-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LYO1f5y6cCyhHUB+/7PY5PjWHtHaGblOWXd2S0xxj4tPsQVfX+9EcMfhi6OH7Ic5 6rA36Qnh8VhN0BDfJqadfw== 0000070145-99-000002.txt : 19990129 0000070145-99-000002.hdr.sgml : 19990129 ACCESSION NUMBER: 0000070145-99-000002 CONFORMED SUBMISSION TYPE: U5S PUBLIC DOCUMENT COUNT: 23 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19990128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL FUEL GAS CO CENTRAL INDEX KEY: 0000070145 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 131086010 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: U5S SEC ACT: SEC FILE NUMBER: 001-03880 FILM NUMBER: 99514726 BUSINESS ADDRESS: STREET 1: 10 LAFAYETTE SQ CITY: BUFFALO STATE: NY ZIP: 14203 BUSINESS PHONE: 7168576980 MAIL ADDRESS: STREET 1: 10 LAFAYETTE SQ STREET 2: 10 LAFAYETTE SQ CITY: BUFFALO STATE: NY ZIP: 14203 U5S 1 NATIONAL FUEL U5S - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. -------------------------- FORM U5S ANNUAL REPORT For the Fiscal Year Ended September 30, 1998 -------------------------- Filed Pursuant to the Public Utility Holding Company Act of 1935 by National Fuel Gas Company 10 Lafayette Square, Buffalo, N.Y. 14203 - -------------------------------------------------------------------------------- NATIONAL FUEL GAS COMPANY ------------------------- FORM U5S - ANNUAL REPORT ------------------------ For the Fiscal Year Ended September 30, 1998 -------------------------------------------- TABLE OF CONTENTS ----------------- Page ---- ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1998 3 ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS 9 ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES 9 ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES 11 ITEM 5. INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES 12 ITEM 6. OFFICERS AND DIRECTORS Part I. Names, principal business address and positions held as of September 30, 1998 13 Part II. Financial connections as of September 30, 1998 17 Part III. Compensation and other related information 17 ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS 22 ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS Part I. Intercompany sales and services (1) Salaries of officers of the Registrant 23 (2) Services rendered by Statutory Subsidiaries 24 (3) Services rendered by Registrant 31 Part II. Contracts to purchase services or goods between any System company and any affiliate 32 Part III. Employment of any person by any System company for the performance on a continuing basis of management services 32 ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES 32 ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS Financial Statements (Index) 36 Exhibits 81 SIGNATURE 90 ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1998 - ------- ----------------------------------------------------------------- Number of Common Percent of Issuer Owner's Name of Company Shares Owned Voting Power Book Value Book Value - --------------- ------------ ------------ ---------- ---------- Registrant: - ---------- (Thousands of Dollars) National Fuel Gas Company (Parent, Company or Registrant) - - - - Statutory Subsidiaries: - ----------------------- National Fuel Gas Distribution Corporation (Distribution Corporation) (Note 1) 2,000 100% $441,556 $441,556 Unsecured Debt (Note 10) - - $402,900 $402,900 National Fuel Gas Supply Corporation (Supply Corporation) (Note 2) 1,013,802 100% $251,221 $251,221 Unsecured Debt (Note 10) - - $176,765 $176,765 Seneca Resources Corporation (Seneca Resources) (Note 3) 100,000 100% $ 83,188 $ 83,188 Unsecured Debt (Note 10) - - $468,900 $468,900 HarCor Energy (Note 11) - - $ 31,597 $ 31,597 Secured Debt (Note 19) - - $ 53,649 $ 62,571 Empire Exploration Company, Empire 1983 Drilling Program, Empire 1983 Joint Venture (Note 12) N/A N/A $ 970 $ 970 Highland Land & Minerals, Inc. (Highland) (Note 4) 4,500 100% $ 4,880 $ 4,880 Unsecured Debt (Note 10) - - $ 2,000 $ 2,000 Utility Constructors, Inc. (UCI) *(Note 5) 1,000 100% $ 2,194 $ 2,194 Data-Track Account Services, Inc. (Data-Track) (Note 6) 1,000 100% $ 704 $ 704 Leidy Hub, Inc. (Leidy Hub) (Note 7) 4,000 100% $ 715 $ 715 Ellisburg-Leidy Northeast Hub Company (Note 7) N/A 50% $ 117 $ 137 National Fuel Resources, Inc. (NFR) (Note 8) 10,000 100% $ 11,309 $ 11,309 Unsecured Debt (Note 10) - - $ 2,200 $ 2,200 Horizon Energy Development, Inc. (Horizon) (Notes 9 and 13-15) 1,250 100% $ 33,856 $ 33,856 Unsecured Debt (Note 10) - - $ 92,700 $ 92,700 Sceptre Power Company *(Note 13) N/A 100% $ 3,326 $ 3,326 Horizon Energy Holdings, Inc. (HEHI)(Note 14) 2,000 100% $120,809 $120,809 Horizon Energy Development B.V. (HED B.V.)(Note 14) 400 100% $ 35,548 $ 35,548 Severoceske teplarny, a.s. (SCT) (Note 14) 937,197 82.7% $ 49,908 $ 46,185 Unsecured Debt (Note 10) - - $ 4,883 $ 4,883 Teplarna Liberec, a.s. (TL) (Note 14) 70 70% $ 11,944 $ 10,773 ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1998 - ------- ----------------------------------------------------------------- (Continued) ----------- Number of Common Percent of Issuer Owner's Name of Company Shares Owned Voting Power Book Value Book Value - --------------- ------------ ------------ --------- ----------- Registrant: - ---------- (Thousands of Dollars) Energoservis Liberec, s.r.o. (EL) (Note 14) N/A 100% $ 3 $ 3 Zkusebna mericu tepla a vodomeru Litomerice, s.r.o. (ZL) (Note 14) N/A 100% $ 3 $ 3 SCT SoftMaker, s.r.o. (SM) (Note 14) N/A 100% $ 126 $ 126 Zatecka teplarenska, a.s. (ZT) (Note 14) 34,200 34% $ 1,309 $ 1,309 AMES MOST, s.r.o. (AM) (Note 14) N/A 100% $ 3 $ 3 Teplo Branany, s.r.o. (TB) (Note 14) N/A 49% $ 2 $ 2 Jablonecka teplarenska a realitni, a.s. (JTR) (Note 14) 340 34% $ 283 $ 283 Prvni severozapadni teplarenska, a.s. (PSZT)(Note 14) 867,102 86.2% $ 61,977 $ 75,833 Unsecured Debt (Note 10) - - $ 63,004 $ 63,004 ENOP Company, s.r.o. (ENOP)(Note 14) N/A 100% $ 901 $ 1,019 Horizon Energy Development, s.r.o. (HED) (Note 14) N/A 100% $ 1,023 $ 1,023 Power Development, s.r.o. (PD) (Note 14) N/A 100% $ 1,813 $ 1,813 Teplarna Kromeriz a.s. (Kromeriz) (Note 14) 1,000 100% $ 659 $ 659 Upstate Energy, Inc. (Upstate) (Note 16) 1,000 100% $ (190) $ (190) Unsecured Debt (Note 10) - - $ 1,100 $ 1,100 Seneca Independence Pipeline Company (SIP) (Note 17) 1,000 100% $ 107 $ 107 Unsecured Debt (Note 10) - - $ 5,600 $ 5,600 Niagara Independence Marketing Company (NIM) (Note 18) 1,000 100% $ 1 $ 1 Notes: *Inactive subsidiary. (1) Distribution Corporation is a public utility that sells natural gas and ------------------------- provides gas transportation service in western New York and northwestern Pennsylvania. (2) Supply Corporation is engaged in the transportation and storage of ------------------- natural gas for affiliated and nonaffiliated companies. (3) Seneca Resources is engaged in the exploration for, and the development ----------------- and purchase of, natural gas and oil reserves in the Gulf Coast of Texas, Louisiana and Alabama, in California, in Wyoming and in the Appalachian region of the United States. In addition, Seneca Resources is engaged in the marketing of timber from its Pennsylvania land holdings. ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1998 - ------- ----------------------------------------------------------------- (Continued) ----------- (4) Highland operates several sawmills and kilns in northwestern -------- Pennsylvania and processes timber from north-central Pennsylvania, primarily high quality hardwoods. (5) UCI discontinued its operations (primarily pipeline construction) in --- 1995 and its affairs are being wound down. (6) Data-Track provides collection services (principally issuing collection ---------- notices) for the subsidiaries of the Company. (7) Leidy Hub is a New York corporation formed to provide various natural --------- gas hub services to customers in the eastern United States through a 50% ownership of Ellisburg-Leidy Northeast Hub Company (a Pennsylvania general partnership). (8) NFR is engaged in the marketing and brokerage of natural gas and --- electricity, and the performance of energy management services for utilities and end-users located in the northeastern United States. (9) Horizon was formed to engage in foreign and domestic energy projects through investment in various business entities (see Notes 13-15). (10) Unsecured debt is presented on page 7. (11) In May 1998, Seneca West Corporation (Seneca West), a wholly-owned subsidiary of Seneca, was merged with and into HarCor Energy Inc. (HarCor), a Delaware Corporation that was organized in May 1987. The merger was accomplished through a tender offer of the outstanding shares of HarCor. HarCor is engaged in the exploration for, and the development of, natural gas and oil reserves located primarily in the San Joaquin Basin in California. (12) In December 1983, Empire Exploration, Inc. (which was subsequently merged into Seneca Resources) established a drilling fund through a series of limited partnerships in which it acts as general partner (See File No. 70-6909). Empire Exploration, Inc.'s aggregate investment in all three limited partnerships amounted to $970,150. (13) Horizon became one of the partners in Sceptre Power Company, a California general partnership, on September 15, 1995. This partnership was dissolved as of December 23, 1996 and is currently winding down operations. (14) Horizon owns 100% of the capital stock of HEHI, a New York corporation which owns 100% of HED B.V. (formerly known as Beheer-en-Beleggingsmaatschappij Bruwabel B.V.). HED B.V. in turn owns 100% of the ownership interests of HED and PD (both Czech corporations). PD owns 100% of the ownership interests of Kromeriz (also a Czech corporation). During fiscal 1997, HED B.V. acquired 36.8% of the outstanding shares of SCT and, during fiscal 1998, increased its ownership interest to 82.7% as of September 30, 1998. SCT owns 100% of the ownership interests of EL, ZL, SM and AM, 70% of the ownership interest of TL, 34% of the ownership interest of ZT, 34% of the ownership interest of JTR and 49% of the ownership interest of TB. All SCT subsidiaries are Czech corporations or limited liability companies. Also during 1998, HED B.V. acquired an 86.2% ownership interest in PSZT which in turn owns 100% of the ownership interests of ENOP. HED B.V. and its subsidiaries are primarily engaged in district heating and power generation operations in the Czech Republic. ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1998 - ------- ----------------------------------------------------------------- (Continued) ----------- (15) At September 30, 1998, Horizon owned 60% of the voting power of Sceptre Kabirwala, L.L.C. (SKLLC) (a Delaware limited liability company) which in turn owned 60% of the voting power of KPP Investment, L.L.C. (KPP) (a Delaware limited liability company. At September 30, 1996, KPP owned 48.19% of the voting stock of Fauji Kabirwala Power Company Limited (FKPCL) (a Pakistan public limited company). During 1997, KPP sold its interest in FKPCL, and SKLLC and KPP have since been dissolved. (16) Upstate (formerly known as Niagara Energy Trading, Inc.) is a New York corporation formed in July 1997 to engage in wholesale natural gas marketing and other energy-related activities. (17) SIP, a Delaware corporation formed in July 1997 purchased a one-third general partnership interest in Independence Pipeline Company (Independence), a Delaware general partnership. Independence, after receipt of regulatory approvals, plans to construct and operate the Independence Pipeline, a 370-mile interstate pipeline system which would transport about 900,000 dekatherms per day of natural gas from Defiance, Ohio to Leidy, Pennsylvania. (18) NIM is a Delaware corporation formed in September 1997 to own a one-third general partnership interest in DirectLink Gas Marketing Company, which will engage in natural gas marketing and related businesses, in part by subscribing for firm transportation capacity on the Independence Pipeline. (19) The senior secured debt of HarCor Energy has an interest rate of 14.875%. However, in accordance with Accounting Principles Board Opinion No. 16, "Business Combinations," at acquisition, Seneca adjusted the senior secured debt to fair market value on the opening balance sheet to reflect an effective interest rate of 5.875% and the projected redemption of this debt in 1999. ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1998 - ------- ----------------------------------------------------------------- (Continued) -----------
Note (10) Unsecured Debt Principal Issuer Owner's Name of Company Amount Book Book (Issuer) Security Owned by Registrant Owed Value Value - --------------- ---------------------------- --------- ------ ------- (Thousands of Dollars) Distribution Corporation Intercompany Notes: 5.72% Due March 1, 1999 $ 50,000 $ 50,000 $ 50,000 6.71% Due February 4, 2000 50,000 50,000 50,000 7.99% Due February 1, 2004 100,000 100,000 100,000 7.46% Due March 30, 2023 49,000 49,000 49,000 8.55% Due July 15, 2024 20,000 20,000 20,000 7.50% Due June 13, 2025 50,000 50,000 50,000 6.26% Due August 12, 2027 30,000 30,000 30,000 5.601% System Money Pool(1) 53,900 53,900 53,900 ---------- ---------- ---------- 402,900 402,900 402,900 ---------- ---------- ---------- Supply Corporation Intercompany Notes: 7.37% Due July 14, 1999 50,000 50,000 50,000 7.99% Due February 1, 2004 25,000 25,000 25,000 8.44% Due November 10, 2012(5) 50,965 50,965 50,965 8.55% Due July 15, 2024 30,000 30,000 30,000 6.26% Due August 12, 2027 10,000 10,000 10,000 5.601% System Money Pool(1) 10,800 10,800 10,800 ---------- ---------- ---------- 176,765 176,765 176,765 ---------- ---------- ---------- Seneca Resources Intercompany Notes: 5.72% Due March 1, 1999 50,000 50,000 50,000 6.39% Due May 27, 2008 120,000 120,000 120,000 6.26% Due August 12, 2027 50,000 50,000 50,000 5.601% System Money Pool(1) 248,900 248,900 248,900 ---------- ---------- ---------- 468,900 468,900 468,900 ---------- ---------- ---------- Highland 5.601% System Money Pool(1) 2,000 2,000 2,300 ---------- ---------- ---------- Horizon Intercompany Notes: 6.26% Due August 12, 2027 10,000 10,000 10,000 6.39% Due May 27, 2008 80,000 80,000 80,000 Lines of credit 5.61%-5.71% 2,700 2,700 2,700 ---------- ---------- ---------- 92,700 92,700 92,700 ---------- ---------- ---------- SCT 14.72%(2) Payable Quarterly Through June 2006 4,524 4,524 4,524 15.00%(3) Payable Quarterly Through December 2000 359 359 359 ---------- ---------- ---------- 4,883 4,883 4,883 ---------- ---------- ---------- PSZT 8.04%(4) Payable March 2000- December 2004 50,596 50,596 50,596 13% Due December 1999 9,908 9,908 9,908 Intercompany Demand Note- 7.24609% 2,500 2,500 2,500 ---------- ---------- ---------- 63,004 63,004 63,004 ---------- ---------- ---------- NFR 5.601% System Money Pool(1) 2,200 2,200 2,200 ---------- ---------- ---------- Upstate Energy 5.601% System Money Pool(1) 1,100 1,100 1,100 ---------- ---------- ----------
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF SEPTEMBER 30, 1998 - ------- ----------------------------------------------------------------- (Concluded) -----------
Note (10) Unsecured Debt Principal Issuer Owner's Name of Company Amount Book Book (Issuer) Security Owned by Registrant Owed Value Value - --------------- ---------------------------- --------- ------ ------- (Thousands of Dollars) -------------------------------- Seneca Independence Pipeline 5.601% System Money Pool(1) 5,600 5,600 5,600 ---------- ---------- ---------- $1,220,052 $1,220,052 $1,220,052 ========== ========== ==========
(1) Interest rate represents weighted average of all short-term securities outstanding at September 30, 1998, pursuant to System money pool arrangement, S.E.C. File No. 70-8297 (Release Nos. 25964, 26076 and 26196). (2) Interest rate is six month PRIBOR (Prague Interbank Offered Rate) plus 1%. (3) Interest rate is Komercni banka, a.s. rate plus 1.5%. (4) Interest rate is six month LIBOR (London Interbank Offered Rate) plus 2.2%. (5) Effective November 19, 1998, Supply Corporation called its $50.965 million note held by the Registrant. Supply Corporation used System Money Pool borrowings to finance the calling of this debt. ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS - ------- --------------------------------------- None during fiscal year ended September 30, 1998. ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES - ------- ----------------------------------------------------------------- 1. Name of Issuer: Upstate Energy, Inc., formerly known as Niagara Energy Trading Inc. Type of Security: Draw on Line of Credit Agreement of $800,000 (issue) Interest Rate: Floating interest rate starting at 5.9% Date of Issue: December 30, 1997 Date of Maturity: January 29, 1998 Consideration: $800,000 Name of Person To Whom Issued: National Fuel Gas Company Exemption: Rule 52 See Form U-6B-2 filed January 23, 1998. 2. Name of Issuer: Upstate Energy, Inc., formerly known as Niagara Energy Trading Inc. Type of Security: Draw on Line of Credit Agreement of $900,000 (issue) Interest Rate: 5.64% Date of Issue: January 29, 1998 Date of Maturity: February 26, 1998 Consideration: $900,000 Name of Person To Whom Issued: National Fuel Gas Company Exemption: Rule 52 See Form U-6B-2 filed May 20, 1998. 3. Name of Issuer: Upstate Energy, Inc., formerly known as Niagara Energy Trading Inc. Type of Security: Draw on Line of Credit Agreement of $300,000 (issue) Interest Rate: 5.66% Date of Issue: January 30, 1998 Date of Maturity: February 26, 1998 Consideration: $300,000 Name of Person To Whom Issued: National Fuel Gas Company Exemption: Rule 52 See Form U-6B-2 filed May 20, 1998. 4. Name of Issuer: Upstate Energy, Inc., formerly known as Niagara Energy Trading Inc. Type of Security: Draw on Line of Credit Agreement of $400,000 (issue) Interest Rate: 5.70% Date of Issue: February 26, 1998 Date of Maturity: March 26, 1998 Consideration: $400,000 Name of Person To Whom Issued: National Fuel Gas Company Exemption: Rule 52 See Form U-6B-2 filed May 20, 1998. 5. Name of Issuer: Seneca Independence Pipeline Company Type of Security: Promissory Note with Principal Amount of $3,500 (issue) Interest Rate: Floating interest rate starting at 5.61% Date of Issue: October 7, 1997 Date of Maturity: February 9, 1998 Consideration: $3,500 Name of Person To Whom Issued: National Fuel Gas Company Exemption: Rule 52 See Form U-6B-2 filed October 17, 1997, as amended. ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES - ------- ----------------------------------------------------------------- (Concluded) ----------- 6. Name of Issuer: Seneca Independence Pipeline Company Type of Security: Promissory Note with Principal Amount of $500,000 (issue) Interest Rate: 5.66% Date of Issue: January 30, 1998 Date of Maturity: March 3, 1998 Consideration: $500,000 Name of Person To Whom Issued: National Fuel Gas Company Exemption: Rule 52 See Form U-6B-2 filed May 20, 1998. 7. Name of Issuer: Seneca Independence Pipeline Company Type of Security: Promissory Note with Principal Amount of $500,000 (renewal) Interest Rate: 5.72% Date of Issue: March 3, 1998 Date of Maturity: March 13, 1998 Consideration: $500,000 Name of Person To Whom Issued: National Fuel Gas Company Exemption: Rule 52 See Form U-6B-2 filed May 20, 1998. 8. Name of Issuer: Seneca Independence Pipeline Company Type of Security: Promissory Note with Principal Amount of $500,000 (renewal) Interest Rate: 5.65% Date of Issue: March 13, 1998 Date of Maturity: March 31, 1998 Consideration: $500,000 Name of Person To Whom Issued: National Fuel Gas Company Exemption: Rule 52 See Form U-6B-2 filed May 20, 1998. 9. Name of Issuer: Horizon Energy Development, Inc. Type of Security: Promissory Note with Principal Amount of $80,000,000 (issue) Interest Rate: 6.39% Date of Issue: May 26, 1998 Date of Maturity: May 27, 2008 Consideration: $80,000,000 Name of Person To Whom Issued: National Fuel Gas Company Exemption: Rule 52 See Form U-6B-2 filed August 31, 1998. 10. Name of Issuer: Seneca Resources Corporation Type of Security: Promissory Note with Principal Amount of $120,000,000 (issue) Interest Rate: 6.39% Date of Issue: May 26, 1998 Date of Maturity: May 27, 2008 Consideration: $120,000,000 Name of Person To Whom Issued: National Fuel Gas Company Exemption: Rule 52 See Form U-6B-2 filed August 31, 1998. 11. Name of Issuer: Prvni severozapadni teplarenska, a.s. (PSZT) Type of Security: Line of Credit Agreement with maximum draw of $40,000,000 (issue) Interest Rate: 6 month LIBOR plus 2% Name of Person To Whom Issued: Horizon Energy Development, Inc. Exemption: Rule 52 See Form U-6B-2 filed August 31, 1998 and Form U-6B-2 filed December 22, 1998. ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES - ------- ---------------------------------------------------------- FISCAL YEAR ENDED SEPTEMBER 30, 1998 ------------------------------------
Name of Company Acquiring, Redeeming Number of Shares or or Retiring Principal Amount Commission ---------------------------- Name of Issuer and Title of Issue Securities Acquired Redeemed Retired Consideration Authorization - --------------------------------- ---------- -------- -------- ------- ------------- ------------- (Thousands of Dollars) ------------------------------------------ Registered Holding Company: - --------------------------- Registrant: 6.42% Note due November 5, 1997 Registrant $ 50,000 $ 50,000 Rule 42 6.08% Note due July 2, 1998 Registrant 50,000 50,000 Rule 42 Seneca Resources: 6.39% Note maturing May 27, 2008 Registrant $120,000 120,000 File No. 70-9153 Horizon: 6.39% Note maturing May 27, 2008 Registrant 80,000 80,000 File No. 70-9153 Subsidiaries of Registered Holding Company: - ------------------------------------------- Distribution Corporation: 6.54% Note due Distribution November 5, 1997 Corporation 7,000 7,000 Rule 42 Supply Corporation: 6.54% Note due Supply November 5, 1997 Corporation 25,000 25,000 Rule 42 Seneca Resources: 6.54% Note due Seneca November 5, 1997 Resources 18,000 18,000 Rule 42 6.22% Note due Seneca July 2, 1998 Resources 50,000 50,000 Rule 42
ITEM 5. INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES - ------- ------------------------------------------------ Number of Aggregate 1. Name of Owner Persons Business of Persons Investment - ---------------- ------- ------------------- ---------- None. ITEM 6. OFFICERS AND DIRECTORS - ------- ---------------------- Part I. Names, principal business address and positions held as of September 30, 1998
Names of System Companies with Which Connected --------------------------------------------------------------------- National National Highland Fuel Gas Fuel Gas Seneca Land & Distribution Supply Resources Minerals, Registrant Corp. Corp. Corp.* Inc. --------------------------------------------------------------------- B. J. Kennedy Buffalo, NY (1) | D,COB,CEO,P,s | D, COB, s | D, COB, s | D, COB, s | s | - ------------------------------------------------------------------------------------------------------------- B. S. Lee Des Plaines, IL (2) | D, df | - | - | - | - | - ------------------------------------------------------------------------------------------------------------- G. L. Mazanec Houston, TX (3) | D, df | - | - | - | - | - ------------------------------------------------------------------------------------------------------------- G. H. Schofield Buffalo, NY (1) | D, df | - | - | - | - | - ------------------------------------------------------------------------------------------------------------- E. T. Mann Buffalo, NY (1) | D, df | - | - | - | - | - ------------------------------------------------------------------------------------------------------------- R. T. Brady Buffalo, NY (4) | D, df | - | - | - | - | - ------------------------------------------------------------------------------------------------------------- W. J. Hill Buffalo, NY (1) | D, df | D | - | - | - | - ------------------------------------------------------------------------------------------------------------- J. V. Glynn Niagara Falls, NY (14)| D, df | - | - | - | - | - ------------------------------------------------------------------------------------------------------------- P. C. Ackerman Buffalo, NY (1) | D, SVP, s | D, P, s | EVP | D, s | D | - ------------------------------------------------------------------------------------------------------------- J. R. Peterson Buffalo, NY (1) | AS, s | - | GC, s | - | - | - ------------------------------------------------------------------------------------------------------------- J. A. Beck Houston, TX (5) | - | - | - | D, P, s | P, D | - ------------------------------------------------------------------------------------------------------------- W. M. Petmecky Houston, TX (5) | - | - | - | SVP, S, s | S | - ------------------------------------------------------------------------------------------------------------- D. A. Brown Houston, TX (5) | - | - | - | VP, s | - | - ------------------------------------------------------------------------------------------------------------- G. E. Klefstad Houston, TX (5) | - | - | - | VP | - | - ------------------------------------------------------------------------------------------------------------- E. E. Wassell Houston, TX (5) | - | - | - | VP, s | - | - ------------------------------------------------------------------------------------------------------------- J. F. McKnight Houston, TX (5) | - | - | - | VP, s | - | - ------------------------------------------------------------------------------------------------------------- C. H. Friedrich Houston, TX (5) | - | - | - | T, AS, s | T | - ------------------------------------------------------------------------------------------------------------- B. L. McMahon Santa Paula, CA (6) | - | - | - | VP | - | - ------------------------------------------------------------------------------------------------------------- A. M. Cellino Buffalo, NY (1) | S, s | VP, s | - | - | - | - ------------------------------------------------------------------------------------------------------------- P. M. Ciprich Buffalo, NY (1) | - | AS, GC, s | - | - | - | - ------------------------------------------------------------------------------------------------------------- W. E. DeForest Buffalo, NY (1) | - | SVP, D, s | s | s | - | - ------------------------------------------------------------------------------------------------------------- B. H. Hale Buffalo, NY (1) | s | - | D, SVP, s | - | - | - ------------------------------------------------------------------------------------------------------------- R. Hare Buffalo, NY (1) | - | - | D, P, s | - | - | - ------------------------------------------------------------------------------------------------------------- R. J. Kreppel Williamsville, NY (21)| - | - | - | - | - | - ------------------------------------------------------------------------------------------------------------- J. P. Pawlowski Buffalo, NY (1) | T, s | D, SVP, T, s | T, S, s | s | - | - ------------------------------------------------------------------------------------------------------------- J. R. Pustulka Buffalo, NY (1) | - | - | VP, s | - | - | - ------------------------------------------------------------------------------------------------------------- J. D. Ramsdell Buffalo, NY (1) | - | VP, s | - | - | - | - ------------------------------------------------------------------------------------------------------------- W. A. Ross Buffalo, NY (1) | - | - | D, VP, s | - | - | - ------------------------------------------------------------------------------------------------------------- D. J. Seeley Buffalo, NY (1) | - | SVP, D, s | - | - | - | - ------------------------------------------------------------------------------------------------------------- D. F. Smith Buffalo, NY (1) | - | SVP, D, S, s | s | D, s | - | - ------------------------------------------------------------------------------------------------------------- R. J. Tanski Buffalo, NY (1) | - | VP, C, s | - | - | - | - ------------------------------------------------------------------------------------------------------------- G. T. Wehrlin Buffalo, NY (1) | C, s | SVP, D, s | s | C, s | - | - ------------------------------------------------------------------------------------------------------------- R. W. Wilcox Buffalo, NY (1) | - | VP, s | s | s | s | - ------------------------------------------------------------------------------------------------------------- R. J. Wright Buffalo, NY (1) | - | VP, s | s | s | s | - ------------------------------------------------------------------------------------------------------------- C. M. Carlotti Erie, PA (25)| - | VP, s | - | - | - | - -------------------------------------------------------------------------------------------------------------
Position Symbol Key ----------------------------------------------------------------- COB - Chairman of the Board of Directors df - Director's Fees CEO - Chief Executive Officer S - Secretary P - President AS - Assistant Secretary EVP - Executive Vice President C - Controller SVP - Senior Vice President D - Director VP - Vice President s - Salary GC - General Counsel T - Treasurer See page 16 for Notes.
Upstate Energy Inc. Data- (Formerly Track National Horizon Niagara Niagara Seneca Utility Account Fuel Energy Energy Independence Independence Constructors Services, Resources, Development, Leidy Hub, Trading Marketing Pipeline Inc. Inc. Inc. Inc.** Inc. *** Inc.) Co.**** Co. - --------------------------------------------------------------------------------------------------------- COB | s | s | - | D | - | D, COB | D, COB | - --------------------------------------------------------------------------------------------------------- - | - | - | - | - | - | - | - | - --------------------------------------------------------------------------------------------------------- - | - | - | - | - | - | - | - | - --------------------------------------------------------------------------------------------------------- - | - | - | - | - | - | - | - | - --------------------------------------------------------------------------------------------------------- - | - | - | - | - | - | - | - | - --------------------------------------------------------------------------------------------------------- - | - | - | - | - | - | - | - | - --------------------------------------------------------------------------------------------------------- - | - | - | - | - | - | - | - | - --------------------------------------------------------------------------------------------------------- - | - | - | - | - | - | - | - | - --------------------------------------------------------------------------------------------------------- D | D, P | - | P, D, s | - | - | - | - | - --------------------------------------------------------------------------------------------------------- - | - | - | - | - | - | - | S | - --------------------------------------------------------------------------------------------------------- P, D | - | - | - | - | P, D | D, P | - | - --------------------------------------------------------------------------------------------------------- S | - | S, T | - | - | S | S | - | - --------------------------------------------------------------------------------------------------------- - | - | - | - | - | - | - | - | - --------------------------------------------------------------------------------------------------------- - | - | - | - | - | - | - | - 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* Directors of Seneca's sole subsidiary are as follows: HarCor Energy, Inc. - ------------------- Board of Directors and Officers: P. C. Ackerman (Director and President) Buffalo, NY (1) J. A. Beck (Director) Houston, TX (5) D. F. Smith (Director) Buffalo, NY (1) J. F. McKnight (Secretary) Houston, TX (5) C. H. Friedrich (Treasurer) Houston, TX (5) ** Directors of Horizon's subsidiaries are as follows: Horizon Energy Holdings, Inc. - ----------------------------- Board of Directors and Officers: P. C. Ackerman (Director and President) Buffalo, NY (1) B. H. Hale (Vice President) Buffalo, NY (1) G. T. Wehrlin (Vice President) Buffalo, NY (1) R. J. Tanski (Secretary and Treasurer) Buffalo, NY (1) Horizon Energy Development, B.V. - -------------------------------- Managing Directors: B. H. Hale Buffalo, NY (1) G. T. Wehrlin Buffalo, NY (1) Hirsch Gebouw (Intra Beheer B.V.) Amsterdam, The Netherlands (8) Horizon Energy Development, s.r.o. - ---------------------------------- Managing Director: B. H. Hale Buffalo, NY (1) Power Development, s.r.o. - ------------------------- Managing Director: B. H. Hale Buffalo, NY (1) Teplarna Kromeriz, a.s. - ----------------------- Directors: Lubos Jarolimek Prague, Czech Republic (7) Jiri Stipek Prague, Czech Republic (7) Severoceske teplarny, a.s. - -------------------------- Board of Directors: P. C. Ackerman Buffalo, NY (1) B. H. Hale Buffalo, NY (1) Lubos Jarolimek Prague, Czech Republic (7) B. J. Kennedy Buffalo, NY (1) Zdenek Kozesnik Most, Czech Republic (15) R. J. Tanski Buffalo, NY (1) Josef Vanzura Most, Czech Republic (15) E. Volkmann Most, Czech Republic (15) G. T. Wehrlin Buffalo, NY (1) Teplarna Liberec, a.s. - ---------------------- Board of Directors: Jiri Drda Liberec, Czech Republic (16) Lubos Jarolimek Prague, Czech Republic (7) Jiri Jezek Liberec, Czech Republic (16) Zdenek Kozesnik Most, Czech Republic (16) Energoservis Liberec, s.r.o. - ---------------------------- Executive: Jiri Samler Liberec, Czech Republic (17) Zateca teplarenska, a.s. - ------------------------ Board of Directors: Bohuslav Kunes Zatec, Czech Republic (18) Josef Marik Zatec, Czech Republic (18) Jiri Sachl Zatec, Czech Republic (18) SCT SoftMaker, s.r.o. - --------------------- Executive: Zdenek Tapsik Most, Czech Republic (19) Zkusebna mericu tepla a vodomeru Litomerice, s.r.o. - --------------------------------------------------- Executive: Karel Stejskal Litomerice, Czech Republic (20) See page 16 for Notes Ames Most, s.r.o. - ----------------- Managing Director: Jiri Bretfeld Most, Czech Republic (15) Teplo Branany, s.r.o. - --------------------- Managing Directors: R. Jiruska Branany, Czech Republic (24) V. Krupka Branany, Czech Republic (24) Jablonecka teplarenska a realitni, a.s. - --------------------------------------- Board of Directors: J. Cerovsky Jablonec, Czech Republic (22) Josef Vanzura Most, Czech Republic (15) Lubos Jarolimek Prague, Czech Republic (7) J. Drabek Jablonec, Czech Republic (22) Prvni severozapadni teplarenska, a.s. - ------------------------------------- Board of Directors: Lubos Jarolimek Prague, Czech Republic (7) Stefan Pallay Most, Czech Republic (23) B. H. Hale Buffalo, NY (1) G. T. Wehrlin Buffalo, NY (1) P. C. Ackerman Buffalo, NY (1) B. J. Kennedy Buffalo, NY (1) R. J. Tanski Buffalo, NY (1) Jiri Sulc Most, Czech Republic (23) ENOP Company, s.r.o. - -------------------- Managing Directors: Miloslav Kaftan Most, Czech Republic (23) Stefan Pallay Most, Czech Republic (23) Roman Kocar Most, Czech Republic (23) *** Directors of Leidy Hub's sole subsidiary is as follows: Ellisburg-Leidy Northeast Hub Company - ------------------------------------- Executive Committee Members: G. T. Wehrlin Buffalo, NY (1) B. Heine Buffalo, NY (1) S. Bergstrom NGC Corporation (9) E. Werneke NICOR, Inc. (10) **** NIM's sole subsidiary is the following general partnership: DirectLink Gas Marketing Company - -------------------------------- Management Committee Members: D. A. Rowekamp Buffalo, NY (1) J. A. Brett MIDCON (11) C. Smith ANR (12) D. Jones Williams (13) Notes (1) National Fuel Gas Company, 10 Lafayette Square, Buffalo, New York 14203 (2) Institute of Gas Technology, 1700 So. Mt. Prospect Road, DesPlaines, IL 60018-1804 (3) Duke Energy Corporation, P.O. Box 1642, Houston, TX 77251-1642 (4) Moog Inc., Plant 24/Seneca at Jamison Rd., East Aurora, NY 14052-0018 (5) Seneca Resources Corporation, 1201 Louisiana Street, Suite 400, Houston, Texas 77002 (6) Seneca Resources Corporation, P.O. Box 630, Sanata Paula, CA 93061-0630 (7) Horizon Energy Development, s.r.o., Maiselova 15, Praha 1 - Josefov, 11000, Czech Republic (8) Intra Beheer B.V., Leidseplein 29, 1017 PS, Amsterdam, The Netherlands (9) NGC Corporation, 1000 Louisiana Street, Suite 5800, Houston, TX 77002-5050 (10) NICOR, Inc., 1844 Ferry Road, Naperville, IL 60563-9600 (11) MGS Marketing Corp., 3200 Southwest Freeway, Houston, TX 77027 (12) Coastal Gas Marketing DirectLink Corp., 9 Greenway Plaza, 22nd Floor, Houston, TX 77046 (13) Williams Independence Marketing Company, One Williams Center, Tulsa, Oklahoma 74172 (14) Maid of the Mist Corporation, 151 Buffalo Avenue, Niagara Falls, New York 14303 - Effective December 17, 1997 (15) Severoceske Teplarny, a.s., Jaroslava Seiferta 2179, 434 01 Most, Czech Republic (16) Teplarna Liberec, a.s., Dr. Milady Horakove 641/34a, 460 01 Liberec 4, Czech Republic (17) Energoservis Liberec, s.r.o., Zeyerova 296, 460 01 Liberec, Czech Republic (18) Zatecka teplarenska, a.s., Svatovaclavska 1020, 438 34 Zatec, Czech Republic (19) SCT SoftMaker, s.r.o., Seifertova 2179, 434 00 Most, Czech Republic (20) Zkusebna mericu tepla a vodomeru Litomerice, s.r.o., k vytopne 1978, 412 01 Litomerice, Czech Republic (21) National Fuel Resources, Inc., 165 Lawrence Bell Drive, Williamsville, NY 14221 (22) Jablonecka teplarenska a realitni, a.s., Liberecka 104 Jablonec nad Nisou, Czech Republic (23) Prvni severozapadni teplarenska, a.s., Komorany, 434 03 Most 3, Czech Republic (24) Teplo Branany, s.r.o., Bilinska 76 Branany, Czech Republic (25) National Fuel Gas Company, 800 State Street, Erie, PA 16501 Item 6. OFFICERS AND DIRECTORS (Continued) - ------- ---------------------------------- Part II. Financial connections as of September 30, 1998: Position Held Applicable Name of Officer Name and Location of in Financial Exemption or Director Financial Institution Institution Rule - --------------- --------------------- ------------- ---------- R. T. Brady Manufacturers and Traders Trust Company, Buffalo, New York Director 70 (a) M&T Bank Corporation, Buffalo, New York Director 70 (a) B. J. Kennedy Marine Midland Bank Buffalo, New York Director 70 (a) G. L. Mazanec Northern Trust Bank of Texas, NA Director 70 (a) J. V. Glynn Manufacturers and Traders Trust Company, Buffalo, New York Director 70 (a) M&T Bank Corporation, Buffalo, New York Director 70 (a) Part III. Compensation and other related information: (A) Compensation of Directors and Executive Officers: The information required by this item appears under "Directors' Compensation," and "Executive Compensation," on page 6, and pages 9 to 19, respectively, of National Fuel Gas Company Proxy Statement, dated December 31, 1998, included as exhibit A (3) to this Form U5S and is incorporated herein by reference. (B) Interest of executive officers and directors in securities of System Companies including options or other rights to acquire securities: The information required by this item appears under "Security Ownership of Certain Beneficial Owners and Management," on pages 7 and 8 of the National Fuel Gas Company Proxy Statement, dated December 31, 1998, included as Exhibit A(3) of this Form U5S and is incorporated herein by reference. (C) Contracts and Transactions with System Companies: Exhibit No. in Document (Incorporated by Reference as Indicated in Notes) -------------------------- Employment Agreement, dated September 17, 1981, with Bernard J. Kennedy. 10.4 (6) Ninth Extension to Employment Agreement with Bernard J. Kennedy, dated September 19, 1996. 10.6 (8) National Fuel Gas Company 1983 Incentive Stock Option Plan, as amended and restated through February 18, 1993. 10.2 (5) Item 6. OFFICERS AND DIRECTORS (Continued) - ------------------------------------------ Part III. Compensation of Directors and Executive Officers (Continued) National Fuel Gas Company 1984 Stock Plan, as amended and restated through February 18, 1993. 10.3 (5) Amendment to National Fuel Gas Company 1984 Stock Plan, dated December 11, 1996. 10.7 (8) National Fuel Gas Company 1993 Award and Option Plan, dated February 18, 1993. 10.1 (5) Amendment to National Fuel Gas Company 1993 Award and Option Plan, dated October 27, 1995. 10.8 (7) Amendment to National Fuel Gas Company 1993 Award and Option Plan, dated December 11, 1996. 10.8 (8) Amendment to National Fuel Gas Company 1993 Award and Option Plan, dated December 18, 1996. 10 (9) National Fuel Gas Company 1997 Award and Option Plan. 10.9 (8) Change in Control Agreement, dated May 1, 1992, with Philip C. Ackerman. 10.4 (3) Change in Control Agreement, dated May 1, 1992, with Richard Hare. 10.5 (3) Form of Change in Control Agreement, dated May 1, 1992, with Walter E. DeForest, Bruce H. Hale, Joseph P. Pawlowski, Dennis J. Seeley, David F. Smith and Gerald T. Wehrlin and dated March 16, 1995 with James A. Beck. 10.16 (8) Agreement, dated August 1, 1989, with Richard Hare. 10-Q (1) Agreement, dated August 1, 1986, with Joseph P. Pawlowski 10.1 (11) Agreement, dated August 1, 1986, with Gerald T. Wehrlin 10.2 (11) National Fuel Gas Company Deferred Compensation Plan, as amended and restated through May 1, 1994. 10-7 (6) Amendment to National Fuel Gas Company Deferred Compensation Plan, dated September 27, 1995. 10.9 (7) Amendment to National Fuel Gas Company Deferred Compensation Plan, dated September 19, 1996. 10.10 (8) Item 6. OFFICERS AND DIRECTORS (Continued) - ------------------------------------------ Part III. Compensation of Directors and Executive Officers (Continued) National Fuel Gas Company Deferred Compensation Plan, as amended and restated through March 20, 1997. 10.3 (11) Amendment to National Fuel Gas Company Deferred Compensation Plan, dated June 16, 1997 10.4 (11) Amendment No. 2 to the National Fuel Gas Company Deferred Compensation Plan, dated March 13, 1998 10.1 (12) National Fuel Gas Company Tophat Plan, dated March 20, 1997 10 (10) Amendment No. 1 to the National Fuel Gas Company Tophat Plan, dated April 6, 1998 10.2 (12) National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan as amended and restated through November 1,1995. 10.10 (7) National Fuel Gas Company and Participating Subsidiaries 1996 Executive Retirement Plan Trust Agreement II, dated May 10, 1996. 10.13 (8) Amendments to National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan, dated September 18, 1997 10.9 (11) Amended and Restated Split Dollar Insurance and Death Benefit Agreement, dated September 17, 1997, with Philip C. Ackerman 10.5 (11) Amended and Restated Split Dollar Insurance and Death Benefit Agreement, dated September 15, 1997, with Richard Hare. 10.6 (11) Amended and Restated Split Dollar Insurance and Death Benefit Agreement, dated September 15, 1997, with Joseph P. Pawlowski. 10.7 (11) Amended and Restated Split Dollar Insurance and Death Benefit Agreement, dated September 15, 1997, with Gerald T. Wehrlin. 10.8 (11) Death Benefits Agreement, dated August 28, 1991, with Bernard J. Kennedy. 10-TT (2) Amendment to Death Benefit Agreement of August 28, 1991, with Bernard J. Kennedy, dated March 15, 1994. 10.11 (7) Summary of Annual At Risk Compensation Incentive Program. 10.10 (4) Item 6. OFFICERS AND DIRECTORS (Continued) - ------------------------------------------ Part III. Compensation of Directors and Executive Officers (Concluded) Administrative Rules with Respect to At Risk Awards under the 1993 Award and Option Plan. 10.14 (8) Excerpts of Minutes from the National Fuel Gas Company Board of Directors Meeting of December 5, 1991 regarding change in control agreements, non-employee director retirement plan, and restrictions on restricted stock. 10-UU (2) Excerpts from Minutes from the National Fuel Gas Company Board of Directors Meeting of September 19, 1996, regarding compensation of non-employee directors and related amendments of By-Laws. 3.1 (8) Administrative Rules of the Compensation Committee of the Board of Directors of National Fuel Gas Company as amended through December 11, 1996. 10.15 (8) Excerpts of Minutes from National Fuel Gas Company Board of Directors Meeting of February 20, 1997, regarding the Retirement Benefits for Bernard J. Kennedy. 10.10 (11) Excerpts of Minutes from National Fuel Gas Company Board of Directors Meeting of March 20, 1997, regarding the Retainer Policy for Non-Employee Directors. 10.11 (11) (Notes) (1) Incorporated by reference from the Exhibit filed with the Annual Report on Form 10-K for fiscal year ended September 30, 1989 in File No. 1-3880. (2) Incorporated by reference from Exhibit filed with the Annual Report on Form 10-K for fiscal year ended September 30, 1991 in File No. 1-3880. (3) Incorporated by reference from Exhibit filed with the Annual Report on Form 10-K for fiscal year ended September 30, 1992 in File No. 1-3880. (4) Incorporated by reference from Exhibit filed with the Annual Report on Form 10-K for fiscal year ended September 30, 1993 in File No. 1-3880. (5) Incorporated by reference from Exhibit filed with the Quarterly Report on Form 10-Q for quarterly period ended March 31, 1993 in File No. 1-3880. (6) Incorporated by reference from Exhibit filed with the Annual Report on Form 10-K for fiscal year ended September 30, 1994 in File No. 1-3880. (7) Incorporated by reference from Exhibit filed with the Annual Report on Form 10-K for fiscal year ended September 30, 1995 in File No. 1-3880. Item 6. OFFICERS AND DIRECTORS (Concluded) - ------- ---------------------------------- Part III. Compensation of Directors and Executive Officers (Concluded) (8) Incorporated by reference from Exhibit filed with the Annual Report on Form 10-K for fiscal year ended September 30, 1996 in File No. 1-3880. (9) Incorporated by reference from Exhibit filed with the Quarterly Report on Form 10-Q for quarterly period ended December 31, 1996, in File No. 1-3880. (10) Incorporated by reference from Exhibit filed with the Quarterly Report on Form 10-Q for quarterly period ended June 30, 1997, in File No. 1-3880. (11) Incorporated by reference from Exhibit filed with the Annual Report on Form 10-K for fiscal year ended September 30, 1997 in File No. 1-3880. (12) Incorporated by reference from Exhibit filed with the Annual Report on Form 10-K for fiscal year ended September 30, 1998 in File No. 1-3880. (D) Indebtedness to System Companies: None (E) Participation in Bonus and Profit-Sharing Arrangements and Other Benefits: The information required by this item appears under "Directors' Compensation," and "Executive Compensation," on page 6 and pages 9 to 19, respectively, of the National Fuel Gas Company Proxy Statement, dated December 31, 1998, included as exhibit A(3) to this Form U5S and incorporated herein by reference. (F) Rights to Indemnity: The information required by this item appears in Article II, Paragraph 8 of the National Fuel Gas Company By-Laws as amended through September 17, 1998. Such By-Laws are listed as Exhibit B(1)(ii) to this Form U5S and are incorporated herein by reference as indicated. The Company also purchases directors and officers liability insurance coverage with an annual aggregate limit of $135 million, and, in recognition of the scope of the foregoing by-law indemnification, certain other errors and omissions and general liability insurance coverages which are applicable to all employees as insureds, including directors and officers. ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS - ------- ----------------------------------
Amount Name of Recipient Accounts Charged Per Books Fiscal Year Ended Name of Company or Beneficiary Purpose of Disbursing Company September 30, 1998 --------------- ----------------- ------- -------------------------- ------------------ Tabulation showing expenditures, disbursements, or payments during the year, in money, goods or services, directly or indirectly to or for the account of: (1) Any political party, candidate for public office or holder of such office, or any committee or agent therefor: Distribution Corporation N/A *FEDPAC Misc. Income Deductions $6,355 Distribution Corporation N/A *NYPAC Misc. Income Deductions $5,598 Distribution Corporation N/A *PAPAC Misc. Income Deductions $3,254 Supply Corporation N/A *FEDPAC Misc. Income Deductions $2,478 Supply Corporation N/A *NYPAC Misc. Income Deductions $2,144 Supply Corporation N/A *PAPAC Misc. Income Deductions $1,392 * Company labor and expenses relating to administration of political action funds. (2) Any citizens group or public relations counsel: Distribution Corporation Greater Buffalo Partnership Civic Operation Expense $64,480 Distribution Corporation 45 Beneficiaries Civic Operation Expense $36,910 Supply Corporation 23 Beneficiaries Civic Operation Expense $ 6,151 Seneca Resources 4 Beneficiaries Civic Operation Expense $ 1,095
The information called for by instruction 2 to Item 7 was compiled, and memoranda from the applicable System Companies were received and are preserved by the Registrant. ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS - ------- ----------------------------------------- Part I. Intercompany sales and services (1) Salaries of officers of the Registrant
NATIONAL FUEL GAS COMPANY ------------------------- REPORT OF OFFICERS' SALARIES ---------------------------- FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 -------------------------------------------- Distribution Supply Seneca Leidy Data- Parent Corp. Corp. Resources Hub Highland Horizon Track NFR Total ------ ------------ ------ --------- ----- -------- ------- ----- --- ----- B. J. Kennedy $80,574 $296,853 $449,520 $10,602 $ - $2,120 $ - $4,240 $4,241 $848,150 P. C. Ackerman 23,500 376,000 - 61,100 - 4,700 4,700 - - 470,000 A. M. Cellino 7,600 144,400 - - - - - - - 152,000 J. P. Pawlowski 11,450 129,638 58,326 28,173 - 1,109 - 65 239 229,000 G. T. Wehrlin 11,450 30,022 13,507 6,524 6,870 257 160,300 15 55 229,000
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued) - ------- ----------------------------------------------------- Part I. Intercompany sales and services (Continued) (2) Services rendered by Statutory Subsidiaries
DISTRIBUTION CORPORATION ------------------------ REPORT OF INTERCOMPANY SALES AND SERVICES ----------------------------------------- FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 -------------------------------------------- (THOUSANDS OF DOLLARS) ---------------------- Common Expenses ------------------------------------------------------------------------------------- Corporate Materials Industrial Accounts Receiving Company Executive Purchasing Communications Management Accounting Engineering Payable - ----------------- --------- ---------- -------------- ---------- ---------- ----------- ------- Supply Corporation $555 $236 $210 $48 $821 $181 $222 Seneca Resources 295 - 6 - 123 - - UCI - - - - - - - Highland 32 - 1 - 10 - - Data-Track 1 - - - - - - NFR 10 - - - 3 - - Leidy Hub - - - - - - - Horizon - - - - - - - Parent Company - - - - - - - NIM - - - - - - - Upstate Energy - - - - - - - ---- ---- ---- --- ---- ---- ---- $893 $236 $217 $48 $957 $181 $222 ==== ==== ==== === ==== ==== ====
Common Expenses ----------------------------------------------------------------------------------- Data Human Government Benefit Receiving Company Processing Resources Legal Finance Affair Services CPR - ----------------- ---------- --------- ----- ------- ---------- -------- --- Supply Corporation $281 $303 $ 75 $661 $84 $262 $271 Seneca Resources 12 12 44 82 - 143 - UCI - - - - - - - Highland - 1 4 7 - 15 - Data-Track - - - - - - - NFR - - 1 2 - 5 - Leidy Hub - - - - - - - Horizon - - - - - - - Parent Company - - - - - - - NIM - - - - - - - Upstate Energy - - - - - - - ---- ---- ---- ---- --- ---- ---- $293 $316 $124 $752 $84 $425 $271 ==== ==== ==== ==== === ==== ====
Common Expenses ------------------- Total Total Total Convenience or Total Service Common Clearing Direct Accommodation Rendered By Receiving Company Payroll Expense Charges* Charges* Payments* Statutory Subsidiaries - ----------------- ------- ------- -------- -------- -------------- ---------------------- Supply Corporation $197 $4,407 $2,894 $3,456 $7,934 $18,691 Seneca Resources - 717 128 210 1,237 2,292 UCI - - - - 72 72 Highland - 70 12 10 40 132 Data-Track - 1 17 74 3 95 NFR - 21 30 18 94 163 Leidy Hub - - - 16 1 17 Horizon - - - 518 49 567 Parent Company - - 9 56 352 417 NIM - - - - 3 3 Upstate Energy - - - - 2 2 ---- ------ ------ ------ ------ ------- $197 $5,216 $3,090 $4,358 $9,787 $22,451 ==== ====== ====== ====== ====== =======
* Analysis of Clearing Charges, Direct Charges & Convenience or Accommodation Payments is presented on pages 25 and 26. ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued) - ------- ----------------------------------------------------- Part I. Intercompany sales and services (Continued) (2) Services rendered by Statutory Subsidiaries
DISTRIBUTION CORPORATION ------------------------ REPORT OF INTERCOMPANY SALES AND SERVICES ----------------------------------------- FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 -------------------------------------------- (THOUSANDS OF DOLLARS) ---------------------- Clearing Charges ---------------------------------------------------------------------------- Material Total Issue & Data Messenger Clearing Receiving Company Transfer Telecommunications Rental Postage Processing Expense Charges - ----------------- -------- ------------------ ------ ------- ---------- --------- --------- Supply Corporation $1,186 $179 $23 $7 $1,408 $ 91 $2,894 Seneca Resources 22 31 - - 65 10 128 UCI - - - - - - - Highland - - - - 5 7 12 Data-Track - 12 - - 3 2 17 NFR 4 15 - - 9 2 30 Leidy Hub - - - - - - - Horizon - - - - - - - Parent Company - - 1 - 8 - 9 NIM - - - - - - - Upstate Energy - - - - - - - ------ ---- --- -- ------ ---- ------ $1,212 $237 $24 $7 $1,498 $112 $3,090 ====== ==== === == ====== ==== ======
Direct Charges ---------------------------------------------------------------------------------------- Telecom- Contract Corporate Receiving Company Land MMD munications Insurance Operations Administration Communication Accounting - ----------------- ----- --- ----------- --------- ---------- -------------- ------------- ---------- Supply Corporation $341 $4 $9 $302 $2,130 $72 $9 $ - Seneca Resources - - - - 27 - - - UCI - - - - - - - - Highland - - - - - - - - Data-Track - - - - - - - - NFR - - - - - - - - Leidy Hub - - - - - - - - Horizon - - - - - - - 35 Parent Company - - - - - - - 1 NIM - - - - - - - - Upstate Energy - - - - - - - - ---- -- -- ---- ------ --- -- --- $341 $4 $9 $302 $2,157 $72 $9 $36 ==== == == ==== ====== === == ===
Direct Charges ------------------------------------------------------------------------------------ Government Gas Revenue OMS Receiving Company Legal Purchasing Affairs Finance Planning Executive Recovery General - ----------------- ----- ---------- ---------- ------- -------- --------- -------- ------- Supply Corporation $8 $11 $261 $178 $29 $ 99 $ - $3 Seneca Resources - - - 20 - 161 - - UCI - - - - - - - - Highland - - - - - 10 - - Data-Track - - - - - - 13 - NFR - - - 6 - 12 - - Leidy Hub - - - - - 16 - - Horizon - - - 195 - 288 - - Parent Company - - - 24 - 20 - - NIM - - - - - - - - Upstate Energy - - - - - - - -- --- ---- ---- --- ---- --- -- $8 $11 $261 $423 $29 $606 $13 $3 == === ==== ==== === ==== === ==
Direct Charges ------------------------ Total Benefit Credit Direct Receiving Company Services Administration Charges - ----------------- -------- -------------- ------- Supply Corporation $ - $ - $3,456 Seneca Resources 2 - 210 UCI - - - Highland - - 10 Data-Track - 61 74 NFR - - 18 Leidy Hub - - 16 Horizon - - 518 Parent Company 11 - 56 NIM - - - Upstate Energy - - - --- --- ------ $13 $61 $4,358 === === ====== ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued) - ------- ----------------------------------------------------- Part I. Intercompany sales and services (Continued) (2) Services rendered by Statutory Subsidiaries (Continued)
