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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
For the fiscal year ended September 30, 1995 Commission File
Number 0-234
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Mobile Gas Service Corporation
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(Exact name of registrant as specified in its charter)
Alabama 63-0142930
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(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2828 Dauphin Street, Mobile, Alabama 36606
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (334) 476-2720
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
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None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock ($2.50 par value)
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(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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The aggregate market value of Common Stock, Par Value $2.50 per share,
held by non-affiliates (based upon the average of the high and low prices as
reported by NASDAQ on November 30, 1995) was approximately $71,899,691.
As of November 30, 1995, there were 3,213,394 shares of Common Stock,
Par Value $2.50 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders on January 26, 1996 are incorporated by reference into Part III.
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PART I
Item 1. Business.
GENERAL
Mobile Gas Service Corporation (together with its subsidiaries, the
"Company" or "Registrant", and exclusive of its subsidiaries, "Mobile Gas") was
incorporated under the laws of the State of Alabama in 1933. The Company is
engaged in the purchase, distribution, sale and transportation of natural gas
to approximately 100,000 residential, commercial and industrial customers in
southwest Alabama, including the City of Mobile and adjacent areas. The
Company has increased its customer base from approximately 84,900 peak-month
customers in fiscal 1989 through the acquisition of the gas distribution system
of the City of Bayou La Batre in fiscal 1990, which added approximately 2,400
customers, and the acquisition of certain assets of the Utilities Board of the
Town of Citronelle in fiscal 1993, which added almost 8,000 customers.
Additional growth has been accomplished through marketing of Company services
to new construction and existing households and businesses. The Company's
service territory covers approximately 300 square miles. Mobile Gas is also
involved in merchandise sales, specifically sales of natural gas appliances.
MGS Energy Services, Inc. ("MGS Energy"), a wholly-owned subsidiary,
was incorporated in March 1983. Through MGS Energy, the Company provides
contract and consulting work for utilities and industrial customers. MGS
Energy owns a 51% interest in Southern Gas Transmission Company ("SGT"), an
Alabama general partnership which was formed in November 1991. SGT was
established to provide transportation services to the facilities of Alabama
River Pulp Company, Inc. During fiscal year 1992, SGT constructed and began
operating a 50-mile pipeline from the facilities of Koch Gateway Pipeline
Company ("Koch"), formerly United Gas Pipe Line Company, near Flomaton, Alabama
to the facilities of Alabama River Pulp Company, Inc. in Claiborne, Alabama.
MGS Storage Services, Inc. ("MGS Storage"), a wholly-owned subsidiary,
was incorporated on December 4, 1991. MGS Storage and MGS Energy formed Bay
Gas Storage Company, Ltd. ("Bay Gas"), an Alabama limited partnership, on
January 13, 1992, with MGS Storage as general partner and MGS Energy as the
initial limited partner. MGS Storage and MGS Energy initially held partnership
interests of 87 1/2% and 12 1/2%, respectively, in Bay Gas. As of September
12, 1994, MGS Energy's 12 1/2% limited partnership interest was transferred to
Olin Corporation ("Olin"). Bay Gas provides for the storage and delivery of
natural gas for Mobile Gas. Bay Gas also markets its storage services to other
customers.
MGS Marketing Services, Inc. ("MGS Marketing"), a wholly-owned
subsidiary, was incorporated on March 5, 1993 to assist existing and potential
customers in the purchase of natural gas.
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CUSTOMERS
Of the approximately 100,000 customers of the Company, approximately
95% are residential customers. In the fiscal year ended September 30, 1995,
approximately 66% of the Company's gas revenues came from residential
customers, 15% from commercial sales, 8% from industrial sales and 11% from
transportation services. Residential sales in 1995 accounted for approximately
14% of the total volume of gas delivered to the Company's customers, with
commercial, industrial and transportation deliveries accounting for
approximately 4%, 4% and 74%, respectively. The ten largest customers of the
Company accounted for approximately 13% of the Company's gross margin in fiscal
1995, with the largest accounting for approximately 3%. For further
information with respect to revenues from and deliveries to the various
categories of the Company's customers, see Item 6, "Selected Financial Data".
In May 1995, the Company entered into a long-term contract with
Tuscaloosa Steel Corporation to transport natural gas to a proposed new iron
ore reduction facility to be located adjacent to downtown Mobile. When fully
operational in 1997, that facility is expected to use approximately 35,000
MMBTU of gas per day, making Tuscaloosa Steel the largest volume user of
natural gas on the Company's system. To fulfill its obligations under such
contract, the Company will construct approximately five miles of new high
pressure pipeline and upgrade certain other segments of its existing
facilities, representing a capital commitment of nearly $10,000,000. The
Company expects construction to be completed in mid-1997.
GAS SUPPLY
The Company is directly connected to Mobil's natural gas processing
plant in South Mobile county and to Shell's Yellowhammer Plant. Mobile Gas has
contracted for a portion of its firm supply directly with these producers. For
the fiscal year ended September 30, 1995, the Company obtained approximately
70% of its gas supply from sources located in the Mobile Bay area, with the
balance being obtained from interstate sources.
To encourage more competition among natural gas suppliers, FERC issued
Order 636 in 1992. Order 636 required interstate pipelines to unbundle or
separate gas sales, transportation and storage services. With the
implementation of Order 636, most pipelines discontinued their traditional
merchant function resulting in each local distribution company becoming
responsible for obtaining all of its gas supply in the open market. While
unbundling of these services allows a local distribution company, such as
Mobile Gas, more flexibility in selecting and managing the type of services
required to provide its customers with the lowest possible priced gas while
maintaining a reliable gas supply, it also places additional responsibility on
a distribution company to obtain its natural gas supply in the open market on a
timely basis to fulfill commitments during peak demand periods. The Company
believes that the Bay Gas storage facility, which had already been planned by
the Company prior to Order 636, will enhance its ability to respond to the
changes in the industry brought about by Order 636.
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The Company has a current peak day firm requirement of 129,870 MMBTUs.
Firm supply needs of 80,000 MMBTU/day are expected to be met through the
withdrawal of gas from the storage facility owned by Bay Gas. The Company also
has firm supply contracts with Mobil for 10,000 MMBTU/day through October 31,
2000 and Shell for 13,000 MMBTU/day through December 31, 1996, through the
direct connections with their processing plants. Additionally, the Company has
contracted for firm transportation and storage service ("No-Notice Service")
for 26,870 MMBTU/day from Koch under agreements extending to April 1, 1999. In
conjunction with the No-Notice Service, the Company has contracted with Koch
Gas Services, an affiliate of Koch, to provide firm gas supply to April 1,
1997.
GAS STORAGE
Construction of the storage facility was completed in 1994. The
cavern is designed to hold up to 3.7 BCF of natural gas. Approximately 1.3 BCF
of the gas to be injected into the storage cavern, called "base gas," will
remain in the cavern to provide sufficient pressure to maintain cavern
integrity, and the remainder, approximately 2.4 BCF, represents working storage
capacity. Compressors are required to inject gas into the storage facility
and, because the moisture content of stored gas must be lowered to reach the
requisite standard for use, dehydrators are required to treat gas upon
withdrawal.
During 1995, a pipeline interconnect with Florida Gas Transmission, an
interstate pipeline company, was completed. Bay Gas has also entered into an
agreement with Koch for a pipeline interconnection which will further expand
access to interstate markets. The Koch interconnect is expected to be
completed in December 1995.
Mobile Gas entered into a Gas Storage Agreement with Bay Gas under
which Bay Gas agreed to provide storage of approximately one-third of the
working storage capacity for an initial period of 20 years. The cavern
currently has sufficient injection and withdrawal capacity to meet the
requirements of the Mobile Gas storage contract. Most of the storage
facility's current injection capacity of 35,000 MMBTU/day and withdrawal
capacity of 107,000 MMBTU/day will be utilized under the Mobile Gas storage
contract, under which injection capacity of 15,000 MMBTU/day and withdrawal
capacity of 80,000 MMBTU/day are committed to Mobile Gas. The unused injection
and withdrawal capacity are not anticipated to be sufficient to allow Bay Gas
to provide services to any substantial additional customers; however, Bay Gas
has entered into several contracts to provide interruptible storage service.
In the event that additional customers contract for a substantial
portion of the remaining capacity of the storage facility, the Company would
expend additional funds to add injection and withdrawal capacity to serve such
customers. There can be no assurance that Bay Gas will enter into any such
contracts.
Under its agreements with Olin, Bay Gas has the right to develop up to
2 additional caverns on the property leased from Olin. Olin has the right,
from the time of
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commencement of operations at the storage facility until Bay Gas makes certain
required payments to Olin prior to commencement of the construction of a second
cavern, to increase its ownership interest in Bay Gas by an additional 12 1/2%,
by purchasing from MGS Storage such additional percentage at a price based on
the book equity of MGS Storage in Bay Gas. The Company is unable to determine
at this time whether additional caverns will be developed at the storage
facility, but anticipates that an additional cavern would be considered if and
when contracts are obtained for the entire capacity of the first cavern.
COMPETITION
Gas Distribution Competition. The Company is not in significant
direct competition with respect to the retail distribution of natural gas to
residential and small commercial customers within its service area.
Electricity competes with natural gas for such uses as cooking, water heating
and space heating.
The Company's large commercial and industrial customers either buy
natural gas from the Company or have contracted with the Company for
transportation of customer-owned gas. With certain limited exceptions the
Company's rates are structured so that the gross margin is the same whether gas
is sold or transported. Some industrial customers have the capability to use
either fuel oil, coal, wood chips or natural gas, and choose their fuel
depending upon a number of factors, including the availability and price of
such fuels. In recent years, the Company has had adequate supplies so that
interruptible industrial customers that are capable of using alternative fuels
have not had supplies curtailed, and the price of natural gas has remained at
levels such that, in most cases, these industrial customers have chosen to use
natural gas rather than other fuels. The Company's rate tariffs include a
competitive fuel clause which allows the Company to adjust its rates to certain
large commercial and industrial customers in order to compete with alternative
energy sources. However, there can be no assurance that the current
competitive advantage of natural gas over alternative fuels will continue. See
"Rates and Regulation."
Due to the close proximity of various pipelines and gas processing
plants to the Company's service area, there exists the possibility that current
or prospective customers could install their own facilities and connect
directly to a supply source and thereby "bypass" the Company's service. The
Company believes that because it has worked closely with major industrial
customers to meet those customers' needs, and because of its ability to provide
competitive pricing under its rate tariffs, none of the Company's customers
have bypassed its facilities to date. Although there can be no assurance as to
future developments, the Company intends to continue its efforts to reduce the
likelihood of bypass by offering competitive rates and services to such
customers.
Gas Storage Competition. A number of types of competitors may provide
services like or in competition with those of Bay Gas. These include, among
others, natural gas storage facilities, natural gas aggregators (who rebundle
services ordered unbundled by FERC Order 636), and natural gas pipelines. Bay
Gas believes that its strategic
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geographic location and its ability to charge market-based rates for interstate
storage services will enable it to effectively compete with such competitors.
See "Rates and Regulation."
RATES AND REGULATION
The Company's natural gas distribution operations are under the
jurisdiction of the Alabama Public Service Commission ("APSC"). The APSC
approves rates which are intended to permit the recovery of the cost of service
including a return on investment. Rates are determined by reference to rate
tariffs approved by the APSC in traditional rate proceedings or, for certain
large customers, on a case-by-case basis. In addition, pursuant to APSC order,
rates for a limited number of large industrial customers are determined on a
privately negotiated basis. The APSC also approves the issuance of debt and
equity securities and has supervision and regulatory authority over service,
equipment, accounting, and other matters.
During the year ended September 30, 1995, the Company petitioned the
APSC for an increase in rates. On November 27, 1995, the APSC approved an
increase in rates designed to generate an additional $6,890,000 in annual
revenues, excluding the effects of changes in the base price of gas. The
increased rates went into effect on December 1, 1995. The rates for service
rendered by the Company are on file with the APSC.
The Company's tariffs include a purchased gas adjustment clause which
allows the Company to pass on to certain of its customers increases or
decreases in gas costs from those reflected in its tariff charges. Adjustments
under such clauses require periodic filings with the APSC but do not require a
general rate proceeding. Under the purchased gas adjustment clause, the
Company has a competitive fuel clause which gives it the right to adjust its
rates to certain large customers in order to compete with alternative energy
sources. Any margin lost as a result of competitive fuel clause adjustments is
recoverable from its other customers.
Gas deliveries to certain industrial customers are subject to
regulation by the APSC through contract approval. The operations of SGT, which
consist only of intrastate transportation of gas, are also regulated by the
APSC.
Bay Gas is a regulated utility governed under the jurisdiction of the
APSC, which issued a Certificate of Public Convenience and Necessity to Bay Gas
on May 4, 1992. As a regulated utility, Bay Gas' intrastate storage contracts
are subject to APSC approval. Operation of the storage cavern and well-head
equipment are subject to regulation by the Oil and Gas Board of the State of
Alabama. On March 25, 1994, FERC issued an order approving Bay Gas'
application for permission to charge market-based rates for interstate storage
services. The FERC order enables Bay Gas to provide storage services to
entities outside of the State of Alabama. Market-based rates allow Bay Gas to
respond to market conditions and minimizes regulatory involvement in the
setting of its rates for storage services.
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The Company has been granted nonexclusive franchises to construct,
maintain and operate a natural gas distribution system in the areas in which it
operates. Except for the franchise granted by Mobile County, Alabama, which
has no stated expiration date, the franchises have expiration dates, the
earliest of which is in 2007. The Company has no reason to believe that the
franchises will not be renewed upon expiration.
SEASONAL NATURE OF BUSINESS
The nature of the Company's business is highly seasonal and
temperature-sensitive. As a result, the Company's operating results in any
given period reflect, in addition to other matters, the impact of weather, with
colder temperatures resulting in increased sales by the Company. The
substantial impact of this sensitivity to seasonal conditions is reflected in
the Company's results of operations and the Company anticipates that it will
continue to be so reflected in future periods.
Due to the seasonality of the Company's business, the generation of
working capital is greatly impaired during the summer months because of reduced
gas sales. Cash needs during this period are generally met through short-term
financing arrangements or the reduction of temporary investments as is common
in the industry.
ENVIRONMENTAL ISSUES
The Company is subject to various federal, state and local laws and
regulations relating to the environment, which have not had a material effect
on the Company's financial position or results of operations.
Like many gas distribution companies, prior to the widespread
availability of natural gas, the Company manufactured gas for sale to its
customers. In contrast to some other companies which operated multiple
manufactured gas plants, the Company and its predecessor operated only one such
plant, which discontinued operations in 1933. The process for manufacturing
gas produced by-products and residuals, such as coal tar, and certain remnants
of these residuals are sometimes found at former gas manufacturing sites.
The Company conducted a preliminary assessment in 1994 of its former
gas plant site and has tested certain waters in the vicinity of the site. The
Company developed and has implemented a plan for the site based on the advice
of its environmental consultants, which involves securing and monitoring the
site, and continued testing. Based on the results of tests to date, the
Company does not believe that the site currently poses any threat to human
health or the environment. While no conclusion can be reached at this time as
to whether any further remedial action might ultimately be required, based on
currently available information, it is believed that any costs with respect to
the site are likely to be immaterial, and the Company has therefore established
no reserve for such costs in its financial statements. The Company intends
that, should further investigation or changes in environmental laws or
regulations require material expenditures for investigation,
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remediation, or clean-up with regard to the site, it would apply to the APSC
for appropriate rate recovery of such costs. However, there can be no
assurance that the APSC would approve the recovery of such costs or the amount
and timing of any such recovery.
EMPLOYEES
Mobile Gas employed 270 full-time employees as of September 30, 1995.
Of these, approximately 38% are represented by the Oil, Chemical and Atomic
Workers International Union, Local No. 3-541. As of September 30, 1995 Bay Gas
employed five full-time employees. The Company believes that it enjoys
generally good labor relations.
Item 2. Properties.
The Company's properties consist of distribution, general,
transmission, and storage plant. The distribution plant is located in Mobile
County, Alabama and is used in the distribution of natural gas to the Company's
customers. The distribution plant consists primarily of mains, services,
meters and regulating equipment, all of which are adequate to serve the present
customers. The distribution plant is located on property which the Company is
entitled to use as a result of franchises granted by municipal corporations, or
on easements or rights-of-way.
The general plant consists of land, structures (with aggregate floor
space of approximately 118,000 square feet), office equipment, transportation
equipment and miscellaneous equipment, all located in Mobile County, Alabama.
The transmission plant consists of a pipeline of approximately 50
miles and related surface equipment which is used in the transmission of
natural gas by SGT and is located primarily in Monroe County, Alabama. The
transmission plant is located on easements or rights-of-way.
The storage plant, consisting of an underground cavern for the storage
of natural gas and related pipeline and surface facilities, is located
primarily in Washington County, Alabama. The storage plant is constructed on a
leasehold estate with an initial term of 50 years, which will expire in 2040,
and which may be renewed at the Company's option for an additional term of 20
years.
Substantially all of the property of the Company is pledged as
collateral for the long-term debt.
Item 3. Legal Proceedings.
FERC Order 636 permits pipelines to recover from their customers the
transition costs of restructuring their services. On October 16, 1995, Koch
filed tariff sheets which have been approved by the FERC to be effective
November 1, 1995, which reflect recovery
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of transition costs over a two- year period through a reservation surcharge.
Based on the reservation surcharge in Koch's tariff sheets and the Company's
contract reservation volumes over the next two years, the Company's share of
transition costs is estimated to be $43,000.
Take-or-pay costs represent (i) Koch's costs of buying out gas
contracts with its producer-suppliers (those contracts contain clauses
requiring Koch either to take the gas or to pay for it even if not taken) and
(ii) the costs of buying down Koch's commitments under those contracts. As a
result of a take-or-pay settlement between Koch and its customers entered into
during the year ended September 30, 1993, the Company recorded a liability of
$860,000 during 1993. An additional liability of $679,000 was recorded during
the year ended September 30, 1994 as a result of settlements filed in 1994
which resolved all take-or-pay cost recovery issues. The above settlements
have been approved by the FERC, and the Company has recovered all take-or-pay
costs from its customers as allowed by the APSC. During the year ended
September 30, 1995, the Company paid all remaining unpaid take-or-pay costs as
required by such settlements.
Although the Company is not involved currently in material litigation,
the Company may from time to time be involved in litigation in the ordinary
course of its business.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Executive Officers of the Registrant
Pursuant to General Instruction G(3) of Form 10-K, the following list
is included as an unnumbered Item in Part I of this Report in lieu of being
included in the proxy statement to be filed with the Securities and Exchange
Commission.
Information relating to executive officers who are also directors and
nominees for election as directors is included under the caption "Election of
Directors" contained in the Company's definitive proxy statement with respect
to its 1996 Annual Meeting of Stockholders and is incorporated herein by
reference.
The following is a list of names and ages of all of the executive
officers who are not also directors or nominees for election as directors of
the Registrant indicating all positions and offices with the Registrant held by
each such person and each such person's principal occupations or employment
during the past five years. All such persons have been elected for terms
expiring in January 1996. Officers serve at the pleasure of the Board of
Directors of the Company.
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<TABLE>
<CAPTION>
Business Experience
Name, Age, and Position During Past 5 Years
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<S> <C>
W. G. Coffeen, III, 48 Appointed in 1986
Vice President - Marketing;
Director/Vice President
MGS Marketing Services, Inc.
Gerald S. Keen, 59 Appointed in December 1989
Vice President - Operations;
Director/President - MGS Energy
Services, Inc.;
Director/President - MGS Storage
Services, Inc.
Charles P. Huffman, 42 Appointed in January 1995; Previously: Chief Financial
Vice President, Chief Officer (1993-1994); Treasurer (1991-1993); Assistant
Financial Officer, Treasurer, Treasurer (1980-1991)
and Assistant Secretary;
Treasurer - MGS Energy Services, Inc.;
Director/Treasurer - MGS Storage
Services, Inc.;
Director/Treasurer - MGS Marketing
Services, Inc.
G. Edgar Downing, Jr., 39 Appointed in January 1995; Previously: Secretary and
Vice President, Secretary and General General Counsel (1993-1994); Assistant Secretary (1991-
Counsel; Director/Secretary - MGS Energy 1993), General Attorney (1990-1993)*
Services, Inc.; Director/
Secretary - MGS Storage
Services, Inc.;
Secretary - MGS Marketing Services, Inc.
A. H. Tenhundfeld, Jr., 48
Vice President - Administration and Appointed in March 1995; Previously: Vice President -
Planning Finance and Treasurer, Dravo Corporation (December 1989-
February 1995)
</TABLE>
* Mr. Downing is the son-in-law of Gaylord C. Lyon, a Director of the Company.
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PART II
Item 5. Market for the Registrant's Common Stock Equity and Related
Stockholder Matters.
The Registrant's Common Stock, $2.50 par value, is traded on the
NASDAQ National Market under the symbol "MBLE". As of December 15, 1995 there
were 1,630 holders of record of the Company's common stock. Information
regarding Common Stock dividends and the bid price range for Common Stock
during the periods indicated is as follows:
<TABLE>
<CAPTION>
Per Share
Dividends Declared Bid Price Range
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Quarter Ended 1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
High Low High Low
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
December 31 $.26 $.25 $22 1/4 $19 1/4 $26 $24 3/4
March 31 .26 .25 20 19 1/4 28 1/2 25 1/4
June 30 .27 .26 21 19 1/4 28 3/4 25 3/4
September 30 .27 .26 21 1/2 20 1/4 26 1/4 21 1/4
</TABLE>
Over-the-counter quotations reflect inter-dealer prices without retail mark-up,
mark-down or commissions and may not necessarily represent actual transactions.
While the Board of Directors intends to continue the practice of
paying dividends quarterly, amounts and dates of such dividends as may be
declared will be dependent upon the Registrant's future earnings, financial
requirements, and other factors.
The Registrant's long-term debt instruments contain certain debt to
equity ratio requirements and restrictions on the payment of cash dividends and
the purchase of shares of its capital stock. At September 30, 1995, under the
most limiting of such provisions, retained earnings in the amount of
$10,143,177 was unrestricted.
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Item 6. Selected Financial Data.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Years Ended September 30, 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL DATA (in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Gas Revenues $ 56,204 $ 60,470 $ 54,292 $ 51,166 $ 48,337
Merchandise Sales and Jobbing 2,907 2,824 2,525 2,366 2,174
- ----------------------------------------------------------------------------------------------------------------------
Total Operating Revenues $ 59,111 $ 63,294 $ 56,817 $ 53,532 $ 50,511
Net Income $ 4,028 $ 4,893 $ 4,920 $ 5,368 $ 4,051
Preferred Stock Dividends 5 29 29 29
- ----------------------------------------------------------------------------------------------------------------------
Earnings Applicable to Common Stock $ 4,028 $ 4,888 $ 4,891 $ 5,339 $ 4,022
- ----------------------------------------------------------------------------------------------------------------------
Earnings Per Share of Common Stock $ 1.26 $ 1.78 $ 1.79 $ 1.96 $ 1.48
- ----------------------------------------------------------------------------------------------------------------------
Cash Dividends Per Share of Common Stock $ 1.06 $ 1.02 $ .96 $ .90 $ .86
- ----------------------------------------------------------------------------------------------------------------------
Average Common Shares Outstanding 3,208 2,752 2,733 2,726 2,718
Total Assets $ 136,567 $ 134,529 $ 116,839 $ 80,531 $ 67,281
Long-Term Debt Obligations $ 57,328 $ 59,047 $ 60,416 $ 26,833 $ 14,765
STATISTICAL
Gas Revenues (in thousands):
Sales:
Residential $ 36,106 $ 40,535 $ 35,204 $ 33,023 $ 30,126
Commercial 8,664 9,076 7,723 7,052 6,930
Industrial-Firm 723 767 727 644 1,575
Industrial-Interruptible 3,577 3,554 4,123 4,760 4,879
Transportation 6,172 5,881 5,927 5,104 4,299
Storage Other Than Intercompany 245 13
Other 717 644 588 583 528
- ----------------------------------------------------------------------------------------------------------------------
Total $ 56,204 $ 60,470 $ 54,292 $ 51,166 $ 48,337
- ----------------------------------------------------------------------------------------------------------------------
Delivery to Customers (in thousand therms):
Gas Sales:
Residential 47,992 56,100 50,046 49,986 44,291
Commercial 15,982 16,794 14,888 14,688 14,034
Industrial-Firm 1,948 2,148 2,097 2,084 5,689
Industrial-Interruptible 13,275 12,566 17,099 23,077 23,883
Transportation 274,859 253,702 237,499 221,608 190,074
- ----------------------------------------------------------------------------------------------------------------------
Total 354,056 341,310 321,629 311,443 277,971
- ----------------------------------------------------------------------------------------------------------------------
Customers Billed (Peak Month):
Residential 94,822 94,424 91,936 84,640 83,485
Commercial 5,292 5,250 4,866 4,839 4,864
Industrial-Firm 13 13 11 12 12
Industrial-Interruptible 38 38 40 37 37
Transportation 29 31 30 30 29
- ----------------------------------------------------------------------------------------------------------------------
Total 100,194 99,756 96,883 89,558 88,427
- ----------------------------------------------------------------------------------------------------------------------
Average Use and Revenue Per
Residential Customer:
Gas Used (Therms) 512 602 574 597 536
Revenue $ 385 $ 435 $ 404 $ 394 $ 365
Revenue Per Therm $ .75 $ .72 $ .70 $ .66 $ .68
Degree Days (Annual Normal in 1995 and 1994 -1702;
1991 to 1993 - 1,695) (1) 1,331 1,837 1,611 1,689 1,302
NUMBER OF EMPLOYEES (END OF PERIOD) 270 260 243 238 243
</TABLE>
Note: (1) The number of degrees that the daily mean temperature falls below 65
degrees F.
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Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
THE COMPANY
The Company's natural gas distribution operations are under the
jurisdiction of the Alabama Public Service Commission (APSC). The Company's
rate tariffs allow the cost of gas supplies and certain taxes to be passed
through to customers. These costs, therefore, ultimately have little impact on
the Company's earnings. Other costs, including a return on investment, must be
recovered through rates approved in traditional rate proceedings. (See Note 13
to the Consolidated Financial Statements.)
The nature of the Company's distribution business is highly seasonal
and temperature sensitive. As a result, in addition to other matters, the
Company's operating results in any given period reflect the impact of weather
through either increased or decreased sales volumes.
Bay Gas, which commenced operations in September 1994, is a regulated
utility governed under the jurisdiction of the APSC and as such, Bay Gas'
intrastate storage contracts are subject to APSC approval. In addition, by
Federal Energy Regulatory Commission order, Bay Gas is permitted to charge
market-based rates for interstate storage services.
RESULTS OF OPERATIONS
NET INCOME
The Company's net income for 1995 amounted to $4.0 million or $1.26
per share compared to $4.9 million or $1.78 per share for 1994. The 1995
decrease in net income reflects the impact of one of the warmest winters on
record in 1995 compared to a 1994 winter that was 7.9% colder than normal.
Earnings per share in 1995 were also impacted by the September 1994 issuance of
460,000 shares of Common Stock. The major portion of the proceeds from the
stock issuance were invested into Bay Gas which, in its first year of
operation, made only a limited contribution to net income. Currently, Bay Gas
has a contract with Mobile Gas to provide firm storage services and contracts
with third parties to provide interruptible storage services. Because certain
construction would be required to provide storage services to significant
additional customers, revenues from contracts with such customers, if any,
would not have a significant positive effect on the company's earnings per
share prior to fiscal 1997. There can be no assurance that Bay Gas will enter
into any such contracts. By APSC order, any losses from Bay Gas will not be
recoverable through increased rates to Mobile Gas customers.
Net income of $4.9 million or $1.79 per share was reported for 1993.
An increase from 1993 to 1994 in operating income of $902,000 was offset by an
increase in interest expense of $885,000.
13
<PAGE> 14
OPERATING REVENUES
Gross revenues from the sale and transportation of natural gas totaled
$56.2 million in 1995, $60.5 million in 1994, and $54.3 million in 1993. The
decrease in 1995 gross revenues reflects the impact of warmer weather which was
27.5% warmer than 1994 and 21.8% warmer than normal. Gas volumes sold and
delivered to temperature sensitive customers, who are primarily residential and
small commercial customers, tend to fluctuate as a function of weather.
Temperature sensitive volumes decreased 13.0% in 1995, which resulted in a $4.8
million or 10.1% decrease in revenues from these customers as compared to 1994.
Offsetting the decrease in gas revenues from temperature sensitive customers
was a 7.9% increase in gas volumes sold and delivered in 1995 to industrial and
large commercial customers. Revenues from these customers increased $253,000 or
2.1% in 1995 as compared to 1994 as a result of increased plant utilization by
such customers. Another offset to the decrease in revenue from temperature
sensitive customers was the effect of the first full year of operation of Bay
Gas. Non-intercompany revenues from Bay Gas operations increased $232,000 in
1995 as compared to 1994.
The increase in gross revenues for 1994 compared to 1993 reflects the
effect of the first full year of operations of customers acquired from the
Utilities Board of the Town of Citronelle ("Citronelle") in May 1993. These
customers accounted for $2.7 million of the increase in revenues. Also
contributing to the increase in revenues was the effect of weather which in
1994 was 14.0% colder than 1993 and 7.9% colder than normal. As a result of the
colder weather and the acquisition of Citronelle, gas volumes sold and
delivered to temperature sensitive customers in 1994 increased 12.2% as
compared to 1993.
Merchandise sales and jobbing revenues were $2.9 million in 1995, $2.8
million in 1994, and $2.5 million in 1993. The increases for both years
resulted primarily from increased sales volumes.
EXPENSES
Cost of gas decreased $6.9 million or 27.5% in 1995 compared to 1994.
The 1995 decrease is primarily attributed to the Company's use of the Bay Gas
storage facility, as opposed to interstate pipeline companies' facilities, for
storage of gas which is used as a firm gas supply to ensure that a certain
amount of gas supply is available during peak demand periods. Amounts paid to
Bay Gas of $4.1 million for gas storage services, a component of gas costs,
have been eliminated in consolidation. Another factor in the 1995 decrease is
the 9.6% decrease in gas volumes sold to customers during 1995. Cost of gas
increased $2.9 million or 12.8% in 1994 compared to 1993 as a result of factors
discussed above which influenced gas revenues.
Cost of merchandise and jobbing decreased $49,000 or 2.2% in 1995
despite an increase in merchandise and jobbing revenue as a result of higher
profit margins realized
14
<PAGE> 15
on 1995 sales. Cost of merchandise and jobbing increased $248,000 or 12.7%
primarily as a result of increased sales volumes reported in 1994.
Operations expense increased $913,000 or 6.1% in 1995 as compared to
1994. Of this increase, $647,000 is attributed to the first full year of Bay
Gas operations, with the remaining increase due to general inflation.
Operations expense increased $1.2 million or 8.5% in 1994 compared to 1993 as a
result of servicing additional customers acquired from Citronelle and the
colder weather experienced in 1994. Also contributing to the 1994 increase were
special promotional expenses.
Maintenance expense increased $241,000, or 19.3% in 1994 compared to
1993. The 1994 increase resulted from the additional customers acquired from
Citronelle and certain structural repairs made to buildings.
Depreciation expense increased $1.0 million or 26.0% in 1995 compared
to 1994 and $545,000 or 15.7% in 1994 compared to 1993. Increases for both
years were due to continued growth in depreciable plant in service.
Depreciation attributable to Bay Gas accounted for $776,000 of the increase in
1995, while assets acquired from Citronelle accounted for $393,000 of the
increase in 1994.
Taxes, other than income taxes, consist primarily of state and local
taxes which are based on gross revenues and fluctuate accordingly. These taxes
are passed through to customers and thus do not impact the Company's net
income. Another component of taxes, other than income taxes, is taxes paid on
property. Bay Gas property taxes and other taxes increased $362,000 as a result
of the first full year of operations. As a result, taxes other than income
taxes increased in 1995 compared to 1994 despite lower revenues in 1995.
Gross interest expense increased $66,000 or 1.2% in 1995 and $1.5
million or 37.3% in 1994. An increase in short-term borrowings accounted for
the 1995 increase while the Company's issuance of $12 million of 7.48% Series
First Mortgage Bonds in July 1993 and $22.5 million of 8.19% Guaranteed Senior
Secured Notes ("Bay Gas Notes") during 1993 accounted for the increase in 1994.
Interest on the Bay Gas Notes was capitalized during construction of the
storage facility and is reflected in the allowance for borrowed funds used
during construction, which has the effect of reducing net interest expense. As
a result of the commencement of Bay Gas operations in September 1994, interest
on the Bay Gas Notes was no longer capitalized during 1995, which increased net
interest expense by $2.0 million.
Higher interest income in 1993 results from earnings on the temporary
investment of the funds received upon issuance of the two First Mortgage Bonds
by the Company in advance of the funds being expended.
Income taxes fluctuated with the changes in pre-tax income. The
Company's effective tax rates in 1995, 1994, and 1993 were 36.0%, 36.4% and
35.9% respectively. Income tax expense is detailed in Note 7 to the
Consolidated Financial Statements.
15
<PAGE> 16
EFFECTS OF INFLATION
Inflation impacts the prices the Company must pay for labor and other
goods and services required for operation, maintenance and capital
improvements. Changes in purchased gas costs are passed through to customers in
accordance with the approved provision of the Company's rate tariffs. Increases
in other costs must be recovered through timely filings for rate relief.
GAS SUPPLY
A primary goal of the Company is to provide gas at the lowest possible
cost while maintaining a reliable long-term supply. To accomplish this goal the
Company has diversified its gas supply by constructing and purchasing pipelines
to access the vast gas reserves in our area, both offshore and onshore. The
Company has also contracted with certain of these sources for firm supply. In
addition, the Company has completed construction of a storage cavern which
provides for a major portion of the Company's peak day needs. The storage
cavern commenced operations in September 1994 when the Company began to inject
gas for storage. The diversification of sources gives the Company more
flexibility to obtain gas at the most favorable prices. See Note 3 to the
Consolidated Financial Statements for a discussion of certain gas supply
issues.
ENVIRONMENTAL
The Company is subject to various federal, state, and local laws and
regulations relating to the environment, which thus far have not had a material
effect on the Company's financial position or results of operations. See Note
10 to the Consolidated Financial Statements for a discussion of certain
environmental issues.
CAPITAL RESOURCES AND LIQUIDITY
The Company's cash needs reflect the capital-intensive nature of its
business. The following table briefly describes capital expenditures in the
periods indicated:
Fiscal Years Ended September 30, (In thousands)
<TABLE>
<CAPTION>
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
System improvement and expansion $ 8,121 $ 8,187 $ 5,716
Gas system acquisition 11,603
Gas storage facility 2,917 19,810 7,923
------- ------- -------
Total $11,038 $27,997 $25,242
</TABLE>
The Company generally relies on internally generated funds and
short-term borrowings to meet working capital requirements and temporarily
finance normal capital expenditures. Cash flows from operating activities were
lower in 1995 as compared to 1994
16
<PAGE> 17
due primarily to decreased net income and the change in operating assets and
liabilities. These two factors which decreased cash flow were partially offset
by an increase in depreciation in 1995. The fluctuation in operating assets and
liabilities is generally the result of the timing of cash receipts and
payments. Funds provided by operations totaled $8.9 million in 1995,
representing 57% of the Company's cash needs during such period, the remainder
of which was obtained through reduction of temporary investments and cash
equivalents and by drawings upon the Company's revolving credit agreement.
Funds provided by operations totaled $13.0 million in 1994, representing 40% of
the Company's cash needs. Additional funding in 1994 was provided through
reduction of temporary investments and by the issuance of 460,000 shares of
Common Stock during September 1994. Funds provided by operations accounted for
24% of the Company's cash needs in 1993 with the remainder of the Company's
cash needs provided by the issuance of long-term debt.
In 1993, additional financing was required for the $11.6 million
purchase of a portion of the gas distribution system of Citronelle. Mobile Gas
issued a $4.1 million 9%, 20-year unsecured note to Citronelle for the purchase
and also issued $12.0 million in 7.48% Series First Mortgage Bonds due 2023,
which funded the cash portion of the purchase price related to the Citronelle
acquisition, as well as the early retirement of an aggregate principal amount
of $4.4 million of the 8% Series First Mortgage Bonds due 1997 and the 9.35%
Series First Mortgage Bonds due 1996.
