
Purchaser (as the case may be), by notice given to the Issuer
prior to delivery of any payment for Notes to be purchased, if
prior to such time (i) trading in any securities issued by the
Issuer shall have been suspended or halted on any exchange
(whether U.S. or foreign), or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited
or minimum prices shall have been established on such Exchange,
(ii) a banking moratorium shall have been declared by either U.S.
Federal or New York State or Connecticut State authorities,
(iii) there shall have been a lowering in the ratings of any of<PAGE>
27
the Issuer's debt securities by any Rating Agency or any public
announcement that any Rating Agency has under surveillance or
review its rating of any such debt securities (other than an
announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading, of such rating) or
(iv) there shall have occurred, in the reasonable judgment of
such Agent or Purchaser (as the case may be), a material change
in national or international political, financial or economic
conditions that makes it impracticable or inadvisable to market
the Notes or to proceed with completion of the sale of and
payment for such Notes.
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The
respective agreements, representations, warranties, indemnities
and other statements of the Issuer or its officers and of each of
you set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by
or on behalf of any of you or by or on behalf of the Issuer or
any of the controlling persons referred to in Section 9, and will
survive delivery of and payment for the Notes.
12. INCREASES IN THE AMOUNT OF THE NOTES. The
aggregate principal amount of Notes that may be sold by the
Issuer may be increased pursuant to an amendment to this
Agreement in the form attached hereto as Exhibit D executed by
all the parties hereto. Upon the execution and delivery of any
such amendment, to the extent agreed upon by the Issuer and you,
the Issuer shall deliver to each of you, appropriately updated,
(a) a certificate of the Issuer dated as of the date of such
amendment to the effect set forth in Section 5(a)(ii), (b) the
opinion of Murtha, Cullina, Richter and Pinney dated the date of
such amendment to the effect set forth in Section 5(a)(iii) and
(c) the letter of Arthur Andersen LLP dated the date of such
amendment to the effect set forth in Section 5(a)(v), and the
Issuer shall furnish to each of you such further information,
certificates and documents as you may reasonably request.
13. NOTICES. All communications hereunder will be in
writing, and effective only on receipt, or (but only where
specifically provided in the Procedures) by telephone and, if
sent to you, will be mailed, delivered, telecopied and confirmed
or telexed and confirmed to you, at the address specified in
Schedule II hereto; or, if sent to the Issuer, will be mailed,
delivered, telecopied and confirmed or telexed and confirmed to
it at 100 Columbus Boulevard, Hartford, Connecticut 06144,
Attention: Chief Financial Officer (telephone: (860) 727-3000;
telecopy: (860) 727-3064).
14. SUCCESSORS. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their<PAGE>
28
respective successors and the controlling persons referred to in
Section 9, and no other person will have any right or obligation
hereunder.
15. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED
-------------------------------------------------
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
----------------------------------------------------------------
YORK.
----
16. COUNTERPARTS. This Agreement may be signed in
counterparts with the same effect as if the signatures thereto
and hereto were upon the same instrument.
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us the
enclosed duplicate hereof, whereupon this letter and your
acceptance shall represent a binding agreement between the Issuer
and each of you.
Very truly yours,
CONNECTICUT NATURAL GAS CORPORATION,
by:
Name: James P. Bolduc
Title: Executive Vice President
and Chief Financial Officer
The foregoing Agreement is
hereby confirmed and accepted
as of the date hereof.
PAINEWEBBER INCORPORATED
by:
Name:
Title:
A.G. EDWARDS & SONS, INC.,
by:
Name: Lester H. Krone
Title: Vice President<PAGE>
INDEX OF DEFINITIONS
--------------------
Term Section
---- -------
Introductory Paragraph
Agents 2(b)(i)
Closing Date 1(m)
CTG 2(a)(i)
Commission 1(u)
Environmental Laws 4(a)(viii)
Exchange Act 1(n)
FERC
Institutional Accredited 8(a)
Investors Introductory Paragraph
Issuer
Issuing and Paying Agency Introductory Paragraph
Agreement Introductory Paragraph
Issuing and Paying Agent
Materials of Environmental 1(n)
Concern Introductory Paragraph
Notes 1(a)
Offering Memorandum Introductory Paragraph
Procedures Introductory Paragraph
Purchaser 8(a)
QIBs 1(c)
Rating Agency Introductory Paragraph
Regulation D 1(i)
Rule 144A 4(a)(xiv)
Rule 144A Information Introductory Paragraph
Rules and Regulations Introductory Paragraph
Securities Act 2(b)(i)
Terms Agreement Introductory Paragraph
Tranche Introductory Paragraph
Trust Indenture Act Introductory Paragraph
you<PAGE>
SCHEDULE I
----------
The Issuer agrees to pay the Agents a commission equal
to the following percentage of the principal amount of each Note
sold by such Agent, and to pay the Purchasers a commission in the
form of a discount to the purchase price equal to the following
percentage of the principal amount of each Note purchased by such
Agent under Section 2(b):
Term Commission Rate
---- ---------------
Twelve months to less than eighteen months .150%
Eighteen months to less than two years .200%
Two years to less than three years .250%
Three years to less than four years .350%
Four years to less than five years .450%
Five years to less than six years .500%
Six years to less than seven years .550%
Seven years to less than ten years .600%
Ten years to less than fifteen years .625%
Fifteen years to less than twenty years .700%
Twenty years or longer but not more than
thirty years .750%
The commission rate payable to any Agent with respect
to any Notes, and the discount with respect to Notes sold to a
Purchaser, may be increased by agreement between the Issuer and
such Agent or Purchaser, with no requirement that the other
Agents or Purchasers receive notice of, or consent to, such
higher commission rate or discount.<PAGE>
SCHEDULE II
-----------
PaineWebber Incorporated
1285 Avenue of the Americas
New York, N.Y. 10019
Telephone: (212) 713-2000
Telecopy: (212) 969-7602
Attention: Walter S. Hulse, III
A.G. Edwards & Sons, Inc.
One North Jefferson
St. Louis, MO 63103
Telephone: (314) 955-5000
Telecopy: (314) 955-5989
Attention: Corporate Debt Syndicate<PAGE>
SCHEDULE III
The information set forth below constitutes the only
information furnished to the Issuer by or on behalf of the Agents
expressly for use in the Offering Memorandum (or any amendment or
supplement thereto):
the names PaineWebber Incorporated and A.G. Edwards &
Sons, Inc. contained on the cover page of the Offering
Memorandum (each of which names has been provided solely by
the respective named placement agent).<PAGE>
EXHIBIT A
MEDIUM-TERM NOTE ADMINISTRATIVE PROCEDURES
------------------------------------------
August _____, 1997
The Medium-Term Notes, Series B (the "Notes") of
Connecticut Natural Gas Corporation (the "Issuers") are to be
offered on a continuing basis by PaineWebber Incorporated and
A.G. Edwards & Sons, Inc., as agents (the "Agents"). No Agent
will be obligated to purchase Notes for its own account. The
Notes are to be offered pursuant to an Amended and Restated
Placement Agency Agreement dated August _____, 1997 between the
Issuer and the Agents dated as of the date hereof (the
"Agreement"). The Agreement provides both for the sale of Notes
by the Company directly to investors (as may from time to time be
agreed to by the Company and the Agents) in which case each such
Agent will act as an agent of the Company in soliciting Note
purchases, and for the sale of Notes by the Company to one or
more of the Agents as principal for resale to investors and other
purchasers. The Agents have agreed to use reasonable efforts to
solicit offers to purchase Notes. State Street Bank and Trust
Company, as successor to Shawmut Bank Connecticut, National
Association (the "Issuing and Paying Agent") is the issuing and
paying agent with respect to the Notes under the Issuing and
Paying Agency Agreement, dated as of June 14, 1994 between the
Issuer and the Issuing and Paying Agent as amended by the First
Amendment thereto dated as of August _____, 1997, (the "Issuing
and Paying Agency Agreement"), under which the Notes will be
issued. The Notes are in the form of Exhibit I to the Issuing
and Paying Agency Agreement.
The procedures to be followed during, and the specific
terms of, the solicitation of offers by each Agent and the sale
as a result thereof by the Issuer are explained below.