DISTRIBUTION CORPORATION ------------------------ ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS ------------------------------------------------- FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 -------------------------------------------- (THOUSANDS OF DOLLARS) ---------------------- Receiving Company ------------------------------------------------------------------ Parent Supply Seneca Data- Leidy Company Corporation Resources UCI Track Highland NFR Hub Horizon ------- ----------- --------- --- ----- -------- --- ----- ------- Material $ - $ 963 $ - $ - $- $ - $ - $- $ - Rents - 191 - - - - - - - Transportation - 10 - - - - - - - Utilities - 356 71 - - - 19 - 1 Contractors & Outside Services 30 530 6 - - - 11 - 4 Equipment Purchases & Rentals 1 828 8 - - - 23 - 1 Employee Benefits 26 3,136 47 - - 6 - - 28 Office Expense 5 567 9 61 1 4 15 - (3) Dues & Subscriptions 67 293 - - - - - - - Other Insurance - 921 1,047 - - 29 19 - 16 Injuries & Damages - - - 3 - - - - - Other 223 135 48 8 2 1 7 1 2 Advertising - 3 1 - - - - - - Postage - 1 - - - - - - - ---- ------ ------ --- -- --- --- -- --- $352 $7,934 $1,237 $72 $3 $40 $94 $1 $49 ==== ====== ====== === == === === == ===
Receiving Company ----------------- Upstate NIM Energy Total --- ------ ----- Material $- $- $ 963 Rents - - 191 Transportation - - 10 Utilities - - 447 Contractors & Outside Services - 1 582 Equipment Putchases & Rentals 3 1 865 Employee Benefits - - 3,243 Office Expense - - 659 Dues & Subscriptions - - 360 Other Insurance - - 2,032 Injuries & Damages - - 3 Other - - 427 Advertising - - 4 Postage - - 1 -- -- ------ $3 $2 $9,787 == == ====== ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued) - ------- ----------------------------------------------------- Part I. Intercompany sales and services (Continued) (2) Services rendered by Statutory Subsidiaries (Continued)
SUPPLY CORPORATION ------------------ REPORT OF INTERCOMPANY SALES AND SERVICES ----------------------------------------- FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 -------------------------------------------- (THOUSANDS OF DOLLARS) ---------------------- Clearing Accounts Direct Charges ------------------------------------ ---------------------------- Material Total Production Issue & Rental Clearing Interstate Receiving Company Clearing Transfer Clear Charges Valuation Marketing Finance - ----------------- ---------- -------- ------ -------- --------- ---------- ------- Distribution Corp. $ - $1,785 $2,761 $4,546 $3 $1 $ - Seneca Resources 248 5 3 256 - - - Horizon - - 6 6 - - 166 Highland - - - - - - - Data Track - - - - - - - NFR - - - - - - - Leidy Hub - - - - - - - Parent Company - - 13 13 - - - Seneca Independence - - - - - - - ---- ------ ------ ------ -- -- ---- $248 $1,790 $2,783 $4,821 $3 $1 $166 ==== ====== ====== ====== == == ====
Direct Charges Continued ----------------------------------------------------------------------- Operations, Construction & Human Gas Customer Receiving Company Engineering Resources Land Control Executive Service Legal - ----------------- ----------- --------- ---- ------- --------- -------------- ----- Distribution Corp. $274 $110 $377 $1,024 $158 $2,079 $11 Seneca Resources - - 72 - 13 67 - Horizon - - - - 233 - - Highland - - 1 - 3 - - Data Track - - - - 6 - - NFR - - - - 6 - - Leidy Hub - - - - - - - Parent Company - 2 - - 40 - - Seneca Independence - - - - - - - ---- ---- ---- ------ ---- ------ --- $274 $112 $450 $1,024 $459 $2,146 $11 ==== ==== ==== ====== ==== ====== ===
Total Services Total Total Convenience or Rendered By Direct Clearing Accommodation Statutory Receiving Company Charges Charges Payments* Subsidiaries - ----------------- ------- -------- -------------- -------------- Distribution Corp. $4,037 $4,546 $1,417 $10,000 Seneca Resources 152 256 25 433 Horizon 399 6 1 406 Highland 4 - - 4 Data Track 6 - 1 7 NFR 6 - 5 11 Leidy Hub - - 6 6 Parent Company 42 13 14 69 Seneca Indepencence - - 4 4 ------ ------ ------ ------- $4,646 $4,821 $1,473 $10,940 ====== ====== ====== ======= * Analysis of Convenience or Accommodation Payments is presented on page 28. ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued) - ------- ----------------------------------------------------- Part I. Intercompany sales and services (Continued) (2) Services rendered by Statutory Subsidiaries (Continued) SUPPLY CORPORATION ------------------ ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS ------------------------------------------------- FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 -------------------------------------------- (THOUSANDS OF DOLLARS) ---------------------- Receiving Company --------------------------------------------------- Parent Distribution Seneca Horizon Company Corporation Resources Energy Highland ------- ----------- --------- ------- -------- Material $ - $ 234 $ 4 $- $- Rents - - - - - Transportation - 14 - - - Utilities - 87 4 - - Contractors & Outside Services - 197 - 4 - Equipment Purchases & Rentals - 405 2 - - Employee Benefits 14 99 2 - - Office Expense - 44 1 1 - Dues & Memberships - 34 - - - Other - 267 12 - - Other Insurance - 35 - - - Postage - 1 - - - --- ------ --- -- -- $14 $1,417 $25 $5 $- === ====== === == == Receiving Company ----------------------------- Data- Seneca Track NFR Leidy Hub Independence Total ----- --- --------- ------------ ----- Material $- $- $- $- $ 238 Rents - - - - - Transportation - - - - 14 Utilities - 1 - - 92 Contractors & Outside Services - - 6 4 207 Equipment Purchases & Rentals - - - - 407 Employee Benefits 1 1 - - 117 Office Expense - 3 - - 49 Dues & Memberships - - - - 34 Other - - - - 279 Other Insurance - - - - 35 Postage - - - - 1 -- -- -- -- ------ $1 $5 $6 $4 $1,473 == == == == ====== ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued) - ------- ----------------------------------------------------- Part I. Intercompany sales and services (Continued) (2) Services rendered by Statutory Subsidiaries (Continued)
SENECA RESOURCES ---------------- REPORT OF INTERCOMPANY SALES AND SERVICES ----------------------------------------- FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 -------------------------------------------- (THOUSANDS OF DOLLARS) ---------------------- Total Services Convenience or Rendered By Timber Accommodation Statutory Receiving Company Sales Operations Payments Subsidiaries - ----------------- ----- ---------- -------- ------------ Supply Corporation $ - $ 648 $ 18 $ 666 Highland 8,958 - - 8,958 NFR - 546 61 607 Upstate Energy - 127 14 141 Data-Track - - 55 55 Parent Company - - 1 1 ------ ------ ---- ------- $8,958 $1,321 $149 $10,428 ====== ====== ==== =======
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS ------------------------------------------------- Receiving Company ------------------------------------------------------ Parent Upstate Supply Data- Company Energy Corporation NFR Track Total ------- ------ ----------- --- ----- ----- Other $1 $14 $18 $61 $55 $149 -- --- --- --- --- ---- $1 $14 $18 $61 $55 $149 == === === === === ==== ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued) - ------- ----------------------------------------------------- Part I. Intercompany sales and services (Continued) (2) Services rendered by Statutory Subsidiaries (Continued) HIGHLAND -------- REPORT OF INTERCOMPANY SALES AND SERVICES ----------------------------------------- FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 -------------------------------------------- (THOUSANDS OF DOLLARS) ---------------------- Total Services Rendered By Convenience Statutory Receiving Company Payments Subsidiaries - ----------------- -------- ------------ Seneca Resources $292 $292 NFR --- REPORT OF INTERCOMPANY SALES AND SERVICES ----------------------------------------- FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 -------------------------------------------- (THOUSANDS OF DOLLARS) ---------------------- Convenience Total Services or Rendered By Accommodation Statutory Receiving Company Payments Subsidiaries - ----------------- ------------- ------------ Distribution Corporation $3 $3 ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Continued) - ------- ----------------------------------------------------- Part I. Intercompany sales and services (Concluded) (2) Services rendered by Statutory Subsidiaries (Concluded) DATA-TRACK ---------- REPORT OF INTERCOMPANY SALES AND SERVICES ----------------------------------------- FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 -------------------------------------------- (THOUSANDS OF DOLLARS) ---------------------- Total Services Rendered by Collection Statutory Receiving Company Services Subsidiaries - ----------------- ---------- ------------ Distribution Corporation $386 $386 National Fuel Resources 2 2 ---- ---- $388 $388 ==== ==== (3) Services rendered by Registrant No services were rendered for a charge by the Registrant to any of its subsidiaries during the fiscal year ended September 30, 1998. ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS (Concluded) - ------- ----------------------------------------------------- Part II. Contracts to purchase services or goods between any System company and any affiliate at September 30, 1998: None Part III. Employment of any person by any System company for the performance on a continuing basis of management services: Description of Contract and Annual Name Scope of Services Consideration ---- --------------------------- ------------- Joseph Maljovec Performs management and $ 61,421 consulting services for Highland. ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES - ------- -------------------------------------------------- Part I. Interests in Foreign Utility Companies I. Severoceske teplarny, a.s. and Teplarna Liberec, a.s. (a) Severoceske teplarny, a.s. (SCT) J. Seiferta 2179 434 01 Most Czech Republic Teplarna Liberec, a.s. (TL) Dr. M. Horakove 641/34a 460 01 Liberec Czech Republic SCT generates and supplies steam heat to customers in the Czech Republic. It has been designated as a foreign utility company because it owns a 70% interest (common equity) in TL. TL has been designated as a foreign utility company because it owns and operates a 12 MW steam powered electric generation turbine and sells the electricity produced at wholesale. Horizon Energy Development, Inc. (Horizon) owns 100% of the capital stock of Horizon Energy Holdings, Inc. ("HEHI") which owns 100% of the capital stock of Horizon Energy Development B.V. ("HEDBV") which owns 82.70% of the capital stock of SCT, which owns 70% of the capital stock of TL. (b) Horizon owns 100% of the capital stock of HEHI. Such investment was valued at $120,809,000 as of September 30, 1998. HEHI owns 100% of the capital stock of HEDBV. Such investment was valued at $35,548,000 as of September 30, 1998. HEDBV owned 82.70% of the capital stock of consolidated SCT and such investment was valued at $46,185,000 as of September 30, 1998. SCT owns 70% of the capital stock of TL. Such investment was valued at $10,773,000 as of September 30, 1998. The financial statements of Horizon and its subsidiaries are found on pages 55 through 80 of this Form U5S. ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES (Continued) - ------- -------------------------------------------------------------- There are no debts or other financial obligations of HEHI, HEDBV, SCT or TL for which there is recourse, directly or indirectly, to the registered holding company or another system company. There are no direct or indirect guarantees of any securities of TL by the registered holding company. There have been no transfers of any assets from any system company to TL. (c) The ratios of debt to common equity of SCT and TL were 9.03% and 1.98%, respectively, at September 30, 1998. The earnings of SCT and TL for the twelve months ended September 30, 1998 (net of minority interest) were $1,991,000 and $252,000, respectively. The financial statements of SCT and TL are found on pages 69 through 72 of this Form U5S. (d) There are management support agreements between Horizon Energy Development, s.r.o. (HED) and SCT and TL. Under these agreements, HED agrees to provide management services (i.e., strategic, legal, marketing, public relations and human resource services) to both SCT and TL. The agreement with SCT calls for SCT to pay HED CZK 3,000,000 on a quarterly basis. The agreement with TL also calls for a quarterly payment of CZK 3,000,000 to HED. There is a service agreement between SCT and TL calling for TL to pay SCT CZK 1,500,000 on a monthly basis. The services SCT provides are similar to those described above. II. Prvni severozapadni teplarenska, a.s. (a) Prvni severozapadni teplarenska, a.s. (PSZT) Komorany u Mostu 434 03 Most Czech Republic PSZT generates and supplies steam heat to customers in the Czech Republic. PSZT also generates electric energy for sale. PSZT has been designated as a foreign utility company because it own and operates a coal-fired electric generation plant with generating capacity of 236 MW and sells the electricity it produces at wholesale. Horizon owns 100% of the capital stock of HEHI which owns 100% of the capital stock of HEDBV which owns 86.2% of the capital stock of PSZT. (b) Horizon owns 100% of the capital stock of HEHI. Such investment was valued at $120,809,000 as of September 30, 1998. HEHI owns 100% of the capital stock of HEDBV. Such investment was valued at $35,548,000 at September 30, 1998. As of September 30, 1998, HEDBV owned 86.2% of the capital stock of PSZT and such investment was valued at $75,833,000. The financial statements of Horizon and its subsidiaries are found on pages 55 through 80 of this Form U5S. As of September 30, 1998 there were no debts or other financial obligations of HEHI, HEDBV or PSZT for which there was recourse, directly or indirectly, to the registered holding ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES (Continued) - ------- -------------------------------------------------------------- company or another system company other than amounts lent by Horizon to PSZT under a loan agreement between those two parties. At September 30, 1998, PSZT owed $2,500,000 under the terms of that loan agreement. There are no direct or indirect guarantees of any securities or PSZT by the registered holding company. There have been no transfers of any assets from any system company to PSZT. (c) The ratio of debt to common equity of PSZT was 83.08% at September 30, 1998. The earnings of PSZT for the twelve months ended September 30, 1998 (net of minority interest) were $3,682,000. The financial statements of PSZT are found on pages 73 through 76 of this Form U5S. (d) There is a management support agreement between HED and PSZT. Under this agreement, HED agrees to provide management services (i.e., strategic, legal, marketing, public relations and human resource services) to PSZT. The agreement with PSZT calls for PSZT to pay HED CZK 4,500,000 on a quarterly basis. III. Teplarna Kromeriz, a.s. (a) Teplarna Kromeriz, a.s. (Kromeriz) Na Sadkach 3572 767 01 Kromeriz Czech Republic Kromeriz generates and supplies steam heat to customers in the Czech Republic. It has been designated as a foreign utility company because it has developed initial plans to add a 38 MW simple-cycle electric generating unit at its site. Horizon owns 100% of the capital stock of HEHI which owns 100% of the capital stock of HEDBV which owns 100% of the business shares of Power Development, s.r.o., (PD)(a limited liability company) which owns 100% of the capital stock of Kromeriz. (b) Horizon owns 100% of the capital stock of HEHI. Such investment was valued at $120,809,000 as of September 30, 1998. HEHI owns 100% of the capital stock of HEDBV. Such investment was valued at $35,548,000 at September 30, 1998. HEDBV owns 100% of the business shares of PD. Such investment was valued at $1,813,000 at September 30, 1998. PD owns 100% of the capital stock of Kromeriz. Such investment was valued at $659,000 at September 30, 1998. The financial statements of Horizon and its subsidiaries are found on pages 55 through 80 of this Form U5S. There are no debts or other financial obligations of HEHI, HEDBV, PD or Kromeriz for which there is recourse, directly or indirectly, to the registered holding company or another system company. There are no direct or indirect guarantees of any securities of Kromeriz by the registered holding company. There have been no transfers of any assets from any system company to Kromeriz. (c) Debt to common equity ratio - Not Applicable. Kromeriz posted a $78,000 net loss for the twelve months ended September 30, 1998. The financial statements of Kromeriz are found on pages 77 through 80 of this Form U5S. ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES (Concluded) - ------- -------------------------------------------------------------- (d) There is a management support agreement between HED and Kromeriz. Under this agreement, HED agrees to provide management services (i.e., strategic, legal, marketing, public relations and human resource services) to Kromeriz. The agreement with Kromeriz calls for Kromeriz to pay HED CZK 100,000 on a monthly basis. Part II Relationship of Foreign Utility Companies to System Companies Organization charts showing the relationships of Kromeriz, SCT, TL and PSZT to system companies are provided as Exhibits H-1, H-2 and H-3 to this Form U5S. Part III Aggregate Investment in Foreign Utility Companies The Registrant's aggregate investment in foreign utility companies at September 30, 1998 was $122,677,000 which was 27.8% of its aggregate capital investment in Distribution Corporation, the Registrant's domestic public utility subsidiary. The aggregate investment amounts used in this calculation represent the common stock equity of the companies involved. ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS - -------- --------------------------------- NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES ------------------------------------------ INDEX TO FINANCIAL STATEMENTS ----------------------------- SEPTEMBER 30, 1998 ------------------ Page ---- National Fuel Gas Company and Subsidiaries: Report of Independent Accountants 38 Consolidating and Consolidated Balance Sheet at September 30, 1998 39-42 Consolidating and Consolidated Statement of Income for the Fiscal Year Ended September 30, 1998 43-44 Consolidating and Consolidated Statement of Earnings Reinvested in the Business for the Fiscal Year Ended September 30, 1998 45-46 Consolidating and Consolidated Statement of Cash Flows for the Fiscal Year Ended September 30, 1998 47-50 Seneca Resources Corporation: Consolidating Balance Sheet at September 30, 1998 51 Consolidating Statement of Income for the Fiscal Year Ended September 30, 1998 52 Consolidating Statement of Earnings Reinvested in the Business for the Fiscal Year Ended September 30, 1998 53 Consolidating Statement of Cash Flows for the Fiscal Year Ended September 30, 1998 54 Horizon Energy Development, Inc. (Horizon): Consolidating Balance Sheet at September 30, 1998 55 Consolidating Statement of Income for the Fiscal Year Ended September 30, 1998 56 Consolidating Statement of Earnings Reinvested in the Business for the Fiscal Year Ended September 30, 1998 57 Consolidating Statement of Cash Flows for the Fiscal Year Ended September 30, 1998 58 Horizon Energy Holdings: Consolidating Balance Sheet at September 30, 1998 59 Horizon Energy Development B.V. (Horizon B.V.): Consolidating Balance Sheet at September 30, 1998 61-62 Consolidating Statement of Income for the Fiscal Year Ended September 30, 1998 63-64 Consolidating Statement of Earnings Reinvested in the Business for the Fiscal Year Ended September 30, 1998 65-66 Consolidating Statement of Cash Flows for the Fiscal Year Ended September 30, 1998 67-68 Severoceske teplarny, a.s. (SCT): Consolidating Balance Sheet at September 30, 1998 69 Consolidating Statement of Income for the Fiscal Year Ended September 30, 1998 70 Consolidating Statement of Earnings Reinvested in the Business for the Fiscal Year Ended September 30, 1998 71 Consolidating Statement of Cash Flows for the Fiscal Year Ended September 30, 1998 72 ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS (Concluded) - -------- --------------------------------------------- NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES ------------------------------------------ INDEX TO FINANCIAL STATEMENTS ----------------------------- SEPTEMBER 30, 1998 ------------------ Page ---- Prvni severozapadni teplarenska, a.s. (PSZT): Consolidating Balance Sheet at September 30, 1998 73 Consolidating Statement of Income for the Fiscal Year Ended September 30, 1998 74 Consolidating Statement of Earnings Reinvested in the Business for the Fiscal Year Ended September 30, 1998 75 Consolidating Statement of Cash Flows for the Fiscal Year Ended September 30, 1998 76 Power Development, s.r.o. (Power Development): Consolidating Balance Sheet at September 30, 1998 77 Consolidating Statement of Income for the Fiscal Year Ended September 30, 1998 78 Consolidating Statement of Earnings Reinvested in the Business for the Fiscal Year Ended September 30, 1998 79 Consolidating Statement of Cash Flows for the Fiscal Year Ended September 30, 1998 80 Notes to Consolidated Financial Statements * * The Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, are incorporated herein by reference. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of National Fuel Gas Company In our opinion, the consolidated financial statements listed in the index appearing under Item 10 on Pages 36 and 37 present fairly, in all material respects, the financial position of National Fuel Gas Company and its subsidiaries at September 30, 1998, and the results of their operations and their cash flows for the year then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. Our audit was made for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The consolidating information on Pages 39 through 80 is presented for purposes of additional analysis rather than to present financial position, results of operations and cash flows of the individual companies. Accordingly, we do not express an opinion on the financial position, results of operations and cash flows of the individual companies. However, the consolidating information on Pages 39 through 80 has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole. PricewaterhouseCoopers LLP Buffalo, New York October 27, 1998
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) National National Seneca Highland Data-Track National Fuel Gas Fuel Gas Resources Leidy Land & Utility Account Fuel Gas Distribution Supply Corp. Hub, Minerals, Constructors, Services, Company Corp. Corp. (Consolidated) Inc. Inc. Inc. Inc. -------- ------------ -------- -------------- ----- --------- ------------- ---------- ASSETS ------ PROPERTY, PLANT & EQUIPMENT $ 132 $1,220,288 $728,311 $947,090 $ 3 $8,202 $ 632 $ - - ------------- Less: Accumulated Depreciation, Depletion and Amortization 123 313,534 267,359 275,721 3 2,092 632 - ---------- ---------- -------- -------- ------ ------ ------ ---- 9 906,754 460,952 671,369 - 6,110 - - ---------- ---------- -------- -------- ------ ------ ------ ---- CURRENT ASSETS: - --------------- Cash and Temporary Cash Investments 7,071 3,686 758 1,848 86 133 135 26 Notes Receivable -Intercompany 477,200 - - 11,800 700 - 500 700 Allowance for Uncollectible Accounts - (4,326) - (104) - - (293) - Accounts Receivable -Intercompany 19,695 9,642 12,250 1,372 3 46 5 21 Accounts Receivable 165 51,861 4,330 14,164 - 644 325 35 Unbilled Utility Revenue - 14,693 - - - - - - Dividends Receivable -Intercompany 17,289 - - - - - - - Materials and Supplies - at average cost - 4,448 11,615 1,130 - 1,394 - - Gas Stored Underground - 28,819 - - - - - - Unrecovered Purchased Gas Costs - 6,316 - - - - - - Prepayments 680 12,498 2,814 3,381 6 158 14 - ---------- ---------- -------- -------- ------ ------ ------ ---- 522,100 127,637 31,767 33,591 795 2,375 686 782 ---------- ---------- -------- -------- ------ ------ ------ ---- OTHER ASSETS: - ------------- Recoverable Future Taxes - 83,345 4,958 - - - - - Unamortized Debt Expense 5,409 12,925 3,961 - - - - - Other Regulatory Assets 4,805 28,520 8,410 - - - - - Deferred Charges 2,912 2,109 3,423 2,289 2 - - - Investment in Associated Companies 839,311 - 61 - - - - - Notes of Subsidiaries 674,965 - - - - - - - Other 6,768 10,356 7,415 1,473 137 - 1,978 - ---------- ---------- -------- -------- ------ ------ ------ ---- 1,534,170 137,255 28,228 3,762 139 - 1,978 - ---------- ---------- -------- -------- ------ ------ ------ ---- $2,056,279 $1,171,646 $520,947 $708,722 $ 934 $8,485 $2,664 $782 ========== ========== ======== ======== ====== ====== ====== ====
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
Horizon National Energy Seneca Nigara Fuel Development, Upstate Indep. Indep. Total Before Eliminations Consolidated Resources, Inc. Energy Pipeline Marketing Eliminations & Adjustments Company and Inc. (Consolidated) Inc. Company Company & Adjustments Dr (Cr) Subsidiaries - ---------- -------------- ------- -------- --------- ------------- ------------- ------------ $ 485 $281,710 $ - $ - $ - $3,186,853 $ - $3,186,853 132 79,120 - - - 938,716 - 938,716 ------- -------- ---- ------ --- ---------- ----------- ---------- 353 202,590 - - - 2,248,137 - 2,248,137 ------- -------- ---- ------ --- ---------- ----------- ---------- 7,032 8,908 51 18 1 29,753 684 30,437 - 2,500 - - - 493,400 (493,400) - (633) (876) - - - (6,232) - (6,232) 5 6 16 - - 43,061 (43,061) - 7,287 9,753 2 - - 88,566 2 88,568 - 710 - - - 15,403 - 15,403 - - - - - 17,289 (17,289) - - 6,059 - - - 24,646 (37) 24,609 2,077 - 765 - - 31,661 - 31,661 - - - - - 6,316 - 6,316 51 154 - - - 19,756 (1) 19,755 ------- -------- ---- ------ --- ---------- ----------- ---------- 15,819 27,214 834 18 1 763,619 (553,102) 210,517 ------- -------- ---- ------ --- ---------- ----------- ---------- - - - - - 88,303 - 88,303 - - - - - 22,295 - 22,295 - - - - - 41,735 - 41,735 183 - - - - 10,918 (2,299) 8,619 - - - - - 839,372 (839,372) - - - - - - 674,965 (674,965) - 588 12,535 - 5,772 - 47,022 17,831 64,853 ------- -------- ---- ------ --- ---------- ----------- ---------- 771 12,535 - 5,772 - 1,724,610 (1,498,805) 225,805 ------- -------- ---- ------ --- ---------- ----------- ---------- $16,943 $242,339 $834 $5,790 $ 1 $4,736,366 $(2,051,907) $2,684,459 ======= ======== ==== ====== === ========== =========== ==========
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) National National Seneca Highland Data-Track National Fuel Gas Fuel Gas Resources Leidy Land & Utility Account Fuel Gas Distribution Supply Corp. Hub, Minerals, Constructors, Services, Company Corp. Corp. (Consolidated) Inc. Inc. Inc. Inc. -------- ------------ -------- -------------- ----- --------- ------------- ---------- CAPITALIZATION AND LIABILITIES - --------------- CAPITALIZATION: - --------------- Common Stock $1 Par Value; Authorized - 200,000,000 Shares; Issued and Outstanding - 38,468,795 Shares $ 38,469 $ - $ - $ - $ - $ - $ - $ - Capital Stock of Subsidiaries - 59,171 25,345 500 4 5 1 1 Paid in Capital 416,239 121,668 35,894 104,035 1,365 445 3,359 499 Earnings Reinvested in the Business 428,112 260,717 189,982 (21,347) (654) 4,430 (1,166) 204 Cumulative Translation Adjustment 7,265 - - - - - - - ---------- ---------- -------- -------- ------ ------ ------ ---- Total Common Stock Equity 890,085 441,556 251,221 83,188 715 4,880 2,194 704 Long-Term Debt, Net of Current Portion 624,000 - - 3,993 - - - - Notes Payable - Intercompany - 299,000 115,965 170,000 - - - - ---------- ---------- -------- -------- ------ ------ ------ ---- Total Capitalization 1,514,085 740,556 367,186 257,181 715 4,880 2,194 704 ---------- ---------- -------- -------- ------ ------ ------ ---- Minority Interest in Foreign Subsidiaries - - - - - - - - ---------- ---------- -------- -------- ------ ------ ------ ---- CURRENT AND ACCRUED LIABILITIES: - ------------ Notes Payable to Banks and Commercial Paper 326,300 - - - - - - - Notes Payable - Intercompany 16,200 103,900 60,800 298,900 - 2,000 - - Current Portion of Long-Term Debt 150,000 - - 66,218 - - - - Accounts Payable 333 26,975 6,489 17,744 - 100 1 (15) Amounts Payable to Customers - 5,781 - - - - - - Accounts Payable - Intercompany 1,824 20,264 9,456 6,048 16 979 - 4 Dividends Payable - Intercompany - 8,700 6,154 2,000 - 200 200 - Other Accruals and Current Liabilities 44,851 26,115 7,996 (7,349) 88 93 83 62 ---------- ---------- -------- -------- ------ ------ ------ ---- 539,508 191,735 90,895 383,561 104 3,372 284 51 ---------- ---------- -------- -------- ------ ------ ------ ---- DEFERRED CREDITS: - ----------------- Accumulated Deferred Income Taxes (641) 139,665 51,398 64,386 115 170 (484) (22) Taxes Refundable to Customers - 19,847 (1,443) - - - - - Unamortized Investment Tax Credit - 11,019 353 - - - - - Other Deferred Credits 3,327 68,824 12,558 3,594 - 63 670 49 ---------- ---------- -------- -------- ------ ------ ------ ---- 2,686 239,355 62,866 67,980 115 233 186 27 ---------- ---------- -------- -------- ------ ------ ------ ---- $2,056,279 $1,171,646 $520,947 $708,722 $ 934 $8,485 $2,664 $782 ========== ========== ======== ======== ====== ====== ====== ====
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
Horizon National Energy Seneca Niagara Fuel Development, Upstate Indep. Indep. Total Before Eliminations Consolidated Resources, Inc. Energy Pipeline Marketing Eliminations & Adjustments Company and Inc. (Consolidated) Inc. Company Company & Adjustments (Dr) Cr Subsidiaries - ---------- -------------- ------- -------- --------- ------------- ------------- ------------ $ - $ - $ - $ - $ - $ 38,469 $ - $ 38,469 10 5 1 1 1 85,045 (85,045) - 3,490 38,245 - - - 725,239 (309,000) 416,239 7,809 (11,659) (191) 106 - 856,343 (428,231) 428,112 - 7,265 - - - 14,530 (7,265) 7,265 ------- -------- ------- ------ --- ---------- ----------- ---------- 11,309 33,856 (190) 107 1 1,719,626 (829,541) 890,085 - 64,676 - - - 692,669 - 692,669 - 90,000 - - - 674,965 (674,965) - ------- -------- ------- ------ --- ---------- ----------- ---------- 11,309 188,532 (190) 107 1 3,087,260 (1,504,506) 1,582,754 ------- -------- ------- ------ --- ---------- ----------- ---------- - 25,479 - - - 25,479 - 25,479 ------- -------- ------- ------ --- ---------- ----------- ---------- - - - - - 326,300 - 326,300 2,200 2,700 1,100 5,600 - 493,400 (493,400) - - 711 - - - 216,929 - 216,929 2,146 8,682 - - - 62,455 (2,522) 59,933 - - - - - 5,781 - 5,781 1,032 2,976 31 26 - 42,656 (42,656) - 35 - - - - 17,289 (17,289) - 50 8,649 (103) (54) - 80,481 (1) 80,480 ------- -------- ------ ------ --- ---------- ----------- ---------- 5,463 23,718 1,028 5,572 - 1,245,291 (555,868) 689,423 ------- -------- ------ ------ --- ---------- ----------- ---------- (871) 4,398 - 111 - 258,225 (3) 258,222 - - - - - 18,404 - 18,404 - - - - - 11,372 - 11,372 1,042 212 (4) - - 90,335 8,470 98,805 ------- -------- ------ ------ --- ---------- ----------- ---------- 171 4,610 (4) 111 - 378,336 8,467 386,803 ------- -------- ------ ------ --- ---------- ----------- ---------- $16,943 $242,339 $ 834 $5,790 $ 1 $4,736,366 $(2,051,907) $2,684,459 ======= ======== ====== ====== === ========== =========== ==========
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATING STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) National National Seneca Highland Data-Track National Fuel Gas Fuel Gas Resources Leidy Land & Utility Account Fuel Gas Distribution Supply Corp. Hub, Minerals, Constructors, Services, Company Corp. Corp. (Consolidated) Inc. Inc. Inc. Inc. ------- ------------ -------- -------------- ----- --------- ------------- ---------- OPERATING REVENUE: $ - $871,180 $170,983 $137,422 $ - $13,614 $ - $377 - ----------------- -------- -------- -------- -------- ---- ------- ----- ---- OPERATING EXPENSE: - ------------------ Purchased Gas - 451,837 118 4,716 - - - - Fuel Used in Heat and Electric Generation - - - - - - - - Operation 3,181 168,487 56,477 36,597 33 11,233 (16) 302 Maintenance - 15,896 9,809 29 - - - - Property, Franchise & Other Taxes 521 77,018 11,249 1,630 1 150 12 - Depreciation, Depletion and Amortization 2 33,459 21,816 55,668 - 438 70 28 Impairment of Oil & Gas Producing Properties - - - 128,996 - - - - Income Taxes 235 30,077 29,587 (38,969) 45 935 146 30 -------- -------- -------- -------- ---- ------- ----- ---- 3,939 776,774 129,056 188,667 79 12,756 212 360 -------- -------- -------- -------- ---- ------- ----- ---- Operating Income (Loss) (3,939) 94,406 41,927 (51,245) (79) 858 (212) 17 -------- -------- -------- -------- ---- ------- ----- ---- OTHER INCOME: - ------------- Unremitted Earnings (Loss) of Subsidiaries (30,400) - - - - - - - Dividends from Subsidiaries 62,356 - - - - - - - Interest-Intercompany 66,226 268 - 467 28 39 46 30 Other 463 1,753 12,897 10,676 139 33 376 (5) -------- -------- -------- -------- ---- ------- ----- ---- 98,645 2,021 12,897 11,143 167 72 422 25 -------- -------- -------- -------- ---- ------- ----- ---- Income (Loss) Before Interest Charges and Minority Interest in Foreign Subsidiaries 94,706 96,427 54,824 (40,102) 88 930 210 42 -------- -------- -------- -------- ---- ------ ----- ---- INTEREST CHARGES: - ----------------- Interest on Long-Term Debt 47,767 - - 2,921 - - - - Interest-Intercompany 1,049 27,063 14,456 20,085 5 28 - - Other Interest 13,586 17,576 622 - - - - - -------- -------- -------- -------- ---- ------- ----- ---- 62,402 44,639 15,078 23,006 5 28 - - -------- -------- -------- -------- ---- ------- ----- ---- Minority Interest in Foreign Subsidiaries - - - - - - - - --------- -------- -------- -------- ---- ------- ----- ---- Income (Loss) Before Cumulative Effect 32,304 51,788 39,746 (63,108) 83 902 210 42 Cumulative Effect of Change in Accounting For Depletion (9,116) - - (9,116) - - - - -------- -------- -------- -------- ---- ------- ----- ---- Net Income (Loss) Available for Common Stock $ 23,188 $ 51,788 $ 39,746 $(72,224) $ 83 $ 902 $ 210 $ 42 ======== ======== ======== ======== ==== ======= ===== ====
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
Horizon National Energy Seneca Fuel Development, Upstate Indep. Total Before Eliminations Consolidated Resources, Inc. Energy Pipeline Eliminations & Adjustments Company and Inc. (Consolidated) Inc. Company & Adjustments (Dr) Cr Subsidiaries - ---------- -------------- ------- -------- ------------- ------------- ------------ $87,187 $76,259 $1,157 $ - $1,358,179 $(110,179) $1,248,000 ------- ------- ------ ---- ---------- --------- ---------- 82,621 - 1,048 - 540,340 (98,594) 441,746 - 37,592 - - 37,592 - 37,592 3,314 27,247 397 4 307,256 (13,035) 294,221 - 59 - - 25,793 - 25,793 320 1,916 - - 92,817 - 92,817 90 7,309 - - 118,880 - 118,880 - - - - 128,996 - 128,996 471 2,158 (102) 57 24,670 (646) 24,024 ------- ------- ------ ---- ---------- --------- ---------- 86,816 76,281 1,343 61 1,276,344 (112,275) 1,164,069 ------- ------- ------ ---- ---------- --------- ---------- 371 (22) (186) (61) 81,835 2,096 83,931 ------- ------- ------ ---- ---------- --------- ---------- - - - - (30,400) 30,400 - - - - - 62,356 (62,356) - 151 20 - - 67,275 (67,275) - 296 10,682 22 322 37,654 (1,784) 35,870 ------- ------- ------ ---- ---------- --------- ---------- 447 10,702 22 322 136,885 (101,015) 35,870 ------- ------- ------ ---- ---------- --------- ---------- 818 10,680 (164) 261 218,720 (98,919) 119,801 ------- ------- ------ ---- ---------- --------- ---------- - 2,466 - - 53,154 - 53,154 16 4,406 17 150 67,275 (67,275) - 15 316 10 5 32,130 - 32,130 ------- ------- ------ ---- ---------- --------- ---------- 31 7,188 27 155 152,559 (67,275) 85,284 ------- ------- ------ ---- ---------- --------- ---------- - (2,213) - - (2,213) - (2,213) ------- ------- ------ ---- ---------- --------- ---------- 787 1,279 (191) 106 63,948 (31,644) 32,304 - - - - (18,232) 9,116 (9,116) ------- ------- ------ ---- ---------- --------- ---------- $ 787 $ 1,279 $ (191) $106 $ 45,716 $ (22,528) $ 23,188 ======= ======= ====== ==== ========== ========= ==========
Weighted Average Basic Earnings Per Common Share Common Shares Outstanding Income Before Cumulative Effect $ 0.85 ------------------------- Cumulative Effect of Change in Accounting Used in Basic For Depletion (0.24) ------ Calculation 38,316,397 Net Income Available for Common Stock $ 0.61 ========== ====== Used in Diluted Diluted Earnings Per Common Share --------------------------------- Calculation 38,703,526 Income Before Cumulative Effect $ 0.84 ========== Cumulative Effect of Change in Accounting For Depletion (0.24) Net Income Available for Common Stock $ 0.60
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATING STATEMENT OF EARNINGS REINVESTED IN THE BUSINESS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) National National Seneca Highland Data-Track National Fuel Gas Fuel Gas Resources Leidy Land & Utility Account Fuel Gas Distribution Supply Corp. Hub, Minerals, Constructors, Services, Company Corp. Corp. (Consolidated) Inc. Inc. Inc. Inc. -------- ----------- -------- -------------- ----- --------- ------------- ---------- EARNINGS REINVESTED - ------------------- IN THE BUSINESS - --------------- Balance at Beginning of Year $472,595 $243,729 $174,852 $ 52,877 $(737) $4,328 $(1,375) $162 Net Income (Loss) Available for Common Stock 23,188 51,788 39,746 (72,224) 83 902 210 42 Dividends on Common Stock (1998 - $1.77 per share) (67,671) (34,800) (24,616) (2,000) - (800) - - -------- -------- -------- -------- ----- ------ ------- ---- Balance at End of Year $428,112 $260,717 $189,982 $(21,347) $(654) $4,430 $(1,165) $204 ======== ======== ======== ======== ===== ====== ======= ====
At September 30, 1998 --------------------- Intercompany Eliminations: - -------------------------- Earnings Reinvested in the Business: Unremitted Earnings of Subsidiaries Since Acquisition $430,967 Earnings Reinvested in the Business of Subsidiaries at Acquisition 7,095 Consolidating Adjustment (9,830) -------- $428,232 ======== Net Income Available for Common Stock: Subsidiaries-Dividends on Common Stock $ 62,356 Unremitted Earnings (Loss) of Subsidiaries (30,400) Cumulative Effect of Change in Accounting of Subsidiary (9,116) Consolidating Adjustment (312) -------- $ 22,528 ======== See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
Horizon National Energy Seneca Fuel Development, Upstate Indep. Total Before Eliminations Consolidated Resources, Inc. Energy Pipeline Eliminations & Adjustments Company and Inc. (Consolidated) Inc. Company & Adjustments (Dr) Cr Subsidiaries - ---------- -------------- ------- -------- ------------- ------------- ------------ $7,162 $(12,938) $ - $ - $ 940,655 $(468,060) $472,595 787 1,279 (191) 106 45,716 (22,528) 23,188 (140) - - - (130,027) 62,356 (67,671) ------ -------- ----- ---- --------- --------- -------- $7,809 $(11,659) $(191) $106 $ 856,344 $(428,232) $428,112 ====== ======== ===== ==== ========= ========= ========
ANALYSIS OF INVESTMENTS IN ASSOCIATED COMPANIES AT SEPTEMBER 30, 1998 Par or Earnings Total Investment Stated Value Reinvested in Unremitted in Associated of Paid the Business Earnings Cumulative Companies Subsidiary in at Since Translation at Stock Capital Acquisition Acquisition Adjustment Equity ------------- ------- -------------- ----------- ----------- ---------------- Registrant: Distribution Corporation $59,171 $121,668 $4,636 $256,081 $ - $441,556 Supply Corporation 25,345 35,833 2,453 187,529 - 251,160 Seneca Resources 500 104,035 6 (21,353) - 83,188 Leidy Hub 4 1,365 - (654) - 715 Highland 5 445 - 4,430 - 4,880 UCI 1 3,359 - (1,165) - 2,195 Data-Track 1 499 - 204 - 704 NFR 10 3,490 - 7,809 - 11,309 Horizon 5 38,245 - (11,659) 7,265 33,856 Upstate Energy 1 - - (191) - (190) Seneca Independence 1 - - 106 - 107 Niagara Independence 1 - - - - 1 Consolidating Adjustment - - - 9,830 - 9,830 ------- -------- ------ -------- ------ -------- 85,045 308,939 7,095 430,967 7,265 839,311 Supply Corporation: Seneca Resources - 61 - - - 61 ------- -------- ------ -------- ------ -------- $85,045 $309,000 $7,095 $430,967 $7,265 $839,372 ======= ======== ====== ======== ====== ========
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Data- National National Seneca Highland Track National Fuel Gas Fuel Gas Resources Leidy Land & Utility Account Fuel Gas Distribution Supply Corp. Hub, Minerals, Constructors Services, Company Corp. Corp. (Consolidated) Inc. Inc. Inc. Inc. -------- ------------ ------- -------------- ------ --------- ------------ --------- OPERATING ACTIVITIES: - --------------------- Net Income (Loss) Available for Common Stock $ 23,188 $ 51,788 $39,746 $(72,224) $ 83 $ 902 $210 $42 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Cumulative Effect of Changes in Accounting for Depletion 9,116 - - 9,116 - - - - Unremitted Earnings of Subsidiaries 30,400 - - - - - - - Impairment of Oil and Gas Producing Properties - - - 128,996 - - - - Depreciation, Depletion and Amortization 2 33,459 21,816 55,668 - 438 70 28 Deferred Income Taxes (67) (2,916) (117) (23,867) (106) 178 (46) (9) Minority Interest in Foreign Subsidiaries - - - - - - - - Other 843 531 (229) (3,086) (140) 4 - 5 Change in: Receivables and Unbilled Utility Revenue 7,736 24,035 6,040 2,461 - (63) - (35) Accounts Receivable- Intercompany (6,156) 1,631 (1,412) (597) (3) 2 5 10 Gas Stored Underground and Material and Supplies - 2,317 779 (654) - (840) - - Unrecovered Purchased Gas Costs - (6,316) - - - - - - Prepayments 382 (3,169) (221) 3,691 - (47) - - Accounts Payable 196 (11,832) (5,005) (5,202) - 95 (14) - Amounts Payable to Customers - (4,402) (333) - - - - - Accounts Payable-Intercompany (6,448) 3,048 1,585 3,680 5 226 - (8) Other Accruals and Current Liabilities 11,632 (22,256) (3,345) (11,270) 149 24 4 33 Other Assets (1,555) 4,860 (1,703) 189 - - - - Other Liabilities 222 8,889 7,265 1,859 - 10 (82) 16 -------- -------- ------- -------- ----- ----- ---- --- Net Cash Provided by (Used in) Operating Activities $ 69,491 $ 79,667 $64,866 $ 88,760 $ (12) $ 929 $147 $82 -------- -------- ------- -------- ----- ----- ---- ---
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference. (Consolidating Statement of Cash Flows continues on pages 45 and 46)
Horizon National Energy Seneca Niagara Fuel Development, Upstate Indep. Indep. Total Before Consolidated Resources, Inc. Energy Pipeline Marketing Eliminations Eliminations Company and Inc. (Consolidated) Inc. Company Company & Adjustments & Adjustments Subsidiaries - ---------- -------------- ------- -------- --------- ------------- ------------- ------------ $ 787 $ 1,279 $ (191) $ 106 $ - $ 45,716 $(22,528) $ 23,188 - - - - - 18,232 (9,116) 9,116 - - - - - 30,400 (30,400) - - - - - - 128,996 - 128,996 90 7,309 - - - 118,880 - 118,880 (138) 1,385 - 112 - (25,591) (646) (26,237) - 2,213 - - - 2,213 - 2,213 296 (8,238) - - - (10,014) 3,636 (6,378) (243) 3,369 (2) - - 43,298 1,902 45,200 34 - (16) - - (6,502) 6,502 - (2,077) (31) (765) - - (1,271) - (1,271) - - - - - (6,316) - (6,316) 140 53 - - - 829 - 829 (1,131) (467) - - - (23,360) (1,615) (24,975) - - - - - (4,735) - (4,735) 993 2,103 30 26 - 5,240 (5,240) - 225 3,251 (106) (54) - (21,713) 6,232 (15,481) (75) 62 - (320) - 1,458 (1,422) 36 (2,935) (121) - - - 15,123 (5,210) 9,913 ------- ------- ------ ----- ----- -------- -------- -------- $(4,034) $12,167 $(1,050) $(130) $ - $310,883 $(57,905) $252,978 ------- ------- ------- ----- ----- -------- -------- --------
NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Data- National National Seneca Highland Track National Fuel Gas Fuel Gas Resources Leidy Land & Utility Account Fuel Gas Distribution Supply Corp. Hub, Minerals, Constructors, Services, Company Corp. Corp. (Consolidated) Inc. Inc. Inc. Inc. -------- ------------ -------- -------------- ----- --------- ------------- --------- INVESTING ACTIVITIES: - --------------------- Capital Expenditures $ - $(50,680) $(23,692) $(300,065) $ - $(3,698) $ - $ - Investment in Subsidiaries, Net of Cash Acquired - - - (29,757) - - - - Investment in Associated Companies (34,200) - - - - - - - Change in Notes and Dividends Receivable - Intercompany (315,488) - - (8,400) (700) 1,200 600 (200) Other - - - 2,935 1,035 30 88 70 --------- -------- -------- -------- ------ ------- ----- ----- Net Cash Provided by (Used In) Investing Activities (349,688) (50,680) (23,692) (335,287) 335 (2,468) 688 (130) --------- -------- -------- --------- ------ ------- ----- ----- FINANCING ACTIVITIES: - --------------------- Change in Notes Payable to Banks and Commercial Paper 233,900 - - - - - - - Change in Notes Payable-Intercompany 3,000 7,700 (16,400) 250,300 (300) 2,000 - - Capital Contribution - - - - - - (800) - Net Proceeds from Issuance of Long-Term Debt 198,750 - - - - - - - Reduction of Long-Term Debt (100,000) - - (3,359) - - - - Proceeds from Issuance of Common Stock 11,512 - - - - - - - Dividends Paid on Common Stock (66,959) (33,612) (24,616) - - (800) - - Dividends Paid to Minority Interest - - - - - - - - --------- -------- -------- --------- ------ ------- ----- ----- Net Cash Provided by (Used in) Financing Activities 280,203 (25,912) (41,016) 246,941 (300) 1,200 (800) - ---------- -------- -------- --------- ------ ------- ----- ----- Effect of Exchange Rates on Cash - - - - - - - - ---------- -------- -------- --------- ------ ------- ----- ----- Net Increase (Decrease) in Cash and Temporary Cash Investments 6 3,075 158 414 23 (339) 35 (48) Cash and Temporary Cash Investments at Beginning of Year 7,065 611 600 1,434 63 472 100 74 --------- -------- -------- --------- ------ ------- ----- ----- Cash and Temporary Cash Investments at End of Year $ 7,071 $ 3,686 $ 758 $ 1,848 $ 86 $ 133 $ 135 $ 26 ========= ======== ======== ========= ====== ======= ===== =====
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
Horizon National Energy Seneca Niagara Fuel Development, Upstate Indep. Indep. Total Before Consolidated Resources, Inc. Energy Pipeline Marketing Eliminations Eliminations Company and Inc. (Consolidated) Inc. Company Company & Adjustments & Adjustments Subsidiaries - ---------- -------------- ------ -------- --------- ------------- ------------- ------------ $ (320) $(14,778) $ - $ - $ - $(393,233) $ - $(393,233) - (82,209) - - - (111,966) - (111,966) - - - - - (34,200) 34,200 - 7,000 (2,500) - - - (318,488) 318,488 - - 3,636 - (5,453) - 2,341 (211) 2,130 ------ -------- ------ -------- ---- --------- --------- --------- 6,680 (95,851) - (5,453) - (855,546) 352,477 (503,069) ------ -------- ------ -------- ---- --------- --------- --------- - (4,513) - - - 229,387 - 229,387 2,200 60,100 1,100 5,600 - 315,300 (315,300) - - 35,000 - - - 34,200 (34,200) - - - - - - 198,750 - 198,750 - (508) - - - (103,867) - (103,867) - - - - - 11,512 (3,659) 7,853 (140) - - - - (126,127) 59,168 (66,959) - (253) - - - (253) - (253) ------ -------- ------ -------- ---- --------- --------- --------- 2,060 89,826 1,100 5,600 - 558,902 (293,991) 264,911 ------ -------- ------ -------- ---- --------- --------- --------- - 1,578 - - - 1,578 - 1,578 ------ -------- ------ -------- ---- --------- --------- --------- 4,706 7,720 50 17 - 15,817 581 16,398 2,326 1,188 1 1 1 13,936 103 14,039 ------ -------- ------ -------- ---- --------- --------- --------- $7,032 $ 8,908 $ 51 $ 18 $ 1 $ 29,753 $ 684 $ 30,437 ====== ======== ====== ======== ==== ========= ========= =========
SENECA RESOURCES CORPORATION CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Consolidated Seneca HarCor Eliminations Seneca Resources Energy, Total Before and Resources Corporation Inc. Eliminations Adjustments Corporation ----------- ------- ------------ ----------- ------------- ASSETS - ------ PROPERTY, PLANT & EQUIPMENT $835,017 $112,073 $947,090 $ - $947,090 - --------------------------- Less: Accumulated DD&A 259,715 15,637 275,352 369 275,721 -------- -------- -------- --------- -------- 575,302 96,436 671,738 (369) 671,369 -------- -------- -------- --------- -------- CURRENT ASSETS: - --------------- Cash and Temporary Cash Investments 1,796 52 1,848 - 1,848 Notes Receivable - Intercompany 11,800 - 11,800 - 11,800 Allowance for Uncollectible Accounts (104) - (104) - (104) Accounts Receivable - Intercompany 4,267 (662) 3,605 (2,233) 1,372 Accounts Receivable 12,809 1,355 14,164 - 14,164 Materials and Supplies -at average cost 1,130 - 1,130 - 1,130 Prepayments 3,242 139 3,381 - 3,381 -------- -------- -------- --------- -------- 34,940 884 35,824 (2,233) 33,591 -------- -------- -------- --------- -------- OTHER ASSETS: - ------------- Deferred Charges 390 1,899 2,289 - 2,289 Investment in Associated Company 31,358 - 31,358 (31,358) - Other Assets 1,473 - 1,473 - 1,473 -------- -------- -------- --------- -------- 33,221 1,899 35,120 (31,358) 3,762 -------- -------- -------- --------- -------- TOTAL ASSETS $643,463 $ 99,219 $742,682 $ (33,960) $708,722 ======== ======== ======== ========= ======== CAPITALIZATION & LIABILITIES - ---------------------------- CAPITALIZATION: - --------------- Common Stock $ 500 $ - $ 500 $ - $ 500 Paid - in - Capital 104,035 32,538 136,573 (32,538) 104,035 Earnings Reinvested in the Business (21,347) (941) (22,288) 941 (21,347) -------- -------- -------- --------- -------- Total Common Stock Equity 83,188 31,597 114,785 (31,597) 83,188 Long-Term Debt, Net of Current Portion 3,993 - 3,993 - 3,993 Notes Payable - Intercompany 170,000 - 170,000 - 170,000 -------- -------- -------- --------- -------- Total Capitalization 257,181 31,597 288,778 (31,597) 257,181 -------- -------- -------- --------- -------- CURRENT AND ACCRUED LIABILITIES: - -------------------------------- Notes Payable - Intercompany 298,900 - 298,900 - 298,900 Current Portion of Long-Term Debt 3,647 62,571 66,218 - 66,218 Accounts Payable 17,087 657 17,744 - 17,744 Accounts Payable - Intercompany 5,141 3,140 8,281 (2,233) 6,048 Dividends Payable - Intercompany 2,000 - 2,000 - 2,000 Other Accruals and Current Liabilities (7,968) 610 (7,358) 9 (7,349) -------- -------- -------- --------- -------- 318,807 66,978 385,785 (2,224) 383,561 -------- -------- -------- --------- -------- DEFERRED CREDITS: - ----------------- Accumulated Deferred Income Taxes 63,881 644 64,525 (139) 64,386 Other Deferred Credits 3,594 - 3,594 - 3,594 -------- -------- -------- --------- -------- 67,475 644 68,119 (139) 67,980 -------- -------- -------- --------- -------- TOTAL CAPITALIZATION & LIABILITIES $643,463 $ 99,219 $742,682 $ (33,960) $708,722 ======== ======== ======== ========= ========
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
SENECA RESOURCES CORPORATION CONSOLIDATING STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Consolidated Seneca HarCor Eliminations Seneca Resources Energy, Total Before and Resources Corporation Inc. Eliminations Adjustments Corporation ----------- ------- ------------ ----------- ------------- OPERATING REVENUE: $129,971 $ 7,451 $137,422 $ - $137,422 - ----------------- -------- -------- -------- --------- -------- OPERATING EXPENSE: - ------------------ Purchased Gas 1,339 3,377 4,716 - 4,716 Operation 34,718 1,879 36,597 - 36,597 Maintenance 29 - 29 - 29 Property, Franchise & Other Taxes 1,489 141 1,630 - 1,630 Depreciation, Depletion & Amortization 53,717 1,582 55,299 369 55,668 Impairment of Oil & Gas Producing Properties 128,996 - 128,996 - 128,996 Income Taxes (38,417) (422) (38,839) (130) (38,969) -------- -------- -------- --------- -------- 181,871 6,557 188,428 239 188,667 -------- -------- -------- --------- -------- Operating Income (Loss) (51,900) 894 (51,006) (239) (51,245) -------- -------- -------- --------- -------- OTHER INCOME: - ------------- Unremitted Earnings of Subsidiaries (1,180) - (1,180) 1,180 - Interest - Intercompany 467 - 467 - 467 Other 10,673 3 10,676 - 10,676 -------- -------- -------- --------- -------- 9,960 3 9,963 1,180 11,143 -------- -------- -------- --------- -------- Income (Loss) Before Interest Charges (41,940) 897 (41,043) 941 (40,102) -------- -------- -------- --------- -------- INTEREST CHARGES: - ----------------- Interest on Long-Term Debt 1,083 1,838 2,921 - 2,921 Interest - Intercompany 20,085 - 20,085 - 20,085 -------- -------- -------- --------- -------- 21,168 1,838 23,006 - 23,006 -------- -------- -------- --------- -------- Income (Loss) Before Cumulative Effect (63,108) (941) (64,049) 941 (63,108) Cumulative Effect of Change in Accounting For Depletion (9,116) - (9,116) - (9,116) -------- -------- -------- --------- -------- Net Income (Loss) Available for Common Stock $(72,224) $ (941) $(73,165) $ 941 $(72,224) ======== ======== ======== ========= ========
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
SENECA RESOURCES CORPORATION CONSOLIDATING STATEMENT OF EARNINGS REINVESTED IN THE BUSINESS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Consolidated Seneca HarCor Eliminations Seneca Resources Energy, Total Before and Resources Corporation Inc. Eliminations Adjustments Corporation ----------- ------- ------------ ----------- ------------- Balance at Beginning of Year $ 52,877 $ -* $ 52,877 $ - $ 52,877 Net Income (Loss) Available for Common Stock (72,224) (941) (73,165) 941 (72,224) Dividends on Common Stock (2,000) - (2,000) - (2,000) -------- -------- -------- --------- -------- Balance at End of Year $(21,347) $ (941) $(22,288) $ 941 $(21,347) ======== ======== ======== ========= ========
*Represents retained earnings at the date of acquisition. See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
SENECA RESOURCES CORPORATION CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Consolidated Seneca HarCor Eliminations Seneca Resources Energy, Total Before and Resources Corporation Inc. Eliminations Adjustments Corporation ----------- ------- ------------ ----------- ------------- OPERATING ACTIVITIES: - --------------------- Net Income (Loss) Available for Common Stock $(72,224) $ (941) $(73,165) $ 941 $(72,224) Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities Cumulative Effect of Changes in Accounting for Depletion 9,116 - 9,116 - 9,116 Unremitted Earnings of Subsidiaries 1,180 - 1,180 (1,180) - Impairment of Oil and Gas Producing Properties 128,996 - 128,996 - 128,996 Depreciation, Depletion and Amortization 53,717 1,582 55,299 369 55,668 Deferred Income Taxes (24,372) 644 (23,728) (139) (23,867) Other (1,000) (2,086) (3,086) - (3,086) Change in: Accounts Receivables 1,115 1,346 2,461 - 2,461 Accounts Receivable - Intercompany (3,492) 662 (2,830) 2,233 (597) Materials and Supplies (654) - (654) - (654) Prepayments 1,254 2,437 3,691 - 3,691 Accounts Payable (3,374) (1,828) (5,202) - (5,202) Accounts Payable - Intercompany 2,773 3,140 5,913 (2,233) 3,680 Other Accruals and Current Liabilities (5,951) (5,328) (11,279) 9 (11,270) Other Assets 2,088 (1,899) 189 - 189 Other Liabilities 1,859 - 1,859 - 1,859 -------- -------- -------- --------- -------- Net Cash Provided by (Used in) Operating Activities 91,031 (2,271) 88,760 - 88,760 -------- -------- -------- --------- -------- INVESTING ACTIVITIES: - --------------------- Capital Expenditures (299,608) (457) (300,065) - (300,065) Investment in Subsidiaries, Net of Cash Acquired (32,537) - (32,537) 2,780 (29,757) Change in Notes and Dividends Receivable - Intercompany (8,400) - (8,400) - (8,400) Other 2,935 - 2,935 - 2,935 -------- -------- -------- --------- -------- Net Cash Provided by (Used in) Investing Activities (337,610) (457) (338,067) 2,780 (335,287) -------- -------- -------- --------- -------- FINANCING ACTIVITIES: - --------------------- Change in Notes Payable - Intercompany 250,300 - 250,300 - 250,300 Reduction of Long-Term Debt (3,359) - (3,359) - (3,359) -------- -------- -------- --------- -------- Net Cash Provided by Financing Activities 246,941 - 246,941 - 246,941 -------- -------- -------- --------- -------- Net Increase (Decrease) in Cash and Temporary Cash Investments 362 (2,728) (2,366) 2,780 414 Cash and Temporary Cash Investments at Beginning of Year 1,434 2,780* 4,214 (2,780) 1,434 -------- -------- -------- --------- -------- Cash and Temporary Cash Investments at End of Year $ 1,796 $ 52 $ 1,848 $ - $ 1,848 ======== ======== ======== ========= ========
*Represents cash balance at the date of acquisition. See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
