SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1994 Commission File # 1-8353
NUI CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-1869941
(State of incorporation) (I.R.S. employer
identification no.)
550 Route 202-206, P.O. Box 760, Bedminster, New Jersey 07921-0760
(Address of principal executive offices, including zip code)
(908) 781-0500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK, No Par Value New York Stock Exchange, Inc.
(Title of class) (Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days:
X
Indicate by check mark if disclosure of delinquent filers, pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to the Form 10-K:
The aggregate market value of 7,839,574 shares of common stock held by
non-affiliates of the registrant calculated using the $15.375 per share
closing price on October 31, 1994 was: $120,533,450.
The number of shares outstanding of each of the registrant's classes of
common stock, as of October 31, 1994:
Common Stock, No Par Value: 9,184,593 shares outstanding.
Documents incorporated by reference: NUI Corporation's definitive Proxy
Statement for the Company's Annual Meeting of Stockholders, which is
expected to be filed with the Securities and Exchange Commission no
later than 120 days subsequent to September 30, 1994.<PAGE>
NUI Corporation
Annual Report on Form 10-K For The
Fiscal Year Ended September 30, 1994
TABLE OF CONTENTS
PART I
Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 10
Item 4. Submission of Matters to a Vote of Security Holders . . . . . 10
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters . . 11
Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . 14
Item 8. Financial Statements and Supplementary Data . . . . . . . . . 20
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . 20
PART III
Item 10. Directors and Executive Officers of the Registrant . . . . . 20
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . 20
Item 12. Security Ownership of Certain Beneficial Owners and Management 20
Item 13. Certain Relationships and Related Transactions . . . . . . . 20
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K . . . . 21<PAGE>
NUI Corporation
Annual Report on Form 10-K For The
Fiscal Year Ended September 30, 1994
PART I
Item 1. Business
NUI Corporation ("NUI" or the "Company") was incorporated in New
Jersey in 1969, and is engaged primarily in the sale and transportation
of natural gas. The Company serves more than 347,000 customers in six
states through its operating divisions: Elizabethtown Gas Company ("New
Jersey Division"), City Gas Company of Florida ("Florida Division") and
Pennsylvania & Southern Gas Company ("PSGS Division"), which operates as
North Carolina Gas Service (North Carolina), Elkton Gas Service
(Maryland), Valley Cities Gas Service (Pennsylvania) and Waverly Gas
Service (New York). Pennsylvania & Southern Gas Company was acquired by
the Company pursuant to a merger ("PSGS Merger") that was consummated on
April 19, 1994. Upon consummation of the PSGS Merger, the Company's
principal operating subsidiary, Elizabethtown Gas Company, was merged
with and into NUI. (See Note 2 of the "Notes to the Consolidated
Financial Statements").
In addition to its gas distribution operations, the Company
provides bill processing and related customer services for utilities and
municipalities through its Utility Billing Services, Inc. subsidiary,
and gas supply, planning and management services through its Natural Gas
Services, Inc. subsidiary.
The principal executive offices of the Company are located at
550 Route 202-206, Box 760, Bedminster, NJ 07921-0760; telephone:
(908) 781-0500.
Territory and Customers Served
See Item 6 - "Selected Financial Data Summary Consolidated
Operating Data" for summary information by customer class with respect
to operating revenues, gas volumes sold or transported and average
customers served. The Company serves more than 347,000 customers, of
which approximately 67% are in New Jersey, 27% are in Florida, 3% are in
North Carolina, 1% are in Maryland, and 2% are in Pennsylvania and New
York combined. Approximately 53% of the Company's customers are
residential and commercial customers that purchase gas primarily for
space heating. The Company's operating revenues for fiscal 1994 amounted
to $392.3 million, of which approximately 84% was generated in New
Jersey, 14% was generated in Florida, 1% was generated in North
Carolina, less than one percent was generated in Maryland and 1% was
generated in Pennsylvania and New York combined. Gas volumes sold or
transported in fiscal 1994 amounted to 78.1 million Mcf, of which
approximately 84% was sold or transported in New Jersey, 13% was sold or
transported in Florida, 1.5% was sold or transported in North Carolina,
less than one percent was sold in Maryland and 1.5% was sold or
transported in Pennsylvania and New York combined. An Mcf is a basic
unit of measurement for natural gas comprising 1,000 cubic feet of gas.
1<PAGE>
The addition of the PSGS Division did not have a significant impact on
fiscal 1994's operating revenues, operating margins and volumes sold or
transported since this division was acquired after the fiscal 1994
heating season.
The Company provides gas sales and transportation service
comprising twenty percent of the primary fuel requirements of a 614
megawatt cogeneration facility that began commercial operation in New
Jersey in July 1992 to supply electric power to New York City. In fiscal
1994, sales and transportation of gas to this customer accounted for
approximately 6% of the Company's operating revenues and approximately
9% of total gas sold or transported. The Company is authorized by the
New Jersey Board of Public Utilities (the "NJBPU") to retain
approximately $2.3 million of the operating margins that are realized
from these sales over approximately four years. Through fiscal 1994, the
Company has realized approximately $1.7 million of this amount.
Operating margins that otherwise would be realized on gas sold or
transported to the facility are used to reduce gas costs charged to firm
customers.
New Jersey Division The Company, through its New Jersey Division,
provides gas service to over 234,000 customers in franchised territories
within seven counties, or portions thereof, in central and northwestern
New Jersey. The New Jersey Division's 1,300 square-mile service
territory has a total population of approximately 950,000. Most of the
New Jersey Division's customers are located in densely-populated central
New Jersey, where increases in the number of customers are primarily
from conversions to gas heating from alternative forms of heating.
The New Jersey Division's gas volumes sold or transported and
customers served for the past three fiscal years were as follows:
Gas Volumes Sold or Transported (in thousands of
Mcf)
1994 1993 1992
Firm Sales:
Residential 20,315 19,115 18,225
Commercial 11,528 10,463 9,639
Industrial 5,025 4,781 5,052
Interruptible Sales 14,156 12,345 9,333
Transportation 14,367 15,459 14,100
Services
------ ------ ------
Total 65,391 62,163 56,349
====== ====== ======
Customers Served (twelve-month average)
1994 1993 1992
Firm:
Residential
Heating 155,473 151,621 147,447
Residential
Non-heat 61,012 62,520 64,387
Commercial 16,966 16,588 16,249
Industrial 360 377 402
Interruptible 74 75 76
Transportation 94 85 67
------ ------ ------
2<PAGE>
Total 233,979 231,266 228,628
======= ======= =======
Approximately 70% of the residential heating customers added in
New Jersey since October 1, 1991 represented homes that were converted
to gas heating from other forms of space heating and the remainder
consisted of new homes. The reduction in residential non-heating
customers principally reflects conversions to full gas heating service.
The growth in the number of customers in the residential heating class
reflects the Company's marketing emphasis toward that class of
customers. Although new residential construction was slow in fiscal
1992, the pace of growth in new residential construction starts began to
increase in the last quarter of fiscal 1993 and remained steady at that
increased level during fiscal 1994.
The growth in the commercial class' volumes of gas sold and
number of customers reflects the Company's marketing emphasis on
commercial conversions. In fiscal 1994, 24 schools and 556 businesses
and housing complexes, which are subject to New Jersey legislation
requiring the registration, systematic testing and monitoring of
underground fuel oil and propane storage tanks, converted to gas heating
systems and/or switched from interruptible service to firm service.
School conversions totaled 13 in fiscal 1993 and 24 in fiscal 1992.
Business and housing complex conversions totaled 360 in fiscal 1993 and
439 in fiscal 1992. In addition, changing economic conditions, coupled
with environmental concerns and legislation, are creating a market for
natural gas for large commercial air conditioning units and compressed
natural gas fleet vehicles. Also, the Company has an economic
development program to help spur economic growth and jobs creation which
provides grants and reduced rates for qualifying businesses that start
up, relocate or expand within designated areas.
The growth in the volumes of gas sold to industrial customers in
fiscal 1994 primarily reflects increased usage by the Company's existing
customers. The decrease in the volumes of gas sold to these customers in
fiscal 1993 as compared with fiscal 1992 levels principally reflected
the customer's choice to utilize the Company's transportation service
instead of its gas sales service. The rate charged to transportation
customers is less than the rate charged to firm industrial customers
because the transportation customer rate does not include any cost of
gas component. However, the operating margins from both rates are
substantially the same.
The New Jersey Division's "interruptible" customers have
alternative energy sources and use gas on an "as available" basis.
Variations in the volume of gas sold or transported to these customers
do not have a significant current effect on the Company's earnings
because, in accordance with New Jersey regulatory requirements, 90% to
95% of the margins that otherwise would be realized on gas sold or
transported to interruptible customers is used to reduce gas costs
charged to firm customers.
The decrease in the volume of gas transported in fiscal 1994
reflects periods of extreme weather conditions during which there was
reduced availability of capacity on the interstate pipeline system. This
reduced availability prevented certain suppliers of the transportation
service customers from providing gas during these periods. Many of these
transportation service customers have alternative energy sources and
3<PAGE>
during these periods they either converted to interruptible sales
service or alternate sources of energy.
In March 1994, the New Jersey Division filed with the NJBPU new
tariffs which are designed to provide for the unbundling of natural gas
transportation and sales services to commercial and industrial
customers. The Company expects the effect of the new tariffs to be
neutral on the operating revenues and margins of the Company.
Florida Division. The Company, through its Florida Division, is
the second largest natural gas utility in Florida, supplying gas to more
than 92,000 customers in Dade and Broward Counties in south Florida and
in Brevard and St. Lucie Counties on the central east coast of Florida.
The Florida Division's service areas cover approximately 850 square
miles and have a population of approximately 500,000.
The Florida Division's gas volumes sold or transported and
customers served for the past three fiscal years were as follows:
Gas Volumes Sold or Transported (in thousands of
Mcf)
1994 1993 1992
Firm Sales:
Residential 1,983 1,904 2,026
Commercial 4,439 4,455 4,367
Interruptible Sales 1,958 2,186 1,809
Transportation 1,063 980 716
Services
----- ----- -----
otal 9,443 9,525 8,918
===== ===== =====
Customers Served (twelve-month average)
1994 1993 1992
Firm:
Residential 87,194 83,541 83,615
Commercial 4,539 4,428 4,421
Interruptible 28 30 28
Transportation 8 2 2
------ ------ ------
Total 91,769 88,001 88,066
====== ====== ======
The Florida Division's residential customers purchase gas
primarily for water heating, cooking and clothes drying. Some customers
in Brevard County also purchase gas to provide space heating during the
relatively mild winter season. The growth in the twelve-month average
number of customers in fiscal 1994 principally reflects new construction
and the return of customers in south Dade County, Florida, who had
suffered losses as a result of Hurricane Andrew in August 1992. The
variations in volumes of gas sold to residential customers reflect the
changes in the number of customers and the impact of weather patterns on
the Florida Division's customers in Brevard County. The market for new
residential construction in Dade, Broward and Brevard counties has been
expanding rapidly, and the Florida Division expanded its staff to the
level necessary to serve the potential customers stemming from this
4<PAGE>
growth. The Company anticipates that in fiscal 1995, the Florida
Division will reduce its level of operating expenses and that it will
focus on developing the commercial and residential margin potential from
mains currently in place while selectively expanding to future
development areas.
The Company initiated natural gas service to St. Lucie County in
fiscal 1993 through the construction of a gate station interconnection
with the interstate pipeline system, acquisition and conversion of an
existing underground propane system and the extension of mains to
potential growth areas within the city of Port St. Lucie. The Company
substantially completed expansion of its mains in fiscal 1994. The net
investment in plant in the city as of September 30, 1994 was $4.3
million. Of this amount, $2.4 million was included in the determination
of a permanent rate increase authorized by the Florida Public Service
Commission (the "FPSC") on November 29, 1994 (see "Regulation"). As of
September 30, 1994, service is being provided to approximately 500
residential customers in St. Lucie County. The Company anticipates that
this start-up development project will generate increased margins over
time. The Company has the opportunity to seek FPSC approval to add the
remainder of this start-up investment to its permanent rates as new
customers are added.
In fiscal 1993, the Company entered into a contract with the
National Aeronautics and Space Administration for the initiation of
natural gas sales service at Kennedy Space Center in Brevard County.
Such service began in the fourth quarter of fiscal 1994. The Company
invested $4.2 million in fiscal 1994 to construct the facilities
necessary to provide this service, all of which was included in the
determination of its new permanent rates (see "Regulation").
As further discussed in "Regulation", the November 29, 1994 FPSC
vote that authorized new permanent rates for the Florida Division,
removed the division's leased appliance business from regulation.
During fiscal years 1992 through 1994 the approved tariffs covering the
monthly rentals of appliances reflected the Company's intent to use this
business to promote natural gas usage in the residential market. The
Company had a net investment of $14.9 millon in this business as of
September 30, 1994, with revenues of $2.4 million and Operating Income
Before Income Taxes of $426,000 for fiscal 1994. The Company
anticipates that in fiscal 1995 it will begin to pursue higher returns
from this business.
The Florida Division's commercial business consists primarily of
schools, businesses and public facilities, of which the number of
customers tends to increase concurrently with the continuing growth in
population within the Florida Division's service areas. Variations in
volumes of gas sold within this class of customers reflect customer
growth and the effects of variations of weather patterns. As with its
residential markets, the Company is seeking to maximize the utilization
of its existing mains by emphasizing marketing efforts toward potential
commercial business along these lines.
The Florida Division's industrial customers and certain
commercial customers are served under tariffs applicable to
"interruptible" customers. Unlike the Company's New Jersey Division,
the Florida Division's interruptible customers do not generally have
alternative energy sources, although their service is on an "as
5<PAGE>
available" basis. The Company retains all of the operating margins from
sales to these customers and does not expect there to be any significant
impact to the Company's earnings from any service interruptions which
may occur.
Certain industrial customers have converted their natural gas
service from a sales basis to a transportation basis. The Florida
Division's transportation tariff provides margins on transportation
services that are substantially the same as margins earned on gas sales.
The Company is working with several of its customers on the potential
conversion of their service in fiscal 1995.
In August 1994, the Company discovered that three employees of
the Florida Division had, over a period of approximately two years,
colluded to defraud the Company in conjunction with its purchase of
certain computer and related services. These employees have been
discharged and the Company has reported this matter to the appropriate
authorities. In addition, the Company has charged fiscal 1994 earnings
approximately $200,000 (pre-tax), and has instituted civil suit against
these employees for restitution.
The Company is instituting revised policies and procedures
regarding certain aspects of the Florida Division's operations,
including the Florida Division's budget and planning process, bidding
procedures, lease or purchasing decisions, use of outside contractors,
conflict of interest policy and evaluation of main extension
feasibility. The institution and compliance with these revised policies
and procedures was incorporated in the order of the FPSC authorizing the
Florida Division's new permanent rates (see "Regulation"). The Company
believes that compliance with the foregoing policies and procedures will
not have a material adverse effect on the financial condition or results
of operations of the Company.
PSGS Division.
North Carolina. The Company, through North Carolina Gas Service
("NCGS"), provides gas service to approximately 12,000 customers in
Rockingham and Stokes Counties in North Carolina, which territories
comprise approximately 560 square miles. Since its acquisition by the
Company on April 19, 1994, NCGS sold or transported approximately 1.2
million Mcf of gas as follows: 9% sold to residential customers, 10%
sold to commercial customers, 58% sold to industrial customers and 23%
transported to commercial and industrial customers.
Maryland. The Company, through Elkton Gas Service ("Elkton"),
provides gas service to approximately 2,700 customers in franchised
territories comprising approximately 14 square miles within Cecil
County, Maryland. Since its acquisition by the Company on April 19,
1994, Elkton sold approximately 114,000 Mcf of gas as follows: 39% sold
to residential customers, 31% sold to commercial customers and 30% sold
to industrial customers.
Pennsylvania and New York. The Company, through Valley Cities
Gas Service ("Valley Cities") and Waverly Gas Service ("Waverly"),
provides gas service to approximately 5,700 customers in franchised
territories comprising 104 square miles within Bradford County,
Pennsylvania and the Village of Waverly, New York and surrounding areas.
Since their acquisition by the Company on April 19, 1994, Valley Cities
6<PAGE>
and Waverly sold or transported approximately 1.2 million Mcf of gas as
follows: 9% sold to residential customers, 4% sold to commercial
customers, 13% sold to industrial customers and 74% transported to
commercial and industrial customers.
Gas Supply and Operations
In recent years, the gas industry has been undergoing structural
changes in response to policies of the Federal Energy Regulatory
Commission (the "FERC") to increase competition. Traditionally,
interstate pipelines were wholesalers of natural gas to local
distribution companies and generally did not provide separate
transportation or other services for specific customers. In 1985, the
FERC adopted Order No. 436 that encouraged interstate pipelines to make
transportation of gas available to customers on a non-discriminatory
basis. Such voluntary "open access" by certain interstate pipelines
enhanced the opportunity for the Company, other local gas distribution
companies and industrial customers to purchase natural gas directly from
gas producers and others. In 1992, the FERC issued Order No. 636 that,
among other things, mandated the separation or "unbundling" of
interstate pipeline sales, transportation and storage services and
established guidelines for capacity management effective in 1993. The
transition to Order No. 636 has the effect of increasing the opportunity
for local gas distribution companies and industrial customers to
purchase natural gas from alternative sources, while increasing the
potential business and regulatory risk borne by a local gas distribution
company with respect to the acquisition and management of natural gas
services. Although the implementation of Order No. 636 involved the
restructuring of the Company's contracts with all of its pipeline
suppliers, the most significant restructuring pertains to certain
pipelines that together deliver less than one-third of the Company's
total firm gas supply.
Under Order No. 636 the pipeline companies are passing through to
their customers transition costs associated with mandated restructuring,
such as costs resulting from buying out unmarketable gas purchase
contracts. The Company has been charged approximately $5.5 million of
such costs as of September 30, 1994, which the Company has been
authorized to recover through its gas cost adjustment clauses. The
Company currently estimates that its remaining Order No. 636 transition
obligation will be approximately $3.9 million. This estimate is subject
to subsequent FERC actions based upon filings by the Company's pipeline
suppliers.
The Company endeavors to utilize its pipeline capacity
efficiently by matching capacity to its load profile to the extent
feasible. To this end, the Company has had a broad unbundled service
tariff for certain of its New Jersey Division customers since 1987. In
March 1994, the New Jersey Division filed tariffs with the NJBPU to
extend unbundled service to its other industrial customers as well as
its commercial customers (see "Regulation"). The Company continues to
avail itself of opportunities to improve the utilization of its pipeline
capacity by pursuing broad based customer growth, including off peak
markets, and utilizing capacity release provisions within Order No. 636
when operationally feasible.
The Company's gas supply during fiscal 1994, came from the
7<PAGE>
following sources: approximately 13% from purchases under contracts with
primary pipeline suppliers and additional purchases under their filed
tariffs; approximately 87% from purchases from various producers and gas
marketers, purchases under long-term contracts with independent
producers and owned production; and less than 1% from propane and
liquefied natural gas ("LNG"). The Company manages its gas supply
portfolio to assure a diverse, reliable and secure supply of natural gas
at the lowest reasonable cost. In fiscal 1994, the Company's largest
single supplier accounted for 13% of the Company's total gas purchases.
The Company has long-term gas delivery contracts with seven
interstate pipeline companies. Under these contracts, the Company has a
right to delivery, on a firm year-round basis, of up to 84.7 million Mcf
of natural gas annually with a maximum of approximately 248,000 Mcf per
day. Both the price and conditions of service of these contracts are
regulated by the FERC.
The Company has long-term gas purchase contracts for the supply
of natural gas for its system with eight suppliers, including one
interstate pipeline company, four gas marketers and three independent
producers. The Company also has a long term supply and delivery contract
with an interstate pipeline. Under these contracts, the Company has a
right to purchase, on a firm year-round basis, up to 45.6 million Mcf of
natural gas annually with a maximum of approximately 132,000 Mcf per
day. In addition, the Company has access to spot market gas through the
interstate pipeline system to supplement or replace, on a short-term
basis, portions of its long-term gas purchase contracts when such
actions can reduce overall gas costs or are necessary to supply
interruptible customers.
In order to have available sufficient quantities of gas during
the heating season, the Company stores gas during non-peak periods and
purchases supplemental gas, including propane, LNG and gas available
under contracts with certain large cogeneration customers, as it deems
necessary. The storage contracts provide the Company with an aggregate
of 15.5 million Mcf of natural gas storage capacity and provide the
Company with the right to receive a maximum daily quantity of 174,900
Mcf. The contracts with cogeneration customers provide 35,800 Mcf of
daily gas supply to meet peak loads by allowing the Company to take back
capacity and supply that otherwise is dedicated to serve those
customers.
The Company's peak load facilities in New Jersey include a
propane-air plant with a daily production capacity of 27,400 Mcf, fixed
propane storage totaling 674,000 gallons and rail car sidings capable of
storing an additional 300,000 gallons. The Company has an LNG storage
and vaporization facility with a daily delivery capacity of 24,300 Mcf
and storage capacity of 131,000 Mcf.
The Company owns working interests in gas production from certain
gas wells in New York State. Gas reserves subject to recovery under an
existing rate order applicable to the New Jersey Division are
approximately 138,000 Mcf as of September 30, 1994.
The Company's maximum daily sendout in fiscal 1994 was
approximately 344,800 Mcf in its New Jersey Division, 43,800 Mcf in its
Florida Division,18,900 Mcf in North Carolina, 4,300 Mcf in Maryland and
15,800 Mcf in Pennsylvania and New York combined. The Company maintains
8<PAGE>
sufficient gas supply and delivery capacity for a maximum daily sendout
capacity for the New Jersey Division of approximately 380,500 Mcf,
approximately 53,200 Mcf for its Florida Division, approximately 20,900
Mcf for North Carolina, approximately 5,000 Mcf for Maryland and
approximately 17,000 Mcf for Pennsylvania and New York combined.
Certain of the Company's long-term contracts for the supply,
storage and delivery of natural gas include fixed charges that amount to
approximately $71 million annually, of which approximately $47 million
is associated with pipeline delivery contracts. The Company currently
recovers, and expects to continue to recover, such fixed charges through
its gas cost adjustment clauses. The Company also is committed to
purchase, at market-related prices, minimum quantities of gas that, in
the aggregate, are approximately 10 million Mcf per year or to pay
certain costs in the event the minimum quantities are not taken. The
Company expects that minimum demand on its systems for the duration of
these contracts will continue to exceed these minimum purchase
obligations.
In November 1994, the Company and seven other Northeastern and
Mid-Atlantic gas distribution companies formed an alliance to increase
supply reliability and reduce costs. The alliance intends to commence
operations during the fiscal 1995 winter season. Subject to mutually
agreeable terms and conditions, members of the alliance will be able to
arrange for transfers of natural gas supplies among members when needs
arise.
The Company is authorized by its state regulatory commissions to
recover through rates (exclusive of carrying costs), surcharges from its
pipeline suppliers that relate to take-or-pay obligations that the
suppliers had with natural gas producers.
The Company distributes gas through approximately 5,600 miles of
steel, cast iron and plastic mains. The Company has physical
interconnections with four interstate pipelines in New Jersey and one
interstate pipeline in Florida. In addition, the Company has physical
interconnections in North Carolina and Pennsylvania with interstate
pipelines which also connect to the New Jersey Division. Common
interstate pipelines along the Company's operating system provide the
Company with greater flexibility in managing pipeline capacity and
supply, and thereby optimize system utilization.
Regulation
The Company is subject to regulation with respect to, among other
matters, rates, service, accounting and the issuance of securities. The
Company is subject to regulation as an operating utility by the public
utility commissions of the states in which it serves. The Company is
also subject to regulation by the United States Department of
Transportation under the Natural Gas Pipeline Safety Act of 1968, with
respect to the design, installation, testing, construction and
maintenance of pipeline facilities. Natural gas purchases,
transportation service and storage service provided to the Company by
interstate pipeline companies are subject to regulation by the FERC (see
" Gas Supply and Operations"). In addition, the Company is subject to
federal and state legislation with respect to water, air quality, solid
waste disposal and employee health and safety matters and to
environmental regulations issued by the United States Environmental
9<PAGE>
Protection Agency, the New Jersey Department of Environmental Protection
and other federal and state agencies.
The Company's current rates and tariffs for its New Jersey
Division reflect a rate case that was settled in October 1991, under
which the Company obtained a weather normalization clause. The weather
normalization clause is designed to help stabilize the Company's results
by increasing amounts charged to customers when weather has been warmer
than normal and by decreasing amounts charged when weather has been
colder than normal. No adjustment to fiscal 1994's operating margins was
required as the weather fell within the normal range. Revenue
adjustments pursuant to the weather normalization clause increased the
Company's operating margins by $1.3 million in fiscal 1993 and by $0.8
million in fiscal 1992.
In March 1994, the New Jersey Division filed with the NJBPU new
tariffs which are designed to provide for unbundling of natural gas
transportation and sales services to commercial and industrial
customers. The Company expects the effect of the new tariffs to be
neutral on the operating revenues and margins of the Company.
The Company's rates and tariffs for its Florida Division during
fiscal years 1992, 1993 and 1994 were authorized in August 1991. On
November 29, 1994, the FPSC voted to authorize the Florida Division to
increase its permanent rates by $1.6 million annually (the "FPSC
Order"). This authorization was in response to the Florida Division's
May 1994 filing with the FPSC requesting an $8.6 million increase to its
base rates. The FPSC Order provides for a rate base amounting to
approximately $82.6 million with an overall allowed after tax rate of
return of 7.26%. In addition, the FPSC Order provides for several
tariff changes designed to promote growth in developing markets for
natural gas, including an experimental rate to foster increased usage of
natural gas as a fuel for vehicles. The FPSC Order further approved the
deregulation of the Florida Division's leased appliance business which
consists of leasing water heaters, clothes dryers and ranges to
customers to promote natural gas usage in the residential market (see
"Territory and Customers Served- Florida Division").
The current rates and tariffs for the PSGS Division were
authorized between October 1988 and December 1993. This division was
acquired after the heating season in fiscal 1994 and serves
approximately 20,000 customers. The tariff for NCGS reflects a weather
normalization clause for its heat sensitive residential and commercial
customers. No adjustment for weather normalization was applicable to
the Company's North Carolina operations in fiscal 1994 since it was
acquired after the heating season.
The Company's tariffs contain adjustment clauses that enable the
Company to recover purchased gas costs. The adjustment clauses provide
for periodic reconciliation of actual recoverable gas costs with the
estimated amounts that have been billed. Under or over recovery at the
reconciliation date is recovered from or refunded to customers in
subsequent periods.
Capital Expenditures
Capital expenditures, which consist primarily of expenditures to
expand and upgrade the Company's gas distribution systems, were
10<PAGE>
$55.8 million in fiscal 1994, $39.6 million in fiscal 1993 and
$31.3 million in fiscal 1992. Approximately $36 million of fiscal 1994
capital expenditures were for construction relating to new customers and
additional distribution, storage and other gas plant facilities. The
Company's capital expenditures are expected to be approximately $44
million in fiscal 1995, including approximately $25 million for system
expansion. In addition, the net present value of minimum lease payments
relating to noncancelable operating leases, which relate principally to
New Jersey Division office space, is approximately $24 million as of
September 30, 1994, including $4.4 million payable in fiscal 1995.
Seasonal Aspects
Sales of gas to some classes of customers are affected by
variations in demand due to changes in weather conditions, including
normal seasonal variations throughout the year. The demand for gas for
heating purposes is closely related to the severity of the winter
heating season. Seasonal variations affect short-term cash requirements.
Persons Employed
As of September 30, 1994, the Company employed 1,167 persons, of
which 298 employees of the New Jersey Division were represented by the
Utility Workers Union of America (Local 424), 125 employees of the
Florida Division and 19 employees in Pennsylvania were represented by
The Teamsters Union, and 47 employees in North Carolina were represented
by the International Brotherhood of Electrical Workers. The current
labor contract with the New Jersey Division's union was renegotiated
effective November 20, 1994 and expires on November 20, 1998. The
Florida Division's contract expires on March 31, 1997. The Pennsylvania
contract expires on September 30, 1996, and the North Carolina contract
expires on August 20, 1995.
Competition
The Company competes with distributors of other fuels and forms
of energy, including electricity, fuel oil and propane, in all portions
of the territories in which it has distributions mains. In 1992, the
FERC issued Order No. 636 (see "Gas Supply and Operations").
Subsequently, initiatives were sponsored in various states whose
purposes were to "unbundle" or separate into distinct transactions the
purchase of the gas commodity from the purchase of transportation
services for the gas. Since that time, competition has arisen from
other gas distributors, and has continued from gas marketers.
Currently, in the territories the Company serves, this competition has
focused on the large industrial customer market; where open access to
the interstate pipeline transmission systems allows certain industrial
customers to purchase gas from alternative sources for transportation
through the Company's distribution systems and may allow certain
industrial customers to bypass the Company's systems altogether by
connecting directly to an interstate gas pipeline. The Company expects
that in fiscal 1995, its New Jersey Division's commercial market
customers will also be able to seek their supply of gas separately,
through competitors of the Company. As noted in "Territory and
Customers Served- New Jersey Division", the margins that the Company has
received from transportation service, as compared to "bundled" gas
11<PAGE>
sales, have been substantially the same. The Company expects that the
tariff revisions, which will go into effect when its New Jersey
Division's commercial customers are able to seek separate gas supply
arrangements, will also not have a material adverse effect on the
earnings of the Company.
Electricity and oil are the principal non-gas competitors in the
residential and commercial markets where the primary uses of energy are
for space heating, water heating, cooking and clothes drying.
The Company believes that in order to compete, it must offer a
greater variety of services at more competitive prices. See Item 7 -
"Management's Discussion and Analysis of Financial Condition and Results
of Operations - Outlook and Business Plan" for discussion of the
Company's preparation for the impact of increased competition.
Franchises
The Company holds non-exclusive municipal franchises and other
consents which enable it to provide natural gas in the territories it
serves. The Company intends to renew these franchises and consents as
they expire.
Environment
Reference is made to Item 7- "Management's Discussion and
Analysis of Financial Condition and Results of Operations- Capital
Expenditures and Commitments" and Note 9, "Commitments and
Contingencies" of the "Notes to the Consolidated Financial Statements"
for information regarding environmental matters affecting the Company.
Item 2. Properties
The Company owns approximately 5,600 miles of steel, cast iron
and plastic gas mains, together with gate stations, meters and other gas
equipment. In addition, the Company owns peak shaving plants, including
an LNG storage facility in Elizabeth, New Jersey. The assets of the
Florida Division are subject to the lien of a mortgage securing $9.8
million of indebtedness.
The Company also owns real property in Union, Middlesex, Warren,
Sussex and Hunterdon Counties in New Jersey, and in Dade, Broward,
Brevard and St. Lucie Counties in Florida, portions of which are under
lease to others. The Company's owned properties include a general office
building in Hialeah, Florida, that serves as the Florida Division's
headquarters; another office facility in Rockledge, Florida; and office
buildings in both Reidsville, North Carolina and Sayre, Pennsylvania,
which serve as operating offices for the North Carolina and the
Pennsylvania and New York operations, respectively. The Company also
owns various service centers in New Jersey, Florida, North Carolina,
Maryland and Pennsylvania from which the Company dispatches service
crews and conducts construction and maintenance activities. In addition,
the Company owns working interests in certain gas production properties
in New York State.
The Company leases office space in Bedminster, New Jersey, that
12<PAGE>
serves as its corporate headquarters and leases certain other facilities
in New Jersey that are operated as customer business offices. The
Company also leases approximately 160,000 square feet in an office
building in Union, New Jersey, which serves as the New Jersey Division's
headquarters. The building is owned and operated by the Liberty Hall
Joint Venture. Participants in the joint venture are Cali Liberty Hall
Associates, a New Jersey general partnership, and a Kean family trust,
of which John Kean and Stewart Kean are trustees. John Kean and Stewart
Kean beneficially own more than 5% of the outstanding shares of NUI
common stock. All negotiations relative to the lease were conducted
between the Company and Cali Liberty Hall Associates. No person involved
with the Kean family trust participated in such discussions. The lease
agreement is for an initial term through 2009 with two consecutive
five-year renewal options. The Company also has the right of first
refusal to purchase the building in the event the owner seeks to sell
the property. The annual base rent was approximately $2.6 million in
fiscal 1994, and is $2.9 million in fiscal years 1995 through 1999,
$3.3 million in fiscal years 2000 through 2004, $3.7 million in fiscal
years 2005 through 2008, and $2.9 million in 2009.
Subject to minor exceptions and encumbrances, all other property
materially important to the Company and all principal plants are owned
in fee simple, except that most of the mains and pipes are installed in
public streets under franchise or statutory rights or are constructed on
rights of way acquired from the apparent owner of the fee.
Item 3. Legal Proceedings
In August 1994, the Company discovered that three employees of
the Florida Division had, over a period of approximately two years,
colluded to defraud the Company in conjunction with its purchase of
certain computer equipment and related services. These employees have
been discharged and the Company has reported this matter to the
appropriate authorities. In addition, the Company has charged fiscal
1994 earnings approximately $200,000 (pre-tax), and has instituted civil
suit against these employees for restitution.
The Company is involved in various claims and litigation
incidental to its business. In the opinion of management, none of these
claims and litigation will have a material adverse effect on the
Company's results of operations or its financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was presented for submission to a vote of security
holders through the solicitation of proxies or otherwise during the last
quarter of fiscal 1994.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
13<PAGE>
NUI common stock is listed on the New York Stock Exchange (the
"NYSE") and is traded under the symbol "NUI". The quarterly cash
dividends paid and the reported high and low closing price per share of
NUI common stock for the two years ended September 30, 1994 were as
follows:
Quarterly Price Range
Cash
Dividend High Low
Fiscal 1994:
First
Quarter $0.40 $29.00 $25.25
Second
Quarter 0.40 28.75 24.125
Third
Quarter 0.40 24.50 21.00
Fourth
Quarter 0.40 22.75 17.75
Fiscal 1993:
First
Quarter $0.395 $25.25 $22.25
Second
Quarter 0.395 28.125 23.50
Third
Quarter 0.40 28.00 25.125
Fourth
Quarter 0.40 29.375 27.875
There were 6,928 shareholders of record of NUI common stock at
October 31, 1994.
On October 26, 1994, the Company declared a quarterly dividend at
a rate of $0.225 per share. The rate in prior quarters had been $0.40
per share. It is the Company's intent to continue to pay quarterly
dividends in the foreseeable future. However, NUI's dividend policy is
reviewed on an ongoing basis and is dependent upon the Company's
expectation of future earnings, cash flow, financial condition, capital
requirements and other factors.
The Company's long-term debt agreements include, among other
things, restrictions as to the payment of cash dividends. Under the most
restrictive of these provisions, the Company is permitted to pay $19.5
million of cash dividends at September 30, 1994.
14<PAGE>
Item 6. Selected Financial Data
Summary Consolidated Financial Data
(in thousands, except per share amounts)
Fiscal Years Ended September 30,
1994 1993 1992 1991 1990
Income Statement Data:
Operating Revenues $392,286 $354,889 $291,032 $291,320 $295,950
Operating Income 25,833 26,702 25,170 19,457 22,396
Interest Expense 15,566 13,768 14,980 15,634 15,058
Net Income $ 10,780 $13,810 $ 11,808 $ 3,447 $ 8,719
====== ====== ====== ====== ======
Net Income Per Share of
Common Stock $1.25 $1.70 $1.68 $0.55 $1.42
==== ==== ==== ==== ====
Dividends Paid Per Share of
Common Stock $1.60 $1.59 $1.58 $1.57 $1.56
==== ==== ==== ==== ====
Total Assets at September
30 $601,648 $483,911 $467,321 $406,491 $384,344
Capitalization at September
30:
Current Portion of
Long-Term Debt and Capital
Lease Obligations $2,761 $3,882 $7,550 $4,147 $2,942
Notes Payable to Banks 110,125 69,325 46,375 46,875 51,300
Capital Lease Obligations 11,932 12,290 13,422 14,871 16,369
Long-Term Debt 160,928 142,090 131,546 106,189 97,048
Common Shareholders' Equity 142,768 122,384 116,933 85,182 89,291
Book Value Per Share 15.59 14.93 14.55 13.43 14.39
Common Shares Outstanding 9,157 8,201 8,036 6,342 6,204
Note to the Summary Consolidated Financial Data:
Net income for fiscal 1991 includes provisions to write off certain
merger-related fees and expenses and to write down certain properties
and investments amounting to $3.3 million (after tax), or $0.53 per
share.
15<PAGE>
Summary Consolidated Operating Data
Fiscal Years Ended September 30,
1994 1993 1992 1991 1990
Operating Revenues (Dollars
in thousands)
Firm Sales:
Residential $188,472 $170,150 $145,149 $143,763 $150,607
Commercial 105,985 93,633 76,685 76,341 78,224
Industrial 25,809 23,066 21,928 24,914 25,848
Interruptible Sales 52,058 48,838 31,888 35,083 31,650
Transportation Services 13,273 12,154 10,410 7,792 6,661
Appliance Leasing, Fees and
Other 6,689 7,048 4,972 3,427 2,960
------- ------- ------- ------- -------
Total $392,286 $354,889 $291,032 $291,320 $295,950
======= ======= ======= ======= =======
Gas Sold or Transported
(MMcf)
Firm Sales:
Residential 22,558 21,019 20,251 18,133 19,598
Commercial 16,175 14,918 14,006 12,599 13,034
Industrial 5,323 4,781 5,052 5,427 5,459
Interruptible Sales 16,713 14,531 11,142 12,624 10,419
Transportation Services 17,290 16,439 14,816 11,778 10,096
------- ------- ------- ------- -------
Total 78,059 71,688 65,267 60,561 58,606
======= ======= ======= ======= =======
Customers Served (Twelve
month averages)
Firm:
Residential 312,647 297,682 295,449 291,571 282,191
Commercial 22,726 21,016 20,670 20,292 19,753
Industrial 382 377 402 427 439
Interruptible and
Transportation 238 192 173 161 151
------- ------- ------- ------- -------
Total 335,993 319,267 316,694 312,451 302,534
======= ======= ======= ======= =======
Degree Days in New Jersey 4,944 4,703 4,880 4,219 4,736
(normal: 4,978)
Employees 1,167 1,011 979 965 976
16<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis refers to all operating
divisions and subsidiaries of NUI Corporation ("NUI" or the "Company").
