UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
---------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- -------------------
Commission file number 1-12859
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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 Boulevard, Hartford, Connecticut 06103
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(Address of principal executive offices) (Zip Code)
(860) 727-3000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report).
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date (applicable only
to Corporate Issuers). Number of shares of common stock outstanding as of
the close of business on July 30, 1999: 8,648,029.
FINANCIAL STATEMENTS
CTG RESOURCES, INC.
The condensed financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. Although the Company believes that
the disclosures are adequate to make the information presented not
misleading, it is suggested that these condensed financial statements be
read in conjunction with the financial statements and the notes thereto
included in the Company's annual report on Form 10-K. In the opinion of the
Company, all adjustments necessary to present fairly the consolidated
financial position of CTG Resources, Inc. as of June 30, 1999 and 1998 and
the results of its operations and its cash flows for the three months, nine
months and twelve months ended June 30, 1999 and 1998 have been included.
The results of operations for such interim periods are not necessarily
indicative of the results for the full year.
"INTERIM DATA UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
June 30, Sept. 30, June 30,
ASSETS 1999 1998 1998
------ --------- --------- ---------
Plant and Equipment:
Regulated energy $ 457,625 $ 447,463 $ 439,232
Unregulated energy 63,118 63,079 63,241
Construction work in progress 5,956 3,647 1,702
--------- --------- ---------
526,699 514,189 504,175
Less-Allowance for depreciation 189,059 176,173 173,811
--------- --------- ---------
337,640 338,016 330,364
--------- --------- ---------
Investments, at equity 12,476 11,821 11,656
--------- --------- ---------
Current Assets:
Cash and cash equivalents 36,013 1,264 4,893
Accounts and notes receivable 37,177 34,796 42,257
Allowance for doubtful accounts (5,009) (3,283) (4,577)
Accrued utility revenue 3,536 3,789 3,834
Inventories 14,918 17,852 13,585
Prepaid expenses 5,493 11,707 4,973
--------- --------- ---------
92,128 66,125 64,965
--------- --------- ---------
Deferred Charges and Other Assets:
Unrecovered future taxes 6,781 10,734 10,467
Other assets 28,416 32,485 32,555
--------- --------- ---------
35,197 43,219 43,022
--------- --------- ---------
$ 477,441 $ 459,181 $ 450,007
========= ========= =========
</TABLE>
"INTERIM DATA UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS (Concluded)
(Dollars in Thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
June 30, Sept. 30, June 30,
CAPITALIZATION AND LIABILITIES 1999 1998 1998
------------------------------ --------- --------- ---------
Capitalization:
Common Stock $ 67,448 $ 67,448 $ 67,490
Retained Earnings 66,841 56,447 61,394
--------- --------- ---------
134,289 123,895 128,884
Unearned compensation -
Restricted stock awards (510) (498) (745)
--------- --------- ---------
Common stock equity 133,779 123,397 128,139
Preferred stock, not subject to
mandatory redemption 879 879 879
Long-term debt 217,516 215,852 184,853
--------- --------- ---------
352,174 340,128 313,871
--------- --------- ---------
Current Liabilities:
Current portion of long-term debt 3,237 5,733 6,587
Notes Payable - 2,000 17,000
Accounts payable and accrued expenses 25,232 30,813 26,400
Refundable purchased gas costs 10,617 1,640 8,685
Accrued liabilities 7,341 5,024 6,345
--------- --------- ---------
46,427 45,210 65,017
--------- --------- ---------
Deferred Credits:
Deferred income taxes 56,635 50,175 48,061
Unfunded deferred income taxes 6,781 10,734 10,467
Investment tax credits 2,596 2,761 2,817
Refundable taxes 5,348 4,252 4,290
Other 7,480 5,921 5,484
--------- --------- ---------
78,840 73,843 71,119
--------- --------- ---------
$ 477,441 $ 459,181 $ 450,007
========= ========= =========
</TABLE>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except for per share data)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-----------------------------
<S> <C> <C>
1999 1998
---------- ----------
Operating Revenues $ 52,225 $ 48,370
Less: Cost of Energy 26,686 25,991
State Gross Receipts Tax 1,529 1,547
---------- ----------
Operating Margin 24,010 20,832
---------- ----------
Other Operating Expenses:
Operations & maintenance expenses 12,397 11,850
Depreciation 5,047 4,759
Income taxes 48 (1,372)
Other taxes 1,869 1,820
---------- ----------
19,361 17,057
---------- ----------
Operating Income 4,649 3,775
---------- ----------
Other Income (Deductions):
Equity in partnership earnings 575 856
Merger-related costs (2,047) -
Other income/(deductions) 755 (113)
Income Taxes (363) (457)
---------- ----------
(1,080) 286
---------- ----------
Income Before Interest Charges 3,569 4,061
---------- ----------
Interest and Debt Expense 4,349 3,882
---------- ----------
Net Income/(Loss) (780) 179
Less-Dividends on Preferred Stock 15 15
---------- ----------
Net Income/(Loss) Applicable to Common Stock $ (795) $ 164
========== ==========
Income/(Loss) Per Average Share of
Common Stock:
Basic $ (0.09) $ 0.02
========== ==========
Fully diluted $ (0.09) $ 0.02
========== ==========
Average Common Shares Outstanding
During the Period:
Basic 8,648,029 8,652,171
========== ==========
Fully diluted 8,656,668 8,663,643
========== ==========
Dividends Per Share of Common Stock $ 0.26 $ 0.25
========== ==========
</TABLE>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except for per share data)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
-----------------------------
<S> <C> <C>
1999 1998
---------- ----------
Operating Revenues $ 246,905 $ 246,182
Less: Cost of Energy 130,242 131,906
State Gross Receipts Tax 8,272 8,641
---------- ----------
Operating Margin 108,391 105,635
---------- ----------
Operating Expenses:
Operations & maintenance expenses 41,080 41,228
Depreciation 15,133 14,239
Income taxes 16,485 15,112
Other taxes 5,662 5,640
---------- ----------
78,360 76,219
---------- ----------
Operating Income 30,031 29,416
---------- ----------
Other Income (Deductions):
Equity in partnership earnings 1,629 2,519
Merger-related costs (2,047) -
Other income/(deductions) 1,337 (1,635)
Income Taxes (931) (523)
---------- ----------
(12) 361
---------- ----------
Income Before Interest Charges 30,019 29,777
---------- ----------
Interest and Debt Expense 12,866 11,748
---------- ----------
Net Income 17,153 18,029
Less-Dividends on Preferred Stock 46 46
---------- ----------
Net Income Applicable to Common Stock $ 17,107 $ 17,983
========== ==========
Income Per Average Share of
Common Stock:
Basic $ 1.98 $ 2.01
========== ==========
Fully diluted $ 1.98 $ 2.01
========== ==========
Average Common Shares Outstanding
During the Period:
Basic 8,648,029 8,945,211
========== ==========
Fully diluted 8,650,909 8,956,683
========== ==========
Dividends Per Share of Common Stock $ 0.78 $ 0.75
========== ==========
</TABLE>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except for per share data)
<TABLE>
<CAPTION>
Twelve Months Ended
June 30,
-----------------------------
<S> <C> <C>
1999 1998
---------- ----------
Operating Revenues $ 283,471 $ 284,563
Less: Cost of Energy 149,021 151,589
State Gross Receipts Tax 9,291 9,792
---------- ----------
Operating Margin 125,159 123,182
---------- ----------
Operating Expenses:
Operations & maintenance expenses 53,836 55,968
Depreciation 20,199 18,850
Income taxes 13,583 12,389
Other taxes 7,471 7,488
---------- ----------
95,089 94,695
---------- ----------
Operating Income 30,070 28,487
---------- ----------
Other Income (Deductions):
Equity in partnership earnings 2,381 3,242
Merger-related costs (2,047) -
Other income/(deductions) 2,377 (1,042)
Income Taxes (1,420) (753)
---------- ----------
1,291 1,447
---------- ----------
Income Before Interest Charges 31,361 29,934
---------- ----------
Interest and Debt Expense 17,042 14,893
---------- ----------
Net Income 14,319 15,041
Less-Dividends on Preferred Stock 61 62
---------- ----------
Net Income Applicable to Common Stock $ 14,258 $ 14,979
========== ==========
Income Per Average Share of
Common Stock:
Basic $ 1.65 $ 1.60
========== ==========
Fully diluted $ 1.65 $ 1.60
========== ==========
Average Common Shares Outstanding
During the Period:
Basic 8,649,073 9,371,371
========== ==========
Fully diluted 8,655,163 9,382,843
========== ==========
Dividends Per Share of Common Stock $ 1.03 $ 1.13
========== ==========
</TABLE>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------
<S> <C> <C>
1999 1998
---- ----
Cash Flows from Operations $21,225 $ 7,264
-------- --------
Cash Flows for Investing Activities:
Capital expenditures (5,077) (3,382)
Purchase of cogeneration assets - (17,067)
Cash distributions received from
investments - 737
Other, net 334 261
-------- --------
Net cash used in investing activities (4,743) (19,451)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (2,263) (2,178)
Issuance/(repurchase) of common
stock, net - 43
Other stock activity, net (159) (4)
Principal retired on long-term debt (10) (10)
Short-term debt - 15,000
-------- --------
Net cash provided by/(used in)
financing activities (2,432) 12,851
-------- --------
Increase in Cash and
Cash Equivalents 14,050 664
Cash and Cash Equivalents at
Beginning of Period 21,963 4,229
-------- --------
Cash and Cash Equivalents at
End of Period $36,013 $ 4,893
======== ========
</TABLE>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------
<S> <C> <C>
1999 1998
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Income/(Loss) $ (780) $ 179
-------- --------
Adjustments to reconcile income
to net cash:
Depreciation and amortization 5,214 4,977
Provision for uncollectible accounts 875 744
Deferred income taxes, net (870) 77
Equity in partnership earnings (575) (856)
Change in assets and liabilities:
Accounts receivable 22,921 14,302
Accrued utility revenue 7,090 8,443
Inventories (3,283) (4,932)
Purchased gas costs (2,330) (1,295)
Prepaid expenses (314) 567
Accounts payable and accrued expenses (7,613) (16,566)
Other assets/liabilities 890 1,624
-------- --------
Total adjustments 22,005 7,085
-------- --------
Cash flows from operations $21,225 $ 7,264
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $ 9,786 $ 4,388
======== ========
Income taxes $ 1,950 $ 4,605
======== ========
</TABLE>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
----------------------
<S> <C> <C>
1999 1998
---- ----
Cash Flows from Operations $58,281 $31,265
-------- --------
Cash Flows for Investing Activities:
Capital expenditures (15,839) (10,563)
Purchase of cogeneration assets - (17,067)
Cash distributions received from
investments 974 1,955
Other, net 1,082 1,639
-------- --------
Net cash used in investing activities (13,783) (24,036)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (6,759) (6,535)
Issue/(repurchase) of common
stock, net - (52,919)
Other stock activity, net (158) (6)
Issuance of long-term debt 35,000 64,000
Principal retired on long-term debt (5,032) (834)
Short-term debt (32,800) (10,500)
-------- --------
Net cash used in
financing activities (9,749) (6,794)
-------- --------
Increase in Cash and
Cash Equivalents 34,749 435
Cash and Cash Equivalents at
Beginning of Period 1,264 4,458
-------- --------
Cash and Cash Equivalents at
End of Period $36,013 $ 4,893
======== ========
</TABLE>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
----------------------
<S> <C> <C>
1999 1998
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Net Income $17,153 $18,029
-------- --------
Adjustments to reconcile net income
to net cash:
Depreciation and amortization 15,637 14,874
Provision for uncollectible accounts 4,568 4,127
Deferred income taxes, net 7,391 4,394
Equity in partnership earnings (1,629) (2,519)
Change in assets and liabilities:
Accounts receivable (4,910) (15,682)
Accrued utility revenue 253 790
Inventories 2,934 3,999
Purchased gas costs 8,977 3,971
Prepaid expenses 6,214 3,930
Accounts payable and accrued expenses (3,264) (7,630)
Other assets/liabilities 4,957 2,982
-------- --------
Total adjustments 41,128 13,236
-------- --------
Cash flows from operations $58,281 $31,265
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $17,411 $11,078
======== ========
Income taxes $ 2,156 $ 8,027
======== ========
</TABLE>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Twelve Months Ended
June 30,
----------------------
<S> <C> <C>
1999 1998
---- ----
Cash Flows from Operations $53,782 $25,769
-------- --------
Cash Flows for Investing Activities:
Capital expenditures (27,711) (21,566)
Purchase of cogeneration assets - (17,067)
Cash distributions received from
investments 1,462 2,685
Other,net 343 1,360
-------- --------
Net cash used in investing activities (25,906) (34,588)
-------- --------
Cash Flows from Financing Activities:
Dividends paid (8,881) (10,592)
Issuance/(repurchase) of common
stock, net (31) (52,304)
Other stock activity, net (157) 497
Issuance of long-term debt 45,600 64,000
Principal retired on long-term debt (16,287) (21,766)
Short-term debt (17,000) 17,000
-------- --------
Net cash provided by/(used) in
financing activities 3,244 (3,165)
-------- --------
Increase/(Decrease) in Cash and
Cash Equivalents 31,120 (11,984)
Cash and Cash Equivalents at
Beginning of Period 4,893 16,877
-------- --------
Cash and Cash Equivalents at
End of Period $36,013 $ 4,893
======== ========
</TABLE>
"UNAUDITED"
CTG RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Twelve Months Ended
June 30,
----------------------
<S> <C> <C>
1999 1998
---- ----
Schedule Reconciling Earnings to
Cash Flows from Operations:
Net Income $14,320 $15,041
-------- --------
Adjustments to reconcile net income
to net cash:
Depreciation and amortization 21,066 18,849
Provision for uncollectible accounts 4,750 5,799
Deferred income taxes, net 9,411 627
Equity in partnership earnings (2,381) (3,242)
Change in assets and liabilities:
Accounts receivable 1,208 (8,462)
Accrued utility revenue 298 (398)
Inventories (1,333) (3,892)
Purchased gas costs 1,932 (3,901)
Prepaid expenses (520) 375
Accounts payable and accrued expenses (457) 2,428
Other assets/liabilities 5,488 2,545
-------- --------
Total adjustments 39,462 10,728
-------- --------
Cash flows from operations $53,782 $25,769
======== ========
Supplemental Disclosures of Cash Flow
Information:
Cash Paid During the Period for:
Interest (net of amount capitalized) $20,555 $12,823
======== ========
Income taxes $ 2,171 $ 8,027
======== ========
</TABLE>
"UNAUDITED"
CTG RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Thousands of Dollars)
(1) Merger with Energy East
On June 29, 1999, CTG Resources, Inc. ("the Company" or "CTG")
announced that it had entered into an Agreement and Plan of Merger with
Energy East Corporation, a New York corporation ("Energy East"), and a
wholly-owned subsidiary of Energy East, Oak Merger Co. ("Oak"),
pursuant to which CTG will merge with and into Oak (the "Merger"). The
Merger is contingent, among other things, upon the approvals of CTG's
shareholders, the Connecticut Department of Public Utility Control
("DPUC"), the United States Securities and Exchange Commission and the
Federal Communications Commission. Energy East and CTG anticipate that
these approvals will be obtained within twelve months.
Through June 30, 1999 the Company has incurred and expensed merger-
related costs of $2,047. The Company expects to incur additional
merger-related costs estimated at $3,453. These costs will be expensed
as they are incurred.
(2) Adriaen's Landing
During fiscal 1998, the Company was approached by local businesses and
government agencies regarding the development of a stadium for the New
England Patriots football team, along with a convention center and
hotel and retail, recreational and housing facilities. The
development, known as Adriaen's Landing, was to be built on a site that
includes the Company's headquarters, gas operations center and the
Columbus Boulevard steam and chilled water production facilities. In
order to accommodate the development as currently planned, the Company
would have been required to relocate those facilities. A relocation
would have a significant impact on the Company's business and
operations during the transition.
Discussions and progress concerning the relocation of the Company's
facilities continued into the third quarter of fiscal 1999. On April
30, 1999, however, the New England Patriots terminated the agreement
under which the team would have relocated to Connecticut and the
construction of the stadium. Prior to this date, the State of
Connecticut acknowledged a verbal agreement in principle with the
Company over certain terms to govern its relocation, but left many
essential terms unresolved. The State's plans for development of this
site now are unclear, and largely for this reason, the Company cannot
assess the impact of future developments, including any arrangement
pertaining to the funding of relocation and any related land
preparation or remediation costs. If an agreement cannot be reached,
the Secretary of the Office of Policy and Management of the State of
Connecticut has the authority under recently enacted legislation to
condemn the property on which the Company's facilities are located for
use as a stadium. Although the Company would be entitled to just
compensation for the value of its properties taken, as well as certain
relocation costs, the ultimate amount of the compensation in any such
condemnation would be subject to court determination.
The Company believes that the Adriaen's Landing project would be
beneficial to the Greater Hartford area and provides an opportunity for
new customers to the Company. The Company has indicated its
willingness to relocate provided that the relocation is accomplished in
a way that will not materially disadvantage the Company or its
customers.
The Adriaen's Landing site, including the Company's property, contains
contaminants, some of which originated during the Company's former gas
manufacturing activities. The Company believes that if the development
activities trigger the remediation of contamination on the Company's
property, the cost of the remediation should be regarded as part of the
project development costs. Prior decisions of the DPUC indicate that
the costs of remediating property that is found to have been
contaminated by a gas utility's former gas manufacturing activities are
generally recoverable from the utility's customers.
(3) Subsequent Event - Legal Matters
In November 1995, certain Connecticut plumbers and HVAC contractors,
including Connecticut Cooling Total Air, Inc. and two trade
associations, filed three class action suits against the Company's
wholly-owned subsidiary, Connecticut Natural Gas Corporation ("CNG"),
and the State's two other local gas distribution companies ("LDCs"),
claiming that the LDCs, including CNG, had performed gas service work
in customers' homes without proper contractors' licenses from the State
of Connecticut. The suits claimed that CNG violated the Connecticut
Unfair Trade Practices Act, committed tortious interference with
contract and/or business expectancies, violated the Connecticut
Antitrust Act, and conspired with the other two Connecticut gas
companies to violate the license statute.
On July 30, 1999, CNG reached a tentative settlement to resolve all
three actions. The suit for violations of the Connecticut Unfair Trade
Practices Act and for tortious interference with contract and/or
business expectancies was withdrawn by the plaintiffs. With respect to
the remaining two actions, CNG and the plaintiffs expect to file a
joint motion for certification of a class for purposes of settlement
with CNG only, in August 1999. Thereafter, it is expected that the
Court will hold a hearing to certify that class and to order that
notice of the settlement be given to the potential class members.
Those class members will be given the opportunity to opt out of the
class altogether and an opportunity to object to the terms of the
settlement. Under the terms of a settlement agreement executed by
counsel for CNG and counsel for the named plaintiffs on July 30, 1999,
if CNG determines that too many people have either opted out of the
settlement or have objected to the settlement, CNG may unilaterally
withdraw from the settlement. If that does not occur, and the Court
determines that the settlement is fair, reasonable and adequate, those
remaining two actions will be settled along the terms described below.
The terms of the settlement are as follows: CNG will pay the plaintiff
class $175, CNG will enter into a number of non-monetary concessions to
the plaintiff class, CNG will receive releases from the named
plaintiffs, and CNG will obtain an order from the Court that bars
members of the plaintiff class from suing CNG on substantially the same
claims as those asserted in the lawsuits.
(4) Reclassifications
Certain prior year amounts have been reclassified to conform with
current year classifications.
