As filed with the Securities and Exchange Commission on February 14, 1996
File No. 70-8767
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________
AMENDMENT NO. 1 TO
FORM U-1 APPLICATION-DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________
Cinergy Corp.
Cinergy Services, Inc.
139 East Fourth Street
Cincinnati, Ohio 45202
Cinergy Investments, Inc.
251 North Illinois Street, Suite 1410
Indianapolis, Indiana 46204
(Name of companies filing this statement
and addresses of principal executive offices)
Cinergy Corp.
(Name of top registered holding company parent)
William L. Sheafer
Treasurer
Cinergy Corp.
(address above)
(Name and address of agent of service)
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application-Declaration to:
Stephen P. Biggerstaff Cheryl M. Foley
Manager Vice President, General Counsel
Cinergy Investments, Inc. and Corporate Secretary
(address above) Cinergy Corp.
(address above)
William T. Baker, Jr.
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
1. Sections B ("Background") and C ("Proposed Business Activities of
EnergyCos") of Item 1 are amended and restated in their entirety to read as
follows:
B. Background
(I) District Energy Systems
In Cincinnati as in many other American cities, most large commercial
buildings provide air conditioning from chilled water systems internal to
each building. Currently, the chilled water systems in approximately 90%
of Cincinnati's downtown office buildings rely on chlorofluorocarbon, or
"CFC," refrigerant to produce the cooling effect. Owners and managers of
most large commercial buildings in downtown Cincinnati are considering
whether to retrofit or replace their existing chillers in the next several
years due to age or environmental considerations; either option involves
major capital expenditures, ranging from hundreds of thousands to several
million dollars.
Likewise, a number of the owners and managers of large commercial buildings
in downtown Cincinnati are analyzing whether to replace the heating systems
in their buildings. Many of these systems are old and approaching the end
of their useful lives, are expensive to replace, use relatively inefficient
boilers, occupy a disproportionately large amount of building space, and
raise environmental issues associated with emission of nitrogen oxides
("NOx").
The installation of "district" cooling and heating systems in downtown
Cincinnati offers a cost-effective, energy-efficient alternative for
cooling and heating large commercial buildings. The basic concept is
analogous to that of connecting to the electrical distribution system as
opposed to generating one's own electricity on-site. Under a district
cooling system, rather than each office building supplying its own cooling
needs on a "self-contained" basis, through a chiller located within that
building, the needs of dozens of office buildings may be "outsourced" -
that is, supplied by underground pipes distributing cooled water to the
buildings from a centrally-located chilled water plant operated by a
third-party provider. A district cooling system's physical infrastructure
consists principally of the central plant itself (usually a multi-story
building housing the chillers, pumps, water wells, piping, valves, cooling
towers - located on the roof but often screened from view from the street -
as well as control center and offices) and the associated distribution
system - specifically, the network of underground pipes running from the
central plant to connections in the client buildings (through the supply
pipes) and looping back to the plant (through the return pipes). District
cooling can provide a cost-effective alternative for cooling not only large
commercial buildings in a central business area but also other large
complexes such as hospitals and universities.
Under a district heating system, the distribution system is very similar to
that for a district cooling system, except that the supply and return pipes
are usually smaller than their counterparts in a district cooling system.
The basic central plant facilities for a district heating system consist of
boilers, pumps, piping, valves, tanks, water treatment, make-up water and
controls necessary to produce steam or hot water. Although the central
production facilities for combined district cooling and heating systems can
(and in fact tend to) be housed in the same building, the distribution
networks must be physically separate - i.e., the pipes used to transport
and loop the hot water back to the central plant must be used exclusively
for that purpose (although the heating and cooling pipes may be "jointly
trenched" (nested together in the same trench under the street surface)).
District cooling and/or heating systems are in place in over 20 American
cities, including Baltimore, Chicago, Indianapolis, Minneapolis, Nashville,
Pittsburgh, San Francisco, St. Louis and three in Ohio (Akron, Cleveland
and Youngstown)./1/ Many of these cities' district heating systems have
been in place for decades. Among the major benefits of district energy
systems are the following:
* Customers. By virtue of economies of scale and state-of-the-art
technology, district energy systems offer building owners and operators an
economical and efficient alternative to refurbishing or replacing (or
installing in the first place) their own on-site cooling and/or heating
systems, enabling building owners and operators to avoid major capital
expenditures and the costs associated with operating and maintaining their
own cooling and heating systems.
Lower Capital Costs: Under a district energy system, the principal and
interest payments, property taxes and insurance costs associated with
replacing or retrofitting on-site chillers/boilers are eliminated. The
only initial costs in most buildings served by district energy are for heat
exchangers, pumps and associated piping.
Lower Operating and Maintenance Costs: With district energy, a client
building has less need for on-site operating and maintenance personnel and
costly maintenance contracts with third-party providers. Ancillary
chiller/boiler operating expenses (such as electricity, gas, water
treatment chemicals and make-up water) are also eliminated.
More Revenue-Generating Space: Elimination of an on-site chiller/boiler
system and its appurtenances frees up valuable floor space within the
building and increases architectural flexibility.
In addition to the benefits noted above, synergistic benefits can be
expected to accrue to customers if they purchase both their cooling and
heating needs from a single district energy system. These benefits include
further substantial reductions in capital outlays and operation and
maintenance costs, more building space available for commercial use, and a
likely reduction in air emissions.
Also, the economics of district energy systems improve when district
heating is added incrementally to a new district cooling system (and vice
versa), especially if the "backbone" pipes and central plant equipment for
the district heating can be installed at the same time as those for the
district cooling system. The installation of combined systems causes less
disruption to city streets and motorists in congested downtown central
business districts. A growing number of district energy systems feature
combined cooling and heating central plant facilities.
* Communities. District cooling and heating systems are important economic
development tools for urban areas in competing against less densely
developed suburban commercial and industrial areas, where such centralized
systems are less feasible. The ability of real estate developers to access
district chilled and heated water for their commercial and industrial
projects effectively reduces the capital cost of building those projects;
once built, the facilities cost comparatively less to operate and maintain.
* Environment. District energy systems also benefit the environment.
First, chilled water systems built today shun CFCs in favor of a new,
environmentally more compatible generation of refrigerants. Second, many
of the older boilers in commercial buildings are inefficient and do not use
low NOx burners. Although there are no regulatory mandates to reduce NOx
emissions from the operation of these boilers, there is a growing public
awareness focusing on the level of emissions from these less efficient
heating systems. By contrast, many of the larger boilers used in new
district heating plants employ more efficient, low NOx burner technology.
Finally, district energy systems promote energy conservation and
efficiency. District energy systems help smooth load at the local utility
and reduce energy demand, especially during peak hours. In turn, this can
enable the utility to defer the need to build new generating facilities.
(ii) Discussions involving Cinergy with respect to
Development of District Energy System in Cincinnati
Cinergy's Ohio utility subsidiary, The Cincinnati Gas & Electric Company
("CG&E"), owns, operates and maintains a large chilled water system for
cooling its Fourth & Main and Fourth & Walnut buildings, covering nearly
one complete city block in the core of the central business district of
downtown Cincinnati. This chilled water system is obsolete, 45 years old,
inefficient, costly to maintain, and uses a CFC-based refrigerant; by the
spring of 1995 CG&E had decided to replace it. Upon learning that CG&E was
planning to replace its chillers, several nearby building owners asked
whether or not CG&E might consider installing larger chillers that would
accommodate their needs as well, thereby permitting them to address the CFC
concerns and avoid the large capital outlays and operating and maintenance
headaches associated with retrofitting or replacing their existing
chillers. Since those initial discussions, Cinergy representatives have
had a number of discussions with other downtown building owners or managers
who have expressed a strong interest in district cooling. Several of these
customers have also expressed a strong interest in district heating.
Cinergy personnel are also involved in discussions with third parties
concerning acquisition (by ground lease or fee simple title) of the
necessary realty in the downtown area, together with any required zoning
variances, for the siting and construction of one or more combined central
plant facilities.
In order to provide district cooling and heating in Cincinnati, Cinergy
will need to obtain one or more franchises from the City of Cincinnati.
The City also has jurisdiction over the rates that would be charged to
district energy customers. To that end, Cinergy representatives have had
preliminary discussions with the City's staff. Pursuant to those
discussions and the staff's recommendations to Mayor Roxanne Qualls and the
City Council Members, the City is preparing to award one or more district
cooling and heating franchises covering the downtown central business
district as well as possibly other locations within the greater
metropolitan area.
On January 24, 1996, the City Council adopted an ordinance granting Cinergy
a non-exclusive franchise to provide district cooling in downtown
Cincinnati and calling for commencement of discussions with Cinergy
regarding a district heating franchise. Among the provisions of the
franchise agreement with the City of Cincinnati for district cooling (and
district heating in the future) are the following:
* The franchise term is 25 years with a "reopener" clause after year 5 to
extend the term.
* The agreement establishes several fee structures depending upon the type
of franchise the City ultimately grants (see below), e.g., a non-exclusive
for district cooling, an exclusive for district cooling, or an exclusive
for both district cooling and heating. In general, the fee to be paid
annually to the City ranges from about 2-4% of gross revenues, depending on
the type of franchise. The franchise agreement also contains an annual
minimum fee provision.
* The rates for the district cooling (and heating) services will be
negotiated by contract directly with the customers and the rates will be
based on market prices. The City will not request any rate caps.
* The franchise agreement contains a "most favored nation" provision
regarding the City's purchase of district energy services.
* The City reserves the right to convert the non-exclusive franchise to an
exclusive franchise and to include district heating.
(The execution form of franchise agreement with the City is included as
Exhibit D-1.)
C. Proposed Business Activities of EnergyCos
Applicants request authorization for the EnergyCos to engage in the
businesses of a district cooling company and a district heating company,
respectively, within the greater Cincinnati metropolitan area. These
activities would include:
* design, construction, installation, ownership, operation, management,
repair and maintenance of one or more combined or stand-alone central
chilled water (in the case of CoolCo) and heating plants (in the case of
HeatCo) and associated distribution pipes and ancillary equipment and
facilities;
* acquisitions of required franchises, zoning variances, interests in
realty and any other necessary permits;
* execution of water cooling (in the case of CoolCo) and water heating (in
the case of HeatCo) contracts with customers providing for delivery of
chilled or heated water to the customers' facilities for cooling or heating
purposes and rendition of associated services/2/; and
* retention of consultants and third-party contractors with respect to the
foregoing activities.