The Bay Gas Storage facility is able to hold up to 3.7 billion cubic
feet ("BCF") of natural gas, of which approximately 2.4 BCF represents working
storage capacity and 1.3 BCF represents base gas to remain in the cavern to
provide sufficient pressure to maintain cavern integrity. Capital costs as of
September 30, 1995, which include an interconnect with Florida Gas
Transmission, an interstate pipeline company, were approximately $33.3 million
plus an additional $1.7 million for base gas. Funds for the development and
construction of the Bay Gas storage facility have come from private issuance of
the $22.5 million of Bay Gas Notes, pursuant to an Indenture of Mortgage which
secures the Bay Gas Notes. Additional funds have come from cash equivalents on
hand and Mobile Gas' issuance of 460,000 shares of Common Stock in September
1994, which generated net proceeds of $9.3 million.
Bay Gas has entered into an agreement with Koch Gateway Pipeline
Company for a pipeline interconnection which will further expand access to
interstate markets. Expected to be completed in December 1995 at a cost to Bay
Gas of $1,000,000, this interconnect will be funded through an equity
contribution from the Bay Gas partners to Bay Gas. Funds for such equity
contribution by Mobile Gas will be obtained from short-term bank borrowings.
Currently, Bay Gas has a contract with Mobile Gas to provide storage
of approximately one-third of the working storage capacity of the storage
facility or approximately .8 BCF. Additionally, Bay Gas has entered into
several contracts to provide interruptible storage service. Should Bay Gas
enter into significant contracts to provide firm
17
<PAGE> 18
storage services, additional equipment, which will consist primarily of
compressors and dehydrators, will need to be added to give the storage facility
sufficient injection and withdrawal capacity. The Company estimates that up to
$6.7 million in capital expenditures, plus $850,000 for additional base gas
(based on current costs) would be required to efficiently utilize all the
remaining storage capacity of the storage facility. The Company ultimately
intends to finance the cost of these additional facilities by issuing up to
$7.5 million in debt under the Bay Gas Indenture and through an equity
contribution from the Bay Gas partners to Bay Gas. Funds for such equity
contribution by Mobile Gas would be obtained from short-term bank borrowings
and funds provided by operations. The Company anticipates that additional base
gas costs would also be financed from short-term bank borrowings.
During 1995, Mobile Gas entered into a long-term contract with an
industrial customer to transport gas to the customer's facility. In order to
service the customer by mid 1997, an estimated $10 million in new facilities
will be constructed by the Company. At September 30, 1995, $150,000 had been
expended on constructing these facilities.
In addition to the cash requirements of Bay Gas, the Company
anticipates fiscal 1996 capital expenditures related to the Company's regular
construction program to be $6.4 million. Funds for the Company's cash needs
other than Bay Gas are expected to come primarily from internal cash generation
and draws upon the Company's unused committed lines of credit totaling $18.2
million at September 30, 1995. Management believes it has adequate financial
flexibility to meet its anticipated cash needs in the foreseeable future.
Item 8. Financial Statements and Supplementary Data.
The financial statements and financial statement schedules and the
Independent Auditors' Report thereon filed as part of this report are listed in
the "Mobile Gas Service Corporation and Subsidiaries Index to Financial
Statements and Schedules" at Page F-1, which follows Part IV hereof.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not Applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information under the captions "Election of Directors" and
"Information Regarding the Board of Directors" contained in the Company's
definitive proxy statement with respect to its 1996 Annual Meeting of
Stockholders is incorporated herein by reference.
18
<PAGE> 19
For information with respect to executive officers of the Registrant,
see "Executive Officers of the Registrant" at the end of Part I of this Report.
Information under the caption "Reports Under Section 16 of the
Securities and Exchange Act" contained in the Company's definitive proxy
statement with respect to its 1996 Annual Meeting of Stockholders is
incorporated herein by reference.
Item 11. Executive Compensation.
Information under the caption "Executive Compensation" contained in
the Company's definitive proxy statement with respect to its 1996 Annual
Meeting of Stockholders is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information under the caption "Security Ownership of Certain
Beneficial Owners and Management" contained in the Company's definitive proxy
statement with respect to its 1996 Annual Meeting of Stockholders is
incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
Not Applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a), (d) Financial Statements and Financial Statement Schedules
See "Mobile Gas Service Corporation and Subsidiaries
Index to Financial Statements and Schedules" at page
F-1, which follows Part IV hereof.
(3) Exhibits - See Exhibit Index on pages E-1 through
E-4.
(b) No reports on Form 8-K were filed during the last
quarter of the fiscal year ended September 30, 1995.
(c) Exhibits filed with this report are attached hereto.
19
<PAGE> 20
Signatures
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MOBILE GAS SERVICE CORPORATION
------------------------------
Registrant
By: /s/ Charles P. Huffman
-------------------------------------
Charles P. Huffman, Vice President,
Chief Financial Officer and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William J. Hearin Director, Chairman December 1, 1995
- ---------------------
William J. Hearin
/s/ Walter L. Hovell Director, Vice-Chairman December 1, 1995
- --------------------
Walter L. Hovell
Director, President and
Chief Executive Officer
/s/ John S. Davis (Principal Executive Officer) December 1, 1995
- -----------------
John S. Davis
Vice President, Chief Financial
Officer and Treasurer (Principal
/s/ Charles P. Huffman Financial and Accounting Officer) December 1, 1995
- ----------------------
Charles P. Huffman
/s/ Joseph G. Hollis Director December 1, 1995
- --------------------
Joseph G. Hollis
</TABLE>
20
<PAGE> 21
Signatures (Continued)
<TABLE>
<S> <C> <C>
/s/ John C. Hope Director December 1, 1995
- ----------------
John C. Hope
/s/ Gaylord C. Lyon Director December 1, 1995
- -------------------
Gaylord C. Lyon
/s/ S. Felton Mitchell, Jr. Director December 1, 1995
- --------------------------
S. Felton Mitchell, Jr.
/s/ G. Montgomery Mitchell Director December 1, 1995
- --------------------------
G. Montgomery Mitchell
/s/ F. B. Muhlfeld Director December 1, 1995
- ------------------
F. B. Muhlfeld
/s/ E. B. Peebles, Jr. Director December 1, 1995
- ---------------------
E. B. Peebles, Jr.
/s/ Thomas B. Van Antwerp Director December 1, 1995
- -------------------------
Thomas B. Van Antwerp
</TABLE>
21
<PAGE> 22
MOBILE GAS SERVICE CORPORATION
AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
<TABLE>
<S> <C>
Independent Auditors' Report F-2
Consolidated Balance Sheets, September 30, 1995 and 1994 F-3
Consolidated Statements of Income for the years ended
September 30, 1995, 1994 and 1993 F-5
Consolidated Statements of Cash Flow for the years ended
September 30, 1995, 1994 and 1993 F-6
Consolidated Statements of Common Stockholders' Equity
for the years ended September 30, 1995, 1994 and 1993 F-7
Notes to Consolidated Financial Statements F-8
Financial Statement Schedules
- -----------------------------
II Valuation and Qualifying Accounts and Reserves, Years
Ended September 30, 1995, 1994 and 1993 S-1
Schedules other than that referred to above are omitted and are not applicable or not required.
</TABLE>
F-1
<PAGE> 23
INDEPENDENT AUDITORS' REPORT
Mobile Gas Service Corporation:
We have audited the accompanying consolidated balance sheets of Mobile
Gas Service Corporation and subsidiaries as of September 30, 1995 and 1994 and
the related consolidated statements of income, common stockholders' equity, and
cash flows for each of the three fiscal years in the period ended September 30,
1995. Our audits also included the financial statement schedules listed in the
Index referred to in Item 14. These financial statements and financial
statement schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by Management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Mobile Gas Service
Corporation and its subsidiaries at September 30, 1995 and 1994, and the
results of their operations and their cash flows for each of the three fiscal
years in the period ended September 30, 1995, in conformity with generally
accepted accounting principles. Also, in our opinion, such financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
As discussed in Note 7 to the Consolidated Financial Statements, the
Company changed its method of accounting for income taxes effective October 1,
1993.
/s/ Deloitte & Touche LLP
- -------------------------
Deloitte & Touche LLP
Mobile, Alabama
October 31, 1995
F-2
<PAGE> 24
CONSOLIDATED
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
==========================================================================================================================
September 30, (in thousands) 1995 1994
==========================================================================================================================
<S> <C> <C>
Property, Plant, and Equipment - At Cost $146,589 $136,242
Less Accumulated Depreciation and Amortization 31,853 28,657
- --------------------------------------------------------------------------------------------------------------------------
Net Property, Plant, and Equipment 114,736 107,585
Construction Work in Progress 188 1,154
- --------------------------------------------------------------------------------------------------------------------------
Total Property, Plant, and Equipment 114,924 108,739
- --------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and Cash Equivalents 1,023 4,045
Temporary Investments (At Cost Which Approximates Market) 1,900
Special Deposits 1,717
Receivables:
Gas 2,809 2,484
Merchandise 1,444 1,611
Other 208 255
Allowance for Doubtful Accounts (266) (215)
Materials, Supplies, and Merchandise (At Average Cost) 1,206 978
Gas Stored Underground For Current Use (At Average Cost) 1,352 896
Deferred Gas Costs 156 195
Accumulated Deferred Income Taxes 3,540 2,408
Prepayments 1,456 1,513
- --------------------------------------------------------------------------------------------------------------------------
Total Current Assets 12,928 17,787
- --------------------------------------------------------------------------------------------------------------------------
Regulatory Assets 1,780 1,736
Merchandise Receivables Due After One Year 5,305 4,365
Deferred Charges 1,630 1,902
- --------------------------------------------------------------------------------------------------------------------------
Total $136,567 $134,529
==========================================================================================================================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
F-3
<PAGE> 25
CONSOLIDATED
BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
==========================================================================================================================
September 30, (in thousands, except share data) 1995 1994
==========================================================================================================================
<S> <C> <C>
Capitalization:
Stockholders' Equity:
Common Stock, $2.50 Par Value
(Authorized 4,000,000 Shares; Outstanding
1995 - 3,211,000; 1994 - 3,202,000 Shares) $ 8,028 $ 8,005
Capital in Excess of Par Value 9,123 8,962
Retained Earnings 27,912 27,284
- --------------------------------------------------------------------------------------------------------------------------
Total Stockholders' Equity 45,063 44,251
Minority Interest 2,011 1,835
Long-Term Debt (Less Current Maturities) 57,328 59,047
- --------------------------------------------------------------------------------------------------------------------------
Total Capitalization 104,402 105,133
- --------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Long-Term Debt Due Within One Year 1,719 1,369
Notes Payable to Banks 1,800
Accounts Payable 2,249 3,236
Take-or-Pay Costs 1,150
Dividends Declared 867 833
Customer Deposits 1,558 1,549
Taxes Accrued 2,273 2,207
Interest Accrued 1,673 1,698
Deferred Purchased Gas Adjustment 5,960 3,085
Other Liabilities 2,237 1,777
- --------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 20,336 16,904
- --------------------------------------------------------------------------------------------------------------------------
Accrued Pension Cost 1,639 1,507
Accrued Postretirement Benefit Cost 1,480 1,652
Accumulated Deferred Income Taxes 8,213 6,753
Accumulated Deferred Investment Tax Credits 497 521
Other Liabilities 2,059
Commitments and Contingencies (Note 10)
- --------------------------------------------------------------------------------------------------------------------------
Total $136,567 $134,529
==========================================================================================================================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE> 26
CONSOLIDATED
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
==============================================================================================================================
Years Ended September 30, (in thousands, except per share data) 1995 1994 1993
==============================================================================================================================
<S> <C> <C> <C>
Operating Revenues
Gas Revenues $56,204 $60,470 $54,292
Merchandise Sales and Jobbing 2,907 2,824 2,525
- ------------------------------------------------------------------------------------------------------------------------------
Total Operating Revenues 59,111 63,294 56,817
- ------------------------------------------------------------------------------------------------------------------------------
Operating Expenses
Cost of Gas 18,311 25,251 22,378
Cost of Merchandise and Jobbing 2,148 2,197 1,949
Operations 15,826 14,913 13,742
Maintenance 1,419 1,490 1,249
Depreciation 5,055 4,013 3,468
Taxes, Other Than Income Taxes 4,758 4,600 4,103
- ------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses 47,517 52,464 46,889
- ------------------------------------------------------------------------------------------------------------------------------
Operating Income 11,594 10,830 9,928
- ------------------------------------------------------------------------------------------------------------------------------
Other Income and (Expense)
Interest Expense (5,485) (5,419) (3,947)
Allowance for Borrowed Funds Used During Construction 57 2,003 1,038
Interest Income 438 559 885
Minority Interest (312) (284) (232)
- ------------------------------------------------------------------------------------------------------------------------------
Total Other Income (Expense) (5,302) (3,141) (2,256)
- ------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes 6,292 7,689 7,672
Income Taxes 2,264 2,796 2,752
- ------------------------------------------------------------------------------------------------------------------------------
Net Income 4,028 4,893 4,920
Preferred Stock Dividend Requirements 5 29
- ------------------------------------------------------------------------------------------------------------------------------
Earnings Applicable to Common Stock $4,028 $4,888 $4,891
- ------------------------------------------------------------------------------------------------------------------------------
Average Shares Outstanding 3,208 2,752 2,733
- ------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share of Common Stock $1.26 $1.78 $1.79
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE> 27
page
CONSOLIDATED
STATEMENTS OF
CASH FLOWS
<TABLE>
<CAPTION>
==============================================================================================================================
Years Ended September 30, (in thousands) 1995 1994 1993
==============================================================================================================================
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $4,028 $4,893 $4,920
Depreciation and Amortization 5,261 4,207 3,645
Provision for Losses on Accounts Receivable 293 259 128
Provision for Deferred Income Taxes 494 (286) 1,474
Provision for Deferred Gas Cost 39 74 (89)
Minority Interest 176 215 94
- ------------------------------------------------------------------------------------------------------------------------------
10,291 9,362 10,172
Changes in Operating Assets and Liabilities (1,390) 3,646 (1,988)
- ------------------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 8,901 13,008 8,184
- ------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Capital Expenditures (11,038) (27,997) (13,639)
Acquisition of Business, Net of Cash Acquired (11,603)
Net Change in Temporary Investments 1,900 11,000 (12,900)
- ------------------------------------------------------------------------------------------------------------------------------
Net Cash Used In Investing Activities (9,138) (16,997) (38,142)
- ------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Repayment of Long-Term Debt (1,369) (1,548) (5,830)
Proceeds from Issuance of Long-Term Debt 38,581
Proceeds from Issuance of Common Stock 9,318
Changes in Short-Term Borrowings 1,800
Payment of Dividends, Net of Dividend Reinvestment (3,216) (2,749) (2,511)
Redemption of Preferred Stock (642)
- ------------------------------------------------------------------------------------------------------------------------------
Net Cash (Used) Provided by Financing Activities (2,785) 4,379 30,240
- ------------------------------------------------------------------------------------------------------------------------------
Net (Decrease) Increase in Cash and Cash Equivalents (3,022) 390 282
Cash and Cash Equivalents at Beginning of Year 4,045 3,655 3,373
- ------------------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $1,023 $4,045 $3,655
- ------------------------------------------------------------------------------------------------------------------------------
Cash Paid During the Year for:
Interest $5,294 $5,309 $3,172
- ------------------------------------------------------------------------------------------------------------------------------
Income Taxes $1,938 $3,055 $2,218
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
F-6
<PAGE> 28
CONSOLIDATED
STATEMENTS OF
COMMON STOCKHOLDERS'
EQUITY
<TABLE>
<CAPTION>
Common Stock
------------------------ Capital in
Number of Par Excess of Retained
(In thousands, except per share data) Shares Value Par Value Earnings
====================================================================================================================================
<S> <C> <C> <C> <C>
Balance at September 30, 1992 2,729 $6,823 $513 $23,085
Net Income 4,920
Dividend Reinvestment Plan 7 16 127
Cash Dividends:
Common Stock - $.96 per share (2,624)
Preferred Stock - $4.90 per share (29)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1993 2,736 6,839 640 25,352
Net Income 4,893
Dividend Reinvestment Plan 6 16 153
Cash Dividends:
Common Stock - $1.02 per share (2,914)
Preferred Stock - $.83 per share (5)
Premium on Redemption of Preferred Stock (42)
Issuance of Common Stock 460 1,150 8,168
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1994 3,202 8,005 8,961 27,284
Net Income 4,028
Dividend Reinvestment Plan 9 23 162
Cash Dividends:
Common Stock - $1.06 per share (3,400)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at September 30, 1995 3,211 $8,028 $9,123 $27,912
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
F-7
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Mobile
Gas Service Corporation, its wholly-owned subsidiaries, MGS Energy Services,
Inc., MGS Storage Services, Inc., MGS Marketing Services, Inc., its 87.5%
owned partnership, Bay Gas Storage Company, Ltd. (Bay Gas), and its 51% owned
partnership, Southern Gas Transmission Company (collectively the"Company"). All
significant intercompany balances and transactions have been eliminated.
PROPERTY, PLANT, AND EQUIPMENT
The cost of additions includes direct labor and materials, allocable
administrative and general expenses, pension and payroll taxes, and an
allowance for funds used during construction. The cost of depreciable property
retired, plus cost of dismantling, less salvage, is charged to accumulated
depreciation. Estimated interest cost associated with property under
construction, based upon weighted average interest rate for short-term
borrowings or the interest rate on borrowings for specific projects, is
capitalized as an allowance for borrowed funds used during construction.
Maintenance, repairs, and minor renewals and betterment of property
are charged to operations.
Provisions for depreciation are computed principally on straight-line
rates for financial statement purposes and on accelerated rates for income tax
purposes. Depreciation for financial statement purposes is provided at an
annual rate averaging approximately 4% of depreciable property, excluding the
gas storage facility which is depreciated at an annual rate averaging 2.7%.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Temporary
investments, consisting of certificates of deposit, committed to be used for
construction are excluded from cash equivalents.
REVENUES AND GAS COSTS
Rates charged to gas customers are subject to the jurisdiction of the
Alabama Public Service Commission (APSC). Increases or decreases in the cost
of gas and certain other costs are passed through to customers in accordance
with provisions in the Company's rate schedules. Any over or under recoveries
of these costs are charged or credited to cost of gas and included in current
assets or liabilities.
F-8
<PAGE> 30
Revenues from residential and commercial customers are recorded as
meters are read on a cycle basis throughout each month. The commodity cost of
purchased gas applicable to gas delivered to customers but not yet billed
under the cycle billing method is deferred.
INCOME TAXES
Beginning October 1, 1993, the Company adopted the Statement of
Financial Accounting Standards No. 109,"Accounting for Income Taxes" ("SFAS
109"). SFAS 109 required the Company to change to the asset and liability
method of accounting for income taxes which required the establishment of
deferred tax liabilities and assets, as measured by enacted tax rates, for all
temporary differences caused when the tax basis of an asset or liability
differs from that reported in the financial statements. Due to the regulated
nature of the Company's utility business, the primary effect of adoption of
this statement was recorded as a regulatory asset. The effect on income as a
result of the adoption of this statement was not significant.
For fiscal year ended September 30, 1993, deferred income taxes are
generally recorded for timing differences between book and taxable income. The
tax effect of differences in book and tax depreciation related to pre-1981
property additions, however, was flowed through to income.
Investment tax credits realized after 1980 are deferred and amortized
over the average life of the related property in accordance with regulatory
treatment.
RECLASSIFICATIONS
Certain amounts in the prior year financial statements have been
reclassified to conform with the 1995 financial statement presentation.
2. DETAIL OF SELECTED BALANCE SHEET ACCOUNTS
THE FUNCTIONAL CLASSIFICATIONS FOR THE COST OF PROPERTY, PLANT, AND EQUIPMENT
ARE AS FOLLOWS AT SEPTEMBER 30, (IN THOUSANDS):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Distribution Plant $85,646 $79,420
General Plant 12,396 11,032
Storage Plant 34,954 32,055
Transmission Plant 3,464 3,464
Acquisition Adjustment 10,129 10,271
-------- -------
Total Property, Plant, and Equipment $146,589 $136,242
======== ========
</TABLE>
F-9
<PAGE> 31
THE COMPONENTS OF REGULATORY ASSETS ARE AS FOLLOWS AT SEPTEMBER 30, (IN
THOUSANDS):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Income Taxes (Note 7) $1,569 $1,736
Postemployment Benefits (Note 9) 211
-------- --------
Total Regulatory Assets $1,780 $1,736
======== ========
</TABLE>
3. REGULATORY MATTERS
DESCRIPTION OF BUSINESS
The Company is engaged principally in the distribution of natural gas
to residential, commercial, and industrial customers in South Alabama subject
to regulation by the APSC. For the major portion of the Company's business, the
APSC approves rates which are intended to permit the recovery of the cost of
service including a return on investment. Gas deliveries to certain industrial
customers are subject to regulation by the APSC through contract approval. In
September 1994, Bay Gas completed the development and construction of a natural
gas storage facility located in a salt dome near the north end of the Company's
service area. As a separate utility regulated by the APSC, Bay Gas' intrastate
storage contracts require APSC approval. In addition, by Federal Energy
Regulatory Commission order, Bay Gas is permitted to charge market-based rates
for interstate storage services. The Company is also engaged in various
unregulated activities including the sale and financing of gas appliances,
jobbing work, and contract and consulting work for utilities and industrial
customers. Substantially all property, plant, and equipment is considered
utility plant. Included in property, plant, and equipment are acquisition
adjustments, net of amortization, of $9,203,000 and $9,592,000 at September 30,
1995 and 1994, respectively. Such acquisition adjustments are being amortized
to cost of service over the lives of the assets acquired.
FERC ORDER 636
In April 1992, the Federal Energy Regulatory Commission (FERC) issued
Order 636 which requires pipeline companies to unbundle services such as
transportation and storage from traditional merchant service and offer these
services on a nondiscriminatory basis to all shippers of natural gas. The
Company and Koch Gateway Pipeline Company (Koch), formerly United Gas Pipe
Line Company, have entered into contracts, approved by the FERC and effective
April 1, 1994, complying with Order 636 methodology. Approximately twenty
percent of the Company's firm gas supply is delivered under such contracts.
Pricing under the contracts in accordance with Order 636 has not had a material
impact on the Company's cost of gas. The remaining firm gas supply for the
Company is obtained from intrastate sources and the Company's own storage
facility.
F-10
<PAGE> 32
Order 636 permits pipelines to recover from their customers the
transition costs of restructuring their services. On October 16, 1995, Koch
filed tariff sheets, which have been approved by the FERC to be effective
November 1, 1995, which reflect recovery of transition costs over a two-year
period through a reservation surcharge. Based on the reservation surcharge in
Koch's tariff sheets and the Company's contract reservation volumes over the
next two years, the Company's share of transition costs is estimated to be
$43,000.
TAKE-OR-PAY COSTS
As a result of a take-or-pay cost settlement between Koch and its
customers entered into during the year ended September 30, 1993, the Company
recorded a liability of $860,000 during 1993. An additional liability of
$679,000 was recorded during the year ended September 30, 1994 as a result of
settlements filed in 1994 which resolved all take-or-pay cost recovery issues.
The above settlements have been approved by the FERC, and the Company has
recovered all take-or-pay costs from its customers as allowed by the APSC.
During the year ended September 30, 1995, the Company paid all remaining unpaid
take-or-pay costs as required by such settlements.
4. CAPITAL STOCK
In January 1993, the stockholders approved the Mobile Gas Service
Corporation 1992 Stock Option Plan ("the Plan") which provides for the granting
of incentive stock options, non-qualified stock options, and stock appreciation
rights to key employees. Under the Plan, 150,000 shares of the Company's
authorized but unissued common stock have been reserved for issuance. No stock
options or stock appreciation rights had been granted as of September 30, 1994.
During the year ended September 30, 1995, 105,000 options were granted at an
option price of $21.125, representing the market price on the date of the
grant. Stock options become 25% exercisable on the first anniversary of the
date of grant, and an additional 25% become exercisable each succeeding year.
No stock options were exercised during 1995 and no stock options are
exercisable at September 30, 1995. As of September 30, 1995, there remained
45,000 shares for which options may be granted under the Plan.
At September 30, 1995, 24,000 shares of the Company's authorized but
unissued common stock were reserved for issuance under the Company's Dividend
Reinvestment Plan.
5. RESTRICTIONS ON RETAINED EARNINGS
The Company's long-term debt instruments contain certain debt to
equity ratio requirements and restrictions on the payment of cash dividends and
the purchase of shares of its capital stock. At September 30, 1995, under the
most limiting provisions, retained earnings in the amount of $10,143,177 were
unrestricted.
F-11
<PAGE> 33
6. LONG-TERM DEBT
LONG-TERM DEBT CONSISTS OF THE FOLLOWING AT SEPTEMBER 30, (IN THOUSANDS):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Mobile Gas Service Corporation
First Mortgage Bonds
10.25% Series, Due October 1, 2003 $7,000 $7,500
8.75% Series, Due July 1, 2022 12,000 12,000
7.48% Series, Due July 1, 2023 12,000 12,000
9% Note, Due May 13, 2023 3,914 4,001
Southern Gas Transmission Company
Revenue Note, Series A, Due February 1, 1999
(Interest varies from 6.875% to 8.05%) 1,920 2,415
Bay Gas Storage Company, Ltd.
8.19% Guaranteed Senior Secured Notes
due December 1, 2014 22,213 22,500
--------- ---------
Total 59,047 60,416
Less amounts due within one year 1,719 1,369
--------- ---------
Total long-term debt $57,328 $59,047
========= =========
</TABLE>
Maturities and sinking fund requirements on long-term debt in each of
the five fiscal years subsequent to September 30, 1995 are as follows: 1996 -
$1,719,000; 1997 -$2,068,000; 1998 - $2,180,000; 1999 - $2,100,000; and 2000 -
$1,962,000.
Substantially all of the property of the Company is pledged as
collateral for the long-term debt.
At September 30, 1995, the Company had a $20 million revolving credit
agreement which expires in July 1997, with a group of banks. Drawings upon the
agreement may be made as needed providing that the Company is in compliance
with certain covenants in the revolving credit agreement and other loan
agreements. The Company currently is in compliance with all such convenants.
The Company pays a fee for its committed lines of credit rather than maintain
compensating balances. The commitment fee is 0.125% of the average daily
unborrowed amount during the annual period of calculation. Unused committed
lines of credit at September 30, 1995 were $18.2 million. Short-term borrowings
outstanding were $1.8 million with a weighted average interest rate of 6.875%
at September 30, 1995. There were no short-term borrowings at September 30,
1994.
F-12
<PAGE> 34
7. INCOME TAXES
THE COMPONENTS OF INCOME TAX EXPENSE ARE AS FOLLOWS FOR THE YEARS ENDED
SEPTEMBER 30, (IN THOUSANDS):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income Tax Components
Current:
Federal $1,622 $2,819 $1,185
State 172 287 117
------- ------- -------
1,794 3,106 1,302
------- ------- -------
Deferred:
Federal 448 (260) 1,337
State 46 (26) 137
------- ------- -------
494 (286) 1,474
------- ------- -------
Deferred investment tax
credit amortization (24) (24) (24)
------- ------- -------
Total $2,264 $2,796 $2,752
======= ======= =======
</TABLE>
THE TAX EFFECT OF TIMING DIFFERENCES IS AS FOLLOWS FOR THE YEAR ENDED SEPTEMBER
30, (IN THOUSANDS):
<TABLE>
<CAPTION>
1993
----
<S> <C>
Excess of tax over book depreciation
on post-1980 property additions $720
Over collection of gas and certain other costs 977
Other (223)
------
Total deferred income taxes $1,474
======
</TABLE>
A RECONCILIATION OF INCOME TAX EXPENSE AND THE AMOUNT COMPUTED BY MULTIPLYING
INCOME BEFORE INCOME TAXES BY THE STATUTORY FEDERAL INCOME TAX RATE FOR THE
PERIODS INDICATED IS AS FOLLOWS FOR THE YEARS ENDED SEPTEMBER 30, (IN
THOUSANDS):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory Federal income taxes $2,139 $2,614 $2,608
Excess of book over tax depreciation on
pre-1981 property additions 109 106 104
State income taxes 144 172 168
Gas supply settlement (74) (68) (153)
Other, net (54) (28) 25
------- ------- --------
Income tax expense $2,264 $2,796 $2,752
------- ------- --------
Effective tax rate 36.0% 36.4% 35.9%
</TABLE>
F-13
<PAGE> 35
Changes in the deferred income taxes relating to utility operations
arising from the adoption of SFAS 109 represent income taxes recoverable
through future rates over the life of the related assets and liabilities. A
regulatory asset of $1,569,000 and $1,736,000 at September 30, 1995 and 1994,
respectively, has been recorded as a result of the increase in the net deferred
tax liability related to utility operations. In accordance with the current
rate making practices followed by the APSC, the tax effect of these differences
is expected to be collected in customer rates when such taxes become payable.
No valuation allowance is deemed necessary, as the Company anticipates
generating adequate future taxable income to realize the benefits of all
deferred tax assets on the balance sheet.
THE SIGNIFICANT TAX COMPONENTS OF THE COMPANY'S NET DEFERRED TAX LIABILITY AS
OF SEPTEMBER 30, ARE (IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred Tax Liabilities:
Differences between book and tax basis of property $7,860 $6,253
Prepaid Insurance 318 355
Regulatory Asset 568 629
Other 156 190
------- --------
8,902 7,427
------- --------
Deferred Tax Assets:
Pension 593 546
Purchased Gas Adjustment 2,158 1,117
Gross Receipts Taxes 371 409
Unbilled Revenue 169 271
Postretirement 244 232
Other 694 507
------- --------
4,229 3,082
------- --------
Net Deferred Tax Liability $4,673 $4,345
======= ========
</TABLE>
8. RETIREMENT PLANS AND OTHER BENEFITS
The Company has a noncontributory, defined benefit retirement plan
covering substantially all of its employees. Benefits are based on the greater
of amounts resulting from two different formulas: years of service and average
compensation during the last five years of employment or years of service and
compensation during the term of employment. The"projected unit credit"
actuarial method was used to determine the service cost and actuarial
liability. The Company annually contributes to the plan an amount deductible
for Federal income tax purposes.
F-14
<PAGE> 36
NET PERIODIC PENSION COST INCLUDED THE FOLLOWING COMPONENTS FOR THE YEARS ENDED
SEPTEMBER 30, (IN THOUSANDS):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost $431 $433 $429
Interest cost 1,168 1,086 999
Actual return on plan assets (3,549) (490) (3,320)
Net amortization and deferral 2,082 (856) 2,047
----- ----- -----
Net pension cost $132 $173 $155
===== ===== =====
</TABLE>
ASSUMPTIONS USED IN THE ACTUARIAL COMPUTATIONS FOR THE YEARS ENDED SEPTEMBER 30
WERE:
<TABLE>
<CAPTION>
1995 1994 1993
---- ----- ----
<S> <C> <C> <C>
Weighted average discount rate 7.5% 7.5% 7.5%
Rate of increase in future compensation 6.1% 6.1% 6.1%
Expected long-term rate of return on plan assets 7.5% 7.5% 7.5%
</TABLE>
THE FOLLOWING TABLE SETS FORTH THE PLAN'S FUNDED STATUS AND AMOUNT RECORDED IN
THE FINANCIAL STATEMENTS AT SEPTEMBER 30, (IN THOUSANDS):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $(12,177) $(11,675)
Nonvested benefits (705) (810)
-------- --------
Accumulated benefit obligation (12,882) (12,485)
Effect of projected future compensation (3,488) (3,171)
-------- --------
Projected benefit obligation (16,370) (15,656)
Plan assets at market value, primarily listed stocks and bonds 22,717 20,011
-------- --------
Excess of plan assets over projected benefit obligations 6,347 4,355
Unrecognized net gain (6,904) (4,636)
Prior service cost not yet recognized 510 550
Remaining unrecognized net asset being
recognized over 16.7 years (1,592) (1,776)
-------- --------
Accrued pension cost $ (1,639) $ (1,507)
======== ========
</TABLE>
The Company's eligible employees may participate in the Employee
Savings Plan or the Bargaining Unit Employee Savings Plan by investing a
percentage of their compensation in the Plans with the Company matching a part
of the employee investment. The Company's contributions for the years ended
September 30, 1995, 1994, and 1993 were $177,000, $162,000, and $145,000,
respectively.
F-15
<PAGE> 37
9. OTHER POSTEMPLOYMENT BENEFITS
The Company provides certain health care and life insurance benefits
for retired employees. Substantially all employees may become eligible for such
benefits if they retire under the provisions of the Company's retirement plan.
The Company is accruing costs over the expected service period of the
employees. The"projected unit credit" actuarial method was used to determine
the service cost and actuarial liability.
NET PERIODIC POSTRETIREMENT BENEFIT COST INCLUDED THE FOLLOWING COMPONENTS FOR
THE YEARS ENDED SEPTEMBER 30, (IN THOUSANDS):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Service cost $78 $96 $94
Interest cost 216 231 235
Actual return on plan assets (150) (18) (41)
Net amortization and deferral 48 (48) 23
---- ---- ----
Net periodic postretirement benefit cost $192 $261 $311
---- ---- ----
ASSUMPTIONS USED IN THE ACTUARIAL COMPUTATIONS:
1995 1994 1993
---- ---- ----
Weighted average discount rate 7.5% 7.5% 7.5%
Rate of increase in future compensation 6.1% 6.1% 6.1%
Expected long-term rate of return on assets 7.0% 7.0% 7.0%
</TABLE>
The September 30, 1995 accumulated benefit obligation was determined
using an assumed health care cost trend rate of 10.7% in 1995, gradually
declining to 5.0% in the year 2006 and thereafter. The September 30, 1994
accumulated benefit obligation was determined using an assumed health care cost
trend rate of 13.7% in 1994 which gradually declines to 6.5% in the year 2010
and thereafter. If the health care cost trend rate assumptions were increased
by 1%, the accumulated postretirement benefit obligation as of September 30,
1995 would be increased by 10.7%. The effect of this change on the sum of the
service cost and interest cost components would be an increase of 11.6%.
F-16
<PAGE> 38
THE FOLLOWING TABLE SETS FORTH THE PLAN'S FUNDED STATUS AND AMOUNT RECORDED IN
THE FINANCIAL STATEMENTS AT SEPTEMBER 30, (IN THOUSANDS):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Accumulated postretirement benefit obligation:
Portion attributable to retirees $(1,623) $(1,549)
Fully eligible active plan participants (434) (660)
Other active plan participants (1,047) (1,130)
------- -------
Accumulated postretirement benefit obligation (3,104) (3,339)
Plan assets - cash equivalents, stocks and bonds 1,421 1,052
------- -------
Accumulated postretirement benefit obligation
in excess of plan assets (1,683) (2,287)
Unrecognized net loss 375 229
Prior service cost not yet recognized (566)
------- -------
Accrued postretirement benefit cost (1,874) (2,058)
Less: Current accrued postretirement benefit cost 394 406
------- -------
Long-term accrued postretirement benefit cost $(1,480) $(1,652)
======= =======
</TABLE>
The unrecognized net loss has resulted principally from a difference
between estimated and actual health care costs.
In September 1991, the Company formed two voluntary employees'
beneficiary association (VEBA) trusts to fund postretirement health and life
insurance benefits. The Company's contributions to this plan in 1995, 1994 and
1993 were $218,000, $200,000 and $450,000, respectively.
Beginning October 1, 1994, the Company adopted the Statement of
Financial Accounting Standards No. 112,"Employers' Accounting for
Postemployment Benefits" ("SFAS 112"). SFAS 112 required the Company to record
the cost of providing postemployment benefits to former or inactive employees,
their beneficiaries, and covered dependents after employment but before
retirement. For the year ended September 30, 1995, the Company recorded a
liability for postemployment benefits of $211,000 with a corresponding charge
to regulatory assets. The regulatory asset is expected to be amortized to
expense and will be recovered from customers through rates paid over a period
to be determined by the APSC.
10. COMMITMENTS AND CONTINGENCIES
The Company has contracts, which expire at various dates through the
year 2000, for firm supplies of natural gas. A portion of firm supply
requirements are expected to be met through the withdrawal of gas from the
storage facility owned by Bay Gas. Mobile Gas Service Corporation has entered
into a Gas Storage Agreement under which Bay Gas is to provide storage services
for an initial period of 20 years which began in September 1994 with the
commencement of commercial operations of the storage facility. The purchased
gas adjustment provisions of the Company's rate schedules permit the recovery
of gas costs from the Company's customers.