HORIZON ENERGY DEVELOPMENT, INC. AND SUBSIDIARIES CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Horizon Horizon Energy Energy Sceptre Consolidated Development, Holdings Power Total Before Horizon and Inc. (Consolidated) Company Eliminations Eliminations Subsidiaries ------------ -------------- ------- ------------ ------------ ------------ ASSETS - ------ PROPERTY, PLANT & EQUIPMENT $ - $281,710 $ - $281,710 $ - $281,710 - --------------------------- Less: Accumulated DD&A - 79,120 - 79,120 - 79,120 -------- -------- ------- -------- --------- -------- - 202,590 - 202,590 - 202,590 -------- -------- ------- -------- --------- -------- CURRENT ASSETS: - --------------- Cash and Temporary Cash Investments 97 8,810 1 8,908 - 8,908 Notes Receivable Intercompany 6,530 - - 6,530 (4,030) 2,500 Allowance for Uncollectible Accounts - (876) - (876) - (876) Accounts Receivable - Intercompany 51 - - 51 (45) 6 Accounts Receivable - 9,743 10 9,753 - 9,753 Unbilled Utility Revenue - 710 - 710 - 710 Materials and Supplies - 6,059 - 6,059 - 6,059 Prepaid Expenses 3 151 - 154 - 154 -------- -------- ------- -------- --------- -------- 6,681 24,597 11 31,289 (4,075) 27,214 -------- -------- ------- -------- --------- -------- OTHER ASSETS: - ------------- Investment in Associated Companies 124,135 - - 124,135 (124,135) - Other Assets - 12,535 - 12,535 - 12,535 Intercompany Notes Receivable 2,500 - - 2,500 (2,500) - Deferred Charges - - - - - - -------- -------- ------- -------- --------- -------- 126,635 12,535 - 139,170 (126,635) 12,535 -------- -------- ------- -------- --------- -------- TOTAL ASSETS $133,316 $239,722 $ 11 $373,049 $(130,710) $242,339 ======== ======== ======= ======== ========= ======== CAPITALIZATION & LIABILITIES - ---------------------------- CAPITALIZATION: - --------------- Common Stock $ 5 $ 2 $ - $ 7 $ (2) $ 5 Paid - in - Capital 38,245 114,957 - 153,202 (114,957) 38,245 Capital Contribution from Horizon - - 10,901 10,901 (10,901) - Earnings Reinvested in the Business (11,659) (2,057) (7,575) (21,291) 9,632 (11,659) Cumulative Translation Adjustment 7,265 7,907 - 15,172 (7,907) 7,265 -------- -------- ------- -------- --------- -------- 33,856 120,809 3,326 157,991 (124,135) 33,856 -------- -------- ------- -------- --------- -------- - Long-Term Debt, Net of Current Portion - 64,676 - 64,676 - 64,676 Notes Payable-Intercompany 90,000 2,500 - 92,500 (2,500) 90,000 -------- -------- ------- -------- --------- -------- 123,856 187,985 3,326 315,167 (126,635) 188,532 -------- -------- ------- -------- --------- -------- Minority Interest in Foreign Subsidiaries - 25,479 - 25,479 - 25,479 -------- -------- ------- -------- --------- -------- CURRENT AND ACCRUED LIABILITIES: - -------------------------------- Notes Payable - Intercompany 2,700 - - 2,700 - 2,700 Current Portion of Long-Term Debt - 711 - 711 - 711 Accounts Payable 86 8,586 11 8,683 (1) 8,682 Accounts Payable - Intercompany 2,977 4,073 - 7,050 (4,074) 2,976 Other Accruals and Current Liabilities 3,815 8,141 (3,307) 8,649 - 8,649 -------- -------- ------- -------- --------- -------- 9,578 21,511 (3,296) 27,793 (4,075) 23,718 -------- -------- ------- -------- --------- -------- DEFERRED CREDITS: - ----------------- Accumulated Deferred Income Taxes (152) 4,570 (20) 4,398 - 4,398 Other Deferred Credits 34 177 1 212 - 212 -------- -------- ------- -------- --------- -------- (118) 4,747 (19) 4,610 - 4,610 -------- -------- ------- -------- --------- -------- TOTAL CAPITALIZATION & LIABILITIES $133,316 $239,722 $ 11 $373,049 $(130,710) $242,339 ======== ======== ======= ======== ========= ========
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
HORIZON ENERGY DEVELOPMENT, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Horizon Energy Horizon Energy Sceptre Consolidated Development, Holdings Power Total Before Horizon and Inc. (Consolidated)(1) Company Eliminations Eliminations Subsidiaries ------------ ----------------- ------- ------------ ------------ ------------ OPERATING REVENUE: $ - $76,259 $ - $76,259 $ - $76,259 - ----------------- ------- ------- ------- ------- ------- ------- OPERATING EXPENSE: - ------------------ Fuel Used in Heat and Electric Generation - 37,592 - 37,592 - 37,592 Operation 1,992 25,225 30 27,247 - 27,247 Maintenance - 59 - 59 - 59 Property, Franchise & Other Taxes 13 1,902 1 1,916 - 1,916 Depreciation, Depletion and Amortization - 7,309 - 7,309 - 7,309 Income Taxes (2,165) 4,334 (11) 2,158 - 2,158 ------- ------- ------- ------- ------- ------- (160) 76,421 20 76,281 - 76,281 ------- ------- ------- ------- ------- ------- Operating Income (Loss) 160 (162) (20) (22) - (22) ------- ------- ------- ------- ------- ------- OTHER INCOME: - ------------- Unremitted Earnings of Subsidiaries 5,330 - - 5,330 (5,330) - Other 225 10,573 - 10,798 (96) 10,702 ------- ------- ------- ------- ------- ------- 5,555 10,573 - 16,128 (5,426) 10,702 ------- ------- ------- ------- ------- ------- Income (Loss) Before Interest Charges and Minority Interest in Foreign Subsidiaries 5,715 10,411 (20) 16,106 (5,426) 10,680 ------- ------- ------- ------- ------- ------- INTEREST CHARGES - ---------------- Interest on Long-Term Debt - 2,466 - 2,466 - 2,466 Interest-Intercompany 4,406 96 - 4,502 (96) 4,406 Other Interest 30 286 - 316 - 316 ------- ------- ------- ------- ------- ------- 4,436 2,848 - 7,284 (96) 7,188 ------- ------- ------- ------- ------- ------- Minority Interest in Foreign Subsidiaries - (2,213) - (2,213) - (2,213) ------- ------- ------- ------- ------- ------- Net Income (Loss) Available for Common Stock $ 1,279 $ 5,350 $ (20) $ 6,609 $(5,330) $ 1,279 ======= ======= ======= ======= ======= =======
(1)Effective April 30, 1998, Horizon Energy Development, Inc. transferred (at book value) its investment in Horizon B.V. to Horizon Energy Holdings. These non-cash transfers served as the means of capitalizing Horizon Energy Holdings. Since Horizon Energy Holdings had no other income statement activity than that provided by consolidated Horizon B.V., the amounts in this column represent the income statement activity of consolidated Horizon B.V. for the fiscal year ended September 30, 1998. See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
HORIZON ENERGY DEVELOPMENT, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF EARNINGS REINVESTED IN THE BUSINESS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Horizon Energy Horizon Energy Sceptre Consolidated EARNINGS REINVESTED Development, Holdings Power Total Before Horizon and IN THE BUSINESS Inc. (Consolidated) Company Eliminations Eliminations Subsidiaries - ------------------- ------------ -------------- ------- ------------ ------------ ------------ Balance at Beginning of Year $(12,938) $(1,657) $(7,555) $(22,150) $ 9,212 $(12,938) Net Income (Loss) Available for Common Stock 1,279 5,350 (20) 6,609 (5,330) 1,279 Adjustment(1) - (5,750) - (5,750) 5,750 - -------- ------- ------- -------- ------- -------- Balance at End of Year $(11,659) $(2,057) $(7,575) $(21,291) $ 9,632 $(11,659) ======== ======= ======= ======== ======= ========
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference. (1) Effective April 30, 1998, Horizon Energy Development, Inc. transferred (at book value) its investment in Horizon B.V. as well as its current accounts receivable from Horizon B.V. to a new corporation, Horizon Energy Holdings. These non-cash transfers served as the means of capitalizing Horizon Energy Holdings. On April 30, 1998, the capital structure of Horizon Energy Holdings consisted of 2,000 shares at $1 par value with the remaining book value of the transferred assets recorded as paid in capital. The retained earnings balance of consolidated Horizon B.V. at April 30, 1998, was $5,750. This amount became part of the paid in capital of Horizon Energy Holdings.
HORIZON ENERGY DEVELOPMENT, INC. AND SUBSIDIARIES CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Horizon Horizon Energy Energy Holdings Sceptre Total Before Eliminations Consolidated Development, (Consolidated) Power Eliminations and Horizon and Inc. (1) Company & Adjustments Adjustments Subsidiaries ------------ -------------- ------- ------------- ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: - ------------------------------------- Net Income (Loss) $ 1,279 $ 5,350 $(20) $ 6,609 $ (5,330) $ 1,279 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Unremitted Earnings of Subsidiaries (5,330) - - (5,330) 5,330 - Depreciation, Depletion & Amortization - 7,309 - 7,309 - 7,309 Deferred Income Taxes (63) 1,448 - 1,385 - 1,385 Minority Interest in Foreign Subsidiaries - 2,213 - 2,213 - 2,213 Other - (8,238) - (8,238) - (8,238) Change in: Receivables and Unbilled Utility Revenue - 3,369 - 3,369 - 3,369 Materials and Supplies - (31) - (31) - (31) Prepayments (3) 56 - 53 - 53 Accounts Payable 12 (772) 4 (756) 289 (467) Accounts Payable - Intercompany 2,103 - - 2,103 - 2,103 Other Accruals and Current Liabilities (71) 3,343 (21) 3,251 - 3,251 Other Assets 128 (66) - 62 - 62 Other Liabilities 4 (125) - (121) - (121) -------- ------- ---- -------- -------- -------- Net Cash Provided by (Used in) Operations (1,941) 13,856 (37) 11,878 289 12,167 -------- -------- ---- -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: - ------------------------------------- Capital Expenditures - (14,778) - (14,778) - (14,778) Accounts Receivable - Intercompany (87,871) - - (87,871) 87,871 - Change in Notes and Dividends Receivable - Intercompany (5,000) - - (5,000) 2,500 (2,500) Investment in Associated Companies (200) - - (200) 200 - Investment in Subsidiaries, Net of Cash Acquired - (82,209) - (82,209) - (82,209) Other - 3,636 - 3,636 - 3,636 -------- -------- ---- -------- -------- -------- Net Cash Provided by (Used in) Investing Activities (93,071) (93,351) - (186,422) 90,571 (95,851) -------- -------- ---- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: - ------------------------------------- Change in Notes Payable to Banks and Commercial Paper - (4,513) - (4,513) - (4,513) Accounts Payable - Intercompany - 88,160 - 88,160 (88,160) - Change in Notes Payable - Intercompany 60,100 2,500 - 62,600 (2,500) 60,100 Capital Contribution 35,000 214 (14) 35,200 (200) 35,000 Reduction of Long-Term Debt - (508) - (508) - (508) Dividends Paid to Minority Interest - (253) - (253) - (253) -------- -------- ---- -------- -------- --------- Net Cash Provided by (Used in) Financing Activities 95,100 85,600 (14) 180,686 (90,860) 89,826 -------- -------- ---- -------- -------- -------- Effect of Exchange Rates on Cash - 1,578 - 1,578 - 1,578 -------- -------- ---- -------- -------- -------- Net Increase (Decrease) in Cash and Temporary Cash Investments 88 7,683 (51) 7,720 - 7,720 Cash and Temporary Cash Investments at Beginning of Period 9 1,127 52 1,188 - 1,188 -------- -------- ---- -------- -------- -------- Cash and Temporary Cash Investments at End of Period $ 97 $ 8,810 $ 1 $ 8,908 $ - $ 8,908 ======== ======== ==== ======== ======== ========
(1)Effective April 30, 1998, Horizon Energy Development, Inc. transferred (at book value) its investment in Horizon B.V. to Horizon Energy Holdings. These non-cash transfers served as the means of capitalizing Horizon Energy Holdings. Since Horizon Energy Holdings had no cash flow activity other than that provided by consolidated Horizon B.V., the amounts in this column represent the cash flow activity of consolidated Horizon B.V. for the fiscal year ended September 30, 1998. See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
HORIZON ENERGY HOLDINGS CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Consolidated Horizon Horizon Energy Horizon Energy Development B.V. Total Before Energy Holdings Holdings(1) (Consolidated) Eliminations Eliminations and Subsidiaries ----------- -------------- ------------ ------------ ---------------- ASSETS - ------ PROPERTY, PLANT & EQUIPMENT $ - $281,710 $281,710 $ - $281,710 - --------------------------- Less: Accumulated DD&A - 79,120 79,120 - 79,120 -------- -------- -------- --------- -------- - 202,590 202,590 - 202,590 -------- -------- -------- --------- -------- CURRENT ASSETS: - --------------- Cash and Temporary Cash Investments - 8,810 8,810 - 8,810 Accounts Receivable - Intercompany 85,261 - 85,261 (85,261) - Allowance for Uncollectible Accounts - (876) (876) - (876) Accounts Receivable - 9,743 9,743 - 9,743 Unbilled Utility Revenue - 710 710 - 710 Materials and Supplies - 6,059 6,059 - 6,059 Prepayments - 151 151 - 151 -------- -------- -------- --------- -------- 85,261 24,597 109,858 (85,261) 24,597 -------- -------- -------- --------- -------- OTHER ASSETS: - ------------- Investment in Associated Companies 35,548 - 35,548 (35,548) - Other Assets - 12,535 12,535 - 12,535 -------- -------- -------- --------- -------- 35,548 12,535 48,083 (35,548) 12,535 -------- -------- -------- --------- -------- TOTAL ASSETS $120,809 $239,722 $360,531 $(120,809) $239,722 ======== ======== ======== ========= ======== CAPITALIZATION & LIABILITIES - ---------------------------- CAPITALIZATION: - --------------- Common Stock $ 2 $ 29 $ 31 $ (29) $ 2 Paid - in - Capital 114,957 24,561 139,518 (24,561) 114,957 Earnings Reinvested in the Business (2,057) 3,693 1,636 (3,693) (2,057) Cumulative Translation Adjustment 7,907 7,265 15,172 (7,265) 7,907 -------- -------- -------- --------- -------- Total Common Stock Equity 120,809 35,548 156,357 (35,548) 120,809 Long-Term Debt, Net of Current Portion - 64,676 64,676 - 64,676 Long-Term Debt - Intercompany - 2,500 2,500 - 2,500 -------- -------- -------- --------- -------- Total Capitalization 120,809 102,724 223,533 (35,548) 187,985 -------- -------- -------- --------- -------- Minority Interest in Foreign Subsidiaries - 25,479 25,479 - 25,479 -------- -------- -------- --------- -------- CURRENT AND ACCRUED LIABILITIES: - -------------------------------- Current Portion of Long-Term Debt - 711 711 - 711 Accounts Payable - 8,586 8,586 - 8,586 Accounts Payable - Intercompany - 89,334 89,334 (85,261) 4,073 Other Accruals and Current Liabilities - 8,141 8,141 - 8,141 -------- -------- -------- --------- -------- - 106,772 106,772 (85,261) 21,511 -------- -------- -------- --------- -------- DEFERRED CREDITS: - ----------------- Accumulated Deferred Income Taxes - 4,570 4,570 - 4,570 Other Deferred Credits - 177 177 - 177 -------- -------- -------- --------- -------- - 4,747 4,747 - 4,747 -------- -------- -------- --------- -------- TOTAL CAPITALIZATION & LIABILITIES $120,809 $239,722 $360,531 $(120,809) $239,722 ======== ======== ======== ========= ========
(1) Effective April 30, 1998, Horizon Energy Development, Inc. transferred (at book value) its investment in Horizon B.V. to Horizon Energy Holdings. These non-cash transfers served as the means of capitalizing Horizon Energy Holdings. Horizon Energy Holdings had no income statement activity or cash flow activity other than that provided by consolidated Horizon B.V. The income statement and cash flow statement of consolidated Horizon B.V. can be found on pages 61-62 and pages 63-64, respectively. See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference. THIS PAGE LEFT BLANK INTENTIONALLY
HORIZON ENERGY DEVELOPMENT, B.V. CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Prvni Severoceske severozapadni teplarny, a.s. teplarenska, a.s. Power (SCT) (PSZT) Development Horizon Energy Horizon B.V. (Consolidated) (Consolidated) (Consolidated) Development, s.r.o. ------------ -------------- -------------- -------------- ------------------- ASSETS - ------ PROPERTY, PLANT & EQUIPMENT $ - $ 83,463 $196,796 $1,191 $ 260 - --------------------------- Less: Accumulated DD&A - 27,604 51,109 210 197 -------- -------- -------- ------ ------ - 55,859 145,687 981 63 -------- -------- -------- ------ ------ CURRENT ASSETS: - --------------- Cash and Temporary Cash Investments - 7,419 1,141 107 143 Allowance for Uncollectible Accounts - (733) (143) - - Accounts Receivable - Intercompany 60 - - - 263 Accounts Receivable 3 4,129 5,379 142 90 Unbilled Utility Revenue - 707 3 - - Materials and Supplies - 4,269 1,790 - - Prepayments - 62 57 1 31 -------- -------- -------- ------ ------ 63 15,853 8,227 250 527 -------- -------- -------- ------ ------ OTHER ASSETS: - ------------- Investment in Associated Companies 124,855 - - - - Other - (1,704) 13,158 660 421 -------- -------- -------- ------ ------ 124,855 (1,704) 13,158 660 421 -------- -------- -------- ------ ------ TOTAL ASSETS $124,918 $ 70,008 $167,072 $1,891 $1,011 ======== ======== ======== ====== ====== CAPITALIZATION & LIABILITIES - ---------------------------- CAPITALIZATION: - --------------- Common Stock $ 29 $ 38,540 $ 28,938 $ 760 $1,779 Paid - in - Capital 24,561 7,253 35,622 1,562 - Earnings Reinvested in the Business 3,693 594 3,682 (384) (702) Cumulative Translation Adjustment 7,265 (202) 7,591 (125) (54) -------- -------- -------- ------ ------ Total Common Stock Equity 35,548 46,185 75,833 1,813 1,023 Long-Term Debt, Net of Current Portion - 4,172 60,504 - - Notes Payable - Intercompany - - 2,500 - - -------- -------- -------- ------ ------ Total Capitalization 35,548 50,357 138,837 1,813 1,023 -------- -------- -------- ------ ------ Minority Interest in Foreign Subsidiaries - 15,526 9,953 - - -------- -------- -------- ------ ------ CURRENT AND ACCRUED LIABILITIES: - -------------------------------- Current Portion of Long-Term Debt - 711 - - - Accounts Payable 109 1,362 7,579 (223) 22 Accounts Payable - Intercompany 89,256 (1) 1 218 (79) Other Accruals and Current Liabilities 5 1,576 6,553 (37) 44 -------- -------- -------- ------ ------ 89,370 3,648 14,133 (42) (13) -------- -------- -------- ------ ------ DEFERRED CREDITS: - ----------------- Accumulated Deferred Income Tax - 421 4,149 - - Other Deferred Credits - 56 - 120 1 -------- -------- -------- ------ ------ - 477 4,149 120 1 -------- -------- -------- ------ ------ TOTAL CAPITALIZATION & LIABILITIES $124,918 $ 70,008 $167,072 $1,891 $1,011 ======== ======== ======== ====== ======
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
Consolidated Total Before Horizon B.V. Eliminations Eliminations and Subsidiaries ------------ ------------ ---------------- $281,710 $ - $281,710 79,120 - 79,120 -------- --------- -------- 202,590 - 202,590 -------- --------- -------- 8,810 - 8,810 (876) - (876) 323 (323) - 9,743 - 9,743 710 - 710 6,059 - 6,059 151 - 151 -------- --------- -------- 24,920 (323) 24,597 -------- --------- -------- 124,855 (124,855) - 12,535 - 12,535 -------- --------- -------- 137,390 (124,855) 12,535 -------- --------- -------- $364,900 $(125,178) $239,722 ======== ========= ======== $ 70,046 $ (70,017) $ 29 68,998 (44,437) 24,561 6,883 (3,190) 3,693 14,475 (7,210) 7,265 -------- --------- -------- 160,402 (124,854) 35,548 64,676 - 64,676 2,500 - 2,500 -------- --------- -------- 227,578 (124,854) 102,724 -------- --------- -------- 25,479 - 25,479 -------- --------- -------- 711 - 711 8,849 (263) 8,586 89,395 (61) 89,334 8,141 - 8,141 -------- --------- -------- 107,096 (324) 106,772 -------- --------- -------- 4,570 - 4,570 177 - 177 -------- --------- -------- 4,747 - 4,747 -------- --------- -------- $364,900 $(125,178) $239,722 ======== ========= ========
HORIZON ENERGY DEVELOPMENT, B.V. CONSOLIDATING STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Power SCT PSZT Development Horizon Energy Horizon B.V. (Consolidated) (Consolidated) (Consolidated) Development, s.r.o. ------------ -------------- -------------- -------------- ------------------- OPERATING REVENUE: $ - $ 38,434 $ 36,275 $1,594 $ 956 - ----------------- -------- -------- -------- ------ ------ OPERATING EXPENSE: - ------------------ Fuel Used in Heat and Electric Generation - 18,789 17,523 1,280 - Operation 126 12,435 12,383 305 901 Maintenance - - - 40 19 Property, Franchise & Other Taxes (29) 1,099 828 1 3 Depreciation, Depletion and Amortization - 2,912 4,320 33 44 Income Taxes - 1,354 2,980 - - -------- -------- -------- ------ ------ 97 36,589 38,034 1,659 967 -------- -------- -------- ------ ------ Operating Income (Loss) (97) 1,845 (1,759) (65) (11) -------- -------- -------- ------ ------ OTHER INCOME: - ------------- Unremitted Earnings of Subsidiaries 5,396 - - - - Other 57 1,616 8,842 26 32 -------- -------- -------- ------ ------ 5,453 1,616 8,842 26 32 -------- -------- -------- ------ ------ Income (Loss) Before Interest Charges and Minority Interest in Foreign Subsidiaries 5,356 3,461 7,083 (39) 21 -------- -------- -------- ------ ------ INTEREST CHARGES: - ----------------- Interest on Long-Term Debt - 702 1,764 - - Interest-Intercompany - - - 96 - Other Interest 6 31 161 88 - -------- -------- -------- ------ ------ 6 733 1,925 184 - -------- -------- -------- ------ ------ Minority Interest in Foreign Subsidiaries - (737) (1,476) - - -------- -------- -------- ------ ------ Net Income (Loss) Available for Common Stock $ 5,350 $ 1,991 $ 3,682 $ (223) $ 21 ======== ======== ======== ====== ======
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
Consolidated Total Before Horizon B.V. Eliminations Eliminations and Subsidiaries ------------ ------------ ---------------- $ 77,259 $ (1,000) $ 76,259 -------- -------- -------- 37,592 - 37,592 26,150 (925) 25,225 59 - 59 1,902 - 1,902 7,309 - 7,309 4,334 - 4,334 -------- -------- -------- 77,346 (925) 76,421 -------- -------- -------- (87) (75) (162) -------- -------- -------- 5,396 (5,396) - 10,573 - 10,573 -------- -------- -------- 15,969 (5,396) 10,573 -------- -------- -------- 15,882 (5,471) 10,411 -------- -------- -------- 2,466 - 2,466 96 - 96 286 - 286 -------- -------- -------- 2,848 - 2,848 -------- -------- -------- (2,213) - (2,213) -------- -------- -------- $ 10,821 $ (5,471) $ 5,350 ======== ======== ========
HORIZON ENERGY DEVELOPMENT, B.V. CONSOLIDATING STATEMENT OF EARNINGS REINVESTED IN THE BUSINESS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Power SCT PSZT Development Horizon Energy Horizon B.V. (Consolidated) (Consolidated) (Consolidated) Development, s.r.o. ------------ -------------- -------------- -------------- ------------------- EARNINGS REINVESTED IN THE BUSINESS: - ---------------- Balance at Beginning of Year $ (1,657) $ -* $ -* $ (161) $ (723) Net Income (Loss) Available For Common Stock 5,350 1,991 3,682 (223) 21 Dividends on Common Stock - (1,397) - - - -------- -------- -------- ------ ------ Balance at End of Year $ 3,693 $ 594 $ 3,682 $ (384) $ (702) ======== ======== ======== ====== ======
*Represents the retained earnings balance at the date of acquisition. See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
Consolidated Total Before Horizon B.V. Eliminations Eliminations and Subsidiaries ------------ ------------ ---------------- $ (2,541) $ 884 $ (1,657) 10,821 (5,471) 5,350 (1,397) 1,397 - -------- -------- -------- $ 6,883 $ (3,190) $ 3,693 ======== ======== ========
HORIZON ENERGY DEVELOPMENT, B.V. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Power SCT PSZT Development Horizon Energy Horizon B.V. (Consolidated) (Consolidated) (Consolidated) Development, s.r.o. ------------ -------------- -------------- -------------- ------------------- CASH FLOWS FROM OPERATING ACTIVITIES: - --------------------- Net Income (Loss) $ 5,350 $ 1,991 $ 3,682 $ (223) $ 21 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Unremitted Earnings of Subsidiaries (5,471) - - - - Depreciation, Depletion & Amortization - 2,912 4,320 33 44 Deferred Income Taxes - (103) 1,551 - - Minority Interest in Foreign Subsidiaries - 737 1,476 - - Other - (295) (8,031) 53 35 Change in: Accounts Receivable - Intercompany - - - - (263) Receivables and Unbilled Utility Revenue 211 1,275 1,496 16 371 Materials and Supplies - (427) 396 - - Prepayments - 61 21 1 (27) Accounts Payable (260) (1,905) 2,802 (831) (315) Other Accruals and Current Liabilities (244) 105 3,059 386 37 Other Assets - (44) (22) - - Other Liabilities - (22) - (103) - -------- --------- -------- ------ ------ Net Cash Provided by (Used in) Operating Activities (414) 4,285 10,750 (668) (97) -------- -------- -------- ------ ------ CASH FLOWS FROM INVESTING ACTIVITIES: - ------------------------------------- Capital Expenditures - (2,252) (12,431) (21) (74) Dividends Received from Associated Company 1,435 - - - - Investment in Associated Companies (1,600) - - - - Investment in Subsidiaries, Net of Cash Acquired (89,464) - - - - Other - 165 3,471 - - -------- -------- -------- ------ ------ Net Cash Used in Investing Activities (89,629) (2,087) (8,960) (21) (74) -------- -------- -------- ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES: - ------------------------------------- Change in Notes Payable to Banks and Commercial Paper - - (4,513) - - Accounts Payable - Intercompany 88,836 - 1 - (677) Change in Notes Payable - Intercompany - - 2,500 - - Capital Contributions 214 - - 761 839 Reduction of Long-Term Debt - (508) - - - Dividends Paid on Common Stock - (1,688) - - - -------- -------- -------- ------ ------ Net Cash Provided by (Used in) Financing Activities 89,050 (2,196) (2,012) 761 162 -------- -------- -------- ------ ------ Effect of Exchange Rates on Cash - 1,101 424 (40) 93 -------- -------- -------- ------ ------ Net Increase (Decrease) in Cash and Temporary Cash Investments (993) 1,103 202 32 84 Cash and Temporary Cash Investments at Beginning of Period 993 6,316* 939* 75 59 -------- -------- -------- ------ ------ Cash and Temporary Cash Investments at End of Period $ - $ 7,419 $ 1,141 $ 107 $ 143 ======== ======== ======== ====== ======
*Represents cash balance at the date of acquisition. See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
Consolidated Total Before Horizon B.V. Eliminations Eliminations and Subsidiaries ------------ ------------ ---------------- $ 10,821 $ (5,471) $ 5,350 (5,471) 5,471 - 7,309 - 7,309 1,448 - 1,448 2,213 - 2,213 (8,238) - (8,238) (263) 263 - 3,369 - 3,369 (31) - (31) 56 - 56 (509) (263) (772) 3,343 - 3,343 (66) - (66) (125) - (125) -------- -------- --------- 13,856 - 13,856 -------- -------- --------- (14,778) - (14,778) 1,435 (1,435) - (1,600) 1,600 - (89,464) 7,255 (82,209) 3,636 - 3,636 -------- -------- --------- (100,771) 7,420 (93,351) -------- -------- --------- (4,513) - (4,513) 88,160 - 88,160 2,500 - 2,500 1,814 (1,600) 214 (508) - (508) (1,688) 1,435 (253) -------- -------- --------- 85,765 (165) 85,600 -------- -------- --------- 1,578 - 1,578 -------- -------- --------- 428 7,255 7,683 8,382 (7,255) 1,127 -------- -------- --------- $ 8,810 $ - $ 8,810 ======== ======== =========
SEVEROCESKE TEPLARNY, A.S. CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Teplarna Total Before Consolidated SCT Liberec Eliminations Eliminations SCT -------- -------- ------------ ------------ ------------ ASSETS - ------ PROPERTY, PLANT & EQUIPMENT $ 68,692 $ 14,771 $ 83,463 $ - $ 83,463 - --------------------------- Less: Accumulated DD&A 24,940 2,664 27,604 - 27,604 -------- -------- -------- --------- -------- 43,752 12,107 55,859 - 55,859 -------- -------- -------- --------- -------- CURRENT ASSETS: - --------------- Cash and Temporary Cash Investments 5,000 2,419 7,419 - 7,419 Allowance for Uncollectible Accounts (263) (470) (733) - (733) Accounts Receivable - Intercompany 17 - 17 (17) - Accounts Receivable 2,948 1,181 4,129 - 4,129 Unbilled Utility Revenue 636 71 707 - 707 Materials and Supplies 2,004 2,265 4,269 - 4,269 Prepayments 61 1 62 - 62 -------- -------- -------- --------- -------- 10,403 5,467 15,870 (17) 15,853 -------- -------- -------- --------- -------- OTHER ASSETS: - ------------- Notes of Subsidiaries 246 - 246 (246) - Investment in Associated Companies 10,773 - 10,773 (10,773) - Other Assets (553) (1,151) (1,704) - (1,704) -------- -------- -------- --------- -------- 10,466 (1,151) 9,315 (11,019) (1,704) -------- -------- -------- --------- -------- TOTAL ASSETS $ 64,621 $ 16,423 $ 81,044 $ (11,036) $ 70,008 ======== ======== ======== ========= ======== CAPITALIZATION & LIABILITIES - ---------------------------- CAPITALIZATION: - --------------- Common Stock $ 38,540 $ 17,004 $ 55,544 $ (17,004) $ 38,540 Paid - in - Capital 7,253 (5,723) 1,530 5,723 7,253 Earnings Reinvested in the Business 594 252 846 (252) 594 Cumulative Translation Adjustment (202) (760) (962) 760 (202) -------- -------- -------- --------- -------- Total Common Stock Equity 46,185 10,773 56,958 (10,773) 46,185 Long-Term Debt, Net of Current Portion 4,172 - 4,172 - 4,172 Notes Payable-Intercompany - 213 213 (213) - -------- -------- -------- --------- -------- Total Capitalization 50,357 10,986 61,343 (10,986) 50,357 -------- -------- -------- --------- -------- Minority Interest in Foreign Subsidiaries 10,407 5,119 15,526 - 15,526 -------- -------- -------- --------- -------- CURRENT AND ACCRUED LIABILITIES: - -------------------------------- Current Portion of Long-Term Debt 711 - 711 - 711 Accounts Payable 1,296 103 1,399 (37) 1,362 Accounts Payable - Intercompany 13 (1) 12 (13) (1) Other Accruals and Current Liabilities 1,323 253 1,576 - 1,576 -------- -------- -------- --------- -------- 3,343 355 3,698 (50) 3,648 -------- -------- -------- --------- -------- DEFERRED CREDITS: - ----------------- Accumulated Deferred Income Taxes 458 (37) 421 - 421 Other Deferred Credits 56 - 56 - 56 -------- -------- -------- --------- -------- 514 (37) 477 - 477 -------- -------- -------- --------- -------- TOTAL CAPITALIZATION & LIABILITIES $ 64,621 $ 16,423 $ 81,044 $ (11,036) $ 70,008 ======== ======== ======== ========= ========
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
SEVEROCESKE TEPLARNY, A.S. CONSOLIDATING STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Teplarna Total Before Consolidated SCT Liberec Eliminations Eliminations SCT ------- -------- ------------ ------------ ------------ OPERATING REVENUE: $24,193 $16,363 $40,556 $(2,122) $38,434 ----------------- ------- ------- ------- ------- ------- OPERATING EXPENSE: ------------------ Fuel Used in Heat and Electric Generation 10,165 8,624 18,789 - 18,789 Operation 7,950 6,607 14,557 (2,122) 12,435 Property, Franchise & Other Taxes 797 302 1,099 - 1,099 Depreciation, Depletion and Amortization 2,204 708 2,912 - 2,912 Income Taxes 1,178 176 1,354 - 1,354 ------- ------- ------- ------- ------- 22,294 16,417 38,711 (2,122) 36,589 ------- ------- ------- ------- ------- Operating Income (Loss) 1,899 (54) 1,845 - 1,845 ------- ------- ------- ------- ------- OTHER INCOME: ------------- Unremitted Earnings of Subsidiary 252 - 252 (252) - Other 1,175 441 1,616 - 1,616 ------- ------- ------- ------- ------- 1,427 441 1,868 (252) 1,616 ------- ------- ------- ------- ------- Income (Loss) Before Interest Charges and Minority Interest in Foreign Subsidiaries 3,326 387 3,713 (252) 3,461 ------- ------- ------- ------- ------- INTEREST CHARGES ---------------- Interest on Long-Term Debt 702 - 702 - 702 Other Interest - 31 31 - 31 ------- ------- ------- ------- ------- 702 31 733 - 733 ------- ------- ------- ------- ------- Minority Interest in Foreign Subsidiaries (633) (104) (737) - (737) ------- ------- ------- ------- ------- Net Income (Loss) Available for Common Stock $ 1,991 $ 252 $ 2,243 $ (252) $ 1,991 ======= ======= ======= ======= =======
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
SEVEROCESKE TEPLARNY, A.S. CONSOLIDATING STATEMENT OF EARNINGS REINVESTED IN THE BUSINESS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) EARNINGS REINVESTED Teplarna Total Before Consolidated IN THE BUSINESS SCT Liberec Eliminations Eliminations SCT - --------------- -------- -------- ------------ ------------ ------------ Balance at Beginning of Year $ - $ - $ - $ - $ - Net Income (Loss) Available for Common Stock 1,991 252 2,243 (252) 1,991 Dividends on Common Stock (1,397) - (1,397) - (1,397) -------- ------- -------- ------- -------- Balance at End of Year $ 594 $ 252 $ 846 $ (252) $ 594 ======== ======= ======== ======= ========
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
SEVEROCESKE TEPLARNY, A.S. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Total Before Eliminations Teplarna Eliminations and Consolidated SCT Liberec & Adjustments Adjustments SCT -------- -------- ------------- ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: - ------------------------------------- Net Income (Loss) $ 1,991 $ 252 $ 2,243 $ (252) $ 1,991 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Unremitted Earnings of Subsidiary (252) - (252) 252 - Depreciation, Depletion & Amortization 2,204 708 2,912 - 2,912 Deferred Income Taxes (36) (67) (103) - (103) Minority Interest in Foreign Subsidiaries 633 104 737 - 737 Other (286) (9) (295) - (295) Change in: Receivables and Unbilled Utility Revenue 595 680 1,275 - 1,275 Materials and Supplies 53 (480) (427) - (427) Prepayments 61 - 61 - 61 Accounts Payable (1,252) (364) (1,616) (289) (1,905) Accounts Payable - Intercompany (259) - (259) 259 - Other Accruals and Current Liabilities 6 99 105 - 105 Other Assets (44) - (44) - (44) Other Liabilities (22) - (22) - (22) -------- ------- -------- -------- -------- Net Cash Provided by (Used in) Operating Activities 3,392 923 4,315 (30) 4,285 -------- -------- -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: - ------------------------------------- Capital Expenditures (1,919) (333) (2,252) - (2,252) Change in Notes Receivable - Intercompany 27 - 27 (27) - Other 156 9 165 - 165 -------- -------- -------- -------- -------- Net Cash Used in Investing Activities (1,736) (324) (2,060) (27) (2,087) -------- -------- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: - ------------------------------------- Change in Notes Payable - Intercompany - (57) (57) 57 - Reduction of Long-Term Debt (508) - (508) - (508) Dividends Paid on Common Stock (1,688) - (1,688) - (1,688) -------- -------- -------- -------- --------- Net Cash Provided by (Used in) Financing Activities (2,196) (57) (2,253) 57 (2,196) -------- -------- -------- -------- -------- Effect of Exchange Rates on Cash 846 255 1,101 - 1,101 -------- -------- -------- -------- -------- Net Increase (Decrease) in Cash and Temporary Cash Investments 306 797 1,103 - 1,103 Cash and Temporary Cash Investments at Acquisition 4,694 1,622 6,316 - 6,316 -------- -------- -------- -------- -------- Cash and Temporary Cash Investments at End of Period $ 5,000 $ 2,419 $ 7,419 $ - $ 7,419 ======== ======== ======== ======== ========
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
PRVNI SEVEROZAPADNI TEPLARENSKA, A.S. CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Total Before Consolidated PSZT ENOP Eliminations Eliminations PSZT -------- -------- ------------ ------------ ------------ ASSETS - ------ PROPERTY, PLANT & EQUIPMENT $196,796 $ - $196,796 $ - $196,796 - --------------------------- Less: Accumulated DD&A 51,109 - 51,109 - 51,109 -------- -------- -------- --------- -------- 145,687 - 145,687 - 145,687 -------- -------- -------- --------- -------- CURRENT ASSETS: - --------------- Cash and Temporary Cash Investments 1,138 3 1,141 - 1,141 Allowance for Uncollectible Accounts (143) - (143) - (143) Accounts Receivable - Intercompany - - - - - Accounts Receivable 4,445 934 5,379 - 5,379 Unbilled Utility Revenue 3 - 3 - 3 Materials and Supplies 1,790 - 1,790 - 1,790 Prepaid Expenses 57 - 57 - 57 -------- -------- -------- --------- -------- 7,290 937 8,227 - 8,227 -------- -------- -------- ---------- -------- OTHER ASSETS: - ------------- Investment in Associated Company 1,019 - 1,019 (1,019) - Other Assets 13,040 118 13,158 - 13,158 -------- -------- -------- --------- -------- 14,059 118 14,177 (1,019) 13,158 -------- -------- -------- --------- -------- TOTAL ASSETS $167,036 $ 1,055 $168,091 $ (1,019) $167,072 ======== ======== ======== ========= ======== CAPITALIZATION & LIABILITIES - ---------------------------- CAPITALIZATION: - --------------- Common Stock $ 28,938 $ 3 $ 28,941 $ (3) $ 28,938 Paid - in - Capital 35,622 883 36,505 (883) 35,622 Earnings Reinvested in the Business 3,682 22 3,704 (22) 3,682 Cumulative Translation Adjustment 7,591 111 7,702 (111) 7,591 -------- -------- -------- --------- -------- Total Common Stock Equity 75,833 1,019 76,852 (1,019) 75,833 Long-Term Debt, Net of Current Portion 60,504 - 60,504 - 60,504 Notes Payable-Intercompany 2,500 - 2,500 - 2,500 -------- -------- -------- --------- -------- Total Capitalization 138,837 1,019 139,856 (1,019) 138,837 -------- -------- -------- --------- -------- Minority Interest in Foreign Subsidiaries 9,953 - 9,953 - 9,953 -------- -------- -------- --------- -------- CURRENT AND ACCRUED LIABILITIES: - -------------------------------- Accounts Payable 7,428 151 7,579 - 7,579 Accounts Payable - Intercompany 1 - 1 - 1 Other Accruals and Current Liabilities 6,668 (115) 6,553 - 6,553 -------- -------- -------- --------- -------- 14,097 36 14,133 - 14,133 -------- -------- -------- --------- -------- DEFERRED CREDITS: - ----------------- Accumulated Deferred Income Taxes 4,149 - 4,149 - 4,149 Other Deferred Credits - - - - - -------- -------- -------- --------- -------- 4,149 - 4,149 - 4,149 -------- -------- -------- --------- -------- TOTAL CAPITALIZATION & LIABILITIES $167,036 $ 1,055 $168,091 $ (1,019) $167,072 ======== ======== ======== ========= ========
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
PRVNI SEVEROZAPADNI TEPLARENSKA, A.S. CONSOLIDATING STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Total Before Consolidated PSZT ENOP Eliminations Eliminations PSZT ------- ------- ------------ ------------ ------------ OPERATING REVENUE: $37,257 $ 4,186 $41,443 $(5,168) $36,275 ----------------- ------- ------- ------- ------- ------- OPERATING EXPENSE: ------------------ Fuel Used in Heat and Electric Generation 17,523 - 17,523 - 17,523 Operation 13,617 3,934 17,551 (5,168) 12,383 Property, Franchise & Other Taxes 623 205 828 - 828 Depreciation, Depletion and Amortization 4,320 - 4,320 - 4,320 Income Taxes 2,954 26 2,980 - 2,980 ------- ------- ------- ------- ------- 39,037 4,165 43,202 (5,168) 38,034 ------- ------- ------- ------- ------- Operating Income (Loss) (1,780) 21 (1,759) - (1,759) ------- ------- ------- ------- ------- OTHER INCOME: ------------- Unremitted Earnings of Subsidiary 22 - 22 (22) - Other 8,841 1 8,842 - 8,842 ------- ------- ------- ------- ------- 8,863 1 8,864 (22) 8,842 ------- ------- ------- ------- ------- Income (Loss) Before Interest Charges and Minority Interest in Foreign Subsidiaries 7,083 22 7,105 (22) 7,083 ------- ------- ------- ------- ------- INTEREST CHARGES ---------------- Interest on Long-Term Debt 1,764 - 1,764 - 1,764 Other Interest 161 - 161 - 161 ------- ------- ------- ------- ------- 1,925 - 1,925 - 1,925 ------- ------- ------- ------- ------- Minority Interest in Foreign Subsidiaries (1,476) - (1,476) - (1,476) ------- ------- ------- ------- ------- Net Income (Loss) Available for Common Stock $ 3,682 $ 22 $ 3,704 $ (22) $ 3,682 ======= ======= ======= ======= =======
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
PRVNI SEVEROZAPADNI TEPLARENSKA, A.S. CONSOLIDATING STATEMENT OF EARNINGS REINVESTED IN THE BUSINESS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) EARNINGS REINVESTED Total Before Consolidated IN THE BUSINESS PSZT ENOP Eliminations Eliminations PSZT - --------------- -------- ------- ------------ ------------ ------------ Balance at Beginning of Year $ - $ - $ - $ - $ - Net Income (Loss) Available for Common Stock 3,682 22 3,704 (22) 3,682 -------- ------- -------- ------- -------- Balance at End of Year $ 3,682 $ 22 $ 3,704 $ (22) $ 3,682 ======== ======= ======== ======= ========
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
PRVNI SEVEROZAPADNI TEPLARENSKA, A.S. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Total Before Eliminations Eliminations and Consolidated PSZT ENOP & Adjustments Adjustments PSZT -------- -------- ------------- ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: - ------------------------------------- Net Income (Loss) $ 3,682 $ 22 $ 3,704 $ (22) $ 3,682 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Unremitted Earnings of Subsidiary (22) - (22) 22 - Depreciation, Depletion & Amortization 4,320 - 4,320 - 4,320 Deferred Income Taxes 1,551 - 1,551 - 1,551 Minority Interest in Foreign Subsidiaries 1,476 - 1,476 - 1,476 Other (8,036) 5 (8,031) - (8,031) Change in: Receivables and Unbilled Utility Revenue 1,866 (370) 1,496 - 1,496 Materials and Supplies (114) 510 396 - 396 Prepayments 21 - 21 - 21 Accounts Payable 2,996 (194) 2,802 - 2,802 Other Accruals and Current Liabilities 3,045 14 3,059 - 3,059 Other Assets (22) - (22) - (22) -------- ------- -------- -------- -------- Net Cash Provided by (Used in) Operating Activities 10,763 (13) 10,750 - 10,750 -------- -------- -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: - ------------------------------------- Capital Expenditures (12,431) - (12,431) - (12,431) Other 3,471 - 3,471 - 3,471 -------- -------- -------- -------- -------- Net Cash Used in Investing Activities (8,960) - (8,960) - (8,960) -------- -------- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: - ------------------------------------- Change in Notes Payable to Banks and Commercial Paper (4,513) - (4,513) - (4,513) Accounts Payable - Intercompany 1 - 1 - 1 Change in Notes Payable - Intercompany 2,500 - 2,500 - 2,500 -------- -------- -------- -------- --------- Net Cash Used in Financing Activities (2,012) - (2,012) - (2,012) -------- -------- -------- -------- -------- Effect of Exchange Rates on Cash 429 (5) 424 - 424 -------- -------- -------- -------- -------- Net Increase (Decrease) in Cash and Temporary Cash Investments 220 (18) 202 - 202 Cash and Temporary Cash Investments at Acquisition 918 21 939 - 939 -------- -------- -------- -------- -------- Cash and Temporary Cash Investments at End of Period $ 1,138 $ 3 $ 1,141 $ - $ 1,141 ======== ======== ======== ======== ========
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
POWER DEVELOPMENT, S.R.O. CONSOLIDATING BALANCE SHEET AT SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Consolidated Power Teplarna Total Before Power Development Kromeriz Eliminations Eliminations Development ----------- -------- ------------ ------------ ------------ ASSETS - ------ PROPERTY, PLANT & EQUIPMENT $ - $1,191 $1,191 $ - $1,191 - --------------------------- Less: Accumulated DD&A - 210 210 - 210 ------ ------ ------ ------- ------ - 981 981 - 981 ------ ------ ------ ------- ------ CURRENT ASSETS: - --------------- Cash and Temporary Cash Investments 22 85 107 - 107 Accounts Receivable - Intercompany 1,422 - 1,422 (1,422) - Accounts Receivable - 142 142 - 142 Prepayments - 1 1 - 1 ------ ------ ------ ------- ------ 1,444 228 1,672 (1,422) 250 ------ ------ ------ ------- ------ OTHER ASSETS: - ------------- Other Assets 659 660 1,319 (659) 660 ------ ------ ------ ------- ------ TOTAL ASSETS $2,103 $1,869 $3,972 $(2,081) $1,891 ====== ====== ====== ======= ====== CAPITALIZATION & LIABILITIES - ---------------------------- CAPITALIZATION: - --------------- Common Stock $ 760 $ 36 $ 796 $ (36) $ 760 Paid - in - Capital 1,562 845 2,407 (845) 1,562 Earnings Reinvested in the Business (384) (190) (574) 190 (384) Cumulative Translation Adjustment (125) (32) (157) 32 (125) ------ ------ ------ ------- ------ Total Capitalization 1,813 659 2,472 (659) 1,813 ------ ------ ------ ------- ------ CURRENT AND ACCRUED LIABILITIES: - -------------------------------- Accounts Payable 72 188 260 (483) (223) Accounts Payable - Intercompany 218 939 1,157 (939) 218 Other Accruals and Current Liabilities - (37) (37) - (37) ------ ------ ------ ------- ------ 290 1,090 1,380 (1,422) (42) ------ ------ ------ ------- ------ DEFERRED CREDITS: - ----------------- Other Deferred Credits - 120 120 - 120 ------ ------ ------ ------- ------ - 120 120 - 120 ------ ------ ------ ------- ------ TOTAL CAPITALIZATION & LIABILITIES $2,103 $1,869 $3,972 $(2,081) $1,891 ====== ====== ====== ======= ======
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
POWER DEVELOPMENT, S.R.O. CONSOLIDATING STATEMENT OF INCOME FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Consolidated Power Teplarna Total Before Power Development Kromeriz Eliminations Eliminations Development ----------- -------- ------------ ------------ ------------ OPERATING REVENUE: $ 2 $1,594 $1,596 $(2) $1,594 - ----------------- ----- ------ ------ --- ------ OPERATING EXPENSE: - ------------------ Fuel Used in Heat and Electric Generation - 1,280 1,280 - 1,280 Operation 13 294 307 (2) 305 Maintenance - 40 40 - 40 Property, Franchise & Other Taxes - 1 1 - 1 Depreciation, Depletion and Amortization - 33 33 - 33 ----- ------ ------ --- ------ 13 1,648 1,661 (2) 1,659 ----- ------ ------ --- ------ Operating Income (Loss) (11) (54) (65) - (65) ----- ------ ------ --- ------ OTHER INCOME: - ------------- Unremitted Earnings of Subsidiary (78) - (78) 78 - Other - 26 26 - 26 ----- ------ ------ --- ------ (78) 26 (52) 78 26 ----- ------ ------ --- ------ Income (Loss) Before Interest Charges (89) (28) (117) 78 (39) ----- ------ ------ --- ------ INTEREST CHARGES - ---------------- Interest - Intercompany 96 - 96 - 96 Other Interest 38 50 88 - 88 ----- ------ ------ --- ------ 134 50 184 - 184 ----- ------ ------ --- ------ Net Income (Loss) Available for Common Stock $(223) $ (78) $ (301) $78 $ (223) ===== ====== ====== === ======
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
POWER DEVELOPMENT, S.R.O. CONSOLIDATING STATEMENT OF EARNINGS REINVESTED IN THE BUSINESS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Consolidated EARNINGS REINVESTED Power Teplarna Total Before Power IN THE BUSINESS Development Kromeriz Eliminations Eliminations Development - --------------- ----------- -------- ------------ ------------ ------------ Balance at Beginning of Year $(161) $(112) $(273) $112 $(161) Net Income (Loss) Available for Common Stock (223) (78) (301) 78 (223) ----- ----- ----- ---- ----- Balance at End of Year $(384) $(190) $(574) $190 $(384) ===== ===== ===== ==== =====
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference.
POWER DEVELOPMENT, S.R.O. CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 (THOUSANDS OF DOLLARS) Total Before Eliminations Consolidated Power Teplarna Eliminations and Power Development Kromeriz & Adjustments Adjustments Development ----------- -------- ------------- ----------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: - ------------------------------------- Net Income (Loss) $(223) $ (78) $(301) $ 78 $(223) Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Unremitted Earnings of Subsidiary 78 - 78 (78) - Depreciation, Depletion & Amortization - 33 33 - 33 Other - 53 53 - 53 Change in: Accounts Receivable - Intercompany (384) (63) (447) 447 - Accounts Receivable 16 - 16 - 16 Prepayments - 1 1 - 1 Accounts Payable 5 (452) (447) (384) (831) Accounts Payable - Intercompany (270) 333 63 (63) - Other Accruals and Current Liabilities - 386 386 - 386 Other Liabilities - (103) (103) - (103) ----- ----- ----- ----- ----- Net Cash Provided by (Used in) Operating Activities (778) 110 (668) - (668) ----- ----- ----- ----- ----- CASH FLOWS FROM INVESTING ACTIVITIES: - ------------------------------------- Capital Expenditures - (21) (21) - (21) ----- ----- ----- ----- ----- Net Cash Used in Investing Activities - (21) (21) - (21) ----- ----- ----- ----- ----- CASH FLOWS FROM FINANCING ACTIVITIES: - ------------------------------------- Capital Contributions 761 - 761 - 761 ----- ----- ----- ----- ----- Net Cash Provided by Financing Activities 761 - 761 - 761 ----- ----- ----- ----- ----- Effect of Exchange Rates on Cash 24 (64) (40) - (40) ----- ----- ----- ----- ----- Net Increase in Cash and Temporary Cash Investments 7 25 32 - 32 Cash and Temporary Cash Investments at Acquisition 15 60 75 - 75 ----- ----- ----- ----- ----- Cash and Temporary Cash Investments at End of Period $ 22 $ 85 $ 107 $ - $ 107 ===== ===== ===== ===== =====