The Company's operating divisions are Elizabethtown Gas Company (New
Jersey), City Gas Company of Florida (Florida) and Pennsylvania &
Southern Gas Company ("PSGS"), which operates as North Carolina Gas
Service (North Carolina), Elkton Gas Service (Maryland), Valley Cities
Gas Service (Pennsylvania) and Waverly Gas Service (New York). PSGS was
acquired in a merger on April 19, 1994 (see Note 2 of the Notes to the
Consolidated Financial Statements).
Results of Operations
Operating Revenues and Operating Margins. The following
summarizes the Company's operating revenues and margins for the past
three fiscal years (in thousands):
1994 1993 1992
Operating Revenues $392,286 $354,889 $291,032
Purchased Gas and Fuel (223,421) (195,842)(139,309)
Gross Receipts and
Franchise Taxes (31,790) (30,472) (30,297)
------- ------- -------
$137,075 $128,575 $121,426
Operating Margins ======= ======= =======
The Company's operating revenues increased by $37.4 million, or
11%, in fiscal 1994 as compared with fiscal 1993, and by $63.9 million,
or 22%, in fiscal 1993 as compared with fiscal 1992. The increases in
both years principally reflect increases in the number of customers
served, including the addition of the PSGS Division in fiscal 1994,
greater industrial demand and the effect of gas cost adjustment clauses.
The effect of weather in New Jersey contributed to higher revenues in
fiscal 1994 as the weather was 5% colder than in the prior year.
Measured in degree days, weather in New Jersey was normal in fiscal
1994, 6% warmer than normal in fiscal 1993, and 2% warmer than normal in
fiscal 1992.
The Company's total average number of customers served increased
by 16,726 (including 10,245 from the PSGS acquisition), or 5.2%, in
fiscal 1994 as compared with fiscal 1993, and by 2,573, or 0.8%, in
fiscal 1993 as compared with fiscal 1992. The number of heating
customers served in fiscal 1994 increased by 12,996 or 7.9% (including
the PSGS acquisition), as compared with fiscal 1993, and by 4,715, or
3.0%, in fiscal 1993 as compared with fiscal 1992, including the effects
of converting existing water heating and cooking service customers into
gas heating customers. The addition of PSGS heating customers from the
PSGS acquisition had a less significant impact on fiscal 1994's
operating revenues and margins since PSGS was acquired after the heating
season.
Gas cost adjustment clauses enable the Company to pass through to
its customers, via periodic adjustments to amounts billed, increased or
decreased costs incurred by the Company for purchased gas, without
17<PAGE>
affecting operating margins. Adjustments related to changes in gas costs
had the net effect of increasing operating revenues by $28.3 million in
fiscal 1994 and $12.4 million in fiscal 1993, and reducing operating
revenues by $16.0 million in fiscal 1992, with offsetting adjustments to
purchased gas and fuel costs and to gross receipts and franchise taxes.
The Company's operating margins increased by $8.5 million, or
6.6%, in fiscal 1994 as compared to fiscal 1993, and by $7.1 million, or
5.9%, in fiscal 1993 as compared with fiscal 1992. The increases in both
years principally reflect increases in the number of customers served.
The Company has weather normalization clauses in its New Jersey
and North Carolina tariffs which are designed to help stabilize the
Company's results by increasing amounts charged to customers when
weather has been warmer than normal and by decreasing amounts charged
when weather has been colder than normal. In New Jersey, since fiscal
1994 fell within the normal range, no adjustment was required. Margins
were increased $1.3 million in fiscal 1993 and $0.8 million in fiscal
1992 for the effects of warmer-than-normal weather. No adjustment was
applicable to the Company's North Carolina operations in fiscal 1994
since it was acquired after the heating season.
Operating Income. The following summarizes elements of the
Company's operating income for the past three fiscal years (in
thousands):
1994 1993 1992
Operating Margins $137,075 $128,575 $121,426
Operation and
Maintenance Expenses (85,237) (74,784) (71,450)
Depreciation and
Amortization (17,446) (15,082) (14,273)
Payroll and Other Taxe s (6,467) (5,258) (4,978)
------- ------- -------
Operating Income Before
Income Taxes 27,925 33,451 30,725
Income Taxes (2,092) (6,749) (5,555)
------- ------- -------
Operating Income $ 25,833 $ 26,702 $ 25,170
======= ======= =======
Although operating margins increased, the Company's operating
income before income taxes decreased by $5.5 million, or 17%, in fiscal
1994 as compared with fiscal 1993, principally attributable to increased
operating expenses. This increase was due in part to higher costs
associated with system growth, including the payroll and employee
benefits costs attributable to a larger work force and depreciation due
to additional plant-in-service. Increased operation and maintenance
expenses were also the result of severe weather experienced in New
Jersey during portions of this past heating season. System growth is
occurring principally in the Company's Florida Division where the
Company's capital expenditure program includes the development of the
Port St. Lucie franchise, the construction of a new pipeline in Brevard
County, which includes service to the National Aeronautics and Space
Administration's Kennedy Space Center, and additional main extensions
for future growth. In addition, operating income before income taxes
was adversely affected by a $0.9 million loss incurred by the inclusion
of the operations of the PSGS Division after the heating season. The
18<PAGE>
decrease in income taxes for fiscal 1994 as compared to fiscal 1993 was
due to lower pre-tax income, as well as the reversal of $1.8 million of
income tax reserves no longer required as a result of management's
review of necessary reserve levels.
In fiscal 1993, operating income before income taxes increased by
$2.7 million as compared with fiscal 1992, principally reflecting the
improvement in operating margins, partially offset by increased
operation and maintenance expenses.
Other Income and Expense. Other income, net, for fiscal 1992
included realized net pretax gains on the sale of marketable securities
amounting to $0.8 million.
Interest Expense. The increase in interest expense in fiscal 1994
principally reflects higher outstanding borrowings as compared with
fiscal 1993. Interest expense decreased in fiscal 1993 as compared with
fiscal 1992 principally due to lower prevailing interest rates,
partially offset by higher outstanding borrowings. See- "Financing
Activities and Resources."
Net Income. Net income for fiscal 1994 was $10.8 million, or
$1.25 per share, as compared with net income of $13.8 million, or $1.70
per share, in fiscal 1993, and $11.8 million, or $1.68 per share, in
fiscal 1992. The decrease in fiscal 1994 is primarily due to (1) an
approximate $4.8 million decrease in operating income before income
taxes as a result of higher operating expenses in the Company's Florida
Division associated with system growth, coupled with lower than
anticipated margins in that division due to slower than anticipated
customer growth, (2) higher interest costs (approximately $1.2 million
after taxes) and (3) a $0.6 million net operating loss from the addition
of PSGS following the conclusion of the heating season. The PSGS Merger
had a dilutive effect of $0.14 per share in fiscal 1994, including the
effect of the issuance of 683,443 additional shares of NUI common stock
for all the outstanding shares of PSGS. Partly offsetting these
decreases was the reversal of approximately $1.8 million of income tax
reserves no longer required as a result of management's review of
necessary reserve levels.
The increase in net income in fiscal 1993 as compared with fiscal
1992 reflects higher volumes of gas sold or transported as a result of
additional residential and commercial customers and increased demand by
industrial customers, coupled with lower interest expense.
Net income per share in fiscal 1994 and fiscal 1993 was also
affected by the increased number of outstanding shares of NUI common
stock as compared to prior years.
Regulatory Matters
On November 4, 1994, the New Jersey Board of Public Utilities
("NJBPU") approved a petition filed by the Company's New Jersey Division
to reduce its annual gas cost adjustment revenues by approximately $11.9
million. The decrease reflects the Company's projections for lower gas
costs over the coming year and will have no effect on the Company's
operating margins. The NJBPU also approved a refund of approximately
$2.8 million to customers in the first quarter of fiscal 1995 as a
result of lower than projected gas prices paid in fiscal 1994.
19<PAGE>
On November 29, 1994, the Florida Public Service Commission
("FPSC") voted to authorize the Florida Division to increase its
permanent rates by $1.6 million annually. This authorization was in
response to the Florida Division's May 1994 filing with the FPSC
requesting an $8.6 million increase to its base rates.
In March 1994, the Company's New Jersey Division filed with the
NJBPU new tariffs which are designed to provide for unbundling of
natural gas transportation and sales services to commercial and
industrial customers. The Company expects the effect of the new tariffs
to be neutral to the operating revenues and margins of the Company.
Financing Activities and Resources
The Company's cash provided by operating activities was $22.5
million in fiscal 1994, $4.3 million in fiscal 1993 and $12.4 million in
fiscal 1992. The increase in fiscal 1994 as compared with fiscal 1993
was primarily attributable to the temporary overcollection of lower-
than-anticipated gas costs and lower costs for fuel held in inventory.
The decrease in fiscal 1993 as compared with fiscal 1992 principally
reflects the acceleration of payments for the New Jersey Division's
gross receipts and franchise taxes (see-" Capital Expenditures and
Commitments").
Because the Company's business is highly seasonal, short-term
debt is used to meet seasonal working capital requirements. The Company
also borrows under its bank lines of credit to finance portions of its
capital expenditures, pending refinancing through the issuance of equity
or long-term indebtedness at a later date depending upon prevailing
market conditions.
Short-Term Debt. The weighted average daily amounts outstanding
of notes payable to banks and the weighted average interest rates on
those amounts were $82.0 million at 4.1% in fiscal 1994, $53.9 million
at 3.6% in fiscal 1993 and $44.1 million at 5.1% in fiscal 1992. The
weighted average daily amounts of notes payable to banks increased
principally to finance portions of the Company's construction
expenditures, primarily related to system growth in Florida, and the
accelerated payment of New Jersey gross receipts and franchise taxes
(see-"Capital Expenditures and Commitments"). At September 30, 1994, the
Company had outstanding notes payable to banks amounting to $110.1
million and available unused lines of credit amounting to $52.9 million.
In November 1994, the Company filed a shelf registration
statement with the Securities and Exchange Commission for an aggregate
of $100 million of debt and equity securities. The Company does not
anticipate issuing equity securities in the near future. The Company
does anticipate issuing debt securities from time to time depending upon
prevailing market conditions and intends to use part of the proceeds of
such securities to (1) repay certain variable rate debt, which may
include $30 million currently classified as long-term debt, (2) finance
part of the Company's future capital expenditures, and (3) if
economically feasible (based upon prevailing market interest rates),
prepay the remaining $9.8 million balance of its first mortgage bonds.
The call premium to redeem the Company's remaining first mortgage bonds
is approximately $0.4 million.
Long-Term Debt and Funds for Construction Held by Trustee. On
20<PAGE>
August 16, 1994, the Company issued $66.5 million of tax-exempt bonds in
New Jersey and Florida. These issuances were comprised of $46.5 million
of 6.35% Gas Facilities Refunding Revenue Bonds, due October 1, 2022,
which replaced the same amount of outstanding debt bearing interest at
11% and 11.25%, and $20 million of 6.40% Gas Facilities Revenue Bonds,
due October 1, 2024, which will be used to finance part of the Company's
capital expenditure program in Florida.
The Company deposits in trust the unexpended portion of the net
proceeds from its Gas Facilities Revenue Bonds until drawn upon for
eligible expenditures. As of September 30, 1994, the total unexpended
portion of all of the Company's Gas Facilities Revenue Bonds was $26.9
million and is classified on the Company's consolidated balance sheet as
funds for construction held by trustee.
Common Stock. The Company issued 272,556 in fiscal 1994, 165,186
in fiscal 1993, and 193,755 shares of NUI common stock during fiscal
1992, in connection with NUI Direct, the Company's common stock
investment plan (formerly the NUI Dividend Reinvestment & Stock Purchase
Plan), and various employee benefit plans. The proceeds of such
issuances amounted to $6.3 million, $4.2 million and $3.8 million in
fiscal 1994, 1993 and 1992, respectively, and were used primarily to
reduce outstanding short-term debt.
On April 19, 1994, the Company issued 683,443 additional shares
of NUI common stock in connection with the PSGS Merger (see Note 2 of
the Notes to the Consolidated Financial Statements).
In May 1992, the Company issued an additional 1,500,000 shares of
NUI common stock through a public offering. The aggregate net proceeds,
which amounted to $27.4 million, were used to reduce outstanding short-
term debt.
Capital Expenditures and Commitments
Capital expenditures, which consist primarily of expenditures to
expand and upgrade the Company's gas distribution systems, were $55.8
million in fiscal 1994, $39.6 million in fiscal 1993 and $31.3 million
in fiscal 1992. Approximately $36 million of fiscal 1994 capital
expenditures were for construction relating to new customers and
additional distribution, storage and other gas plant facilities. The
Company's capital expenditures are expected to be approximately $44
million in fiscal 1995, including approximately $25 million for
construction relating to new customers and additional distribution,
storage and other gas plant facilities. In addition, the net present
value of minimum lease payments relating to noncancelable operating
leases, which relate principally to New Jersey Division office space, is
approximately $24 million as of September 30, 1994, including $4.4
million payable in fiscal 1995.
As discussed in Note 9 of the Notes to the Consolidated Financial
Statements, the Company owns or previously owned certain properties on
which gas was manufactured by the Company or by other parties in the
past. Coal tar residues are present on six New Jersey Division sites and
the Company's PSGS Division may have contaminants on as many as ten
former sites. The Company, with the assistance of an outside consultant,
has begun preliminary assessments on certain of the PSGS Division sites.
The Company is not able at this time to determine the extent of
21<PAGE>
contamination at the other PSGS Division sites, if any, the requirement
for remediation if contamination is present, or the costs associated
with remediation. As of September 30, 1994, the Company has recorded a
total reserve for probable environmental remediation liabilities of
approximately $32 million, which the Company expects it will expend in
the next twenty years. This estimate does not include any possible costs
for those PSGS Division sites for which preliminary assessments have not
begun. Based on currently available information and analysis, the
Company believes that it is reasonably possible that costs associated
with remediation could exceed current reserves by an amount of up to $15
million. The Company believes that certain of its remediation costs
will be recoverable in rates and that a portion of such costs may be
recoverable from the Company's insurance carriers and former owners and
operators of the sites. However, with respect to remediation costs
associated with certain of those PSGS Division sites for which
preliminary assessments have begun, the Company is not able at this time
to determine the extent of possible recovery, if any, from among PSGS
ratepayers, insurance carriers or former owners and operators.
Consequently, the Company has recorded $1.9 million as an additional
plant acquisition adjustment. Should additional information concerning
the PSGS Division's probable environmental liability become known and
subject to reasonable quantification within one year from the date of
the PSGS Merger, the plant acquisition adjustment may be changed
accordingly (see Note 2 of the Notes to the Consolidated Financial
Statements).
In June 1991, legislation was enacted in New Jersey that
accelerated the payments of approximately $30 million of gross receipts
and franchise taxes by an average of almost one and a half years in
stages from 1992 through 1994. The Company expects that future base rate
orders will reflect the recovery of costs associated with the related
additional financing requirements.
Certain of the Company's long-term contracts for the supply,
storage and delivery of natural gas include fixed charges that amount to
approximately $71 million annually, of which approximately $47 million
is associated with pipeline delivery contracts. The Company currently
recovers, and expects to continue to recover, such fixed charges through
its gas cost adjustment clauses. The Company also is committed to
purchase, at market-related prices, minimum quantities of gas that, in
the aggregate, are approximately 10 million Mcf per year or to pay
certain costs in the event the minimum quantities are not taken. The
Company expects that minimum demand on its systems for the duration of
these contracts will continue to exceed these minimum purchase
obligations.
The implementation of the Federal Energy Regulatory Commission's
("FERC") Order No. 636 required the restructuring of the Company's
contracts with certain pipeline companies that together supply less than
one-third of the Company's total firm gas supply. Under Order No. 636
the pipeline companies are passing through to their customers transition
costs associated with mandated restructuring, such as costs resulting
from buying out unmarketable gas purchase contracts. The Company has
been charged approximately $5.5 million of such costs as of September
30, 1994, which the Company has been authorized to recover through its
gas cost adjustment clauses. The Company currently estimates that its
remaining Order No. 636 transition obligation will be approximately $3.9
million. This estimate is subject to subsequent FERC actions based upon
22<PAGE>
filings by the Company's pipeline suppliers.
As of September 30, 1994, the scheduled repayments of the
Company's long-term debt over the next five years were as follows: $1.2
million in fiscal 1995, $1.2 million in fiscal 1996, $3.3 million in
fiscal 1997, $31.0 million in fiscal 1998 and $1.0 million in fiscal
1999. See-"Financing Activities and Resources".
Acquisition of Pennsylvania & Southern Gas Company
As discussed in Note 2 of the Notes to the Consolidated Financial
Statements, the Company completed its planned merger with PSGS on April
19, 1994. The merger resulted in a 7% increase in the number of
customers served as well as a 10% increase in annual gas volume
throughput. Greater customer diversity and common gas transmission
pipelines will provide greater flexibility in managing gas capacity and
supply, thereby increasing opportunities for lowering the overall cost
of gas.
Outlook and Business Plan
The gas distribution industry is changing, and management
believes that utilities can no longer rely upon a stable revenue stream.
The traditional local gas distribution company no longer enjoys a
competition-free environment. As a result, management believes that
local gas companies must offer a greater variety of services at more
competitive prices or risk losing business to competition. In view of
the foregoing and the Company's dividend payout levels compared to
earnings during the periods since 1988, when the Company spun-off all of
its non-utility subsidiaries into KCS Energy Group, the Company
declared, on October 26, 1994, a quarterly dividend at a rate of $0.225
per share. The rate in prior quarters had been $0.40 per share.
The Company's plan is to prepare for the impact of increased
competition. In furtherance of this plan, the Company is conducting a
review of its operations to determine its optimum operating structure.
It is anticipated that this review will result in further consolidation
of support functions across divisional lines, thereby eliminating
redundancies and improving efficiencies. To prepare for the
restructuring and as part of this review, the Company announced plans
for an early retirement program which will be offered to approximately
10% of its employees. The Company estimates that approximately 65% of
the 112 eligible employees will opt for the program and, at this level,
the discounted savings to be realized over the next seven years is
approximately $12 million with associated costs of approximately $5
million.
In addition to reducing costs and improving operating
efficiencies, the Company is seeking to increase margins through its
subsidiary Natural Gas Services, which currently markets natural gas and
transportation service in Florida and is developing plans which may
include marketing these services to customers within NUI's other
franchise areas and to others outside of these areas.
Total fiscal 1995 capital expenditures are anticipated to be $44
million (see-"Capital Expenditures and Commitments") as compared with
$55.8 million in fiscal 1994. Of this, capital expenditures in Florida
are anticipated to be $11.6 million in fiscal 1995 as compared with
23<PAGE>
$21.7 million in fiscal 1994, which included the completion of the
initial phases of two significant main extension projects. The focus in
fiscal 1995 is to develop the commercial and residential margin
potential in the Florida Division while expanding its mains selectively
to future development areas.
If the Company is unable to accomplish its plans described above,
a trend of lower net income is expected to continue.
Effects of Inflation
The Company's tariffs provide gas cost adjustment clauses through
which rates charged to customers are adjusted for changes in the cost of
gas on a reasonably current basis. Increases in other utility costs and
expenses not otherwise offset by increases in revenue could have an
adverse effect on earnings due to the time lag associated with the
regulatory process and the uncertainty of whether the regulatory process
will allow full recovery of such costs.
Item 8. Financial Statements and Supplementary Data
Consolidated financial statements of the Company at September 30,
1994 and 1993 and for each of the fiscal years in the three year period
ended September 30, 1994 and the auditors' report thereon, and unaudited
quarterly financial data for the two-year period ended September 30,
1994, are included herewith as indicated on the "Index to Financial
Statements and Schedules" on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
24<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors and officers of the Company is included in
the definitive Proxy Statement for the Company's Annual Meeting of
Stockholders, which is incorporated herein by reference. It is expected
that such Proxy Statement will be filed with the Securities and Exchange
Commission no later than January 28, 1995.
Effective December 6, 1994, Jack Langer, a director of the Company, was
relieved of his position as President and Chief Executive Officer of the
Florida Division. Glyn Hazelden, an officer of the New Jersey Division, has
assumed the role of Chief Operating Officer of the Florida Division.
Item 11. Executive Compensation
Information concerning executive compensation is included in the definitive
Proxy Statement for the Company's Annual Meeting of Stockholders, which is
incorporated herein by reference. It is expected that such Proxy Statement
will be filed with the Securities and Exchange Commission no later than
January 28, 1995.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information concerning security ownership of certain beneficial owners and
management is included in the definitive Proxy Statement for the Company's
Annual Meeting of Stockholders, which is incorporated herein by reference.
It is expected that such Proxy Statement will be filed with the Securities
and Exchange Commission no later than January 28, 1995.
Item 13. Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions is
included in the definitive Proxy Statement for the Company's Annual Meeting
of Stockholders, which is incorporated herein by reference. It is expected
that such Proxy Statement will be filed with the Securities and Exchange
Commission no later than January 28, 1995.
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1) Consolidated financial statements of the Company at September
30, 1994 and 1993 and for each of the fiscal years in the three-year
period ended September 30, 1994 and the auditors' report thereon, and
unaudited quarterly financial data for the two-year period ended Septem-
ber 30, 1994 are included herewith as indicated on the "Index to
Financial Statements and Schedules" on page F-1.
(2) The applicable financial statement schedules for the fiscal
years 1994, 1993 and 1992 are included herewith as indicated on the
"Index to Financial Statements and Schedules" on page F-1.
(3) Exhibits:
Exhibit
No. Description Reference
2(i) Letter Agreement, dated June 29, Incorporated by
1993, by and between NUI reference to Exhibit 2-1
Corporation and Pennsylvania & to Registration
Southern Gas Company Statement No. 33-50561
2(ii) Agreement and Plan of Merger,
dated as of July 27, 1993, by Incorporated by
and between NUI Corporation and reference to Exhibit 2-2
Pennsylvania & Southern Gas to Registration
Company Statement No. 33-50561
3(i) Certificate of Incorporation, Incorporated by
amended and restated as of March reference to Exhibit
12, 1991 3(i) to NUI's Form 10-K
Report for Fiscal 1991
3(ii) By-Laws, amended and restated as Incorporated by
of March 12, 1991 reference to Exhibit
3(ii) to NUI's Form 10-K
Report for Fiscal 1991
10(i) Service Agreement by and between Incorporated by
Transcontinental Gas Pipe Line reference to Exhibit
Corporation and Elizabethtown 10-1 to Registration
Gas Company ("EGC"), dated Statement No. 33-50561
February 1, 1992
10(ii) Service Agreement under Rate Incorporated by
Schedule GSS by and between reference to Exhibit
Transcontinental Gas Pipe Line 10-2 to Registration
Corporation and EGC, dated May Statement No. 33-50561
3, 1972
10(iii) Service Agreement under Rate Incorporated by
Schedule LG-A by and between reference to Exhibit
Transcontinental Gas Pipe Line 10-3 to Registration
Corporation and EGC, dated Statement No. 33-50561
January 12, 1971
26<PAGE>
Exhibit
No. Description Reference
10(iv) Service Agreement by and between Incorporated by
Transcontinental Gas Pipe Line reference to Exhibit
Corporation and EGC, dated 10-4 to Registration
November 1, 1991 Statement No. 33-50561
10(v) Service Agreement for Storage Filed herewith
Gas by and between
Transcontinental Gas Pipe Line
Corporation and EGC, dated
November 1, 1994
10(vi) Firm Gas Transportation Incorporated by
Agreement by and among reference to Exhibit
Transcontinental Gas Pipe Line 10-6 to Registration
Corporation, EGC and National Statement No. 33-50561
Fuel Gas Supply Corporation,
dated November 1, 1984
10(vii) Gas Transportation Agreement by Incorporated by
and among Transcontinental Gas reference to Exhibit
Pipe Line Corporation and EGC, 10-7 to Registration
dated February 4, 1991 Statement No. 33-50561
10(viii) Service Agreement for Rate
Schedule CDS by and between
Texas Eastern Transmission
Corporation and EGC, dated
December 1, 1993 Filed herewith
10(ix) Service Agreement under Rate
Schedule FTS-7 by and between
Texas Eastern Transmission
Corporation and EGC, dated
October 25, 1994 Filed herewith
10(x) Service Agreement for Rate
Schedule FTS-5 by and between Incorporated by
Texas Eastern Transmission reference to Exhibit
Corporation and EGC, dated June 10-10 to Registration
1, 1993 Statement No. 33-50561
10(xi) Service Agreement under Rate
Schedule FTS-8 by and between
Texas Eastern Transmission
Corporation and EGC, dated June
28, 1994 Filed herewith
10(xii) Service Agreement for Rate
Schedule FTS-5 by and between Incorporated by
Texas Eastern Transmission reference to Exhibit
Corporation and EGC, dated June 10-12 to Registration
1, 1993 Statement No. 33-50561
10(xiii) Service Agreement for Rate
Schedule FTS-2 by and between Incorporated by
Texas Eastern Transmission reference to Exhibit
Corporation and EGC, dated June 10-13 to Registration
1, 1993 Statement No. 33-50561
27<PAGE>
Exhibit
No. Description Reference
10(xiv) Service Agreement under NTS Rate Incorporated by
Schedule by and between Columbia reference to Exhibit
Gas Transmission Corporation and 10(xiv) to NUI's Form
EGC, dated November 1, 1993 10-K Report for Fiscal
1993
10(xv) Service Agreement under SST Rate Incorporated by
Schedule by and between Columbia reference to Exhibit
Gas Transmission Corporation and 10(xv) to NUI's Form 10-
EGC, dated November 1, 1993 K Report for Fiscal 1993
10(xvi) Service Agreement under FTS Rate Incorporated by
Schedule by and between Columbia reference to Exhibit
Gas Transmission Corporation and 10(xvi) to NUI's Form
EGC, dated November 1, 1993 10-K Report for Fiscal
1993
10(xvii) Gas Transportation Agreement Incorporated by
under FT-G Rate Schedule by and reference to Exhibit
between Tennessee Gas Pipeline 10(xvii) to NUI's Form
Company and EGC (Contract #597), 10-K Report for Fiscal
dated September 1, 1993 1993
10(xviii) Gas Transportation Agreement Incorporated by
under FT-G Rate Schedule by and reference to Exhibit
between Tennessee Gas Pipeline 10(xviii) to NUI's Form
Company and EGC (Contract #603), 10-K Report for Fiscal
dated September 1, 1993 1993
10(xix) Gas Transportation Agreement by Incorporated by
and between Tennessee Gas reference to Exhibit
Pipeline Company and EGC, dated 10-17 to Registration
March 30, 1993 Statement No. 33-50561
10(xx) Firm Transportation Service Incorporated by
Agreement under FTS-1 Rate reference to Exhibit
Schedule by and between City Gas 10(xx) of NUI's Form 10-
and Florida Gas Transmission K Report for Fiscal 1993
dated October 1, 1993
10(xxi) Lease Agreement between EGC and Incorporated by
Liberty Hall Joint Venture, reference to Exhibit
dated August 17, 1987 10(vi) of EGC's Form
10-K Report for Fiscal
1987
10(xxii) 1988 Stock Plan Incorporated by
reference to Exhibit
10-8 to Registration
Statement No. 33-21525
10(xxii) First Amendment to 1988 Stock Incorporated by
Plan reference to Exhibit
10(xxxiii) to
Registration Statement
No. 33-46162
28<PAGE>
Exhibit
No. Description Reference
10(xxiii) Form of Termination of Incorporated by
Employment and Change in Control reference to Exhibit
Agreements 10(xi) of NUI's Form
10-K Report for Fiscal
1991
10(xxiv) Firm Transportation Service Filed herewith
Agreement under FTS-2 Rate
Schedule by and between City Gas
and Florida Gas Transmission,
dated December 12, 1991 and
Amendment dated November 12,
1993.
10(xxv) Service Agreement under Rate Filed herewith
Schedule LG-A by and between
Transcontinental Gas Pipeline
and North Carolina Gas Service
Division of Pennsylvania &
Southern Gas Company, dated
August 5, 1971.
10(xxvi) Service Agreement under Rate Filed herewith
Schedule GSS by and between
Transcontinental Gas Pipeline
and North Carolina Gas Service
Division of Pennsylvania &
Southern Gas Company, dated
April 13, 1974.
10(xxvii) Service Agreement under Rate Filed herewith
Schedule FS by and between
Transcontinental Gas Pipeline
and North Carolina Gas Service
Division of Pennsylvania &
Southern Gas Company, dated
August 1, 1991.
10(xxviii) Service Agreement under Rate Filed herewith
Schedule FT by and between
Transcontinental Gas Pipeline
and North Carolina Gas Service
Division of Pennsylvania &
Southern Gas Company, dated
February 1, 1992.
10(xxix) Gas Sales and Purchase Agreement Filed herewith
by and between Texaco Gas
Marketing, Inc. and Pennsylvania
& Southern Gas Company, dated
November 1, 1991.
29<PAGE>
Exhibit
No. Description Reference
Gas Storage Contract under Rate Filed herewith
10(xxx) Schedule FS by and between
Tennessee Gas Pipeline Company
and Pennsylvania & Southern Gas
Company, dated September 1,
1993.
10(xxxi) Gas Transportation Agreement Filed herewith
under Rate Schedule FT-A by and
between Tennessee Gas Pipeline
Co. and Pennsylvania & Southern
Gas Company, dated September 1,
1993 (Contract #935).
10(xxxii) Gas Transportation Agreement Filed herewith
under Rate Schedule FT-A by and
between Tennessee Gas Pipeline
Co. and Pennsylvania & Southern
Gas Company, dated September 1,
1993 (Contract #936).
10(xxxiii) Gas Transportation Agreement Filed herewith
under Rate Schedule FT-A by and
between Tennessee Gas Pipeline
Co. and Pennsylvania & Southern
Gas Company, dated September 1,
1993 (Contract #959).
10(xxxiv) Gas Transportation Agreement Filed herewith
under Rate Schedule FT-A by and
between Tennessee Gas Pipeline
Co. and Pennsylvania & Southern
Gas Company, dated September 1,
1993 (Contract #2157).
10(xxxv) Employment Agreement, dated as Filed herewith
of July 29, 1988, between NUI
Corporation and Jack Langer
21 Subsidiaries of NUI Corporation Filed herewith
23 Consent of Independent Public Filed herewith
Accountants
27 Financial Data Schedule Filed herewith
Exhibits listed above which have heretofore been filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933 or the Securities Exchange Act of 1934, and which were designated
as noted above and have not been amended, are hereby incorporated by
reference and made a part hereof with the same effect as if filed
herewith.
The Company is a party to various agreements with respect to
long-term indebtedness to which the total amount of indebtedness
authorized under each agreement, respectively, does not exceed 10% of
30<PAGE>
the total assets of the Company on a consolidated basis. The Company
hereby agrees to furnish to the Securities and Exchange Commission
copies of such agreements upon request.
(b) Reports on Form 8-K:
On July 29, 1994, the Company filed a Form 8-K, Item 5, Other
Events, reporting the issuance of a press release on July 21, 1994 of
the Company's third quarter results.
On November 1, 1994, the Company filed a Form 8-K, Item 5, Other
Events, reporting the issuance of a press release on October 26, 1994
stating that the Company's quarterly dividend to shareholders was
reduced from a rate of $0.40 per share to a rate of $0.225 per share.
31<PAGE>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Consolidated Financial Statements of NUI Corporation and Subsidiaries:
Report of Independent Public Accountants . . . . . F-2
Consolidated Financial Statements as of
September 30, 1994 and 1993 and for Each
of the Fiscal Years in the Three-Year Period
Ended September 30, 1994 . . . . . . . . . . . . . F-3
Unaudited Quarterly Financial Data for
the Two-Year Period Ended September 30, 1994
(Note 10 of the Notes to the Company's Consolidated
Financial Statements) . . . . . . . . . . . . . . . F-17
Financial Statement Schedules of NUI Corporation and Subsidiaries:
Report of Independent Public Accountants . . . . . F-2
Schedule V Property, Plant and Equipment
for Each of the Fiscal Years in the Three-Year
Period Ended September 30, 1994 . . . . . . . . . . F-18
Schedule VI Accumulated Depreciation and
Amortization of Property, Plant and Equipment
for Each of the Fiscal Years in the Three-Year
Period Ended September 30, 1994 . . . . . . . . . . F-19
Schedule VIII Valuation and Qualifying Accounts
for Each of the Fiscal Years in the Three-Year
Period Ended September 30, 1994 . . . . . . . . . . F-20
Schedule IX Short-Term Borrowings
for Each of the Fiscal Years in the Three-Year
Period Ended September 30, 1994 . . . . . . . . . . F-21
All other schedules are omitted because they are not
required, are inapplicable or the information is otherwise shown in the
financial statements or notes thereto.
F-1<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To NUI Corporation:
We have audited the accompanying consolidated balance sheet and
statement of consolidated capitalization of NUI Corporation (a New
Jersey corporation) and subsidiaries as of September 30, 1994 and 1993,
and the related statements of consolidated income, cash flows and
shareholders' equity, for each of the three years in the period ended
September 30, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of NUI Corporation and subsidiaries as of September 30, 1994 and 1993,
and the results of their operations and their cash flows for each of the
three years in the period ended September 30, 1994, in conformity with
generally accepted accounting principles.
As discussed in Notes 1 and 8 to the Consolidated Financial
Statements, effective October 1, 1993, the Company changed its method of
accounting for income taxes and other postretirement benefits.
We have also audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet and statement of
consolidated capitalization as of September 30, 1992, 1991 and 1990, and
the related consolidated statements of income, cash flows, taxes and
shareholders' equity, for each of the two years in the period ended
September 30, 1991 (none of which are presented herein), and have
expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the summary consolidated financial
data for each of the five years in the period ending September 30, 1994,
appearing under the heading "Summary Consolidated Financial Data" is
fairly stated in all material respects in relation to the consolidated
financial statements from which it has been derived.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedules listed in
Item 14(a)(2) are the responsibility of the Company's management and are
presented for purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion,
fairly state in all material respects the financial data required to be
set forth therein in relation to the basic financial statements taken as
a whole.<PAGE>
ARTHUR ANDERSEN LLP
New York, New York
November 22, 1994
F-2<PAGE>
NUI Corporation and Subsidiaries
Statement of Consolidated Income
(Dollars in thousands, except per share amounts)
Years ended September 30,
1994 1993 1992
$392,286 $354,889 $291,032
Operating Revenues ------- ------- -------
Operating Expenses
Purchased gas and fuel 223,421 195,842 139,309
Other operation 78,560 69,255 66,126
Maintenance 6,677 5,529 5,324
Depreciation and amortization 17,446 15,082 14,273
General taxes 38,257 35,730 35,275
2,092 6,749 5,555
Income taxes ------- ------- -------
366,453 328,187 265,862
Total operating expenses ------- ------- -------
Operating Income 25,833 26,702 25,170
Other Income and Expense
Dividend and interest income 306 366 960
Other income, net 218 787 1,372
(11) (277) (714)
Income taxes ------- ------- -------
Total other income and 513 876 1,618
expense, net ------- ------ -------
15,566 13,768 14,980
Interest Expense ------- ------- -------
$ 10,780 $ 13,810 $ 11,808
Net Income ======= ======= =======
Net Income Per Share of $1.25 $1.70 $1.68
Common Stock ==== ==== ====
Dividends Per Share of Common
Stock $1.60 $1.59 $1.58
Weighted Average Number of
Shares of Common Stock
Outstanding 8,617,790 8,124,065 7,033,420
See notes to consolidated financial statements
F-3<PAGE>
NUI Corporation and Subsidiaries
Consolidated Balance Sheet
(Dollars in thousands)
September 30,
1994 1993
ASSETS
Property, Plant and Equipment
Utility plant, at original cost $566,982 $483,853
Accumulated depreciation and amortization (173,894) (151,725)
Unamortized plant acquisition adjustments 33,604 15,084
------- -------
Net utility plant 426,692 347,212
------- -------
Funds for Construction Held by Trustee 26,906 24,184
------- -------
Investments in Marketable Securities 3,468 3,986
------- -------
Current Assets
Cash 5,637 1,873
Accounts receivable 39,584 29,909
Allowance for doubtful accounts (1,368) (1,225)
Fuel inventories, at average cost 28,616 28,456
Prepayments and other 13,435 7,797
------- -------
Current assets 85,904 66,810
------- -------
Deferred Charges and Other Assets 58,678 41,719
------- -------
$601,648 $483,911
======= =======
CAPITALIZATION AND LIABILITIES
Capitalization (See accompanying
statements)
Common shareholders' equity $142,768 $122,384
Preferred stock -- --
Long-term debt 160,928 142,090
------- -------
Capitalization 303,696 264,474
------- -------
Capital Lease Obligations 11,932 12,290
------- -------
Current Liabilities
Current portion of long-term debt and
capital lease obligations 2,761 3,882
Notes payable to banks 110,125 69,325
Accounts payable, customer deposits and
accrued liabilities 53,476 48,513
General taxes 1,170 6,078
Federal income taxes 6,079 5,057
------- -------
Current liabilities 173,611 132,855
------- -------
Deferred Credits and Other Liabilities
Deferred Federal income taxes 50,066 34,078
Unamortized investment tax credits 7,570 7,687
Other liabilities 54,773 32,527
------- -------
Deferred credits and other liabilities 112,409 74,292
------- -------<PAGE>
$601,648 $483,911
======= =======
See notes to consolidated financial statements
F-4
F-5<PAGE>
NUI Corporation and Subsidiaries
Statement of Consolidated Cash Flows
(Dollars in thousands)
Years Ended September 30,
1994 1993 1992
Operating Activities
Net income $10,780 $13,810 $11,808
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 18,773 16,346 15,716
Amortization of non-current
fuel inventory 438 709 860
Deferred Federal income taxes 6,893 8,726 2,653
Amortization of deferred investment
tax credits (476) (461) (462)
Other 3,171 3,453 2,711
Effect of changes in:
Accounts receivable, net (5,724) (152) (2,155)
Fuel inventories (193) (9,630) (7,415)
Deferred cost of gas 4,332 (824) (3,332)
Accounts payable, deposits and accruals 1,795 (7,541) 9,409
Gross receipts and franchise taxes (10,280) (14,182) (4,488)
Other (6,986) (5,988) (12,947)
------ ------ ------
Net cash provided by operating activities 22,523 4,266 12,358
------ ------ ------
Financing Activities
Proceeds from sales of common stock 6,323 4,177 31,242
Dividends to shareholders (13,836) (12,905) (11,343)
Proceeds from issuance of long-term debt 66,500 30,000 52,860
Funds for construction held by
trustee, net (2,093) 11,015 (32,338)
Repayments of long-term debt (54,159) (22,734) (25,914)
Principal payments under capital
lease obligations (2,055) (1,874) (2,355)
Net short-term borrowings 33,893 22,950 (500)
------ ------ ------
Net cash provided by financing activities 34,573 30,629 11,652
Investing Activities
Cash expenditures for property, plant and
equipment (53,601) (35,442) (30,742)
Proceeds from sales of marketable
securities 659 56 6,170
Proceeds from sale of assets 1,610 -- --
Other (2,000) (1,123) ( 574)
------ ------ ------
Net cash used for investing activities (53,332) (36,509) (25,146)
Net Increase (Decrease) in Cash $ 3,764 $(1,614) $(1,136)
====== ====== ======
Cash
At beginning of period $ 1,873 $ 3,487 $ 4,623
At end of period 5,637 1,873 3,487<PAGE>
Supplemental Disclosures of Cash Flows
Income taxes paid $ 666 $ 2,377 $ 2,295
Interest paid 17,597 15,135 16,275
See notes to consolidated financial statements
F-5<PAGE>
NUI Corporation and Subsidiaries
Statement of Consolidated Capitalization
(Dollars in thousands)
September 30,
1994 1993
Long-Term Debt
Gas facilities revenue bonds
11.25% due June 1, 2014 $ -- $ 21,500
11% due June 1, 2014 -- 25,000
6.625% due October 1, 2021 8,400 8,400
6.75% due October 1, 2021* 46,200 46,200
6.35% due October 1, 2022 46,500 --
6.40% due October 1, 2024* 20,000 --
First mortgage bonds
14% due July 1, 1994 -- 800
8% due April 1, 1997 2,500 2,625
8.5% due May 1, 2002 7,273 8,182
Credit agreement indebtedness 30,000 30,000
ESOP indebtedness, 6% due May 31, 2002 1,217 1,339
------- -------
Total long-term debt, including
current portion 162,090 144,046
Current portion of long-term debt (1,162) (1,956)
------- -------
Total long-term debt 160,928 142,090
------- -------
Preferred Stock, 5,000,000 shares
authorized; none issued -- --
Common Shareholders' Equity
Common Stock, no par value; shares
authorized: 30,000,000;
shares outstanding: 9,157,095 in 1994
and 8,201,096 in 1993 138,082 114,895
Shares held in treasury (797) (797)
Retained earnings 6,700 9,718
Valuation of marketable securities -- (93)
Unearned employee compensation - ESOP (1,217) (1,339)
------- -------
Total common shareholders' equity 142,768 122,384
------- -------
Total Capitalization $303,696 $264,474
======= =======
* The total unexpended portion of the net proceeds from these bonds,
amounting to $26.9 million as of September 30, 1994, is carried on the
Company's consolidated balance sheet as funds for construction held by
trustee until drawn upon for eligible construction expenditures.