F-17
<PAGE> 39
The Company is subject to various federal, state and local laws and
regulations relating to the environment which have not had a material effect
on the Company's financial position or results of operations.
Like many gas distribution companies, prior to the widespread
availability of natural gas, the Company manufactured gas for sale to its
customers. In contrast to some other companies which operated multiple
manufactured gas plants, the Company and its predecessor operated only one such
plant, which discontinued operations in 1933. The process for manufacturing gas
produced by-products and residuals, such as coal tar, and certain remnants of
these residuals are sometimes found at former gas manufacturing sites.
The Company conducted a preliminary assessment in 1994 of its former
gas plant site and has tested certain waters in the vicinity of the site. The
Company developed and has implemented a plan for the site based on advice of
its environmental consultants, which involves securing and monitoring the site,
and continued testing. Based on the results of tests to date, the Company does
not believe that the site currently poses any threat to human health or the
environment. While no conclusion can be reached at this time as to whether any
further remedial action might ultimately be required, based on currently
available information, it is believed that any costs with respect to the site
are likely to be immaterial, and the Company has therefore established no
reserve for such costs in its financial statements. The Company intends that,
should further investigation or changes in environmental laws or regulations
require material expenditures for investigation, remediation, or clean-up with
regard to the site, it would apply to the APSC for appropriate rate recovery of
such costs. However, there can be no assurance that the APSC would approve the
recovery of such costs or the amount and timing of any such recovery.
11. ACQUISITION OF GAS SYSTEM
On May 13, 1993, the Company purchased a portion of the assets of the
gas distribution system of the Utilities Board of the Town of Citronelle. The
cost of the acquisition was $11.6 million. The purchase price consisted of cash
and a $4.1 million 9% note payable over 20 years. The assets acquired,
consisting primarily of utility plant, were recorded at their fair values using
the purchase method of accounting. The acquired system serves approximately
8,000 customers in Mobile County, Alabama.
The following unaudited pro forma information for the year ended
September 30, 1993 presents the consolidated results of operations of the
Company and Citronelle as if the acquisition had occurred on October 1, 1992.
The pro forma information is not necessarily indicative of the results of
operations which would have actually been obtained during such period (in
thousands, except per share data).
<TABLE>
<S> <C>
Gas Revenues $57,471
Earnings Applicable to Common Stock $ 4,850
Earnings per Share of Common Stock $1.77
</TABLE>
F-18
<PAGE> 40
12. QUARTERLY FINANCIAL DATA (UNAUDITED)
QUARTERLY FINANCIAL DATA FOR 1995 AND 1994 IS SUMMARIZED AS FOLLOWS (IN
THOUSANDS, EXCEPT PER SHARE DATA):
<TABLE>
<CAPTION>
Three Months Ended
------------------------
Dec. 31 Mar. 31 Jun. 30 Sep. 30
------- ------- ------- -------
<S> <C> <C> <C> <C>
1995
Total operating revenues $13,784 $23,156 $12,039 $10,132
Total operating income $2,404 $5,817 $2,033 $1,340
Net income $740 $2,792 $439 $57
Earnings per share of Common Stock $.23 $.87 $.14 $.02
1994
Total operating revenues $17,220 $24,738 $11,494 $9,842
Total operating income $3,088 $5,941 $1,241 $560
Net income (loss) $1,558 $3,240 $341 $(246)
Earnings (loss) per share of Common Stock $.57 $1.18 $.12 $(.09)
</TABLE>
The pattern of quarterly earnings reflects a seasonal nature because weather
conditions strongly influence operating results.
13. SUBSEQUENT EVENT (UNAUDITED)
During the year ended September 30, 1995, the Company petitioned the
APSC for an increase in rates. Subsequent to year-end, the APSC approved an
increase in rates designed to generate an additional $6,890,000 in annual
revenues, excluding the effects of changes in the base price of gas. The
increased rates went into effect on December 1, 1995.
F-19
<PAGE> 41
SCHEDULE II
MOBILE GAS SERVICE CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
(in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- ------------------------------- -------- --------
ADDITIONS
-------------------------------
CHARGED TO
BALANCE AT COSTS CHARGED TO BALANCE AT
BEGINNING AND OTHER ACCOUNTS DEDUCTIONS END
DESCRIPTION OF YEAR EXPENSES AMOUNT AMOUNT OF YEAR
----------- ------- -------- ------ ------ -------
<S> <C> <C> <C> <C>
Reserves deducted from assets to
which they apply -
Allowance for doubtful accounts:
September 30, 1995 $215 $293 (1) $242 $266
September 30, 1994 $205 $260 (1) $250 $215
September 30, 1993 $159 $128 (1) $ 82 $205
</TABLE>
NOTES:
(1) Accounts written off - net of recoveries.
S-1
<PAGE> 42
MOBILE GAS SERVICE CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- --------------------------------------------------------
<S> <C>
3(a) Restated Articles of Incorporation (incorporated by reference to Exhibit 3(i)-B to Form 8-K Current
Report dated January 28, 1994)
3(b) By-laws, adopted January 27, 1995 (incorporated by reference to Exhibit 3(b) to Form 8-K Current Report
dated January 27, 1995)
4(a)-1 Indenture of Mortgage and Deed of Trust of the Company dated as of December 1, 1941 (incorporated by
reference to Exhibit B-a to Registration Statement No. 2-4887)
<CAPTION>
Sup. Ind.
Dated as of File Reference Exhibit
----------- -------------- -------
<S> <C> <C> <C>
4(a)-2 10/1/44 Reg. No. 2-5493 7-6
4(a)-3
4(a)-3 7/1/52 Form 10-K for fiscal year ended
September 30, 1985
4(a)-4 6/1/54 " 4(a)-4
4(a)-5 4/1/57 " 4(a)-5
4(a)-6 7/1/61 " 4(a)-6
4(a)-7 6/1/63 " 4(a)-7
4(a)-8 10/1/64 " 4(a)-8
4(a)-9 7/1/72 " 4(a)-9
4(a)-10 8/1/75 " 4(a)-10
4(a)-11 7/1/79 " 4(a)-11
4(a)-12 7/1/82 " 4(a)-12
4(a)-13 7/1/86 Form 10-K for fiscal year ended 4(a)-13
September 30, 1986
4(a)-14 10/1/88 Form 10-K for fiscal year ended 4(a)-14
September 30, 1989
4(a)-15 7/1/92 Form 10-K for fiscal year 4(a)-15
ended September 30, 1992,
4(a)-16 7/1/93 Form 10-K for fiscal year 4(a)-16
ended September 30, 1993,
4(a)-17 12/3/93 Form 10-K for fiscal year 4(a)-17
ended September 30, 1993,
4(b) Southern Gas Transmission Company Indenture (incorporated by reference to Exhibit 4(b) to Form 10-K for
fiscal year ended September 30, 1992)
</TABLE>
E-1
<PAGE> 43
<TABLE>
<S> <C>
4(c)-1 Bay Gas Indenture dated as of October 1, 1992 (incorporated by reference to Exhibit 4(c) to Form 10-K
for fiscal year ended September 30, 1992)
4(c)-2* First Supplemental Indenture dated as of October 1, 1994 supplemental to Bay Gas Indenture
4(d) Promissory Note to the Utilities Board of the Town of Citronelle dated May 13, 1993 (incorporated by
reference to Form 10-K for fiscal year ended September 30, 1993)
10(d)-1 Firm Service Agreement with Koch Gas Services Company dated December 1, 1994 (incorporated by reference
to Exhibit 10(d)-1 to Form 10-K for fiscal year ended September 30, 1994)
10(d)-2 Settlement Agreement with Koch Gateway Pipeline Company dated September 21, 1993 (incorporated by
reference to Exhibit 10(d)-2 to Form 10-K for fiscal year ended September 30, 1993)
10(d)-3 No Notice Service Agreements between Koch Gateway Pipeline Company and Mobile Gas Service Corporation
dated November 1, 1993 (incorporated by reference to Form S-1, Registration Statement No. 33-82498)
10(d)-4 Gas Supply Agreement between Mobile Gas Service Corporation and Koch Gas Services Company made as of
the 1st day of April, 1994 (incorporated by reference to Form S-1, Registration Statement No. 33-82498)
10(e)-1 Gas Sale and Purchase Contract between Shell Gas Trading Company as Seller and Mobile Gas Service
Corporation as Buyer dated January 1, 1992 (incorporated by reference to Exhibit 10(e) to Form 10-K for
year ended September 30, 1992)
10(e)-2 Amendment dated December 1, 1993 to Gas Sale and Purchase Contract with Shell (incorporated by
reference to Exhibit 10(e)-2 to Form 10-K for fiscal year ended September 30, 1993)
10(f) * Agreement for Sale and Purchase of Gas - Mobile Plant dated August 10, 1995 between Mobil Natural Gas
Inc. and Mobile Gas Service Corporation
10(i) Mobile Gas Service Corporation/Bay Gas Storage Company, Ltd. Gas Storage Agreement dated February 26,
1992 (incorporated by reference to Exhibit 10(i) to Form 10-K for fiscal year ended September 30, 1992)
10(j) Directors/Officers Indemnification Agreement (incorporated by reference to Exhibit 10(j) to Form 10-K
for fiscal year ended September 30, 1992)
10(k)-1 ** Amended and Restated Supplemental Deferred Compensation Agreement with Walter L. Hovell, dated December
11, 1992 (incorporated by reference to Exhibit 10(k) to Form 10-K for fiscal year ended September 30,
1992)
</TABLE>
E-2
<PAGE> 44
<TABLE>
<S> <C>
10(k)-2 ** Amendment to Amended and Restated Supplemental Deferred Compensation Agreement dated January 27, 1995
between the Company and Walter L. Hovell (incorporated by reference to Exhibit 10(k)-2 to Form 8-K
Current Report dated January 27, 1995)
10(l)-1 Bay Gas Agreement by and among Mobile Gas Service Corporation, MGS Storage Services, Inc., MGS Energy
Services, Inc. and Olin Corporation, dated December 5, 1991 (incorporated by reference to Exhibit 10(l)
to Form 10-K for fiscal year ended September 30, 1992)
10(l)-2 Assignment of Limited Partnership Interest in Bay Gas Storage Company, Ltd. dated as of September 12,
1994 (incorporated by reference to Exhibit 10(l)-2 to Form 10-K for fiscal year ended September 30,
1994)
10(m)-1 Limited Partnership Agreement between MGS Storage Services, Inc., as General Partner, and MGS Energy
Services, Inc., as Limited Partner (forming Bay Gas Storage Company, Ltd.), dated December 5, 1991
(incorporated by reference to Exhibit 10(m) to Form 10-K for fiscal year ended September 30, 1992)
10(m)-2 First Amendment to Limited Partnership Agreement dated as of April 6, 1992 and Second Amendment to
Limited Partnership Agreement dated as of September 12, 1994 (incorporated by reference to Exhibit
10(m)-2 to Form 10-K for fiscal year ended September 30, 1994)
10(n) Cavity Development and Storage Agreement between Olin Corporation and Bay Gas Storage Company, Ltd.,
dated January 14, 1992 (incorporated by reference to Exhibit 10(n) to Form 10-K for fiscal year ended
September 30, 1992)
10(o) * Transportation Agreement between Mobile Gas Service Corporation and Tuscaloosa Steel Corporation dated
as of May 15, 1995
10(p) Note Guaranty Agreement between Mobile Gas Service Corporation and AmSouth Bank N.A., Trustee, dated as
of January 1, 1992, relating to Indenture of Southern Gas Transmission Company (incorporated by
reference to Exhibit 10(p) to Form 10-K for fiscal year ended September 30, 1992)
10(q) Guaranty Agreement by Mobile Gas Service Corporation, dated as of October 1, 1992, relating to
Indenture of Bay Gas Storage Company, Ltd. (incorporated by reference to Exhibit 10(q) to Form 10-K for
fiscal year ended September 30, 1992)
10(r) ** Mobile Gas Service Corporation 1992 Stock Option Plan (incorporated by reference to Exhibit A to
definitive proxy statement dated December 21, 1992)
10(s) ** Mobile Gas Service Corporation Incentive Compensation Plan (incorporated by reference to Exhibit B to
definitive proxy statement dated December 21, 1992)
10(t) Agreement for Purchase and Sale of Assets by and between The Utilities Board of the Town of Citronelle
and Mobile Gas Service Corporation dated January 28,
</TABLE>
E-3
<PAGE> 45
<TABLE>
<S> <C> <C>
1993 (incorporated by reference to Exhibit 10(t) to Form 10-K for fiscal year ended September 30, 1993)
10(u) * Revolving Credit Agreement dated July 17, 1995 by and among Mobile Gas Service Corporation as Borrower,
AmSouth Bank of Alabama as Agent, and AmSouth Bank of Alabama, First Alabama Bank, Whitney Bank of
Alabama, Bank of Mobile, SouthTrust Bank of Alabama, N.A., and Commonwealth National Bank as Lenders
10(v) Compressor Facility and Pipeline Construction Agreement between Bay Gas Storage Company, Ltd. and BE&K
Construction Company dated January 13, 1994 (incorporated by reference to Exhibit 10(v) to Form S-1
Registration Statement No. 33-82498)
10(w) Contract for Construction of the Bay Gas Pipeline System between Bay Gas Storage Company, Ltd. and WHC,
Inc. dated January 10, 1994 (incorporated by reference to Exhibit 10(w) to Form S-1 Registration
Statement No. 33-82498)
10(x) ** Letter dated October 7, 1994 from Mobile Gas Service Corporation to John S. Davis confirming terms of
employment (incorporated by reference to Exhibit A to Form 8-K Current Report filed November 2, 1994)
10(y) ** Consulting Agreement dated January 27, 1995 between the Company and Walter L. Hovell (incorporated by
reference to Exhibit 10(y) to Form 8-K Current Report dated January 27, 1995)
10(z) ** Mobile Gas Service Corporation Non-Employee Directors Deferred Fee Plan (incorporated by reference to
Exhibit 10(z) to Form 8-K Current Report dated January 27, 1995)
21 * Subsidiaries of Registrant and Partnerships in which Registrant Owns an Interest
23 * Consent of Deloitte & Touche
27 * Financial Data Schedule
</TABLE>
*Filed herewith
** Management contract or compensatory plan or arrangement
E-4
<PAGE> 1
EXHIBIT 4(c)-2
<PAGE> 2
CONFORMED COPY
================================================================================
BAY GAS STORAGE COMPANY, LTD.
to
AMSOUTH BANK OF ALABAMA,
Trustee
--------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of September 1, 1994
--------------------
Supplementing Indenture of Mortgage, Assignment and
Security Agreement
Dated as of October 1, 1992
================================================================================
This Instrument Prepared by:
James E. Jenz
c/o Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
ARTICLE ONE MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.01. Trustee Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.02. Indenture Confirmed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.03. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Exhibit A Description of Real Property
</TABLE>
-i-
<PAGE> 4
THIS IS A FIRST SUPPLEMENTAL INDENTURE, dated as of September 1, 1994,
by and between BAY GAS STORAGE COMPANY, LTD., an Alabama limited partnership
having its principal place of business at 2828 Dauphin Street, Mobile, Alabama
36606 (the "Company"), and AMSOUTH BANK OF ALABAMA, a state banking corporation
duly organized and existing under the laws of the State of Alabama (the
successor to AmSouth Bank, N.A.), and having a place of business at 63 South
Royal Street, Mobile, Alabama 36602, as Trustee (the "Trustee").
The Company heretofore executed and delivered to the Trustee, its
Indenture of Mortgage, Assignment and Security Agreement (hereinafter referred
to as the "Original Indenture"), dated as of October 1, 1992, in order to
secure $22,500,000 aggregate principal amount of its Senior Secured Notes,
Series 8.19%, due December 1, 2014 (the "Series 8.19% Notes") and such other
Notes as may thereafter be issued thereunder, which Original Indenture is
recorded in (a) Mortgage Book 171, pages 269 through 371 of the records in the
office of the Judge of Probate of Washington County, Alabama, and (b) Real
Property Book 3985, pages 0475 through 0577 of the records in the office of the
Judge of Probate of Mobile County, Alabama. Pursuant to Section 5.22 of the
Original Indenture, the Company has completed the process of acquiring the
Pipeline Right-of-Way and the Company is entering into this First Supplemental
Indenture in order to comply with its agreement set forth therein to record a
supplemental indenture in the appropriate offices in a form satisfactory to the
Trustee and the holders of the Series 8.19% Notes containing the legal
description to the Pipeline Right-of-Way. This First Supplemental Indenture
provides additional security for the indebtedness secured by the Original
Indenture, and such indebtedness remains unchanged in amount and in time of
maturity.
Pursuant to the provisions of this First Supplemental Indenture, the
Company proposes to mortgage and convey additional properties acquired by the
Company which constitute the Pipeline Right-of-Way and, in addition, the
Company proposes to (i) restate the legal description of the First Cavity Site
and (ii) to mortgage and convey miscellaneous additional real property
interests to be used in connection with the Facility. The Original Indenture
and each indenture supplemental thereto are collectively referred to herein as
the "Indenture ".
All acts and things necessary to constitute these presents a valid
indenture and agreement according to its terms, have been done and performed,
and the execution of this First Supplemental Indenture has in all respects been
duly authorized, and the Company, in the exercise of the legal right and power
vested in it, executes this First Supplemental Indenture. Terms not otherwise
defined herein shall have the meaning set forth in the Original Indenture.
<PAGE> 5
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSESTH:
That in consideration of the covenants herein contained and to secure
the payment of the principal of and interest (and premium, if any) on the
Series 8.19%Notes and such other Notes as may at any time be issued and
outstanding under the Indenture, in accordance with the tenor thereof, and to
declare the terms and conditions upon which the Series 8.19% Notes and the
Notes of any other series may be authenticated, delivered and issued, and"to
secure the performance and observance of all the covenants and conditions
contained in any Notes or in the Indenture and in consideration of the sum of
$1.00 to it paid and of other valuable consideration, the receipt whereof is
hereby acknowledged, the Company does hereby grant, bargain, sell, convey,
assign, mortgage and pledge unto the Trustee, and its successor or successors
in trust and to its assigns, the following described property:
All real estate and rights and interests therein of the
Company described in Exhibit A attached hereto and made a part hereof.
Together with all and singular the tenements, hereditaments, and
appurtenances belonging or in any wise appertaining to the aforesaid property
or any part thereof, with the reversion and reversions, remainder or
remainders, and subject to the terms of the Indenture, all tolls, rents,
revenues, issues, income and profits thereof, and all the estate, right, title,
interest and claim whatsoever, at law as well as in equity, that the Company
now has or may hereafter acquire in and to the aforesaid property, rights, and
franchises and every part and parcel thereof
TO HAVE AND TO HOLD the property hereinabove specifically described as
Mortgaged Property (as defined in the Indenture), unto the Trustee and its
successor or successors in trust forever,
IN TRUST, NEVERTHELESS, with power of sale, for the equal and
proportionate benefit and security of the holders from time to time of the
Notes that may be issued under the Indenture and indentures supplemental hereto
including this First Supplemental Indenture and for the enforcement of the
payment of such Notes in accordance with their terms.
AND UPON THE TRUSTS and subject to the covenants and conditions set
forth in the Indenture.
ARTICLE ONE
MISCELLANEOUS PROVISIONS
Section 1.01. Trustee Responsibility. The recitals of fact herein are
statements by the Company and not by the Trustee; and the Trustee is in no way
responsible for the existence or description of the mortgaged and pledged
property, the value thereof, the title of the Company thereto, the validity or
adequacy of the security afforded hereby, the validity or priority of the lien
hereof, or the validity of the Original Indenture.
-2-
<PAGE> 6
Section 1.02. Indenture Confirmed. In all respects not
inconsistent with the terms and provisions of this First Supplemental
Indenture, the Original Indenture as hereby supplemented, is approved and
confirmed.
Section 1.03. Counterparts. This First Supplemental Indenture may be
executed in several counterparts, and each counterpart shall be an original
instrument and all collectively shall be one instrument.
-3-
<PAGE> 7
IN WITNESS WHEREOF, Bay Gas Storage Company, Ltd. has caused this
First Supplemental Indenture to be signed in its partnership name by the
President or a Vice President of its General Partner and its seal to be
hereunto affixed and attested by the Secretary of its General Partner and
AmSouth Bank of Alabama, as Trustee, has caused this First Supplemental
Indenture to be signed in its corporate name by its Vice President and its
corporate seal to be hereunto affixed and attested by its Assistant Secretary,
as of the day and year first above written.
BAY GAS STORAGE COMPANY LTD.
By MGS STORAGE SERVICES, INC.
Its General Partner
By /s/ Gerald S. Keen
-------------------------------------
Its President
[SEAL]
ATTEST:
/s/ G. Edgar Downing, Jr.
- ------------------------------------
Its Secretary
AMSOUTH BANK OF ALABAMA, Trustee
By /s/ Joel T. Daves IV
-------------------------------------
Its Sr. Vice President & Trust Officer
-----------------------------------
[CORPORATE SEAL]
ATTEST:
/s/ Joseph H. Baker, Jr.
- ------------------------------------
Its Sr. Vice President
--------------------------------
-4-
<PAGE> 8
STATE OF ALABAMA )
) SS
COUNTY OF MOBILE )
I, Martha E. O'Hara , a Notary Public in and for the County and State
aforesaid, do hereby certify that Gerald S. Keen, personally known to me to be
the same person whose name is, as President of MGS Storage Services, Inc. an
Alabama corporation, as the General Partner of Bay Gas Storage Company, Ltd.,
subscribed to the foregoing instrument, and who is known to me, acknowledged
before me on this day that, being informed of the contents of the instrument,
he as such officer and with full authority, executed the same voluntarily for
and as the act of said General Partner.
Given under my hand and notarial seal this 9th day of September, 1994.
/s/ Martha E. O'Hara
----------------------------------------
Notary Public
[SEAL]
Commission expires:
3/22/97
<PAGE> 9
STATE OF ALABAMA )
) SS
COUNTY OF Mobile )
I, Martha E. O'Hara, a Notary Public in and for the County and state
aforesaid, do hereby certify that Joel T. Daves IV, whose name as Sr. Vice
President and Trust Officer of AMSOUTH BANK OF ALABAMA, a state banking
corporation, as Trustee, is signed to the foregoing First Supplemental
Indenture and who is known to me, acknowledged before me on this day that,
being informed of the contents of said First Supplemental Indenture he, as such
officer and with full authority, executed the same voluntarily for and as the
act of said AMSOUTH BANK OF ALABAMA, acting solely in its capacity as Trustee
as aforesaid.
Given under my hand and notarial seal this 9th day of September, 1994.
/s/ Martha E. O'Hara
----------------------------------------
Notary Public
[SEAL]
Commission expires:
3/22/97
<PAGE> 10
BAY GAS STORAGE COMPANY, LTD.
FIRST SUPPLEMENTAL INDENTURE TO
INDENTURE OF MORTGAGE, ASSIGNMENT AND SECURITY AGREEMENT
DATED AS OF OCTOBER 1, 1992
DESCRIPTION OF REAL PROPERTY
FIRST CAVITY SITE:
The description of the First Cavity Site contained in the Original
Indenture is hereby restated to read as follows:
A leasehold estate, created by that certain Surface Lease dated as of
January 14, 1992 between OLIN CORPORATION, a Virginia corporation, as Lessor,
and BAY GAS STORAGE COMPANY, LTD., an Alabama limited partnership, as Lessee,
filed for record in the office of the Judge of Probate of Washington County,
Alabama, in Deed Record Book No. 320, page 74, et seq. and amended by that
certain First Amendment to Surface Lease made as of the 18th day of August,
1994, filed for record in the office of the Judge of Probate of Washington
County, Alabama, in Miscellaneous Book No. 0100, page 119, et seq. in the
following described land and also all the rights of the Company created by that
certain Cavity Development and Storage Agreement dated January 14, 1992 between
Olin Corporation and the Company, filed for record in the office of the Judge
of Probate of Washington County, Alabama, in Deed Record Book No. 320, page 106
et seq. and amended by that certain First Amendment to Cavity Development and
Storage Agreement dated as of the 18th day of August, 1994, filed for record in
the office of the Judge of Probate of Washington County, Alabama, in
Miscellaneous Book No. 0100, page 112, et seq.:
Commencing at a 6" iron pipe w/ concrete at the Northwest corner of
the SW 1/4 of the NW 1/4 of Section 29, T 3 N, R I E, Washington
County, Alabama, thence North 89'59'52" East along the North line of
said SW 1/4 - NW 1/4 a distance of 352.53 feet, thence North 00degrees
00' 00" E a distance of 332.41 feet to the point of beginning, thence
North 00degrees00'00" East for 260.62 feet, thence North 90degrees 00'
00" East for 275.62 feet, thence South 00degrees 00' 00" East for
260.62 feet, thence North 90degrees00' 00" West for 275.62 feet to the
point of beginning. Containing 1.649 acres more or less and being in
the NW 1/4 - NW 1/4 of Section 29, T 3 N, R 1 E, Washington County,
Alabama. All being a part of the property of Olin Corporation;
EXHIBIT A
(to First Supplemental Indenture)
<PAGE> 11
provided, however, that the foregoing description of the First Cavity Site
shall be deemed to include only those interests which the Company may have
under the said Surface Lease or the said Cavity Development and Storage
Agreement insofar as the same relate to the land described under the heading
"FIRST CAVITY SITE".
INGRESS/EGRESS EASEMENTS TO FIRST CAVITY SITE AND SURFACE FACILITY SITE:
The ingress/egress rights created by that certain document titled
"Right-of-way and Easement" dated November 10, 1992 between OLIN CORPORATION, a
Virginia corporation, as grantor, and BAY GAS STORAGE COMPANY, LTD., an
Alabama limited partnership, as grantee, and filed for record in the office of
the Judge of Probate of Washington County, Alabama, on November 12, 1992 in
Deed Record Book 321, page 13 et seq. as the same may be from time to time
supplemented or amended.
PIPELINE EASEMENT BETWEEN FIRST CAVITY SITE AND SURFACE FACILITY SITE:
The rights created by that certain document titled "Pipeline
Right-of-Way and Easement" dated February 4, 1994 between OLIN CORPORATION, a
Virginia corporation, as grantor, and BAY GAS STORAGE COMPANY, LTD., an Alabama
limited partnership, as grantee, and filed for record in the office of the
Judge of Probate of Washington County, Alabama, on March 9, 1994 in Deed Record
Book 337, page 20 et seq. as the same may be from time to time supplemented or
amended including, without limitation, that certain document titled "Amendment
to Pipeline Right-of-Way and Easement" executed as of the 30th day of August,
1994 and filed for record in the office of the Judge of Probate of Washington
County, Alabama, on September 1, 1994 in Deed Book 341, page 233, et seq.
PIPELINE RIGHT-OF-WAY:
A right-of-way created by a series of easements or right-of-way
agreements, permits and licenses in favor of BAY GAS STORAGE COMPANY, LTD., an
Alabama limited partnership, in the following described land including any
permits, licenses, agreements for the accommodation of a utility, franchises or
privileges granted by any private or municipal parties to cross under any
railroads, rights of way, roads or highways in the path of the following
described land:
A-2
<PAGE> 12
WASHINGTON COUNTY, ALABAMA
[WA2]
PARCEL A: Commencing at the Northwest corner of the Southwest Quarter of the
Northwest Quarter of Section 29, Township 3 North, Range 1 East, Washington
County, Alabama, run North 89 degrees-59'-52" East along the North line of the
Southwest Quarter of the Northwest Quarter of said Section 29 a distance of
2788.06 feet; thence South 600.12 feet; thence East 340.0 feet to the point of
beginning of the easement herein described; thence South 57.49 feet to a point
on the North right of way line of Olin Access Road (80-foot right of way);
thence Northeastwardly along said right of way 44.10 feet; thence North 38.93
feet; thence West 40.0 feet to the point of beginning.
PARCEL B: Commencing at the Northwest corner of the Southwest Quarter of the
Northwest Quarter of Section 29, Township 3 North, Range 1 East, Washington
County, Alabama, run North 89 degrees-59'-52" East along the North line of the
Southwest Quarter of the Northwest Quarter of said Section 29 a distance of
2,788.06 feet; thence South 600.12 feet; thence East 340.0 feet; thence South
145.71 feet to a point on the South right of way line of Olin Access Road to
the point of beginning of the easement herein described; thence South 494.54
feet; thence South 41 degrees-06'-11" West 42.12 feet; thence South 15
degrees-06'-11" West 106.93 feet; thence South 10 degrees-53'-49" East 100.23
feet; thence South 15 degrees-06'-19" West 117.96 feet to a point on the North
line of Lot 2, Plat of the Survey of the Real Estate of Joseph Johnston as
recorded in Deed Book 19, Page 627, Probate Court records, Washington County,
Alabama; thence North 89 degrees-08'-19" East along said North line 41.6 feet;
thence North 15 degrees-06'-19" East 115.61 feet; thence North 10
degrees-53'-49" West 100.24 feet; thence North 15 degrees-06'-11" East 88.46
feet; thence North 41 degrees-06'- 11" East 47.87 feet; thence North 528.10
feet to the aforesaid South right of way line; thence Southwestwardly along
said right of way 44.10 feet to the point of beginning.
[WA3]
A 40-foot pipeline easement described as follows: Commencing at the Southwest
corner of Section 29, Township 3 North, Range 1 East, Washington County,
Alabama, run Northwardly along the West boundary of said Section 29 a distance
of 16 chains to the South boundary of Lot 2, Plat of the Survey of the Real
Estate of Joseph Johnston as recorded in Deed Book 19, Page 627, Probate Court
records, Washington County, Alabama; thence Eastwardly along said South
boundary 2,738.53 feet, more or less, to the West boundary of a 100-foot
Alabama Power Company easement and the point of beginning of the easement
herein described; thence North 15 degrees-06'-19" East along said West boundary
1,412.55 feet to the North boundary of said Lot 2; thence South 89
degrees-08'-19" West along said North boundary 41.6 feet; thence South 15
degrees-06'-19" West 1,412.55 feet to the South boundary of said Lot 2; thence
North 89 degrees-08'-19" East along said South boundary 41.6 feet to the point
of beginning.
[WA4]
Commencing at the Southwest corner of Section 29, Township 3 North, Range 1
East, Washington County, Alabama, run Northwardly along the West boundary of
said Section 29 a distance of 16 chains to the North boundary of Lot 1, Plat of
the Survey of the Real Estate of Joseph Johnston as recorded in Deed Book 19,
Page 627, Probate Court records, Washington County, Alabama; thence Eastwardly
along the North boundary of said Lot 1 a distance of 2,738.52 feet, more or
less, to the West boundary of a 100-foot Alabama Power Company easement and the
point of beginning of the easement herein described; thence South 15
degrees-06'-19" West along said West boundary 1,098.2 feet to the South line of
said Section 29; thence South 89 degrees-08'-19" West along said South line
41.6 feet; thence North 15 degrees-06'-19" East 1,098.2 feet; thence North 89
degrees-08'-19" East along the North line of said Lot 1 a distance of 41.6 feet
to the point of beginning.
A-3
<PAGE> 13
[WA5]
A 40-foot pipeline easement described as follows: Commencing at the Northwest
corner of Section 30, Township 3 North, Range 1 East, Washington County,
Alabama, run Eastwardly along the North line of said Section 30 a distance of
2,455.44 feet to the West boundary of a 100-foot Alabama Power Company easement
and the point of beginning of the easement herein described; thence South 15
degrees-06'-19" West along said West line 2,701.65 feet to the South boundary
of the Northwest Quarter of said Section 30; thence South 89 degrees-08'-19"
West along said South boundary 41.6 feet; thence North 15 degrees-06'-19" East
2,701.65 feet; thence North 89 degrees-08'-19" East along the North line of
said Section 30 a distance of 41.6 feet to the point of beginning.
[WA5]
Commencing at the Northwest corner of Section 30, Township 3 North, Range 1
East, Washington County Alabama, run Eastwardly along the North line of said
Section 30 a distance of 2,455.44 feet to a point on the East line of an
existing pipeline easement as recorded in Deed Book 327, Pages 209-219, Probate
Court records, Washington County, Alabama. Said point also being on the West
boundary of a 100 foot Alabama Power Company easement; thence South 15
degrees-06'-19" West along said West line 1,779.14 feet to the point of
beginning of the easement herein described; thence South 29 degrees-53'-41"
East 58.0 feet; thence South 15 degrees-06'-19" West 140.71 feet; thence South
60 degrees-06'-19" West 58.0 feet; thence North 15 degrees-06'-19" East 222.74
feet to the point of beginning.
[WA7]
A 40-foot pipeline easement described as follows: Commencing at the Southwest
corner of Section 30, Township 3 North, Range 1 East, Washington County,
Alabama, run Eastwardly along the South line of said Section 30 a distance of
1,322.80 feet; thence Northwardly along the West line of the East Half of the
Southwest Quarter of said Section 30 a distance of 970.7 feet to the West
boundary of a 100-foot Alabama Power Company easement and the point of
beginning of the easement herein described; thence North 00 degrees-10'-10"
East along the West boundary of said East Half of the Southwest Quarter 155.2
feet; thence North 15 degrees-06'-19" East 1,530.76 feet; thence North 89
degrees-08'-19" East along the North line of the Southwest Quarter of said
Section 30 a distance of 41.6 feet; thence South 15 degrees-06'-19" West along
the West boundary of said Alabama Power Company easement 1,692.16 feet to the
point of beginning.
[WA8 Sec. 30]
A 40-foot pipeline easement described as follows: Commencing at the Southwest
corner of Section 30, Township 3 North, Range 1 East, Washington County,
Alabama, run Eastwardly along the South line of said Section 30 a distance of
851.38 feet to the West boundary of a 100-foot Alabama Power Company easement
and the point of beginning of the easement herein described; thence North 27
degrees-33'-48" East along said West line 941.23 feet; thence North 15
degrees-06'-19" East along said West line 148.52 feet to the East line of the
West Half of the Southwest Quarter of said Section 30; thence North 00
degrees-10'-10" East along said East line 155.2 feet; thence South 15
degrees-06'-19" West 294.10 feet; thence South 27 degrees-33'-48" West 958.52
feet; thence North 89 degrees-08'-19" East along the South line of said Section
30 a distance of 45.48 feet to the point of beginning.
[WA8 Sec.45]
PARCEL A: Commencing at the Northwest corner of Section 45, Township 3 North,
Range 1 East, Washington County, Alabama, run Eastwardly along the North line
of said Section 45 a distance of 851.38 feet to the West boundary of a 100-foot
Alabama Power Company easement and the point of beginning of the easement
herein described; thence South 27 degrees- 33'-48" West along said West
boundary
A-4
<PAGE> 14
216.12 feet; thence South 02 degrees-22'-37" East 335.48 feet; thence South 81
degrees-44'-50" West 52.54 feet to the East right of way line of U. S. Highway
43; thence along said East right of way line as follows: North 08 degrees-17'-
45" West 85.06 feet, North 00 degrees-38'-51" West 241.47 feet to the P.C. of
an 11,269.16-foot radius curve to the right; thence Northwardly and Westwardly
along the arc of said curve and along said East right of way line (chord bears
North 08 degrees-09'-20" West 1.47 feet) a distance of 1.47 feet; thence North
27 degrees-33'-48" East 233.01 feet; thence North 89 degrees-08'-19" East
along the North line of said Section 45 a distance of 45.48 feet to the point
of beginning.
PARCEL B: Commencing at the Northwest corner of Section 45, Township 3 North,
Range 1 East, Washington County, Alabama, run Southwardly along the West line
of said Section 45 a distance of 1,359.49 feet; thence Eastwardly along the
South line of the Northwest Quarter of the Northwest Quarter of said Section 25
a distance of 139.09 feet to the West boundary of a 100-foot Alabama Power
Company easement and the point of beginning of the easement herein described;
thence North 27 degrees-33'-48" East along said West line 641.04 feet to the
West right of way line of U. S. Highway 43; thence North 10 degrees-51'-22"
West along said West line 264.82 feet; thence South 81 degrees-44'-58" West
59.32 feet; thence South 08 degrees-15'-10" East 295.07 feet; thence South 27
degrees-33'-48" West 596.19 feet; thence North 89 degrees-08'-19" East along
the South line of said Northwest Quarter of the Northwest Quarter 45.48 feet to
the point of beginning.
