SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM U5S
ANNUAL REPORT
For the Fiscal Year Ended September 30, 1995
Filed Pursuant to the
Public Utility Holding Company Act of 1935
by
National Fuel Gas Company
10 Lafayette Square, Buffalo, N.Y. 14203
<PAGE 2>
NATIONAL FUEL GAS COMPANY
FORM U5S - ANNUAL REPORT
For the Fiscal Year Ended September 30, 1995
TABLE OF CONTENTS
Page
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF
SEPTEMBER 30, 1995 3
ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS 7
ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF
SYSTEM SECURITIES 7
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM
SECURITIES 8
ITEM 5. INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES 9
ITEM 6. OFFICERS AND DIRECTORS
Part I. Names, principal business address and
positions held as of September 30, 1995 11
Part II. Financial connections as of September 30, 1995 13
Part III. Compensation and other related information 13
ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS 17
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Part I. Intercompany sales and services
(1) Salaries of officers of the Registrant 18
(2) Services rendered by Statutory Subsidiaries 19
(3) Services rendered by Registrant 26
Part II. Contracts to purchase services or goods
between any System company and any affiliate 27
Part III. Employment of any person by any System
company for the performance on a continuing
basis of management services 27
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES 27
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements (Index) 28
Exhibits 43
SIGNATURE 48
<PAGE 3>
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1995
Number of Common Percent of Issuer Owner's
Name of Company Shares Owned Voting Power Book Value Book Value
- - --------------- ---------------- ------------ ---------- ----------
Registrant: (Thousands of Dollars)
National Fuel Gas Company
(Parent, Company or Registrant) - - - -
Statutory Subsidiaries:
National Fuel Gas Distribution
Corporation (Distribution
Corporation) (Note 1) 2,000 100% $385,773 $385,773
Unsecured Debt (Note 10) - - $379,100 $379,100
National Fuel Gas Supply
Corporation (Supply
Corporation) (Note 2) 1,013,802 100% $206,918 $206,918
Unsecured Debt (Note 10) - - $228,965 $228,965
Seneca Resources Corporation
(Seneca Resources) (Note 3) 100,000 100% $115,226 $115,226
Unsecured Debt (Note 10) - - $173,700 $173,700
Empire Exploration Company,
Empire 1983 Drilling
Program and Empire 1983
Joint Venture (Note 11) N/A N/A $ 970 $ 970
Highland Land & Minerals, Inc.
(Highland) (Note 4) 4,500 100% $ 4,887 $ 4,887
Utility Constructors, Inc.
(UCI) (Note 5) 1,000 100% $ 4,134 $ 4,134
Data-Track Account Services,
Inc. (Data-Track) (Note 6) 1,000 100% $ 612 $ 612
Leidy Hub, Inc. (Leidy Hub)
(Note 7) 4,000 100% $ 225 $ 225
Unsecured Debt (Note 10) - - $ 200 $ 200
Ellisburg-Leidy Northeast
Hub Company (Note 12) N/A 50% $ 302 $ 111
National Fuel Resources, Inc.
(NFR) (Note 8) 10,000 100% $ 7,251 $ 7,251
Horizon Energy Development, Inc.
(Horizon) (Note 9) 500 100% $ 838 $ 838
Sceptre Power Company (Note 13) N/A 100% $ 869 $ 869
<PAGE 4>
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1995
(Continued)
Notes:
(1) Distribution Corporation is a public utility that sells natural gas and
provides gas transportation service in western New York and northwestern
Pennsylvania.
(2) Supply Corporation is engaged in the transportation and storage of
natural gas for affiliated and nonaffiliated companies.
(3) Seneca Resources is engaged in the exploration for, and the development
and purchase of, natural gas and oil reserves in the Gulf Coast of Texas
and Louisiana, in California, and in the Appalachian region of the
United States. In addition, Seneca Resources is engaged in the marketing
of timber from its Pennsylvania land holdings.
(4) Highland operates a sawmill and kiln in Kane, Pennsylvania.
(5) UCI discontinued its operations (primarily pipeline construction) in
1995 and its affairs are being wound down.
(6) Data-Track provides collection services (principally issuing collection
notices) for the subsidiaries of the Company, particularly Distribution
Corporation.
(7) Leidy Hub is engaged in providing various natural gas hub services to
customers in the northeastern, mid-Atlantic, Chicago and Los Angeles
areas of the United States and Ontario, Canada, through (i) Leidy Hub's
50% ownership of Ellisburg-Leidy Northeast Hub Company and (ii) Leidy
Hub's 14.5% ownership of Enerchange, L.L.C. (Enerchange) (consummated
in October 1995 - see Note 12).
(8) NFR is engaged in the marketing and brokerage of natural gas and the
performance of energy management services for utilities and end-users
located in the northeastern United States.
(9) Horizon was incorporated in the State of New York on June 6, 1995 and
was initially capitalized by the Registrant on September 15, 1995.
Horizon was formed to engage in foreign and domestic energy projects
through investment as a sole or partial owner in various business
entities including Sceptre Power Company (see Note 13).
(10) Unsecured debt is presented on page 6.
(11) In December 1983, Empire Exploration, Inc. (which was subsequently
merged into Seneca Resources) established a drilling fund through a
series of limited partnerships in which it acts as general partner (See
File No. 70-6909). Empire Exploration, Inc.'s aggregate investment in
all three limited partnerships amounted to $970,150.
<PAGE 5>
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1995
(Continued)
(12) Leidy Hub and Hub Services, Inc. (a wholly-owned subsidiary of Natural
Gas Clearinghouse) entered into a Partnership Agreement on September
1, 1994 to form Ellisburg-Leidy Northeast Hub Company (the
Partnership). Leidy Hub and Hub Services, Inc. each had a 50% interest
in the Partnership. In June 1995, Hub Services, Inc. assigned its
interest in the Partnership to Enerchange, L.L.C.
In October 1995, Leidy Hub acquired a 14.5% ownership interest in
Enerchange. This investment effectively gave Leidy Hub (i) a somewhat
larger portion of the profits or losses of Ellisburg-Leidy Northeast
Hub Company, (ii) a portion of the profits or losses of natural gas hubs
in Chicago and Los Angeles, (iii) 14.5% of Enerchange's profits or
losses in buying and selling gas at all three hubs, and (iv) 14.5% of
Enerchange's profits or losses as a 50% owner of Quick Trade, L.L.C.,
which is developing an on-line computer service on which subscribers
will buy and sell gas at hubs and obtain related services.
(13) Horizon became one of the partners in Sceptre Power Company, a
California general partnership, on September 15, 1995. (See Exhibit
(13)iii.)
<PAGE 6>
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1995
(Concluded)
Note (10) Unsecured Debt
Principal Issuer Owner's
Name of Company Amount Book Book
(Issuer) Security Owned by Registrant Owed Value Value
- - --------------- ---------------------------- --------- ------ -------
(Thousands of Dollars)
Distribution
Corporation Intercompany Notes:
9.03% Due December 18, 1995 $ 8,000 $ 8,000 $ 8,000
9.00% Due December 18, 1995 9,000 9,000 9,000
9.03% Due December 20, 1995 13,000 13,000 13,000
6.54% Due November 5, 1997 7,000 7,000 7,000
6.71% Due February 4, 2000 50,000 50,000 50,000
7.99% Due February 1, 2004 100,000 100,000 100,000
7.46% Due March 30, 2023 49,000 49,000 49,000
8.55% Due July 15, 2024 20,000 20,000 20,000
7.50% Due June 13, 2025 50,000 50,000 50,000
5.9026% System Money Pool* 73,100 73,100 73,100
-------- -------- --------
379,100 379,100 379,100
-------- -------- --------
Supply
Corporation Intercompany Notes:
9.03% Due December 18, 1995 17,500 17,500 17,500
9.00% Due December 18, 1995 11,000 11,000 11,000
6.54% Due November 5, 1997 25,000 25,000 25,000
7.37% Due July 14, 1999 50,000 50,000 50,000
7.99% Due February 1, 2004 25,000 25,000 25,000
8.44% Due November 10, 2012 50,965 50,965 50,965
8.55% Due July 15, 2024 30,000 30,000 30,000
5.9026% System Money Pool* 19,500 19,500 19,500
-------- -------- --------
228,965 228,965 228,965
-------- -------- --------
Seneca
Resources Intercompany Notes:
4.66% Due September 9, 1996 30,000 30,000 30,000
6.54% Due November 5, 1997 18,000 18,000 18,000
6.22% Due July 2, 1998 50,000 50,000 50,000
5.9026% System Money Pool* 75,700 75,700 75,700
-------- -------- --------
173,700 173,700 173,700
-------- -------- --------
Leidy Hub 5.9026% System Money Pool* 200 200 200
-------- -------- --------
$781,965 $781,965 $781,965
======== ======== ========
* Interest rate represents weighted average of all short-term securities
outstanding at September 30, 1995, pursuant to System money pool
arrangement, S.E.C. File No. 70-8297 (Release Nos. 25964, 26076 and 26196).
<PAGE 7>
ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS
None during fiscal year ended September 30, 1995.
ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES
None during fiscal year ended September 30, 1995.
<PAGE 8>
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES
FISCAL YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Name of Company Number of Shares or
Acquiring, Redeeming Principal Amount Commission
----------------------------
Name of Issuer and Title of Issue or Retiring Securities Acquired Redeemed Retired Consideration Authorization
- - --------------------------------- ---------------------- -------- -------- --------------------- -------------
(Thousands of Dollars)
------------------------------------------
<S> <C> <C> <C> <C> <C>
Registered Holding Company:
Registrant:
6.07% Note due May 1, 1995 Registrant $55,000 $ 55,000 Rule 42
6.10% Note due May 1, 1995 Registrant 20,000 20,000 Rule 42
9.32% Note due June 8, 1995 Registrant 20,000 20,000 Rule 42
6.10% Note due June 23, 1995 Registrant 1,000 1,000 Rule 42
Distribution Corporation:
7.50% Note maturing
June 13, 2025 Registrant $50,000 50,000 File No. 70-8541
Seneca Resources:
6.22% Note maturing
July 2, 1998 Registrant 50,000 50,000 File No. 70-8541
--------
Subsidiaries of Registered
Holding Company
Distribution Corporation:
6.21% Note Due May 1, 1995 Distribution Corp. 23,000 $23,000 Rule 42
6.24% Note due May 1, 1995 Distribution Corp. 20,000 20,000 Rule 42
9.45% Note due June 8, 1995 Distribution Corp. 20,000 20,000 Rule 42
6.23% Note due June 23, 1995 Distribution Corp. 1,000 1,000 Rule 42
Seneca Resources:
6.21% Note due May 1, 1995 Seneca Resources 32,000 $32,000 Rule 42
</TABLE>
<PAGE 9>
ITEM 5. INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES
Number of Aggregate
1. Name of Owner Persons Business of Persons Investment
------------- --------- ------------------- ----------
Distribution Corporation Two Municipalities and $1,088
Civic Organizations
Supply Corporation One Purchase of natural $ 81
gas and other
petroleum products
Name and
Business Description Owner's
2. Name of Owner of Issuer of Securities Book Value
------------- --------- ------------- ----------
Leidy Hub Metscan, Inc. 400,000 shares $0*
A developer of of common stock
an electronic
gas meter
reading device
56,500 shares of $0*
preferred A stock
29,167 shares of $0*
preferred B stock
* Metscan, Inc. ceased operations and liquidated during 1995. Accordingly,
Leidy Hub wrote its investment down to zero in 1995.
<PAGE 10>
THIS PAGE LEFT BLANK INTENTIONALLY
<PAGE 11>
ITEM 6. OFFICERS AND DIRECTORS
Part I. Names, principal business address and positions held as of September
30, 1995
<TABLE>
<CAPTION>
Names of System Companies with Which Connected
--------------------------------------------------------------
National Fuel National Fuel Seneca
Gas Distribution Gas Supply Resources
Registrant Corp. Corp. Corp.
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
B. J. Kennedy Buffalo, NY (1) | D,COB,CEO,P,s | D, COB, s | D, COB, s | s |
- - -------------------------------------------------------------------------------------------------------
B. S. Lee Des Plaines, IL (2) | D, df | - | - | - |
- - -------------------------------------------------------------------------------------------------------
J. M. Brown Buffalo, NY (1) | D, df | - | - | - |
- - -------------------------------------------------------------------------------------------------------
D. N. Campbell Cambridge, MA (3) | D, df | - | - | - |
- - -------------------------------------------------------------------------------------------------------
L. F. Kahl Niagara Falls, NY (4) | D, df | - | - | - |
- - -------------------------------------------------------------------------------------------------------
L. Rochwarger Buffalo, NY (5) | D, df | - | - | - |
- - -------------------------------------------------------------------------------------------------------
G. H. Schofield Buffalo, NY (1) | D, df | - | - | - |
- - -------------------------------------------------------------------------------------------------------
E. T. Mann Buffalo, NY (1) | D, df | - | - | - |
- - -------------------------------------------------------------------------------------------------------
R. T. Brady Buffalo, NY (1) D, df - - -
- - -------------------------------------------------------------------------------------------------------
P. C. Ackerman Buffalo, NY (1) | D, SVP, s | D, EVP(8), s | EVP ,s | D, P, s |
- - -------------------------------------------------------------------------------------------------------
J. A. Beck Houston, TX (6) | - | - | - | EVP, s |
- - -------------------------------------------------------------------------------------------------------
R. P. Borneman Buffalo, NY (1) | - | VP ,s | s | s |
- - -------------------------------------------------------------------------------------------------------
D. A. Brown Houston, TX (6) - - - VP, s
- - -------------------------------------------------------------------------------------------------------
A. M. Cellino Buffalo, NY (1) | AS, s(9) | VP, s | - | - |
- - -------------------------------------------------------------------------------------------------------
W. E. DeForest Buffalo, NY (1) | - | SVP, D, s | s | s |
- - -------------------------------------------------------------------------------------------------------
R. M. DiValerio Buffalo, NY (1) | S, s(10) | - | D,S,GC,s(11)| - |
- - -------------------------------------------------------------------------------------------------------
C. H. Friedrich Houston, TX (6) | - | - | - | T, s |
- - -------------------------------------------------------------------------------------------------------
B. H. Hale Buffalo, NY (1) | s | D, SVP, s | - | - |
- - -------------------------------------------------------------------------------------------------------
R. Hare Buffalo, NY (1) | - | - | D, P, s | - |
- - -------------------------------------------------------------------------------------------------------
W. J. Hill Buffalo, NY (1) | D(12) | D, P, (13), s | - | - |
- - -------------------------------------------------------------------------------------------------------
R. J. Kreppel Buffalo, NY (1) | - | - | - | - |
- - ------------------------------------------------------------------------------------------------------
J. F. McKnight Houston, TX (6) | - | - | - | VP, s |
- - -------------------------------------------------------------------------------------------------------
J. P. Pawlowski Buffalo, NY (1) | T, s | D, SVP, T, s | T, (14), s | s |
- - ------------------------------------------------------------------------------------------------------
W. M. Petmecky Houston, TX (6) - | - | - | SVP, S, s |
- - -------------------------------------------------------------------------------------------------------
J. R. Pustulka Buffalo, NY (1) | - | - | VP, s | - |
- - -------------------------------------------------------------------------------------------------------
J. D. Ramsdell Buffalo, NY (1) | - | VP, s | - | - |
- - -------------------------------------------------------------------------------------------------------
W. A. Ross Buffalo, NY (1) | - | - | D, VP, s | - |
- - -------------------------------------------------------------------------------------------------------
D. J. Seeley Buffalo, NY (1) | - | s | D, SVP, s | - |
- - -------------------------------------------------------------------------------------------------------
D. F. Smith Buffalo, NY (1) | - | SVP, D, S, s | s | D, s |
- - -------------------------------------------------------------------------------------------------------
R. J. Tanski Buffalo, NY (1) | - | VP, GC, s | - | - |
- - -------------------------------------------------------------------------------------------------------
P. A. Turek Erie, PA (7) | - | - | D, VP, s | - |
- - ------------------------------------------------------------------------------------------------------
E. E. Wassell Houston, TX (6) - | - | - | VP, s |
- - -------------------------------------------------------------------------------------------------------
G. T. Wehrlin Buffalo, NY (1) | C, s | SVP, D, C, s | s | D, C, s |
- - -------------------------------------------------------------------------------------------------------
R. W. Wilcox Buffalo, NY (1) | - | VP, s | s | s |
- - -------------------------------------------------------------------------------------------------------
R. J. Wright Buffalo, NY (1) | - | VP, s | s | s |
- - -------------------------------------------------------------------------------------------------------
</TABLE>
Position Symbol Key
--------------------------------------------------------------------
COB - Chairman of the Board of Directors df - Director's Fees
CEO - Chief Executive Officer S - Secretary
P - President AS - Assistant Secretary
EVP - Executive Vice President C - Controller
SVP - Senior Vice President D - Director
VP - Vice President s - Salary
GC - General Counsel T - Treasurer
Notes
(1) National Fuel Gas Company, 10 Lafayette Square, Buffalo, New York 14203
(2) Institute of Gas Technology, 1700 So. Mt. Prospect Road, DesPlaines,
IL 60018-1804
(3) Bolt, Beranek & Newman, 10 Molton Street, Cambridge, MA 02138
(4) The Carborundum Company, 1625 Buffalo Avenue, Niagara Falls, NY 14303
(5) Rockmont Corporation, 135 Delaware Avenue, Buffalo, New York 14202
(6) Seneca Resources Corp., 333 Clay Street, Houston, Texas 77002 through
January 31, 1996, then 1201 Louisiana Street, Suite 400, Houston, Texas
77002
(7) National Fuel Gas, 1100 State Street, Erie, Pennsylvania 16512
(8) Mr. Ackerman was elected President effective 10/1/95.
(9) Ms. Cellino was elected Secretary effective 10/1/95.
(10) and (11) Mr. DiValerio retired effective 10/1/95.
(12) Mr. Hill was elected Director effective 9/30/95.
(13) Mr. Hill retired from National Fuel Gas Distribution Corporation effective
10/1/95.
(14) Mr. Pawlowski was elected Secretary effective 10/1/95.
<PAGE 12>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------
Highland Utility Data-Track Horizon
Land & Constructors Account National Fuel Leidy-Hub, Energy
Minerals, Inc. Inc. Services, Inc. Resources, Inc. Inc. Development, Inc.
- - -----------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
s | COB, s | s | s | D | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
D, P, s | D, P, s | D, P | - | - | D, P
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | s | D, P, s | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | VP
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | D, P, s | - | -
- - -----------------------------------------------------------------------------------------------------
S, T, s | T, s | T, s | s | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
D, s | D, S, s | D, S, s | D, s | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | S, T | - | -
- - -----------------------------------------------------------------------------------------------------
- | - | - | - | - | -
- - -----------------------------------------------------------------------------------------------------
D, s | D, s | D, s | D, s | D, S, T, s | S, T
- - -----------------------------------------------------------------------------------------------------
s | s | s | s | - | -
- - -----------------------------------------------------------------------------------------------------
s | s | s | s | - | -
- - -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE 13>
Item 6. OFFICERS AND DIRECTORS (Continued)
Part II. Financial connections as of September 30, 1995:
Position Held Applicable
Name of Officer Name and Location of in Financial Exemption
or Director Financial Institution Institution Rule
- - --------------- --------------------- ------------- ----------
R. T. Brady Manufacturers and Traders
Trust Company,
Buffalo, New York Director 70 (a)
First Empire State
Corporation,
Buffalo, New York Director 70 (a)
D. N. Campbell Manufacturers & Traders
Trust Company,
Buffalo, New York Director 70 (a)
First Empire State
Corporation,
Buffalo, New York Director 70 (a)
B. J. Kennedy Marine Midland Bank
Buffalo, New York Director 70 (a)
Part III. Compensation and other related information:
(A) Compensation of Directors and Executive Officers:
The information required by this item appears under "Directors'
Compensation," and "Executive Compensation," on pages 6 to 7 and pages 8 to 21,
respectively, of National Fuel Gas Company Proxy Statement, dated January 5,
1996, included as exhibit A (3) to this Form U5S and is incorporated herein by
reference.
(B) Interest of executive officers and directors in securities of System
Companies including options or other rights to acquire securities:
The information required by this item appears under "Security Ownership
of Certain Beneficial Owners and Management," on pages 7 to 8 of the National
Fuel Gas Company Proxy Statement, dated January 5, 1996, included as Exhibit
A(3) of this Form U5S and is incorporated herein by reference.
(C) Contracts and Transactions with System Companies:
Exhibit No. in Document
(Incorporated by Reference
as Indicated in Notes)
--------------------------
Employment Agreement, dated September 17,
1981, with Bernard J. Kennedy. 10.4 (6)
Eighth Extension to Employment Agreement
with Bernard J. Kennedy, dated September 20, 1991. 10-SS (2)
National Fuel Gas Company 1983 Incentive
Stock Option Plan, as amended and restated
through February 18, 1993. 10.2 (5)
<PAGE 14>
Item 6. OFFICERS AND DIRECTORS (Continued)
Part III. Compensation of Directors and Executive Officers (Continued)
National Fuel Gas Company 1984 Stock Plan,
as amended and restated through February 18, 1993. 10.3 (5)
National Fuel Gas Company 1993 Award and
Option Plan, dated February 18, 1993. 10.1 (5)
Amendment to National Fuel Gas Company 1993
Award and Option Plan, dated October 27, 1995. 10.8 (7)
Change in Control Agreement, dated May 1, 1992,
with Philip C. Ackerman. 10.4 (3)
Change in Control Agreement, dated May 1, 1992,
with Richard Hare. 10.5 (3)
Change in Control Agreement, dated May 1, 1992,
with William J. Hill. 10.6 (3)
Agreement, dated August 1, 1989, with Richard Hare. 10-Q (1)
National Fuel Gas Company Deferred Compensation
Plan, as amended and restated through May 1, 1994. 10-7 (6)
Amendment to National Fuel Gas Company Deferred
Compensation Plan, dated September 27, 1995. 10.9 (7)
National Fuel Gas Company and Participating
Subsidiaries Executive Retirement Plan as
amended and restated through November 1, 1995. 10.10 (7)
Executive Death Benefits Agreement, dated
April 1, 1991, with William J. Hill. 10.8 (3)
Split Dollar Death Benefits Agreement, dated
April 1, 1991, with Richard Hare. 10.9 (6)
Amendment to Split Dollar Death Benefits
Agreement, dated March 15, 1994, with Richard Hare. 10.5 (6)
Split Dollar Death Benefits Agreement, dated
April 1, 1991, with Philip C. Ackerman. 10.10 (6)
Amendment to Split Dollar Death Benefits
Agreement, dated March 15, 1994, with Philip C.
Ackerman. 10.6 (6)
Death Benefits Agreement, dated August 28,
1991, with Bernard J. Kennedy. 10-TT (2)
<PAGE 15>
Item 6. OFFICERS AND DIRECTORS (Continued)
Part III. Compensation of Directors and Executive Officers (Continued)
Amendment to Death Benefit Agreement of
August 28, 1991, with Bernard J. Kennedy,
dated March 15, 1994. 10.11 (7)
Summary of Annual at Risk Compensation
Incentive Program. 10.10 (4)
Excerpts of Minutes from the National Fuel
Gas Company Board of Directors Meeting of
December 5, 1991. 10-UU (2)
(Notes)
(1) Incorporated by reference from the Exhibit filed with the Annual
Report on Form 10-K for fiscal year ended September 30, 1989 in
File No. 1-3880.
(2) Incorporated by reference from Exhibit filed with the Annual
Report on Form 10-K for fiscal year ended September 30, 1991 in
File
No. 1-3880.
(3) Incorporated by reference from Exhibit filed with the Annual
Report on Form 10-K for fiscal year ended September 30, 1992 in
File
No. 1-3880.
(4) Incorporated by reference from Exhibit filed with the Annual
Report on Form 10-K for fiscal year ended September 30, 1993 in
File
No. 1-3880.
(5) Incorporated by reference from Exhibit filed with the Quarterly
Report on Form 10-Q for quarterly period ended March 31, 1993 in
File No. 1-3880.
(6) Incorporated by reference from Exhibit filed with the Annual
Report on Form 10-K for fiscal year ended September 30, 1994 in
File
No. 1-3880.
(7) Incorporated by reference from Exhibit filed with the Annual
Report on Form 10-K for fiscal year ended September 30, 1995 in
File
No. 1-3880.
(D) Indebtedness to System Companies: None
<PAGE 16>
Item 6. OFFICERS AND DIRECTORS (Concluded)
Part III. Compensation of Directors and Executive Officers (Concluded)
(E) Participation in Bonus and Profit-Sharing Arrangements and Other
Benefits:
The information required by this item appears under "Directors'
Compensation," and "Executive Compensation," on Pages 6 to 7 and pages 8
to 21, respectively, of the National Fuel Gas Company Proxy Statement,
dated January 5, 1996, included as exhibit A(3) to this Form U5S and
incorporated herein by reference.
(F) Rights to Indemnity:
The information required by this item appears in Article II, Paragraph 8
of the National Fuel Gas Company By-Laws as amended through June 9, 1994. Such
By-Laws are listed as Exhibit B(1)(iii) to this Form U5S and are incorporated
herein by reference as indicated.