See the notes to the consolidated financial statements.
F-6<PAGE>
<TABLE>
NUI Corporation and Subsidiaries
Statement of Consolidated Shareholders' Equity
(Dollars in thousands)
<CAPTION>
Unearned
Common Stock Valuation Employee
Shares Paid-in Held in Retained Marketable Compensation-
Outstanding Amount Treasury Earnings Securities ESOP Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
September 30, 1991 6,342,155 $ 79,476 $(797) $8,071 $ -- $(1,568) $85,182
Common stock
issued
Public offering 1,500,000 27,425 27,425
Other* 193,755 3,817 3,817
Net income 11,808 11,808
Cash dividends (11,343) (11,343)
Valuation
adjustments (205) (205)
ESOP transactions 139 110 249
--------- ------- ---- ------ ---- ----- -------
Balance,
September 30, 1992 8,035,910 110,718 (797) 8,675 (205) (1,458) 116,933
Common stock
issued* 165,186 4,177 4,177
Net income 13,810 13,810
Cash dividends (12,905) (12,905)
Valuation
adjustments 112 112
ESOP transactions 138 119 257
--------- ------- ---- ------- ---- ------ -------
Balance
September 30, 1993 8,201,096 114,895 (797) 9,718 (93) (1,339) 122,384
Common stock
issued
PSGS acquisition 683,443 16,864 16,864
Other* 272,556 6,323 6,323
Net income 10,780 10,780
Cash dividends (13,836) (13,836)<PAGE>
Valuation
adjustments 93 93
ESOP transactions 38 122 160
--------- ------- ---- ------- ---- ------ -------
Balance,
September 30, 1994 9,157,095 $138,082 ($797) $6,700 $ -- ($1,217) $142,768
========= ======== ====== ====== ====== ======== ========
</TABLE>
* Represents common stock issued in connection with NUI Direct and various
employee benefit plans.
See the notes to the consolidated financial statements
F-7<PAGE>
NUI Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements
include all operating divisions and subsidiaries of NUI Corporation
("NUI" or the "Company"). The Company's operating divisions include
Elizabethtown Gas Company (New Jersey), City Gas Company of Florida
(Florida) and Pennsylvania & Southern Gas Company ("PSGS"), which
operates as North Carolina Gas Service (North Carolina), Elkton Gas
Service (Maryland), Valley Cities Gas Service (Pennsylvania) and Waverly
Gas Service (New York). All intercompany accounts and transactions have
been eliminated in consolidation.
Certain reclassifications have been made to the prior year
financial statements to conform with the current year presentation.
Regulation. The Company is subject to regulation as an operating
utility by the public utility commissions of the states in which it
serves.
Property, Plant and Equipment. Utility plant is stated at its
original cost at the time it was placed into service. Depreciation is
provided on a straight-line basis over the remaining estimated lives of
depreciable property by applying composite average annual rates as
approved by the state commissions. The composite average annual
depreciation rate was 3.1% each in fiscal years 1994, 1993 and 1992. At
the time properties are retired, the original cost plus the cost of
retirement, less salvage, is charged to accumulated depreciation.
Repairs of all property, plant and equipment and replacements and
renewals of minor items of property are charged to maintenance expense
as incurred.
The unamortized plant acquisition adjustments represent the
remaining unamortized portion of the excess, at the date of acquisition,
of the purchase price over the book value of net assets acquired. The
excess is being amortized on a straight-line basis over thirty years
from the date of acquisition. The results of operations of acquired
entities have been included in the accompanying consolidated operations
for the periods subsequent to their acquisition.
Revenues and Gas and Fuel Costs. Operating revenues include accrued
unbilled revenues through the end of each accounting period. Operating
revenues also reflect adjustments attributable to weather normalization
clauses that are accrued during the winter heating season and billed or
credited to customers in the following year.
Costs of gas and fuel are recognized as expenses in accordance with
the gas cost adjustment clause applicable in each state. Such clauses
provide for periodic reconciliations of actual recoverable gas costs and
the estimated amounts that have been billed to customers. Under or over
recoveries are deferred when they arise and are recovered from or
refunded to customers in subsequent periods.<PAGE>
Restricted Cash. In accordance with certain regulatory requirements
in North Carolina, the Company is required to deposit pipeline supplier
refunds in an interest-bearing account. These funds, which amounted to
approximately $0.8 million as of September 30, 1994, are restricted for
uses as prescribed by North Carolina regulatory authorities and are
classified in the Company's consolidated balance sheet in deferred
charges and other assets with a corresponding amount included in other
liabilities.
Income Taxes. During fiscal 1993 and 1992, the Company deferred
income taxes resulting from timing differences in the recognition of
revenues and expenses for tax and accounting purposes. In fiscal 1994,
the Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", which requires the liability method to be
used to account for deferred income taxes. Under this method, deferred
income taxes related to tax and accounting basis differences are
recognized at the statutory income tax rates in effect when the tax is
expected to be paid.
Investment tax credits, which were generated principally in
connection with additions to utility plant made prior to January 1,
1986, are being amortized over the estimated service lives of the
properties that gave rise to the credits.
Net Income Per Share of Common Stock. Net income per share of
common stock is based on the weighted average number of shares of NUI
common stock outstanding. The assumed exercise of outstanding options
would not have a dilutive effect on net income per share of common
stock.
2. Acquisition of Pennsylvania & Southern Gas Company
On April 19, 1994, the Company issued and exchanged 683,443 shares
of NUI common stock for all of the outstanding common shares of PSGS
pursuant to the merger of PSGS with and into NUI (the "PSGS Merger").
The transaction was valued at approximately $17 million. PSGS was a gas
distribution utility with approximately 22,000 customers with operations
in North Carolina, Maryland, Pennsylvania and New York. Upon
consummation of the PSGS Merger, the Company's principal operating
utility, Elizabethtown Gas Company, was merged with and into NUI.
The PSGS Merger has been accounted for as a purchase in accordance
with generally accepted accounting principles and the results of
operations of PSGS have been consolidated with those of NUI as of April
19, 1994. Due to the effects of the regulatory process, the underlying
net assets of PSGS have been recorded at their historical net book
value. The excess of the purchase price over the historical net book
value of the underlying net assets of PSGS is included in utility plant
as a "plant acquisition adjustment". On September 30, 1994, NUI sold its
PSGS propane assets. The excess of the purchase price over the net book
value of the propane assets sold reduced the plant acquisition
adjustment by approximately $1.4 million. As discussed further in Note 9
of the Notes to the Consolidated Financial Statements, the Company, in
connection with the PSGS Merger, acquired former coal gas manufacturing
facilities. No provision for environmental remediation had been made by
PSGS in its financial statements prior to the Merger. As of September
30, 1994, the Company has recorded $1.9 million additional plant
acquisition adjustment to provide for probable environmental remediation
liabilities.<PAGE>
As a result of the foregoing, the plant acquisition adjustment
related to the PSGS Merger, as of September 30, 1994, is approximately
$10.3 million, including the effects of providing deferred income taxes,
and is being amortized over a thirty-year period, which approximates the
remaining useful life of the utility plant acquired. The plant
acquisition adjustment is preliminary. Should additional information
concerning the PSGS Division's probable environmental liabilities become
known and subject to reasonable quantification within one year from the
date of the PSGS Merger, the amount of the plant acquisition adjustment
may be changed accordingly.
3. Capitalization
Long-Term Debt. On August 16, 1994, the Company issued $66.5
million of tax-exempt bonds in New Jersey and Florida. These issuances
were comprised of $46.5 million of 6.35% Gas Facilities Refunding
Revenue Bonds, due October 1, 2022, which replaced the same amount of
outstanding debt bearing interest at 11% and 11.25%, and $20 million of
6.40% Gas Facilities Revenue Bonds, due October 1, 2024, which will be
used to finance part of the Company's capital expenditure program in
Florida.
The Company deposits in trust the unexpended portion of the net
proceeds from its Gas Facilities Revenue Bonds until drawn upon for
eligible expenditures. As of September 30, 1994, the total unexpended
portion was $26.9 million and is classified on the Company's
consolidated balance sheet as funds for construction held by trustee.
In the first quarter of fiscal 1994, the Company entered into a
three-year $30 million bank credit agreement that was used to repay,
without penalty, the loans outstanding under a previous agreement and to
reduce outstanding short-term debt. Accordingly, the short-term debt and
currently maturing long-term debt repaid with the proceeds of the new
credit agreement were classified as long-term as of September 30, 1993.
The weighted average interest rate on credit agreement borrowings was
approximately 4.4% in fiscal 1994, 3.6% in fiscal 1993 and 4.9% in
fiscal 1992.
As of September 30, 1994, the scheduled repayments of the Company's
long-term debt over the next five years were as follows: $1.2 million in
fiscal 1995, $1.2 million in fiscal 1996, $3.3 million in fiscal 1997,
$31.0 million in fiscal 1998 and $1.0 million in fiscal 1999. The
remaining $9.8 million balance of the Company's first mortgage bonds
(which are secured by the Florida Division's assets) is currently
eligible for optional prepayment. The call premium to redeem these bonds
is approximately $0.4 million.
Preferred Stock. The Company has 5,000,000 shares of authorized but
unissued preferred stock.
Common Stock. As discussed in Note 2 of the Notes to the
Consolidated Financial Statements, the Company issued 683,443 shares of
NUI common stock in connection with the acquisition of PSGS on April 19,
1994. The Company periodically issues shares in connection with NUI
Direct, the Company's common stock investment plan (formerly the NUI
Dividend Reinvestment & Stock Purchase Plan), and various employee
benefit plans. At September 30, 1994, shares reserved for issuance under
these plans were: NUI Direct, 239,342; Savings and Investment
Plan, 45,631; and 1988 Stock Plan, 49,683.<PAGE>
Stock Plans. The Company's Board of Directors believes that both
directors' and management's interest should be closely aligned with that
of shareholders. As a result, the compensation program for directors,
executive officers and key employees includes long-term compensation
involving shares of NUI common stock.
Each non-employee director of the Company earns an annual retainer
fee that consists of a deferred grant of shares of NUI common stock.
Effective April 1, 1994, such retainer fee was equivalent to a fair
market value of $15,000 on the date of grant. On November 22, 1994, the
Company' Board of Directors reduced such annual retainer fee from
$15,000 to $12,000, retroactive to April 1, 1994. In addition, as of
June 1, 1994, non-employee directors who also chair committees receive
additional deferred grants with a fair market value of $2,500 on the
date of grant. As of September 30, 1994, the total deferred grants for
non-employee directors provide for the issuance of 14,012 shares of NUI
common stock, an increase of 4,960 shares during fiscal 1994.
Shares granted as long-term compensation for executive officers and
key employees amounted to 15,730 shares in fiscal 1994, 18,300 shares in
fiscal 1993 and 21,900 shares in fiscal 1992. As of September 30, 1994,
a total of 50,005 shares that have been granted as long-term
compensation are subject to vesting requirements, and are restricted
from resale.
Executive officers and key employees are eligible to be granted
options for the purchase of NUI common stock at prices equal to the
market price per share on the date of grant. The option must be
exercised within ten years from the date of grant. As of September 30,
1994, outstanding options provide for the purchase of 13,000 shares of
NUI common stock at prices ranging from $15.77 to $17.625 per share.
Options with respect to 4,000 shares carry stock appreciation rights.
Options exercised in fiscal 1994 consist of the purchase of 2,300
shares of NUI common stock, with an exercise value of $14.42 per share
and a market value of approximately $22.84 per share. A total of 1,150
options lapsed in fiscal 1994. Options exercised in fiscal 1993
consisted of the purchase of 6,000 shares of NUI common stock and
payment on 15,150 stock appreciation rights, each with an exercise value
ranging from $14.42 to $15.77 per share and a market value of
approximately $24.00 per share. Options exercised in fiscal 1992
consisted of the purchase of 4,400 shares of NUI common stock and
payment on 4,400 stock appreciation rights, each with an exercise value
of $15.77 per share and a market value of approximately $18.81 per
share.
Employee Stock Ownership Plan. The Company provides an employee
stock ownership plan for certain employees of its Florida Division (the
"ESOP"), which was funded initially with indebtedness that is guaranteed
by a subsidiary of NUI. The Company incurred ESOP contribution expense
amounting to $0.9 million in fiscal 1994, $0.9 million in fiscal 1993
and $0.7 million in fiscal 1992, representing contributions for loan
payments and to acquire additional shares of NUI common stock. Of this
amount, approximately $0.1 million in each of fiscal years 1994, 1993
and 1992, represents interest expense. As of September 30, 1994, the
ESOP trust held 268,800 shares of NUI common stock, of which 204,918
shares were allocated to participating employees. Participating
employees are entitled to vote the allocated shares and the ESOP trustee
votes the remainder of the shares.<PAGE>
Dividend Restrictions. The Company's long-term debt agreements
include, among other things, restrictions as to the payment of cash
dividends. Under the most restrictive of these provisions, the Company
is permitted to pay $19.5 million of cash dividends at September 30,
1994.
4. Notes Payable to Banks
At September 30, 1994, the Company's outstanding notes payable to
banks were $110.1 million with a combined weighted average interest rate
of 5.3%. Unused lines of credit at September 30, 1994 were $52.9
million. While there are no formal compensating balance requirements,
certain banks have indicated that satisfactory balances should be
maintained to support the lines of credit and services provided.
The weighted average daily amount outstanding of notes payable to
banks and the weighted average interest rate on that amount was $82.0
million at 4.1% in fiscal 1994, $53.9 million at 3.6% in fiscal 1993 and
$44.1 million at 5.1% in fiscal 1992.
5. Leases
Property, plant and equipment held under capital leases amounted to
$22.9 million at September 30, 1994 and $22.0 million at September 30,
1993, with related accumulated amortization of $9.7 million and
$8.0 million, respectively. These properties consisted principally of
leasehold improvements and office furniture and fixtures for a
divisional headquarters. A summary of future minimum payments for
properties held under capital leases follows (in thousands):
1995 $ 2,693
1996 2,430
1997 2,236
1998 2,063
1999 8,523
2000 and thereafter 314
------
Total future minimum
payments $18,259
Amount representing
interest (4,728)
Current portion of capital
lease obligations (1,599)
------
$11,932
Capital lease obligations ======
Minimum payments under noncancelable operating leases, which relate
principally to office space for a divisional headquarters, are
approximately $4.4 million in fiscal 1995, $4.0 million in fiscal 1996,
$3.5 million in fiscal 1997, and $3.0 million each in fiscal years 1998
and 1999.
Rents charged to operating expenses were $4.3 million in fiscal
1994, $4.2 million in fiscal 1993 and $3.9 million in fiscal 1992.<PAGE>
6. Financial Instruments
The fair value of the Company's funds for construction held by
trustee and notes payable to banks are approximately equivalent to their
carrying value. The fair value of the Company's long-term debt was less
than its carrying value by approximately $5 million as of September 30,
1994, and exceeded its carrying value by approximately $5 million as of
September 30, 1993. The fair value of long-term debt was estimated
based on quoted market prices for the same or similar issues. The
Company's investments in marketable securities consist principally of
publicly-traded equity securities that are carried at the lower of
aggregate cost or market value. As of September 30, 1994, the cost of
the Company's investments in marketable securities approximates their
market value.
7. Consolidated Taxes
The Company's general taxes are comprised of the following (in
thousands):
1994 1993 1992
Gross receipts and
franchise $31,790 $30,472 $30,297
Payroll 3,474 2,992 2,850
Other 2,993 2,266 2,128
------ ----- ------
$38,257 $35,730 $35,275
====== ====== ======
The provision for Federal income taxes is comprised of the
following (in thousands):
1994 1993 1992
Currently payable $(4,102) $(1,571) $3,640
------ ------ -----
Deferred:
Depreciation of utility plant 2,409 2,298 2,650
Alternative minimum tax 108 (732) 724
Deferred charges 1,216 1,282 (360)
Gross receipts and
franchise taxes 3,700 4,947 (643)
Other, net (540) 931 282
----- ----- -----
Total deferred, net 6,893 8,726 2,653
----- ----- -----
Amortization of investment
tax credits (476) (461) (462)
----- ----- -----
Total provision for
Federal income taxes $2,315 $6,694 $5,831
===== ===== =====<PAGE>
The components of the Company's net deferred tax liability as of
September 30, 1994 are as follows (in thousands):
Net Liability
(Asset)
Depreciation and other utility
plant differences $42,653
Plant acquisition adjustments 7,295
Alternative minimum tax (1,952)
Unamortized investment tax credit (2,629)
Deferred charges 5,052
Other (353)
------
$50,066
======
The Company has an alternative minimum tax credit carry forward of
approximately $2.0 million at September 30, 1994. This credit can be
carried forward indefinitely.
The Company's effective income tax rates differ from the statutory
Federal income tax rates due to the following (in thousands):
1994 1993 1992
Income before Federal income taxes $13,095 $20,504 $17,639
----- ----- -----
Federal income taxes computed
at the statutory tax rate
(34% in fiscal 1994, 34.75% in
fiscal 1993 and 34% in fiscal 1992) 4,452 7,125 5,997
Increase (reduction) resulting from:
Excess of book over tax depreciation 373 432 446
Amortization of investment tax credits (476) (461) (462)
Adjustments of prior years' taxes (1,770) -- --
Other, net (264) (402) (150)
----- ----- -----
Total provision for Federal income taxes 2,315 6,694 5,831
Provision (benefit) for state income taxes (212) 332 438
----- ----- -----
Total provision for income taxes 2,103 7,026 6,269
(Less) provision included in other
income and expense (11) (277) (714)
----- ----- -----
Provision for income taxes included in
operating expenses $2,092 $6,749 $5,555
===== ===== =====
8. Retirement Benefits
Pension Benefits. The Company has non-contributory defined benefit
retirement plans which cover substantially all of its employees, other
than the Florida Division's unionized employees who participate in a
union sponsored multi-employer plan. The Company funds its plans in
accordance with the requirements of the Employee Retirement Income
Security Act of 1974 and makes contributions to the union sponsored plan<PAGE>
in accordance with its contractual obligations. Benefits paid under the
Company's plans are based on years of service and levels of
compensation. The Company's actuarial calculation of pension expense is
based on the projected unit cost method.
The components of pension expense for the Company's plans were as
follows (in thousands):
1994 1993 1992
Service cost $2,579 $ 1,775 $ 1,608
Interest cost 5,016 4,394 4,078
Return on plan assets (6,855) (11,240) (6,744)
Net amortization (343) 4,805 556
----- ----- -----
Pension expense $ 397 $ (266) $ (502)
(credit) ===== ===== =====
The status of the Company's funded plans as of September 30 was as
follows (in thousands):
1994 1993
Actuarial present value of
benefit obligation:
Vested benefits $48,658 $49,860
Non-vested benefits 3,188 3,464
------ ------
Accumulated benefit obligation 51,846 53,324
Projected increases in
compensation levels 15,869 17,350
------ ------
Projected benefit obligation 67,715 70,674
Market value of plan assets 81,219 77,832
------ ------
Plan assets in excess of
projected benefit obligation 13,504 7,158
Unrecognized net (gain) loss and
prior service cost (5,344) 354
Unrecognized net transition
asset (4,576) (5,228)
------ ------
$ 3,584 $ 2,284
Pension prepayment ====== ======
The projected benefit obligation was calculated using a discount
rate of 8% in fiscal 1994 and 7% in fiscal 1993 and an assumed annual
increase in compensation levels of 5% in fiscal 1994 and fiscal 1993.
The expected long-term rate of return on assets is 9%. The assets of the
Company's funded plans are invested primarily in publicly-traded fixed
income and equity securities.
Certain key employees also participate in an unfunded supplemental
retirement plan. The projected benefit obligation under this plan was
$3.2 million as of September 30, 1994 and $3.1 million as of September
30, 1993, and the expense for this plan was approximately $0.5 million
in fiscal 1994 and $0.4 million in both fiscal 1993 and fiscal 1992.
Postretirement Benefits Other Than Pensions. The Company provides
certain health care benefits to substantially all retirees receiving<PAGE>
benefits under a Company pension plan, other than the Florida Division
plan, who reach retirement age while working for the company.
In fiscal 1994, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions", which, among other things, requires
companies to accrue the expected cost of providing other postretirement
benefits to employees and their beneficiaries during the years that
eligible employees render the necessary service. The Company does not
currently fund these future benefits.
The components of postretirement benefit expense other than
pensions for the year ended September 30, 1994 follows (in thousands):
Service cost $ 515
Interest cost 1,462
Amortization of transition
obligation 1,028
-----
Net postretirement benefit
expense 3,005
Benefits paid (509)
-----
Increase in accrued
postretirement benefit $ 2,496
obligation ======
The status of the Company's postretirement plans other than pension
as of September 30, 1994 is as follows (in thousands):
Accumulated postretirement
benefit obligation:
Retirees $ 9,951
Fully eligible active plan
participants 5,233
Other active plan
participants 6,330
------
Total accumulated postretirement
benefit obligation 21,514
Unrecognized transition
obligation (19,531)
Unrecognized net gain 1,130
------
Accrued postretirement benefit $ 3,113
obligation ======
The health care trend rate assumption is 12.5% in the first year
gradually decreasing to 6% for the year 2004 and later. The discount
rate used to compute the accumulated postretirement benefit obligation
at September 30, 1994 was 8%. An increase in the health care trend rate
assumption by one percentage point in all years would increase the
accumulated postretirement benefit obligation by approximately $2.9
million and the aggregate annual service and interest costs by
approximately $0.4 million.<PAGE>
The Company has received an order from the New Jersey Board of
Public Utilities (the "NJBPU") permitting the New Jersey Division to
defer the difference between the amount of expense computed as claims
are incurred and the amount computed on the accrual method, pending
ratemaking treatment that would be considered in a base rate proceeding.
The consensus issued in 1993 by the Emerging Issues Task Force of the
Financial Accounting Standards Board (the "EITF") permits rate regulated
companies to defer such expenses for as long as five years when the
ratemaking treatment provides for them to be fully recovered in the
subsequent fifteen year period. The Company expects to seek ratemaking
treatment that is consistent with the EITF's consensus.
The Company continually evaluates alternative ways to manage these
benefits and control their costs. Any changes in the plan or revisions
to assumptions that affect the amount of expected future benefit may
have a significant effect on the amount of the reported obligation and
the annual deferral and expense.
9. Commitments and Contingencies
Commitments. Capital expenditures are expected to be approximately
$44 million in fiscal 1995.
Environmental Matters. The Company is subject to federal and state
legislation with respect to water, air quality, solid waste disposal and
employee health and safety matters and to environmental regulations
issued by the United States Environmental Protection Agency (the "EPA"),
the New Jersey Department of Environmental Protection (the "NJDEP"), and
other federal and state agencies.
The Company owns, or previously owned, certain properties on which
gas was manufactured by the Company or by other parties in the past.
Coal tar residues are present on six New Jersey Division sites and the
Company has reported their presence to the EPA, the NJDEP and the NJBPU.
In April 1991, the NJDEP issued an Administrative Consent Order that
established the procedures to be followed by the Company in the
development of its remediation plan for the site on South Street in
Elizabeth, New Jersey. Subsequently, the Company and the NJDEP entered
into Memoranda of Agreement that established procedures for the
development of investigation and remediation plans for the other five
New Jersey Division sites.
During the course of its due diligence activities in connection
with the PSGS Merger (see Note 2 of the Notes to the Consolidated
Financial Statements), the Company was informed that PSGS had owned or
operated ten former coal gas manufacturing facilities, only three of
which PSGS currently owns. PSGS had been notified that it is a potential
responsible party with respect to four of these ten sites. As a result
of a preliminary assessment completed by the North Carolina Department
of Environment, Health, and Natural Resources, Division of Solid Waste
Management, one of these sites has been recommended for a screening site
investigation. The other three sites have recently been subjected to a
preliminary assessment by the EPA which indicated that no further action
was required. No provision had been made, prior to the PSGS Merger, in
PSGS' financial statements for environmental remediation. The Company,
with the assistance of an outside consultant, has begun preliminary
assessments on certain of the PSGS Division sites. The Company is not
able at this time to determine the extent of contamination at the other
sites, if any, the requirement for remediation if contamination is
present, or the costs associated with remediation.<PAGE>
As of September 30, 1994, the Company has recorded a total reserve
for probable environmental remediation liabilities of approximately $32
million, which the Company expects to expend in the next twenty years.
The reserve is net of approximately $5 million, which, in accordance
with an agreement, will be borne by a prior owner and operator of
certain New Jersey sites. This estimate does not include any possible
costs for those PSGS Division sites for which preliminary assessments
have not begun. The Company, with the assistance of outside consulting
firms, determined the estimate of probable expenditures by assessing the
cost of (1) obtaining additional required data about each site and (2)
the applicable remedial action, among those currently known, that the
Company believes is most appropriate for each site. Based on currently
available information and analysis, the Company believes that it is
reasonably possible that costs associated with these sites may exceed
current reserves by an amount of up to $15 million.
The Company believes that certain of its remediation costs will be
recoverable in rates and that a portion of such costs may be recoverable
from the Company's insurance carriers. The current base rate order for
the Company's New Jersey Division permits the Company to utilize full
deferred accounting for coal tar related expenditures. The current base
rate order also provides for the recovery through rates of $130,000
annually of coal tar related expenditures incurred prior to the rate
order. Accordingly, the Company has recorded a regulatory asset of
approximately $32 million as of September 30, 1994, reflecting the
future recovery of environmental remediation liabilities related to the
New Jersey Division sites. This amount includes costs incurred of
approximately $0.4 million in fiscal 1994 and $0.8 million in fiscal
1993. Other New Jersey utilities also have received authorization to
recover similar environmental expenditures in rates. The Company intends
to seek recovery of the PSGS Division's environmental liabilities from
ratepayers in the PSGS states, former owners and operators, and
insurance carriers. However, based on preliminary assessments on certain
of the PSGS Division sites, the Company is not able at this time to
determine the extent of recovery, if any. Consequently, the Company
recorded an amount of $1.9 million as an additional plant acquisition
adjustment (see Note 2 of the Notes to the Consolidated Financial
Statements).
Gas Procurement Contracts. Certain of the Company's long-term
contracts for the supply, storage and delivery of natural gas include
fixed charges that amount to approximately $71 million annually, of
which approximately $47 million is associated with pipeline delivery
contracts. The Company currently recovers, and expects to continue to
recover, such fixed charges through its gas cost adjustment clauses. The
Company also is committed to purchase, at market-related prices, minimum
quantities of gas that, in the aggregate, are approximately 10 million
Mcf per year or to pay certain costs in the event the minimum quantities
are not taken. The Company expects that minimum demand on its systems
for the duration of these contracts will continue to exceed these
minimum purchase obligations.
The implementation of the Federal Energy Regulatory Commission's
("FERC") Order No. 636 required the restructuring of the Company's
contracts with certain pipeline companies that together supply less than
one-third of the Company's total firm gas supply. Under Order No. 636
the pipeline companies are passing through to their customers transition
costs associated with mandated restructuring, such as costs resulting
from buying out unmarketable gas purchase contracts. The Company has
been charged approximately $5.5 million of such costs as of September<PAGE>
30, 1994, which the Company has been authorized to recover through its
gas cost adjustment clauses. The Company currently estimates that its
remaining Order No. 636 transition obligation will be approximately $3.9
million. This estimate is subject to subsequent FERC actions based upon
filings by the Company's pipeline suppliers.
Other. In August 1994, the Company discovered that three employees
of the Florida Division had, over a period of approximately two years,
colluded to defraud the Company in conjunction with its purchase of
certain computer equipment and related services. These employees have
been discharged and the Company has reported this matter to the
appropriate authorities. In addition, the Company has charged fiscal
1994 earnings approximately $200,000 (pre-tax), and has instituted civil
suit against these employees for restitution.
In addition, the Company is involved in various claims and
litigation incidental to its business. In the opinion of management,
none of these claims and litigation will have a material adverse effect
on the Company's results of operations or its financial condition.<PAGE>
10. Unaudited Quarterly Financial Data
The quarterly financial data presented below reflects the seasonal
nature of the Company's operations which normally results in higher
earnings during the heating season which is primarily in the first two
fiscal quarters (in thousands, except per share amounts):
Fiscal Quarters
First Second Third Fourth
1994:
Operating Revenues $105,603 $152,537 $74,747 $59,399
Operating Income (Loss) 9,351 15,365 1,731 (614)
Net Income (Loss) 5,852 11,818 (2,234) (4,656)
Net Income (Loss) Per Share 0.71 1.43 (0.25) (0.51)
1993:
Operating Revenues $101,115 $132,036 $69,072 $52,666
Operating Income (Loss) 10,035 15,952 2,272 (1,557)
Net Income (Loss) 6,758 12,738 (1,018) (4,668)
Net Income (Loss) Per Share 0.84 1.57 (0.12) (0.59)
Quarterly net income (loss) per share does not total to the annual
amounts due to rounding and to changes in the average common shares
outstanding.
In the fourth quarter of fiscal 1994, the Company reversed $1.6
million of income tax reserves no longer required as a result of
management's review of necessary reserve levels.<PAGE>
SCHEDULE V
NUI Corporation and Subsidiaries
Property, Plant and Equipment
For Each of the Fiscal Years in the
Three-Year Period Ended September 30, 1994
(Dollars in thousands)
Balance, Balance,
Beginning Additions Other End of
Classification of Period at Cost Retirements Changes Period
1994
Intangible plant $ 1,074 $ 125 $ -- $ 24 $ 1,223
Non-depreciable 2,117 477 -- -- 2,594
plant
Production 8,427 85 20 1,143 9,635
Storage 7,705 42 -- -- 7,747
Transmission plant 2,346 87 -- 1,122 3,555
Distribution plant 395,771 46,042 2,741 24,990 464,062
General plant 59,054 3,775 556 3,382 65,655
Gas producing 1,403 -- -- -- 1,403
properties
Construction work in 5,956 5,152 -- -- 11,108
progress
------- ------ ----- ------ -------
$483,853 $55,785 $3,317 $30,661a $566,982
======= ====== ===== ====== =======
1993
Intangible plant $ 1,047 $ 27 $-- $-- $1,074
Non-depreciable 1,911 6 -- 200b 2,117
plant
Production 8,160 267 -- -- 8,427
Storage 6,550 1,155 -- -- 7,705
Transmission plant 2,295 51 -- -- 2,346
Distribution plant 365,334 31,044 1,194 587b 395,771
General plant 55,757 6,242 2,158 (787)b 59,054
Gas producing 1,403 -- -- -- 1,403
properties
Construction work in 5,153 803 -- -- 5,956
progress
------- ------ ----- --- -------
$447,610 $39,595 $3,352 $-- $483,853
======= ====== ==== === =======
1992
Intangible plant $ 630 $417 $-- $-- $1,047
Non-depreciable 1,899 12 -- -- 1,911
plant
Production 8,139 23 2 -- 8,160
Storage 6,455 401 306 -- 6,550
Transmission plant 1,717 578 -- -- 2,295
Distribution plant 344,190 22,209 1,065 -- 365,334
General plant 52,448 6,118 2,809 -- 55,757
Gas producing 1,403 -- -- -- 1,403
properties
Construction work in 3,579 1,574 -- -- 5,153
progress
------ ------ ----- --- -------
$420,460 $31,332 $4,182 $-- $447,610
======= ====== ===== === =======
a Added as a result of an acquisition.
b Reclassification among accounts.
F-18<PAGE>
<TABLE>
SCHEDULE VI
NUI Corporation and Subsidiaries
Accumulated Depreciation and Amortization
of Property, Plant and Equipment
For Each of the Fiscal Years in the
Three-Year Period Ended September 30, 1994
(Dollars in thousands)
<CAPTION>
Balance, Additions Charged to Balance,
Beginning Depreciation Other Retire- Other Changes End of
Classification of Period Expense Expenses ments Salvage Other Period
<S> <C> <C> <C> <C> <C> <C> <C>
1994
Intangible plant $ 359 $ 223 $ -- $ -- $ -- $ -- $ 582
Production 4,492 351 -- 20 -- 737a,b 5,560
Storage 5,821 423 -- -- -- (736)a,b 5,508
Transmission plant 1,123 51 -- -- -- 609a,b 1,783
Distribution plant 118,812 13,025 -- 2,741 45 5,556a,b 134,697
General Plant 19,715 2,437 1,218 492 13 1,470a,b 24,361
Gas producing
properties 1,403 -- -- -- -- -- 1,403
------- ------ ----- ----- --- ----- -------
$151,725 $16,510 $1,218 $3,253 $58 $7,636 $173,894
======= ====== ===== ===== === ===== =======
1993
Intangible plant $ 138 $ 221 $ -- $ -- $ -- $ -- $ 359
Production 4,431 255 -- -- -- (194)a 4,492
Storage 5,477 349 -- -- -- (5)a 5,821
Transmission plant 1,081 42 -- -- -- -- 1,123
Distribution plant 110,610 10,099 -- 1,180 -- (717)a,c 118,812
General Plant 16,988 4,116 600 1,782 -- (207)a,c 19,715
Gas producing
properties 1,361 -- 42 -- -- -- 1,403
------- ------ ----- ----- --- ----- -------
$140,086 $15,082 $642 $2,962 $ -- $(1,123 $151,725
======= ====== ===== ===== --- ===== =======<PAGE>
1992
Intangible plant $ 11 $ 127 $ -- $ -- $ -- $ -- $ 138
Production 4,217 250 -- 2 -- (34) 4,431
Storage 5,545 308 -- 306 -- (70) 5,477
Transmission plant 1,045 36 -- -- -- -- 1,081
Distribution plant 102,811 9,386 -- 1,065 1 (523) 110,610
General plant 14,725 4,166 610 2,791 309 (31) 16,988
Gas producing
properties 1,210 -- 151 -- -- -- 1,361
------- ------ ----- ----- --- ----- -------
$129,564 $14,273 $ 761 $4,164 $310 $(658)a $140,086
======= ====== ====== ===== === ===== =======
<F1>
a Removal costs.
<F2>
b Added as a result of an acquisition.
<F3>
c Reclassification among accounts.
</TABLE>
F-19<PAGE>
<TABLE>
SCHEDULE VIII
NUI Corporation and Subsidiaries
Valuation and Qualifying Accounts
For Each of the Fiscal Years in the
Three-Year Period Ended September 30, 1994
(Dollars in thousands)
<CAPTION>
Additions Charged to
Balance, Balance,
Beginning Costs and End of
Description of Period Expenses Other Deductions Period
<S> <C> <C> <C> <C> <C>
1994
Allowance for doubtful $970(a)
accounts $ 1,225 $2,771 $182(c) $3,780(b) $1,368
Reserve for environmental
matters(d) $24,700 -- $7,481(d) -- $32,181
1993
Allowance for doubtful
accounts $1,370 $1,852 $474(a) $2,471(b) $1,225
Reserve for environmental
matters(d) $24,700 -- -- -- $24,700
1992
Allowance for doubtful
accounts $1,041 $2,281 $744(a) $2,696(b) $1,370
Reserve for environmental
matters(d) $24,700 -- -- -- $24,700
<F1>
a Recoveries.
<F2>
b Uncollectible amounts written off.
<F3>
c Added as a result of an acquisition.
<F4>
d The related cost of the reserve established in fiscal 1991, as well as $5.6 million of
fiscal 1994 additions, was recorded as a deferred charge. The remaining fiscal 1994
additions of $1.9 million was recorded as an additional utility plant acquisition
adjustment. See "Commitments and Contingencies--Environmental Matters," Note 9 of the
Notes to the Consolidated Financial Statements.
</TABLE>
F-20<PAGE>
SCHEDULE IX
NUI Corporation and Subsidiaries
Short-Term Borrowings
For Each of the Fiscal Years in the
Three-Year Period Ended September 30, 1994
(Dollars in thousands)
1994 1993 1992
Amount outstanding at
year end $110,125 $69,325(a) $46,375
Maximum amount
outstanding $110,325 $86,375 $74,375
Average daily amount
outstanding $81,974 $53,919 $44,150
Range of interest rates 3.1-5.3% 2.8-5.0% 3.2-7.5%
Weighted average
interest rates:
On average daily
amount outstanding 4.1% 3.6% 5.1%
On year end balance 5.3% 3.8% 3.9%
a Excludes $15.0 million of notes payable to banks that were
refinanced with the net proceeds of a new NUI bank credit
agreement entered into in fiscal 1994.