[WA11 (1 of 2)]
Commencing at the Northwest corner of Section 45, Township 3 North, Range 1
East, Washington County, Alabama, run Southwardly along the West line of said
Section 45 a distance of 1,359.49 feet to the Northwest corner of the Southwest
Quarter of the Northwest Quarter of said Section 45; thence Eastwardly along
the North line of said Quarter a distance of 139.09 feet to a point on the West
boundary of a 100-foot Alabama Power Company easement and the point of
beginning of the easement herein described; thence South 27 degrees-33'-48"
West 301.82 feet to a point on the West line of aforesaid Section 45; thence
North 00 degrees-07'-34" East along said West line 86.81 feet; thence North 27
degrees-33'- 48" East 203.12 feet to a point on the North line of the Southwest
Quarter of the Northwest Quarter of said Section 45; thence North 89
degrees-08'-19" East along said North line 45.48 feet to the point of
beginning.
[WA11 (2 of 2)]
Commencing at the Southeast corner of Section 13, Township 3 North, Range 1
West, Washington County, Alabama, run Northwardly along the East line of said
Section 13 a distance of 2,652.65 feet to the South line of the South Half of
the Northeast Quarter of said Section 13; thence Westwardly along said South
line a distance of 567.94 feet to the West line of a 100-foot Alabama Power
Company easement and the point of beginning of the easement herein described;
thence North 27 degrees-33'-48" East along said West line 1,232.56 feet to the
East line of said Section 13; thence North 00 degrees-07'-34" East along said
East line 86.81 feet; thence South 27 degrees-33'-48" West 1,330.37 feet to the
South line of the South Half of the Northeast Quarter of said Section 13;
thence South 89 degrees-51'-51" East 45.07 feet to the point of beginning.
[WA12]
Commencing at the Southeast corner of Section 13, Township 3 North, Range 1
West, Washington County, Alabama, run Northwardly along the East line of said
Section 13 a distance of 1,326.33 feet; thence Westwardly along the South line
of the North Half of the South Half of said Section 13 a distance of 1,256.47
feet to the West line of a 100-foot Alabama Power Company easement and the
point of beginning of the easement herein described; thence North 27
degrees-33'- 48" East along said West line 1,494.30 feet to the North line of
the South Half of said Section 13; thence North 89 degrees-51'-51" West along
said North line 45.07 feet; thence South 27 degrees-33'-48" West 1,494.3 feet
to the South line
A-5
<PAGE> 15
of the North Half of the South Half of said Section 13; thence South 89
degrees-51'-51" East along said South line 45.07 feet to the point of
beginning.
[WA14 Sec. 13]
Commencing at the Southeast corner of Section 13, Township 3 North, Range 1
West, Washington County, Alabama, run Westwardly along the South line of said
Section 13 a distance of 1,669.81 feet to the West boundary of a 100-foot
Alabama Power Company easement and the point of beginning of the easement
herein described; thence North 89 degrees-51'- 51" West along said South line
40.66 feet; thence North 10 degrees-29'-19" East 845.2 feet; thence North 27
degrees-33'- 48" East 557.56 feet to the North line of the South Half of the
South Half of said Section 13; thence South 89 degrees- 51'-51" East 45.07 feet
to the West line of said 100-foot Alabama Power Company easement; thence South
27 degrees-33'- 48" West along said West line 572.31 feet; thence South 10
degrees-29'-19" West along said West line 831.89 feet to the point of
beginning.
[WA14 ]
Commencing at the Northeast corner of Section 24, Township 3 North, Range 1
West, Washington County, Alabama, run Westwardly along the North line of said
Section 24 a distance of 1,669.81 feet to the West line of a 100-foot Alabama
Power Company easement and the point of beginning of the easement herein
described; thence South 10 degrees-29'-19" West and along said West right of
way line 663.86 feet to the North line of the North Half of the South Half of
the Northwest Quarter of the Northeast Quarter of said Section 24; thence
continue South 10 degrees-29'-19" West 332.02 feet to the South line of said
North Half of the South Half of the Northwest Quarter of the Northeast Quarter;
thence continue South 10 degrees-29'-19" West along said West 100-foot Alabama
Power Company easement line 1,661.09 feet to the South line of the Northeast
Quarter of said Section 24; thence South 89 degrees-53'-28" West along said
South line 40.69 feet; thence North 10 degrees-29'-19" East 1,661.20 feet to
the South line of said North Half of the South Half of the Northwest Quarter of
the Northeast Quarter; thence South 89 degrees-57'-22" East along said South
line 40.67 feet; thence North 10 degrees-29'-19" East along the West line of
said 100-foot Alabama Power Company easement 332.02 feet; thence North 89
degrees-55'-32" West 40.67 feet; thence North 10 degrees-29'-19" East 663.9
feet to the North line of said Section 24; thence South 89 degrees-51'-51" East
along said North line 40.66 feet to the point of beginning.
[WA15]
Commencing at the Northeast corner of Section 24, Township 3 North, Range 1
West, Washington County, Alabama, run Westwardly along the North line of said
Section 24 a distance of 1,669.81 feet to the West boundary of a 100-foot
Alabama Power Company easement; thence Southwardly and along said West line
663.86 feet to the point of beginning of the easement herein described; thence
continue along said West line South 10 degrees-29'-19" West 332.02 feet; thence
North 89 degrees-57'-22" West along the South line of the North Half of the
South Half of the Northwest Quarter of the Northeast Quarter of said Section 24
a distance of 40.67 feet; thence North 10 degrees-29'-19" East 332.05 feet;
thence South 89 degrees-55'-32" East along the North line of said North Half of
the South Half of the Northwest Quarter of the Northeast Quarter of said
Section 24 a distance of 40.67 feet to the point of beginning.
[WA16]
Commencing at the Northeast corner of Section 24, Township 3 North, Range 1
West, Washington County, Alabama, run Southwardly along the East line of said
Section 24 a distance of 2,604.54 feet; thence West along the North line of the
Southeast Quarter of said Section 24 a distance of 2,147.29 feet to the West
boundary of a 100-foot Alabama Power Company easement and the point of
beginning of the easement herein described; thence South 10 degrees-29'-19"
West along said West line 1,361.55 feet;
A-6
<PAGE> 16
thence South 89 degrees-46'-08" West along the South line of the North Half of
the Southeast Quarter of said Section 24 a distance of 40.71 feet; thence North
10 degrees-29'-19" East 1,361.64 feet; thence North 89 degrees-53'-28" East
along the North line of the Southeast Quarter of said Section 24 a distance of
40.69 feet to the point of beginning.
[WA17]
Commencing at the Northeast corner of Section 24, Township 3 North, Range 1
West, Washington County, Alabama, run Southwardly along the East line of said
Section 24 a distance of 3,937.81 feet; thence Westwardly along the North line
of the South Half of the Southeast Quarter of said Section 24 a distance of
2,387.45 feet to the West boundary of a 100- foot Alabama Power Company
easement and the point of beginning of the easement herein described; thence
South 10 degrees-29'-19" West 600.46 feet to a line 590 feet South of and
parallel to the North line of the South Half of the Southeast Quarter of said
Section 24; thence South 89 degrees-46'-08" West a distance of 40.71 feet;
thence North 10 degrees-29'-19" East 600.46 feet; thence North 89
degrees-46'-08" East along the North line of the South Half of the Southeast
Quarter of said Section 24 a distance of 40.71 feet to the point of beginning.
[WA18]
Commencing at the Southeast corner of Section 24, Township 3 North, Range 1
West, Washington County, Alabama, run Westwardly along the South line of said
Section 24 a distance of 2,600.30 feet to the West line of a 100-foot Alabama
Power Company easement and the point of beginning of the easement herein
described; thence North 02 degrees-04'-55" East 138.82 feet; thence North 10
degrees-29'-19" East 583.11 feet to a line 590 feet South of and parallel to
the North line of the South Half of the Southeast Quarter of said Section 24;
thence South 89 degrees-46'-08" West 40.71 feet; thence South 10
degrees-29'-19" West 578.48 feet; thence South 02 degrees-04'-55" West 142.88
feet; thence South 89 degrees- 32'-06" East along the South line of said
Section 24 a distance of 40.02 feet to the point of beginning.
[WA19]
Commencing at the Northeast corner of Section 25, Township 3 North, Range 1
West, Washington County, Alabama, run Westwardly along the North line of said
Section 25 a distance of 2,600.3 feet to the West boundary of a 100-foot
Alabama Power Company easement and the point of beginning of the easement
herein described; thence South 02 degrees-04'-55" West along said West boundary
1,337.26 feet to the South line of the Northwest Quarter of the Northeast
Quarter of said Section 25; thence North 89 degrees-44'-45" West along said
South line 9.25 feet to the West line of the Northeast Quarter of said Section
25; thence North 00 degrees-06'-56" East along said West line 896.46 feet;
thence North 02 degrees-04'-55" East 440.49 feet; thence South 89
degrees-32'-06" East along the North line of said Section 25 a distance of
40.02 feet to the point of beginning.
[WA21]
Commencing at the Northeast corner of Section 25, Township 3 North, Range 1
West, Washington County, Alabama, run Southwardly along the East line of said
Section 25 a distance of 2,654.04 feet; thence Westwardly along the South line
of the North Half of said Section 25 a distance of 2,692.68 feet to the West
line of a 100-foot Alabama Power Company easement and the point of beginning of
the easement herein described; thence North 02 degrees-04'-55" East along said
West line 1,337.6 feet to the South line of the Northwest Quarter of the
Northeast Quarter of said Section 25; thence North 89 degrees-44'-45" West
along said South line of the Northwest Quarter of the Northeast Quarter 9.25
feet; thence North 00 degrees-06'-56" East along the West line of the Northeast
Quarter of said Section 25 a distance of 896.46 feet; thence South 02
degrees-04'-55" West 2,234.66 feet; thence South 89 degrees-57'-23"
A-7
<PAGE> 17
East along the South line of the North half of said Section 25 a distance of
40.02 feet to the point of beginning.
[WA22]
Commencing at the Northeast corner of Section 25, Township 3 North, Range 1
West, Washington County, Alabama run Southwardly along the East line of said
Section 25 a distance of 2,654.04 feet; thence Westwardly along the North line
of the South Half of said Section 25 a distance of 2,692.68 feet to the West
boundary of a 100-foot Alabama Power Company easement and the point of
beginning of the easement herein described; thence South 02 degrees-04'-55"
West 1,337.93 feet to the South line of the North Half of the South Half of
said Section 25; thence South 89 degrees-49'-59" West along said South line
40.03 feet; thence North 02 degrees-04'-55" East 1,338.08 feet; thence South 89
degrees-57'- 23" East along the North line of the South Half of said Section 25
a distance of 40.02 feet to the point of beginning.
[WA23]
Commencing at the Southeast corner of Section 25, Township 3 North, Range 1
West, Washington County, Alabama, run Westwardly along the South line of said
Section 25 a distance of 2,784.97 feet to the West line of a 100-foot Alabama
Power Company easement and the point of beginning of the easement herein
described; thence North 02 degrees-04'-55" East along said West line 1,331.79
feet to the North line of the South Half of the South Half of said Section 25;
thence South 89 degrees-49'-59" West along said North line 40.03 feet; thence
South 02 degrees-04'-55" West 1,331.84 feet to the South line of said Section
25; thence North 89 degrees-45'-21" East along said South line 40.03 feet to
the point of beginning.
[WA24]
Commencing at the Southwest corner of Section 36, Township 3 North, Range 1
West, Washington County, Alabama, run Eastwardly along the South line of said
Section 36 a distance of 2,380.81 feet to the West boundary of a 100-foot
Alabama Power Company easement and the point of beginning of the easement
herein described; thence North 02 degrees-04'- 55" East along said West line
5,328.3 feet to the North line of said Section 36; thence South 89
degrees-45'-21" West along said North line 40.03 feet; thence South 02
degrees-04'-55" West 5,328.51 feet to the South line of said Section 36; thence
North 89 degrees-26'-55" East 40.04 feet to the point of beginning.
[WA25]
Commencing at the Northwest corner of Section 1, Township 2 North, Range 1
West, Washington County, Alabama, run Eastwardly along the North line of said
Section 1 a distance of 2,380.81 feet to the West boundary of a 100-foot
Alabama Power Company easement and the point of beginning of the easement
herein described; thence South 02 degrees-04'-55" West along said West line
2,658.07 feet to the South line of the Northeast Quarter of said Section 1;
thence South 89 degrees-30'-41" West along said South line 40.04 feet; thence
North 02 degrees-04'-55" East 2,658.03 feet; thence North 89 degrees-26'-55"
East along the North line of said Section 1 a distance of 40.04 feet to the
point of beginning.
[WA25]
Commencing at the Northwest corner of Section 1, Township 2 North, Range 1
West, Washington County, Alabama, run Eastwardly along the North line of said
Section 1 a distance of 2340.77 feet to the West line of an easement described
by instrument recorded in Real Property Book 327, Pages 87-90, Probate Court
Records, Washington County, Alabama; thence South 02 degrees-04'-55" West along
the South line of said easement 456.5 feet to the point of beginning of the
easement herein described; thence continue South 02 degrees-04'-55" West along
said West line 56.61 feet; thence South 47 degrees-02'-32"
A-8
<PAGE> 18
West 127.28 feet; thence South 02 degrees-07'-45" West 81.49 feet; thence South
42 degrees-52'-18" East 127.39 feet; thence South 02 degrees-04'-55" West along
the West line of said existing pipeline easement 56.61 feet; thence North 42
degrees-52'-18" West 184.03 feet; thence North 02 degrees-07'-45" East 114.59
feet; thence North 47 degrees-02'-32" East 183.87 feet to the point of
beginning.
[WA26]
Commencing at the Southwest corner of Section 1, Township 2 North, Range 1
West, Washington County, Alabama, run Eastwardly along the South line of said
Section 1 a distance of 2,007.72 feet; thence Northwardly along the West line
of the East Half of the Southeast Quarter of the Southwest Quarter of said
Section 1 a distance of 1,327.55 feet to the North line of the Southeast
Quarter of the Southwest Quarter of said Section 1; thence Eastwardly along
said line 232.96 feet to the West boundary of a 100-foot Alabama Power Company
easement and the point of beginning of the easement herein described; thence
North 02 degrees-04'-55" East along the West line of said easement 1,328.96
feet to the North line of the Southwest Quarter of said Section 1; thence South
89 degrees-30'-41" West along said North line 40.04 feet; thence South 02
degrees-04'-55" West 1,328.94 feet; thence North 89 degrees-32'-33" East along
the North line of said Southeast Quarter of the Southwest Quarter 40.04 feet to
the point of beginning.
[WA27]
PARCEL A: Commencing at the Southwest corner of Section 1, Township 2 North,
Range 1 West, Washington County, Alabama, run Eastwardly along the South line
of said Section 1 a distance of 2,007.72 feet; thence Northwardly along the
West line of the East Half of the Southeast Quarter of the Southwest Quarter of
said Section 1 a distance of 1,327.55 feet; thence Eastwardly along the North
line of the Southeast Quarter of the Southwest Quarter of said Section 1 a
distance of 232.96 feet to the West boundary of a 100-foot Alabama Power
Company easement and the point of beginning of the easement herein described;
thence South 02 degrees-04'-55" West along said West line 246.58 feet; thence
South 42 degrees-55'-02" East 161.95 feet to a point on the East line of the
West Half of the East Half of the Southeast Quarter of the Southwest Quarter of
said Section 1; thence South 00 degrees-02'-39" West along said East line
228.01 feet; thence North 70 degrees-59'-31" West along the North right of way
line of Fairford Road (80-foot right of way) 39.29 feet; thence North 02
degrees-04'-55" East 189.34 feet; thence North 42 degrees-55'-02" West 176.82
feet; thence North 02 degrees-04'-55" East 261.38 feet; thence North 89
degrees-32'-33" East along the North line of the Southeast Quarter of the
Southwest Quarter of said Section 1 a distance of 40.04 feet to the point of
beginning.
PARCEL B: Commencing at the Southwest corner of Section 1, Township 2 North,
Range 1 West, Washington County, Alabama, run Eastwardly along the South line
of said Section 1 a distance of 2,193.48 feet to the West boundary of a
100-foot Alabama Power Company easement; thence North 02 degrees-04'-55" East
along said West boundary 201.05 feet to the point of beginning of the easement
herein described; thence continue North 02 degrees-04'-55" East along said West
boundary 234.16 feet; thence North 47 degrees-04'-51" East 176.82 feet; thence
North 02 degrees-04'-55" East 95.34 feet; thence North 70 degrees-59'-31" West
along the South right of way line of Fairford Road (80-foot right of way) 41.81
feet; thence South 02 degrees-04'-55" West 90.94 feet; thence South 47
degrees-04'-51" West 176.82 feet; thence South 02 degrees-04'-55" West 247.11
feet; thence South 82 degrees-44'-32" East along the North line of a 100-foot
Alabama, Tennessee, and Northern Railroad right of way 40.16 feet to the point
of beginning.
PARCEL C: Commencing at the Southwest corner of Section 1, Township 2 North,
Range 1 West, Washington County, Alabama, run Eastwardly along the South line
of said Section 1 a distance of 2,193.48 feet to the West boundary of a
100-foot Alabama Power Company easement and the point of beginning of the
easement herein described; thence North 02 degrees-04'- 55" East along said
West line 100.64 feet; thence North 82 degrees-44'-32" West along the South
right of way line of a 100-foot Alabama,
A-9
<PAGE> 19
Tennessee, and Northern Railroad right of way 40.16 feet; thence South 02
degrees-04'-55" West 106.02 feet; thence North 89 degrees-34'-26" East along
the South line of said Section 1 a distance of 40.04 feet to the point of
beginning.
[WA28]
Commencing at the Southwest corner of Section 1, Township 2 North, Range 1
West, Washington County, Alabama, run Eastwardly along the South line of said
Section 1 a distance of 2,193.48 feet to the West boundary of a 100-foot
Alabama Power Company easement; thence Northwardly along the West boundary of
said easement 777.26 feet to the North right of way line of Fairford Road;
thence Eastwardly along said line 128.17 feet to the West line of the East Half
of the East Half of the Southeast Quarter of the Southwest Quarter of said
Section 1; thence Northwardly along said West line 210 feet to the point of
beginning of the easement herein described; thence North 00 degrees-02'-39"
East along said West line 18.01 feet; thence South 42 degrees-55'-02" East
14.88 feet; thence South 02 degrees-04'-55" West 10.49 feet; thence North 70
degrees-59'-31" West 10.32 feet to the point of beginning.
[WA29]
Commencing at the Southwest corner of Section 1, Township 2 North, Range 1
West, Washington County, Alabama, run Eastwardly along the South line of said
Section 1 a distance of 2,193.48 feet to the West boundary of a 100-foot
Alabama Power Company easement; thence Northwardly along the West boundary of
said easement 777.26 feet to the North right of way line of Fairford Road;
thence Eastwardly along said line 128.17 feet to the West line of the East Half
of the East Half of the Southeast Quarter of the Southwest Quarter of said
Section 1 and the point of beginning of the easement herein described; thence
North 00 degrees-02'-39" East along said West line 210.0 feet; thence South 70
degrees-59'-31" East 10.32 feet; thence South 02 degrees-04'-55" West 207.6
feet to the North line of Fairford Road; thence North 70 degrees-59'-31" West
along said North line 2.52 feet to the point of beginning.
[WA32]
Commencing at the Southwest corner of Section 12, Township 2 North, Range 1
West, Washington County, Alabama, run Eastwardly along the South line of said
Section 12 a distance of 2,006.19 feet to the West boundary of a 100-foot
Alabama Power Company easement and the point of beginning of the easement
herein described; thence North 02 degrees-04'- 55" East along said West
boundary 5,315.11 feet to the North line of said Section 12; thence South 89
degrees-34'-26" West 40.04 feet; thence South 02 degrees-04'-55" West 4,648.99
feet to the North right of way line of Red Fox Road; thence North 86
degrees-30'-10" East along said North right of way line 40.19 feet; thence
South 02 degrees-04'-55" West 60.28 feet to the South right of way line of said
Red Fox Road; thence South 86 degrees- 30'-10" West along said South right of
way line 40.19 feet; thence South 02 degrees-04'-55" West 605.76 feet to the
South line of said Section 12; thence North 89 degrees-41'-56" East 40.04 feet
to the point of beginning.
MOBILE COUNTY, ALABAMA
[MO1]
Commencing at the Southwest corner of Section 13, Township 2 North, Range 1
West, Mobile County, Alabama, run Eastwardly along the South line of said
Section 13 a distance of 1,802.40 feet to the West line of a 100-foot Alabama
Power Company easement and the point of beginning of the easement herein
described; thence North 02 degrees-04'-55" East along said West line 5,353.21
feet to the North line of said Section 13; thence South 89 degrees-41'-56" West
along said North line 40.03 feet; thence South
A-10
<PAGE> 20
02 degrees-04'-55" West 5,352.96 feet; thence South 89 degrees-56'-51" East
along the South line of said Section 13 a distance of 40.03 feet to the point
of beginning.
[MO1]
A pipeline easement described as: Beginning at the Southwest corner of Section
13, Township 2 North, Range 1 West, Mobile County, Alabama, run North 00
degrees-05'-59" West along the West line of said Section 13 a distance of 40
feet; thence South 89 degrees-56'-51" East and parallel with the South boundary
of said Section 13 a distance of 1662.67 feet; thence North 45 degrees-03'-09"
East 148.42 feet to the West line of an easement described in Real Property
Book 4051, Pages 960-964, Probate Court Records, Mobile County, Alabama; thence
South 02 degrees-04'-55" West along the West line of said easement 58.68 feet;
thence South 45 degrees-03'-09" West 122.05 feet to a point on the South line
of said Section 13; thence North 89 degrees-56'-51" West along said South line
1679.13 feet to the point of beginning.
[MO1]
Beginning at the Southeast corner of Section 14, Township 2 North, Range 1
West, Mobile County, Alabama, run Westwardly along the South line of said
section 40 feet; thence North 00 degrees-06'-11" West 40.04 feet; thence South
89 degrees- 56'-51" East 40 feet; thence South 00 degrees-05'-59 East 40 feet
to the point of beginning.
[MO1]
A pipeline easement described as beginning at the Northeast corner of Section
23, Township 2 North, Range 1 West, Mobile County, Alabama, run South 00
degrees-06'-11" East along the East line of said Section 23 a distance of
2653.07 feet to the Southeast corner of the Northeast quarter of said Section
23; thence continuing along the East line of said Section 23, run South 00
degrees-09'-56" West 418.40 feet; thence South 44 degrees-53'-53" West 67.77
feet; thence South 00 degrees-04'-41" East 87.57 feet; thence South 45
degrees-06'-07" East 66.62 feet to a point on said East line; thence South 00
degrees-09'-56" along said East line 341.81 feet; thence South 37
degrees-39'-34" West 462.27 feet; thence South 02 degrees-41'-18" West 17.78
feet to a point on the North line of the East half of the Southeast quarter of
Southeast quarter of said Section 23; thence Westwardly along said North line
40.04 feet; thence North 02 degrees-41'- 18" East 32.26 feet; thence North 37
degrees-39'-34" East 461.3 feet; thence North 00 degrees-09'-56" East 311.55
feet; thence North 45 degrees-06'-07" West 66.52 feet; thence North 00
degrees-04'-41" West 120.71 feet; thence North 44 degrees-53'-53" East 67.87
feet; thence North 00 degrees-09'-56" East 401.85 feet; thence North 00
degrees-06'-11" West 2653.04 feet to a point on the North line of said Section
23; thence Eastwardly along said North line 40 feet to the point of beginning.
[MO2A]
Commencing at the Southeast corner of Section 23, Township 2 North, Range 1
West, Mobile County, Alabama, run Northwardly along the East line of said
Section 23 a distance of 9.14 feet to the point of beginning of the easement
herein described; thence South 89 degrees-48'-27" West 201.65 feet; thence
North 15 degrees-26'-25" West 573.48 feet; thence North 02 degrees-41'-18" East
766.13 feet to the North line of the East half of the Southeast quarter of said
the Southeast quarter of Section 23; thence Eastwardly along said North line
40.04 feet; thence South 02 degrees-41'-18" West 761.63 feet; thence South 15
degrees-26'-25" East 536.54 feet; thence North 89 degrees-48'-27" East 171.34
feet to the East line of said Section 23; thence South 00 degrees-09'-56" West
along said East line 40.0 feet to the point of beginning.
A-11
<PAGE> 21
[MO4]
Commencing at the Southwest corner of Section 24, Township 2 North, Range 1
West, Mobile County, Alabama, run Northwardly along the West line of said
Section 24 9.14 feet to the point of beginning of the easement herein
described; thence North 00 degrees-09'-56" East along said West line 40 feet;
thence North 89 degrees-48'-27" East 61.95 feet to the West line of a pipeline
easement recorded in Real Property Book 4060, pages 941-945, Probate Court
Records, Mobile County, Alabama; thence South 00 degrees-17'-59" East along the
West Line of said easement 40 feet; thence South 89 degrees-48'-27" West 62.27
feet to the point of beginning.
[MO4]
Commencing at the Northwest corner of Section 24, Township 2 North, Range 1
West, Mobile County, Alabama, run Southwardly along the West line of said
Section 24 a distance of 3,653.84 feet to a point; thence Eastwardly along the
South line of property described by an instrument recorded in Real Property
Book 1209, Page 422, Probate Court records, Mobile County, Alabama, a distance
of 564.93 feet to the West boundary of a 100-foot Alabama Power Company
easement and the point of beginning of the easement herein described; thence
South 24 degrees-44'-06" West along said West line 1,115.63 feet; thence
continuing along said West line, run South 00 degrees-17'-59" East 636.87 feet
to a point on the South line of said Section 24; thence North 89
degrees-56'-51" West along said South line 40.0 feet; thence North 00
degrees-17'-59" West 645.5 feet; thence North 24 degrees-44'-06" East 1,106.28
feet; thence North 89 degrees-46'-21" East along the South line of property
described in an instrument recorded in Real Property Book 1209, Page 422,
aforesaid Probate Court records a distance of 43.96 feet to the point of
beginning.
[MO5]
Commencing at the Northwest corner of Section 25, Township 2 North, Range 1
West, Mobile County, Alabama, run Eastwardly along the North line of said
Section 25 a distance of 102.35 feet to the West boundary of a 100-foot Alabama
Power Company easement and the point of beginning of the easement herein
described; thence South 00 degrees-17'-59" East along said West line 1,327.31
feet to the North line of Mt. Vernon Estates Unit One, as recorded in Map Book
31, Page 15, Probate Court records, Mobile County, Alabama; thence North 89
degrees-47'-43" West along said North line 40.0 feet; thence North 00
degrees-17'-59" West 1,327.2 feet to the North line of said Section 25; thence
South 89 degrees-56'-51" East along said North line 40.0 feet to the point of
beginning.
[MO6]
Commencing at the Northwest corner of Lot 1, Mt. Vernon Estates, Unit One, as
recorded in Map Book 31, Page 15, Probate Court records, Mobile County,
Alabama, run Eastwardly along the North line of said Lot 1 a distance of 70.17
feet to the West boundary of a 100-foot Alabama Power Company easement and the
point of beginning of the easement herein described; thence South 00
degrees-17'-59" East along said West line 446.15 feet; thence South 89
degrees-36'-22" West along the South line of said Lot 1 a distance of 40.0
feet; thence North 00 degrees-17'-59" West 446.56 feet; thence South 89
degrees-47'-43" East along the North line of said Lot 1 a distance of 40.0 feet
to the point of beginning.
[MO8]
Commencing at the Northeast corner of Lot 17, Mt. Vernon Estates, Unit One, as
recorded in Map Book 31, Page 15, Probate Court records, Mobile County,
Alabama, run Westwardly along the North line of said Lot 17 a distance of
220.67 feet to the West boundary of a 100-foot Alabama Power Company easement
and the point of beginning of the easement herein described; thence South 00
degrees-17'-59" East along said West line 758.36 feet; thence South 89
degrees-01'-52" West along the South line of said Lot 17
A-12
<PAGE> 22
a distance of 40.0 feet; thence North 00 degrees-17'-59" West 758.76 feet;
thence North 89 degrees-36'-22" East along the North line of said Lot 17 a
distance of 40.0 feet to the point of beginning.
[MO10]
Commencing at the Northwest corner of Section 25, Township 2 North, Range 1
West, Mobile County, Alabama, run Southwardly along the West boundary of said
Section 25 a distance of 2,593.58 feet to a projection of the South boundary of
Mt. Vernon Estates, Unit One, as per plat recorded in Map Book 31, Page 15,
Probate Court records, Mobile County, Alabama; thence Eastwardly along said
projection and said South line 98.09 feet to the West boundary of a 100-foot
Alabama Power Company easement and the point of beginning of the easement
herein described; thence South 00 degrees-17'- 59" East along said West line
1,359.41 feet to the South line of the Northwest Quarter of the Southwest
Quarter of said Section 25; thence South 89 degrees-01'-52" West along said
South line 40.0 feet; thence North 00 degrees-17'-59" West 1,349.41 feet to the
South line of said Mt. Vernon Estates, Unit One; thence South 89
degrees-01'-52" East along said South line 40.0 feet to the point of beginning.
[MO11]
Commencing at the Southwest corner of Section 25, Township 2 North, Range 1
West, Mobile County, Alabama, run Northwardly along the West line of said
Section 25 a distance of 1,349.29 feet to the North line of the South Half of
the Southwest Quarter of said Section 25; thence Eastwardly along said North
line 95.88 feet to the West boundary of a 100-foot Alabama Power Company
easement and the point of beginning of the easement herein described; thence
South 00 degrees-17'-59" East along said West line and a projection thereof
1,344.96 feet; thence South 24 degrees-52'-59" East 6.54 feet to the South line
of said Section 25; thence Westwardly along the South line of said Section 25 a
distance of 42.72 feet; thence North 00 degrees-17'-59" West 1,350.22 feet to
said North line; thence North 89 degrees-01'-52" East 40.0 feet to the point of
beginning.
[MO12]
PARCEL A: Commencing at the Northwest corner of Section 36, Township 2 North,
Range 1 West, Mobile County, Alabama, run Eastwardly along the North line of
said Section 36 a distance of 96.38 feet to the point of beginning of the
easement herein described; thence South 24 degrees-52'-59" East 508 feet;
thence South 38 degrees-28'-20" West 177.52 feet; thence North 47
degrees-35'-45" West along the North line of Coy Smith Highway ( 80-foot right
of way) 40.09 feet; thence North 38 degrees-28'-20" East 150.09 feet; thence
North 24 degrees-52'-59" West 498.58 feet; thence North 00 degrees-17'-59" West
2.99 feet to a point on the North line of said Section 36; thence Eastwardly
along said North line 42.72 feet to the point of beginning.
PARCEL B: Beginning at the Southwest corner of Section 36, Township 2 North,
Range 1 West, Mobile County, Alabama, run North 00 degrees-09'-19" East along
the West line of said Section 36, a distance of 4,509.82 feet; thence North 38
degrees-28'-20" East 196.65 feet; thence South 47 degrees-35'-45" East along
the South right of way line of Coy Smith Highway (80-foot right of way) 40.09
feet to a point; thence South 38 degrees-28'-20" West 81.83 feet; thence South
00 degrees-45'-29" West 4,573.07 feet to a point on the South line of said
Section 36; thence Westwardly along said South line 52.77 feet to the point of
beginning.
[MO12]
Commencing at the Southeast corner of Section 36, Township 2 North, Range 1
West, Mobile County, Alabama, run Eastwardly along the South line of said
Section 36 a distance of 52.77 feet to a point on the East line of a pipeline
easement conveyed by instrument recorded in Real Property Book 4050,
A-13
<PAGE> 23
Pages 1029-1033, Probate Court Records, Mobile County, Alabama; thence North 00
degrees-45'-29" East along the East line of said easement 2197.45 feet to the
point of beginning of the easement herein described; thence continue North 00
degrees-45'-29" East and along the East line of said existing easement 56.57
feet; thence North 45 degrees-45'-38" East 128.06 feet; thence North 00
degrees-44'-19" East 344.48 feet; thence North 44 degrees-15'-36" West 127.86
feet to the East line of said existing easement; thence North 00
degrees-45'-29" East along said East line 56.55 feet; thence South 44
degrees-15'-36" East 184.40 feet; thence South 00 degrees-44'-19" West 377.63
feet; thence South 45 degrees-45'-38" West 184.63 feet to the point of
beginning.
[MO14]
Commencing at the Southwest corner of Section 1, Township 1 North, Range 1
West, Mobile County, Alabama, run North 00 degrees-20'-47" East along the West
line of said Section 1 a distance of 197.17 feet to the point of beginning of
the easement herein described; thence continue North 00 degrees-20'-47" East
along the West line of said Section 1 a distance of 5,102.21 feet to the
Northwest corner of said Section 1; thence Eastwardly along the North line of
said Section 1 a distance of 52.77 feet; thence South 00 degrees-45'-29" West
591.19 feet; thence South 00 degrees-23'-46" West 4,499.44 feet; thence South
44 degrees-36'-14" East 293.29 feet to a point on the South line of said
Section 1; thence Westwardly along said South line 56.18 feet; thence North 44
degrees-36'-14" West 276.92 feet to the point of beginning.
[MO14]
PARCEL A
Commencing at the Southwest Corner of Section 1, Township 1 North, Range 1
West, Mobile County, Alabama run Eastwardly along the South Line of said
Section 1, a distance of 76.08 feet to the point of beginning of the easement
herein described; thence Northwardly and Westwardly along the arc of a
non-tangential curve to the right (radius - 2015 feet chord bears North 12
degrees-38'-26" West 160.82 feet) a distance of 160.86 feet to a point on the
South line of an existing pipeline easement as recorded in Real Property Book
4050, pgs. 1029-1033 Probate Court Records, Mobile County, Alabama; thence
South 44 degrees-36'14" East along said South line 72.70 feet; thence
Southwardly and Eastwardly along the arc of a non-tangential curve to the left
(radius - 1975.0 feet chord bears South 12 degrees-37'-02" East 180.54 feet) a
distance of 180.61 feet; thence westwardly along the South line of aforesaid
Section 1 a distance of 41.43 to the point of beginning.
PARCEL B
Commencing at the Southwest Corner of Section 1, Township 1 North, Range 1
West, Mobile County, Alabama run Eastwardly along the South Line of said
Section 1, a distance of 117.51 feet; thence Northwardly and Westwardly along
the arc of a non-tangential curve (radius - 1975.0 feet chord bears North 12
degrees-37'-02" West 180.54 feet) a distance of 180.61 feet to the point of
beginning of the easement herein described; thence continuing Northwardly and
Westwardly along said arc a distance of 357.21 feet (chord bears North 04
degrees-48'-58" West 356.72 feet) to a point on the East line of an existing
pipeline easement as recorded in Real Property Book 4050, Pages 1029-1033,
Probate Court Records, Mobile County, Alabama; thence South 00 degrees-23'-46"
West along said East line a distance of 322.84 feet, thence continuing along
said existing easement line South 44 degrees-36'-14" East 45.83 feet to the
point of beginning.
[MO16]
Commencing at the Northwest corner of Section 12, Township 1 North, Range 1
West, Mobile County, Alabama, run Eastwardly along the North line of said
Section 12 a distance of 76.08 feet to the point
A-14
<PAGE> 24
of beginning of the easement herein described; thence continue Eastwardly along
said North line 41.43 feet; thence Southwardly and Eastwardly along the arc of
a non-tangential curve to the left (radius 1,975.00 feet chord bears South 21
degrees-41'-28" East 444.00 feet) a distance of 444.95 feet; thence South 00
degrees-23'-46" West 81.10 feet; thence Northwardly and Westwardly along the
arc of a non-tangential curve to the right (radius - 2,015.00 feet chord bears
North 22 degrees-27'-55" West 528.65 feet) a distance of 530.18 feet to the
point of beginning.