See Notes to Consolidated Financial Statements included in Item 8 of National Fuel Gas Company's Form 10-K for the fiscal year ended September 30, 1998, incorporated herein by reference. EXHIBITS A. *(1) Annual Report on Form 10-K for fiscal year ended September 30, 1998 filed December 21, 1998 (File No. 1-3880) (2) National Fuel Gas Company 1998 Annual Report to Shareholders (paper copy submitted under cover of Form SE) *(3) National Fuel Gas Company Proxy Statement, dated and filed December 31, 1998 (File No. 1-03880) B. Articles of Incorporation, By-Laws and Partnership Agreements (1) National Fuel Gas Company *i Restated Certificate of Incorporation of National Fuel Gas Company, dated September 21, 1998 (Exhibit 3.1, Form 10-K for fiscal year ended September 30, 1998 in File No. 1-3880) *ii National Fuel Gas Company By-Laws as amended through September 17, 1998 (Exhibit 3.2, Form 10-K for fiscal year ended September 30, 1998 in File No. 1-3880) (2) National Fuel Gas Distribution Corporation *i By-Laws, as amended (Exhibit 2(i), designated as Exhibit EX-3(b) for EDGAR purposes, Form U5S for fiscal year ended September 30, 1994) *ii Restated Certificate of Incorporation of National Fuel Gas Distribution Corporation, dated May 9, 1988 (Exhibit B-1 in File No. 70-7478) (3) National Fuel Gas Supply Corporation *i By-Laws, as amended (Exhibit (3)i, Form U5S for fiscal year ended September 30, 1989) *ii Articles of Incorporation of United Natural Gas Company, dated February 1, 1886 (Exhibit (3)ii, Form U5S for fiscal year ended September 30, 1984) *iii Certificate of Merger and Consolidation dated January 2, 1951 (Exhibit (3)iii, Form U5S for fiscal year ended September 30, 1984) *iv Joint Agreement and Plan of Merger, dated June 18, 1974 (Exhibit (3)iv, Form U5S for fiscal year ended September 30, 1987) *v Certificate of Merger and Plan of Merger of Penn-York Energy Corporation and National Fuel Gas Supply Corporation dated April 1, 1994 (Exhibit (3)v, designated as Exhibit EX-99-3 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1994) * Incorporated herein by reference as indicated. EXHIBITS (Continued) (4) Leidy Hub, Inc. (Formerly Enerop Corporation) *i By-Laws (Exhibit A-15, File No. 70-7478) *ii Restated Articles of Incorporation of Enerop Corporation dated April 13, 1988 (Exhibit B-4 in File No. 70-7478) *iii Action by Board of Directors to amend the By-Laws dated October 10, 1993 including a Restated Certificate of Incorporation of Enerop Corporation dated October 15, 1993 (Exhibit (4)iii, designated as Exhibit EX-3 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1993) *iv Partnership Agreement between Leidy Hub, Inc. and Hub Services, Inc. dated September 1, 1994 (Exhibit (4)iv, designated as Exhibit EX-99-1 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1994) *v Ellisburg-Leidy Northeast Hub Company Admission Agreement dated June 12, 1995 (Exhibit (4)v, designated as Exhibit EX-99-1 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1995) *vi Letter Agreement between Leidy Hub, Inc. and Hub Services, Inc. dated June 12, 1995 (Exhibit (4)vi, designated as Exhibit EX-99-2 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1995) *vii Consent and waiver by Leidy Hub, Inc. dated June 12, 1995 (Exhibit (4)vii, designated as Exhibit EX-99-3 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1995) (5) Seneca Resources Corporation *i By-Laws, as amended (Exhibit (5)i, Form U5S for fiscal year ended September 30, 1989) *ii Articles of Incorporation of Mars Natural Gas Company dated March 29, 1913 (Exhibit (5)ii, Form U5S for fiscal year ended September 30, 1984) *iii Secretary's Certificate dated January 4, 1918 (Exhibit (5)iii, Form U5S for fiscal year ended September 30, 1984) *iv Articles of Amendment, dated March 30, 1955 (Exhibit (5)iv, Form U5S for fiscal year ended September 30, 1984) *v Certificate of Amendment changing name of the Mars Company to Seneca Resources Corporation, January 29, 1976 (Exhibit (5)v, Form U5S for fiscal year ended September 30, 1984) *vi Certificate of Merger and Plan of Merger of Seneca Resources Corporation and Empire Exploration, Inc. dated April 29, 1994 (Exhibit (5)vi, designated as Exhibit EX-99-2 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1994) * Incorporated herein by reference as indicated. EXHIBITS (Continued) *(6) Limited Partnership Agreement dated November 28, 1983, between Empire Exploration, Inc. (now Seneca Resources Corporation) as general partner and Herman P. Loonsk as limited partner (Exhibit (8), Form U5S for fiscal year ended September 30, 1984) *(7) Empire 1983 Drilling Program, Limited Partnership Agreement, dated November 28, 1983, between Empire Exploration, Inc., (now Seneca Resources Corporation) as general partner and those parties collectively called limited partners (Exhibit (9), Form U5S for fiscal year ended September 30, 1984) *(8) Empire 1983 Joint Venture Agreement dated December 6, 1983 between Empire Exploration, Inc. (now Seneca Resources Corporation) and Empire 1983 Drilling Program (Exhibit (10), Form U5S for fiscal year ended September 30, 1984) (9) Highland Land & Minerals, Inc. *i Certificate of Incorporation, dated August 19, 1982 (Exhibit (11)i, Form U5S for fiscal year ended September 30, 1985) *ii By-Laws (Exhibit (11) ii, Form U5S for fiscal year ended September 30, 1987) (10) Utility Constructors, Inc. *i Articles of Incorporation, dated December 23, 1986, and certificate of amendment dated December 31, 1986 (Exhibit (12)i, Form U5S for fiscal year ended September 30, 1987) *ii By-Laws (Exhibit (12)ii, Form U5S for fiscal year ended September 30, 1987) (11) Data-Track Account Services, Inc. *i Restated Articles of Incorporation, dated March 2, 1984 (Exhibit A-1, File No. 70-7512) *ii By-Laws (Exhibit A-2, File No. 70-7512) (12) National Fuel Resources, Inc. *i Articles of Incorporation, dated January 9, 1991 (Exhibit (14)i, designated as Exhibit EX-3(a) for EDGAR purposes, Form U5S for fiscal year ended September 30, 1992) *ii By-Laws (Exhibit (14)ii, designated as Exhibit EX-3(b) for EDGAR purposes, Form U5S for fiscal year ended September 30, 1992) * Incorporated herein by reference as indicated. EXHIBITS (Continued) (13) Horizon Energy Development, Inc. *i Certificate of Incorporation (Exhibit (13)i, designated as Exhibit EX-3(a) for EDGAR purposes, Form U5S for fiscal year ended September 30, 1995) *ii By-Laws (Exhibit (13)ii, designated as Exhibit EX-3(b) for EDGAR purposes, Form U5S for fiscal year ended September 30, 1995) (14) Horizon Energy Holdings, Inc. i Certificate of Incorporation dated April 1, 1998. Designated as Exhibit EX99-1 for EDGAR purposes. ii By-Laws. Designated as Exhibit EX99-2 for EDGAR purposes. (15) Horizon Energy Development B.V. (formerly Beheeren- Beleggingmaatschappij Bruwabel B.V. *i Articles of Incorporation (Exhibit (14), designated as exhibit EX-99-2 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1996) (16) Horizon Energy Development, s.r.o. (formerly Power International, s.r.o.) *i Founding Notarial Deed, dated May 8, 1991 (Exhibit (15)i, designated as Exhibit EX-99-9 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1996) *ii Notarial Deed, dated December 2, 1993 (Exhibit (15)ii, designated as Exhibit EX-99-10 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1996) *iii Notarial Deed, dated June 28, 1996 (Exhibit (15)iii, designated as Exhibit EX-99-11 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1996) *iv Notarial Deed, dated November 27, 1996 (Exhibit (15)iv, designated as Exhibit EX-99-12 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1996) (17) Power Development, s.r.o. *i Founding Notarial Deed, dated May 4, 1994 (Exhibit (16)i, designated as Exhibit EX-99-13 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1996) * Incorporated herein by reference as indicated EXHIBITS (Continued) *ii Notarial Deed, dated June 28, 1996 (Exhibit (16)ii, designated as Exhibit EX-99-14 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1996) *iii Notarial Deed, dated November 27, 1996 (Exhibit (16)iii, designated as Exhibit EX-99-15 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1996) (18) Teplarna Kromeriz a.s. *i Statutes, dated June 1996 (Exhibit (17), designated as Exhibit EX-99-16 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1996) (19) KPP Investment, L.L.C. *i Limited Liability Company Agreement dated January 11, 1996 (Exhibit (18)i, designated as exhibit EX-99-3 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1996) *ii Certificate of Formation, dated January 15, 1997 (Exhibit (18)ii, designated at Exhibit EX-99-4 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1996) (20) Sceptre Kabirwala, L.L.C. *i Limited Liability Company Agreement dated January 26, 1996 (Exhibit (19)i, designated as exhibit EX-99-5 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1996) *ii Certificate of Formation, dated January 10, 1997 (Exhibit (19)ii, designated as Exhibit EX-99-6 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1996) (21) Severoceske Teplarny, a.s. *i Articles of Association, dated April 24, 1997 (Exhibit (20)i, designated as Exhibit EX99-11 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1997) (22) Teplarna Liberec, a.s. *i Founding Contract, dated November 11, 1994 (Exhibit (21)i, designated as Exhibit EX99-12 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1997) *ii Notarial Record, dated November 11, 1994 (Exhibit (21)ii, designated as Exhibit EX99-13 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1997) *iii Articles of the Association, dated June 12, 1997 (Exhibit (21)iii, designated as Exhibit EX99-14 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1997) * Incorporated herein by reference as indicated. EXHIBITS (Continued) (23) Energoservis Liberec, s.r.o. *i Articles of Incorporation of Limited Liability Company Foundation, dated August 14, 1995 (Exhibit (22)i, designated as Exhibit EX99-15 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1997) *ii Notarial Record, dated January 22, 1996 (Exhibit (22)ii, designated as Exhibit EX99-16 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1997) (24) Zateca teplarenska, a.s. *i Foundation Charter, dated December 4, 1995 (Exhibit (23)i, designated as Exhibit EX99-17 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1997) *ii Articles of Association, dated December 4, 1995 (Exhibit (23)ii, designated as Exhibit EX99-18 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1997) (25) SCT Softmaker, s.r.o. *i Notarial Record, dated September 24, 1996 (Exhibit (24)i, designated as Exhibit EX99-19 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1997) (26) Zkusebna mericu tepla a vodomeru Litomerice, s.r.o. *i Founders Deed, dated January 22, 1996 (Exhibit (25)i, designated as Exhibit EX99-20 for EDGAR purposes, Form U5S/A for fiscal year ended September 30, 1997) (27) AMES MOST, s.r.o. i Founders Deed, dated October 10, 1997. Designated as Exhibit 99-3 for EDGAR purposes. (28) Teplo Branany, s.r.o. i Partnership Agreement, dated November 18, 1997. Designated as Exhibit 99-4 for EDGAR purposes. (29) Jablonecka teplarenska a realitni, a.s. i Articles of Association. Designated as Exhibit EX99-5 for EDGAR purposes. (30) Prvni severozapadni teplarenska, a.s. i Notarial Record, dated April 28, 1992. Designated as Exhibit EX99-6 for EDGAR purposes. * Incorporated herein by reference as indicated. EXHIBITS (Continued) ii Articles of Association, dated April 28, 1992. Designated as Exhibit EX99-7 for EDGAR purposes. (31) ENOP, s.r.o. i Founders Deed, dated December 19, 1995. Designated as Exhibit EX99-8 for EDGAR purposes. (32) Upstate Energy Inc. (formerly known as Niagara Energy Trading Inc.) i Restated Certificate of Incorporation of Niagara Energy Trading Inc., dated May 19, 1998. Designated as Exhibit EX99-9 for EDGAR purposes. ii By-Laws as amended June 19, 1998. Designated as Exhibit EX99-10 for EDGAR purposes. (33) Niagara Independence Marketing Company *i Certificate of Incorporation dated September 17, 1997 (Exhibit (27)i, designated as exhibit EX99-3 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1997) ii By-Laws amended March 11, 1998. Designated at Exhibit EX99-11 for EDGAR purposes. *iii Marketing Partnership Agreement among Coastal Gas Marketing DirectLink Corp., MGS Marketing Corp., Niagara Independence Marketing Company and Williams Independence Marketing Company (Exhibit (27)iii, designated as Exhibit EX-99-5 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1997) (34) Seneca Independence Pipeline Company *i Certificate of Incorporation of Empire Oklahoma, Inc. dated April 16, 1996 (Exhibit (28)i, designated as Exhibit EX-99-6 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1997) *ii Certificate of Amendment of Certificate of Incorporation of Empire Oklahoma, Inc. dated July 24, 1997 (Exhibit (28)ii, designated as exhibit EX-99-7 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1997) iii By-Laws amended March 11, 1998. Designated as Exhibit EX99-12 for EDGAR purposes. (35) HarCor Energy, Inc. i Amended and Restated Certificate of Incorporation, dated September 1, 1998. Designated as Exhibit EX99-13 for EDGAR purposes. ii By-Laws, as amended. Designated as Exhibit EX99-14 for EDGAR purposes. * Incorporated herein by reference as indicated. EXHIBITS (Continued) C. Indentures * Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 2(b) in File No. 2-51796) * Third Supplemental Indenture dated as of December 1, 1982, to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4(a)(4) in File No. 33-49401) * Tenth Supplemental Indenture dated as of February 1, 1992, to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4(a), Form 8-K dated February 14, 1992 in File No. 1-3880) * Eleventh Supplemental Indenture dated as of May 1, 1992, to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4(b), Form 8-K dated February 14, 1992 in File No. 1-3880) * Twelfth Supplemental Indenture dated as of June 1, 1992, to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4(c), Form 8-K dated June 18, 1992 in File No. 1-3880) * Thirteenth Supplemental Indenture dated as of March 1, 1993, to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4(a)(14) in File No. 33-49401) * Fourteenth Supplemental Indenture dated as of July 1, 1993, to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4.1, Form 10-K for fiscal year ended September 30, 1993 in File No. 1-3880) * Fifteenth Supplemental Indenture dated as of September 1, 1996 to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4.1, Form 10-K for fiscal year ended September 30, 1996 in File No. 1-3880) * Rights Agreement between National Fuel Gas Company and Marine Midland Bank dated June 12, 1996 (Exhibit 99.1, Form 8-K dated June 13, 1996 in File No. 1-3880) D. * Tax Allocation Agreement pursuant to Rule 45(c) (Exhibit (D), designated as exhibit EX-99-10 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1997) * Incorporated herein by reference as indicated. EXHIBITS (Concluded) E. *(1) Employee Relocation Manual filed pursuant to Rule 48(b) (Exhibit E(1), designated as Exhibit EX-99-9 for EDGAR purposes, Form U5S for fiscal year ended September 30, 1997) (2) National Fuel Employee Computer Purchase Program filed pursuant to Rule 48(b). Designated as Exhibit EX99-15 for EDGAR purposes. (3) Independence Pipeline Company Unaudited Financial Statements for the quarter and year-to-date period ended September 30, 1998 and Unaudited Financial Statements for the period September 23, 1997 through December 31, 1997. These documents are subject to a request for confidential treatment under Rule 104(b) of the Public Utility Holding Company Act of 1935, filed October 6, 1997. Note: Referencing Exhibit E(2), Form U5S for fiscal year ended September 30, 1997, filed in paper only as prescribed by Rule 16(c), during the quarter ended March 31, 1998, the Company disposed of its interest in Enerchange, L.L.C. and therefore no longer has access to the annual report of Enerchange, L.L.C. F. Schedules of Supporting Items of this Report - None. G. Financial Data Schedules. (Designated as Exhibit EX-27 for EDGAR purposes.) H. (1) Organization chart showing relationship to Teplarna Kromeriz, a.s., a foreign utility company. Designated as Exhibit EX99-16 for EDGAR purposes. (2) Organization chart showing relationship to Severoceske teplarny, a.s. and Teplarna Liberec, a.s., both of which are foreign utility companies. Designated as Exhibit EX99-17 for EDGAR purposes. (3) Organization chart showing relationship to Prvni severozapadni teplarenska, a.s., a foreign utility company. Designated as Exhibit EX99-18 for EDGAR purposes. I. (1) SCT Audited Financial Statements for the Calendar Year Ended December 31, 1997. Designated as Exhibit EX99-19 for EDGAR purposes. (2) TL Audited Financial Statements for the Calendar Year Ended December 31, 1997. Designated as Exhibit EX99-20 for EDGAR purposes. (3) PSZT Audited Financial Statements for the Calendar Year Ended December 31, 1997. These financial statements will be filed by amendment when available. (4) Kromeriz Audited Financial Statements for the Calendar Year Ended December 31, 1997. These financial statements will be filed by amendment when available. * Incorporated herein by reference as indicated. S I G N A T U R E The undersigned System company has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized pursuant to the requirements of the Public Utility Holding Company Act of 1935. NATIONAL FUEL GAS COMPANY By: /s/ Joseph P. Pawlowski ------------------------ Joseph P. Pawlowski, Treasurer and Principal Accounting Officer Date: January 28, 1999 ---------------- EXHIBIT INDEX EX27-1 Financial Data Schedule of National Fuel Gas Company for period ending September 30, 1997 EX27-2 Financial Data Schedule of National Fuel Gas Distribution Corporation for period ending September 30, 1997 EX99-1 Certificate of Incorporation of Horizon Energy Holdings Inc. dated April 1, 1998 EX99-2 By-Laws of Horizon Energy Holdings, Inc. EX99-3 Founders Deed of AMES MOST, s.r.o. dated October 10, 1997 EX99-4 Partnership Agreement of Teplo Branany, s.r.o. dated November 18, 1997 EX99-5 Articles of Association of Jablonecka teplarenska a realitni, a.s. EX99-6 Notarial Record of Prvni severozapadni teplarenska, a.s. dated April 28, 1992 EX99-7 Articles of Association of Prvni severozapadni teplarenska, a.s. dated April 28, 1992 EX99-8 Founders Deed of ENOP, s.r.o. dated December 19, 1995 EX99-9 Restated Certificate of Incorporation of Niagara Energy Trading Inc. dated May 19, 1998 EX99-10 By-Laws of Upstate Energy Inc. EX99-11 By-Laws of Niagara Independence Marketing Company EX99-12 Amended By-Laws of Seneca Independence Pipeline Company EX99-13 Amended Certificate of Incorporation of HarCor Energy, Inc. dated September 1, 1998 EX99-14 By-Laws of HarCor Energy, Inc. EX99-15 National Fuel Employee Computer Purchase Program EX99-16 Organization Chart of Teplarna Kromeriz, a.s. EX99-17 Organization Chart of Severoceske teplarny, a.s. and Teplarna Liberec, a.s. EX99-18 Organization Chart of Prvni severozapadni teplarenska, a.s. EX99-19 SCT Financial Statements for Year Ended December 31, 1997. EX99-20 TL Financial Statements for Year Ended December 31, 1997. EX-27 2 FDS OF NATIONAL FUEL GAS CO. WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
UT THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL FUEL GAS COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS SEP-30-1998 OCT-01-1997 SEP-30-1998 PER-BOOK 2,248,137 0 210,517 8,619 217,186 2,684,459 38,469 416,239 428,112 890,085 0 0 692,669 196,300 0 130,000 216,929 0 0 0 558,476 2,684,459 1,248,000 24,024 1,140,045 1,164,069 83,931 35,870 119,801 85,284 23,188 0 23,188 67,671 47,767 252,978 0.61 0.60
EX-27 3 FDS OF NFGDC
UT THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL FUEL GAS DISTRIBUTION CORPORATION'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS SEP-30-1998 OCT-01-1997 SEP-30-1998 PER-BOOK 906,754 0 127,637 2,109 135,146 1,171,646 59,171 121,668 260,717 441,556 0 0 299,000 103,900 0 0 0 0 0 0 327,190 1,171,646 871,180 30,077 746,697 776,774 94,406 2,021 96,427 44,639 51,788 0 51,788 34,800 0 79,667 0 0
EX-99 4 CERTIFICATE OF INC. OF HORIZON ENERGY CERTIFICATE OF INCORPORATION OF HORIZON ENERGY HOLDINGS, INC. Under Section 402 of the Business Corporation Law Counsel: Sarah J. Mugel 10 Lafayette Square Buffalo, NY 14203 CERTIFICATE OF INCORPORATION OF HORIZON ENERGY HOLDINGS, INC. Under Section 402 of the Business Corporation Law The undersigned for the purpose of forming a corporation pursuant to Section 402 of the Business Corporation Law of the State of New York does hereby certify and set forth: 1. The name of this corporation is Horizon Energy Holdings, Inc. 2. The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the Business Corporation Law of the State of New York. The corporation is not formed to engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained. 3. The office of this corporation is to be located in the County of Erie, State of New York. 4. The corporation shall have authority to issue an aggregate of 20,000 shares, which shall be of one class only, and which shall have a par value of one dollar ($1.00) per share. 5. The Secretary of the State of New York is hereby designated the agent of this corporation upon whom process against this corporation may be served. The post office address to which the Secretary of State shall mail a copy of any process against this corporation is 10 Lafayette Square, City of Buffalo, County of Erie, State of New York 14203, attention: R. J. Tanski. In witness whereof, the undersigned has subscribed this certificate of incorporation this 1st day of April, 1998, and I affirm the statements contained therein as true under penalties of perjury. /s/ Sarah J. Mugel ------------------------- Sarah J. Mugel Incorporator 10 Lafayette Square Buffalo, New York 14203 EX-99 5 BY-LAWS OF HORIZON ENERGY HOLDINGS B Y - L A W S OF HORIZON ENERGY HOLDINGS, INC. ARTICLE I --------- OFFICES ------- Section 1. Principal Office. The principal office of this Corporation --------- ----------------- shall be in the City of Buffalo, State of New York. Section 2. Other Offices. The Corporation may have such other offices --------- ------------- and places of business, within or without the State of New York, as may be determined by the Directors. ARTICLE II ---------- Meetings of Shareholders ------------------------ Section 1. Annual Meeting. The annual meeting of the shareholders shall --------- -------------- be held each year at a time and place to be designated by the President of the Corporation. Section 2. Special Meetings. Special Meetings of shareholders may be --------- ----------------- called at any time by a majority of the Directors, the President of the Corporation or the holders of not less than 25 percent of all of the shares entitled to vote at a meeting. Section 3. Notice. The Secretary shall give written notice, personally --------- ------ or by mail, to all shareholders of record of the holding of any regular or special meeting of shareholders. Notice shall be given personally or by first class mail not fewer than ten nor more than fifty days prior to the date of the meeting or by third-class mail not fewer than twenty-four nor more than fifty days prior to the date of the meeting. No notice shall be required in the case of any shareholder who waives the same in writing or attends the meeting without protesting prior to its conclusion the lack of notice. Notice of a special meeting shall state the purpose for which the meeting is called. Section 4. Quorum and Vote. The presence in person or by proxy of ---------- ---------------- holders of the majority of outstanding stock entitled to vote shall be necessary to constitute a quorum. The affirmative vote of a majority of the votes cast at a meeting shall be the act of the shareholders, provided that a quorum is present at such meeting and that the vote of a greater or lesser number of shares is not required by law or by the certificate of incorporation. Section 5. Adjourned Meetings. In case a quorum shall not be present at --------- ------------------ any duly called meeting, the majority of those present may adjourn the meeting from time to time not exceeding thirty days at any one time until a quorum shall be present and the business of the meeting accomplished; and of such adjourned meeting, no notice need be given except as required by law. Section 6. Written Consent of Shareholders. Whenever shareholders are --------- ------------------------------- required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken, signed by the holders of all outstanding shares entitled to vote thereon. ARTICLE III ----------- Directors --------- Section 1. Number. The number of Directors of the Corporation shall be --------- ------ one (1), who shall hold office for one year and/or until his or her successors are elected and qualify. The number of Directors may be increased or decreased from time to time by amendment to these By-Laws made by a majority of the Board of Directors or by the shareholders. Section 2. Powers. The Board of Directors may adopt such rules and ---------- ------ regulations for the conduct of business of its meetings, the exercise of its powers and the management of the affairs of the Corporation as it may deem proper, not inconsistent with the laws of the State of New York, the Certificate of Incorporation or these By-Laws. In addition to the powers and authorities by these By-Laws expressly conferred upon it, the Board of Directors may exercise all such powers of the Corporation and do such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the shareholders. Section 3. Election. The Directors shall be chosen at the annual ---------- -------- shareholders' meeting by a plurality of the votes cast, and each of such Directors shall serve until the next annual meeting of shareholders and until such Director's successor has been elected and qualified. Any vacancy occurring in the Board of Directors by reason of death, resignation, removal (with or without cause) or disqualification of a Director or increase in the number of Directors, or for any other reason, shall be filled by a majority of the Directors remaining; and such Director shall serve until the next annual meeting of shareholders and until such Director's successor is elected. A Director need not be a shareholder. The Directors may elect from their number a Chairman. Section 4. Quorum. A majority of the entire Board of Directors shall be --------- ------ necessary to constitute a quorum unless the number of Directors in office is less than a quorum, in which event any newly created directorship and any vacancy may be filled by the affirmative vote of one of the Directors then in office. Section 5. Meetings. Meetings of the Board of Directors will be held --------- -------- upon the call of and at such times and places as are designated by the President or the Secretary; and such call shall be issued whenever requested in writing by any two Directors. Meetings may be held outside the State of New York. Notice of each meeting shall be by telegram or by any written communication, but no notice shall be required in the case of any Director who waives the same or attends the meeting. If such notice is served personally or by telegram, it must be so served not less than two days prior to the meeting; and, if mailed, it must be mailed not less than five days prior to the meeting. Any one or more members of the Board or any committee thereof may participate in a meeting of such Board or committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. Section 6. Written Consent of Directors. Any action required or ---------- ------------------------------ permitted to be taken by the Board of Directors or any committee thereof may be taken without a meeting if all members of the Board or of the committee consent in writing to the adoption of the resolution authorizing the action. The resolution and the written consent thereto by the members of the Board or committee shall be filed with the minutes of the proceeding of the Board or committee. Section 7. Removal of Directors. Any Director may be removed with or --------- --------------------- without cause at any time by the vote of shareholders holding a majority of shares entitled to vote thereon at a meeting of shareholders. Section 8. Committees of the Board. The Board of Directors, by ---------- ------------------------- resolution adopted by a majority of the entire Board, may designate from among its members an executive committee and other committees, each consisting of three or more Directors and each of which, to the extent provided in such resolution and not prohibited by law, shall have the authority of the Board. Each such committee shall serve at the pleasure of the Board. The necessary notice of meetings of each such committee, and procedure thereat, shall be in accordance with the resolution appointing the same or, if not so provided, as determined by each such committee itself. Section 9. Compensation. Directors, as such, shall not receive any --------- ------------ stated salary for their services, but by resolution of the Board of Directors a fixed fee and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board or of any committee of the Board, provided that nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. ARTICLE IV ---------- Procedure at Meetings --------------------- The order of business and all other matters of procedure at any meeting of shareholders or Directors, unless determined at the meeting itself by majority vote, shall be determined by the person presiding, who shall be the President or, in his absence, such other officer or Director as shall be chosen by a majority vote at such meeting. ARTICLE V --------- Officers -------- Section 1. Election. The Corporation shall have such officers as the --------- -------- Board of Directors may elect, which may include a President, Vice President(s), Secretary, Treasurer, and such other officers as the Board of Directors shall deem appropriate. Such officers shall serve at the pleasure of the Directors and shall receive compensation to be determined by the Board. Section 2. President. The President shall be the chief executive ---------- --------- officer of the Corporation. The President shall have supervision and control of the management of the business of the Corporation, shall have authority to fix compensation of all employees of the Corporation other than the officers, shall be generally in charge of all the affairs of the Corporation, and shall see that all orders and resolutions of the Board are carried into effect. Section 3. Vice President. The Vice President or, if more than one, the --------- -------------- Vice Presidents in the order determined by the Board, in the absence or incapacity of the President, shall perform the duties of that officer; and shall perform such duties as the Board and the President may from time to time prescribe. Section 4. Secretary. The Secretary shall have custody of the minutes --------- --------- of the Corporation, have charge of the certificate book and shall perform the other duties customarily performed by the Secretary of a corporation. Section 5. Treasurer. The Treasurer shall maintain the financial --------- --------- records of the Corporation and perform the other duties customarily performed by the Treasurer of a corporation. ARTICLE VI ---------- Indemnification of Directors and Officers ----------------------------------------- Section 1. Indemnification. The Corporation shall indemnify to the --------- --------------- broadest and maximum extent permitted by the New York Business Corporation Law, as the same exists on the date of the adoption of this Article or to the greater extent permitted by any amendment of that Law (the intent being to provide the greatest of those indemnification rights permitted by that Law at any time from the time of the act or omission through the final disposition of the action) any person ("Indemnitee") made or threatened to be made a party to any action or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of any other Corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which any Director or officer of the Corporation served in any capacity at the request of the Corporation, by reason of the fact that such person is or was a Director or officer of the Corporation or is or was serving such other enterprise at the request of the Corporation; provided, however, that the Corporation shall provide indemnification in connection with any such action or proceeding initiated by an Indemnitee only if such action or proceeding was authorized by the Board of Directors. Section 2. Advances. Expenses incurred by any Indemnitee in defending --------- -------- an action or proceeding shall be paid by the Corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of an Indemnitee to repay the expenses so advanced by the Corporation to the extent they exceed the indemnification to which the Indemnitee is entitled. Unless otherwise required by law, such Indemnitee shall not be required as a condition of obtaining advancement of expenses hereunder to show that the Indemnitee has met the applicable standard of conduct provided by law for indemnification in connection with such action or proceeding. Section 3. Inurement. The rights of indemnification and advancement of --------- --------- expenses provided for in this Article shall inure to the benefit of the Indemnitee's legal representatives, heirs and distributees. Section 4. Insurance. The Board of Directors of the Corporation may, in --------- --------- its discretion, authorize the Corporation to purchase and maintain insurance to indemnify itself for any obligation which it incurs as a result of the indemnification of any Indemnitee or to indemnify any Indemnitee to the fullest extent permitted by law. Section 5. Interpretation. To the extent permitted under applicable --------- -------------- law, the rights of indemnification and advancement of expenses provided in this Article (a) shall be available with respect to events occurring prior to the adoption of this Article, (b) shall continue to exist after any rescission or restrictive amendment of this Article with respect to events occurring prior to such rescission or amendment, (c) shall be interpreted on the basis of applicable law in effect at the time of the occurrence of the event or events giving rise to the action or proceeding or, at the sole discretion of the Indemnitee (or, if applicable, at the sole discretion of the heirs, distributees or legal representatives of such Indemnitee seeking such rights), on the basis of applicable law in effect at the time such rights are claimed and (d) shall be in the nature of contract rights that may be enforced in any court of competent jurisdiction as if the Corporation and the Indemnitee were parties to a separate written agreement. Section 6. Other Rights. The rights of indemnification and advancement --------- ------------ of expenses provided in this Article shall not be deemed exclusive of any other rights to which any Indemnitee or other person may now or hereafter be otherwise entitled, whether contained in the Certificate of Incorporation, these By-Laws, a resolution of the Board of Directors or an agreement providing for such indemnification, the creation of such other rights being hereby expressly authorized. Without limiting the generality of the foregoing, the rights of indemnification and advancement of expenses provided in this Article shall not be deemed exclusive of any rights, pursuant to statute or otherwise, of any Indemnitee or other person in any action or proceeding to have assessed or allowed in his or her favor, against the Corporation or otherwise, his or her costs and expenses incurred therein or in connection therewith or any part thereof. Section 7. Notice to Shareholders. If any action with respect to ---------- ----------------------- indemnification of Directors and officers is taken by way of payment of indemnification, amendment of these By-Laws, resolution of Directors or by agreement, then the Corporation shall, not later than the next annual meeting of shareholders, unless such meeting is held within three months from the date of such action, and, in any event, within fifteen months from the date of such action, mail to its shareholders of record at the time entitled to vote for the election of Directors a statement specifying the action taken. Section 8. Severability. If this Article or any part hereof shall be --------- ------------ held unenforceable in any respect by a court of competent jurisdiction, it shall be deemed modified to the minimum extent necessary to make it enforceable, and the remainder of this Article shall remain fully enforceable. ARTICLE VII ----------- Certificates for Shares ----------------------- Section 1. General Requirements. Certificates representing shares or --------- --------------------- fractions of a share of the Corporation shall be bound in a book, shall be numbered and issued in consecutive order, shall be signed by the Chairman of the Board of Directors, President or Vice President and the Secretary or Treasurer, under the Corporation's seal; and in the stub of each certificate shall be entered the name of the person owning the shares represented thereby, the number of such shares and the date of issue. All certificates exchanged or returned to the Corporation shall be marked cancelled, with the date of cancellation, by the Secretary, and shall be immediately attached to the stubs in the certificate books from which they were detached when issued. Section 2. Transfer. Transfer of shares shall be made only upon the --------- -------- books of the Corporation by the registered holder in person or by attorney, duly authorized, and upon surrender of the certificate or certificates for such shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer. A record shall be made of each transfer, and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer on the record of shareholders of the Corporation. Section 3. Lost Certificates. The Board of Directors may direct a new --------- ------------------ share certificate to be issued in place of any certificate previously issued by the Corporation alleged to have been lost, destroyed or wrongfully taken, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, destroyed or wrongfully taken. As a condition of authorizing such issue of a new certificate, the Board of Directors may, in its discretion, require the owner of such lost, destroyed or wrongfully taken certificate, or the owner's legal representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, destroyed or wrongfully taken. Section 4. Record Date. In lieu of closing the books of the ---------- ------------ Corporation, the Board of Directors may fix in advance a date, not exceeding fifty days nor less than ten days, as the record date for the determination of shareholders entitled to receive notice of, or to vote at, any meeting of shareholders, or to consent to any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividends, or allotment of any rights, or for the purpose of any other action. ARTICLE VIII ------------ MISCELLANEOUS ------------- Section 1. Dividends. Subject to the applicable provisions of the --------- --------- Certificate of Incorporation, the Board of Directors may declare dividends from time to time upon the capital stock of the Corporation from the surplus or net profits available therefor. Section 2. Fiscal Year. The fiscal year of the Corporation shall begin --------- ----------- on the 1st day of October in each calendar year and end on the 30th day of September of the next succeeding calendar year. Section 3. Checks, Notes, etc. Checks, notes, drafts, bills of exchange --------- ------------------ and orders for payment of money shall be signed or endorsed in such manner as shall be determined by the Board of Directors. The funds of the Corporation shall be deposited in such bank or trust company, and checks drawn against such funds shall be signed in such manner as may be determined from time to time by the Board of Directors. Section 4. Notice and Waiver of Notice. Any notice required to be given --------- --------------------------- under these By-Laws may be waived by the person entitled thereto, in writing, by telegram, cable, facsimile transmission or radiogram, and the presence of any person at a meeting shall constitute waiver of notice thereof as to such person. Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated; and any notice so required shall be deemed to be sufficient if given by depositing it in a post office or post box in a sealed postpaid wrapper, addressed to such shareholder, officer or director, at such address as appears on the books of the Corporation, and such notice shall be deemed to have been given on the day of such deposit. ARTICLE IX ---------- Amendments ---------- These By-Laws and any hereafter adopted may be added to, amended, altered or repealed by a majority of the votes cast at a duly held meeting of shareholders by the holders of shares entitled to vote thereto. Subject to any restrictions imposed by shareholders, these By-Laws and any hereafter adopted may be added to, amended, altered or repealed by a vote of the majority of the Directors present at any duly held meeting. EX-99 6 FOUNDERS DEED OF AMES MOST TRANSLATION JUDr. Jaroslava Mala, public notary, with office in Most, Moskevska 1/14 __________________________________________________________Page one NZ 385/97 N 384/97 FOUNDER'S DEED COUNTERPART NOTARIAL RECORD written this tenth day of October nineteen hundred and ninety seven in front of me, JUDr. Jaroslava Mala, public notary, with office in Most, in the notary's office in Most, Moskevska 1/14. Present is the participant, who has declared that he is fully competent to undertake all legal acts and whose identity was proved by valid official identity documents, namely: Mr. Josef Van ura, birth certificate number 43.06.08/102, residing in Jirkov, 5. kvitna 1512, legal representative of Severoeeske teplarny, a.s. with registered office in Most, J. Seiferta 2179, Chairman of the Board of Directors of this joint-stock company, identification number 46708065,---------------------------- who has made in front of me, public notary, the following statement on founding the limited liability company: First: Severoeeske teplarny, a.s. with registered office in Most, ul. J. Seiferta 2179, identification number 46708065, represented by Josef Vanura, the company's legal representative ("member"), are founding by this Founder's Deed pursuant to Act 513/1991 Coll. as subsequently amended ("Commercial Code"), as a single member, a limited liability company (s.r.o. in Czech - translator's note) ("company") in accordance with conditions given by this Founder's Deed.--------- Second: The business name of the company is as follows: AMES MOST s.r.o. Under this business name the company will act in the legal relations and will be recorded at the Regional Court in Usti nad Labem, authorized by keeping the Commercial Register ("Register Court").------------------------------------- The company is formed by the day to which it was recorded at the Register Court. The record into the Commercial Register will by made public by the Register Court. The Register Court will allocate the company the identification number. The registered office of the company is in Most, J. Seiferta 2179, zip code 434 01.----------------------------------------------------------------------------- Third: The single member of the company on the basis of this Founder's Deed are Severoeeske teplarny, a.s. with registered office in most, J. Seiferta 2179, identification number 46708065. Fourth: The company has been founded by this Founder's Deed for an indefinite period of time. Fifth: The scope of business is as follows: - - technical and thermal measurements on heat equipment, except official measurements - - calibration of thermometers and pressure gauges - - purchase of goods to be sold and sale of goods. Sixth: The registered capital of the company as of the foundation day amounts to 100,000 CZK (in words: one hundred thousand Czech Crowns) Seventh: A member's contribution is the monetary contribution totaling to 100,000 CZK (in words: one hundred thousand Czech Crowns). This monetary contribution will be paid up by the member as a lump sum in cash before submitting the proposal for recording the company into the Commercial Register at the latest. The founder, i.e. Severoeeske teplarny, a.s. who acts as an administrator of the contribution, will manage the member's paid-up contribution prior to the incorporation of the company. The company shall acquire ownership title to the above mentioned contribution on the day of its incorporation. Eighth: Company Bodies The highest body of the company is the general meeting of the company's members. Pursuant to section 132 (1) 1 of the Commercial Code, a single member exercises the power of the general meeting. He decides all the questions, which are entrusted by the Commercial Code or this Founder's Deed to the general meeting. The decision of the single member when he exercises the powers of the general meeting must be in writing and carry his signature. The notarial record is only required in the instances stipulated in section 127 (4) of the Commercial Code. An executive constitutes the statutory body of the company. The company has one executive. The first company's executive on the basis of this Founder's Deed is ing. Jioi Bretfelt, residing is Most, ESA 2128, birth certificate number 650721/0787. Additional executives are appointed or recalled by the general meeting the power of which is exercised by the single member of the company. The executive has the right to act independently in the name of the company. The signing on behalf of the company is made in such a way that to the written or printed business name of the company the executive puts his signature. Prohibition of competitive conduct stipulated in section 136 of the Commercial Code applies to the executive. Ninth: The ownership interest represents the rights and duties of the member and his thereto corresponding participation in the company. The size of such ownership interest is determined in accordance with the ratio of the contribution made by the member to the registered capital of the company. The ownership interest is not identical with the contribution of the member. This Founder's Deed permits, with the prior approval of the general meeting, the transfer of the ownership interest to another party. The ownership interest may be divided in the case of its transfer or transference to a legal successor of the member. When the ownership interest is divided, the fixed amount of contribution stipulated in section 109 (1) of the Commercial Code must be preserved. The approval of the general meeting is required for the division of the ownership interest. The company may not acquire its own ownership interests. Tenth: The company shall create the reserve fund to cover the company losses or to overcome its adverse economic results. The reserve fund amounts to 10 per cent of the registered capital (in words: ten thousand Czech Crowns). The reserve fund is to be created in an amount equal to at least 10 per cent of the net profits, but without exceeding 5 per cent of the value of the registered capital. This fund shall be annually replenished by an amount of at least 5 per cent of the net profits, until the fund reaches the level equal to at least 10 per cent of the registered capital. Eleventh: The company is founded by this Founder's Deed and is incorporated as of the day to which the entry in the Commercial Register was made. An application for an entry of the company in the Commercial Register is to be signed by the executive and filed by 90 (in words: ninety) days from the foundation of the company or from submitting the trade or other entrepreneurial license. An application for an entry of the company in the Commercial Register must be accompanied by documents verifying the facts which are to be entered in the Commercial Register. A counterpart of this Notarial Record including the Founder's Deed, as well as the document confirming that the registered capital in accordance with section 111 (2) of the Commercial Code has been fully paid up, must be attached to the application. The authenticity of the signature of the person applying for the entry in the Commercial Register, must be officially authenticated. The company is responsible for breaching its obligations and other legal duties by all its property. The legal status of the company is governed by the law of the Czech Republic and by its general mandatory legal regulations, namely in matters not regulated by this Founder's Deed, in particular by relevant provisions of the Commercial Code and related regulations. About the aforesaid, the notarial record was written out, ready by the participant, approved by him and signed in front of me. Van ura s.s. L.S. Jaroslava Mala public notary s.s. I affirm that the counterpart of this notarial record corresponds word-for-word with the original document of October 10, 1997 NZ 375/97 and that it is assigned to Mr. Josef Van ura, residing in Jirkov, 5. kvitna 1512. In Most this tenth day of October nineteen hundred and ninety seven. I affirm that this photocopy corresponds word-for-word with the counterpart of the document from which it was made, consisting of 2 sheets in which no changes, amendments, inserts or crossings-out were made which could invalidate its authenticity. This photocopy is complete and includes 4 pages. In Most, 11/3/97 Round Seal JUDr. Jaroslava Mala, public notary in Most Miroslava Koeova authorized by the public notary JUDr. Jaroslava Mala EX-99 7 PARTNERSHIP AG. OF TEPLO BRANANY On the below stated day, month and year Severoeeske teplarny, a.s. having registered office in Most, J. Seiferta 2179, represented on the basis of written power of attorney by the Chairman of the Board of Directors, Mr. Josef VAN URA, living at Jirkov, 5. kvitna 1512 IEO: 46708065 DIE: 206-46708065 Banking connection KB Most, account number 15509-491/0100 (hereinafter only SET) on the one hand and Municipality of Braoany represented by the mayor of the municipality Mr. Miroslav Antala, living at Braoany 146 IEO: 26 58 45 Banking connection Komereni banka Most, account number 2927-491/0100 (hereinafter only Municipality) on the other hand (hereinafter only the "partners") have concluded the following PARTNERSHIP AGREEMENT on establishment of limited liability company P A R T I. Article 1 Introductory Stipulations The partners hereby establish a limited liability company (hereinafter only the "Company") under the conditions as stated by Commercial Code and this partnership agreement. Article 2 Company name Company name is as follows: Teplo Braoany, spol. s r.o. Article 3 Registered Office Registered office of the Company is at Braoany, Bilinska 76, zip code 435 22 Article 4 Company Period The Company has been established for indefinite period. Article 5 Acting and Signing on behalf of the Company 1. Two managers are the statutory body of the Company. 2. Both of them act on behalf of the Company jointly. 3. Both the managers have right to act on behalf of the Company in all matters that have not been assigned to general meeting by the law or reserved by the general meeting itself. 4. Signing on behalf of the company is performed in such a way that both company managers put their signatures to the company name. Article 6 Company Managers The first managers of the Company are as follows: Roman Jiruska, living at Probo tov, Okru ni 354, birth-certificate number 65 05 08/1748 Vlastimil Krupka, living at Braoany, birth-certificate number 51 08 08/169 Article 7 Scope of Business Scope of business of the Company is as follows: 1) generation, purchase, distribution and sale of heat and hot service water and related services 2) commercial activity - purchase of goods to be sold and sale of goods Article 8 Basic Capital Basic capital of the Company is equal to CZK 100,000 (one hundred Czech crowns). PART II. Article 9 Partners Contributions and Deposit Administrator The basic capital of the Company consists of the following partners' contributions: 1. SET: monetary contribution of CZK 49,000 (forty nine thousand crowns) to be handed over or transferred through a money order to the deposit administrator within 14 days from signature of this agreement. 2. Municipality: monetary contribution of CZK 51,000 (fifty one thousand crowns) to be handed over or transferred through a money order to the deposit administrator within 14 days from signature of this agreement. 3. The municipality of Braoany was mutually agreed as deposit administrator. Article 10 Business Shares of Partners 1. Business share of a partner represents the right and obligations of the partner and corresponding participation of the partner in the Company. 2. Each partner can have only one business share, irrespective of to how many contributions it will oblige itself. 3. Business share can be divided only on its transfer to a legal successor. The division is conditioned by the general meeting consent. 4. With consent of the general meeting the partner may transfer its business share to another partner or other person. 5. The contract of transfer of business share must be made in writing, while the acquirer, if he is not the partner, shall declare that he joins the partnership agreement. The signatures must be formally verified. 6. On cessation of the legal entity that is a partner, its business share comes to its legal successor. 7. The partners hereof have the priority in taking over the business share of other partner proportionally to their existing business shares. They shall enforce this right not later than thirty days from the date of written notification by a partner of intention to transfer the business share. Article 11 Rights and Obligations of Partners 1. The partner shall pay the contribution in the amount and in terms as stated herein. 2. Another partner can join the company after consent of the general meeting. The new partner shall pay the contribution in agreed amount, and that within three months from his entry into the Company. If the partner does not pay the contribution in stated term, he shall pay the penalty in the amount of 20% out of the sum unpaid. 3. The partners exercise their rights related to company management and control at the general meeting through their authorized representatives. 4. The partners may ask the managers to give them the information on all matters of the Company, and have the right to examine all documents of the Company. 5. The partners have the right to profit sharing proportionally to their contributions paid. The profit sharing is determined only after completion of the reserve fund. The partners shall return the profit share paid at variance with stipulations of the Commercial Code or wording of the partnership agreement. 6. The partners cannot ask for return of their contributions for the company period. 7. Each of the partners shall contribute to activity and development of the Company according to its abilities, protect goodwill of the Company, and take care of increase of the Company assets. 8. Each of the partners has the right to: a) a duplicate of the yearly financial statements; b) examine the accounting books and documents of the Company. 9. Each of the partners is entitled to compensation of expenses incurred to it purposefully on behalf of the Company. 10. The Company is liable towards its creditors for its obligations by its all property. 11. Until the Company is registered in the trade register, the partners shall be liable for obligations taken over on behalf of the Company severally and jointly. 12. Each of the partners has the right: a) to take part in the general meeting; b) to require explanations; c) to put forward comments; d) to vote on proposals submitted. 13. The partner exercises its vote at the general meeting, and that through its authorized representative. The power of attorney shall always be written, and valid only for the agenda of one general meeting. The power of attorney shall be handed over prior to the meeting and must also be filed with the original minutes of the general meeting. Article 12 Management and Bodies of the Company 1. The general meeting is the highest body of the Company. 2. The statutory body of the Company are two managers, who are authorized to act on behalf of the Company in the way as stated in Article 5. 3. Both the managers act on behalf of the Company in legal or other proceedings. If the managers themselves are subject to a suit, the general meeting appoints the company representatives. Article 13 General Meeting 1. The scope of the general meeting is as follows: a) approval or refusal of acts made by the founders prior to origin of the Company; b) approval of yearly financial statements, distribution of profits and settlement of losses; c) decision-making on change of the partnership agreement; d) decision-making on Company winding up; e) decision-making on increase/decrease of the basic capital or on the value of a non-monetary deposit f) appointment, withdrawal and remuneration of the Company managers; g) proposal for expulsion of a partner; h) review and approval of: - business policy; - financial policy; - conception and strategy of the Company development; - long-term plans; - organizational order, rules of management and remuneration system as submitted by the manager; i) decision-making on entry of a new partner into the Company; j) decision-making on entry of the Company into another company; k) decision-making on transformation of the Company into other form of commercial partnership. 2. A notarial record shall be made of the decisions taken according to letters a), c), d) and e). 3. The partner takes part in the general meeting through its authorized representative on the basis of power of attorney. The vote of authorized representative of the municipality becomes effective by its ratification by the municipality board within 10 days after the general meeting, while the ratification must be delivered to the company manager. Failure in meeting the term shall mean that the general meeting's decision is valid. 4. The general meeting shall be called by the company managers at least once a year. The term and agenda of the general meeting shall be stated by the managers taking into account written suggestions of the partners. 5. The Company managers shall summon an extraordinary general meeting in the following cases: a) the Company has lost a third of its basic capital; b) the Company has been insolvent for more than 2 months; c) if it is required by the partners. However, if the Company managers do not call the general meeting within a month from delivery of the request to do it, the partners have the right to call the general meeting themselves. d) if the reserve fund gets under a half compared with its level by the date of the last general meeting. 6. The general meeting term and agenda shall be notified to the partners at least 15 days before the general meeting by a written invitation. 7. The general meeting has a quorum if both the partners take part in it through their authorized representatives. The approval of both partners is required to make a decision of the general meeting according to Article 13 p. 1 letter a), b), c), d), e), f), h), with the exception of voting on non-monetary deposit of a partner. Other matters are decided by simple majority, while Municipality has two votes and SEZ one vote. 8. If the general meeting called has not a quorum, a new general meeting shall be called according to the rules stated for the original general meeting. 9. The voting is made by acclamation. 10. Each partner or manager can ask, within three months, a court to claim invalidity of general meeting decision, if it is at variance with legal regulations or partnership agreement. 11. Each partner has the right to claim for compensation of damages on behalf of the Company toward a manager or both managers who are liable for the damage caused by them to the Company. 12. The partners can make decisions also outside the general meeting. If it is the case, the manager submits the draft decision to partners for written statements. If a partner does not make a statement within 15 days, it means it does not agree. 13. The partners which take part in the general meeting through their authorized representatives shall be signed in the list of persons present, wherein the following must be stated: a) company name/name of the partner, birth-certificate/registration number (IEO), domicile/registered office of the partner; b) authorized representative first name, surname and permanent address; c) authorized representative signature. 14. The general meeting is presided over by one of the Company managers. 15. The minutes of the general meeting must be made within 15 days from the meeting and signed by authorized representatives and manager, who presided over the general meeting. The minutes must include: a) company name and registered office/place of business; b) place and time of the general meeting; c) general meeting agenda; d) name of chairman; e) name of secretary; f) important events in course of the meeting; - - statements made; - - written reports; - - basic opinions and protests of the partners; g) general meeting decisions with specification of reservation or protest of a partner on its demand. 16. The minutes of the general meeting shall be given to both partners. The original will be stored in the Company files together with the list of the persons present. On demand of any of the partners the authorized personnel shall make a copy or extract of the general meeting minutes. 17. The general meeting can charge other bodies of the Company or other persons with performing its certain rights. Article 14 Rights and Obligations of Managers 1. The managers are appointed by the general meeting out of the partners or other persons. 2. The managers have the following duties: a) to ensure Company management in all matters that are not in the scope of the other bodies of the Company; b) to submit proposals and recommendations to the other bodies of the Company; c) to attend the general meeting in an advisory capacity and give relevant explanations; d) to appoint and withdraw the managers of internal organizations of the Company; e) to handle the labour law agenda of the Company including decision-making on wage matters; f) to perform the functions they have been charged with by the other bodies of the Company; g) to perform the functions necessary to fulfilment of the tasks resulting from common legal regulations and rules of management of the Company; h) to keep the interests of the Company thoroughly; i) to receive credits following prior consent of the general meeting; j) to select independent auditors/audit companies to audit yearly financial statements of the Company following prior consent of the general meeting. 3. The Company managers shall ensure: a) keeping proper records and accounting; b) keeping a list of partners; c) information on the Company matters for the partners; d) elaboration of materials to: - - business policy; - - financial policy; - - conception and strategy of development; - - long-term planning; - - changes and amendments of organizational order, management system and rules. 4. The ban on competition shall apply to the Company managers in accordance with ss. 136 and ss. 135 p. 2 of the Commercial Code. 5. Each of the Company managers decides individually in business cases under the value of CZK 100,000. If the value exceeds CZK 100,000, a consent of both Company managers is needed. The consent of both partners is required for the value over CZK 1,000,000. 6. The proposal for Company registration in the trade register shall be submitted and signed by both managers. Article 15 Supervisory Board The Company does not establish a supervisory board on its foundation. Article 16 Basic Capital Increase 1. The general meeting can take decision on increase of the basic capital of the Company in case that then monetary contributions have been fully paid up. The basic capital increase is allowed only by non-monetary deposits until all monetary contributions are fully paid up. 2. Basic capital increase by non-monetary deposits is allowed on the basis of the general meeting's decision in the following cases: a) duty of additional payment of present partners according to the volume of their shares; b) contribution of a new partner; c) transfer of company assets exceeding the basic capital of the Company to its basic capital. 