"UNAUDITED"
CTG RESOURCES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 1999
(Dollars in Thousands Except for Per Share Amounts)
CTG Resources, Inc. ("the Company" or "CTG") is a holding company and parent
of the Connecticut Natural Gas Corporation ("CNG") and The Energy Network,
Inc. ("TEN"). CNG is an energy provider engaged in the regulated
distribution, sale and transportation of natural gas. TEN holds and
operates, through divisions or wholly-owned subsidiaries, CTG's unregulated,
diversified businesses, which are primarily engaged in district heating and
cooling. TEN also holds the Company's equity investments in the Iroquois
Gas Transmission System ("Iroquois") and the Downtown Cogeneration
Associates ("DCA") partnerships.
On June 29, 1999, CTG announced that it had entered into an Agreement and
Plan of Merger with Energy East Corporation, a New York corporation ("Energy
East"), and a wholly-owned subsidiary of Energy East, Oak Merger Co.
("Oak"), pursuant to which CTG will merge with and into Oak (the "Merger").
The Merger is contingent, among other things, upon the approvals of CTG's
shareholders, the Connecticut Department of Public Utility Control ("DPUC"),
the United States Securities and Exchange Commission and the Federal
Communications Commission. Energy East and CTG anticipate that these
approvals will be obtained within twelve months.
RESULTS OF OPERATIONS
CTG has recorded a consolidated loss of $(.09) per share for the quarter
ending June 30, 1999, and consolidated earnings per share of $1.98 for the
nine months and $1.65 for the twelve months ended June 30, 1999. A charge
of $(.22) per share, net of income taxes, for merger-related costs is
included in all 1999 per share amounts. Without these merger-related
expenses earnings per share would be $.13 for the quarter, $2.20 for the
nine months and $1.87 for the twelve months ended June 30, 1999. These
compare to earnings per share of $.02 for the quarter, $2.01 for the nine
months and $1.60 for the twelve months ended June 30, 1998. Earnings per
share between fiscal 1999 and fiscal 1998 also include benefits of $.07 in
the nine months ended June 1999 and $.13 in the twelve months ended June
1999 as a result of the lower weighted average shares outstanding because of
the October 1997 repurchase of common stock.
Operating Margin
The following table presents the changes in gas revenues, gas operating
margin, heating degree days (a measure of weather) and gas deliveries for
all periods reported in the statements of income:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended Twelve Months Ended
June 30, June 30, June 30,
<S> <C> <C> <C> <C> <C> <C>
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- --------
Gas Revenues $ 46,531 $ 44,736 $230,012 $231,810 $260,648 $263,464
======== ======== ======== ======== ======== ========
Gas Operating Margin $ 20,572 $ 19,058 $ 97,953 $ 96,482 $110,712 $109,062
======== ======== ======== ======== ======== ========
Heating Degree Days 622 618 5,530 5,474 5,599 5,591
===== ===== ===== ===== ===== =====
Commodity and
Transportation
Volumes(mmcf):
Firm Gas Sales 2,725 2,986 18,183 19,037 19,721 20,765
Interruptible Gas
Sales 1,765 1,942 6,909 7,699 8,287 9,495
Off-System Gas
Sales 3,097 3,043 10,996 8,600 13,856 10,924
Transportation
Services 1,622 1,089 4,735 3,333 5,777 4,326
------ ------ ------ ------ ------ ------
Total 9,209 9,060 40,823 38,669 47,641 45,510
====== ====== ====== ====== ====== ======
</TABLE>
Gas operating margin is equal to gas revenues less the cost of gas and
Connecticut gross revenues tax. Warmer weather during the winter heating
season is the principal reason why gas operating margin is not significantly
higher in fiscal 1999 as compared to 1998. Although overall gas throughput
is higher in fiscal 1999, the warmer winter weather has resulted in fewer
sales of gas to the higher-margin firm and interruptible classes of
customers for winter heating. However, higher interruptible margins,
resulting from a greater decline in gas costs than billing rates,
contributed to the increase in overall operating margin in fiscal 1999.
Off-system sales have been higher in fiscal 1999 and have also increased the
contribution to operating margin. A management fee earned on behalf of a
gas marketing company, recorded in the third quarter of fiscal 1999, also
added to operating margin.
The Company continues to add firm heating customers from year to year. Firm
sales historically follow variations in winter weather. Some commercial and
industrial customers have migrated to transportation rates. This will not
impact operating margin, because transportation tariffs are designed to earn
the same margin as the sales and delivery of natural gas.
Weather Stabilization Program
In September 1998, CNG purchased an insurance product for the winter heating
season (November through March). The program was designed to reduce some of
the effects of abnormal winter weather on earnings. This program helps to
offset lost margins and thus provides the Company with additional earnings
in the event of significantly warmer winter weather in return for an
insurance premium which increases in the event of significantly colder
winter weather. In the winter heating season of fiscal 1999, the Company
realized a net benefit from this program of approximately $671, net of
income taxes, equivalent to $.08 per share.
Operations and Maintenance Expenses
Fiscal 1999 Operations and Maintenance ("O&M") expenses reflect the benefit
of the weather stabilization insurance program described above and a net
decrease in O&M expenses in all periods. In the first quarter of fiscal
1999, the Company began to record operating expenses for a cogeneration
plant which was purchased by TEN in June 1998, subsequently repowered, and
brought on line in December 1998 to serve a large local hospital complex
(See Earnings from Diversified Operations, below). These new expenses have
partially offset the overall reduction in O&M expenses.
The fiscal 1999 net decrease in O&M expenses reflects lower costs related to
employee benefits and pension related expenses, computer-related services
and corporate insurance as well as an increase in customer service fees from
CNG's service contract program. These benefits to O&M expenses were
partially offset by higher expenses recorded for compensation, professional
and consulting services and bad debts.
Employee Benefits costs have benefited from reduced medical claims and a
premium refund. Pension costs reflect a reduction in expenses resulting
from favorable plan performance and changes in actuarial assumptions in the
plans. Workers' compensation insurance costs have declined because of lower
actual and projected claims realized as a result of the Company's aggressive
management of claims. Computer related costs reflect changes to equipment
lease contracts. Customer service fees were generated by a growing natural
gas equipment service contract program. Variations in levels of bad debt
expenses typically relate to customers' natural gas bills and actual
collection levels. Compensation expenses reflect increases in wages and
salaries as well as higher payments made related to incentive awards and
commissions. Changes in levels of expenses for outside services primarily
reflect costs incurred for legal services.
Income Taxes
Overall, the effective tax rate increased between the nine months ended June
30, 1999 and June 30, 1998. The reasons for this higher fiscal 1999 income
tax rate are non-deductible merger-related costs and higher income taxes
recorded for plant-related depreciation.
Other Income/(Deductions)
Merger-related costs of $2,047, to date, appear as a separate line item in
this section of the statements of income. Income tax benefits of $118,
related to some of these costs, are included in the income taxes caption in
Other Income/(Deductions).
The Company recorded Other Income for all periods in fiscal 1999, as
compared to Other Deductions recorded for all periods in fiscal 1998. All
fiscal 1998 periods included costs related to the closing of certain
diversified operations. The absence of these expenses in fiscal 1999 is the
primary reason for the change to Other Income in all periods. Fiscal 1999
Other Income also reflects interest income from a note receivable and from
the investment of trust funds, higher income from merchandising operations,
and lower costs for life insurance premiums and promotional advertising
expenses. These benefits are partially offset by increased costs related to
converting CNG's regulated propane service program to natural gas.
Interest and Debt Expense
Higher interest and debt expense has been recorded in fiscal 1999 primarily
because of additional long-term debt issued during the first quarter of both
fiscal 1999 and fiscal 1998.
Earnings from Diversified Businesses
TEN recorded earnings per share of $.05 for the quarter, $.10 for the nine
months and $.16 for the twelve months ended June 30, 1999. These compare to
earnings per share of $.03 for the quarter, $.03 for the nine months and
$.14 for the twelve months ended June 30, 1998. The nine months ended June
1998 includes a loss of $(.10) and the twelve months ended June 1998
includes a loss of $(.08) from charges to income related to the wind down of
certain unregulated gas marketing operations.
TEN's fiscal 1999 results reflect new sales of electricity and steam from
TEN's new cogeneration facility at Hartford Hospital, which came on line in
December 1998. Earnings also reflect the benefits of higher steam sales for
heating, higher chilled water sales for cooling, lower district heating and
cooling ("DHC") energy and production costs and a reimbursement of legal
fees. Costs related to new business development activities partially offset
these benefits to earnings. TEN continues to review its pricing structure
so that it meets current market demands as energy deregulation and changes
in energy costs move forward.
TEN's earnings from its equity interest in two partnerships are lower in
fiscal 1999. The majority of these earnings are from Iroquois, and in
August 1998 Iroquois' approved tariffs allowed by the Federal Energy
Regulatory Commission were reduced, resulting in lower income.
MATERIAL CHANGES IN FINANCIAL CONDITION
Cash Flows
The Company's cash position is strong at the end of the third quarter of
fiscal 1999. By the end of the third quarter of the fiscal year, the
Company often has no short-term borrowings outstanding and available cash is
invested in short-term instruments. Most of the Company's sales, and
related outgoing cash flows for natural gas, or for steam or hot water
production costs, occur during the winter heating season which ends in mid
April, and most of the customer payments from these sales have been received
by June. Chilled water production costs do not peak until the fourth
quarter of the fiscal year. In addition, the quarter ending June is the
start of the Company's primary construction season. However, because of the
lag between when these costs are incurred and when the invoices are received
and paid, these major cash expenditures will not begin to show a significant
impact on cash flows until the fourth quarter of the fiscal year.
Proceeds from long-term debt issued in the first quarter of fiscal 1999 were
used to refinance short-term debt, some of which had been used to finance
the June 1998 acquisition of the Hartford Hospital cogeneration facilities.
Long-term debt issued in the first quarter of fiscal 1998 was used to
finance a stock repurchase and to retire existing short-term debt.
Investing Activities
On April 6, 1999, TEN executed a twenty-five year agreement with the City of
Hartford to supply hot and chilled water to several facilities referred to
collectively as The Learning Corridor. Energy to serve these customers will
be produced at TEN's cogeneration facility located at Hartford Hospital.
Construction of necessary pipeline and other facilities began in the third
quarter of fiscal 1999. Service to The Learning Corridor is expected to
begin in early 2000. The cost of this expansion of TEN's DHC system is
estimated to be approximately $4,000 to $6,000, to be expended between
fiscal 1999 and 2000. Approximately $3,000 was included in the total
projected DHC system expansion costs for fiscal 1999 reported in the
Company's Form 10-K for the fiscal year ended September 30, 1998.
Adriaen's Landing
During fiscal 1998, the Company was approached by local businesses and
government agencies regarding the development of a stadium for the New
England Patriots football team, along with a convention center and hotel and
retail, recreational and housing facilities. The development, known as
Adriaen's Landing, was to be built on a site that includes the Company's
headquarters, gas operations center and the Columbus Boulevard steam and
chilled water production facilities. In order to accommodate the
development as currently planned, the Company would have been required to
relocate those facilities. A relocation would have a significant impact on
the Company's business and operations during the transition.
Discussions and progress concerning the relocation of the Company's
facilities continued into the third quarter of fiscal 1999. On April 30,
1999, however, the New England Patriots terminated the agreement under which
the team would have relocated to Connecticut. This effectively stopped the
plans for the construction of an open-air football stadium. Prior to this
date, the State of Connecticut acknowledged a verbal agreement in principle
with the Company over certain terms to govern its relocation, but left many
essential terms unresolved. The State's plans for development of this site
now are unclear, and largely for this reason, the Company cannot assess the
impact of future developments, including any arrangement pertaining to the
funding of relocation and any related land preparation or remediation costs.
If an agreement cannot be reached, the Secretary of the Office of Policy and
Management of the State of Connecticut has the authority under recently
enacted legislation to condemn the property on which the Company's
facilities are located for use as a stadium. Although the Company would be
entitled to just compensation for the value of its properties taken, as well
as certain relocation costs, the ultimate amount of the compensation in any
such condemnation would be subject to court determination.
The Company believes that the Adriaen's Landing project would be beneficial
to the Greater Hartford area and provides an opportunity for new customers
to the Company. The Company has indicated its willingness to relocate
provided that the relocation is accomplished in a way that will not
materially disadvantage the Company or its customers.
The Adriaen's Landing site, including the Company's property, contains
contaminants, some of which originated during the Company's former gas
manufacturing activities. The Company believes that if the development
activities trigger the remediation of contamination on the Company's
property, the cost of the remediation should be regarded as part of the
project development costs. Prior decisions of the DPUC indicate that the
costs of remediating property that is found to have been contaminated by a
gas utility's former gas manufacturing activities are generally recoverable
from the utility's customers.
Regulatory Matters
CNG's last rate decision from the DPUC regarding base rates for natural gas
service was issued in October 1995. By state statute, CNG is required to
undergo a financial review with the DPUC commencing in October 1999. The
Company has made the decision to initiate a general rate hearing rather than
await such a statutory financial review.
YEAR 2000 READINESS
CTG 's Year 2000 Readiness
CTG has been preparing for Year 2000 ("Y2K") issues for a number of years.
In 1989, CTG started the implementation of a Long-Range Information Systems
Plan that addressed the replacement or redevelopment of all key CTG
applications. All systems replaced or redeveloped since 1989 were required
to be Y2K ready. In January 1998, a task force was organized to address all
Y2K issues throughout CTG operations. The task force, headed by a Y2K
compliance officer, is comprised of individuals from every business unit
within CTG and is charged with assembling an inventory of date impacted
systems, identifying critical vendors and customers for readiness,
prioritizing systems that are not ready, identifying critical dates for
readiness, developing and executing test plans for all critical high
priority application programs and embedded technology, developing
contingency plans for vendors and systems that are not ready, and certifying
that all systems and critical vendors are ready. All of the above-noted
activities of the task force, with the exception of developing contingency
plans and the system testing and certification phases, were completed during
the last quarter of calendar year 1998. Initial contingency plans were
completed during the first quarter of calendar 1999. These contingency plans
will be updated throughout 1999 as needed. The testing and certification of
systems and critical vendors will be completed during the remaining months
of calendar 1999.
CTG has five systems that are not Y2K ready at this time (Payroll/HR,
Computer Aided Dispatch, Supervision Control and Data Acquisition, Remote
Meter Reading, and TEN's financial system). Through the normal replacement
schedule, these systems will be Y2K ready by calendar year-end 1999.
In April 1998, a letter and survey were sent to CTG's vendors requesting a
status of their Y2K efforts. In September 1998, a second letter and survey
were sent to vendors who did not respond. For all critical vendors who do
not respond or are not Y2K ready by the critical dates identified, CTG will
make arrangements for alternate suppliers and service providers. This
process will continue to take place throughout 1999. Parts and materials
which are critical to CTG's operations will be acquired from vendors in
adequate quantities and inventoried prior to the end of 1999.
Although not all vendors have returned surveys, no third parties with whom
CTG has significant business relationships have disclosed problems which
would indicate the potential for business interruptions.
During the quarter ending March 31, 1999, CTG received the results of
reviews of its Y2K readiness by an outside legal firm and an outside
consultant. During the quarter ending June 30,1999, CTG received the results
of a Y2K readiness review conducted by an outside consultant on behalf of
the DPUC. These reviews revealed no material items. CTG has integrated the
recommendations received from these consultants into its Y2K readiness plan.
Costs to Address CTG's Year 2000 Issues
CTG does not foresee incurring significant incremental costs, nor has it
incurred significant outside consulting costs, relating to the Y2K issue. In
accordance with the aforementioned Long-Range Information Systems Plan, CTG
has been replacing or redeveloping its major computer applications over the
past decade.
Risks of CTG's Year 2000 Issues
CTG's current schedule is subject to change, depending on developments that
may arise through unforeseen business circumstances and through the
remediation and testing phases of its Y2K readiness effort. CTG also depends
upon third parties, including customers, suppliers, government agencies and
financial institutions, to reliably deliver products and services. Although
CTG has not received responses from all third parties, CTG has not
identified any known Y2K-related event, trend, demand, commitment, or
uncertainty which would likely have a material effect on CTG's business,
results of operations, liquidity, capital resources or financial condition.
CTG has canvassed its critical vendors and no such vendor has indicated it
will not be ready for the Y2K. CTG has assigned critical dates for vendors
to show readiness throughout 1999. If a vendor does not show readiness by a
specific date, CTG will either find a replacement vendor or develop a work-
around.
Natural gas supply disruptions are not expected due to Y2K issues. CTG s
gas supply is substantially dependent upon natural gas pipelines and other
third party natural gas suppliers that it has no control over. None of the
pipelines or suppliers has expressed expectations of gas supply delivery
problems as a result of Y2K issues; therefore, CTG expects to be able to
reliably supply customers. CTG has and will continue to work with pipelines
and suppliers to examine their Y2K readiness.
Based on the current schedule for completion of Y2K tasks, CTG believes its
planning is adequate to secure Y2K readiness of critical systems and
operations. CTG is not able to predict all the factors that could cause
actual results to differ materially from its current expectations regarding
its Y2K readiness. However, if CTG and/or third parties with whom CTG has
significant business relationships fail to achieve Y2K readiness with
respect to critical systems or operations, there could be a material adverse
effect on CTG's results of operations and financial position.
CTG's Contingency Plans
CTG's contingency plans include selecting alternate vendors that are Y2K
ready, using back-up systems which do not rely on computers, and obtaining
and stocking critical parts and materials. Critical dates for readiness have
been established for systems and vendors utilized throughout CTG. These
critical dates have been established in order to allow sufficient time for
CTG to either remediate any date-sensitive features in existing computer
software and applications critical to CTG's business or to acquire services
and products from alternate providers which are Y2K ready. Contingency
planning is an ongoing process and will continue throughout 1999.
SUBSEQUENT EVENTS
Legal Matters
In November 1995, certain Connecticut plumbers and HVAC contractors,
including Connecticut Cooling Total Air, Inc. and two trade associations,
filed three class action suits against CNG and the State's two other local
gas distribution companies ("LDCs"), claiming that the LDCs, including CNG,
had performed gas service work in customers' homes without proper
contractors' licenses from the State of Connecticut. The suits claimed that
CNG violated the Connecticut Unfair Trade Practices Act, committed tortious
interference with contract and/or business expectancies, violated the
Connecticut Antitrust Act, and conspired with the other two gas companies to
violate the license statute.
On July 30, 1999, CNG reached a tentative settlement to resolve all three
actions. The suit for violations of the Connecticut Unfair Trade Practices
Act and for tortious interference with contract and/or business expectancies
was withdrawn by the plaintiffs. With respect to the remaining two actions,
CNG and the plaintiffs expect to file a joint motion for certification of a
class for purposes of settlement with CNG only, in August 1999. Thereafter,
it is expected that the Court will hold a hearing to certify that class and
to order that notice of the settlement be given to the potential class
members. Those class members will be given the opportunity to opt out of
the class altogether and an opportunity to object to the terms of the
settlement. Under the terms of a settlement agreement executed by counsel
for CNG and counsel for the named plaintiffs on July 30, 1999, if CNG
determines that too many people have either opted out of the settlement or
have objected to the settlement, CNG may unilaterally withdraw from the
settlement. If that does not occur, and the Court determines that the
settlement is fair, reasonable and adequate, those remaining two actions
will be settled along the terms described below.
The terms of the settlement are as follows: CNG will pay the plaintiff
class $175, CNG will enter into a number of non-monetary concessions to the
plaintiff class, CNG will receive releases from the named plaintiffs, and
CNG will obtain an order from the Court that bars members of the plaintiff
class from suing CNG on substantially the same claims as those asserted in
the lawsuits.