Administrative and record-keeping responsibilities will be
handled for the Issuer by its Treasurer. The Issuer will advise
each Agent and the Issuing and Paying Agent in writing of those
persons handling administrative responsibilities with whom the
Agents and the Issuing and Paying Agent are to communicate
regarding offers to purchase Notes and the details of their
delivery and will promptly advise each Agent and the Issuing and
Paying Agent in writing if any such person shall cease to handle
such responsibilities or of the authorization of any additional
person to handle such responsibilities.
The Notes will either be issued (a) in book-entry form
and represented by one or more fully registered Notes (each, a
"Book-Entry Note") delivered to the Issuing and Paying Agent, as
A-1<PAGE>
agent for The Depository Trust Company ("DTC"), and recorded in
the book-entry system maintained by DTC, or (b) in certificated
form delivered to the purchaser thereof or a person designated by
such purchaser. Except in the limited circumstances described in
the Offering Memorandum, owners of beneficial interests in Book-
Entry Notes will not be entitled to physical delivery of Notes in
certificated form equal in principal amount to their respective
beneficial interests.
General procedures relating to the issuance of all
Notes are set forth in Part I hereof. Book-Entry Notes will be
issued in accordance with the procedures set forth in Part II, as
adjusted in accordance with changes in DTC's operating
requirements. Notes issued in certificated form will be issued
in accordance with the procedures set forth in Part III hereof.
Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Issuing and
Paying Agency Agreement or the Notes, as the case may be. Only
those provisions in the Administrative Procedures that are
applicable to the particular role to be performed by the related
Agent or Agents shall apply to the offer and sale of the relevant
Note. To the extent the procedures set forth below conflict with
the provisions of the Notes, the Issuing and Paying Agency
Agreement, DTC's operating requirements or the Agreement, the
relevant provisions of the Notes, the Issuing and Paying Agency
Agreement, DTC's operating requirements or the Placement Agency
Agreement shall control.
A-2<PAGE>
PART I: PROCEDURES OF GENERAL
APPLICABILITY
MATURITIES: Each Note will mature on a Business Day not
less than one year nor more than 30 years
after the Original Issue Date (as defined
below) for such Note.
DENOMINATIONS: The denomination of any Note will be in U.S.
dollars and a minimum of $100,000 or any
larger amount that is an integral multiple of
$1,000.
FORM: Notes will be issued only in fully registered
form in accordance with the Issuing and
Paying Agency Agreement.
DATE OF ISSUANCE: Each Note will be dated the date of its
authentication by the Issuing and Paying
Agent. Each Note will also bear an
"Original Issue Date", which will be the date
of its original issue, or in the case of any
Note (or portion thereof) issued subsequently
upon transfer or exchange of a Note or in
lieu of a destroyed, mutilated, defaced, lost
or stolen Note, the Original Issue Date of
the predecessor Note, regardless of the date
of authentication of such subsequently issued
Note.
PROCEDURE FOR RATE
SETTING AND POSTING:
The Issuer and the Agents will discuss from
time to time the aggregate principal amount
of, the issuance price of and the interest
rates to be borne by, Notes that may be sold
as a result of the solicitation of offers by
the Agents. If the Issuer decides to set
prices of, and rates borne by, any Notes in
respect of which the Agents are to solicit
offers (the setting of such prices and rates
to be referred to herein as "posting") or if
the Issuer decides to change prices or rates
previously posted by it, it will promptly
advise the Agents of such prices and rates to
be posted.
If the Issuer does not post prices and rates
and an Agent receives an offer to purchase
A-3<PAGE>
Notes, such Agent will promptly advise the
Issuer by telephone of any such offer other
than offers rejected by such Agent as
provided below.
ACCEPTANCE OF
OFFERS: Any Agent may, in its reasonable discretion,
reject any offer to purchase Notes received
by it, in whole or, if permitted by the terms
thereof, in part. Each Agent will promptly
advise the Issuer of any offers to purchase
Notes received by such Agent, other than
offers rejected by such Agent and, if such
Agent or any of its affiliates shall be the
offeror, shall advise the Issuer of that
fact. The Issuer will have the sole right to
accept offers to purchase Notes in whole or,
if permitted by the terms thereof, in part.
The Issuer may reject any such offer in whole
or, if permitted by the terms thereof, in
part. The Issuer will forthwith advise an
Agent of the acceptance or rejection of any
offer received through such Agent (the
"Presenting Agent"), and such Agent will so
advise the offeror.
SUSPENSION OF
SOLICITATION: The Issuer reserves the right, in its sole
discretion, to instruct the Agents to suspend
at any time, for any period of time or
permanently, the solicitation of offers to
purchase Notes. Upon receipt of such
instructions, the Agents will forthwith
suspend solicitation of offers to purchase
Notes from the Issuer until such time as the
Issuer has advised them that such
solicitation may be resumed.
In the event that at the time the Issuer
suspends solicitation of offers to purchase
there shall be any offers previously
communicated to the Issuer by any Agent and
which offers have not been accepted or
rejected at the time of such suspension, the
Issuer will accept or reject such offers in
whole or, if permitted by the terms thereof,
in part, and will promptly advise the
Presenting Agents of such acceptances or
rejections.
In the event that at the time the Issuer
suspends solicitation of offers to purchase
A-4<PAGE>
there shall be any offers that have been
accepted by the Issuer but are outstanding
for settlement, the Issuer will promptly
advise the Agents and the Issuing and Paying
Agent whether such offers may be settled and
whether copies of the Offering Memorandum as
in effect at the time of the suspension,
together with any appropriate Supplement, may
be delivered in connection with the
settlement of such offers. The Issuer will
have the sole responsibility for such
decision and for any arrangements that may be
made in the event that the Issuer determines
that such offers may not be settled or that
copies of such Offering Memorandum or
Supplement may not be so delivered. No such
suspension shall excuse any failure by the
Issuer to fulfill a contractual obligation to
deliver any Notes.
DELIVERY OF
OFFERING MEMORANDUM:
Subject to the immediately preceding
paragraph, the Presenting Agent will deliver
to each purchaser of Notes an Offering
Memorandum (other than documents incorporated
by reference therein unless such documents
are otherwise attached to the Offering
Memorandum) and, if applicable, a Supplement
as herein described with respect to each Note
sold pursuant to an offer solicited by such
Presenting Agent. Subject to the immediately
preceding paragraph, if notice of a change in
the terms of such Notes from the terms set
forth in the Offering Memorandum, as amended
or supplemented, is received by the
Presenting Agent between the time an offer
for a Note is received and the time the
Offering Memorandum is delivered to a
purchaser, such Offering Memorandum shall be
in the form in effect when the corresponding
offer was accepted. The Issuer will make such
delivery if such Note is sold directly by the
Issuer to a purchaser (other than a
Purchaser).
CONFIRMATION: For each offer to purchase a Note solicited
by an Agent and accepted by the Issuer, such
Agent will issue a confirmation to the
purchaser, with a copy to the Issuer, setting
A-5<PAGE>
forth the details set forth below in clauses
l through 8 of the first paragraph under
"Details for Settlement" and delivery and
payment instructions.
SETTLEMENT DATE: Subject to Section 6 of the Agreement, the
Settlement Date with respect to any offer to
purchase Notes accepted by the Issuer will be
the fifth Business Day next succeeding the
date of acceptance unless otherwise agreed by
the purchaser and the Issuer and shall be
specified upon acceptance of such offer.
ISSUING AND PAYING
AGENT NOT TO RISK FUNDS:
Nothing herein shall be deemed to require the
Issuing and Paying Agent to risk or expend
its own funds in connection with any payment
to the Issuer or the Agents or any purchaser,
it being understood by all parties that
payments made by the Issuing and Paying Agent
to the Issuer or the Agents or a purchaser
shall be made only to the extent that
immediately available funds are provided to
the Issuing and Paying Agent for such
purpose.
AUTHENTICITY OF
SIGNATURES: The Issuer will cause the Issuing and Paying
Agent to furnish the Agents from time to time
with the specimen signatures of each of the
Issuing and Paying Agent's officers,
employees or agents who has been authorized
by the Issuing and Paying Agent to
authenticate Notes, but the Agents will have
no obligation or liability to the Issuer or
to the Issuing and Paying Agent in respect of
the authenticity of the signature of any
officer, employee or agent of the Issuer or
the Issuing and Paying Agent on any Note.