3. The proposal for basic capital increase can be put forward by either partner. The notification of convocation of the general meeting which agenda will include the basic capital increase shall contain the following data: a) reason of the proposal for basic capital increase; b) method of increase; c) value of increase; d) proposal of changes in the partnership agreement. 4. New partners shall explicitly state in the written statement of their contributions that they enter the Company according to the valid partnership agreement. The signatures of new partners must be formally verified. 5. The Company managers shall submit the proposal for basic capital increase to the trade register without unreasonable delay. 6. The Company managers shall inform all partners of decision of the trade register court and of relevant changes in the partnership agreement resulting from it within 30 days from the date of delivery of the register court's decision. 7. The basic capital increase becomes effective on the date of its entry in the trade register by relevant court. Article 17 Basic Capital Decrease 1. The general meeting can take decision on decrease of the basic capital of the Company, while the level of the basic capital and the level of contribution of an individual partner must not drop under the value stated by the law. 3. The proposal for basic capital decrease can be put forward by either partner. The notification of convocation of the general meeting which agenda will include the basic capital decrease shall contain the following data: a) reason of the proposal for basic capital decrease; b) method of increase; c) the maximum value of decrease; d) proposal of changes in the partnership agreement. 3. The basic capital decrease will be divided among the individual partners proportionally to their contributions. At the same time the stipulation of Article 19 p. 1 shall apply. 4. The Company manager shall publish the basic capital decrease and its amount within 15 days following the general meeting decision twice, with time interval of 30 days between individual notifications. In the notification the creditors shall be invited to enforce their debts within 90 days from the last notification. 5. On general meeting decision on basic capital decrease it must be decided what guarantees will be given by the Company to its creditors, who claim their debts in time, or how their debts will be satisfied. 6. The Company managers shall submit the proposal for basic capital decrease and making changes in the partnership agreement to the trade register without unreasonable delay. 7. The basic capital decrease becomes effective on the date of its entry in the trade register by relevant court. Article 18 Financial Management, Accounting and Reserve Fund 1. The principles of financial management of the Company are subject to the law on accounting. 2. Both yearly financial statements and extraordinary financial statements are performed and subject to audit according to common legal regulations. 3. The Company elaborates and provides the relevant authorities reports of its activities according to common legal regulations. 4. The Company creates a reserve fund in compliance with ss. 124 of the Commercial Code. 5. The reserve fund is completed in compliance with ss. 124 of the Commercial Code until the level corresponding to at least 10% of basic capital its achieved. 6. The Company managers make decision on use of the reserve fund to cover the Company losses or for actions to overcome unfavourable course of economy of the Company. Article 19 Cessation of Participation of a Partner in the Company 1. Participation of a partner in the Company ceases to exist by: a) cessation of the legal entity; b) transfer of business share; c) cancellation of the participation by a court; d) an agreement. 2. Neither partner has the right to withdraw unilaterally from the Company. It can transfer its business share to the other partner or another person with the general meeting's consent. 3. The partner can propose the court to cancel its participation in the Company, if it is not justifiably possible to require its persistence in the Company. 4. The cessation of participation of a partner in the Company will also be caused by declaration of bankruptcy over the partner's assets or refusal of the petition in bankruptcy due to insufficient assets of the partner. 5. The Company can require before the court expulsion of a partner who breaks its obligations in a serious way although it has been called to meet them and informed of its possible expulsion in writing. 6. The partner which participation in the Company was cancelled by the court, who was expelled or agreed upon termination of its participation in the Company has the right for settlement of its share by money or other property in the same value payable within 3 months from acceptance of extraordinary financial statements. The same right is given to the partner's legal successor, if no business share was transferred to him. 7. The settlement share is calculated by the ratio of the paid up contribution of the partner which participation in the Company ceased to the paid up contribution of the other partner. Article 20 Company Winding up and Liquidation 1. The Company is wound up by the following acts: a) general meeting decision on Company winding up; b) court decision on company winding up; c) general meeting decision on merge, fuse or division of the Company or on its transformation into another form of commercial partnership; d) discharge in bankruptcy due to fulfilment of settlement resolution or due to the reason that the Company assets is not sufficient to cover the bankruptcy proceeding costs, or refusal of proposal for declaration of bankruptcy due to insufficient assets. 2. Prior to liquidation of the Company the general meeting shall appoint a liquidator with the exception of p. 1b), when the liquidator is appointed by a court. On company winding up with liquidation, either partner has the right to share in the liquidation balance that is calculated analogously to the settlement share. 3. The Company ceases by its removal from the trade register. PART III. Article 21 Final Stipulations 1. Each partner has one vote at initial general meeting. 2. If not stated otherwise in this agreement, the other matters shall be subject to stipulations of Commercial Code or Civil Code and related common mandatory legal regulations. 3. Consent of both partners is necessary to amend the partnership agreement. Article 22 Number of Copies and Specimen Signatures 1. This agreement has been elaborated in 8 duplicates. Each of the partners is given two of them; another two duplicates will be filed with the trade register, and the remaining two will be filed in the files of the Company. 2. The signatures of partners put below the agreement serve simultaneously as specimen signatures. As evidence of the truth of the above said the partners and both manager of the Company put their signatures herein before the body stated by law for verification of the signatures. At illegible November 18, 1997 ............................ ............................. 1st partner 1st manager ............................ ............................. 2nd partner 2nd manager Verification of signatures by state notaries EX-99 8 ARTICLES OF ASSOC. OF JABLONECKA Annex 4 (Annex 2 to the Shareholders Agreement) ARTICLES OF ASSOCIATION of the stock corporation Jablonecka teplarenska a realitni, a.s. TABLE OF CONTENTS - ----------------- PART I BASIC PROVISIONS Article 1 Incorporation of the Stock Corporation Article 2 Business Name and Registered Office of the Company Article 3 Duration of the Company Article 4 Scope of Business/Activities of the Company Article 5 Registered Capital of the Company Article 6 Shares Article 7 Paying off the Shares Article 8 Transfer of Shares Article 9 Bonds PART II COMPANY ORGANIZATION Article 10 Company Bodies A. GENERAL MEETING Article 11 Status and Scope of the General Meeting Article 12 Convening and Venue of the General Meeting Article 13 Participation in the General Meeting Article 14 Deliberations of the General Meeting Article 15 General Meeting's Decision-Taking B. BOARD OF DIRECTORS Article 16 Status and Competencies of the Board of Directors Article 17 Composition, Establishment and Term of Office of the Board of Directors Article 18 Convening the Board of Directors' Meeting Article 19 Board of Directors' Meeting Article 20 Board of Directors' Decision-Taking Article 21 Board of Directors' Decision-Taking out of the Meeting Article 22 Remuneration of the Board of Directors' Members Article 23 Non-Competition and Confidentiality C. SUPERVISORY BOARD Article 24 Status and Competencies of the Supervisory Board Article 25 Supervisory Board's Composition, Establishment and Term of Office Article 26 Convening of the Supervisory Board Article 27 Supervisory Board's Meeting Article 28 Supervisory Board's Decision-Taking Article 29 Non-Competition and Confidentiality Article 30 Remuneration of the Supervisory Board's Members PART III GENERAL DIRECTOR Article 31 General Director's Authority and Position PART IV ACTING ON BEHALF OF THE COMPANY Article 32 Acting on Behalf of the Company Article 33 Signing on Behalf of the Company Article 34 Procuracy PART V COMPANY ECONOMY Article 35 Business Year and Fiscal Year Article 36 Company Records and Accounting Article 37 Financial Statements Article 38 Abbreviated Quarterly Balance Sheet Article 39 Profit Allocation Article 40 Reserve Fund Article 41 Settlement of Company Losses Article 42 Increase in the Registered Capital Article 43 Increase in the Registered Capital by Subscription for New Shares Article 44 Conditional Increase in the Registered Capital Article 45 Increase in the Registered Capital from Own Resources Article 46 Increase in the Registered Capital by the Board of Directors Article 47 Registered Capital Decrease Article 48 Registered Capital Decrease by Decreasing the Nominal Value of Shares and Interim Certificates Article 49 Registered Capital Decrease by Withdrawal of Shares from the Market by Drawing Article 50 Registered Capital Decrease by Withdrawal of Shares on the Basis of Public Proposal Article 51 Registered Capital Decrease by Abandonment of a Share Issue PART VI WINDING-UP AND DISSOLUTION OF THE COMPANY Article 52 Ways of the Company's Winding-up Article 53 General Meeting's Decision on Company's Winding-up Article 54 Company's Liquidation Article 55 Company's Dissolution PART VII FINAL PROVISIONS Article 56 Notices Article 57 Legal Relations in the Company and Settlement of Disputes Article 58 Amendments and Changes of the Articles of Association Article 59 Interpretation Clause I. INTRODUCTORY PROVISIONS Article 1 Incorporation of the Stock Corporation -------------------------------------- The stock corporation Jablonecka teplarenska a realitni, a.s. ("the Company") was established by entry in the Commercial Register on 7th December 1994, and was recorded in Section B, Insert 643 of the Commercial Register kept by the Regional Court in Usti nad Labem. Article 2 Business Name and Registered Office of the Company -------------------------------------------------- 1. Business name of the Company is as follows: Jablonecka teplarenska a realitni, a.s. 2. Registered office of the Company is: Jablonec nad Nisou, Liberecko 104 Article 3 Duration of the Company ----------------------- The Company has been established for indefinite period of time. Article 4 Scope of Business/Activities of the Company ------------------------------------------- Scope of business/activities of the Company is as follows: a) purchase and sale of real estates, b) purchase of goods to be sold and sale in the frame of free licenses, c) heat generation and distribution. Article 5 Registered Capital of the Company --------------------------------- 1. Registered capital of the Company amounts to CZK _________ (___________ Czech crowns). 2. The General Meeting decides on an increase or reduction in the registered capital on the basis of generally binding legal regulations and provisions of these Articles of Association. Article 6 Shares ------ 1. The Company's registered capital, mentioned in Article 5 para. 1, is divided into 1,000 (one thousand) shares of nominal value CZK 1,000 (one thousand Czech crowns). The Company's shares are registered and certificated shares. 2. The Company shall maintain a list of shareholders for shares, in which the type and form of share, its nominal value, the business name or designation and registered office of a legal entity or name and place of residence of a natural person who is a shareholder, and the share's serial number and changes in that information. At a shareholder's request, the company shall provide him with an extract from the part of the shareholders' list relating to such shareholder. Article 7 Paying off the Shares --------------------- 1. On an increase in the registered capital by subscription of new shares, the General Meeting shall stipulate the terms and method of share paying-off on the basis of generally binding legal regulations and provisions of these Articles of Association. 2. Subscribing the shares on increasing the registered capital, the subscriber shall pay off a part of their nominal value as stated by the General Meeting, however not less than 30 per cent plus capital in excess of par value, if any, otherwise the share subscription is invalid. The remaining part of the issue price of the shares shall be paid off by the subscriber within one year of the entry of the registered capital increase in the Commercial Register. Non-monetary contributions have to be paid off prior to a submission of the application for entry of the registered capital increase in the Commercial Register. 3. In case of a delay in paying off the issue price of the shares subscribed or of its payable part according to paragraph 2., the subscriber shall pay the outstanding sum within 30 (thirty) days from delivery of the Board of Directors' call, otherwise the Board of Directors shall ask for a return of the interim certificate within a reasonable time-limit as specified by them. If the excluded subscriber does not return the interim certificate within the specified time-limit, the Board of Directors shall declare the certificate invalid and issue, instead of it, a new interim certificate or shares to the person approved by the General Meeting, who will pay the issue price of these shares. If no new provisional certificate or shares are issued, the General Meeting decides on registered capital decreasing according to Article 51. 4. In case of delay in repayment of the issue price of the subscribed shares or its part payable, the forbearance money shall always be 30 per cent p.a. out of the outstanding sum. Article 8 Transfer of Shares ------------------ 1. The shareholders have the priority to obtain (by purchase, gift, exchange or otherwise) the Company's shares. 2. If a shareholder ("the transferor") wishes to sell or otherwise dispose of his/her shares, then: a) the transferor shall notify (by registered mail) the other shareholders of his/her intention and method of disposal ( "the first notification of transfer"). The first notification of transfer shall contain the unit price of transferred the shares, the method of its repayment, names and addresses of all potential transferees (if potential transferee acts on behalf or to the account of a third party, also the name and address of the third party), and also any other conditions of the transfer intended. If the intended disposal of shares means their exchange, the transferor shall specify the exchange object and its market price instead of the unit price of shares. At a request of some shareholders (in case of reasonable doubts regarding the price of the exchange object) the transferor shall evidence the price by an expert estimation. The unit price at which the shares will be offered to the other shareholders will then be calculated from the exchange object price. b) the transferor shall offer the other shareholders his/her shares in the first notification of transfer (maximum under the same conditions like the ones offered by a third party), and namely at the ratio corresponding to the contribution of their shares in the registered capital of the Company. c) the shareholders, who fully or partially accept the transferor's offer ("the first acceptance"), shall pay, in case of purchase, the purchase price for the shares offered, under the conditions stated in the offer, namely within 30 (thirty) days from delivery of the first notification of transfer. If some of the shareholders do not accept the transferor's offer before them in full extent, it shall be considered that they have refused the offer to this extent. d) in case that the other shareholders do not accept the offer for all offered shares of the transferor after expiration of the first acceptance time-limit, the transferor shall without unnecessary delay offer all refused shares to those shareholders who have accepted the offer in full extent ("the second notification of transfer"). e) in the second notification of transfer, the transferor shall specify total number of refused shares, while the unit price shall conform to the unit price of the first notification of transfer. The shareholders addressed shall inform of the extent to which they have been willing to accept the second offer ("the second acceptance") within 5 (five) days from delivery of the second notification of transfer. The transferor shall confirm the addressed shareholders the extent at which it would be possible to satisfy their second acceptance immediately following delivery of the second acceptance. If the sum of the second acceptances exceed the number of refused shares, the ratio at which the acceptances will be satisfied depends on the transferor's will. In case of sale of shares the period for the purchase price to be paid is 30 (thirty) days from delivery of confirmation of the first acceptance. 3. If none of the shareholders accepts the offer in the first notification of transfer in full extent or if the offer is not accepted in full extent in the second notification of transfer, the transferor shall have the right to transfer the refused shares ("the free shares") to a transferee, and that under conditions in compliance with the first notification of transfer. The unit price of the free shares transferred must be at least the same or higher than the unit price stated in the first notification of transfer. 4. If the share transfer is not implemented in compliance with the terms of the first notification, namely not later than 30 (thirty) days from expiration of the period for the second acceptance [or within 30 (thirty) days from expiration of the period for the first acceptance, if none of the shareholders accepts the offer in full extent], the shares shall be considered free and shall again be subject to priority according to these Articles of Association. 5. Transferability of interim certificates substituting the unpaid inscribed registered shares is limited in the same way. Article 9 Bonds ----- 1. The Company may, on the basis of the General Meeting's resolution, issue bonds, that carry a right of exchange for the Company's shares ("the convertible bonds") or bonds that carry pre-emptive rights to a share subscription ("bonds with attached pre-emptive rights"), provided that the General Meeting concurrently decides on a conditional increase in the capital stock. 2. The resolution of the General Meeting under paragraph 1 must be passed by a two thirds majority of the attending shareholders. 3. Shareholders of the company have a right of pre-emption to acquire convertible bonds and bonds with attached pre-emptive rights. II. COMPANY ORGANIZATION Article 10 Company Bodies -------------- The bodies of the Company are as follows: A. General Meeting B. Board of Directors C. Supervisory Board A. GENERAL MEETING Article 11 Status and Competencies of the General Meeting ---------------------------------------------- 1. The General Meeting is the supreme body of the Company. It consists of all shareholders present. 2. The following falls under the authority of the General Meeting: a) decisions to amend the Articles of the Association, provided such amendment is not a consequence of an increase to authorized capital by the Board of Directors in accordance with Section 210 of the Commercial Code, b) decisions on an increase or a decrease to the Company's registered capital in form of monetary or nonmonetary contributions and on the issue of bonds; the powers of the Board of Directors under Section 210 of the Commercial Register are not hereby affected, c) decision on exclusion or restriction of a pre-emptive right to obtain convertible bonds and bonds with attached pre-emptive rights, and on exclusion or restriction of the pre-emptive right to subscribe new shares according to Section 204a of the Commercial Code, d) the election and recall of members of the Board of Directors and the Supervisory Board, other than members of the Supervisory Board elected in accordance with Section 200 of the Commercial Code, e) the approval of the financial statements, decisions on the distribution of profit or covering of loss and the setting of Board members' directors' fees, f) deciding to change the type or form of shares, the rights pertaining to each type of share, restricting the negotiability of registered shares, g) decision on Reserve Fund increase over the limit set forth by the Articles of Association, h) decision on establishment or cancellation of other bodies not defined in Article 10 of the Articles of Association, and definition of their statuses and competencies including their relation to the Board of Directors and the other bodies of the Company, i) decisions on remuneration to the members of the Board of Directors and the Supervisory Board, j) decisions on the liquidation of the Company and the approval of shares in the net proceeds of liquidation and decisions on the Company's transformation to another form or cooperative, merger, consolidation or division, k) decisions on submitting requests for permission for public trading in the Company's shares in accordance with the special law on canceling the public tradability of shares, l) decision on transformation of the shares issued as certificated securities to uncertificated securities and vice versa, m) decision to sell the enterprise in whole or part, n) decision on authorization of the Board of Directors to increase the registered capital, o) decision on creating new funds of the Company and determination of rules of their creation and use; p) decision on other issues which the law or these Articles of Association entrust to the authority of the General Meeting. Article 12 Convening and venue of the General Meeting ------------------------------------------ 1. The General Meeting is held at least once a year. It is convened by the Board of Directors, or by one of its members in cases stipulated by law, in such a way that it is held no later than eight months after the final day of the accounting period. 2. The Board of Directors is obliged to call an Extraordinary General Meeting if: a) it learns that the Company's losses have exceeded half of its authorized capital, b) the Company is bankrupt, c) if it is required by other interests of the Company, d) if requested by a shareholder whose shares have a nominal value exceeding 10 per cent of the registered capital to discuss matters proposed. 3. The Supervisory Board shall convene the General Meeting whenever the interests of the Company so require, and propose any necessary measures to it. 4. The General Meeting is convened by sending an invitation to the shareholders by registered mail, at least 30 days prior to the General Meeting. The Extraordinary General Meeting pursuant to paragraph 2 d) is convened by the Board of Directors in such a way that it shall be held within 40 days of the date, when it received the application for its convocation. In this case the time-limit for sending the written invitation is at least 15 days prior to Extraordinary General Meeting. Unless the Board of Directors meets this duty, the court, at a request of the shareholders stated in paragraph 2 d), shall make a decision on their authorization to convene the Extraordinary General Meeting. 5. Notification of the holding of the General Meeting must contain the Company's trading name and registered office, the date, time and venue where it is to be held, an indication of whether it is an ordinary, extraordinary or reconvened General Meeting, the agenda for the General Meeting, requirements of the Articles of Association for participation of shareholders at the General Meeting and performance of their voting rights, and other prerequisites prescribed by these Articles of Association or generally binding legal regulations. 6. At the request of shareholders owning shares with a nominal value exceeding 10 per cent of the registered capital, the Board of Directors is obliged to include matters specified by such shareholders in the agenda for the General Meeting. If such request was received after the published announcement, the Board of Directors shall send a supplement to the agenda for the General Meeting by registered mail at least ten days before the General Meeting. If such sending is not possible, matters in the agenda which were not presented in the invitation may only be decided with the participation and the consent of all of the Company's shareholders. 7. The General Meeting is usually held at the Company's registered office. It may be however held elsewhere. Article 13 Participation in General Meeting -------------------------------- 1. Every shareholder has the right to attend the General Meeting, to vote, to ask for explanations, and to receive answers with regard to matters concerning the company, if such matters are on the agenda of the General Meeting, and to make proposals and counterproposals. 2. The shareholder cannot exercise a voting right: a) attached to an interim certificate if he is in default on making part payments for the issue price of not fully-paid shares; b) if the General Meeting is deciding on valuation of his nonmonetary contribution; c) if the General Meeting is deciding whether a contract is to be concluded with him or whether non-performance of some duty should be excused; d) if he breaches his duty to make a public proposal for purchase of the shares under Section 183b of the Commercial Code in the scope by which the shares acquired by him exceed the proportion which binds the shareholder to make a public proposal to conclude the contract for purchase of such shares; e) when he breaches his duty under Section 183d; f) in other cases prescribed by law. 3. A shareholder may participate and exercise voting rights at the General Meeting personally, by its statutory body or by proxy on the basis of a written letter of proxy. The shareholder's proxy on the basis of the power of attorney shall hand over the written power of attorney, wherein his/her powers are defined unambiguously, on checking the list of persons present. The shareholder's signature must be officially certified. A member of the Company's Board of Directors or Supervisory Board may not be a shareholder's proxy. On registration, every shareholder or his/her proxy shall submit the following documents: a) natural person: - ------------------ - - valid identity card of the shareholder or his/her proxy (the power of attorney with formally authenticated signature in case of the proxy). b) for legal entity: - ------------------- - - updated extract from the Commercial Register, not older than three months, - - valid identity card of the statutory body or a member of the statutory body acting on behalf of the legal entity, or of its proxy (power of attorney with formally authenticated signature in case of the proxy). 4. The members of the Board of Directors and Supervisory Board take part in the General Meeting. 5. Shareholders in attendance at the General Meeting are inscribed in an attendance roll which indicates the business name or designation in registered office of a legal entity or name and place of residence of a natural person who is a shareholder, or of his proxy holder, the number of shares and the nominal value of shares entitling the shareholder to vote, or where applicable the fact that the shares do not entitle the shareholder to vote. The Chairman of the General Meeting and the minutes clerk elected in accordance with these Articles of Association shall certify the correctness of the attendance roll by their signatures. If the Company refuses to inscribe a certain person in the attendance roll, it shall indicate this fact in the attendance roll along with the reason for the refusal. Article 14 Deliberations of the General Meeting ------------------------------------ 1. The General Meeting is conducted by the elected General Meeting Chairman, or, until his/her election, a member of the Board of Directors authorized by the Board of Directors. 2. After commencement of the General Meeting, the authorized member of the Board of Directors puts forward the proposal for approval of the General Meeting Rules of Procedure and Voting as the first point of the agenda. The Rules of Procedure and Voting shall govern the organization of proceedings and voting at the General Meeting in details, and also include the Board of Directors' proposal for occupation of the functions of the General Meeting's bodies, namely the Chairman, Minute Clerk, two verifiers of the minutes and vote tellers of the General Meeting. A counterproposal for occupation of the General Meeting's bodies, if any, shall contain the name of particular person, while the person shall be present and must agree with his/her potential nomination. In case of a duly put forward counterproposal, the authorized member of the Board of Directors shall first vote on the original proposal of the Board of Directors. If the proposal passes, it is not necessary to vote on counterproposals. Otherwise it shall be voted gradually on all counterproposals, and that in the order in which they were put forward or handed over in writing until all members of the General Meeting's bodies are elected. The same procedure shall apply to the voting on counterproposals put forward during further proceedings of the General Meeting. Counterproposals can be put forward only before voting begins to relevant item of the agenda. 3. Explanations to potential questions of the shareholders regarding the Company related matters included in the General Meeting's agenda shall be given to the shareholders in course of the General Meeting proceedings. The other questions shall be answered in course of the General Meeting or within 30 days in writing to the questioner's address. The Chairman of the Board of Directors shall take a decision on the method of answer. 4. To ensure due proceedings the Chairman of the Board of Directors can take an organizational measure or announce a break in the proceedings anytime in course of the General Meeting. 5. The way of voting i.e. whether the voting will be public (by acclamation) or secret, by means of voting slips, shall be specified in the Rules of Procedure and Voting. It is possible to use computers for voting and scrutinizing. 6. The Chairman or authorized member of the Board of Directors shall decide the order of questions, who supports the motion who votes against the proposal, and who abstained on public voting. In case of giving only two of these questions, the result of the last question shall be recorded according to the number present persons, who did not vote on the questions put. 7. The General Meeting can continue the proceedings, if it is clear during scrutinizing that required majority of votes to accept a decision has been achieved or if it is evident that such a majority cannot be achieved. The correct result of the voting shall be put down in the General Meeting's minutes. 8. Proposals, statements and other documents presented for discussion at the General Meeting shall be attached to the minutes of the General Meeting. 9. The Board of Directors is obliged to ensure that the minutes are prepared within 30 days of the day on which the General Meeting was concluded. The minutes shall be signed by the Chairman of the General Meeting, the Minutes Clerk and the two elected Verifiers. 10. Every shareholder may at any time request that the Board of Directors issue a copy of the minutes or a part thereof throughout the time of the Company's existence. The expenses connected with obtaining a copy of the minutes or a part thereof shall be borne by the shareholder. Article 15 General Meeting's Decision-Taking --------------------------------- 1. The General Meeting takes resolutions. 2. General Meeting has a quorum, if shareholders who own shares of nominal value exceeding 67 per cent of the registered capital of the Company are present personally or represented by their proxies or statutory bodies. 3. If a quorum has not been achieved after expiry of one hour from the time for which the General Meeting has been convened, the Board of Directors shall reconvene the General Meeting. The Board of Directors shall convene such reconvened General Meeting by means of a new invitation, while an invitation must be sent no later than 15 days after the day for which the original General Meeting was convened. The reconvened General Meeting must be held 6 weeks of the day for which the original General Meeting was convened. Notification of the reconvening of the General Meeting must be published within 15 days of the day on which the original General Meeting was to have been held. The new General Meeting must have an unmodified agenda and shall have a quorum regardless of the number of the shareholders present and the total nominal value of their shares. 4. Matters not placed on the proposed agenda of the General Meeting may be decided only in the presence, and with the consent, of all shareholders of the Company or their proxies. 5. Every 1,000 CZK of the nominal value of the shares represents one vote of a shareholder. 6. The General Meeting passes resolutions by a majority of vote of the attending shareholders, unless these Articles of Association require qualified majority. 7. A qualified majority means that at least two-thirds or three quarters of votes of the attending shareholders are reqired to pass a resolution, unless it is further stipulated otherwise. 8. The qualified (two-thirds) majority vote of the attending shareholders shall be required when deciding on the following matters: a) on amendments to the Articles of Association, unless it concerns a change resulting from an increase in the registered capital decided by the Board of Directors under Section 210 of the Commercial Code; b) on an increase or decrease in the Company's registered capital and on the issue of bonds; c) on the winding-up of the Company and approving shares in the liquidation remainder, and deciding on the Company's transformation to another company form or a coopertive, the Company's merger, consolidation or division; c) decision on establishment or cancellation of other bodies not defined in Article 10 of the Articles of Association, and definition of their statuses and competencies including their relation to the Board of Directors and the other bodies of the Company; d) on the sale of the Company or its part. Should the General Meeting decides on increasing or reducing the registered capital, it should require approval by no less than a two-thirds majority of the attending shareholders of each class of share which the Company issued, or instead of which it issued interim certificates. 9. The qualified (three-quarters) majority of the attending shareholders shall be required for deciding on the following matters: a) elimination or restriction of pre-emptive rights to convertible bonds or to bonds carrying pre-emptive rights; b) elimination or restriction of pre-emptive rights to subscribe for new shares to increase the registered capital; c) increasing the registered capital by nonmonetary contributions. If the Company issued more than one class of shares, approval by at least a three- quarters majority of the attending shareholders owning each class of shares, or instead of which interim certificates were issued, shall be required for the General Meeting's decision. 10. Approval by no less than a three-quarters majority of the attending shareholders owning the appropriate shares shall be required for the General Meeting's decision on the following matters: a) a change of the rights attached to a particular class of shares, b) a change of the class of shares, c) a restriction of transferability of registered shares, d) a cancellation of public tradability of the Company's shares. B. BOARD OF DIRECTORS Article 16 Status and Competencies of the Board of Directors ------------------------------------------------- 1. The Board of Directors is a statutory body of the Company, which manages the Compnay's activity, secures it management and acts in its name. 2. The Board of Directors takes decision in all of the Company's affairs except those reserved by law or by these Articles of Association to the authority of the General Meeting. 3. The Board of Directors in particular: a) carries out the management of the Company's business and ensures operational matters of the Company; b) perform the rights of employer within the competence of the organization manager according to the Labour Code or other employment and legal regulations; c) convenes the Ordinary General Meeting at least once a year, or the Extraordinary or Reconvened General Meeting, as the case may be, and organizes them; d) decides on heat prices in compliance with the Agreement on Heat Price Costing for Residential Customers concluded between the City and SCT; e) ensure elaborating of the following documents and submits them to the General Meeting: - proposal for conception of business activities of the Company and proposals for its changes; - proposals for changes in the Articles of Association; - proposals for registered capital increase/decrease, or for issue of bonds; - financial statements; - proposal for profit distribution including level and method of payment of dividend and director's fees; - report on business activities of the Company and of the state of the Company's assets on the date of holding the General Meeting; - proposals for a settlement of the Company's losses arisen in previous business year and proposals for additional approval of reserve fund use; - proposal for a reserve fund increase over the limit stipulated by the Articles of Association; - proposals for establishment or cancellation of other bodies not defined in Article 10 of the Articles of Association, and for specification of their status and competencies; - proposal for amalgamation, merger, division or cancellation of the Company; - proposal for remuneration of the Board of Directors' and Supervisory Board's members. f) carries out the General Meeting's resolutions; g) organizes the compilation of the financial statements; h) decides on the use of money from the Reserve Fund in emergencies, in compliance with the relevant provisions of the Commercial Code; i) keeps a list of shareholders in accordance with Article 6 para. 2 of these Articles of Association; j) secures the maintenance of the Company's accounting and commercial books and other documents of the Company; k) approves transfers of the Company's shares; l) exercises also other rights and decisions on other matters that have to be resolved to ensure proper operation of the Company and that are not reserved to the authority of other bodies of the Company by a law or these Articles of Association; m) submits the Supervisory Board the Company related reports as required by the Supervisory Board. 4. The Board of Directors acts and signs on behalf of the Company in accordance with Article 32 and 33. 5. The Board of Directors shall follow the principles and instructions approved by the General Meeting, provided that they are in conformity with legal provisions and these Articles of Association. 6. The Board of Directors shall convene an Extraordinary General Meeting, without undue delay, should it ascertain the facts according to Article 12 para. 2a) of these Articles of Association, and shall propose to the General Meeting the wnding-up of the Company and the commencement of its liquidation or adoption of another measure. 7. The Board of Directors is obliged to file with the appropriate court, without undue delay, a motion for adjudication of a bankruptcy order on the Company, if the conditions stipulated by a special law are met. A breach of this duty by fault by a member of the Board of Directors due to negligence shall result in such member's liability for the Company's obligations that will arise after the day when the Board of Directors breached such duty. 8. Members of the Board of Directors are obliged to carry out their functions with due care and to maintain silence on confidential information and facts whose disclosure to third parties may harm the Company. Members of the Board of Directors are not responsible for any harm they cause to the Company by carrying out an instruction by the General Meeting, provided at least one member of the Board of Directors has alerted the General Meeting to the inappropriate nature of the instruction and has requested that a protest against the inappropriate instruction be recorded in the minutes of the General Meeting and the General Meeting has insisted upon the inappropriate instruction. This does not apply where the instruction by the General Meeting is in conflict with statutory provisions. Article 17 Composition, Establishment and Term of Office of the Board of Directors ----------------------------------------------------------------------- 1. The Board of Directors has 5 (five) members. 2. The members of the Board of Directors are elected and recalled by the General Meeting. 3. The Board of Directors, as a team, is elected for a three-year period. The term of office does not end until a new Board of Directors is elected, it starts on the day of electing the Board members, i.e. all of its members. If the term of office of the individual Board members does not end earlier, it will finish on the last date of the Board of Directors' term of office irrespective when they were elected as Board members by the General Meeting. Any Board member can be reelected. 4. A member of the Board of Directors may withdraw from the function by his/her written statement delivered to the Board of Directors. In such a case his/her function expires on the date when his/her withdrawal has been or should have been discussed by the Board of Directors'. Unless the Board of Directors stipulates otherwise, the office of the Board of Directors is identical with the Company's registered office. 5. The Board of Directors whose number of members elected by the General Meeting has not fallen below one half may appoint substitute members to serve until the next General Meeting that shall elect the appointed member or another natural person. 6. The Board of Directors shall elect its Chairman and Deputy Chairman out of its members. 7. The Deputy Chairman stands for the Chairman following a mutual agreement or if the Chairman is not able to perform his function for any reason. Provided the Deputy Chairman is not able to perform his function either, his function shall be performed by a member of the Board of Directors authorized to do so in compliance with the Rules of Procedure of the Board of Directors. In such cases the Deputy Chairman or authorized Board member shall take over the rights and obligations of the Board Chairman. Article 18 Convening the Board of Directors' Meeting ----------------------------------------- 1. The Board of Directors meets at least once in three months. 2. The meeting of the Board of Directors is convened by its Chairman by means of a written invitation, in which he shall specify the place, date, hour and agenda of the meeting. The other conditions shall comply with the Rules of Procedure of the Board of Directors. 3. The Chairman of the Board of Directors is obliged to convene the Board of Directors within 15 days of delivery of a request whenever it is required so in writing by any Board member of the Supervisory Board. The invitation must contain a reason for convening the Board of Directors' meeting and a draft agenda of the meeting. Article 19 Board of Directors' Meeting --------------------------- 1. Meetings of the Board of Directors are conducted by its Chairman. The Chairman can charge the Deputy Chairman or a member of the Board of Directors to preside over the meeting. 2. Minutes are taken of the proceedings and decisions of the Board of Directors, signed by the Chairman of the Board of Directors and the Minutes Clerk. 3. Minutes of meetings of the Board of Directors must name Board members who voted against individual resolutions of the Board of Directors or who abstained from voting. Unless it is provided otherwise, it shall apply that members not recorded voted in favor of a particular resolution. 4. Expenses connected with meetings of the Board of Directors are borne by the Company. Article 20 Board of Directors' Decision-Taking ----------------------------------- 1. The Board of Directors takes resolutions and has a quorum when at least 4 (four) of its members are present. 2. A majority vote of the attending shareholders is required to pass a resolution concerning any matter discussed at the meeting of the Board of Directors, unless these Articles of Association require a different majority. 3. On election and recall of the Board Chairman or Deputy Chairman, these persons shall not vote. 4. The votes of all members of the Board of Directors are required to pass a resolution concerning heat prices in accordance with the provision of Article 16 para. 3d). Article 21 Board of Directors' Decision-Taking out of the Meeting ------------------------------------------------------ 1. In emergencies, if all members of the Board of Directors agree, the Chairman of the Board of Directors may ask for the decision per rollam by written, teletype, fax or similar question to all members of the Board of Directors. However, in such a case, all of the members must express their opinion to the proposal and the decision must be taken univocally. A decision per rollam must be incorporated in the minutes of the next Board of Directors' meeting. 2. Any organizational activities connected with decision taking out of the meeting of the Board of Directors shall be ensured by the Chairman of the Board of Directors. Article 22 Remuneration of the Board of Directors' Members ----------------------------------------------- 1. The level of bonuses of the Board of Directors' members shall be decided by the General Meeting. 2. The Board of Directors decides on the distribution of bonuses according to para. 1 to its members and on the date on which the bonuses shall be paid. 3. On the basis of yearlong results, the members of the Board of Directors may be paid director's fees, the level and payment of which is decided by the General Meeting of the Company. 4. The Board of Directors decides on the distribution of director's fees to its members. 5. In case of shorter than yearlong work of a member of the Board of Directors in this body of the Company, he is entitled to receive an aliquot part of bonuses and director's fees. He shall not be given the aliquot part, if he has worked as a member of the Board of Directors for a period shorter than two months. 6. The director's fees are due within three months of the date when a resolution concerning their levels and payment was passed by the General Meeting. Article 23 Non-Competition and Confidentiality ----------------------------------- 1. In addition to the facts listed in Section 196 para. 1 of the Commercial Code, any member of the Board of Directors shall not: a) use the reputation of the Company's products or services intending to make such a profit for himself or for a third person, which otherwise cannot be achieved; b) act with the aim to get a priority or other unauthorized benefit for himself or for a third person during his activity; 2. In addition, any member of the Board of Directors shall: a) keep secret of production, technical, organizational and other facts learnt by him in course of his activity, and of the facts that shall be kept confidential such as business or professional secret; b) keep secret of transactions and balance sheets of the Company; take care that unauthorized persons do not receive such data. C. SUPERVISORY BOARD Article 24 Status and Competencies of the Supervisory Board ------------------------------------------------ 1. The Supervisory Board is the supervising elected authority of the Company. 2. The Supervisory Board shall oversee how the Board of Directors exercises its range of powers and how the business activity of the Company is conducted. 3. In particular, the Supervisory Board a) reviews observance of generally binding legal regulations, the Company's Articles of Association and resolutions of the General Meeting; b) reviews the annual financial statements and proposal for the allocation of profit, including a proposal for dividend and director's fee payment and submits a report on the results of its reviewing to the General Meeting; c) reviews abbreviated quarterly balance sheets; d) convenes a General Meeting where this is required in the interests of the Company; e) submits its opinions, recommendations and proposals to the General Meeting and the Board of Directors; f) examines records, accounting, commercial books and other documents of the Company; g) ask the Board of Directors for a report on the Company's business to carry out its supervising activities. 4. The Supervisory Board follows principles and instructions approved by the General Meeting. Article 25 Supervisory Board's Composition, Establishment and Term of Office ----------------------------------------------------------------- 1. The Supervisory Board has 3 (three) members. 2. The members of the Supervisory Board are elected and recalled by the General Meeting or the Company's employees under Section 200 Subsection 1 of the Commercial Code. A member of the Supervisory Board cannot be a member of the Board of Directors simultaneously. 3. The term of office of the Supervisory Board's members lasts three years. Their term of office may not, however, end before new members have been elected. Any member of the Supervisory Board may be reelected. 4. A member of the Supervisory Board may withdraw from the function by his/her written statement delivered to the Supervisory Board. In such a case his/her function expires on the date when his/her withdrawal has been or should have been discussed by the Supervisory Board. Unless the Supervisory Board is identical with the Company's registered office. 5. The Supervisory Board shall elect its Chairman out of its members. 6. The Chairman of the Supervisory Board may authorize any member of the Supervisory Board to stand in for him. In such a case, the authorized member has rights and duties of the Chairman. Article 26 Convening of the Supervisory Board ---------------------------------- 1. The Supervisory Board meets at least four times a year. 2. The meeting of the Supervisory Board is convened by its Chairman by means of a written invitation, in which he shall specify the place, date, hour and agenda of the meeting. The invitations must be dispatched at least 15 days before the meeting. If all members of the Supervisory Board agree, a Board meeting may be convened by wire or fax. However, such an invitation must contain the aforesaid elements and the members of the Supervisory Board must confirm its receipt and must agree with this way of convening the Supervisory Board. The receipt of the invitation must be confirmed and the consent must be given by the beginning of the Supervisory Board's meeting. 3. The Chairman of the Supervisory Board is obliged to convene the Board of Directors whenever it is required so by any Board member or the Board of Directors provided they say an urgent reason for convening of the Supervisory Board. 4. The Board meetings are held in the Company's headquarters, unless the Supervisory Board reaches a different decision. 5. At its discretion, the Supervisory Board may also invite members of other Company's bodies, employees, shareholders and other persons. Article 27 The Supervisory Board's Meeting ------------------------------- 1. Meetings of the Supervisory Board are conducted by its Chairman or a Board member authorized by the Chairman. 2. Minutes are taken of the Supervisory Board and the Minutes Clerk. In the minutes, there are also opinions of a minority of the members provided they require it. 3. Expenses connected with meetings of the Supervisory Board are borne by the Company. Article 28 Supervisory Board Decision-Taking --------------------------------- 1. The Supervisory Board takes resolutions and has a quorum whan an absolute majority of its members is present at the meeting. 2. Absolute majority of votes of all members of the Supervisory Board is required to pass a resolution concerning any matter discussed at the meeting of the Supervisory Board. 3. On election and recall of the Board Chairman, this person shall not vote. Article 29 Non-Competition and Confidentiality ----------------------------------- The same principles of non-competition and confidentiality shall apply to the members of the Supervisory Board as for the members of the Board of Directors set forth in Article 23 of these Articles of Association. Article 30 Remuneration of the Supervisory Board's Members ----------------------------------------------- 1. The level of bonuses of the Supervisory Board's members shall be decided by the General Meeting. 2. The Supervisory Board decides on the distribution of bonuses according to para. 1 to its members and on the date on which the bonuses shall be paid. 3. On the basis of yearlong results, the members of the Supervisory Board may be paid director's fees, the level and payment of which is decided by the General Meeting of the Company. 4. The Supervisory Board decides on the distribution of director's fees to its members. 5. In case of shorter than yearlong work of a member of the Supervisory Board in this body of the Company, he is entitled to receive an aliquot part of bonuses and director's fees. He shall not be given the aliquot part, if he has worked as a member of the Supervisory Board for a period shorter than two months. 6. The director's fees are due in nearest payday following the date when a resolution concerning their levels and payment was passed by the General Meeting. III. GENERAL DIRECTOR Article 31 General Director's Authority and Position ----------------------------------------- 1. There is a function of the General Director established in the Company. The General Director is appointed and recalled by the Board of Directors, which also defines the scope of General Director's powers and a way of his remuneration. 