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. Such statements include but are not limited to
disclosures about the Company's merger with Energy East, Adriaen's Landing,
future Operating Margin, the Weather Stabilization Program, changes in
Operating and Maintenance expenses, Income Taxes, Year 2000 Compliance, cash
flows, the District Heating and Cooling Expansion, regulatory proceedings
and the settlement of outstanding legal matters.
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, actual results almost always vary
from expectations, 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,
shareholder approvals, state and federal regulatory approvals, and other
uncertainties, all of which are difficult to predict and beyond the control
of the Company.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
99(1) Exhibit Index
10(136) First Amendment to Connecticut Natural Gas Corporation
Executive Restricted Stock Plan, dated May 17, 1999
10(137) First Amendment to Restricted Stock Agreement (Under the
Connecticut Natural Gas Corporation Executive Restricted
Stock Plan), dated April 27, 1999
10(138) Connecticut Natural Gas Corporation Officers' Retirement
Plan (As Amended and Restated Effective As Of March 31,
1999), dated May 17, 1999
10(139) First Amendment to Connecticut Natural Gas Corporation
Officers' Retirement Plan, dated June 21, 1999
10(140) Sixth Amendment to the Connecticut Natural Gas Corporation
Officers Retirement Plan Trust Agreement, dated April 27,
1999
10(141) The Energy Network, Inc., Instrument of Adoption of
Connecticut Natural Gas Corporation Officers' Retirement
Plan, dated April 27, 1999
10(142) First Amendment to the Connecticut Natural Gas Corporation
Deferred Compensation Plan Trust Agreement, dated April 27,
1999
10(143) Eleventh Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan, dated May 19, 1999
10(144) Twelfth Amendment to Connecticut Natural Gas Corporation
Employee Savings Plan, dated June 7, 1999
10(145) Eleventh Amendment to Connecticut Natural Gas Corporation
Union Employee Savings Plan, dated May 19, 1999
10(146) Twelfth Amendment to Connecticut Natural Gas Corporation
Union Employee Savings Plan, dated June 7, 1999
10(147) District Heating & Cooling Service Agreement between The
Energy Network, Inc. and The City of Hartford, dated April
6, 1999
27 Financial Data Schedule
(b) A report on Form 8-K, dated June 29, 1999, was filed with the
Commission on June 30, 1999. Under Item 5. Other Information, the
Company announced that it had entered into an Agreement and Plan of
Merger with Energy East Corporation (the "Merger"). Under Item 7.
Financial Statements, Pro Forma Financial Information and Exhibits the
Company filed the Agreement and Plan of Merger, the Amendment to Rights
Agreement and the Press Release which was issued to announce the
merger.
SIGNATURE
Pursuant to the requirements 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.
Date 08/06/99 By: S/ Andrew H. Johnson
-------------------- -----------------------------------
(Andrew H. Johnson)
Treasurer and Chief Accounting Officer
(On behalf of the registrant and as
Chief Accounting Officer)
Exhibit 99.1
Page 1 of 2
CTG RESOURCES, INC.
Quarterly Report on Form 10-Q
Exhibit Index
Quarter Ended June 30, 1999
Document
Item Description Description
------------ ----------- ------------
99(1) Exhibit Index Ex-99.1
10(136) First Amendment to Connecticut Ex-10.136
Natural Gas Corporation Executive
Restricted Stock Plan
10(137) First Amendment to Restricted Stock Ex-10.137
Agreement (Under the Connecticut
Natural Gas Corporation Executive
Restricted Stock Plan)
10(138) Connecticut Natural Gas Corporation Ex-10.138
Officers' Retirement Plan (As
Amended and Restated Effective As
Of March 31, 1999)
10(139) First Amendment to Connecticut Ex-10.139
Natural Gas Corporation Officers'
Retirement Plan
10(140) Sixth Amendment to the Connecticut Ex-10.140
Natural Gas Corporation Officers
Retirement Plan Trust Agreement
10(141) The Energy Network, Inc., Ex-10.141
Instrument of Adoption of
Connecticut Natural Gas Corporation
Officers' Retirement Plan
10(142) First Amendment to the Connecticut Ex-10.142
Natural Gas Corporation Deferred
Compensation Plan Trust Agreement
10(143) Eleventh Amendment to Connecticut Ex-10.143
Natural Gas Corporation Employee
Savings Plan
10(144) Twelfth Amendment to Connecticut Ex-10.144
Natural Gas Corporation Employee
Savings Plan
10(145) Eleventh Amendment to Connecticut Ex-10.145
Natural Gas Corporation Union
Employee Savings Plan
Exhibit 99.1
Page 2 of 2
CTG RESOURCES, INC.
Quarterly Report on Form 10-Q
Exhibit Index (Concluded)
Quarter Ended June 30, 1999
Document
Item Description Description
------------ ----------- ------------
10(146) Twelfth Amendment to Connecticut Ex-10.146
Natural Gas Corporation Union
Employee Savings Plan
10(147) District Heating & Cooling Service Ex-10.147
Agreement between The Energy
Network, Inc. and The City of
Hartford
27 Financial Data Schedule Ex-27
FIRST AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
EXECUTIVE RESTRICTED STOCK PLAN
The Connecticut Natural Gas Corporation Executive
Restricted Stock Plan (the "Plan") is hereby amended, effective
as of March 31, 1997, in the following respects:
1. By deleting the phrase "stock of the Corporation"
where it appears in Section 1 of the Plan and inserting in lieu
thereof the phrase "Shares, as defined below,".
2. By deleting Section 2(j) of the Plan and inserting
in lieu thereof the following:
"(j) "Shares means (i) prior to March 31, 1997,
shares of common stock of the Corporation and (ii) on
and after March 31, 1997, shares of common stock of the
Company."
3. By adding a new Section 2(l) to the Plan after
Section 2.1(k) as follows:
"(l) "Company" means CTG Resources, Inc. or any
successor or successors."
4. By deleting the first sentence of Section 10(c) of
the Plan and inserting in lieu thereof the following:
"Neither the Corporation nor the Company is required to
cause Shares issued under the Plan to be registered
under the Securities Act of 1933 or the securities laws
of any state."
5. By deleting the first sentence of Section 10(d) of
the Plan and inserting in lieu thereof the following:
"Any obligation to issue Shares pursuant to any Award
shall be conditioned on the Company's ability at
nominal expense to issue such Shares in compliance with
all applicable statutes, rules or regulations of any
governmental authority."
IN WITNESS WHEREOF, Connecticut Natural Gas Corporation
has caused this instrument to be executed in its name and by its
authorized officers as of the 17th day of May, 1999.
CONNECTICUT NATURAL GAS CORPORATION
By: S/ Jean S. McCarthy
------------------------------
(Corporate Seal)
ATTEST:
S/ R.L. Babcock
-------------------------
Secretary
2
FIRST AMENDMENT TO
RESTRICTED STOCK AGREEMENT
(Under The Connecticut Natural Gas Corporation Executive
Restricted Stock Plan)
THIS AMENDMENT is made and entered into as of the 27th
day of April, 1999, by and between CONNECTICUT NATURAL GAS
CORPORATION, a Connecticut corporation with its principal
executive offices in Hartford, Connecticut (hereinafter referred
to as "CNG") and ______________________________ (hereinafter
referred to as the "Participant").
W I T N E S S E T H:
WHEREAS, by Agreement dated as of October 1, 1996 (the
"Agreement") CNG and the Participant entered into an Agreement
entitled Restricted Stock Agreement (Under the Connecticut
Natural Gas Corporation Executive Restricted Stock Plan); and
WHEREAS, the parties wish to amend the Agreement in the
particulars set forth below;
NOW, THEREFORE, CNG and the Participant agree as
follows effective as of March 31, 1997:
1. By adding the following sentence at the end of the
first paragraph of Section 2 of the Agreement:
"All references in the Agreement to the "Corporation's
capital stock", "common stock of the Corporation" or
any similar term shall be deemed to mean and refer to
the common or capital stock of CTG Resources, Inc. or
its successor or successors for all periods from and
after March 31, 1997."
2. By deleting the last sentence of the first
paragraph of Section 3(b) of the Agreement and inserting in lieu
thereof the following:
"The Committee shall take into consideration
adjustments in the capital structure (of the type
referred to in Section 12 of this Agreement) of the
Corporation and of the companies in the comparative
group and such other factors as it, in its sole
discretion, shall deem appropriate to measure the
performance of the Corporation and the respective
companies and their ranking for purposes of Section
3(c) below."
3. By deleting Section 4(a) of the Agreement and
inserting in lieu thereof the following:
"(a) The Restricted Property may not be
encumbered, sold, assigned, transferred, pledged or
otherwise disposed of at any time during the period
that Risks of Forfeiture apply, in accordance with
Sections 4 and 5, to such Restricted Property (the
"Restriction Period"). If any of the Restricted
Property is so encumbered, sold, assigned, transferred,
pledged or otherwise disposed of during the Restriction
Period, all then Restricted Property held for the
account of Participant shall automatically be forfeited
to the Corporation."
4. By deleting the phrase "an employee of the
Corporation or a Subsidiary, as the case may be," where it
appears in Section 4(b) of the Agreement and inserting in lieu
thereof the phrase "an employee of the Corporation or a
Subsidiary, as the case may be, and all Affiliates (as defined
below) thereof,".
5. By adding a new paragraph at the end of Section
4(b) of the Agreement as follows:
"For purposes of this Agreement, "Affiliate" shall
mean any parent of the Corporation, any entity in which
the Corporation or parent of the Corporation directly
or indirectly owns 50% or more of the voting
securities, or any other entity that is included in a
controlled group of corporations in which the
Corporation is included as provided in Section 414(b)
of the Internal Revenue Code or is a trade or business
under common control with the Corporation as provided
in Section 414(c) of the Internal Revenue Code."
6. By deleting the phrases "employed by the
Corporation or any Subsidiary " and "employment with the
Corporation or a Subsidiary" where they appear in Section 5(b) of
the Agreement and inserting in lieu thereof, respectively, the
phrases "employed by the Corporation or any Subsidiary, as the
case may be, and all Affiliates thereof" and "employment with the
Corporation, Subsidiary or Affiliate, as the case may be."
7. By deleting Section 5(c) of the Agreement and
inserting in lieu thereof the following:
(c) Upon the occurrence of a Change of Control, as
defined below, all Risks of Forfeiture will lapse and all
Restricted Property shall vest and become distributable in
accordance with the terms of Section 5 hereof, without
further adjustment attributable to the Adjustment
Provisions. For purposes of this Agreement, a "Change of
Control" shall mean: (i) the acquisition by any
individual, entity or group (within the meaning of Section
13(d) (3) or 14(d) (2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of either
(1) the then outstanding shares of common stock of CTG
Resources, Inc. (for purposes of this Section 5(c),
hereinafter the "Company") (the "Outstanding Common Stock")
or (2) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally
in the election of directors (the "Outstanding Voting
Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition directly
from the Company, (2) any acquisition by the Company, (3)
any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any acquisition
by any corporation pursuant to a transaction which complies
with clauses (1), (2) and (3) of subsection (iii) of this
Section 14(a); or (ii) Individuals who, as of March 31,
1997, constitute the Board of Directors of the Company (the
"Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director
subsequent to March 31, 1997 whose election, or nomination
for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board of Directors of the Company; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, immediately following
such Business Combination, (1) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Common Stock and
Outstanding Voting Securities immediately prior to such
Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or
all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Common Stock and Outstanding Voting Securities,
as the case may be, (2) no Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or any
related corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination, and (3) at least
a majority of the members of the board of directors of the
corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board of
Directors of the Company, providing for such Business
Combination; or (iv) Approval by the shareholders of the
Company of a complete liquidation or dissolution of the
Company."
8. By adding the following sentence at the end of
Section 11 of the Agreement:
"All references to the "Corporation" in this Section 11
shall be deemed to mean and refer to CTG Resources,
Inc. or its successor or successors for all periods
from and after March 31, 1997."
9. Except as herein above modified and amended, the
Agreement, as amended, shall remain in full force and effect.
IN WITNESS WHEREOF, Connecticut Natural Gas Corporation
has caused this First Amendment to be duly executed in its
corporate name, and the Participant has hereunto set his/her hand
and seal effective as of the date first above written.
CONNECTICUT NATURAL GAS CORPORATION
By
Its
PARTICIPANT
CONNECTICUT NATURAL GAS CORPORATION
OFFICERS' RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE AS OF MARCH 1, 1999)
-----------------------------------------------------
The Connecticut Natural Gas Corporation Officers'
Retirement Plan (the "Plan") was established by Connecticut
Natural Gas Corporation to provide eligible officers with certain
supplemental retirement benefits. The terms and conditions of
the Plan, as amended and restated effective as of March 1, 1999,
are hereinafter set forth.
ARTICLE I
DEFINITIONS
Except as otherwise expressly provided herein or unless
the context otherwise requires, the terms defined in this Article
I shall have the meanings assigned to them herein, shall include
the plural as well as the singular and the masculine gender
whenever used shall include the feminine.
I.1 "ACTUARIAL (OR ACTUARIALLY) EQUIVALENT" shall mean
equality in value of the aggregate amounts expected to be
received under different forms of payment based on the following
actuarial factors and assumptions:
(a) In respect of a Participant first hired by the
Corporation and its Affiliated Companies prior to May 1,
1998: mortality, blended rates equal to 50% male rates plus
50% female rates from the GAM83 mortality table; and
interest of 7 1/2% per annum to the Participant's earliest
retirement age under Section 3.2 (or current age, if older)
and interest of 4 1/2% per annum, thereafter.
(b) In respect of a Participant first hired by the
Corporation and its Affiliated Companies on or after May 1,
1998: mortality, blended rates equal to 50% male rates plus
50% female rates from the GAM83 mortality table; and
interest of 7 1/2% per annum.
I.2 "AFFILIATED COMPANY" shall mean the parent of the
Corporation, any entity in which the Corporation or parent of the
Corporation directly or indirectly beneficially owns 50% or more
of the voting securities, or any other entity that is included in
a controlled group of corporations in which the Corporation is
included as provided in Section 414(b) of the Internal Revenue
Code or is a trade or business under common control with the
Corporation as provided in Section 414(c) of the Internal Revenue
Code.
I.3 "BOARD OF DIRECTORS" shall mean the Board of
Directors of the Corporation.
I.4 "CORPORATION" shall mean Connecticut Natural Gas
Corporation, or any successor or successors thereto.
I.5 "CHANGE OF CONTROL" shall have the meaning set
forth in Section 5.7(a) hereof.
I.6 "EMPLOYER" shall mean the Corporation and any
Affiliated Company which has adopted the Plan with the consent of
the Board of Directors.
I.7 "NORMAL RETIREMENT DATE" shall mean the date on
which a Participant attains age 65.
I.8 "PARTICIPANT" shall mean any officer of an
Employer who has become a Participant in the Plan in accordance
with Section 2.1 and who has not ceased to be a Participant as
provided in Section 2.2.
I.9 "PENSION PLAN" shall mean the Connecticut Natural
Gas Corporation Pension Plan, as in effect from time to time, and
any successor or successors thereto.
I.10 "PLAN" shall mean the Plan set forth in this
instrument, as it may, from time to time, be amended.
I.11 "SALARY" shall mean base salary payable to an
employee by any and all of the Employers, inclusive of any base
salary reductions made at the employee's election under any
qualified or nonqualified plan of deferred compensation or under
any cafeteria plan, but exclusive of bonuses, incentive payments,
stock options, grants, dividends or payments in lieu of
dividends, and any other additional compensation received by the
employee from an Employer.
I.12 "SOCIAL SECURITY BENEFITS" shall mean the
estimated annual primary insurance amount available to the
Participant at age 65 under Title II of the Social Security Act
as in effect on the earlier of the date on which the Participant
attains age 65 or the date he/she terminates employment with the
Employers. If Social Security Benefits are to be determined
prior to the Participant attaining age 65, they shall be
calculated on the assumptions that (i) the Participant, if under
age 60, would continue to receive after termination until
3
attainment of age 60 compensation which would be treated as wages
for purposes of the Social Security Act at the same rate as
his/her annualized compensation from the Employers at the time of
termination and (ii) the Participant has no earnings after
attaining age 60 (or after termination if he/she terminates after
attaining age 60) recognized for Social Security purposes. The
determination of a Participant's Social Security Benefits shall
be made without regard to any subsequent changes in the Social
Security Act occurring after the earlier of the date on which the
Participant attains age 65 or the date of his/her termination of
employment with the Employers. The fact that a Participant does
not actually receive such amount of Social Security Benefits
determined hereunder because of failure to apply or for any other
reason shall be disregarded.
A Participant's actual wage history with the Employers
shall be utilized in computing the Social Security Benefits. In
addition, in computing a Participant's pre-hire salary history
(i.e., for calendar years prior to hire), the Participant's
compensation shall be estimated by applying a salary scale,
projected backwards, to his/her compensation for the final full
calendar year of employment which is a level percentage per year
equal to six percent (6%) per year. However, the Corporation
shall give clear written notice to each Participant of the
Participant's right to supply actual salary history and of the
financial consequences of failing to supply such history. The
Plan benefit of a Participant will be adjusted by the reduction
4
based upon actual salary history for years previously estimated
before hire if the Participant supplies documentation of that
history. Such documentation must be provided no later than a
reasonable period of time following the later of the date of
termination of employment and the time when the Participant is
notified of the benefit to which he/she is entitled. If a
Participant supplies his/her own wage history, it shall be used
in computing his/her Social Security Benefits hereunder whether
it leads to higher or lower Social Security Benefits.
I.13 "YEAR OF SERVICE" shall mean the most recent
period of a Participant's consecutive, continuous service as an
employee of one or more of the Employers, computed on the basis
of one-twelfth year for each completed month of service.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
II.1 ELIBIBILITY. Each officer of an Employer who is
designated as an officer of the Employer by resolution of the
Board of Directors of the Employer at an organizational meeting
thereof shall become a Participant upon such designation. Each
other officer of an Employer shall become a Participant upon
his/her being designated as a Participant by the Board of
Directors of the Employer.
II.2 TERMINATION OF PARTICIPATION. An officer who has
become a Participant as provided in Section 2.1 shall continue as
a Participant as long as he/she remains an officer of an Employer
5
and shall cease to be a Participant at the time he/she for any
reason is no longer an officer of any Employer; provided,
however, that a Participant who ceases to be an officer of the
Employers and is then entitled to begin receiving benefits or is
entitled to receive future benefits under the Plan shall continue
as a Participant until his/her death.
ARTICLE III
RETIREMENT BENEFITS
III.1 RETIREMENT AT NORMAL RETIREMENT DATE.