The Company also purchases directors and officers liability insurance
with a primary limit of $35 million and $40 million in excess coverage, and, in
recognition of the scope of the foregoing by-law indemnification, certain other
errors and omissions and general liability insurance coverages which are
applicable to all employees as insureds, including directors and officers.
<PAGE 17>
ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS
<TABLE>
<CAPTION>
Amount
Name of Recipient Accounts Charged Per Books Fiscal Year Ended
Name of Company or Beneficiary Purpose of Disbursing Company September 30, 1995
--------------- ----------------- ------- -------------------------- ------------------
Tabulation showing expenditures, disbursements, or payments during the year, in
money, goods or services, directly or indirectly to or for the account of:
(1) Any political party, candidate for public office or holder of such office,
or any committee or agent therefor:
<S> <C> <C> <C> <C>
Distribution Corporation N/A *FEDPAC Misc. Income Deductions $8,976
Distribution Corporation N/A *NYPAC Misc. Income Deductions $9,221
Distribution Corporation N/A *PAPAC Misc. Income Deductions $5,793
Supply Corporation N/A *FEDPAC Misc. Income Deductions $4,833
Supply Corporation N/A *NYPAC Misc. Income Deductions $4,481
Supply Corporation N/A *PAPAC Misc. Income Deductions $3,704
* Company labor and expenses relating to administration of political action funds.
(2) Any citizens group or public relations counsel:
Distribution Corporation Alliance for a New
New York Civic Operation Expense $43,750
Distribution Corporation Greater Buffalo
Partnership Civic Operation Expense $31,923
Distribution Corporation 46 Beneficiaries Civic Operation Expense $30,462
Supply Corporation 6 Beneficiaries Civic Operation Expense $ 2,952
National Fuel Resources 3 Beneficiaries Civic Operation Expense $ 1,435
Seneca Resources 2 Beneficiaries Civic Operation Expense $ 635
The information called for by instruction 2 to Item 7 was compiled, and
memoranda from the applicable System Companies were received and are preserved
by the Registrant.
</TABLE>
<PAGE 18>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Part I. Intercompany sales and services
<TABLE>
<CAPTION>
(1) Salaries of officers of the Registrant
NATIONAL FUEL GAS COMPANY
-------------------------
REPORT OF OFFICERS' SALARIES
----------------------------
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
--------------------------------------------
Distribution Supply Seneca Data- Leidy
Parent Corp. Corp. Resources UCI Highland Track NFR Hub Total
------ ------------ ------ --------- --- -------- ----- --- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
B. J. Kennedy $73,983 $275,853 $418,611 $ 5,912 $3,940 $1,969 $3,941 $3,941 - $788,150
P. C. Ackerman 18,281 109,684 193,775 36,560 3,656 3,656 - - - 365,612
T. E. Burns* 509 5,584 3,092 915 40 28 2 13 - 10,183
A. M. Cellino 2,427 123,948 - - - - - - - 126,375
R. M. DiValerio** 8,183 - 155,467 - - - - - - 163,650
J. P. Pawlowski 10,144 112,991 58,206 19,964 776 603 53 138 - 202,875
G. T. Wehrlin 56,494 82,956 43,090 14,539 571 440 38 112 4,635 202,875
* Retired effective November 1, 1994.
** Retired effective October 1, 1995
</TABLE>
<PAGE 19>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued)
Part I. Intercompany sales and services (Continued)
<TABLE>
<CAPTION>
(2) Services rendered by Statutory Subsidiaries
DISTRIBUTION CORPORATION
------------------------
REPORT OF INTERCOMPANY SALES AND SERVICES
-----------------------------------------
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
--------------------------------------------
(THOUSANDS OF DOLLARS)
----------------------
Common Expenses
----------------------------------------------------------------------------
Public
Relations Materials Industrial
Receiving Company Executive Purchasing Common Management Accounting Engineering
- - ----------------- --------- ---------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Supply Corporation $ 798 $225 $280 $493 $1,169 $224
Seneca Resources 274 15 11 - 111 -
UCI 15 1 1 - 6 -
Highland 19 1 1 - 7 -
Data-Track 2 - - - 1 -
NFR 5 - - - 2 -
------ ---- ---- ---- ------ ----
$1,113 $242 $293 $493 $1,296 $224
====== ==== ==== ==== ====== ====
</TABLE>
<TABLE>
<CAPTION>
Clearing Accounts and Direct Charges
------------------------------------------------------------------------------------
Data Material,
Processing Telecom- Risk Operations & Issues & Gas
Receiving Company - Other munications Land Management Construction Transfers Planning
- - ----------------- ---------- ----------- ---- ---------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Supply Corporation $1,325 $ 11 $215 $298 $607 $661 $ 5
Seneca Resources 129 3 12 - 1 1 -
UCI - - - - - - -
Highland - - - - - - -
Data-Track - - - - 42 6 -
NFR - - - - - 2 -
Leidy Hub - - - - - - -
Horizon - - - - - - -
------ ---- ---- ---- ---- ---- ----
$1,454 $ 14 $227 $298 $650 $670 $ 5
====== ==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Clearing Accounts and Direct Charges Continued
---------------------------------------------------------------
Convenience or
Facilities Accomodation
Receiving Company Valuation Management Accounting Purchasing Payments *
- - ----------------- --------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Supply Corporation $2 $116 $ - $ 1 $7,680
Seneca Resources - - - - 1,464
UCI - - - - 1,134
Highland - - - - 5
Data-Track - - - - 78
NFR - - 7 - 132
Leidy Hub - - - - 1
Horizon - - 8 - -
-- ---- ---- ---- -------
$2 $116 $ 15 $ 1 $10,494
== ==== ==== ==== =======
</TABLE>
* Analysis of Convenience or Accommodation Payments is presented on page 21.
<PAGE 20>
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------
Public Affairs Data Human Government
Administration Processing Resources Legal Finance Affairs
- - -------------- ---------- --------- ----- ------- ----------
<C> <C> <C> <C> <C> <C>
$ 90 $441 $421 $ 2 $1,229 $ 92
- 8 147 1 115 -
- - 9 - 6 -
- 1 10 - 8 -
- - 1 - 1 -
- - 2 - 2 -
---- ---- ---- --- ------ ----
$ 90 $450 $590 $ 3 $1,361 $ 92
==== ==== ==== === ====== ====
</TABLE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------------------------------------------------
Messenger Revenue Government Gas Materials Energy Training &
Expense Legal Executive Recovery Engineering Finance Affairs Control Management Services Development Administration
- - --------- ----- --------- -------- ----------- ------- ---------- ------- ---------- -------- ----------- --------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$51 $ 2 $ 77 $ - $20 $113 $53 $5 $40 $15 $45 $ -
3 10 22 - - 18 - - - - - -
- - 20 - - 43 - - - - - -
- - 8 - - - - - - - - -
- - - 17 - - - - - - - -
- 9 - - - 17 - - - - - 1
- - 9 - - - - - - - - -
- - - - - 8 - - - - - -
--- --- ---- --- --- ---- --- --- --- --- --- ---
$54 $21 $136 $17 $20 $199 $53 $5 $40 $15 $45 $ 1
=== === ==== === === ==== === === === === === ===
</TABLE>
Total
Services Rendered
by Statutory Subsidiaries
- - -------------------------
$16,806
2,345
1,235
60
148
179
10
16
-------
$20,799
=======
<PAGE 21>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued)
Part I. Intercompany sales and services (Continued)
<TABLE>
<CAPTION>
(2) Services rendered by Statutory Subsidiaries (Continued)
DISTRIBUTION CORPORATION
------------------------
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS
-------------------------------------------------
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
--------------------------------------------
(THOUSANDS OF DOLLARS)
----------------------
Receiving Company
---------------------------------------------------------------
Supply Seneca Data- Leidy
Corporation Resources UCI Highland Track NFR Hub Total
----------- --------- --- -------- ----- --- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Material $ 798 $ - $ - $- $ - $ 24 $- $ 822
Rents 291 36 - - - - - 327
Transportation 8 - - - 1 - - 9
Utilities 279 17 7 - 28 - - 331
Contractors &
Outside Services 421 34 41 - - 2 - 498
Equipment Purchases
& Rentals 970 26 586 - 32 14 - 1,628
Employee Benefits 784 119 82 5 - 1 - 991
Office Expense 674 74 46 - 4 4 1 803
Dues & Subscriptions 360 - - - - - - 360
Postage 21 5 - - 12 1 - 39
Other Insurance 1,054 1,129 354 - - 80 - 2,617
Injuries and Damages - - 11 - - - - 11
Advertising 1 1 - - - - - 2
Environmental 11 - - - - - - 11
Other 2,008 23 7 - 1 6 - 2,045
------ ------ ------ -- --- ---- -- -------
$7,680 $1,464 $1,134 $5 $78 $132 $1 $10,494
====== ====== ====== == === ==== == =======
</TABLE>
<PAGE 22>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued)
Part I. Intercompany sales and services (Continued)
(2) Services rendered by Statutory Subsidiaries (Continued)
SUPPLY CORPORATION
------------------
REPORT OF INTERCOMPANY SALES AND SERVICES
-----------------------------------------
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
--------------------------------------------
(THOUSANDS OF DOLLARS)
----------------------
Clearing Accounts and Direct Charges
--------------------------------------------------------------
Human Operations & Contract
Receiving Company Engineering Resources Land Geology Construction Legal Admin.
- - ----------------- ----------- --------- ---- ------- ------------ ----- --------
Distribution Corp. $590 $165 $225 $ - $2,202 $33 $40
Seneca Resources 1 - 137 15 81 - -
UCI - - - - 6 - -
Highland - - - - - - -
Data Track - - - - - - -
NFR - - - - - - -
---- ---- ---- --- ------ --- ---
$591 $165 $362 $15 $2,289 $33 $40
==== ==== ==== === ====== === ===
Clearing Accounts and Direct Charges Continued
------------------------------------------------------------
Total Services
Material Convenience or Rendered By
Issues & Gas Accommodation Statutory
Receiving Company Transfers Control Executive Payments* Subsidiaries
- - ----------------- --------- ------- --------- -------------- -------------
Distribution Corp. $652 $795 $ 23 $5,313 $10,038
Seneca Resources 13 - 4 827 1,078
UCI - 57 69 40 172
Highland - - 3 39 42
Data Track - - 5 1 6
NFR - - 1 16 17
---- ---- ---- ------ -------
$665 $852 $105 $6,236 $11,353
==== ==== ==== ====== =======
* Analysis of Convenience or Accommodation Payments is presented on page 23.
<PAGE 23>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued)
Part I. Intercompany sales and services (Continued)
(2) Services rendered by Statutory Subsidiaries (Continued)
SUPPLY CORPORATION
------------------
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS
-------------------------------------------------
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
--------------------------------------------
(THOUSANDS OF DOLLARS)
----------------------
Receiving Company
----------------------------------------------------------
Distribution Seneca Data
Corporation Resources UCI Highland NFR Track Total
------------ --------- --- -------- --- ----- -----
Material $ 127 $ 8 $ - $ - $ 6 $- $ 141
Rents 3,023 54 - - 10 - 3,087
Transportation 6 3 - - - - 9
Utilities 81 15 - - - 1 97
Contractors &
Outside Services 310 48 - - - - 358
Equipment Purchases
& Rentals 787 4 - - - - 791
Employee Benefits 47 3 - - - - 50
Office Expense 304 16 - - - - 320
Dues & Subscriptions 19 - - - - - 19
Aircraft Expense - - (4) - - - (4)
Environmental 1 20 - - - - 21
Other Insurance 60 18 40 - - - 118
Postage 1 - - - - - 1
Production Clearing - 555 - - - - 555
Other 547 83 4 39 - - 673
------ ---- --- --- --- -- ------
$5,313 $827 $40 $39 $16 $1 $6,236
====== ==== === === === == ======
<PAGE 24>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued)
Part I. Intercompany sales and services (Continued)
(2) Services rendered by Statutory Subsidiaries (Continued)
SENECA RESOURCES
----------------
REPORT OF INTERCOMPANY SALES AND SERVICES
-----------------------------------------
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
--------------------------------------------
(THOUSANDS OF DOLLARS)
----------------------
Convenience or Total
Accommodation Services Rendered By
Receiving Company Operations Payments Statutory Subsidiaries
- - ----------------- ---------- -------------- ----------------------
Distribution Corporation $ 3 $230 $233
Supply Corporation - 26 26
Highland - 155 155
UCI - 39 39
NFR 9 160 169
Data-Track - 4 4
---- ---- ----
$ 12 $614 $626
==== ==== ====
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS
-------------------------------------------------
Receiving Company
----------------------------------------------------------
Distribution Supply Data
Corporation Corporation Highland NFR Track UCI Total
------------ ----------- -------- --- ----- --- -----
Employee Benefits $ - $20 $ - $ 4 $- $ - $ 24
Rent - 3 - 34 - - 37
Office Expense 3 2 6 1 4 1 17
Contractors and
Outside Services 1 16 8 - - 25
Other Insurance 113 - 35 - - - 148
Utilities - - - 3 - - 3
Other 13 - 98 110 - 38 259
Equipment Purch. 101 - - - - - 101
---- --- ---- ---- -- --- ----
$230 $26 $155 $160 $4 $39 $614
==== === ==== ==== == === ====
<PAGE 25>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued)
Part I. Intercompany sales and services (Continued)
(2) Services rendered by Statutory Subsidiaries (Continued)
UCI
---
REPORT OF INTERCOMPANY SALES AND SERVICES
-----------------------------------------
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
--------------------------------------------
(THOUSANDS OF DOLLARS)
----------------------
Construction
Receiving Company Services
- - ----------------- ------------
Distribution Corporation $ 237
Supply Corporation 3,390
Seneca Resources 249
Highland 39
------
$3,915
======
HIGHLAND
--------
REPORT OF INTERCOMPANY SALES AND SERVICES
-----------------------------------------
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
--------------------------------------------
(THOUSANDS OF DOLLARS)
----------------------
Right-of-Way Clearing
Receiving Company and Logging
- - ----------------- ---------------------
Supply Corporation $ 9
Seneca Resources 154
----
$163
====
<PAGE 26>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued)
Part I. Intercompany sales and services (Concluded)
(2) Services rendered by Statutory Subsidiaries (Concluded)
DATA-TRACK
----------
REPORT OF INTERCOMPANY SALES AND SERVICES
-----------------------------------------
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
--------------------------------------------
(THOUSANDS OF DOLLARS)
----------------------
Convenience
or Total Services
Accommodation Collection Rendered by
Receiving Company Payments Services Statutory Subsidiaries
- - ----------------- ------------- ---------- ----------------------
Distribution
Corporation $3 $413 $416
Supply Corporation 2 - 2
-- ---- ----
$5 $413 $418
== ==== ====
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS
-------------------------------------------------
Receiving Company
---------------------------------
Distribution Supply
Corporation Corporation Total
------------ ----------- -----
Utilities $3 $2 $5
-- -- --
$3 $2 $5
== == ==
(3) Services rendered by Registrant
No services were rendered for a charge by the Registrant to any
of its subsidiaries during the fiscal year ended September 30,
1995.
<PAGE 27>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Concluded)
Part II. Contracts to purchase services or goods between any System
company and any affiliate at September 30, 1995:
None
Part III. Employment of any person by any System company for the
performance on a continuing basis of management services:
Description of Contract and Annual
Name Scope of Services Consideration
--------------- --------------------------- -------------
Joseph Maljovec Performs management and $55,536
consulting services for the
Registrant's wholly-owned
sawmill subsidiary, Highland
Land & Minerals, Inc.
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES
Not applicable.
<PAGE 28>
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
Page
Report of Independent Accountants 28
National Fuel Gas Company and Subsidiaries:
Consolidated and Consolidating Balance Sheet at
September 30, 1995, and Consolidated Balance
Sheet at September 30, 1994 31 - 34
Consolidated and Consolidating Statement of Income
for the Fiscal Year Ended September 30, 1995, and
Consolidated Statement of Income for the Fiscal
Years Ended September 30, 1994 and 1993 35 - 36
Consolidated and Consolidating Statement of
Earnings Reinvested in the Business for the
Fiscal Year Ended September 30, 1995, and the
Consolidated Statement of Earnings Reinvested
in the Business for the Fiscal Years Ended
September 30, 1994 and 1993 37 - 38
Consolidated and Consolidating Statement of
Cash Flows for the Fiscal Year Ended
September 30, 1995, and the Consolidated
Statement of Cash Flows for the Fiscal Years
Ended September 30, 1994 and 1993 39 - 42
Notes to Consolidated Financial Statements for
Fiscal Years 1995, 1994 and 1993 *
* The Notes to Consolidated Financial Statements included in Item 8 of
National Fuel Gas Company's Form 10-K for the fiscal year ended September
30, 1995, are incorporated herein by reference.
<PAGE 29>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of
National Fuel Gas Company
In our opinion, the consolidated financial statements listed in the index
appearing under Item 10 on Page 28 present fairly, in all material respects, the
financial position of National Fuel Gas Company and its subsidiaries at
September 30, 1995 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended September 30, 1995, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Notes A and G to the consolidated financial statements which are
incorporated by reference on Page 28, the Company adopted the new accounting
standards for postretirement benefits other than pensions, income taxes and
other postemployment benefits in fiscal 1994.
Our audit was made for the purpose of forming an opinion on the consolidated
financial statements taken as a whole. The consolidating information on Pages 31
through 42 is presented for purposes of additional analysis rather than to
present financial position, results of operations and cash flows of the
individual companies. Accordingly, we do not express an opinion on the financial
position, results of operations and cash flows of the individual companies.
However, the consolidating information on Pages 31 through 42 has been subjected
to the auditing procedures applied in the audit of the consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the consolidated financial statements taken as a whole.
PRICE WATERHOUSE LLP
Buffalo, New York
October 27, 1995
<PAGE 30>
THIS PAGE LEFT BLANK INTENTIONALLY
<PAGE 31>
<TABLE>
<CAPTION>
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AT SEPTEMBER 30, 1995
( THOUSANDS OF DOLLARS )
National National Highland
National Fuel Gas Fuel Gas Seneca Land &
Fuel Gas Distribution Supply Resources Leidy Hub, Minerals,
Company Corporation Corporation Corporation Inc. Inc.
--------- ------------ ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
PROPERTY, PLANT & EQUIPMENT:
Gas Utilities $ 0 $1,088,325 $678,642 $ 0 $ 0 $ 0
Non-Utilities 244 80 14 550,938 3 3,157
---------- ---------- -------- -------- ----- ------
244 1,088,405 678,656 550,938 3 3,157
Less: Accumulated Depreciation,
Depletion and Amortization 113 265,641 215,010 190,828 3 1,170
---------- ---------- -------- -------- ----- ------
131 822,764 463,646 360,110 0 1,987
---------- ---------- -------- -------- ----- ------
CURRENT ASSETS:
Cash and Temporary Cash Investments 7,125 1,776 833 1,285 76 37
Notes Receivable - Intercompany 257,000 0 13,100 0 0 2,100
Allowance for Uncollectible Accounts 0 (4,734) 0 (124) 0 0
Accounts Receivable - Intercompany 12,428 10,418 12,290 1,255 0 240
Accounts Receivable 8,374 53,287 7,497 6,119 1 433
Unbilled Utility Revenue 0 20,838 0 0 0 0
Dividends Receivable - Intercompany 14,355 0 0 0 0 0
Materials and Supplies - at
average cost 0 8,301 14,016 1,547 0 529
Gas Stored Underground 0 25,589 0 0 0 0
Prepayments 649 21,602 5,342 1,780 6 105
---------- ---------- -------- -------- ----- ------
299,931 137,077 53,078 11,862 83 3,444
---------- ---------- -------- -------- ----- ------
OTHER ASSETS:
Recoverable Future Taxes 0 88,778 5,275 0 0 0
Unamortized Debt Expense 4,941 17,412 4,623 0 0 0
Other Regulatory Assets 0 34,981 2,059 0 0 0
Deferred Charges 2,579 1,388 5,443 450 2 0
Investment in Associated Companies 732,329 0 61 0 0 0
Notes of Subsidiaries 524,965 0 0 0 0 0
Other 3,742 8,874 5,047 918 111 0
---------- ---------- -------- -------- ---- ------
1,268,556 151,433 22,508 1,368 113 0
---------- ---------- -------- -------- ---- ------
$1,568,618 $1,111,274 $539,232 $373,340 $196 $5,431
========== ========== ======== ======== ==== ======
See Notes to Consolidated Financial Statements included in Item 8 of National
Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1995,
incorporated herein by reference.
</TABLE>
<PAGE 32>
<TABLE>
<CAPTION>
Consolidated Balance Sheet
Data-Track National Horizon National Fuel Gas Company
Utility Account Fuel Energy Total Before Eliminations and Subsidiaries
Constructors, Services, Resources, Development Eliminations & Adjustments September 30,
Inc. Inc. Inc. Inc. & Adjustments Dr (Cr) 1995 1994
- - ------------- ---------- ---------- ----------- ------------- ------------- ------------ -------------
<C> <C> <C> <C> <C> <C> <C> <C>
$ 0 $ 0 $ 0 $ 0 $1,766,967 $ 0 $1,766,967 $1,679,066
683 111 68 70 555,368 0 555,368 490,001
------ ---- ------ ------ ---------- ----------- ---------- ----------
683 111 68 70 2,322,335 0 2,322,335 2,169,067
370 3 15 0 673,153 0 673,153 623,517
------ ---- ------ ------ ---------- ----------- ---------- ----------
313 108 53 70 1,649,182 0 1,649,182 1,545,550
------ ---- ------ ------ ---------- ----------- ---------- ----------
77 120 749 632 12,710 47 12,757 29,016
800 400 4,400 0 277,800 (277,800) 0 0
(332) 0 (734) 0 (5,924) 0 (5,924) (5,055)
33 23 32 0 36,719 (36,719) 0 0
302 0 3,944 0 79,957 1,900 81,857 100,549
0 0 0 0 20,838 0 20,838 17,311
0 0 0 0 14,355 (14,355) 0 0
18 0 0 0 24,411 (37) 24,374 23,796
0 0 0 0 25,589 0 25,589 31,900
134 0 160 0 29,778 (25) 29,753 20,609
------ ---- ------ ------ ---------- ----------- ---------- ----------
1,032 543 8,551 632 516,233 (326,989) 189,244 218,126
------ ---- ------ ------ ---------- ----------- ---------- ----------
0 0 0 0 94,053 0 94,053 99,742
0 0 0 0 26,976 0 26,976 28,396
0 0 0 0 37,040 0 37,040 47,737
0 3 8 712 10,585 (1,932) 8,653 15,797
0 0 0 0 732,390 (732,390) 0 0
0 0 0 0 524,965 (524,965) 0 0
2,259 0 1,157 0 22,108 11,046 33,154 26,309
------ ---- ------ ------ ---------- ----------- ---------- ----------
2,259 3 1,165 712 1,448,117 (1,248,241) 199,876 217,981
------ ---- ------ ------ ---------- ----------- ---------- ----------
$3,604 $654 $9,769 $1,414 $3,613,532 $(1,575,230) $2,038,302 $1,981,657
====== ==== ====== ====== ========== =========== ========== ==========
</TABLE>
<PAGE 33>
<TABLE>
<CAPTION>
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AT SEPTEMBER 30, 1995
( THOUSANDS OF DOLLARS )
National National Highland
National Fuel Gas Fuel Gas Seneca Land &
Fuel Gas Distribution Supply Resources Leidy Hub Minerals,
Company Corporation Corporation Corporation Inc. Inc.
-------- ------------ ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common Stock, $1 Par Value
Authorized - 100,000,000 Shares;
Issued and Outstanding - 37,434,363
Shares and 37,278,409 Shares,
Respectively $ 37,434 $ 0 $ 0 $ 0 $ 0 $ 0
Capital Stock of Subsidiaries 0 59,170 25,345 500 4 4
Paid in Capital 383,031 121,668 35,894 104,035 1,038 446
Earnings Reinvested in the Business 380,123 204,935 145,679 10,691 (817) 4,437
---------- ---------- -------- -------- ------ ------
Total Common Stock Equity 800,588 385,773 206,918 115,226 225 4,887
Long-Term Debt, Net of Current Portion 474,000 0 0 0 0 0
Notes Payable - Intercompany 0 276,000 180,965 68,000 0 0
---------- ---------- -------- -------- ------ ------
Total Capitalization 1,274,588 661,773 387,883 183,226 225 4,887
---------- ---------- -------- -------- ------ ------
CURRENT AND ACCRUED LIABILITIES:
Notes Payable to Banks and
Commercial Paper 147,600 0 0 0 0 0
Notes Payable - Intercompany 20,800 103,100 48,000 105,700 200 0
Current Portion of Long-Term Debt 88,500 0 0 0 0 0
Accounts Payable 145 37,927 8,162 8,078 0 5
Amounts Payable to Customers 0 50,541 460 0 0 0
Accounts Payable - Intercompany 9,959 13,465 8,886 1,901 4 358
Dividends Payable - Intercompany 0 8,392 5,528 0 0 200
Other Accruals and Current Liabilities 25,366 18,148 9,855 (428) (359) (2)
---------- ---------- -------- -------- ------ ------
292,370 231,573 80,891 115,251 (155) 561
---------- ---------- -------- -------- ------ ------
DEFERRED CREDITS:
Accumulated Deferred Income Taxes (460) 153,494 63,055 72,699 126 (27)
Taxes Refundable to Customers 0 22,479 601 0 0 0
Unamortized Investment Tax Credit 0 12,957 423 0 0 0
Other Deferred Credits 2,120 28,998 6,379 2,164 0 10
---------- ---------- -------- -------- ------ ------
1,660 217,928 70,458 74,863 126 (17)
---------- ---------- -------- -------- ------ ------
$1,568,618 $1,111,274 $539,232 $373,340 $ 196 $5,431
========== ========== ======== ======== ====== ======
See Notes to Consolidated Financial Statements included in Item 8 of National
Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1995, incorporated
herein by reference.