PAYMENT OF EXPENSES:
Each Agent shall forward to the Issuer, on a
quarterly basis, a statement of the out-of-
pocket expenses incurred by such Agent during
that quarter that are reimbursable to it
pursuant to the terms of the Agency
Agreement. The Issuer will remit payment to
each Agent currently on a quarterly basis.
A-6<PAGE>
RESTRICTION ON
TRANSFERS: No Note may be resold or transferred in any
manner that does not comply with the
applicable restrictions on resale or transfer
or the procedures required for resale or
transfer set forth in the Issuing and Paying
Agency Agreement and on the Note certificate.
The Issuing and Paying Agent shall have no
obligation to monitor such restrictions,
other than as specifically provided in the
Issuing and Paying Agency Agreement.
PART II: PROCEDURES FOR NOTES ISSUED
-------------------------------------
IN BOOK-ENTRY FORM
------------------
In connection with the qualification of the Book-Entry
Notes for eligibility in the book-entry system maintained by DTC,
the Issuing and Paying Agent will perform the custodial, document
control and administrative functions described below, in
accordance with its respective obligations under a Letter of
Representations from the Company and the Issuing and Paying Agent
to DTC, dated June 14, 1994, and a Medium-Term Note Certificate
Agreement, dated December 21, 1993, between the Issuing and
Paying Agent and DTC (the "Certificate Agreement"), and its
obligations as a participant in DTC, including DTC's Same-Day
Funds Settlement System ("SDFS").
ISSUANCE: All Book-Entry Notes having the
same Original Issue Date,
redemption provisions, interest
payment dates, interest rate, and
Stated Maturity (collectively, the
"Terms") will be represented
initially by a single Global Note
in fully registered form without
coupons.
Each Book-Entry Note will be dated
and issued as of the date of its
authentication by the Issuing and
Paying Agent. Each Book-Entry Note
will bear an original issue date,
which will be (i) with respect to
an original Book-Entry Note (or any
portion thereof), the original
issue date specified in such Book-
Entry Note and (ii) following a
consolidation of Global Notes, with
respect to the Book-Entry Note
A-7<PAGE>
resulting from such consolidation,
the most recent Interest Payment
Date to which interest has been
paid or duly provided for on the
predecessor Global Notes,
regardless of the date of
authentication of such resulting
Book-Entry Note. No Book-Entry
Note will represent any securities
in certificated form.
IDENTIFICATION: The Issuer has arranged with the
CUSIP Service Bureau of Standard &
Poor's Ratings Group, a division of
McGraw-Hill, (the "CUSIP Service
Bureau") for the reservation of
approximately 900 PPN numbers which
have been reserved for and relating
to Book-Entry Notes and the Company
has delivered to the Issuing and
Paying Agent and DTC a written list
of such PPN numbers. The Company
will assign PPN numbers to Book-
Entry Notes as described below
under Settlement Procedure B. DTC
will notify the CUSIP Service
Bureau periodically of the PPN
numbers that the Issuer has
assigned to Book-Entry Notes. The
Issuing and Paying Agent will
notify the Issuer at any time when
fewer than 100 of the reserved PPN
numbers remain unassigned to Book-
Entry Notes, and, if it deems
necessary, the Issuer will reserve
additional PPN numbers for
assignment to Book-Entry Notes.
Upon obtaining such additional PPN
numbers, the Issuer will deliver a
list of such additional numbers to
the Issuing and Paying Agent and
DTC.
REGISTRATION: Unless otherwise specified by DTC,
each Book-Entry Note will be
registered in the name of Cede &
Co., as nominee for DTC, on the
register maintained by the Issuing
and Paying Agent under the Issuing
and Paying Agency Agreement. The
beneficial owner of a Note issued
A-8<PAGE>
in book-entry form (I.E., an owner
of a beneficial interest in a Book-
Entry Note) (or one or more
indirect participants in DTC
designated by such owner) will
designate one or more participants
in DTC (with respect to such Note
issued in book-entry form, the
"Participants") to act as agent or
agents for such beneficial owner in
connection with the book-entry
system maintained by DTC, and DTC
will record in book-entry form, in
accordance with instructions
provided by such Participants, a
credit balance with respect to such
Note issued in book-entry form in
the account of such Participants.
The ownership interest of such
beneficial owner in such Note
issued in book-entry form will be
recorded through the records of
such Participants or through the
separate records of such
Participants and one or more
indirect participants in DTC.
TRANSFERS: Transfers of beneficial ownership
interests in a Book-Entry Note will
be accomplished by book entries
made by DTC and, in turn, by
Participants (and in certain cases,
one or more indirect participants
in DTC) acting on behalf of
beneficial transferors and
transferees of such Book-Entry
Note.
EXCHANGES: After the first Interest Payment
Date on individual issues of the
Notes, the Issuing and Paying Agent
may deliver to DTC Reorganization
Department, Interactive Data
Control and the CUSIP Service
Bureau at any time a written notice
of consolidation specifying (a) the
PPN numbers of two or more Global
Notes outstanding on such date that
represent Book-Entry Notes having
the same Terms, (other than
Original Issue Dates) and for which
interest has been paid to the same
A-9<PAGE>
date; (b) a date, occurring at
least 30 days after such written
notice is delivered and at least 30
days before the next Interest
Payment Date for the related Notes
issued in book-entry form, on which
such Global Notes shall be
exchanged for a single replacement
Global Note; and (c) a new PPN
number, obtained from the Issuer,
to be assigned to such replacement
Global Note. Upon receipt of such
a notice, DTC will send to its
participants (including the Issuing
and Paying Agent) a written
reorganization notice to the effect
that such exchange will occur on
such date. Prior to the specified
exchange date, the Issuing and
Paying Agent will deliver to the
CUSIP Service Bureau written notice
setting forth such exchange date
and the new PPN number and stating
that, as of such exchange date, the
PPN numbers of the Global Notes to
be exchanged will no longer be
valid. On the specified exchange
date, the Issuing and Paying Agent
will exchange such Global Notes for
a single Global Note bearing the
new PPN number and the PPN numbers
of the exchanged Global Notes will,
in accordance with CUSIP Service
Bureau procedures, be canceled and
not immediately reassigned.
INTEREST PAYMENTS: GENERAL. Interest (if any) on each
Note will accrue from the Original
Issue Date of such Note, and will
be calculated and paid in the
manner described in such Note.
Unless otherwise provided in the
Issuing and Paying Agency Agreement
or the Notes, the first payment of
interest on any Note originally
issued after a Record Date and on
or before the next succeeding
Interest Payment Date will be made
no earlier than the Interest
Payment Date following the next
succeeding Record Date. Interest
A-10<PAGE>
payable at maturity of a Note, or
upon earlier redemption or
repayment, will be payable to the
person to whom the principal of
such Note is payable. DTC will
arrange for each pending deposit
message described under Settlement
Procedure C below to be transmitted
to Standard & Poor's Ratings Group,
which will use the information in
the message to include certain
terms of the related Book-Entry
Note in the appropriate daily bond
report published by Standard &
Poor's Ratings Group.
RECORD DATES. The Record Dates
with respect to the Interest
Payment Dates shall be the first
calendar day (whether or not a
Business Day) of the month of such
Interest Payment Date.
INTEREST PAYMENT DATES. Unless
otherwise specified pursuant to
Settlement Procedure "A" below,
interest payments on Book-Entry
Notes will be made semiannually on
January 15 and July 15 of each year
and at Maturity; PROVIDED, HOWEVER,
that if an Interest Payment Date
for a Book-Entry Note is not a
Business Day, the payment due on
such day shall be made on the next
succeeding Business Day and no
interest shall accrue on such
payment for the period from and
after such Interest Payment Date;
PROVIDED FURTHER, that in the case
of a Book-Entry Note issued between
a Regular Record Date and an
Interest Payment Date, the first
interest payment will be made on
the Interest Payment Date following
the next succeeding Regular Record
Date.