Upon the termination of a Participant from the
employment of the Employers on or after his/her Normal Retirement
Date for any reason other than death, the Participant shall be
entitled under the Plan, subject to Sections 3.3, 3.5 and 5.2, to
an annual amount, on a single-life annuity basis, equal to the
GREATER OF:
(i) sixty percent (60%) of his/her highest rate of
annual Salary as in effect at any time prior to termination,
plus one percent (1 %) of her/her highest rate of annual
Salary as in effect at any time prior to termination, for
each Year of Service in excess of twenty-five (25), not to
exceed an additional five percent (5 %) (65% total maximum)
for Participants with thirty (30) or more Years of Service,
REDUCED BY:
(a) the Actuarial Equivalent, as expressed on a
single-life annuity basis, of the annual amount of
6
the Participant's vested accrued benefits under
the Pension Plan and all other qualified defined
benefit pension plans of the Employers, assuming
that such benefits commence thereunder at the time
benefits commence under this Plan;
(b) the Actuarial Equivalent, as expressed on a
single-life annuity basis, of the annual amount of
the Participant's vested accrued benefits under
all other qualified and nonqualified defined
benefit pension programs on account of any prior
employment, assuming that such benefits commence
thereunder at the time benefits commence under
this Plan; and
(c) fifty percent (50%) of the Participant's Social
Security Benefits, except that the amount of the
offset under this paragraph (c) shall be reduced
to the extent such offset would reduce the benefit
(after reduction under paragraphs (a) and (b))
payable below what otherwise would be payable as
determined under this Section 3.1(i) without
regard to this paragraph (c) and based upon the
Participant's rate of annual Salary, if any, in
effect on December 31, 1991; or
(ii) the excess of (a) the annual benefit that would
have been provided under the Pension Plan if the limits
imposed by the Federal tax laws upon benefits under
7
qualified plans (i.e., the limits under Section 415 and
Section 401(a)(17) of the Internal Revenue Code) did not
apply, over (b) the annual benefit actually payable under
the Pension Plan. Such benefits under the Pension Plan
shall be expressed on a single-life annuity basis and
determined as if they commenced as of the date benefits are
to commence under this Plan.
For purposes of this Section 3.1, any benefit referred to in
paragraph (i)(a) or (b) or paragraph (ii) above shall be
determined without regard to the provisions of any applicable
"qualified domestic relations order" as defined in Section 414(p)
of the Internal Revenue Code.
3.2 RETIREMENT AT OR AFTER AGE SIXTY. Upon the termination
of a Participant, for any reason other than death, from the
employment of the Employers on or after age sixty (60) but prior
to his/her Normal Retirement Date, the Participant shall be
entitled under the Plan, subject to Sections 3.3, 3.5 and 5.2, to
an annual amount, on a single-life annuity basis, equal to the
GREATER OF:
(i) sixty percent (60%) of his/her highest rate
of annual Salary as in effect at any time prior to
termination, plus one percent (1%) of his/her highest rate
of annual Salary as in effect at any time prior to
termination, for each Year of Service in excess of
twenty-five (25), not to exceed an additional five percent
(5%) (65% total maximum) for Participants with thirty (30)
8
or more Years of Service, REDUCED BY:
(a) the Actuarial Equivalent, as expressed on a
single-life annuity basis, of the annual amount of
the Participant's vested accrued benefits under
the Pension Plan and all other qualified defined
benefit pension plans of the Employers, assuming
such benefits commence thereunder at the time
benefits commence under this Plan;
(b) the Actuarial Equivalent, as expressed on a
single-life annuity basis, of the annual amount of
the Participant's vested accrued benefits under
all other qualified and nonqualified defined
benefit pension programs on account of any prior
employment, assuming such benefits commence
thereunder at the time benefits commence under
this Plan; and
(c) fifty percent (50%) of the Participant's Social
Security Benefits, except that the amount of the
offset under this paragraph (c) shall be reduced
to the extent such offset would reduce the benefit
(after reduction under paragraphs (a) and (b))
payable below what otherwise would be payable as
determined under this Section 3.2(i) without
regard to this paragraph (c) and based upon the
Participant's rate of annual Salary, if any, in
effect on December 3, 1991; or
9
(ii) the excess of (a) the annual benefit that would
have been provided under the Pension Plan if the limits
imposed by the Federal tax laws upon benefits under
qualified plans (i.e., the limits under Section 415 and
Section 401(a)(17) of the Internal Revenue Code) did not
apply, over (b) the benefit actually payable under the
Pension Plan. Such benefits under the Pension Plan shall be
expressed on a single-life annuity basis and determined as
if they commenced as of the date benefits are to commence
under this Plan.
For purposes of this Section 3.2, any benefit referred to in
paragraph (i)(a) or (b) or paragraph (ii) shall be determined
without regard to the provisions of any applicable "qualified
domestic relations order" as defined in Section 414(p) of the
Internal Revenue Code.
3.3 METHODS OF PAYMENT
(a) UNMARRIED PARTICIPANTS. If a Participant is
unmarried at the time benefits commence, then his/her benefits
hereunder shall be monthly payments payable by his/her Employer
in the form of an annuity for his/her lifetime, and if the
Participant dies prior to the completion of 120 payments
hereunder, then any remaining payments shall continue to be made
by the Employer to his/her beneficiary or beneficiaries. A
Participant shall have the right to designate a beneficiary on
such forms as the Corporation shall provide. In the event that
there is no effective beneficiary designation form on file with
10
the Corporation at the time of the Participant's death, any
remaining payments shall be paid to his/her surviving spouse, if
any; otherwise to his/her surviving issue, PER STIRPES; and in
the further event that the Participant is not survived by any
issue, then any remaining payments shall be made to his/her
estate for the duration of the 120 payment period.
(b) MARRIED PARTICIPANTS. If a Participant is married
at the time benefits commence, then benefits hereunder shall be
monthly payments payable by his/her Employer in the form of an
annuity for his/her lifetime and, at his/her death, remaining
payments shall be made to his/her surviving spouse, if he/she
survives him/her and said surviving spouse was married to the
Participant at the time benefits commenced to the Participant
hereunder, at a rate which is 66-2/3 % of the amount of benefit
payment during the Participant's lifetime. However, if the
Participant had completed at least 15 but less than 21 Years of
Service, the surviving spouse benefit otherwise payable shall be
increased by an amount equal to five percent (5%) of the
surviving spouse benefit which would have been payable if
benefits were payable as an Actuarially Equivalent joint and
fifty percent (50%) survivor annuity. If the Participant had
completed at least 21 but less than 31 Years of Service, then the
surviving spouse benefit otherwise payable shall be increased by
an amount equal to 10% of the surviving spouse benefit which
would have been payable if benefits were payable as an
Actuarially Equivalent joint and 50% survivor annuity. If the
11
Participant had completed 31 or more Years of Service, the
surviving spouse benefit otherwise payable shall be increased by
an amount equal to 15% of the surviving spouse benefit which
would have been payable if benefits were payable as an
Actuarially Equivalent joint and fifty percent (50%) survivor
annuity.
(c) ACTUARIAL EQUIVALENCE. The amount of benefits
payable under this Plan as determined in Sections 3.1, 3.2 and
3.4 is expressed in the form of an annual single-life annuity
with no death benefits. Benefit payments under the methods of
payment set forth in Sections 3.3(a) and (b) (excluding the
additional surviving spouse benefits above the basic 66-2/3 %
amount) shall be Actuarially Equivalent to the benefits as
expressed in the form of an annual single-life annuity with no
death benefits.
3.4 RETIREMENT ON ACCOUNT OF DISABILITY. Upon the
termination of a Participant from the employment of the Employers
prior to age sixty (60) on account of disability because of
illness or injury of such severity that the Participant is unable
to perform the usual duties of his/her employment with the
Employers as conclusively determined by the Board of Directors,
the Participant shall be entitled under the Plan, subject to
Section 3.3, 3.5 and 5.2, to an annual amount, on a single-life
annuity basis, equal to the GREATER OF:
(i) sixty percent (60%) of his/her highest rate of
annual Salary as in effect at any time prior to termination,
12
plus one percent (1%) of his/her highest rate of annual
Salary as in effect at any time prior to termination, for
each Year of Service in excess of twenty-five (25), not to
exceed an additional five percent (5%) (65% total maximum)
for Participant with thirty (30) or more Years of Service,
REDUCED BY:
(a) the Actuarial Equivalent, as expressed on a
single-life annuity basis, of the annual amount of
the Participant's vested accrued benefits under
the Pension Plan and all other qualified defined
benefit pension plans of the Employers, assuming
such benefits commence thereunder at the time
benefits commence under this Plan;
(b) the Actuarial Equivalent, as expressed on a
single-life annuity basis, of the annual amount of
the Participant's vested accrued benefits under
all other qualified and nonqualified defined
benefit pension programs on account of prior
employment, assuming such benefits commence
thereunder at the time benefits commence under
this Plan; and
(c) fifty percent (50%) of the Participant's Social
Security Benefits, except that the amount of the
offset under this paragraph (c) shall be reduced
to the extent such offset would reduce the benefit
(after reduction under paragraphs (a) and (b))
13
payable below what otherwise would be payable as
determined under this Section 3.4(i) without
regard to this paragraph (c) and based upon the
Participant's rate of annual Salary, if any, in
effect on December 31, 1991; or
(ii) the excess of (a) the annual benefit that would
have been provided under the Pension Plan if the limits
imposed by the Federal tax laws upon benefits under
qualified plans (i.e., the limits under Section 415 and
Section 401(a)(17) of the Internal Revenue Code) did not
apply, over (b) the benefit actually payable under the
Pension Plan. Such benefits under the Pension Plan shall be
expressed on a single-life annuity basis and determined as
if they commenced as of the date benefits are to commence
under this Plan.
For purposes of this Section 3.4, any benefit referred to in
paragraph (i)(a) or (b) or paragraph (ii) shall be determined
without regard to the provisions of any applicable "qualified
domestic relations order" as defined in Section 414(p) of the
Internal Revenue Code.
3.5 RETIREMENT WITH SHORT-TERM SERVICE. The annual
amount determined under Section 3.1(i), 3.2(i) or 3.4(i) in
respect of a Participant who had been an employee of the
Employers for less than fifteen Years of Service at the time of
his/her termination for reasons other than death will be reduced
(before comparison to the amount determined under Section
14
3.1(ii), 3.2(ii) or 3.4(ii), respectively) in the proportion that
his/her Years of Service, rounded to the nearest full year, are
to fifteen. Notwithstanding the preceding sentence, if a Change
of Control has occurred, the benefits payable under this Plan
shall be fully vested as provided in Section 5.7(b); however, the
requirements for reduction for Years of Service less than
fifteen, set forth in this Section 3.5, shall continue to apply.
3.6 FORFEITURE. If a Participant ceases to be an
officer of the Employers for any reason prior to being entitled
to benefits under this Article III or by reason of Section
5.7(b), he/she shall forfeit all benefits from the Plan, except
to the extent the Participant ceases to be an officer by reason
of his or her death in which case the provisions of Article IV
shall apply.
ARTICLE IV
DEATH BENEFITS
4.1 DEATH BEFORE RETIREMENT. If a Participant should die
while actively employed by an Employer and prior to his/her
actual termination, and if the Participant is survived by a
spouse to whom he/she was married for at least one (1) year at
the time of death, then benefits under this Plan shall be payable
by the Employer to such surviving spouse as follows:
(i) If the Participant had not attained age sixty (60)
at the time of his/her death, benefits for the surviving
spouse shall be equal to forty percent (40%) of the
15
Participant's highest rate of annual Salary as in effect at
any time prior to death, REDUCED BY:
(a) the Actuarial Equivalent, as expressed on a
single-life annuity basis, of the annual amount of
any preretirement survivor annuity benefits
payable to the surviving spouse following the
Participant's death under the Pension Plan and all
other qualified defined benefit pension plans of
the Employers; and
(b) the Actuarial Equivalent, as expressed on a
single-life basis, of the annual amount of
survivor annuity benefits payable to the surviving
spouse following the Participant's death under all
other qualified and nonqualified defined benefit
pension programs on account of any prior
employment of the Participant.
Benefits in the amount of one-twelfth of the annual benefits
determined above shall commence as of the first day of the
month following the Participant's death and shall be payable
monthly thereafter for the balance of the surviving spouse's
lifetime.
(ii) If the Participant had attained age sixty (60) at
the time of his/her death, benefits for the surviving spouse
shall be computed as if the Participant had terminated on
the day before his/her death, and based upon the service of
the Participant at that time. Benefits shall be calculated
16
in accordance with the applicable provisions of paragraph
(b) of Section 3.3, relating to remaining payments to the
surviving spouse following the death of the Participant.
Benefits shall commence as of the first day of the month
following the Participant's death and shall be payable
monthly thereafter for the balance of the surviving spouse's
lifetime.
(iii) If the Participant should die prior to
his/her actual termination with the Employers, and if the
Participant is unmarried or if he/she was not married to
his/her spouse for at least one (1) year at the time of the
Participant's death, no benefit will be paid under this
Plan.
4.2 AFTER RETIREMENT. If the Participant dies after
actual termination, no benefit will be paid under the Plan,
except for any benefits payable to the surviving spouse or
beneficiaries in accordance with Section 3.3.
17
ARTICLE V
GENERAL PROVISIONS
5.1 NONASSIGNABILITY. No right or interest of any
Participant, spouse or beneficiary in the Plan shall be
transferable or assignable or shall be subject to alienation,
anticipation or encumbrance, and no right or interest of any
Participant in the Plan or his/her spouse or beneficiary in the
Plan shall be subject to any garnishment, attachment or
execution. A Participant has only the unsecured promise of
his/her Employer to pay benefits under this Plan and has the
status of an unsecured general creditor. No Participant receives
any right against or security interest in any fund used to
provide benefits hereunder, and any fund shall at all times
remain subject to claims of general creditors of the Corporation
or other Employer, as the case may be.
5.2 COMMENCEMENT OF BENEFIT PAYMENTS; COST OF LIVING
ADJUSTMENT. (a) Benefit payments under Article III shall
commence as of the first day of the month following termination
of employment with the Employers. If, however, the Participant
is then employed by an Affiliated Company, payment shall not
commence until the Participant is no longer employed by the
Affiliated Company and the Employers and, if the Participant
should die prior to the time he/she is no longer so employed, the
Participant shall be deemed (i) actively employed by an Employer
solely for purposes of determining if death benefits are payable
(but not the amount of death benefits which shall be based on
18
his/her Salary and Years of Service with the Employers) as
provided in Section 4.1 and (ii) not to have terminated within
the meaning of Section 4.2.
(b) As of July 1 of each year, commencing July 1,
1984, the monthly annuity benefit payable under the Plan to any
Participant, surviving spouse or beneficiary whose benefits under
the Plan commenced before the immediately preceding January 1,
will be increased by a percentage of the amount of benefit
(including all previous increases) to which the Participant,
surviving spouse or beneficiary, as the case may be, would have
been entitled but for such increase. The annual percentage of
increase under this Section 5.2(b) will be the lesser of (i)
three percent (3%) and (ii) the percentage increase in the Index
for January of the year for which the benefit increase is being
determined over the Index for the preceding January. If the
Index is decreased, there will be no increase in benefits.
"Index" shall mean the index published by the Bureau of Labor
Statistics of the U.S. Department of Labor, known as the Consumer
Price Index for Urban Wage Earners and Clerical Workers - Revised
(1967 = 100) for All Cities. For identification purposes, the
Index for January, 1983 was 293.1.
The amount of any death benefit determined and payable
to a beneficiary under Section 3.3(a) or surviving spouse benefit
determined and payable pursuant to Section 3.3(b) shall be
subject to adjustment under this Section 5.2(b) in the same
manner and at the same time as the benefit payable to the
19
Participant, such that the total initial benefit payable to the
surviving spouse or beneficiary bears the same percentage
relationship to the Participant's benefit immediately prior to
his/her death and after adjustments under this Section 5.2(b) as
the ratio of the original death benefit or total surviving spouse
benefit is to the original benefit payable to the Participant.
Notwithstanding the foregoing, the provisions of this
Section 5.2(b) shall not apply to any Participant first hired by
the Corporation and its Affiliated Companies on or after May 1,
1998 or to the surviving spouse or beneficiary of any such
Participant.
5.3 AMENDMENT AND TERMINATION. (a) Prior to the
occurrence of a Change of Control, the benefits payable under
this Plan may be terminated by the Board of Directors of the
Corporation at any time, and any or all of the provisions of the
Plan may be amended, modified, suspended or terminated by the
Board of Directors at any time or from time to time. Prior to a
Change of Control, upon termination of the Plan, all benefits
payable or to be payable under this Plan shall cease.
(b) After a Change of Control has occurred, this Plan
shall may not be modified or amended in any manner which is
adverse to any Participant (or surviving spouse or beneficiary or
beneficiaries then entitled to receive benefits, if applicable)
unless the signed written consent to such amendment is obtained
from such Participant (or surviving spouse or beneficiary or
beneficiaries then entitled to receive benefits, if applicable).
20
After a Change of Control has occurred, the Plan shall not be
terminated until all obligations to pay benefits under the Plan
have been satisfied.
5.4 COMPUTATION OF EXCESS BENEFIT. For purposes of
subsection (ii)(a) of Section 3.1, subsection (ii)(a) of Section
3.2, and subsection (ii)(a) of Section 3.4, in computing the
benefit that would have been provided under the Pension Plan if
the limits imposed by the Federal tax laws upon benefits under
qualified plans (i.e., the limits under Section 415 and
401(a)(17) of the Internal Revenue Code) did not apply, it shall
also be assumed that the definition of "Earnings" (or any
successor term) under the Pension Plan includes amounts deferred
under the Connecticut Natural Gas Corporation Deferred
Compensation Plan in the year of the deferral. It is the intent
of the Corporation that the amount of benefits provided hereunder
shall be unaffected by whether or not the Participant has
deferred amounts under the Connecticut Natural Gas Corporation
Deferred Compensation Plan or any successor thereto.
5.5 ADMINISTRATION.
(a) APPOINTMENT OF COMMITTEE. Except as otherwise
expressly provided herein, the Plan shall be administered by the
Compensation Committee (the "Committee") of the Board of
Directors of the Corporation. Vacancies on the Committee shall
be filled by the Board of Directors.
(b) ELECTION OF CHAIRMAN; QUORUM; MAJORITY VOTE. The
Board of Directors also shall elect a member of the Committee as
21
Chairman. The Committee shall appoint a Secretary who may, but
need not, be a member of the Committee. The Committee may
authorize one or more of their number, or the Secretary of the
Committee, to execute or deliver any instrument or give any
instruction on its behalf. The majority of the members of the
Committee at the time in office shall constitute a quorum for the
transaction of business. Any determination or action of the
Committee may be made or taken by a majority of the members
present at any meeting thereof, or without a meeting, by a
resolution or written memorandum signed by all of the members
then in office. No member of the Committee who is (or was) a
Participant shall participate in any Committee deliberations or
decisions relating solely to himself/herself.
(c) DUTIES. Subject to the provisions of this Plan,
the Committee shall have the discretionary authority to operate,
interpret and construe this Plan, to make all computations of
benefits hereunder and to determine all questions of eligibility,
status and rights of officers and their spouses or beneficiaries
hereunder. After the occurrence of a Change of Control, however,
the Committee shall interpret and construe the Plan consistent
with the way in which it interpreted and construed the Plan prior
to the Change of Control. The Committee may establish rules for
the transaction of its business and the administration of the
Plan. The Committee shall establish a claims procedure under
this Plan as provided in Section 5.10. Unless and to the extent
expressly provided otherwise in any trust agreement established
22
to provide amounts payable under the Plan, any determination or
action of the Committee respecting the administration of this
Plan shall be final, conclusive and binding on all persons having
an interest herein.
5.6 FACILITY OF PAYMENT. If the Committee determines
after receipt of evidence satisfactory to it, that any
Participant, spouse or beneficiary, as the case may be, to whom a
payment is due hereunder is incompetent by reason of physical or
mental disability or is a minor, the Committee shall have the
power to cause the payments becoming due to such Participant,
spouse or beneficiary to be made to another for the benefit of
the Participant, spouse or beneficiary, without responsibility of
the Corporation or the Committee to see the application of such
payment. Payments made pursuant to such power shall operate as a
complete discharge of the Corporation and the Committee.