</TABLE>
<PAGE 34>
<TABLE>
<CAPTION>
Consolidated Balance Sheet
Data-Track National Horizon National Fuel Gas Company
Utility Account Fuel Energy Total Before Eliminations and Subsidiaries
Constructors, Services, Resources, Development, Eliminations & Adjustments September 30,
Inc. Inc. Inc. Inc. & Adjustments (Dr) Cr 1995 1994
- - ------------- --------- ---------- ------------ ------------- ------------- ------------- --------------
<C> <C> <C> <C> <C> <C> <C> <C>
$ 0 $ 0 $ 0 $ 0 $ 37,434 $ 0 $ 37,434 $ 37,278
1 1 10 1 85,036 (85,036) 0 0
5,759 499 3,490 1,000 656,860 (273,829) 383,031 379,156
(1,626) 112 3,751 (163) 747,122 (366,999) 380,123 363,854
------ ---- ------ ------ ---------- ----------- ---------- ----------
4,134 612 7,251 838 1,526,452 (725,864) 800,588 780,288
0 0 0 0 474,000 0 474,000 462,500
0 0 0 0 524,965 (524,965) 0 0
------ ---- ------ ------ ---------- ----------- ---------- ----------
4,134 612 7,251 838 2,525,417 (1,250,829) 1,274,588 1,242,788
------ ---- ------ ------ ---------- ----------- ---------- ----------
0 0 0 0 147,600 0 147,600 112,500
0 0 0 0 277,800 (277,800) 0 0
0 0 0 0 88,500 0 88,500 96,000
50 8 860 25 55,260 (1,418) 53,842 68,293
0 0 0 0 51,001 0 51,001 38,714
0 11 850 639 36,073 (36,073) 0 0
200 0 35 0 14,355 (14,355) 0 0
(968) 27 479 0 52,118 0 52,118 59,742
------ ---- ------ ------ ---------- ----------- ---------- ----------
(718) 46 2,224 664 722,707 (329,646) 393,061 375,249
------ ---- ------ ------ ---------- ----------- ---------- ----------
(534) (1) (147) (88) 288,117 646 288,763 273,560
0 0 0 0 23,080 0 23,080 31,688
0 0 0 0 13,380 0 13,380 14,057
722 (3) 441 0 40,831 4,599 45,430 44,315
------ ---- ------ ------ ---------- ----------- ---------- ----------
188 (4) 294 (88) 365,408 5,245 370,653 363,620
------ ---- ------ ------ ---------- ----------- ---------- ----------
$3,604 $654 $9,769 $1,414 $3,613,532 $(1,575,230) $2,038,302 $1,981,657
====== ==== ====== ====== ========== =========== ========== ==========
</TABLE>
<PAGE 35>
<TABLE>
<CAPTION>
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
( THOUSANDS OF DOLLARS )
National National Highland
National Fuel Gas Fuel Gas Seneca Land &
Fuel Gas Distribution Supply Resources Leidy Hub Minerals,
Company Corporation Corporation Corporation Inc. Inc.
--------- ------------ ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Gas Sales $ 0 $743,996 $ 0 $ 1,244 $ 0 $ 0
Other Operating Revenues 0 42,068 164,587 60,079 0 7,985
-------- -------- -------- ------- ----- ------
0 786,064 164,587 61,323 0 7,985
-------- -------- -------- ------- ----- ------
OPERATING EXPENSE:
Purchased Gas 0 399,073 0 1,015 0 0
Operation Expense 3,756 175,911 58,801 19,272 619 6,756
Maintenance 0 17,723 7,986 10 0 0
Property, Franchise & Other Taxes 619 79,530 10,596 790 0 88
Depreciation, Depletion & Amortization 6 30,052 19,320 21,511 0 207
Income Taxes - Net 393 21,190 18,520 2,909 (187) 483
-------- -------- -------- ------- ----- ------
4,774 723,479 115,223 45,507 432 7,534
-------- -------- -------- ------- ----- ------
Operating Income ( Loss ) (4,774) 62,585 49,364 15,816 (432) 451
-------- -------- -------- ------- ----- ------
OTHER INCOME:
Unremitted Earnings of Subsidiaries 22,076 0 0 0 0 0
Dividends from Subsidiaries 53,495 0 0 0 0 0
Interest-Intercompany 54,090 74 1,282 0 0 147
Other 494 1,268 250 174 97 49
-------- -------- -------- ------- ----- ------
130,155 1,342 1,532 174 97 196
-------- -------- -------- ------- ----- ------
Income (Loss) Before Interest Charges 125,381 63,927 50,896 15,990 (335) 647
-------- -------- -------- ------- ----- ------
INTEREST CHARGES:
Interest on Long-Term Debt 40,896 0 0 0 0 0
Interest-Intercompany 1,837 26,913 17,942 8,987 11 0
Other Interest 6,754 4,637 1,346 266 0 0
-------- -------- -------- ------- ----- ------
49,487 31,550 19,288 9,253 11 0
-------- -------- -------- ------- ----- ------
Income Before Cumulative Effect 75,894 32,377 31,608 6,737 (346) 647
Cumulative Effect of Changes in
Accounting 0 0 0 0 0 0
-------- -------- -------- ------- ----- ------
Net Income (Loss) Available for Common Stock $ 75,894 $ 32,377 $ 31,608 $ 6,737 $(346) $ 647
======== ======== ======== ======= ===== ======
* Includes revenues from affiliates and non-affiliates of $ 3,915 and $ 3,528, respectively.
See Notes to Consolidated Financial Statements included in Item 8 of National
Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1995,
incorporated herein by reference.
</TABLE>
<PAGE 36>
<TABLE>
<CAPTION>
Consolidated Statement of Income
National Fuel Gas Company
Data-Track National Horizon and Subsidiaries
Utility Account Fuel Energy Total Before Eliminations & For the Fiscal Year Ended
Constructors, Services, Resources, Development, Eliminations Adjustments September 30,
Inc. Inc. Inc. Inc. & Adjustments (Dr) Cr 1995 1994 1993
- - ------------- ---------- ---------- ------------ ------------- -------------- ------------ ----------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0 $ 0 $40,628 $ 0 $ 785,868 $ (17) $ 785,851 $ 943,700 $ 846,391
7,443 412 239 0 282,813 (93,168) 189,645 197,624 173,991
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
7,443* 412 40,867 0 1,068,681 (93,185) 975,496 1,141,324 1,020,382
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
0 0 36,616 0 436,704 85,610 351,094 497,687 409,005
8,388 382 1,802 250 275,937 9,151 266,786 260,411 258,918
0 0 0 0 25,719 0 25,719 30,979 24,312
130 2 82 0 91,837 0 91,837 103,788 95,393
675 2 9 0 71,782 0 71,782 74,764 69,425
(389) 21 1,026 (87) 43,879 0 43,879 47,792 41,046
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
8,804 407 39,535 163 945,858 94,761 851,097 1,015,421 898,099
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
(1,361) 5 1,332 (163) 122,823 1,576 124,399 125,903 122,283
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
0 0 0 0 22,076 22,076 0 0 0
0 0 0 0 53,495 53,495 0 0 0
29 24 282 0 55,928 55,928 0 0 0
3,017 0 29 0 5,378 0 5,378 3,656 4,833
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
3,046 24 311 0 136,877 131,499 5,378 3,656 4,833
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
1,685 29 1,643 (163) 259,700 (129,923) 129,777 129,559 127,116
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
0 0 0 0 40,896 0 40,896 36,699 38,507
237 0 0 0 55,927 55,927 0 0 0
4 0 17 0 13,024 37 12,987 10,425 13,392
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
241 0 17 0 109,847 55,964 53,883 47,124 51,899
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
1,444 29 1,626 (163) 149,853 (73,959) 75,894 82,435 75,217
0 0 0 0 0 0 0 3,237 0
------ ---- ------- ----- ---------- -------- ----------- ----------- -----------
$1,444 $ 29 $ 1,626 $(163) $ 149,853 $(73,959) $ 75,894 $ 85,672 $ 75,217
====== ==== ======= ===== ========== ======== =========== =========== ===========
Earnings Per Common Share
Income Before Cumulative Effect $2.03 $2.23 $2.15
Cumulative Effect of Changes in Accounting 0 0.09 0
----- ----- -----
Net Income Available for Common Stock $2.03 $2.32 $2.15
===== ===== =====
Weighted Average Common Shares Outstanding 37,396,875 37,046,249 34,938,722
========== ========== ==========
</TABLE>
<PAGE 37>
<TABLE>
<CAPTION>
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF EARNINGS REINVESTED IN THE BUSINESS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
( THOUSANDS OF DOLLARS )
National National Highland
National Fuel Gas Fuel Gas Seneca Land &
Fuel Gas Distribution Supply Resources Leidy Hub Minerals,
Company Corporation Corporation Corporation Inc. Inc.
--------- ------------ ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS REINVESTED IN THE BUSINESS
Balance at Beginning of Year $363,854 $205,226 $134,663 $ 5,004 $(471) $3,990
Net Income ( Loss ) Available
for Common Stock 75,894 32,377 31,608 6,737 (346) 647
Dividends on Common Stock
( 1995 - $1.60; 1994 - $1.56 ;
1993 - $1.52 per share ) (59,625) (32,668) (20,592) 0 0 (200)
Adjustment:
DD&A Adjustment (1) 0 0 0 (1,050) 0 0
-------- -------- -------- ------ ----- ------
Balance at End of Year $380,123 $204,935 $145,679 $10,691 $(817) $4,437
======== ======== ======== ======= ===== ======
</TABLE>
<TABLE>
<CAPTION>
At September 30, 1995
---------------------
<S> <C>
Intercompany Eliminations:
Earnings Reinvested in the Business:
Unremitted Earnings of Subsidiaries
Since Acquisition $366,430
Earnings Reinvested in the Business
of Subsidiaries at Acquisition 7,095
Consolidating Adjustment (6,526)
--------
$366,999
========
Net Income available for Common Stock:
Subsidiaries - Dividends on
Common Stock $53,495
Unremitted Earnings of Subsidiaries 22,076
Consolidating Adjustment (1,612)
-------
$73,959
=======
See Notes to Consolidated Financial Statements included in Item 8 of National
Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1995,
incorporated herein by reference.
</TABLE>
<PAGE 38>
<TABLE>
<CAPTION>
Consolidated Statement of Earnings
Reinvested in the Business
Data-Track National Horizon National Fuel Gas Company
Utility Account Fuel Energy Total Before Eliminations and Subsidiaries
Constructors, Services, Resources, Development, Eliminations & Adjustments For the Fiscal Year Ended September 30,
Inc. Inc. Inc. Inc. & Adjustments ( Dr ) Cr 1995 1994 1993
- - ------------- ---------- ---------- ------------ -------------- -------------- ------- ---------- ---------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$(3,070) $ 83 $2,160 $ 0 $711,439 $(347,585) $363,854 $335,907 $314,334
1,444 29 1,626 (163) 149,853 (73,959) 75,894 85,672 75,217
0 0 (35) 0 (113,120) 53,495 (59,625) (57,725) (53,644)
0 0 0 0 (1,050) 1,050 0 0 0
------- ---- ------ ----- -------- --------- -------- -------- --------
$(1,626) $112 $3,751 $(163) $747,122 $(366,999) $380,123 $363,854 $335,907
======= ==== ====== ===== ======== ========= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
ANALYSIS OF INVESTMENTS IN ASSOCIATED COMPANIES AT SEPTEMBER 30, 1995
Par or Earnings Total Investment
Stated Value Reinvested in Unremitted in Associated
of Paid the Business Earnings Companies
Subsidiary in at Since at
Stock Capital Acquisition Acquisition Equity
------------- ------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Registrant:
Distribution Corporation $59,170 $121,668 $4,636 $200,299 $385,773
Supply Corporation 25,345 35,833 2,453 143,226 206,857
Seneca Resources 500 104,035 6 10,685 115,226
Leidy Hub 4 1,038 0 (817) 225
Highland 4 446 0 4,437 4,887
UCI 1 5,759 0 (1,626) 4,134
Data-Track 1 499 0 112 612
NFR 10 3,490 0 3,751 7,251
Horizon 1 1,000 0 (163) 838
Consolidating Adjustment 0 0 0 6,526 6,526
------- -------- ------ -------- --------
85,036 273,768 7,095 366,430 732,329
Supply Corporation:
Seneca Resources 0 61 0 0 61
------- -------- ------ -------- --------
$85,036 $273,829 $7,095 $366,430 $732,390
======= ======== ====== ======== ========
(1) Reflects reclassification of prior years consolidating DD & A adjustment
relating to the Company's exploration and production operations into Seneca
Resource's retained earnings.
</TABLE>
<PAGE 39>
<TABLE>
<CAPTION>
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
( THOUSANDS OF DOLLARS )
National National Highland
National Fuel Gas Fuel Gas Seneca Land &
Fuel Gas Distribution Supply Resources Leidy Hub, Minerals,
Company Corporation Corporation Corporation Inc. Inc.
-------- ------------ ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net Income (Loss) Available for Common Stock $75,894 $ 32,377 $31,608 $ 6,737 $(346) $647
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities
Cumulative Effect of Changes in
Accounting 0 0 0 0 0 0
Depreciation, Depletion and Amortization 6 30,052 19,320 21,511 0 207
Deferred Income Taxes (280) (3,913) 5,809 7,999 168 17
Other 835 663 (470) 0 0 0
Change in:
Receivables and Unbilled Utility Revenue (590) 10,311 (2,011) 3,565 5 17
Accounts Receivable - Intercompany 1,189 3,800 1,854 14 0 (59)
Gas Stored Underground
and Material and Supplies 0 6,331 (215) (220) 0 (146)
Unrecovered Purchased Gas Costs 0 0 0 0 0 0
Prepayments (424) (7,189) (1,522) 101 0 (26)
Accounts Payable (66) (3,624) (286) (10,898) 0 (11)
Amounts Payable to Customers 0 32,199 (19,912) 0 0 0
Accounts Payable - Intercompany 2,104 (6,111) (3,543) 1,513 3 53
Other Accruals and Current Liabilities (1,228) (7,705) 6,896 2,727 (407) (505)
Other Assets and Liabilities - Net (5,205) 18,540 (4,828) (168) 553 7
------- -------- ------- ------- ----- ----
Net Cash Provided by ( Used in ) Operating
Activities $72,235 $105,731 $32,700 $32,881 $ (24) $201
======= ======== ======= ======= ===== ====
See Notes to Consolidated Financial Statements included in Item 8 of National
Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1995, incorporated
herein by reference.
(Consolidating Statement of Cash Flows continues on pages 41 and 42.)
</TABLE>
<PAGE 40>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
National Fuel Gas Company
Data-Track National Horizon and Subsidiaries
Utility Account Fuel Energy Total Before For the Fiscal Year Ended
Constructors, Services, Resources, Development, Eliminations Eliminations September 30,
Inc. Inc. Inc. Inc. & Adjustments & Adjustments 1995 1994 1993
------------- ---------- ---------- ------------ ------------- ------------- ---------- ---------- ----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$1,444 $29 $1,626 $(163) $149,853 $(73,959) $ 75,894 $ 85,672 $ 75,217
0 0 0 0 0 0 0 (3,237) 0
675 2 9 0 71,782 0 71,782 74,764 69,425
(742) (1) (517) (88) 8,452 0 8,452 4,853 16,919
(2,555) 0 328 0 (1,199) 1,474 275 5,780 5,574
4,294 0 443 0 16,034 0 16,034 863 (21,531)
606 28 509 0 7,941 (7,941) 0 0 0
(17) 0 0 0 5,733 0 5,733 (15,539) 7,156
0 0 0 0 0 0 0 20,772 (7,739)
(57) 1 (28) 0 (9,144) 0 (9,144) (3,017) (1,489)
(1,326) (1) 325 25 (15,862) 1,411 (14,451) 23,774 (2,579)
0 0 0 0 12,287 0 12,287 (2,062) (18,808)
(32) (10) 220 639 (5,164) 5,164 0 0 0
(576) 26 (533) 0 (1,305) 0 (1,305) 3,072 15,249
238 (2) (322) (711) 8,102 (199) 7,903 3,534 (13,691)
------ --- ------ ----- -------- -------- -------- -------- --------
$1,952 $72 $2,060 $(298) $247,510 $(74,050) $173,460 $199,229 $123,703
====== === ====== ===== ======== ======== ======== ======== ========
</TABLE>
<PAGE 41>
<TABLE>
<CAPTION>
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS (CONCLUDED)
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
( THOUSANDS OF DOLLARS )
National National Highland
National Fuel Gas Fuel Gas Seneca Land &
Fuel Gas Distribution Supply Resources Leidy Hub, Minerals,
Company Corporation Corporation Corporation Inc. Inc.
--------- ------------ ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTING ACTIVITIES:
Capital Expenditures $ 0 $(64,844) $(38,677) $(78,085) $ 0 $(347)
Capital Contribution 0 0 0 0 0 0
Investment in Associated Companies (22,876) 0 0 0 0 0
Other 0 0 0 4,045 0 0
-------- -------- -------- -------- ---- -----
Net Cash Provided by ( Used in )
Investing Activities (22,876) (64,844) (38,677) (74,040) 0 (347)
-------- -------- -------- -------- ---- -----
FINANCING ACTIVITIES:
Change in Notes Payable to Banks
and Commercial Paper 35,100 0 0 0 0 0
Change in Notes Payable - Intercompany (21,800) (22,500) (1,900) 40,700 0 0
Change in Notes and Dividends
Receivable - Intercompany (11,507) 0 24,600 0 0 0
Proceeds from Issuance of Long - Term Debt 100,000 0 0 0 0 0
Reduction of Long - Term Debt (96,000) 0 0 0 0 0
Proceeds from Issuance of Common Stock 4,029 0 0 0 0 0
Dividends Paid on Common Stock (59,194) (31,744) (19,444) 0 0 0
-------- -------- -------- -------- ---- -----
Net Cash Provided by ( Used in )
Financing Activities (49,372) (54,244) 3,256 40,700 0 0
-------- -------- -------- -------- ---- -----
Net Increase ( Decrease ) in Cash and
Temporary Cash Investments (13) (13,357) (2,721) (459) (24) (146)
Cash and Temporary Cash Investments at
Beginning of Year 7,138 15,133 3,554 1,744 100 183
-------- -------- -------- -------- ---- -----
Cash and Temporary Cash Investments at
End of Year $ 7,125 $ 1,776 $ 833 $ 1,285 $ 76 $ 37
======== ======== ======== ======== ==== =====
See Notes to Consolidated Financial Statements included in Item 8 of National
Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1995, incorporated
herein by reference.
</TABLE>
<PAGE 42>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
National Fuel Gas Company
Data-Track National Horizon and Subsidiaries
Utility Account Fuel Energy Total Before For the Fiscal Year Ended
Constructors, Services, Resources, Development, Eliminations Eliminations September 30,
Inc. Inc. Inc. Inc. & Adjustments & Adjustments 1995 1994 1993
- - ------------- ---------- ---------- ------------ ------------- ------------- ---------- ----------- -----------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$ (727) $(26) $ (50) $ (70) $(182,826) $ 0 $(182,826) $(135,084) $(131,926)
0 0 0 1,000 1,000 (1,000) 0 0 0
0 0 0 0 (22,876) 22,876 0 0 0
6,855 0 (254) 0 10,646 0 10,646 3,586 225
------- ---- ------- ------ --------- ------ --------- --------- ---------
6,128 (26) (304) 930 (194,056) 21,876 (172,180) (131,498) (131,701)
------- ---- ------- ------ --------- ------ --------- --------- ---------
0 0 0 0 35,100 0 35,100 (84,300) (30,200)
(7,300) 0 0 0 (12,800) 12,800 0 0 0
(800) 0 (2,000) 0 10,293 (10,293) 0 0 0
0 0 0 0 100,000 0 100,000 100,000 129,000
0 0 0 0 (96,000) 0 (96,000) (19,917) (180,083)
0 0 0 0 4,029 (1,474) 2,555 9,064 78,822
0 0 0 0 (110,382) 51,188 (59,194) (57,157) (52,224)
------- ---- ------- ------ --------- ------ --------- --------- ---------
(8,100) 0 (2,000) 0 (69,760) 52,221 (17,539) (52,310) (54,685)
------- ---- ------- ------ --------- ------ --------- --------- ---------
(20) 46 (244) 632 (16,306) 47 (16,259) 15,421 (62,683)
97 74 993 0 29,016 0 29,016 13,595 76,278
------- ---- ------- ------ --------- ------ --------- --------- ---------
$ 77 $120 $ 749 $ 632 $ 12,710 $ 47 $ 12,757 $ 29,016 $ 13,595
======= ==== ======= ====== ========= ======= ========= ========= =========
</TABLE>
<PAGE 43>
EXHIBITS
A. *(1) Annual Report on Form 10-K for fiscal year ended September 30,
1995 filed December 20, 1995 (File No. 1-3880).
(2) National Fuel Gas Company 1995 Annual Report to Shareholders
(paper copy submitted under cover of Form SE).
*(3) National Fuel Gas Company Proxy Statement, dated January 5, 1996,
filed January 4, 1996 (File No. 1-03880)
B. Articles of Incorporation, By-Laws and Partnership Agreements
(1) National Fuel Gas Company
*i Restated Certificate of Incorporation of National Fuel
Gas Company, dated March 15, 1985 (Exhibit 10-00, Form
10-K for fiscal year ended September 30, 1991 in File
No.
1-3880)
*ii Certificate of Amendment of Restated Certificate of
Incorporation, dated March 17, 1992 (Exhibit EX-3(a),
Form 10-K for fiscal year ended September 30, 1992 in
File No. 1-3880)
*iii National Fuel Gas Company By-Laws as amended through
June 9, 1994. (Exhibit 3.1, Form 10-K for fiscal
year ended September 30, 1994 in File No. 1-3880)
*iv Certificate of Amendment of Restated Certificate of
Incorporation of National Fuel Gas Company, dated
March 9, 1987 (Exhibit 3.1, Form 10-K for fiscal year
ended September 30, 1995 in File No. 1-3880)
*v Certificate of Amendment of Restated Certificate of
Incorporation of National Fuel Gas Company, dated
February 22, 1988 (Exhibit 3.2, Form 10-K for fiscal
year ended September 30, 1995 in File No. 1-3880)
(2) National Fuel Gas Distribution Corporation
*i By-Laws, as amended (Exhibit 2(i), designated as
Exhibit EX-3(b) for EDGAR purposes, Form U5S for
fiscal year ended September 30, 1994)
*ii Restated Certificate of Incorporation of National Fuel
Gas Distribution Corporation,
dated May 9, 1988 (Exhibit B-1 in File No. 70-7478)
(3) National Fuel Gas Supply Corporation
*i By-Laws, as amended (Exhibit (3) i, Form U5S for
fiscal year ended September 30, 1989)
*ii Articles of Incorporation of United Natural Gas
Company, dated February 1, 1886 (Exhibit (3)ii, Form
U5S for fiscal year ended September 30, 1984)
* Incorporated herein by reference as indicated.
<PAGE 44>
EXHIBITS (Continued)
*iii Certificate of Merger and Consolidation dated January
2, 1951 (Exhibit (3)iii, Form U5S for fiscal year
ended September 30, 1984)
*iv Joint Agreement and Plan of Merger, dated June 18,
1974. (Exhibit (3) iv, Form U5S for fiscal year ended
September 30, 1987)
*v Certificate of Merger and Plan of Merger of Penn-York
Energy Corporation and National Fuel Gas Supply
Corporation dated April 1, 1994. (Exhibit (3)v,
designated as Exhibit EX-99-3 for EDGAR purposes, Form
U5S for fiscal year ended September 30, 1994)
(4) Leidy Hub, Inc. (Formerly Enerop Corporation)
*i By-Laws (Exhibit A-15, File No. 70-7478)
*ii Restated Articles of Incorporation of Enerop
Corporation dated April 13, 1988 (Exhibit B-4 in File
No. 70-7478)
*iii Action by Board of Directors to amend the By-Laws
dated October 10, 1993 including a Restated
Certificate of Incorporation of Enerop Corporation
dated October 15, 1993 (Exhibit (4)iii, designated as
Exhibit EX-3 for EDGAR purposes, Form U5S for fiscal
year ended September 30, 1993)
*iv Partnership Agreement between Leidy Hub, Inc. and Hub
Services, Inc. dated September 1, 1994. (Exhibit
(4)iv, designated as Exhibit EX-99-1 for EDGAR
purposes, Form U5S for fiscal year ended September 30,
1994)
v Ellisburg-Leidy Northeast Hub Company Admission
Agreement dated June 12, 1995. (designated as Exhibit
EX-99-1 for EDGAR purposes)
vi Letter Agreement between Leidy Hub, Inc. and Hub
Services, Inc. dated June 12, 1995. (designated as
Exhibit EX-99-2 for EDGAR purposes)
vii Consent and waiver by Leidy Hub, Inc. dated June 12,
1995. (designated as Exhibit EX-99-3 for EDGAR
purposes)
*viii Pre-Purchase Agreement between Leidy Hub, Inc. and Hub
Services, Inc. dated June 12, 1995. (Exhibit A-6
designated as EX-2 for EDGAR purposes, Form U-1 filed
July 10, 1995 in File No. 70-8655)
(5) Seneca Resources Corporation
*i By-Laws, as amended (Exhibit (5) i, Form U5S for
fiscal year ended September 30, 1989)
* Incorporated herein by reference as indicated.