The above listing is not intended to be exhaustive, but is for illustrative
purposes only.
Prospective customers of the EnergyCos would be comprised of nonassociates
(specifically, existing electric and gas customers of CG&E within
Cincinnati) as well as, at least as to chilled water, CG&E itself. Any
sales of chilled or hot water to CG&E, together with any incidental
services, construction or goods, would be exempt from Commission
jurisdiction pursuant to Rule 81. CoolCo's chillers will initially be
electric-powered, and CoolCo will purchase electricity from CG&E. HeatCo's
boilers will be gas-fired (possibly with fuel oil as a back-up), and HeatCo
will purchase gas from CG&E. In addition, CG&E will supply the balance of
the energy needs for the EnergyCos' central plant facilities.
As part of their business activities, CoolCo and HeatCo also request
authorization to provide financing to nonassociate customers in connection
with sales of chilled or heated water. In order to connect to the
EnergyCos' district energy systems, some prospective customers may need to
replace their cooling/heating interface equipment (i.e., such items as heat
exchangers, pumps and some internal piping on the customer's premises).
Some of the building owners and managers, to further reduce capital
outlays, are interested in the EnergyCos financing these equipment
upgrades. The EnergyCos propose to provide such financing by selling the
necessary equipment to the customers on credit; the customer would repay
the respective EnergyCo for the equipment pursuant to a separate line-item
charge to its monthly bill from the EnergyCo for chilled or hot water. The
monthly charge would cover a portion of the equipment's total sale price to
the customer (reflecting a mark-up from the cost paid by the EnergyCo to
the equipment vendor) plus a finance charge. In connection with the
proposed customer financing, the EnergyCos would not acquire any promissory
notes or other securities from their customers.
As set forth below, the district energy business proposed herein will
benefit the Cinergy system, its customers and investors, and the public.
* Demand Side Management. The EnergyCos' district energy business not only
will help smooth the overall load served by CG&E but also will help reduce
CG&E's summer electric load and winter gas load, especially during peak
hours. On-site chiller and boiler systems typically carry excess cooling
and heating capacity to meet occasional peak demands, which results in
inefficient partial chiller/boiler loads during most of the year.
Currently each building in downtown Cincinnati must have enough installed
cooling capacity (typically at least two chillers per building) to meet its
peak load and provide for backup in case of chiller failure. By contrast,
the EnergyCos' central plant chillers not only will constitute
significantly more technologically sophisticated equipment than the
building owners' existing chillers, but will be sized and operated to be
staged on and off to follow the combined load of the downtown buildings.
In this manner, the EnergyCos' chillers will be operated at or near peak
efficiency and will achieve the highest seasonal efficiency possible. As a
consequence, the maximum load on CG&E's system should be reduced, thereby
assisting CG&E in deferring the construction or acquisition of new
generation resources.
* Additional Environmental Benefits. Because less electricity will be
consumed by CG&E's large commercial customers in downtown Cincinnati, the
proposed district energy business will result in decreased electric
generation by-product airborne pollutants in the Cincinnati area. This is
especially significant since Cincinnati is in a moderate non-attainment
area for ozone under the federal Clean Air Act regulations. Moreover,
Cinergy's district energy business will decrease the level of CFC and NOx
emissions in the Cincinnati area.
* Business Development. Cinergy's district energy business will make a
significant contribution to the economic development of Cincinnati by
enhancing the City's infrastructure and increasing the City's
competitiveness (in terms of retaining existing and attracting new
businesses) vis-a-vis other comparable cities and suburban areas.
Obviously, Cinergy - headquartered in Cincinnati with its principal
operating subsidiary, CG&E, also located there - has a substantial vested
interest in the economic development of the City and its core business
district.
* Customer Satisfaction. As already noted, the impetus for Cinergy's
proposed district energy business came directly from customers of CG&E,
commercial building owners and managers in the downtown area who had heard
of CG&E's plans to replace its aging chillers. The recent granting by the
City to Cinergy of a non-exclusive franchise to provide district energy to
the downtown area stemmed in part from the City Council's recognition of
the strong endorsement by these downtown building owners and real estate
developers for Cinergy's proposal, and their desire that Cinergy's district
energy business be up and running at the earliest possible date. By
reducing the capital expenses of these customers, Cinergy's district energy
business should bolster the financial strength and continued viability of
CG&E's existing base of large commercial customers in downtown Cincinnati.
More generally, implementation of the proposed transactions should generate
increased satisfaction and loyalty toward Cinergy among its customers -
especially important as the industry becomes more competitive and energy
providers strive to differentiate themselves from their competitors.
Cinergy's district energy business will serve as a model of Cinergy's
capability to meet the diverse energy-related needs of its customers
through innovative products and services.
* Investors. Cinergy would not undertake its proposed district energy
business without a strong expectation of realizing profits to accrue to the
benefit of Cinergy's investors.
The proposed district energy business is closely related to Cinergy's core
utility business. In the first place, CoolCo and HeatCo will be public
utilities under Ohio law (see Item 4 below). They will operate within
Cincinnati, the hub of CG&E's service territory, serving existing retail
utility customers of CG&E and will themselves receive electricity and gas
from CG&E to fuel their central plant facilities. The EnergyCos' district
energy business will reduce the demand on CG&E's electric and gas systems,
fostering CG&E's demand side management program while at the same time
producing benefits for CG&E utility customers (capital cost and O&M
savings).
It is no less apparent that the district energy business is a natural
extension of Cinergy's traditional gas and electric business, made feasible
by the skills and experience developed in those core operations. The basic
infrastructure of a district energy system - the central plant production
facility, with its chillers/boilers and cooling towers, together with the
distribution piping system - bears an obvious close similarity to the basic
infrastructure of the conventional vertically integrated electric/gas
utility system. In building, owning and operating its district energy
facilities, the EnergyCos would draw upon the Cinergy system's extensive
experience, knowledge and resources derived from the operating
subsidiaries' long history of building and operating large complex power
plants and other energy facilities. In this regard, CG&E over the years
has installed and maintained large piping systems in the streets of
downtown Cincinnati to serve its gas customers. Cinergy power plants such
as the Zimmer and Gibson generating stations are exceedingly complex,
state-of-the art facilities, handling huge volumes of steam, hot water and
condenser water. As already noted with reference to CG&E, as a direct
adjunct to their utility operations, the Cinergy companies own and operate
central chilled water systems and associated cooling towers, used for air
conditioning offices, control rooms, computers and other critical equipment
centers.
2. Subsection (v) of Section D of Item 1 ("Organization and Financing of
EnergyCos") is amended and restated in its entirety to read as follows:
(v) Use of Proceeds
The EnergyCos would use the proceeds of the parent company financing
transactions proposed herein (as well as the proceeds of exempt financing
transactions) for general corporate purposes, including financing of the
construction, operation and maintenance of their central plant facilities
and associated distribution pipe systems and other ongoing working capital
needs.
In this regard, Cinergy estimates the initial cooling load for downtown
Cincinnati to be about 15,000 tons; the first phase of the EnergyCos
proposed district energy business, designed to serve this load, involves
the construction of the central district energy plant (initially expected
to be solely dedicated to district cooling) and the installation of the
associated underground piping system, at an aggregate estimated cost of not
less than $30 million and with an expected completion date of mid-1997.
The annual capital expenses associated with maintaining the initial
district cooling facilities are estimated at $1-2 million. In the event
that the EnergyCos modify the central plant to accommodate district
heating, and install the related dedicated piping system, the cost of these
anticipated capital improvements is estimated at not less than
approximately $10 million.
In addition, Cinergy anticipates that over the next ten years the aggregate
cooling load for the downtown Cincinnati area will grow to about 50,000
tons. Depending on the actual magnitude of downtown development, two
additional central stations (and related distribution piping networks) will
likely be required to serve this augmented load; the initial construction
cost for each additional central station (including the related
distribution system) is estimated at not less than $30 million.
None of such proceeds will be used by the EnergyCos to invest in any exempt
wholesale generator ("EWG") or foreign utility company ("FUCO") as defined
in the Act.
3. Section F of Item 1 is amended and restated in its entirety to read as
follows:
F. Rule 24 Notification Certificates
Applicants propose to furnish the Commission with the following information
with respect to the EnergyCos on a periodic basis. Within 60 days
following the end of each calendar quarter (commencing with the first
calendar quarter following the Commission's order in this proceeding),
Cinergy Services will file with the Commission a certificate of
notification pursuant to Rule 24 comprised of the following: (1) an
unaudited balance sheet and income statement of each EnergyCo for the
preceding calendar quarter; (2) a summary of the business activities
undertaken by each EnergyCo during the preceding quarter, including any
related customer financing; (3) a summary of the financing activities with
respect to the EnergyCos during the preceding quarter, including both
exempt and jurisdictional transactions; (4) a summary of any services
received by each EnergyCo from Cinergy Services, identifying each service
by function and the aggregate cost thereof to the EnergyCo; and (5)
information sufficient to demonstrate that any chilled or hot water,
together with any incidental services, construction or goods, sold by
either EnergyCo to CG&E (or any other associate company) pursuant to Rule
81 have been so provided on terms comparable to those offered to
nonassociate customers (having due regard to any differences of quality or
quantity).
The foregoing notwithstanding, to the extent that any of such information
becomes required to be reported to the Commission pursuant to Rule 58 (see
Rel. No. 35-26313, June 20, 1995), that information would no longer be
reported via certificates of notification in this proceeding.
4. Item 4 is amended and restated in its entirety to read as follows:
Item 4. Regulatory Approval.
The EnergyCos will be subject to regulation as public utilities by both the
PUCO and, as to rates, the City of Cincinnati.
Specifically, under Ohio law, CoolCo and HeatCo would be deemed a "cooling
company" and "heating company," respectively, and therefore in each case a
"public utility." See Ohio Rev. Code Ann. ("ORCA") Sections 4905.02,
4905.03(A)(9). Accordingly, HeatCo and CoolCo would be subject to the
general jurisdiction of the PUCO. See ORCA Section 4905.05. CoolCo and
HeatCo, respectively, are not required under Ohio law to request PUCO
approval to become a public utility. Pursuant to ORCA Section 4905.02, the
definition of a "public utility" encompasses a "[a] heating or cooling
company, when engaged in the business of supplying water through pipes or
tubing to consumers within this state for heating or cooling purposes"
(emphasis added) (ORCA Section 4905.03(A)(9)). Nor does the PUCO have
jurisdiction over the acquisition of securities of the EnergyCos by
Investments or Cinergy.