5.7 CHANGE OF CONTROL
(a) For purposes of this Plan, a "Change of Control"
shall mean: (i) the acquisition by any individual, entity or
group (within the meaning of Section 13(d) (3) or 14(d) (2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more
of either (1) the then outstanding shares of common stock of the
Company (the "Outstanding Common Stock") or (2) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors
23
(the "Outstanding Voting Securities"); provided, however, that
for purposes of this subsection (i), the following acquisitions
shall not constitute a Change of Control: (1) any acquisition
directly from the Company, (2) any acquisition by the Company,
(3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company or ( 4) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(1), (2) and (3) of subsection (iii) of this Section 5.7(a); or
(ii) Individuals who, as of March 1, 1999, constitute the Board
of Directors of the Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board of
Directors of the Company; provided, however, that any individual
becoming a director subsequent to March 1, 1999 whose election,
or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board of Directors of the
Company; or (iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
24
Combination"), in each case, unless, immediately following such
Business Combination, (1) all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Common Stock and Outstanding
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Common Stock and
Outstanding Voting Securities, as the case may be, (2) no Person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of
the Company or any related corporation or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of
the then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the Business
25
Combination, and (3) at least a majority of the members of the
board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action
of the Board of Directors of the Company, providing for such
Business Combination; or (iv) Approval by the shareholders of
the Company of a complete liquidation or dissolution of the
Company. As used in this Section 5.7, the term 'Company' shall
mean CTG Resources, Inc.
(b) If a Change of Control has occurred, then each
Participant who is participating in this Plan shall be considered
to be fully vested under the Plan even if the Participant ceases
to be an officer or terminates employment with the Employers,
voluntarily or involuntarily, prior to attainment of age sixty
(60). In the event a Participant who becomes fully vested in
accordance with the preceding sentence terminates employment
prior to attainment of age sixty (60), however, benefits shall be
determined as provided in Section 3.2 even though the Participant
is not then age sixty (60) but shall not commence until the
Participant attains age sixty (60); and any offsets to the
benefits provided hereunder for benefits provided under any
defined benefit pension programs shall be calculated assuming
that benefits commenced thereunder at the time the Participant
attained age sixty (60). If following a Change of Control the
Participant ceases to be an officer or terminates employment,
voluntarily or involuntarily, and thereafter dies prior to
26
attainment of age sixty (60), and is survived by a spouse to whom
he/she was married for at least one (1) year at the time of
death, then benefits shall be payable to such surviving spouse in
accordance with the provisions of Section 4.1(i) hereof, even
though such Participant is not then an officer or employed by an
Employer; provided that if any survivor annuity benefits are
payable under any defined benefit pension programs referenced in
said Section 4.1(i), but such benefits do not commence at the
time of the officer's death, then the value of such future
benefits shall offset the benefits otherwise provided on an
Actuarially Equivalent basis.
5.8 NO GUARANTEE OF EMPLOYMENT. Nothing contained in
the Plan shall be construed as a contract of employment between
the Corporation or an Affiliated Company and the Participant, or
as a right of the Participant to be continued in the employment
of the Corporation or an Affiliated Company, or as a limitation
of the right of the Corporation or Affiliated Company to
discharge the Participant, with or without cause.
5.9 PLAN ADMINISTRATOR. The Corporation shall be the
"Administrator" under the Plan for purposes of the Employee
Retirement Income Security Act of 1974, as amended from time to
time.
5.10 CLAIMS. The Committee will provide the
Participant, his/her spouse or beneficiary whose claim for
benefits under the Plan has been fully or partially denied a
written notice setting forth the specific reasons for such
27
denial. Such notice shall state that the Participant, his/her
spouse or beneficiary, as the case may be, is entitled to request
a review, by the Committee, of the decision denying the claim.
5.11 SUCCESSOR. The Corporation and other Employers
shall require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization, operation of law
or otherwise) to all or substantially all of the business and/or
assets of the Corporation or other Employer, as the case may be,
expressly to assume and to agree to perform this Plan in the same
manner and to the same extent that the Corporation or other
Employer would be required to perform if no such succession had
taken place. This Plan shall be binding upon and inure to the
benefit of the Corporation and other Employers and any successor
of or to the Corporation and other Employers, including without
limitation any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the
Corporation or other Employer whether by sale, merger,
consolidation, reorganization, operation of law or otherwise (and
any such successor to the Corporation or other Employer shall
thereafter be deemed the "Corporation" or such "Employer", as the
case may be, for the purposes of this Plan) and the heirs,
executors and administrators of the Participant.
Executed at Hartford, Connecticut this 17th day of May,
1999.
Attest: CONNECTICUT NATURAL GAS CORPORATION
28
S/ R.L. Babcock By S/ Jean S. McCarthy
--------------------------- -----------------------------------
29
FIRST AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
OFFICERS' RETIREMENT PLAN
THIS AMENDMENT made this 21st day of June, 1999, by
CONNECTICUT NATURAL GAS CORPORATION (the "Corporation"), for the
purpose of amending its Officers' Retirement Plan,
W I T N E S S E T H :
WHEREAS, by written plan instrument dated May 17, 1999, the
Corporation amended and restated the Connecticut Natural Gas
Corporation Officers' Retirement Plan (the "Plan"), effective
March 1, 1999; and
WHEREAS, the Corporation wishes to amend the Plan in the
particulars set forth below;
NOW, THEREFORE, the Corporation hereby amends the Plan as
follows:
1. The heading to Section 3.2 is amended to read as
follows:
"RETIREMENT AT OR AFTER AGE SIXTY; OR AT OR AFTER AGE
FIFTY-FIVE WITH AT LEAST TEN YEARS OF CONTINUOUS SERVICE."
2. The following paragraph is added to Section 3.2 at the
end thereof:
"Effective May 25, 1999, a Participant who terminates,
for any reason other than death, from the employment of the
Employers on or after May 25, 1999, and also on or after
attaining age fifty-five (55) and completing at least ten
(10) Years of Continuous Service, as that term is defined
under the Connecticut Natural Gas Corporation Pension Plan,
but prior to age sixty (60), shall also be entitled to a
benefit hereunder. Such benefit shall be determined in
accordance with the provisions of this Section 3.2;
provided, however, that if the benefit is determined under
paragraph (i) of Section 3.2, the amount otherwise
determined thereunder (after taking into account all
reductions under subparagraphs (a), (b) and (c) thereof,
with the offsets under subparagraphs (a) and (b) to be
calculated as if the benefits described therein commence at
age sixty (60), and also after taking into account any
reduction under Section 3.5 for less than 15 Years of
Service) shall be further reduced by three percent (3%) per
year for each year prior to age sixty (60), in a manner
consistent with the methodology currently utilized under the
Connecticut Natural Gas Corporation Pension Plan. The
amount so reduced shall be compared to the benefit provided
under paragraph (ii) of Section 3.2, and the Participant
shall be entitled to the greater of the two benefits. Any
benefit referred to in this paragraph shall be determined
without regard to the provisions of any applicable
"qualified domestic relations order" as defined in Section
414(p) of the Internal Revenue Code."
3. Paragraph (b) of Section 5.7 is amended to read as
follows:
"(b) If a Change of Control has occurred, then each
Participant who is participating in this Plan shall be considered
to be fully vested under the Plan even if the Participant ceases
to be an officer or terminates employment with the Employers,
voluntarily or involuntarily, prior to attainment of age sixty
(60), or prior to attainment of age fifty-five (55) and
completion of at least ten (10) Years of Continuous Service. In
the event a Participant who becomes fully vested in accordance
with the preceding sentence terminates employment prior to
attainment of age sixty (60), or prior to attainment of age
fifty-five (55) and completion of at least ten (10) Years of
Continuous Service, benefits shall be determined as provided in
Section 3.2 (as amended hereunder) even though the Participant is
not then age sixty (60), or age fifty-five (55) with at least ten
(10) Years of Continuous Service as the case may be; however,
benefits shall not commence until the Participant attains age
sixty (60) or, if the Participant completed at least ten (10)
Years of Continuous Service, age fifty-five (55); and any offsets
to the benefits provided hereunder for benefits provided under
any defined benefit pension programs shall be calculated in
accordance with the principles set forth in Section 3.2 (as
amended hereunder). If following a Change of Control the
Participant ceases to be an officer or terminates employment,
voluntarily or involuntarily, and thereafter dies prior to
commencement of benefits hereunder and prior to attainment of age
sixty (60), and is survived by a spouse to whom he/she was
married for at least one (1) year at the time of death, then
benefits shall be payable to such surviving spouse in accordance
with the provisions of Section 4.1(i) hereof, even though such
Participant is not then an officer or employed by an Employer;
provided that if any survivor annuity benefits are payable under
any defined benefit pension programs referenced in said Section
4.1(i), but such benefits do not commence at the time of the
officer's death, then the value of such future benefits shall
offset the benefits otherwise provided on an Actuarially
Equivalent basis."
4. Except as hereinabove modified and amended, the Plan
shall remain in full force and effect.
5. This Amendment is effective as of May 25, 1999.
Executed at Hartford, Connecticut on the day and year first
above written.
2
ATTEST: CONNECTICUT NATURAL GAS
CORPORATION
S/ Jeffrey A. Hall 6/21/99 By S/ Jean S. McCarthy
--------------------------- --------------------------------
Its Vice President Human Resources
3
SIXTH AMENDMENT TO THE
CONNECTICUT NATURAL GAS CORPORATION
OFFICERS RETIREMENT PLAN
TRUST AGREEMENT
This Agreement made this 27th day of April, 1999, by
and between the Connecticut Natural Gas Corporation, a
Connecticut corporation with its principal place of office in
Hartford, Connecticut (hereinafter referred to as the "Company"),
and Fleet National Bank, a bank with trust powers having a
principal place of business in Hartford, Connecticut (hereinafter
referred to as the "Trustee"),
W I T N E S S E T H
WHEREAS, by Agreement dated January 9, 1989 (the
"Agreement"), the Company and The Connecticut Bank & Trust
Company, N.A. entered into an Agreement entitled "The Connecticut
Natural Gas Corporation Officers Retirement Plan Trust
Agreement"; and
WHEREAS, Fleet National Bank has succeeded to the trust
business of the Connecticut Bank & Trust Company, N.A., and is
currently serving as trustee; and
WHEREAS, the parties reserve the right to amend the
Agreement in Article X, Section 10.1 thereof, subject to the
conditions set forth therein; and
WHEREAS, the Agreement has previously been amended five
times; and
WHEREAS, the Company wishes to amend the Agreement in
the particulars set forth below;
NOW, THEREFORE, the Company and the Trustee agree as
follows;
1. By adding a new Section 1.4 to the Agreement, as
heretofore amended, after Section 1.3 thereof as follows:
"1.4 This Trust may be adopted by affiliates
of the Company, in order to satisfy their
obligations under the Plan, with the knowledge and
consent of the Company. Such adoption shall be
accomplished by signing an instrument becoming a
party to the Agreement. In the event that one or
more affiliated employers adopts the Trust, the
following rules shall apply notwithstanding
anything to the Trust to the contrary:
(a) The powers and obligations reserved for
the "Company" under Sections 3.1, 3.2, Article IV
(other than the last two sentences of Section
4.4), Articles V, VI, VII, VIII, X, XI (other than
Section 11.3), and XII shall remain exclusively
vested in the entity first named above, i.e.
Connecticut Natural Gas Corporation.
(b) For purposes of Article II, Sections 3.3
and 3.4, the last two sentences of Section 4.4 to
the extent attributable to its participants and
beneficiaries, Article IX, and Section 11.3,
"Company" shall mean, with respect to each
separate adopting entity, only that entity.
Without limiting the foregoing, the provisions of
Article II shall apply separately to each such
entity and the participants and beneficiaries
thereof, and the assets attributable to an
adopting entity's contributions shall be subject
to the claims of only that entity's general
creditors, regardless of the solvency or
obligations of any other adopting entity.
(c) A separate adopting entity other than
Connecticut Natural Gas Corporation may terminate
its participation in the Trust, subject to Article
IX, by written notice to the Trustee and to
Connecticut Natural Gas Corporation.
(d) The Trustee shall maintain a separate
account reflecting the equitable share of the
Company and each other adopting entity in the
Fund."
IN WITNESS WHEREOF, the parties have caused this Sixth
Amendment to be duly executed and their respective corporate
seals to be hereunto affixed as of the date first shown above
written.
ATTEST CONNECTICUT NATURAL GAS CORPORATION
S/ R.L. Babcock By S/ Jean S. McCarthy
------------------------ -----------------------------------
Its Vice President, Human Resources
ATTEST FLEET NATIONAL BANK
By
Its
-2-
STATE OF CONNECTICUT )
) ss
COUNTY OF HARTFORD )
Personally appeared JEAN McCARTHY of Connecticut
Natural Gas Corporation, signer of the foregoing instrument and
acknowledge the same to be his/her free act and deed as such
___________________ and the free act and deed of said corporation
before me.
S/ Judith A. Ries
----------------------------------
Notary Public
My commission expires: 2/28/2000
STATE OF CONNECTICUT )
) ss
COUNTY OF HARTFORD )
Personally appeared ________________ of Fleet National
Bank, signer of the foregoing instrument and acknowledge the same
to be his/her free act and deed as such ___________________ and
the free act and deed of said corporation before me.
Notary Public
My commission expires:
-3-
THE ENERGY NETWORK, INC.
INSTRUMENT OF ADOPTION
OF
CONNECTICUT NATURAL GAS CORPORATION OFFICERS' RETIREMENT PLAN
-------------------------------------------------------------
The Energy Network, Inc., a Connecticut corporation
(the "Company"), hereby adopts, effective as of April 27, 1999,
the Connecticut Natural Gas Corporation Officers' Retirement
Plan, as heretofore amended (the "Plan"), a copy of which Plan is
annexed hereto as Exhibit A, thereby becoming an Employer in the
Plan as defined in Section 1.6 of the Plan. The Company agrees
to be bound by all the terms and conditions of the Plan as now in
effect and as hereafter amended from time to time.
IN WITNESS WHEREOF, the Company has executed this
instrument as of the 27th day of April, 1999.
THE ENERGY NETWORK, INC.
By: S/ R.L. Babcock
------------------------------
Title: Vice President
------------------------------
Pursuant to the resolutions of the Board of Directors
of Connecticut Natural Gas Corporation, this Instrument of
Adoption and the terms and provisions hereof are hereby consented
to by Connecticut Natural Gas Corporation.
CONNECTICUT NATURAL GAS CORPORATION
By S/ Jean S. McCarthy
--------------------------------------
FIRST AMENDMENT TO THE
CONNECTICUT NATURAL GAS CORPORATION
DEFERRED COMPENSATION PLAN TRUST AGREEMENT
THIS AMENDMENT is made and entered into this 27th day
of April, 1999, by and between CONNECTICUT NATURAL GAS
CORPORATION, a Connecticut corporation with its principal office
in Hartford, Connecticut (hereinafter referred to as "CNG") and
PUTNAM FIDUCIARY TRUST COMPANY (hereinafter referred to as the
"Trustee").
W I T N E S S E T H:
WHEREAS, by Agreement dated April 27, 1999 (the
"Agreement") CNG and the Trustee entered into an Agreement
entitled Connecticut Natural Gas Corporation Deferred
Compensation Plan Trust Agreement; and
WHEREAS, the parties reserved the right to amend the
Agreement in Section 12(a) thereof, subject to the conditions set
forth therein; and
WHEREAS, CNG wishes to amend the Agreement in the
particulars set forth below;
NOW, THEREFORE, the CNG and the Trustee agree as
follows effective as of March 1, 1999:
1. The last sentence of Section 1(e) of the Agreement
is deleted in its entirety and the following is inserted in lieu
thereof:
"Neither the Trustee nor any Plan participant shall
have a right to compel such additional amounts other
than amounts required under Section 14."
2. The phrase "Sections 5, 7, 8, 9, 10, 11 and 12" in
Section 1(g)(i) of the Agreement is deleted in its entirety and
the phrase "Sections 5, 7, 8, 9, 10, 11, 12 and 14" is inserted
in lieu thereof.
3. A new Section 14 is added to the Agreement after
Section 13 of the Agreement as follows:
"Section 14. Change of Control
(a) For purposes of this Agreement, a "Change of
Control" shall mean: (i) the acquisition by any
individual, entity or group (within the meaning of
Section 13(d) (3) or 14(d) (2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of either (1) the then outstanding
shares of common stock of CTG Resources, Inc. (the
"Company") (the "Outstanding Common Stock") or (2) the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Voting
Securities"); provided, however, that for purposes of
this subsection (i), the following acquisitions shall
not constitute a Change of Control: (1) any acquisition
directly from the Company, (2) any acquisition by the
Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or
(4) any acquisition by any corporation pursuant to a
transaction which complies with clauses (1), (2) and
(3) of subsection (iii) of this Section 14(a); or (ii)
Individuals who, as of March 1, 1999, constitute the
Board of Directors of the Company (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board of Directors of the Company;
provided, however, that any individual becoming a
director subsequent to March 1, 1999 whose election, or
nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office
occurs as a result of an actual or threatened election
contest with respect to the election or removal of
directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other
than the Board of Directors of the Company; or (iii)
Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a
"Business Combination"), in each case, unless,
immediately following such Business Combination, (1)
all or substantially all of the individuals and
entities who were the beneficial owners, respectively,
of the Outstanding Common Stock and Outstanding Voting
Securities immediately prior to such Business
Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding
2
shares of common stock and the combined voting power of
the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination (including, without limitation, a
corporation which as a result of such transaction owns
the Company or all or substantially all of the
Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business
Combination of the Outstanding Common Stock and
Outstanding Voting Securities, as the case may be, (2)
no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan
(or related trust) of the Company or any related
corporation or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the
combined voting power of the then outstanding voting
securities of such corporation except to the extent
that such ownership existed prior to the Business
Combination, and (3) at least a majority of the members
of the board of directors of the corporation resulting
from such Business Combination were members of the
Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board of
Directors of the Company, providing for such Business
Combination; or (iv) Approval by the shareholders of
the Company of a complete liquidation or dissolution of
the Company."
(b) Notwithstanding any other provision of this
Agreement to the contrary, as soon as practicable following
a Change of Control, the Employer shall calculate the
maximum aggregate amount required under the Plan to satisfy
the liability to all Plan Participants (and beneficiaries)
who may be entitled to payments under the Plan as of the
Change of Control and shall calculate an estimate of the
expenses reasonably likely to be incurred by the Trust from
the date of calculation until the termination of the Trust
including the Trustee's fees. The aggregate of such amounts
for the Plan plus such additional amounts as the Employer
reasonably determines to be necessary to pay the anticipated
expenses of the Trust including the Trustee's fees is
hereinafter referred to as the "Maximum Amount Payable."
The Employer and other entities adopting the Trust shall
have the obligations to make contributions to the Trust and
shall make contributions to the Trust in cash, within three
business days of such calculation, in an amount equal to the
excess (the "Excess"), if any, of the Maximum Amount Payable
3
over the then fair market value of the assets of the Trust.
As of each subsequent accounting and valuation under this
Agreement , the Employer shall make a similar calculation;
and if at any time following a Change of Control a valuation
of the assets of the Trust occurs pursuant to this
Agreement, and it is determined that an Excess shall exist,
the Employer and other entities adopting the Trust shall
within three days thereof contribute in cash such amount to
the Trust as is necessary to eliminate the Excess.
(c) The Board of Directors of the Employer and the
Chief Executive Officer of the Employer shall each have a
duty to inform the Trustee whenever a Change of Control has
occurred. If any two Plan participants notify the Trustee
in writing that a Change of Control has occurred, then
unless the Trustee receives written notice from the Employer
that, in the opinion of independent legal counsel to the
Employer (which opinion may be based on representations of
fact as long as counsel does not know that such
representation are untrue), such a Change of Control has not
occurred, a Change of Control will be deemed to have
occurred for purposes of this Agreement."
4. Except as herein above modified and amended, the
Agreement, as amended, shall remain in full force and effect.