F-21<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Bedminster, State of New Jersey, on the
29th day of December, 1994
NUI CORPORATION
By: JOSEPH P. COUGHLIN, Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
JOHN KEAN Chairman, Chief Executive December 29, 1994
Officer and Director
(Principal executive
officer)
DAVID P. VINCENT Executive Vice-President December 29, 1994
and Chief Financial
Officer (Principal
financial officer)
BERNARD F. LENIHAN Vice President and December 29, 1994
Controller (Principal
accounting officer)
JOHN W. ATHERTON, JR. Director December 29, 1994
C. R. CARVER Director December 29, 1994
DR. VERA KING FARRIS Director December 29, 1994
JAMES J. FORESE Director December 29, 1994
ROBERT W. KEAN, JR. Director December 29, 1994
JACK LANGER Director December 29, 1994
BERNARD S. LEE Director December 29, 1994
R. V. WHISNAND Director December 29, 1994
JOHN WINTHROP Director December 29, 1994
F-22<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description
10(v) Service Agreement for Storage Gas by and between
Transcontinental Gas Pipe Line Corporation and EGC
Corporation, dated November 1, 1994
10(viii) Service Agreement for Rate Schedule CDS by and between
Texas Eastern Transmission Corporation and EGC, dated
December 1, 1993
10(ix) Service Agreement under Rate Schedule FTS-7 by and
between Texas Eastern Transmission Corporation and EGC,
dated October 25, 1994
10(xi) Service Agreement under Rate Schedule FTS-8 by and
between Texas Eastern Transmission Corporation and EGC,
dated June 28, 1994
10(xxiv) Firm Transportation Service Agreement under FTS-2 Rate
Schedule by and between City Gas and Florida Gas
Transmission, dated December 12, 1991 and Amendment
dated November 12, 1993
10(xxv) Service Agreement under Rate Schedule LG-A by and
between Transcontinental Gas Pipeline and North
Carolina Gas Service Division of Pennsylvania &
Southern Gas Company, dated August 5, 1971
10(xxvi) Service Agreement under Rate Schedule GSS by and
between Transcontinental Gas Pipeline and North
Carolina Gas Service Division of Pennsylvania &
Southern Gas Company, dated April 13, 1974
10(xxvii) Service Agreement under Rate Schedule FS by and between
Transcontinental Gas Pipeline and North Carolina Gas
Service Division of Pennsylvania & Southern Gas
Company, dated August 1, 1991
10(xxviii) Service Agreement under Rate Schedule FT by and between
Transcontinental Gas Pipeline and North Carolina Gas
Service Division of Pennsylvania & Southern Gas
Company, dated February 1, 1992
10(xxix) Gas Sales and Purchase Agreement by and between Texaco
Gas Marketing, Inc. and Pennsylvania & Southern Gas
Company, dated November 1, 1991
10(xxx) Gas Storage Contract under Rate Schedule FS by and
between Tennessee Gas Pipeline Company and Pennsylvania
& Southern Gas Company, dated September 1, 1993
10(xxxi) Gas Transportation Agreement under Rate Schedule FT-A
by and between Tennessee Gas Pipeline Co. and
Pennsylvania & Southern Gas Company, dated September 1,
1993 (Contract #935)
F-23<PAGE>
INDEX TO EXHIBITS
10(xxxii) Gas Transportation Agreement under Rate Schedule FT-A
by and between Tennessee Gas Pipeline Co. and
Pennsylvania & Southern Gas Company, dated September 1,
1993 (Contract #936)
10(xxxiii) Gas Transportation Agreement under Rate Schedule FT-A
by and between Tennessee Gas Pipeline Co. and
Pennsylvania & Southern Gas Company, dated September 1,
1993 (Contract #959)
10(xxxiv) Gas Transportation Agreement under Rate Schedule Ft-A
by and between Tennessee Gas Pipeline Co. and
Pennsylvania & Southern Gas Company, dated September 1,
1993 (Contract #2157)
10(xxxv) Employment Agreement, dated as of July 29, 1988,
between NUI Corporation and Jack Langer
10(xxiv) Service Agreement (#6785) by and between
Transcontinental Gas Pipe Line Corp. and EGC, dated
November 1, 1993
10(xxv) Service Agreement (#6787) by and between
Transcontinental Gas Pipe Line Corp. and EGC, dated
November 1, 1993
10(xxvi) Service Agreement (#6788) by and between
Transcontinental Gas Pipe Line Corp. and EGC, dated
November 1, 1993
10(xxvii) Service Agreement (#6779) by and between
Transcontinental Gas Pipe Line Corp. and EGC, dated
November 1, 1993
10(xxviii) Service Agreement (#6755) by and between
Transcontinental Gas Pipe Line Corp. and EGC, dated
November 1, 1993
21 Subsidiaries of NUI Corporation
23 Consent of Independent Public Accountants
27 Financial Data Schedule
F-24<PAGE>
SERVICE AGREEMENT
THIS AGREEMENT entered into as of this first day of
November, 1994, by and between TRANSCONTINENTAL GAS PIPE LINE
CORPORATION, a Delaware corporation, hereinafter referred to as
"Seller," first party, and ELIZABETHTOWN GAS COMPANY, hereinafter
referred to as "Buyer," second party,
WITNESSETH
WHEREAS, pursuant to the Order No. 636, issued by the
Federal Energy Regulatory Commission (Commission), Buyer has
notified Seller of its desire to convert its firm transportation
service under Seller's Rate Schedule X-278 from service under
Part 157 of the Commission's regulations to service under Part
284 (G) of the Commission's regulations; and
WHEREAS, Buyer has designated that such Part 284(G) service
will be rendered under Seller's Rate Schedule FT; and
WHEREAS, Seller has prepared this agreement for service for
Buyer under Rate Schedule FT, and this agreement will supersede
and terminate the existing service agreement between Seller and
Buyer under Rate Schedule X-278.
NOW, THEREFORE, Seller and Buyer agree as follows:
ARTICLE I
GAS TRANSPORTATION SERVICE
1. Subject to the terms and provisions of this agreement
and of Seller's Rate Schedule FT, Buyer agrees to deliver or
cause to be delivered natural gas for transportation and Seller
agrees to receive, transport and redeliver natural gas to Buyer
or for the account of Buyer, on a firm basis, up to the dekatherm
equivalent of a Transportation Contract Quantity ("TCQ") of
14,493 Mcf per day.
2. Transportation service rendered hereunder shall not be
subject to curtailment or interruption except as provided in
Section 11 of the General Terms and Conditions of Seller's FERC
Gas Tariff.<PAGE>
ARTICLE II
POINT(S) OF RECEIPT
Buyer shall deliver or cause to be delivered gas at the
point(s) of receipt hereunder at a pressure sufficient to allow
the gas to enter the pipeline system at the varying pressures
that may exist in such system from time to time. In the event
the maximum operating pressure(s) of the pipeline system, at the
point(s) of receipt hereunder, is from time to time increased or
decreased, then the maximum allowable pressure(s) of the gas
delivered or caused to be delivered by Buyer at the point(s) of
receipt hereunder shall be correspondingly increased or decreased
upon written notification to Buyer. The point(s) of receipt for
natural gas received for transportation pursuant to this
agreement shall be:
Points of Receipt
The Existing Point of Interconnection between Seller and
National Fuel Gas Supply Corporation at Wharton, Potter County,
Pennsylvania.
ARTICLE III
POINT(S) OF DELIVERY
Seller shall redeliver to Buyer or for the account of Buyer
the gas transported hereunder at the following point(s) of
delivery and at a pressure(s) of:
See Exhibit "A" attached hereto for the Points of Delivery.
ARTICLE IV
TERM OF AGREEMENT
This agreement shall be effective as of November 1, 1994
and shall remain in force and in effect until 8:00 a.m. Eastern
Standard Time, 2014 and thereafter until
terminated by Seller or Buyer upon at least one year prior
written notice; provided, however, this agreement shall terminate
immediately and, subject to the receipt of necessary
authorizations, if any, Seller may discontinue service hereunder
if (a) Buyer, in Seller's reasonable judgment fails to
demonstrate credit worthiness and (b) Buyer fails to provide
adequate security in accordance with Section 8.3 of Seller's'
Rate Schedule FT. As set forth in Section 8 of Article II of
Seller's August 7, 1989 revised Stipulation and Agreement in
Docket Nos. RP88-68 et. al., (a) pregranted abandonment under
Section 284.221(d) of the Commission's Regulations shall not
apply to any long term conversions from firm sales service to
transportation service under Seller's Rate Schedule Ft and (b)
Seller shall not exercise its right to terminate this service
agreement as it applies to transportation service resulting from
conversions from firm sales service so long as Buyer is willing
to pay rates no less favorable than Seller is otherwise able to
collect from third parties for such service.<PAGE>
ARTICLE V
RATE SCHEDULE AND PRICE
1. Buyer shall pay Seller for natural gas delivered to
Buyer hereunder in accordance with Seller's Rate Schedule FT and
the applicable provisions of the General Terms and Conditions of
Seller's FERC Gas Tariff as filed with the Federal Energy
Regulatory Commission, and as the same may be legally amended or
superseded from time to time. Such Rate Schedule and General
Terms and Conditions are by this reference made a part hereof.
2. Seller and Buyer agree that the quantity of gas that
Buyer delivers or causes to be delivered to Seller shall include
the quantity of gas retained for applicable compressor fuel, line
loss make-up (and injection fuel under Seller's Rate Schedule
GUST, if applicable) in providing the transportation service
hereunder, which quantity may be changed from time to time and
which will be specified in the currently effective Sheet No. 44
of Volume No. I of this Tariff which relates to service under
this agreement and which is incorporated herein.
3. In addition to the applicable charges for firm
transportation service pursuant to Section 3 of Seller's Rate
Schedule FT, Buyer shall reimburse Seller for any and all filing
fees incurred as a result of Buyer's request for service under
Seller's Rate Schedule FT, to the extent such fees are imposed
upon Seller by the Federal Energy Regulatory Commission or any
successor governmental authority having jurisdiction.
ARTICLE VI
MISCELLANEOUS
1. This agreement supersedes and cancels as of the
effective date hereof the following contract(s) between the
parties hereto:
Rate Schedule X-278 Service Agreement between Seller
and Buyer dated November 1, 1985.
2. No waiver by either party of any one or more defaults
by the other in the performance of any provisions of this
agreement shall operate or be construed as a waiver of any future
default or defaults, whether of a like or different character.
3. The interpretation and performance of this agreement
shall be in accordance with the laws of the State of Texas,
without recourse to the law governing conflict of laws, and to
all present and future valid laws with respect to the subject
matter, including present and future orders, rules and
regulations of duly constituted authorities.
4. This agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and
assigns.
5. Notices to either party shall be in writing and shall
be considered as duly delivered when mailed to the other party at
the following address:<PAGE>
(a) If to Seller:
Transcontinental Gas Pipe Line Corporation
P.0. Box 1396
Houston, Texas 77251
Attention: Customer Services - Northern
Market Area
(b) If to buyer:
EIizabethtown Gas Company
One Elizabethtown Plaza
P. O. Box 3175
Union, New Jersey 07053
Attention: Director, Gas Supply &
Federal Regulatory Matters
Such addresses may be changed from time to time by mailing
appropriate notice thereof to the other party by certified or
registered mail.
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be signed by their respective officers or
representatives thereunto duly authorized.
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
(Seller)
By /S/ Thomas F. Skains
Senior Vice President-
Transportation and Customer
Services
ELIZABETHTOWN GAS COMPANY
(Buyer)
By: /S/ Thomas E. Smith
Vice President - Gas Supply
and Planning <PAGE>
Contract #: 800361
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
This Service Agreement, made and entered into this 1 day of
December, 1993, by and between TEXAS EASTERN TRANSMISSION
CORPORATION, a Delaware Corporation (herein called "Pipeline")
and ELIZABETHTOWN GAS COMPANY (herein called "Customer", whether
one or more),
W I T N E S S E T H:
WHEREAS, the Federal Energy Regulatory Commission required
Pipeline to restructure Pipeline's services to reflect compliance
with Order Nos. 636, 636-A, and 636-B (collectively hereinafter
referred to as "Order No. 636"); and
WHEREAS, by order issued January 13, 1993 (62 FERC P61,015)
and order issued April 22, 1993 (63 FERC P61,100), the Federal
Energy Regulatory Commission accepted Pipeline's revised tariff
sheets filed in compliance with Order No. 636 to become effective
June 1, 1993, subject to certain conditions set forth in the
April 22, 1993 order; and
WHEREAS, CNG Tranmission Corporation ("CNG") made its final
Order No. 636 service elections on May 3, 1993 pursuant to the
April 22, 1993 order and Pipeline filed revised tariff sheets to
become effective June 1, 1993 in compliance with the April 22,
1993 order;
WHEREAS, Customer is also a customer of CNG; and
WHEREAS, CNG, in compliance with Order No. 636 and Federal
Energy Regulatory Commission orders issued in Docket No. RS92-21,
is assigning its firm service rights on Pipeline directly to its
customers; and
WHEREAS, Customer's service rights hereunder are part of
CNG's service rights being assigned to its customers; and
WHEREAS, Pipeline and Customer now desire to enter into this
Service Agreement to reflect the assignment of CNG's service
rights to Customer;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of
Pipeline's Rate Schedule CDS, and of the General Terms and
Conditions, transportation service hereunder will be firm.
Subject to the terms, conditions and limitations hereof and of
Sections 2.3 and 2.4 of Pipeline's Rate Schedule CDS, Pipeline<PAGE>
shall deliver to those points on Pipeline's system as specified
in Article IV herein or available to Customer pursuant to Section
14 of the General Terms and Conditions (hereinafter referred to
as Point(s) of Delivery), for Customer's account, as requested
for any day, natural gas quantities up to Customer's MDQ.
Customer's MDQ is as follows:
Maximum Daily Quantity (MDQ) 3,603 dth
Subject to variances as may be permitted by Sections 2.4 of
Rate Schedule CDS or the General Terms and Conditions, Customer
shall deliver to Pipeline and Pipeline shall receive, for
Customer's account, at those points on Pipeline's system as
specified in Article IV herein or available to Customer pursuant
to Section 14 of the General Terms and Conditions (hereinafter
referred to as Point(s) of Receipt) daily quantities of gas equal
to the daily quantities delivered to Customer pursuant to this
Service Agreement up to Customer's MDQ, plus Applicable Shrinkage
as specified in the General Terms and Conditions.
Pipeline shall not be obligated to, but may at its
discretion, receive at any Point of Receipt on any day a quantity
of gas in excess of the applicable Maximum Daily Receipt
Obligation (MDRO), plus Applicable Shrinkage, but shall not
receive in the aggregate at all Points of Receipt on any day a
quantity of gas in excess of the applicable MDQ, plus Applicable
Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a
quantity of gas in excess of the applicable Maximum Daily
Delivery Obligation (MDDO), but shall not deliver in the
aggregate at all Points of Delivery on any day a quantity of gas
in excess of the MDQ.
In addition to the MDQ and subject to the terms, conditions
and limitations hereof, Rate Schedule CDS and the General Terms
and Conditions, Pipeline shall deliver within the Access Area
under this and all other service agreements under Rate Schedules
CDS, FT-l, and/or SCT, quantities up to Customer's Operational
Segment Capacity Entitlements, excluding those Operational
Segment Capacity Entitlements scheduled to meet Customer's MDQ,
for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on
October 1, 1993 and shall continue in force and effect until
10/31/1999 and year to year thereafter unless this Service
Agreement is terminated as hereinafter provided. This Service
Agreement may be terminated by either Pipeline or Customer upon
five (5) years prior written notice to the other specifying a
termination date of any year occurring on or after the expiration
of the primary term. Subject to Section 22 of Pipeline's General
Terms and Conditions and without prejudice to such rights, this
Service Agreement may be terminated at any time by Pipeline in
the event Customer fails to pay part or all of the amount of any
bill for service hereunder and such failure continues for thirty
(30) days after payment is due; provided, Pipeline gives thirty<PAGE>
(30) days prior written notice to Customer of such termination
and provided further such termination shall not be effective if,
prior to the date of termination, Customer either pays such
outstanding bill or furnishes a good and sufficient surety bond
guaranteeing payment to Pipeline of such outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED
CONTRACT TERM OR THE PROVISION OF A TERMINATION NOTICE BY
CUSTOMER TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE
NATURAL GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION.
PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS
CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE
GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE
TERMINATION.
Any portions of this Service Agreement necessary to correct
or cash-out imbalances under this Service Agreement as required
by the General Terms and Conditions of Pipeline's FERC Gas
Tariff, Volume No. 1, shall survive the other parts of this
Service Agreement until such time as such balancing has been
accomplished.
ARTICLE III
RATE SCHEDULE
This service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule CDS and of
the General Terms and Conditions of Pipeline's FERC Gas Tariff on
file with the Federal Energy Regulatory Commission, all of which
are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered
hereunder and for the availability of such service in the period
stated, the applicable prices established under Pipeline's Rate
Schedule CDS as filed with the Federal Energy Regulatory
Commission, and as same may hereafter be legally amended or
superseded.
Customer agrees that Pipeline shall have the unilateral
right to file with the appropriate regulatory authority and make
changes effective in (a) the rates and charges applicable to
service pursuant to Pipeline's Rate Schedule CDS, (b) Pipeline's
Rate Schedule CDS pursuant to which service hereunder is rendered
or (c) any provision of the General Terms and Conditions
applicable to Rate Schedule CDS. Notwithstanding the foregoing,
Customer does not agree that Pipeline shall have the unilateral
right without the consent of Customer subsequent to the execution
of this Service Agreement and Pipeline shall not have the right
during the effectiveness of this Service Agreement to make any
filings pursuant to Section 4 of the Natural Gas Act to change
the MDQ specified in Article I, to change the term of the
agreement as specified in Article II, to change Point(s) of
Receipt specified in Article IV, to change the Point(s) of
Delivery specified in Article IV, or to change the firm character
of the service hereunder. Pipeline agrees that Customer may
protest or contest the aforementioned filings, and Customer does
not waive any rights it may have with respect to such filings.<PAGE>
<PAGE>
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which
Pipeline shall receive and deliver gas, respectively, shall be
specified in Exhibit(s) A and B of the executed service
agreement. Customer's Zone Boundary Entry Quantity and Zone
Boundary Exit Quantity for each of Pipeline's zones shall be
specified in Exhibit C of the executed service agreement.
Exhibit(s) A, B and C are hereby incorporated as part of
this Service Agreement for all intents and purposes as if fully
copied and set forth herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account
shall conform to the quality specifications set forth in Section
5 of Pipeline's General Terms and Conditions. Customer agrees
that in the event Customer tenders for service hereunder and
Pipeline agrees to accept natural gas which does not comply with
Pipeline's quality specifications, as expressly provided for in
Section 5 of Pipeline's General Terms and Conditions, Customer
shall pay all costs associated with processing of such gas as
necessary to comply with such quality specifications. Customer
shall execute or cause its supplier to execute, if such supplier
has retained processing rights to the gas delivered to Customer,
the appropriate agreements prior to the commencement of service
for the transportation and processing of any liquefiable
hydrocarbons and any PVR quantities associated with the
processing of gas received by Pipeline at the Point(s) of Receipt
under such Customer's service agreement. In addition, subject to
the execution of appropriate agreements, Pipeline is willing to
transport liquids associated with the gas produced and tendered
for transportation hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Pipeline's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Service Agreement, or any notice which any party may
desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered,
certified, or regular mail to the post office address of the
parties hereto, as the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310<PAGE>
(b) Customer: ELIZABETHTOWN GAS COMPANY
1085 MORRIS AVENUE
UNION, NJ 07083
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this Service Agreement; and either
Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter;
otherwise, neither Customer nor Pipeline shall assign this
Service Agreement or any of its rights hereunder unless it first
shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the
consent of the other. In addition, Customer may assign its
rights to capacity pursuant to Section 3.14 of the General Terms
and Conditions. To the extent Customer so desires, when it
releases capacity pursuant to Section 3.14 of the General Terms
and Conditions, Customer may require privity between Customer and
the Replacement Customer, as further provided in the applicable
Capacity Release Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties
are subject to all present and future valid laws with respect to
the subject matter, State and Federal, and to all valid present
and future orders, rules, and regulations of duly constituted
authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between
the parties hereto as described below:
NONE<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Service Agreement to be signed by their respective Presidents,
Vice Presidents or other duly authorized agents and their respec-
tive corporate seals to be hereto affixed and attested by their
respective Secretaries or Assistant Secretaries, the day and year
first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By /S/ Diane T. Tom
Vice President
ATTEST:
/S/ Robert W. Reed
Secretary
ELIZABETHTOWN GAS COMPANY
By /S/ Thomas E. Smith
VICE PRESIDENT
SUPPLY AND PLANNING
ATTEST:
/S/ Kenneth G. Ward
Assistant Secretary<PAGE>
Contract #: 331003
SERVICE AGREEMENT
FOR RATE SCHEDULE FTS-7
This Service Agreement, made and entered into this 28 day
of June, 1994, by and between TEXAS EASTERN TRANSMISSION
CORPORATION, a Delaware Corporation (herein called "Pipeline")
and ELIZABETHTOWN GAS COMPANY (herein called "Customer", whether
one or more), a Division of NUI Corporation, a New Jersey
Corporation,
W I T N E S S E T H:
WHEREAS, the Federal Energy Regulatory Commission required
Pipeline to restructure Pipeline's services to reflect compliance
with Order Nos. 636, 636-A, and 636-B (collectively hereinafter
referred to as "Order No. 636"); and
WHEREAS, by order issued January 13, 1993 (62 FERC P61,015)
and order issued April 22, 1993 (63 FERC P61,100), the Federal
Energy Regulatory Commission accepted Pipeline's revised tariff
sheets filed in compliance with Order No. 636 to become effective
June 1, 1993, subject to certain conditions set forth in the
April 22, 1993 order; and
WHEREAS, Customer made its final Order No. 636 service
elections on May 3, 1993 pursuant to the April 22, 1993 order and
Pipeline filed revised tariff sheets to become effective June 1,
1993 in compliance with the April 22, 1993 order;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof and
of Pipeline's Rate Schedule FTS-7, Pipeline agrees to deliver on
a firm basis for Customer's account quantities of gas up to the
following quantity:
Maximum Daily Quantity (MDQ) 13,715 dth
Pipeline shall receive for Customer's account, at the
Customer Point(s), for transportation hereunder daily quantities
of gas up to Customer's MDQ, plus Applicable Shrinkage. Pipeline
shall transport and deliver for Customer's account, at the CNG
Point(s), such daily quantities tendered up to such Customer's
MDQ.
Pipeline shall receive for Customer's account, at the CNG
Point(s), for transportation hereunder daily quantities of gas up
to Customer's MDQ, plus Applicable Shrinkage. Pipeline shall
transport and deliver for Customer's account, at the Customer
Point(s), such daily quantities tendered up to such Customer's<PAGE>
MDQ.<PAGE>
Pipeline shall not be obligated to, but may at its
discretion, receive at any Point of Receipt on any day a quantity
of gas in excess of the applicable Maximum Daily Receipt
Obligation (MDRO), plus Applicable Shrinkage, but shall not
receive in the aggregate at all Points of Receipt on any day a
quantity of gas in excess of the applicable MDQ, plus Applicable
Shrinkage, as specified in the executed service agreement.
Pipeline shall not be obligated to, but may at its discretion,
deliver at any Point of Delivery on any day a quantity of gas in
excess of the applicable Maximum Daily Delivery Obligation
(MDDO), but shall not deliver in the aggregate at all Points of
Delivery on any day a quantity of gas in excess of the applicable
MDQ, as specified in the executed service agreement.
ARTICLE II
TERM OF AGREEMENT
This Service Agreement shall become effective on June 1,
1993, and shall continue in force and effect until April 15,
2000, and from year to year thereafter unless terminated by
either party upon twenty-four months' prior written notice.
Subject to Section 22 of Pipeline's General Terms and Conditions
and without prejudice to such rights, this Service Agreement may
be terminated at any time by Pipeline in the event Customer fails
to pay part or all of the amount of any bill for service
hereunder and such failure continues for thirty (30) days after
payment is due; provided, Pipeline gives thirty (30) days prior
written notice to Customer of such termination and provided
further such termination shall not be effective if, prior to the
date of termination, Customer either pays such outstanding bill
or furnishes a good and sufficient surety bond guaranteeing
payment to Pipeline of such outstanding bill. Notwithstanding
the foregoing, service shall not be terminated unless and until
Pipeline has received abandonment authority pursuant to Section 7
of the Natural Gas Act. Customer shall have the right to oppose
Pipeline's application to the Federal Energy Regulatory
Commission, or any successor agency, for such abandonment
authority. For the 120 days following termination of this
Service Agreement, Pipeline shall utilize its best efforts to
provide Customer with such additional interruptible
transportation service, to be provided pursuant to Rate Schedule
IT-1 or successor of Rate Schedule IT-1, as is necessary for
Customer to withdraw and receive delivery of all gas remaining in
storage pursuant to CNG's Rate Schedule GSS.
Any portions of this Service Agreement necessary to correct
or cash-out imbalances under this Service Agreement as required
by the General Terms and Conditions of Pipeline's FERC Gas
Tariff, Volume No. 1, shall survive the other parts of this
Service Agreement until such time as such balancing has been
accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule FTS-7 and<PAGE>
of the General Terms and Conditions of Pipeline's FERC Gas Tariff
on file with the Federal Energy Regulatory Commission, all of
which are by this reference made a part hereof.
Customer shall pay Pipeline for all services rendered
hereunder and for the availability of such service in the period
stated, the applicable prices established under Pipeline's Rate
Schedule FTS-7 as filed with the Federal Energy Regulatory
Commission and as the same may be hereafter revised or changed.
Pipeline shall have the right from time to time, by the
filing of a revised rate schedule, to increase or decrease the
rates, to change the form of the applicable rate schedule and to
take such other and further action with respect thereto without
further consent by Customer and such changes in rates and other
changes shall ecome the Rate Schedule and Terms and conditions
under which the gas shall be transported hereunder. Customer
shall have the right to oppose any of the foregoing and to
request reduction in rates to the extent that Customer is legally
permitted to do so under the Natural Gas Act.
ARTICLE IV
CUSTOMER POINT(S) AND CNG POINT(S)
Natural gas to be received by Pipeline for Customer's
account for service hereunder shall be received on the outlet
side of the measuring station at or near the following designated
Customer Point(s) or CNG Point(s), and natural gas to be
delivered by Pipeline for Customer's account hereunder shall be
delivered at the outlet side of the measuring stations at or near
the following designated CNG Point(s) or Customer Point(s), in
accordance with the Maximum Daily Receipt Obligation (MDRO) plus
Applicable Shrinkage, Maximum Daily Delivery Obligations (MDDO),
receipt and delivery pressure obligations and measurement
responsibilities indicated below for each:
Maximum
Customer Daily Pressure Measurement
Point Obligation Obligation Responsi-
bilities
1. In Middlesex 13,715 dth 300 psig TE
County, New Jersey
and designated by
Pipeline as
Measuring Station
70275
2. In Middlesex 13,715 dth 100 psig TE
County, New Jersey
and designated by
Pipeline as
Measuring Station
71075
3. In Hunterdon 6,122 dth 100 psig TE<PAGE>
County, New Jersey
and designated by
Pipeline as
Measuring Station
70584
Maximum Measurement
CNG Daily Pressure Responsi-
Point Obligation Obligation bilities
1. In Westmoreland 13,715 dth At such TE
County, pressure
Pennsylvania necessary to
and designated by enter
Pipeline as Pipeline's
Measuring Station facilities not
75082 to exceed the
Maximum
Operating
Pressure
2. In Clinton 0 dth At such Consolidated
County, Pennsylvania pressure Gas
and designated by necessary to
Pipeline as enter
Measuring Station Pipeline's
75082 facilities not
to exceed the
Maximum
Allowable
Operating
Pressure
provided, however, receipt of gas by Pipeline for Customer's
account at Customer Point(s), shall be accomplished solely by the
displacement of gas quantities otherwise deliverable to Customer
by Pipeline pursuant to other contractual arrangements between
Pipeline and Customer, and which quantities shall be billed by
Pipeline and paid by Customer as if such deliveries in fact
occurred pursuant to the relevant contractual arrangements;
further provided, however, that until changed by a subsequent
Agreement between Pipeline and Customer, Pipeline's aggregate
maximum daily delivery obligation at the Customer's Point(s) of
Delivery described above, including Pipeline's maximum daily
delivery obligation under this and all other Service Agreements
existing between Pipeline and Customer, shall in no event exceed
the following:
Aggregate Maximum Daily
Customer's Point Delivery Obligation
No. 1 39,047 dth
No. 2 37,652 dth
No. 3 6,122 dth
and provided further that Pipeline shall have no obligation to
deliver natural gas designated as MDQ at any Customer Point other<PAGE>
than that listed below:
Customer Point
Measuring Station 70275, Middlesex County, New Jersey<PAGE>
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account
shall conform to the quality specifications set forth in Section
5 of Pipeline's General Terms and Conditions. Customer agrees
that in the event Customer tenders for service hereunder and
Pipeline agrees to accept natural gas which does not comply with
Pipeline's quality specifications, as expressly provided for in
Section 5 of Pipeline's General Terms and Conditions, Customer
shall pay all costs associated with processing of such gas as
necessary to comply with such quality specifications.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Pipeline's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Service Agreement, or any notice which any party may
desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered, certi-
fied, or regular mail to the post office address of the parties
hereto, as the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: Elizabethtown Gas Company
One Elizabethtown Plaza
Union, NJ 07083
Attention: DIRECTOR
GAS SUPPLY & FEDERAL REGULATORY MATTERS
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this Service Agreement; and either
Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter;
otherwise, neither Customer nor Pipeline shall assign this
Service Agreement or any of its rights hereunder unless it first
shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the
consent of the other.<PAGE>
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties
are subject to all present and future valid laws with respect to
the subject matter, State and Federal, and to all valid present
and future orders, rules, and regulations of duly constituted
authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between
the parties hereto as described below:
Service Agreement dated April 12, 1990, between Pipeline and
Customer under Pipeline's Rate Schedule SS-2 (Pipeline's
Contract No. 311992)
IN WITNESS WHEREOF, the parties hereto have caused this
Service Agreement to be signed by their respective Presidents,
Vice Presidents or other duty authorized agents and their respec-
tive corporate seals to be hereto affixed and attested by their
respective Secretaries or Assistant Secretaries, the day and year
first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By /S/ Diane T. Tom
Vice President
ATTEST:
/S/ Robert W. Reed
Secretary
ELIZABETHTOWN GAS COMPANY,
a Division of NUI
By /S/ Thomas E. Smith
Vice President
Supply and Planning
ATTEST:
/S/ Kenneth G. Ward
Asst. Secretary<PAGE>
Contract #: 331013
SERVICE AGREEMENT
FOR RATE SCHEDULE FTS-8
This Service Agreement, made and entered into this 28 day of
June, 1994, by and between TEXAS EASTERN TRANSMISSION
CORPORATION, a Delaware Corporation (herein called "Pipeline")
and ELIZABETHTOWN GAS COMPANY, a Division of NUI Corporation,
(herein called "Customer", whether one or more),
W I T N E S S E T H:
WHEREAS, the Federal Energy Regulatory Commission required
Pipeline to restructure Pipeline's services to reflect compliance
with Order Nos. 636, 636-A, and 636-B (collectively hereinafter
referred to as "Order No. 636"); and
WHEREAS, by order issued January 13, 1993 (62 FERC P61,015)
and order issued April 22, 1993 (63 FERC P61,100), the Federal
Energy Regulatory Commission accepted Pipeline's revised tariff
sheets filed in compliance with Order No. 636 to become effective
June 1, 1993, subject to certain conditions set forth in the
April 22, 1993 order; and
WHEREAS, Customer made its final Order No. 636 service
elections on May 3, 1993 pursuant to the April 22, 1993 order and
Pipeline filed revised tariff sheets to become effective June 1,
1993 in compliance with the April 22, 1993 order;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties do
covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of
Pipeline's Rate Schedule FTS-8, Pipeline agrees to deliver on a
firm basis for Customer's account quantities of gas up to the
following quantity:
Maximum Daily Quantity (MDQ) 8,469 dth
Pipeline shall receive for Customer's account, at the
Customer Point(s), for transportation hereunder daily quantities
of gas up to Customer's MDQ, plus Applicable Shrinkage. Pipeline
shall transport and delivery for Customer's account, at the CNG
Point(s), such daily quantities tendered up to such Customer's
MDQ.
Pipeline shall receive for Customer's account, at the CNG
Point(s), for transportation hereunder daily quantities of gas up
to Customer's MDQ, plus Applicable Shrinkage. Pipeline shall
transport and deliver for Customer's account, at the Customer
Point(s), such daily quantities tendered up to such Customer's
MDQ.<PAGE>
<PAGE>
Pipeline shall not be obligated to, but may at its
discretion, receive at any Point of Receipt on any day a quantity
of gas in excess of the applicable Maximum Daily Receipt
Obligation (MDRO), plus Applicable Shrinkage, but shall not
receive in the aggregate at all Points of Receipt on any day a
quantity of gas in excess of the applicable MDQ, plus Applicable
Shrinkage. Pipeline shall not be obligated to, but may at its
discretion, deliver at any Point of Delivery on any day a
quantity of gas in excess of the applicable Maximum Daily
Delivery Obligation (MDDO), but shall not deliver in the
aggregate at all Points of Delivery on any day a quantity of gas
in excess of the MDQ, as specified in the executed service
agreement.
ARTICLE II
TERM OF AGREEMENT
This Service Agreement shall become effective on June 1,
1993 and shall continue in force and effect until March 31, 2006,
and from year to year thereafter unless terminated by either
party upon twenty-four months' prior written notice. Subject to
Section 22 of Pipeline's General Terms and Conditions and without
prejudice to such rights, this Service Agreement may be
terminated at any time by Pipeline in the event Customer fails to
pay part or all of the amount of any bill for service hereunder
and such failure continues for thirty (30) days after payment is
due; provided, Pipeline gives thirty (30) days prior written
notice to Customer of such termination and provided further such
termination shall not be effective if, prior to the date of
termination, Customer either pays such outstanding bill or
furnishes a good and sufficient surety bond guaranteeing payment
to Pipeline of such outstanding bill. Notwithstanding the
foregoing, service shall not be terminated unless and until
Pipeline has received abandonment authority pursuant to Section 7
of the Natural Gas Act. Customer shall have the right to oppose
Pipeline's application to the Federal Energy Regulatory
Commission, or any successor agency, for such abandonment
authority. For the 120 days following termination of this
Service Agreement, Pipeline shall utilize its best efforts to
provide Customer with such additional interruptible
transportation service, to be provided pursuant to Rate Schedule
IT-1 or successor of Rate Schedule IT-1, as is necessary for
Customer to withdraw and receive delivery of all gas remaining in
storage pursuant to CNG's Rate Schedule GSS.
Any portions of this Service Agreement necessary to correct
or cash-out imbalances under this Service Agreement as required
by the General Terms and Conditions of Pipeline's FERC Gas
Tariff, Volume No. 1, shall survive the other parts of this
Service Agreement until such time as such balancing has been
accomplished.<PAGE>
ARTICLE III
RATE SCHEDULE
This service Agreement in all respects shall be and remain
subject to the applicable provisions of Rate Schedule FTS-8 and
of the General Terms and Conditions of Pipeline's FERC Gas Tariff
on file with the Federal Energy Regulatory Commission, all of
which are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered
hereunder and for the availability of such service in the period
stated, the applicable prices established under Pipeline's Rate
Schedule FTS-8 as filed with the Federal Energy Regulatory
Commission, and as same may be hereafter revised or changed.
Pipeline shall have the right from time to time, by the
filing of a revised rate schedule, to incfease or decrease the
rates, to change the form of the applicable rate schedule and to
take such other and further action with respect thereto without
further consent by customer and such changes in rates an dother
changes shall become the Rate Schedule and Terms and Conditions
under which the gas shall be transported hereunder. Customer
shall have the right to oppose any of the foregoing and to
request reduction in rates to the extent that Customer is legally
permitted to do so under the Natural Gas Act.