The general jurisdiction of the PUCO over public utilities extends to
supervision of the "general condition, capitalization, and franchises, and
as to the manner in which their properties are leased, operated, managed,
and conducted with respect to the adequacy or accommodation afforded by
their service, the safety and security of the public and their employees,
and their compliance with all laws, orders of the [public utilities]
commission, franchises, and charter requirements." ORCA Section 4905.06.
By way of example, and without attempting to be exhaustive, PUCO
jurisdiction specifically includes: supervisory authority over books and
records, accounts, facilities and property within the state, and products
and services (ORCA Sections 4903.02, 4903.03, 4905.04, 4905.05, 4905.06);
assessment for PUCO and Consumers' Counsel expenses (ORCA Section 4905.10);
the system of accounts (ORCA Sections 4905.13, 4905.17, 4905.18); the
required filing of annual reports and certain contracts (ORCA Sections
4905.14, 4905.16); tariffs and schedules of services ORCA Sections 4905.22,
4905.28, 4905.30, 4905.32, 4905.33); the abandonment of facilities (ORCA
Sections 4905.20-.21); financing (ORCA Sections 4905.40-.42); and, the
declaration of stock, bond or scrip dividends or distributions (ORCA
Section 4905.46).
More specifically, with respect to PUCO jurisdiction over public utility
financing, the PUCO has statutory authority to approve the issuance of
"stocks, bonds, notes, and other evidences of indebtedness, payable at
periods of more than twelve months after their date of issuance." ORCA
Section 4905.40. Pursuant to this statutory requirement, Investments filed
a joint application with the PUCO on February 7, 1996 (see Exhibit D-2)
requesting approval for each of CoolCo and HeatCo to issue 100 shares of
no-par common stock to Investments, for the formation of the respective
companies. PUCO approval is expected before the end of February 1996.
In addition to the PUCO's jurisdiction, CoolCo and HeatCo must each receive
a franchise from the City of Cincinnati by virtue of their proposed
operations within Cincinnati. Under "home rule" provisions of Ohio law,
the City also has primary jurisdiction over the rates to be charged to the
EnergyCos' customers for the provision of chilled or heated water within
the City of Cincinnati. See ORCA Section 4909.34.
No other city, state or federal regulatory agency (other than the
Commission under the Act) has jurisdiction over the proposed transactions.
Item 6. Exhibits and Financial Statements.
(a) Exhibits. Except as otherwise indicated below, the following
exhibits are filed herewith:
A-1 Form of articles of incorporation of CoolCo/HeatCo
A-2 Form of by-laws of CoolCo/HeatCo
A-3 Form of common stock certificate of CoolCo/HeatCo
D-1 Execution Form of Franchise Agreement
D-2 Joint Application to PUCO in respect of EnergyCos filed February
7, 1996 (Case Nos. 96-126-CC-AIS and 96-127-HT-AIS)
D-3 Order of PUCO in Case Nos. 96-126-CC-AIS and 96-127-HT-AIS (to be
filed by amendment)
F-1 Preliminary opinion of counsel
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the undersigned companies have
duly caused this document to be signed on their behalf by the undersigned
thereunto duly authorized.
Dated: February 14, 1996
CINERGY CORP.
By: /s/ William L. Sheafer
Treasurer
CINERGY INVESTMENTS, INC.
By: /s/ William L. Sheafer
Treasurer
CINERGY SERVICES, INC.
By: /s/ William L. Sheafer
Treasurer
<PAGE>
ENDNOTES
/1/ In addition, plans were recently announced for the construction of a
district cooling system for downtown Boston. See The Energy Daily, Jan.
26, 1996 at 1.
/2/ Several prospective customers have expressed an interest in being
supplied with both district hot water and steam. Any steam
sales would comprise no more than a small portion of HeatCo's business
(i.e., not more than 10% of HeatCo's total annual operating revenues).
Accordingly, Cinergy requests authorization for HeatCo to market both hot
water and steam.
<PAGE>
EXHIBIT A-1
ARTICLES OF INCORPORATION
OF
CoolCo/HeatCo
The undersigned, desiring to form a corporation for profit under
Sections 1701.01 et seq. of the Ohio Revised Code, does hereby certify:
FIRST: The name of the corporation shall be (CoolCo/HeatCo)(the
"Corporation").
SECOND: The principal office of the Corporation in the State of Ohio
is to be located in the City of Cincinnati, County of Hamilton.
THIRD: The purpose for which the Corporation is formed is to engage
in any lawful act or activity for which corporations may be formed under
the General Corporation Law of the State of Ohio.
FOURTH: The number of shares which the Corporation is authorized to
have outstanding is Eight Hundred Fifty (850), all of which shall be common
shares without par value.
FIFTH: To the extent permitted by law the Corporation may, from time
to time, pursuant to authorization of the Board of Directors and without
action by the shareholders, purchase or otherwise acquire shares of any
class, bonds, debentures, notes script, warrants, obligations, evidences of
indebtedness, or other securities of the corporation (or any other
corporation) in such manner, upon such terms, and in such amounts as the
Board of Directors may determine.
SIXTH: No transaction between the Corporation and any other
corporation shall in any way be affected or invalidated by the fact that
any director of the Corporation has an interest in such other corporation,
including being a director or officer of such corporation, provided that
the fact that the interest exists shall be disclosed or shall have been
known to the Board of Directors, or a majority thereof; any director of the
Corporation who has such an interest may be counted in determining the
existence of a quorum at any meeting of the Board of Directors of the
Corporation which shall authorize such transactions, and may vote thereat
to authorize such transaction, with like force and effect as if he were not
so interested.
SEVENTH: No holders of shares of the Corporation shall have any
preemptive right to subscribe for or to purchase any shares of the
Corporation of any class, whether such shares or such class be now or
hereafter authorized.
EIGHTH: Any amendment hereto, including any that could be adopted by
the Board of Directors of this Corporation, may be adopted at a meeting of
shareholders held for such purpose by the affirmative vote of the holders
of shares entitled to exercise a majority of the voting power of the
Corporation on such proposal.
IN WITNESS WHEREOF, the undersigned has executed these Articles this
____ day of ____________________, 1996.
Cheryl M. Foley, Incorporator
<PAGE>
EXHIBIT A-2
CODE OF REGULATIONS
OF
COOLCO/HEATCO (THE "CORPORATION")
ARTICLE I
OFFICES
Section 1. Offices. The location of the Corporation's principal
office shall be in the City of Cincinnati, County of Hamilton, State of
Ohio. The Corporation may, in addition to its principal office in the
State of Ohio, establish and maintain an office or offices elsewhere in
Ohio and in such other states and places as the Board of Directors may from
time to time find necessary or desirable, at which the books, documents and
papers of the Corporation may be kept.
ARTICLE II
STOCKHOLDERS' MEETINGS
Section 1. Annual Meeting. An Annual Meeting of Stockholders of the
Corporation for the election of directors and for the transaction of any
other proper business shall be held at such time and date in each year as
the Board of Directors may from time to time determine, and shall be held
at the principal office of the Corporation in Cincinnati, Ohio.
Section 2. Notice of Annual Meeting. Notice of the annual meeting
shall be given in writing to each stockholder entitled to vote thereat, at
such address as appears on the records of the Corporation at least ten (10)
days and not more than forty-five (45) days prior to the meeting.
Section 3. Special Meetings. A special meeting of the stockholders
of the Corporation entitled to vote on any business to be considered at any
such meeting may be called by the Chairman of the Board or the President or
by a majority of the members of the Board of Directors then in office,
acting with or without a meeting or by the persons who hold 25 percent of
all shares outstanding and entitled to vote thereat upon notice in writing,
stating the time, place and purpose of the special meeting. The business
transacted at the special meeting shall be confined to the purposes and
objects stated in the call.
Section 4. Notice of Special Meeting. Notice of special meeting, in
writing, stating the time, place and purpose thereof, shall be given to
each stockholder entitled to vote thereat, at least ten (10) days and not
more than forty-five (45) days prior to the meeting.
Section 5. Waiver of Notice. Notice of the time, place and purpose
of any meeting of stockholders may be waived by the written assent of every
stockholder entitled to notice, filed with or entered upon the records of
the meeting, either before or after the holding thereof.
Section 6. Action Without Meeting. Any action which, under any
provision of the General Corporation Law of Ohio, or the Articles, or the
Regulations, may be taken at a meeting of the Stockholders, may be taken
without a meeting if authorized by a writing signed by all the holders of
shares who would be entitled to notice of meeting for such purpose.
Whenever a Certificate, in respect of any such action taken without a
meeting is required by the General Corporation Law of Ohio to be filed in
the office of the Secretary of State, the officers signing the same shall
state therein that the action was authorized in the manner aforesaid.
Section 7. Quorum. The holders of shares entitling them to exercise
a majority of the voting power, present in person or by proxy at any
meeting of the stockholders, unless otherwise specified by law, shall
constitute a quorum.
If, however, at any meeting of the stockholders, a quorum shall fail
to attend in person or by proxy, a majority in interest of the stockholders
attending in person or by proxy at the time and place of such meeting may
adjourn the meeting from time to time without further notice, other than by
announcement at the meeting at which such adjournment is taken, until a
quorum shall be present. At any such adjourned meeting at which a quorum
shall be present, any business may be transacted which might have been
transacted at the meeting as originally called.
Section 8. Voting. Whenever directors are to be elected at a
meeting, they shall be elected by a plurality of the votes cast at the
meeting by the holders of stock entitled to vote. Whenever any corporate
action, other than the election of directors, is to be taken by vote of
stockholders at a meeting, it shall, except as otherwise required by law or
by the Certificate of Incorporation or by these Code of Regulations, be
authorized by a majority of the votes cast at the meeting of the holders of
stock entitled to vote thereon.
Except as otherwise provided by law, or by the Certificate of
Incorporation, each holder of record of stock of the Corporation entitled
to vote on any matter at any meeting of stockholders shall be entitled to
one (1) vote for each share of such stock standing in the name of such
holder on the stock ledger of the Corporation on the record date for the
determination of the stockholders entitled to vote at the meeting.