PAYMENTS OF PRINCIPAL AND PAYMENTS OF INTEREST ONLY. Not
INTEREST: later than five Business Days
following each Record Date, the
Issuing and Paying Agent will
deliver to the Issuer and DTC a
A-11<PAGE>
written notice specifying by PPN
number the amount of interest to be
paid on each Book-Entry Note on the
following Interest Payment Date
(other than an Interest Payment
Date coinciding with a Maturity
Date) and the total of such
amounts. DTC will confirm the
amount payable on each Book-Entry
Note on such Interest Payment Date
by reference to the daily bond
reports published by Standard &
Poor's. On such Interest Payment
Date, the Issuer will pay to the
Issuing and Paying Agent, and the
Issuing and Paying Agent in turn
will pay to DTC, such total amount
of interest due (other than at
Maturity Date), at the times and in
the manner set forth below under
"Manner of Payment."
PAYMENTS AT MATURITY DATE. Prior
to the first Business Day of each
month in which principal and/or
interest is to be paid, the Issuing
and Paying Agent will deliver to
the Issuer and DTC a written list
of principal, interest and premium,
if any, to be paid on each Book-
Entry Note maturing either at
Stated Maturity or on a Redemption
Date in the following month. The
Issuing and Paying Agent, the
Issuer and DTC will confirm the
amounts of such principal and
interest payments with respect to a
Book-Entry Note on or about the
fifth Business Day preceding the
Maturity of such Book-Entry Note.
On or before Maturity Date, the
Issuer will pay to the Issuing and
Paying Agent, and the Issuing and
Paying Agent in turn will pay to
DTC, the principal amount of such
Note, together with interest and
premium, if any, due at such
Maturity Date, at the times and in
the manner set forth below under
"Manner of Payment." Promptly
after payment to DTC of the
principal and interest due at
A-12<PAGE>
Maturity of such Book-Entry Note,
the Issuing and Paying Agent will
cancel such Book-Entry Note in
accordance with the Issuing and
Paying Agency Agreement and so
advise the Issuer. If any Maturity
of a Book-Entry Note is not a
Business Day, the payment due on
such day shall be made on the next
succeeding Business Day and no
interest shall accrue on such
payment for the period from and
after such Maturity.
MANNER OF PAYMENT. The total
amount of any principal, premium,
if any, and interest due on Book-
Entry Notes on any Interest Payment
Date or at Maturity shall be
transferred by the Issuer to the
Issuing and Paying Agent to an
account designated by the Issuing
and Paying Agent in funds available
for use by the Issuing and Paying
Agent as of 12:00 noon, New York
City time, on such date. The
Issuer will confirm such
instructions in writing to the
Issuing and Paying Agent. Prior to
2:00 p.m., New York City time, on
such date or as soon as possible
thereafter, the Issuing and Paying
Agent will pay (but only from funds
withdrawn from such account) by
separate wire transfer (using
Fedwire message entry instructions
in a form previously specified by
DTC) to an account at the Federal
Reserve Bank of New York previously
specified by DTC, in funds
available for immediate use by DTC,
each payment of interest, principal
and premium, if any, due on a Book-
Entry Note on such date. Thereafter
on such date, DTC will pay, in
accordance with its SDFS operating
procedures then in effect, such
amounts in funds available for
immediate use to the respective
Participants in whose names such
Notes are recorded in the book-
entry system maintained by DTC.
A-13<PAGE>
Neither the Issuer nor the Issuing
and Paying Agent shall have any
responsibility or liability for the
payment by DTC of the principal of,
or premium, if any, or interest on,
the Book-Entry Notes to such
Participants.
WITHHOLDING TAXES. The amount of
any taxes required under applicable
law to be withheld from any
interest payment on a Note will be
determined and withheld by the
Participant, indirect participant
in DTC or other Person responsible
for forwarding payments and
materials directly to the
beneficial owner of such Note.
SETTLEMENT PROCEDURES: Settlement Procedures with regard
to each Book-Entry Note sold by the
Presenting Agent, as agent of the
Company, will be as follows:
A. The Presenting Agent will
advise the Issuer by telephone
(confirmed in writing) or
telecopy of the following
Settlement information:
1. Taxpayer identification
number of the purchaser.
2. Principal amount of the
Note.
3. Interest rate, and interest
payment dates.
4. Price to public of the
Note.
5. Trade date.
6. Settlement Date (Original
Issue Date).
7. Maturity.
8. Net proceeds to the
Company.
A-14<PAGE>
9. Agent's commission.
10. Redemption provisions, if
any.
B. The Issuer will advise the
Issuing and Paying Agent by
telephone (confirmed in
writing) or telecopy by 10:00
a.m. on the second Business Day
preceding the Settlement Date
of the above settlement
information received from the
Presenting Agent with respect
to the Book-Entry Note
representing such Note.
C. The Issuer will assign a PPN
number to such Note and the
Issuing and Paying Agent will
communicate to DTC through
DTC's Participant Terminal
System, a pending deposit
message specifying the
following settlement
information, which will route
such relevant information to
the Presenting Agent, Standard
& Poor's Ratings Group and
Interactive Data Corporation:
1. The information set forth
in Settlement Procedure A.
2. Identification numbers of
the participant accounts
maintained by DTC on behalf
of the Issuing and Paying
Agent and the Agent.
3. Initial Interest Payment
Date for such Note, number
of days by which such date
succeeds the related Record
Date for DTC purposes and,
if then calculable, the
amount of interest payable
on such Interest Payment
Date (which amount shall
have been confirmed by the
Issuing and Paying Agent).
A-15<PAGE>
4. PPN number of the Book-
Entry Note representing
such Note.
D. The Issuing and Paying Agent
will complete a Book-Entry Note
representing such Note in a
form that has been approved by
the Company, the Agents and the
Issuing and Paying Agent.
E. The Issuing and Paying Agent
will authenticate the Book-
Entry Note representing such
Note.
F. DTC will credit such Note to
the participant account of the
Issuing and Paying Agent
maintained by DTC.
G. The Issuing and Paying Agent
will enter an SDFS deliver
order through DTC's Participant
Terminal System instructing DTC
(i) to debit such Note to the
Issuing and Paying Agent's
participant account and credit
such Note to the participant
account of the Presenting Agent
maintained by DTC and (ii) to
debit the settlement account of
the Presenting Agent and credit
the settlement account of the
Issuing and Paying Agent
maintained by DTC, in an amount
equal to the price of such Note
less such Agent's commission.
Any entry of such a deliver
order shall be deemed to
constitute a representation and
warranty by the Issuing and
Paying Agent to DTC that (i)
the Book-Entry Note
representing such Note has been
issued and authenticated and
(ii) the Issuing and Paying
Agent is holding such Book-
Entry Note pursuant to the Note
Certificate Agreement between
the Issuing and Paying Agent
and DTC.
A-16<PAGE>
H. The Presenting Agent will enter
an SDFS deliver order through
DTC's Participant Terminal
System instructing DTC (i) to
debit such Note to the
Presenting Agent's participant
account and credit such Note to
the participant account of the
Participants maintained by DTC
and (ii) to debit the
settlement accounts of such
Participants and credit the
settlement account of the
Presenting Agent maintained by
DTC, in an amount equal to the
public offering price of such
Note.
I. Transfers of funds in
accordance with SDFS deliver
orders described in Settlement
Procedures G and H will be
settled in accordance with SDFS
operating procedures in effect
on the Settlement Date.
J. Upon receipt of such funds, the
Issuing and Paying Agent will
credit to an account of the
Company identified to the
Issuing and Paying Agent funds
available for immediate use in
the amount transferred to the
Issuing and Paying Agent in
accordance with Settlement
Procedure G.
K. The Presenting Agent will
confirm the purchase of such
Note to the purchaser either by
transmitting to the Participant
with respect to such Note a
confirmation order through
DTC's Participant Terminal
System or by mailing a written
confirmation to such purchaser.
A-17<PAGE>
SETTLEMENT PROCEDURES For orders of Notes accepted by the
TIMETABLE: Company, Settlement Procedures "A"
through "K" set forth above shall
be completed as soon as possible
but not later than the respective
times (New York City time) set
forth below:
SETTLEMENT
PROCEDURE TIME
---------- ----
A 11:00 a.m. on the trade
date
B 12:00 noon on the trade
date
C 2:00 p.m. on the trade
date
D 3:00 p.m. on the
Business Day before
Settlement Date
E 9:00 a.m. on Settlement
Date
F 10:00 a.m. on
Settlement Date
G-H 2:00 p.m. on the
Settlement Date
I 4:45 p.m. on Settlement
Date
J-K 5:00 p.m. on Settlement
Date
If a sale is to be settled more
than one Business Day after the
trade date, Settlement Procedures
A, B, and C shall be completed as
soon as practicable but in no event
later than 11:00 a.m. and 12:00
noon on the first Business Day
after such sale date but no later
than 2:00 p.m. on the Business Day
before the Settlement Date,
respectively. Settlement Procedure
I is subject to extension in
accordance with any extension of
Fedwire closing deadlines and in
the other events specified in the
SDFS operating procedures in effect
on the Settlement Date.