[MO16]
Commencing at the Northwest corner of Section 12, Township 1 North, Range 1
West, Mobile County, Alabama, run Eastwardly along the North line of said
Section 12 a distance of 195.65 feet to the point of beginning of the easement
herein described; thence continue Eastwardly along the North line of said
Section 12 a distance of 56.18 feet; thence South 44 degrees-36'-14" East
102.71 feet; thence South 00 degrees-23'-46" West 1,060.1 feet; thence South 45
degrees-23'-46" West 206.5 feet; thence Westwardly along the South line of Lot
10, Subdivision of West 1/2 of Section 12 and East 1/2 of Section 11, Township
1 North, Range 1 West, as per plat recorded in Deed Book 147 N.S., Pages 62-63,
Probate Court records, Mobile County, Alabama, a distance of 56.96 feet; thence
North 45 degrees-23'-46" East 230.48 feet; thence North 00 degrees-23'-46" East
1,126.96 feet; thence North 44 degrees-36'-14" West 125.6 feet to the point of
beginning.
[MO17]
Commencing at the Northwest corner of Section 12, Township 1 North, Range 1
West, Mobile County, Alabama, run Southwardly along the West line of said
Section 12 a distance of 1,518.41 feet to the point of beginning of the
easement herein described; thence continue South 01 degrees-07'-42" West along
said West line 549.3 feet to a point on the South line of Lot 11, Subdivision
of West 1/2 of Section 12 and East 1/2 of Section 11, Township 1 North, Range 1
West, as per plat recorded in Deed Book 147, N. S., Pages 62-63, Probate Court
records, Mobile County, Alabama; thence Eastwardly along said South line 68.48
feet; thence North 00 degrees-28'-07" East 554.38 feet; thence North 45
degrees-23'-46" East 191.89 feet to a point on the North line of said Lot 11;
thence Westwardly along the North line of said Lot 11 a distance of 56.96 feet;
thence South 45 degrees-23'-46" West 199.24 feet to the point of beginning.
[MO18]
Commencing at the Northwest corner of Section 12, Township 1 North, Range 1
West, Mobile County, Alabama, run Southwardly along the West line of said
Section 12 a distance of 2,067.71 feet to the point of beginning of the
easement herein described; thence Eastwardly along the North line of Lot 12,
Subdivision of West 1/2 of Section 12 and East 1/2 of Section 11, Township 1
North, Range 1 West, as per plat recorded in Deed Book 147 N. S., Pages 62-63,
Probate Court records, Mobile County, Alabama, a distance of 68.48 feet; thence
South 00 degrees-28'-07" West 1,378.25 feet; thence Westwardly along the South
line of Lot 13 of said subdivision a distance of 84.36 feet to a point on the
West line of said Section 12; thence North 01 degrees-07'-42" East along said
West line 1,378.47 feet to the point of beginning.
[MO19]
Commencing at the Southwest corner of Section 12, Township 1 North, Range 1
West, Mobile County, Alabama, run Northwardly along the West line of said
Section 12 a distance of 689.24 feet to a point on the South line of Lot 15,
Subdivision of West 1/2 of Section 12 and East 1/2 of Section 11, Township 1
North, Range 1 West, as recorded in Deed Book 147 N.S., Pages 62-63, Probate
Court records, Mobile County, Alabama; thence Eastwardly along said South line
a distance of 60.23 feet to the point of beginning of the easement herein
described; thence North 00 degrees-28'-07" East 1,378.25 feet
A-15
<PAGE> 25
to a point on the North line of Lot 14 of said subdivision; thence Eastwardly
along said North line 40.0 feet; thence South 00 degrees-28'-07" West 1,378.25
feet to a point on the South line of said Lot 15; thence Westwardly along said
South line 40.0 feet to the point of beginning.
[MO20]
Beginning at the Southwest corner of Section 12, Township 1 North, Range 1
West, Mobile County, Alabama, run North 01 degrees-07'-42" East along the West
line of said Section 12 a distance of 689.24 feet; thence Eastwardly along the
North line of Lot 16, Subdivision of West 1/2 of Section 12 and East 1/2 of
Section 11, Township 1 North, Range 1 West, as per plat recorded in Deed Book
147 N. S., Page 62-63, Probate Court records, Mobile County, Alabama, a
distance of 100.23 feet; thence South 00 degrees-28'-07" West 689.13 feet to a
point on the South line of said Lot 16; thence Westwardly along the South line
of said Lot 16 and the South line of said Section 12 a distance of 108.17 feet
to the point of beginning.
[MO21]
Commencing at the Northwest corner of Section 13, Township 1 North, Range 1
West, Mobile County, Alabama, run South 89 degrees-20'-30" East along the North
line of said Section 13 a distance of 63.17 feet to the point of beginning of
the easement herein described; thence continue South 89 degrees-20'-30" East
along said North line 2,503.26 feet to a point on the East line of property
known as the Chastang Landfill; thence South 01 degrees-43'-03" West along said
East line 2,991.87 feet; thence South 19 degrees-32'-20" East 460.87 feet;
thence South 89 degrees-56'-30" East 1,056.37 feet to the West line of a
100-foot Frisco Railroad right of way; thence South 01 degrees-49'-07" West
along said West line 1,555.64 feet; thence South 21 degrees-06'-28" West 136.39
feet; thence South 01 degrees-49'-07" West 86.04 feet to a point on the South
line of said Section 13; thence North 89 degrees-40'-07" West 40.01 feet;
thence North 01 degrees- 49'-07" East 93.9 feet; thence North 21
degrees-06'-28" East 136.39 feet; thence North 01 degrees-49'-07" East 1,507.59
feet; thence North 89 degrees-56'-30" West 1,043.29 feet; thence North 19
degrees-32'-20" West 496.03 feet; thence North 01 degrees-43'-03" East 2,958.52
feet; thence North 89 degrees-20'-30" West 2,462.38 feet; thence North 00
degrees-28'- 07" East 40.0 feet to the point of beginning.
[MO23]
Commencing at the Northeast corner of Lot 1, Zeno Chastang, Jr., Estate, as
recorded in deed book 52, page 367, Probate Court Records, Mobile County,
Alabama, run westwardly along the North line of Section 24 Township 1 North,
Range 1 West, Mobile County, Alabama a distance of 672.27 feet to the West line
of a 100 foot Frisco Railroad right-of-way; thence continued westwardly along
said North line 45.07 feet to the point of beginning of the easement herein
described. Thence South 01 degrees-49'-07" West 373.35 feet; thence South 26
degrees-11'-07" East 95.85 feet; thence South 01 degrees-49'-07" West along the
West line of said Frisco Railroad right-of-way 1757.58 feet. Thence South 29
degrees- 48'-50" West 95.71 feet; thence South 01 degrees-49'-07" West 97.92
feet to a point on the North line of Section 38, Township 1 North, Range 1
West, Mobile County, Alabama. Thence North 89 degrees-41'-57" West along the
North line of said Section 38 a distance of 40.01 feet; thence North 01
degrees-49'-07" East 108.95 feet; thence North 29 degrees-48'- 50" East 95.71
feet; thence North 01 degrees-49'-07" East 1737.64 feet; thence North 26
degrees-11'-07" West 95.85 feet; thence North 01 degrees-49'-07" East 382.27
feet to a point on the North line of said Section 24; thence South 89
degrees-40'-07" East 40.01 feet to the point of beginning.
[MO24]
Commencing at the Northeast corner of Section 38, Township 1 North, Range 1
West, Mobile County, Alabama, run Westwardly along said North line 1,819.6
feet, more or less, to the West line of a 100-foot Frisco Railroad right of
way; thence continue Westwardly along said North line 45.02 feet to the
A-16
<PAGE> 26
point of beginning of the easement herein described; thence North 89
degrees-41'-57" West along said North line 40.01 feet; thence South 01
degrees-49'-07" West 510.26 feet; thence South 26 degrees-09'-40" East 23.7
feet to a point on the South line of property described in Deed Book 568, Pages
131-132, Probate Court records, Mobile County, Alabama; thence North 78
degrees-04'-16" East along said South line 41.27 feet; thence North 26
degrees-09'-40" West 23.88 feet to a point which is 45 feet West of the West
line of said Frisco Railroad right of way when measured perpendicular to said
right of way; thence North 01 degrees-49'-07" East and parallel with said West
right of way line a distance of 501.35 feet to the point of beginning.
[MO25]
Commencing at the Northeast corner of Section 38, Township 1 North, Range 1
West, Mobile County, Alabama, run Westwardly along said North line 1,819.6
feet, more or less, to the West line of a 100-foot Frisco Railroad right of
way; thence Southwardly along said West line 515.5 feet, more or less, to the
intersection of the South line of property described in Deed Book 568, Pages
131-132, Probate Court records, Mobile County, Alabama; thence South 78
degrees-04'-16" West along said South line 34.83 feet to the point of beginning
of the easement herein described; thence continue South 78 degrees-04'-16" West
along said South line 41.27 feet; thence South 26 degrees-09'-27" East 72.22
feet; thence South 01 degrees-49'-07" West 572.84 feet to the North line of
property described in Real Property Book 3853, Pages 64-65, aforesaid Probate
Court records; thence North 66 degrees-47'-47" East along said North line 44.14
feet to the West line of said Frisco Railroad right of way; thence North 01
degrees-49'-07" East 564.13 feet; thence North 26 degrees-09'-27" West 72.04
feet to the point of beginning.
[MO26]
Commencing at the Easternmost corner of Parcel H, Division of the Estate of
Pauline Chastang, Deceased, as recorded in Deed Book 330, Pages 635-636,
Probate Court records, Mobile County, Alabama, said point also being the
Northwest corner of Fractional Section 39, Township 1 North, Range 1 West,
Mobile County, Alabama, run North 38 degrees-48'-03" West along the East
boundary of said Division of the Estate of Pauline Chastang, Deceased, a
distance of 232.35 feet to the West line of a 100-foot Frisco Railroad right of
way and the point of beginning of the easement herein described; thence North
01 degrees-49'-07" East along said West line 696.06 feet to a point on the
projected North boundary of Parcel E of said Division of the Estate of Pauline
Chastang; thence South 66 degrees-47'-47" West along said projection and along
the North line of property now or formerly of Steve A. and Janet T. Andry (RPB
3853, Pages 64-65, aforeaid Probate Court records) a distance of 44.14 feet;
thence South 01 degrees-49'-07" West 630.75 feet; thence South 38
degrees-48'-03" East 61.44 feet to the point of beginning.
[MO28]
Commencing at the Easternmost corner of Parcel H, Division of the Estate of
Pauline Chastang, Deceased, as recorded in Deed Book 330, Pages 635-636,
Probate Court records, Mobile County, Alabama, said point also being the
Northwest corner of Fractional Section 39, Township 1 North, Range 1 West,
Mobile County, Alabama, run Northwardly along the East boundary of said
Division of the Estate of Pauline Chastang, Deceased, a distance of 232.35 feet
to the West line of a 100-foot Frisco Railroad right of way and the point of
beginning of the easement herein described; thence North 38 degrees-48'-03"
West 61.44 feet; thence South 01 degrees-49'-07" West along a line which is 40
feet West of (measured perpendicular) and parallel to the West line of said
Frisco Railroad right of way a distance of 92.28 feet to the North line of said
Parcel H; thence North 53 degrees-03'-44" East a distance of 51.29 feet to said
West right of way line; thence North 01 degrees-49'-07" East along said West
right of way line 13.53 feet to the point of beginning.
A-17
<PAGE> 27
[MO29]
Commencing at the Easternmost corner of Parcel H, Division of the Estate of
Pauline Chastang, Deceased, as recorded in Deed Book 330, Pages 635-636,
Probate Court records, Mobile County, Alabama, said point also being the
Northwest corner of Fractional Section 39, Township 1 North, Range 1 West,
Mobile County, Alabama, run South 51 degrees-11'-57" West along the South line
of said Parcel H a distance of 199.29 feet to the West line of a 100-foot
Frisco Railroad right of way and the point of beginning of the easement herein
described; thence North 01 degrees-49'-07" East 292.58 feet to a point on the
North line of said Parcel H; thence South 53 degrees-03'-44" West 51.29 feet;
thence South 01 degrees-49'- 07" West 294.78 feet to a point on the South line
of said Parcel H; thence North 51 degrees-11'-57" East along said South line a
distance of 52.7 feet to the point of beginning.
[MO30]
Commencing at the Northern most corner of Section 40, Township 1 North, Range 1
West, Mobile County, Alabama, runs Southwestwardly along the North line of said
Section 40, a distance of 199.29 feet to the West line of a Frisco Railroad 100
Foot right-of-way and the point of beginning of the easement herein described;
thence South 01 degrees-49'-07" West along said West line 1,151.9 feet more or
less to the North bank of Sweet Water branch; thence Southwestwardly along the
meanders of said North bank, 41.6 feet more or less to a point which is 40 feet
West of said West right-of-way line when measured perpendicular to said West
right-of-way line; thence North 01 degrees-49'-07" East 1,129.0 feet more or
less to the North line of said Section 40; thence North 51 degrees-11'-57" East
along said North line 52.7 feet to the point of beginning.
[MO31]
Commencing at the Northwest corner of Lot B as shown on Plat of "Madam Irene
Andry's Land" as recorded in Deed Book 156, pages 316 and 317, Probate Court
Records, Mobile County, Alabama, run eastwardly along the North line of a
parcel described in Real Property book 1903, pages 545 through 547 aforesaid
Probate Court Records, a distance of 2,651.15 feet to the West line of the 100
foot Frisco Railroad right-of-way and the point of beginning of the easement
herein described; thence North 01 degrees-49'-07" East along said West line
1117.3 feet more or less to the North bank of Sweet water branch; thence
Southwestwardly along the meanders of said North bank, 41.6 feet more or less
to a point which is 40 feet West of the West line of said Frisco Railroad
right-of-way when measured perpendicular to said West line; thence South 01
degrees-49'-07" West, 1105.9 feet more or less; thence South 08 degrees-16'-59"
East along the North line parcel described in Real Property book 1903, pages
545 to 547 of aforesaid Probate Court Records, a distance of 40 feet to the
point of beginning.
[MO33]
Commencing at Northwest corner of Section 40, Township 1 North, Range 1 West,
Mobile County, Alabama, run Eastwardly along the North line of parcel described
in Real Property Book 1903, Pages 545-547, Probate Court records, Mobile
County, Alabama, a distance of 2,651.15 feet to the West line of a 100-foot
Frisco Railroad right of way for the point of beginning of the property herein
described; thence South 01 degrees-49'-07" West along said West line 677.93
feet; thence South 85 degrees-03'-07" West along the South line of parcel in
described in aforesaid Real Property Book 1903, Pages 545-647 a distance of
40.28 feet; thence North 01 degrees-49'-07" East 682.61 feet; thence South 88
degrees-16'- 59" East along said North line 40.0 feet to the point of
beginning.
[MO35]
Commencing at the Northwest corner of Section 40, Township 1 North, Range 1
West, Mobile County, Alabama, run Southwardly along the West line of said
Section 40 a distance of 984.17 feet, more or
A-18
<PAGE> 28
less, to the South line of Lot C, Madame Irene Andry's Land, as recorded in
Deed Book 156, Pages 316-317, Probate Court records, Mobile County, Alabama;
thence Eastwardly along said South line 2,633.43 feet to the West line of a
100-foot Frisco Railroad right of way and the point of beginning of the
easement herein described; thence South 01 degrees-49'- 07" West along said
West right of way line 342.08 feet; thence South 81 degrees-23'-30" West along
the South line of property described in Deed Book 550, Pages 79-80, aforesaid
Probate Court records a distance of 40.67 feet; thence North 01 degrees-49'-07"
East 344.69 feet; thence North 85 degrees-03'-07" East along the South line of
said Lot C a distance of 40.28 feet to the point of beginning.
[MO36]
Commencing at the Northwest corner of Section 40, Township 1 North, Range 1
West, Mobile County, Alabama, run Southwardly along the West line of said
Section 40 2009.17 feet; thence Eastwardly along the North line of Bucks land
(also being the North line of parcel described in Will Book 14, pages 460-461,
Probate Court records, Mobile County, Alabama) a distance of 2,658.28 feet to a
point on the West line of a 100-foot Frisco Railroad right of way and the point
of beginning of the easement herein described; thence North 01 degrees-49'-07"
East along said West right of way line a distance of 345.26 feet; thence South
81 degrees-23'-30" West along the South line of property described in Deed Book
550, Pages 79-80, aforesaid Probate Court records, a distance of 40.67 feet;
thence South 01 degrees-49'-07" West 347.94 feet; thence North 77
degrees-43'-32" East along the North line of said Bucks land 41.24 feet to the
point of beginning.
[MO37]
Commencing at the Northwest corner of Section 40, Township 1 North, Range 1
West, Mobile County, Alabama, run Southwardly along the West line of said
Section 40 a distance of 2,009.17 feet,more or less, to the North line of
property described in Will Book 14, pages 460-461, Probate Court records,
Mobile County, Alabama; thence Northeastwardly along said North line a distance
of 2,658.28 feet to the West line of a 100-foot Frisco Railroad right of way
and the point of beginning of the easement herein described; thence South 01
degrees-49'-07" West along said West right of way line 1,347.02 feet; thence
South 77 degrees-43'-32" West along the South line of property described in
Will Book 14, Pages 464-461 a distance of 41.24 feet; thence North 01
degrees-49'-07" East 1,347.02 feet; thence North 77 degrees-43'- 32" East along
said North line 41.24 feet to the point of beginning.
[MO38]
Commencing at the Northwest corner of Section 40, Township 1 North, Range 1
West, Mobile County, Alabama, run Southwardly along the West line of said
Section 40 a distance of 3,345 feet, more or less, to the South line of
property described in Will Book 14, Pages 460-461, Probate Court records,
Mobile County, Alabama; thence Eastwardly along said South line 2,608.81 feet
to the West line of a 100-foot Frisco Railroad right of way and the point of
beginning of the easement herein described; thence South 01 degrees-49'-07"
West along said West right of way line 977.48 feet; thence South 64
degrees-50'-20" West along the South line of said Section 40 a distance of
44.88 feet; thence North 01 degrees- 49'-07" East 987.80 feet; thence North 77
degrees-43'-32" East along the South line of property described in aforesaid
Will Book 14, Pages 460-461, a distance of 41.24 feet to the point of
beginning.
[MO39]
Commencing at the Southeast corner of Section 25, Township 1 North, Range 1
West, Mobile County, Alabama, run West along the South line of said Section 25
a distance of 1,984.8 feet, more or less, to the West right of way line of a
100-foot Frisco Railroad right of way and the point of beginning of the
easement herein described; thence North 01 degrees-49'- 07" East along said
West right of way line
A-19
<PAGE> 29
108.24 feet, more or less; thence South 64 degrees-50'-20" West along the North
line of said Section 25 a distance of 44.88 feet; thence South 01
degrees-49'-07" West 89.15 feet, more or less, to the South line of said
Section 25; thence East along said South line 40.02 feet to the point of
beginning.
[MO40]
Commencing at the Northeast corner of Section 36, Township 1 North, Range 1
West, Mobile County, Alabama, run Westwardly along said North line 1,985 feet,
more or less, to the West line of a 100-foot Frisco Railroad right of way and
the point of beginning of the easement herein described; thence South 01
degrees-49'-07" West along said West right of way line 1,326.09 feet; thence
North 89 degrees-53'-36" West along the South line of the Estate of Harold T.
Chastang 40.02 feet; thence North 01 degrees-49'-07" East 1,326.02 feet; thence
Eastwardly along the South line of said Section 36 a distance of 40.02 feet to
the point of beginning.
[MO41]
Commencing at the Northwest corner of Section 36, Township 1 North, Range 1
West, Mobile County,Alabama, run South along the West line of said Section 36 a
distance of 1,320 feet, more or less; thence Eastwardly along the South line of
the Estate of Harold T. Chastang a distance of 3,221.92 feet to a point on the
West line of a 100-foot Frisco Railroad right of way and the point of beginning
of the easement herein described; thence South 01 degrees-49'-07" West along
said West right of way line 1,244.21 feet; thence South 22 degrees-15'-49" West
114.14 feet; thence North 89 degrees-53'-36' West along the North line of the
South Half of said Section 36 a distance of 32.39 feet; thence North 22
degrees-15'-49" East 92.32 feet; thence North 01 degrees-49'-07" East 1,264.43
feet; thence South 89 degrees-53'-36" East along the South line of said Estate
of Harold T. Chastang 40.02 feet to the point of beginning.
[MO44 Sec. 36]
PARCEL A - Commencing at the Southeast corner of Section 36, Township 1 North,
Range 1 West, Mobile County, Alabama, said point being marked by the Ellicott
Stone, run thence North 89 degrees-58'-31" West along the South line of said
Section 36 a distance of 516.92 feet to the point of beginning of the easement
herein described; thence continue North 89 degrees-58'-31" West 36.71 feet;
thence North 35 degrees-09'-42" West 259.34 feet; thence South 85
degrees-40'-47" West 145.54 feet to a point on the East right of way line of U.
S. Highway 43; thence Northwardly and Westwardly along the arc of a 17,251.73
foot radius curve to the left and along said East right of way line 30.01 feet
(chord bears North 02 degrees-39'-53" West 30.01 feet); thence North 85
degrees-40'-47" East 161.7 feet; thence South 35 degrees-09'-42" East 297.52
feet to the point of beginning.
PARCEL B - Commencing at the Southeast corner of Section 36, Township 1 North,
Range 1 West, Mobile County, Alabama, said point being marked by the Ellicott
Stone, run thence North 89 degrees-58'-31" West along the South line of said
Section 36 a distance of 516.92 feet; thence continue North 89 degrees-58'-31"
West 36.71 feet; thence North 35 degrees-09'-42" West 259.34 feet; thence South
85 degrees-40'-47" West 145.54 feet to a point on the East right of way line of
U. S. Highway 43; thence South 85 degrees-40'-47" West 209.59 feet to the West
right of way line of U. S. Highway 43 and the point of beginning of the
easement herein described; thence South 85 degrees-40'-47" West 352.41 feet;
thence North 88 degrees-11'-23" West 579.71 feet to the East right of way line
of the Frisco Railroad; thence North 01 degrees-48'-31" East along said East
right of way line 30.0 feet; thence South 88 degrees-11'-23" East 578.11 feet;
thence North 85 degrees-40'-47" East 359.69 feet to the West right of way line
of U. S. Highway 43; thence Southwestwardly along said West right of way line
31.29 feet to the point of beginning.
PARCEL C - Commencing at the Southeast corner of Section 36, Township 1 North,
Range 1 West, Mobile County, Alabama, said point being marked by the Ellicott
Stone, run thence North 89 degrees-58'-31"
A-20
<PAGE> 30
West along the South line of said Section 36 a distance of 516.92 feet; thence
continue North 89 degrees-58'-31" West 36.71 feet; thence North 35
degrees-09'-42" West 259.34 feet; thence South 85 degrees-40'-47" West 145.54
feet to a point on the East right of way line of U. S. Highway 43; thence South
85 degrees-40'-47" West 209.59 feet to the West right of way line of U. S.
Highway 43 thence South 85 degrees-40'-47" West 352.41 feet; thence North 88
degrees-11'-23" West 579.71 feet to the East right of way line of the Frisco
Railroad; thence North 88 degrees-11'-23" West 100.0 feet to the West right of
way line of the Frisco Railroad and the point of beginning of the easement
herein described; thence continue North 88 degrees-11'-23" West 30.0 feet;
thence North 01 degrees-48'-31" East 2,065.82 feet; thence North 24
degrees-38'-31" West 108.28 feet; thence North 02 degrees-04'-03' East 281.85
feet; thence North 22 degrees-15'-49" East 18.13 feet; thence South 89
degrees-53'-36" East along the North line of the South Half of said Section 36
a distance of 32.39 feet; thence South 22 degrees-15'-49" West 25.01 feet;
thence South 02 degrees-04'-03" West 269.39 feet; thence South 24
degrees-38'-31" East 108.20 feet to the West right of way line of the Frisco
Railroad; thence South 01 degrees- 48'-31" West along said West line 2,072.87
feet to the point of beginning.
[MO44 Sec. 1]
Commencing at the Northeast corner of Section 1, Township 1 South, Range 1
West, Mobile County, Alabama, thence Westwardly along the North line of said
Section 1 a distance of 516.92 feet to the point of beginning of the easement
herein described; thence South 35 degrees-09'-42" East 206.07 feet to a point
on the West line of a 100-foot Southern Railroad right of way; thence South 00
degrees-30'-14" East along said West right of way line 2,827.18 feet to the
North line of property described in an instrument recorded in Real Property
Book 2067, Pages 652-658, Probate Court records, Mobile County, Alabama;
thence South 89 degrees-41'-48" West along said North line 30.0 feet; thence
North 00 degrees- 30'-14" West 2,817.71 feet; thence North 35 degrees-09'-42"
West 217.86 feet to the North line of said Section 1; thence South 89
degrees-58'-31" East 36.71 feet to the point of beginning.
[MO48, MO50]
PARCEL A - Commencing at the Southeast corner of Section 1, Township 1 South,
Range 1 West, Mobile County, Alabama, run Northwardly along the East line of
said Section 1 a distance of 1,331.93 feet; thence North 89 degrees-55'-35"
West 344.57 feet to a point on the West line of a 100-foot Southern Railroad
right of way and the point of beginning of the easement herein described;
thence North 00 degrees-29'-43" West 998.0 feet; thence South 89
degrees-42'-02" West 30.0 feet; thence South 00 degrees-29'-43" East 997.80
feet; thence South 89 degrees-55'-35" East 30.0 feet to the point of beginning.
PARCEL B - Commencing at the Northeast corner of Section 12, Township 1 South,
Range 1 West, Mobile County, Alabama, run Westwardly along the North line of
said Section 12 a distance of 327.9 feet to the West line of a 100-foot
Southern Railroad right of way and the point of beginning of the easement
herein described; thence South 00 degrees-29'-43" East alaong said West right
of way line 100.01 feet to a point on the South line of property described in
Real Property Book 2347, Pages 624-626, Probate Court records, Mobile County,
Alabama; thence North 89 degrees-54'-19" West along said South line 30.0 feet;
thence North 00 degrees-29'-43" West 100.01 feet to a point on the North line
of said Section 12; thence South 89 degrees-54'-19" East 30.0 feet to the point
of beginning.
[MO49]
Commencing at the Southeast corner of Section 1, Township 1 South, Range 1
West, Mobile County, Alabama, run Westwardly along the South line of said
Section 1 a distance of 327.9 feet to the West line of a 100-foot Southern
Railroad right of way and the point of beginning of the easement herein
described; thence North 00 degrees-29'-43" West along said West right of way
line 647.66 feet; thence North 20 degrees-31'-41" West 43.56 feet; thence North
00 degrees-29'-43" West 565.89 feet; thence North 19 degrees-27'-43" East 43.88
feet to a point on said West right of way line; thence North 00 degrees-29'-43"
West along said West right of way line 35.8 feet to a point on the South line
of property described in Real Property
A-21
<PAGE> 31
Book 2067, Pages 652-658, Probate Court records, Mobile County, Alabama; thence
North 89 degrees-55'-35" West along said South line 30.0 feet; thence South 00
degrees-29'-43" East 30.82 feet; thence South 19 degrees-27'-43" West 43.88
feet; thence South 00 degrees-29 degrees-43" East 576.46 feet; thence South 20
degrees-31'-41" East 43.55 feet; thence South 00 degrees-29'-43" East 642.06
feet; thence South 89 degrees-54'-19" East 30.0 feet to the point of beginning.
[MO51]
Commencing at the Northeast corner of Section 12, Township 1 South, Range 1
West, Mobile County, Alabama, run Westwardly along the North line of said
Section 12 a distance of 327.9 feet to the West line of a 100-foot Southern
Railroad right of way; thence Southwardly along said West right of way line
100.01 feet to the point of beginning of the easement herein described; thence
South 00 degrees-29'-43" East along said West line 500.02 feet; thence North 89
degrees-52'-48" West along the North line of property described in Real
Property Book 2119, Pages 940-968 (Parcel A), Probate Court records, Mobile
County, Alabama, a distance of 30 feet; thence North 00 degrees-29'-43" West
500.01 feet; thence South 89 degrees-54'-19" East along the South line of
property described in Real Property Book 2347, Pages 624-626 (Parcel A),
aforesaid Probate Court records, a distance of 30.0 feet to the point of
beginning.
[MO52]
Commencing at the Northeast corner of Section 12, Township 1 South, Range 1
West, Mobile County, Alabama, run Westwardly along the North line of said
Section 12 a distance of 327.9 feet to the West line of a 100-foot Southern
Railroad right of way; thence Southwardly along said West right of way line
600.03 feet to the point of beginning of the easement herein described; thence
continue South 00 degrees-29'-43" East along said West right of way line
1,122.50 feet to the centerline of Cold Creek; thence along the meanders of the
centerline of said Cold Creek run South 65 degrees-53'-34" West 32.74 feet;
thence North 00 degrees-29'-43" West 1,135.94 feet to a point on the North line
of property described in Real Property Book 2119, Pages 940-986, Probate Court
records, Mobile County, Alabama,; thence South 89 degrees-52'- 48" East along
said North line 30.0 feet to the point of beginning.
[MO54]
Commencing at the Northeast corner of Section 12, Township 1 South, Range 1
West, Mobile County, Alabama, run Westwardly along the North line of said
Section 12 a distance of 327.9 feet to a point on the West line of a 100-foot
Southern Railroad right of way; thence Southwardly along said West line 1722.53
feet to the point of beginning of the easement herein described; thence
continue South 00 degrees-29'-43" East along said West line 1308.39 feet;
thence South 04 degrees-31'-17" West 328.45 feet; thence South 28
degrees-28'-38" East 61.21 feet; thence South 00 degrees-29'-43" East 422.60
feet along said West right of way line; thence South 27 degrees-30'-35" West
112.49 feet; thence South 00 degrees-29'-43" East 60.66 feet to the South line
of property described in Parcel A in an instrument recorded in Real Property
Book 3132, Pages 859-862, Probate Court records, Mobile County, Alabama; thence
South 89 degrees-53'-43" West 30 feet; thence North 00 degrees-29'-43" West
67.94 feet; thence North 27 degrees-30'-35" East 112.49 feet; thence North 00
degrees-29'-43" West 407.64 feet; thence North 28 degrees-28'-38" West 62.63
feet; thence North 04 degrees-31'-17" East 336.02 feet; thence North 00
degrees-29'-43" West 1293.96 feet to a point in the centerline of Cold Creek;
thence North 65 degrees-53'-34" East along said centerline 32.74 feet to the
point of beginning.
[MO55]
Commencing at the Southeast corner of Section 12, Township 1 South, Range 1
West, Mobile County, Alabama, run Northwardly along the East line of said
Section 12 a distance of 280.95 feet to a point on the South line of property
described as parcel 3 on instrument recorded in Real Property Book 3132,
A-22
<PAGE> 32
Pages 879-884, Probate Court records, Mobile County, Alabama; thence South 73
degrees-31'-15" West along said South line a distance of 338 feet, more or
less, to a point on the West line of a 100-foot Southern Railroad right of way
for the point of beginning of the easement herein described; thence North 00
degrees-27'-03" West along said West right of way line 39.29 feet; thence
continue along said West right of way line North 00 degrees-29'-43" West 938.96
feet; thence North 28 degrees-27'-05" West 112.69 feet; thence North 00
degrees-29'-43" West 75.35 feet to a point on the South line of property
described in Real Property Book 3132, Pages 859-860, aforesaid Probate Court
records (Parcel 1); thence South 89 degrees-53'-43" West along said South line
30.0 feet; thence South 00 degrees-29'-43" East 83.03 feet; thence South 28
degrees-27'-05" East 112.69 feet; thence South 00 degrees-29'-43" East 931.48
feet; thence South 00 degrees- 27'-03" East 683.89 feet; thence South 25
degrees-32'-19" West 49.91 feet; thence South 00 degrees-27'-03" East 650.06
feet to a point on the South line of property described in Parcel 1 on
instrument recorded in Real Property Book 3132, Pages 879-884, aforesaid
Probate Court records; thence North 72 degrees-57'-57" East along said South
line 31.30 feet; thence North 00 degrees-27'-03" West 634.21 feet; thence North
25 degrees-32'-19" East 49.91 feet to a point on the West line of a 100-foot
Southern Railroad right of way; thence North 00 degrees-27'-03" West along said
West line 651.53 feet to the point of beginning.
[MO56]
Commencing at the Southeast corner of Section 13, Township 1 South, Range 1
West, Mobile County, Alabama, thence Northwardly along the East line of said
Section 13 a distance of 836.4 feet to a point on the South line of property
described as Parcel A in an instrument recorded in Real Property Book 3645,
Pages 1-8, Probate Court records, Mobile County, Alabama; thence Westwardly
along the South line of said parcel A 270.0 feet to the West line of a 100-foot
Southern Railroad right of way; thence Northwardly along said West right of way
line 645.0 feet; thence South 89 degrees-32'-57" West 10.0 feet to the point of
beginning of the easement herein described; thence continue South 89
degrees-32'-57" West and along the South boundary of property described as
Exception No. 9 in an instrument recorded in Real Property Book 3645, Pages
1-8, aforesaid Probate Court records, a distance of 30.0 feet; thence North 00
degrees- 27'-03" West 74.18 feet; thence North 11 degrees-32'-56" East 48.10
feet; thence North 00 degrees-27'-03" West 1253.32 feet; thence North 45
degrees-27'-03" West 60.56 feet; thence North 00 degrees-27'-03" West 46.68
feet; thence North 09 degrees-16'-04" East 51.15 feet; thence North 00
degrees-27'-03" West 701.56 feet; thence North 28 degrees-26'-38" West 117.41
feet; thence North 00 degrees-27'-03" West 170.57 feet; thence North 27
degrees-32'-57" East 143.61 feet; thence North 00 degrees-27'-03" West 76.48
feet; thence North 72 degrees-57'-57" East 31.3 feet; thence South 00
degrees-27'- 03" East 92.89 feet; thence South 27 degrees-32'-57" West 143.61
feet; thence South 00 degrees-27'-03" East 155.61 feet; thence South 28
degrees-26'-38" East 117.41 feet; thence South 00 degrees-27'-03" East 711.59
feet; thence South 09 degrees-16'-04" West 51.15 feet; thence South 00
degrees-27'-03" East 31.70 feet; thence South 45 degrees-27'-03" East 60.56
feet to a point on the West line of aforesaid 100-foot Southern Railroad right
of way; thence South 00 degrees- 27'-03" East along said West right of way line
1268.90 feet; thence South 11 degrees-32'-56" West 48.10 feet; thence South 00
degrees-27'-03" East 71.03 feet to the point of beginning.
[MO57]
Commencing at the Southeast corner of Section 13, Township 1 South, Range 1
West, Mobile County, Alabama, run Northwardly along the East line of said
Section 13 a distance of 836.4 feet to a point on the South boundary of
property described as Parcel A in an instrument recorded in Real Property Book
3645, Pages 1-8, Probate Court records, Mobile County, Alabama; thence
Westwardly along said South boundary 270.0 feet to the West line of a 100-foot
Southern Railroad right of way; thence continue Westwardly along said South
boundary 20.3 feet to the point of beginning of the easement herein described;
thence South 89 degrees-31'-29" West along said South boundary 30.0 feet;
thence North 00 degrees-27'- 03" West 35.63 feet; thence North 44
degrees-32'-57" East 28.7 feet; thence North 00 degrees-27'-03" West 497.81
feet; thence North 45 degrees-27'-03" West 7.07 feet; thence North 00
degrees-27'-03" West 86.28 feet to a point on the South boundary of property
described as Exception No. 9 in an instrument recorded
A-23
<PAGE> 33
in Real Property Book 3645, Pages 1-8, aforesaid Probate Court records; thence
North 89 degrees-32'-57" East along the South boundary of said Exception No. 9
a distance of 30.0 feet; thence South 00 degrees-27'-03" East 73.85 feet;
thence South 45 degrees-27'-03" East 7.07 feet to a point on the West line of
said 100-foot Southern Railroad right of way; thence South 00 degrees-27'-03"
East 522.67 feet; thence South 44 degrees-32'-57" West 28.7 feet; thence South
00 degrees-27'-03" East 23.20 feet to the point of beginning.
[MO58]
PARCEL A: Commencing at the Southeast corner of Section 13, Township 1 South,
Range 1 West, Mobile County, Alabama,run Northwardly along the East line of
said Section 13 a distance of 836.4 feet; thence run Westwardly along the South
boundary of property described as Parcel A of an instrument recorded in Real
Property Book 3645, Pages 1-8, Probate Court records, Mobile County, Alabama, a
distance of 270.0 feet to the West line of a 100-foot Southern Railroad right
of way; thence continue Westwardly along said South boundary a distance of 20.3
feet to the point of beginning of the easement herein described; thence South
00 degrees-27'-03" East and parallel to said West railroad right of way line
1,912.97 feet; thence South 44 degrees-32'-57" West 309.73 feet; thence North
71 degrees-51'-28" West 33.49 feet; thence North 44 degrees-32'-57" East 312.20
feet; thence North 00 degrees-27'-03" West 1,900.53 feet; thence North 89
degrees- 31'-29" East 30.0 feet to the point of beginning.