<PAGE 45>
EXHIBITS (Continued)
*ii Articles of Incorporation of Mars Natural Gas Company
dated March 29, 1913 (Exhibit (5)ii, Form U5S for
fiscal year ended September 30, 1984)
*iii Secretary's Certificate dated January 4, 1918 (Exhibit
(5)iii, Form U5S for fiscal year ended September 30,
1984)
*iv Articles of Amendment, dated March 30, 1955 (Exhibit
(5)iv, Form U5S for fiscal year ended September 30,
1984)
*v Certificate of Amendment changing name of the Mars
Company to Seneca Resources Corporation, January 29,
1976 (Exhibit (5)v, Form U5S for fiscal year ended
September 30, 1984)
*vi Certificate of Merger and Plan of Merger of Seneca
Resources Corporation and Empire Exploration, Inc.
dated April 29, 1994. (Exhibit (5)vi, designated as
Exhibit EX-99-2 for EDGAR purposes, Form U5S for
fiscal year ended September 30, 1994)
*(6) Limited Partnership Agreement dated November 28, 1983, between
Empire Exploration, Inc. (now Seneca Resources Corporation)
as general partner and Herman P. Loonsk as limited partner
(Exhibit (8), Form U5S for fiscal year ended September 30,
1984)
*(7) Empire 1983 Drilling Program, Limited Partnership Agreement,
dated November 28, 1983, between Empire Exploration, Inc.,
(now Seneca Resources Corporation) as general partner and
those parties collectively called limited partners. (Exhibit
(9), Form U5S for fiscal year ended September 30, 1984)
*(8) Empire 1983 Joint Venture Agreement dated December 6, 1983
between Empire Exploration, Inc. (now Seneca Resources
Corporation) and Empire 1983 Drilling Program (Exhibit (10),
Form U5S for fiscal year ended September 30, 1984)
(9) Highland Land & Minerals, Inc.
*i Certificate of Incorporation, dated August 19, 1982
(Exhibit (11)i, Form U5S for fiscal year ended
September 30, 1985)
*ii By-Laws (Exhibit (11) ii, Form U5S for fiscal year
ended September 30, 1987)
(10) Utility Constructors, Inc.
*i Articles of Incorporation, dated December 23, 1986, and
certificate of amendment dated December 31, 1986.
(Exhibit (12)i, Form U5S for fiscal year ended
September 30, 1987)
*ii By-Laws (Exhibit (12) ii, Form U5S for fiscal year
ended September 30, 1987)
* Incorporated herein by reference as indicated.
<PAGE 46>
EXHIBITS (Continued)
(11) Data-Track Account Services, Inc.
*i Restated Articles of Incorporation, dated March 2, 1984
(Exhibit A-1, File No. 70-7512)
*ii By-Laws (Exhibit A-2, File No. 70-7512)
(12) National Fuel Resources, Inc.
*i Articles of Incorporation, dated January 9, 1991.
(Exhibit (14)i; designated as Exhibit EX-3(a) for EDGAR
purposes, Form U5S for fiscal year ended September 30,
1992)
*ii By-Laws (Exhibit (14)ii; designated as Exhibit EX-3(b)
for EDGAR purposes, Form U5S for fiscal year ended
September 30, 1992)
(13) Horizon Energy Development, Inc.
i Certificate of Incorporation. Designated as Exhibit
EX-3(a) for EDGAR purposes.
ii By-Laws. Designated as Exhibit EX-3(b) for EDGAR
purposes.
iii Partnership agreement of Sceptre Power Company, dated
September 15, 1995. Designated as Exhibit EX-99-4 for
EDGAR purposes. [Portions of the agreement are subject
to a request for confidential treatment under Rule
104(b).]
C. Indentures
* Indenture dated as of October 15, 1974, between the Company and
The Bank of New York (formerly Irving Trust Company) (Exhibit 2(b)
in File No. 2-51796)
* Ninth Supplemental Indenture dated as of January 1, 1990, to
Indenture dated as of October 15, 1974, between the Company and The
Bank of New York (formerly Irving Trust Company) (Exhibit EX-4.4,
Form 10-K for fiscal year ended September 30, 1992 in File No.
1-3880)
* Tenth Supplemental Indenture dated as of February 1, 1992, to
Indenture dated as of October 15, 1974, between the Company and The
Bank of New York (formerly Irving Trust Company) (Exhibit 4(a),
Form 8-K dated February 14, 1992 in File No. 1-3880)
* Eleventh Supplemental Indenture dated as of May 1, 1992, to
Indenture dated as of October 15, 1974, between the Company and The
Bank of New York (formerly Irving Trust Company) (Exhibit 4(b),
Form 8-K dated February 14, 1992 in File No. 1-3880)
* Twelfth Supplemental Indenture dated as of June 1, 1992, to
Indenture dated as of October 15, 1974, between the Company and The
Bank of New York (formerly Irving Trust Company) (Exhibit 4(c),
Form 8-K dated June 18, 1992, in File No. 1-3880)
* Incorporated herein by reference as indicated.
<PAGE 47>
EXHIBITS (Concluded)
* Thirteenth Supplemental Indenture dated as of March 1, 1993, to
Indenture dated as of October 15, 1974, between the Company and The
Bank of New York (formerly Irving Trust Company) (Exhibit 4(a) (14)
in File No. 33-49401)
* Fourteenth Supplemental Indenture dated as of July 1, 1993, to
Indenture dated as of October 15, 1974, between the Company and The
Bank of New York (formerly Irving Trust Company) (Exhibit 4.1, Form
10-K for fiscal year ended September 30, 1993 in File No. 1-3880)
D. Tax Allocation Agreement pursuant to Rule 45(c). (Designated as
EX-99-5 for EDGAR purposes.)
E. * Filing pursuant to Rule 48(b) (Exhibit (E) Form U5S for fiscal
year ended September 30, 1991)
F. Schedules of Supporting Items of this Report - None.
G. Financial Data Schedules. (Designated as Exhibits EX-27-1 and EX-27-2
for EDGAR purposes.)
H. Not applicable.
I. Not applicable.
* Incorporated herein by reference as indicated.
<PAGE 48>
S I G N A T U R E
The undersigned System company has duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized pursuant to
the requirements of the Public Utility Holding Company Act of 1935.
NATIONAL FUEL GAS COMPANY
By: /s/ Joseph P. Pawlowski
---------------------------------
Joseph P. Pawlowski, Treasurer
and Principal Accounting Officer
Date: January 29, 1996
----------------
<PAGE 49>
Exhibit Index
-------------
EX-3(a) Certificate of Incorporation
EX-3(b) By-Laws
EX-27-1 Financial Data Schedule of National Fuel Gas Company for period
ending September 30, 1995
EX-27-2 Financial Data Schedule of National Fuel Gas Distribution
Corporation for period ending September 30, 1995
EX-99-1 Ellisburg-Leidy Hortheast Hub Company Admission Agreement dated
June 12, 1995
EX-99-2 Letter Agreement between Leidy Hub, Inc. and Hub Services, Inc.
dated June 12, 1995
EX-99-3 Consent and waiver by Leidy Hub, Inc. dated June 12, 1995
EX-99-4 Partnership agreement of Sceptre Power Company dated September 15,
1995
EX-99-5 Tax Allocation Agreement pursuant to Rule 45(c)
CERTIFICATE
OF
INCORPORATION
OF
HORIZON ENERGY DEVELOPMENT, INC.
Under Section 402 of the
Business Corporation Law
Filer: Kyle G. Storie
10 Lafayette Square
Buffalo, New York 14203
<PAGE 2>
CERTIFICATE OF INCORPORATION
OF
HORIZON ENERGY DEVELOPMENT, INC.
------------------------
Under Section 402 of the
Business Corporation Law
------------------------
The undersigned, being over the age of eighteen, for the purpose of forming
a corporation pursuant to Section 402 of the Business Corporation Law, hereby
certifies:
FIRST: The name of the Corporation is Horizon Energy Development, Inc.
SECOND: The purpose for which it is formed is to engage in any lawful act
or activity for which corporations may be organized under the Business
Corporation Law of New York, provided that the Corporation shall not engage in
any act or activity requiring the consent or approval of any state official,
department, board, agency or other body without such consent or approval first
being obtained.
THIRD: The office of the Corporation is to be located in the County of
Erie, State of New York.
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is 20,000 shares of common stock, $1.00 par value.
<PAGE 3>
FIFTH: The Secretary of State is designated the agent of the Corporation
upon whom process against the Corporation may be served. The post office
address to which the Secretary of State shall mail a copy of any process
against the Corporation served upon him is 10 Lafayette Square, Buffalo,
New York 14203, Attn: Bruce H. Hale.
SIXTH: To the fullest extent permitted by the New York Business Corporation
Law, as the same exists on the date of the incorporation of the Corporation or
to such greater extent permitted by any amendment thereof, a director of the
Corporation shall not be liable to the Corporation or its shareholders for
damages for any breach of duty as a director. No amendment or repeal of this
paragraph or adoption of any provision inconsistent herewith shall have any
effect on the liability of any director of the Corporation with respect to
any act or omission as a director occurring prior to the amendment, repeal or
adoption.
IN WITNESS WHEREOF, I have executed this Certificate this 25th day of
May, 1995 and affirmed the statements contained herein as true under penalties
of perjury.
------------------------------------------------
/s/ Bruce H. Hale
Bruce H. Hale, Incorporator
10 Lafayette Square
Buffalo, New York 14203
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL FUEL
GAS COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,649,182
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 189,244
<TOTAL-DEFERRED-CHARGES> 8,653
<OTHER-ASSETS> 191,223
<TOTAL-ASSETS> 2,038,302
<COMMON> 37,434
<CAPITAL-SURPLUS-PAID-IN> 383,031
<RETAINED-EARNINGS> 380,123
<TOTAL-COMMON-STOCKHOLDERS-EQ> 800,588
0
0
<LONG-TERM-DEBT-NET> 474,000
<SHORT-TERM-NOTES> 52,600
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 95,000
<LONG-TERM-DEBT-CURRENT-PORT> 88,500
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 527,614
<TOT-CAPITALIZATION-AND-LIAB> 2,038,302
<GROSS-OPERATING-REVENUE> 975,496
<INCOME-TAX-EXPENSE> 43,879
<OTHER-OPERATING-EXPENSES> 807,218
<TOTAL-OPERATING-EXPENSES> 851,097
<OPERATING-INCOME-LOSS> 124,399
<OTHER-INCOME-NET> 5,378
<INCOME-BEFORE-INTEREST-EXPEN> 129,777
<TOTAL-INTEREST-EXPENSE> 53,883
<NET-INCOME> 75,894
0
<EARNINGS-AVAILABLE-FOR-COMM> 75,894
<COMMON-STOCK-DIVIDENDS> 59,625
<TOTAL-INTEREST-ON-BONDS> 40,896
<CASH-FLOW-OPERATIONS> 173,460
<EPS-PRIMARY> 2.03
<EPS-DILUTED> 2.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL FUEL
GAS DISTRIBUTION CORPORATION'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SUBSIDIARY>
<NUMBER> 1
<NAME> NATIONAL FUEL GAS DISTRIBUTION CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 822,764
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 137,077
<TOTAL-DEFERRED-CHARGES> 1,388
<OTHER-ASSETS> 150,045
<TOTAL-ASSETS> 1,111,274
<COMMON> 59,170
<CAPITAL-SURPLUS-PAID-IN> 121,668
<RETAINED-EARNINGS> 204,935
<TOTAL-COMMON-STOCKHOLDERS-EQ> 385,773
0
0
<LONG-TERM-DEBT-NET> 276,000
<SHORT-TERM-NOTES> 103,100
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 346,401
<TOT-CAPITALIZATION-AND-LIAB> 1,111,274
<GROSS-OPERATING-REVENUE> 786,064
<INCOME-TAX-EXPENSE> 21,190
<OTHER-OPERATING-EXPENSES> 702,289
<TOTAL-OPERATING-EXPENSES> 723,479
<OPERATING-INCOME-LOSS> 62,585
<OTHER-INCOME-NET> 1,342
<INCOME-BEFORE-INTEREST-EXPEN> 63,927
<TOTAL-INTEREST-EXPENSE> 31,550
<NET-INCOME> 32,377
0
<EARNINGS-AVAILABLE-FOR-COMM> 32,377
<COMMON-STOCK-DIVIDENDS> 32,668
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 105,731
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
ELLISBURG-LEIDY NORTHEAST HUB COMPANY
ADMISSION AGREEMENT
This Admission Agreement is entered into this 12th day of June,
1995, by and among Ellisburg-Leidy Northeast Hub Company, a Pennsylvania general
partnership (the "Partnership"), Enerchange, L.L.C., a Delaware limited
liability company ("Enerchange"), Hub Services, Inc., a Delaware corporation
("HSI"), and Leidy Hub, Inc., a New York corporation ("LHI").
WITNESSETH
WHEREAS, LHI and HSI created the Partnership pursuant to that
certain Partnership Agreement dated and effective as of September 1, 1994 (the
"Partnership Agreement"); and
WHEREAS, Article XI of the Partnership Agreement provides that no
transfer of a Partnership interest to any Person shall be effective until the
transferring Partner and its Transferee shall have executed and delivered to all
other Partners an "appropriate document" as described in Section 11.1 of the
Partnership Agreement (LHI being the only such "other Partner"); and
WHEREAS, the parties desire that HSI shall transfer its Partnership
interest to Enerchange, and that this Admission Agreement shall constitute such
"appropriate document"; and
WHEREAS, contemporaneously with the execution of this Admission
Agreement HSI has executed an Assignment whereby HSI transfers its Partnership
interest to Enerchange;
NOW THEREFORE, in consideration of the mutual agreements, promises,
and undertakings set forth herein, the parties agree as follows:
1. Capitalized words appearing in this Admission Agreement shall
carry the definitions set forth in the Partnership Agreement unless the text of
this Admission Agreement states otherwise.
2. Upon execution of this Admission Agreement, Enerchange shall
become a Partner in the Partnership, shall be treated as a party to the
Partnership Agreement for all purposes, and shall be entitled to all profits,
losses and cash distributions pursuant to the Partnership Agreement to which HSI
would be entitled in the absence of this Admission Agreement.
3. Enerchange hereby ratifies and adopts the entirety of the
Partnership Agreement and agrees to accept all benefits granted to Partners in
the Partnership and to assume all the obligations imposed on Partners in the
Partnership, including, without limitation, the obligation to make all Capital
Contributions required of Partners pursuant to Section 1.6 of the Partnership
Agreement. The Partnership and Enerchange acknowledge that (i) Enerchange is not
required to make an Initial Capital Contribution pursuant to Section 1.4 of the
Partnership Agreement, (ii) Enerchange's agreement to make all other
<PAGE 2>
Capital Contributions required by the Partnership agreement satisfies the
requirement of Section 1.6 of the Partnership Agreement and (iii) Enerchange is
not bound by the representations contained in Section 3.2 of the Partnership
Agreement.
4. Enerchange agrees to be bound by the terms of the Partnership
Agreement and all the other contractual liabilities of the Partnership. HSI and
Enerchange each represent and warrant to LHI and to the Partnership that the
Transfer is made in accordance with all applicable laws and regulations,
including, without limitation, securities laws.
5. Except as set forth in this Admission Agreement, the original
terms and conditions of the Partnership Agreement shall remain in full force and
effect.
6. The Capital Account positions of the Partners, after giving
effect to this Admission Agreement, would have been as follows as of April 30,
1995:
LHI $113,398.06
Enerchange $133,660.06
IN WITNESS WHEREOF, the parties have executed this Admission
Agreement as of the date first above written.
ELLISBURG-LEIDY NORTHEAST HUB COMPANY
By LEIDY HUB, INC., general partner
By: /s/ Walter E. DeForest
------------------------------------------
Walter E. DeForest
President
AND
By HUB SERVICES, INC., general partner
By: /s/ Stephen W. Bergstrom
------------------------------------------
Stephen W. Bergstrom
Executive Vice President
ENERCHANGE, L.L.C.
By: /s/ Stephen W. Bergstrom
------------------------------------------
Title:_____________________
<PAGE 3>
HUB SERVICES, INC.
By: /s/ Stephen W. Bergstrom
------------------------------------------
Stephen W. Bergstrom
Executive Vice President
LEIDY HUB, INC.
By: /s/ Walter E. DeForest
------------------------------------------
Walter E. DeForest
President
LEIDY HUB, INC.
10 Lafayette Square
Buffalo, New York 14203
June 12, 1995
Stephen W. Bergstrom
Hub Services, Inc.
13430 Northwest Freeway, #1200
Houston, Texas 77040
RE: Ellisburg-Leidy Northeast Hub Company
Dear Steve:
As you know, Leidy Hub, Inc. ("LHI") and Hub Services, Inc. ("HSI") are
the sole partners in a Pennsylvania general partnership named Ellisburg-Leidy
Northeast Hub Company (the "Partnership") pursuant to a Partnership Agreement
dated as of September 1, 1994 (the "Partnership Agreement").
Section 7.1 of the Partnership Agreement provides that the initial term
of the Partnership continues until September 1, 1996, and automatically
continues thereafter for additional terms of one year unless a Partner notifies
the other Partner(s), at least three months prior to the end of the term, that
the Partnership shall not be automatically continued for another term. Thus, the
first opportunity to terminate the Partnership would be for a Partner to issue a
notice on or before May 1, 1996 terminating the Partnership as of September 1,
1996 (the "First Opportunity"), and the next opportunity would be for a Partner
to issue that notice on or before May 1, 1997 terminating the Partnership as of
September 1, 1997 (the "Second Opportunity").
LHI is willing to waive its right to the First Opportunity and the
Second Opportunity if HSI is. Accordingly, the execution of this Letter
Agreement by LHI and HSI hereby effectively waives the rights of LHI, HSI and
their successors and assigns, to the First Opportunity and the Second
Opportunity. The next opportunity to terminate the Partnership pursuant to
Section 7.1 of the Partnership Agreement shall be for a Partner to give notice
to the other Partner(s) by May 1, 1998, terminating the Partnership effective
September 1, 1998.
<PAGE 2>
Stephen W. Bergstrom
June 12, 1995
Page 2
LHI is also willing to waive its right, pursuant to Section 11.3(c) of
the Partnership Agreement, to pledge up to 25% of its Partnership interest if
HSI is. Accordingly, the execution of this Letter Agreement by LHI and HSI
effectively waives the rights of LHI and HSI, and their successors and assigns,
to pledge any portion of their Partnership interests.
Very truly yours,
LEIDY HUB, INC.
By: /s/ Walter E. DeForest
--------------------------------------
Walter E. DeForest
President
ACCEPTED AND AGREED TO:
HUB SERVICES, INC.
By: /s/ Stephen W. Bergstrom
----------------------------------
Stephen W. Bergstrom
Executive Vice President
LEIDY HUB, INC.
10 Lafayette Square
Buffalo, New York 14203
June 12, 1995
Stephen W. Bergstrom
Hub Services, Inc.
13430 Northwest Freeway, #1200
Houston, Texas 77040
RE: Ellisburg-Leidy Northeast Hub Company
Dear Steve:
As you know, Leidy Hub, Inc. ("LHI") and Hub Services, Inc. ("HSI")
are the sole partners in a Pennsylvania general partnership named
Ellisburg-Leidy Northeast Hub Company (the "Partnership") pursuant to a
Partnership Agreement dated as of September 1, 1994 (the "Partnership
Agreement").
HSI wishes to transfer, on or about June 12, 1995, HSI's
Partnership interest to Enerchange, L.L.C., a Delaware member-managed limited
liability company ("Enerchange"), as a capital contribution to Enerchange, as
part of a transaction (the "Transaction") in which:
(i) HSI acquires a 99% ownership interest in Enerchange,
(ii) HSI commits to sell to LHI a 14.5% ownership interest in
Enerchange upon LHI's receipt of the necessary regulatory
approval(s); and
(iii) Enerchange as Transferee executes and delivers to LHI an
"appropriate document" as described in Section 11.1 of the
Partnership Agreement.
Pursuant to Section 11.1 of the Partnership Agreement, effective
upon the consummation of the Transaction, LHI hereby consents to the transfer of
HSI's Partnership interest to Enerchange.
<PAGE 2>
Stephen W. Bergstrom
June 12, 1995
Page 2
With respect to the Transaction, LHI hereby waives its rights under
(i) Sections 11.4 and 11.5 of the Partnership Agreement to receipt of a Transfer
Notice and LHI's prior right to purchase HSI's Partnership interest and (ii) any
other provisions of the Partnership Agreement necessary to effect the
Transaction.
Very truly yours,
LEIDY HUB, INC.
By: /s/ Walter E. DeForest
---------------------------------
Walter E. DeForest
President
cc: John Herbert, Esq.
Natural Gas Clearinghouse
13430 Northwest Freeway, #1200
Houston, Texas 77040
B Y - L A W S
OF
HORIZON ENERGY DEVELOPMENT, INC.
ARTICLE I
Meetings of Shareholders
Section 1. Annual Meeting. The annual meeting of
the shareholders shall be held each year at a time and place to be designated by
the President of the Corporation.
Section 2. Special Meetings. Special Meetings of
shareholders may be called at any time by a majority of the Directors, the
President of the Corporation or the holders of not less than 25 percent of all
of the shares entitled to vote at a meeting.
Section 3. Notice. The Secretary shall give written
notice, personally or by mail, to all shareholders of record of the holding
of any regular or special meeting of shareholders. Notice shall be given
personally or by first class mail not fewer than ten nor more than fifty days
prior to the date of the meeting or by third-class mail not fewer than
twenty-four nor more than fifty days prior to the date of the meeting. No notice
shall be required in the case of any shareholder who waives the same in writing
or attends the meeting without protesting prior to its conclusion the lack of
notice. Notice of a special meeting shall state the purpose for which the
meeting is called.
<PAGE 2>
Section 4. Quorum and Vote. The presence in person
or by proxy of holders of the majority of outstanding stock entitled to
vote shall be necessary to constitute a quorum. The affirmative vote of a
majority of the votes cast at a meeting shall be the act of the shareholders,
provided that a quorum is present at such meeting and that the vote of a greater
or lesser number of shares is not required by law or by the certificate of
incorporation.
Section 5. Adjourned Meetings. In case a quorum
shall not be present at any duly called meeting, the majority of those
present may adjourn the meeting from time to time not exceeding thirty days at
any one time until a quorum shall be present and the business of the meeting
accomplished; and of such adjourned
meeting, no notice need be given except as required by law.
Section 6. Written Consent of Shareholders.
Whenever shareholders are required or permitted to take any action by vote,
such action may be taken without a meeting on written consent, setting forth the
action so taken, signed by the holders of all outstanding shares entitled to
vote thereon.
ARTICLE II
Directors
Section 1. Number. The number of Directors of the
Corporation shall be such number, but not less than three, as is fixed from
time to time by the Board of Directors by vote of a majority of the entire
Board, except that when there are fewer than three shareholders the number of
Directors may be less than three but not less than the number of shareholders.
<PAGE 3>
The "entire Board" means the total number of Directors the Corporation would
have if there were no vacancies. Until further action by the Board of
Directors, the number of Directors shall be one.
Section 2. Election. The Directors shall be chosen
at the annual shareholders' meeting by a plurality of the votes cast, and
each of such Directors shall serve until the next annual meeting of shareholders
and until such Director's successor has been elected and qualified. Any vacancy
occurring in the Board of Directors by reason of death, resignation, removal
(with or without cause) or disqualification of a Director or increase in the
number of Directors, or for any other reason, shall be filled by a majority of
the Directors remaining; and such Director shall serve until the next annual
meeting of shareholders and until such Director's successor is elected. A
Director need not be a shareholder. The Directors may elect from their number a
Chairman.
Section 3. Quorum. A majority of the entire Board
of Directors shall be necessary to constitute a quorum unless the number of
Directors in office is less than a quorum, in which event any newly created
directorship and any vacancy may be filled by the affirmative vote of one of the
Directors then in office.
Section 4. Meetings. Meetings of the Board of
Directors will be held upon the call of and at such times and places as are
designated by the President or the Secretary; and such call shall be issued
whenever requested in writing by any two Directors. Meetings may be held outside
the State of New York. Notice of each meeting shall be by telegram or by any
<PAGE 4>
written communication, but no notice shall be required in the case of any
Director who waives the same or attends the meeting. If such notice is served
personally or by telegram, it must be so served not less than two days prior to
the meeting; and, if mailed, it must be mailed not less than five days prior to
the meeting.