ARTICLE IV
CUSTOMER POINT(S) AND CNG POINT(S)
Natural gas to be received by Pipeline for Customer's
account for service hereunder shall be received on the outlet
side of the measuring station at or near the following designated
Customer Point(s) or CNG Point(s), and natural gas to be
delivered by Pipeline for Customer's account hereunder shall be
delibered at the outlet side of the measuring stations at or near
the following designated CNG Point(s) or Customer Point(s), in
accordance with the Maximum Daily Receipt Obligation (MDRO) plus
Applicable Shrinkage, Maximum Daily Delivery Obligation (MDDO),
receipt and delivery pressure obligations and measurement
responsibilities indicated below for each:<PAGE>
<TABLE>
<CAPTION>
Customer Maximum Daily Pressure Measurement
Point Obligation Obligation Responsibilities
<S> <C> <C> <S>
1. In Middlesex County, New 8,469 dth At any pressure requested by Pipeline
Jersey, and designated by Customer, provided however,
Pipeline as Measuring Station the Maximum Delivery Pressure
72075 shall not exceed 300 psig
2. In Hunterdon County, New 6,122 dth At any pressure requested by Pipeline
Jersey, and designated by Customer, provided however,
Pipeline as Measuring Station the Maximum Delivery Pressure
70584 shall not exceed 300 psig
3. Middlesex County, New 8,469 dth At any pressure requested by Pipeline
Jersey, and designated by Customer, provided however,
Pipeline as Measuring Station the Maximum Delivery Pressure
71075 shall not exceed 300 psig
Maximum Daily Pressure Measurement
CNG Point Obligation Obligation Responsibilities
1. In Noble County, Ohio, and 0 dth (1) At such pressure existing in TE
designated by Pipeline as 4,432 dth (2) Pipeline's facilities not to
Measuring Station 70450 exceed the Maximum Allowable
Operating Pressure
2. In Monroe County, Ohio, and 0 dth (1) At such pressure existing in TE
designated by Pipeline as 4,432 dth (2) Pipeline's facilities not to
Measuring Station 70471 exceed the Maximum Allowable
Operating Pressure
3. In Monroe County, Ohio, and 0 dth (1) At such pressure existing in CNG Transmission
designated by Pipeline as 4,432 dth (2) Pipeline's facilities not to
Measuring Station 70983 exceed the Maximum Allowable
Operating Pressure
4. In Monroe County, Ohio, and 0 dth (1) At such pressure existing in TE
designated by Pipeline as 4,432 dth (2) Pipeline's facilities not to
Measuring Station 70004 exceed the Maximum Allowable
Operating Pressure
5. In Marshall County, West 0 dth (1) At such pressure existing in TE
Virginia, and designated by 4,432 dth (2) Pipeline's facilities not to
Pipeline as Measuring Station exceed the Maximum Allowable
70372 Operating Pressure
6. In Greene County, 4,432 dth (1) At such pressure existing in TE
Pennsylvania, and designated by 4,432 dth (2) Pipeline's facilities not to
Pipeline as Measuring Station exceed the Maximum Allowable
75037 Operating Pressure<PAGE>
7. In Somerset County, 4,432 dth (1) At such pressure existing in TE
Pennsylvania, and designated by 4,432 dth (2) Pipeline's facilities not to
Pipeline as Measuring Station exceed the Maximum Allowable
70051 Operating Pressure
8. In Westmoreland County, 4,432 dth (1) At such pressure existing in CNG Transmission
Pennsylvania, and designated by 4,432 dth (2) Pipeline's facilities not to
Pipeline as Measuring Station exceed the Maximum Allowable
75082 Operating Pressure
9. In Clinton County, 4,037 dth (1) At such pressure existing in CNG Transmission
Pennsylvania, and designated by 4,037 dth (2) Pipeline's facilities not to
Pipeline as Measuring Station exceed the Maximum Allowable
75931 Operating Pressure
</TABLE>
(1) For receipt by Pipeline for Customer's Account
(2) For delivery by Pipeline for Customer's Account<PAGE>
provided, however, that Pipeline's maximum daily receipt
obligation shall not exceed 4,432 dth in the aggregate at CNG
Points (6), (7) and (8) above;
further provided, however, that Pipeline's maximum daily delivery
obligation shall not exceed 4,432 dth in the aggregate at CNG
Points (1) through (8) above;
further provided, however, receipt of gas by Pipeline for
Customer's account at Customer Point(s) shall be accomplished
solely by the displacement of gas quantities otherwise
deliverable to Customer by Pipeline pursuant to other contractual
arrangements between Pipeline and Customer, and which quantities
shall be billed by Pipeline and paid by Customer as if such
deliveries in fact occurred pursuant to the relevant contractual
arrangements;
further provided, however, that until changed by a subsequent
Agreement between Pipeline and Customer, Pipeline's aggregate
maximum daily delivery obligations at each of the Customer Points
described above, including Pipeline's maximum daily delivery
obligations under this and all other Service Agreements existing
between Pipeline and Customer, shall in no event exceed the
following:
Customer Aggregate Maximum
Delivery Daily Delivery Obligation
No. 1 39,047 dth
No. 2 6,122 dth
No. 3 37,652 dth
and provided further that Pipeline shall have no obligation to
delivery natural gas designated as MDQ at any Customer Point
other than that listed below:
Customer Point
Measuring Station 71075, Middlesex County, New Jersey
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account
shall conform to the quality specifications set forth in Section
5 of Pipeline's General Terms and Conditions. Customer agrees
that in the event Customer tenders for service hereunder and
Pipeline agrees to accept natural gas which does not comply with
Pipeline's quality specifications, as expressly provided for in
Section 5 of Pipeline's General Terms and Conditions, Customer
shall pay all costs associated with processing of such gas as
necessary to comply with such quality specifications. <PAGE>
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the
General Terms and Conditions of Pipeline's FERC Gas Tariff, any
notice, request, demand, statement, bill or payment provided for
in this Service Agreement, or any notice which any party may
desire to give to the other, shall be in writing and shall be
considered as duly delivered when mailed by registered,
certified, or regular mail to the post office address of the
parties hereto, as the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court
Houston, TX 77056-5310
(b) Customer: ELIZABETHTOWN GAS COMPANY
One Elizabethtown Plaza
UNION, NJ 07083
or such other address as either party shall designate by formal
written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Customer, or of Pipeline, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this Service Agreement; and either
Customer or Pipeline may assign or pledge this Service Agreement
under the provisions of any mortgage, deed of trust, indenture,
bank credit agreement, assignment, receivable sale, or similar
instrument which it has executed or may execute hereafter;
otherwise, neither Customer nor Pipeline shall assign this
Service Agreement or any of its rights hereunder unless it first
shall have obtained the consent thereto in writing of the other;
provided further, however, that neither Customer nor Pipeline
shall be released from its obligations hereunder without the
consent of the other.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement
shall be in accordance with the laws of the State of Texas
without recourse to the law governing conflict of laws.<PAGE>
This Service Agreement and the obligations of the parties
are subject to all present and future valid laws with respect to
the subject matter, State and Federal, and to all valid present
and future orders, rules, and regulations of duly constituted
authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the
effective date of this Service Agreement, the contract(s) between
the parties hereto as described below:
Service Agreement dated April 12, 1990, between Pipeline and
Customer under Pipeline's Rate Schedule SS-3 (Pipeline's Contract
No. 311993)
IN WITNESS WHEREOF, the parties hereto have caused this
Service Agreement to be signed by their respective Presidents,
Vice Presidents or other duly authorized agents and their respec-
tive corporate seals to be hereto affixed and attested by their
respective Secretaries or Assistant Secretaries, the day and year
first above written.
TEXAS EASTERN TRANSMISSION CORPORATION
By /S/ Diane T. Tom
Vice President
ATTEST:
/S/ Robert W. Reed
Secretary
ELIZABETHTOWN GAS COMPANY
By /S/ Thomas E. Smith
VICE PRESIDENT
SUPPLY AND PLANNING
ATTEST:
/S/ Kenneth G. Ward
Assistant Secretary<PAGE>
SERVICE AGREEMENT
FOR FIRM TRANSPORTATION SERVICE
THIS AGREEMENT entered into this 12th day of December, 1991,
by and between Florida Gas Transmission Company, a Corporation of
the State of Delaware (herein called "Transporter"), and City Gas
Company of Florida, (herein called "Shipper").
W I T N E S S E T H :
WHEREAS, Shipper wishes to purchase firm natural gas
transportation service from Transporter and Transporter wishes to
provide firm natural gas transportation service to Shipper and
WHEREAS, Shipper has completed and submitted to Transporter
a valid request for firm transportation service ("Request"), and
WHEREAS, in accordance with such Request, such service will
be provided by Transporter for Shipper in accordance with the
terms hereof.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the sufficiency
of which is hereby acknowledged, Transporter and Shipper do
covenant and agree as follows:
ARTICLE I
Definitions
In addition to the definitions incorporated herein through
Transporter's Rate Schedule FTS-2, the following terms when used
herein shall have the meanings set forth below:
1.1 The term "Gas" shall mean pipeline quality natural gas
which complies with the quality provisions set forth in the
General Terms and Conditions of Transporter's effective FERC Gas
Tariff Volume No. 1, and includes gas remaining after processing
thereof.
1.2 The term "Rate Schedule FTS-2" shall mean Transporter's
Rate Schedule FTS-2 as filed with the FERC as changed and
adjusted from time to time by Transporter in accordance with
Section 3.3 hereof or in compliance with any final FERC order
affecting such rate schedule.
1.3 The term "FERC" shall mean the Federal Energy
Regulatory Commission or any successor regulatory agency or body,
including the Congress, which has authority to regulate the rates
and services of Transporter.<PAGE>
ARTICLE II
Quantity
2.1 The Maximum Daily Transportation Quantity ("MDTQ")
shall be set forth in Exhibit B attached hereto. The applicable
MDTQ shall be the largest daily quantity of gas Shipper may
tender for transportation in the aggregate to all Points of
Receipt, exclusive of Transporter's Fuel if applicable, and
receive at all Point(s) of Delivery as specified on Exhibits A
and B hereto on any day.
2.2 Shipper may tender natural gas for transportation to
Transporter on any day, up to the MDTQ plus Transporter's Fuel.
Transporter agrees to receive the aggregate of the quantities of
natural gas that Shipper tenders for transportation at the
Receipt Points, up to the maximum daily quantity specified for
each such Point on Exhibit A hereto, and to transport and deliver
to Shipper at each Delivery Point specified on Exhibit B, up to
the maximum daily quantity specified for each such point on
Exhibit B, the amount tendered by Shipper less Transporter's
Fuel, if applicable (as provided in Rate Schedule FTS-2),
provided, however, that Transporter shall never be required to
transport and deliver on any day more than the MDTQ.
ARTICLE III
Rate Schedule
3.1 Upon the commencement of service hereunder, Shipper
shall pay Transporter, for all service rendered hereunder, the
rates established under Transporter's Rate Schedule FTS-2 as
filed with the FERC and as said Rate Schedule may hereafter be
legally amended or superseded.
3.2 This Agreement in all respects shall be and remain
subject to the provisions of said Rate Schedule and of the
applicable provisions of the General Terms and Conditions of
Transporter on file with the FERC (as the same may hereafter be
legally amended or superseded), all of which are made a part
hereof by this reference.
3.3. Transporter shall have the unilateral right to file
with the appropriate regulatory authority and make changes
authorized by such authority in (a) the rates and charges
applicable to its Rate Schedule FTS-2, (b) Rate Schedule FTS-2
pursuant to which this service is rendered; provided, however,
that the firm character of service shall not be subject to change
hereunder, or (c) any provisions of the General Terms and
Conditions applicable to Rate Schedule FTS-2. Transporter agrees
that Shipper may protest or contest the aforementioned filings,
or seek authorization from duly constituted regulatory
authorities for Such adjustment of Transporter's existing FERC
Gas Tariff as may be found necessary in order to assure that the
provisions in (a), (b), or (c) above are just and reasonable.
ARTICLE IV
Term of Agreement
4.1 This Agreement shall be effective upon the "in-service
date of the Phase III Facilities", which shall be deemed to be
the first day of the month following the date on which<PAGE>
Transporter gives notice to the Commission that the Phase III
Facilities, as defined in Article X of this Agreement, are in-
service, and shall continue in effect for a primary term (which
shall not be less than a period of twenty years) of 20 years.
4.2 Termination for Non-Payment. In the event Shipper
fails to pay for service provided pursuant to this Agreement,
Transporter, in addition to any other rights it may have, shall
also have the right to suspend or terminate service as permitted
by the applicable provision of the General Terms and Conditions
to Transporter's FERC Gas Tariff.
ARTICLE V
Point(s) of Receipt and Delivery
and Maximum Daily Quantities
5.1 The Point(s) of Receipt and maximum daily quantity for
each point(s), for all gas delivered by Shipper into
Transporter's pipeline system under this Agreement shall be at
the Point(s) of Receipt on Transporter's pipeline system as set
forth in Exhibit A attached hereto.
5.2 The Point(s) of Delivery and maximum daily quantity for
each point(s) for all gas delivered by Transporter to Shipper, or
for the account of Shipper, under this Agreement shall be at the
Point(s) of Delivery as set forth in Exhibit B.
ARTICLE VI
Notices
All notices, payments and communications with respect to
this Agreement shall be in writing and sent to the addresses
stated below or at any other such address as may hereafter be
designated in writing:
ADMINISTRATIVE MATTERS
Transporter: Florida Gas Transmission Company
P. 0. Box 1188
Houston, Texas 77251-1188
Attention: Contract Management Department
Shipper: City Gas Company of Florida
955 E. 25th Street
Hialeah, FL 33013
Attention: Jack Langer
cc: Paul J. Prezorski
Elizabethtown Gas Company
One Elizabethtown Plaza
Union, NJ 07083
Fax: (908)289-1370
PAYMENT BY WIRE TRANSFER
Transporter: Florida Gas Transmission Company
NCNB National Bank
Account No. 001658806
Charlotte, North Carolina<PAGE>
ARTICLE VII
Facilities
Subsequent to commencement of service under this Agreement,
Transporter shall not be obligated to, but may, at its sole
discretion, construct or acquire new facilities, or expand
existing facilities, in order to perform service under this
Agreement. For purposes of this Agreement and Rate Schedule
FTS-2, an expanded facility shall be deemed to be a new facility.
If in Transporter's reasonable judgment it is necessary to
construct or acquire new facilities, or to expand existing
facilities, in order to enable Transporter to receive or deliver
Shipper's MDTQ at the Point(s) of Receipt and Delivery, and
Transporter determines as provided herein to construct, acquire,
or expand such facilities, then Transporter shall notify Shipper
of the additional cost required, and such facilities shall,
subject to the receipt and acceptance by Transporter of any
necessary authorizations, permits and approvals, be constructed,
acquired or expanded to permit the receipt and delivery of gas as
provided for herein. Shipper agrees to reimburse Transporter,
promptly upon receipt of Transporter's invoices, for all costs
and expenses incurred under this Article VII by Transporter for
any pipeline and related facilities including but not limited to
the cost of any tap, electronic measurement equipment or data
communications equipment for new meters, and appurtenant
equipment and materials, and overhead expenses. To the extent
such reimbursement qualifies as a contribution in aid of
construction under the Tax Reform Act of 1986, P.L. 99-514
(1986), Shipper also shall reimburse Transporter for the income
taxes incurred by Transporter as a direct result of such
contribution in aid of construction by Shipper, as calculated
pursuant to the Commission's order in Transwestern Pipeline
Company, 45 FERC Paragraph 61,116 (1988). Transporter shall have
title to and the exclusive right to operate and maintain all such
facilities.
ARTICLE VIII
Regulatory Authorizations and Approvals
8.1 Transporter's obligation to provide service is
conditioned upon receipt and acceptance of any necessary
regulatory authorization that is acceptable in form and substance
to Transporter to provide Firm Transportation Service to Shipper
in accordance with the terms of Rate Schedule FTS-2, or any
successor thereto which is substantially similar in form and
content, and this Service Agreement. Shipper agrees to reimburse
Transporter for all reporting and/or filing fees incurred by
Transporter in providing service under this Service Agreement.
ARTICLE IX
Pressure
9.1 The quantities of gas delivered or caused to be
delivered by Shipper to Transporter hereunder shall be delivered
into Transporter's pipeline system at a pressure sufficient to
enter Transporter's system, but in no event shall such gas be
delivered at a pressure exceeding the maximum authorized
operating pressure or such other pressure as Transporter permits
at the Point(s) of Receipt.<PAGE>
9.2 Transporter shall have no obligation to provide
compression and/or alter its system operations to effectuate
deliveries at the Point(s) of Delivery hereunder.
ARTICLE X
Other Provisions
10.1 No later than November 1, 1991, Shipper must
demonstrate creditworthiness satisfactory to Transporter. In the
event Shipper fails to establish creditworthiness by such date,
Transporter has the option to terminate this Agreement at any
time thereafter. For purposes of establishing and maintaining
credit, Shipper shall provide Transporter with the information
set forth in proposed section 23 of the General Terms and
Conditions as filed in Transporter's rate proceeding in FERC
Docket No. RP91-187, or any succeeding section that becomes
effective on January 1, 1992.
10.2 Service pursuant to this Agreement is expressly subject
to the following conditions:
(a) The issuance, and acceptance by Transporter, of all
necessary authorizations from the FERC pursuant to the Natural
Gas Act or Natural Gas Policy Act permitting Transporter to
construct, own and operate the Phase III facilities as described
in Transporter's certificate application, as it may be amended or
supplemented from time to time, and to effectuate the proposed
service hereunder (hereinafter "Phase III Facilities"). All such
authorizations shall be in form and substance satisfactory to
Transporter, and shall be final before the respective
governmental authority and no longer subject to appeal or
rehearing; provided, however, that Transporter may waive the
condition that such authority be final and/or no longer subject
to appeal or rehearing. Such authorization shall include
approval of a capacity allocation methodology acceptable to
Transporter in the event requests for service for the proposed
Phase III Facilities exceed the availability of the expanded
capacity which Transporter, in its sole discretion, is willing to
build;
(b) Receipt and acceptance by Transporter of all other approvals
required to construct the Phase III Facilities including all
necessary authorizations from federal, state, local, and/or
municipal agencies or other governmental authorities. All such
approvals shall be in form and substance satisfactory to
Transporter, and shall be final before the respective
governmental authority and no longer subject to appeal or
rehearing; provided, however, that Transporter may waive the
condition that such authority be final and/or no longer subject
to appeal or rehearing.
(c) The receipt of executed firm transportation service
agreements from other shippers sufficient to economically justify
construction of the Phase III Facilities, in Transporter's sole
opinion.<PAGE>
(d) The approval of rates by the Commission for transportation
services provided on the Phase III Facilities that are acceptable
to Transporter, in Transporter's sole opinion. Shipper agrees to
support a levelized rate methodology for the Phase III Facilities
in any proceeding before the Commission during the term of this
Agreement.
(e) Receipt by Transporter of all necessary right-of-way
easements or permits in form and substance acceptable to
Transporter;
(f) Transporter obtaining financing to construct the Phase III
Facilities that is satisfactory to transporter, in Transporter's
sole opinion. Shipper agrees to provide reasonable cooperation
in Transporter's effort to obtain financing;
(g) Transporter's and Shipper's obligations hereunder shall be
subject to the provisions of any final FERC order determining an
allocation of capacity of Transporter's Phase III Facilities.
However, in the event such allocation of capacity does not
provide Shipper with the Annual MDTQs set forth in the
Subscription Quantity Form, which is required to be completed and
signed by Shipper and which is incorporated herein by reference,
Shipper shall have the option to terminate this Agreement within
fifteen (15) days of notice by Transporter of Shipper's
allocation. If Shipper agrees to accept service for a lesser
Annual amount, Transporter shall have the option to provide
service at such lesser amount in the event all other conditions
set forth in this Article X are satisfied. In the event such
allocation of capacity does not provide Shipper with the Seasonal
MDTQs set for in the Subscription Quantity Form, Shipper may, but
shall not be obligated to, contract for such lesser Seasonal
amount. However, Shipper shall still be obligated for the
allocated Annual MDTQ in accordance with the provisions of this
paragraph (g).
(h) Shipper is obligated to reimburse Transporter for the
construction of taps, meters, receipt and delivery point
upgrades, construction of supply and delivery laterals not
included in the description of the Phase III Facilities and any
other construction necessary to receive gas into, and deliver gas
from, Transporter's Phase III Facilities. To the extent such
reimbursement qualifies as a contribution in aid of construction
under the Tax Reform Act of 1986, P.L. 99-514 (1986), shipper
also shall reimburse Transporter for the income taxes incurred by
Transporter as a direct result of such contribution in aid of
construction by Shipper, as calculated pursuant to the
Commission's order in Transwestern Pipeline company, 45 FERC
Paragraph 61,116 (1988). Transporter shall have title to and the
exclusive right to operate and maintain all such facilities.
(j) In the event that all requisite approvals necessary to
effectuate the proposed service hereunder are not granted in
satisfactory form on or before December 31, 1993, then at such
time either party shall have the right to terminate this
Agreement upon sixty days written notice; provided, however, that
if such approvals are obtained prior to the expiration of the
sixty day notice period, such notice shall be of no further force
or effect and this Agreement shall continue in accordance with
the terms herein.<PAGE>
(k) Transporter agrees to make all reasonable efforts to obtain
the necessary authorizations, financing service commitments and
all other approvals necessary to effectuate service under this
Agreement. Shipper agrees to exercise good faith in the
performance of this Agreement by supporting Transporter's efforts
to obtain all necessary authorizations, financing and other
approvals necessary to effectuate service under this Agreement.
(l) At any time prior to Transporter's acceptance of all
authorizations necessary to construct the Phase III Facilities,
Transporter retains the right to terminate this Agreement, and to
withdraw any requests or applications for regulatory approvals,
and to terminate this project, at any time Transporter determines
in its sole discretion that the project is no longer economical
to pursue.
In the event the conditions set forth in this Article X are
not satisfied, this Agreement shall be deemed null and void upon
written notice by Transporter to Shipper.
ARTICLE XI
Miscellaneous
11.1 This Agreement shall bind and benefit the successors
and assigns of the respective parties hereto; provided, however,
neither party shall assign this Agreement or any of its rights or
obligations hereunder without first obtaining the written consent
of the other party and any other regulatory authorizations deemed
necessary by Transporter.
11.2 No waiver by either party of any one or more defaults
by the other in the performance of any provisions of this
Agreement shall operate or be construed as a waiver of any future
defaults of a like or different character.
11.3 This Agreement contains Exhibits A and B which are
incorporated fully herein.
11.4 This Agreement shall not be binding upon Transporter
until executed by Transporter.
11.5 THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers effective as of the
date first written above.
TRANSPORTER SHIPPER
FLORIDA GAS TRANSMISSION COMPANY CITY GAS COMPANY OF FLORIDA
By: Peter E. Weidler By: Jack Langer
Title: Vice President Title: President & CEO
ATTEST: ATTEST:
By: James C. Dowden By: Alice Harris
Title: VP - Throughput Management Title: Executive VP
Date: 4/20/92 Date: December 12, 1991<PAGE>
AMENDMENT
FIRM TRANSPORTATION SERVICE AGREEMENT
RATE SCHEDULE FTS-2
THIS AMENDMENT is entered into on the 12th day of November,
1993, between Florida Gas Transmission Company ("Transporter"), a
Delaware corporation and City Gas Company of Florida, A Division
of Elizabethtown Gas Company ("Shipper"), a New Jersey
Corporation.
W I T N E S S E T H
WHEREAS, Transporter and Shipper are parties to two Firm
Transportation Service Agreements dated December 12, 1991, for
service under Rate Schedule FTS-2 of Transporter's F.E.R.C Gas
Tariff (hereinafter referred to individually as "Contract No.
3607" and "Contract No. 3608" and collectively as "FTS-2 Service
Agreements") and Shipper is a Phase III Shipper; and,
WHEREAS, soleLy for administrative purposes, transporter and
shipper desire to combine the rights, obligations, and
liabilities, including the Maximum Daily Transportation
Quantities, of the FTS-2 Service Agreements into one FTS-2
service agreement by cancelling Contract No. 3607 and revising
Contract No. 3608 to include all rights, obligations, and
liabilities previously covered by Contract No. 3607; and,
WHEREAS, Transporter and shipper are parties to the Offer of
Settlement filed on August 25, 1992, in Docket No. CP92-182,
et.al., which represented the agreement between the parties
resolving all non-environmental issues, including but not limited
to, rate capacity, allocation of receipt point capacity, and
terms and conditions of firm transportation service through
Transporter's Phase III Expansion ("Settlement"); and,
WHEREAS, the parties agreed, pursuant to paragraph 3 of
Article (Negotiated Allocation of Risk Among FGT and The
Signatory Parties) of the Stipulation and Agreement contained in
the Settlement, to execute, within sixty (60)days of
Transporter's acceptance of an order from the Federal energy
Regulatory Commission ("Commission"), an amendment to the FTS-2
Service Agreements between Transporter and each Phase III Shipper
that (i) incorporates the Rate Caps elected by such Phase III
Shipper; and (ii) deletes any pre-existing termination rights of
the Phase III Shipper under the FTS-2 Service agreements or any
related agreements between Transporter and shipper; and,
WHEREAS, On September 15, 1993, the Commission issued an
order, satisfactory to transporter, in Docket No. CP92-182, et
al., approving and accepting the Settlement without modification
("Order"); and,
WHEREAS, Transporter accepted the certificate issued by the
Order on October 14, 1993; and,
WHEREAS, Transporter and Shipper desire to implement the
amendment process agreed to in the Settlement, as approved by the
Order.<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, Transporter and Shipper agree as
follows:
1. Section 3.1 of the FTS-2 Service Agreement is hereby deleted
and replaced in its entirety with the following provisions:
During the first twenty (20) years of service under this
Agreement, Shipper shall pay Transporter the lower of (1)
the rates established under Transporter's Rate Schedule FTS-
2, as filed with and approved by the FERC and as said Rate
Schedule may hereafter be legally amended or superseded, or
(2) the Final Rate Cap as determined below:
(i) For the first two years of service, the Rate Cap
shall be $0.80 per MMBtu.
(ii) Commencing on the third year of service and
extending for a period of one year, the Rate Cap shall be $0.82
per MMBtu.
(iii) Commending on the fourth year of service and
extending for a period of one year, the Rate Cap shall be $0.84
per MMBTU.
(iv) Commencing on the firth year of service and
extending to the end of the eighth year of service, the Rate Cap
shall be $0.86 per MMBTU.
(v) Commencing on the ninth year of service and
extending to the end of the twentieth year of service, the Rate
Cap shall be calculated as follows:
On each Anniversary ("Anniversary Date"), the Final Rate Cap
to be effective for the subsequent twelve-month period shall
be determined as the sum of (a) seventy percent (70%) of the
Rate Cap which was effective for the eighth year of service
("Base Rate Cap") and (b) thirty percent (30%) of the Base
Rate Cap escalated (but not decreased) through use of the
GDP Implicit Price Deflator (or any substitute index that
the parties mutually agree to in writing) determined by
multiplying thirty percent (30%) of the Base Rate Cap by a
fraction, the numerator of which is the GDP Implicit Price
Deflator for the last calendar quarter immediately preceding
the Anniversary Date and the denominator of which is the GDP
Implicit Price Deflator for the calendar quarter immediately
preceding the first month of the eighth year of service.
The Initial Base Rate Cap and all Final Rate Caps to be
calculated hereunder are stated in nominal dollars and are
100 percent load factor rates, exclusive of all applicable
surcharges and fuel. The Initial Base Rate Cap assumes the
levelized rate methodology which Transporter filed for
approval in the Offer of Settlement and Stipulation and
Agreement of the parties in Docket No. CP92-182, et al., on
August 25, 1992 ("Settlement").
The Initial Base Rate Cap and any subsequent Rate Cap used
in the calculation of a Final Rate Cap hereunder shall be
adjusted for the impact of changes in State and Federal<PAGE>
income tax rates by adding or subtracting from the
applicable Rate Cap the difference between the applicable
Commission approved rate and such rate as adjusted to
include changes in State and/or Federal income tax rates
utilizing the cost of service underlying such rate. In the
event of changes in State and/or Federal income tax rates
prior to the effectiveness of initial FTS-2 rates, the Rate
Cap adjustment shall be determined by adding or subtracting
the difference between the initial rates and the initial
rates as recalculated to include the State and Federal
income tax rates as included in the April 15, 1992 filing in
Docket No. CP92-182-001.
Rate Cap adjustments shall be implemented on the date of
effectiveness of tariff sheets filed by Transporter
incorporating changes in State and/or Federal income tax
rates.
The Initial Base Rate Cap is based on $23.5 million of
pipeline rehabilitation costs allocated to the existing
cost-of-service. In the event more than $23.5 million of
rehabilitation costs are allocated to the existing cost-of-
service, then the Initial Base Rate Cap and any subsequent
Rate Cap used in the calculation of a Final Rate Cap shall
be adjusted downward by $.0006 per every $1 million (or
portion thereof) allocated to the existing cost-of-service
over and above the $23.5 million. In the event less than
$23.5 million of rehabilitation costs are allocated to the
existing cost-of-service, then the Initial Base Rate Cap and
any subsequent Rate Cap used in the calculation of a Final
Rate Cap shall be adjusted upward by $.0006 per every $1
million (or portion thereof) less than the $23.5 million
currently allocated to the Phase III cost-of-service.
Shipper agrees that it shall not avail itself of any other
Rate Cap that may be made available to it by the Commission.
2. Section 10.2(g) of Article 10 (Other Provision) of the FTS-2
Service Agreements regarding Shipper's right to terminate in the
event the Annual Maximum Daily Transportation Quantity allocation
was less than the amount stated in Shipper's Subscription
Quantity Form, is no longer applicable and shall be deleted in
its entirety.
3. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS NOTWITHSTANDING
ANY CONFLICT OF LAW RULES WHICH MAY REQUIRE THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION.
4. Upon execution by both parties, this Agreement shall be
deemed effective for all purposes as of the date of the FTS-2
Service Agreements.
5. Transporter and shipper each represent and warrant to the
other, as applicable, that it is either (i) a corporation duly
organized and validly existing under the laws of the State of its
incorporation and has the power and authority to execute,
deliver, and carry out the terms and provisions of the FTS-2
Service Agreements, as amended herein and in the Settlement; of
(ii) has received all authorizations, consents, and approvals of<PAGE>
governmental bodies, states or local agencies, committees,
boards, or councils having jurisdiction, necessary to execute,
deliver, and carry out the terms and provisions of the FTS-2
Service Agreements, as amended herein and in the Settlement.
6. Upon execution of the revised Exhibits A and B attached
hereto by both parties to reflect the transfer of Maximum Daily
Transportation Quantity from Contract No. 3607 to Contract No.
3608, Contract No. 3607 will be terminated in its entirety
effective as of the date of such contracts were executed and
Contract No. 3609 shall remain in full force and effect, as
amended herein and in the Settlement.
IN WITNESS WHEREOF, the parties have caused this Amendment
to be executed as of the date written above by their duly
authorized officers and representatives.
"Shipper" "Transporter"
CITY GAS COMPANY OF FLORIDA, FLORIDA GAS TRANSMISSION COMPANY
A DIVISION OF ELIZABETHTOWN
GAS COMPANY
BY: Jack Langer By: Peter E. Weidler
Title: President & CEO Title: Vice President of
Marketing<PAGE>
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
SERVICE AGREEMENT UNDER RATE SCHEDULE LG-A
THIS AGREEMENT entered into this 5th day of August,
1974, by and between TRANSCONTINENTAL GAS PIPE LINE CORPORATION,
a Delaware corporation, hereinafter referred to as "Seller,"
first party, and NORTH CAROLINA GAS SERVICE DIVISION OF
PENNSYLVANIA & SOUTHERN GAS COMPANY, a Delaware corporation,
hereinafter referred to as "Buyer," second party,
W I T N E S S E T H :
WHEREAS, Buyer is purchasing gas from Seller under
Seller's Rate Schedule CD-2, and Buyer desires to purchase and
Seller desires to sell liquefied natural gas storage service
under Seller's Rate Schedule LG-A as set forth herein:
NOW, THEREFORE, Seller and Buyer agree as follows:
ARTICLE I
SERVICE TO BE RENDERED
Subject to the terms and provisions of this agreement
and of Seller's Rate Schedule LG-A, Seller agrees to liquify
natural gas, store such gas in liquefied form, withdraw from
storage, gasaify and deliver to Buyer, volumes of natural gas as
follows:
To withdraw from liquid storage, gasify, transport and
deliver to Buyer during each Withdrawal Period at the delivery
points set forth below, the gas stored in liquefied form by
Seller for Buyer's account up to a maximum volume in any day of
2,140 Mcf, which volume shall be Buyer's Liquefaction Demand.
To liquify and store in liquefied form for Buyer's account
during the Injection Period of any year up to a total volume of
12,540 Mcf, which volume shall be Buyer's Liquifaction Capacity
Volume.
ARTICLE II
POINT OF DELIVERY
The Point or Points of Delivery for all natural gas
delivered by Seller to Buyer under this agreement shall be at or
near:
(1) REIDSVILLE METER AND REGULATOR STATION, located at milepost
1377.73 of Seller's main tansmission line, on the
northeasterly side of State Highway No. 87, approximately
6.5 miles northwesterly from the City of Reidsville,
Rockingham County, North Carolina.<PAGE>
(2) DRAPER METER AND REGULATOR STATION, located at milepost
1386.34 on Seller's main transmission line, on the
southeasterly side of State Highway No. 770, approximately 7
miles easterly of the city of Leaksville, Rockingham County,
North Carolina.
(3) BETHANY METER AND REGULATOR STATION, located at milepost
1365.98 on Seller's main transmission line adjacent ot North
Carolina State Highway 65 (approximately 3.2 miles southwest
from Seller's Compressor Station No. 160) Rockingham County,
North Carolina.
(4) SPRAY METER STATION, located at milepost 1382.53 on Seller's
main transmission line adjacent ot Transco's Dan River Meter
Station approximately 0.5 mile south of Dan River,
Rockingham County, North Carolina.
ARTICLE III
DELIVERY PRESSURE
Seller shall deliver natural gas to Buyer at the Point(s) of
Delivery at a pressure(s) of: not less than fifty (50) pounds per
square inch gauge, or at such other pressures as may be agreed
upon in the day-to-day operations of Buyer and Seller.
ARTICLE IV
TERM OF AGREEMENT
This agreement shall be effective November 1, 1974 and shall
remain in force and effect for a period terminating October 31,
1991.
ARTICLE V
RATE SCHEDULE AND PRICE
Buyer shall pay Seller for natural gas service rendered
hereunder in accordance with Seller's Rate Schedule LG-A and the
applicable provisions of the General Terms and Conditions of
Seller's FPC Gas Tariff as filed with the Federal Power
Commissions and as the same may be amended or superseded from
time to time at the initiative of either party. Such rate
schedule and General Terms and Conditions are by this reference
made a part hereof.
ARTICLE VI
MISCELLANEOUS
1. The subject headings of the Articles of this agreement
are inserted for the purpose of convenient reference and are not
intended to be a part of this agreement nor to be considered in
any interpretation of the same.
2. This agreement supersedes and cancels as of the
effective date hereof the following contracts between the parties<PAGE>
hereto: Service Agreement dated January 12, 1971.
3. No waiver by either party of any one or more defaults by
the other in the performance of any provisions of this agreement
shall operate or be construed as a waiver of any future default
or defaults, whether of a like or different character.
4. This agreement shall be interpreted, performed and
enforced in accordance with the laws of the State of North
Carolina.
5. This agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be signed by their respective Presidents or Vice
Presidents thereunto duly authorized and have caused their
respective corporate seals to be hereunto affixed and attested by
their respective Secretaries or Assistant Secretaries the day and
year above written.
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
ATTEST:
BY /S/ Joan Devaney BY /S/ C.H. MULLENDORE JR.
Asst. Secretary Vice President (Seller)
ATTEST: NORTH CAROLINA GAS SERVICE DIVISION
OF PENNSYLVANIA & SOUTHERN GAS CO.
BY /S/ Kenneth J. Robino BY /S/ C. B. Coulter
Asst. Secretary President<PAGE>
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
SERVICE AGREEMENT UNDER RATE SCHEDULE GSS
THIS AGREEMENT entered into this 13th day of April,
1972, by and between TRANSCONTINENTAL GAS PIPE LINE CORPORATION,
a Delaware corporation, hereinafter referred to as "Seller,"
first party, and NORTH CAROLINA GAS SERVICE DIVISION OF
PENNSYLVANIA & SOUTHERN GAS COMPANY, a Delaware corporation,
hereinafter referred to as "Buyer," second party,
W I T N E S S E T H :
WHEREAS, Buyer is purchasing gas from Seller under
Seller's Rate Schedule CD-2, and Buyer desires to purchase and
Seller desires to sell natural gas storage service under Seller's
Rate Schedule GSS as set forth herein:
NOW, THEREFORE, Seller and Buyer agree as follows:
ARTICLE I
SERVICE TO BE RENDERED
Subject to the terms and provisions of this agreement
and of Seller's Rate Schedule GSS, Seller agrees to receive from
Buyer for storage, inject into storage for Buyer's account,
store, withdraw from storage (or cause to be injected into
storage for Buyer's account, stored, and withdrawn from storage)
and deliver to Buyer, volumes of natural gas purchased from
Seller as follows:
To withdraw from storage or cause to be withdrawn from
storage, transport and deliver to Buyer at the delivery points
set forth below, the gas stored for Buyer's account up to a
maximum volume in any day of 2,650 Mcf, which volume shall be
Buyer's Storage Demand.
To receive and store or cause to be stored up to a total
volume at any one time of 140,630 Mcf, which volume shall be
Buyer's Storage Capacity Volume.
ARTICLE II
POINT OF DELIVERY
The Point or Points of Delivery for all natural gas
delivered by Seller to Buyer under this agreement shall be at or
near:
(1) REIDSVILLE METER AND REGULATOR STATION, located at milepost
1377.73 of Seller's main tansmission line, on the
northeasterly side of State Highway No. 87, approximately
6.5 miles northwesterly from the City of Reidsville,
Rockingham County, North Carolina.<PAGE>
<PAGE>
(2) DRAPER METER AND REGULATOR STATION, located at milepost
1386.34 on Seller's main transmission line, on the
southeasterly side of State Highway No. 770, approximately 7
miles easterly of the city of Leaksville, Rockingham County,
North Carolina.
(3) BETHANY METER AND REGULATOR STATION, located at milepost
1365.98 on Seller's main transmission line adjacent ot North
Carolina State Highway 65 (approximately 3.2 miles southwest
from Seller's Compressor Station No. 160) Rockingham County,
North Carolina.
(4) SPRAY METER STATION, located at milepost 1382.53 on Seller's
main transmission line adjacent ot Transco's Dan River Meter
Station approximately 0.5 mile south of Dan River,
Rockingham County, North Carolina.
ARTICLE III
DELIVERY PRESSURE
Seller shall deliver natural gas to Buyer at the Point(s) of
Delivery at a pressure(s) of: not less than fifty (50) pounds per
square inch gauge, or at such other pressures as may be agreed
upon in the day-to-day operations of Buyer and Seller.
ARTICLE IV
TERM OF AGREEMENT
This agreement shall be effective April 1, 1972 and shall
remain in force and effect for a period of twenty (20) years
thereafter.
ARTICLE V
RATE SCHEDULE AND PRICE
Buyer shall pay Seller for natural gas service rendered
hereunder in accordance with Seller's Rate Schedule GSS and the
applicable provisions of the General Terms and Conditions of
Seller's FPC Gas Tariff as filed with the Federal Power
Commissions and as the same may be amended or superseded from
time to time at the initiative of either party. Such rate
schedule and General Terms and Conditions are by this reference
made a part hereof.
ARTICLE VI
MISCELLANEOUS
1. The subject headings of the Articles of this agreement
are inserted for the purpose of convenient reference and are not
intended to be a part of this agreement nor to be considered in
any interpretation of the same.<PAGE>
2. This agreement supersedes and cancels as of the
effective date hereof the following contracts between the parties
hereto: Service Agreement dated August 6, 1971.
3. No waiver by either party of any one or more defaults by
the other in the performance of any provisions of ' this
agreement shall operate or be construed as a waiver of any future
default or defaults, whether of a like or different character.
4. This agreement shall be interpreted, performed and
enforced in accordance with the laws of the State of North
Carolina.