[MO58]
PARCEL B: Commencing at the Southeast corner of Section 13, Township 1 South,
Range 1 West, Mobile County, Alabama, run Northwardly along the East line of
said Section 13 a distance of 836.4 feet; thence run Westwardly along the South
boundary of property described as Parcel A of an instrument recorded in Real
Property Book 3645, Pages 1-8, Probate Court records, Mobile County, Alabama, a
distance of 270.0 feet to the West line of a 100-foot Southern Railroad right
of way; thence continue Westwardly along said South boundary a distance of 20.3
feet; thence South 00 degrees-27'-03" East and parallel to said West railroad
right of way line 1,912.97 feet; thence South 44 degrees-32'-57" West 309.73
feet to the point of beginning of the easement herein described; thence South
00 degrees-02'-28" West 34.76 feet to the South line of property described as
Parcel 3 in an instrument recorded in Real Property Book 2986, Pages 143-147,
Probate Court records, Mobile County, Alabama; thence North 89 degrees-57'-32"
West along said South line 474.30 feet; thence North 11 degrees-49'-13" West
along the East right of way line of U. S. Highway 43 a distance of 102.48 feet;
thence North 69 degrees-14'-28" East 84.84 feet; thence North 87
degrees-42'-34" East 109.82 feet; thence South 71 degrees-51'-28" East 322.28
feet to the point of beginning.
[MO59]
Commencing at the Northeast corner of Section 24, Township 1 South, Range 1
West, Mobile County, Alabama, run Southwardly along the East line of said
Section 24 a distance of 1,335.12 feet, more or less, to the South line of
property described in Real Property Book 2986, Pages 143-147, Probate Court
records, Mobile County, Alabama; thence North 89 degrees-57'-32" West along
said South line 686.81 feet to the point of beginning of the easement herein
described; thence continue North 89 degrees-57'-32" West along said South line
170.0 feet; thence South 00 degrees-02'- 28" West 50.0 feet; thence South 89
degrees-57'-32" East 170.0 feet; thence North 00 degrees-02'-28" East 50.0 feet
to the point of beginning.
A-24
<PAGE> 1
EXHIBIT 10(f)
<PAGE> 2
MOBIL NATURAL GAS INC.
12450 GREENSPOINT DRIVE
HOUSTON, TEXAS 77060-1991
August 10, 1995
CONFIDENTIAL
Mr. J. Harris Oswalt
Mobile Gas Service Corporation
P. 0. Box 2248
2828 Dauphin St.
Mobile, Alabama 36652
AGREEMENT FOR SALE AND
PURCHASE OF GAS
MOBILE PLANT
S-6650
Ladies and Gentlemen:
This letter shall confirm the agreement between Mobil Natural Gas Inc.
("Mobil") and Mobile Gas Service Corporation ("Buyer") for the sale and
purchase of gas for a [***proprietary information omitted***] year price
renegotiation and term extension through close of [***proprietary information
omitted***], in accordance with provisions of the Letter Agreement dated
November 1, 1991. When executed by both parties, this Letter Agreement shall
constitute a binding agreement between Mobil and Buyer.
Mobil agrees to sell, and Buyer agrees to purchase, natural gas during the term
hereof in accordance with the following provisions and the terms and provisions
of Appendices A, B, C, and D, attached to and made part of this letter
Agreement:
1. NATURE OF SALE: Warranty. Mobil warrants that it will deliver gas in
accordance with Section 4 of Appendix B, or pay damages, pursuant to
Section 5 thereof, for its failure to deliver such quantity, except to
the extent of any gas which Mobil is unable to deliver pursuant to
Section 9, Force Majeure, of Appendix B.
2. QUANTITY: The Maximum Contract Quantity (MCQ) for each day during the
term of this Agreement shall be the quantity set out on Appendix A.
3. SALES POINT(S): Title to and possession of gas delivered shall pass from
Mobil to Buyer at the Sales Point(s) listed on Appendix A.
<PAGE> 3
Mobile Gas Service Corporation
August 10, 1995
Page 2
4. COMMODITY CHARGE: Buyer agrees to pay Mobil the Commodity Charge
indicated on Appendix A for each MMBtu of gas nominated by Buyer with
adjustment to actuals to follow.
5. RESERVATION CHARGE: Regardless of the amount of gas actually taken by
Buyer in any month, Buyer agrees to pay Mobil the Reservation Charge
indicated on Appendix A in consideration for Mobil's agreement to make
a quantity of gas, up to the MCQ, available each day.
This Letter Agreement, and Appendices A, B, C, and D constitute the parties'
entire agreement as to the matters covered hereby.
If the foregoing correctly reflects your understanding of our agreement, please
execute both of the enclosed originals of this Letter Agreement and return one
fully executed original to the undersigned.
Very truly yours,
MOBIL NATURAL GAS INC.
/s/ Daryl T. Landry
Daryl T. Landry
Area Sales Manager
ACCEPTED AND AGREED TO
This 14th day of September 1995
BUYER: MOBILE GAS SERVICE CORPORATION
By: /s/ Gerald S. Keen
Name (Printed): Gerald S. Keen
Title: Vice President
<PAGE> 4
APPENDIX A
WARRANTY LETTER AGREEMENT
Attached to and forming part of the Letter Agreement dated November 1, 1991
between Mobil Natural Gas Inc. and Mobile Gas Service Corporation.
PART I
MCQ SALES POINT(S)
<TABLE>
<CAPTION>
EFFECTIVE PERIOD (MMBtu/D) Location Meter No.
- ---------------- --------- -------- ---------
<S> <C> <C>
[***proprietary information omitted***] Mobil Mobile Bay 2460
Alternate: Koch Gateway
Pipeline Co.
At Whistler
</TABLE>
PART II
<TABLE>
<CAPTION>
COMMODITY CHARGE MMBtu (Dry)1 RESERVATION CHARGE
- ---------------------------- ------------------
<S> <C>
[***proprietary information omitted***] Calculated monthly, according to the formula R
=[***proprietary information omitted***], where P equals the
commodity Charge; MCQ equals the Maximum Contract Quantity
([***proprietary information omitted***] MMBTU/D); and D
equals the number of gas days in the month.
</TABLE>
AGREED AND ACCEPTED this 14th day of September, 1995.
BUYER: SELLER:
MOBILE GAS SERVICES CORPORATION MOBIL NATURAL GAS
INC.
By: /S/ Gerald S. Keen By: /S/ Daryl T. Landry
1 The Commodity charge includes all taxes, transportation
charges, and other add-ons, aftributable to the gas prior to delivery,
excluding only sales, use, and gross receipts taxes arising at the time of
delivery and/or title passage. Buyer shall pay all sales, use, and gross
receipts taxes unless Buyer is exempt, by law, from such taxes. Buyer agrees
to provide Seller copies of any applicable exemption certificates.
2 The Inside FERC Index shall be determined monthly by
calculating the arithmetic average of the 30 day spot prices for gas delivered
into the following pipeline systems at the identified supply areas:
[***proprietary information omitted***], as reported in the publication "Inside
FERC's Gas Market Report (McGraw Hill) under the heading of "Index", for the
first Day of the Month or the earliest Day in that Month for which such prices
are reported.
3 Should implications of FERC Order 636 change the value of the
commodity, both parties agree to attempt to renegotiate said commodity for the
remaining term of the contract.
<PAGE> 5
APPENDIX B
TERMS & CONDITIONS
WARRANTY LETTER AGREEMENT
1. DEFINITIONS:
a. MMBtu: The unit of measurement shall be one million British Thermal
Units (MMBtu), determined on the basis of gross heating value (determined at
60degreesF when saturated with water vapor at an absolute pressure of 14.73
psia, adjusted for water content as delivered).
b. Day: A period from 7:00 A.M. at the Sales Points until 7:00 A.M. on the
following day.
c. Month: A period from 7:00 A.M. on the first Day of the calendar month
and ending at 7:00 A.M. on the first Day of the following month.
2. DECONTROL: Buyer and Seller agree, to the extent they are legally
empowered to do so, that gas sold under this Agreement shall not be subject to
control by any governmental agency. Instead, the parties intend to have their
negotiated price govern.
3. BUYER'S OBLIGATIONS: Buyer will notify Mobil, in writing, on or before
the 20th Day of each Month, of the quantity of gas Buyer willt purchase each
Day during the next Month (Purchase Quantity). Buyer may request any quantity,
including zero, up to the MCQ. Except to the extent prevented by Force
Majeure, it is Buyer's intention to take each day at least 80% of all gas
nominated at the Sales Point(s). As to any failure to take at least 80% of the
monthly nominated quantity at the delivery point, or take during any month at
least 80% of the nominated quantity at the delivery point, Buyer shall pay
Seller, in addition to the commodity price set forth on Appendix A, the
difference between 80% of the nominated quantity and the quantities actually
delivered multiplied by 20% of the commodity price.
4. SELLER'S OBLIGATIONS: Mobil agrees to deliver each Day at the Sales
Point(s) a quantity of gas within +- 10% of the Purchase Quantity (Daily
Operating Tolerance), up to the MCQ. Mobil's obligation to deliver gas during
any Month shall be met by deliveries within +- 5% (Monthly Operating Tolerance)
of the Monthly Purchase Quantity (the sum of the Purchase Quantities in effect
each Day during such Month).
5. DAMAGES: If Mobil tenders a quantity of gas which is less than the
Purchase Quantity and outside the Daily Operating Tolerance and is not excused
by Mobil's force majeure or an act or omission of Buyer or Buyer's transporter,
Mobil shall pay damages for such failure in an amount equal to the increased
costs which Buyer demonstrates it paid for replacement Gas. Such increased
costs, if any, shall be measured by comparing: (i) the total costs paid by
Buyer for the replacement gas and Buyer's costs to have such gas delivered to
the Sales Point(s) to (ii) the total costs which would otherwise have been paid
by Buyer to purchase gas hereunder and have such gas delivered to its
facilities, provided that it is understood that Buyer will purchase the least
expensive replacement gas consistent with consideration of reliability of
supply. If, however, any such shortfall does not result in Buyer receiving
less gas at its facilities than required, but rather results in an imbalance
under Buyer's transportation agreement(s), Mobil shall have no obligation to
pay damages for such shortfall; provided that Mobil, upon written demand and
after having failed to make-up such imbalance within the maximum period
prescribed in Buyer's transportation agreement(s), shall reimburse Buyer for
any imbalance penalties caused by Mobil's shortfall and paid by Buyer under its
transportation agreement(s). Buyer's written demand for damages or
reimbursement for imbalance penalties must be received within sixty (60) Days
after the end of the Month for which damages or imbalance penalties are claimed
or Buyer shalt be deemed to have waived any right to seek damages or
reimbursement for imbalance penalties for such Month.
6. BILLING & PAYMENT: Mobil will provide Buyer an invoice by the 10th Day
of each Month showing the quantity of gas tendered at the Sales Points during
the preceding Month and the amount due therefor. If actual measurement data is
not available, Mobil will estimate the volume delivered using the best
information available. Payment shall be made by electronic transmission of
funds, or other means agreeable to the parties, within ten (10) Days of the
date of the date of Mobil's posting its invoice in the U.S. mails or other
delivery mechanism or service. A revised invoice will be prepared as soon as
actual data is available, and any additional payment, or refund, will be made
within 10 days after the posting of Mobil's invoice in the U.S. mails or other
delivery mechanism or service. Buyer's obligation to pay for gas received will
not be excused for force majeure, and wiII survive the termination hereof. If
Buyer faiIs to pay any amount when due, interest thereon shat I accrue at the
lesser of the average prime commercial rate being charged during the period of
delinquency by Citibank, N.A., New York, N.Y. or the effective maximum legal
rate. Each party has the right, at its expense and during business hours, to
examine the pertinent records and books of the other to verify the accuracy of
any invoice, charge, or computation.
7. MEASUREMENT, QUALITY & PRESSURE: The parties will agree which, as
between them, is responsible for measurement. Measurement requirements will be
those in effect on the pipeline system through which gas is transported to the
Sales Point(s). Gas tendered by Mobil will meet the quality and pressure
specifications of the pipeline and/or facilities at the Sales Point(s) into
which gas is delivered.
8. WARRANTY OF TITLE: Mobil warrants, at the time of delivery, Mobil's
title to all gas delivered, and that such gas will be free from liens, claims
or encumbrances. Mobil indemnifies Buyer against any direct loss, damage or
expense Buyer may sustain from a claim involving gas hereunder prior to
delivery at the Sales Point(s). Buyer agrees to indemnify Mobil against any
direct loss, damage, or expense Mobil may sustain from a claim involving gas
hereunder at or after delivery at the Sales Point(s). Neither party shall be
liable to the other for indirect, consequential, or special damages.
9. FORCE MAJEURE: Non-performance of any obligation hereunder, other than
the obligation to pay for gas taken, shall be excused if prevented by an
occurrence of force maieure, but only for so long as performance is prevented
by such force majeure. The party claiming excuse shall promptly advise the
other party of such force majeure event and shall, with reasonable efforts,
seek to remedy the occurrence. Force majeure as used herein shall mean any
event beyond the reasonable control of the party in question which prevents, in
whole or part, that party's performance of obligations hereunder, and shall
include, without limitation: floods, hurricanes, breakage or accident to
machinery, plants or pipelines, failure or inability of Mobil's or Buyer's
transporter(s) to transport gas made available hereunder, and the operation of
governmental authority (except at the request of the party claiming force
majeure), but shall not include Buyer's loss of markets or Mobil's inability to
secure gas at prices satisfactory to Mobil.
10. PROCESSING: Mobil reserves the right to process gas after delivery at
the Sales Point(s), and agrees to indemnify Buyer for any Btu losses and
transportation charges incurred by Buyer as a result of Mobil's processing.
11. NOTICE: All notices will be in writing and will be deemed delivered when
mailed by U.S. Mail to the address of the other party. Notice by telecopier
shall be effective when received provided a copy is mailed by the U.S. Mail
within two (2) working days.
12. MISCELLANEOUS: This Agreement may not be assigned, except to an
affiliate of the assigning party, without the prior written consent of the
other party, and shall be governed by the laws of the State of Texas without
recourse to the rules for conflicts of Laws.
13. ALABAMA PUBLIC COMMISSION APPROVAL: It is understood that Buyer will
seek approval of the Alabama Public Commission of this contract. If the
Alabama Public Commission issues an order disapproving this contract, or
otherwise indicates its disapproval, then Buyer may terminate this contract by
giving 30 days prior written notice. Should Buyer not so terminate the
contract, the terms and provisions of this contract shall remain in full force
and effect for the remaining term. In the event of any such termination, Mobil
shall not be obligated to refund any amounts received by Mobil for gas
delivered under this contract prior to termination.
<PAGE> 6
APPENDIX C
During a month, Buyer may request on 24 hours notice a change in the Purchase
Quantity for the portion of such Month remaining after the date of such a
request, upward by [***proprietary information omitted***] percent
([***proprietary information omitted***]%) of the MCQ not to exceed the MCQ, or
downward by [***proprietary information omitted***] percent([***proprietary
information omitted***]) of the MCQ, not less than zero, by notifying Seller
verbally (followed by written confirmation within 24 hours) of its desire for
such a change. This swing option is available on a [***proprietary information
omitted***] month basis ([***proprietary information omitted***]). If the
swing option is not utilized in any given month, that option becomes null and
void and is not available to be carried forward for use in future months (i.e.,
there is no accumulation of unused monthly swing options).
<PAGE> 7
APPENDIX D
STAND-BY SERVICE
Stand-by Service Mobil will provide an additional volume of gas up to
[***proprietary information omitted***] MMBtu/D
delivered into Mobile Gas Service if unsold gas is
available or if gas becomes available through the
curtailment of [***proprietary information
omitted***] on the Mobile Gas Service System, in the
event of an emergency shutdown at [***proprietary
information omitted***]. A service fee equal to
[***proprietary information omitted***] will be added
to the commodity cost then in effect.
<PAGE> 1
EXHIBIT 10(o)
<PAGE> 2
CONFORMED COPY
MOBILE GAS SERVICE CORPORATION
TRANSPORTATION AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of this
15th day of May, 1995 by and between MOBILE GAS SERVICE CORPORATION, an Alabama
corporation with a mailing address of P. O. Box 2248, Mobile, Alabama 36652,
herein called "Mobile Gas," and TUSCALOOSA STEEL CORPORATION, an Alabama
corporation with a mailing address of 1700 Holt Road, N.E., Tuscaloosa, Alabama
35404-1000, herein called "Customer."
WHEREAS, Customer desires to use natural gas for the operation of
Customer's planned direct iron reduction units and associated plant equipment
to be located at Customer's proposed plant on its "McDuffie Island" site in
Mobile, Alabama (the "Plant"); and
WHEREAS, Mobile Gas operates a system for the distribution of natural
gas from natural gas transmission pipelines and processing plants, through
which Mobile Gas can transport to the Plant gas purchased by Customer or its
agents from third parties ("Customer's Shippers") and delivered by Customer's
Shippers to Mobile Gas, and the parties desire that Mobile Gas provide such
transportation services to Customer and construct certain pipeline facilities
for such purpose.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I - TERM OF AGREEMENT
1.1 The term of this Agreement shall be [**proprietary information
deleted**] Contract Years, beginning on the Commencement Date, as defined in
Article IV. "Contract Years" shall mean the consecutive twelve-month calendar
periods commencing with the first day of the month beginning after the
Commencement Date (provided that if the Commencement Date is the first day of a
month, the first Contract Year shall commence on such date, and if the
Commencement Date is not the first day of a month, the first Contract Year
shall also include the period from the Commencement Date to the first day of
the month beginning after the Commencement Date).
1.2 So long as Customer is not in default hereunder at the
expiration of the initial term hereof, as the same may be extended pursuant to
Section 9.3 (the "Expiration Date"), either Customer or Mobile Gas may extend
this Agreement for an additional term of fifteen Contract Years immediately
following the Expiration Date (the "Renewal Term") by notifying the other of
its intent to so extend not less than 90
<PAGE> 3
days prior to the Expiration Date. The Rate for such Renewal Term is set forth
on Exhibit "A."
1.3 Notwithstanding the provisions of Section 1.1, this Agreement
shall become effective as of the date hereof with respect to the obligations of
the parties specified in ARTICLE III hereof, and payment obligations arising
prior to expiration or termination of this Agreement shall remain in effect
after the term of this Agreement.
1.4 This Agreement may only be terminated prior to the expiration
of the initial term or the Renewal Term hereof, if any, as the case may be:
(a) by Mobile Gas
(i) in accordance with Section 8.4,
(ii) in accordance with Section 9.4(b), or
(iii) after occurrence of any material breach by
Customer in the performance of its
obligations hereunder and the continuance
of such breach 90 days after notice by
Mobile Gas to Customer of such breach and
demand by Mobile Gas that Customer cure
same;
(b) by Customer
(i) in accordance with Section 9.4(a), or
(ii) in accordance with Exhibit A, or
(iii) after occurrence of any material breach by
Mobile Gas in the performance of its
obligations hereunder and the continuance
of such breach 90 days after notice by
Customer to Mobile Gas of such breach and
demand by Customer that Mobile Gas cure
same. In the event of termination by
Customer under this clause (iii), Customer
shall not owe any further minimum bill
payments or termination payments in lieu
thereof as provided for in Exhibit A.
<PAGE> 4
ARTICLE II - TRANSPORTATION SERVICE
2.1 Mobile Gas will transport up to a volume of [**proprietary
information deleted**] MMBtu per day, not to exceed [**proprietary information
deleted**] MMBtu per hour ("Contract Demand Volume") to the Point of
Redelivery, as hereinafter defined, for use at the Plant. Customer will pay
Mobile Gas for all gas transported by Mobile Gas to the Plant and agrees to
accept transportation service from Mobile Gas subject to the terms and
conditions hereof. As used herein the term "MMBtu" shall mean 1,000,000
British Thermal Units (which means the amount of heat required to raise the
temperature of one pound of distilled water one degree Fahrenheit at 60 degrees
Fahrenheit at a constant pressure of 14.73 pounds per square inch absolute).
2.2 The effective Rates for the initial term, and any renewal
term, if any, and certain other terms pertaining to such transportation service
are specified in Exhibit "A" which is attached hereto and made part of this
Agreement. Customer agrees that Mobile Gas shall be the sole transporter of
natural gas to the Plant during the term of this Agreement.
2.3 If this Agreement is renewed for a Renewal Term, if at any
time and from time to time during Contract Years [**proprietary information
deleted**] through [**proprietary information deleted**] the volume transported
pursuant to this Agreement is less than an average volume of [**proprietary
information deleted**] MMBtu per day for any consecutive [**proprietary
information deleted**]-month period (with force majeure days excluded from the
calculation), then Mobile Gas may, by not less than 30 days' written notice to
Customer, reduce the Contract Demand Volume to a Contract Demand Volume equal
to [**proprietary information deleted**] of such average daily volume during
such [**proprietary information deleted**]-month period. Such reduction shall
not affect the applicable Rate or the minimum bill provisions set forth in
Exhibit "A".
2.4 If this Agreement is renewed for a Renewal Term, if during any
Contract Year during the Renewal Term the average volume of gas transported is
below [**proprietary information deleted**] MMBtu per day (with force majeure
days and up to two weeks of Customer scheduled maintenance excluded from the
calculation), Mobile Gas may, by not less than 30 days' written notice to
Customer, cause the Rate for transportation of gas to thereafter be the rate
set forth in the T-1 Tariff of Mobile Gas, or any tariff which is a successor
thereto, and such Rate shall remain in effect during the remainder of the
Renewal Term. Any such rate change shall not affect the minimum bill
provisions set forth in Exhibit "A".
2.5 During Contract Years [**proprietary information deleted**]
through [**proprietary information deleted**], Customer may, by not less than
30 days' written notice to Mobile Gas, elect once to reduce the Contract Demand
Volume to
3
<PAGE> 5
[**proprietary information deleted**] MMBtu, and in such event, the annual
minimum bill amount for the following Contract Years shall be reduced to
[**proprietary information deleted**] through the end of Contract Year
[**proprietary information deleted**]. In such event, such reduced Contract
Demand Volume would remain in effect during any Renewal Term, and the minimum
bill during such Renewal Term would be as specified in Exhibit "A".
ARTICLE III - ACTIONS PRIOR TO COMMENCEMENT DATE;
NOTICE OF FACILITIES COMPLETION
3.1 Customer shall be responsible for construction of its pipeline
from the Point of Redelivery to the Plant, and for construction of the Plant.
Promptly after the execution of this Agreement, Customer shall provide to
Mobile Gas an easement in form reasonably acceptable to Mobile Gas for
construction of that portion, if any, of the Facilities, as hereinafter
defined, as shall cross property owned or leased by Customer, as well as for
construction and maintenance of a metering station on the Plant premises.
3.2 Promptly after the execution of this Agreement and receipt of
all required regulatory approvals, easements and rights-of-way as may be
required, Mobile Gas shall begin construction of the facilities necessary to
deliver natural gas to the Point of Redelivery specified herein (the
"Facilities"). Mobile Gas will proceed with reasonable dispatch to obtain
required regulatory approvals, easements and rights of way as may be required
hereunder. Mobile Gas shall at its expense complete such construction of the
Facilities as is required to enable Mobile Gas to deliver gas to Customer at
the Point of Redelivery at the Contract Demand Volume ("Facilities Completion")
not later than 18 months after the execution of this Agreement. Not more than
60 nor less than 20 days prior to such Facilities Completion, Mobile Gas shall
provide notice to Customer of the date that Facilities Completion will occur.
ARTICLE IV - COMMENCEMENT DATE
4.1 The "Commencement Date" shall be the earlier of (i) the date
Customer first takes natural gas from the Facilities into the Plant, or (ii) 30
days after the date of Facilities Completion, provided that the Commencement
Date pursuant to this subsection 4.1(ii) shall not be earlier than 18 months
after the execution of this Agreement.
4
<PAGE> 6
ARTICLE V - QUALITY
5.1 The volumes of natural gas delivered by Customer's Shippers
and redelivered by Mobile Gas hereunder shall be measured at an equivalent
pressure base of 14.73 pounds per square inch absolute ("psia") and an assumed
atmospheric pressure of 14.7 psia, and at a temperature base of 60 degrees
Fahrenheit. The volume of natural gas determined hereunder shall be adjusted
to give effect to Boyle's Law in accordance with standard procedure.
5.2 The quality of the gas delivered by Customer's Shippers to
Mobile Gas and redelivered by Mobile Gas to Customer shall be pipeline quality,
and:
(a) Shall be dehydrated and shall in no event have a
water content in excess of seven (7) pounds of water
per million (1,000,000) cubic feet of gas measured at
a pressure base of 14.73 psia and at a temperature
base of 60 degrees Fahrenheit, as determined by dew
point or other moisture measuring equipment in
general use in the industry.
(b) Shall not contain more than one (1) grain of hydrogen
sulfide per one hundred (100) cubic feet as
determined by quantitative methods in general use in
the industry.
(c) Shall not contain more than twenty (20) grains of
total sulphur, including hydrogen sulfide, per one
hundred (100) cubic feet as determined by
quantitative methods in general use in the industry.
(d) Shall not contain in excess of:
(i) Three percent (3.0%) by volume carbon
dioxide.
(ii) Two percent (2.0%) by volume oxygen.
(iii) Three percent (3.0%) by volume nitrogen.
(e) Shall be commercially free from dust, gum,
gum-forming constituents or other liquid or solid
matter which might become separate from the gas in
the course of transportation through pipelines.
(f) Shall be commercially free of water and other
objectionable liquids at the temperature and pressure
at which the gas is delivered and the gas shall not
contain any hydrocarbons which might condense to free
liquids in the pipeline under normal pipeline
conditions.
5
<PAGE> 7
ARTICLE VI - POINT OF DELIVERY AND REDELIVERY
6.1 Customer's Shipper shall deliver gas (at a pressure sufficient
to enter into the interconnection at the Point of Delivery) to be transported
by Mobile Gas hereunder to Mobile Gas' presently existing interconnections with
(a) [**proprietary information deleted**], (b) [**proprietary information
deleted**], (c) [**proprietary information deleted**], or (d) [**proprietary
information deleted**] (each a "Point of Delivery"). Any additional Point of
Delivery shall only be designated by mutual written agreement of Mobile Gas and
Customer.
6.2 No more than [**proprietary information deleted**] MMBtu per
hour, nor more than [**proprietary information deleted**] MMBtu per day shall
be delivered to the [**proprietary information deleted**] interconnection; no
more than [**proprietary information deleted**] MMBtu per hour, nor more than
[**proprietary information deleted**] MMBtu per day shall be delivered to
[**proprietary information deleted**] interconnection; and no more than
[**proprietary information deleted**] MMBtu per hour, nor more than
[**proprietary information deleted**] MMBtu per day shall be delivered to the
[**proprietary information deleted**] interconnection. These allocations are
subject to the daily and hourly volume restrictions in Section 2.1.
6.3 Upon Customer's request, which shall include an undertaking
satisfactory to Mobile Gas that Customer will reimburse Mobile Gas for all
costs reasonably incurred (including all taxes, whether income tax or
otherwise, incurred as a result of receipt of such reimbursement), Mobile Gas
shall install at any one or more Points of Delivery additional metering
capacity which will allow Customer increased allocations at the Points of
Delivery specified in Section 6.2.
6.4 [**proprietary information deleted**]
6.5 The Point of Redelivery of natural gas by Mobile Gas to
Customer hereunder shall be the flange outlet of the Mobile Gas metering
station, which shall be located at or near the boundary of and on the Plant
premises property.
ARTICLE VII - PRESSURE AT POINT OF REDELIVERY
7.1 Mobile Gas shall deliver gas to the Point of Redelivery at the
highest operating pressure available from time to time in the Mobile Gas system
for deliveries at the Point of Redelivery, but at not less than [**proprietary
information deleted**] pounds per square inch gauge (psig) nor more than
[**proprietary information deleted**] pounds per square inch gauge (psig).
6
<PAGE> 8
ARTICLE VIII - BILLING
8.1 On or before the seventh (7th) working day of each calendar
month, Mobile Gas shall render to Customer a statement of the amount of gas
transported hereunder by Mobile Gas to Customer during the preceding calendar
month (and with respect to the first such statement, for the portion of a
month, if any, between the Commencement Date and the first full calendar month)
and shall also render a bill for all gas so transported. Customer shall make
payment to Mobile Gas at P. O. Box 2248, Mobile, Alabama 36652, or at such
other address as may be provided by Mobile Gas by notice to Customer, on or
before the twenty-fifth (25th) day of that month or 15 days after the date the
bill is rendered, whichever is later.
8.2 On or before the seventh (7th) working day after the end of
each consecutive Contract Year, Mobile Gas shall render to Customer a statement
of the amount, if any, by which the aggregate billings by Mobile Gas to
Customer during the preceding Contract Year were less than the minimum annual
bill specified on Exhibit "A" (the "Minimum Bill Balance"), and if there exists
a Minimum Bill Balance, shall also render a bill for such amount in accordance
with Section 8.1. Customer shall make payment to Mobile Gas of the Minimum
Bill Balance, if any, in accordance with Section 8.1.
8.3 In the event that Customer fails to pay any amounts due
hereunder when due, interest shall accrue on all unpaid amounts from the date
due until paid at a rate of interest equal to 2% in excess of the rate of
interest reported as the "prime rate" in the "Money Rates" section of The Wall
Street Journal or any successor thereto.
8.4 Should Customer fail to pay to Mobile Gas any amount for which
a bill has been rendered and which is due to Mobile Gas by the time specified
in Section 8.1, and such failure to pay continues for an additional five days,
then Mobile Gas may suspend deliveries of gas hereunder 10 days after written
notice given on or after the last day of such additional five days to Customer
of such failure to pay. In the event Mobile Gas has given the written notice
prescribed in the preceding sentence, it will at least 72 hours prior to
suspension of deliveries of gas pursuant to this Section 8.4, send notice by
facsimile to two separate individuals designated by Customer by notice to
Mobile Gas. Mobile Gas will also endeavor to give further personal or
telephonic notice to such person or office at the Plant as Customer may specify
by notice to Mobile Gas, at least 72 hours prior to suspension of deliveries of
gas pursuant to this Section 8.4. In the event written notice has been given
as provided above, and payment has not been received for a period of 90 days,
such period commencing on the date of the written notice described above, then
Mobile Gas may, in its sole discretion, terminate this Agreement. Such
termination shall not relieve Customer from the termination payment obligations
set forth in Exhibit A(2).
7
<PAGE> 9
8.5 In the event that Customer disputes any amount shown on a
statement issued by Mobile Gas to Customer, such disputed amount shall be paid.
Notwithstanding such payment, Customer shall have the right to claim from
Mobile Gas such disputed amount. Upon receipt by Mobile Gas of any claim from
Customer for a disputed amount, Mobile Gas and Customer shall endeavor to
amicably resolve the disputed amount prior to institution of arbitration by
Customer. The parties are not obligated to pursue amicable resolution for more
than ten (10) days.
ARTICLE IX - FORCE MAJEURE
9.1 In the event of either party hereto being rendered unable,
wholly or in part, by force majeure to carry out its obligations under this
Agreement, other than to make payments hereunder (except as provided below),
the obligations of the party, as far as they are affected by such force
majeure, shall be suspended during the continuance of any inability so caused,
but for no longer period, and such cause shall as far as possible be remedied
with all reasonable dispatch. The party so affected by such event of force
majeure shall give written notice, with reasonably full particulars of such
force majeure, including without limitation measures to be taken to alleviate
such force majeure, in writing or by fax to the other party as soon as possible
after the occurrence of the causes so relied upon.
9.2 The term "force majeure" as employed herein shall mean,
without limitation, acts of God, strikes, lockouts, or other industrial
disturbances, acts of the public enemy, sabotage, wars, blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, floods,
storms, fires, washouts, arrests and restraints of rulers and peoples, civil
disturbances, explosions, breakage or accident to lines of pipe, hydrate
obstructions of lines of pipe, repairs, failure of adequate supply pressures to
any Point of Delivery or other operational constraints affecting the Mobile Gas
system, inability of either party to obtain necessary permits or regulatory
approvals or to obtain easements or rights of way, freezing of a well or
plant, well blowouts, craterings, and the act of any court or governmental
authority, or any other cause, whether of the kind herein enumerated or
otherwise, not within the control of the party claiming suspension or which, by
the exercise of due diligence, such party is unable to prevent or overcome;
provided however, that the settlement of strikes or lockouts shall entirely be
within the discretion of the party engaged in such labor dispute, and the
requirement that any force majeure shall be remedied with the exercise of
diligence shall not require the settlement of strikes or lockouts by acceding
to the demands of opposing parties when such course is inadvisable in the
discretion of the party engaged in such labor dispute.
9.3 In the event Mobile Gas is, due to an event of force majeure
as herein defined, unable to provide transportation services under this
Agreement for a consecutive ninety-day period, then the obligation of Customer
to make payment
8
<PAGE> 10
hereunder shall thereafter be suspended until service is again made available
hereunder, and the term of this Agreement shall be automatically extended for a
period equal to the period during which payment is so suspended.
9.4 (a) In the event a force majeure condition claimed by
Mobile Gas is not corrected within [**proprietary
information deleted**] days, Customer may, at its
discretion, elect to terminate this Agreement upon
[**proprietary information deleted**] days written
notice, and this Agreement shall terminate at the end
of such [**proprietary information deleted**] day
period without relieving either party from any
obligations due on the date of such termination.
(b) In the event a force majeure condition claimed by
Customer is not corrected within [**proprietary
information deleted**] days, Mobile Gas may, at its
discretion, elect to terminate this Agreement upon
[**proprietary information deleted**] days written
notice, and this Agreement shall terminate at the end
of such [**proprietary information deleted**] day
period without relieving either party from any
obligations due on the date of such termination,
except that Customer shall not owe any further
minimum bill payments or termination payments in lieu
thereof as provided for in Exhibit "A".
ARTICLE X - CONDITIONS OF TRANSPORTATION INTERRUPTION
10.1 All nominated gas (up to the Contract Demand Volume) delivered
by Customer's Shipper to the Point of Delivery in compliance herewith shall be
considered an authorized volume of gas, and shall be transported to the Point
of Redelivery by Mobile Gas, subject to the terms hereof.
10.2 Notwithstanding any other provision of this Agreement, the
transportation service to be provided by Mobile Gas hereunder is subject to
interruption in any amount (up to and including one hundred percent
interruption) at any time if, in the exercise of its sole discretion, Mobile
Gas determines such interruption is necessary only
(a) due to maintenance, improvement, replacement or
alterations to plants, lines of pipe or related
facilities of Mobile Gas, provided, however, that
interruptions for such purposes shall not exceed
[**proprietary information deleted**] days during the
initial [**proprietary information deleted**] year
term of this Agreement, with there being
9
<PAGE> 11
no such limitation associated with any renewal term
hereunder,
(b) due to force majeure conditions as defined in Article
IX, or
(c) pursuant to any Curtailment Plan in effect from time
to time applicable to Mobile Gas customers and
approved by the Alabama Public Service Commission
("APSC").
10.3 In the event of circumstances giving rise to interruption or
curtailment under Section 10.2(a) or (c), Mobile Gas shall exert its best
efforts to provide as early a prior notice of interruption or curtailment as is
practicable under the circumstances, and shall (unless prevented by force
majeure), if reasonably possible, provide at least eight hours' notice of the
time and extent of such interruption or curtailment.
10.4 Mobile Gas shall use reasonable dispatch to restore
transportation service after an interruption pursuant to Section 10.2 of this
Agreement.
10.5 Mobile Gas and Customer shall each have sole discretion in
scheduling their respective maintenance, improvements, replacements or
alterations to plants. However, the parties do agree to communicate with one
another in an effort to schedule maintenance, improvements, replacements or
alterations to plants in such a way as to minimize any interference with
Customer's operations.
ARTICLE XI - NOMINATION PROCEDURE
11.1 Customer or Customer's agents shall provide to Mobile Gas a
daily confirming nomination to match the nomination made by Customer's Shipper.