4
IN WITNESS WHEREOF, the parties have caused this First
Amendment to be duly executed and respective corporate seals to
be hereunto affixed as of the date first above written.
ATTEST: CONNECTICUT NATURAL GAS CORPORATION
S/ R.L. Babcock By S/ Jean S. McCarthy
---------------------- -----------------------------------
Its Vice President, Human Resources
ATTEST: PUTNAM FIDUCIARY TRUST COMPANY
By
Its
STATE OF CONNECTICUT )
) SS.
COUNTY OF HARTFORD )
Personally appeared Jean McCarthy, Vice President of
Connecticut Natural Gas Corporation, signer of the foregoing
instrument, and acknowledged the same to be his free act and deed
as such ___________________, and the free act and deed of said
corporation, before me.
Judith A. Ries
----------------------------------
Commissioner of the Superior Court
Notary Public
My Commission Expires: 2/28/2000
5
COMMONWEALTH OF MASSACHUSETTS )
) SS.
COUNTY OF ________________________ )
Personally appeared __________________________,
_____________________ of Putnam Fiduciary Trust Company, signer
of the foregoing instrument, and acknowledged the same to be his
free act and deed as such ___________________, and the free act
and deed of said corporation, before me.
Notary Public
My Commission Expires:
6
ELEVENTH AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
The Connecticut Natural Gas Corporation Employee Savings
Plan is hereby amended as follows:
1. For purposes of clarification, the following sentence
is added to Section 2.05A:
"As used in this Section 2.05A, the terms "Incumbent
Board" or "Board of Directors" are intended to refer to the
Board of Directors of CTG Resources, Inc."
2. For purposes of clarification, the last sentence of
Section 9.03 is amended by the deletion of the words "CNG or any
of its subsidiaries" and the substitution of the words "CNG or
any of its parent, subsidiaries or other affiliates (e.g., The
Energy Network, Inc.) or any successor thereto."
3. Except as hereinabove modified and amended, the amended
and restated Plan (as amended) shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company executes this Eleventh
Amendment this 19th day of May, 1999.
CONNECTICUT NATURAL GAS
CORPORATION
S/ R.L. Babcock By S/ Jean S. McCarthy
--------------------------- ----------------------------------
Witness Its Vice President, Human Resources
TWELFTH AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
EMPLOYEE SAVINGS PLAN
The Connecticut Natural Gas Corporation Employee Savings
Plan is hereby amended as follows:
1. The last sentence of paragraph (a) of Section 2.09 is
amended to read as follows:
"Effective July 1, 1999, however, the term
"Compensation" shall include commissions."
2. The following paragraph (e) is added to Section 3.01,
effective July 1, 1999:
"(e) Effective July 1, 1999, each Employee (as defined
in Section 2.14) who has not previously met the service
requirement for eligibility shall be eligible to make salary
reduction (CODA) contributions and voluntary unmatched
after-tax contributions within the limits prescribed under
Section 4.01 of the Plan beginning with the last to occur of
(1) the first payroll period beginning on or after July 1,
1999, or (2) the first payroll period beginning on or after
the first day of the month following the Employee's date of
employment as an Employee, or (3) the first payroll period
beginning on or after the first day of the month following
the Employee's attainment of age twenty-one (21). (This
provision is intended to include existing Employees who have
not yet met the service requirement under the Plan, as well
as future hires; the age requirement continues to apply.)
Such individuals shall also be eligible to make
contributions by way of rollover or direct transfer in
accordance with Section 4.12 hereof. The provisions of the
Plan regarding elections and changes thereto applicable to
Participants generally shall also apply to such individuals.
However, notwithstanding anything to the contrary in
Section 5 or elsewhere in the Plan, such Employees shall not
be entitled to begin receiving allocations of matching
contributions until the time they are otherwise entitled to
participate in the Plan, determined in accordance with the
prior provisions of this Section 3.01 and Section 3.04."
3. For purposes of clarification, paragraphs (a) and (b)
of Section 5.01, as amended by the Eighth Amendment, are each
amended by the deletion of the word "Compensation" immediately
following the word "Participant's" which is contained in said
paragraphs and the substitution of the phrase "CODA
contributions" in lieu thereof.
4. The following paragraph (f) is added to Section 5.01,
as set forth in the Eighth Amendment, at the end thereof:
"(f) It is the intent of the Company, and the Plan is
so interpreted, so as to not penalize Participants whose
salary reduction (CODA) contributions are required to cease
as a result of the limitation under Section 402(g) of the
Code (currently $10,000); and accordingly, matching
contributions shall continue for such Participants for the
balance of the year as determined by the Administrator at
the rate of match applicable to such Participant in order
that the Participant not be penalized by the timing of such
salary reduction (CODA) contributions."
5. Except as hereinabove modified and amended, the amended
and restated Plan (as amended) shall remain in full force and
effect.
IN WITNESS WHEREOF, the Connecticut Natural Gas Corporation
executes this Twelfth Amendment this 7th day of June, 1999.
ATTEST: CONNECTICUT NATURAL GAS
CORPORATION
S/ Patricia A. Ouellette By S/ Jean S. McCarthy
----------------------------- ----------------------------------
Its Vice President Human Resources
------------------------------
2
ELEVENTH AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
The Connecticut Natural Gas Corporation Union Employee
Savings Plan is hereby amended as follows:
1. For purposes of clarification, the following sentence
is added to Section 2.05A:
"As used in this Section 2.05A, the terms "Incumbent
Board" or "Board of Directors" are intended to refer to the
Board of Directors of CTG Resources, Inc."
2. For purposes of clarification, the last sentence of
Section 9.03 is amended by the deletion of the words "CNG or any
of its subsidiaries" and the substitution of the words "CNG or
any of its parent, subsidiaries or other affiliates (e.g., The
Energy Network, Inc.) or any successor thereto."
3. Except as hereinabove modified and amended, the amended
and restated Plan (as amended) shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company executes this Eleventh
Amendment this 19th day of May, 1999.
CONNECTICUT NATURAL GAS
CORPORATION
S/ R.L. Babcock By S/ Jean s. McCarthy
-------------------------- ----------------------------------
Witness Its Vice President Human Resources
TWELFTH AMENDMENT TO
CONNECTICUT NATURAL GAS CORPORATION
UNION EMPLOYEE SAVINGS PLAN
The Connecticut Natural Gas Corporation Union Employee Savings
Plan is hereby amended as follows:
1. The following paragraph (e) is added to Section
3.01, effective July 1, 1999:
"(e) Effective July 1, 1999, each Employee (as defined
in Section 2.13) who has not previously met the service
requirement for eligibility shall be eligible to make salary
reduction (CODA) contributions and voluntary unmatched after-
tax contributions within the limits prescribed under Section
4.01 of the Plan beginning with the last to occur of (1) the
first payroll period beginning on or after July 1, 1999, or
(2) the first payroll period beginning on or after the first
day of the month following the Employee's date of employment
as an Employee, or (3) the first payroll period beginning on
or after the first day of the month following the Employee's
attainment of age twenty-one (21). (This provision is
intended to include existing Employees who have not yet met
the service requirement under the Plan, as well as future
hires; the age requirement continues to apply.) Such
individuals shall also be eligible to make contributions by
way of rollover or direct transfer in accordance with Section
4.11 hereof. The provisions of the Plan regarding elections
and changes thereto applicable to Participants generally shall
also apply to such individuals. However, notwithstanding
anything to the contrary in Section 5 or elsewhere in the
Plan, such Employees shall not be entitled to begin receiving
allocations of matching contributions until the time they are
otherwise entitled to participate in the Plan, determined in
accordance with the prior provisions of this Section 3.01 and
Section 3.04."
2. The following paragraph (g) is added to Section 5.01, as
set forth in the Eighth and Ninth Amendments, at the end thereof:
"(g) It is the intent of the Company, and the Plan is so
interpreted, so as to not penalize Participants whose salary
reduction (CODA) contributions are required to cease as a
result of the limitation under Section 402(g) of the Code
(currently $10,000); and accordingly, matching contributions
shall continue for such Participants for the balance of the
year as determined by the Administrator at the rate of match
applicable to such Participant in order that the Participant
not be penalized by the timing of such salary reduction (CODA)
contributions."
3. Except as hereinabove modified and amended, the amended
and restated Plan (as amended) shall remain in full force and
effect.
IN WITNESS WHEREOF, the Connecticut Natural Gas Corporation
executes this Twelfth Amendment this 7th day of June, 1999.
ATTEST: CONNECTICUT NATURAL GAS
CORPORATION
S/ Patricia A. Ouelette By S/ Jean S. McCarthy
--------------------------- -----------------------------------
Its Vice President, Human Resources
-------------------------------
2
THE ENERGY NETWORK, INC.
AND
THE CITY OF HARTFORD
DISTRICT HEATING & COOLING SERVICE AGREEMENT
Subject to the terms and conditions set forth in this Service
Agreement ("Agreement"), The Energy Network, Inc. ("Seller"), a
Connecticut corporation with a place of business at 100 Columbus
Boulevard, Hartford, Connecticut 06103, and the City of Hartford
("Purchaser"), a municipal corporation with its place of business
at 550 Main Street, Hartford, Connecticut 06103, agree as follows:
Premises: Montessori Magnet School
Middle School
Math, Science and Arts High School
Commons Building
Theatre
Parking Garage and Retail Space
All located between Vernon, Brownell, Broad and Washington Streets
in the City of Hartford (known as The Learning Corridor), as more
particularly described in Exhibit A-1 attached hereto.
Term commences on the Heating Cut-Over Date shown on Exhibit C and
ends on a date twenty-five (25) years later.
Energy Products:
---------------
/X/ Chilled Water
/ / Steam
/X/ Hot Water
1. AGREEMENT TO PURCHASE AND SELL.
a. PURCHASE. Provided Purchaser shall have executed and
delivered easements (the "Easements" for access, construction,
maintenance and service substantially in the form attached hereto
as Exhibit A, which Easements Purchaser agrees to execute and
deliver, and subject to and in accordance with the terms and
conditions of this Agreement, Seller shall supply to Purchaser, and
Purchaser shall purchase from Seller, all of the Energy Products
(as herein defined) required by Purchaser to enable it to heat and
air condition the Premises during the term of this Agreement. All
such Energy Products shall be supplied by Seller in accordance
with the Energy Product Specifications set forth in Exhibit A-2 and
at the rates delineated in Exhibit B, both of which exhibits are
attached hereto and incorporated herein by reference.
b. REQUIREMENTS. Subject to the other terms of this
Agreement, Purchaser agrees that, from the Service Date until the
end of the term of this Agreement, Purchaser will only use
Seller's Energy Products to heat and air condition the Premises,
except that Purchaser shall be entitled to use other means to heat
or air condition discrete portions of the Premises that are
impossible or impracticable to heat or air condition with Seller's
Energy Products. Purchaser shall obtain Seller's written consent
to the use of such other means, such consent not to be unreasonably
withheld or delayed.
c. REPRESENTATIONS. Seller hereby represents, warrants and
agrees that it is the owner of that certain steam facility formerly
known as Hartford Hospital CCF-1 and that it will contract with
Hartford Hospital to purchase certain additional steam capacity
(collectively, the "Steam Facility"), and that it will become the
owner of or obtain the necessary rights to a chilled water facility
(the "Chilled Water Facility"), from which Seller will initially
provide the Energy Products to the Premises. The Steam Facility
and the Chilled Water Facility will have sufficient capacity to
service the Premises and any other uses of Energy Products which
are (or are to be) supplied therefrom. In the event Seller decides
to relocate any of such facilities, it shall then certify to
Purchaser that the new Facilities have available capacity adequate
to service the Project.
2. TERM. The term of this Agreement shall be as indicated
on Page 1.
3. SERVICE INTERRUPTIONS.
a. For purposes of this Agreement, the following terms shall
have the meanings ascribed thereto below:
(i) A "Planned Interruption" shall mean any interruption in
the supply of Energy Products to the Premises which (A)
occurs during a time when Purchaser's heating or cooling
system calls for the interrupted Energy Product, and (B)
meets all of the requirements set forth in subparagraph
(b) below;
(ii) A "Covered Interruption" shall mean a Planned
Interruption for or with respect to which Seller provides
Temporary Service at or for the Premises in accordance
with subparagraph (e) below;
(iii) "Permanent Service" shall mean the supply of Energy
Products to the Premises from one or more permanent
facilities;
(iv) "Temporary Service" shall mean the supply of Energy
Products to the Premises from one or more portable units;
(v) At any time any buildings on the Premises are occupied, a
"Service Failure" shall mean any inability of the Seller
to deliver required Energy Products to the Premises at
the temperatures set forth in Exhibit D and at the flow
rates set forth in Exhibit A-2, provided that Purchaser
was then able to extract energy at the temperature
differential set forth in Exhibit D and at the flow rate
and energy quantities set forth in Exhibit A-2. At all
other times, a "Service Failure" shall mean the inability
by Seller to deliver Energy Products to the Premises at
such temperatures and at such flow rates as are
necessary to avoid any actual, or imminent threat of,
damage to or injury on the Premises (or any persons or
property located thereon or thereat); and
(vi) An "Impermissible Interruption" shall mean any of the
following: (A) any interruption in the supply of required
Energy Products to the Premises other than (1) a Covered
Interruption or (2) a Planned Interruption which
Purchaser agrees does not require Temporary Service, or
(B) any Covered Interruption which nonetheless results in
a Service Failure. Purchaser shall send Seller a written
notice as soon as practicable after the event when it
claims that an Impermissible Interruption has occurred.
b. Subject to the provisions of subparagraphs (e) and 6(a)
below, Seller shall have the right, at all reasonable times, to
interrupt the supply of Energy Products to the Premises for the
purpose of performing necessary maintenance, repairs, and/or
connections to those of its mains, pipes and related machinery and
equipment which service the Premises. Seller's rights as aforesaid
are, and at all times during the term hereof shall be, contingent
upon Seller's providing Purchaser with at least five (5) days'
prior written notice of any such interruption. Seller shall
exercise due diligence and act with reasonable dispatch in
restoring any such service, providing, however, that, to the extent
reasonably practicable, any of the above-described work shall be
(and the reasonableness of any interruption experienced in
connection therewith shall largely be dependant upon such work's
not being able to reasonably be) accomplished during evenings,
weekends and other non-academic hours.
c. Subject to the provisions of subparagraphs (e) and 6(a)
below, Purchaser acknowledges that emergencies may occur which will
require Seller to interrupt the supply of Energy Products to the
Premises before the Seller can provide Purchaser with the notice
required pursuant to Subparagraph (b) above. In such event, Seller
shall notify Purchaser as soon as practicable. Seller shall then
exercise due diligence and act with immediate dispatch to either
(1) restore permanent service, or (2) if such service neither can
nor will be restored in twenty-four (24) hours, provide Temporary
Service, at or for the Premises. Thereafter, Seller shall act with
reasonable dispatch in restoring permanent service to the Premises,
providing, however, that, to the extent reasonably practicable, any
of that work shall be (and the reasonableness of any interruption
experienced in connection therewith shall largely be dependant upon
such work s not being able to reasonably be) accomplished during
evenings, weekends and other non-academic hours.
d. Any notice provided by Seller pursuant to this paragraph
3 shall identify (i) the date and time at which the subject
interruption began (or is scheduled to occur), (ii) the reason(s)
therefor, (iii)the efforts being (or to be) undertaken by Seller to
provide Temporary Service, (iv) the efforts being (or to be)
undertaken by Seller to restore permanent service, (v) the dates
and times during which the efforts to restore permanent service is
to be performed, and (vi) the date and time by which such efforts
are expected to be completed.
e. Seller shall ensure that Temporary Service is available
at or for the Premises prior to implementing any Planned
Interruption whenever Seller knows or should know that, but for
such Temporary Service, a Planned Interruption will result in an
Impermissible Interruption. In the event of any other
interruption, Seller shall ensure that either Temporary Service is
available at or for the Premises, or permanent service will be
restored to the Premises, within twenty-four (24) hours after the
occurrence of such interruption. Seller shall pay Purchaser $1,000
per day for each 24-hour period that Seller fails to provide
Temporary Service as required by this subparagraph. In addition,
Seller shall bear the cost of providing Temporary Service in the
case of an interruption unless the interruption is due principally
to an act or omission of Purchaser and Seller is unable after
reasonable effort to recover the costs associated with providing
Temporary Service from a third party. In any of these latter
circumstances, Purchaser shall be responsible for the cost of such
Temporary Service. In the event Seller fails to provide any
Temporary Service required to be provided hereunder, then
Purchaser, in addition to any other rights and remedies it may
have, all of which are hereby expressly reserved to Purchaser, may
obtain the same from some other source and charge the reasonable
cost thereof to Seller.
4. PAYMENT. Provided that Seller has completed all work
necessary to furnish the Energy Products to The Learning Corridor
(and further provided that such completion has not been prevented
by acts of the Purchaser), and commencing on the Heating Cut-Over
date shown on Exhibit C, Seller shall render a monthly invoice to
Purchaser which reflects (a) the Fixed Payment as defined in
Exhibit B and (b) the appropriate Variable Payment as defined in
Exhibit B, including consumption recorded with respect to each of
the six (6) facilities which comprise the Premises. Purchaser
shall pay in full within thirty (30) days the undisputed portion of
any invoice delivered by Seller.
5. FORCE MAJEURE. Neither Seller nor Purchaser shall be
considered to have breached its obligations under this Agreement to
the extent either is precluded from performing any of its
obligations hereunder by reason of any act, omission or
circumstance occasioned by or in consequence of any acts of God,
acts of the public enemy, wars, blockades, insurrection, riots,
lightning, earthquakes, fires, storms, floods, washouts, arrests,
restraints of ruler and peoples, civil disturbances, explosions,
strikes, breakage or accident to machinery or lines of pipe or
mains, the binding order of any court or government authority which
has been resisted in good faith by all reasonable legal means, or
the failure or want of any necessary supplies or products not
within the control of such party; providing, first, that any such
act, omission or circumstance is not due to the negligence or
willful misconduct of the party seeking to be excused therefrom (or
any of its officers, directors, officials, agents or employees);
and, providing, further, that such party is unable to prevent or
overcome such act, omission or circumstance by the exercise of due
diligence. Such causes or contingencies affecting performance by
Seller or Purchaser, however, shall not relieve either of them of
liability in the event of their concurring negligence or in the
event of their failure to use due diligence to remedy the situation
and remove the cause in an adequate manner and with all reasonable
dispatch.