If settlement of a Book-Entry Note
is rescheduled or canceled, the
Issuing and Paying Agent, if
A-18<PAGE>
notified in time, will deliver to
DTC, through DTC's Participant
Terminal System, a cancellation
message to such effect by no later
than 2:00 pm., New York City time,
on the Business Day immediately
preceding the scheduled Settlement
Date.
FAILURE TO SETTLE: If the Issuing and Paying Agent
fails to enter an SDFS deliver
order with respect to a Book-Entry
Note pursuant to Settlement
Procedure G, the Issuing and Paying
Agent may deliver to DTC, through
DTC's Participant Terminal System,
as soon as practicable a withdrawal
message instructing DTC to debit
such Note to the participant
account of the Issuing and Paying
Agent maintained at DTC. DTC will
process the withdrawal message,
PROVIDED that such participant
account contains a principal amount
of the Book-Entry Note representing
such Note that is at least equal to
the principal amount to be debited.
If withdrawal messages are
processed with respect to all the
Notes represented by a Book-Entry
Note, the Issuing and Paying Agent
will mark such Book-Entry Note
"canceled," make appropriate
entries in its records and send
such canceled Book-Entry Note to
the Company. The CUSIP number
assigned to such Book-Entry Note
shall, in accordance with CUSIP
Service Bureau procedures, be
canceled and not immediately
reassigned. If withdrawal messages
are processed with respect to a
portion of the Notes represented by
a Book-Entry Note, the Issuing and
Paying Agent will exchange such
Book-Entry Note for two Book-Entry
Notes, one of which shall represent
the Book-Entry Notes for which
withdrawal messages are processed
and shall be canceled immediately
after issuance, and the other of
which shall represent the other
A-19<PAGE>
Notes previously represented by the
surrendered Book-Entry Note and
shall bear the CUSIP number of the
surrendered Book-Entry Note.
If the purchase price for any Book-
Entry Note is not timely paid to
the Participants with respect to
such Note by the beneficial
purchaser thereof (or a person,
including an indirect participant
in DTC, acting on behalf of such
purchaser), such Participants and,
in turn, the related Agent may
enter SDFS deliver orders through
DTC's Participant Terminal System
reversing the orders entered
pursuant to Settlement Procedures G
and H, respectively. Thereafter,
the Issuing and Paying Agent will
deliver the withdrawal message and
take the related actions described
in the preceding paragraph. If
such failure shall have occurred
for any reason other than default
by the applicable Agent to perform
its obligations hereunder or under
the Placement Agency Agreement, the
Company will reimburse such Agent
on an equitable basis for its loss
of the use of funds during the
period when the funds were credited
to the account of the Company.
Notwithstanding the foregoing, upon
any failure to settle with respect
to a Book-Entry Note, DTC may take
any actions in accordance with its
SDFS operating Procedures then in
effect. In the event of a failure
to settle with respect to a Note
that was to have been represented
by a Book-Entry Note also
representing other Notes, the
Issuing and Paying Agent will
provide, in accordance with
Settlement Procedures D and E, for
the authentication and issuance of
a Book-Entry Note representing such
remaining Notes and will make
appropriate entries in its records.
A-20<PAGE>
PART III: PROCEDURES FOR NOTES ISSUED
--------------------------------------
IN CERTIFICATED FORM
--------------------
INTEREST PAYMENTS: Interest (if any) on each Note will
accrue from the Original Issue Date
of such Note, and will be
calculated and paid in the manner
described in such Note.
Unless otherwise provided in the
Issuing and Paying Agency Agreement
or the Notes, the first payment of
interest on any Note originally
issued after a Record Date and on
or before the next succeeding
Interest Payment Date will be made
no earlier than the Interest
Payment Date following the next
succeeding Record Date. Interest
payable at maturity of a Note, or
upon earlier redemption or
repayment, will be payable to the
person to whom the principal of
such Note is payable. All interest
payments for each Interest Payment
Date (excluding interest payments
made on the Maturity Date or upon
the acceleration thereof or on
earlier redemption) will be made by
check mailed to the person entitled
thereto as provided above, or at
the option of the registered
holder, at such other place in the
United States as the registered
holder shall designate to the
Issuing and Paying Agent in
writing, except that a holder of
the equivalent of $10,000,000 or
more in aggregate principal amount
of Notes with the same Interest
Payment Date shall be entitled to
receive such payments in
immediately available funds paid to
an account at a bank in New York,
New York (or other bank consented
to by the Issuer and the Issuing
and Paying Agent), but only if
appropriate payment instructions
A-21<PAGE>
have been received in writing by
the Issuing and Paying Agent not
less than 10 days prior to the
applicable Interest Payment Date
(provided that such bank designated
by the registered holder has
appropriate facilities therefor).
Within five Business Days following
each Record Date, the Issuing and
Paying Agent will provide to the
Issuer a list of interest payments
to be made for each Note on the
next succeeding Interest Payment
Date and the total amount of the
interest payments. The Issuing and
Paying Agent will provide monthly
to the Issuer a list of the
principal, premium, if any, and
interest to be paid on Notes
maturing or being redeemed in the
next succeeding month.
SETTLEMENT: The Issuer will instruct the
Issuing and Paying Agent to effect
delivery of each Note no later than
1:00 p.m., New York City time, on
the Settlement Date to the
Presenting Agent for delivery to
the purchaser.
DETAILS FOR
SETTLEMENT: For each offer to purchase a Note
that is accepted by the Issuer, the
Presenting Agent will provide
(unless provided by the purchaser
directly to the Issuer) by
telephone the following information
to the Issuer:
1. The exact name of the
Registered Owner.
2. The exact address of the
Registered Owner and the
address for delivery, notices
and payments of principal and
interest.
3. The taxpayer identification
number of the Registered Owner.
4. A description of the terms and
provisions of the Notes that
includes the information
A-22<PAGE>
identified in Exhibit B to the
Agreement and any other
information required to
describe such Notes properly.
5. The Issue Price.
6. The Trade Date.
7. The Settlement Date.
8. The Presenting Agent's
commission, determined as
provided in Section 2(a) of
the Agreement.
The Issuer will advise the Issuing
and Paying Agent of the foregoing
information for each offer to
purchase a Note solicited by the
Presenting Agent and accepted by
the Issuer in time for the Issuing
and Paying Agent to prepare and
authenticate the required Note, but
not later than 10:00 a.m. New York
City time on the second Business
Day preceding the Settlement Date.
Before accepting any offer to
purchase a Note to be settled in
less than three Business Days, the
Issuer shall verify that the
Issuing and Paying Agent will have
adequate time to prepare and
authenticate such Note.
After receiving from the Presenting
Agent the details for each offer to
purchase a Note, the Issuer will,
after recording the details and any
necessary calculations, provide
appropriate documentation to the
Issuing and Paying Agent, including
the information provided by the
Presenting Agent necessary for the
preparation and authentication of
such Note. Prior to preparing the
Note for delivery (but in any case
no later than 10:00 a.m. on the
Business Day next preceding the
Settlement Date therefor), the
Issuing and Paying Agent will
confirm the details of such issue
with the Issuer, and the Issuer
will confirm such instruction to
the Presenting Agent, in each case
by telephone, telecopy or telex.
A-23<PAGE>
DELIVERIES AND
CASH PAYMENT: Upon receipt of appropriate
documentation and instructions with
respect to the Notes constituting a
Tranche, the Issuer will cause the
Issuing and Paying Agent to prepare
and authenticate the form of Note
previously approved by the Issuer,
the Presenting Agent and the
Issuing and Paying Agent and
deliver such Note and a customer
receipt to the purchaser.
If the form of Note is not
pre-printed and four-ply, the
Issuing and Paying Agent shall
deliver a photocopy of such
authenticated Note to the
Presenting Agent and the Issuer and
shall retain one copy. Otherwise,
it shall deliver the copies in the
four-ply Note as follows:
Stub l--For the Presenting
Agent.