Confirmation shall be made by voice or fax prior to 3 P.M., Mobile, Alabama
time, the day before a weekday delivery to Mobile Gas and by 3 P.M., Mobile,
Alabama time, on the Friday before any weekend delivery.
ARTICLE XII - NOTICES
12.1 Whenever any notice, request, demand or statement is required
or permitted to be given under any provision of this Agreement, unless
expressly provided otherwise herein, such shall be in writing, signed by or on
behalf of the person giving the same, and shall be deemed to have been given
when mailed by first class mail, sent by Federal Express, Express Mail, or
similar overnight delivery or courier service, or delivered in person, or sent
by facsimile transmission with the transmission confirmed by the transmitting
equipment of the sender, to the address of such party as hereinafter set forth:
10
<PAGE> 12
Mobile Gas Service Corporation Tuscaloosa Steel Corporation
2828 Dauphin Street (36606) 1700 Holt Road, N.E.
P. O. Box 2248 Tuscaloosa, Alabama 35404-1000
Mobile, Alabama 36652
Fax: (334) 478-5817 Fax: (205) 507-3112
Telephone: (334) 476-2720 Telephone: (205) 507-3107
or to such other address or facsimile number as one party may specify by
written notice to the other.
ARTICLE XIII - LAW GOVERNING
13.1 This Agreement shall be governed by and construed in
accordance with the laws of the State of Alabama.
ARTICLE XIV - ENTIRE AGREEMENT
14.1 This instrument embodies the entire Agreement and
understanding between the parties hereto. There are no Agreements,
understandings, conditions, warranties, or representations, oral or written,
express or implied, with reference to the subject matter hereof that are not
merged herein or superseded hereby.
ARTICLE XV - SPECIAL PROVISIONS
The following Special Provisions are made a part hereof:
15.1 Mobile Gas may, but shall not be obligated to, transport or
provide volumes in excess of the Contract Demand Volume if requested by
Customer. If, on any day, the Customer takes an Unauthorized Volume of gas,
the Customer shall, upon written request, pay to Mobile Gas, as damages, any
costs incurred by Mobile Gas. An "Unauthorized Volume" is a volume in excess
of the authorized volume described in Section 10.1 or any volume taken by
Customer in excess of permitted volume during a period of curtailment described
in a notice of interruption given by Mobile Gas in accordance with Section
10.2. The payment of costs incurred by Mobile Gas for unauthorized volumes
taken by Customer shall not under any circumstances be considered as giving
Customer the right to take unauthorized volumes, nor shall such payment be
considered as a substitute for or exclusive of any other remedies available to
Mobile Gas against Customer for failure to respect its obligations to adhere to
the provisions of this Agreement.
11
<PAGE> 13
15.2 In the event Mobile Gas incurs any cost, expense and/or
penalties resulting from Customer being over- or under- nominated for any
period of time, Customer shall, upon written request, reimburse Mobile Gas for
such cost, expenses and/or penalties.
15.3 When Mobile Gas becomes aware that costs will be incurred by
Customer as a result of the Customer's non-compliance with the provisions of
Sections 15.1 or 15.2, Mobile Gas will endeavor to advise Customer as soon as
practicable of such event.
15.4 A "day" when used in this Agreement shall mean a twenty-four
(24) hour period ending at 8:00 A.M., Mobile, Alabama time.
15.5 (a) The unit of volume for measurement of gas delivered
hereunder shall be one (1) cubic foot of gas at base
temperature of sixty (60) degrees Fahrenheit and at
an absolute pressure of fourteen and seventy-three
hundredths (14.73) pounds per square inch. All
fundamental constants, observations, records, and
procedures involved in determining and/or verifying
the quantity and other characteristics of gas
delivered hereunder shall, unless otherwise specified
herein, be in accordance with industry standards, as
exist now and may from time to time be amended or
supplemented. All measurements of gas shall be
determined by calculation into terms of such unit.
All quantities given herein, unless expressly stated
otherwise, are in terms of such unit.
Notwithstanding the foregoing, it is agreed that, for
all purposes, the Btu content of the gas received and
delivered by Mobile Gas hereunder shall be measured
on an "as delivered" basis rather than a fully
saturated or "wet" basis.
(b) Mobile Gas shall install, maintain and operate, or
cause to be installed, maintained and operated, the
measurement facilities required hereunder. Said
measurement facilities shall be so equipped with
meters, gauges, and other instruments of standard
make and design commonly acceptable in the industry,
as to accomplish the accurate measurement of gas
delivered hereunder. The calibrating and adjustment
of meters shall be done by Mobile Gas or its agent.
The accuracy of Mobile Gas measuring equipment shall
be verified at appropriate intervals, for instance,
orifice meters shall be calibrated at least once in
each thirty (30) day period, and turbine meters once
each year. Mobile Gas shall keep all meters accurate
and in repair. Mobile Gas shall give Customer
reasonable notice of all tests conducted on measuring
equipment in order that, if Customer desires,
Customer may have
12
<PAGE> 14
its representative present. If either party desires a
special test of any measuring equipment, it will
promptly notify the other party and the parties shall
then cooperate to secure a prompt verification of the
accuracy of such equipment. The expenses of any such
special test, if requested by Customer, shall be
borne by Customer if the measuring equipment tested
is found to be accurate within the limits of plus or
minus two percent (2%) of error. For the purposes of
measurement and meter calibration, the atmospheric
pressure shall be assumed to be fourteen and
seventy-three hundredths (14.73) pounds per square
inch, irrespective of variations in natural
atmospheric pressure from time to time.
(c) Customer may, at its option and expense, install and
operate a check meter on its premises to check Mobile
Gas's meter, but measurement of gas delivered to
Customer for the purpose of this Agreement shall be
by Mobile Gas's operated metering only. Any check
meter installed shall be of a standard type and shall
be subject at all reasonable times to inspection or
examination by Mobile Gas, but the reading,
calibration and adjustment thereof and changing of
charts shall be done only by the employees or agents
of Customer.
(d) If upon any test the metering equipment in the
aggregate is found to be inaccurate, by more than two
percent (2%), either plus or minus, registration
thereof and any payment based upon such registration
shall be corrected at the rate of such inaccuracy for
any period of inaccuracy which is definitely known or
agreed upon, or if not known or agreed upon, then for
a period extending back one-half (1/2) of the time
elapsed since the day of the last calibration.
Following any test, any metering equipment found to
be inaccurate to any degree shall be adjusted
immediately to measure accurately; however, if any
inaccuracy is two percent (2%) or less, all prior
readings and measurements shall be deemed to be
accurate and no adjustments to any prior reading
shall be made.
(e) If for any reason, any meter is out of service or out
of repair so that the quantity of gas delivered
through such meter cannot be ascertained or computed
from the readings thereof, the quantity of gas so
delivered during such period shall be estimated and
agreed upon by the parties hereto upon the basis of
the best available data, using the first of the
following methods which is feasible:
13
<PAGE> 15
(i) by using the registration of any check
measuring equipment, if installed and
registering accurately;
(ii) by correcting the error if the percentage
of error is ascertainable by calibration,
test, or mathematical calculation; or
(iii) by estimating the quantity of gas
deliveries by deliveries during preceding
periods under similar conditions when the
meter was registering accurately.
(f) The measurement hereunder shall be corrected to give
effect to Boyle's Law at the pressure and temperature
under which gas is delivered hereunder.
(g) Mobile Gas will allow Customer access to all pulses
and other data from the Mobile Gas meters installed
to provide service pursuant to this Agreement.
(h) If at any time during the term of this Agreement a
new method or technique is developed with respect to
gas measurement, or the determination of the factors
used in such gas measurement, such new method or
technique may be substituted for any method set forth
herein which meets generally accepted industry
standards and practices and is acceptable to both
parties.
15.6 Mobile Gas agrees to protect, defend, indemnify, and hold
harmless the Customer, its officers, directors, agents and/or employees from
and against any claims, demands, losses, damages, suits and expenses, for
damages and/or injury to persons and/or property which may be brought against
the Customer, its officers, directors, agents and/or employees arising out of,
or resulting from, the transportation of natural gas from the Point of Delivery
to the Point of Redelivery pursuant to the terms and conditions expressed
herein.
15.7 Customer agrees to protect, defend, indemnify, and hold
harmless Mobile Gas, its officers, directors, agents and/or employees from and
against any claims, demands, losses, damages, suits and expenses, for damages
and/or injury to persons and/or property which may be brought against Mobile
Gas, its officers, directors, agents and/or employees arising out of, or
resulting from, the transportation of natural gas by the Customer or its agents
to the Point of Delivery and from the Point of Redelivery to and through its
plant and facilities.
15.8 Customer warrants for itself, its successors and assigns, that
it will have at the time of delivery of gas for transportation hereunder good
title or valid right to
14
<PAGE> 16
deliver such gas hereunder; that the gas it delivers hereunder shall be free
and clear of all liens, encumbrances, or claims whatsoever; and that it will
indemnify Mobile Gas and save it harmless from all claims, suits, actions,
damages, costs and expenses arising directly or indirectly from or with respect
to the title to gas tendered to Mobile Gas hereunder.
15.9 As between Customer and Mobile Gas, Customer shall be in
control and possession of the gas transported hereunder prior to delivery to
Mobile Gas at the Point of Delivery and after delivery by Mobile Gas to
Customer at the Point of Redelivery, and Mobile Gas shall be in control and
possession of the gas after the receipt of the same at the Point of Delivery
and until delivery by Mobile Gas to Customer at the Point of Redelivery. The
risk of loss for all gas transported hereunder shall be and remain with the
party having control and possession of the gas as herein provided.
15.10 Mobile Gas agrees to transport additional volumes of gas to
Customer for a period of up to thirty (30) days beyond the termination of this
Agreement in order to bring into balance any imbalance that exists at the
termination of this Agreement.
15.11 Customer may at its sole option and from time to time appoint
an Agent, and upon such appointment notify Mobile Gas of such appointment, to
represent Customer for purposes of making nominations, delivering gas to a
Delivery Point and adjusting balances. Customer acknowledges that Mobile Gas
may rely on instructions of Customer's duly appointed Agents as if such
instructions were made by Customer until such time as Customer sends Mobile Gas
a notice requiring Mobile Gas to no longer accept instructions from such Agent.
ARTICLE XVI - MISCELLANEOUS PROVISIONS
16.1 This Agreement may not be assigned by either party hereto
without the written consent of the other party hereto, such consent not to be
unreasonably withheld or delayed. Any assignment without prior consent shall
be void and without force and effect.
16.2 The effectiveness of this Agreement is subject to approval
hereof by the APSC.
ARTICLE XVII - ARBITRATION
17.1 Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled exclusively by arbitration
pursuant to the Commercial Arbitration Rules of the American Arbitration
Association.
15
<PAGE> 17
17.2 All arbitrations pursuant to this Agreement shall be held at
Mobile, Alabama.
17.3 There shall be three arbitrators. One of the arbitrators
shall be appointed by Mobile Gas, the second by Customer, and the third shall
be a neutral arbitrator selected by these two arbitrators. Such neutral
arbitrator shall be chairman of the arbitration panel.
17.4 The arbitration shall be decided by a majority vote of the
arbitration panel. The cost of arbitration, including the fees of the
arbitrators, shall be borne by the losing party, unless the arbitrators decide
otherwise.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by its officer thereunto duly authorized as of the date first above
written.
WITNESS: MOBILE GAS SERVICE CORPORATION
/s/ G. Edgar Downing, Jr. By: /s/ John S. Davis
- --------------------------------- --------------------------------
Its: President
--------------------------------
WITNESS: TUSCALOOSA STEEL CORPORATION
/s/ D. W. Wilson By: /s/ D. C. Wagg
- -------------------------------------- --------------------------------
Its: Vice President Finance
--------------------------------
16
<PAGE> 18
EXHIBIT '"A"
MCDUFFIE ISLAND SITE
MOBILE GAS SERVICE CORPORATION
TRANSPORTATION SERVICE CONDITIONS
[**proprietary information deleted**]
<PAGE> 19
EXHIBIT "B"
MCDUFFIE ISLAND SITE
MOBILE GAS SERVICE CORPORATION
TRANSPORTATION SERVICE CONDITIONS
[**proprietary information deleted**]
<PAGE> 1
EXHIBIT 10(u)
<PAGE> 2
REVOLVING CREDIT AGREEMENT
BY AND AMONG
MOBILE GAS SERVICE CORPORATION,
AS BORROWER,
AND
AMSOUTH BANK OF ALABAMA, AS AGENT,
AND
AMSOUTH BANK OF ALABAMA, FIRST ALABAMA BANK,
WHITNEY BANK OF ALABAMA, BANK OF MOBILE,
SOUTHTRUST BANK OF ALABAMA, N.A., AND COMMONWEALTH
NATIONAL BANK,
AS LENDERS
* * *
$20,000,000
* * *
JULY 17, 1995
<PAGE> 3
REVOLVING CREDIT AGREEMENT
This Revolving Credit Agreement is entered into as of the 17th day of
July, 1995, by and among Mobile Gas Service Corporation, as Borrower
("Borrower"), AmSouth Bank of Alabama, as Agent for Lenders to the extent and
in the manner provided in Article IX below ("Agent"), and AmSouth Bank of
Alabama, First Alabama Bank, Whitney Bank of Alabama, Bank of Mobile,
SouthTrust Bank of Alabama, N.A., and Commonwealth National Bank, as Lenders
(collectively, "Lenders").
W I T N E S S E T H :
WHEREAS, Borrower has requested that Lenders enter into this Revolving
Credit Agreement to provide for a revolving credit facility for lending to
Borrower; and
WHEREAS, Lenders have agreed to do so upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and for other valuable consideration, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS OF TERMS
For the purposes of this Agreement, unless the context otherwise
requires, the following terms shall have the respective meanings assigned to
them in this Article I or in the section or recital referred to below:
Section 1.01. "Advance" shall mean the disbursement by a Lender of
a sum or sums loaned to Borrower pursuant to this Agreement.
Section 1.02. "Agent" shall have the meaning assigned to such term
in the preamble hereof.
Section 1.03. "Agreement" or "this Agreement" shall mean this
Revolving Credit Agreement as the same may be amended or modified from time to
time.
Section 1.04. "AmSouth Bank" shall mean AmSouth Bank of Alabama, an
Alabama banking corporation.
Section 1.05. "Applicable Rate of Interest" shall mean the rate of
interest designated in accordance with Section 3.02 hereof.
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<PAGE> 4
Section 1.06. "Bank of Mobile" shall mean Bank of Mobile, an
Alabama banking corporation.
Section 1.07. "Borrower" shall have the meaning assigned to such
term in the preamble hereof.
Section 1.08. "Borrowing" shall mean the combined Advances made by
Lenders to Borrower on a single date pursuant to a Notice of Borrowing.
Section 1.09. "Borrowing Account" shall mean a demand deposit
account in AmSouth Bank in the name of, and under the control of, Borrower.
Section 1.10. "Borrowing Date" shall mean any date specified in a
Notice of Borrowing delivered in accordance with the provisions of Section
2.02(a) as a date on which Borrower requests that Lenders make a Borrowing
hereunder.
Section 1.11. "Business Day" shall mean a day on which banks are
open for business in Mobile, Alabama.
Section 1.12. "Commitment" shall mean the obligation of each Lender
to extend credit to Borrower under this Agreement in an aggregate principal
amount not to exceed such Lender's Committed Sum.
Section 1.13. "Commitment Period" shall mean the period beginning
on the date hereof and ending on the Commitment Termination Date.
Section 1.14. "Commitment Termination Date" shall mean the earlier
of (i) July 17, 1997 or, if such date is not a Business Day, the Business Day
next succeeding such date, unless the Lenders and Borrower shall agree in
writing by July 17, 1996 to the extension of the date of payment of the
indebtedness evidenced by the Notes for one additional period of one (1) year,
in which event the date of payment of indebtedness evidenced by the Notes, as
thereby extended, shall be the Commitment Termination Date, or (ii) date on
which the Commitment is terminated by either Borrower or Lenders pursuant to
the provisions hereof.
Section 1.15. "Committed Sum" shall mean, with respect to a Lender,
the amount set forth below opposite the name of such Lender:
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<PAGE> 5
AmSouth Bank - $7,000,000 .00
First Alabama Bank - 5,000,000.00
Whitney Bank - 5,000,000.00
Bank of Mobile - 2,000,000.00
SouthTrust Bank - 900,000.00
Commonwealth Bank - 100,000.00
Section 1.16. "Commonwealth Bank" shall mean Commonwealth National
Bank, a national banking association.
Section 1.17. "Debtor Laws" shall mean all applicable liquidation,
conservatorship, bankruptcy, moratorium, arrangement, receivership, insolvency,
reorganization or similar laws of any jurisdiction from time to time in effect
affecting the rights of creditors generally.
Section 1.18. "Default" shall mean any of the events specified in
Article VII, regardless of whether there shall have occurred any passage of
time or giving of notice or both that would be necessary in order to constitute
such event an Event of Default.
Section 1.19. "Dollars" and the sign "$" shall refer to currency of
the United States of America.
Section 1.20. "Event of Default" shall have the meaning assigned to
such term in Section 7.01.
Section 1.21. "First Alabama Bank" shall mean First Alabama Bank,
an Alabama banking corporation.
Section 1.22. "Governmental Authority" shall mean any government
(or any political subdivision or jurisdiction thereof), court, bureau, agency
or other governmental authority having jurisdiction over either Borrower or any
of its business, operations or properties.
Section 1.23. "Indebtedness" shall mean (a) Indenture of Mortgage
and Deed of Trust and Supplemental Indentures thereto listed as Exhibits No.
4(a)-1 through 4(a)-17 to Borrower's Annual Report on Form 10-K for the fiscal
year ended September 30, 1994; (b) Note Guaranty Agreement between Borrower and
AmSouth Bank N.A., Trustee, relating to Southern Gas Transmission Company
Indenture listed as Exhibit No. 10(p) to such Form 10-K; and (c) Guaranty
Agreement by Borrower relating to Bay Gas Indenture listed as Exhibit No. 10(q)
to such Form 10-K.
Section 1.24. "Lenders" shall have the meaning assigned to such
term in the preamble hereof.
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<PAGE> 6
Section 1.25. "LIBOR-Based Rate" shall mean a fluctuating rate of
interest equal to the average offered rate in the London Interbank Market for
deposits in Dollars for a one-month period, as reported in the Money Rates
section of The Wall Street Journal ("LIBOR Rate"), plus 100 basis points
(1.00%). The LIBOR-Based Rate shall be adjusted effective as of the first day
of each calendar month, based upon the LIBOR Rate in effect as of the first
Business Day of such month, and shall remain in effect throughout such calendar
month.
Section 1.26. "Loan Documents" shall mean this Agreement and the
Notes.
Section 1.27. "Loans" shall mean the Revolving Credit Loans; each,
individually, a "Loan".
Section 1.28. "Maximum Rate" shall mean, on any day, the highest
nonusurious rate of interest permitted by applicable law on such day that at
any time, or from time to time, may be contracted for, taken, reserved, charged
or received on the Indebtedness evidenced by the Notes under the laws which are
presently in effect of the United States of America and the State of Alabama
applicable to the holders of the Notes and such Indebtedness or, to the extent
permitted by law, under such applicable laws of the United States of America
and the State of Alabama which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws now allow.
Section 1.29. "Notes" shall mean the Revolving Credit Notes
executed by Borrower and delivered pursuant to the terms of this Agreement,
together with any renewals, extensions or modifications thereof; each,
individually, a "Note".
Section 1.30. "Notice of Borrowing" shall have the meaning assigned
to such term in Section 2.02(a).
Section 1.31. "Obligations" shall mean:
(a) all present and future indebtedness, obligations and
liabilities of Borrower to Agent and Lenders arising pursuant to this
Agreement, regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, joint, several,
or joint and several;
(b) all present and future indebtedness, obligations and
liabilities of Borrower to Lenders arising pursuant to or represented
by the Notes and all interest accruing thereon, and reasonable
attorneys' fees incurred in the enforcement or collection thereof;
(c) all present and future indebtedness, obligations and
liabilities of Borrower evidenced by or arising pursuant to any of the
Loan Documents; and
-5-
<PAGE> 7
(d) all renewals, extensions, modifications and
refundings of the indebtedness referred to in the foregoing clauses,
or any part thereof.
Section 1.32. "Percentage" shall mean, with respect to each Lender,
the percentage set forth below opposite the name of such Lender:
AmSouth Bank - 35% (.35)
First Alabama Bank - 25% (.25)
Whitney Bank - 25% (.25)
Bank of Mobile - 10% (.10)
SouthTrust Bank - 4.5% (.045)
Commonwealth Bank - 0.5% (.005)
Section 1.33. "Prime-Based Rate" shall mean a fluctuating rate of
interest equal to the prime rate as reported in the Money Rates section of The
Wall Street Journal, minus 125 basis points (1.25%). The Prime-Based Rate
shall be adjusted as of the date each change in the prime rate is reported in
the Money Rates section of The Wall Street Journal.
Section 1.34. "Revolving Credit Loans" shall mean the aggregate
unpaid principal balance of all Borrowings made under Article II.
Section 1.35. "Revolving Credit Notes" shall have the meaning
assigned to such term in Section 3.01.
Section 1.36. "SouthTrust Bank" shall mean SouthTrust Bank of
Alabama, N.A., a national banking association.
Section 1.37. "Taxes" shall have the meaning assigned to such term
in Section 3.08.
Section 1.38. "Total Commitment" shall mean $20,000,000.00.
Section 1.39. "Whitney Bank" shall mean Whitney Bank of Alabama, an
Alabama banking corporation.
Section 1.40. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the
above-defined meanings when used in the Notes or any Loan Documents,
certificate, report or otherdocument made or delivered pursuant to this Loan
Agreement, unless the context thereof shall otherwise require.
-6-
<PAGE> 8
(b) Defined terms used herein in the singular shall import the
plural and vice-versa.
(c) The words "hereof", "herein", "hereunder" and similar terms
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement.
ARTICLE II
THE REVOLVING LOANS
Section 2.01. Revolving Commitments. Subject to the terms and
conditions of the Agreement, each Lender severally (and not jointly) agrees to
lend to Borrower on a revolving basis, in one or more Advances, from time to
time during the Commitment Period, an amount equal to such Lender's Percentage
of amounts requested by Borrower in each Notice of Borrowing; provided,
however, that (a) total Borrowings outstanding at any one time shall not exceed
$20,000,000, (b) no Lender shall be obligated to make an Advance if such
Advance would cause the unpaid principal balance of the indebtedness evidenced
by the Note payable to it to be in excess of such Lender's Committed Sum, (c)
each Borrowing shall be in an amount not less than $100,000.00, with any
Borrowing in excess of $100,000.00 to be in increments of $100,000.00, and (d)
each Borrowing shall be made ratably by all Lenders in accordance with their
respective percentages. Within the limits of this Section 2.01, during the
Commitment Period Borrower may borrow, repay and reborrow in accordance with
the terms and conditions of this Agreement.
Section 2.02. Manner of Borrowing.
(a) Notice of Borrowing. Borrower shall give Agent telephonic
notice by noon, local time in Mobile, Alabama, on the day of each requested
Borrowing hereunder, confirmed in writing by hand delivery or facsimile within
one (1) hour of such telephonic notice (a "Notice of Borrowing"), specifying
(i) the aggregate amount of such Borrowing, and (ii) the Applicable Rate of
Interest.
(b) Notice Irrevocable. Each Notice of Borrowing shall be
irrevocable and binding on Borrower, and Borrower shall indemnify each Lender
against any cost, loss or expense incurred by such Lender as a result of any
failure to fulfill, on or before the date specified for a Borrowing, the
conditions to such Borrowing set forth herein, including without limitation,
any cost, loss or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by any Lender to fund the Advance to be
made by such Lender as part of such Borrowing.
(c) Funding. After receiving a Notice of Borrowing in the manner
provided herein, Agent shall promptly notify each Lender by telephone
(confirmed immediately
-7-
<PAGE> 9
by telecopier, telex or cable), telecopier, telex or cable of the terms of such
notice and such Lender's Percentage of such Borrowing. Each Lender shall,
before 2:00 p.m., local time in Mobile, Alabama, on the date a Borrowing is
requested as specified in a Notice of Borrowing, deposit with Agent such
Lender's Percentage of such Borrowing in immediately available funds. Upon
apparent fulfillment of all applicable conditions set forth herein and after
receipt by Agent of such funds, Agent shall deposit such funds into the
Borrowing Account. The failure of any Lender to make any Advance required to
be made by it hereunder shall not relieve any other Lender of its obligation to
make its Advance hereunder. If any Lender fails to provide its Percentage of
any Borrowing and if all conditions to such Borrowing have apparently been
satisfied, Agent will make available to Borrower the funds received by it from
the other Lenders. Neither Agent nor any Lender shall be responsible for the
performance by any other Lender of its obligations hereunder. In the event of
any failure by a Lender to make an Advance required hereunder, the other
Lenders may (but shall not be required to) purchase (on a pro rata basis,
according to their respective Percentages) such Lender's Revolving Credit Note.
Unless Agent shall have received notice from a Lender prior to 2:00
p.m., local time in Mobile, Alabama, on the date of any Borrowing that such
Lender will not make available to Agent such Lender's Percentage of such
Borrowing, Agent may assume that such Lender has made such amount available to
Agent on the date of such Borrowing and Agent may, in reliance upon such
assumption, make available a corresponding amount to or on behalf of Borrower
on such date. If and to the extent any Lender shall not have so made its
Percentage of any Borrowing available to Agent, Borrower agrees to repay to
Agent forthwith on demand such corresponding amount together with interest
thereon, for each day from the date such amount is made available to or on
behalf of Borrower until the date such amount is repaid to Agent, at the rate
per annum equal to the rate applicable to the Borrowing in question.
Section 2.03. Commitment Fees. Borrower agrees to pay to Agent,
for the account of each Lender, an availability fee for the Commitment Period
computed at a rate per annum equal to one-eighth of one percent (1/8 of 1%) on
the average daily unborrowed amount of such Lender's Committed Sum in effect
during the period for which payment is made. Such commitment fees shall be
payable annually in arrears on the first Business Day after the anniversary of
this Agreement.
Section 2.04. Termination of Commitment By Borrower. Borrower may
at any time, upon not less than thirty (30) Business Days' prior written notice
to Lenders, terminate the Commitment; provided, however, that upon the
termination of the Commitment, all Obligations shall be immediately due and
payable.
Section 2.05. Use of Proceeds. The proceeds of each Borrowing
shall be used for the working capital and general corporate purposes of
Borrower.
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ARTICLE III
NOTES AND NOTE PAYMENTS
Section 3.01. Revolving Credit Notes. The Advances made under
Article II hereof by a Lender shall be evidenced by a promissory note (a
"Revolving Credit Note") executed by Borrower, which Revolving Credit Note
shall (a) be dated the date hereof, (b) be in the amount of such Lender's
Committed Sum, (c) be payable to the order of such Lender at the office of
Agent, (d) bear interest in accordance herewith, and (e) be in the form of
Exhibits "A-1", "A- 2", "A-3", "A-4", "A-5", and "A-6" attached hereto, as
appropriate, with blanks appropriately completed in conformity herewith.
Notwithstanding the principal amount of any Lender's Revolving Credit Note as
stated on the face thereof, the amount of principal actually owing on such
Revolving Credit Note at any given time shall be the aggregate of all Advances
theretofore made by a Lender to Borrower hereunder, less all payments of
principal theretofore actually received hereunder by such Lender. Each Lender
is authorized, but is not required, to endorse on the schedule attached to its
Revolving Credit Note appropriate notations evidencing the date and amount of
each Advance as well as the amount of each payment made by Borrower thereunder.
Section 3.02. Interest Rates. For any Borrowing, Borrower shall
designate the Applicable Rate of Interest, which shall be either the
LIBOR-Based Rate or the Prime-Based Rate.
Section 3.03. Principal Payments and Prepayments.
(a) Payment of the Notes. The unpaid principal amount of each
Revolving Credit Note, and all accrued but unpaid interest thereon, shall be
due and payable on the earlier of (i) the Commitment Termination Date, or (ii)
the date on which the Notes become due and payable under the provisions of
Section 7.02 hereof.
(b) Optional Principal Prepayments on the Notes. At any time and
from time to time Borrower may prepay without premium or penalty the principal
of the Notes then outstanding, in whole or in part.
Section 3.04. Payment of Interest on the Notes. Interest upon the
Notes shall be calculated at the end of each calendar month and shall be
payable on the first business day of the next calendar month and at the
Commitment Termination Date for all interest accrued and unpaid on such date.
Section 3.05. Calculation of Interest Rates. Interest on the
unpaid principal of each Note shall be calculated on the basis of the actual
days elapsed in a year consisting of 365 days.
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Section 3.06. Manner and Application of Payments. All payments and
prepayments of principal of, and interest on, any Note to or for the account of
any Lender shall be made by Borrower to Agent before 2:00 p.m., local time in
Mobile, Alabama, in federal or other immediately available funds at Agent's
principal banking office in Mobile, Alabama. Any payment or prepayment
received by Agent after 2:00 p.m., local time in Mobile, Alabama, shall be
deemed to have been received by Agent on the next succeeding Business Day.
Should the principal of or interest on any Note, or any commitment fee, become
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day. Each payment received by
Agent hereunder for the account of Lenders shall be promptly distributed by
Agent to each Lender.
Section 3.07. Pro Rata Treatment. Each payment and each prepayment
received by Agent for the account of Lenders shall be distributed to each
Lender entitled to share in such payment in accordance with the Percentage of
such Lender (or in accordance with such Lender's pro rata share of total
Advances, in the event that such Lender's pro rata share of Advances is not
equal to such Lender's Percentage).
Section 3.08. Taxes.
(a) Any and all payments by Borrower hereunder or under the Notes
shall be made in accordance with this Article III, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto
(hereinafter referred to as "Taxes").
(b) Borrower shall pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or under the Loan Documents or from the
execution, delivery or registration of, or otherwise with respect to, any of
the Loan Documents (hereinafter referred to as "Other Taxes").
(c) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this Section 3.08 shall survive the payment in full of the Obligations.
Section 3.09. Sharing of Payments, Etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) in excess of such Lender's Percentage of payments
shared prorata by all Lenders, such Lender shall forthwith purchase from the
other Lenders such participations in the Loans made by them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
the other Lenders shall be rescinded and
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each other Lender shall repay to the purchasing Lender the purchase price to
the extent of such recovery together with an amount equal to such Lender's
ratable share (according to the proportion of (i) the amount of such Lender's
required repayment, to (ii) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount recovered. Borrower agrees that any
Lender purchasing a participation from another Lender pursuant to this Section
3.09 may, to the fullest extent permitted by law, exercise all of its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of Borrower in the amount of
such participation pursuant to the terms hereof.
Section 3.10. Indemnity. Borrower shall indemnify each Lender and
hold each Lender harmless from any loss or expense or loss of margin which such
Lender may sustain or incur as a consequence of Borrower's failure or refusal
to borrow after Borrower has given a Notice of Borrowing pursuant to Section
3.02(a). This covenant shall survive termination of this Agreement and payment
of the Obligations for a period of one (1) year. A statement setting forth the
calculations of any amounts payable pursuant to this subsection submitted by a
Lender to Borrower and Agent shall be conclusive in the absence of manifest
error.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Initial Advance. The obligation of each Lender to
make the renewal and extension of existing Obligations which is deemed to be
incorporated in the initial Advance hereunder is subject to the condition
precedent that, on or before the date of such Advance, Agent shall have
received for each Lender the following, each dated as of the date of such
Advance, in form and substance satisfactory to Agent and such Lender:
(a) Revolving Credit Note. A duly executed Revolving Credit Note,
payable to the order of such Lender.
(b) Resolutions of Borrower. Resolutions of Borrower approving
the Loans contemplated hereby, duly adopted by Borrower's Board of Directors
and accompanied by a certificate of the Secretary or Assistant Secretary of
Borrower stating that such resolutions are true and correct, have not been
altered or repealed and are in full force and effect.
Section 4.02. All Advances. The obligation of each Lender to make
any Advance under this Agreement (including the initial Advance) shall be
subject to the following conditions precedent:
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(a) No Defaults. As of the date of the making of such Advance,
there shall exist no Default or Event of Default.
(b) Compliance with Agreement. Borrower shall have performed and
complied with all agreements and conditions contained herein and in each of the
Loan Documents which are required to be performed or complied with by Borrower
before or on the date of such Advance.
(c) Notice of Borrowing. In the case of any Borrowing, Agent
shall have received from Borrower a Notice of Borrowing in the form attached
hereto as Exhibit "B", dated as of the date of such Borrowing and signed by an
authorized officer of Borrower.
(d) Representations and Warranties. The representations and
warranties contained in Article VII hereof and in each of the Loan Documents
shall be true in all respects on the date of making of such Advance, with the
same force and effect as though made on and as of that date.
(e) Bankruptcy Proceedings. No proceeding or case under Debtor
Law shall have been commenced by or against Borrower or any direct or indirect
Subsidiary of Borrower.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Revolving Credit Loans hereunder,
Borrower represents and warrants to Lenders that:
Section 5.01. Organization and Good Standing. Borrower is a
corporation duly organized and existing in good standing under the laws of the
State of Alabama, and has the corporate power and authority to own its
properties and assets and to transact the business in which it is engaged.
Section 5.02. Authorization and Power. Borrower has the corporate
power and requisite authority to execute, deliver and perform the Loan
Documents to be executed by Borrower. Borrower is duly authorized to, and has
taken all corporate action necessary to authorize Borrower to execute, deliver
and perform the Loan Documents executed by Borrower. Borrower is and will
continue to be duly authorized to perform the Loan Documents executed by
Borrower.
Section 5.03. No Conflicts or Consents. Neither the execution and
delivery of the Loan Documents, nor the consummation of any of the transactions
therein contemplated, nor compliance with the terms and provisions thereof,
will materially
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contravene or conflict with any provision of law, statute or regulation to
which Borrower is subject or any judgment, license, order or permit applicable
to Borrower, or any indenture, loan agreement, mortgage, deed of trust, or
other agreement or instrument to which Borrower is a party or to which Borrower
may be subject, or violate any provision of the charter or bylaws of Borrower.
No consent, approval, authorization or order of any court or Governmental
Authority or third party is required and has not been obtained in connection
with the execution and delivery by Borrower of the Loan Documents or to
consummate the transactions contemplated hereby or thereby.
Section 5.04. Enforceable Obligations. The Loan Documents have
been duly executed and delivered by Borrower and are the legal and binding
obligations of Borrower, enforceable in accordance with their respective terms,
except as limited by Debtor Laws.
Section 5.05. No Default. No event known to Borrower has occurred
and is continuing which constitutes a Default or an Event of Default.
Section 5.06. Use of Proceeds; Margin Stock. The proceeds of the
Revolving Credit Loans will be used by Borrower solely for the purposes
specified in this Agreement. None of such proceeds will be used for the
purpose of purchasing or carrying any "margin stock" as defined in Regulation
U, Regulation X, or Regulation G, or for the purpose of reducing or retiring
any Indebtedness which was originally incurred to purchase or carry a "margin
stock" or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of such Regulation U, Regulation X, or
Regulation G. Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stocks. Borrower has neither
taken nor will take, and no Person acting on behalf of Borrower has taken or
will take, any action which might cause the Notes or any of the other Loan
Documents, including this Agreement, to violate Regulation U, Regulation X, or
Regulation G or any other regulations of the Board of Governors of the Federal
Reserve System or to violate Section 8 of the Securities Exchange Act of 1934
or any rule or regulation thereunder, in each case as now in effect or as the
same may hereinafter be in effect. Borrower neither owns, nor does any
subsidiary of Borrower own, "margin stock".
Section 5.07. Taxes. All tax returns required to be filed by
Borrower in any jurisdiction have been filed and all taxes (including mortgage
recording taxes), assessments, fees and other governmental charges upon
Borrower or upon any of its properties, income or franchises have been paid
prior to the time that such taxes could give rise to a lien thereon. There is
no known material proposed tax assessment against Borrower and Borrower is not
aware of any basis for such assessment.
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ARTICLE VI
AFFIRMATIVE COVENANTS
So long as Lenders have any commitment to make Advances hereunder, and
until payment in full of the Notes, Borrower agrees that (unless Lenders shall
otherwise consent in writing):
Section 6.01. Financial Information. Borrower shall deliver to
each Lender, within three (3) days of its transmittal for filing with the
Securities and Exchange Commission, a true and correct copy of each Form 10-Q
and Form 10-K of Borrower.