5. This agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be signed by their respective Presidents or Vice
Presidents thereunto duly authorized and have caused their
respective corporate seals to be hereunto affixed and attested by
their respective Secretaries or Assistant Secretaries the day and
year above written.
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
ATTEST:
BY /S/ Tom Wheat BY /S/ C.H. MULLENDORE JR.
Secretary Vice President (Seller)
ATTEST: NORTH CAROLINA GAS SERVICE DIVISION
OF PENNSYLVANIA & SOUTHERN GAS CO.
BY /S/ Secretary BY /S/ C. B. Coulter
Secretary President<PAGE>
TRANSCONTINENTAL GAS PIPE LINE CORPORATION
THIS AGREEMENT entered into this 1st day of August, 1991, by
and between TRANSCONTINENTAL GAS PIPE LINE CORPORATION, a
Delaware corporation, hereinafter referred to as "Seller", first
party, and NORTH CAROLINA GAS SERVICE, hereinafter referred to as
"Buyer", second party,
W I T N E S S E T H
WHEREAS, pursuant to orders issued by the Federal Energy
Regulatory Commission in Docket No. CPSS-391, Seller has
authority to render firm sales service to Buyer; and whereas,
pursuant to a precedent agreement dated August 9, 1990, Seller
and Buyer agree to enter into this FS Service Agreement.
NOW, THEREFORE, Seller and Buyer agree as follows:
ARTICLE I
GAS SERVICE
1. Subject to the terms and conditions of Seller's Rate
Schedule FS and this Service Agreement, Seller agrees to make
available on a firm basis each day for purchase by Buyer such
quantities of gas as Buyer may request from time to time not to
exceed Buyer's Daily Sales Entitlement as set forth on Exhibit
'A' attached hereto. Such service shall not be subject to
curtailment or interruption except as provided in Articles V and
VI of this Service Agreement.
ARTICLE II
TERM OF AGREEMENT
1. This Agreement shall be effective as of the later of
November 1, 1990 or the date on which all necessary Commission
authorizations are received and shall remain in force and effect
until March 31, 2001 ('Primary Term'). For purposes of this
Service Agreement, the term "Contract Year" shall mean the period
from the effective date through March 31, 1991 and each twelve
month period thereafter through the term of this Service
Agreement. In the event of such curtailment or interruption
Section 11 or 13 of the General Terms and Conditions shall apply.
2. Commencing at the end of the Primary Term, and on each
anniversary date thereafter, the term of this Service Agreement
shall be extended by successive one Contract Year periods unless
either Buyer or Seller notifies the other in writing not less
than two Contract Years prior to the end of the Primary Term or
two Contract Years prior to any anniversary date thereafter, as
the case may be, of its election not to extend the term of this
Service Agreement.
3. In the event Seller has elected, pursuant to Section 2
above, to terminate this Service Agreement, but Seller has not
received abandonment authorization under Section 7(b) of the
Natural Gas Act on or before one hundred eighty (180) days prior<PAGE>
to the effective date of such termination, then Buyer and Seller
shall negotiate new terms and conditions pursuant to the
procedure set forth in Section 1 of Article VII of this Service
Agreement.
It is the intent of the parties that such renegotiated terms
and provisions will provide for a firm sales service under which
Buyer would be entitled to its ratable share, based on Buyer's
Daily Sales Entitlement, of the gas supplies. Such renegotiated
terms and conditions shall govern FS Service during any period
after termination of this Service Agreement but prior to receipt
of any necessary abandonment authorization; provided, however,
such renegotiated terms and provisions shall in no way extend the
contractual obligations of the parties under this Service
Agreement (i.e. such renegotiated terms and conditions are only
intended to determine the manner in which service will be
performed under Transco's NGA Section 7(c) Certificate prior to
receipt of abandonment authorization.)
ARTICLE III
RATES AND CHARGES
1. Buyer shall pay Seller each month as invoiced the sum of
the following charges:
(a) Firm Service Charge: the product of (i) Buyer's Daily
Sales Entitlement and (ii) the applicable Firm Service Fee per
Mcf determined pursuant to the procedures set forth on Exhibit
#A# attached to this Service Agreement;
(b) Non-Gas Demand Charge: the product of (i) Buyer's Daily
Sales Entitlement and (ii) the applicable FS Non-Gas Cost Service
Fee as set forth on Sheet No. 23 of Sellers FERC Gas Tariff; and
(c) Gas Commodity Charge: the product of (i) the Gas
Commodity Rate which is comprised of the Delivered Gas Price per
dt less the actual Transportation Charge per dt and (ii) the
total volumes of gas (in dts) purchased hereunder at the
Redelivery Points) by Buyer. The Delivered Gas Price per dt shall
be determined each month in accordance with the provisions of
Exhibit "A" attached to this Service Agreement. The actual
Transportation Charge shall equal the commodity portion of all
transportation charges by Seller under Seller's Rate Schedules FT
and/or IT (at the maximum applicable nondiscounted rates),
including the imputed unit cost of fuel retained, the GRI
Adjustment Charge, the ACA Charge, Seller's PSP surcharge(s) and
any other FERC-approved charge by Seller, if applicable, to
transport gas sold and purchased under Seller's FS Rate Schedule
from the Delivery Point(s) to the Redelivery Points) set forth in
Exhibit "B" to this Service Agreement;
2. (a) In the event that Seller is unable on any day to
deliver the quantities of gas requested by Buyer pursuant to the
terms of this Service Agreement up to Buyer's Daily Sales
Entitlement, the provisions set forth in Section 3 of this
Article III and Exhibit "C" attached to this Service Agreement
shall apply.<PAGE>
(b) Except as set forth in Section 3 of this Article III,
Article VII, Section 3(e) of Exhibit "A" and Exhibit "C" attached
hereto, Buyer and Seller agree that the price at which gas is
purchased and sold hereunder, including the Firm Service Charge,
is final, and that neither party will contest in any proceeding
the appropriateness of such price or of the pricing mechanism set
forth herein, and that neither party will seek or be entitled to
any refunds or adjustment in price as a result of any such
proceedings.
3. In the event that Seller is unable on any day to deliver
at the delivery point(s) quantities of gas requested by Buyer up
to Buyer's Daily Sales Entitlement, the Firm Service Charge set
forth in Section 1(a) of this Article III shall be reduced for
such month by an amount equal to the product of (a) the
difference between Buyer's Nominated Purchase Quantity (Mcfs) and
the volumes actually delivered (Mcf) by Seller on the day the
underdelivery occurred and (b) the Firm Service Fee per Mcf
divided by the number of days in such month.
4. Buyer agrees that Seller shall have the unilateral right
to file with the appropriate regulatory authority and make
changes effective in a) Seller's Rate Schedule FS pursuant to
which service hereunder is rendered, b) any provisions of the
General Terms and Conditions of Seller's FERC Gas Tariff that are
applicable to Rate Schedule FS or c) this Service Agreement;
provided, however, Seller shall not have the right, without the
consent of Buyer, unless required to do so pursuant to applicable
laws or regulations, to make any filings pursuant to Section 4 of
the Natural Gas Act to change any of the material terms and/or
provisions of this Service Agreement, including adding any new
provisions to this Service Agreement, the Rate Schedule FS or the
General Terms and Conditions of Seller's Tariff that would modify
the material terms and/or provisions of this Service Agreement.
The parties agree for purposes of this section that only Article
I, Article II, Article III, Article IV, Article V, Article VI,
Article VII and the provisions of Exhibits "A", "B" and "C"
hereto shall be considered material. Seller agrees that nothing
herein is intended to limit Buyer's right to protest or contest
the aforementioned filings.
ARTICLE IV
POINT(S) OF DELIVERY AND AGENCY AUTHORITY
1. Gas purchased and sold hereunder will be delivered by
Seller for Buyer's account at (a) the interconnection(s) of
Seller's pipeline facilities with the facilities of third party
seller(s) from whom Seller purchases its gas supply and/or (b)
the interconnection(s) of Seller's pipeline facilities with the
facilities of third party transporter(s) with whom Seller has
contracted for the transportation of gas supplies to its system
and/or (c) the outlet of Seller's system storage facilities
("Delivery Point(s) ").
2. Buyer hereby appoints Seller as its agent for the purpose
of arranging for the transportation of gas purchased and sold
hereunder from the Delivery Point(s) to the ultimate point(s) of
delivery ("Redelivery Points") to Buyer listed on Exhibit "B"
attached hereto. In consideration of Buyer's obligation under
this Service Agreement, including the payment of certain fees<PAGE>
pursuant to Article III hereof, Seller agrees to accept such
agency appointment. Pursuant to this agency authority Seller may
(a) request and execute on Buyer's behalf transportation Service
Agreement(s) under Seller's Rate Schedule IT to transport gas
purchased hereunder and/or (b) nominate and schedule
transportation service under Buyer's IT and FT Agreements for gas
purchased by Buyer hereunder. Seller shall be responsible for
all imbalance penalties incurred in connection with volumes
purchased under this Service Agreement.
Buyer agrees not to exercise any rights it has under the FT
Agreement or otherwise which would interfere in any way with
Seller's ability to utilize a pro rata share of capacity
entitlements under the FT Agreement(s), as set forth in Transco's
FT Rate Schedule, ("Telescoped Rights") (including any associated
upstream Rate Schedule IT or third party pipeline capacity
entitlements) to arrange for the transportation of gas purchased
and sold to Buyer hereunder. For purposes of the preceding
sentence, Seller's pro rata share at Station 65 shall be equal to
the product of (i) a percentage calculated by dividing Buyer's
Daily Sales Entitlement by Buyer's Total Daily Transportation
Contract Quantity under the FT Agreement(s) and (ii) a percentage
calculated by dividing the quantity of gas requested hereunder
from Seller on such day by Buyer's total daily sales entitlement
under the FS Agreement. For purposes of determining Seller's pro
rata share of capacity at any point on Seller's system the
product of (i) and (ii) above shall be multiplied by Buyer's
Transportation Contract Quantity under the FT Agreement at the
applicable point.
ARTICLE V
GAS SUPPLY UNDERTAKINGS
1. In consideration of Buyer's obligations under this
Service Agreement, including the Firm Service Charge, Seller
undertakes to have available sufficient gas supplies to perform
its sales obligation for the term of this Service Agreement,
which shall consist of the Primary Term and any extension thereto
pursuant to Section 2 of Article II above, subject only to:
(a) the force majeure provisions of Article VI of this
Service Agreement;
(b) the non-interference by the Commission or any other
governmental body (legislative, executive or judicial) with the
terms and conditions of this Service Agreement which are material
to Seller's ability to secure gas supplies. The parties agree
for purposes of this subsection that Article II, Article III,
Article IV, this Article V, Article VI, Article VII, and the
provisions in Exhibits "A", "B" and "C" hereto are material to
Seller's ability to secure gas supplies; and
(c) the absence of any material change in the regulatory
environment which frustrates Seller's ability to provide service
in the manner contemplated by this Service Agreement. By way of
example but not of limitation, any direct or indirect re-
regulation of field prices or any requirement that interstate
pipelines function as common carriers would constitute such a
material change.<PAGE>
The foregoing is not intended nor shall it be construed as
obligating Seller to furnish gas supplies hereunder which are
marketable in all of Buyer's markets at all times during the term
of the Service Agreement as such term is defined above in this
Section 1, or as extending Seller's gas supply undertakings
beyond the term of this Service Agreement as such term is defined
above in this Section 1.
2. In consideration of Seller's obligations under this
Service Agreement, Buyer undertakes to perform its obligations
for the term of this Service Agreement subject only to:
(a) the force majeure provisions set forth in Article VI
below;
(b) the non-interference by the Commission or any other
governmental body (legislative, executive or judicial) with the
terms and conditions of FS Service and/or this Service Agreement
which are material to Buyer's ability to perform its obligations;
and
(c) the absence of any material change in the regulatory
environment which would frustrate Buyer's ability to perform its
obligations in the manner contemplated by this Service Agreement.
By way of example, but not of limitation, any actions taken by a
state and/or local public utility commission having jurisdiction
over Buyer, which prohibits Buyer from buying gas under this
Service Agreement or from recovering the cost of buying gas under
this Service Agreement from Buyer's customer(s) would constitute
such a material change.
3. Subsections 1(b), 1(c), 2(b) and 2(c) of this Article V,
insofar as they would operate to suspend under this agreement the
supply obligations of Seller or purchase obligations of Buyer
under certain specified circumstances and events, shall suspend
the rights and obligations of the parties under this Service
Agreement prospectively only upon written notice to the other
party and are not intended, nor shall they be construed, as
excusing any obligations of Seller and/or Buyer arising under the
Service Agreement for periods prior to the date of receipt of
such notice ("Notice Date"). In the event Seller's supply
obligation is suspended pursuant to this subsection 3, such
obligation shall be suspended on a nondiscriminatory basis.
The Party giving notice of suspension ("Suspending Party")
shall take all reasonable steps to remedy the situation and
remove the cause or contingencies affecting the performance of
the obligations under this Service Agreement. During any period
that the obligations of the Seller hereunder are suspended
pursuant to Sections 1 (b) or (c) above, but not 1 (a) Seller
agrees to continue firm sales service to Buyer; provided however,
the terms and conditions governing such service during such
period of suspension ("Suspension Period") shall not be the terms
set forth in this Service Agreement. Instead, the terms and
conditions of such service shall be negotiated by the parties
pursuant to the procedure set forth in Section 2 of Article VII
of this Service Agreement. It is the intent of the parties that <PAGE>
such renegotiated terms and provisions will provide for a firm
sales service on a nondiscriminatory basis under which Buyer
would be entitled to its ratable share, based on Buyer's Daily
Sales Entitlement, of the available gas supplies.
The term force majeure as employed herein shall mean acts of
God, strikes, lockouts or other industrial disturbances, acts of
the public enemy, wars, blockades, insurrections, riots,
epidemics, landslides, lightning, earthquakes, fires, storms,
floods, washouts, arrests, the order of any court or government
authority having jurisdiction while the same is in force and
effect, civil disturbances, explosions, breakage, accidents to
machinery or lines of pipe, freezing of or damage to wells or
delivery facilities, National Weather Service warnings or
advisories, whether official or unofficial, that result in the
evacuation of facilities or platforms, well blowouts, inability
to obtain or unavoidable delay in obtaining material, equipment,
and any other cause whether of the kind herein enumerated or
otherwise, not reasonably within the control of the party
claiming suspension and which by the exercise of due diligence
such party is unable to prevent or overcome.
In the event of either party being rendered unable, wholly
or in part, by force majeure to carry out its obligations (other
than the continuing obligation set forth hereinbelow), it is
agreed that on such party's giving notice and full particulars of
such force majeure in writing or by telegraph or telecopy to the
other party within a reasonable time (not to exceed five (5)
days) after the occurrence of the cause relied on, the
obligations of both parties, so far as they are affected by such
force majeure, shall be suspended during such period of force
majeure, but for no longer period, and such cause shall so far as
possible be remedied with all reasonable dispatch.
Neither party shall be liable in damages to the other for
any act, omission or circumstance occasioned by or in consequence
of, force majeure, as herein defined.
Such causes or contingencies affecting the performance by
either party however, shall not relieve it of liability unless
such party shall give notice and full particulars of such cause
or contingency in writing or by telegraph or telecopy to the
other party within a reasonable time after the occurrence relied
upon, nor shall such causes or contingencies affecting the
performance by either party relieve it of liability in the event
of its failure to use due diligence to remedy the situation and
remove the cause with all reasonable dispatch, nor shall such
causes or transportation contingencies affecting the performance
relieve Buyer from its obligation to make payments of amounts in
respect of commodity charges for natural gas delivered, Firm
Service Charges and Non-Gas Demand Charges, except for any
adjustment to the Firm Service Charge as specified in Article Ill
of this Service Agreement.
ARTICLE VII
ARBITRATION AND RENEGOTIATION
1. On or before one hundred eighty (180) days prior to the
date on which this Service Agreement terminates pursuant to
Article II hereof, Seller shall submit an Offer ("Offer") to<PAGE>
Buyer setting forth proposed terms and conditions for continued
service. Buyer may submit a Counter Offer ("Counter Offer")
within ten (10) working days of receipt of the Offer. If a
Counter Offer is received within the indicated period, the
parties will proceed with negotiations. If a Counter Offer is not
received within ten (10) working days, the Offer will be deemed
accept. If the parties are unable to agree on the terms and
conditions for continued service within thirty (30) days ("30 day
Negotiation Period") following Seller's receipt of the Counter
Offer, the Offer and the Counter Offer will be submitted to a
Board of Arbitration in Washington, D. C. in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association (but not administered by the American Arbitration
Association) subject to the parties agreement herein to modify or
override those rules in certain respects by adoption of the
following procedures:
(a) Within ten (10) days following the end of the 30 day
Negotiation Period, each party must name its choice of an
arbitrator who has accept the appointment. In the event either
party fails to name an arbitrator, such party's arbitrator shall
be appointed by the Senior Judge (in service) of the United
States District Court for the District of Columbia. Within ten
(10) days after both arbitrators have accepted appointment, the
two arbitrators shall name a third arbitrator, or, if they are
unable to agree upon the third, the third arbitrator shall be
appointed by the Senior Judge (in service) of the United States
District Court for the District of Columbia. The three (3)
arbitrators shall be qualified by education and/or experience to
pass on the particular issues in dispute, and shall not be (i)
financially interested in the outcome of the dispute or (ii)
former or current employees of either party. Each party shall
pay the compensation and expenses of the arbitrator named by or
for it, and both shall share equally the compensation and
expenses of the third arbitrator.
(b) The three arbitrators shall meet and hear the parties
with respect to matters relevant to which proposed Offer will,
among other things, compensate Seller for the value of providing
the continued service, which shall include but not be limited to
executed long term sales agreements between other sellers serving
the same or similar markets and their customers. The
jurisdiction of the arbitrators shall be limited to the
selection, based on all relevant evidence presented, of either
the Offer or the Counter Offer proposed either by Seller or by
Buyer pursuant to the provisions of this section. No other
provisions shall be selected by the arbitrators. The decision by
the arbitrators shall be in writing, signed by the arbitrators or
a majority of them, rendered within seventy (70) days of the
appointment of the third arbitrator, and final, binding and non-
appealable, except as set forth in the Uniform Arbitration Act of
Delaware (Del. Code Ann. tit. 10, Section 5703 (1974) as to the
parties hereto. The provisions adopted by the arbitrators shall
be effective as of the first day following termination of this
Service Agreement. During any period prior to a decision by the
arbitrators but after the expiration of the primary term of this
Service Agreement, Buyer shall continue to pay the rates and
charges in effect prior to the expiration of the primary term.
Such rates and charges shall be adjusted retroactively as
necessary to conform to the arbitrators' decision.<PAGE>
2. In the event the rights and obligations of the parties
hereunder are suspended pursuant to Section 3 of Article V above,
then within ten (10) working days following the Notice Date, the
Suspending Party shall submit an Offer ("Offer") to the other
party setting forth proposed terms and conditions for continued
FS Service. The other party may submit a Counter Offer ("Counter
Offer") within ten (10) working days of receipt of the Offer. If
a Counter Offer is received within the indicated period, the
parties will proceed with negotiations. If a Counter Offer is
not received within ten (10) working days, the Offer will be
deemed accepted. If the parties are unable to agree on the terms
and conditions for continued FS Service within thirty (30) days
("30 day Negotiation Period") following the Suspending Party's
receipt of the Counter Offer, the Offer and the Counter Offer
will be submitted to a Board of Arbitration in Washington, D. C.
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (but not administered by the
American Arbitration Association) subject to the parties'
agreement herein to modify or override those rules in certain
respects by adoption of the following procedures:
(a) Within ten (10) days following the end of the 30 day
Negotiation Period, each party must name its choice of an
arbitrator who has accepted the appointment. In the event either
party fails to name an arbitrator, such party's arbitrator shall
be appointed by the Senior Judge (in service) of the United
States District Court for the District of Columbia. Within
fifteen (15) days after both arbitrators have accepted
appointment, the two arbitrators shall name a third arbitrator,
or, if they are unable to agree upon the third, the third
arbitrator shall be appointed by the Senior Judge (in service) of
the United States District Court for the District of Columbia.
The three (3) arbitrators shall be qualified by education and/or
experience to pass on the particular issues in dispute and shall
not be (i) financially interested in the outcome of the dispute
or (ii) current or former employees of either party. Each party
shall pay the compensation and expenses of the arbitrator named
by or for it, and both shall share equally the compensation and
expenses of the third arbitrator.
(b) The three arbitrators shall meet and hear the parties
with respect to matters relevant to which proposed Offer will,
among other things, compensate Seller for the value of providing
the continued service, which shall include but not be limited to
executed long term sales agreements between other Sellers serving
similar markets and their customers. The jurisdiction of the
arbitrators shall be limited to the selection, based on all
relevant evidence presented, of either the Offer or the Counter
Offer proposed either by Seller or by Buyer pursuant to the
provisions of this section. No other provisions shall be
selected by the arbitrators. The decision by the arbitrators
shall be in writing, signed by the arbitrators or a majority of
them, rendered within forty-five (45) days of the appointment of
the third arbitrator, and final, binding and non-appealable,
except as set forth in the Uniform Arbitration Act of Delaware
(Del. Code Ann. tit. 10, Section 5703 (1974)) as to the parties
hereto. The provisions adopted by the arbitrators shall be
effective as of the first day following the Notice Date
regardless of the actual date of decision of the arbitrators. In
#the event the situation that led to the suspension is not<PAGE>
remedied within six (6) months of the Notice Date, this Service
Agreement may be terminated by either party. In the event Seller
elects to terminate this Service Agreement at such time, but
Seller has not yet received authorization under Section 7(b) of
the NGA to abandon service under the FS Rate Schedule, then the
terms and conditions in effect during the Suspension Period shall
continue in effect during the period following Seller's
termination of this Service Agreement until the date any
necessary abandonment authority is received by Seller. During
any period prior to a decision by the arbitrators but after the
Notice Date, Buyer shall continue to pay the rates and charges in
effect prior to the Notice Date, subject to any adjustments to
the Firm Service Charge set forth in Article III of this Service
Agreement. Such rates and charges shall be adjusted
retroactively as necessary to conform to the arbitrators'
decision.
ARTICLE VIII
MISCELLANEOUS
1. The subject headings of the Articles of this agreement
are inserted for the purpose of convenient reference and are not
intended to be a part of this agreement nor to be considered in
any interpretation of the same.
2. This agreement supersedes and cancels as of the effective
date hereof the following contract(s) between the parties hereto:
none
3. No waiver by either party of any one or more defaults by
the other in the performance of any provisions of this agreement
shall operate or be construed as a waiver of any future default
or defaults, whether of a like or a different character.
4. THE INTERPRETATION AND PERFORMANCE OF THIS SERVICE
AGREEMENT SHALL BE IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT RECOURSE TO THE LAW GOVERNING CONFLICT OF LAWS,
AND TO ALL PRESENT AND FUTURE VALID LAWS WITH RESPECT TO THE
SUBJECT MATTER, INCLUDING PRESENT AND FUTURE ORDERS, RULES AND
REGULATIONS OF DULY CONSTITUTED AUTHORITIES.
5. Notices to either party shall be in writing and shall be
considered as duly delivered when mailed to the other party at
the following address:
(a) If to Seller:
Transcontinental Gas Pipe Line Corporation
P. 0. Box 1396
Houston, Texas 77251
Attention: Senior Vice President - Gas Supply
(b) If to Buyer:
North Carolina Gas Service
140 South Scales Street
Reidsville, North Carolina 27320
Attention: Mr. James Carl<PAGE>
6. This agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be signed by their respective Presidents or Vice
Presidents thereunto duly authorized and attested by their
respective Secretaries or Assistant Secretaries the day and year
above written.
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
ATTEST:
By: Grace L. Bellinji By: James C. Forsman
Asst. Secretary Senior Vice President -
Gas Supply
SELLER
NORTH CAROLINA GAS SERVICE
ATTEST:
By: Bernard L. Smith By: E. L. Lohmann
Asst. Secretary President & CEO
BUYER<PAGE>
EXHIBIT "A"
SALES ENTITLEMENTS AND GAS PRICE
1. Buyer's Daily Sales Entitlement: Buyer's Daily Sales
Entitlement(s) shall be equal to 8,795 Mcf/d. (Buyer's Daily
Sales Entitlement and Nominated Purchase Quantity shall be
increased as appropriate, to the dekatherm equivalent quantity
and to include fuel retained by Seller under its Rate Schedules
FT and IT, as applicable, to transport such gas from the Delivery
Point(s) to the Redelivery Point(s).)
2. Procedure to Determine the Delivered Gas Price and Buyer's
Nominated Purchase Quantity:
(a) No later than two (2) business days prior to Seller's
receipt point transportation nomination deadline for the
applicable month, Seller shall propose to Buyer a Delivered Gas
Price for the following month. Such proposed Delivered Gas Price
may be revised by Seller at any time prior to acceptance by Buyer
in writing; provide however Seller agrees not to revise a
proposed Delivery Gas Price that Buyer has verbally agreed to
accept, as long as Buyer confirms such acceptance by telecopy or
other written communication as soon as possible but in no event
later than the close of business on the day of verbal acceptance.
During the succeeding period ending on the date set forth in
Subparagraph c) below, Buyer and Seller shall negotiate with the
intent of determining a mutually agreeable Delivery Gas Price for
the following month.
(c) No later than five (5) p.m. C.S.T. on the day prior to the
day that receipt point transportation nominations are due on
Seller's system for the applicable month, Buyer shall notify
Seller in writing of Buyer's daily nominated purchase quantity
not to exceed Buyer's Daily Sales Entitlement ("Nominated
Purchase Quantity") for the following month and, if Buyer and
Seller have agreed to a Delivered Gas Price for the following
month, such agreed to Delivered Gas Price. In the event Buyer and
Seller have been unable to agree to a Delivered Gas Price for the
following month, or if during the period from the effective date
of this Service Agreement through March 31, 1991 the agreed to
Delivered Gas Price is higher than the Default Price, the
Delivered Gas Price shall be the Default Price, which shall equal
the sum of (1) the Unit Price of Gas as determined in accordance
with Subparagraph (d) below and (2) the Commodity portion of all
transportation charges by Seller under Seller's Rate Schedule FT
(calculated on a fully telescoped basis at the maximum applicable
rate) and associated upstream transportation charges under
Seller's Rate Schedule IT (calculated on a fully telescoped basis
at the maximum applicable rate), including the imputed unit cost
of fuel retained by Seller, the GRl Adjustment Charge, the ACA
Charge, Seller's PSP Surcharges), and any other charge by Seller
which has been approved by the FERC, if applicable, to transport
the gas sold and purchased hereunder to the Redelivery Points)
("Transportation Charge").
In the event of a refund and/or surcharge by Seller
applicable to the Transportation Charge for zone(s) 1, 2 and/or
3, Seller's refund and/or surcharge obligation to Buyer related<PAGE>
to the transportation of gas purchased by Buyer hereunder, shall
be determined by multiplying (i) the per unit amount obtained by
dividing the total dollars which Seller is obligated to refund
and/or entitled to surcharge for zone(s) 1, 2 and/or 3 which are
associated with Seller's transportation of gas purchased by all
Buyers under this Rate Schedule FS by the total quantity of gas
purchased by all such Buyers under this Rate Schedule FS during
the period to which such adjustment is applicable by (ii) the
quantity of gas purchased by Buyer under this Rate Schedule FS
during the period to which such adjustment is applicable.
Refunds and/or surcharges applicable to the Transportation Charge
for zone(s) 4, 5 and/or 6 shall be determine based on the actual
volumes purchased and transported for each Buyer. The foregoing
surcharge and/or refund shall be the only adjustment to the
Delivered Gas Price hereunder.
(d) Unit Price of Gas:
The Unit Price of Gas shall be determined by computing the
following:
(i) During the period from the effective date of this
Service Agreement through March 31, 1991 - the simple average of
the four regional prices (rounded to the fourth decimal place)
set forth in the table "Gas Price Report" (in $/MMBtu) published
in the first issue for such month of Natural Gas Week for any
succeeding publication of Oil Daily, Inc.) for these regions: 1)
Texas, Gulf Coast Offshore, Spot Delivered to Pipeline; 2) Texas,
Gulf Coast Onshore, Spot Delivered to Pipeline; 3) Louisiana,
Gulf Coast Offshore, Spot Delivered to Pipeline; 4) Louisiana,
Gulf Coast Onshore, Spot Delivered to Pipeline.
(ii) During the period from April 1, 1991 through the term
of this Service Agreement as extended for the Nominated Purchase
Quantity - the simple average of the four regional prices
(rounded to the fourth decimal place) set forth in the table "Gas
Price Report" (in $/MMBtu) published in the first issue for such
month of Natural Gas Week (or any succeeding publication of Oil
Daily, Inc.) for these regions: 1) Texas, Gulf Coast Offshore,
Spot Delivered to Pipeline; 2) Texas, Gulf Coast Onshore, Spot
Delivered to Pipeline; 3) Louisiana, Gulf Coast Offshore, Spot
Delivered to Pipeline; 4) Louisiana, Gulf Coast Onshore, Spot
Delivered to Pipeline.
(iii)During the period from April 1, 1991 through the term
of this Service Agreement as extended for quantities purchased
hereunder in excess of the Nominated Purchase Quantity-100% of
the price set forth in the table "Gas Price Report" (in $/MMBTU)
published in the first issue for such month of Natural Gas Week
for any succeeding publication of Oil Daily, Inc.) for the
region: Louisiana, Gulf Coast Onshore, Spot Delivered to
Pipeline.
(iv) Either Buyer or Seller may request a change in the
price determination procedures set forth in this Subparagraph (d)
in the event that the operation of such procedures does not
reasonably reflect the weighted average price of spot gas
available to Buyer, as reported to and verified by an
independent, nationally recognized public accounting firm. For
purposes of this subparagraph, the results of the existing<PAGE>
procedure shall be deemed to be reasonably reflective of such
weighted average spot gas price so long as it falls within a
range of 90 to 110 percent of such price. If such range is
exceeded for three consecutive months, then Seller and Buyer
shall meet to undertake to agree upon an alternative published
spot price index. Additionally, in the event Oil Daily, Inc.
ceases publishing Natural Gas Week (and does not replace it with
a successor publication), the parties shall use best efforts to
agree on an alternative publication in a timely manner.
(e) Nothing herein or in the Service Agreement shall require
Buyer to agree prior to any Calendar Month to nominate to
purchase any quantity of gas hereunder during the following
Calendar Month and Buyer's failure to nominate, or
undernomination of gas quantities, hereunder for any month shall
not limit Buyer's ability to request or Seller's obligation to
deliver quantities of gas hereunder on any day up to Buyer's
Daily Sales Entitlement; provided, however, Buyer agrees that
Buyer's Nominated Purchase Quantity may be relied upon by Seller
as the approximate quantity of gas which Buyer will purchase from
Seller hereunder during the next Calendar Month unless Buyer is
required to change such purchases as a result of a change in
market conditions, and, provided further, Buyer agrees that a
change in the price of gas supplies available to Buyer shall not
constitute such a change in market conditions.
(f) Buyer and Seller hereby agree that the delivered price of
gas is commercially sensitive information and agree that neither
will disclose such information to any third party unless by
mutual consent, which will not be unreasonably withheld or unless
required to do so by judicial or governmental order, rule or
regulation, except that selected data may be aggregated and
composited with comparable data from the contracts for
statistical purposes, by a person subject to reasonable
confidentiality restrictions and provided that neither the
identity of Buyer or Seller nor any data not necessary for such
statistical purpose is disclosed.
3. Firm Service Fee
a) During the period from the effective date of this Service
Agreement through March 31, 1992, the Firm Service Fee shall be
$6.50 per Mcf for each month.
b) During the period from April 1, 1992 through March 31, 1993,
the Firm Service Fee shall be $6.20 per Mcf for each month.
c) During the period from april 1, 1993 until renegotiated
pursuant to subparagraph d) below, the Firm Service Fee shall be
$5.80 per Mcf for each month.
d) Either party may request that the Firm Service Fee be
renegotiated effective April 1, 1994, and annually thereafter.
Either party may request renegotiation by giving notice to the
other party at least one hundred eighty (180) days prior to the
first day of the contract year for which the Firm Service Fee is
being renegotiated. In the event the parties are unable to agree
on a new Firm Service Fee at least one hundred fifty (150) days
prior to the first day of the contract year for which the Firm
Service Fee is being renegotiated then the party requesting<PAGE>
renegotiation shall make a final offer to the other party for a
new Firm Service Fee ("Final Offer") within five days following
the commencement of such one hundred fifty (150) day period. The
other party may submit a final counter offer ("Final Counter
Offer") within ten (10) working days of receipt of the request.
If a Final Counter Offer is receive within the indicated period,
the parties will proceed with negotiations. If a Final Counter
Offer is not received within ten (10) working days, the Final
Offer submitted by the party requesting renegotiation will be
deemed accepted. If the parties are unable to agree on a new Firm
Service Fee by one hundred twenty (120) days prior to the first
day of the applicable contract year, both the Final Offer and the
Final Counter Offer will be submitted to a board of arbitration
in Washington, D.C. in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (but not
administered by the American Arbitration Association), but
subject to the parties' agreement herein to modify or override
those rules in certain respects by adoption of the following
procedures:
(i) No later than one hundred (100) days prior to the first
day of the year for which renegotiation has been requested, each
party must name its choice of an arbitrator who has accepted the
appointment. In the event either party fails to name an
arbitrator, such party's arbitrator shall be appointed by the
Senior Judge (in service) of the United States District Court for
the District of Columbia. Within ten (10) days after both
arbitrators have accepted appointment, the two arbitrators shall
name a third arbitrator, or, if they are unable to agree upon the
third, the third arbitrator shall be appointed by the Senior
Judge (in service) of the United States District Court for the
District of Columbia. The three (3) arbitrators shall be
qualified by education and/or experience to pass on the
particular issues in dispute and shall not be (i) financially
interested in the outcome of the dispute or (ii) current or
former employees of either party. Each party shall pay the
compensation and expenses of the arbitrator named by or for it,
and both shall share equally the compensation and expenses of the
third arbitrator.
(ii) The three arbitrators shall meet and hear the parties
with respect to matters relevant to which proposed Firm Service
Fee will compensate Seller for the value of providing and
maintaining long term gas supplies, on terms and conditions
consistent with a "swing service", which shall include but not be
limited to executed long term sales agreements between other
Sellers serving the same or similar markets and their customers.
The jurisdiction of the arbitrators shall be limited to the
selection, based on all relevant evidence presented, of either
the Final Offer or the Final Counter Offer proposed either by
Seller or by Buyer pursuant to the provisions of this subsection
(e). No other Service Fee will be selected by the arbitrators.
The decision by the arbitrators shall be in writing, signed by
the arbitrators or a majority of them, rendered within seventy
(70) days of the appointment of the third arbitrator, and final,
binding and non-appealable, except as set forth in the Uniform
Arbitration Act of Delaware (Del. Code Ann. tit. 10, Section
5703 (1974)) as to the parties hereto. The provisions adopted by
the arbitrators shall be effective as of the first day of the
applicable year, regardless of the actual date of decision of the<PAGE>
arbitrators. During any period prior to a decision by the
arbitrators but after commencement of the Contract Year for which
the Service Fee is being renegotiated, Buyer shall continue to
pay the Service Fee that was in effect during the previous
Contract Year. Such Service Fee shall be adjusted retroactively,
as necessary, to conform to the arbitrators decision.
4. Other Conditions
None.<PAGE>
EXHIBIT B
REDELIVERY POINTS
1. Station 54 (Delivery to Seller's Washington Storage Field
for injection into storage is subject to the terms, conditions,
and limitations of Seller's WSS Rate Schedule.
2. Reidsville Meter and Regulator Station, located at milepost
1377.73 on Seller's main transmission line on the northeasterly
side of State Highway No. 87, approximately 6.5 miles
northwesterly from the City of Reidsville, Rockingham County,
North Carolina.
3. Draper Meter and Regulator Station, located at milepost
1386.34 on Seller's main transmission line on the southeasterly
side of State Highway No. 770, approximately 7 miles easterly of
the City of Leaksville, Rockingham County, North Carolina.
4. Bethany Meter and Regulator Station, located at milepost
1365.98 on Seller's main transmission line adjacent to North
Carolina State Highway No. 65 (approximately 3.2 miles southwest
from Seller's Compressor Station No. 160), Rockingham County,
North Carolina.
5. Spray Meter Station, located at milepost 1382.53 on Seller's
main transmission line adjacent to Transco's Dan River Meter
Station, approximately 0.5 miles south of Dan River, Rockingham
County, North Carolina.
6. Seller's Eminence Storage Field, Covington County,
Mississippi.<PAGE>
EXHIBIT C
DAMAGES
1. (a) In the event that Seller is unable on any day to
deliver the quantities of gas requested by Buyer pursuant to the
terms of this Service Agreement up to Buyer's Daily Sales
Entitlement, and if Buyer is unable to replace such volumes with
volumes from other natural gas (excluding liquefied natural gas
and synthetic natural gas) sources, then Seller shall pay to
Buyer, as Buyer's sole and exclusive remedy for such failure to
deliver (except for the adjustments specified in Section 3 of
Article III of this Service Agreement) liquidated damages in an
amount equal to one hundred fifty percent (150%) of the Unit
Price for the applicable month (as defined in Paragraph 2(d) of
Exhibit "A" to this Service Agreement) multiplied by the
difference between Buyer's Nominated Purchase Quantity and the
sum of the volumes delivered hereunder and the Replacement
Volumes, as defined below, if any, purchased by Buyer.
(b) In the event that Seller is unable on any day to
deliver the quantities of gas requested by Buyer pursuant to the
terms of this Service Agreement, up to Buyer's Daily Sales
Entitlement, and if Buyer is able to replace such volumes with
volumes from other natural gas (excluding liquefied natural gas
and synthetic natural gas) sources ("Replacement Volumes"), then
Seller shall pay to Buyer, as Buyer's sole and exclusive remedy
for such failure to deliver (except for the adjustments specified
in Section 3 of Article III of this Service Agreement) liquidated
damages in an amount equal to (i) the difference between (a) the
price per dekatherm that Buyer would have paid if the gas had
been delivered under this Service Agreement (including the Firm
Service Fee) and (b) the cost per dekatherm reasonably incurred
by Buyer for such replacement volumes, such cost to be adjusted
if necessary for pricing point comparability, multiplied by (ii)
the difference, not to exceed one hundred percent (100%) of the
Replacement Volumes, between (a) Buyer's Daily Sales Entitlement
and (b) the volume actually delivered hereunder.