Upon the demand of any stockholder entitled to vote, the vote for
directors or the vote on any other matter at a meeting shall be by written
ballot, but otherwise the method of voting and the manner in which votes
are counted shall be discretionary with the presiding officer at the
meeting.
Section 9. Presiding Officer and Secretary. At every meeting of
stockholders the Chairman of the Board, or, in his absence, the President,
or, in his absence, the appointee of the meeting shall preside. The
Secretary, or, in his or her absence an Assistant Secretary, or if none be
present, the appointee of the presiding officer of the meeting, shall act
as secretary of the meeting.
Section 10. Proxies. Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act
for him or her by proxy, but no such proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer
period. Every proxy shall be signed by the stockholder or by his duly
authorized attorney. A stockholder may authorize another person or persons
to act for him as proxy by transmitting or authorizing the transmission of
a telegram, cablegram, or other means of electronic transmission to the
person who will be the holder of the proxy or to a proxy solicitation firm,
proxy support service organization or like agent duly authorized by the
person who will be the holder of the proxy to receive such transmission if
such transmission is submitted with information from which it may be
determined that the transmission was authorized by the stockholder.
Section 11. List of Stockholders. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten (10)
days before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice of the meeting,
or, if not so specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who
is present.
The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by
this Section or the books of the Corporation, or to vote in person or by
proxy at any meeting of stockholders.
ARTICLE III
DIRECTORS
Section 1. Number of Directors, Tenure, Vacancies. Except as
otherwise provided by statute, all the corporate powers, business and
property of the Corporation shall be exercised, conducted and controlled by
a Board of Directors of not less than three (3), and not more than five
(5), who need not be stockholders.
The directors shall be elected annually and each director shall
continue in office until the annual meeting held next after his election,
and until his successor shall have been elected and qualified.
Any member of the Board of Directors may resign at any time by giving
written notice to the Chairman of the Board, or the President or to the
Secretary of the Corporation.
All vacancies occurring in the Board of Directors, may be filled by
the remaining directors at any stated or special meeting. A director thus
elected to fill any vacancy shall hold office for the unexpired term of his
predecessor and until his successor is elected and qualifies.
Any director may be removed at any time by the affirmative vote of a
majority of the stock then issued and entitled to vote at a special meeting
of stockholders called for the purpose.
Section 2. Annual Organization Meeting. Immediately after each
annual election, the newly elected directors may meet forthwith (either
within or without the State of Ohio) for the purpose of organization, the
election of officers and the transaction of other business. If a majority
of the directors be then present, no prior notice of such meeting shall be
required to be given. The place and time of such first meeting may,
however, be fixed by written consent of a majority of the directors, or by
three (3) days written notice given by the Secretary of the Corporation.
Section 3. Regular Meetings. Regular meetings of the Board of
Directors may be held at any reasonable time and place (either within or
without the State of Ohio), and upon such notice, as the Board of Directors
may from time to time determine.
Section 4. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board or the President and
must be called by the written requests of two (2) members of the Board of
Directors.
Section 5. Notice of Meetings. Notice of meetings shall be given to
each director in accordance with Article X, Section 1, of these
Regulations.
Section 6. Quorum. A majority of the Board of Directors shall
constitute a quorum for the transaction of business, but a majority of
those present at the time and place of any meeting, although less than a
quorum, may adjourn the same form time to time, without notice, until a
quorum be had. The act of a majority of the Directors present at any such
meeting, at which a quorum is present shall be the act of the Board of
Directors.
Section 7. Compensation of Directors. Each director of the
Corporation (other than directors who are salaried employees of the
Corporation or any of its affiliates) shall be entitled to receive as
compensation for services such amounts as may be determined from time to
time by the Board of Directors in form either in fees for attendance at the
meeting of the Board of Directors, or by payment at the rate of a fixed sum
per month or both. The same payment may also be made to any one other than
a director officially called to attend any such meeting.
Section 8. Executive Committee. The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate annually
three (3) or more of their number, to constitute an Executive Committee,
and may delegate to such committee power to exercise in the intervals
between the meetings of the Board of Directors the powers of the Board in
the management of the business and affairs of the Corporation. Each member
of the Executive Committee shall continue to be a member thereof only
during the pleasure of a majority of the whole board.
The Executive Committee may act by a majority of its members at a
meeting or by a writing signed by all of its members.
All action by the Executive Committee shall be reported to the Board
of Directors at its meeting next succeeding such action.
Non-employee members of such Executive Committee shall be entitled to
receive such fees and compensation as the Board of Directors may determine.
Section 9. Other Committees. The Board of Directors may also appoint
such other standing or temporary committees from time to time as they may
see fit, delegating to such committees all or any part of their own powers.
The members of such committees shall be entitled to receive such fees as
the Board may determine.
ARTICLE IV
OFFICERS, AGENTS AND EMPLOYEES
Section 1. Appointment and Term of Office. The executive officers of
the Corporation, shall consist of a Chairman of the Board, a Vice-Chairman,
a Chief Executive Officer, a President, one or more Vice-Presidents, a
Secretary, a Treasurer and a Comptroller, all of whom shall be elected by
the Board of Directors, and shall hold office for one (1) year and until
their successors are chosen and qualified. Any number of such offices may
be held by the same person, but no officer shall execute, acknowledge or
verify any instrument in more than one capacity. Any vacancy occurring in
the office of the Chairman, Chief Executive Officer or President shall be
filed by the Board of Directors. The Chairman, Chief Executive Officer or
President shall be subject to removal without cause only by vote of the
Board of Directors at a special meeting of the Board of Directors called
for that purpose.
The Board of Directors may appoint, and may delegate power to appoint,
such other non-executive officers, agents and employees as it may deem
necessary or proper, who shall hold their offices or positions for such
terms, have such authority and perform such duties as may from time to time
be determined by or pursuant to authorization of the Board of Directors.
Section 2. The Chairman of the Board. The Chairman of the Board
shall be a director and shall preside at all meetings of the Board of
Directors and, in the absence or inability to act of the Chief Executive
Officer, meetings of stockholders and shall, subject to the Board's
direction and control, be the Board's representative and medium of
communication, and shall perform such other duties as may from time to time
be assigned to the Chairman of the Board by the Board of Directors. The
Chairman of the Board shall direct the long-term strategic planning process
of the Corporation and shall also lend his or her expertise to the
President, as may be requested from time to time by the President. The
Chairman shall be a member of the Executive Committee. The Internal
Auditing Department will report directly to the Chairman of the Board.
Section 3. Vice-Chairman. The Vice-Chairman of the Board shall be a
director and shall preside at meetings of the Board of Directors in the
absence or inability to act of the Chairman of the Board or meetings of
stockholders in the absence or inability to act of the Chief Executive
Officer and the Chairman of the Board. The Vice-Chairman shall perform
such other duties as may from time to time be assigned to him or her by the
Board of Directors. The Vice-Chairman shall be a member of the Executive
Committee.
Section 4. Chief Executive Officer. The Chief Executive Officer
shall be a director and shall preside at all meetings of the stockholders,
and, in the absence or inability to act of the Chairman of the Board and
the Vice-Chairman, meetings of the Board of Directors, and shall submit a
report of the operations of the Corporation for the fiscal year to the
stockholders at their annual meeting and from time to time shall report to
the Board of Directors all matters within his or her knowledge which the
interests of the Corporation may require be brought to their notice. The
Chief Executive Officer shall be the chairman of the Executive Committee
and ex officio a member of all standing committees. Where the offices of
President and Chief Executive Officer are held by different individuals,
the President will report directly to the Chief Executive Officer.
Section 5. The President. The President shall be the chief operation
officer of the Corporation. The President shall have general and active
management and direction of the affairs of the Corporation, shall have
supervision of all departments and of all officers of the Corporation,
shall see that the orders and resolutions of the Board of Directors and of
the Executive Committee are carried into effect, and shall have the general
powers and duties of supervision and management ususally vested in the
office of President of a corporation. All corporate officers and functions
except those reporting to the Chairman of the Board or Chief Executive
Officer shall report directly to the President.
Section 6. The Vice-Presidents. The Vice-Presidents shall perform
such duties as the Board of Directors shall, from time to time, require.
In the absence or incapacity of the President, the Vice-President
designated by the President or Board of Directors or Executive Committee
shall exercise the powers and duties of the President.
Section 7. The Secretary. The Secretary shall attend all meetings of
the Board of Directors, of the Executive Committee and any other committee
of the Board of Directors and of the stockholders and act as clerk thereof
and record all votes and the minutes of all proceedings in a book to be
kept for that purpose, and shall perform like duties for the standing
committees when required.
The Secretary shall keep in safe custody the seal of the corporation
and, whenever authorized by the Board of Directors or the Executive
Committee, affix the seal to any instrument requiring the same.
The Secretary shall see that proper notice is given of all the
meetings of the stockholders of the Corporation and of the Board of
Directors and shall perform such other duties as may be prescribed from
time to time by the Board of Directors, the Chairman, the Chief Executive
Officer, or by the President.
Section 8. The Treasurer. The Treasurer shall be the financial
officer of the Corporation, shall keep full and accurate accounts of all
collections, receipts and disbursements in books belonging to the
corporation, shall deposit all moneys and other valuables in the name and
to the credit of the Corporation, in such depositories as may be directed
by the Board of Directors, shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, the Chairman, the Chief Executive
Officer, or the President, taking proper vouchers therefor, and shall
render to the President, the Chief Executive Officer, the Chairman, and/or
directors at all regular meetings of the Board, or whenever they may
require it, and to the annual meeting of the stockholders, an account of
all his or her transactions as Treasurer and of the financial condition of
the Corporation.
The Treasurer shall also perform such other duties as the Board of
Directors, the Chairman, the Chief Executive Officer, or the President may
from time to time require.
If required by the Board of Directors, the Treasurer shall give the
Corporation a bond in a form and in a sum with surety satisfactory to the
Board of Directors for the faithful performance of the duties of his or her
office and the restoration to the Corporation in the case of his or her
death, resignation or removal from office of all books, papers, vouchers,
money and other property of whatever kind in his or her possession
belonging to the Corporation.
Assistant Treasurers. At the request of the Treasurer, or in his or
her absence or inability to act, the Assistant Treasurer or, if there be
more than one, the Assistant Treasurer designated by the Treasurer, shall
perform the duties of the Treasurer and when so acting shall have all the
powers of and be subject to all the restrictions of the Treasurer. The
Assistant Treasurers shall perform such other duties as may from time to
time be assigned to them by the President, the Treasurer, or the Board of
Directors.