Any one or more members of the Board or
any committee thereof may participate in a meeting of such Board or
committee by means of a conference telephone or similar communications equipment
allowing all persons participating in the meeting to hear each other at the same
time. Participation by such means shall constitute presence in person at a
meeting.
Section 5. Written Consent of Directors. Any action
required or permitted to be taken by the Board of Directors or any
committee thereof may be taken without a meeting if all members of the Board or
of the committee consent in writing to the adoption of the resolution
authorizing the action. The resolution and the written consent thereto by the
members of the Board or committee shall be filed with the minutes of the
proceeding of the Board or committee.
Section 6. Removal of Directors. Any Director may
be removed with or without cause at any time by the vote of shareholders
holding a majority of shares entitled to vote thereon at a meeting of
shareholders.
Section 7. Committees of the Board. The Board of
Directors, by resolution adopted by a majority of the entire Board, may
designate from among its members an executive committee and other committees,
<PAGE 5>
each consisting of three or more Directors and each of which, to the extent
provided in such resolution and not prohibited by law, shall have the authority
of the Board. Each such committee shall serve at the pleasure of the Board. The
necessary notice of meetings of each such committee, and procedure thereat,
shall be in accordance with the resolution appointing the same or, if not so
provided, as determined by each such committee itself.
ARTICLE III
Procedure at Meetings
The order of business and all other matters of
procedure at any meeting of shareholders or Directors, unless determined at
the meeting itself by majority vote, shall be determined by the person
presiding, who shall be the President or, in his absence, such other officer of
Director as shall be chosen by a majority vote at such meeting.
ARTICLE IV
Officers
Section 1. Election. The Corporation shall have
such officers as the Board of Directors may elect, which may include a
President, Vice President, Secretary, Treasurer, and such other officers as the
Board of Directors shall deem appropriate. Such officers shall serve at the
pleasure of the Directors and shall receive compensation to be determined by the
Board.
Section 2. President. The President shall be the
chief executive officer of the Corporation. The President shall have
supervision and control of the management of the business of the Corporation,
<PAGE 6>
shall have authority to fix compensation of all employees of the
Corporation other than the officers, shall be generally in charge of all the
affairs of the Corporation, and shall see that all orders and resolutions of the
Board are carried into effect.
Section 3. Vice President. The Vice President or,
if more than one, the Vice Presidents in the order determined by the Board,
in the absence or incapacity of the President, shall perform the duties of that
officer; and shall perform such duties as the Board and the President may from
time to time prescribe.
Section 4. Secretary. The Secretary shall have
custody of the minutes of the Corporation, have charge of the certificate
book and shall perform the other duties customarily performed by the Secretary
of a corporation.
Section 5. Treasurer. The Treasurer shall maintain
the financial records of the Corporation and perform the other duties
customarily performed by the Treasurer of a corporation.
ARTICLE V
Indemnification of Directors and Officers
Section 1. Indemnification. The Corporation shall
indemnify to the broadest and maximum extent permitted by the New York
Business Corporation Law, as the same exists on the date of the adoption of this
Article or to the greater extent permitted by any amendment of that Law (the
intent being to provide the greatest of those indemnification rights permitted
by that Law at any time from the time of the act or omission through the final
<PAGE 7>
disposition of the action) any person ("Indemnitee") made or threatened to
be made a party to any action or proceeding, whether civil, criminal,
administrative or investigative, including an action by or in the right of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which any Director or officer of the Corporation served in any
capacity at the request of the Corporation, by reason of the fact that such
person is or was a Director or officer of the Corporation or is or was serving
such other enterprise at the request of the Corporation; provided, however, that
the Corporation shall provide indemnification in connection with any such action
or proceeding initiated by an Indemnitee only if such action or proceeding was
authorized by the Board of Directors.
Section 2. Advances. Expenses incurred by any
Indemnitee in defending an action or proceeding shall be paid by the
Corporation in advance of the final disposition of such action or proceeding
upon receipt of an undertaking by or on behalf of an Indemnitee to repay the
expenses so advanced by the Corporation to the extent they exceed the
indemnification to which the Indemnitee is entitled. Unless otherwise required
by law, such Indemnitee shall not be required as a condition of obtaining
advancement of expenses hereunder to show that the Indemnitee has met the
applicable standard of conduct provided by law for indemnification in connection
with such action or proceeding.
Section 3. Inurement. The rights of indemnification
and advancement of expenses provided for in this Article shall inure to
<PAGE 8>
the benefit of the Indemnitee's legal representatives, heirs and distributees.
Section 4. Insurance. The Board of Directors of the
Corporation may, in its discretion, authorize the Corporation to purchase
and maintain insurance to indemnify itself for any obligation which it incurs as
a result of the indemnification of any Indemnitee or to indemnify any Indemnitee
to the fullest extent permitted by law.
Section 5. Interpretation. To the extent permitted
under applicable law, the rights of indemnification and advancement of
expenses provided in this Article (a) shall be available with respect to events
occurring prior to the adoption of this Article, (b) shall continue to exist
after any rescission or restrictive amendment of this Article with respect to
events occurring prior to such rescission or amendment, (c) shall be interpreted
on the basis of applicable law in effect at the time of the occurrence of the
event or events giving rise to the action or proceeding or, at the sole
discretion of the Indemnitee (or, if applicable, at the sole discretion of the
heirs, distributees or legal representatives of such Indemnitee seeking such
rights), on the basis of applicable law in effect at the time such rights are
claimed and (d) shall be in the nature of contract rights that may be enforced
in any court of competent jurisdiction as if the Corporation and the Indemnitee
were parties to a separate written agreement.
Section 6. Other Rights. The rights of
indemnification and advancement of expenses provided in this Article shall not
<PAGE 9>
be deemed exclusive of any other rights to which any Indemnitee or other
person may now or hereafter be otherwise entitled, whether contained in the
Certificate of Incorporation, these By-Laws, a resolution of the Board of
Directors or an agreement providing for such indemnification, the creation of
such other rights being hereby expressly authorized. Without limiting the
generality of the foregoing, the rights of indemnification and advancement of
expenses provided in this Article shall not deemed exclusive of any rights,
pursuant to statute or otherwise, of any Indemnitee or other person in any
action or proceeding to have assessed or allowed in his or her favor, against
the Corporation or otherwise, his or her costs and expenses incurred therein or
in connection therewith or any part thereof. Section 7. Notice to Shareholders.
If any action with respect to indemnification of Directors and officers is
taken by way of payment of indemnification, amendment of these By-Laws,
resolution of Directors or by agreement, then the Corporation shall, not later
than the next annual meeting of shareholders, unless such meeting is held within
three months form the date of such action, and, in any event, within fifteen
months from the date of such action, mail to its shareholders of record at the
time entitled to vote for the election of Directors a statement specifying the
action taken. Section 8. Severability. If this Article or any part hereof shall
be held unenforceable in any respect by a court of competent jurisdiction, it
shall be deemed modified to the minimum extent necessary to make it enforceable,
and the remainder of this Article shall remain fully enforceable.
<PAGE 10>
ARTICLE VI
Certificates for Shares
Section 1. General Requirements. Certificates
representing shares or fractions of a share of the Corporation shall be
bound in a book, shall be numbered and issued in consecutive order, shall be
signed by the Chairman of the Board of Directors, President or Vice President
and the Secretary or Treasurer, under the Corporation's seal; and in the stub of
each certificate shall be entered the name of the person owning the shares
represented thereby, the number of such shares and the date of issue. All
certificates exchanged or returned to the Corporation shall be marked cancelled,
with the date of cancellation, by the Secretary, and shall be immediately
attached to the stubs in the certificate books from which they were detached
when issued.
Section 2. Lost Certificates. The Board of
Directors may direct a new share certificate to be issued in place of any
certificate previously issued by the Corporation alleged to have been lost,
destroyed or wrongfully taken, upon the making of an affidavit of that fact by
the person claiming the certificate to be lost, destroyed or wrongfully taken.
As a condition of authorizing such issue of a new certificate, the Board of
Directors may, in its discretion, require the owner of such lost, destroyed or
wrongfully taken certificate, or the owner's legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, destroyed or wrongfully taken.
<PAGE 11>
ARTICLE VII
Amendments
These By-Laws and any hereafter adopted may be added
to, amended, altered or repealed by a majority of the votes cast at a duly
held meeting of shareholders by the holders of shares entitled to vote thereto.
Subject to any restrictions imposed by shareholders, these By-Laws and any
hereafter adopted may be added to, amended, altered or repealed by a vote of the
majority of the Directors present at any duly held meeting.
PORTIONS OF THIS AGREEMENT ARE SUBJECT TO A REQUEST FOR CONFIDENTIAL TREATMENT
UNDER RULE 104(b)
SCEPTRE POWER COMPANY
SUCCESSION AGREEMENT
by and between
HORIZON ENERGY DEVELOPMENT, INC.
SCEPTRE RESOURCES, LTD.
SCEPTRE ENERGY, INC.
NOVERGAZ (1994), INC.
POWER PROJECT DEVELOPMENT, INC.
effective as of
September 15, 1995
<PAGE i>
TABLE OF CONTENTS
RECITALS......................................................................1
SECTION 1.....................................................................3
DEFINITIONS..... ....................................................3
SECTION 2.....................................................................4
AMENDMENT OF THE PARTNERSHIP AGREEMENT
OF SCEPTRE POWER COMPANY........................................4
SECTION 3....................................................................33
ADMISSION OF HORIZON ENERGY DEVELOPMENT, INC.
AS A PARTNER IN SCEPTRE POWER COMPANY..........................33
SECTION 4....................................................................33
TRANSFER OF INTERESTS IN CERTAIN PERSONAL PROPERTY..................33
SECTION 5....................................................................34
TRANSFER OF PROPERTY RIGHTS IN THE PARTNERSHIP......................34
SECTION 6....................................................................36
ADDITIONAL CONSIDERATION............................................36
SECTION 7....................................................................43
DISPOSITION OF CASH ON CLOSING......................................43
SECTION 8....................................................................43
DEVELOPMENT OF EXISTING PROJECTS....................................43
SECTION 9....................................................................44
OUTSTANDING LETTER OF CREDIT........................................44
SECTION 10...................................................................44
WAIVER OF CLAIMS BY PPD.............................................44
SECTION 11...................................................................44
REPRESENTATIONS AND WARRANTIES OF ALL PARTIES.......................44
SECTION 12...................................................................45
REPRESENTATIONS AND WARRANTIES OF
SRL, SEI, NOVERGAZ AND PPD..........................................45
<PAGE ii>
SECTION 13...................................................................48
REPRESENTATIONS AND WARRANTIES BY
SRL, SEI AND NOVERGAZ..............................................48
SECTION 14...................................................................48
INDEMNIFICATION.....................................................48
SECTION 15...................................................................49
NOTICES 49
SECTION 16...................................................................52
WITHDRAWAL OF SEI AND NOVERGAZ AS PARTNERS
IN SCEPTRE POWER COMPANY............................................52
SECTION 17...................................................................52
MISCELLANEOUS.......................................................52
SECTION 18...................................................................54
CONSENT TO JURISDICTION: ATTORNIES' FEES............................54
<PAGE 1>
SUCCESSION AGREEMENT
Sceptre Power Company
THIS AGREEMENT (the "Succession Agreement"), by and between
HORIZON ENERGY DEVELOPMENT, INC. ("HORIZON"), a wholly owned corporate
subsidiary of National Fuel Gas Company, duly organized under the laws of the
State of New York, SCEPTRE RESOURCES, LTD. ("SRL"), a corporation duly
incorporated under the laws of Canada, SCEPTRE ENERGY, INC. ("SEI"), a wholly
owned corporate subsidiary of SRL, duly organized under the laws of the State of
Delaware, NOVERGAZ (1994), INC. (successor in interest to Novergaz, Inc.)
"NOVERGAZ", a corporation duly incorporated under the laws of the Province of
Quebec, and POWER PROJECT DEVELOPMENT, INC. ("PPD"), a corporation duly
incorporated under the laws of the State of California, is entered into this
15th day of September 1995 (the "Closing Date"), in the context of the following
facts and circumstances:
RECITALS
A.) In 1992, SEI, NOVERGAZ, and PPD associated themselves
together as general co-partners in a California general partnership, doing
business under the firm name and style of "Sceptre Power Company" (hereinafter,
sometimes, the "Partnership"), for the purposes of developing, financing,
constructing and operating, if necessary, power projects, and to manage the
interests, if any, of the Partnership and/or SRL and NOVERGAZ in such power
projects after the same have been completed.
B.) The agreement establishing the terms and conditions of the
Partnership (the "Partnership Agreement") is unwritten, except as respects the
Sceptre Power Company Continuation Agreement. However, a summary of certain
provisions of the Partnership Agreement is set forth in Article 2 of that
certain Cogeneration Projects Agreement (the "Cogen Agreement") by and between
SRL, Novergaz, Inc. and PPD, dated November 13, 1992.
C.) Since its formation, the Partnership has been, and on the
date hereof is, engaged exclusively in the development of various power
projects, including, without limitation,
<PAGE 2>
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
Neither of the latter power projects has attained Financial
Closing at the date hereof.
D.) In an agreement dated August 18, 1995 (the "August 18,
1995 Agreement"), SRL, SEI, NOVERGAZ, PPD, and National Fuel Gas Company agreed,
among other things, that (1) National Fuel Gas Company, or one of its wholly
owned subsidiaries (e.g., HORIZON), shall be admitted to the Partnership as a
general partner thereof, (2) NOVERGAZ and SEI shall transfer 100% of their
respective Partnership Property Rights to National Fuel Gas Company, or such
wholly owned subsidiary, and (3) upon the consummation of said transactions, SEI
and NOVERGAZ shall withdraw as partners of the Partnership, all as provided for
in the August 18, 1995 Agreement.
E.) The principals of PPD have formed, and are the sole
members of, Sceptre Power Company, L.L.C. ("SPCLLC"), a limited liability
company organized under the Limited Liability Company Act of the State of
California; SPCLLC and Horizon intend to negotiate an Agreement pursuant to
which SPCLLC will manage and conduct the day-to-day operations of Sceptre Power
Company (the "Management and Operating Agreement").
F.) Upon its admission to the Partnership, HORIZON will become
the Managing Partner of Sceptre Power Company, and HORIZON and SPCLLC have
agreed that, upon the negotiation and execution of the Management and Operation
Agreement, (1) SPCLLC shall be substituted for PPD as a partner of Sceptre Power
Company, and (2) the day-to-day operations of the Partnership will be conducted
by SPCLLC, under the terms and conditions of said Management and Operation
Agreement.
NOW, THEREFORE, with a view to implementing the August 18,
1995 Agreement and in consideration of the premises and the representations,
warranties, and covenants contained herein, the parties agree as follows:
<PAGE 3>
SECTION 1
DEFINITIONS
-----------
1.1 "$" shall mean the lawful currency of the United
States of America.
1.2 "Financial Closing" bears the meaning attributable
thereto in Section 1.26 of the Implementation Agreement
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
1.3 "Going Forward Expenses" shall mean the Partnership's
monetary obligations, accrued on or after (but not before) July 1, 1995,
including, without limitation, such obligations incurred or accrued in respect
of goods and services obtained by the Partnership, accounts payable, salaries of
Partnership employees and officers, leases entered into by or on behalf of the
Partnership, Project development costs and letters of credit referable to
Projects, provided, however, that Going Forward Expenses shall not include
expenses incurred by or on behalf of SRL or SEI, Novergaz, or PPD, individually
or as partners of the Partnership, in connection with proposed other succession
arrangements, or any costs, expenses or losses related to or arising from draws
or attempted draws against the letter of credit referred to in Section 6.5(ii)
of this Succession Agreement.
1.4 "Premium Date" bears the meaning attributable thereto
in the Power Purchase Agreement
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b).
1.5 "Project" shall mean the development, design,
engineering, manufacture, financing, construction, permitting, completion,
<PAGE 4>
commissioning, insurance, ownership, operation and maintenance of electricity
and steam generating plants, and all activities incidental thereto.
1.6 "Property Rights" in a partnership is defined as that
term is defined in Section 15024 of the California Corporations Code.
1.7 "Sceptre Power Company Continuation Agreement" denotes
the agreement thus described by and between PPD, NOVERGAZ, SRL and SEI executed
prior to the date hereof.
1.8 "Sellers" shall mean NOVERGAZ and SRL, collectively.
SECTION 2
AMENDMENT OF THE PARTNERSHIP AGREEMENT
--------------------------------------
OF SCEPTRE POWER COMPANY
------------------------
2.1 The Partnership Agreement of Sceptre Power Company is
unwritten. A summary of some of the terms and conditions upon which SEI, PPD,
and Novergaz, Inc. (predecessor in interest to NOVERGAZ) formed Sceptre Power
Company as a California general partnership appears in Article 2 of the Cogen
Agreement. Coincident with the admission of HORIZON as a partner of Sceptre
Power Company, that summary of the Partnership Agreement is amended and restated
as set forth in this Section 2.1, to wit:
(a) Paragraph 2.1(c)(ii) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "The business of Sceptre Power Company is to develop, finance,
construct and operate, if necessary, Power Projects and to manage the interests
of the Partnership and the interest, if any, of any partner in such Power
Projects after the same have been completed. For purposes hereof, `Power
Projects' shall mean `Exempt Projects' and `Domestic Power Projects', as those
terms are defined in the United States Securities and Exchange Commission
Release No. 35-26364;70-8649, issued August 29, 1995 in National Fuel Gas
Company, et al."
<PAGE 5>
(b) Paragraph 2.1(c)(iii) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "Subject to subparagraphs viii and ix below, all ownership and
voting interest of the Partnership belong to Horizon Energy Development, Inc."
(c) Paragraph 2.1(c)(iv) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "The Partnership shall be managed by Horizon Energy
Development, Inc., which, for such purpose, is hereby designated the `Managing
Partner' of Sceptre Power Company."
(d) Wherever it appears in Article 2 of the Cogen
Agreement, the phrase "Management Committee" is deleted, and the phrase
"Managing Partner" is substituted in lieu thereof.
(e) Paragraph 2.1(c)(viii) is amended by substituting in
lieu of the first sentence thereof, the following to wit: "Horizon Energy
Development, Inc. shall receive one hundred percent (100%) of any and all cash
distributions of the Partnership until such time as Horizon Energy Development,
Inc. shall have been reimbursed in respect of one hundred per cent (100%) of all
cash and the value of all tangible and intangible property contributed or
advanced by it and National Fuel Gas Company to the Partnership (`Payout')."
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
<PAGE 6>
(h) Paragraph 2.1(c)(xi) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "Horizon" will provide all guarantees or letters of credit in
support of Partnership obligations that may, in Horizon's reasonable business
judgement, be reasonably required in order for the Partnership to carry on its
business.
(i) Paragraph 2.1(c)(xii) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "The Managing Partner will, from time to time, review the
structures and operations contemplated hereunder, with a view to ensuring that
such structures and operations are consistent with the interests of the
Partnership."
<PAGE 7>
(j) Paragraph 2.2(a) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "Horizon Energy Development, Inc. and/or other equity investors
in the respective Projects will determine the optimum structure thereof, taking
into consideration the Partnership's business interests."
(k) Paragraph 2.2(b) of the Cogen Agreement is
eliminated in its entirety, and the following is substituted in lieu
thereof, to wit: "The equity for each Project will be provided by Horizon Energy
Development, Inc. and/or other investor(s)."
(l) Paragraphs 2.2(c) and 2.2(d) of the Cogen Agreement
are amended insofar as necessary to substitute "Horizon Energy Development,
Inc." in lieu of "the Owners" wherever the latter phrase occurs in said
subparagraphs.
2.2 The parties hereto contemplate that SPCLLC will shortly
be substituted for PPD as a partner in Sceptre Power Company. Coincident
with the admission of SPCLLC as such partner, PPD shall withdraw as a partner of
Sceptre Power Company, and the Partnership Agreement of Sceptre Power Company is
hereby amended and restated, in its entirety, as follows, effective as of such
withdrawal and admission, to wit:
1. Definitions. As used in this Partnership Agreement, the
following terms shall have the following meanings:
(a) "Capital Account": shall mean the account of each
Partner determined pursuant to Paragraph 7(h) hereof.
(b) "Capital Contribution" shall mean all
contributions made to the capital of the Partnership by a Partner
pursuant to Paragraph 7 hereof, excluding loans to the Partnership.
(c) "Capital Item" shall mean the aggregate of net
proceeds received by the Partnership after retirement of applicable
Partnership debt or any portion thereof upon the occurrence of any of
the following events:
<PAGE 8>
(i) any sale of all or part of the Partnership's
property,
(ii) receipt of insurance payments or damage
recoveries paid to the Partnership in respect of Partnership property,
to the extent not used to repair or restore such property,
(iii) receipt of condemnation proceeds by the
Partnership for the taking of all or part of the Partnership's
property, to the extent not used to repair or restore such property or
paid to Partnership creditors,
(iv) receipt of proceeds derived from any financing
or refinancing of a mortgage or other encumbrance upon Partnership
property, or
(v) restoration of any reserves previously set aside
from Capital Items which are deemed available for distribution by the
Managing Partner,
less
----
any expenses incurred in connection with the receipt or collection of
any such proceeds.
(d) "Net Cash Flow" means, for any accounting period,
the Partnership's revenues realized or derived during said period from
its operations (but not including any loan proceeds, advances or
Capital Contributions) less (i) expenses (including, but not limited
to, debt service and taxes), (ii) such reserves as the Managing Partner
deems reasonably necessary for the proper operation of the
Partnership's business, and (iii) any fees and expenditures authorized
by this Agreement, excepting expenditures paid out of capital or loan
proceeds.
(e) "Certificate" shall mean any doing business
certificate of the Partnership required to be filed pursuant to the
laws of the State of California or any other jurisdiction.
<PAGE 9>
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended, or corresponding provisions of future laws.
(g) "Partnership Interest" or "Interest", when used
with respect to any Partner, shall refer to that percentage of the
total interest in capital and profits of the Partnership owned by the
Partner.
(h) "Liquidation of a Partner's Interest" shall occur
upon the earlier of the date upon which there is a liquidation of the
Partnership or the date upon which there is a termination of a
Partner's entire interest in the Partnership by means of a distribution
or series of distributions to the Partner by the Partnership.
(i) "Managing Partner" shall mean Horizon Energy
Development, Inc. (hereinafter, "Horizon"), or any other entity which
succeeds Horizon in such capacity.
(j) "Partners" shall refer, collectively, to the Managing
Partner and the general partner(s). Reference to a "Partner" shall be
to any one of the Partners.
(k) "Property Rights", when used with reference to a
Partner, is defined as that term is defined in Section 15024 of the
California Corporations Code.
(l) "Partnership" shall mean Sceptre Power Company, the
Partnership subject to this Agreement.
(m) "Partnership Law" shall mean Title 2, Chapter 1
of the California Corporations Code, as now in effect and as hereafter
amended.
<PAGE 10>
(n) "Project" shall mean the whole or any part of an
"Exempt Project" or a "Domestic Power Project", as those terms are
defined in the United States Securities and Exchange Commission Release
No. 35-26364;70-8649, issued August 29, 1995 in National Fuel Gas
Company, et al.
2. Formation. Sceptre Energy, Inc., Novergaz, Inc. and Power
Project Development, Inc. have heretofore formed and constituted a
general partnership pursuant to the Partnership Law and an unwritten
partnership agreement. The Partners hereby ratify the formation of
Sceptre Power Company and hereby agree and constitute this agreement as
the amended and restated Partnership Agreement of Sceptre Power
Company.
3. Name and Place of Business. The Partnership is and shall
be conducted under the name of "Sceptre Power Company", or such other
name as the Managing Partner shall hereafter designate by written
notice to the Partner(s). The Partnership's principal place of
business shall be 6 Hutton Centre Drive, Suite 1200, Santa Ana,
California 92707. The Managing Partner may, in its discretion, change
the location of the Partnership's principal place of business to
another location in Orange County, California, upon notice of such
change to all Partners.
4. Business Purpose. The business purpose of the
Partnership is to identify, perform due diligence upon, develop,
design, engineer, manufacture, finance, construct, and operate Projects
and to manage the interests, if any, of the Partnership and of the
Partners in Projects after the same have been completed, and to do all
things reasonably incident thereto, including, without limitation,
borrowing money for Partnership purposes, securing such borrowings by
mortgage, pledge or other lien, and selling or otherwise disposing of
its interest in a Project at any time. The Partnership shall not
engage in any other business except as provided herein.
<PAGE 11>
5. Title to Partnership Property. The Partnership shall, in
the name of the Partnership, acquire title to property and any other
assets required to effect the purposes of the Partnership. The Managing
Partner shall execute such documents as may be necessary to reflect the
Partnership's ownership of its property and assets in such public
offices in the State and elsewhere, as may be required by, or
appropriate under, applicable law.
6. Term. Unless sooner dissolved and terminated in
accordance with the provisions hereof, or as otherwise provided by law,
the term of the Partnership shall continue until December 31, 1998,
provided, however, that, prior to the expiration thereof, the term of
the Partnership may be extended by the unanimous agreement of the
Partners.