2. The General Director shall manage the Company within the scope of his powers given him by the Board of Directors in the manager's contract. Particularly, he shall: a) implement the decisions of the General Meeting and Board of Directors; b) ensure control of the Company, issue organizational standards and governing acts of the Company; c) perform his functions delegated on him by the Board of Directors; d) act on behalf of the Company within the written authorization from the Board of Directors; e) submit proposals to the Board of Directors. IV. ACTING ON BEHALF OF THE COMPANY Article 32 Acting on Behalf of the Company ------------------------------- The Board of Directors acts on behalf of the Company in all matters concerning the Company towards third parties, before courts and other bodies. Eithe the Chairman of the Board of Directors, or its Deputy Chairman, or at least two members of the Board of Directors jointly are entitled to act on behalf of the Company. Article 33 Signing on Behalf of the Company -------------------------------- Signing on behalf of the Company is carried out in such a way that either Chairman of the Board of Directors and the Deputy Chairman jointly, or at least three members of the Board of Directors jointly put their signatures to the Company's printed, imprinted or written trading name. Article 34 Procuracy --------- 1. The Board of Directors may confer procuracy, if need be. If the procuracy includes an authorization to alienate real estate and encumber it, at least 4 members of the Board of Directors must agree with the authorization hereof. 2. The procuracy shall become effective when it is recorded in the Commercial Register. 3. The agent by proxy shall perform his function with due care, and keep secret of confidential information and facts, the disclosure of which to third persons would cause a damage to the Company. V. COMPANY ECONOMY Article 35 Business Year and Fiscal Year ----------------------------- The first business year and the first fiscal year of the Company begin by its entry in the Commercial Register and ends on 31st December of current year. Any other business and fiscal years coincide with the calendar years. Article 36 Company Records and Accounting ------------------------------ Records and accounting of the Company shall be made in compliance with relevant generally valid legal regulations. Article 37 Financial Statements -------------------- 1. The Board of Directors shall arrange for the compilation of financial statements and a proposal for the profit allocation, including setting of director's fees and the way of their payment or covering of the Company's loss, as the case may be. The Board of Directors shall submit the financial statements to the Supervisory Board for review and to an auditor for verification. 2. After the review by the Supervisory Board and verification by the auditor, the Board of Directors shall send the main data of the financial statements to the shareholders along with an invitation to nearest General Meeting. If the Company issues bearer shares, the Board of Directors shall publish the main data in the notification of the General Meeting. Then, the Board of Directors shall submit the financial statements reviewed by the Supervisory Board and verified by the auditor to the General Meeting. At the same time the Supervisory Board shall submit the General Meeting a report of the results of its review. 3. The Company's auditor is nominated by the Board of Directors and approved by the Supervisory Board for relevant business year in accordance with Section 39 of the Commercial Code. 4. The annual financial statements must be elaborated in compliance with generally valid legal regulations and rules of proper accounting to provide full information of the assets and financial situation of the Company, of the level of profit achieved or loss arisen in the last business year. 5. At a proposal of a shareholder owning more than 10 per cent of the Company's shares, the Company is obliged to enable to examine all the Company's documents by an auditor appointed by the shareholder, for the purpose of an ordinary or extraordinary audit. The expenses connected with such an audit shall be borne by the shareholder unless the Board of Directors decides otherwise. Article 38 Abbreviated Quarterly Balance Sheet ----------------------------------- In addition to the financial statements, the Board of Directors shall ensure elaboration of abbreviated quarterly balance sheets providing basic information of current assets and finance of the Company, effectiveness of its economy in previous three months and of the level of profit or loss arisen in that period. Such an abbreviated quarterly balance sheet is also subject to review by the Supervisory Board. Article 39 Profit Allocation ----------------- 1. The General Meeting decides on the allocation of the Company's profit on the basis of a proposal by the Board of Directors, following a review of such proposal by the Supervisory Board. 2. Any shareholder has right to a share in the Company's profit (dividend), which has been approved to be allocated by the General Meeting according to the economic results of the Company. If the Company does not issue preference shares with priority to payment of the dividend, the shareholder's share shall be determined as a ratio of nominal value of his shares and the nominal value of all shareholders' shares. 3. The effectiveness of the General Meeting's decision on payment of dividend shall base the title for dividend payment for all those, who have been authorized persons in accordance with the Commercial Code and these Articles of Association on the General Meeting date. 4. Ways and terms of the dividend payment shall be proposed by the Board of Directors and approved by the General Meeting. 5. The title of a person entitled to dividend ceases, if he does not exercise it within four-year period of the due date. 6. The Company may not distribute profit among shareholders when, according to its financial statements, its net business assets on the last day of the accounting period are in an amount intended only for use in or, due to the allocation of profit, would be lower than the registered capital of the Company, increased by: a) the subscribed nominal value of shares, if the Company's shares were subscribed in order to increase the registered capital, and the new registered capital was not entered in the Commercial Register on the day when the annual financial statement was prepared; b) the Reserve fund created from profit coverning the Company's losses; c) the Reserve fund created under Article 40 para. 4 and 5. 7. The share of members of the Board of Directors and the Supervisory Board in the Company's profit (the director's fees) may be determined by the General Meeting from profits approved for allocation. 8. The amount of profit distributed may not be higher than the amount of profit shown in the annual financial statement for the last accounting period, reduced by the mandatory allocation to the Reserve Fund under Article 40 para. 2 and by non-settled losses, and increased by retained profits from proceding years and funds created from profits which the Company may use as it sees fit. 9. Where the accounting of the Company includes setting-up expenses as an intangible fixed assets, or where an intangible fixed assets were the object of a non-monetary contribution to the Company, such intangible fixed assets must be depreciated in the accounting no later than within five years after incorporation of the Company or the day such contribution was provided. Should the value of such intangible fixed assets not be entirely depreciated in the accounting, the Company may not pay out a profit share. This shall not apply when funds created from profits, which the Company may use freely as it sees fit and retained profits from previous years are at least as high as the depreciated book value of the said intangible fixed assets. Article 40 Reserve Fund ------------ 1. The reserve fund serves for settlement of losses of the Company. 2. The Company shall create the Reserve Fund from profits shown in the financial statement for the year in which it attains profit for the first time. It shall transfer to such fund at least 20 per cent of the profit, but no more than 10 per cent of the value of the registered capital. This fund shall be replenished by at least 5 per cent of the profit, until the amount being equal to 20 per cent of the Company's registered capital is reached. The Reserve Fund created in this manner may only be used by the Company to settle a loss. 3. The General Meeting shall take decision on potential further creation of the Reserve Fund over the level defined in the previous paragraph. 4. If the Company decreases the registered capital to transfer the means into the reserve fund for settlement of a future loss, the reserve fund, created in such a level, can be used only for settlement of loss or increase of the registered capital of the Company, if it exceeds the mandatory level as stated in paragraph 2. The Reserve Fund created according to paragraph 5 shall not be taken into account. 5. If the Company shows its own shares or interim certificates in assets part of its books, the reserve fund must achieve the level equal to the value of the shares or interim certificates after deduction of the value created according to paragraph 4 or the obligatory created value according to paragraph 2. 6. It is the Board of Directors that shall decide on the use of the Reserve Fund. Each use of the Reserve Fund has to be announced to the Supervisory Board. Article 41 Settlement of Company Losses ---------------------------- 1. The General Meeting decides on a way of settlement of the Company's losses as put forward by the Board of Directors following its review by the Supervisory Board. 2. Potential losses arising on Company operations shall be covered mainly from its Reserve Fund, if not stipulated otherwise by the General Meeting. The use of the Reserve Fund and approval of the use follow from the Article 40. Article 42 Increase in the Registered Capital ---------------------------------- 1. An increase in the registered capital shall be decided by the General Meeting under the conditions stipulated by these Articles of Association and generally valid legal regulations in the manner following them. A notarial record must be made of the decision. The Company may increase the registered capital as follows: a) by subscription for new shares, b) conditionally, c) from own resources. 2. The increase in the registered capital shall become effective from the day of its entry in the Commercial Register. Article 43 Increase in the Registered Capital by Subscription for New Shares ----------------------------------------------------------------- 1. The registered capital may be increased by a subscription for new shares only if the shareholders of the Company have paid all previously subscribed shares. This restriction shall not apply if the registered capital is to be increased by a subscription for shares and their issue price is only to be paid by non-monetary contributions. 2. Within 30 days of the General Meeting's resolution to increase the registered capital, the Board of Directors shall file an application for entry of this resolution in the Commercial Register. After such entry, the Board of Directors will make public the resolution, without undue delay. Share subscription may not commence prior to the entry of the General Meeting's resolution into the Commercial Register. 3. Each shareholder has a pre-emptive right to subscribe for a part of the Company's new shares in the scope of his portion of the existing registered capital, provided that such shares are to be subscribed by monetary contributions. 4. A pre-emptive right attached to a shares is separately transferable as of the day when the resolution of the General Meeting concerning the increase in the registered capital was entered in the Commercial Register. A pre-emptive right shall extinguish on expiry of the time-limit set for its exercise. 5. Shareholders' pre-emptive rights may be restricted or eliminated in a resolution of the General Meeting to increase the registered capital only if there is a serious reason to do so on the part of the Company. Pre-emptive rights may be restricted only to the same extent for all owners of the same class of shares. Pre-emptive rights may be eliminated only for all shareholders or for all owners of one class of shares. 6. The General Meeting may decide in its resolution on the registered capital increase that all the shares or a part of the shares that will not be subscribed with enforcement of the pre-emptive right, may be subscribed by the shareholders on the basis of an agreement according to Section 205 of the Commercial Code, or offered to a particular interested person or persons, or determine a way of selection of such persons interested. Unless the General Meeting's decision contains the above-mentioned data, the shares shall be offered for subscription by means of a public notice. Article 44 Conditional Increase in the Registered Capital ---------------------------------------------- 1. When the General Meeting decides to issue convertible bonds or bonds with attached pre-emptive rigthts, it shall concurrently decide on an increase in the registered capital in the extent to which rights of exchange arising from convertible bonds, or pre-emptive rights from bonds carrying pre-emptive rights may be exercised ("a conditional increase in the registered capital"). 2. The amount of the conditional increase in the registered capital may not exceed one half of the registered capital entered in the Commercial Register on the day when the General Meeting passes the resolution on the issue of the bonds. 3. The issue of convertible bonds and bonds carrying pre-emptive rights cannot start until the General Meeting's resolution is entered in the Commercial Register and until it is made public. 4. The Company shall issue shares in the amount of the asserted exchange and pre-emptive rights after the increased capital stock has been entered into the Commercial Register. Article 45 Increase in the Registered Capital from Own Resources ----------------------------------------------------- 1. After approving an annual or extraordinary financial statement and allotting the relevant amount to the Reserve Fund under Article 40 para. 2, the General Meeting may decide to use profit, or its part, or other own resources shown in the financial statement as liabilities of the Company, for increasing the registered capital. 2. A prequisite for an increase in the registered capital is the availability of a financial statement, verified by an auditor without reservations and compiled from data established on a day before eight months have elapsed since the day of the General Meeting's decision. 3. The Company must not increase the registered capital from its own resources, if its net business assets do not reach the value of the registered capital increased by the mandatory part of the reserve fund according to Section 161d of the Commercial Code, and by a part of the reserve fund created according to Section 216a and 217 of the Commercial Code that can be used only for settlement of a loss. 4. Neither the reserve fund created according to Section 161d of the Commercial Code nor the mandatory created Reserve Fund for settlement of the Company losses can be used for registered capital increase. 5. The registered capital cannot be increased more than is the difference between the value of net business assets and the sum of the value of registered capital and mandatory part of the Reserve Fund according to Section 161d of the Commercial Code and mandatory reserve fund for settlement of losses of the Company according to Section 216a and 217 of the Commercial Code. 6. The registered capital shall be increased from own resources of the Company either by issue of new shares with their free distribution among the shareholders according to the nominal values of their shares or by increase in the nominal value of current shares. Article 46 Increase in the Registered Capital by the Board of Directors ------------------------------------------------------------ 1. The General Meeting may authorize the Board of Directors to take a decision on registered capital increase under the conditions stipulated by these Articles of Association and common mandatory legal regulations and in the way following from them, namely by subscribing the shares or from own resources of the Company with the exception of retained profit, however not more than by a third of current amount of the registered capital in the time of decision-making by the Board of Directors (hereinafter only "the authorization to increase the registered capital"). If the Board of Directors is authorized to increase the registered capital by non-monetary deposits, the authorization shall include also the specification of the Company's body that will decide of evaluating the non-monetary deposit on the basis of an expert opinion. 2. An authorization to increase the registered capital may be given to five years as a maximum of the day of the General Meeting that reached a decision on an increase in the registered capital. 3. On decision-making of the Board of Directors on registered capital increase by subscription of new shares, the priority of shareholders to subscription of a part of the new shares of the Company corresponding to their share in the registered capital must not be limited or excluded. 4. The consent of all members of the Board of Directors is required to pass the decision on increasing the registered capital, and the decision shall be recorded in the form of a notarial record. The registered capital increase must not be decided out of the Board of Directors' meeting in the way as set forth in Article 21. Article 47 Registered Capital Decrease --------------------------- 1. The General Meeting decides on decreasing the registered capital of the Company. Namely, it shall be made under conditions stated by these Articles of Association and common mandatory legal regulations and in the way following from them. A notarial record shall be made of the decision. 2. The registered capital must not be decreased under its minimum level stated by law. The decrease in the registered capital must not worsen settlement of debts. 3. If the Company shall decrease the registered capital, it shall use its own shares or provisional certificates, if it has owned them. In the other cases of registered capital decrease the Company shall use mainly its own shares or provisional certificates for decreasing the registered capital. The registered capital can be decreased in different way only if the former way is not sufficient to decrease the registered capital to the level stated by the General Meeting. If the registered capital is decreased only utilizing the own shares or provisional certificates owned by the Company, the stipulation on separate voting by individual types of shares shall not be applied. 4. If the Company does not own any own shares or provisional certificates or if use of its own shares or provisional certificates according to paragraph 3 is not enough to decrease the registered capital, the registered capital shall be decreased by decreasing the nominal value of the shares or of unpaid shares substituted by provisional certificates, or by withdrawal the shares from circulation or by not issuing the unpaid shares instead of the provisional certificates. Article 48 Registered Capital Decrease by Decreasing Nominal Value of Shares and --------------------------------------------------------------------- Interim Certificates -------------------- 1. If the nominal value of shares or unpaid shares is decreased, it shall be decreased proportionally for all shares of the Company. 2. Decreasing the nominal value of shares or unpaid shares, for which interim certificates were issued, shall be performed by replacement of the shares or interim certificates for the ones of lower nominal value, or by identification of the lower nominal value on existing shares or interim certificates with confirmation by signature of the members of the Board of Directors authorized to act on behalf of the Company, and that in compliance with the General Meeting's decision. Article 49 Registered Capital Decrease by Withdrawal of Shares on the Basis of Public -------------------------------------------------------------------------- Proposal -------- 1. The General Meeting can decide that the registered capital is to be decreased by withdrawal of shares from the market on the basis of public proposal of a contract for purchase of the shares. If it is the case, the General Meeting's decision can state that the registered capital: a) shall be decreased by nominal value of the shares to be withdrawn from circulation on the basis of public proposal of the contract; b) shall be decreased by a fixed amount. 2. The public proposal of the contract for purchase of shares to withdraw them from circulation or of free withdrawal of the shares from the market shall be sent by the Board of Directors to all shareholders by registered mail. The purchase price due term and the period for submission of certificated shares of the Company must not proceed the date of entry of the registered capital decrease in the Commercial Register. If a shareholder does not submit the certificated shares of the Company within the specified term, he will lose relevant rights until their submission. If the shares are not submitted on the Board of Directors' call even within an additional period, the Board of Directors shall declare them invalid. 3. If the registered capital is to be decreased according to paragraph 1 a), the General Meeting's decision shall contain authorization of the Board of Directors to apply for entry of the registered capital amount in the Commercial Register, in the extent corresponding to the approved public proposal for the contract. Article 50 Registered Capital Decrease by Abandonment of a Share Issue ----------------------------------------------------------- 1. The General Meeting can decide that the registered capital is to be decreased by abandonment of a share issue in the extent corresponding to the unpaid nominal value of the shares by subscribers, if the Company does not proceed according to Section 177 para. 4 to 7 of the Commercial Code. 2. Abandonment of a issue of the unpaid shares shall be performed in such a way that the Board of Directors will ask the shareholder, who has failed to pay the issue price or its part, to return the interim certificate, while the Company will not issue the shares substituted by the interim certificate and return the subscriber the issue price paid until then after deduction of the Company titles toward the subscriber without unreasonable delay after the entry of the registered capital decrease in the Commercial Register. If the shareholder does not submit the interim certificate in a prescribed period, he will lose the related titles until the interim certificate is submitted. If the interim certificate is not submitted on the Board of Directors' call even within an additional period, the Board of Directors shall declare it invalid. VI. WINDING-UP AND DISSOLUTION OF THE COMPANY Article 51 Way of the Company's winding-up ------------------------------- The Company can be dissolved: a) by General Meeting's decision on winding-up of the Company and of its transformation into another company form or a co-operative or on amalgamation, merger or division of the Company; b) by the date stated in the General Meeting's decision on winding-up of the Company with liquidation; otherwise by the date of acceptance of the decision; c) by the date stated in the court's decision on winding-up of the Company; otherwise by the date of effectiveness of such a decision; d) by cancellation of the bankruptcy proceedings after fulfilment of the distribution schedule, or by cancellation of the bankruptcy proceeding for the reason that the bankrupt's property is not enough to pay the costs of bankruptcy proceeding, or by refusal of the proposal for declaration of bankruptcy because of insufficient property. Article 52 General Meeting's Decision on Company Winding-up ------------------------------------------------ A notarial record shall be made of all decisions of the General Meeting regarding all matters specified in Article 49 para. a) and b). Article 53 Company's Liquidation --------------------- 1. The way of the Company's liquidation on its winding-up shall follow generally binding legal terms. 2. The General Meeting shall decide the method of settlement of the liquidation balance of the Company's assets, while the liquidation balance shall be divided among the shareholders proportionally to nominal values of their shares. Article 54 Company's Dissolution --------------------- The Company is dissolved by erasing from the Commercial Register. VII. FINAL PROVISIONS Article 55 Notices ------- 1. The facts stated by generally binding legal regulations, these Articles of Association or decisions of the General Meeting shall be published by the Company in the Commercial Bulletin. 2. The Company shall send written documents intended for shareholders owning the inscribed shares by registered mail to their addresses put down in the list of shareholders. The written documents intended for the other persons shall be sent to their addresses given to the Company. Article 56 Legal Relations in the Company and Settlement of Disputes --------------------------------------------------------- 1. Company establishment, legal relations and dissolution as well as any legal relations resulting from the Articles of Association and labor or other relations within the Company including the relations resulting from sickness insurance and social security system shall be subject to the Czech generally binding legal regulations. 2. Potential disputes between the shareholders and Company, disputes between the Company and the members of its bodies as well as disputes between the shareholders relating their participation in the Company shall be settled out of court. If failed, the dispute shall be put before and decided by relevant court of the Czech Republic. Article 57 Amendments and Changes of the Articles of Association ----------------------------------------------------- 1. Any amendments and changes of the Articles of Association shall be decided by the General Meeting following a proposal of the Board of Directors or on the basis of counterproposals of the shareholders present at the General Meeting, or following a proposal of the Supervisory Board, if the Supervisory Board has convened the General Meeting and proposed necessary actions. 2. If the Company decides increase or decrease the registered capital, a distribution of shares, change of form or type of shares or limitation of or change in transferability of inscribed shares, the relevant change in the Articles of Association becomes effective on the date of entry of these facts in the Commercial Register. The other changes in the Articles of Association become effective in the moment of their acceptance by the General Meeting, if a later effective date does not follow from the General Meeting's decision or from the law. Article 58 Interpretation Clause --------------------- 1. If a provision of the Articles of Association becomes invalid, ineffective or questionable because of changes in regulations, the other provisions of the Articles of Association shall not be affected by the fact. Such a provision shall be replaced either by a provision of relevant generally binding legal regulation nearest to the intended purpose of the Articles by its character and purpose, or, in absence of such a regulation, by a method of solution common in business relations. 2. Anywhere the term "shares" is used in the Articles of Association, it shall mean the shares of the Company. Anywhere a reference to an article or paragraph in the Articles of Association without detailed identification is made, it shall mean the provision of these Articles of Association. EX-99 9 NOTARIAL RECORD OF PRVNI 1. SZT, a.s. 8N/267/92 8N 288/92 COUNTERPART Notarial record written before me, JUDr. Zdeoka Prochazkova, at the request of the hereinafter mentioned Founder, at the Public Notary's Office for Prague 8 at Celetna 38, Prague 1, the twenty-eighth day of April nineteen hundred and ninety two (28 April 1992). The National Property Fund of the Czech Republic, with its registered office at Gorkeho namisti 32, Prague 1 ("the Founder"), was represented by Ing. Marie Netikova, born on 13 February 1952, residing at Geuvarova 1281, Prague 6, in accordance with the power of attorney as of 2 March 1992 that is an integral part of this notarial record. The present person, who declared that she is fully competent to undertake legal acts and whose identity was proven legally, required that the notary public wrote a notarial record concerning this --------------attestation of the Founder's decision------------------- I. The Founder establishes the stock corporation Prvni severozapadni teplarenska, a.s. ("the Company"), with its registered office in Komooany u Mostu, in this Founder's Deed, for an indefinite period of time. The Company shall be incorporated by recording in the Commercial Register. II. The Company's scope of business: 1. electricity and heat production and sale, 2. distribution of heat from own as well as other heat sources, 3. investment activities, 4. projecting within the scope of the assigned authorization, 5. engineering activities in development, operation and economy of heating plants, 6. expert analyses with regard to materials in power-producing facilities, 7. running an industrial school. III. The Founder has made a decision that the Company's registered capital amounts to Kes 956,198,000 (in words: nine hundred and fifty-six million one hundred and ninety-eight thousand Czechoslovak crowns) upon its foundation. This registered capital is formed by tangible and other property of the state enterprise Severoeeske teplarenske zavody (Northbohemian Heating Plants) that was passed to the Founder on the grounds of a privatization project. The list of this property is attached hereto as Annex 1. The evaluation of the contributed property was carried out and approved in the privatization project of the previously mentioned enterprise pursuant to the Act 92/1991 Coll. The said evaluation replaces, with regard to Section 11 of the Act 92/1991 Coll., an evaluation of the Founder's non-monetary contribution to the registered capital of the stock corporation based on an expert estimate in accordance with Section 163 Subsection 1 (e) of the Act 513/1991 Coll., the Commercial Code. All rights and duties of the aforesaid state enterprise related to the contributed property, except for industrial or other intangible rights, are passed to the Company along with the contributed tangible property. IV. The Company's registered capital mentioned in Article III hereof shall be divided to 956,198 bearer shares, each having the nominal value of 1,000 Kes. All the shares shall be taken over by the Founder who undertakes to handle them in the manner stipulated in the approved privatization project of the aforesaid state enterprise. V. The Founder declares that he approves the Company's Articles of Association in their full extent and without reservation. The Articles of Association are attached hereto as Annex 2. VI. The Founder, as a single shareholder, exercises the powers of the General Meeting ensuing from generally binding instructions and the Company's Articles of Association, until the shares are passed to other shareholders according to the approved privatization project of the aforesaid state enterprise. VII. The Founder appoints members 1. of the Board of Directors: Ing. Stefan Pallay, personal identification number: 430313/7690 residing at Zahradni 5180, Chomutov, Ing. Frantisek Pracny, personal identification number: 571019/1542 residing at Gen. Svobody 1712, Jirkov, Ing. Vladimir Eechovsky, personal identification number: 430731/4600 residing at Hrdlovska 646, Osek Ing. Kamil Novotny, personal identification number: 600130/1834 residing at Eeska 480/31, Most 2. of the Supervisory Board: Jaroslav Kubin, personal identification number: 570618/0953 residing at Bilehradska 405/319, Most Ivan Zabransky, personal identification number: 410828/433 residing at Lipska 2524/63, Chomutov PhDr. Vlastimil Dole al, personal identification number: 541226/0678 residing at Ruska 936, Litvinov Jioi Kral, personal identification number: 570618/0953 residing at Moravska 49, Chomutov VIII. The Company's legal relations are governed by the Czechoslovak laws. All expenses connected with the Company's foundation are shared by the Company. The Company shall arrange that the real estate that was contributed by the Founder to the Company's registered capital in accordance with Article III hereof is recorded as the Company's property in the register of real estate of the appropriate Land Registry. IX. The Founder shall receive three copies of this notarial record. The notarial record was written about this, I, the notary public, read it to the Founder who approved and signed it in her own hand before me. Ing. Marie Netikova, in her own hand L.S. JUDr.Zdeoka Prochazkova, in her own hand Notary public In confirm that this counterpart of the notarial record as well as the Annexes hereto, having 18 pages, fully correspond with the original filed in the register of documents at the Public Notary's Office for Prague 8. Round seal: PUBLIC NOTARY'S OFFICE FOR PRAGUE 8 signature: Z. Prochazkova Round seal Annex 1 to the Founder's Deed ----------------------------- List of property contributed by the Founder to the stock corporation Prvni severozapadni teplarenska, a.s. Komooany u Mostu (All values are in thous. Kes) total assets: 997,380 including: fixed assets of net book value: 710,420 liabilities: 123,373 property of the entity included in the bookkeeping: 874,007 other assets that are not recorded in the accounting: 179,361 total property of the privatized entity: 1,053,368 reserve fund of the stock corporation: 95,619 registered capital of the stock corporation: 956,198 carried-over balance of the Cultural and Social Fund to the stock corporation: 1,550 share type: pieces: nominal value: limited assignment: bearer shares (coupon 784,083 1,000 no privatization) bearer shares (others) 172,115 1,000 no Checked by: Round seal: NATIONAL PROPERTY FUND signature illegible Statutory declaration --------------------- This Annex is based on the updated privatization project of the state enterprise Severoeeske teplarenske zavody Most - o.z. Komooany (Northbohemian Heating Plants Most - branch Komooany). Finances are held in the bank accounts of this state enterprise, No. 1000-491 Komereni banka Most. Seal: SEVEROEESKE TEPLARENSKE ZAVODY, state enterprise Branch Komooany Heating Plant KOMOOANY signature: Ing. Pallay Stefan signature of the statutory body of the state enterprise EX-99 10 ARTICLES OF ASSOC. OF PRVNI Annex 2 ------- to the Founder's Deed in form of a notarial record -------------------------------------------------- Articles of Association of the stock corporation Prvni severozapadni teplarenska, a.s. I. GENERAL PROVISIONS Article 1 Foundation of the Stock Corporation ----------------------------------- The stock corporation Prvni severozapadni teplarenska a.s. ("the Company") was founded by the National Property Fund of the Czech Republic ("the Founder") as the sole founder having its registered office at Gorkeho nam. 32, Prague 1, in a single act on the basis of the Founders' Deed (comprising the Founder's decision in accordance with the Section 172, Subsections 2 and 3, and Section 171, Subsection 1 of the Act 513/1991 Coll., the Commercial Code), as of April 28, 1992, prepared in form of a notarial record Article 2 Business Name and Registered Office of the Company -------------------------------------------------- 1. The Company's business name: Prvni severozapadni teplarenska, a.s. 2. The Company's registered office: Komooany u Mostu Article 3 Duration of the Company ----------------------- The Company has been founded for an indefinite period of time. Article 4 The Company's scope of business: -------------------------------- 1. electricity and heat production and sale, 2. distribution of heat from own as well as other heat sources, 3. investment activities, 4. projecting within the scope of the assigned authorization, 5. engineering activities in development, operation and economy of heating plants, 6. expert analyses with regard to materials in power-producing facilities, 7. running an industrial school. Article 5 The Company's registered capital -------------------------------- 1. The Company's registered capital amounts to Kes 956,198,000 (in words: nine hundred and fifty-six million one hundred and ninety-eight thousand Czechoslovak crowns) upon its foundation. 2. The Founder shall deposit the registered capital by the day of filing the petition for recording in the Commercial Register. 3. The General Meeting shall decide on an increase or a decrease in the registered capital on the strength of generally binding legal regulations and these Articles of Association. Article 6 Shares ------ The Company's registered capital mentioned in Article 5 para. 1 hereof shall be divided to 956,198 bearer shares, each having the nominal value of 1,000 Kes. Article 7 Record of the Company in the Commercial Register, Incorporation of the Company ------------------------------------------------------------------------------ 1. The Company is recorded in the Commercial Register at the District Court Usti nad Labem, at Narodniho odboje 1274, Usti nad Labem. 2. The manner of this record follows the relevant provisions of generally binding legal regulations, the Company's Founder's Deed and the Articles of Association. 3. The Company is incorporated on the day of being recorded in the Commercial Register. II. Organization of the Company --------------------------- Article 8 Company Bodies -------------- The Company bodies are as follows: a) the General Meeting, b) the Board of Directors, c) the Supervisory Board. A. GENERAL MEETING --------------- Article 9 Status and Competencies of the General Meeting ---------------------------------------------- 1. The Company's supreme body is the General Meeting. It consists of all present shareholders. 2. The competencies of the General Meeting include in particular: a) decisions on the Company's business concept and changes thereof, b) decisions on changes in the Articles of Association, c) decisions on an increase or decrease in the registered capital and issue of bonds, d) election and revocation of members of the Board of Directors and of the Supervisory Board, e) approval of annual financial statements, as well as decisions on profit distribution, including determination of director's fees and dividends, f) approval of annual reports on the Company's business and the status of the Company's property, g) decisions on changes in rights related to the individual share types, h) decisions on the way of covering the Company's losses of the preceding business year as well as additional approval of the reserve fund use, i) decisions on an increase of the reserve fund above the level stipulated by the Articles of Association. j) decisions on establishing, affiliation of the Company, its division and other changes of the Company's legal status, k) decisions on foundation and dissolution of other company bodies that are not mentioned in Article 8 hereof, as well as decisions on restrictions of their status and competencies, including their relationship with the Board of Directors and other company bodies, l) settlement of disputes among the company bodies, m) determination of director's fees for the members of the Board of Directors and the Supervisory Board, n) decisions on the Company's dissolution with liquidation, decisions on the Company's dissolution and its transformation to another company form or a cooperative, or on its consolidation, merger or division, o) decisions on the way of settlement the liquidation balance of the Company's property, p) decisions on transfers and lease of the Company's real estate. 3. The General Meeting may retain a right to decide on other issues. Article 10 Participation in the General Meeting ------------------------------------ 1. Every shareholder is entitled to attend the General Meeting, vote there, ask for explanations and submit proposals. 2. When performing his rights at the General Meeting the shareholder is entitled to be present himself or to be represented by his statutory body or a proxy. The proxy cannot however be a member of the Board of Directors or the Supervisory Board. For this purpose the shareholder shall provide a written power of attorney to the proxy, which has to contain the scope of proxy's authorization and has to be signed by the represented shareholder. The proxy is obliged to deliver the power of attorney to the Board of Directors prior to the opening of the General Meeting. The signature of the represented shareholder has to be authenticated. It does not have to be authenticated if it is a power of attorney granted by the National Property Fund. 3. Members of the Board of Directors and Supervisory Board take part in the General Meeting. Article 11 Convening of the General Meeting -------------------------------- 1. The General Meeting is held once a year and is called by the Board of Directors, however within six month of the end of the previous calendar year. 2. The Board of Directors shall convene an Extraordinary General Meeting: a) after they find out that the Company loss exceeded the value equal to one third of the registered capital, b) if the Company is insolvent for more than three months, c) if it is required by other serious interests of the Company, d) if the Supervisory Board requires so, e) if it is required by shareholders having shares whose nominal value exceeds 10% of the Company's registered capital and if the shareholders propose a specific issue to be discussed at that General Meeting. 1. Unless the Board of Directors convenes the General Meeting within 30 days of delivery of such a proposal, the Extraordinary General Meeting shall be convened by a court. 2. The General Meeting may also be called by the Supervisory Board if it is in the interests of the Company. 3. The General Meeting is convened by means of a registered letter that has to be delivered to every shareholder in the shareholders' list thirty days prior to the General Meeting. This shareholders may however waive this time-limit in individual cases. If the Company issues bearer shares, it shall publish an anouncement about the General Meeting in the stipulated time-limit. 4. The announcement on holding the General Meeting must contain the Company's name and registered office, venue, date and time of the General Meeting, specification whether regular or extraordinary General Meeting is called and agenda of the General Meeting, conditions of exercising the voting right and other requirements stipulated by these Articles of Association or the General Meeting's resolutions. 5. At the request of the shareholders having shares whose nominal value exceeds 10% of the Company's registered capital, the Board of Directors (or the Supervisory Board, as the case may be) is obliged to incorporate the matter required by them in the agenda. 6. The venue of the General Meeting is the Company's registered office unless the preceeding General Meeting stipulated otherwise. Article 12 Deliberations of the General Meeting ------------------------------------ 1. The General Meeting shall elect its Chairman, minute clerk, two verifiers of the minutes and persons charged with counting the votes. 2. The Chairman conducts the deliberations of the General Meeting. 3. Minutes of the General Meeting are taken. 4. The elements of the attendance list and requirements, contents, the way of making the minutes and the verification thereof are governed by the relevent provisions of generally binding legal regulations. Article 13 Decision-making of the General Meeting -------------------------------------- 1. The General Meeting constitutes a quorum if the shareholders having shares whose nominal value exceeds 50 per cent of the Company's registered capital are present regardless if personally or represented by their statutory bodies or a proxy with a power of attorney. 2. If the General Meeting does not constitute a quorum by one hour after the stipulated beginning of the General Meeting, the Board of Directors shall convene an alternate General Meeting that shall take place within three weeks of the day on which the originally convened General Meeting should have taken place. The Alternate General Meeting, which shall have the same agenda, has a quorum regardless of the number of the shareholders present and the nominal value of their shares. This fact must be stressed in the invitation. 3. Matters not placed on the announced agenda of the General Meeting may be decided only in the presence, and with the consent, of all the shareholders of the Company. 4. Each 1,000 CZK of the nominal value of the shares represents one vote of a shareholder. 5. The General Meeting passes resolutions by a majority vote of the attending shareholders, unless qualified majority is required. 6. A qualified majority means that at least two-thirds of valid votes of the attending shareholders are required to pass a resolution. 7. The qualified majority vote of the attending shareholders shall be required when deciding on the following matters: - on amendments to the Articles of Association, - increase or decrease in the registered capital, - a change of the rights attached to a particular class of shares, - winding-up of the Company. 8. Two-thirds of votes of all shareholders having a particular class of shares (not only two-thirds of votes of the shareholders present) are required to pass a resolution cencerning a change of the rights attached to the particular class of shares. 1. The General Meeting votes by acclamation unless the General Meeting decided otherwise. B. BOARD OF DIRECTORS ------------------ Article 14 Status and Competencies of the Board of Directors ------------------------------------------------- 1. The Board of Directors is the statutory body of the Company, which manages the Company's activity, secures its management and acts in its name. 2. The Board of Directors takes decisions in all of the Company's affairs except those reserved by generally binding legal regulations, by these Articles of Association or by the General Meeting's resolution to the authority of the General Meeting. 3. The Board of Directors in particular: a) carries out the management of the Company's business and ensures operational matters of the Company, b) performs the rights of employer, c) convenes the General Meeting, c) arranges for and submits to the General Meeting. - proposal for the Company's business concept and proposals for its changes, - proposals for amendments of the Articles of Association, - proposals for an increase or decrease in the registered capital, as well as a bond issue, - annual financial statements, - proposal for profit distribution inclusive of determination of the amount and payment of dividends and director's fees, - annual reports on the Company's business activities and the status of its property, - proposals for the way of covering the Company's losses of the preceding business year as well as proposals for an additional approval of the reserve fund use, - proposals for an increase of the reserve fund above the level stipulated by the Articles of Association. - proposals for establisment and dissolution of other company bodies that are not mentioned in Article 8 hereof, as well as restrictions of their status and competencies, - proposal for winding-up of the Company. d) performs resolutions of the General Meeting, e) arranges for abbreviated quarterly balance sheets, f) decides on a use of the reserve fund in emergencies, g) keeps a register of shareholders, h) makes arrangements for the proper keeping of the prescribed records, accounting, trade books and other documents of the Company. 4. The Board of Directors acts on behalf of the Company in accordance with Articles 29 and 30. 1. The activities of the Board of Directors are governed by principles and instructions approved by the General Meeting. Article 15 Composition, Establishment and Term of Office of the Board of Directors ----------------------------------------------------------------------- 1. The Board of Directors has four members. 2. Upon founding the Company, the Founder shall appoint the first members of the Board of Directors in the Founder's Deed. Later, Board members are elected and recalled by the General Meeting. 3. The Board of Directors is elected for a three-year period. The term of office does not end until a new Board of Directors is elected. Board members may be reelected. 4. A member of the Board of Directors may withdraw from the function by his/her written statement delivered to the Board of Directors. In such a case his/her function expires on the date when his/her withdrawal has been or should have been discussed by the General Meeting. 5. The Board of Directors is entitled to appoint one substitute member in the place of the member whose membership in the Board of Directors has expired or who has withdrawn from his/her function. This substitute member will serve till the next General Meeting. 6. The Board of Directors shall elect its Chairman and one Deputy Chairman out of its members if it has five members at the most. If it has more than five members, the Board of Directors shall elect its Chairman and two Deputy Chairmen. Article 16 Convening of the Board of Directors ----------------------------------- 1. The Board of Directors' meetings take place at least once in three months. 2. The meeting of the Board of Directors is convened by its Chairman by means of a written invitation, in which he shall specify the place, date, hour and agenda of the meeting. The invitations must be dispatched at least 15 days before the meeting. If all members of the Board of Directors agree, a Board meeting may be convened by wire or by telefax. However, such an invitation must contain the aforesaid elements and the members of the Board of Directors must confirm its receipt. 3. The Chairman of the Board of Directors is obliged to convene the Board of Directors whenever it is required so by any Board member or the Supervisory Board. 4. The Board meetings are held in the Company's headquarters, unless the Board of Directors reaches a different decision. 5. If a member cannot attend a Board meeting, he is entitled to authorize another person in writing to act for him at the meeting. The authorized person may however act only for one absent member at the Board meeting. 6. At its discretion, the Board of Directors may also invite members of other Company's bodies, employees or shareholders. Article 17 Board of Directors' Meetings ---------------------------- 1. Meetings of the Board of Directors are conducted by its Chairman. If being absent, the meeting is conducted by the Deputy Chairman. 2. Minutes are taken of the proceedings and decisions of the Board of Directors, signed by the Chairman of the Board of Directors and the minutes clerk appointed by the Board of Directors. 3. Expenses connected with meetings and other activities of the Board of Directors are borne by the Company. Article 18 Board of Directors' Decision Making ----------------------------------- 1. The Board of Directors has a quorum when an absolute majority of its members, personally or represented by their proxies having powers of attorney is present. 2. Absolute majority of votes of the Board of Directors' members present is required to pass a resolution concerning any matter discussed at the meeting of the Board of Directors. If there is an equality of votes, the vote of the Board Chairman is casting. 3. On election and recall of the Board Chairman, this person shall not vote. Article 19 Board of Directors' Decision Making out of the Meeting ------------------------------------------------------ 1. If all members agree, the Board of Directors may also take decisions out of its meetings. In such a case, all the Board members must express their opinions concerning the draft resolution and the resolution must be approved unanimously. 2. A decision per rollam must be incorporated in the minutes of the next Board of Directors' meeting. 3. Any organizational activities connected with decision taking out of the meeting of the Board of Directors shall be ensured by the Chairman of the Board of Directors. Article 20 Duties of the Board of Directors' Members ----------------------------------------- 1. Members of the Board of Directors are obliged to carry out their functions with due care and to maintain silence on confidential information and facts whose disclosure to third parties may harm the Company. 2. Members of the Board of Directors are also obliged to observe restrictions regarding a prohibition of competitive conduct that follow from the appropriate generally binding legal regulations. 3. Consequences of violating the obligations mentioned in paragraphs 1 and 2 result from generally binding legal regulations. 4. Members of the Board of Directors are responsible to the Company for damage caused by them by violating their obligations when carrying out their functions, and that under conditions and to the extent stipulated by generally binding legal regulations. If several members of the Board of Directors cause a damage, they are responsible for it to the Company jointly and severally. Article 21 Director's Fees of the Board of Directors' Members -------------------------------------------------- Members of the Board of Directors are entitled to receive director's fees, determined by the General Meeting, for their incumbency. C. SUPERVISORY BOARD ----------------- Article 22 Status and competencies of the Supervisory Board ------------------------------------------------ 1. The Supervisory Board is the supervising authority of the Company. 2. The Supervisory Board oversees the exercise of the powers of the Board of Directors and the carrying out of the Company's business activities. 3. In particular, the Supervisory Board a) reviews observance of generally binding legal regulations, the Company's Articles of Association and the General Meeting's resolutions. b) reviews the annual financial statements and proposal for profit distribution, as well as determination of the amount and payment of dividends and director's fees, and submits its opinion to the General Meeting, c) reviews abbreviated quarterly balance sheets, d) convenes an Extraordinary General Meeting where this is required in the interests of the Company, e) submits the General Meeting and the Board of Directors its opinions, recommendations and proposals, f) examines records, accounting, trade books and other documents of the Company anytime. 1. The Supervisory Board follows principles and instructions approved by the General Meeting. Article 23 Supervisory Board's Composition, Establishment and Term of Office ----------------------------------------------------------------- 1. The Supervisory Board has four members. 2. Upon the Company's foundation, the Founder appoints the first members of the Supervisory Board in the Founder's Deed. Later two thirds of the Supervisory Board's members are elected and recalled by the General Meeting and one third is elected and recalled by the Company's employees. A member of the Supervisory Board cannot be a member of the Board of Directors at the same time. 3. The Supervisory Board is elected for a three-year period. The term of office does not end until a new Supervisory Board is elected. The Supervisory Board may be reelected. 4. A member of the Supervisory Board may withdraw from the function by his written statement delivered to the Supervisory Board. In such a case his function expires on the date when his withdrawal has been or should have been discussed by the General Meeting. The Supervisory Board shall elect its Chairman. Article 24 Convening of the Supervisory Board ---------------------------------- 1. The Supervisory Board shall meet at least twice a year. 2. The meeting of the Supervisory Board is convened by its Chairman by means of a written invitation, in which he shall specify the place, date, hour and agenda of the meeting. The invitations must be dispatched at least 15 days before the meeting. If all members of the Supervisory Board agree, a Board meeting may be convened by wire or by telefax. However, such an invitation must contain the aforesaid elements and the members of the Supervisory Board must confirm its receipt. 