6. TERMINATION BY PURCHASER.
a. This Agreement is subject to the limitation that,
(i) whenever Seller shall fail to pay any undisputed portions
of amounts which are owed to Purchaser within thirty (30)
days of Purchaser's written demand therefor; or
(ii) in the event five (5) or more Impermissible Interruptions
occur in any three hundred sixty-five (365) day period;
provided that Seller has not begun to and thereafter
diligently proceeds to complete all efforts required to
correct, to Purchaser's reasonable satisfaction, the
causes of the event or events which led to the
Impermissible Interruptions; or
(iii) in the event Temporary Service is required to be
supplied to the Premises from a portable unit which
materially inconveniences Purchaser for more than ten
(10) School Days (being herein defined as any day on
which any academic programs are (or were) scheduled to be
provided or conducted in any buildings on the Premises)
in any fiscal year or for more than thirty (30) School
Days in any five (5) year period; or
(iv) whenever the Seller shall do, or permit anything to be
done, whether by action or inaction, contrary to any
material covenant or agreement on the part of Seller
contained herein, or shall fail in the keeping or
performance of any of the material covenants, agreements,
terms or provisions of this Agreement which on the part
or behalf of Seller are to be kept or performed, and
Seller shall fail to commence to take steps to remedy the
same within thirty (30) days after written notice shall
have been given to Seller by Purchaser specifying the
same, or, in the event the matter or thing complained of
in said notice cannot reasonably be cured within said
thirty (30) day period, then such additional period of
time as is required to cure said default providing Seller
shall diligently commence and shall thereafter diligently
proceed to remedy the same; or
(v) whenever an involuntary petition shall be filed against
Seller under any bankruptcy or insolvency law or under
the reorganization provisions of any law of like import,
or a receiver of Seller or of or for the property of
Seller shall be appointed without the acquiescence of
Seller, or whenever this Agreement or the unexpired
balance of the Term would, by operation of law or
otherwise, except for this provision, devolve upon or
pass to any person, firm or corporation other than Seller
or a corporation in which Seller may be duly merged,
converted or consolidated under statutory procedure, and
such circumstance under this subparagraph (v) shall
continue and shall remain undischarged or unstayed for an
aggregate period of sixty (60) days (whether or not
consecutive) or shall not be remedied by Seller within
sixty (60) days; or
(vi) whenever Seller shall make an assignment of the property
of Seller for the benefit of creditors or shall file a
voluntary petition under any bankruptcy or insolvency
law, or whenever any court or competent jurisdiction
shall approve a petition filed by Seller under the
reorganization provisions of the United States Bankruptcy
Code or under the provisions of any law of like import,
or whenever a petition shall be filed by Seller under the
arrangement provisions of the United States Bankruptcy
Code or under the provisions of any law of like import,
or whenever Seller shall desert or abandon the Demised
Premises;
THEN (providing Purchaser is not then in default of any of its
obligations under this Agreement beyond any period provided for
notice and an opportunity to cure the same, but regardless of and
notwithstanding the fact the Purchaser has or may have some other
remedy under this Agreement or by virtue hereof, or in law or in
equity) Purchaser may, subject to the following provisions of this
subparagraph, give to the Seller a notice (herein called the
"second notice") of intention to end the Term of this Agreement
specifying a day not less than ten (10) days thereafter as being
the termination date hereof, and, upon the giving of the second
notice, this Agreement and the term hereby granted shall expire and
terminate upon the day so specified in the second notice as fully
and completely and with the same force and effect as if the day so
specified were the date hereinbefore fixed for the expiration of
the Term of this Agreement and (except as provided in subparagraph
18(j) hereof) all rights of Seller under this Agreement shall
thereupon expire and terminate. Any right Purchaser may have to
terminate this Agreement by virtue of the occurrence of any event
of the type delineated in Sections 6(a)(i) or (iii) hereof shall be
expressly contingent upon Purchaser's giving Seller the second
notice of Purchaser's intent to terminate this Agreement within one
hundred eighty (180) days of the occurrence of the same; it being
the intent of the parties that, unless Purchaser provides such
notice within said time frame, Purchaser shall be deemed to have
irrevocably waived its right to terminate this Agreement pursuant
to this subparagraph as a result of said event. The failure of
Purchaser to exercise any right it otherwise has to terminate this
Agreement by virtue of the occurrence of any such event shall not,
however, constitute, or be deemed to, have caused, a waiver by
Purchaser of any right it otherwise might then or thereafter have
hereunder as a result of the occurrence of any other event.
b. In addition to the foregoing rights, but not in
derogation thereof, Purchaser shall not be required to pay any
costs or fees hereunder during any period of time when Energy
Products are not available hereunder at the times and in the manner
required hereby, prorated for the period of such failure to supply,
excepting instances of scheduled system maintenance, when no
abatement of fees or costs shall apply. In the event that
Purchaser becomes entitled under this section to terminate this
Agreement, then Purchaser and Seller agree that any damages which
may be asserted by Purchaser to obtain a permanent supply of energy
to enable it to heat and air condition the Premises shall be
calculated net of any expenses saved as a consequence of the breach
with any necessary capital costs being depreciated over not fewer
than twenty (20) years, using the Purchaser's actual cost of
capital. Except as provided in subparagraphs 18(e) and (j) below
or as otherwise specifically enumerated in this Agreement, neither
party nor either party s parents, subsidiaries, affiliates, agents,
officers, directors, officials, or employees shall be liable to the
other party or said other party's parents, subsidiaries,
affiliates, agents, officers, directors, officials or employees for
claims for incidental, indirect or consequential damages, whether
based on breach of warranty (express or implied), contract, tort or
otherwise, connected with or resulting from, directly or
indirectly, performance or non-performance by either party of any
of its obligations under this Agreement.
c. Notwithstanding anything to the contrary set forth in
this Agreement, so long as the Purchaser is the City of Hartford
(the "City"), the Seller's obligation to provide any goods or
services under this Agreement in any fiscal year, and the
Purchaser's obligation to pay the Seller for any such goods or
services in any fiscal year (including, without limitation, any
fixed or other charges which otherwise would be payable by the
Purchaser regardless or whether any goods or services were in fact
provided to the Purchaser that year), is expressly contingent upon
the Purchaser's having first appropriated sufficient funds for that
purpose for such year to cover the cost of the same. If at any
time the Purchaser knows or has reason to believe that it has
failed to appropriate sufficient sums for said purpose, the
Purchaser shall promptly notify the Seller of that fact, and the
Seller shall then have the option to terminate this Agreement by
providing the Purchaser with written notice to that effect in
accordance with Section 19(e) of this Agreement. Any such
termination shall be effective as of the latter of (i) the date
through which the Purchaser reasonably can be expected to pay for
any and all charges hereunder that year by virtue of the sums
appropriated for that purpose, or (ii) the date specified in such
notice as the last day through which the Seller intends to provide
any goods or services hereunder. For purposes of this Agreement, a
"fiscal year" shall be the period between July 1 of each calendar
year and June 30th of the following calendar year, or such other
period of time which is adopted by the City as its official fiscal
year.
7. TERMINATION BY SELLER.
a. This Agreement is subject to the limitation that,
(i) whenever Purchaser shall fail to pay the undisputed
portion of any amounts which are owed to Seller within
thirty (30) days of Seller's written demand therefor; or
(ii) whenever the Purchaser shall do, or permit anything to be
done, whether by action or inaction, contrary to any
covenant or agreement on the part of Purchaser contained
herein, or shall fail in the keeping or performance of
any of the covenants, agreements, terms or provisions of
this Agreement which on the part or behalf of Purchaser
are to be kept or performed, and Purchaser shall fail to
commence to take steps to remedy the same within thirty
(30) days after written notice shall have been given to
Purchaser by Seller specifying the same, or, in the
event the matter or thing complained of in said notice
cannot reasonably be cured within said thirty (30) day
period, then such additional period of time as is
required to cure said default providing Purchaser shall
diligently commence and shall thereafter diligently
proceed; or
(iii) whenever an involuntary petition shall be filed
against Purchaser under any bankruptcy or insolvency law
or under the reorganization provisions of any law of like
import, or a receiver of Purchaser or of or for the
property of Purchaser shall be appointed without the
acquiescence of Purchaser, or whenever this Agreement or
the unexpired balance of the Term would, by operation of
law or otherwise, except for this provision, devolve upon
or pass to any person, firm or corporation other than
Purchaser or a corporation in which Purchaser may be duly
merged, converted or consolidated under statutory
procedure, and such circumstance under this subparagraph
(iii) shall continue and shall remain undischarged or
unstayed for an aggregate period of sixty (60) days
(whether or not consecutive) or shall not be remedied by
Purchaser within sixty (60) days; or
(iv) whenever Purchaser shall make an assignment of the
property of Purchaser for the benefit of creditors or
shall file a voluntary petition under any bankruptcy or
insolvency law, or whenever any court or competent
jurisdiction shall approve a petition filed by Purchaser
under the reorganization provisions of the United States
Bankruptcy Code or under the provisions of any law of
like import, or whenever a petition shall be filed by
Purchaser under the arrangement provisions of the United
States Bankruptcy Code or under the provisions of any law
of like import, or whenever Purchaser shall desert or
abandon the Demised Premises; or
(v) whenever some or all of Seller's facilities are destroyed
or substantially damaged by reason of Force Majeure or
all or a substantial portion of such facilities is taken
by eminent domain proceedings, such that the Seller
cannot meet its obligations hereunder and Seller
reasonably elects within ninety (90) days of any said
event not to rebuild or restore the facilities or
equipment by providing written notice to Purchaser of
that election; or
(vi) whenever any governmental entity withdraws any
governmental authority which otherwise is required by
Seller to furnish, or fails to enforce any governmental
rule or regulation and thereby prevents Seller from
furnishing, Energy Products substantially as required
under the provisions of this Agreement; providing that it
is impossible for Seller to regain such authority or
economically impracticable for Seller to comply with such
rules or regulations, and Seller notifies Purchaser of
that event within thirty (30) days of its occurrence;
THEN (providing Seller is not then in default of any of its
obligations under this Agreement beyond any period provided for
notice and an opportunity to cure the same, but regardless of and
notwithstanding the fact the Seller has or may have some other
remedy under this Agreement or by virtue hereof, or in law or in
equity) Seller may give to the Purchaser a notice (herein called
the "second notice") of intention to end the Term of this Agreement
specifying a day not less than ten (10) days thereafter as being
the termination date hereof, and, upon the giving of the second
notice, this Agreement and the term hereby granted shall expire and
terminate upon the day so specified in the second notice as fully
and completely and with the same force and effect as if the day so
specified were the date hereinbefore fixed for the expiration of
the Term of this Agreement and (except as provided in subparagraph
18(j) hereof) all rights of Purchaser under this Agreement shall
thereupon expire and terminate.
8. NONWAIVER. The failure of either party to assert its
rights under this Agreement shall not constitute a waiver of such
right except as stated otherwise. In the event of termination of
this Agreement, Seller may enter the Premises for the purpose of
removing Seller's equipment on at least thirty (30) days written
notice of its intent to do the same; providing, first, that no such
equipment shall be removed during any hours or in any manner as
would cause or threaten to cause any disruption of any academic
programs being conducted on the Premises; and, providing, further,
that Seller shall promptly repair any damage which may be effected
to the Premises by reason of its removal of its equipment.
Seller s obligations to indemnify and hold harmless Purchaser, and
to maintain insurance for the benefit of Purchaser, as provided in
Sections 19 (i) and (j) below shall continue to apply during and
with respect to any activity which may be undertaken by Seller
pursuant to this paragraph, notwithstanding the prior termination
hereof.
9. PURCHASER'S FACILITIES. Seller shall furnish Purchaser
with inlet strainers which are appropriate for the Energy Products
to be provided hereunder at no additional cost to Purchaser. Said
strainers, together with all piping, valves, regulators and other
equipment furnished by Purchaser, shall be and remain the property
of Purchaser. Purchaser agrees that it will properly maintain such
equipment at all times.
Additionally, by payment of $1,200,000.00, Purchaser may
acquire title to all of the pipe, valves, meters, flow regulators,
manholes and related equipment and materials that are to be
furnished and installed on the Learning Corridor property as
described in Exhibit A-1. Notwithstanding this transfer of title,
Seller shall continue to be fully responsible for the maintenance,
repair and replacement of all such transferred equipment for the
duration of the Term of this Agreement, except to the extent that
such maintenance, repair and replacement is required due to actions
of Purchaser.
In the event that the Purchaser pays the $1,200,000.00
described above, the initial Capital Recovery Component of the
Monthly Payment, which is more fully described in Exhibit B-Rate
Schedule shall be reduced by $9,167.00.
10. SELLER'S FACILITIES. The Seller also shall furnish and
install all valves, piping, meters, submeters, regulators and other
equipment which are required for delivery and monitoring of the
Energy Products between the Facility and the outside wall of the
building(s) to which they are to be supplied by Seller, all of
which property, with the exception of the inlet strainer, shall be
and remain the property of Seller, and is herein referred to as the
"Distribution System". Seller shall notify the Purchaser regarding
the proposed routing of the Distribution System from the Facility
not later than the date indicated on, and shall otherwise construct
said system in accordance with, the Development Milestone Schedule
which is attached hereto and made a part hereof as Exhibit C.
Seller agrees that it will properly maintain such equipment at all
times. Purchaser hereby grants Seller a right of access to
Seller's facilities for the purpose of maintaining and operating
same, provided that Seller shall give Purchaser prior notice of its
desire for such access, which notice shall not be required in the
case of an emergency.
11. METERING, ACCESS. Purchaser shall provide the Seller the
spaces at the Premises designated in Exhibit D in which to meter
Energy Product usage, which spaces shall be located within the
vicinity of the place where service enters the buildings. Seller
shall be allowed access to the Premises at all reasonable times for
the purpose of operating, inspecting, reading, repairing,
maintaining or altering any of Seller's equipment or meters located
in the Premises. Seller agrees to calibrate all meters for
accuracy in accordance with the manufacturer's specifications and
to provide the results of such calibration to Purchaser. Purchaser
reserves the right independently at its own expense to check the
calibration of such meters, provided it has notified Seller in
advance of such checking and Seller approves of the procedure and
personnel to be employed, which approval will not be unreasonably
withheld or delayed.
12. CONTROL WITHIN THE PREMISES. The Purchaser shall be
responsible for the control and possession of hot, chilled water
and return water from the time the hot or chilled water passes the
outlet side (or Purchaser's side) of Seller's inlet service valve
until the return water passes the inlet side (or Purchaser's side)
of Seller's outlet service valve. Except to the extent Seller is
negligent in the delivery of the Energy Products, after hot and
chilled water have passed the first of these two points, and before
the return water has passed the second of these two points, Seller
shall have no responsibility for anything which may be done, happen
or arise with respect to such hot, chilled water or return water.
Nothing in this Section 13 shall affect Seller's responsibility for
the accurate metering of Energy Products nor shall it affect
Seller's right of access to perform such metering or maintenance of
Seller's equipment located on the Premises.
13. GOVERNING LAW. This Agreement shall be governed by, and
construed, interpreted and enforced in accordance with the laws of
the State of Connecticut as such laws are applied to contracts
between Connecticut residents entered into and to be performed
entirely in Connecticut.
14. ASSIGNMENT.
a. This Agreement may be assigned by Seller, provided
Purchaser shall have consented thereto (such consent not to be
unreasonably withheld or delayed) and that the assignee assumes all
obligations hereunder. Purchaser also consents to any collateral
assignment of this Agreement by Seller to any lender in connection
with any financing of its construction or improvements to its
district heating and cooling system. Purchaser agrees to execute a
written consent to effectuate any assignment permitted under this
Agreement.
b. This Agreement may be assigned by Purchaser with Seller's
consent to any person or entity to whom ownership or possession of
the Premises is transferred on the condition that the assignee
shall assume all of Purchaser's obligations hereunder for the
balance of the term of this Agreement. Upon such assumption (in
such form and on such terms as are reasonably satisfactory to
Seller), Purchaser shall be relieved of all of its obligations
hereunder and all references herein to Purchaser shall be deemed to
mean Purchaser's assignee. Seller reserves the right to withhold
its consent to such assignment(s) and assumption(s) only if, in the
Seller's reasonable judgment, Seller concludes that the assignee(s)
will be incapable of meeting the obligations of Purchaser
hereunder. A copy of this Agreement, or a notice of this
Agreement, may be filed on the land records of the City of
Hartford. In the event of such filing, the rights and obligations
herein set forth shall be deemed to be covenants running with the
land and binding upon the successors and assigns of the parties.
c. Notwithstanding the foregoing, Seller agrees that
Purchaser may assign this Agreement and its rights and obligations
hereunder to The Learning Corridor Corporation (the "LCC"), or any
entity related thereto (individually and collectively, an "LCC
Assignee"), in which event such LCC Assignee shall be liable for
the performance of this Agreement if and only to the extent that
such assignee has received rents or other payments pursuant to
leases and other agreements relating to the Learning Corridor
sufficient to meet all of its obligations hereunder; providing,
however, that no such assignment shall be effective and LCC
Assignee's liability hereunder shall be limited as aforesaid unless
and until all referenced rents and other payments due to the LCC
Assignee shall have been collaterally assigned to Seller to the
extent necessary to secure payments due Seller hereunder.
15. CUSTOMER INSTRUCTIONS. Seller has provided Purchaser
with Customer Instructions which are attached as Exhibit D. Seller
will notify Purchaser in writing of proposed changes in the
Customer Instructions at least four (4) weeks before the changes
are effective, provided Purchaser shall not be required to accept
any changes which have a material effect on the terms and
conditions of this Agreement.
16. PRIOR AGREEMENTS. Intentionally Omitted.
17. ARBITRATION.
a. Any controversy or dispute as to (i) whether either party
has breached any of its obligations under this Agreement or, if so,
the extent to which the other is entitled to any damages as a
result thereof, or (ii) whether, and, if so, to what extent, any
adjustment is required in any of the rates to be charged to
Purchaser as provided in Exhibit B hereto, shall be resolved by
binding arbitration in Hartford, Connecticut in accordance with the
procedures and requirements set forth in this Paragraph 17. Except
as modified herein, such arbitration shall be held in accordance
with the rules then prevailing for commercial arbitrations before
the American Arbitration Association. Such resolution shall be
final and conclusive as to such controversy or dispute and may be
enforced in any court of competent jurisdiction.
b. Each party shall give written notice to the other of the
existence and nature of any dispute proposed to be arbitrated. If,
within 15 days (except in the case of matters which are the subject
of Paragraphs 6 and 7), the dispute is not resolved through
negotiations pursued diligently in good faith, then either party
may initiate arbitration by so advising the other party in writing.
If the parties cannot agree on a single arbitrator within 10 days
thereafter, each party shall by written notice appoint an
arbitrator and the two thus appointed shall select a third
arbitrator to serve as Chair of the panel of arbitrators, and such
three arbitrators shall determine all matters by majority vote.
Any such arbitrators shall be either (a) members in good standing
of the Connecticut Bar with at least ten (10) years experience as a
practicing attorney, who, if any dispute or controversy involves or
is likely to involve the interpretation or application of any of
the provisions of Exhibit B to this Agreement, have spent the
majority of at least five (5) years litigating or negotiating
complex financial or commercial matters, or (b) other professionals
with at least ten (10) years experience in or with the utility
industry. Prior to appointment, the arbitrator(s) shall agree to
conduct such arbitration in accordance with the terms of this
paragraph.
c. Except as otherwise provided by the arbitrator(s), the
parties shall have six (6) months to perform discovery and present
evidence and argument to the arbitrator(s). During that period the
arbitrator(s) shall be available to receive and consider all such
evidence as is relevant and, within reasonable limits due to the
restricted time period, to hear as much of such argument as
possible, giving a fair allocation of time to each party to the
arbitration. The arbitrator(s) shall use all reasonable means to
expedite discovery and shall sanction noncompliance with reasonable
discovery requests or any discovery order. The arbitrator(s) shall
not consider any evidence or argument not presented during such
period. At the conclusion of such period the arbitrator(s) shall
have thirty (30) days to reach a determination.
d. The arbitrator(s) shall have the right only to interpret
and apply the terms of this Agreement and may not change any such
terms, deprive any party thereto of any right or remedy expressly
provided hereunder, or provide any right or remedy that has been
excluded hereunder.
e. The determination of the arbitrator or the majority of
the arbitrators shall be conclusive upon the parties. The
arbitrator or the majority of the arbitrators shall give written
notice to the parties stating the determination and findings of
fact and conclusions of law, and shall furnish to each party a copy
thereof signed by him or them within ten (10) calendar days from
the date of such determination.
f. All costs of the arbitrator(s) in connection with any
arbitration shall be paid by the nonprevailing party, unless the
arbitrator(s) shall otherwise determine for good cause on a case-
by-case basis.
g. Nothing herein shall preclude either party from seeking
to restrain the breach or threatened breach of this Agreement by
the other in a court of equity, or from pursuing any other
equitable rights or remedies which it may have against the other,
or, except to the extent any claim or action is for or sounds in
breach of contract, from pursuing any other rights or remedies it
may have against the other in a court of law.