Section 9. The Comptroller. The Comptroller shall have control over
all accounts and records of the Corporation pertaining to moneys,
properties, materials and supplies. He or she shall have executive
direction over the bookkeeping and accounting departments and shall have
general supervision over the records in all other departments pertaining to
moneys, properties, materials and supplies. He or she shall have such
other powers and duties as are incident to the office of the Comptroller of
a corporation and shall be subject at all times to the direction and
control of the Board of Directors, the Chairman, the Chief Executive
Officer, the President or a Vice President.
Assistant Comptrollers. At the request of the Comptroller, or in his
or her absence or inability to act, the Assistant Comptroller or, if there
be more than one, the Assistant Comptroller designated by the Comptroller,
shall perform the duties of the Comptroller and when so acting shall have
all powers of and be subject to all the restrictions of the Comptroller.
The Assistant Comptrollers shall perform such other duties as may from time
to time be assigned to them by the President, the Comptroller, or the Board
of Directors.
Section 10. Compensation and Bond. The compensation of the officers
of the Corporation shall be fixed by the Compensation Committee of the
Board of Directors, but this power may be delegated to any officer in
respect of other officers under his or her control. The Corporation may
secure the fidelity of any or all of its officers, agents or employees by
bond or otherwise.
ARTICLE V
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES, AND AGENTS
Section 1.(A) Indemnification of Directors, Officers, Employees, and
Agents. The Corporation shall indemnify or agree to indemnify any person
who was or is a party or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, other than an action by
or in the right of the Corporation, by reason of the fact that he is or was
a director, officer, employee, or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, trustee, officer,
employee, or agent of another corporation, domestic or foreign, nonprofit
or for profit, partnership, joint venture, trust, or other enterprise,
against expenses, including attorney's fees, judgments, fines, and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit, or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests
of the Corporation and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation and, with respect to
any criminal action or proceeding, he had reasonable cause to believe that
his conduct was unlawful.
(B) The Corporation shall indemnify or agree to indemnify any
person who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that
he is or was a director, officer, employee, or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, trustee,
officer, employee, or agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, joint venture, trust, or other
enterprise, against expenses, including attorney's fees, actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Corporation,
except that no indemnification shall be made in respect of any of the
following:
(1) Any claim, issue, or matter as to which such
person is adjudged to be liable for negligence or
misconduct in the performance of his duty to the
Corporation unless, and only to the extent that the
court of common pleas, or the court in which such
action or suit was brought determines upon application
that, despite the adjudication of liability, but in
view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnify for such
expenses as the court of common pleas or such other
court shall deem proper.
(2) Any action or suit in which the only liability
asserted against a director is pursuant to Section
1701.95 of the Revised Code.
(C) To the extent that a director, trustee, officer, employee,
or agent has been successful on the merits or otherwise in defense of any
action, suit, or proceedings referred to in the foregoing paragraphs of
this Article, or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses, including attorney's fees, actually
and reasonably incurred by him in connection with the action, suit, or
proceeding.
(D) Any indemnification under Paragraphs (A) and (B) of Section
1 of this Article, unless ordered by a court, shall be made by the
Corporation only as authorized in the specific case upon a determination
that indemnification of the director, trustee, officer, employee, or agent
is proper in the circumstances because he has met the applicable standard
of conduct set forth in such Paragraphs (A) and (B). Such determination
shall be made as follows: (1) by a majority vote of quorum consisting of
directors of the indemnifying Corporation who were not and are not parties
to or threatened with any such action, suit, or proceeding; (2) if the
quorum described in (D)(1) of this Section is not obtainable or if a
majority vote of a quorum of disinterested directors so directs, in a
written opinion by independent legal counsel other than an attorney, or a
firm having associated with it an attorney, who has been retained by or who
has performed services for the Corporation or any person to be indemnified
within the past five (5) years; (3) by the stockholders; or (4) by the
court of common pleas or the court in which such action, suit, or
proceeding was brought.
Any determination made by the disinterested directors under
(D)(1) of this Section or by independent legal counsel under (D)(2) of this
Section shall be promptly communicated to the person who threatened or
brought the action or suit by or in the right of the Corporation under (D)
of this Section, and within ten (10) days after receipt of such
notification, such person shall have the right to petition the court of
common pleas or the court in which such action or suit was brought to
review the reasonableness of such determination.
Section 2. Advances for Litigation Expenses May Be Made. Expenses,
including attorney's fees, incurred by a director, trustee, officer ,
employee, or agent in defending any action, suit, or proceeding referred to
in Section 1 of this Article, may be paid by the Corporation as they are
incurred in advance of the final disposition of the action, suit, or
proceeding as authorized by the directors in the specific case upon receipt
of an undertaking by or on behalf of the director, trustee, officer,
employee, or agent to repay such amount, if it ultimately is determined
that he is not entitled to be indemnified by the Corporation.
Section 3. Indemnification Nonexclusive. The indemnification
provided by this Article shall not be exclusive of, and shall be in
addition to, any other rights granted to those seeking indemnification
under these Regulations, any agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be a director, trustee,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
Section 4. Indemnity Insurance. The Corporation may purchase and
maintain insurance or furnish similar protection, including but not limited
to trust funds, letters of credit, or self-insurance, on behalf of or for
any person who is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, trustee, officer, employee, or agent of another corporation,
domestic or foreign, nonprofit or for profit, partnership, joint venture,
trust, or other enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him
against such liability under this Section. Insurance may be purchased from
or maintained with a person in which the Corporation has a financial
interest.
Section 5. Payments of Expenses Not Limited. The indemnification
provided by Section 1.(A) and 1.(B) of this Article does not limit the
payment of expenses as they are incurred, indemnification, insurance, or
other protection that may be provided pursuant to Sections 2, 3, and 4 of
this Article. Sections 1.(A) and 1.(B) of this Article do not create any
obligation to repay or return payments made by the Corporation pursuant to
Sections 2, 3, or 4 of this Article.
Section 6. Survival of Indemnification. As used in this Article,
references to "Corporation" include all constituent corporations in a
consolidation or merger and the new or surviving corporation, so that any
person who is or was a director, officer, employee, or agent of such a
constituent corporation, or is or was serving at the request of such
constituent corporation, domestic or foreign, nonprofit or for profit,
partnership, joint venture, trust, or other enterprise, shall stand in the
same position under this Article with respect to the new or surviving
corporation as he would if he had served the new or surviving corporation
in the same capacity.
ARTICLE VI
CAPITAL STOCK
Section 1. Form and Execution of Certificates. The certificates for
shares of the stock of the Corporation shall be of such form and content,
not inconsistent with the law and the Articles of Incorporation, as shall
be approved by the Board of Directors. The certificates shall be signed by
the Chairman or by the President or a Vice-President and also by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer. All certificates shall be consecutively numbered in each class
of shares. The name and address of the person owning the shares
represented thereby, with the number of such shares and the date of issue,
shall be entered on the Corporation's books.
Section 2. Transfer of Shares. Transfer of shares shall be made upon
the books of the Corporation and before a new certificate is issued the old
certificates shall be surrendered for cancellation.
Section 3. Closing of Transfer Books or Taking Record of
Stockholders. The Board of Directors may fix a time not exceeding forty-five
(45) days preceding the date of any meeting of stockholders or any
dividend payment date or any date for the allotment of rights as a record
date for the determination of the stockholders entitled to notice of such
meeting or to vote thereat or to receive such dividends or rights as the
case may be; or the Board of Directors may close the books of the
Corporation against transfer of shares during the whole or any part of such
period.
Section 4. Lost Stock Certificates. In the case of a lost stock
certificate a new stock certificate may be issued in its place upon proof
of such loss, destruction or mutilation and upon the giving of a
satisfactory bond of indemnity to the Corporation and/or to the transfer
agent and registrar of such stock, if any, in such sum and under such terms
as the Board of Directors may provide.
ARTICLE VII
DIVIDENDS
Section 1. Dividends. Dividends may be declared by the Board of
Directors and paid in cash, shares, or other property out of the annual net
income of the Corporation or out of its net assets in excess of its
capital, computed in accordance with the state statutes and subject to the
conditions and limitations imposed by the Articles of Incorporation.
Before payment of any dividends or making distribution of any profits
there may be set apart out of the excess of assets available for dividends
such sum or sums as the Board of Directors from time to time in their
absolute discretion think proper as a reserve fund for any proper purpose.
ARTICLE VIII
FISCAL YEAR
Section 1. Fiscal Year. The fiscal year of the Corporation shall
begin on the first day of January and terminate on the thirty-first day of
December in each year.
ARTICLE IX
CONTRACTS, CHECKS, NOTICES, ETC.
Section 1. Contracts, Checks, Notices, Etc. The Board of Directors
or the Finance Committee may by resolution adopted at any meeting designate
officers of the Corporation who may in the name of the Corporation execute
contracts, checks, drafts, and order for the payment of money in its behalf
and, in the discretion of the Board of Directors or the Finance Committee,
such officers may be so authorized to sign such contracts or checks singly
without the necessity of counter-signature.
ARTICLE X
NOTICE AND WAIVER OF NOTICE
Section 1. Notice and Waiver of Notice. Any notice required to be
given by these Regulations to a director or officer may be given in
writing, personally served or through the United States Mail, or by
telephone, telegram, cablegram or radiogram, and such notice shall be
deemed to be given at the time when the same shall be thus transmitted.
Any notice required to be given by these Regulations may be waived by the
person to such notice.
ARTICLE XI
AMENDMENT
Section 1. Amendment. These Regulations may be amended or repealed
at any meeting of the stockholders of the Corporation by the affirmative
vote of the holders of record of shares entitling them to exercise a
majority of the voting power on such proposal, or, without a meeting, by
the written consent of the holders of record of shares entitling them to
exercise two-thirds of the voting power on such proposal.
<PAGE>
EXHIBIT A-3
File No. 70-8767
FORM OF COMMON STOCK CERTIFICATE
OF COOLCO/HEATCO
Incorporated Under The Laws Of The State Of Ohio
Number Shares
[CoolCo/HeatCo]
This Certifies that _____________ is the owner of __________ fully paid and
non-assessable shares of [CoolCo/HeatCo] transferable only on the books of
the Corporation by the holder hereof in person or by Attorney upon
surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its corporate seal to be
hereunto affixed.