(c) Notwithstanding subsections 1(a) and 1(b) above, if
Seller's failure to deliver is due to a force majeure condition
or an adverse governmental action as described in subsections 1
(a), 1 (b) or 1 (c) of Article V of this Service Agreement,
Seller shall not be required to pay any damages (except for the
adjustment specified in Section 3 of Article III of this Service
Agreement).
2. Notwithstanding anything to the contrary herein, Seller's
obligation to make payments for failure to deliver the volumes
nominated by Buyer on any day Pursuant to Section 2(a) of this
Exhibit "C" shall be limited to sixty days in any one (l)
Contract Year period.<PAGE>
System Contract #0.3922
SERVICE AGREEMENT
between
TRANSCONTINENTAL GAS PIPE LINE CORPORATION and
NORTH CAROLINA GAS SERVICE
DIVISION OF PENNSYLVANIA & SOUTHERN GAS COMPANY
DATED
February 1, 1992<PAGE>
SERVICE AGREEMENT
THIS AGREEMENT entered into this 1st day of February, 1992,
by and between TRANSCONTINENTAL GAS PIPE LINE CORPORATION, a
Delaware corporation, hereinafter referred to as "Seller", first
party, and NORTH CAROLINA GAS SERVICE, DIVISION OF PENNSYLVANIA &
SOUTHERN GAS COMPANY, hereinafter referred to as "Buyer," second
party,
W I T N E S S E T H
WHEREAS, Buyer and Seller desire to consolidate the existing
limited term and long term firm transportation service agreements
between Buyer and Seller into a single long term service
agreement under Seller's Rate Schedule FT.
NOW, THEREFORE, Seller and Buyer agree as follows:
ARTICLE I
GAS TRANSPORTATION SERVICE
1. Subject to the terms arid provisions of this agreement
and of Seller's Rate Schedule FT, Buyer agrees to deliver or
cause to be delivered to Seller gas for transportation and Seller
agrees to receive, transport and redeliver natural gas to Buyer
or for the account of Buyer, on a firm basis, up to the dekatherm
equivalent of a Transportation Contract quantity ("TCQ") of
10,478 Mcf per day.
2. Transportation service rendered hereunder shall not be
subject to curtailment or interruption except as provided in
Section 11 of the General Terms and Conditions of Seller's FERC
Gas Tariff.
ARTICLE II
POINT(S) OF RECEIPT
Buyer shall deliver or cause to be delivered gas at the
Point(s) of receipt hereunder at a pressure sufficient to allow
the gas to enter Seller's pipeline system at the varying
pressures that may exist in such system from time to time:
provided, however, that such pressure of the gas delivered or
caused to be delivered by Buyer shall not exceed the maximum
operating pressure(s) specified below. In the event the maximum
operating pressure(s) of Seller's pipeline system, at the
Point(s) of receipt hereunder, is from time to time increased or
decreased, then the maximum allowable pressure(s) of the gas
delivered or caused to be delivered by Buyer to Seller at the
point(s) of receipt shall be correspondingly increased or
decreased upon written notification of Seller to Buyers. The
point(s) of receipt for natural gas received for transportation
pursuant to this agreement shall be:
SEE Exhibit A, attached hereto, for points of receipt.<PAGE>
ARTICLE III
POINT (S) OF DELIVERY
Seller shall redeliver to Buyer or for the account of Buyer
the gas transported hereunder at the following point(s) of
delivery and at a pressure(s) of:
SEE Exhibit B, attached hereto, for points of delivery and
pressures.
ARTICLE IV
TERM OF AGREEMENT
This agreement shall be effective as of February 1, 1992 and
shall remain in force and effect until 8:00 a.m. Eastern
Standard Time March 31, 2005 and thereafter until terminated by
Seller or Buyer upon at least three (3) years written notice;
provided, however, this agreement shall terminate immediately
and, subject to the receipt of necessary authorizations, if any,
Seller may discontinue service hereunder if (a) Buyer, in
Seller's reasonable judgment fails to demonstrate credit
worthiness, and (b) Buyer fails to provide adequate security in
accordance with Section 8.3 of Seller's Rate Schedule FT. As set
forth in Section 8 of Article II of Seller's August 7, 1989
revised Stipulation and Agreement in Docket Nos. RP88-G8 et al.,
(a) pregranted abandonment under Section 284.221 (d) of the
Commission's Regulations shall not apply to any long term
conversions from firm sales service to transportation service
under Seller's Rate Schedule FT and (b) Seller shall not exercise
its right to terminate this service agreement as it applies to
transportation service resulting from conversions from firm sales
service so long as Buyer is willing to pay rates no less
favorable than Seller is otherwise able to collect from third
parties for such service.
ARTICLE V
RATE SCHEDULE AND PRICE
1. Buyer shall pay Seller for natural gas delivered to
Buyer hereunder in accordance with Seller's Rate Schedule FT and
the applicable provisions of the General TermS and Conditions of
Seller's FERC Gas Tariff as filed with the Federal Energy
Regulatory Commission, and as the same may be legally amended or
superseded from time to time. Such Rate Schedule and General
Terms and Conditions are by this reference made a part hereof.
2. Seller and Buyer agree that the quantity of gas that
Buyer delivers or causes to be delivered to Seller shall include
the quantity of gas retained by Seller for applicable compressor
fuel, line loss make-up (and injection fuel under Seller's Rate
Schedule GSS, if applicable) in providing the transportation
service hereunder, which quantity may be changed from time to
time and which will be specified in the currently effective Sheet
No. 44 of Volume No. 1 of this Tariff which relates to service
under this agreement and which is incorporated herein.<PAGE>
3. In addition to the applicable charges for firm
transportation service pursuant to Section 3 of Seller's Rate
Schedule FT, Buyer shall reimburse Seller for any and all filing
fees incurred as a result of Buyer's request for service under
Seller's Rate Schedule FT, to the extent such fees are imposed
upon Seller by the Federal Energy Regulatory Commission or any
successor governmental authority having jurisdiction.
ARTICLE VI
MISCELLANEOUS
1. This Agreement supersedes and cancels as of the
effective date hereof the following contract(s) between the
parties hereto:
FT Service Agreement dated April 10, 1990, as amended August 1,
1991 (system contract 0.3922); FT (limited term) Service
Agreement dated April 10, 1990, as amended August 1, 1991 (system
contract 0.3432/0.3463) the term of which Buyer and Seller hereby
agree to extend until the effective date of service hereunder.
2. No waiver by either party of any one or more defaults
by the other in the performance of any provisions of this
agreement shall operate or be construed as a waiver of any future
default or defaults, whether of a like or different character.
3. The interpretation and performance of this agreement
shall be in accordance with the laws of the State of Texas,
without recourse to the law governing conflict of laws, and to
all present and future valid laws with respect to the subject
matter, including present and future orders, rules and
regulations of duly constituted authorities.
4. This agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and
assigns.
5. Notices to either party shall be in writing and shall
be considered as duly delivered when mailed to the other party at
the following address:
(a) If to Seller:
Transcontinental Gas Pipe Line Corporation
P. 0. Box 1396
Houston, Texas 77251
Attention Director - Transportation Services
(b) If to Buyer:
North Carolina Gas Service, Division of
Pennsylvania & Southern Gas Company
P. O. Box 130
Sayre, Pennsylvania 18840
Attention Mr. James Carl
Such address may be changed from time to time by mailing
appropriate notice thereof to the other party by certified or
registered mail.<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be signed by their respective officers or
representatives thereunto duly authorized.
TRANSCONTINENTAL GAS PIPE LINE
CORPORATION
(Seller)
By: Thomas E. Skains
Senior Vice President
Transportation and Customer
Services
NORTH CAROLINA GAS SERVICE, A
DIVISION OF PENNSYLVANIA &
SOUTHERN GAS COMPANY
(Buyer)
By: James W. Carl
Title: Vice President<PAGE>
NATURAL GAS SALES AND PURCHASE AGREEMENT
Texaco Gas Marketing Inc, a Delaware corporation having its
principal place of business at 1111 Bagby, Houston, Texas 77002
(hereafter "Seller") agrees to sell natural gas to Pennsylvania &
Southern Gas Company, a Delaware corporation having its principal
place of business at 102 Desmond Street, Sayre, Pennsylvania
18840 (hereafter "Buyer"), and Buyer agrees to purchase natural
gas on the following terms and conditions:
1. Term
The term of this Agreement is from November 1, 1991 to
November 1, 1996, and month to month thereafter, until terminated
by either party upon 30 days written notice, and may be further
renewed or extended only upon written agreement of the parties.
2. Quantity
(a) Seller shall sell to Buyer and Buyer shall purchase from
Seller on a firm basis a Daily Quantity (hereafter DQ) of gas
equal to 1,661 MMBtu plus the amount of fuel gas required by the
transporting pipeline to deliver 1,661 MMBtu from the Title
Transfer Point to the interconnect between Buyer's facilities and
the transporting pipeline.
(b) At any time during the term of this Agreement, Buyer
may request an increase of the DQ. Seller may, within its sole
discretion, agree to sell and deliver such additional quantities
to Buyer, but shall not be obligated to do so. Any such
agreement between Buyer and Seller shall be in writing, in the
form of an amendment to this Agreement, and executed by both
parties.
3. Title Transfer Point
Gas sold pursuant to this Agreement shall be delivered by
Seller and taken by Buyer in accordance with the telescoping
allocation methodology of Transcontinental Gas Pipe Line
Corporation (Transco) as defined in Transco's tariff at the Title
Transfer Point specified on Exhibit "A" attached hereto. Any
amendment to Exhibit "A" shall not be effective until the
amendment is in writing and signed by both parties.
4. Quality
Gas delivered by Seller shall be of a quality acceptable to
the first pipeline transporting gas for sale hereunder.
5. Measurement
The quantity and heating value of the gas delivered by
Seller shall be determined by the first transporting pipeline
according to the terms and conditions contained in that
pipeline's tariff.<PAGE>
6. Price
Buyer shall pay Seller each month for gas nominated an
amount equal to the sum of an index price as reported in the
first issue published in the month of delivery of Natural Gas
Week plus $0.10 per MMBtu. The index price shall be the price
posted under "Spot Prices on Natural Gas Pipeline Systems" for
deliveries on Transcontinental Gas Pipe Line Corporation at the
delivery point which corresponds to the Title Transfer Point
listed in Exhibit A. In the event such index ceases to be
published, Buyer and Seller shall meet promptly and commence good
faith negotiations to select an alternative publication or
pricing mechanism.
Buyer shall be responsible for paying the amounts billed
each month pursuant to the above pricing formula in accordance
with Section 9 (the Billing and Payment section) hereof.
Should Buyer fail to take the DQ, Buyer shall pay Seller, in
addition to the price of gas stated above, an amount in
consideration for the administrative costs to Seller resulting
from Buyers's failure to take gas. This charge shall be
calculated by subtracting the amount of gas taken by Buyer from
the DQ and multiplying the positive difference (if any) times 20%
of the then effective price of gas.
7. Failure to Perform
If for any reason other than force majeure Seller fails to
deliver gas in accordance with the terms of this Agreement, Buyer
shall have the right, in addition to all other remedies permitted
under the Agreement, to reduce the DQ or terminate the Agreement
with ninety (90) days written notice.
If for any reason other than force majeure. Buyer fails to
take gas in accordance with the terms of this Agreement, Seller
shall have the right, in addition to all other remedies permitted
under the Agreement, to either reduce the DQ or terminate the
Agreement with ninety (90) days written notice.
8. Nominations
No later than seven (7) days before the end of the month,
Buyer shall submit to Seller orally or in writing, estimates of
the daily quantity that Buyer desires to purchase during the
following month for delivery at each Title Transfer Point listed
on Exhibit "A"; provided, that Buyer and Seller shall allocate
such quantities in accordance with the telescoping allocation
methodology of Transco.
9. Billing and Payment
(a) Buyer shall pay Seller for gas nominated, on the later
of fifteen (15) days after the date of Seller's invoice or the
twenty-fifth (25th) of such month. The invoice, sent monthly,
shall reflect an estimate of the quantities delivered, based on
the quantities nominated and scheduled for transportation by the
transporting pipeline. Buyer shall pay in full the invoice based
on nominated quantities.<PAGE>
(b) Should actual quantities delivered differ from the
nominated amount, Seller shall credit or debit Buyer's account on
the next monthly invoice. At the termination of this Agreement,
Seller shall issue a final invoice or credit by the earlier of
thirty (30) days from the termination date or five (5) days after
actual data becomes available from the transporting pipeline(s).
(c) To assist Seller in preparing invoices, Buyer shall
send Seller by telecopy, promptly on Seller's request, copies of
transportation invoices that Buyer or subsequent purchasers of
the gas may have received from the transporting pipeline(s),
together with copies of allocation statements that Buyer or
subsequent purchasers of the gas may have furnished to the
transporting pipeline(s).
10. Interest
Interest shall accrue on late payments at the lesser of
twelve percent (12%) per annum or the maximum lawful rate.
11. Notice
Address for invoice and payment:
Buyer: Pennsylvania Southern Gas Company
102 Desmond Street
Sayre, Pennsylvania 18840
Attention: Mr. James W. Carl
Fax No.: (717) 888-0396
Seller: Texaco Gas Marketing Inc.
P.0. Box 852306
Dallas, Texas 75285-2306
Wire Transfer - NCNB, Dallas, Texas
Acct. No. 125975262
**ABA No. 111000025
Any written notice other than for invoice or payment, shall
be delivered personally, telecopied or sent by regular or
overnight mail to:
Buyer: Pennsylvania Southern Gas Company
102 Desmond Street
Sayre, Pennsylvania 18840
Attention: Mr. James W. Carl
Fax No.: (717) 888-0396
Seller: Texaco Gas Marketing Inc.
P.0. Box 4700
Houston, Texas 77210-4700
Attention: Manager Natural Gas Sales
Northeast/Southeast Region
Such notice shall be deemed given at the time it is sent.<PAGE>
12. Pipeline Imbalances and Penalties
(a) Buyer and Seller acknowledge that various causes may
result in a pipeline imbalance on any pipeline transporting gas
delivered under this Agreement. Therefore, Buyer and Seller agree
to cooperate with each other and with any transporting
pipeline(s) to remedy any pipeline imbalance as soon as either
party becomes aware of one.
(b) Should either Buyer or Seller nevertheless sustain any
type of penalty charge from a transporting pipeline, including
but not limited to imbalance and scheduling penalties, each party
agrees to bear the cost of any penalty charge caused by that
party. If Seller's transporting pipeline levies a penalty
against Seller that Buyer caused, Buyer shall reimburse Seller
for the full amount of the charge within thirty days of receipt
of documentation of the charge. Likewise, if Buyer's transporting
pipeline levies a penalty charge against Buyer that Seller
caused, Seller shall reimburse Buyer for the full amount of the
charge within thirty days of receipt of documentation of the
charge.
(c) If, however, the cause of a penalty is an event of
force majeure as defined in Section 15 herein, then neither party
shall have any obligation to reimburse the other for any penalty
charges assessed.
13. Reservation:
(a) Seller reserves the right to process all gas sold
pursuant to this Agreement, prior to or after same has been
delivered to Buyer, for recovery of ethane, propane, and heavier
hydrocarbons, and all non-hydrocarbon substances. Seller shall
indemnify and hold Buyer harmless from taxes, fees or other
charges incurred by reason of the exercise of the gas processing
rights herein excepted.
(b) It is hereby agreed that Seller may make its own
arrangements with the owners of third party pipelines or
processing plants for the transportation or processing of
Seller's liquids and/or liquefiables. In the event Seller elects
hereunder to have its gas processed for removal of liquids and/or
liquefiable hydrocarbons, the plant volume reduction attributable
to such processing shall be subtracted from the quantities of gas
delivered hereunder at the Title Transfer Point.
14. Title and Indemnification
(a) Seller warrants title to all gas delivered to Buyer,
free of liens, encumbrances, and adverse claims. Seller shall
indemnify and hold Buyer harmless from taxes, fees or other
charges (including but not limited to obligations to pay
royalties and overriding royalties) incurred with respect to the
gas before title passes to Buyer at the Title Transfer Point.
Buyer shall indemnify and hold Seller harmless from taxes, fees
or other charges incurred with respect to the gas when title
passes to Buyer at the Title Transfer Point and thereafter.<PAGE>
(b) Prior to passage of title, Seller shall be solely
responsible for all transportation costs and arrangements and
shall indemnify, defend, protect, and hold Buyer harmless with
respect to any losses, claims, liabilities (including costs of
court and reasonable attorney's fees), injuries or damages of any
kind, including but not limited to, claims of damage to property
or the environment arising from the sale, purchase,
transportation, processing, or end-use of such gas. After
passage of title, Buyer shall be solely responsible for all
transportation costs and arrangements and shall indemnify,
defend, protect, and hold Seller harmless with respect to any
losses, claims, liabilities (including costs of court and
reasonable attorney's fees), injuries or damages of any kind,
including but not limited to, claims of damage to property or the
environment arising from the sale, purchase, transportation,
processing, or end-use of such gas.
(c) It is the expressed intention of the parties that
indemnity obligations under this Agreement be without limit, and
without regard to the cause or causes thereof, the strict
liability or negligence of any party or parties, whether such
negligence be sole, joint or concurrent, active or passive.
15. Force Majeure
(a) Either party shall be excused from delivering or taking
gas when and for so long as such performance is made impossible
or commercially impracticable by an event of force majeure. The
following are defined to be events of force majeure; act of God;
war; sabotage; civil disturbance; fire, explosion or other
accident; freezing of wells or pipes; hurricanes; earthquakes;
refusal or inability of any transporting pipeline to transport
gas sold under this Agreement; breakage or failure of pipelines
or equipment; withdrawal of pipelines or equipment from service
for scheduled or unscheduled maintenance; work stoppage; any
government statute, rule, regulation or order concerning the
"production," purchase, sale or transportation of natural gas
that prohibits either party from performing under the Agreement,
and any other occurrence not reasonably within the control of the
party affected. However, nothing herein shall excuse Buyer from
its obligation to pay for gas delivered prior to notification by
Buyer of an event of force majeure.
(b) As soon as possible after the occurrence of any event
of force majeure, the party claiming force majeure shall notify
the other party by telephone or telecopy followed by notice in
writing. The party affected shall act in a commercially
reasonable manner and with due diligence to recommence
performance; provided, however, that the course of action to be
taken in response to any work stoppage shall be left to the sole
discretion of the party affected.
16. Cover
In the event of Seller's unexcused failure to deliver gas,
Buyer may cover, if necessary, by making a reasonable purchase of
gas or other fuel in substitution for Seller's gas until Seller
can resume delivery. Buyer's remedy in damages for an unexcused
failure to deliver gas shall be limited to the difference between
the cost of cover and the Agreement price at the time of such<PAGE>
failure. However, Seller shall not be liable for any damages
until Buyer notifies Seller in writing of Buyers intent to
exercise his right to cover Seller's unexcused failure to deliver
such gas properly nominated.
17. Limitation of Damages
In no event shall either party be liable to the other for
incidental or consequential damages whether such damages are
claimed under breach of warranty, breach of contract, tort or any
other theory or cause of action at law or in equity.
18. Regulatory Out
(a) Notwithstanding any other provision of this agreement,
if at any time during the term of this agreement, any federal or
state law or any rule, order, opinion, enactment or regulation of
any governmental authority or of any court, prevents Buyer from
including in its cost of service for ratemaking purposes to its
customers the full amount of any cost incurred under this
agreement which Buyer has agreed to pay Seller hereunder, then
Buyer shall immediately notify Seller in writing of the price
that it is allowed to include in its cost of service for
ratemaking purposes for gas purchased under this Agreement. Upon
receiving such notification, Seller, at its sole discretion, may
choose to either amend the Agreement so that the Buyer can
include in its Cost of service for ratemaking purposes the full
price for gas sold under the Agreement or terminate the
Agreement. Seller shall notify Buyer of its choice in writing
within twenty-four (24) hours of receiving Buyer's notice.
(b) Notwithstanding any other provision of this agreement,
if at any time during the term of this agreement, any federal or
state law or any rule, order, opinion, enactment or regulation of
any governmental authority or of any court, prevents Seller from
recovering from Buyer the full price for gas, which Buyer has
agreed to pay Seller hereunder, inclusive of any penalties for
failure to take, as set forth herein, then Seller shall be
excused from delivering gas, effective prospectively from the
date that Buyer receives written notice from Seller of the
pertinent rule, order, opinion, enactment or regulation.
(c) Each time that a party invokes this right to be excused
from taking or delivering gas pursuant to this paragraph, the
parties may either renegotiate an acceptable price, or, at any
time during renegotiation or in lieu of renegotiation, terminate
this Agreement immediately.
19. Choice of Law
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
ITS CHOICE OF LAW PROVISIONS, AND THE PARTIES HERETO STIPULATE
THAT WITH RESPECT TO ANY AND ALL DISPUTES BETWEEN THE PARTIES
ARISING FROM OR RELATING TO THIS AGREEMENT VENUE SHALL LIE IN THE
FEDERAL OR STATE COURTS OF HOUSTON, HARRIS COUNT, TEXAS.<PAGE>
20. Credit Requirements
Buyer shall make credit arrangements satisfactory to Seller
which may include provision of a letter of credit or a guarantee
of payment by Buyer's parent company. Seller reserves the right
to request such credit arrangements before and during the term of
the agreement and, if Buyer fails to make credit arrangements
satisfactory to Seller, Seller may suspend deliveries hereunder.
21. Audit
Buyer or Seller shall have the right, at its sole expense
and during normal business hours, to audit the accounts and
records of the other party to the extent necessary to verify the
quantities and charges pursuant hereto. Neither party shall have
the right to perform more than two (2) such audits per year.
Such right to audit shall be available for the duration of this
Agreement and for two years after its termination.
22. Limitation of Assignment
Neither party shall assign this Agreement without the prior
written consent of the other party. Either party may terminate
this Agreement immediately if it is assigned without the other
party's prior written consent.
23. Waiver
The failure of either party to exercise any right granted
herein shall not impair, nor be deemed to be a waiver of, that
party's privilege of exercising that right at any subsequent
time.
24. Entire Agreement
This Agreement contains the entire agreement of the parties
with respect to the natural gas sales and purchases addressed in
this Agreement. Each party affirms that the other party has made
no representation other than those contained in this Agreement.
25. Amendment
No amendment to this Agreement shall be effective unless it
is in writing and signed by both parties.
26. Execution
A binding agreement between the parties on the terms stated
herein will be formed only at such time as both parties shall
have executed this Agreement.
Texaco Gas Marketing Inc. Pennsylvania and Southern
Gas Company
By: By: James W. Carl
Title: Attorney-In-Fact Title: Vice President
Authorized Agent or Officer of
Pennsylvania & Southern Gas Co.<PAGE>
Contract No.: 2277
GAS STORAGE CONTRACT
(For Use Under Rate Schedule FS)
THIS AGREEMENT is made and entered into as of the 1st day of
September, 1993, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and PENNSYLVANIA & SOUTHERN GAS COMPANY, a Delaware corporation,
hereinafter referred to as "Shipper." Transporter and Shipper
shall collectively be referred to herein as the "parties."
ARTICLE I - SCOPE OF CONTRACT
Following the commencement of service hereunder, in accordance
with the terms of Transporter's Rate Schedule FS (Market Area),
and of this Agreement, Transporter shall receive for injection
for Shipper's account a daily quantity of gas up to Shipper's
Maximum Injection Quantity (on any day) and Maximum Storage
Quantity of 424,530 Dth (on a cumulative basis) and on demand
shall withdraw from Shipper's storage account and deliver to
Shipper a daily quantity of gas up to Shipper's Maximum Daily
Withdrawal Quantity of 4,717 Dth.
ARTICLE II - SERVICE POINT
the point or points at which the gas is to be tendered for
delivery by Transporter to Shipper under this contract shall be
at the storage service point at Transporter's Compressor Station
313.
ARTICLE III - PRICE
1. Shipper agrees to pay Transporter for all natural gas
storage service furnished to Shipper hereunder, including
compensation for system fuel and losses, at Transporter's legally
effective rate or at any effective superseding rate applicable to
the type of service specified herein. Transporter's present
legally effectively rate for said service is contained in
Transporter's Rate Schedule FS as filed with the Federal Energy
Regulatory Commission.
2. Shipper agrees to reimburse Transporter for any filing or
similar fees, which have not been previously paid by Shipper,
which Transporter incurs in rendering service hereunder.
3. Shipper agrees that Transporter shall have the unilateral
right to file with the appropriate regulatory authority and make
effective changes in (a) the rates and charges applicable to
service pursuant to Transporter's Rate Schedule FS, (b) the rate<PAGE>
schedule(s) pursuant to which service hereunder is rendered, or
(c) any provision of the General Terms and Conditions applicable
to those rate schedules. Transporter agrees that Shipper may
protest or contest the aforementioned filings, or may seek
authorization from duly constituted regulatory authorities for
such adjustment of Transporter's existing FERC Gas Tariff as may
be found necessary to assure Transporter's just and reasonable
rates.
ARTICLE IV - INCORPORATION OF RATE SCHEDULE AND TARIFF PROVISIONS
This Agreement shall be subject to the terms of Transporter's
rate Schedule FS, as filed with the Federal Energy Regulatory
Commission, together with the General Terms and conditions
applicable thereto (including any changes tin Said Rate Schedule
or General terms and conditions as may from time to time be filed
and made effective by Transporter).
ARTICLE V - TERM OF CONTRACT
This Agreement shall be effective as of September 1, 1993, and
shall remain in force and effect until November 1, 2000 ("Primary
Term" ) and on a month to month basis thereafter unless
terminated by either Party upon at least thirty (30) days prior
written notice to the other Party; provided, however, that if the
Primary Term is one year or more, then unless Shipper elects upon
one year's prior written notice to Transporter to request a
lesser extension term, the Agreement shall automatically extend
upon the expiration of the primary term for a term of five years;
and shall automatically extend for successive five year terms
thereafter unless shipper provides notice as described above in
advance of the expiration of a succeeding term; provided further,
if the FERC or other governmental body having jurisdiction over
the service rendered pursuant to this Agreement authorizes
abandonment of such service, this Agreement shall terminate on
the abandonment date permitted by the FERC or such other
governmental body.
ARTICLE VI - NOTICES
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
party intended to receive the same, as follows:
TRANSPORTER: Tennessee Gas Pipeline Company
P. O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: Pennsylvania & Southern Gas Company
102 Desmond Street<PAGE>
Sayre, PA 18840
Attention: James W. Carl<PAGE>
BILLING: Pennsylvania & Southern Gas Company
102 Desmond Street
Sayre, PA 18840
Attention: James W. Carl
or to such other address as either Party shall designate by
formal written notice to the other.
ARTICLE VII - ASSIGNMENT
Any company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Transporter or of Shipper, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this contract. Otherwise no
assignment of the contract or any of the rights or obligations
thereunder shall be made by shipper, except pursuant to the
General Terms and Conditions of Transporter's FERC Gas Tariff.
It is agreed, however, that the restrictions on assignment
contained in this Article shall not in any way prevent either
Party to the Contract from pledging or mortgaging its rights
thereunder as security for its indebtedness.
ARTICLE VIII - LAW OF CONTRACT
The interpretation and performance of this contract shall be in
accordance with and controlled by the laws of the State of Texas,
without regard to the doctrines governing choice of law.
ARTICLE IX - PRIOR AGREEMENTS CANCELLED
Transporter and shipper agree that this Contract, as of the date
hereof, shall supersede and cancel the following contract(s)
between the parties hereto:
Contract for Storage Service dated:
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be duty executed in several counterparts as of the
date first hereinabove written.
TENNESSEE GAS PIPELINE COMPANY
BY: /S/ Glen Schuler
Agent and Attorney-in-Fact
PENNSYLVANIA & SOUTHERN GAS COMPANY
BY: /S/ James W. Carl
TITLE: Vice President
DATE: August 25, 1993<PAGE>
Contract No.: 2277
GAS STORAGE CONTRACT
(For Use Under Rate Schedule FS)
THIS AGREEMENT is made and entered into as of the 1st day of
September, 1993, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and PENNSYLVANIA & SOUTHERN GAS COMPANY, a Delaware corporation,
hereinafter referred to as "Shipper." Transporter and Shipper
shall collectively be referred to herein as the "parties."
ARTICLE I - SCOPE OF CONTRACT
Following the commencement of service hereunder, in accordance
with the terms of Transporter's Rate Schedule FS (Market Area),
and of this Agreement, Transporter shall receive for injection
for Shipper's account a daily quantity of gas up to Shipper's
Maximum Injection Quantity (on any day) and Maximum Storage
Quantity of 424,530 Dth (on a cumulative basis) and on demand
shall withdraw from Shipper's storage account and deliver to
Shipper a daily quantity of gas up to Shipper's Maximum Daily
Withdrawal Quantity of 4,717 Dth.
ARTICLE II - SERVICE POINT
the point or points at which the gas is to be tendered for
delivery by Transporter to Shipper under this contract shall be
at the storage service point at Transporter's Compressor Station
313.
ARTICLE III - PRICE
1. Shipper agrees to pay Transporter for all natural gas
storage service furnished to Shipper hereunder, including
compensation for system fuel and losses, at Transporter's legally
effective rate or at any effective superseding rate applicable to
the type of service specified herein. Transporter's present
legally effectively rate for said service is contained in
Transporter's Rate Schedule FS as filed with the Federal Energy
Regulatory Commission.
2. Shipper agrees to reimburse Transporter for any filing or
similar fees, which have not been previously paid by Shipper,
which Transporter incurs in rendering service hereunder.
3. Shipper agrees that Transporter shall have the unilateral
right to file with the appropriate regulatory authority and make
effective changes in (a) the rates and charges applicable to
service pursuant to Transporter's Rate Schedule FS, (b) the rate<PAGE>
schedule(s) pursuant to which service hereunder is rendered, or
(c) any provision of the General Terms and Conditions applicable
to those rate schedules. Transporter agrees that Shipper may
protest or contest the aforementioned filings, or may seek
authorization from duly constituted regulatory authorities for
such adjustment of Transporter's existing FERC Gas Tariff as may
be found necessary to assure Transporter's just and reasonable
rates.
ARTICLE IV - INCORPORATION OF RATE SCHEDULE AND TARIFF PROVISIONS
This Agreement shall be subject to the terms of Transporter's
rate Schedule FS, as filed with the Federal Energy Regulatory
Commission, together with the General Terms and conditions
applicable thereto (including any changes tin Said Rate Schedule
or General terms and conditions as may from time to time be filed
and made effective by Transporter).
ARTICLE V - TERM OF CONTRACT
This Agreement shall be effective as of September 1, 1993, and
shall remain in force and effect until November 1, 2000 ("Primary
Term" ) and on a month to month basis thereafter unless
terminated by either Party upon at least thirty (30) days prior
written notice to the other Party; provided, however, that if the
Primary Term is one year or more, then unless Shipper elects upon
one year's prior written notice to Transporter to request a
lesser extension term, the Agreement shall automatically extend
upon the expiration of the primary term for a term of five years;
and shall automatically extend for successive five year terms
thereafter unless shipper provides notice as described above in
advance of the expiration of a succeeding term; provided further,
if the FERC or other governmental body having jurisdiction over
the service rendered pursuant to this Agreement authorizes
abandonment of such service, this Agreement shall terminate on
the abandonment date permitted by the FERC or such other
governmental body.
ARTICLE VI - NOTICES
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
party intended to receive the same, as follows:
TRANSPORTER: Tennessee Gas Pipeline Company
P. O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: Pennsylvania & Southern Gas Company
102 Desmond Street<PAGE>
Sayre, PA 18840
Attention: James W. Carl<PAGE>
BILLING: Pennsylvania & Southern Gas Company
102 Desmond Street
Sayre, PA 18840
Attention: James W. Carl
or to such other address as either Party shall designate by
formal written notice to the other.
ARTICLE VII - ASSIGNMENT
Any company which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
Transporter or of Shipper, as the case may be, shall be entitled
to the rights and shall be subject to the obligations of its
predecessor in title under this contract. Otherwise no
assignment of the contract or any of the rights or obligations
thereunder shall be made by shipper, except pursuant to the
General Terms and Conditions of Transporter's FERC Gas Tariff.
It is agreed, however, that the restrictions on assignment
contained in this Article shall not in any way prevent either
Party to the Contract from pledging or mortgaging its rights
thereunder as security for its indebtedness.
ARTICLE VIII - LAW OF CONTRACT
The interpretation and performance of this contract shall be in
accordance with and controlled by the laws of the State of Texas,
without regard to the doctrines governing choice of law.
ARTICLE IX - PRIOR AGREEMENTS CANCELLED
Transporter and shipper agree that this Contract, as of the date
hereof, shall supersede and cancel the following contract(s)
between the parties hereto:
Contract for Storage Service dated:
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be duty executed in several counterparts as of the
date first hereinabove written.
TENNESSEE GAS PIPELINE COMPANY
BY: /S/ Glen Schuler
Agent and Attorney-in-Fact
PENNSYLVANIA & SOUTHERN GAS COMPANY
BY: /S/ James W. Carl
TITLE: Vice President
DATE: August 25, 1993<PAGE>
Contract No.: 936
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
THIS AGREEMENT is made and entered into as of the 1st day of
September, 1993, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and PENNSYLVANIA & SOUTHERN GAS COMPANY, a Delaware corporation,
hereinafter referred to as "Shipper." Transporter and Shipper
shall collectively be referred to herein as the "parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY - shall mean the maximum daily
quantity (MDQ) of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for the
account of Shipper hereunder on each day during each month of
each year during the term hereof which shall be 6,527 dekatherms
(Dth). Any limitations of the quantities to be received from
each Point of Receipt and/or delivered to each Point of Delivery
shall be as specified on Exhibit A attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and
receive daily on a firm basis, at the Point (s) of Receipt from
Shipper or for Shipper's account such quantity of gas as Shipper
makes available up to the Transportation Quantity, and to deliver
to or for the account of Shipper to the Point(s) of Delivery an
Equivalent Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Receipt and Delivery Points shall be those points
specified on Exhibit A attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in<PAGE>
this Agreement.
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENT
For all gas received, transported and delivered hereunder the
parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that
no new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter then responsibility
for operations shall be deemed to be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing upon the date of
execution, the rates, charges and surcharges to be paid by
Shipper to Transporter for the transportation service provided
herein, shall be in accordance with Transporter's Rate Schedule
FT-A and the General Terms and Conditions of Transporter's FERC
Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees, which have not been previously
paid by Shipper, which Transporter incurs in rendering service
hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes in
(a) the rates and charges applicable to service pursuant to
Transporter's Rate Schedule FT-A (b) the rate schedule(s)
pursuant to which service hereunder is rendered, or (c) any
provision of the General Terms and Conditions applicable to those
rate schedules. Transporter agrees that Shipper may protest or
contest the aforementioned filings, or may seek authorization
from duly constituted regulatory authorities for such adjustment
of Transporter's existing FERC Gas Tariff as may be found
necessary to assure Transporter's just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively, of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.<PAGE>
<PAGE>
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and
Conditions incorporated therein, as the same may be changed or
superseded from time to time in accordance with the rules and
regulations of the FERC.
ARTICLE IX
REGULATION
9.l This Agreement shall be Subject to all applicable and lawful
governmental statutes, orders, rules and regulations and is
contingent upon the receipt and continuation of all necessary
regulatory approvals or authorizations upon terms acceptable to
Transporter. This Agreement shall be void and of no force and
effect if any necessary regulatory approval is not so obtained or
continued. All parties hereto shall cooperate to obtain or
continue all necessary approvals or authorizations, but no party
shall be liable to any other party for failure to obtain or
continue such approvals or authorizations.
9.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas Tariff,
Shipper warrants the following:
a. Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place as of the requested effective date of service,
and that it has advised the upstream and downstream
transporters of the receipt and delivery points under
this Agreement and any quantity limitations for each
point as specified on Exhibit A attached hereto.
Shipper agrees to indemnify and hold Transporter
harmless for refusal to transport gas hereunder in the
event any upstream or downstream transporter fails to
receive or deliver gas as contemplated by this
Agreement.<PAGE>
(b) Shipper agrees to indemnify and hold Transporter
harmless from all suits, actions, debts, accounts,
damages, costs, losses and expenses (including
reasonable attorneys fees) arising from or out of
breach of any warranty, express or implied, by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This Agreement shall be effective as of September 1, 1993,
and shall remain in force and effect until October 31, 2000
("Primary Term" ) and on a month to month basis thereafter unless
terminated by either Party upon at least thirty (30) days prior
written notice to the other Party; provided, however, that if the
Primary Term is one year or more, then unless Shipper elects upon
one year's prior written notice to Transporter to request a
lesser extension term, the Agreement shall automatically extend
upon the expiration of the primary term for a term of five years;
and shall automatically extend for successive five year terms
thereafter unless shipper provides notice as described above in
advance of the expiration of a succeeding term; provided further,
if the FERC or other governmental body having jurisdiction over
the service rendered pursuant to this Agreement authorizes
abandonment of such service, this Agreement shall terminate on
the abandonment date permitted by the FERC or such other
governmental body.
12.2 Any portions of this Agreement necessary to correct or
cash-out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's FERC Gas Tariff
Volume No. 1 shall survive the other parts of this Agreement
until such time as such balancing has been accomplished.
12.3 This Agreement will terminate upon notice from Transporter
in the event Shipper fails to pay all of the amount of any bill
for service rendered by Transporter hereunder in accord with the
terms and conditions of Article VI of the General Terms and
Conditions o? Transporter's FERC Tariff.
ARTICLE XIII
NOTICE
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
party intended to receive the same, as follows:
TRANSPORTER: Tennessee Gas Pipeline Company<PAGE>
P. O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: Pennsylvania & Southern Gas Company
102 Desmond Street
Sayre, PA 18840
Attention: James W. Carl
BILLING: Pennsylvania & Southern Gas Company
102 Desmond Street
Sayre, PA 18840
Attention: James W. Carl
or to such other address as either Party shall designate by
formal written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture, or other instrument which it
has executed or may execute hereafter as security for
indebtedness. Either party may without relieving itself of its
obligation under this Agreement, assign any of its rights
hereunder to a company with which it is affiliated, otherwise,
Shipper shall not assign this Agreement or any of its rights
hereunder, except in accord with Article III, Section 11 of the
General Terms and Conditions.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
either Party hereto shall be entitled to the rights and shall be
subject to the obligations of its predecessor in interest under
this Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 The interpretation and performance of this contract shall
be in accordance with and controlled by the laws of the State of
Texas, without regard to the doctrines governing choice of law.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction, then
that provision will be considered severable at either party's
option; and if the severability option is exercised, the
remaining provisions of the Agreement shall remain in full force
and effect.