18. ACCESS AND DEVELOPMENT. In order to effectuate the
foregoing agreements, the parties agree as follows:
a. NOTICE. Seller shall notify the Purchaser regarding the
proposed routing of its pipelines for its hot and chilled water
prior to the submission of its permit applications.
b. SERVICE REQUIREMENTS. Seller shall install service
adequate to satisfy the Purchaser's heating and cooling
requirements in accordance with the Energy Product Specifications
set forth in Exhibit A-2 hereto.
The Parties shall cooperate fully with each other and with
each others' contractors in the construction of the on-site
portions of Seller's work in a manner that will not adversely
impact either Party's construction effort.
c. ATTENDANCE AT MEETINGS. Seller and Purchaser will make
all reasonable efforts to participate in the Purchaser's project
coordination meetings.
d. REPORTS. Seller shall provide the Purchaser a monthly
update of Seller's progress measured against the Milestone
Development Schedule. If it becomes apparent to the Purchaser that
the Seller may not be able to achieve the Late Completion
Milestones, Purchaser may demand that Seller take corrective
action.
e. DAMAGES FOR DELAY. Seller hereby acknowledges and agrees
that time is of the essence in the performance of this Agreement
and, to that end, that Purchaser is relying on Seller to have
completed the permanent facilities on the Premises, and
substantially completed the Distribution System and any and all
other offsite facilities necessary to provide the Energy Products
to the Premises, by no later than the final completion date set
forth in Exhibit C. Seller hereby acknowledges and agrees that
Purchaser is likely to incur damages in excess of $10,000.00 a
month should Seller fail to complete such work as aforesaid.
Accordingly, and without in any way limiting any rights or remedies
which Purchaser may have against Seller, all of which are hereby
reserved on Purchaser's behalf, Seller hereby agrees that it shall
pay Purchaser the sum of $10,000 per month (prorated for any part
thereof) for and on and as of the last day of each month (or part
thereof) that Seller has not completed such work after the last day
of the month immediately preceding the final completion date set
forth in Exhibit C. Any amounts payable by Seller as aforesaid
shall merely constitute the pre-payment by Seller of a portion of
the damages which are likely to be incurred and for which Seller
shall remain liable hereunder; it being the agreement of the
parties, however, that if Seller believes that Purchaser has not
incurred damages equal to at least $10,000 a month (prorated for
any part thereof), Seller will have the burden of proving by clear
and convincing evidence that Purchaser has not in fact been damaged
to that extent.
f. LICENSES. Seller shall be solely responsible for
securing all permits and licenses and for the construction of all
of the facilities, equipment and pipelines that may be required to
serve the Purchaser's facilities. Purchaser will cooperate with
Seller in the filing of any appropriate applications.
Notwithstanding these provisions, Purchaser shall provide Seller,
at no cost to Seller, all necessary easements and similar rights to
enable Seller to construct and maintain its facilities within areas
that are controlled by Purchaser.
g. ALTERNATE CONNECTIONS. Seller will incorporate alternate
connection points in its design for those portions of the hot water
and chilled water systems that are to be located on the Purchaser's
site. These alternate connection points will be designed and
located to mutually agreeable standards to allow the Seller to
isolate the Purchaser's facility and to connect temporary boilers
and chillers to the on-site distribution system. This design
feature will enable Seller to satisfy Purchaser's full design load
in the event that the operation of Purchaser's hot water and
chilled water production facilities or Purchaser's pipelines are
disrupted.
h. LIENS. Seller shall not allow any liens to be placed
against Purchaser's properties. If any such liens are filed,
Seller shall discharge the same promptly at Seller's expense.
i. INSURANCE.
During the term hereof, the Seller shall carry and keep in
force the following types and amounts of liability insurance:
(i) GENERAL LIABILITY INSURANCE. The Seller shall carry and
keep in force a policy or policies of comprehensive
general liability insurance (including contractual
liability coverage) insuring against damages to persons
or property (including, but not limited to, loss of life)
occurring upon, in or about the Premises, in an amount
not less than a combined single limit of at least One
Million Dollars ($1,000,000.00) for each occurrence with
a deductible not exceeding Ten Thousand Dollars
($10,000.00), which deductible is understood to be the
responsibility of the Seller;
(ii) Automobile Liability Insurance for all automobiles used
by the Seller and/or any of its officers, agents and/or
employees in connection with the services provided by it
hereunder, with a combined single limit of one million
dollars ($1,000,000.00) for each accident with a
deductible not exceeding Ten Thousand Dollars
($10,000.00), which deductible is understood to be the
responsibility of the Seller; and
(iii) Workers' Compensation Insurance covering the Seller's
and its agent's and Seller's employees at the Connecticut
Statutory limit including Employers' Liability with
limits of $100,000.00 for each accident, $500,000.00 for
each disease/policy limit, and $100,000 for disease for
each employee, with a deductible not exceeding Ten
Thousand Dollars ($10,000.00), which deductible is
understood to be the responsibility of the Seller; and
(iv) Umbrella Liability following form over the insurance
provided under subsections (a)(i) and a(ii) above, and
Employer's Liability Insurance, with a limit of liability
which, when combined with the primary insurance over
which such excess coverage is being provided, equals at
least Ten Million Dollars ($10,000,000.00).
The amounts of the aforementioned coverages shall be reviewed
and, as appropriate, revised by agreement of the parties as of July
1, 2001 and every (3rd) anniversary thereof thereafter. In the
event the parties are unable to reach agreement as to whether and,
if so, to what extent, any changes should be made in the foregoing
at least ninety (90) days prior to the date that any such agreement
is otherwise required hereunder, the parties shall (and, at any
other time, either party may, at its own sole cost and expense)
cause said coverages to be determined at least forty-five (45) days
prior to said date by an independent adjuster approved by both
parties (an "Independent Adjuster"), which approval shall not be
unreasonably withheld or delayed. For purposes of the foregoing,
any person which is nominated by a party (the "nominating party")
to serve as an Independent Adjuster hereunder shall be deemed
approved by the other party unless said other party (the "objecting
party") provides written notice of its objection thereto to the
nominating party within five (5) business days of the objecting
party's receipt of said nomination. In the event the parties are
unable to agree on an Independent Adjuster within thirty (30) days
of either party's having first nominated any person to serve in
that capacity, or should any dispute exist concerning any
determination reached by any Independent Adjuster, the amount of
such coverages as then remain in dispute shall be resolved by
arbitration in accordance with Section 17 below; providing, first,
that neither party shall be able to dispute any determination which
is made by an Independent Adjuster unless it gives notice of its
intent so to do within thirty (30) days of its receipt of notice of
such adjuster's determination thereof under and in accordance with
this Agreement, and providing, further, that in the event of any
such dispute, any and all coverages in question shall be and remain
the higher of the amounts previously required hereunder or the
amounts determined to be appropriate by the Independent Adjuster
until the matter is resolved pursuant to arbitration at which time
the coverages in dispute shall be as established by the
arbitrators, subject to future adjustment pursuant to this
paragraph.
The insurances required in this Section may be carried on
either an "occurrence" or a "claims made" basis, providing,
however, that, should any insurance be carried on a "claims made"
basis, the Seller also shall be obligated to procure an extended
reporting period thereto or a subsequent "claims made" policy with
the same retroactive date as the prior "claims made" policy, as
necessary to protect CREC and the Purchaser from any claims,
actions or causes of action which first accrue during the term
hereof.
All insurance which is carried pursuant to this shall include
provisions which deny to the insurer acquisition by subrogation of
rights of recovery against the Purchaser, as and to the extent such
rights have been waived by the insured party prior to occurrence of
loss or injury as set forth elsewhere in this paragraph, and
insofar as and to the extent that such provisions may be effective
without making it impossible to obtain insurance coverage from
reputable companies qualified to do business in the State of
Connecticut even though extra premiums may result therefrom. The
Purchaser shall be entitled to have duplicates of certificates of
any policies containing such provision. The Seller hereby waives
its rights of recovery against the Purchaser for loss or injury
against which the Purchaser is protected by insurance containing
said provisions, reserving, however, any rights with respect to any
excess of loss or injury over the amount recovered by such
insurance.
The Purchaser shall be named as additional insureds for all
insurance policies required hereunder. The Seller shall file
certificates of all such insurance with the Purchaser. All
insurance will be effected under standard form policies by insurers
of recognized responsibility which are licensed and/or admitted to
do business in the State of Connecticut and which are rated as A-
(X) or better by the latest edition of Best's Rating Guide or other
recognized replacement therefor (or as otherwise approved by
Purchaser in writing on a case by case basis upon issuance of any
policy and/or any renewal thereof, which approval may be withheld
in its sole and absolute discretion), and will provide for thirty
(30) days prior notice of any cancellation of or changes in
coverage provided in the certificates of insurance. Copies of such
insurance policies, or certificates of insurance, will be provided
to the Purchaser upon the execution of this Agreement and no later
than thirty (30) days prior to each renewal date thereof each year
thereafter.
All insurance policies referred to in this Article shall
provide that any losses thereunder shall be adjusted with the
Purchaser and the Seller and that loss thereunder shall be payable
to the Seller and the Purchaser, as their interests may appear.
Neither the Seller nor Purchaser shall unreasonably withhold or
delay its endorsement to any insurance check payable hereunder.
Except as otherwise provided to the contrary in this Section,
any insurance required by this Agreement may be obtained by means
of any combination of primary and umbrella coverages and by
endorsement and/or rider to a separate or blanket policy and/or
under a blanket policy in lieu of a separate policy or policies,
provided that the Seller shall deliver a certificate of insurance
of any said separate or blanket policies and/or endorsements and/or
riders evidencing to the Purchaser that the same complies in all
respects with the provisions of this Agreement, and that the
coverages thereunder and the protection afforded the Purchaser
thereunder are at least equal to the coverages and protection which
would be provided under a separate policy or policies procured
solely under and by reason of this Agreement. The certificates of
such policy or policies evidencing such coverages shall be
delivered to the Purchaser upon the execution hereof and as of
thirty (30) days prior to the anniversary date thereof each year
thereafter.
All references in this Article to a "deductible" shall be
deemed to mean a deductible and/or a self insured retention.
The Seller agrees that it will not carry or be the beneficiary
of any insurance insuring the Seller or any other person or entity
against the risks for which insurance is required to be maintained
pursuant to this Section unless the Purchaser is named as
Additional Insureds thereunder and the insurance and insurance
carriers otherwise comply with the terms of this Section.
It is agreed between the parties hereunto that the amounts of
insurance in this Agreement do not, in any way, limit the liability
of the Seller to the Purchaser by virtue of its promise to
indemnify and hold harmless the Purchaser so that in the event that
any Claim results in a settlement or judgment in an amount in
excess of the amount of insurance coverage carried by the Seller,
the Seller shall be liable to the Purchaser for the difference,
plus all fees and expenses incurred in collecting the same, all at
the Seller s sole cost and expense. In the event the City of
Hartford, as the initial Purchaser, assigns its interests in this
Agreement in connection with any lease of the Premises, then the
term "Purchaser" as used in this Section 19(i) shall be deemed to
mean and include the City and the assignee.
j. INDEMNIFICATION.
(i) The Seller shall indemnify, defend and hold harmless the
Purchaser, and its agents, officials, employees and
assigns from and against any and all loss or liability
(statutory or otherwise), claims, actions, suits,
demands, judgments, costs, executions, interest and
expense whatsoever, including, but not limited to, costs
of investigation, defense and settlement and all
reasonable attorneys' fees and disbursements,
(hereinafter, individually and collectively, a "Claim" or
"Claims") for or arising from Seller's Facility or
Distribution System, or Seller's performance or lack
thereof hereunder, or the negligence of Seller or any of
its officers, directors, agents or employees, including,
but not limited to, Claims based upon the Seller's
failure to pay for or provide goods or services as
required hereunder or any act or omission on the part of
the Seller or any of its agents, officers, directors or
employees in the acquisition or provision thereof, as
well as Claims for or arising from injury to, or death
of, any person or persons, or damage to real or personal
property (including the loss of use thereof), which
occurs under, in connection with or by reason of this
Agreement or the Seller's performance hereunder (or lack
thereof) during the term hereof. In case any action or
proceeding is brought against the Purchaser by reason of
any matter which is the subject of the foregoing
indemnity, the Seller shall pay all costs, reasonable
attorneys' fees, out-of-pocket expenses, and liabilities
resulting therefrom, and shall resist such action or
proceeding by attorneys chosen by it and reasonably
satisfactory to the Purchaser, as applicable.
(ii) The Purchaser shall indemnify, defend and hold harmless
the Seller, and its agents, officers, directors and
employees and assigns from and against any and all loss
or liability (statutory or otherwise), claims, actions,
suits, demands, judgments, costs, executions, interest
and expense whatsoever, including, but not limited to,
costs of investigation, defense and settlement and all
reasonable attorneys' fees and disbursements,
(hereinafter, individually and collectively, a "Claim" or
"Claims") for or arising from Purchaser's performance or
lack thereof hereunder or the negligence of Purchaser or
any of its officials, agents or employees, including, but
not limited to, Claims based upon the Purchaser's failure
to pay for or provide goods or services as required
hereunder or any act or omission on the part of Purchaser
or any of its agents, officers, directors or employee in
the acquisition or provision thereof, as well as Claims
for or arising from injury to, or death of, any person or
persons, or damage to real or personal property
(including the loss of use thereof), which occurs under,
in connection with or by reason of this Agreement or the
Purchaser s performance hereunder (or lack thereof)
during the term hereof. In case any action or proceeding
is brought against the Purchaser by reason of any matter
which is the subject of the foregoing indemnity, the
Purchaser shall pay all costs, reasonable attorneys'
fees, out-of-pocket expenses, and liabilities resulting
therefrom, and shall resist such action or proceeding by
attorneys chosen by it and reasonably satisfactory to the
Seller, as applicable.
k. LATE PAYMENTS. At its option, either party may impose a
late payment charge not to exceed 1.25% per month on all sums not
paid thereto in full as and when due hereunder. The exercise of
this option by either party shall not preclude said party from
exercising any other right or remedy it may have under or by virtue
of this Agreement.
19. MISCELLANEOUS.
a. This Agreement shall be binding upon Purchaser, Seller
and their respective successors and assigns
b. The headings and titles of paragraphs are for convenience
only and do not affect the meaning or interpretation of any
provision hereof.
c. Except as otherwise stated herein, this Agreement
constitutes the entire understanding and agreement of the parties
hereto as to the subject matter hereof and supersedes all prior
agreements, understandings and negotiations between the parties
with respect thereto. No modification or amendment of this
Agreement shall be valid and effective unless expressly set forth
in an agreement in writing signed by Purchaser and Seller.
d. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, and all of which together
shall constitute but one and the same instrument.
e. Any notice, invoice or other communication that is
required to be given pursuant to this Agreement shall be sent to
the persons or offices, and to the addresses, set forth below:
If to Seller: Reginald L. Babcock, Esq.
Vice President, General Counsel
and Secretary
The Energy Network
100 Columbus Boulevard
Hartford, CT 06144-1500
If to Purchaser: City Manager
City of Hartford
550 Main Street
Hartford, CT 06103
With a copy to:
Corporation Counsel
City of Hartford
550 Main Street
Hartford, CT 06103
f. Purchaser and its successors and assigns shall have the
right at any time during the term of this Agreement to prepay in
whole or in part the so-called "Capital Recovery Component"
described in Exhibit B based upon a price fairly determined which
reflects the Seller's investment (net of depreciation) and the
assumed return on such investment over the term hereof. In the
event such right to prepay is exercised, Purchaser and Seller shall
grant to each other such rights, easements and licenses as may be
reasonably necessary for Seller to retain the use and equipment of
the affected assets and for Purchaser to acquire legal title to
such assets; provided that nothing in the foregoing shall otherwise
alter the rights and obligations of the parties hereto under this
Agreement.
20. CONDITIONS OF ACCESS TO AND WORK ON THE PREMISES.
To the extent reasonably possible and except in cases of
emergency, Seller shall not attempt to gain access to, maintain or
perform any other work with respect to any equipment or any other
matter or thing on the Premises at any time when its so doing is
likely to cause any disruption of any academic programs being
conducted on the Premises. Seller further agrees that it shall
repair any damage which may occur to the Premises by reason of any
work or other activity which it performs or in which it is engaged
thereon.
21. NO MECHANIC'S LIENS.
Notice is hereby given that the City of Hartford shall not be
liable for any labor or materials furnished or to be furnished to
the Seller upon credit, and that no mechanic's or other lien, for
any such labor or materials shall attach to or affect the estate or
interest of the City in and to Premises. Whenever and as often as
any such lien shall have been filed against the Premises, whether
or not based upon any action or interest of Seller or of any
subcontractor or if any conditional bill of sale shall have been
filed for or affecting any materials, machinery or fixtures used in
the construction, repair or operation thereof, or annexed thereto,
by the Seller, the Seller shall forthwith take such action by
bonding, deposit or payment as will remove or satisfy the lien or
conditional bill of sale.
22. WARRANTY OF EQUIPMENT. Seller hereby warrants that all
of the materials which are purchased from the Seller hereunder
shall be suitable for the purposes intended and shall be free from
defects in material and workmanship as and when installed Seller
hereunder.
SELLER:
THE ENERGY NETWORK, INC.
By: S/ James P. Laurito 4/5/99
-----------------------------
Its: President
Duly Authorized
PURCHASER:
CITY OF HARTFORD
By: S/ Kevin G. Dubay
-----------------------------
Its:Acting City Manager 4/6/99
Duly Authorized Kevin G. Dubay
Approved as to legality and form.
S/ Michael C. Calleris
----------------------------------
Acting Corporation Counsel
Exhibits Attached:
Exhibit A - Easement Form
Exhibit A-1 - Legal Description (map)
Exhibit A-2 - Energy Product Specifications
Exhibit B - Rate Schedule
Appendix to Exhibit B - The Learning Corridor Pricing
Appendix to Exhibit B - Hot/Chilled Water Pricing
Exhibit C - Development Milestone Schedule
Exhibit D - Customer Instructions
<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> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 293,914
<OTHER-PROPERTY-AND-INVEST> 56,202
<TOTAL-CURRENT-ASSETS> 92,128
<TOTAL-DEFERRED-CHARGES> 35,197
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 477,441
<COMMON> 66,938
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 66,841
<TOTAL-COMMON-STOCKHOLDERS-EQ> 133,779
0
879
<LONG-TERM-DEBT-NET> 217,516
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 3,237
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 122,030
<TOT-CAPITALIZATION-AND-LIAB> 477,441
<GROSS-OPERATING-REVENUE> 246,905
<INCOME-TAX-EXPENSE> 17,416
<OTHER-OPERATING-EXPENSES> 199,458
<TOTAL-OPERATING-EXPENSES> 216,874
<OPERATING-INCOME-LOSS> 30,031
<OTHER-INCOME-NET> (12)
<INCOME-BEFORE-INTEREST-EXPEN> 30,019
<TOTAL-INTEREST-EXPENSE> 12,866
<NET-INCOME> 17,153
46
<EARNINGS-AVAILABLE-FOR-COMM> 17,107
<COMMON-STOCK-DIVIDENDS> 6,713
<TOTAL-INTEREST-ON-BONDS> 1,259
<CASH-FLOW-OPERATIONS> 58,281
<EPS-BASIC> 1.98
<EPS-DILUTED> 1.98
</TABLE>