Dated:
___________ ____________
President Secretary
[Reverse Side of Certificate]
For Value Received, _________ hereby sell, assign and transfer unto
_________ of the Shares represented by the within Certificate, and do
hereby irrevocably constitute and appoint ________ attorney to transfer the
said shares on the books of the within named Corporation, with full power
of substitution in the premises.
Dated: ________, 19___
In presence of _________
<PAGE>
EXHIBIT D-1
THIS CONTRACT is entered into by and between the City of Cincinnati and
Cinergy Technology, Inc. on this day of , 199 .
As used in this agreement the following words and terms have the following
meanings:
"CITY" means the City of Cincinnati, an Ohio Municipal Corporation.
"Grantee" means Cinergy Technology, Inc., an Indiana for profit
corporation, and any successor or assign of Cinergy Investments, Inc. to
this agreement.
"Street" means the surface of, the space below and above, any public right-of-
way, or City owned street, road, alley, highway, sidewalk, or bridge.
"Street" also includes any other property owned by City.
"Agreement" or "Franchise" refer to the rights and obligations permitted by
this contract.
"System" means the chilled water plant or plants, pipes, manholes and the
appurtenances of the chilled water facilities Grantee constructs under this
agreement.
"Gross Revenue" means all income received by Grantee, or any company
related to Grantee, for the sale of chilled water within the operating area
described Section 1A. Gross Revenue includes all sundry revenue received
by Grantee, or any related company, such as tap in fees and service
charges. Gross Revenue does not include income received from the sale of
equipment, provided that the equipment sale is not used as an off set to or
a subsidy of the sale of chilled water. Gross Revenue does not include the
sale of chilled water not associated with or connected to the System.
Section 1. NATURE AND TERM OF GRANT
A. City does hereby grant to Grantee a nonexclusive right to construct,
operate and maintain a chilled water system in the Streets of Cincinnati
bounded by and including Eggleston Avenue on the east, Central Avenue on
the west, Central Parkway on the north and to the banks of the Ohio River
on the south. City will give Grantee the right to install pipes on the
Streets delineated on Grantee's master plan; said plan will be given to
City by December 31, 1995 or three business days prior to the execution of
this agreement, whichever comes first. The master plan will give the
approximate horizontal and vertical location of Grantee's facilities in
Street. The parties acknowledge that the exact location may vary as field
locations dictate Grantee shall provide City with more detailed plans of
the location of its facilities by March 1, 1996. Grantee must have said
pipes installed by December 31, 2000. Nothing contained herein shall
prevent City from permitting another provider to install a System in a
Street if there is adequate space in said Street in addition to what is
required by Grantee's master plan. Grantee acknowledges that the City is
concerned with disruptions to business and traffic and to the overcrowded
condition of the Street's subsurface area. Therefore, Grantee acknowledges
that no pipe shall be installed in a City Street without the prior approval
of the City Engineer, said approval shall not be unreasonably withheld.
B. Grantee shall have the right to operate a chilled water system in the
Streets for a period of twenty-five years commencing with the execution of
this agreement. Five years after execution of this agreement the parties
shall negotiate in good faith to extend this nonexclusive agreement. In
considering a renewal of this agreement City shall consider, among other
things, the adequacy of Grantee's performance and services under this
agreement, Grantee's past and proposed charges for chilled water, City's
economic development needs, and the proposed franchise fees.
Section 2. SALE, TRANSFER OR ASSIGNMENT
Grantee may not sell or transfer the rights under this agreement without
the written consent of City, which shall not be unreasonably withheld.
Prior to any sale or transfer Grantee shall provide City with adequate
information about the acquiring persons' identity, character, competence in
the chilled water business and financial ability to operate the System.
Any sale, transfer, or assignment of the rights under this agreement shall
be binding on Grantee's purchaser, transferee, or assignee. The City's
granting of consent in one instance shall not render unnecessary any
subsequent consent in any other instance.
Nothing contained herein shall be deemed to prohibit the mortgage, pledge
or assignment of Grantee's System for purposes of financing the
construction and operation of the System. Nor shall anything in this
section preclude Grantee from selling or assigning this contract or
transferring the rights under this contract to an associated organization
of Grantee. If such a sale, assignment or transfer takes place Grantee
shall provide City with any information City may need to ensure compliance
with this agreement.
Section 3. ABANDONMENT
Grantee shall not abandon service under this agreement without giving all
of its affected customers and City at least twelve months written notice,
or a lesser time if all affected customers agree otherwise.
Whenever Grantee intends to abandon all or part of the System, Grantee
shall submit to City a written notice describing the portion of the System
to be abandoned and the anticipated date of abandonment. The part(s) of
the System to be given up must be abandoned in accordance with all
ordinances and regulations of City in effect at the time of abandonment.
Section 4. TERMINATION
Unless renewed, this franchise shall terminate at the end of its term.
Before the end of the franchise term, Cincinnati City Council may terminate
this franchise if it finds, after notice and hearing on record, that
Grantee has abandoned the franchise. In the event that Grantee has
continued service in, and efforts to promote, only a portion of the
franchise's geographical area, the franchise may be terminated only as to
the remaining geographical area.
City recognizes that there may be instances, such as a public works project
or a building demolition or vacancy, which may interrupt the demand for
chilled water services. It is the intent of the parties that such events
not be construed as an abandonment, partial abandonment, or failure to
serve or promote a portion of the geographic area.
Section 5. RATES
Grantee shall provide its goods and services on a nondiscriminatory basis.
Grantee will negotiate its rates by contract with its customers. City will
not request any rate caps.
Should City purchase the products or services of Grantee for any City-owned
building or any building wholly leased by City, Grantee shall provide City
with the lowest rates provided to any of Grantee's customers whose building
has characteristics similar to the building City wants served. Subsequent
to any agreement between City and Grantee, should Grantee provide even
lower rates to a similarly situated customer, then City shall receive these
lower rates.
Section 6. COMPENSATION
A. Grantee shall pay to the Treasurer of the City of Cincinnati fifty-thou-
sand dollars, for the year 1996, within thirty days of the execution of
this agreement. Grantee shall pay to the City Treasurer seventy-five
thousand dollars by January 31, 1997 for the year 1997. Subsequent to
1997, and for so long as this agreement is in effect, Grantee shall pay to
the City Treasurer the sum of seventy-five thousand dollars by January 31
of each year.
B. Subsequent to 1997, the minimum payment shall be $75,000 (as set forth
below). In addition to the aforesaid minimum $75,000, Grantee shall pay to
the City if Grantee's Gross Revenue exceeds $3,750,000, in any one year and
if the franchise is exclusive as follows:
Compensation shall be:
If Gross Revenue is over $3,750,000.00
but not over $4,000,000 $75,000 plus 2% over 750,000
If Gross Revenue is over$4,000,000 but
not over $6,000,000 80,000 plus 3% over $4,000,000
If Gross Revenue is over $6,000,000 but
not over $8,000,000 140,000 plus 3.5% over $
6,000,00
If Gross Revenue is over $8,000,000 but
not over $20,000,000 $210,000 plus 4% over $8,000,000
If over $20,000,000 $690,000 plus 5% over
$20,000,000
C. Subsequent to 1997, the minimum payment shall be $75,000 (as set forth
below). In addition to the aforesaid minimum $75,000, Grantee shall pay to
City if Grantee's Gross Revenue exceeds $3,750,000 in any one year, and if
the franchise is nonexclusive, as follows:
Compensation shall be:
If Gross Revenue is over $3,750,000 but
not over $5,000,000 $75,000 plus 2% over $3,750,000
If Gross Revenue is over $5,000,000 but
not over $8,000,000 $100,000 plus 2.5% over $5,000,000
If Gross Revenue is over $8,000,000 but
not over $10,000,000 $175,000 plus 3% over
$8,000,000
If Gross Revenue is over $10,000,000 but $235,000 plus 3.5% over
not over $20,000,00 $10,000,000
If Gross Revenue is over $20,000,000 $585,000 plus 4% over
$20,000,000
D. Whether the franchise is exclusive or nonexclusive the amount due
beyond the minimum seventy-five thousand dollars shall be paid to the City
Treasurer within 30 days of the end of Grantee's fiscal quarter.
E. Should the franchise be totally abandoned pursuant to Section 3, then
in this event Grantee shall not be liable for the seventy-five thousand
dollar minimum fee in years succeeding the total abandonment.
Section 7. AUDITING
The payments mentioned in paragraph 6 shall be to the Treasurer of the City
of Cincinnati. Accompanying each payment, Grantee shall file with the City
Treasurer a report of its calculation of the payment setting forth its
Gross Revenue and the method used to determine Gross Revenue.
All of Grantee's books and records concerning its Gross Revenue and its
calculation of payments to City shall be open for inspection by the
appropriate officer of City, or by City's designee, at all convenient times
to determine the amount of compensation due to City from Grantee under this
agreement.
Section 8. CONSTRUCTION
City reserves the right to authorize the exact location of Grantee's System
within a Street. Grantee shall abide by all City ordinances, rules and
regulations in constructing and maintaining the System. Grantee
acknowledged these ordinances, rules and regulations may change over time
and agrees to abide by all such revisions.
Grantee is responsible for restoration of Streets it may disturb in the
construction, operation, maintenance and abandonment of the System. Said
restoration shall be promptly completed as required by City permit. City
may, after giving written notice (absent an emergency) to Grantee, refill
and/or re-pave any opening caused by Grantee in Street, and the expense
thereof shall be paid by Grantee. City reserves the right, after providing
notice to Grantee, to remove and/or repair any work caused by Grantee
which, in the determination of the City Engineer, is inadequate. The cost
thereof, including the cost of inspection and supervision, shall be paid by
Grantee.
Section 9. RESERVATION OF CITY STREET RIGHTS AND RELOCATION
Nothing in this agreement shall be construed to prevent City from
constructing any public facility, grading, paving, repairing and/or
altering any Street. Whenever City deems its necessary that Grantee's
System in any Street must be relocated for a Governmental Purpose, Grantee,
shall relocate, support and protect, that portion of the System at Grantee'
sole cost. As used herein a "Governmental Purpose" encompasses all
activities defined as a "governmental function" in the current chapter 2744
of the Ohio Revised Code, and more specifically includes Urban Renewal
Projects and any expansion of the Cincinnati Convention Center. In such
event, City shall order the relocation in writing and provide Grantee with
adequate time to complete the relocation. City covenants to cooperate with
Grantee in an effort to minimize Grantee's relocation costs.