15.3 Unless otherwise expressly provided in this Agreement or<PAGE>
Transporter's Gas Tariff, no modification of or supplement to the
terms and provisions stated in this agreement shall be or become
effective, except by the execution of by both Parties of a
written amendment.<PAGE>
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be duty executed in several counterparts as of the
date first hereinabove written.
TENNESSEE GAS PIPELINE COMPANY
BY: /S/ Glen Schuler
Agent and Attorney-in-Fact
PENNSYLVANIA & SOUTHERN GAS COMPANY
BY: /S/ James W. Carl
TITLE: Vice President
DATE: August 25, 1993<PAGE>
Contract No.: 959
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
THIS AGREEMENT is made and entered into as of the 1st day of
September, 1993, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and PENNSYLVANIA & SOUTHERN GAS COMPANY, a Delaware corporation,
hereinafter referred to as "Shipper." Transporter and Shipper
shall collectively be referred to herein as the "parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY - shall mean the maximum daily
quantity (MDQ) of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for the
account of Shipper hereunder on each day during each month of
each year during the term hereof which shall be 2,000 dekatherms
(Dth). Any limitations of the quantities to be received from
each Point of Receipt and/or delivered to each Point of Delivery
shall be as specified on Exhibit A attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and
receive daily on a firm basis, at the Point (s) of Receipt from
Shipper or for Shipper's account such quantity of gas as Shipper
makes available up to the Transportation Quantity, and to deliver
to or for the account of Shipper to the Point(s) of Delivery an
Equivalent Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Receipt and Delivery Points shall be those points
specified on Exhibit A attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in<PAGE>
this Agreement.
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENT
For all gas received, transported and delivered hereunder the
parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that
no new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter then responsibility
for operations shall be deemed to be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing upon the date of
execution, the rates, charges and surcharges to be paid by
Shipper to Transporter for the transportation service provided
herein, shall be in accordance with Transporter's Rate Schedule
FT-A and the General Terms and Conditions of Transporter's FERC
Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees, which have not been previously
paid by Shipper, which Transporter incurs in rendering service
hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes in
(a) the rates and charges applicable to service pursuant to
Transporter's Rate Schedule FT-A (b) the rate schedule(s)
pursuant to which service hereunder is rendered, or (c) any
provision of the General Terms and Conditions applicable to those
rate schedules. Transporter agrees that Shipper may protest or
contest the aforementioned filings, or may seek authorization
from duly constituted regulatory authorities for such adjustment
of Transporter's existing FERC Gas Tariff as may be found
necessary to assure Transporter's just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively, of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.<PAGE>
<PAGE>
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and
Conditions incorporated therein, as the same may be changed or
superseded from time to time in accordance with the rules and
regulations of the FERC.
ARTICLE IX
REGULATION
9.l This Agreement shall be Subject to all applicable and lawful
governmental statutes, orders, rules and regulations and is
contingent upon the receipt and continuation of all necessary
regulatory approvals or authorizations upon terms acceptable to
Transporter. This Agreement shall be void and of no force and
effect if any necessary regulatory approval is not so obtained or
continued. All parties hereto shall cooperate to obtain or
continue all necessary approvals or authorizations, but no party
shall be liable to any other party for failure to obtain or
continue such approvals or authorizations.
9.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas Tariff,
Shipper warrants the following:
a. Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place as of the requested effective date of service,
and that it has advised the upstream and downstream
transporters of the receipt and delivery points under
this Agreement and any quantity limitations for each
point as specified on Exhibit A attached hereto.
Shipper agrees to indemnify and hold Transporter
harmless for refusal to transport gas hereunder in the
event any upstream or downstream transporter fails to
receive or deliver gas as contemplated by this
Agreement.<PAGE>
(b) Shipper agrees to indemnify and hold Transporter
harmless from all suits, actions, debts, accounts,
damages, costs, losses and expenses (including
reasonable attorneys fees) arising from or out of
breach of any warranty, express or implied, by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This Agreement shall be effective as of September 1, 1993,
and shall remain in force and effect until November 1, 2000
("Primary Term" ) and on a month to month basis thereafter unless
terminated by either Party upon at least thirty (30) days prior
written notice to the other Party; provided, however, that if the
Primary Term is one year or more, then unless Shipper elects upon
one year's prior written notice to Transporter to request a
lesser extension term, the Agreement shall automatically extend
upon the expiration of the primary term for a term of five years;
and shall automatically extend for successive five year terms
thereafter unless shipper provides notice as described above in
advance of the expiration of a succeeding term; provided further,
if the FERC or other governmental body having jurisdiction over
the service rendered pursuant to this Agreement authorizes
abandonment of such service, this Agreement shall terminate on
the abandonment date permitted by the FERC or such other
governmental body.
12.2 Any portions of this Agreement necessary to correct or
cash-out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's FERC Gas Tariff
Volume No. 1 shall survive the other parts of this Agreement
until such time as such balancing has been accomplished.
12.3 This Agreement will terminate upon notice from Transporter
in the event Shipper fails to pay all of the amount of any bill
for service rendered by Transporter hereunder in accord with the
terms and conditions of Article VI of the General Terms and
Conditions o? Transporter's FERC Tariff.
ARTICLE XIII
NOTICE
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
party intended to receive the same, as follows:
TRANSPORTER: Tennessee Gas Pipeline Company<PAGE>
P. O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: Pennsylvania & Southern Gas Company
102 Desmond Street
Sayre, PA 18840
Attention: James W. Carl
BILLING: Pennsylvania & Southern Gas Company
102 Desmond Street
Sayre, PA 18840
Attention: James W. Carl
or to such other address as either Party shall designate by
formal written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture, or other instrument which it
has executed or may execute hereafter as security for
indebtedness. Either party may without relieving itself of its
obligation under this Agreement, assign any of its rights
hereunder to a company with which it is affiliated, otherwise,
Shipper shall not assign this Agreement or any of its rights
hereunder, except in accord with Article III, Section 11 of the
General Terms and Conditions.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
either Party hereto shall be entitled to the rights and shall be
subject to the obligations of its predecessor in interest under
this Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 The interpretation and performance of this contract shall
be in accordance with and controlled by the laws of the State of
Texas, without regard to the doctrines governing choice of law.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction, then
that provision will be considered severable at either party's
option; and if the severability option is exercised, the
remaining provisions of the Agreement shall remain in full force
and effect.
15.3 Unless otherwise expressly provided in this Agreement or<PAGE>
Transporter's Gas Tariff, no modification of or supplement to the
terms and provisions stated in this agreement shall be or become
effective, except by the execution of by both Parties of a
written amendment.<PAGE>
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be duty executed in several counterparts as of the
date first hereinabove written.
TENNESSEE GAS PIPELINE COMPANY
BY: /S/ Glen Schuler
Agent and Attorney-in-Fact
PENNSYLVANIA & SOUTHERN GAS COMPANY
BY: /S/ James W. Carl
TITLE: Vice President
DATE: August 25, 1993<PAGE>
Contract No.: 2157
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
THIS AGREEMENT is made and entered into as of the 1st day of
September, 1993, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware Corporation, hereinafter referred to as "Transporter"
and PENNSYLVANIA & SOUTHERN GAS COMPANY, a Delaware corporation,
hereinafter referred to as "Shipper." Transporter and Shipper
shall collectively be referred to herein as the "parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY - shall mean the maximum daily
quantity (MDQ) of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for the
account of Shipper hereunder on each day during each month of
each year during the term hereof which shall be 4,717 dekatherms
(Dth). Any limitations of the quantities to be received from
each Point of Receipt and/or delivered to each Point of Delivery
shall be as specified on Exhibit A attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and
receive daily on a firm basis, at the Point (s) of Receipt from
Shipper or for Shipper's account such quantity of gas as Shipper
makes available up to the Transportation Quantity, and to deliver
to or for the account of Shipper to the Point(s) of Delivery an
Equivalent Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Receipt and Delivery Points shall be those points
specified on Exhibit A attached hereto.
ARTICLE IV
All facilities are in place to render the service provided for in<PAGE>
this Agreement.
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENT
For all gas received, transported and delivered hereunder the
parties agree to the Quality Specifications and Standards for
Measurement as specified in the General Terms and Conditions of
Transporter's FERC Gas Tariff Volume No. 1. To the extent that
no new measurement facilities are installed to provide service
hereunder, measurement operations will continue in the manner in
which they have previously been handled. In the event that such
facilities are not operated by Transporter then responsibility
for operations shall be deemed to be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing upon the date of
execution, the rates, charges and surcharges to be paid by
Shipper to Transporter for the transportation service provided
herein, shall be in accordance with Transporter's Rate Schedule
FT-A and the General Terms and Conditions of Transporter's FERC
Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees, which have not been previously
paid by Shipper, which Transporter incurs in rendering service
hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes in
(a) the rates and charges applicable to service pursuant to
Transporter's Rate Schedule FT-A (b) the rate schedule(s)
pursuant to which service hereunder is rendered, or (c) any
provision of the General Terms and Conditions applicable to those
rate schedules. Transporter agrees that Shipper may protest or
contest the aforementioned filings, or may seek authorization
from duly constituted regulatory authorities for such adjustment
of Transporter's existing FERC Gas Tariff as may be found
necessary to assure Transporter's just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively, of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.<PAGE>
<PAGE>
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions of
Transporter's Rate Schedule FT-A and to the General Terms and
Conditions incorporated therein, as the same may be changed or
superseded from time to time in accordance with the rules and
regulations of the FERC.
ARTICLE IX
REGULATION
9.l This Agreement shall be Subject to all applicable and lawful
governmental statutes, orders, rules and regulations and is
contingent upon the receipt and continuation of all necessary
regulatory approvals or authorizations upon terms acceptable to
Transporter. This Agreement shall be void and of no force and
effect if any necessary regulatory approval is not so obtained or
continued. All parties hereto shall cooperate to obtain or
continue all necessary approvals or authorizations, but no party
shall be liable to any other party for failure to obtain or
continue such approvals or authorizations.
9.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified the responsibility for gas during
transportation shall be as stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas Tariff,
Shipper warrants the following:
a. Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place as of the requested effective date of service,
and that it has advised the upstream and downstream
transporters of the receipt and delivery points under
this Agreement and any quantity limitations for each
point as specified on Exhibit A attached hereto.
Shipper agrees to indemnify and hold Transporter
harmless for refusal to transport gas hereunder in the
event any upstream or downstream transporter fails to
receive or deliver gas as contemplated by this
Agreement.<PAGE>
(b) Shipper agrees to indemnify and hold Transporter
harmless from all suits, actions, debts, accounts,
damages, costs, losses and expenses (including
reasonable attorneys fees) arising from or out of
breach of any warranty, express or implied, by Shipper
herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This Agreement shall be effective as of September 1, 1993,
and shall remain in force and effect until November 1, 2000
("Primary Term" ) and on a month to month basis thereafter unless
terminated by either Party upon at least thirty (30) days prior
written notice to the other Party; provided, however, that if the
Primary Term is one year or more, then unless Shipper elects upon
one year's prior written notice to Transporter to request a
lesser extension term, the Agreement shall automatically extend
upon the expiration of the primary term for a term of five years;
and shall automatically extend for successive five year terms
thereafter unless shipper provides notice as described above in
advance of the expiration of a succeeding term; provided further,
if the FERC or other governmental body having jurisdiction over
the service rendered pursuant to this Agreement authorizes
abandonment of such service, this Agreement shall terminate on
the abandonment date permitted by the FERC or such other
governmental body.
12.2 Any portions of this Agreement necessary to correct or
cash-out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's FERC Gas Tariff
Volume No. 1 shall survive the other parts of this Agreement
until such time as such balancing has been accomplished.
12.3 This Agreement will terminate upon notice from Transporter
in the event Shipper fails to pay all of the amount of any bill
for service rendered by Transporter hereunder in accord with the
terms and conditions of Article VI of the General Terms and
Conditions o? Transporter's FERC Tariff.
ARTICLE XIII
NOTICE
Except as otherwise provided in the General Terms and Conditions
applicable to this Agreement, any notice under this Agreement
shall be in writing and mailed to the post office address of the
party intended to receive the same, as follows:
TRANSPORTER: Tennessee Gas Pipeline Company<PAGE>
P. O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: Pennsylvania & Southern Gas Company
102 Desmond Street
Sayre, PA 18840
Attention: James W. Carl
BILLING: Pennsylvania & Southern Gas Company
102 Desmond Street
Sayre, PA 18840
Attention: James W. Carl
or to such other address as either Party shall designate by
formal written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture, or other instrument which it
has executed or may execute hereafter as security for
indebtedness. Either party may without relieving itself of its
obligation under this Agreement, assign any of its rights
hereunder to a company with which it is affiliated, otherwise,
Shipper shall not assign this Agreement or any of its rights
hereunder, except in accord with Article III, Section 11 of the
General Terms and Conditions.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an entirety, of
either Party hereto shall be entitled to the rights and shall be
subject to the obligations of its predecessor in interest under
this Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 The interpretation and performance of this contract shall
be in accordance with and controlled by the laws of the State of
Texas, without regard to the doctrines governing choice of law.
15.2 If any provisions of this Agreement is declared null and
void, or voidable, by a court of competent jurisdiction, then
that provision will be considered severable at either party's
option; and if the severability option is exercised, the
remaining provisions of the Agreement shall remain in full force
and effect.
15.3 Unless otherwise expressly provided in this Agreement or<PAGE>
Transporter's Gas Tariff, no modification of or supplement to the
terms and provisions stated in this agreement shall be or become
effective, except by the execution of by both Parties of a
written amendment.<PAGE>
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be duty executed in several counterparts as of the
date first hereinabove written.
TENNESSEE GAS PIPELINE COMPANY
BY: /S/ Glen Schuler
Agent and Attorney-in-Fact
PENNSYLVANIA & SOUTHERN GAS COMPANY
BY: /S/ James W. Carl
TITLE: Vice President
DATE: August 25, 1993<PAGE>
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 29th day of July, 1988, by and among NUI
Corporation, a New Jersey corporation, together with its successors and
assigns ("Parent"), having its principal place of business at 1011 Route
22, Box 6060, Bridgewater, New Jersey 08807, Elizabethtown Gas Company
together with its successors and assigns ("Sub"), having its principal
place of business at 1 Elizabethtown Plaza, Elizabethtown, New Jersey
07207, and Jack Langer (the "Executive").
WITNESSETH:
WHEREAS, the Executive is currently employed as President, Chief
Operating Officer and Treasurer of City Gas Company of Florida (the
"Company") and has been employed by the Company in senior executive
capacities for the past several years; and
WHEREAS, the Company is being merged with and into Sub (the
"Merger") simultaneously with the execution of this Agreement; and
WHEREAS, the Boards of Directors of Sub and Parent have determined
that Sub is and will continue to be greatly in need of the Executive's
managerial skills so that the future progress of the Company's
operations, which henceforth will be operated as a division of Sub (the
"Division") will be assured; and
WHEREAS, Sub desires to continue to employ, retain and secure for
itself the experience, ability and services of the Executive as
President and Chief Operating Officer of the Division; and
WHEREAS, the Boards of Directors of Parent and Sub have authorized
this Agreement with the Executive and have approved all of the terms,
conditions and undertakings hereof, all of which the Boards of Directors
have found to be reasonable, proper and in the best interest of Parent
and Sub.
NOW, THEREFORE, it is hereby mutually agreed between the parties as
follows:
ARTICLE I
RIGHTS AND DUTIES OF EMPLOYMENT
1.01 Term of Employment. Sub hereby employs Executive and
Executive hereby accepts employment with Sub for a period of five years
(the "Initial Term") from the date of this Agreement (the "Effective
Date") (hereinafter, together with the extension described below,
referred to as the "Employment Period"). The Initial Term shall be
automatically extended for one additional three-year period, unless Sub
shall give six months written notice ("Termination Notice") to the
Executive prior to the fourth anniversary of the Effective Date that the
Executive's employment will be terminated for good cause resulting from
the acts or omissions of the Employee ("Termination Cause"). Any proper
Termination Notice shall be effective to end the Employment Period on
the fifth anniversary of the Effective Date. If the Executive is
terminated without Termination Cause or not in compliance with the terms
set forth herein the Employment Period shall end on the eighth
anniversary of the Effective Date.<PAGE>
1.02 Duties.
(a) The Executive shall, subject to his continuing
election as President and Chief Operating Officer of the Division,
perform the duties and exercise the powers of President and Chief
Operating Officer of the Division. The Executive shall be responsible
for the supervision over the day to day activities of the Division,
reporting directly to the Chief Executive Officer of the Division;
provided, however, that if, during the Employment Period, S.W. Langer is
unable to serve as Chief Executive Officer of the Division, the
Executive shall assume the duties of Chief Executive Officer as set
forth in Section 1.02 of the Employment Agreement among Parent, Sub and
S.W. Langer of even date and shall report directly to the Board of
Directors of Parent. In addition, during the Employment Period and
subject to his election by its shareholders, Executive shall serve as a
member of the Board of Directors of Parent. During the Employment
Period, Parent will cause Jack Langer to be nominated for election by
the shareholders of Parent to serve as a member of its Board of
Directors.
(b) The Executive shall devote his skill, attention and
best efforts to the business and affairs of the Division. The services
to be rendered by the Executive will be, at all times, of an executive
nature and substantially the same as the services which the Executive
performed for the Company prior to the Merger.
(c) The Executive shall perform his employment duties as
directed by the Chief Executive Officer of the Division and he shall not
be obligated to travel outside of the area of the Division's principal
executive offices located in Hialeah, Florida, unless necessary in
connection with his duties.
1.03 Compensation and Other Benefits.
(a) Compensation. During the Employment Period, Parent
or Sub, as the case may be, shall pay to the Executive an annual base
salary (exclusive of bonus payments and expense allowances) of One
Hundred Forty Thousand Dollars and no/cents ($140,000.00), payable in
substantially equal monthly installments in advance on the first day of
each month during the Employment Period: provided, however, that such
annual base salary may be increased by such additional amounts as
Parent's Board of Directors may from time to time determine. The
Executive's annual base salary as it may be so increased, unless and
until thereafter again increased, shall be the minimum base salary
payable to the Executive hereunder for the balance of the Employment
Period.
(b) Bonuses. In addition to the salary to be paid to
the Executive under subparagraph (a) of this subsection 1.03, the
Executive may receive a bonus for each year during the Employment
Period. Bonuses shall be based upon the performance of the Division and
the Executive as follows:
Bonuses for the Division will be determined in accordance with
the policies established by Parent on a consistent basis for all of the
divisions of Parent and Sub, and shall be distributed by the Division's
Chief Executive Officer among the Division's executives, as the Chief
Executive Officer determines, in his sole discretion.<PAGE>
(c) Fringe Benefits. In addition to the salary and the
bonus to be paid under subparagraphs (a) and (b) of this Section 1.03,
the Executive shall be entitled to participate in (i) all of Parent's or
Sub's pension plans; (ii) all of Parent's or Sub's employee stock option
plans; (iii) all of Parent's or Sub's employee stock ownership plans;
(iv) all of the Company's employee benefit plans which remain in effect
after the Merger in which the Executive participated when he was
employed by the Company; (v) life insurance, hospitalization insurance,
disability insurance and the like; and (vi) all other so-called "fringe
benefits" that are granted to or provided for Parent's or Sub's
executives or which may be granted or provided for them during the
Employment Period. Parent or Sub will provide the Executive, without
charge, with an executive automobile (no less favorable in make or model
than that provided to the Executive by the Company) and reimburse the
Executive for all of the automobile's operation and maintenance
expenses. The automobile shall be replaced with a new model in
accordance with Parent's and Sub's policy, but in no event less
frequently than every three years. Notwithstanding the foregoing
subsection (c) the Executive shall at all times during the Employment
Period be entitled to employment benefits no less favorable than (i)
those to which he was entitled as an employee of the Company; and (ii)
those enjoyed by senior executive officers of Parent, Sub or their
affiliates.
(d) Reimbursement of Expenses: Suitable Office face and
Facilities. Parent or Sub will pay for or reimburse the Executive for
payment of all items of travel, lodging, entertainment and miscellaneous
expenses incurred by him in carrying on his duties and responsibilities
hereunder upon an accounting therefor submitted by the Executive. In
addition, Parent or Sub shall furnish the Executive with office space
and facilities no less favorable than, and consistent with, the office
space and facilities occupied and used by the Executive while he was
employed by the Company, or as hereafter improved.
(e) Vacation. The Executive shall be entitled to (6)
six weeks of paid vacation per fiscal year throughout the Employment
Period, to be taken at the Executive's convenience with due regard for
the needs of the Division, or (ii) if the Executive decides not to take
all or part of such vacation, additional compensation in lieu thereof.
(f) Effect of Absences: Time Requirement of Employment.
It is expressly understood that during the Employment Period, except as
provided in Section 2.05 hereof, that the inability of the Executive to
render services to Sub pursuant to Section 1.02 by reason of absences
due to illness, disability or incapacity, or for any other reasonable
cause, or the failure of the Executive to render any other services to
Sub which he may be asked to render, other than the services specified
in Section l.02, shall not constitute a failure by the Executive to
perform his obligations hereunder and shall not be deemed a breach
hereof or default by him hereunder. Subject to the foregoing, the
Executive agrees to devote such energy, ability and time as shall be
necessary to perform his duties hereunder and as shall be reasonably
requested by Sub.
1.04 (a) Indemnification. The Executive and his legal
representative shall be indemnified for all legal expenses, including
reasonable attorneys' fees, costs and expenses at trial and appellate
levels and all liabilities in connection with any proceeding, action or
claim involving him by reason of his being or having been a director,
officer, employee or agent of the Company, Parent, Sub or their<PAGE>
affiliates, or any other enterprise if serving or having served at the
request of the Company, Parent, Sub or their affiliates, to the fullest
extent permitted by the laws of the State of New Jersey, or by the
articles of incorporation or the by-laws of Parent or Sub.
(b) Advance of Expenses. In the event of any action,
proceeding or claim against the Executive arising out of his serving or
having served in a capacity specified in Section 1.04 (a) hereof, which,
in the Executive's sole judgment, requires him to retain counsel (such
choice of counsel to be made in his sole and absolute discretion) or
otherwise expend his personal funds for his defense in Connection
therewith, Parent and Sub shall be obligated to advance to the Executive
(or pay directly to his counsel) attorneys' fees, expenses and other
costs associated with the Executive's defense of such action, proceeding
or claim at trial and appellate levels.
1.05 (a) Trade Secrets. The Executive recognizes and
acknowledges that the names of the Division's customers, the Division's
methods of operation, sales engineering and other trade secrets, as they
may exist from time to time, are valuable, special and unique assets of
Sub. The Executive shall not, during or after the term of his
employment hereunder, disclose any such names or other trade secrets, or
any part thereof, that the Executive becomes aware of during his
employment, to any person, firm, corporation, association or other
entity, nor shall he attempt to entice away any customer or employee of
the Division or Sub.
(b) Non-Competition. The Executive agrees that, during
the term of this Agreement, he will not directly or indirectly associate
with any business that is competing or developing the ability to compete
directly or indirectly with the Division. For the purposes of this
Section 1.O5(b), the Executive will be deemed to associate with a
business if he owns, manages, operates, controls, participates in the
ownership, management or control, or is otherwise in any manner
connected with such business; provided, however, that the Executive may
invest in a publicly held corporation engaged in such competitive
business provided that such investment shall at no time exceed 1% of the
issued and outstanding capital stock of such corporation, and provided
he is not otherwise associated with it. A business will be deemed to be
competing with the Division if it is making products or providing
services identical or substantially similar to those made or provided by
the Division. Notwithstanding the foregoing, the Executive shall not be
deemed to violate his agreement under this Section 1.O5(b) if he
associates with a business that, subsequent to such association, begins
to compete or begins to develop the ability to compete with the Division
or any of its subsidiaries or affiliates if the Executive (1) does not
participate in such competition or in the development of the ability to
compete and (2) resigns from, disposes of his interest in, or otherwise
effectively disassociates himself from such business upon becoming aware
of such competition or the development by the business of the ability to
compete with the Division.
(c) In the event of a breach by the Executive of the
provisions of this paragraph 1.05, Parent and Sub shall be entitled to
an injunction restraining the Executive from disclosing, in whole or in
part, such trade secrets, or from rendering any services to any person,
firm, corporation, association or other entity to whom such trade
secrets, in whole or in part, have been disclosed.<PAGE>
ARTICLE II
RIGHTS ON TERMINATION OF EMPLOYMENT
2.01 Right of Executive to Terminate Employment. It is
anticipated that the Executive will be: elected to the Board of
Directors of Parent by its shareholders and elected President
and Chief Operating Officer of the Division through the expiration of
the Employment Period hereunder. The Executive may, at his option, and
in addition to all other remedies the Executive may have at law or in
equity, terminate his employment under this Agreement upon not less than
90 days notice to Sub given at any time after the occurrence of any of
the following:
(a) for any reason other than theft, fraud, embezzlement
or substantially similar act by the Executive, or a breach by the
Executive of his agreement under subsection (a) or (b) of Section 1.05
hereof: (i) the Executive is not elected to the Board of Directors of
Parent and President and Chief Operating Officer of the Division for all
periods from the date hereof through the expiration of the Employment
Period hereunder; (ii) the Executive is removed or replaced as a member
of the Board of Directors of Parent or as President and Chief Operating
Officer of the Division at any time prior to the expiration of the
Employment Period hereunder; (iii) the nature or scope of the
Executive's duties as President and Chief Operating Officer of the
Division are significantly reduced prior to such time; (iv) the
Executive's compensation is reduced below the highest annual base salary
he is entitled to receive under this Agreement; (v) Parent or Sub fails
to perform or observe any other provision of this Agreement and such
failure shall continue unremedied for a period of fifteen (15) days
after written notice thereof Shall have been received by Parent
or Sub; or (vi) once the the Executive has assumed the duties of
Chief Executive Officer pursuant to Section 1.02 hereof, he does not
continue to be elected, is removed or replaced, or his duties are
reduced, in such capacity, during the Employment Periods; or
(b) prior to the expiration of the Employment Period
hereunder, there has been a "Change in Control" of Sub or Parent. For
purposes of this Agreement, a "Change in Control" shall be deemed to
have taken place if:
(i) any person (as such term is used in Section
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Act"), but excluding Sub or Parent and any of its subsidiaries or
affiliates), should acquire direct or indirect ownership of 20% or more
of the combined voting power of the then outstanding securities of Sub
or Parent as a result of a tender or exchange offer, open market
purchases, privately-negotiated purchases or otherwise: or
(ii) the shareholders of Sub or Parent should
approve any one of the following transactions:
(a) any consolidation or merger of Sub or
Parent in which Sub or Parent is not the surviving corporation, other
than a merger of Sub or Parent in which the respective holders of the
common stock of Sub or Parent immediately prior to the merger have the
same proportionate ownership of the surviving corporation immediately
after the merger; or<PAGE>
(b) any sale, lease. exchange or other transfer (in
one transaction or a series of related transactions) of all, or
substantially all, the assets of the Division, Sub or Parent; or
(iii) during any period of two consecutive years, the
individuals who at the beginning of such period constitute the Board of
Parent cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the shareholders
of Sub or Parent, of each new director of Parent was approved by a vote
of at least two-thirds of the directors of Parent then still in office
who were directors of Parent at the beginning of the period or a merger
involving Parent and one or more subsidiaries of Parent (including Sub)
in which the holders of the common stock of Parent have the same
proportionate ownership of the surviving corporation immediately after
the merger; or
(c) Sub relocates the executive offices of the Division
more than fifteen miles from the location of its current principal
executive offices at Hialeah, Florida, or a significant change is made
in the location of the performance of the Executive's duties from the
aforementioned offices.
2.02 Right of Parent and Sub to Terminate Employment. Parent
and Sub may immediately terminate the employment of the Executive in the
event of theft, fraud, embezzlement or substantially similar act by the
Executive or a breach by the Executive of his agreement under Subsection
(a) or (b) of Section 1.05 hereof.
2.03 Termination Payments. If the Executive terminates his
employment hereunder pursuant to Section 2.01 hereof, or if prior to the
expiration of the Employment Period hereunder, Parent or Sub terminates
the Executive's employment for any cause other than those enumerated in
Section 2.02 hereof (in either case, the date of such termination shall
hereinafter be referred to as the "Termination Date"), Parent or Sub
shall pay to the Executive and provide him with the following:
(a) Parent or Sub shall pay to the Executive in one lump
sum, within ten (10) days after the Termination Date, an amount equal to
the aggregate salary that would have been paid to the Executive under
the provisions of Section 1.03 hereof (salary calculated at the highest
annual rate he was entitled to receive prior to such Termination Date)
during the period from the Termination Date to and including the date
upon which the Employment Period expires, plus an amount equal to any
tax other than ordinary income tax which may be imposed by the Internal
Revenue Service as a result of such payment, or, at the option of the
Executive, continue to pay the Executive his salary on a monthly basis
at the highest annual rate required by Section 1.03(a), plus the
estimated amount of any bonuses to which he would have been entitled had
he remained in the employ of the Company for the remainder of the
Employment Period.
(b) Parent or Sub shall provide the Executive with
continued coverage under (1) Parent's or Sub's executive group insurance
benefit plan, including the group medical and life insurance plan
thereunder as well as all benefits that were required to be provided to
the Executive pursuant to Section 1.03, excluding the travel-accident
policy.<PAGE>
(c) The Executive shall have the right to exercise all
unexercised stock options granted to the Executive under Parent's or
Sub's benefits plans described in Section 1.03(b) for a period of 90
days after the Termination Date, whether or not such stock options are
then fully exercisable, to the extent such options have not otherwise
expired. In addition, all other awards and conditional remuneration
shall become fully vested and immediately payable to the Executive and
all applicable restrictions shall lapse as of the Termination Date.
(d) Parent or Sub shall pay the Executive at the same
time and in the same manner as his pension benefits are paid under the
Company's pension plan or a successor plan, and in addition to benefits
provided under all pension plans and any supplemental pension plan or
other plan, program or arrangement maintained by the Division, Parent or
Sub to provide employees with retirement benefits and any successor
plans thereto (all such plans being collectively referred to as "Pension
Plans") an amount equal to the difference between:
(i) the sum of the aggregate amounts of pension
payments (determined as a straight life annuity) to which the Executive
would have been entitled under the terms of all Pension Plans in which
he was an active participant immediately prior to the Termination Date
(without regard to any amendment made subsequent to a Change in Control
of Sub or Parent and on or prior to the Termination Date which adversely
affects in any manner the computation of benefits under such plan)
determined as if the Executive was fully vested, and
(ii) the sum of the aggregate monthly amounts of
pension payments (determined as a straight life annuity) to which the
Executive is entitled under the terms of all Pension Plans in which he
was an active participant immediately prior to the Termination Date.
(e) If despite the provisions of Section 2.03(b)above,
benefits under any employee benefit plan shall not be payable or
provided under any such plan to the Executive, or his dependents,
beneficiaries and estate, because he is no longer an employee of Sub,
Sub or Parent themselves shall, to the extent necessary, pay or provide
for payment of such benefits to the Executive, his dependents,
beneficiaries and estate.
2.04 No Obligation to Mitigate Damages. In the event of a
termination the Executive is not obligated to mitigate damages by
seeking other employment.
2.05 Disability. If during the term hereof, because of
mental, physical or other disability, the Executive shall be incapable
for a period of six (6) consecutive months (the "Disability Period") of
substantially performing his obligations and agreements hereunder, the
Board of Directors of Parent, in its discretion, may determine that the
Executive has become totally disabled, provided that a medical doctor
approved by the Executive, or his authorized representative, and
Division's Board of Advisors is of the opinion that he is "totally
disabled." In the event that such a determination is made, six (6)
months following such Disability Period, during which the provisions of
this Agreement shall apply in full, this Agreement shall terminate,
provided, however, that:
(a) for a period of an additional six (6) months after
the date of such termination Parent or Sub shall pay the Executive his
then current annual salary hereunder;<PAGE>
(b) following the six (6) month period specified in
subsection (a) of this Section 2.04, Parent or Sub shall pay the
Executive for the remainder of the Employment Period an amount equal to
seventy-five Percent (75%) of the highest annual base salary he was
entitled to receive under this Agreement;
(c) Parent or Sub shall continue to cover the Executive
under Parent's or Group's group insurance plan, including the group term
life insurance plan thereunder until the expiration of the Employment
Period; and
(d) if the Executive, at any time within six (6) months
following the determination that he is totally disabled, shall become
able again to perform substantially the services contemplated by this
Agreement, then he shall resume his position as President and Chief
Operating Officer of the Division or Chief Executive Officer of the
Division if he had occupied such position prior to the disability for
the remainder of the Employment Period at the highest annual base salary
he had received under this Agreement.
2.06 Beneficiaries of Payments. If the Executive shall die
before receiving all payments to be made by parent or Sub to him
pursuant to any of the provisions hereof, all such payments, or any
remaining payment, as the case may be, shall be made by Parent or Sub to
such beneficiary or beneficiaries as the Executive may designate from
time to time by notice in writing filed with Parent or Sub, or if the
Executive shall fail or fails effectively to designate a beneficiary, or
if no beneficiary shall survive the date when the last payment is to
be made, any remaining payments shall be made to the Executive's estate.
ARTICLE III
GENERAL PROVISIONS
3.01 Reimbursement of Legal Expenses. If litigation shall be
brought to challenge the Executive's entitlement to payments under this
Agreement or to enforce or interpret any provision hereof, Parent and
Sub hereby indemnifies and agrees to reimburse the Executive for his
reasonable attorneys' fees, costs, expenses and disbursements incurred
in such litigation, at trial and appellate levels, and hereby agrees to
pay prejudgment interest on any money judgment obtained by the Executive
calculated at the prime interest rate, as announced from time to time,
of North Carolina National Bank of Florida, N.A., or any successor
thereto, from the date that payment(s) to him should have been made
under this Agreement.
3.02 Succession. This Agreement Shall inure to the benefit of
and be binding upon Sub and Parent, their successors and assigns,
including without limitation, any person, partnership or corporation or
any other entity which may acquire all or substantially all or a
majority of Sub's or Parent's stock, assets or business, or with or into
which Sub or Parent may be consolidated or merged, and this provision
shall apply in the event of any subsequent mergers, consolidations or
transfers, and shall be binding upon the Executive, his heirs and
personal representatives.
3.03 Waiver of Provisions. The failure of any party to
insist, in any one or more instances, upon performance of any of the
terms or conditions of this Agreement shall not be construed as a waiver
or a relinquishment of any right granted hereunder or of the future<PAGE>
performance of any such term or condition, but the obligation of the
other parties with respect thereto shall continue in full force and
effect.
3.04 Notice. Any notice to be given to Sub hereunder shall be
deemed sufficient if in writing sent by registered or certified mail to
its executive offices at 1 Elizabethtown Plaza, Elizabethtown, New
Jersey 07207. Any notice to be given to Parent hereunder shall be
deemed sufficient if in writing sent by registered or certified mail to
its executive offices at 1101 Route 22, Box 6060, Bridgewater, New
Jersey 08807. Any notice to be given to the Executive hereunder shall
be sufficient if in writing and sent by registered or certified
mail to him at the executive offices of the Division. Any party may, by
notice as aforesaid, designate a different address or addresses.
3.05 Amendment. The parties hereto agree that this Agreement
shall not be amended or supplemented in any respect, except by a
subsequent written agreement entered into by all parties hereto.
3.06 Remedies. Notwithstanding any of the foregoing
provisions of this Agreement, any remedies described herein are not
exclusive and the Executive shall have any and all other remedies
available at law or in equity.
3.07 Severability. In the event any provision of this
Agreement shall be held to be illegal, invalid or unenforceable for any
reason, the illegality, invalidity, or unenforceability shall not affect
the remaining provisions hereof, but such illegal, invalid, or
unenforceable provision shall be fully severable and this Agreement
shall be construed and enforced as if the illegal or invalid or
unenforceable provisions had never been included herein.
3.08 Headings. The titles and headings of Articles and
Sections are included for convenience of reference only and are not to
be considered in construction of the provisions hereof.
3.09 Word Usage. Words used in the masculine shall apply to
the feminine where applicable, and wherever the context of this
Agreement dictates, the plural shall be read as the singular and the
singular as the plural.
3.10 Governing Law. This Agreement shall be governed in all
respects by the laws of the State of Florida (without regard to the
principles of conflicts of laws thereof).
3.11 Jurisdiction, Service of Process.
(a) All suits, actions or proceedings with respect to
this Agreement or any judgment entered by any court in respect thereof
may only be brought in the courts of the State of Florida located in
Dade County or in the U.S. District Court for the Southern District of
Florida and Sub, Parent and the Executive each hereby consents to the
exclusive personal jurisdiction of those courts for the purpose of any
suit, action or proceeding arising under this Agreement.
(b) In addition, Sub, Parent and Executive each hereby
irrevocably waives, to the fullest extent permitted by law, any
objection which he or they may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to
this Agreement, or any judgment entered by any court in respect thereof<PAGE>
brought in Dade County, State of Florida, and hereby further irrevocably
waives any claim that any suit, action or proceeding brought in Dade
County, State of Florida has been brought in an inconvenient forum.
3.12 Termination. The execution of this Agreement by the
Executive, Sub and Parent terminates all rights of the Executive under
all Employment Agreements between the Company and the Executive.
IN WITNESS WHEREOF, the Executive has hereunto set his hand,
and pursuant to the authorization from their respective Boards of
Directors, each of Sub and Parent has caused this Agreement to be
executed in its name and on its behalf, all as of the day and year first
above written.
Executive
By: /S/ Jack Langer
Sub
By: /S/ F. W. Sullivan
Parent
By: /S/ John Kean<PAGE>
EXHIBIT NO. 21
SUBSIDIARIES OF NUI CORPORATION
Essel Corporation (a Florida corporation) and Utility
Billing Services, Inc. (a New Jersey corporation) are
wholly-owned subsidiaries of NUI Corporation.
Natural Gas Services, Inc. (a Delaware corporation) is a
wholly-owned subsidiary of Essel Corporation.<PAGE>
EXHIBIT NO. 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated November 22, 1994, included in the
Form 10-K, into the Company's previously filed Registration Statements
File No. 33-51459 relating to NUI Direct, File No. 33-45350 relating to
the Savings and Investment Plan, and File No. 33-24169 relating to the
1988 Stock Plan.
ARTHUR ANDERSEN LLP
New York, New York
December 29, 1994<PAGE>
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