7. Capital Contributions.
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
(b) Horizon shall make further cash working Capital
Contributions to the Partnership in amounts sufficient, and at times
appropriate, to discharge (i) the obligations undertaken by National
Fuel Gas Company under the August 18, 1995 Agreement, and (ii) the
obligations undertaken by the Partnership under the Management and
Operation Agreement with Sceptre Power Company, L.L.C., (the
"Management and Operation Agreement").
<PAGE 12>
(c) Horizon and any other Partner shall have the
right, but not the obligation, to make cash contributions to the
Partnership in addition to those provided for in Paragraphs 7.(a) and
7.(b) hereof, under such terms and conditions as shall, in each such
case, be agreed upon by all Partners.
(d) In consideration of the Capital Contributions
identified above and of its becoming the Managing Partner, Horizon
shall receive the fees and the interest in the Partnership allocated to
it in Paragraphs 9 and 10 hereof.
(e) No Partner shall receive any interest, salary or
drawing with respect to its Capital Contributions or its Capital
Account or for services rendered on behalf of the Partnership or
otherwise in its capacity as a Partner except as otherwise provided in
this Agreement.
(f) No Partner shall have the right to withdraw its
Capital Contribution. Neither Horizon nor any other Managing Partner
shall be liable for the repayment of any Capital Contribution(s) of any
other Partner.
(g) Capital Accounts - The Partnership shall
establish for each Partner a Capital Account which shall be maintained
in accordance with the following provisions:
(i) To each Partner's Capital Account shall be
credited (A) such Partner's Capital Contribution(s) to the Partnership,
(B) items in the nature of income or gain that are allocated to such
Partner pursuant to Paragraph 10 hereof, and (C) the amount of
Partnership liabilities that are assumed by such Partner or are secured
by any Partnership property distributed to such Partner.
<PAGE 13>
(ii) To each Partner's Capital Account shall be
debited the amount of (A) distributions made to such Partner pursuant
to Paragraph 11 hereof, (B) any items in the nature of expenses or
losses that are allocated to such Partner pursuant to Paragraph 10
hereof, and (C) the amount of any liabilities of the Partner assumed by
the Partnership or that are secured by any property contributed by such
Partner to the Partnership.
(iii) In the event any Interest in the Partnership is
transferred in accordance with the terms of this Partnership Agreement,
the transferee shall succeed to the Capital Account of the transferor
to the extent such account relates to the transferred Interest.
(iv) Partners' Capital Accounts shall be maintained
otherwise in accordance with Treasury Regulation Section 1.704-1(b) or
corresponding provisions of future regulations. The foregoing
provisions and other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Treasury
Regulation Section 1.704-1(b), and shall be interpreted and applied in
a manner consistent with such Regulations. In the event the Managing
Partner shall determine that it is prudent to modify the manner in
which the Capital Accounts, or any debits or credits thereto, are
computed in order to comply with such Regulation, the Managing Partner
may make such modification, provided that it is not likely to have a
material effect on the amounts distributable to any Partner pursuant to
Paragraph 18 hereof upon the dissolution of the Partnership.
8. Rights and Duties of the Managing Partner.
(a) Management of Partnership Business - Except as
otherwise provided in this Agreement, all management decisions
respecting the conduct and operation of the Partnership's business
shall be made and determined exclusively by the Managing Partner which,
for such purposes, shall have all rights and powers generally
<PAGE 14>
permitted by law and held by the partners of a California general
partnership in the aggregate. The exercise by the Managing Partner
of any power conferred or permitted by this Agreement shall bind
the Partnership. The Managing Partner is hereby designated as the "Tax
Matters Partner" under the Code. The Partnership hereby indemnifies
and holds harmless the Managing Partner from and against any claim,
loss, expense, liability, action or damage (including, without
limitation, attorneys fees) resulting from its acting or its failure to
take any action as "Managing Partner" and the "Tax Matters Partner",
provided that any such action or failure to act does not constitute
either willful misconduct or the breach of a contract to which the
Partnership or a Partner is a party.
(b) Specific Rights and Powers - In addition to any
other rights and powers which it may possess under this Agreement or
applicable law, the Managing Partner shall have, subject to the
provisions of Paragraph 8.(c), all specific rights and powers required
or appropriate for its management of the Partnership's business which,
by way of illustration but not by way of limitation, shall include the
following rights and powers, to the extent they are in furtherance of
the interest of the Partnership:
(i) to sell, transfer, assign, convey, lease,
sublet, or otherwise dispose of or deal with all or any part of the
Partnership's property and assets;
(ii) to execute and deliver, on behalf of the
Partnership, all documents relating to the Partnership's property and
assets;
(iii) to pay fees relating to arrangements for
financing;
(iv) to borrow money for Partnership purposes
(in addition to those set forth in (ii) and (iii) above), and, if
security is required therefor, to pledge, mortgage or subject to any
other security device any portion of the Partnership's property and
<PAGE 15>
assets, and to enter into any surety arrangements with respect thereto;
(v) to invest funds of the Partnership,
including funds held as reserves, in certificates of deposit,
interest-bearing time deposits in state or national banks having
assets of not less than twenty million dollars, in United States
Government securities, in bank repurchase agreements and bankers'
acceptances as the Managing Partner may, from time to time, deem
appropriate;
(vi) to acquire, enter into and pay for any
contract of insurance which the Managing Partner deems appropriate for
the protection of the Partnership and/or the conservation of its assets
or property, including, without limitation, any Project in which the
Partnership or any of its Partners may have a direct or indirect
beneficial interest;
(vii) to employ, retain or engage attorneys,
consultants, managers, accountants and other professionals (including
such individuals and/or entities affiliated with the Managing Partner)
on behalf of the Partnership;
(viii) to bring or defend, pay, collect,
compromise, arbitrate, resort to legal action, or otherwise adjust
claims or demands of or against the Partnership;
(ix) to establish reasonable reserve funds from
income derived from the Partnership's operations to provide for future
requirements of the Partnership;
(x) to perform or cause to be performed all of
the Partnership's obligations under any agreement to which the
Partnership is a party;
<PAGE 16>
(xi) to lend, or cause to be lent, funds to the
Partnership in its discretion and charge interest thereon as provided
in Paragraph 7.(g);
(xii) to enter into management agreements on
behalf of the Partnership pursuant to which (A) the day-to-day
operations of the Partnership, (B) the implementation and execution of
the Managing Partner's management decisions, and/or (C) the development
or management of any Project may be delegated to any Partner or
affiliate of the Managing Partner upon such terms and conditions,
including, without limitation, compensation, as the Managing Partner
and such other entity(ies) may negotiate and deem appropriate and in
the interests of the Partnership;
(xiii) to maintain the Partnership account records
of all Partners, as well as the books of account of the Partnership;
(xiv) to make, execute and deliver any and all
documents of transfer and conveyance and any and all other
instruments and agreements which may be necessary or appropriate to
carry out the powers herein granted;
(xv) to cause any Certificate to be filed for
record where required, including any amendment thereto and to execute
and record any similar document which the Managing Partner deems
necessary to enable the Partnership to conduct its business as herein
contemplated;
(xvi) to take all actions which the Managing
Partner deems necessary or desirable to cause the Partnership to comply
with all applicable provisions of law and/or regulations;
(xvii) to execute and record financing statements
evidencing the granting of a security interest by the Partnership or
its Partners in any assets of the Partnership;
<PAGE 17>
(xviii) to execute and deliver all documents which
may be necessary or appropriate for the Partnership to acquire,
directly or indirectly, title to or any beneficial interest in any
Project;
(xix) to execute, acknowledge and deliver any and
all instruments necessary to effectuate the foregoing.
By executing this Agreement, the Partners expressly
agree to the exercise by the Managing Partner of the foregoing rights
and powers.
(c) Limitations on Managing Partner's Authority -
Notwithstanding the general authority of the Managing Partner under
Paragraphs 8.(a) and 8.(b) hereof, the following matters shall require
the unanimous approval of all Partners:
(i) any amendment of this Agreement which
directly and deleteriously impacts any Partnership property right(s) of
any Partner other than the Managing Partner;
(ii) any lease, sale, exchange, conveyance or
other transfer or disposition of all, or substantially all, of the
assets of the Partnership (except that any pledge or grant of a
security interest in the assets of the Partnership in connection with
the development or financing of any Project shall be within the
authority of the Managing Partner);
(iii) engaging in a business other than as
provided in this Agreement;
(iv) the sale or assignment of any Partner's
Interest in the Partnership, but not such Partner's rights to receive
fees or other compensation as provided herein, or the admission of
a substitute Managing Partner; and
(v) any material amendment or revision of or
supplement to the Management and Operation Agreement with Sceptre
Power Company, L.L.C., contemplated in Paragraph 7.(b) of this
Agreement.
<PAGE 18>
(d) Other Business Ventures - Any Partner or any
officer, director, employee, shareholder, partner or other person
holding a legal or beneficial interest in any entity that is a Partner
may engage in, or possess an interest in, other business ventures of
every nature and description, independently or with others, and neither
the Partnership nor the Partners shall have any right by virtue of this
Agreement in or to such independent ventures or to the income or
profits derived therefrom, provided, however, that no activity
contemplated in this Paragraph 8.(d) shall, in the Managing Partner's
sole reasonable discretionary business judgment, interfere with or
prejudice Sceptre Power Company, L.L.C.'s performance of the
obligations undertaken by it in the Management and Operation Agreement
contemplated in Paragraph 7.(b) of this Agreement.
(e) Liability of Managing Partner to Other Partner(s)
and Partnership. The Managing Partner shall not be required to devote
all of its time or business efforts or capital to the affairs of the
Partnership, but shall devote so much of such time, efforts and capital
to the business of the Partnership as the Managing Partner, in its sole
reasonable discretionary business judgment, believes to be necessary
and appropriate to manage the affairs of the Partnership and to advance
the business interests of the Partnership. Nor shall the Managing
Partner, as such partner or in its individual capacity, be obligated to
make an equity investment in, or a loan to, any Project unless the
Managing Partner in its sole discretionary business judgment shall deem
such investment or loan (as the case may be) in the individual business
interest of the Managing Partner (as distinguished from the business
interests(s) of the Partnership). Except as otherwise specifically set
forth herein, neither the Managing Partner nor any of its affiliates or
their respective officers, employees or directors shall be liable to
the other Partner(s) because any taxing authority disallows or adjusts
income, deductions or credits in the Partnership income tax returns. In
addition, the doing of any act or the omission to do any act by the
<PAGE 19>
Managing Partner or any of its affiliates, the effect of which may
result in loss or damage to the Partnership, shall not subject the
Managing Partner and an affiliate or their respective officers,
employees or directors to any liability, if the Managing Partner or
such affiliate was acting in good faith in a manner which it
reasonably believed to be in accordance with reasonable business
judgment or otherwise in accordance with the terms of this
Agreement.
9. Managing Partner's Fees and Expenses -
(a) Fees of Managing Partner - In consideration for
performing services which do not constitute duties or obligations of a
general partner of the Partnership, the Managing Partner shall be
reimbursed for its actual expenses incurred in the performance of such
services, in an amount to be agreed upon by the Partners.
(b) Except as otherwise provided herein, the
Partnership shall pay all Partnership expenses (which expenses may be
either billed directly to the Partnership or reimbursed to the Managing
Partner or its affiliate) which may include, but are not limited to:
(i) all costs of borrowed money, taxes and assessments applicable to
the Partnership; (ii) all costs for goods, materials, and services,
whether purchased, engaged or obtained by the Partnership directly or
by the Managing Partner or its affiliate on behalf of the Partnership;
(iii) legal, audit, accounting and other professional fees; (iv)
printing and other expenses and taxes incurred in connection with the
issuance, distribution, transfer, registration and recording of
documents evidencing ownership of an Interest in the Partnership or in
connection with the business of the Partnership; (v) fees and expenses
paid to independent contractors, commercial or investment banks, other
financial institutions or advisors, consultants, insurance brokers and
other agents; (vi) expenses of revising, amending, converting,
<PAGE 20>
modifying or terminating the Partnership; (vii) communication expenses
including, without limitation, expenses in connection with
distributions made by the Partnership to, and communications and
bookkeeping work necessary in maintaining relations with, the
Partners, (viii) expenses in connection with preparing and mailing
reports to be furnished to the Partners for tax reporting or other
purposes, and other reports the furnishing of which the Managing
Partner deems to be in the best interests of the Partnership or the
Partners; (ix) costs of any accounting, statistical or bookkeeping
equipment or services necessary for the maintenance of the books and
records of the Partnership; (x) the cost of preparation and
dissemination of informational material and documentation relating
to the Partnership; (xi) costs incurred in connection with any
litigation, arbitration or other dispute resolution process in which
the Partnership is involved, as well as in any examination or
investigation conducted by or against the Partnership, including
legal and accounting fees incurred in connection therewith; and (xii)
costs of any computer services or equipment or services of personnel
used on behalf of or by the Partnership.
10. Allocations of Profits, Losses and Credits.
(a) Generally - The profits, losses and credits of
the Partnership shall be determined for each taxable year at the end of
the taxable year in accordance with the accounting method followed by
the Partnership for federal income tax purposes and otherwise in
accordance with generally accepted accounting practices and procedures
applied in a consistent manner. Except as otherwise provided, profits
and losses shall be allocated to the Partners quarterly.
(i) The profits, losses and credits of the
Partnership, other than those specified below, shall be allocated to
the Partners in the proportions which their respective aggregate
<PAGE 21>
positive Capital Contributions to the Partnership bear to the total of
such aggregate positive Capital Contributions, computed as of the time
of such allocation.
(ii) Profits and losses of the Partnership
attributable to the sale, exchange or other disposition of all or
substantially all of the Partnership's property, or any other
voluntary or involuntary conversion of the Partnership's property or
to a casualty or taking in condemnation affecting the Partnership's
property shall be allocated among the Partners as follows:
(A) Any such profits shall be allocated as
follows:
(1) ordinary income shall be
allocated in an amount equal to the aggregate deficit in the
Partner's Capital Accounts, to each Partner in the same ratio as
the deficit in such Partner's Capital Account bears to the aggregate
of all such Partners' deficits; any remaining ordinary income shall
be allocated in accordance with (2) below, prior to the allocation of
capital gain. If, after such allocation a deficit remains in the
Capital Accounts of the Partners, an amount of capital gain shall be
allocated to the Partners in proportion to any such deficits in an
amount sufficient to reduce such deficits to zero (in the event that,
by virtue of the preceding allocation or otherwise, there are deficits
in the Capital Accounts of some of the Partners, all such profits shall
be allocated to such Capital Accounts with deficits until such deficits
are reduced to zero);
(2) then to the Partners in the
proportions which their respective aggregate positive Capital
Contributions bear to the total of such aggregate positive Capital
Contributions, computed as of the time of such allocation, until such
time as the respective Partners shall have received allocations of
Capital Items equal to their respective aggregate positive Capital
Contributions plus five percent (5%) per annum (not compounded) for
<PAGE 22>
each year or fraction thereof since such Partner's respective Capital
Contributions shall have been available to the Partnership; and
(3) then, to the respective Partners
in the proportion which their respective aggregate positive Capital
Contributions bear to the total of such aggregate positive Capital
Contributions, computed as of the time of such allocation.
(B) Any such loss shall be allocated:
(1) to the extent that Horizon has a
positive balance in its Capital Account and/or the respective balances
in the Capital Account(s) of the Partner(s) exceed the amount of their
respective aggregate Capital Contribution(s) (collectively, the "Excess
Balances"), in proportion to such Excess Balances until such Excess
Balances are reduced to zero;
(2) then, to and among the Partners
in the ratio which their respective Capital Account balances bear to
the aggregate of all Capital Account balances, until the balance in all
Capital Accounts shall be reduced to zero; and
(3) then, to and among the Partners
in the proportion which their respective aggregate positive Capital
Contributions bear to the total of such aggregate positive Capital
Contributions, computed as of the time of such allocation.
(iii) To the extent that the Partnership shall be
entitled to any deduction for federal income tax purposes as a result
of any interest in profits and losses granted to the Managing Partner,
such deduction shall be allocated for federal income tax purposes to
the Managing Partner.
<PAGE 23>
(iv) Notwithstanding any other provision of this
Paragraph 10.(b), in the event a Partner unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4)-(6) or there is a net decrease in the
excess of the principal balance of any nonrecourse debt of the
Partnership over the Partnership's adjusted tax basis in the Property
securing such debt as allocated pursuant to 1.704-1(b)(4)(iv)(c), and a
Partner's Capital Account balance is reduced below zero in an amount
exceeding the amount of such Partner's deficit account that he is
obligated to restore within the meaning of Treasury Regulation Section
1.704-1(b)(2)(ii), items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner
sufficient to eliminate the deficit balances in his Capital Account
created by such adjustments, allocations, or distributions as quickly
as possible. Any special allocations of items of income or gain
pursuant to this subparagraph (v) shall be taken into account in
computing subsequent allocations of profits pursuant to this
Paragraph 10., so that the net amount of any items so allocated and
the profits, losses and all other items allocated to each Partner
pursuant to this Paragraph 10. shall, to the extent possible, be equal
to the net amount that would have been allocated to each such
Partner pursuant to the provisions of this Paragraph 10. if such
unexpected adjustments, allocations, distributions or decrease had
not occurred.
11. Distributions.
(a) The Partnership's Net Cash Flow shall be
distributed to and among the Partners, at such intervals as the
Managing Partner shall determine, as set forth in this Paragraph 11.
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
<PAGE 24>
(c) Distributions of Capital Items - Distributions
of capital items shall be made and applied in the following order of
priority:
(i) First, to and among the Partners until
such time as each Partner shall have received distributions of
capital items sufficient to reduce the aggregate of its Capital
Contributions to zero plus Capital Contributions in an amount equal to
five percent (5%) per annum (not compounded) for each year or fraction
thereof since such Partner's respective Capital Contributions shall
have been available to the Partnership;
(ii) then, the balance, to and among the
Partners in the proportions which their respective aggregate positive
Capital Contributions bear to the total of such aggregate positive
Capital Contributions, computed as of the time of such distribution.
(d) Liquidating Distributions - Subject to the
applicable provisions of the Management and Operation Agreement, if
any, liquidating distributions shall be made in accordance with the
positive Capital Account balances of the Partners, as determined after
<PAGE 25>
taking into account all Capital Account adjustments for the Partnership
taxable year during which such liquidation occurs.
(e) Standards - The methodology hereinabove set
forth by which distributions and allocations are to be effected are
hereby expressly consented to by each Partner as an express condition
to becoming a Partner.
12. Partners Other Than Managing Partner - The Partners
other than the Managing Partner shall take no part in the management,
conduct or control of the business of the Partnership and shall have
no right or authority to act for or to bind or obligate the
Partnership in any manner whatsoever, except as shall be expressly
provided for in the Management and Operation Agreement, provided,
however, that the Managing Partner will consult with the other
Partner(s) respecting material business decisions whenever
reasonably possible in the Managing Partner's reasonable business
judgement.
13. Assignment, Transfer, or Sale of Property Rights in
the Partnership.
(a) General. Neither all nor part of a Partner's
Property Rights in the Partnership may be assigned, transferred, or
sold without the consent of the other Partners, except as provided in
subparagraph 13.(b) below.
(b) Transfer; Option to Purchase. A Partner shall
not sell, assign, pledge, cause a lien to be placed against, or
encumber (individually or collectively "Transfer") all or any part of
such Partner's Property Rights in the Partnership to any entity other
than a Partner or a wholly owned subsidiary of such Partner unless (i)
the Transfer is part of a transaction in which the transferee is
admitted as a Partner in the Partnership, and (ii) the transferring
Partner shall first have complied with the provisions of this
subparagraph 13.(b). No Transfer of all or any part of a Partner's
<PAGE 26>
Property Rights in the Partnership may be effected unless the
Property Right in question is first offered for sale to the other
Partner(s) by a written offer addressed and delivered to the principal
office of the other Partner(s). That notice shall give the other
Partner(s) the right to purchase the Property Right in question for
the consideration to be received as a result of the proposed
Transfer of the Property Right in question to a non-Partner. The
written offer shall contain all of the terms of the proposed Transfer,
including the name and address of the proposed Transferee. Thereupon,
the other Partner(s) shall have a period of thirty (30) days to notify
the transferring Partner of its (their) intention to purchase the
Property Right in question upon the terms and conditions set forth in
the offer.
(c) Substitution of Partner and Admission of New
Partner Without Substitution of Partner. As a condition to the
admission of any new Partner, the entity so to be admitted shall
execute and acknowledge such instruments (including the power of
attorney referred to in Paragraph 16. below) in form and substance
reasonably satisfactory to the Managing Partner, as the Managing
Partner may deem necessary or desirable to effect such admission and to
confirm the agreement of the entity being admitted as such Partner to
be bound by all the covenants, terms and conditions of this Agreement
as the same may have been amended. Such entity so to be admitted as a
new Partner shall also pay all reasonable expenses in connection with
its admission as a new Partner, including, but not limited to, the cost
of the preparation and filing any amendment to any Certificate which
the Managing Partner may deem necessary or desirable in connection with
the admission of such entity as a new Partner.
(d) Distributions and Allocations Subsequent to
Transfer - A transferee of, or substitute Partner for, a Partner's
Partnership Interest shall be entitled to receive distributions from
the Partnership with respect to such Partnership Interest only after
the Managing Partner has received satisfactory evidence of such
<PAGE 27>
transfer and a transfer fee sufficient to cover the expenses of the
Partnership in connection with such transfer.
14. Books, Records, Accounting and Reports.
(a) Availability. At all times during the existence
of the Partnership, the Managing Partner shall keep or cause to be kept
full and true books of account in accordance with the accrual method of
accounting and otherwise in accordance with generally accepted
accounting principles and procedures applied in a consistent manner,
which shall reflect all Partnership transactions and shall be
appropriate and adequate for the Partnership's business. Such books of
account, together with a copy of this Agreement and any amendments
thereto, shall at all times be maintained at the principal place of
business of the Partnership. Any Partner or his or its duly authorized
representative shall have the right at any time to inspect and copy
from such books and documents during normal business hours upon five
(5) days' written notice to the Managing Partner, and shall have, on
demand, information on matters affecting the Partnership, to the extent
that such information is readily available or can be obtained without
undue expense.
(b) Taxable Year and Accounting Method. The
Partnership's taxable and fiscal years shall end on September 30. The
Partnership shall use the accrual method of accounting. All elections
required or permitted to be made by the Partnership under the Code
shall be made by the Managing Partner in such manner as will, in its
opinion, be most advantageous to the Partners, taking into account
their respective Interests in the Partnership.
15. Bank Accounts - All funds of the Partnership shall be
deposited in the Partnership's name in such bank account or accounts as
may be designated by the Managing Partner and shall be withdrawn on the
<PAGE 28>
signature of the Managing Partner, and/or such other person or persons
as the Managing Partner may authorize.
16. Power of Attorney - Each Partner hereby
irrevocably designates the Managing Partner, including a successor
Managing Partner (or Managing Partners), as its true and lawful
attorney in its name, place and stead to execute and acknowledge
(i) any certificate or other instrument required to be filed by the
Partnership, including the Certificate and any amendment thereto,
and (ii) any and all documents appropriate or necessary in
connection with the continuation, termination, or dissolution of
this Partnership. The creation of the foregoing power of attorney
is coupled with an interest and shall be irrevocable.
17. Admission, Withdrawal or Bankruptcy of a Partner.
(a) Admission. The admission of a new Partner to the
Partnership shall not cause the dissolution of the Partnership unless
all then existing Partners shall agree otherwise in a writing signed by
all such existing Partners prior to or coincident with the admission of
such new Partner.
(b) Withdrawal. Any Partner may withdraw from the
Partnership upon giving each other Partner at least sixty (60) days
prior written notice of such withdrawal. If, at the time of such
notice, the Partnership consists of more than two (2) Partners, the
withdrawal of a Partner shall not cause the dissolution of the
Partnership unless (i) all remaining Partners shall agree otherwise in
a writing signed by all such Partners, prior to or coincident with the
withdrawal of such Partner, or (ii) less than one hundred percent
(100%) of such withdrawing Partner's interest in the Partnership is
sold pursuant to Paragraph 13 of this Agreement on or before the
effective date of such withdrawal.
(c) Bankruptcy. The bankruptcy or insolvency of any
Partner shall cause the dissolution of the Partnership, unless all
<PAGE 29>
of the other Partners shall, within thirty (30) days after notice of
such event, elect to continue the Partnership in a writing signed by
all such Partners.
18. Winding up of the Partnership.
(a) Upon a dissolution of the Partnership, the
Managing Partner (or Court-appointed fiduciary if there be no Managing
Partner or the Managing Partner is unable to act) shall take full
account of the Partnership's liabilities and assets and the assets
shall be liquidated as promptly as consistent with obtaining the fair
value thereof, and the proceeds therefrom, to the extent sufficient
therefor, shall be applied and distributed in the following order:
(i) to the payment and discharge of all of the
Partnership's debts and liabilities (other than those to Partners),
including the establishment of any necessary reserves;
(ii) to the payment of any debts and liabilities
owed to the Managing Partner; and
(iii) to the Partners in accordance with their
Capital Accounts.