Stub 2--For the Issuer.
Stub 3--For the Issuing and
Paying Agent.
Each Note shall be authenticated on
the Settlement Date therefor. The
Issuing and Paying Agent will
authenticate each Note and deliver
it to the Presenting Agent (and
deliver the stubs as indicated
above), all in accordance with
written instructions (or oral
instructions confirmed in writing,
which may be given by telex or
telecopy, on the next Business Day)
from the Issuer.
Upon verification by the Presenting
Agent that a Note has been prepared
and properly authenticated by the
Issuing and Paying Agent and
registered in the name of the
purchaser in the proper principal
amount, payment will be made to the
Issuer by the Presenting Agent the
same day in immediately available
funds. Such payment shall be made
A-24<PAGE>
only upon prior receipt by the
Presenting Agent of immediately
available funds from or on behalf
of the purchaser unless the
Presenting Agent decides, at its
option, exercised in the sole
discretion of such Presenting
Agent, to advance its own funds for
such payment against subsequent
receipt of funds from the
purchaser. The Presenting Agent
shall immediately notify the Issuer
of its decision to advance its own
funds for payment against
subsequent receipt of funds from a
purchaser.
Upon delivery of a Note to the
Presenting Agent, the Presenting
Agent shall promptly deliver such
Note to the purchaser.
In the event any Note is
incorrectly prepared, the Issuing
and Paying Agent shall promptly
issue a replacement Note in
exchange for the incorrectly
prepared Note.
FAILURE TO SETTLE: If the Presenting Agent, at its own
option, has advanced its own funds
for payment against subsequent
receipt of funds from a purchaser,
and if such purchaser shall fail to
make payment for the Note on the
Settlement Date therefor, the
Presenting Agent will promptly
notify the Issuing and Paying Agent
and the Issuer by telephone,
promptly confirmed in writing,
which may be given by telex or
telecopy (but no later than the
next Business Day). In such event,
the Issuer shall promptly provide
the Issuing and Paying Agent with
appropriate documentation and
instructions consistent with these
procedures for the return of the
Note to the Issuing and Paying
Agent, and the Presenting Agent
will promptly return the Note to
the Issuing and Paying Agent. Upon
A-25<PAGE>
(i) confirmation from the Issuing
and Paying Agent in writing which
may be given by telex or telecopy)
that the Issuing and Paying Agent
has received the Note and upon (ii)
confirmation from the Presenting
Agent in writing (which may be
given by telex or telecopy) that
the Presenting Agent has not
received payment from such
purchaser (the matters referred to
in clauses (i) and (ii) are
referred to hereinafter as the
("confirmations"), the Issuer will
promptly pay to the Presenting
Agent an amount in immediately
available funds equal to the amount
previously paid by the Presenting
Agent in respect of such Note.
Assuming receipt of such Note by
the Issuing and Paying Agent and of
the confirmations by the Issuer,
such payment will be made on the
Settlement Date if reasonably
practical, and in any event not
later than the Business Day
following the date of receipt of
the Note and the confirmations. If
a purchaser shall fail to make
payment for such Note for any
reason other than the failure of
the Presenting Agent to provide the
necessary information to the Issuer
as described above for settlement
or to provide a confirmation to the
purchaser within a reasonable
period of time as described above
or otherwise to satisfy its
obligations hereunder or in the
Agreement, and if the Presenting
Agent shall have otherwise complied
with its obligations hereunder and
in the Agreement, the Issuer will
reimburse the Presenting Agent for
its loss of the use of funds during
the period when they were credited
to the account of the Issuer.
Immediately upon receipt of the
Note in respect of which the
failure occurred, the Issuing and
Paying Agent will void said Note,
A-26<PAGE>
make appropriate entries in its
records and destroy such Note; and
upon such action, such Note will be
deemed not to have been issued,
authenticated or delivered.
A-27<PAGE>
EXHIBIT B
TERMS AGREEMENT
[Date]
To: CONNECTICUT NATURAL GAS CORPORATION
Subject in all respects to the
terms and conditions of the Amended and Restated Placement Agency
Agreement (the "Agreement") dated as of August _____, 1997, among
PaineWebber Incorporated., A.G. Edwards & Sons, Inc. and you, the
undersigned agrees to purchase the following Notes of Connecticut
Natural Gas Corporation:
Principal Amount:
Interest Rate:
Maturity Date:
Discount to the Purchaser: ___% of Principal Amount
Purchase Price:
Closing Date and Time:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption [Percentage Reduction]:
Requirements to deliver
the documents specified in
Section 6(a)(ii) of the
Agreement:
Certificate contemplated by
clause (1): [Required/Not
Required]
Opinion contemplated by
clause (2): [Required/Not
Required]
Opinion contemplated by
clause (3): [Required/Not
Required]
Letter contemplated by
clause (4): [Required/Not
Required]
Period during which additional
Notes may not be sold
if not period between trade
date and Closing Date
as specified in Section 4(a)(v) of
the Agreement:
B-1<PAGE>
OTHER PROVISIONS:
[PAINEWEBBER INCORPORATED]
[A.G. EDWARDS & SONS, INC.],
as Purchaser(s),
By:
Name:
Title:
Accepted:
CONNECTICUT NATURAL GAS CORPORATION,
By:
Name:
Title:
B-2<PAGE>
EXHIBIT C
August 13, 1997
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
A.G. Edwards & Sons, Inc.
One North Jefferson
St. Louis, Missouri 63103
Re: Connecticut Natural Gas Corporation U.S. $75,000,000
Medium-Term Notes, Series B
----------------------------------------------------
Dear Sirs:
We have acted as counsel to Connecticut Natural Gas
Corporation, a Connecticut corporation (the "Issuer"), in
connection with the issuance by the Issuer from time to time of
up to $75,000,000 aggregate principal amount of its Medium-Term
Notes, Series B (the "Notes"), due from one year to thirty years
from date of issuance, to be issued pursuant to the Issuing and
Paying Agency Agreement dated as of June 14, 1994 (as amended by
the First Amendment thereto, dated August 13, 1997, the "Issuing
and Paying Agency Agreement"), between the Issuer and State
Street Bank and Trust Company, as successor to Shawmut Bank
Connecticut, National Association.
In that connection, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such
documents, corporate records or other instruments as we have
deemed necessary or appropriate for the purposes of this opinion,
including: (a) the Issuing and Paying Agency Agreement; (b) the
form of the Notes; (c) the Amended and Restated Placement Agency
Agreement (the "Placement Agency Agreement"), including the
Procedures annexed thereto, dated as of August 13, 1997 (the
"Placement Agency Agreement"), between PaineWebber Incorporated
and A.G. Edwards & Sons, Inc. (each, an "Agent" and,
collectively, the "Placement Agents") and the Issuer; (d) the
Offering Memorandum dated August 13, 1997 (the "Offering
Memorandum"), relating to the Notes, which includes and
incorporates by reference the Issuer's audited financial
statements as of and for the fiscal years ended September 30,
1996 and 1995, as Exhibit A, the Issuer's unaudited financial
C-1<PAGE>
PaineWebber Incorporated
A.G. Edwards & Sons, Inc.
August 13, 1997
Page 2
statements as of and for the nine months ended June 30, 1997 and
1996, as Exhibit B, Management's Discussion and Analysis of
Financial Condition and Results of Operations, as Exhibit C, and
the consolidated financial statements of the Issuer as of and for
the fiscal years ended September 30, 1996 and 1995, and the
related accountant's report and notes as filed with the
Securities and Exchange Commission in Item 8 of the Issuer's
Annual Report on Form 10-K for fiscal 1996 (collectively, the
"Incorporated Documents"); (e) the Certificate of Incorporation
and By-laws of the Issuer; (f) resolutions adopted by the Board
of Directors of the Issuer at meetings held on February 22, 1994,
May 24, 1994 and May 20, 1997; and (g) the Decision of the
Connecticut Department of Public Utility Control dated May 11,
1994 (Docket No. 94-04-10). The agreements referred to in (a)
and (c) above are herein referred to collectively as the
"Transaction Agreements."
With respect to matters stated herein to be to the best of
our knowledge, we have consulted with officers of the Issuer who,
by reason of their positions, would be expected to have knowledge
of the relevant facts and circumstances, and made such other
investigations as we have deemed necessary or appropriate.