Section 6.02. Additional Financial Information. Borrower shall
deliver to each Lender such additional financial information as Lenders may
reasonably request from time to time.
Section 6.03. Payment of Taxes and Other Indebtedness. Borrower
shall pay and discharge (a) all taxes, assessments and governmental charges or
levies imposed upon it before delinquent, and (b) all other indebtedness of
Borrower; provided, however, that Borrower shall not be required to pay any
such tax, assessment, charge or levy if and so long as the amount,
applicability or validity thereof shall be contested in good faith by
appropriate proceedings, and appropriate accruals therefor shall be established
in accordance with generally accepted accounting principles.
Section 6.04. Maintenance of Existence and Rights; Conduct of
Business. Borrower shall preserve and maintain its corporate existence and all
of its rights, privileges and franchises necessary or desirable in the normal
conduct of its business, and conduct its business in an orderly and efficient
manner consistent with good business practices.
Section 6.05. Compliance with Material Agreements. Borrower shall
comply in all material respects with all material agreements, indentures,
mortgages or documents binding on it or affecting its properties or business.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01. Events of Default. An "Event of Default" shall exist
if any one or more of the following events (herein collectively called "Events
of Default") shall occur and be continuing:
(a) Borrower shall fail to pay within five (5) days of when due
any principal of, or interest on, any Note or any fee, expense or other payment
required hereunder;
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(b) any representation or warranty made under this Agreement, or
in any certificate or financial statement furnished or made to Lenders pursuant
hereto or in connection herewith or with the Loans hereunder, shall prove to be
untrue or inaccurate in any material respect as of the date on which such
representation or warranty is made;
(c) default shall occur in the performance of any of the covenants
or agreements of Borrower contained herein, and such default remains uncured
ten (10) days after notice of such default is given to Borrower;
(d) default shall occur in the payment of any material
Indebtedness of Borrower (other than the Obligations) or default on the part of
Borrower shall occur in respect of any note, loan agreement or credit agreement
relating to any such Indebtedness and such default shall continue for more than
the period of grace, if any, specified therein; or any such Indebtedness shall
become due before its stated maturity by acceleration of the maturity thereof
or shall become due by its terms and shall not be promptly paid or extended;
(e) Borrower shall (i) apply for or consent to the appointment of
a receiver, trustee, custodian, intervenor or liquidator of itself or of all or
a substantial part of Borrower's assets, (ii) file a voluntary petition in
bankruptcy, admit in a writing delivered or furnished to a third party
(including the Agent or Lenders) that such Borrower is unable to pay its debts
as they become due or generally not pay its debts as they become due, (iii)
make a general assignment for the benefit of creditors, (iv) file a petition or
answer seeking reorganization or an arrangement with creditors or to take
advantage of any bankruptcy or insolvency laws or other Debtor Laws, (v) file
an answer admitting the material allegations of, or consent to, or default in
answering, a petition filed against Borrower in any bankruptcy, reorganization
or insolvency proceeding, or (vi) take corporate action for the purpose of
effecting any of the foregoing;
(f) an involuntary petition or complaint shall be filed against
Borrower seeking bankruptcy or reorganization of Borrower or the appointment of
a receiver, custodian, trustee, intervenor or liquidator of Borrower, or all or
substantially all of the assets of Borrower, and such petition or complaint
shall not have been dismissed within ninety (90) days of the filing thereof; or
an order, order for relief, judgment or decree shall be entered by any court of
competent jurisdiction or other competent authority approving a petition or
complaint seeking reorganization of Borrower or appointing a receiver,
custodian, trustee, intervenor or liquidator of Borrower, or of all or
substantially all of the assets of Borrower.
Section 7.02. Remedies Upon Event of Default. If an Event of
Default shall have occurred and be continuing, then Agent shall, at the request
of Lenders, and may, with the consent of Lenders, exercise any one or more of
the following rights
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and remedies, and any other remedies provided in any of the Loan Documents, as
Lenders in their sole discretion may deem necessary or appropriate: (a)
terminate Lenders' commitment to lend hereunder, (b) declare the principal of,
and all interest then accrued on, the Notes and any other liabilities hereunder
to be forthwith due and payable, whereupon the same shall forthwith become due
and payable without presentment, demand, protest, notice of default, notice of
acceleration or of intention to accelerate or other notice of any kind, all of
which Borrower hereby expressly waives, anything contained herein or in the
Notes to the contrary notwithstanding, (c) reduce any claim to judgment, and/or
(d) without notice of Event of Default or demand, pursue and enforce any of
Lenders' rights and remedies under the Loan Documents, or otherwise provided
under or pursuant to any applicable law; provided, however, that if any Event
of Default specified in Section 7.01 (f) shall occur with respect to Borrower,
the principal of, and all interest on, the Notes and other liabilities
hereunder shall thereupon become due and payable concurrently therewith, and
Lenders' obligations to lend shall immediately terminate hereunder, without any
further action by Agent or any Lender and without presentment, demand, protest,
notice of default, notice of acceleration or of intention to accelerate or
other notice of any kind, all of which Borrower hereby expressly waives.
ARTICLE VIII
THE AGENT
Section 8.01. Appointment and Authorization. Each Lender hereby
irrevocably appoints and authorizes Agent to take such action on its behalf and
to exercise such powers under the Loan Documents as are delegated to Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. With respect to its Commitment, the Advances made by it
and the Notes issued to it, AmSouth Bank shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not Agent; and the term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include AmSouth Bank in its capacity as a Lender. Agent
and its Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with, either
Borrower or any Affiliate and any Person which may do business with either
Borrower or any Affiliate, all as if Agent were not Agent hereunder and without
any duty to account therefor to Lenders.
Section 8.02. Agent's Fees. Borrower shall pay to Agent for its
own account fees, if any, in the amounts and at the times agreed between them.
Section 8.03. Documents. Agent shall not be under a duty to
examine or pass upon the validity, effectiveness, enforceability, genuineness
or value of any of the Loan Documents or any other instrument or document
furnished pursuant thereto
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or in connection therewith, and Agent shall be entitled to assume that the same
are valid, effective, enforceable and genuine and what they purport to be.
Section 8.04. Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving fifteen (15) Business Days' written notice
thereof to Lenders and Borrower. Upon any such resignation, Borrower shall
have the right to appoint a successor Agent from among the remaining Lenders.
If no successor Agent shall have been so appointed by Borrower and shall have
accepted such appointment within fifteen (15) Business Days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Borrower, appoint a successor Agent. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations hereunder. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article VIII shall
continue in effect for its benefit in respect to any actions taken or omitted
to be taken by it while it was acting as Agent.
Section 8.05. Responsibility of Agent. It is expressly understood
and agreed that the obligations of Agent under the Loan Documents are only
those expressly set forth in the Loan Documents and that Agent shall be
entitled to assume that no Default or Event of Default has occurred and is
continuing, unless Agent has actual knowledge of such fact or has received
notice from a Lender that such Lender considers that a Default or an Event of
Default has occurred and is continuing and specifying the nature thereof.
Lenders recognize and agree that Agent shall not be required to determine
independently whether the conditions described in Article VI have been
satisfied and, in disbursing funds to Borrower, may rely fully upon statements
contained in the relevant Notice of Borrowing. Neither Agent nor any of its
directors, officers or employees shall be liable for any action taken or
omitted to be taken by it under or in connection with Loan Documents, except
for its own gross negligence or willful misconduct. Agent shall incur no
liability under or in respect of any of the Loan Documents by acting upon any
notice, consent, certificate, warranty or other paper or instrument believed by
it to be genuine or authentic or to be signed by the proper party or parties,
or with respect to anything which it may do or refrain from doing in the
reasonable exercise of its judgment, or which may seem to it to be necessary or
desirable in the circumstances.
Agent shall not be responsible to Lenders for any recitals,
statements, representations or warranties contained in this Agreement, or in
any certificate or other document referred to or provided for in, or received
by any Lender under, this Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any document
referred to or provided for herein or for any failure by Borrower to perform
any of its obligations hereunder. Agent may,
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after consultation with Lenders, employ agents and attorneys-in-fact and shall
not be answerable, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents or
attorneys-in- fact selected by it with reasonable care.
The relationship between Agent and each of the Lenders is only that of
agent and principal and has no fiduciary aspects, and Agent's duties hereunder
are acknowledged to be only ministerial and not involving the exercise of
discretion on its part. Nothing in this Agreement or elsewhere contained shall
be construed to impose on Agent any duties or responsibilities other than those
for which express provision is herein made. In performing its duties and
functions hereunder, Agent does not assume and shall not be deemed to have
assumed, and hereby expressly disclaims, any obligation or responsibility
toward or any relationship of agency or trust with or for Borrower. As to any
matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of Lenders and such instructions
shall be binding upon all Lenders; provided, however, that Agent shall not be
required to take any action which exposes Agent to personal liability or which
is contrary to this Agreement or applicable law.
Section 8.06. Notices of Event of Default. In the event that Agent
shall have acquired actual knowledge of any Event of Default or of an event
which, with the giving of notice or the lapse of time, or both, would
constitute an Event of Default, Agent shall promptly give notice thereof to the
other Lenders.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Accounting Terms. All accounting terms not
specifically defined in this Agreement shall be construed in accordance with
generally accepted accounting principles.
Section 9.02. Waiver. No failure to exercise, and no delay in
exercising, on the part of any Lender, any right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right. The
rights of Lenders hereunder and under the Loan Documents shall be in addition
to all other rights provided by law. No modification or waiver of any
provision of this Agreement, the Notes or any Loan Documents, nor consent to
departure therefrom, shall be effective unless in writing and no such consent
or waiver shall extend beyond the particular case and purpose involved. No
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notice or demand given in any case shall constitute a waiver of the right to
take other action in the same, similar or other instances without such notice
or demand.
Section 9.03. Payment of Expenses. Borrower agrees, in the event
that Lenders prevail, to pay all reasonable costs and expenses of Lenders
(including, without limitation, the reasonable attorneys' fees of Lenders'
legal counsel) incurred by Lenders in connection with the preservation and
enforcement of Agent's and Lenders' rights under this Agreement and/or the
Notes.
Section 9.04. Notices. Except for telephonic notices permitted
herein, any notices or other communications required or permitted to be given
by this Agreement or any other documents and instruments referred to herein
must be (a) given in writing and personally delivered or mailed by prepaid
United States mail, or (b) made by courier, overnight delivery service or
telecopier or telex delivered or transmitted, to the party to whom such notice
of communication is directed, to the address of such party as follows:
(a) Borrower: Mobile Gas Service Corporation
Post Office Box 2248
Mobile, Alabama 36652
Attention: Charles P. Huffman
Telecopier No.: (334) 478-5817
(b) Agent: AmSouth Bank of Alabama
Post Office Drawer 1628
Mobile, Alabama 36629
Attention: Kyle Pugh
Telecopier No. (334) 438-8377
(b) Lenders: AmSouth Bank of Alabama
Post Office Drawer 1628
Mobile, Alabama 36629
Attention: Kyle Pugh
Telecopier No.: (334) 438-8377
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First Alabama Bank
Post Office Drawer 2527
Mobile, Alabama 36622
Attention: Betty Stewart
Telecopier No.: (334) 690-1020
Whitney Bank of Alabama
Post Office Box 9789
Mobile, Alabama 36691
Attention: John M. Turner, Jr.
Telecopier No.: (334) 450-2675
Bank of Mobile
Post Office Box 3067
Mobile, Alabama 36652
Attention: Robbie Murray
Telecopier No.: (334) 433-5065
SouthTrust Bank of Alabama, N.A.
Post Office Box 1508
Mobile, Alabama 36633
Attention: Sharon Everett
Telecopier No.: (334) 431-9256
Commonwealth National Bank
Post Office Box B
Mobile, Alabama 36601
Attention: Al Johnson
Telecopier No.: (334) 476-5946
Any such notice or other communication shall be deemed to have been given on
the day it is received; provided, however, that any telephonic or other notice
received by
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Agent after 12:00 noon local time in Mobile, Alabama, on any day from Borrower
pursuant to Section 2.02(a) (with respect to a Notice of Borrowing) shall be
deemed for the purposes of such Section to have been given by Borrower on the
next succeeding Business Day. Any party may change its address for purposes of
this Agreement by giving notice of such change to the other parties pursuant to
this Section 9.04.
Section 9.05. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the United States of America and
the State of Alabama.
Section 9.06. Confidentiality. Agent and each Lender agree to hold
any confidential information which they may receive from Borrower pursuant to
this Agreement in confidence, except for disclosure (a) to other Lenders, (b)
to legal counsel, accountants, and other professional advisors, (c) to
regulatory officials as required by law, rule or regulation, (d) as required by
law or legal process or in connection with any legal proceeding, or (e) as
otherwise permitted by the Loan Documents.
Section 9.07. Nonliability of Lenders. The relationship between
Borrower and Lenders is, and shall at all times remain, solely that of borrower
and lenders, and Lenders and Agent neither undertake nor assume any
responsibility or duty to Borrower to review, inspect, supervise, pass judgment
upon, or inform Borrower of any matter in connection with any phase of
Borrower's businesses, operations, or condition, financial or otherwise. There
is not and shall not be deemed to be a fiduciary relationship between Lenders
and Borrower. Borrower shall rely entirely upon its own judgment with respect
to such matters, and any review, inspection, supervision, exercise of judgment,
or information supplied to Borrower by any Lender or Agent in connection with
any such matter is for the protection of Lenders and Agent, and neither
Borrower nor any third party is entitled to rely thereon.
Section 9.08. No Joint Venture. Nothing herein contained or
contained in the other Loan Documents shall be deemed to create a partnership
or joint venture between Lenders and/or Agent on the one hand, and Borrower on
the other hand.
Section 9.09. Binding Effect. The Loan Documents shall be binding
upon and inure to the benefit of Borrower, Agent and Lenders and their
respective successors, assigns and legal representatives; provided, however,
that (a) Borrower may not, without the prior written consent of Lenders, assign
any rights, powers, duties or obligations thereunder, and (b) no Lender may,
without the prior written consent of the other Lenders and Borrower, assign any
rights, powers, duties or obligations thereunder.
-21-
<PAGE> 23
Section 9.10. Entirety. The Loan Documents embody the entire
agreement between the parties and supersede all prior or contemporaneous
agreements and understandings, if any, relating to the subject matter hereof
and thereof.
Section 9.11. Headings. Section headings are for convenience of
reference only and shall in no way affect the interpretation of this Agreement.
Section 9.12. No Third Party Beneficiary. The parties do not
intend the benefits of this Agreement to inure to any third party, nor shall
this Agreement be construed to make or render Agent or Lenders liable to any
materialman, supplier, contractor, subcontractor, purchaser or lessee of any
property owned by Borrower, or for debts or claims accruing to any such persons
against Borrower. Notwithstanding anything contained herein or in the Notes,
or in any other Loan Document, or any conduct or course of conduct by any or
all of the parties hereto, before or after signing, neither this Agreement nor
any other Loan Document shall be construed as creating any right, claim or
cause of action against Agent or Lenders, or any of their officers, directors,
agents or employees, in favor of any materialman, supplier, contractor,
subcontractor, purchaser or lessee of any property owned by Borrower, nor to
any other person or entity other than Borrower.
Section 9.13. Multiple Counterparts. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
BORROWER
MOBILE GAS SERVICE CORPORATION
By: /s/ ILLEGIBLE
-------------------------------------
Title: President and Chief Executive Officer
By: /s/ ILLEGIBLE
-------------------------------------
Title: Vice President, Chief Financial
Officer and Treasurer
-22-
<PAGE> 24
AGENT
AmSOUTH BANK OF ALABAMA, as agent for
Lenders pursuant to the terms hereof
By: /s/ ILLEGIBLE
-----------------------------------------
Title: Assistant Vice President
--------------------------------------
LENDERS
AmSOUTH BANK OF ALABAMA
By: /s/ ILLEGIBLE
-----------------------------------------
Title: Assistant Vice President
--------------------------------------
FIRST ALABAMA BANK
By: /s/ ILLEGIBLE
-----------------------------------------
Title: Assistant Vice President
WHITNEY BANK OF ALABAMA
By: /s/ ILLEGIBLE
-----------------------------------------
Title: President
--------------------------------------
-23-
<PAGE> 25
BANK OF MOBILE
By: /s/ ILLEGIBLE
-----------------------------------------
Title: Vice President
--------------------------------------
SOUTHTRUST BANK OF ALABAMA, N.A.
By: /s/ ILLEGIBLE
-----------------------------------------
Title: Senior Vice President
--------------------------------------
COMMONWEALTH NATIONAL BANK
By: /s/ ILLEGIBLE
-----------------------------------------
Title: Chairman
--------------------------------------
-24-
<PAGE> 26
EXHIBIT "A-1"
REVOLVING CREDIT NOTE
$7,000,000.00 July 17, 1995
FOR VALUE RECEIVED, the undersigned (the "Maker"), hereby unconditionally
promises to pay to the order of AMSOUTH BANK OF ALABAMA, an Alabama banking
corporation (the "Payee"), at the offices of AmSouth Bank of Alabama, as Agent
(the "Agent"), at Mobile, Alabama, or such other address given to Maker by
Agent, the principal sum of SEVEN MILLION and NO/100ths DOLLARS
($7,000,000.00), or so much thereof as may be advanced hereunder and not
repaid, together with interest on the unpaid principal balance from day-to-day
remaining, computed from the date of advance until maturity as set forth in the
Revolving Credit Agreement (hereinafter defined).
This Note has been executed and delivered pursuant to the terms of that
certain Revolving Credit Agreement (the "Revolving Credit Agreement"), between
Maker, Agent and AmSouth Bank of Alabama, First Alabama Bank, Whitney Bank of
Alabama, Bank of Mobile, SouthTrust Bank of Alabama, N.A., and Commonwealth
National Bank, as Lenders, dated of even date herewith, and is one of the
"Notes" referred to therein. Each capitalized term used herein shall, unless
otherwise indicated, have the meaning assigned to such term in the Revolving
Credit Agreement. Reference is hereby made to the Revolving Credit Agreement
for a statement of (i) provisions regarding prepayment of principal due under
this Note, and (ii) the events upon which the maturity of this Note may be
accelerated.
The principal of and interest upon this note shall be due and payable as
set forth in the Revolving Credit Agreement.
The Maker hereby waives demand, presentment, protest, notice of protest,
notice of dishonor, and all of the requirements necessary to hold it liable for
any of the Obligations (meaning thereby this Note and any and all renewals and
extensions thereof).
Neither any failure nor any delay on the part of Payee in exercising any
right, power or privilege under this Note shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege. No
modification, amendment, or waiver of any provision of this Note shall be
effective unless in writing and signed by a duly authorized officer of Payee,
and then the same shall be effective only in the specific instance and for the
purpose for which given.
<PAGE> 27
This Note shall be governed and construed in accordance with the laws of
the State of Alabama.
IN WITNESS WHEREOF, Mobile Gas Service Corporation has caused this
instrument to be executed by its officer thereunto duly authorized as of the
day and date first above written.
MOBILE GAS SERVICE CORPORATION
By:
-------------------------------------
Title: President and Chief Executive
Officer
By:
-------------------------------------
Title: Vice President, Chief
Financial Officer and
Treasurer
<PAGE> 28
EXHIBIT "A-2"
REVOLVING CREDIT NOTE
$5,000,000.00 July 17, 1995
FOR VALUE RECEIVED, the undersigned (the "Maker"), hereby unconditionally
promises to pay to the order of FIRST ALABAMA BANK, an Alabama banking
corporation (the "Payee"), at the offices of AmSouth Bank of Alabama, as Agent
(the "Agent"), at Mobile, Alabama, or such other address given to Maker by
Agent, the principal sum of FIVE MILLION and NO/100ths DOLLARS ($5,000,000.00),
or so much thereof as may be advanced hereunder and not repaid, together with
interest on the unpaid principal balance from day-to-day remaining, computed
from the date of advance until maturity as set forth in the Revolving Credit
Agreement (hereinafter defined).
This Note has been executed and delivered pursuant to the terms of that
certain Revolving Credit Agreement (the "Revolving Credit Agreement"), between
Maker, Agent and AmSouth Bank of Alabama, First Alabama Bank, Whitney Bank of
Alabama, Bank of Mobile, SouthTrust Bank of Alabama, N.A., and Commonwealth
National Bank, as Lenders, dated of even date herewith, and is one of the
"Notes" referred to therein. Each capitalized term used herein shall, unless
otherwise indicated, have the meaning assigned to such term in the Revolving
Credit Agreement. Reference is hereby made to the Revolving Credit Agreement
for a statement of (i) provisions regarding prepayment of principal due under
this Note, and (ii) the events upon which the maturity of this Note may be
accelerated.
The principal of and interest upon this note shall be due and payable as
set forth in the Revolving Credit Agreement.
The Maker hereby waives demand, presentment, protest, notice of protest,
notice of dishonor, and all of the requirements necessary to hold it liable for
any of the Obligations (meaning thereby this Note and any and all renewals and
extensions thereof).
Neither any failure nor any delay on the part of Payee in exercising any
right, power or privilege under this Note shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege. No
modification, amendment, or waiver of any provision of this Note shall be
effective unless in writing and signed by a duly authorized officer of Payee,
and then the same shall be effective only in the specific instance and for the
purpose for which given.
<PAGE> 29
This Note shall be governed and construed in accordance with the laws of
the State of Alabama.
IN WITNESS WHEREOF, Mobile Gas Service Corporation has caused this
instrument to be executed by its officer thereunto duly authorized as of the
day and date first above written.
MOBILE GAS SERVICE CORPORATION
By:
-------------------------------------
Title: President and Chief Executive Officer
By:
-------------------------------------
Title: Vice President, Chief Financial
Officer and Treasurer
<PAGE> 30
EXHIBIT "A-3"
REVOLVING CREDIT NOTE
$5,000,000.00 July 17, 1995
FOR VALUE RECEIVED, the undersigned (the "Maker"), hereby unconditionally
promises to pay to the order of WHITNEY BANK OF ALABAMA, an Alabama banking
corporation (the "Payee"), at the offices of AmSouth Bank of Alabama, as Agent
(the "Agent"), at Mobile, Alabama, or such other address given to Maker by
Agent, the principal sum of FIVE MILLION and NO/100ths DOLLARS ($5,000,000.00),
or so much thereof as may be advanced hereunder and not repaid, together with
interest on the unpaid principal balance from day-to-day remaining, computed
from the date of advance until maturity as set forth in the Revolving Credit
Agreement (hereinafter defined).
This Note has been executed and delivered pursuant to the terms of that
certain Revolving Credit Agreement (the "Revolving Credit Agreement"), between
Maker, Agent and AmSouth Bank of Alabama, First Alabama Bank, Whitney Bank of
Alabama, Bank of Mobile, SouthTrust Bank of Alabama, N.A., and Commonwealth
National Bank, as Lenders, dated of even date herewith, and is one of the
"Notes" referred to therein. Each capitalized term used herein shall, unless
otherwise indicated, have the meaning assigned to such term in the Revolving
Credit Agreement. Reference is hereby made to the Revolving Credit Agreement
for a statement of (i) provisions regarding prepayment of principal due under
this Note, and (ii) the events upon which the maturity of this Note may be
accelerated.
The principal of and interest upon this note shall be due and payable as
set forth in the Revolving Credit Agreement.
The Maker hereby waives demand, presentment, protest, notice of protest,
notice of dishonor, and all of the requirements necessary to hold it liable for
any of the Obligations (meaning thereby this Note and any and all renewals and
extensions thereof).
Neither any failure nor any delay on the part of Payee in exercising any
right, power or privilege under this Note shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege. No
modification, amendment, or waiver of any provision of this Note shall be
effective unless in writing and signed by a duly authorized officer of Payee,
and then the same shall be effective only in the specific instance and for the
purpose for which given.
<PAGE> 31
This Note shall be governed and construed in accordance with the laws of
the State of Alabama.
IN WITNESS WHEREOF, Mobile Gas Service Corporation has caused this
instrument to be executed by its officer thereunto duly authorized as of the
day and date first above written.
MOBILE GAS SERVICE CORPORATION
By:
--------------------------------------------
Title: President and Chief Executive Officer
By:
--------------------------------------------
Title: Vice President, Chief Financial
Officer and Treasurer
<PAGE> 32
EXHIBIT "A-4"
REVOLVING CREDIT NOTE
$2,000,000.00 July 17, 1995
FOR VALUE RECEIVED, the undersigned (the "Maker"), hereby unconditionally
promises to pay to the order of BANK OF MOBILE, an Alabama banking corporation
(the "Payee"), at the offices of AmSouth Bank of Alabama, as Agent (the
"Agent"), at Mobile, Alabama, or such other address given to Maker by Agent,
the principal sum of TWO MILLION and NO/100ths DOLLARS ($2,000,000.00), or so
much thereof as may be advanced hereunder and not repaid, together with
interest on the unpaid principal balance from day-to-day remaining, computed
from the date of advance until maturity as set forth in the Revolving Credit
Agreement (hereinafter defined).
This Note has been executed and delivered pursuant to the terms of that
certain Revolving Credit Agreement (the "Revolving Credit Agreement"), between
Maker, Agent and AmSouth Bank of Alabama, First Alabama Bank, Whitney Bank of
Alabama, Bank of Mobile, SouthTrust Bank of Alabama, N.A., and Commonwealth
National Bank, as Lenders, dated of even date herewith, and is one of the
"Notes" referred to therein. Each capitalized term used herein shall, unless
otherwise indicated, have the meaning assigned to such term in the Revolving
Credit Agreement. Reference is hereby made to the Revolving Credit Agreement
for a statement of (i) provisions regarding prepayment of principal due under
this Note, and (ii) the events upon which the maturity of this Note may be
accelerated.
The principal of and interest upon this note shall be due and payable as
set forth in the Revolving Credit Agreement.
The Maker hereby waives demand, presentment, protest, notice of protest,
notice of dishonor, and all of the requirements necessary to hold it liable for
any of the Obligations (meaning thereby this Note and any and all renewals and
extensions thereof).
Neither any failure nor any delay on the part of Payee in exercising any
right, power or privilege under this Note shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege. No
modification, amendment, or waiver of any provision of this Note shall be
effective unless in writing and signed by a duly authorized officer of Payee,
and then the same shall be effective only in the specific instance and for the
purpose for which given.
<PAGE> 33
This Note shall be governed and construed in accordance with the laws of
the State of Alabama.
IN WITNESS WHEREOF, Mobile Gas Service Corporation has caused this
instrument to be executed by its officer thereunto duly authorized as of the
day and date first above written.
MOBILE GAS SERVICE CORPORATION
By:
-------------------------------------
Title: President and Chief
Executive Officer
By:
-------------------------------------
Title: Vice President, Chief Financial
Officer and Treasurer
<PAGE> 34
EXHIBIT "A-5"
REVOLVING CREDIT NOTE
$900,000.00 July 17, 1995
FOR VALUE RECEIVED, the undersigned (the "Maker"), hereby unconditionally
promises to pay to the order of SOUTHTRUST BANK OF ALABAMA, N.A., a national
banking association (the "Payee"), at the offices of AmSouth Bank of Alabama,
as Agent (the "Agent"), at Mobile, Alabama, or such other address given to
Maker by Agent, the principal sum of NINE HUNDRED THOUSAND and NO/100ths
DOLLARS ($900,000.00), or so much thereof as may be advanced hereunder and not
repaid, together with interest on the unpaid principal balance from day-to-day
remaining, computed from the date of advance until maturity as set forth in the
Revolving Credit Agreement (hereinafter defined).
This Note has been executed and delivered pursuant to the terms of that
certain Revolving Credit Agreement (the "Revolving Credit Agreement"), between
Maker, Agent and AmSouth Bank of Alabama, First Alabama Bank, Whitney Bank of
Alabama, Bank of Mobile, SouthTrust Bank of Alabama, N.A., and Commonwealth
National Bank, as Lenders, dated of even date herewith, and is one of the
"Notes" referred to therein. Each capitalized term used herein shall, unless
otherwise indicated, have the meaning assigned to such term in the Revolving
Credit Agreement. Reference is hereby made to the Revolving Credit Agreement
for a statement of (i) provisions regarding prepayment of principal due under
this Note, and (ii) the events upon which the maturity of this Note may be
accelerated.
The principal of and interest upon this note shall be due and payable as
set forth in the Revolving Credit Agreement.
The Maker hereby waives demand, presentment, protest, notice of protest,
notice of dishonor, and all of the requirements necessary to hold it liable for
any of the Obligations (meaning thereby this Note and any and all renewals and
extensions thereof).
Neither any failure nor any delay on the part of Payee in exercising any
right, power or privilege under this Note shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege. No
modification, amendment, or waiver of any provision of this Note shall be
effective unless in writing and signed by a duly authorized officer of Payee,
and then the same shall be effective only in the specific instance and for the
purpose for which given.
<PAGE> 35
This Note shall be governed and construed in accordance with the laws of
the State of Alabama.
IN WITNESS WHEREOF, mobile gas service corporation has caused this
instrument to be executed by its officer thereunto duly authorized as of the
day and date first above written.
MOBILE GAS SERVICE CORPORATION
By:
-------------------------------------
Title: President and Chief
Executive Officer
By:
-------------------------------------
Title: Vice President, Chief Financial
Officer and Treasurer
<PAGE> 36
EXHIBIT "A-6"
REVOLVING CREDIT NOTE
$100,000.00 July 17, 1995
FOR VALUE RECEIVED, the undersigned (the "Maker"), hereby unconditionally
promises to pay to the order of COMMONWEALTH NATIONAL BANK, a national banking
association (the "Payee"), at the offices of AmSouth Bank of Alabama, as Agent
(the "Agent"), at Mobile, Alabama, or such other address given to Maker by
Agent, the principal sum of ONE HUNDRED THOUSAND and NO/100ths DOLLARS
($100,000.00), or so much thereof as may be advanced hereunder and not repaid,
together with interest on the unpaid principal balance from day-to-day
remaining, computed from the date of advance until maturity as set forth in the
Revolving Credit Agreement (hereinafter defined).
This Note has been executed and delivered pursuant to the terms of that
certain Revolving Credit Agreement (the "Revolving Credit Agreement"), between
Maker, Agent and AmSouth Bank of Alabama, First Alabama Bank, Whitney Bank of
Alabama, Bank of Mobile, SouthTrust Bank of Alabama, N.A., and Commonwealth
National Bank, as Lenders, dated of even date herewith, and is one of the
"Notes" referred to therein. Each capitalized term used herein shall, unless
otherwise indicated, have the meaning assigned to such term in the Revolving
Credit Agreement. Reference is hereby made to the Revolving Credit Agreement
for a statement of (i) provisions regarding prepayment of principal due under
this Note, and (ii) the events upon which the maturity of this Note may be
accelerated.
The principal of and interest upon this note shall be due and payable as
set forth in the Revolving Credit Agreement.
The Maker hereby waives demand, presentment, protest, notice of protest,
notice of dishonor, and all of the requirements necessary to hold it liable for
any of the Obligations (meaning thereby this Note and any and all renewals and
extensions thereof).
Neither any failure nor any delay on the part of Payee in exercising any
right, power or privilege under this Note shall operate as a waiver thereof,
nor shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege. No
modification, amendment, or waiver of any provision of this Note shall be
effective unless in writing and signed by a duly authorized officer of Payee,
and then the same shall be effective only in the specific instance and for the
purpose for which given.
<PAGE> 37
This Note shall be governed and construed in accordance with the laws of
the State of Alabama.
IN WITNESS WHEREOF, Mobile Gas Service Corporation has caused this
instrument to be executed by its officer thereunto duly authorized as of the
day and date first above written.
MOBILE GAS SERVICE CORPORATION
By:
-------------------------------------
Title: President and Chief Executive
Officer
By:
-------------------------------------
Title: Vice President, Chief
Financial Officer and
Treasurer
<PAGE> 38
EXHIBIT "B"
NOTICE OF BORROWING
This Notice of Borrowing is given pursuant to the Revolving Credit
Agreement (the "Agreement") entered into as of the 17th day of July, 1995, by
and among Mobile Gas Service Corporation ("Borrower"), AmSouth Bank of Alabama,
as Agent, and AmSouth Bank of Alabama, First Alabama Bank, Whitney Bank of
Alabama, Bank of Mobile, SouthTrust Bank of Alabama, N.A., and Commonwealth
National Bank, as Lenders, dated of even date herewith, the capitalized terms
used herein having the meanings assigned to them in the Agreement.
REQUESTED DATE OF BORROWING
------------------------
AGGREGATE AMOUNT OF BORROWING REQUESTED
------------------------
PLUS: AGGREGATE BORROWINGS OUTSTANDING
PRIOR TO REQUESTED BORROWING
------------------------
TOTAL BORROWINGS OUTSTANDING AFTER
REQUESTED BORROWING
------------------------
DESIGNATION OF APPLICABLE RATE OF
INTEREST FOR BORROWING (CHECK ONE BOX)
[ ] LIBOR-BASED RATE
[ ] PRIME-BASED RATE
EXECUTED AND DELIVERED this ______ day of ________________199_.
MOBILE GAS SERVICE CORPORATION
BY:
-------------------------------------
Its:
-------------------------------------
<PAGE> 1
EXHIBIT 21
MOBILE GAS SERVICE CORPORATION
SUBSIDIARIES OF REGISTRANT
<TABLE>
<CAPTION>
Percent of Voting State of
Subsidiary Securities Owned Incorporation
---------------------- -------------------- ------------------
<S> <C> <C>
MGS Energy Services, Inc. 100% Alabama
MGS Storage Services, Inc. 100% Alabama
MGS Marketing Services, Inc. 100% Alabama
</TABLE>
PARTNERSHIPS IN WHICH REGISTRANT OWNS AN INTEREST
<TABLE>
<CAPTION>
Partnership Equity Ownership
---------------------- --------------------
<S> <C>
Bay Gas Storage Company, Ltd. 87.5%
Southern Gas Transmission Co. 51%
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
2-74613 on Form S-16 and Registration Statement 33-66974 on Form S-8 of Mobile
Gas Service Corporation of our report dated October 31, 1995, appearing in this
Annual Report on Form 10-K of Mobile Gas Service Corporation for the year ended
September 30, 1995.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Mobile, Alabama
December 22, 1995
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND INCOME STATEMENT FOR THE COMPANY FOR THE YEAR ENDED SEPTEMBER 30, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE COMPANY'S FORM 10-K FOR THE
YEAR ENDED SEPTEMBER 30, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 114,736
<OTHER-PROPERTY-AND-INVEST> 188
<TOTAL-CURRENT-ASSETS> 12,928
<TOTAL-DEFERRED-CHARGES> 1,630
<OTHER-ASSETS> 7,085
<TOTAL-ASSETS> 136,567
<COMMON> 8,028
<CAPITAL-SURPLUS-PAID-IN> 9,123
<RETAINED-EARNINGS> 27,912
<TOTAL-COMMON-STOCKHOLDERS-EQ> 45,063
0
0
<LONG-TERM-DEBT-NET> 57,328
<SHORT-TERM-NOTES> 1,800
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,719
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 30,657
<TOT-CAPITALIZATION-AND-LIAB> 136,567
<GROSS-OPERATING-REVENUE> 59,111
<INCOME-TAX-EXPENSE> 2,264
<OTHER-OPERATING-EXPENSES> 47,517
<TOTAL-OPERATING-EXPENSES> 47,517
<OPERATING-INCOME-LOSS> 11,594
<OTHER-INCOME-NET> (5,302)
<INCOME-BEFORE-INTEREST-EXPEN> 16,896
<TOTAL-INTEREST-EXPENSE> 5,428
<NET-INCOME> 4,028
0
<EARNINGS-AVAILABLE-FOR-COMM> 4,028
<COMMON-STOCK-DIVIDENDS> 3,216
<TOTAL-INTEREST-ON-BONDS> 4,671<F1>
<CASH-FLOW-OPERATIONS> 8,901
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 0
<FN>
<F1>TOTAL INTEREST ON BONDS REPRESENTS INTEREST EXPENSE RELATED TO LONG-TERM DEBT
OUTSTANDING UNDER FIRST MORTGAGE BONDS AND LONG-TERM SECURED NOTES.
</FN>
</TABLE>