Section 10. MAINTENANCE
Grantee covenants to keep System in good operating condition and make
repairs and alterations on a timely basis. Grantee shall make staff
available for emergency repairs on a twenty-four hour basis. Should
Grantee be notified of a pipe leak or excessive vapor discharge Grantee
shall respond to the notice within one hour.
During construction, maintenance, or abandonment Grantee shall provide for
the support and protection of adjacent buildings, governmental and
privately operated facilities.
Grantee shall maintain full participatory membership in the Ohio Utilities
Protection Service so long as it operates System. In addition Grantee
shall provide depth information of its facilities when responding to
requests from the Ohio Utilities Protection Service. Grantee shall provide
City's Permits and Licenses Division with documentation showing that said
membership is current.
Grantee shall provide, at its cost, all available information and
participatory activities requested by the Cincinnati Area Geographic
Information System.
Section 11. ENVIRONMENTAL AND HAZARDOUS SUBSTANCE CONCERNS
In its activities pursued under this agreement, Grantee shall comply with
all rules, regulations, ordinances and statutes concerning the environment,
the use of hazardous materials, noise and the release and control of vapor.
Section 12. AGREEMENT NOT EXCLUSIVE
This agreement is not exclusive. City expressly reserves the right to
grant to other persons or corporations, as well as the right in its own
name as a municipality, to use its Streets for similar or different
purposes allowed Grantee hereunder, except as otherwise provided herein.
Section 13. HOLD HARMLESS AND INSURANCE
A. Grantee acknowledges that despite its best efforts the System may
malfunction causing damage to the property of City. Grantee shall
reimburse City for any damages the City may incur as a result of the
construction, operation, maintenance, existence, replacement or removal of
the System.
Grantee hereby agrees and covenants to indemnify, defend and hold the City,
its officers, agents, and employees harmless from any claim for injury,
damage, loss, cost and expenses, including court and appeals costs, and
reasonable attorney fees arising from any casualty or accident, to person
or property by reason of any act or omission by Grantee done under this
agreement.
The provisions of this section shall not be binding if damages are caused
by an act of City or a third party not an agent of Grantee.
B. Grantee shall maintain in force, for so long as this agreement is in
effect, and available for City inspection, general liability insurance in
the amount of not less than thirty-million dollars. Said insurance shall
cover damages whether they be predicated on Grantee's negligence or on
strict liability.
Section 14. POLICE POWER
City shall retain its power to adopt any applicable ordinances or
regulations as City shall find necessary in the exercise of its police
power; this includes, but is not limited to, City zoning and building
codes.
Section 15. WAIVER
A waiver by City of a breach of this agreement by Grantee is not a waiver
of any future breach by Grantee.
Section 16. REMEDIES
A. Notwithstanding the mutuality requirement of Section 17, if City deems
a matter a material breach, then City may require Grantee to arbitrate the
matter using the procedures set out in paragraph 17. However, a decision
of the arbitrators cannot require the Grantee to terminate any service
provided by the System if contrary to the requirement of the Public
Utilities Commission of Ohio.
B. If a court of competent jurisdiction enters a final unappealable
judgement, or if an arbitration panel as provided herein, finds that
Grantee has practice fraud or deceit upon City then City may terminate all
rights of Grantee arising hereunder; provided, however, that Grantee is not
required to terminate any service if contrary to PUCO requirements.
C. The City shall give Grantee thirty (30) days prior written notice of
its intent to exercise its rights under this Section, stating the reasons
for such action. If Grantee cures the stated reason within the thirty (30)
day notice period, or if the Grantee initiates efforts satisfactory to the
City to remedy the stated violation and the efforts continue in good faith,
the City shall not exercise its remedy rights. If Grantee fails to cure
the stated violation within the thirty (30) day notice period, or if the
Grantee does not undertake efforts satisfactory to the City to remedy the
stated violation, then the City, upon reasonable notice, may impose any or
all of the remedies available under this agreement and in law.
Section 17. ARBITRATION
A. The arbitration procedures provided under this agreement may be
exercised only upon the consent of City and Grantee. The determination of
the arbitrators shall be final and binding upon the City and Grantee.
B. The City may initiate arbitration by sending written notice to Grantee
and the Grantee may initiate arbitration by sending written notice to the
City. The non-initiating party must then consent to arbitration or refuse
arbitration within 15 days from the date notice is received.
C. 1. If arbitration is consented to by both parties, the City and
Grantee shall each select one arbitrator within fifteen (15) days of
receiving notice that arbitration has been consented to.
2. The two arbitrators shall select a third arbitrator within fifteen
(15) days after the appointment of the two arbitrators. If the two
arbitrators are unable to agree upon a third arbitrator within the time
limit, then the third arbitrator shall be appointed by the presiding judge
of the Hamilton County Court of Common Pleas.
D. After all three arbitrators have been selected, they shall each take
an oath to serve neutrally and impartially. The arbitration panel shall
then schedule a date, time and place for hearing the presentations of the
City and the Grantee. The hearing shall occur not more than sixty (60)
days after the appointment of the third arbitrator, unless extended by
mutual agreement of the City and Grantee. The arbitrators shall make a
written report, including findings of fact and conclusions of law, to the
City and the Grantee of their final determination within sixty (60) days
after completion of the hearing.
E. The City and the Grantee shall each pay the cost of the arbitrator it
selected. The cost of the third arbitrator, along with any other costs
associated or arising from the arbitration, shall be divided equally
between the City and the Grantee.
F. In the event that one or both of the parties hereto does not consent
to arbitration, nothing in this section shall be construed as a waiver of
the parties' civil remedies.
Section 18. FORUM FOR LITIGATION
Any litigation between the City and the Grantee arising under or regarding
this agreement shall occur, if in the state courts, in the Hamilton County
Court having jurisdiction thereof, or if in the federal courts, in the
United States District Court for the Southern District of Ohio.
Section 19. NOTICE
Any notice provided for under this agreement shall be sufficient if in
writing and delivered personally to the following addressee or deposited in
the United States Mail, postage prepaid, certified mail, return receipt
requested, addressed as follows, or to such other address as the receiving
party hereafter shall specify in writing:
If to the City: c/o City Manager
City of Cincinnati
City Hall
801 Plum Street
Cincinnati, Ohio 45202
With a Copy to: City Solicitor
City of Cincinnati
Room 214, City Hall
801 Plum Street
Cincinnati, Ohio 45202
- and -
With a Copy to: City Engineer
801 Plum Street
Cincinnati, Ohio 45202
If to the Grantee: William J. Grealis
P.O. Box 960
Cincinnati, Ohio 45201
With a Copy to: Cheryl Foley
P.O. Box 960
Cincinnati, Ohio 45201
Section 20. ABILITY TO RENEGOTIATE
Within one year of execution of the agreement City may, at its discretion,
require that Grantee accept an exclusive franchise for the provision of
chilled water within the geographic area mentioned in Section 1A. In such
event, the compensation paid to City will be as outlined in paragraph six
of this agreement. In such event all other terms and conditions of this
agreement shall remain in full force and effect.
Section 21. HEADQUARTERS
Grantee covenants that the headquarter's personnel of Grantee, or the
headquarter's personnel of the corporate division actually operating
System, shall be located in the City of Cincinnati for at least 10 years
from the date of execution of this agreement.
Section 22. HOT WATER/STEAM OPTION
A. City, at its discretion, retains the right to grant Grantee, and
Grantee accepts the responsibility to construct and operate, an exclusive
franchise to provide hot water and/or steam in the area delineated in
paragraph one. If City exercises this option, and if Grantee has an
exclusive franchise to provide chilled water within the area delineated in
paragraph one, then Grantee shall pay City a total of two-hundred thousand
dollars, within thirty days of the grant of the hot water/steam franchise.
In the event that this option is exercised, any amount paid pursuant to
paragraph 6A for a corresponding year shall be credited. (It is the intent
of the parties that should Grantee receive two exclusive franchises then
Grantee shall pay City a total of $200,000 in the year the hot water/steam
franchise is granted, and a minimum of $100,000 each year thereafter.) In
each year subsequent to the grant of the hot water/steam franchise, and for
so long as this agreement is in effect, Grantee shall pay the City
Treasurer the sum of one-hundred thousand dollars by January 31 of each
year. In addition, Grantee shall pay 4% of its gross revenue exceeding two
million five-hundred thousand dollars.
B. Should City exercise its option hereunder, then in this event the term
"Gross Revenue" shall mean all income received by Grantee, or any company
related to Grantee, for the sale of chilled water, hot water, and/or steam
within the operating area described in Section 1A. Gross Revenue includes
all sundry revenue received by Grantee or any related company, such as tap
in fees and service charges. Gross Revenue does not include income
received from the sale of equipment, provided that the equipment sale is
not used as an offset to or a subsidy of the sale of chilled water, hot
water, and/or steam. Gross Revenue does not include the sale of chilled
water, hot water, and/or steam not associated with or connected to System.
C. The annual minimum payment required under this paragraph shall be paid
on January 31. The amount due beyond the annual minimum payment shall be
paid to the City Treasurer within 30 days of the end of Grantee's fiscal
quarter.
D. Should the hot water/steam franchise granted under this paragraph be
totally abandoned pursuant to paragraph 3 of this agreement, then in this
event Grantee shall be liable for the annual minimum payments in the years
succeeding the abandonment as outlined in paragraph 6A. Should both
franchises be abandoned then Grantee shall not be liable for any minimum
payments in the years succeeding the total abandonment.
E. Should Grantee operate a hot water/steam system as provided in this
paragraph, then with the exceptions of the provisions enumerated in this
paragraph, all provisions of this contract shall be binding on the parties.
F. Should City exercise its options under this paragraph the parties
shall negotiate a time table for the construction and completion of the hot
water/steam system.
RECOMMENDED BY: CITY OF CINCINNATI
By:
Director of Public Works John F. Shirey
City Manager
APPROVED AS TO FORM: CINERGY TECHNOLOGY, INC.