Nothing has come to our attention in the course of such
consultations and investigations which has caused us to believe
that the statements so made herein as to the best of our
knowledge are untrue, incorrect or misleading. We have not
searched the dockets of any court or agency for litigation or
proceedings involving the Issuer.
We express no opinion as to the laws of any jurisdiction
other than the laws of Connecticut and the Federal laws of the
United States. We have made no inquiry into and express no
opinion as to the laws of other jurisdictions. As you are aware,
the Placement Agency Agreement purports to be governed by the
laws of the State of New York. For purposes of this opinion we
have assumed, without investigation, that the laws of the State
of New York applicable to that document and the transactions
contemplated thereby are the same in all respects as the
applicable laws of the State of Connecticut.
For purposes of our opinion concerning the valid existence
of the Issuer in the State of Connecticut, we have relied upon a
certificate of the Secretary of the State of the State of
Connecticut. Based upon the foregoing, and subject to the
limitations and qualifications set forth herein, we are of the
opinion that:
C-2<PAGE>
PaineWebber Incorporated
A.G. Edwards & Sons, Inc.
August 13, 1997
Page 3
1. The Issuer and each of its subsidiaries have been duly
incorporated, are validly existing as corporations under the laws
of the State of Connecticut and have full corporate power and
authority to own their properties and conduct their business as
presently conducted. The Issuer has full corporate power and
authority to execute and deliver the Transaction Agreements and
the Notes and to perform its obligations under such agreements
and the Notes.
2. The Transaction Agreements have been duly authorized,
executed and delivered by the Issuer and constitute legal, valid
and binding obligations of the Issuer, enforceable against the
Issuer in accordance with their respective terms.
3. The Issuer has duly authorized the execution, delivery,
issuance, offering and sale of the Notes and performance of its
obligations thereunder in accordance with their respective terms
and conditions, subject to the determination of certain terms of
the Notes by officers of the Issuer authorized by the Issuer to
establish such terms. Each Note, when completed, executed,
authenticated and delivered as described in the Issuing and
Paying Agency Agreement and the Placement Agency Agreement
against payment of the consideration therefor, will constitute a
legal, valid and binding obligation of the Issuer, enforceable
against the Issuer in accordance with its terms and will entitle
its registered owner to the benefits of the Issuing and Paying
Agency Agreement.
4. The Issuing and Paying Agency Agreement and the form of
the Notes attached thereto conform in all material respects to
the descriptions thereof contained in the Offering Memorandum.
5. To the best of such counsels' knowledge, the Issuer is
not in violation of its charter or by-laws. The execution,
delivery and performance of the Transaction Agreements and the
execution, delivery, issuance, offering and sale of the Notes and
the performance of the obligations under the Notes and such
agreements will not conflict with, result in a breach of,
constitute a default under or result in the creation or
imposition of any lien, charge or encumbrance on any property or
assets of the Issuer or its subsidiaries pursuant to the Issuer's
Certificate of Incorporation, By-laws or, to the best of our
knowledge, any indenture, mortgage, loan agreement, note or
similar financial instrument to which the Issuer or any of its
subsidiaries is a party or to which any of its or their property
is subject or any statute, regulation or order or judgment
C-3<PAGE>
PaineWebber Incorporated
A.G. Edwards & Sons, Inc.
August 13, 1997
Page 4
applicable to the Issuer of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Issuer or any of its subsidiaries.
6. Assuming that the Notes are offered, sold and issued in
compliance with the terms and conditions of the Issuing and
Paying Agency Agreement, the Placement Agency Agreement and the
Procedures contemplated therein, no approval, authorization,
consent or other order of, or filing with, any United States
Federal or Connecticut State governmental authority is legally
required in connection with the execution, delivery and
performance by the Issuer of the Transaction Agreements or the
issuance of the Notes, except such as may be required under
applicable state securities laws in connection with the offer and
sale of the Notes; provided, however, that the approval of the
Connecticut Department of Public Utility Control is required in
connection with the issuance of the Notes and has been obtained
and is in full force and effect with respect to the general terms
and conditions of the program for the issuance of Notes during
the period ending September 30, 1998 subject to the requirement
for further approval of said Department to proposed terms for the
specific issuances of Notes as may be filed by the Issuer with
said Department from time to time.
7. The Issuer is a subsidiary of CTG Resources, Inc., a
Connecticut corporation ("CTG"), and is exempt from any
provisions imposed upon it as a "subsidiary company" of a
"holding company" under the Public Utility Holding Company Act of
1935, as amended, except Section 9(a)(2) thereof.
8. Except as may be set forth or arising out of facts
disclosed in the Offering Memorandum, to the best of our
knowledge, there are no legal or governmental actions, suits or
proceedings before any court or governmental or other regulatory
agency or body of any jurisdiction or any arbitrator now pending
or threatened against the Issuer, its subsidiaries or any of its
or their properties, other than such actions, suits or
proceedings that, considered in the aggregate, would not
reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), earnings, business or
properties of the Issuer or the ability of the Issuer to perform
its obligations under the Transaction Agreements and the Notes.
9. The statements in the Offering Memorandum under the
caption "Description of the Notes," to the extent that they
constitute matters of law, summaries of legal matters, documents
C-4<PAGE>
PaineWebber Incorporated
A.G. Edwards & Sons, Inc.
August 13, 1997
Page 5
or proceedings, or legal conclusions, have been reviewed by us
and are correct in all material respects.
10. The form of Note annexed as Exhibit I to the Issuing
and Paying Agency Agreement conforms in all material respects to
all statements relating thereto contained in the Offering
Memorandum.
11. Neither registration of the Notes under the Securities
Act of 1933, as amended, nor the qualification of an indenture
under the Trust Indenture Act of 1939, as amended, with respect
thereto is required for the offer, sale and, assuming the sale to
an Agent as principal, initial resale of the Notes in the manner
contemplated by the Placement Agency Agreement.
12. The Issuer is not required to register as an
"investment company" under the Investment Company Act of 1940, as
amended, and will not be required to so register as a result of
the transactions contemplated by the Transaction Agreements.
We have not independently verified the accuracy,
completeness or fairness of the statements made or included in
the Offering Memorandum or the Incorporated Documents and take no
responsibility therefor, except to the extent referred to under
Paragraph 4 above and in this paragraph. In the course of the
preparation by the Issuer of the Offering Memorandum, excluding
the Incorporated Documents, we participated in conferences with
certain officers and employees of the Issuer and with its
accountants. We also participated in the preparation by the
Issuer of its Annual Report on Form 10-K for its fiscal year
ended 1996, its Quarterly Report for the quarter ended
December 31, 1996 and CTG's Quarterly Report for the quarter
ended March 31, 1997, and its Proxy Statement respecting its
annual meeting of stockholders held in 1997. Based upon our
examination of the Offering Memorandum, the Incorporated
Documents, our investigation in connection with the preparation
of the Offering Memorandum, and our participation in the
conferences referred to above, we have no reason to believe that
the Offering Memorandum (including the Incorporated Documents)
contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading, provided, however, that we express no view
with respect to any financial statements contained in or
incorporated by reference into the Offering Memorandum or the
C-5<PAGE>
PaineWebber Incorporated
A.G. Edwards & Sons, Inc.
August 13, 1997
Page 6
Incorporated Documents or any financial information derived
therefrom.
The foregoing is subject to the following:
a. The enforceability of the Transaction Agreements and
the Notes is subject to procedural due process and subject to
applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or other laws affecting creditor's rights
generally from time to time in effect and general principles of
equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
b. No opinion is expressed as to the enforceability of (i)
provisions related to self-help, (ii) provisions which purport to
establish evidentiary standards, (iii) provisions related to
waiver of remedies (or the delay or omission of enforcement
thereof), disclaimers, releases of legal or equitable rights,
discharge of defenses, or liquidated damages, (iv) provisions
releasing, exculpating or exempting a party from, or requiring
indemnification of a party for, liability for its own action or
inaction to the extent the action or inaction involves
negligence, recklessness, willful misconduct, unlawful conduct or
conduct against public policy, or (v) any particular remedy where
another remedy has been selected.
c. Provisions in the Transaction Agreements and the Notes
which permit the holders of the Notes to make determinations or
to take actions may be subject to requirements that such
determinations be made or actions be taken on a reasonable basis
and in good faith.