(b) Compliance with Timing Requirements of
Regulations. In the event the Partnership is "liquidated" within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g), (i)
distributions shall be made pursuant to this Paragraph. (if such
liquidation constitutes a dissolution of the Partnership) or Section 11
hereof (if it does not) to the Partners who have positive Capital
Accounts in compliance with Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2), and (ii) if the Managing Partner's Capital
Account has a deficit balance (after giving effect to all
contributions, distributions, and allocations for all taxable years,
including the year during which such liquidation occurs), the Managing
Partner shall contribute to the capital of the Partnership the amount
necessary to restore such deficit balance to zero in compliance with
<PAGE 30>
Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(3). Distributions
pursuant to the preceding sentence may be distributed to a trust
established for the benefit of the Partners for the purposes of
liquidating Partnership assets, collecting amounts owed to the
Partnership, and paying any contingent or unforeseen liabilities
or obligations of the Partnership or of the Managing Partner arising
out of or in connection with the Partnership. The assets of any such
trust shall be distributed to the Partners and, from time to time, in
the reasonable discretion of the Managing Partner, in the same
proportions as the amount distributed to such trust by the Partnership
would otherwise have been distributed to the Partners pursuant to this
Agreement.
19. General Provisions.
(a) Except as otherwise provided in this Agreement or
required by law, any notice, demand or other communication required or
permitted to be given pursuant to this Agreement shall have been
sufficiently given for all purposes if (i) delivered personally to the
entity or an executive officer of the entity to whom that notice,
demand or other communication is directed, or (ii) sent first-class
mail (postage prepaid), by overnight courier or by facsimile
transmission, directed to such entity at its then principal place of
business. Except as otherwise provided in this Agreement, any such
notice sent by first class mail shall be deemed to have been given
three (3) business days after the same was mailed.
(b) Entire Agreement/Amendments. This Agreement
constitutes and contains the entire agreement of the parties hereto
with respect to the matters set forth herein and supersedes any prior
understanding or agreement, oral or written, with respect thereto. No
amendment of this Agreement shall be effective unless the same shall be
set forth in a writing signed by all of the Partners.
<PAGE 31>
(c) Severability. If any term or other provision of
this Agreement shall be declared to be invalid, illegal, or incapable
of being enforced by any rule of law or public policy, all other terms,
provisions and conditions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner
materially adverse to any party to this Agreement. Upon any binding
determination that any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced, the Partners shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties to this Agreement as closely as possible
in an acceptable and legally enforceable manner, to the end that the
transactions contemplated hereby may be effected to the full extent
possible.
(d) Binding Effect and Benefit. This Agreement shall
be binding upon and inure to the benefit of all Partners and each of
the permitted successors and assigns of the Partners. No Partner may
assign rights or delegate obligations hereunder except pursuant to the
provisions hereof and as expressly authorized herein. Nothing in this
Agreement is intended to benefit any entity which is not, at the
relevant time, a Partner of the Partnership.
(e) Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original and
all of which shall constitute one and the same instrument.
(f) Applicable Law - Notwithstanding the place where
this Agreement may be executed by any of the parties hereto, the
parties expressly agree that all the terms and provisions hereof shall
be construed under the laws of the State of California, except where
specifically provided otherwise herein. The partnership aspects of this
Agreement shall be construed under the Partnership Law as now adopted
or as hereafter amended. In the event that any matter relating to the
rights or obligations of any Partner, as such (or the relations of the
<PAGE 32>
Partners to each other) is not provided for herein, such matter shall
be governed by the Partnership Law, if applicable. To the extent
permitted by governing law, this Agreement shall constitute a waiver by
each Partner of all rights under the Partnership Law which are
inconsistent with the provisions of this Agreement, and to the extent
permitted by governing law, the provisions of this Agreement shall
override the provisions of the Partnership Law to the extent of such
inconsistency or contradiction.
(g) Qualification in Other States - In the event the
business of the Partnership is carried on or conducted in states in
addition to the State of California, then the parties agree that this
Partnership shall exist under the laws of each state in which business
is actually conducted by the Partnership, and they severally agree to
execute such other and further documents as may be required or
requested in order that the Managing Partner legally may qualify this
Partnership in such other states. The power of attorney granted to the
Managing Partner by each Partner referred to in Paragraph 16. hereof
shall constitute the authority of the Managing Partner to perform the
ministerial duty of qualifying this Partnership under the laws of any
other state in which it is necessary to file documents or instruments
of qualification. A Partnership office or principal place of business
in any state may be designated from time to time by the Managing
Partner.
(h) Attorneys' Fee. If any legal action arises under
this Agreement or by reason of any asserted breach thereof, the party
which ultimately prevails in such action (including any appeals related
thereto) shall be entitled to recover all costs and expenses, including
reasonable attorneys' fees, incurred in enforcing or attempting to
enforce any of the terms, covenants, or conditions of this Agreement,
including costs incurred prior to commencement of legal action.
<PAGE 33>
SECTION 3
ADMISSION OF HORIZON ENERGY DEVELOPMENT, INC.
---------------------------------------------
AS A PARTNER IN SCEPTRE POWER COMPANY
-------------------------------------
3.1 HORIZON is hereby admitted as a general partner of
Sceptre Power Company, subject to HORIZON'S execution of the Sceptre Power
Company Continuation Agreement.
SECTION 4
TRANSFER OF INTERESTS IN CERTAIN PERSONAL PROPERTY
--------------------------------------------------
4.1 (a) CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE
104(b).
In the aggregate, said payments represent the book
value of Sceptre Power Company's fixed assets at the Closing Date. In
consideration of said payments and other valuable consideration received by
them, respectively, from HORIZON, to their full satisfaction, SRL,
individually, and SEI, NOVERGAZ and PPD, individually and as partners of
Sceptre Power Company, do hereby sell, assign, transfer, deliver and set over
to HORIZON, its successors and assigns, without representations and warranties,
all of their respective rights, titles, and interests in and to the personal
property identified on Schedule 4 to this Agreement.
(b) Each of SRL and NOVERGAZ shall be entitled to audit,
at such party's sole cost and expense, the data and computations which underly
the amount of the payments set forth in Section 4.1 (a) of this Sucession
Agreement, provided, however, that such audit shall be conducted at Sceptre
Power Company's sole cost and expense in the event that the amount of such
respective payments is increased by five percent (5%) as the result of such
audit.
4.2 If at any time after the date hereof, HORIZON shall be
advised that further transfers, assignments, assurances in law, or other acts or
things are necessary or desirable to confirm in HORIZON the title to any of the
personal property identified on said Schedule 4, SRL, SEI, NOVERGAZ and PPD
<PAGE 34>
will, at HORIZON'S expense, as and when requested by HORIZON, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
any and all proper and appropriate instruments of transfer, and will do or cause
to be done all such other acts and deeds as HORIZON may reasonably deem
necessary or appropriate to confirm title to such property in HORIZON and to
otherwise carry out the intent and purposes of this Section 4.
4.3 Other than as set forth in Sections 12 and 13 of this
Succession Agreement, SRL, SEI, NOVERGAZ and PPD make no warranties of any kind
in, under, or by virtue of this Section 4, either express or implied. However,
to the extent permitted by applicable law, this Section 4 is made with full
substitution and subrogation of HORIZON for each of SRL, SEI, NOVERGAZ and PPD
in and to all covenants and warranties by others heretofore given or made for or
in connection with the acquisition of any of the property identified on said
Schedule 4. SRL, SEI, NOVERGAZ AND PPD HEREBY EXPRESSLY DISCLAIM ANY WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE IN REGARD TO THE PROPERTY
IDENTIFIED ON SAID SCHEDULE 4.
SECTION 5
TRANSFER OF PROPERTY RIGHTS IN THE PARTNERSHIP
----------------------------------------------
5.1 Each of NOVERGAZ and SEI, individually and as partners of
Sceptre Power Company, hereby sell, assign, transfer and set over to HORIZON and
its permitted successors and assigns one hundred percent (100%) of their
respective rights, title, and interests in and to the Partnership and its assets
together with all of their respective Property Rights in the Partnership,
including, without limitation, the following:
(a) The business, assets, property and name of Sceptre
Power Company, all of their respective right, title and interest in and to the
same and the goodwill of Sceptre Power Company;
(b) The accounts receivable of Sceptre Power Company;
<PAGE 35>
(c) The contracts and arrangements identified on
Schedule 5.1(c) attached to this Succession Agreement;
(d) The books, records, business files and all other
records of every type and description relating to the business, assets or
property of Sceptre Power Company or any Project; and
(e) Except as expressly provided in Section 6 of this
Succession Agreement, all of Sceptre Power Company's rights, claims and
interests of any nature (whether known or unknown and whether pertaining to
benefits presently existing or arising in the future) that NOVERGAZ or SEI
may have in or arising out of or in any way relating to the
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(B)
including, without limitation (i) the
right to provide any equipment or materials to or for, or perform any services
for, any Project or or its shareholders or affiliates,
or to receive any fees, or recover any costs, from any Project
or its shareholders or affiliates; (ii) the right to own or acquire any equity
or ownership interest in any Project or any shareholder or
affiliate ; (iii) the right to receive any cash flow,
dividends or other distributions of cash or property or other profit or
beneficial interest from any Project, or cash flow, dividends or other
distributions of cash or property or other profit or beneficial interest
or its shareholders or affiliates; and (iv)
any other rights, claims or interests of any nature arising out of or in
any way related to any Project or its
shareholders or affiliates. Such rights, claims and interests are hereinafter
collectively referred to as "Project Rights".
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
5.2 PPD, individually and as a partner of Sceptre Power
Company, hereby expressly consents to the sale, assignments, and transfers
referred to in Section 5.1 of this Succession Agreement.
5.3 SRL hereby expressly consents to the sale, assignments
and transfers referred to in Section 5.1 of this Succession Agreement, and
hereby sells, assigns, transfers and sets over to HORIZON and its permitted
successors and assigns one hundred percent (100%) of its right, title, and
interest, if any, in any and all of the business, goodwill, accounts
<PAGE 36>
receivable, contracts, and Project Rights referred to in Section 5.1 of
this Succession Agreement.
SECTION 6
ADDITIONAL CONSIDERATION
------------------------
6.1 Except as provided in Section 6.2 of this Succession
Agreement, HORIZON hereby assumes and agrees to discharge the obligations
undertaken by NOVERGAZ and SEI, individually and/or as partners of Sceptre Power
Company, in and under each of the contracts and arrangements identified on
Schedule 5.1(c) attached to this Succession Agreement insofar as, and only
insofar as, such obligations accrue or arise after the Closing Date. It is
specifically understood and agreed that HORIZON has neither assumed nor agreed
to assume any obligation of SRL or Sceptre Power Company, or of NOVERGAZ, SEI
and/or PPD, individually or as partners of Sceptre Power Company, or of any of
their respective affiliates or shareholders, other than (i) as expressly set
forth in this ss. 6.1, (ii) obligations arising under or by virtue of the
contracts and arrangements identified on said Schedule 5.1 (c) and the
transactions contemplated therein, and (iii) expenses incurred in the routine
day-to-day ordinary course of Sceptre Power Company's businesss since the date
of the most recent balance sheets.
6.2 (a) HORIZON, on the one hand, and Sellers, on the other
hand, shall each be responsible for fifty percent (50%) of Sceptre Power
Company's aggregate Going Forward Expenses through the close of business on the
Closing Date (hereinafter, the "Shared Section 6.2 Expenses"). In this
connection, the parties hereto agree as follows:
(b) On or before October 13, 1995, Sceptre Power Company
shall compile and cause to be forwarded to each of HORIZON, SRL and NOVERGAZ
cash disbursements and receipt schedules which identify and quantify, as such,
the following data as respects Sceptre Power Company:
<PAGE 37>
(A) Cash per books, as reconciled to bank
statement(s) at the close of business on June 30, 1995;
(B) cash contributions by National Fuel Gas Company
and HORIZON, booked during the period beginning July 1, 1995 and ending
at the close of business on the Closing Date (hereinafter, the "True-up
Period");
(C) cash contributions, if any, by SRL and/or
NOVERGAZ, booked during the True-up Period;
(D) disbursements in respect of the expenses of
Sceptre Power Company incurred or accrued at or before June 30, 1995;
(E) cash distributions, if any, to SRL and NOVERGAZ
during the True-up Period;
(F) cash distributions, if any, to HORIZON during
the True-up Period;
(G) the balance of Sceptre Power Company's cash
disbursements during the True-up Period; and
(H) cash per books as reconciled to bank
statement(s) at the close of business on the Closing Date.
Said schedules (hereinafter, the "Section 6.2(b) Schedules") shall accurately
reflect the indicated information, as developed in accordance with the payment
and accounting principles, practices and procedures employed by Sceptre Power
Company prior to July 1, 1995. Further, such schedules shall provide sufficient
information and detail to enable the respective recipients thereof to verify the
same.
(c) Unless HORIZON, SRL, or NOVERGAZ shall timely
transmit the notification provided for in Section 6.2(d) of this Succession
Agreement, the Section 6.2(b) Schedules shall, for all purposes, be deemed
accurate and binding upon the parties hereto (hereinafter, "Final Schedule
Data").
<PAGE 38>
(d) Upon written notification provided via facsimile
transmission to Sceptre Power Company and to each other recipient of the Section
6.2(b) Schedules on or before 12:00 noon PDT, October 20, 1995, any recipient
of the Section 6.2(b) Schedules may request an audit of any information set
forth on any such schedule, in which event, one (and only one) audit of the
Seciton 6.2(b) Schedules shall be conducted. Such audit shall be conducted at
the offices of Sceptre Power Company, Suite 1200, 6 Hutton Centre Drive, Santa
Ana, California 92707, at a mutually convenient date and time, not later than
November 16, 1995. In the event that such audit resolves all issues related to
the Section 6.2(b) Schedules, HORIZON, SRL and NOVERGAZ shall acknowledge the
accuracy of the respective schedules (as originally compiled, or as revised in
light of the audit, as the case may be) by initialing the same, and the said
initialed schedules shall be deemed to reflect Final Schedule Data.
(e) In the event that any question remains following the
audit described in Section 6.2(d) of this Succession Agreement, the same
shall be referred to Sceptre Power Company's independent auditors, whose
decision respecting the same shall be final and binding upon each of the parties
to this Succession Agreement. The Section 6.2(b) Schedules, adjusted, as
necessary, to reflect (i) the parties' agreement(s) resulting from the audit,
and/or (ii) such auditors' determination(s), as the case may be, shall be deemed
to reflect Final Schedule Data.
(f) The audit and referral to Sceptre Power Company's
independent auditors described in Sections 6.2 (d) and 6.2 (e) of this
Succession Agreement shall be conducted at the requesting party's sole cost and
expense, unless such audit and/or referral, as the case may be, results in a
reduction in the requesting party's Shared Section 6.2 Expense allocation in
excess of five percent (5%), in which event, such audit shall be conducted at
Sceptre Power Company's sole cost and expense.
(g) The Shared Section 6.2 Expenses shall be computed,
as hereinafter set forth, using Final Schedule Data, exclusively, and
HORIZON, on the one hand, and Sellers, on the other hand, shall each be
responsible for .5(G).
<PAGE 39>
(h) Sellers shall be credited with the following portion
of .5(G), to wit: [(A + C - D - E)/(A + B + C - D - E - F - H)] x (G),
hereinafter "Sellers' Section 6.2 Credit".
(i) HORIZON shall be credited with the following portion
of .5(G), to wit: [(B - F - H)/(A + B + C - D - E - F - H)] x (G), hereinafter,
"HORIZON'S Section 6.2 Credit".
(j) In the event that Sellers' Section 6.2 Credit is
less than .5(G), each of SRL and NOVERGAZ shall pay HORIZON, on or before
the tenth (10th) business day following the establishment of Final Schedule
Data, an amount equal to fifty percent (50%) of the amount necessary to increase
Sellers' Section 6.2 Credit to .5(G).
(k) In the event that HORIZON'S Section 6.2 Credit is
less than .5(G), HORIZON shall pay to each of SRL and NOVERGAZ, on or
before the tenth (10th) business day following the establishment of Final
Schedule Data, an amount equal to fifty percent (50%) the amount necessary to
increase HORIZON'S Section 6.2 Credit to .5(G).
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
<PAGE 40>
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
<PAGE 41>
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
<PAGE 42>
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
6.8 As respect SRL's and NOVERGAZ' contingent entitlements
under any or all of Sections 6.3, 6.4, 6.5, 6.6 and 6.7 of this Succession
Agreement, SRL & NOVERGAZ shall have the right (i) to review the books and
records of Sceptre Power Company and/or HORIZON referable to the
contingency(ies) involved and to the transaction(s) and event(s) which give rise
to such entitlement(s) or the failure thereof (as the case my be), and (ii) to
audit, at such party's(ies') sole cost and expense, the computations and
calculations pursuant to which Sceptre Power Company and/or HORIZON quantified
the respective entitlement(s) involved, provided, however, that such audit shall
be conducted at Sceptre Power Company's sole cost and expense in the event that
SRL's and/or NOVERGAZ's respective individual entitlements shall be increased by
an amount in excess of five percent (5%) as the result of such audit.
6.9 No assignment by HORIZON or Sceptre Power Company of an
interest in either
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
shall relieve such assignor of any obligation under Sections 6.3, 6.4 or 6.7 of
this Succession Agreement, and the provisions thereof shall operate as though
<PAGE 43>
such assignor had retained such interest until such time as SRL and
NOVERGAZ have accepted such assignee and mutually satisfactory novation
agreements have been entered into.
SECTION 7
DISPOSITION OF CASH ON CLOSING
------------------------------
7.1 The parties acknowledge that no distributions authorized
in Seciton 6.3 of the August 18, 1995 Agreement were effected prior to the
Closing Date and that, accordingly, the reserve provided for in the second
sentence of said Section 6.3 was not established.
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
SECTION 8
DEVELOPMENT OF EXISTING PROJECTS
--------------------------------
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b).
<PAGE 44>
SECTION 9
OUTSTANDING LETTER OF CREDIT
----------------------------
9.1 Except as provided in Section 6.4 of this Succession
Agreement, SRL, SEI, and/or NOVERGAZ, as the case may be, shall bear ultimate
responsibility as respects all costs, expenses and losses related to or arising
from draws or attempted draws against the letter of credit referred to in
Section 6.4 a(ii) of this Succession Agreement.
SECTION 10
WAIVER OF CLAIMS BY PPD
-----------------------
10.1 PPD hereby acknowledges that its waiver of claims against
SRL, SEI and NOVERGAZ, under the Cogen Agreement or otherwise, provided for in
Section 7 of the August 18, 1995 Agreement has been in effect since August 18,
1995 and shall continue to be effective after the Closing Date.
SECTION 11
REPRESENTATIONS AND WARRANTIES OF ALL PARTIES
---------------------------------------------
11.1 Each party to this Succession Agreement represents and
warrants to each and every other party to this Succession Agreement as follows:
(a) Such party is a corporation, duly organized,
validly existing and in good standing under the laws of the relevant
jurisdiction aforesaid and, insofar as requisite to the consummation of the
transactions contemplated herein is duly qualified as a foreign corporation in
all relevant jurisdictions.
(b) Such party has full corporate power and authority
to enter into this Succession Agreement and to perform its undertakings
hereunder.
(c) Insofar as required under Section 3.2(s) of the
August 18, 1995 Agreement, the execution and delivery of this Succession
<PAGE 45>
Agreement and the consummation of the transactions contemplated thereunder have
been duly authorized by the Board of Directors of such party.
(d) This Succession Agreement has been duly executed
and delivered by such party and is valid and binding upon such party in
accordance with its terms.
(e) Such party has incurred no liability, contingent or
otherwise, for brokers', finders', or consultants' fees relating to (i) the
transactions contemplated in this Succession Agreement, or (ii) the equity
or debt funding of any Project, for which Sceptre Power Company or any other
such party shall or may have any responsibility, whatsoever.
SECTION 12
REPRESENTATIONS AND WARRANTIES OF
---------------------------------
SRL, SEI, NOVERGAZ AND PPD
--------------------------
12.1 Each of SRL, SEI, NOVERGAZ and PPD represents as
follows:
(a) Sceptre Power Company is a general partnership duly
organized, validly existing and in good standing under the laws of the State of
California.
(b) At the date of this Succession Agreement, SEI,
NOVERGAZ and PPD are the general partners, and the only partners, of Sceptre
Power Company.
(c) Immediately prior to each such party's execution of
this Succession Agreement, the only written evidence of the Partnership
Agreement of Sceptre Power Company is (i) the summary of certain provisions
thereof set forth in Article 2 of the Cogen Agreement, and (ii) those portions,
if any, of the Sceptre Power Company Management Committee Minutes which reflect
one or more of the terms and conditions of the Partnership Agreement.
<PAGE 46>
12.2 Each of SRL, SEI, NOVERGAZ and PPD represent and
warrant, to the best of their respective knowledge, information and belief
following reasonable inquiry, as follows:
(a) Sceptre Power Company has filed all tax returns
which are required by law to be filed and has paid or set up an adequate
reserve for the payment of all (i) taxes required to be paid in respect of the
period covered by those returns, if any, (ii) income, franchise, property,
sales, use, employment or other taxes which have or may become due pursuant to
those returns, and (iii) assessments made and all other accrued taxes whether or
not the returns or payments are yet due; and all filed tax returns of Sceptre
Power Company are correct and true in all material respects; there is no
outstanding claimed deficiency with respect to any tax period, no formal or
informal notice of a proposed deficiency, and no notification of any pending
audit of tax returns and no waiver or extension granted by Sceptre Power Company
with respect to any period of limitations affecting assessment of any tax.
(b) There are no material liabilities or obligations of
Sceptre Power Company of any kind, whether accrued, absolute, contingent or
otherwise, which will or might become liabilities of HORIZON by reason of the
transactions contemplated by this Succession Agreement, except those which are
reflected on the balance sheets of Sceptre Power Company or arise under or are
related to contracts and arrangements identified on Schedule 5.1(c) attached to
this Succession Agreement; and no material liabilities or obligations have
arisen since the date of the most recent balance sheets, other than pursuant to
or under the said contracts or arrangements.
(c) The bank accounts and cash of Sceptre Power Company
reflected on the books of Sceptre Power Company, including any certificates
of deposit are not subject to any material bank offset or other charges, and
there have been no uses of cash or reduction of bank deposits since the date of
the most recent interim financial statement, except as necessary to pay current
expenses of Sceptre Power Company.
(d) Sceptre Power Company makes and keeps accurate
books and records reflecting its assets and liabilities and maintains
internal accounting controls that provide reasonable assurance that (i)
<PAGE 47>
transactions are executed with Management's authorization, and (ii) transactions
are recorded as necessary to permit preparation of Sceptre Power Company's
financial statements and to maintain accountability for its assets.
(e) Sceptre Power Company owns, holds and controls
non-assessable and totally unencumbered certificate(s) representing one
hundred percent (100%) of the issued and outstanding stock of Sceptre Kabirwala
Power, Inc.
(f) Sceptre Power Company is in compliance with all
federal, state and local governmental laws and regulations relating to the
employment of labor, including provisions relating to wages, fringe benefits,
hours, working conditions, collective bargaining, or payment of social security
and unemployment taxes and is not liable for arrears on wages or tax or
penalties for failure to comply with such laws.
(g) Other than as set forth in the documents comprising
the contracts and arrangements identified on Schedule 5.1(c) attached to
this Succession Agreement, Sceptre Power Company is not subject to or a party to
any plan, arrangement or contract providing for bonuses, deferred compensation,
retirement payments, profit sharing or other employee benefits to or for which
HORIZON may become subject or liable upon the consummation of the transactions
contemplated in this Succession Agreement.
(h) No suit, action or other proceeding is pending or
threatened before any court, governmental agency, or alternative dispute
resolution tribunal, and, to the best of such party's knowledge, information and
belief, no cause of action or claim exists against Sceptre Power Company, with
respect to the contracts and arrangements identified in Schedule 5.1(c) attached
to this Succession Agreement, or otherwise, which might result in a material
adverse effect upon Sceptre Power Company or, upon consummation of the
transactions contemplated in this Succession Agreement, upon HORIZON, and
neither Sceptre Power Company nor any of its affiliates is in default under any
contract or arrangement identified in Schedule 5.1(c) attached to this
Succession Agreement.
<PAGE 48>
(i) Sceptre Power Company has good, marketable and
unencumbered title to all of the assets identified on Schedule 4 attached
to this Succession Agreement, and upon the consummation of the transactions
contemplated hereby, HORIZON will acquire good and marketable title to said
property.
SECTION 13
REPRESENTATIONS AND WARRANTIES BY
---------------------------------
SRL, SEI AND NOVERGAZ
---------------------
13.1 Each of SRL, SEI and NOVERGAZ represents and warrants
that to the best of such party's knowledge, information and belief, following
reasonable inquiry, and subject to the provisions of the contracts and
arrangement listed on Schedule 5.1 (c) attached to this Succession Agreement,
(i) it has good and marketable title to the interests in the Partnership which
it is conveying pursuant to this Succession Agreement; (ii) that said interests
are free and clear of restrictions on, or conditions to, transfer and are free
and clear of mortgages, liens, privileges, charges, encumbrances, equities,
claims, covenants, conditions or restrictions, of any kind, created by, through
or under such party or Sceptre Power Company; and (iii) that it has the absolute
right and power to convey said interests to HORIZON, without seeking the
approval of any person or entity not a party to this Succession Agreement.