By:
Assistant City Solicitor Jackson Randolph
EXHIBIT D-2
BEFORE
THE PUBLIC UTILITIES COMMISSION OF OHIO
In the Matter of the Application of )
a New Cincinnati District Cooling )
Company for Authority to Issue and ) Case No. 96-126-CC-AIS
Sell up to 100 Shares of No-Par )
Common Stock to its Parent, Cinergy )
Investments, Inc. )
In the Matter of the Application of )
a New Cincinnati District Heating )
Company for Authority to Issue and ) Case No. 96-127-HT-AIS
Sell up to 100 Shares of No-Par )
Common Stock to its Parent, Cinergy )
Investments, Inc. )
JOINT APPLICATION
To the Honorable
The Public Utilities Commission of Ohio:
Cinergy Investments, Inc. ("Investments"), a wholly-owned, non-utility,
sub-holding company subsidiary of Cinergy Corp. ("Cinergy"), a
registered holding company under the Public Utility Holding Company Act of
1935 ("PUHCA"), plans to organize two new Ohio subsidiaries, a new
Cincinnati district cooling company to engage in the district cooling
business ("CoolCo") and a new Cincinnati district heating company to engage
in the district heating business ("HeatCo"). Investments respectfully
represents, on behalf of CoolCo and HeatCo, each of which will be a public
utility as defined by the Ohio Revised Code, the following:
1. CoolCo and HeatCo each will be organized as an Ohio corporation
for the purpose of supplying district cooling and district heating,
respectively, to customers in the metropolitan area of Cincinnati, Ohio.
Accordingly, pursuant to Section 4905.03(A)(9), Ohio Revised Code, CoolCo
will be a cooling company and HeatCo will be a heating company.
2. On January 24, 1996, the City of Cincinnati awarded Cinergy a
non-exclusive franchise to construct, install, maintain and operate a
system for the transmission and supplying of chilled water for cooling
purposes in the downtown central business district of Cincinnati, Ohio.
3. In Cincinnati, as in many other American cities, most large
commercial buildings provide air conditioning from chilled water systems
internal to each building. Currently, the chilled water systems, or
"chillers," in approximately 90% of Cincinnati's downtown office buildings
rely on chlorofluorocarbon, or "CFC," refrigerant to produce the cooling
effect. Studies have established that CFCs are harmful to the earth's
ozone layer, are a potential health hazard and contribute to global
warming. An international treaty has banned the production of CFCs after
1995. Therefore, owners and managers of most large commercial buildings in
downtown Cincinnati are considering whether to retrofit or replace their
existing chillers due to age or environmental considerations; either option
involves major capital expenditures, ranging from hundreds of thousands to
several million dollars.
4. Similarly, a number of the owners and managers of large
commercial buildings in downtown Cincinnati are analyzing whether to
replace the heating systems in their buildings. Many of these systems are
old and approaching the end of their useful lives, are expensive to
replace, use relatively inefficient boilers, occupy a disproportionately
large amount of building space, and raise environmental issues associated
with emission of nitrogen oxides.
5. The installation of district cooling and heating systems in
downtown Cincinnati offers a cost-effective, energy-efficient alternative
for cooling and heating large commercial buildings. The basic concept is
analogous to that of connecting to the electrical distribution system as
opposed to generating one=s own electricity on-site. Under a district
cooling system, rather than each office building supplying its own cooling
needs on a "self-contained" basis, through a chiller located within that
building, the needs of dozens of office buildings may be "outsourced" --
that is, supplied by underground pipes distributing cooled water to the
buildings from a centrally-located chilled water plant operated by a third-
party provider.
6. A district cooling system=s physical infrastructure consists
principally of the central plant itself and the associated distribution
system -- specifically, the network of underground pipes running from the
central plant to the customer buildings (through the supply pipes) and
looping back to the central plant (through the return pipes).
7. Under a district heating system, the distribution system is very
similar to that for a district cooling system, except that the supply and
return pipes are usually smaller than their counterparts in a district
cooling system. Although the central production facilities for combined
district cooling and heating systems can (and in fact tend to) be housed in
the same building, the distribution networks must be physically separate.
In other words, the pipes used to transport and loop the hot water back to
the central plant must be used exclusively for that purpose. However, the
heating and cooling pipes may be nested together in the same trench under
the street surface, or "jointly trenched."
8. District cooling and/or heating systems are in place in over 20
American cities, including Baltimore, Chicago, Indianapolis, Minneapolis,
Nashville, Pittsburgh, San Francisco, St. Louis and three in Ohio (Akron,
Cleveland and Youngstown). In addition, many of these systems have been in
place for a number of years (and even decades for certain heating systems).
9. The economics of district energy systems improve when district
heating is added incrementally to a new district cooling system (and vice
versa), especially if the "backbone" pipes and central plant equipment for
the district heating can be installed at the same time as those for the
district cooling system. Moreover, the installation of combined systems
causes less disruption to city streets and motorists in congested downtown
central business districts. Investments plans to take advantage of the low
incremental cost of installing the heating pipes at the same time as the
cooling pipes.
10. CoolCo and HeatCo will operate as separate companies and will not
share employees or facilities with any other Cinergy operating company.
Cinergy Services, Inc., Cinergy's wholly-owned service company, will
provide services to CoolCo and HeatCo pursuant to a service agreement
approved by the Securities and Exchange Commission under PUHCA.
11. The respective Articles of Incorporation of CoolCo and HeatCo
will provide that each company is authorized to have outstanding 850 shares
of common stock without par value.
12. CoolCo and HeatCo each propose to issue and sell 100 shares of
its no-par common stock to Investments, pursuant to Section 4905.40(A)(1)
and 4905.41(A), Ohio Revised Code. The purpose of these initial issuances
of common shares is for the formation of the respective companies.
13. Construction capital will be acquired by CoolCo and HeatCo
through short-term, interest-bearing, open-account advances from
Investments. At the time CoolCo and HeatCo replace these short-term
advances with the issuance of permanent or long-term securities, they will
comply with applicable approval requirements then in effect.
14. The purpose for issuing these shares is reasonably required for
CoolCo and HeatCo to meet their obligations to provide cooling and heating
services, respectively. The amount of the issuances and their costs are
just and reasonable.
15. The effect the issuances of common stock will have on prospective
revenue requirements for the respective companies can be determined only in
rate proceedings in which all factors relating to revenue requirements are
taken into account according to law. Pursuant to Section 4909.34, Ohio
Revised Code, the City of Cincinnati will have primary jurisdiction over
the rates that will be charged by CoolCo and HeatCo to their customers.
16. CoolCo and HeatCo each will establish its own accounting books
and records in accordance with the Federal Energy Regulatory Commission
Uniform System of Accounts, as adopted by the Commission.
17. Because of the environmental and other considerations discussed
above, potential customers of CoolCo and HeatCo are counting upon district
energy systems having been constructed and ready to commence operation by
not later than March 31, 1997. Construction of the central plant
facilities and distribution piping systems will span an estimated 13
months; consequently, construction must begin as soon as possible. Timely
action by the Commission on this Application is therefore essential.
WHEREFORE, Investments, on behalf of CoolCo and HeatCo, respectfully
requests the Commission to approve this Application.
Respectfully submitted this 6th day of February 1996.
CINERGY INVESTMENTS, INC.
By:/S/Jackson H. Randolph
Chairman of the Board
By:/S/William L. Sheafer
Treasurer
James B. Gainer, Esq.
Jerome A. Vennemann, Esq.
Bradley C. Arnett, Esq.
Cinergy Investments, Inc.
139 East Fourth Street
Cincinnati, Ohio 45202
Attorneys for Cinergy Investments, Inc.
STATE OF OHIO )
COUNTY OF HAMILTON ) ss:
Personally appeared before me Jackson H. Randolph and William L.
Sheafer, who being first duly sworn, say that they are the Chairman of the
Board and the Treasurer, respectively, of Cinergy, Investments, Inc., that
they did sign the foregoing Application, and that the statements contained
therein are true as they verily believe.
Sworn to and subscribed before me this 6th day of February 1996.
_________________________________
Notary Public
EXHIBIT F-1
February 14, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Cinergy Corp., et al.
Application-Declaration in File No. 70-8767
Dear Sirs:
I am Senior Counsel to Cinergy Services, Inc. ("Cinergy Services"), the
service company subsidiary of Cinergy Corp. ("Cinergy"). I am furnishing
this opinion as an exhibit to the Application-Declaration on Form U-1, as
amended by Amendment No.1 of even date herewith, in File No. 70-8767 (the
"U-1") of Cinergy, Cinergy Investments, Inc. ("Investments") and Cinergy
Services. In the U-1, (1) Cinergy and Investments request authority to
establish and finance, in an aggregate principal amount at any time
outstanding not to exceed $100 million through December 31, 2006, two new
subsidiaries (collectively, "EnergyCos") to engage in the district heating
and cooling businesses, respectively, in the greater metropolitan area of
Cincinnati, Ohio; and (2) to the extent, if any, not previously authorized
by the Commission, Cinergy Services requests authorization to provide
certain services to the EnergyCos.
I am of the opinion that each of Cinergy, Investments and Cinergy Services
is, and, upon the incorporation thereof, each EnergyCo will be, a validly
organized and duly existing corporation under the laws of the State of
Delaware or Ohio, as the case may be, and that, upon the issuance of the
Commission's order herein and the receipt of any requisite corporate or
other approvals and authorizations, and in the event that the proposed
transactions are consummated in accordance therewith and in accordance with
the U-1 (including as it may further be amended):
(a) all state laws applicable to the proposed transactions will have been
complied with;
(b) the shares of common stock to be issued by the EnergyCos will be
validly issued, fully paid and nonassessable shares of each such EnergyCo,
and Investments, as the holder thereof, will be entitled to the rights and
privileges appertaining thereto set forth in the articles of incorporation
and by-laws of the EnergyCos;
(c) Investments will legally acquire the shares of common stock of the
EnergyCos referred to in the foregoing paragraph;
(d) any promissory note issued by an EnergyCo will be a valid and binding
obligation of such EnergyCo in accordance with the terms thereof, and any
guarantee issued by Cinergy or Investments in respect thereof will be a
valid and binding obligation of Cinergy or Investments, as applicable; and
(e) the consummation of the transactions described above and of the other
transactions described in the U-1 will not violate the legal rights of the
holders of any securities issued by Cinergy or any associate company
thereof.
I am a member of the bar of the State of Ohio and do not hold myself out as
an expert on the laws of any other state. As to matters involving the laws
of the State of Delaware, I have made or caused to be made a review of such
laws to the extent relevant to this opinion. I hereby consent to the use
of this opinion as an exhibit to the U-1.
Very truly yours,
/s/ Jerome A. Vennemann
Senior Counsel