Each of you may rely on this opinion in connection with the
transactions contemplated by the Transaction Agreements, but it
may not be relied upon by any other person or for any other
purpose whatsoever, without in each instance obtaining our prior
written consent.
Very truly yours,
MURTHA, CULLINA, RICHTER AND PINNEY
By:
Willard F. Pinney, Jr.
A Partner of the Firm
C-6<PAGE>
EXHIBIT D
CONNECTICUT NATURAL GAS CORPORATION
U.S. $
Medium-Term Notes, Series B
With Maturities From One Year to
Thirty Years From Date of Issue
Amendment to Amended and Restated Placement Agency Agreement
------------------------------------------------------------
New York, New York
[Date]
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
A.G. Edwards & Sons, Inc.
One North Jefferson
St. Louis, MO 63103
Dear Sirs:
The Amended and Restated Placement Agency Agreement
dated August 13, 1997 (the "Agreement"), between Connecticut
Natural Gas Corporation, a Connecticut corporation (the
"Issuer"), and you is hereby amended to increase the aggregate
principal amount of Notes (as defined in the Agreement) at any
time outstanding to up to U.S. $ .
[The documents referred to in the second sentence of
Section 12 of the Agreement shall be delivered simultaneously
herewith.]
In all other respects the Agreement shall remain in
full force and effect.
This amendment to the Agreement may be executed in
counterparts, and the executed counterparts shall together
constitute a single instrument.
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us the
enclosed duplicate hereof, whereupon this letter shall represent
D-1<PAGE>
a binding agreement between the Issuer and each of you. This
letter shall not constitute a binding agreement unless and until
it is executed by the Issuer and each of you.
Very truly yours,
CONNECTICUT NATURAL GAS CORPORATION
by:
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date hereof.
PAINEWEBBER INCORPORATED
by:
Name:
Title:
A.G. Edwards & SONS, INC.,
by:
Name:
Title:
D-2<PAGE>
<TABLE>
<CAPTION> EXHIBIT 11
CONNECTICUT NATURAL GAS CORPORATION AND SUBSIDIARIES
-----------------------------------------------------
COMPUTATION OF CONSOLIDATED PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
-------------------------------------------------------------------------
(Thousands of Dollars Except for Shares and Per Share Date)
Fiscal Year Ended September 30,
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
Net income applicable to common stock:
Income $ 17,075 $ 18,995 $ 17,019 $ 17,703 $ 16,855
Less-Preferred stock dividends 62 63 62 66 67
---------- ---------- ---------- ---------- ----------
Net income applicable to common stock $ 17,013 $ 18,932 $ 16,957 $ 17,637 $ 16,788
========== ========== ========== ========== ==========
Weighted average number of shares of common
stock outstanding during the year (1) 10,632,001 10,146,932 9,926,980 9,539,695 9,527,772
========== ========== ========== ========== ==========
Net income per share of common stock -
primary and fully diluted (1) $1.60 $1.87 $1.71 $1.85 $1.76
===== ===== ===== ===== =====
</TABLE>
[FN]
NOTE:
(1) The Company has no common stock equivalents. Therefore, no
adjustments to the weighted average number of shares of common
stock outstanding during any of the years reflected in this
exhibit are necessary in order to calculate either primary or
fully diluted earnings per share. For this reason primary and
fully diluted earnings per share are the same in each year.
<PAGE>
EXHIBIT 21
CTG RESOURCES, INC. AND SUBSIDIARIES
----------------------------------------------------
SUBSIDIARIES OF THE REGISTRANT
------------------------------
<TABLE>
<S> <C> <C>
Percentage of Voting
Incorporated Under Securities Owned By
Name of Subsidiary Laws of Immediate Parent
------------------ ------------------ --------------------
Connecticut Natural Gas
Corporation ("CNG")(1) Connecticut 100%
CNG Realty Corp. Connecticut 100%
The Greenwich Gas System, Inc.(2) Connecticut 100%
The Energy Network, Inc.("TEN")(3) Connecticut 100%
The Hartford Steam Company Connecticut 100%
ENServe, Incorporated Connecticut 100%
ENI Gas Services, Inc. Connecticut 100%
TEN Transmission Company Connecticut 100%
</TABLE>
[FN]
(1) CNG Realty Corp. is a wholly owned subsidiary of CNG at September 30,
1997.
(2) The Greenwich Gas System, Inc.: inactive.
(3) The Hartford Steam Company, ENServe, Incorporated, ENI Gas Services, Inc.
and TEN Transmission Company are wholly owned subsidiaries of TEN at
September 30, 1997.
<PAGE>
EXHIBIT 23
ARTHUR ANDERSEN LLP
Hartford, Connecticut
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, into the Company's
previously filed Registration Statement on Form S-8 (Registration Statement
No. 333-29515) concerning its Employee Savings Plan, Registration Statement
on Form S-8 (Registration Statement No. 333-29521) concerning its Union
Employee Savings Plan and its Registration Statement on Form S-3
(Registration Statement No.33-38087-99) concerning its Automatic Dividend
Reinvestment Plan.
S/ Arthur Andersen LLP
--------------------------
(ARTHUR ANDERSEN LLP)
Hartford, Connecticut
December 17, 1997
<PAGE>
Exhibit 24
Page 1 of 1
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned does
hereby appoint and constitute Reginald L. Babcock as his or her agent and
attorney-in-fact to execute in his or her name, place and stead (whether on
behalf of the undersigned individually or as a director of CTG Resources,
Inc. or otherwise) the Annual Report on Form 10-K of CTG Resources, Inc.
respecting its fiscal year ended September 30, 1997 and any and all
amendments thereto and to file such Form 10-K and any such amendments
thereto with the Securities and Exchange Commission. Said attorney shall
have the power to act hereunder.
IN WITNESS WHEREOF, the undersigned have executed this instrument this
25th day of November, 1997.
S/ Bessye W. Bennett S/ Denis F. Mullane
------------------------------------ ------------------------------------
(Bessye W. Bennett) (Denis F. Mullane)
Director Director
S/ James F. English, Jr. S/ Richard J. Shima
------------------------------------ ------------------------------------
(James F. English, Jr.) (Richard J. Shima)
Director Director
S/ Herman J. Fonteyne S/ Laurence A. Tanner
------------------------------------ ------------------------------------
(Herman J. Fonteyne) (Laurence A. Tanner)
Director Director
S/ Beverly L. Hamilton S/ Michael W. Tomasso
------------------------------------ ------------------------------------
(Beverly L. Hamilton) (Michael W. Tomasso)
Director Director
S/ Harvey S. Levenson
------------------------------------
(Harvey S. Levenson)
Director
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS
SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE
SHEETS, STATEMENTS OF
INCOME, STATEMENTS OF
CASHFLOWS AND STATEMENTS OF
CAPITALIZATION AND IS
QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 290,055
<OTHER-PROPERTY-AND-INVEST> 53,115
<TOTAL-CURRENT-ASSETS> 60,856
<TOTAL-DEFERRED-CHARGES> 60,261
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 464,287
<COMMON> 119,375
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 49,924
<TOTAL-COMMON-STOCKHOLDERS-EQ> 169,299
0
884
<LONG-TERM-DEBT-NET> 126,787
<SHORT-TERM-NOTES> 27,500
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,487
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 138,330
<TOT-CAPITALIZATION-AND-LIAB> 464,287
<GROSS-OPERATING-REVENUE> 305,565
<INCOME-TAX-EXPENSE> 17,624
<OTHER-OPERATING-EXPENSES> 260,057
<TOTAL-OPERATING-EXPENSES> 277,681
<OPERATING-INCOME-LOSS> 27,884
<OTHER-INCOME-NET> 2,032
<INCOME-BEFORE-INTEREST-EXPEN> 29,916
<TOTAL-INTEREST-EXPENSE> 12,841
<NET-INCOME> 17,075
62
<EARNINGS-AVAILABLE-FOR-COMM> 17,013
<COMMON-STOCK-DIVIDENDS> 16,115
<TOTAL-INTEREST-ON-BONDS> 2,105
<CASH-FLOW-OPERATIONS> 31,315
<EPS-PRIMARY> 1.60
<EPS-DILUTED> 1.60
<PAGE>
</TABLE>