SECTION 14
INDEMNIFICATION
---------------
14.1 SRL, SEI and NOVERGAZ shall indemnify HORIZON and hold
it harmless against and in respect to all claims, causes of action,
liabilities, costs and damages of every kind and character (including, without
limitation, those arising under the contracts and arrangements identified in
Schedule 5.1(c) attached to this Succession Agreement, and reasonable attorneys
fees and expenses) that may be asserted against HORIZON, or said parties, or any
of them, or against the properties and assets or any of them which are subject
to this Succession Agreement and which accrue or accrued at or prior to (or
relate to a time or times prior to) the Closing Date (but not including those
that result from or are attributable to any representation of HORIZON contained
<PAGE 49>
in this Succession Agreement being untrue or a breach of any warranty or
covenant of HORIZON contained in this Succession Agreement).
14.2 HORIZON shall indemnify SRL, SEI and NOVERGAZ and hold
them harmless against and in respect to all claims, causes of action,
liabilities, costs and damages of every kind and character (including, without
limitation, those arising under the contracts and arrangements identified in
Schedule 5.1(c) attached to this Succession Agreement, and reasonable attorneys
fees and expenses) that may be asserted against SRL, SEI and NOVERGAZ or
HORIZON, or any of them, or against the properties and assets or any of them
which are subject to this Succession Agreement and which accrue or accrued after
(or relate to a time or times after) the Closing Date (but not including those
that result from or are attributable to any representation of SRL, SEI or
NOVERGAZ contained in this Succession Agreement being untrue or a breach of any
warranty or covenant of SRL, SEI or NOVERGAZ contained in this Succession
Agreement).
SECTION 15
NOTICES
-------
15.1 Except as otherwise provided in this Agreement or
required by law, any notice, demand or other communication required or permitted
to be given pursuant to this Agreement shall have been sufficiently given for
all purposes if (i) delivered personally to the entity or an executive officer
of the entity to whom that notice, demand or other communication is directed, or
(ii) sent first-class mail (postage prepaid), by overnight courier, or by
facsimile transmission, directed to such entity and addressed as follows:
SCEPTRE:
Sceptre Resources Limited
Suite 2000, 400 Third Avenue S.W.
Calgary, Alberta T2P 4H2
Attention: President & CEO
Phone: (403) 298-9800
Fax: (403) 290-1106
<PAGE 50>
Sceptre Energy, Inc.
Suite 2000, 400 Third Avenue S.W.
Calgary, Alberta T2P 4H2
Attention: President & CEO
Phone: (403) 298-9800
Fax: (403) 290-1106
(403) 298-9820
Sceptre Power Company
Suite 1200, 6 Hutton Centre Drive
Santa Ana, California 92707
Attention: President
Phone: (714) 546-1800
Fax: (714) 546-1801
NOVERGAZ:
Novergaz (1994), Inc.
Suite 1400, 740 Notre Dame Street, West
Montreal, Quebec H3C 3X6
Attention: President & CEO
Phone: (514) 871-1127
Fax: (514) 871-1742
POWER PROJECT DEVELOPMENT, INC.:
Power Project Development, Inc.
Suite 1200, 6 Hutton Centre Drive
Santa Ana, California 92707
Attention: President
Phone: (714) 546-1800
Fax: (714) 546-1801
<PAGE 51>
HORIZON ENERGY DEVELOPMENT, INC.:
Horizon Energy Development, Inc.
Suite 800, 10 Lafayette Square
Buffalo, New York 14203
Attention: Bruce H. Hale/Gerald T. Wehrlin
Phone: (716) 857-7024
Fax: (716) 857-7254
<PAGE 52>
SECTION 16
WITHDRAWAL OF SEI AND NOVERGAZ AS PARTNERS
------------------------------------------
IN SCEPTRE POWER COMPANY
------------------------
16.1 SEI and NOVERGAZ hereby withdraw as Partners in Sceptre
Power Company effective the close of business on the Closing Date. Nothing in
this Succession Agreement is intended to or shall be interpreted or construed to
create or continue a partnership, joint venture, or any other fiduciary
relationship by and between any or all of SRL, SEI and NOVERGAZ, on the one
hand, and any or all of the other parties to this Succession Agreement, on the
other hand, after the close of business on the Closing Date.
SECTION 17
MISCELLANEOUS
-------------
17.1 Negotiated Agreement. This Agreement is a negotiated
agreement and the terms, provisions, and conditions thereof, except insofar as
defined therein, shall be interpreted and construed in accordance with their
usual and customary meaning. The parties expressly, knowingly and voluntarily
waive the application of any rule of law or procedure to the effect that
ambiguous or conflicting terms shall be interpreted or construed against the
party whose attorney prepared the executed version or any prior draft of this
Agreement.
17.2 Effect of Waiver. No waiver by a party of any provision
of this Agreement shall be considered a waiver of any other provision or of any
subsequent non-performance of the same or any other provision of this Agreement,
including the time for performance of any such provision. The exercise by a
party of any remedy provided in this Agreement or at law shall not prevent the
exercise by that party of any other remedy provided in this Agreement or at law.
17.3 Counterparts. This Agreement and all amendments thereof
and supplements thereto may be executed in counterparts, which upon
execution thereof by all of the parties thereto, shall be deemed one document.
Further, this Agreement and all amendments thereto and supplements thereof shall
<PAG5 53>
be deemed to have been executed and delivered by a party when that party
has (i) provided each other party thereto, via facsimile transmission, with a
copy of the signature page bearing that party's signature, and (ii) has placed
into the custody of an overnight courier, for delivery to each other party
thereto, a copy of said signature page bearing that party's signature in
original.
17.4 Entire Agreement/Amendments. This Agreement constitutes
and contains the entire agreement of the parties hereto with respect to the
matters set forth herein and supersedes any prior understanding or agreement,
oral or written, with respect thereto. No amendment of this Agreement shall be
effective unless the same shall be set forth in a writing signed by all of the
Partners.
17.5 Severability. If any term or other provision of this
Agreement shall be declared to be invalid, illegal, or incapable of being
enforced by any rule of law or public policy, all other terms, provisions and
conditions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party to this
Agreement. Upon any binding determination that any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties to this Agreement as closely as possible in
an acceptable and legally enforceable manner, to the end that the transactions
contemplated hereby may be effected to the full extent possible.
17.6 Successors, Assignment, Benefit. This Agreement inures
to the benefit of, and is binding upon, the parties thereto and there
respective permitted successors and assigns, provided, however, that no
assignment of this Agreement shall relieve the assignor of any of its
obligations hereunder without the consent of the other parties to this
Agreement, which said consent shall not be unreasonably withheld. Nothing in
this Agreement is intended to benefit any entity which is not a party to this
Agreement.
<PAGE 54>
17.7 Governing Law. Except as hereinafter provided, and
notwithstanding the place where this Agreement may be executed by any of the
parties hereto, the parties expressly agree that this Agreement shall be
governed in all respects, including validity, interpretation and effect by, and
shall be enforceable in accordance with, the law of the State of New York,
without reference to provisions governing choice of law or conflicts of law,
provided, however, that the Partnership aspects of this Agreement shall be
governed by and construed under the law of the State of California.
17.8 Survival. The representations, warranties and covenants
contained herein shall survive the closing of the transaction contemplated in
this Agreement.
17.9 Additional Instruments. The parties hereto shall
deliver or cause to be delivered on the Closing Date, and at such other
times and places as shall be reasonably agreed on, such additional instruments
as any party may reasonably request for the purpose of carrying out this
Agreement.
17.10 No Dissolution. Nothing in this Succession Agreement
shall constitute or be deemed to constitute a "dissolution" of the Partnership
as that concept is defined in relevant provisions of California Law.
SECTION 18
CONSENT TO JURISDICTION: ATTORNIES' FEES
----------------------------------------
18.1 Any suit, action or proceeding arising out of or
relating to this Agreement or any alleged breach thereof shall be brought
in the United States District Court for the Western District of New York in the
City of Buffalo, Erie County, New York, or, in the event that subject matter
jurisdiction shall not lie in said Court, then in the New York State Supreme
<PAGE 55>
Court, Erie County, New York. The respective parties hereto expressly waive
any objection which they may now or hereafter have to the Erie County, New York
venue of any such suit, action or proceeding; irrevocably submit to the
jurisdiction of said United States District Court for the Western District of
New York and said New York State Supreme Court, Erie County, New York (as the
case may be) as respects any such suit, action or proceeding; and irrevocably
waive any right to a trial by jury which might otherwise be available in respect
of any or all of the issues tendered in said suit, action or proceeding.
18.2 Attorneys' Fee. If any legal action arises under this
Agreement or by reason of any asserted breach thereof, the party which
ultimately prevails in such action (including any appeals related thereto) shall
be entitled to recover all costs and expenses, including reasonable attorneys'
fees, incurred in enforcing or attempting to enforce any of the terms,
covenants, or conditions of this Agreement, including costs incurred prior to
commencement of legal action.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement on the dates written below.
Sceptre Resources, Ltd.
By: /s/ Michael A. Grandin Date: September 15, 1995
----------------------------------- -------------------
Michael A. Grandin, President
By: /s/ John A. Macleod Date: September 15, 1995
----------------------------------- -------------------
John A. Macleod, Vice President
Sceptre Energy, Inc.
By: /s/ Michael A. Grandin Date: September 15, 1995
----------------------------------- ------------------
Michael A. Grandin, President
By: /s/ John A. Macleod Date: September 15. 1995
----------------------------------- -------------------
John A. Macleod, Vice President
NOVERGAZ (1994), Inc.
By: /s/ Marc A. Leveugle Date: September 15, 1995
----------------------------------- -------------------
Marc A. Leveugle, Vice President
<PAGE 56>
Power Project Development, Inc.
By: /s/ Jay R. Roland Date: September 15, 1995
----------------------------------- -------------------
Jay R. Roland, President
Horizon Energy Development, Inc.
By: /s/ Gerald T. Wehrlin Date: September 15, 1995
----------------------------------- ------------------
<PAGE 57>
SCHEDULE 4
----------
OFFICE EQUIPMENT INVENTORY
--------------------------
OFFICE NO./TITLE QUANTITY DESCRIPTION
- - ---------------- -------- -----------
10/ Reception 1 Swivel Chair
1 Computer Monitor, Keyboard, Hard Drive,
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 AT&T Legend MLX-201 Console Phone
1 Mobile Security Filing Cabinet
1 Coat Rack and 2 Hangers
11/ Lobby 1 Overstuffed Lounge Chairs
1 Overstuffed Lounge Chairs
1 Overstuffed Lounge Chairs
1 Overstuffed Lounge Chairs
1 Coffee Table
2 Cricket End Tables
1 The Colonna Wall Stand
1 AT&T Legend MLX-10D Phone
2 Table Lamps
12/ Storage 1 IBM Selectric II Typewriter
1 Fireproof Metal Filing Cabinet
1 AT&T Legend MLX-10D Phone
13/ Office 2 Hanging Picture
1 Desk
1 Swivel Chair
2 Guest Chairs
2 Bookcase
1 Credenza
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet IV Printer
1 AT&T Legend MLX-28D Phone
<PAGE 58>
14/ Executive Conference
Rm 1 Octagonal Conference Table
4 Guest Chairs
1 Hanging Picture
1 Phone Stand
1 AT&T Legend MLX-10D Phone
15/ Office 1 Sunset Desk (Mahogany)
1 Wall Unit
1 Credenza
2 Guest Chairs
1 Swivel Chair
1 Overstuffed Lounge Chair
1 Couch
1 End Table
1 Drop Leaf Coffee Table
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
16/ Office 1 Sunset Desk (Mahogany)
1 Wall Unit
2 Guest Chairs
1 Swivel Chair
2 2 Drawer Filing Cabinet
1 Overstuffed Lounge Chair
1 Couch
1 End Table
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
<PAGE 59>
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
17/ Office 1 Desk
2 Bookcases
1 Credenza
1 Swivel Chair
2 Guest Chairs
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
1 AT&T Legend MLX-10D Phone
19/ Office 1 Desk
1 Credenza
2 Bookcases
1 Computer Table
1 Swivel Chair
2 Guest Chairs
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
20/ Office 1 Desk
1 Credenza
2 Bookcases
1 Computer Table
1 Swivel Chair
2 Guest Chairs
<PAGE 60>
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
21/ Office 1 Desk
1 Credenza
2 Bookcases
1 Swivel Chair
2 Guest Chairs
1 Table Stand
1 Hewlett Packard Laser Jet IV Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
22/ Office 1 Desk
1 Credenza
1 Swivel Chair
1 Computer Stand
2 Guest Chairs
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet III Printer
1 Hanging Picture
1 AT&T Legend MLX-10D Phone
23/ Office 1 Desk
1 Credenza
1 Bookcase
1 Swivel Chair
2 Guest Chair
<PAGE 61>
1 AT&T Legend MLX-10D Phone
24/ Office 1 Desk
1 Swivel Chair
2 Guest Chairs
1 Credenza
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet IV Printer
1 AT&T Legend MLX-10D Phone
1 Metal Filing Cabinet - 4 Drawer
1 Metal Filing Cabinet - 4 Drawer
25/ Kitchen 1 Kitchen Table w/ 4 Chairs
1 Microwave
26/ Office 1 Round Conference Table
6 Guest Chairs
1 Phone Stand
1 AT&T Legend MLX-10D Phone
27/ Office 1 Desk
1 Credenza
1 Bookcase
1 Metal Filing Cabinet - 4 Drawer
1 Metal Filing Cabinet - 4 Drawer
1 Metal Filing Cabinet - 4 Drawer
1 AT&T Legend MLX-10 Phone
28/ Office Bay Area 1 Desk
1 Credenza
1 Guest Chair
1 Swivel Chair
1 Computer Monitor, Keyboard, Hard Drive
<PAGE 62>
1 Mouse
1 Hewlitt Packard Laser 4 Jet Printer
1 AT&T Legend MLX-28D Phone
1 Metal Filing Cabinets - 4 Drawer
1 Metal Filing Cabinets - 4 Drawer
1 Metal Filing Cabinets - 4 Drawer
29/ Office Bay Area 1 Desk
1 Credenza
1 Swivel Chair
1 Guest Chair
1 AT&T Legend MLX-28D Phone
1 Computer Monitor, Keyboard, Hard Drive
1 Mouse
1 Hewlett Packard Laser Jet IV Printer
1 Metal Filing Cabinets - 5 Drawer
1 Metal Filing Cabinets - 5 Drawer
30/ Conference Room 1 Conference Table
1 Boardroom Sideboard
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Swivel Chair
1 Hanging Picture
<PAGE 63>
1 AT&T Legend MLX-10D Phone
Executive Vestibule 1 Antique Display Case
1 Antique Display Cabinet
1 Antique Table
1 Hanging Picture
1 Hanging Picture
1 Metal Filing Cabinet - 4 Drawer
1 Metal Filing Cabinet - 4 Drawer
Office Corridor 1 Metal Filing Cabinets - 4 Drawer
1 Bookcase
1 Wall Unit Bookcase/Cabinet
Miscellaneous Asset
Items 1 Hanging Pictures
1 Hanging Pictures
1 Hanging Pictures
N/A Computer Software
N/A Plants
Sceptre Resources Desks, Credenzas, Bookcases, Conference
Limited Tables, Sideboard, Wall Units
(See Attached
Memo)
City Office Furniture Desks, Credenzas, Wall Units, Exec
(See Attached) Conference Table, Swivel Chairs, Guest
Chairs, Lateral Files, Hutch
1 Nokia Cellular Phone
(Serial #: 16501701693)
Miscellaneous Asset
Items 1 Nokia Cellular Phone
(Serial #: 16501700296)
1 Nokia Cellular Phone
(Serial #: 16501658212)
1 Nokia Cellular Phone
(Serial #: 16501700161)
1 Nokia Cellular Phone
(Serial #: 16501699918)
<PAGE 64>
1 Nokia Cellular Phone
(Serial #: 16502203034)
1 Nokia Cellular Phone
(Serial #: 16501685121)
1 Reception Area Desk w/ pencil drawers,
file drawer cabinet & countertop glass
1 Toshiba Portable Laptop Computer
1 Toshiba Portable Laptop Computer
1 Toshiba Portable Laptop Computer
1 Acer Portable Laptop Computer
1 Acer Portable Laptop Computer
1 19" Emmerson Television w/Video Player
<PAGE 65>
SCHEDULE 5.1 (c)
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
<PAGE 66>
SCHEDULE 6.6
CONFIDENTIAL TREATMENT REQUESTED PURSUANT TO RULE 104(b)
AGREEMENT PURSUANT TO RULE 45(c)
UNDER THE PUBLIC UTILITY HOLDING ACT OF 1935
WHEREAS, National Fuel Gas Company ("National"), a corporation
organized under the laws of the State of New Jersey and a registered holding
company under the Public Utility Holding Company Act of 1935 ("Act"), together
with its wholly-owned subsidiaries, listed below:
National Fuel Gas Distribution Corporation
National Fuel Gas Supply Corporation
Seneca Resources Corporation
Leidy Hub, Inc.
Highland Land & Minerals, Inc.
Utility Constructors, Inc.
Data-Track Account Services, Inc.
National Fuel Resources, Inc.
Horizon Energy Development, Inc.
join annually in the filing of a consolidated federal income tax return; and
WHEREAS, it is the intention of National and its subsidiaries
(hereinafter collectively referred to as the "System"), to enter into a Tax
Agreement for the allocation of current federal income taxes; and
WHEREAS, Rule 45(c) of the Act has been adopted by the Securities and
Exchange Commission with the specific intention of providing a method of
allocation of consolidated federal income taxes by a registered holding company
and its subsidiaries;
<PAGE 2>
NOW, THEREFORE, the System does hereby covenant and agree with one
another that the consolidated current federal income tax liability of the System
shall be allocated pursuant to Rule 45(c) of the Act, so that each company of
the System will benefit mutually from the application of said Rule, as follows:
FIRST: There shall be allocated and preserved to each company the tax
effects of its own capital gains or losses which shall be subject to the capital
gains rate, if applicable, its tax credits, investment tax credit recapture and
the effects of any other material items taxed at different rates or involving
special benefits or limitations as may result from an unexpected event,
including changes to the Internal Revenue Code which may be applicable to a
particular company, including its carry-over amounts to the extent those amounts
are absorbed in the taxable year.
SECOND: After giving effect to the special allocations described in
paragraph First above, the balance of the current tax liability of the System
shall be allocated to each System company on the basis of each of their
respective contributions of corporate taxable income to the total consolidated
taxable income of the System, excluding income subject to taxation at the
capital gains rate, if applicable. The tax attributable to such income will have
been separately allocated pursuant to paragraph First above. However, so long as
National has negative corporate taxable income, no portion of the current tax
liability shall be allocated to National as a corporate tax credit. Instead, the
negative corporate taxable income of National shall be allocated to those System
companies which have positive corporate taxable income, on the basis of each of
these companies' contribution of positive corporate taxable income to the total
positive corporate taxable income of the System. The tax allocated to a company
<PAGE 3>
under this paragraph, which may be either positive or negative (except for
National) shall be equal to the consolidated tax liability multiplied by a
fraction, the numerator of which is the positive corporate taxable income of the
Company (as adjusted by National's negative corporate taxable income described
in this paragraph Second above and in paragraph Third); or the negative
corporate taxable income of the Company (as adjusted in paragraph Third),
including any carry-over loss attributable to the Company to the extent absorbed
in the taxable year, and the denominator of which is the consolidated taxable
income of the System (as adjusted in paragraphs First and Third). Companies with
taxable income will be allocated a tax liability under this method while
companies with net operating losses (except National) will be allocated a tax
benefit or credit.
THIRD: The tax effect of intercompany transactions eliminated in the
calculation of consolidated taxable income shall be eliminated from the
corporate taxable income of the companies involved in such transactions in the
calculations provided in paragraph Second.
FOURTH: Any consolidated alternative minimum income tax and
environmental tax arising from consolidated alternative minimum taxable income
(AMTI) will be allocated among the companies on the basis of each of their
respective contributions of positive AMTI to the total positive AMTI of the
System.
FIFTH: Under the method of allocation described in paragraphs First
through Fourth above, the companies agree that the tax allocated to each company
<PAGE 4>
(except National) shall not exceed the amount of tax of such company based upon
a separate return computed as if such company had always filed its tax returns
on a separate return basis. However, in computing the separate return tax
liability of a company, items of carry-forward, carry-back and intercompany
transactions, to the extent that any or all of these items have been utilized by
the System in a prior taxable year's allocation, will be disregarded in order to
comply with the separate return limitation provisions set forth in Rule 45(c) of
the Act and regulations promulgated under Section 1552 of the Internal Revenue
Code. Thus, to the extent that a company receives a tax benefit or credit
pursuant to paragraph Second above, such benefit or credit would be applied to
reduce any tax credits in future years to which such company might otherwise
become entitled under the separate return limitation provisions of Rule 45(c) of
the Act and regulations promulgated under Section 1552 of the Internal Revenue
Code.
IT IS FURTHER AGREED by and among the System as follows:
I. PAYMENTS: It is agreed that those companies allocated a current
federal income tax liability under this agreement will pay the Internal Revenue
Service a portion of that liability in the amounts and on the dates directed by
National, as determined and pursuant to the applicable sections of the Internal
Revenue Code. Another portion of the current federal income tax liability of
those companies shall be paid by them to the other companies which were
<PAGE 5>
allocated a tax benefit. Such payments will also be made in the amounts and on
the dates directed by National.
II. SEPARATE RETURN LIABILITY: The System intends that the result of the
proposed method of allocation and payment will be:
(a) No company will pay more than its separate return liability
as if it had always filed separate returns. However, the
qualifications set out in paragraph Fifth above concerning the
calculation of a separate return tax shall apply;
(b) Each company having a net operating loss or other net tax
benefit will receive in current cash payments the benefit of its
own net operating loss (except as described in paragraph Second)
or other net tax benefits to the extent that the other companies
can utilize such items to offset the tax liability they would
otherwise have on a separate return basis.
III. EFFECTIVE DATE: This Tax Agreement will be effective for allocation of
the current income tax liability of the system for the fiscal year 1995 and all
sbsequent years until this Tax Agreement shall be amended in writing by each of
the companies which is a party thereto.
IV. APPROVAL AND AMENDMENTS: Any amendments to this Tax Agreement may be
made only with the unanimous written consent of all the parties hereto. A copy
of this Tax Agreement is being filed as an exhibit to National's Form U5S Annual
Report to the Securities and Exchange Commission for the year ended September
30, 1995. Any amendments to this Tax Agreement will be filed as an exhibit to
<PAGE 6>
National's Form U5S for the year when the amendment becomes effective. It is
contemplated that any additional companies which hereafter become associated
with the System shall have the option of joining in and becoming a party to this
Tax Agreement by amendment thereto.
V. PRIOR AGREEMENTS SUPERSEDED: Any prior agreements relating to the
allocation of income tax liability among the System are superseded.
IN WITNESS WHEREOF, each of the parties hereto have caused this Tax
Agreement to be executed in its name and on its behalf by one of its officers
duly authorized, and its corporate seal to be affixed hereto by its Secretary on
this 26th day of January 1996.
ATTEST: NATIONAL FUEL GAS COMPANY
By:
- - ----------------------- -------------------------------------------------
Anna Marie Cellino Joseph P. Pawlowski
Secretary Treasurer
ATTEST: NATIONAL FUEL GAS DISTRIBUTION
CORPORATION
By:
- - ----------------------- -------------------------------------------------
David F. Smith Joseph P. Pawlowski
Secretary Treasurer
ATTEST: NATIONAL FUEL GAS SUPPLY
CORPORATION
By:
- - ----------------------- -------------------------------------------------
Joseph P. Pawlowski Richard Hare
Treasurer President
<PAGE 7>
ATTEST: SENECA RESOURCES CORPORATION
By:
- - ----------------------- -------------------------------------------------
William M. Petmecky Calvin H. Friedrich
Secretary Treasurer
ATTEST: LEIDY HUB, INC.
By:
- - ----------------------- -------------------------------------------------
Gerald T. Wehrlin Walter E. DeForest
Secretary President
ATTEST: HIGHLAND LAND & MINERALS, INC.
By:
- - ----------------------- -------------------------------------------------
Joseph P. Pawlowski Philip C. Ackerman
Secretary President
ATTEST: UTILITY CONSTRUCTORS, INC.
By:
- - ----------------------- -------------------------------------------------
David F. Smith Joseph P. Pawlowski
Secretary Treasurer
ATTEST: DATA-TRACK ACCOUNT SERVICES, INC.
By:
- - ----------------------- -------------------------------------------------
David F. Smith Joseph P. Pawlowski
Secretary Treasurer
ATTEST: NATIONAL FUEL RESOURCES, INC.
By:
- - ----------------------- -------------------------------------------------
Ronald J. Tanski David F. Smith
Secretary President
ATTEST: HORIZON ENERGY DEVELOPMENT
By:
- - ----------------------- -------------------------------------------------
Gerald T. Wehrlin Philip C. Ackerman
Secretary President