3. The Chairman of the Supervisory Board is obliged to convene the Supervisory Board whenever it is required so by any Supervisory Board member, the Board of Directors or by any shareholder in writing if he states an urgent reason for convening the Supervisory Board. 4. The Board meetings are held in the Company's headquarters, unless the Supervisory Board reaches a different decision. 5. If a member cannot attend a Supervisory Board meeting, he is entitled to authorize another member of the Supervisory Board in writing to act for him at the meeting. Each member of the Supervisory Board may however act for only one absent member at the meetings. 1. At its discretion, the Supervisory Board may also invite members of other Company's bodies, employees or shareholders to its meetings. Article 25 Supervisory Board's Meetings ---------------------------- 1. Meetings of the Supervisory Board are conducted by its Chairman. 2. Minutes are taken of the proceedings and decisions of the Supervisory Board, signed by the Chairman of the Supervisory Board and the minutes clerk appointed by the Supervisory Board. 3. Expenses connected with meetings and other activities of the Supervisory Board are borne by the Company. Article 26 Supervisory Board's Decision Taking ----------------------------------- 1. The Supervisory Board has a quorum when an absolute majority of its members, personally or represented by their proxies having powers of attorney is present. 2. Absolute majority of votes of all the Supervisory Board's members, not only of the members present, is required to pass a resolution concerning any matter discussed at the meeting of the Supervisory Board. 3. On election and recall of the Supervisory Board's Chairman, this person shall not vote. Article 27 Duties of the Supervisory Board's Members ----------------------------------------- 1. Members of the Supervisory Board are obliged to carry out their functions with due care and to maintain silence on confidential information and facts whose disclosure to third parties may harm the Company. The Supervisory Board's rights ensuing from its authority to supervise are not affected. 2. Members of the Supervisory Board are also obliged to observe restrictions regarding a prohibition of competitive conduct that follow from the appropriate generally binding legal regulations. 3. Consequences of violating the obligations mentioned in paragraphs 1 and 2 result from generally binding legal regulations. 4. Members of the Supervisory Board are responsible to the Company for damage caused by them by violating their obligations when carrying out their functions, and that under conditions and to the extent stipulated by generally binding legal regulations. If several members of the Supervisory Board cause a damage, they are responsible for it to the Company jointly and severally. Article 28 Director's Fees of the Supervisory Board's Members -------------------------------------------------- Members of the Supervisory Board are entitled to receive director's fees, determined by the General Meeting, for their incumbency. III. Acting on behalf of the Company ------------------------------------ Article 29 Acting on Behalf of the Company ------------------------------- The Board of Directors acts on behalf of the Company in all matters concerning the Company towards third parties, before courts and other bodies, and that either all members of the Board of Directors jointly or one member separately who was authorized by the Board of Directors in writing to do so. Article 30 Signing on behalf of the Company -------------------------------- Signing on behalf of the Company is carried out in such a way that either all members of the Board of Directors jointly or the Chairman or Deputy Chairman and one Board member jointly or one Board member separately who was authorized to do so by the Board of Directors in writing put their signatures to the Company's imprinted or written name. IV. Company Economy ------------------- Article 31 Business Year ------------- The first business year of the Company begins upon its incorporation in the Commercial Register and ends on 31 December of the that year. Any other business year coincides with the calendar year. Article 32 Company Records and Accounting ------------------------------ Records and accounting of the Company shall be made in compliance with relevant generally binding legal regulations. Article 33 Annual Financial Statements --------------------------- 1. The Board of Directors shall arrange for the compilation of the annual financial statements and a proposal for the profit distribution including a determination of the amounts and payment of dividends and director's fees, or covering of the Company's loss. The Board of Directors shall submit the finished financial statement and the mentioned proposals to the Supervisory Board for a review by 15 March of every year. Then it shall submit this financial statement to the auditor selected by the General Meeting by 30 April. After the review by the Supervisory Board and verification by the auditor, the Board of Directors shall send the main data of the financial statements to the shareholders, having registered shares, along with an invitation to the nearest General Meeting. If the Company issues bearer shares, the Board of Directors shall publish the main data in the notification of the General Meeting. Then, the Board of Directors shall submit the financial statements reviewed by the Supervisory Board and verified by the auditor to the General Meeting that has to be convened by 30 June of the relevant year. At the same time, the Supervisory Board shall submit the General Meeting a report of the results of its review. 2. The annual financial statements must be elaborated in compliance with generally valid legal regulations and rules of proper accounting to provide full information of the property and financial situation of the Company, of the level of profit achieved or loss arisen in the preceding business year. Article 34 Abbreviated Quarterly Balance Sheet ----------------------------------- In addition to the financial statements, the Board of Directors shall ensure an elaboration of abbreviated quarterly balance sheets providing basic information of current assets and finance of the Company, effectiveness of its economy in the previous calendar year and of the level of profit or loss arisen in that period. Such an abbreviated quarterly balance sheet is also subject to review by the Supervisory Board. Article 35 Profit Distribution ------------------- 1. The General Meeting decides on the distribution of the Company`s profit on the basis of a proposal by the Board of Directors, following a review of such proposal by the Supervisory Board. 2. The Company's profit achieved in a business year is used for a distribution to dividends and director's fees after having deducted taxes, amounts intended for the reserve fund and other purposes approved by the General Meeting. 3. This does not exclude the possibility of the General Meeting's deciding that a part of profit not specially committed is used to increase the Company`s registered capital (Article 39, para. 1 and 3). Article 36 Reserve Fund ------------ 1. The reserve fund serves for settlement of losses of the Company as well as for overcoming an unfavorable period of its economy. 2. 95,619 Kes were put in the reserve fund of the Company upon its incorporation. This fund shall be replenished by at least 5 per cent of the profit, until the amount being equal to 20 per cent of the Company's registered capital is reached. 3. It is the General Meeting that shall decide on use of the reserve fund above the level stipulated in the preceding paragraph. 4. It is the Board of Directors that shall decide on use of the reserve fund. Each use thereof has to be announced to the Supervisory Board. Article 37 Cultural and Social Fund ------------------------ The Company creates a cultural and social fund pursuant to generally binding legal regulations. Rules of creating this fund, its replenishment and use are set forth by the General Meeting. It is the Board of Directors that decides on the use thereof in compliance with the rules stipulated by the General Meeting. Article 38 Settlement of the Company's Losses ---------------------------------- 1. The General Meeting decides on a way of settlement of the Company's losses as put forward by the Board of Directors. 2. Potential losses arising on the Company's operations shall be covered mainly from its reserve fund. The use of the reserve fund and approval of the use follow from the Article 36 para. 4. Article 39 Increase in the Registered Capital ---------------------------------- 1. An increase in the registered capital shall be decided by the General Meeting under the conditions stipulated by these Articles of Association and generally valid legal regulations in the manner following them. A qualified majority of votes is required when deciding on an increase or decrease in the registered capital. A notarial record concerning the decision must be made. 2. Should the Company's registered capital be increased by a subscription for new shares, the General Meeting shall define the way and conditions of the subscription and paying-off. Consequences of violating the obligation to pay off the subscribed shares in time follow generally binding legal regulations. 3. If the registered capital of the Company is increased by a transfer of a part of the Company's profit to the registered capital and new shares having a corresponding nominal value are issued, these shares shall be offered to the present shareholders according to the nominal value of their shares at first. The possibility to take over the new shares that have not been taken over yet must be stressed in the invitation to the next General Meeting sent to the shareholders, or it must be said in the announcement of the next General Meeting. The new shares that will not have been taken over by the end of the next General Meeting shall be offered to third parties in the manner stipulated by the Company's Board of Directors. 4. Provided the General Meeting decides on a decrease in the Company's registered capital, the registered capital may not be decreased below the level stipulated by generally binding legal regulations. V. Winding-up and dissolution of the Company Article 40 Ways of the Company's Winding-up -------------------------------- a) General Meeting's decision on winding-up of the Company and of its transformation into another company form or a co-operative or on amalgamation, merger or division of the Company; b) General Meeting's decision on winding-up of the Company with liquidation; c) the court's decision on winding-up of the Company; d) declaration of bankruptcy of the Company or a cancellation of the bankruptcy proceedings because of a shortage of the Company's property. Article 41 General Meeting's Decision on the Company's Winding-up ------------------------------------------------------ The matters in Art. 40 para. a) and b) are to be decided by the General Meeting's qualified majority of votes. A notarial record regarding all these decisions shall be made. Article 42 The Company's Liquidation ------------------------- 1. The way of the Company's liquidation on its winding-up shall follow generally binding legal regulations. 2. The General Meeting shall decide on the method of settlement of the liquidation balance of the Company's assets, while the liquidation balance shall be divided among the shareholders proportionally according to the nominal values of their shares. Article 43 The Company's Dissolution ------------------------- The Company is dissolved by erasing from the Commercial Register. VI. Final provisions Article 44 Notices ------- 1. The facts stated by generally binding legal regulations, these Articles of Association or decisions of the General Meeting shall be published by the Company in the Commercial Bulletin or Hospodaoske noviny (The Economic Newspapers) or any other national daily newspaper in accordance with the Board of Director's decision. 2. The Company shall send written documents intended for shareholders owning the registered shares by registered mail to their addresses put down in the list of shareholders. They are obliged to inform the Board of Directors of all changes in the data in this list without undue delay. 3. Documents intended for other persons shall be delivered to their addresses announced to the Company. Article 45 Legal Relations in the Company and Settlement of Disputes --------------------------------------------------------- 1. The Company's foundation, legal relations and dissolution as well as any legal relations resulting from the Articles of Association and labor or other relations within the Company including the relations resulting from sickness insurance and social security system shall be subject to the Czechoslovak generally binding legal regulations. 2. Potential disputes between the shareholders and Company, disputes between the Company and the members of its bodies as well as disputes between the shareholders relating to their participation in the Company shall be settled out of court. If failed, the dispute shall be put before and decided by relevant court of Czechoslovakia. The court shall be determined according to the Company's registered office unless generally binding procedural regulations stipulate otherwise. Article 46 Amendments and Changes in the Articles of Association ----------------------------------------------------- Any amendments and changes of the Articles of Association shall be decided by the General Meeting following a proposal of the Board of Directors. A qualified majority of votes is required to reach such a decision, and a notarial record regarding this matter is made. Article 47 Interim Provision concerning the competencies of the General Meeting -------------------------------------------------------------------- The competencies of the General Meeting ensuing from generally binding legal regulations and the Company's Articles of Association are carried out by the Founder as the sole shareholder until shares to other shareholders are transferred in accordance with the approved privatization project of the state enterprise Severoeeske teplarenske zavody. Article 48 Interpretation Clause --------------------- If a provision of the Articles of Association becomes invalid, ineffective or questionable with regard to the valid laws or because of changes thereof, or any provision is missing, the other provisions of the Articles of Association shall not be affected by the fact. Such a provision shall be replaced either by a provision of relevant generally binding legal regulation nearest to the intended purpose of the Articles by its character and purpose, or, in absence of such a regulation, by a method of solution common in business. Article 49 Effectiveness of these Articles of Association ---------------------------------------------- These Articles of Association that are a part of the Founder's Deed of the Company become effective on the day of the Founder's signing the Founder's Deed written in form of a notarial record, an integral part of which these Articles of Association are. Power of attorney We grant a power of attorney to Ing. Marie Netikova, born on 13 February 1952, residing at Guevarova 1281, Prague 6, the employee of the National Property Fund of the Czech Republic, to sign, on behalf of the Fund, notarial records on Founder's Deeds of stock corporations founded by the Fund in accordance with the approved privatization projects and to carry out everything that is necessary for a compilation of the notarial records. Prague, 2 March 1992 signature Ing. Jan Princ, CSc. Deputy Chairman of the Executive Committee Round seal: NATIONAL PROPERTY FUND signature JUDr. Jioi Los member of the Executive Committee Verifying Book No.0-II-315-6,92 on 2 March 1992 Jan Princ, personal identification No.: 390729/035, residing in Unho 345, Jioi Los, personal identification No.: 500318/100, residing at Matuskova 803/11, Prague 4 that I do not know personally and whose identity was proven by their identity cards signed this document before the Notary Public Notary Public Prague-West Prague 1, Celetna 988/38 on 2 March 1992 JUDr. Martina Herzanova Notary Public signature EX-99 11 FOUNDERS DEED OF ENOP 1. SZT, a.s. FOUNDER'S DEED Page One NZ 317/95 COUNTERPART N 322/95 N 322/95 Notarial record written before me, JUDr. Jaroslava Mala, notary in Most, in my office at Moskevska 1/14, Most, the nineteenth day of December nineteen hundred and ninety five. Present is the person I know personally - authorized representative of Prvni severozapadni teplarenska, a.s. with its registered office in Komooany u Mostu who declared that he is fully competent to undertake legal acts and whose identity was proven by his valid official card, namely: Ing. Stefan Pallay, personal identification number: 430313/769, residing at Zahradni 5180, Chomutov representing the Board of Directors of Prvni severozapadni teplarenska, a.s. with its registered office at Komooany u Mostu in accordance with the decision of the Board of Directors of the mentioned stock corporation as of 3 November 1995 on founding a corporation ("s.r.o."), and having a power of attorney as of 19 November 1993, granted by the Board of Directors of Prvni severozapadni teplarenska, a.s. with its registered office in Komo0any u Mostu, which is attached to this Founder's Deed on founding a company - a limited liability company. The mentioned participant declared, before me, the notary, the following matters concerning a foundation of a limited liability company: First: Prvni severozapadni teplarenska, a.s. with its registered office in Komooany u Mostu, represented by Ing. Stefan Pallay, a member of the Board of Directors and the General Director of Prvni severozapadni teplarenska, a.s. with its registered office in Komooany u Mostu, establishes a limited liability company as a sole member by means of this Founder's Deed pursuant to the relevant provisions of the Commercial Code 513/1991 Coll., in its valid wording. Secondly: The Company's trading name is ENOP, s.r.o. Thirdly: The Company's registered office is Komooany u Mostu, Most 3 Fourthly: The Company is founded for an indefinite period of time. Fifthly: The Company's scope of business: 1. Investment-engineering activities, 2. Production, assembly, repairs, retrofitting and periodical tests of the stated pressure equipment - Assembly and repairs of steam boilers, 3. Production, assembly, repairs, retrofitting and periodical tests of the stated pressure equipment - Assembly and repairs of stable pressure vessels, 4. Repairs and assembly of metering devices, 5. Assembly, repairs, maintenance of the stated electrical installations and production of switchboards of low voltage, 6. Assembly and repairs of measuring and regulating technology, 7. Electrical fitting, 8. Production, installation and repairs of centralized heating and ventilation, 9. Bricklayer's trade, 10. Building contractor, 11. Thermal insulation, 12. Locksmith's trade, 13. Tinsmith's trade, 14. Founding of non-ferrous metals, 15. Metal-working, 16. Black-smith's trade, 17. Carpentry 18. Metal grinding and polishing, except for sharpening of knives, scissors and simple tools, 19. Production of tools, 20. Assembly of tubular scaffolding, 21. Maintenance, repairs and retrofitting of power-producing and distributing machinery. Sixthly: Company's registered capital The Company's registered capital amounts to CZK 100,000 (in words: one hundred thousand Czech crowns). Seventh: The contribution of the Founder - member The registered capital of the Company is formed by the Founder's single monetary contribution and corresponds with the Company's registered capital, i.e. with the amount of CZK 100,000, in words: one hundred thousand Czech crowns). The Founder shall pay up the full amount of the registered capital as a lump-sum before the day of filing the petition for incorporating the founded Company in the Commercial Register and he shall issue a written declaration concerning the contribution paying-off which is to be attached to the petition. He shall manage the paid-off contribution until the Company is incorporated and at the same time, he shall act as a manager of the contribution. The Company shall acquire ownership title to the contribution on the day of its incorporation in the Commercial Register. After the Company's incorporation, the Founder, as the manager of the contribution, is obliged to hand it over to the Company without undue delay. If the Company is not incorporated, the manager of the contribution is obliged to return the contribution without undue delay. Until the Company is incorporated, its Founder shall act on behalf of the Company in matters related to the Company's incorporation, unless the Commercial Code or special legal provisions provide otherwise. Eighthly: The Company's bodies The Company's bodies are the General Meeting and Executives. The Company does not establish a supervisory board. 1. General Meeting The General Meeting is the highest body of the Company. The Founder as the single member of the Company exercises the powers of the General Meeting and makes decisions on all matters that are assigned to the General Meeting by the Commercial Code or by this Founder's Deed. The General Meeting's powers Besides the matters listed in Section 125 of the Commercial Code, the General Meeting's powers include: a) approval of the Company's concept of business and changes thereof, b) decisions which disposals of the Company's property are subject to its previous consent, c) decisions on the ways of covering the Company's losses, d) provided the Company employs at least 50 people, the General Meeting may decide that the Company shall issue its Articles of Association in which its internal structure and principles of its management shall be governed in more details than they are governed by this Founder's Deed; in such a case the Articles of Association must be approved by the General Meeting, e) decisions on changes in this Founder's Deed, f) decisions on a fusion, division or merger of the Company, or its transformation to another legal form of a company; it shall also decide on winding-up of the Company. The General Meeting may reserve the right to decide on other matters falling within the competence of the Executives. In case of disputes concerning powers of the individual company bodies (both positive and negative), the General Meeting's decision prevails. 1. Executives The Executives are entitled to decide on all matters that do not fall within the powers of the General Meeting pursuant to the Commercial Code or this Founder's Deed or that are not reserved by the General Meeting itself. The Executives are obliged to participate in the General Meeting; unless they attend the General Meeting as the member's representatives authorized by a power of attorney at the same time, they attend it only as advisers. The Executives arrange for minutes of the General Meeting's deliberations that shall be filed along with attendance lists during the whole period of the Company's duration. The Executives shall make arrangements for the proper keeping of the prescribed records and accounting and inform the member about the affairs of the Company. The Executives must observe the prohibition of competitive conduct within the scope of Section 136 of the Commercial Code; violations have the consequences stipulated in Section 65 of the Commercial Code. Three Executives form a statutory body of the Company. The first Executives of the Company are: Ing. Stefan Pallay, personal identification number: 43.03.13/769 (born on 13 March 1943), residing at Zahradni 5180, Chomutov, Ing. Miloslav Kaftan, personal identification number: 43.10.02/467 (born on October 2, 1943), residing at Valdstejnska 2110, Litvinov Ing. Roman Koear, personal identification number: 64.05.30/0946 (born on 30 May 1964), residing at Fr. Malika 736/966, Most The way of acting in the name of the Company: Either all Executives jointly or two Executives act on behalf of the Company, while one of them is the Executive who is mentioned as first in the Founder's Deed. Decisions and the business management of the Company, if such decisions fall within their competence, require the approval of a majority of the Executives. Signing on behalf of the Company is carried out in such a way that an Executive puts his signature, mentioning his function as an Executive, to the Company's printed, imprinted or written trading name. The Executive may resign by delivering a written notice of this to the General Meeting (Section 66 Subsection 1 of the Commercial Code). His tenure shall end on the day when the General Meeting discusses, or should have discussed, his resignation. (The General Meeting is obliged to discuss his resignation at its subsequent meeting after it learned about that.) Ninth: Company Economy 1. Accounting Period The first accounting period starts on the day of the Company's incorporation and ends on 31 December of the calendar year when the Company was incorporated. The next accounting periods coincide with the relevant calendar years. 2. Duties of the Executives within the Company's economy The Executives are responsible to the General Meeting for a proper economy of the Company and a compliance of the Company's business with the approved concept. The Executives are obliged to arrange for a proper keeping of the prescribed records and accounting, drawing ordinary and extraordinary balance sheets that they submit along with a proposal for profit distribution and an annual report to the General Meeting for discussion and making a decision. The Executives are obliged to inform the member of all affairs of the Company. The Executives are obliged to prepare annual reports for each accounting period. Tenth: Reserve Fund The Company creates a reserve fund amounting to 20 per cent of the registered capital. Upon its incorporation, the Company creates a reserve fund in the full amount specified by the Founder's Deed, i.e. 20 per cent of the Company's registered capital (CZK 20,000, in words: twenty thousand Czech crowns). The reserve fund shall be created from additional payments made by the member over and above his contribution. The Founder shall pay CZK 20,000 to a special bank account within thirty days of the Company's foundation, and thus he creates the reserve fund. The Executives shall decide on the use of the reserve fund and they shall inform the next General Meeting of the use of the reserve fund and its balance. Should the level of the reserve fund fall below the stipulated limit, the reserve fund shall be annually replenished by an amount of 5 per cent of the net profits, until the fund reaches the level stipulated in the Founder's Deed. Eleventh: Profit Distribution It is the General Meeting that decides on a profit distribution on the basis of the Executives' proposal. After having deducted taxes and sums necessary for a replenishment of the reserve fund, the General Meeting shall decide what sum of the profit shall remain in the Company for the purpose of further development thereof. Twelfth: Changes in the Registered Capital Changes in the registered capital are governed by the relevant provisions of the Commercial Code. Thirteenth: Winding-up and Dissolution of the Company Besides the reasons of winding-up of the Company listed in the Commercial Code, the Company is also dissolved by a decision of the General Meeting pursuant to item 8 para. 1f) hereof dealing with the authority of the General Meeting. Fourteenth: Decision of the General Meeting on the Company's Winding-up Provided the General Meeting decides on the Company's winding-up, it shall also decide if the Company is wound up with liquidation or without liquidation. The decision on the Company's winding-up without liquidation must also contain the date on which the Company shall be wound up and it shall bind the Executives to arrange for recording the Company's winding-up in the Commercial Register. The General Meeting shall mention in its decision on the Company's winding-up with a liquidation on which day the Company enters into liquidation, it shall appoint a liquidator and determine his remuneration. At the same time, it shall bind the Executives to file a petition for recording these data in the Commercial Register in time. Fifteenth: Costs of the Company's Foundation The costs of the Company's foundation are shared by the Company and shall be charged as the first expenses of the Company. Sixteenth: Number of the Copies of the Founder's Deed This Founder's Deed has been executed in eight copies. One copy hereof shall be filed in the Commercial Register, two copies shall be deposited in the Founder's files, and two copies shall be filed by the Executives in the archives of the limited liability company. The remaining four copies of the Founder's Deed shall be used by the Founder in legal acts related to the Company's foundation and incorporation. This notarial record was written by me, the notary; the participant read it, approved it and attached his signature hereto.---------------------------------- Prvni severozapadni teplarenska, a.s. with its registered office in Komooany u Mostu L.S. Jaroslava Mala Ing. Stefan Pallay, in his own hand I confirm that the copy of this notarial record intended for Ing. Stefan Pallay corresponds with the original as of 19 December 1995, NZ 317/95, word-for-word.-------------------------------------------------- Round seal: Jaroslava Mala signature: Notary in Most Jaroslava Mala, Notary POWER OF ATTORNEY The below signed Board of Directors of Prvni severozapadni teplarenska, a.s. ("the Principal"), with its registered office in Komooany u Mostu, composed of Ivan Neumaier, personal identification number: 570827/1580 residing at Klobouenicka 1653, Prague 4-Nusle, Ing. Jioi Hrdlieka, personal identification number: 640819/0899 residing at Kurzova 2224, Prague 5 Ing. Kamil Novotny, personal identification number: 600130/1834 residing at Eeska 480, Most Ing. Jindoich Horky, personal identification number: 480117/032 residing at Jerevanska 7, Prague 10 Ing. Stefan Pallay, personal identification number: 430313/769 residing at Zahradni 5180, Chomutov grants a power of attorney to Ing. Stefan Pallay, a member of the Board of Directors and the General Director of the stock corporation ("the Attorney") to act on behalf of the Company before courts and other bodies and to sign documents in the whole scope of the Board of Directors' authority. When signing he adds his signature to the Company's imprinted or written trading name (Article 29 and 30 of the Articles of Association). The Attorney makes decisions as a member of the Board of Directors and within its authorization as a statutory body he is entitled to grant to other persons (deputies of the General Director) a power of attorney to act in his place on behalf of the Principal (Section 33a Subsection 1(a) of the Civil Code). The principal shall be directly bound by acts in law performed by the substitute attorney. This power of attorney comes into force on 19 November 1993 and terminates if the Principal revokes it. Signatures: signature illegible signature illegible Ivan Neumaier Ing. Kamil Novotny signature illegible signature: Horky Ing. Jioi Hrdlieka Ing. Jindoich Horky signature: Ing. Pallay Stefan Ing. Stefan Pallay Komooany, 19 November 1993 EX-99 12 RESTATED CERT. OF INC. OF NIAGARA ENERGY RESTATED CERTIFICATE OF INCORPORATION OF NIAGARA ENERGY TRADING INC. Under Section 8907 of the Business Corporation Law The undersigned, J. A. Beck and W. M. Petmecky, the President and Secretary respectively of Niagara Energy Trading Inc., hereby certify: FIRST The name of the Corporation is Niagara Energy Trading Inc. SECOND The Certificate of Incorporation of the Corporation was filed by the Department of State on July 16, 1997. THIRD The Certificate of Incorporation of the Corporation is amended as follows: To amend the provisions stating the name of the Corporation. FOURTH The text of the Certificate of Incorporation of Niagara Energy Trading Inc. is hereby restated, as amended hereby, to read as herein set forth in full: FIRST: The name of this corporation is Upstate Energy Inc. SECOND: The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the Business Corporation Law of the State of New York. The corporation is not formed to engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained. THIRD: The office of this corporation is to be located in the County of Erie, State of New York. FOURTH: The corporation shall have authority to issue an aggregate of 100 shares, which shall be of one class only, and which shall have a par value of one dollar ($1.00) per share. FIFTH: The Secretary of the State of New York is hereby designated the agent of this corporation upon whom process against this corporation may be served. The post office address to which the Secretary of State shall mail a copy of any process against this corporation is Legal Department, 10 Lafayette Square, City of Buffalo, County of Erie, State of New York 14203. FIFTH The Restatement of the Certificate of Incorporation of Niagara Energy Trading Inc. was authorized by the Unanimous Written Consent of the Board of Directors followed by the Written Consent of the sole shareholder of Niagara Energy Trading Inc. In witness whereof, the undersigned have made and signed this Certificate of Incorporation this 19th day of May, 1998, and they affirm the statements contained herein as true under penalties of perjury. /s/J. A. Beck ------------------------------ J. A. Beck, President /s/W. M. Petmecky ------------------------------ W. M. Petmecky, Secretary EX-99 13 BY-LAWS OF UPSTATE ENERGY Amended 10/8/97 Amended 3/13/98 Amended 5/19/98 Amended 6/19/98 BY-LAWS OF UPSTATE ENERGY INC. ARTICLE I OFFICES ------- Section 1. Principal Office. The principal office of this corporation ----------------- shall be in the City of Buffalo, State of New York. Section 2. Other Offices. The corporation may have such other offices ------------- and places of business, within or without the State of New York, as may be determined by the Directors. ARTICLE II SHAREHOLDERS ------------ Section 1. Place of Meetings. Meetings of the shareholders may be held ----------------- at such place or places, within or without the State of New York, as shall be fixed by the President and stated in the notice of the meeting. Section 2. Annual Meeting. The annual meeting of shareholders for the -------------- election of Directors and the transaction of such other business as may properly come before the meeting shall be held on such business day and time as the President shall designate. Section 3. Notice of Annual Meeting. Written notice of the annual ------------------------- meeting shall be given to each shareholder entitled to vote, at least ten (10) days but no more than fifty (50) days prior to the meeting. Section 4. Special Meetings. Special meetings of the shareholders for ----------------- any purpose or purposes may be called by the President or Board of Directors and must be called by the President or Secretary upon receipt by either of them of the written request of the holders of twenty-five (25) percent of the stock then outstanding and entitled to vote. Section 5. Notice of Special Meeting. Written notice of a special --------------------------- meeting, stating the time, place and purpose or purposes thereof, shall be given to each shareholder entitled to vote, at least ten (10) days but no more than fifty (50) days prior to the meeting. The notice shall also be set forth at whose direction it is being issued. Section 6. Quorum. At any meeting of the shareholders, the holders of ------ record of a majority of the shares of stock then entitled to vote shall constitute a quorum for all purposes, except as otherwise provided by law or the Certificate of Incorporation. Section 7. Voting. Except as may be otherwise provided by the ------ Certificate of Incorporation, at each meeting of the shareholders, every holder of stock then entitled to vote may vote in person or by proxy and shall have one vote for each share registered in his name. Section 8. Adjourned Meetings. Any meeting of shareholders may be ------------------- adjourned to a designated time and place by a vote of a majority in interest of the shareholders present in person or by proxy and entitled to vote, even though less than a quorum is so present. No notice of such an adjourned meeting need be given, other than by announcement at the meeting, and any business may be transacted which might have been transacted at the meeting as originally called. Section 9. Action by Written Consent of Shareholders. Whenever by any ------------------------------------------ provision of statute or of the Certificate of Incorporation or of these By-Laws, shareholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent setting forth the action so taken, signed by the holders of all outstanding shares entitled to vote thereon. Section 10. Appraisal Rights. If, at any meeting, action is proposed to ---------------- be taken which would, if taken, entitle shareholders to receive payment for shares, the notice of such meeting shall include a statement of that purpose and to that effect. ARTICLE III DIRECTORS --------- Section 1. Number. The number of Directors of the corporation shall be ------ one (1), who shall hold office for one year and/or until their successors are elected and qualify. Directors shall be elected at the annual meetings of shareholders. The number of Directors may be increased or decreased from time to time by amendment to these By-Laws made by a majority of the Board of Directors or by the shareholders. Directors need not be shareholders. Section 2. Powers. The Board of Directors may adopt such rules and ------ regulations for the conduct of business of its meetings, the exercise of its powers and the management of the affairs of the corporation as it may deem proper, not inconsistent with the laws of the State of New York, the Certificate of Incorporation or these By-Laws. In addition to the powers and authorities by these By-Laws expressly conferred upon it, the Board of Directors may exercise all such powers of the corporation and do such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the shareholders. Neither the Board of Directors nor any Director who is not an officer shall have (i) any day-to-day duties or responsibilities for planning, directing, organizing or carrying out gas-related operations, including gas transportation, gas sales or gas marketing activities, or (ii) any duties involving day-to-day gas purchasing, marketing, sales, transportation, operations, dispatching, storage or related activities. No Director who is an officer, operating employee or non-operating employee of a "natural gas company" (as defined in the federal Natural Gas Act of 1938, as amended) shall disclose to any Director, officer, operating employee, non-operating employee, contractor, agent or representative of the corporation either: any information received by such natural gas company from a nonaffiliated shipper or potential nonaffiliated shipper; or any information related to transportation (including storage, exchange, backhaul, displacement or other methods of transportation) of natural gas, unless such natural gas company provides that information contemporaneously to all shippers, affiliated and nonaffiliated, on its system. Section 3. Meeting, Quorum, Meeting by Telephone, Action Without ----------------------------------------------------------- Meeting. Meetings of the Board of Directors may be held at any place, either - ------- within or without the State of New York, provided a quorum be in attendance. Except as may be otherwise provided by the Certificate of Incorporation or by the corporate laws of the State of New York, a majority of the Directors in office shall constitute a quorum at any meeting of the Board and the vote of a majority of a quorum of Directors shall constitute the act of the Board. The Board of Directors may hold an annual meeting, without notice, immediately after the annual meeting of the shareholders. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. The Chairman of the Board (if any) or the President or Secretary may call, and at the request of any two Directors must call, a special meeting of the Board of Directors by appropriate notice. Five days' notice is required when given personally or by telegraph, cable or facsimile transmission to each Director. Any one or more members of the Board of Directors or any Committee thereof may participate in a meeting of such Board or any Committee by means of a conference telephone or similar communication equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. Any action required or permitted to be taken by the Board of Directors or any Committee thereof may be taken without a meeting if all members of the Board or the Committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the Board or Committee shall be filed with the minutes of the proceedings of the Board or Committee. Section 4. Resignation, Vacancies, Removal. Any Director may resign at -------------------------------- any time by giving written notice to the President or the Secretary. Such resignation shall take effect at the time stated therein. Except as otherwise provided in the Certificate of Incorporation or in the following paragraph, vacancies occurring in the membership of the Board of Directors, from whatever cause arising, may be filled by a majority vote of the remaining Directors, though less than a quorum. Any one or more of the Directors may be removed for cause by action of the Board of Directors taken by a vote of a majority of all Directors then in office at any regular or special meeting of the Board. Section 5. Committees. The Board of Directors, by resolution adopted by ---------- a majority of the entire Board, may designate from its members an Executive Committee or other committee or committees, each consisting of three or more members, and each of which shall have such powers and authority (to the extent permitted by law) as may be provided in said resolution. Section 6. Compensation. Directors, as such, shall not receive any ------------ stated salary for their services, but by resolution of the Board of Directors a fixed fee and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board or of any committee of the Board, provided that nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor. ARTICLE IV OFFICERS -------- Section 1. Executive Officers. The executive officers of the -------------------- corporation shall be a President, one or more Vice-Presidents, a Treasurer and a Secretary, each of whom shall be elected annually by the Directors and shall hold office for such term as may be prescribed by the Board. All vacancies occurring among any of the offices may be filled by the Board of Directors or, in its discretion, the Board may leave unfilled at its pleasure any of the foregoing offices except the offices of President, Treasurer and Secretary. Any officer may be removed at any time with or without cause by the Board of Directors. Section 2. Other Officers. The Board of Directors may appoint such --------------- other officers and agents with such powers and duties as it shall deem necessary. Section 3. The President. The President shall, in the absence or -------------- non-election of a Chairman of the Board, preside at all meetings of the shareholders and Directors and perform such other duties as from time to time may be assigned to him by the Board of Directors. The President shall be the Chief Executive Officer of the corporation and shall perform all of the duties of the Chairman of the Board as well as those of President. Section 4. The Vice-President. The Vice-President, or if there be more ------------------ than one, the Vice-Presidents (who may have such designations, if any, as the Board of Directors may determine), in the order of their seniority or in any other order determined by the Board shall, in the absence or disability of the President, exercise the powers and perform the duties of the President, and each Vice-President shall exercise such other duties as may be prescribed by the President or the Board. Section 5. The Treasurer. The Treasurer shall have custody of all -------------- funds, securities and other valuable effects of the corporation; he shall receive and give receipts and acquittances for moneys paid in on account of the corporation; he shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors; he shall pay out of the funds on hand all bills, payrolls and other just debts of the corporation, of whatever nature, upon maturity; he shall enter regularly, in books to be kept by him for that purpose, full and accurate accounts of all moneys received and paid out by him on account of the corporation; and he shall perform all other duties incident to the office of Treasurer and as may be prescribed by the Board. Section 6. The Secretary. The Secretary shall keep the minutes of all ------------- proceedings of the Board of Directors and of the shareholders; he shall attend to the giving and serving of all notices to the shareholders and Directors or other notice required by law or by these By-Laws; he shall affix the seal of the corporation to deeds, contracts and other instruments in writing requiring a seal, when duly signed on behalf of the corporation; he shall have charge of the certificate books and stock books and such other books and papers as the Board may direct; and he shall perform all other duties incident to the office of Secretary as the Board may prescribe. ARTICLE V CAPITAL STOCK ------------- Section 1. Form and Execution of Certificates. Certificates of stock ----------------------------------- shall be in such form as required by the laws of the State of New York and as shall be adopted by the Board of Directors. They shall be numbered and registered in the order issued, shall be signed by the President or a Vice-President and by the Secretary or the Treasurer and shall be sealed with the corporate seal or a facsimile thereof. If such a certificate is countersigned by a transfer agent or registered by a registrar, the signatures of any such officers may be facsimile. Section 2. Transfer. Transfer of shares shall be made only upon the -------- books of the corporation by the registered holder in person or by attorney, duly authorized, and upon surrender of the certificate or certificates for such shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer. A record shall be made of each transfer, and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer on the record of shareholders of the corporation. Section 3. Lost or Destroyed Certificates. The holder of any ---------------------------------- certificate representing shares of stock of the corporation may notify the corporation of any loss, theft or destruction thereof, and the Board of Directors may thereupon, in its discretion, cause a new certificate for the same number of shares, to be issued to such holder upon satisfactory proof of such loss, theft or destruction, and the deposit of indemnity by way of bond or otherwise, in such form and amount and with such surety or sureties as the Board of Directors may require, to indemnify the corporation against loss or liability by reason of the issuance of such new certificates. Section 4. Record Date. In lieu of closing the books of the ------------ corporation, the Board of Directors may fix in advance a date, not exceeding fifty days nor less than ten days, as the record date for the determination of shareholders entitled to receive notice of, or to vote at, any meeting of shareholders, or to consent to any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividends, or allotment of any rights, or for the purpose of any other action. ARTICLE VI MISCELLANEOUS ------------- Section 1. Dividends. Subject to the applicable provisions of the --------- Certificate of Incorporation, the Board of Directors may declare dividends from time to time upon the capital stock of the corporation from the surplus or net profits available therefor. Section 2. Fiscal Year. The fiscal year of the corporation shall begin ----------- on the 1st day of October in each calendar year and end on the 30th day of September of the next succeeding calendar year. Section 3. Checks, Notes, etc. Checks, notes, drafts, bills of exchange ------------------ and orders for payment of money shall be signed or endorsed in such manner as shall be determined by the Board of Directors. The funds of the corporation shall be deposited in such bank or trust company, and checks drawn against such funds shall be signed in such manner as may be determined from time to time by the Board of Directors. Section 4. Notice and Waiver of Notice. Any notice required to be given --------------------------- under these By-Laws may be waived by the person entitled thereto, in writing, by telegram, cable, facsimile transmission or radiogram, and the presence of any person at a meeting shall constitute waiver of notice thereof as to such person. Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated; and any notice so required shall be deemed to be sufficient if given by depositing it in a post office or post box in a sealed postpaid wrapper, addressed to such shareholder, officer or director, at such address as appears on the books of the corporation, and such notice shall be deemed to have been given on the day of such deposit. ARTICLE VII INDEMNIFICATION AND INSURANCE ----------------------------- Section 1. Indemnification. Any person made a party to an action or --------------- proceeding, by reason of the fact that he, his testator or his intestate is or was a director or officer of the corporation, or of any other corporation, domestic or foreign, that he, his testator or intestate served in any capacity at the request of the corporation, shall be indemnified by the corporation against the expenses (including attorney's fees, judgments, fines and amounts paid in settlement) actually incurred by him as a result of such action or proceeding, or any appeal therein, to the full extent permissible. Section 2. Insurance. The corporation may purchase and maintain --------- insurance to indemnify the corporation and the directors and officers to the extent permitted. ARTICLE VIII AMENDMENTS ---------- Section 1. The authority to make, alter, amend or repeal these By-Laws is expressly vested in the Board of Directors, subject to the power of the shareholders to change or repeal such By-Laws. EX-99 14 BY-LAWES OF NIAGARA INDEPENDENCE Amended 10/8/97 Amended 3/11/98 BY-LAWS OF NIAGARA INDEPENDENCE MARKETING COMPANY ARTICLE I OFFICES ------- Section 1. Principal Office. The principal office of this corporation ----------------- shall be in the City of Buffalo, State of New York. Section 2. Other Offices. The corporation may have such other offices ------------- and places of business, within or without the State of Delaware, as may be determined by the Directors. ARTICLE II SHAREHOLDERS ------------ Section 1. Place of Meetings. Meetings of the shareholders may be held ----------------- at such place or places, within or without the State of Delaware, as shall be fixed by the President and stated in the notice of the meeting. Section 2. Annual Meeting. The annual meeting of shareholders for the -------------- election of Directors and the transaction of such other business as may properly come before the meeting shall be held on such business day and time as the President shall designate. Section 3. Notice of Annual Meeting. Written notice of the annual ------------------------- meeting shall be given to each shareholder entitled to vote, at least ten (10) days but no more than fifty (50) days prior to the meeting. Section 4. Special Meetings. Special meetings of the shareholders for ----------------- any purpose or purposes may be called by the President or Board of Directors and must be called by the President or Secretary upon receipt by either of them of the written request of the holders of twenty-five (25) percent of the stock then outstanding and entitled to vote. Section 5. Notice of Special Meeting. Written notice of a special --------------------------- meeting, stating the time, place and purpose or purposes thereof, shall be given to each shareholder entitled to vote, at least ten (10) days but no more than fifty (50) days prior to the meeting. The notice shall also be set forth at whose direction it is being issued. Section 6. Quorum. At any meeting of the shareholders, the holders of ------ record of a majority of the shares of stock then entitled to vote shall constitute a quorum for all purposes, except as otherwise provided by law or the Certificate of Incorporation. Section 7. Voting. Except as may be otherwise provided by the ------ Certificate of Incorporation, at each meeting of the shareholders, every holder of stock then entitled to vote may vote in person or by proxy and shall have one vote for each share registered in his name. Section 8. Adjourned Meetings. Any meeting of shareholders may be ------------------- adjourned to a designated time and place by a vote of a majority in interest of the shareholders present in person or by proxy and entitled to vote, even though less than a quorum is so present. No notice of such an adjourned meeting need be given, other than by announcement at the meeting, and any business may be transacted which might have been transacted at the meeting as originally called. Section 9. Action by Written Consent of Shareholders. Whenever by any ------------------------------------------ provision of statute or of the Certificate of Incorporation or of these By-Laws, shareholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent setting forth the action so taken, signed by the holders of all outstanding shares entitled to vote thereon. Section 10. Appraisal Rights. If, at any meeting, action is proposed to ---------------- be taken which would, if taken, entitle shareholders to receive payment for shares, the notice of such meeting shall include a statement of that purpose and to that effect. ARTICLE III DIRECTORS --------- Section 1. Number. The number of Directors of the corporation shall ------ four (4), who shall hold office for one year and/or until their successors are elected and qualify. Directors shall be elected at the annual meetings of shareholders. The number of Directors may be increased or decreased from time to time by amendment to these By-Laws made by a majority of the Board of Directors or by the shareholders. Directors need not be shareholders. Section 2. Powers. The Board of Directors may adopt such rules and ------ regulations for the conduct of business of its meetings, the exercise of its powers and the management of the affairs of the corporation as it may deem proper, not inconsistent with the laws of the State of Delaware, the Certificate of Incorporation or these By-Laws. In addition to the powers and authorities by these By-Laws expressly conferred upon it, the Board of Directors may exercise all such powers of the corporation and do such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the shareholders. Section 3. Meeting, Quorum, Meeting by Telephone, Action Without ----------------------------------------------------------- Meeting. Meetings of the Board of Directors may be held at any place, either - ------- within or without the State of Delaware, provided a quorum be in attendance. Except as may be otherwise provided by the Certificate of Incorporation or by the corporate laws of the State of Delaware, a majority of the Directors in office shall constitute a quorum at any meeting of the Board and the vote of a majority of a quorum of Directors shall constitute the act of the Board. The Board of Directors may hold an annual meeting, without notice, immediately after the annual meeting of the shareholders. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. The Chairman of the Board (if any) or the President or Secretary may call, and at the request of any two Directors must call, a special meeting of the Board of Directors by appropriate notice. Five days' notice is required when given personally or by telegraph, cable or facsimile transmission to each Director. Any one or more members of the Board of Directors or any Committee thereof may participate in a meeting of such Board or any Committee by means of a conference telephone or similar communication equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. Any action required or permitted to be taken by the Board of Directors or any Committee thereof may be taken without a meeting if all members of the Board or the Committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the Board or Committee shall be filed with the minutes of the proceedings of the Board or Committee. Section 4. Resignation, Vacancies, Removal. Any Director may resign at -------------------------------- any time by giving written notice to the President or the Secretary. Such resignation shall take effect at the time stated therein. Except as otherwise provided in the Certificate of Incorporation or in the following paragraph, vacancies occurring in the membership of the Board of Directors, from whatever cause arising, may be filled by a majority vote of the remaining Directors, though less than a quorum. Any one or more of the Directors may be removed for cause by action of the Board of Directors taken by a vote of a majority of all Directors then in office at any regular or special meeting of the Board. Section 5. Committees. The Board of Directors, by resolution adopted by ---------- a majority of the entire Board, may designate from its members an Executive Committee or other committee or committees, each consisting of three or more members, and each of which shall have such powers and authority (to the extent permitted by law) as may be provided in said resolution. Section 6. Compensation. Directors, as such, shall not receive any ------------ stated salary for their services, but by resolution of the Board of Directors a fixed fee and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board or of any committee of the Board, provided that nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor. ARTICLE IV OFFICERS -------- Section 1. Executive Officers. The executive officers of the -------------------- corporation shall be a President, one or more Vice-Presidents, a Treasurer and a Secretary, each of whom shall be elected annually by the Directors and shall hold office for such term as may be prescribed by the Board. All vacancies occurring among any of the offices may be filled by the Board of Directors or, in its discretion, the Board may leave unfilled at its pleasure any of the foregoing offices except the offices of President, Treasurer and Secretary. Any officer may be removed at any time with or without cause by the Board of Directors. Section 2. Other Officers. The Board of Directors may appoint such --------------- other officers and agents with such powers and duties as it shall deem necessary. Section 3. The President. The President shall, in the absence or -------------- non-election of a Chairman of the Board, preside at all meetings of the shareholders and Directors and perform such other duties as from time to time may be assigned to him by the Board of Directors. The President shall be the Chief Executive Officer of the corporation and shall perform all of the duties of the Chairman of the Board as well as those of President. Section 4. The Vice-President. The Vice-President, or if there be more ------------------ than one, the Vice-Presidents (who may have such designations, if any, as the Board of Directors may determine), in the order of their seniority or in any other order determined by the Board shall, in the absence or disability of the President, exercise the powers and perform the duties of the President, and each Vice-President shall exercise such other duties as may be prescribed by the President or the Board. Section 5. The Treasurer. The Treasurer shall have custody of all -------------- funds, securities and other valuable effects of the corporation; he shall receive and give receipts and acquittances for moneys paid in on account of the corporation; he shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors; he shall pay out of the funds on hand all bills, payrolls and other just debts of the corporation, of whatever nature, upon maturity; he shall enter regularly, in books to be kept by him for that purpose, full and accurate accounts of all moneys received and paid out by him on account of the corporation; and he shall perform all other duties incident to the office of Treasurer and as may be prescribed by the Board. Section 6. The Secretary. The Secretary shall keep the minutes of all ------------- proceedings of the Board of Directors and of the shareholders; he shall attend to the giving and serving of all notices to the shareholders and Directors or other notice required by law or by these By-Laws; he shall affix the seal of the corporation to deeds, contracts and other instruments in writing requiring a seal, when duly signed on behalf of the corporation; he shall have charge of the certificate books and stock books and such other books and papers as the Board may direct; and he shall perform all other duties incident to the office of Secretary as the Board may prescribe. ARTICLE V CAPITAL STOCK ------------- Section 1. Form and Execution of Certificates. Certificates of stock ----------------------------------- shall be in such form as required by the laws of the State of Delaware and as shall be adopted by the Board of Directors. They shall be numbered and registered in the order issued, shall be signed by the President or a Vice-President and by the Secretary or the Treasurer and shall be sealed with the corporate seal or a facsimile thereof. If such a certificate is countersigned by a transfer agent or registered by a registrar, the signatures of any such officers may be facsimile. Section 2. Transfer. Transfer of shares shall be made only upon the -------- books of the corporation by the registered holder in person or by attorney, duly authorized, and upon surrender of the certificate or certificates for such shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer. A record shall be made of each transfer, and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer on the record of shareholders of the corporation. Section 3. Lost or Destroyed Certificates. The holder of any ---------------------------------- certificate representing shares of stock of the corporation may notify the corporation of any loss, theft or destruction thereof, and the Board of Directors may thereupon, in its discretion, cause a new certificate for the same number of shares, to be issued to such holder upon satisfactory proof of such loss, theft or destruction, and the deposit of indemnity by way of bond or otherwise, in such form and amount and with such surety or sureties as the Board of Directors may require, to indemnify the corporation against loss or liability by reason of the issuance of such new certificates. Section 4. Record Date. In lieu of closing the books of the ------------ corporation, the Board of Directors may fix in advance a date, not exceeding fifty days nor less than ten days, as the record date for the determination of shareholders entitled to receive notice of, or to vote at, any meeting of shareholders, or to consent to any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividends, or allotment of any rights, or for the purpose of any other action. ARTICLE VI MISCELLANEOUS ------------- Section 1. Dividends. Subject to the applicable provisions of the --------- Certificate of Incorporation, the Board of Directors may declare dividends from time to time upon the capital stock of the corporation from the surplus or net profits available therefor. Section 2. Fiscal Year. The fiscal year of the corporation shall begin ----------- on the 1st day of October in each calendar year and end on the 30th day of September of the next succeeding calendar year. Section 3. Checks, Notes, etc. Checks, notes, drafts, bills of exchange ------------------ and orders for payment of money shall be signed or endorsed in such manner as shall be determined by the Board of Directors. The funds of the corporation shall be deposited in such bank or trust company, and checks drawn against such funds shall be signed in such manner as may be determined from time to time by the Board of Directors. Section 4. Notice and Waiver of Notice. Any notice required to be given --------------------------- under these By-Laws may be waived by the person entitled thereto, in writing, by telegram, cable, facsimile transmission or radiogram, and the presence of any person at a meeting shall constitute waiver of notice thereof as to such person. Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated; and any notice so required shall be deemed to be sufficient if given by depositing it in a post office or post box in a sealed postpaid wrapper, addressed to such shareholder, officer or director, at such address as appears on the books of the corporation, and such notice shall be deemed to have been given on the day of such deposit. ARTICLE VII INDEMNIFICATION AND INSURANCE ----------------------------- Section 1. Indemnification. Any person made a party to an action or --------------- proceeding, by reason of the fact that he, his testator or his intestate is or was a director or officer of the corporation, or of any other corporation, domestic or foreign, that he, his testator or intestate served in any capacity at the request of the corporation, shall be indemnified by the corporation against the expenses (including attorney's fees, judgments, fines and amounts paid in settlement) actually incurred by him as a result of such action or proceeding, or any appeal therein, to the full extent permissible. Section 2. Insurance. The corporation may purchase and maintain --------- insurance to indemnify the corporation and the directors and officers to the extent permitted. ARTICLE VIII AMENDMENTS ---------- Section 1. The authority to make, alter, amend or repeal these By-Laws is expressly vested in the Board of Directors, subject to the power of the shareholders to change or repeal such By-Laws. EX-99 15 AMENDED BY-LAWS OF SENECA INDEPENDENCE Amended 10/8/97 Amended 3/11/98 BY-LAWS OF SENECA INDEPENDENCE PIPELINE COMPANY ARTICLE I OFFICES ------- Section 1. Principal Office. The principal office of this corporation ----------------- shall be in the City of Buffalo, State of New York. Section 2. Other Offices. The corporation may have such other offices ------------- and places of business, within or without the State of Delaware, as may be determined by the Directors. ARTICLE II SHAREHOLDERS ------------ Section 1. Place of Meetings. Meetings of the shareholders may be held ----------------- at such place or places, within or without the State of Delaware, as shall be fixed by the President and stated in the notice of the meeting. Section 2. Annual Meeting. The annual meeting of shareholders for the -------------- election of Directors and the transaction of such other business as may properly come before the meeting shall be held on such business day and time as the President shall designate. Section 3. Notice of Annual Meeting. Written notice of the annual ------------------------- meeting shall be given to each shareholder entitled to vote, at least ten (10) days but no more than fifty (50) days prior to the meeting. Section 4. Special Meetings. Special meetings of the shareholders for ----------------- any purpose or purposes may be called by the President or Board of Directors and must be called by the President or Secretary upon receipt by either of them of the written request of the holders of twenty-five (25) percent of the stock then outstanding and entitled to vote. Section 5. Notice of Special Meeting. Written notice of a special --------------------------- meeting, stating the time, place and purpose or purposes thereof, shall be given to each shareholder entitled to vote, at least ten (10) days but no more than fifty (50) days prior to the meeting. The notice shall also be set forth at whose direction it is being issued. Section 6. Quorum. At any meeting of the shareholders, the holders of ------ record of a majority of the shares of stock then entitled to vote shall constitute a quorum for all purposes, except as otherwise provided by law or the Certificate of Incorporation. Section 7. Voting. Except as may be otherwise provided by the ------ Certificate of Incorporation, at each meeting of the shareholders, every holder of stock then entitled to vote may vote in person or by proxy and shall have one vote for each share registered in his name. Section 8. Adjourned Meetings. Any meeting of shareholders may be ------------------- adjourned to a designated time and place by a vote of a majority in interest of the shareholders present in person or by proxy and entitled to vote, even though less than a quorum is so present. No notice of such an adjourned meeting need be given, other than by announcement at the meeting, and any business may be transacted which might have been transacted at the meeting as originally called. Section 9. Action by Written Consent of Shareholders. Whenever by any ------------------------------------------ provision of statute or of the Certificate of Incorporation or of these By-Laws, shareholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent setting forth the action so taken, signed by the holders of all outstanding shares entitled to vote thereon. Section 10. Appraisal Rights. If, at any meeting, action is proposed to ---------------- be taken which would, if taken, entitle shareholders to receive payment for shares, the notice of such meeting shall include a statement of that purpose and to that effect. ARTICLE III DIRECTORS --------- Section 1. Number. The number of Directors of the corporation shall be ------ three (3), who shall hold office for one year and/or until their successors are elected and qualify. Directors shall be elected at the annual meetings of shareholders. The number of Directors may be increased or decreased from time to time by amendment to these By-Laws made by a majority of the Board of Directors or by the shareholders. Directors need not be shareholders. Section 2. Powers. The Board of Directors may adopt such rules and ------ regulations for the conduct of business of its meetings, the exercise of its powers and the management of the affairs of the corporation as it may deem proper, not inconsistent with the laws of the State of Delaware, the Certificate of Incorporation or these By-Laws. In addition to the powers and authorities by these By-Laws expressly conferred upon it, the Board of Directors may exercise all such powers of the corporation and do such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws directed or required to be exercised or done by the shareholders. Section 3. Meeting, Quorum, Meeting by Telephone, Action Without ----------------------------------------------------------- Meeting. Meetings of the Board of Directors may be held at any place, either - ------- within or without the State of Delaware, provided a quorum be in attendance. Except as may be otherwise provided by the Certificate of Incorporation or by the corporate laws of the State of Delaware, a majority of the Directors in office shall constitute a quorum at any meeting of the Board and the vote of a majority of a quorum of Directors shall constitute the act of the Board. The Board of Directors may hold an annual meeting, without notice, immediately after the annual meeting of the shareholders. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. The Chairman of the Board (if any) or the President or Secretary may call, and at the request of any two Directors must call, a special meeting of the Board of Directors by appropriate notice. Five days' notice is required when given personally or by telegraph, cable or facsimile transmission to each Director. Any one or more members of the Board of Directors or any Committee thereof may participate in a meeting of such Board or any Committee by means of a conference telephone or similar communication equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. Any action required or permitted to be taken by the Board of Directors or any Committee thereof may be taken without a meeting if all members of the Board or the Committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the Board or Committee shall be filed with the minutes of the proceedings of the Board or Committee. Section 4. Resignation, Vacancies, Removal. Any Director may resign at -------------------------------- any time by giving written notice to the President or the Secretary. Such resignation shall take effect at the time stated therein. Except as otherwise provided in the Certificate of Incorporation or in the following paragraph, vacancies occurring in the membership of the Board of Directors, from whatever cause arising, may be filled by a majority vote of the remaining Directors, though less than a quorum. Any one or more of the Directors may be removed for cause by action of the Board of Directors taken by a vote of a majority of all Directors then in office at any regular or special meeting of the Board. Section 5. Committees. The Board of Directors, by resolution adopted by ---------- a majority of the entire Board, may designate from its members an Executive Committee or other committee or committees, each consisting of three or more members, and each of which shall have such powers and authority (to the extent permitted by law) as may be provided in said resolution. Section 6. Compensation. Directors, as such, shall not receive any ------------ stated salary for their services, but by resolution of the Board of Directors a fixed fee and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board or of any committee of the Board, provided that nothing herein contained shall be construed to preclude any Director from serving the corporation in any other capacity and receiving compensation therefor. ARTICLE IV OFFICERS -------- Section 1. Executive Officers. The executive officers of the -------------------- corporation shall be a President, one or more Vice-Presidents, a Treasurer and a Secretary, each of whom shall be elected annually by the Directors and shall hold office for such term as may be prescribed by the Board. All vacancies occurring among any of the offices may be filled by the Board of Directors or, in its discretion, the Board may leave unfilled at its pleasure any of the foregoing offices except the offices of President, Treasurer and Secretary. Any officer may be removed at any time with or without cause by the Board of Directors. Section 2. Other Officers. The Board of Directors may appoint such --------------- other officers and agents with such powers and duties as it shall deem necessary. Section 3. The President. The President shall, in the absence or -------------- non-election of a Chairman of the Board, preside at all meetings of the shareholders and Directors and perform such other duties as from time to time may be assigned to him by the Board of Directors. The President shall be the Chief Executive Officer of the corporation and shall perform all of the duties of the Chairman of the Board as well as those of President. Section 4. The Vice-President. The Vice-President, or if there be more ------------------ than one, the Vice-Presidents (who may have such designations, if any, as the Board of Directors may determine), in the order of their seniority or in any other order determined by the Board shall, in the absence or disability of the President, exercise the powers and perform the duties of the President, and each Vice-President shall exercise such other duties as may be prescribed by the President or the Board. Section 5. The Treasurer. The Treasurer shall have custody of all -------------- funds, securities and other valuable effects of the corporation; he shall receive and give receipts and acquittances for moneys paid in on account of the corporation; he shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors; he shall pay out of the funds on hand all bills, payrolls and other just debts of the corporation, of whatever nature, upon maturity; he shall enter regularly, in books to be kept by him for that purpose, full and accurate accounts of all moneys received and paid out by him on account of the corporation; and he shall perform all other duties incident to the office of Treasurer and as may be prescribed by the Board. Section 6. The Secretary. The Secretary shall keep the minutes of all ------------- proceedings of the Board of Directors and of the shareholders; he shall attend to the giving and serving of all notices to the shareholders and Directors or other notice required by law or by these By-Laws; he shall affix the seal of the corporation to deeds, contracts and other instruments in writing requiring a seal, when duly signed on behalf of the corporation; he shall have charge of the certificate books and stock books and such other books and papers as the Board may direct; and he shall perform all other duties incident to the office of Secretary as the Board may prescribe. ARTICLE V CAPITAL STOCK ------------- Section 1. Form and Execution of Certificates. Certificates of stock ----------------------------------- shall be in such form as required by the laws of the State of Delaware and as shall be adopted by the Board of Directors. They shall be numbered and registered in the order issued, shall be signed by the President or a Vice-President and by the Secretary or the Treasurer and shall be sealed with the corporate seal or a facsimile thereof. If such a certificate is countersigned by a transfer agent or registered by a registrar, the signatures of any such officers may be facsimile. Section 2. Transfer. Transfer of shares shall be made only upon the -------- books of the corporation by the registered holder in person or by attorney, duly authorized, and upon surrender of the certificate or certificates for such shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer. A record shall be made of each transfer, and whenever a transfer shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer on the record of shareholders of the corporation. Section 3. Lost or Destroyed Certificates. The holder of any ---------------------------------- certificate representing shares of stock of the corporation may notify the corporation of any loss, theft or destruction thereof, and the Board of Directors may thereupon, in its discretion, cause a new certificate for the same number of shares, to be issued to such holder upon satisfactory proof of such loss, theft or destruction, and the deposit of indemnity by way of bond or otherwise, in such form and amount and with such surety or sureties as the Board of Directors may require, to indemnify the corporation against loss or liability by reason of the issuance of such new certificates. Section 4. Record Date. In lieu of closing the books of the ------------ corporation, the Board of Directors may fix in advance a date, not exceeding fifty days nor less than ten days, as the record date for the determination of shareholders entitled to receive notice of, or to vote at, any meeting of shareholders, or to consent to any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividends, or allotment of any rights, or for the purpose of any other action. ARTICLE VI MISCELLANEOUS ------------- Section 1. Dividends. Subject to the applicable provisions of the --------- Certificate of Incorporation, the Board of Directors may declare dividends from time to time upon the capital stock of the corporation from the surplus or net profits available therefor. Section 2. Fiscal Year. The fiscal year of the corporation shall begin ----------- on the 1st day of October in each calendar year and end on the 30th day of September of the next succeeding calendar year. Section 3. Checks, Notes, etc. Checks, notes, drafts, bills of exchange ------------------ and orders for payment of money shall be signed or endorsed in such manner as shall be determined by the Board of Directors. The funds of the corporation shall be deposited in such bank or trust company, and checks drawn against such funds shall be signed in such manner as may be determined from time to time by the Board of Directors. Section 4. Notice and Waiver of Notice. Any notice required to be given --------------------------- under these By-Laws may be waived by the person entitled thereto, in writing, by telegram, cable, facsimile transmission or radiogram, and the presence of any person at a meeting shall constitute waiver of notice thereof as to such person. Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated; and any notice so required shall be deemed to be sufficient if given by depositing it in a post office or post box in a sealed postpaid wrapper, addressed to such shareholder, officer or director, at such address as appears on the books of the corporation, and such notice shall be deemed to have been given on the day of such deposit. ARTICLE VII INDEMNIFICATION AND INSURANCE ----------------------------- Section 1. Indemnification. Any person made a party to an action or --------------- proceeding, by reason of the fact that he, his testator or his intestate is or was a director or officer of the corporation, or of any other corporation, domestic or foreign, that he, his testator or intestate served in any capacity at the request of the corporation, shall be indemnified by the corporation against the expenses (including attorney's fees, judgments, fines and amounts paid in settlement) actually incurred by him as a result of such action or proceeding, or any appeal therein, to the full extent permissible. Section 2. Insurance. The corporation may purchase and maintain --------- insurance to indemnify the corporation and the directors and officers to the extent permitted. ARTICLE VIII AMENDMENTS ---------- Section 1. The authority to make, alter, amend or repeal these By-Laws is expressly vested in the Board of Directors, subject to the power of the shareholders to change or repeal such By-Laws. EX-99 16 AMENDED CERT OF INC OF HARCOR STATE OF DELAWARE SECRETARY OF STATE DIVISION OF CORPORATIONS FILED 09:00 AM 11/13/1998 981441088 - 2126867 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF HARCOR ENERGY, INC. The undersigned, John F. McKnight, Secretary of HarCor Energy, Inc., a corporation organized and existing under the laws of the State of Delaware, does hereby certify as follows: FIRST: The name of the corporation is HarCor Energy, Inc. SECOND: The original Certificate of Incorporation of the corporation was filed in the Office of the Secretary of State of the State of Delaware on May 20, 1987 under the name "PPC Merger Corp." THIRD: This Amended and Restated Certificate of Incorporation of the corporation was duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware. FOURTH: The Certificate of Incorporation of the corporation is hereby amended and restated to read in its entirety as follows: ARTICLE 1. The name of the corporation is HarCor Energy, Inc. ARTICLE 2. The registered office of the corporation in the State of Delaware is located at 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent is The Corporation Trust Company. ARTICLE 3. The nature of the business or purposes to be conducted or promoted by the corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. ARTICLE 4. The total number of shares of stock which the corporation shall have authority to issue is one thousand (1,000) shares of common stock, par value $.01 per share. ARTICLE 5. The number of directors of the corporation shall be as specified in, or determined in the manner provided in, the Bylaws of the corporation, and such number may be increased or decreased from time to time in such manner as may be prescribed in the Bylaws. ARTICLE 6. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the Board of Directors is expressly authorized and empowered to adopt, amend and repeal the Bylaws of the corporation, subject to the power of the stockholders of the r-corporation to adopt, amend or repeal any bylaw made by the Board of Directors. ARTICLE 7. Unless and except to the extent that the Bylaws of the corporation shall so require, the election of directors of the corporation need not be by written ballot ARTICLE 8. A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing hereunder with respect to any act or omission occurring prior to such amendment modification or repeal. IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Incorporation on behalf of the corporation and does verify and affirm that the facts stated herein are true as of the lst day of September, 1998. HARCOR ENERGY, INC. By:/s/J. McKnight ----------------------- John. McKnight Secretary - 2 - EX-99 17 BY-LAWS OF HARCOR As Amended BY-LAWS OF HarCor Energy, Inc. ARTICLE I OFFICES ------- SECTION 1. The registered office shall be in the City of Dover, County of Kent, State of Delaware. SECTION 2. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS ------------------------ SECTION 1. All meetings of the stockholders shall be held in the City of Torrance, California, at such place as may be fixed from time to time by the Board of Directors, or at such other place either within or without the State of Delaware as the Board of Directors may determine and which re stated in the notice of the meeting. SECTION 2. The annual meeting of stockholder shall be held each year on a date and time designated by the Board of Directors. At each annual meeting directors shall be elected and any other proper business may be transacted. SECTION 3. A majority of the stock issued and outstanding and entitled to vote at any meeting of stockholders, the holders of which re present in person or represented by proxy, shall constitute a quorum for the transaction of business except as otherwise provided by law, by the Certificate of Incorporation, or by these By-laws. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum and the votes present may continue to transact business until adjournment. If, however, such quorum shall not be present or represented at any meeting of the stockholders, a majority of the voting stock represented in person or by proxy may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is form more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote therat. SECTION 4. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes, or the Certificate of Incorporation, or these By-laws, a different vote is required in which case such express provision shall govern and control the decision of such question. SECTION 5. At each meeting of the stockholders, each stockholder having the right to vote may vote in person or may authorize another person or persons to act for him by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three years prior to said meeting, unless said instrument provides for a longer period. All proxies must be filed with the Secretary of the Corporation at the beginning of each meeting in order to be counted in any vote at the meeting. Each stockholder shall have one vote for each share of stock having voting power, registered in his name on the books of the Corporation on the record date set by the board of Directors as provided in Article V, section 6 hereof. All elections shall be had and all questions decided by a plurality vote. SECTION 6. Special meetings of the stockholders, for any purpose, or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may be called by the President and shall be called by the President or the Secretary at the request in writing of, or a resolution adopted by, a majority of members of the board of Directors. Special meetings of the stockholders may not b e called by any other person or persons. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. SECTION 7. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which notice shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. The written notice of any meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the Corporation. SECTION 8. The officer or agent who has charge of the stock ledger of the corporation shall prepare and made, at least ten 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 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. SECTION 9. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS --------- SECTION 1. The number of directors constituting the entire Board shall be not less than six nor more than twelve as fixed from time to time by vote of a majority of the entire board, provided, however, that the number of directors shall not be reduced so as t shorten the term of any director at the time in office, and provided further, that the number of directors constituting the entire board shall be six until otherwise fixed by a majority of the entire Board. SECTION 2. The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of directors constituting the entire Board permits with the term of office of one class expiring each year. At the annual meeting of stockholders in 1988 directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. At each annual election of directors held after 1988, the directors chosen to succeed those whose terms then expire shall be identified as being of the same class as the directors they succeed and shall be elected for a term expiring at the third succeeding annual election of directors by the stockholders. Any vacancies in the Board of Directors for any reason, and any newly created directorships resulting from any increase in the Board of Directors, may be filled by the bard of Directors, acting by a majority of the directors then in office, although less than a quorum, and any directors so chosen shall hold office until the next election of the class for which such directors shall have been chosen and until their successor shall be elected and have qualified. Any director or the entire Board of Directors may be removed at any time, but only for cause, from the Board of Directors by the affirmative vote of the holders of a majority of the shares then entitled to vote at any meeting of stockholders held for the purpose of electing directors or by the written consent of such number of holders. No decrease in the number of directors shall shorten the term of any incumbent director. SECTION 3. The property and business of the Corporation shall be managed by or under the direction of its board of Directors. In addition to the powers and authorities by these By-laws expressly conferred upon them, the Board may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholder. MEETINGS OF THE BOARD OF DIRECTORS ---------------------------------- SECTION 4. The directors may hold their meetings and have one or more offices, and keep the books of the Corporation outside of the State of Delaware. SECTION 5. Regular meetings of the board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board. Except as otherwise provided by statute, any business may be transacted at any regular meeting of the Board of Directors. SECTION 6. Special meetings of the board of Directors may be called by the President on forty-eight hours' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the President or the Secretary in like manner and on like notice on the written request of two directors unless the board consists of only one director in which case special meetings shall be called by the President or Secretary in like manner or n like notice on the written request of the sole director. SECTION 7. At all meetings of the board of Directors a majority of the authorized number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the vote of a majority of the directors present at any meets at which there is a quorum, shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute, by the Certificate of Corporation or by these By-laws. If a quorum shall not be present at any meeting of the board of Directors, the directors present thereat may adjourn the meeting from time to time, until a quorum shall be present. If only one director is authorized, such sole director shall constitute a quorum. SECTION 8. Unless otherwise restricted by the Certificate of Incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of Directors or of any Committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors. SECTION 9. Unless otherwise restricted by the Certificate of Incorporation or these By-laws, members of the Boards of Directors, or any Committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any Committee, by means of conference telephone or similar communications equipment by means of which al persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting. SECTION 10. Notwithstanding any other provisions of the By-laws of the Corporation ()and notwithstanding the fact that some lesser percentage may be specified by law or the By-laws of the Corporation, the affirmative vote of the holders of 66-2/3% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter, change or repeal Sections 1 and 2 and this Section 10 of this Article III of these By-laws. COMMITTEES OF DIRECTORS ----------------------- SECTION 11. The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more Committees, each such Committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any Committee, who may replace any absent or disqualified member at any meeting of the Committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, any unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such Committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such Committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution, or amending the By-laws of the Corporation; and, unless the resolution or the Certificate of Incorporation expressly so provide, no such Committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. SECTION 12. Each Committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. COMPENSATION OF DIRECTORS ------------------------- SECTION 13. Unless otherwise restricted by the Certificate of Incorporation or these By-laws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing Committees may be allowed like compensation for attending Committee meetings. INDEMINIFICATION ---------------- SECTION 14(a). Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding"), by reason of the fact that he, or a person of whom he is the legal representative, is or was the director, officer, employee or agent of the Corporation (including any controlling shareholder of the Corporation acting as an agent of the Corporation), or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended or other provisions of Delaware law (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said Law permitted the Corporation to provide prior to such amendment) against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties, amounts paid or to be paid in settlement and amounts expended in seeking indemnification granted to such person under applicable law, this By-law or any agreement with the Corporation) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent (including any controlling shareholder of the Corporation acting as an agent of the Corporation), and shall inure to the benefit of his heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) of this Section, the Corporation shall indemnify any person seeking indemnity in connection with an action, suit or proceeding (or part thereof) initiated by such person only if such action, suit or proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section 14 shall be a contract right. Further, the right to indemnification conferred in this Section 14 shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if Delaware General Corporation Law requires of any class of persons entitled to advancement of expenses, the payment of such expenses incurred by a director, officer, employee or agent, including any controlling stockholder of the corporation acting as an agent of the corporation, in his or her capacity as a director, officer, employee or agent in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such person, to repay all amounts so advanced if it shall ultimately be determined that such director, officer, employee or agent, including any controlling stockholder of the Corporation acting as an agent of the Corporation, is not entitled to be indemnified under this Section 14 or otherwise; and provided further, that no advancement of expenses shall be made if the Board of Directors has made a determination that the advancement of expenses is not proper in the circumstances because such person has not met the applicable standard of conduct set forth in the Delaware General Corporation Law. (b) If a claim under paragraph (a) is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if such suit is successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation ( including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. (c) The rights conferred on any person in paragraphs (a) and (b) shall not be exclusive of any right, which such persons may have or hereafter acquire under any statute, provision or the Certificate of Incorporation, By-law, agreement, vote of stockholders or disinterested directors or otherwise. (d) The Board of Directors is authorized to enter into a contract with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing for indemnification rights equivalent to or, if the Board of Directors so determines, greater than, those provided for in this Section 13. (e) The Board of Directors may authorize, by a vote of a majority of a quorum of the Board of Directors, the Corporation to purchase and maintain insurance to the extent reasonably available, at its expense, to protect itself and any such director, officer, employee or agent of the Corporation or any director, officer, employee or agent of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. (f) Any amendment, repeal or modification of any provision of this Section 14 by the stockholders and the directors of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such amendment, repeal or modification. ARTICLE IV OFFICERS -------- SECTION 1. The officers of this Corporation shall be chosen by the Board of Directors and shall include a President, a Secretary, and a Chief Financial Officer. The Corporation may also have at the discretion of the Board of Directors such other officers as are desired, including a Chairman of the Board, one or more Vice Presidents, one or more Assistant Secretaries and Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 hereof. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these By-laws otherwise provide. SECTION 2. The Board of Directors, at its first meeting after each annual meeting of stockholders, shall choose the officers of the Corporation. SECTION 3. The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. SECTION 4. The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors. SECTION 5. The officers of the Corporation shall hold office until their successors are chosen and qualify in their stead. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. If the office of any officer or officers becomes vacant for any reason, the vacancy shall be filled by the Board of Directors. CHAIRMAN OF THE BOARD --------------------- SECTION 6. The Chairman of the Board, if such an officer be elected, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by these By-laws. If there is no President, the Chairman of the Board shall in addition be the Chief Executive Officer of the Corporation and shall have the powers and duties prescribed in Section 7 of this Article IV. PRESIDENT --------- SECTION 7. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the President shall be the Chief Executive Officer of the Corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation. He shall preside at all meetings of the stockholders and, in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Directors. He shall have the general powers and duties of management usually vested in the office of president and chief executive officer of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or these By-laws. VICE PRESIDENTS --------------- SECTION 8. In the absence or disability of the President, the Vice Presidents in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President. The Vice Presidents shall have such other duties as from time to time may be prescribed for them, respectively, by the Board of Directors. SECRETARY AND ASSISTANT SECRETARY --------------------------------- SECTION 9. The Secretary shall attend all sessions of the Board of Directors and all meetings of the stockholders 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 by the Board of Directors. He shall give, or cause to be given, notice of all meetings of the stockholders and of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or these By-laws. He shall keep in safe custody the seal of the Corporation if one be adopted, and when authorized by the Board of Directors, affix the same to any instrument requiring it, and when so affixed it shall be attested by his signature or by the signature of an Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature. CHIEF FINANCIAL OFFICER ----------------------- SECTION 10. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director. The Chief Financial Officer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the President and directors, whenever they request it, an account of all his transactions as Chief Financial Officer and of the financial condition of the Corporation, and shall have other powers and perform such other duties as may be prescribed by the Board of Directors or these By-laws. OFFICER LOANS AND GUARANTIES ---------------------------- SECTION 11. The Corporation may make loans of money or property to, or guarantee the obligation of, any officer of the Corporation or its parent or subsidiary, whether or not the officer is a director, or adopt an employee benefit plan or plans authorizing such loans or guaranties, upon the approval of the Board of Directors, by a vote sufficient without counting the vote of any interested director or directors, if the Board of Directors determines that such a loan or guaranty or plan may reasonably by expected to benefit the Corporation. ARTICLE V CERTIFICATES OF STOCK --------------------- SECTION 1. Every holder of stock of the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman or Vice Chairman of the Board of Directors, or the President or a Vice President, and by the Chief Financial Officer or an Assistant Treasurer or Secretary or an Assistant Secretary of the Corporation, certifying the number of shares represented by the certificate owned by such stockholder in the Corporation. SECTION 2. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. SECTION 3. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder who requests the powers, designations, preferences and relative, participating, optional or other special rights of each class or stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. LOST, STOLEN OR DESTROYED CERTIFICATES -------------------------------------- SECTION 4. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent of the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFERS OF STOCK ------------------ SECTION 5. Upon surrender to the Corporation, or the transfer agent of the Corporation, of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the Corporation to issue or cause to be issued a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. FIXING RECORD DATE ------------------ SECTION 6. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders, or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS ----------------------- SECTION 7. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware. ARTICLE VI GENERAL PROVISIONS ------------------ DIVIDENDS --------- SECTION 1. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation. SECTION 2. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interests of the Corporation, and the directors may abolish any such reserve. CHECKS ------ SECTION 3. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers as the Board of Directors may from time to time designate. FISCAL YEAR ----------- SECTION 4. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. SEAL ---- SECTION 5. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. NOTICES ------- SECTION 6. Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these By-laws, notice is required to be given to any director or stockholder, it shall not be construed to require personal notice, and such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given two days after the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. SECTION 7. Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation or of these By-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ANNUAL STATEMENT ---------------- SECTION 8. The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the Corporation. ARTICLE VII AMENDMENTS ---------- SECTION 1. These By-laws may be altered, amended or repealed or new By-laws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new By-laws be contained in the notice of such special meeting. If the power to adopt, amend or repeal By-laws is conferred upon the Board of Directors by the Certificate of Incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal By-laws. EX-99 18 NFG EMPLOYEE COMPUTER PURCHASE PROGRAM NATIONAL FUEL EMPLOYEE COMPUTER PURCHASE PROGRAM I. INTRODUCTION ------------ The Employee Computer Purchase Program (ECPP) is a program whereby National Fuel Gas Distribution and Supply Corporation (collectively the "Company") will provide interest free loans to eligible employees for the purpose of buying personal computer systems for home use. The objective of the program is to provide employees with a tangible benefit and at the same time facilitate a potential increase in employee productivity through an improved understanding and application of computers. The opportunity to participate in the program will be provided at the discretion of the Company. Employees should consider their purchase carefully since each participating employee will be eligible for only one loan under the program. Applicable computer systems are limited to personal computer systems, related equipment and software. The Information Services Department will reserve the right to approve or disapprove loan applications based on system content. Products meeting this criterion may change from year to year and a list of approved hardware, software and accessories is included as Attachment I. Employees benefit by acquiring a personal computer to do such business oriented tasks as personal finance records, taxes and analyzing major purchase decisions. The program will also benefit those employees utilizing National Fuel's Tuition Reimbursement Program and assist employees in becoming more productive through increased understanding of computers. National Fuel benefits whenever employees are able to increase their productivity through a better understanding of personal computer hardware and software and apply that knowledge to their everyday responsibilities and duties. II. PROGRAM PROVISIONS ------------------ ELIGIBILITY 1. All full time Distribution and Supply Supervisory, Executive, and non-union hourly employees are eligible to participate in the program upon the completion of one (1) year of continuous service. 2. An employee whose salary is being garnished or who has any Company credit action against them cannot participate in the program until such action is resolved. In order to verify the creditworthiness of an employee's application for an ECPP loan, the Company reserves the right to investigate an employee's credit background through a third party consumer reporting agency. 3. The program is limited to the first 215 qualified employees. Loans will be awarded on a first come basis. Applications will be considered and reviewed based on the date the itemized/dated vendor quotation (or paid itemized/dated receipt) and other completed and signed program forms are received in Information Services. The date of the itemized/dated vendor quotation (or paid itemized/dated receipt) must not be older than 30 days from the date the application is received. LOAN CONDITIONS 1. The employee may borrow any amount from $1,000 to $3,000 interest free to cover the full or partial cost of an approved personal computer system and related equipment and software. Any system, related equipment or software obtained through the ECPP cannot be transferred, leased or loaned by the employee for the period of the loan. 2. If an employee who has purchased computer equipment under the program returns equipment for a refund, all monies received are to be returned to National Fuel and applied to the balance of the loan. 3. The sole purpose of this loan is to purchase a computer and associated hardware/software for use at the employee's home. REPAYMENT 1. Payroll deductions will take effect approximately 20 days after the employee receives the check for the system. 2. Loans will be repaid over a 36-month period. The employee may elect to repay the entire amount of the loan prior to the expiration of the 36-month loan period without penalty. 3. If an employee takes an unpaid leave of absence for any reason, the employee is expected to maintain his or her monthly repayment schedule while on leave. 4. If an employee separates from the Company for any reason or disposes of their system prior to repayment of his or her loan, he or she must immediately repay any amount remaining on the loan. HARDWARE OPTIONS & SOFTWARE OPTIONS Approved computer hardware and software are listed in Attachment I. The approved software product options in the program are limited to packages, which are compatible with the hardware selected by employees (as determined by Information Services). MAINTENANCE/SUPPORT The cost of all repairs and the installation of computer hardware/software is the responsibility of the employee. INSURANCE Insurance of the employee's system against theft or damage is the responsibility of the employee and cannot be included in the loan. While insurance is not mandatory under the program, it is strongly recommended. III. PROGRAM MODIFICATION/DISCONTINUANCE ----------------------------------- The Company reserves the right, at its sole discretion, to modify or discontinue this program. Payroll deductions for the unpaid balance on the loan will continue in effect until the loan is paid in full. IV. PROGRAM PARTICIPATION --------------------- Employees who wish to participate should follow this procedure in applying for a loan. 1. Obtain ECPP Loan Agreement/Payroll Deduction Form and Promissory Note from Human Resources (New York) by calling extension 7099. 2. Employee may either: a. Purchase the hardware and/or software outright and then submit a paid/dated itemized receipt; or b. Obtain and submit an itemized/dated quotation from the vendor before making the purchase **Employees will be required to present National Fuel identification to participating LOCAL vendors to qualify for discounts (see Attachment II). In both cases the receipt or quotation must show: -Name and address of vendor -Date of purchase or quotation -All items purchased or to be purchased with the item description, quantity, and individual price for the item, unless included in a package and not separately available -Total cost -Shipping and handling charges, in the case of mail order -Applicable state and local taxes ***Under the provisions outlined in the Employee Computer Purchase Program, an employee who purchases hardware and/or software prior to submitting documentation for approval is not guaranteed a loan. 3. Complete and sign Loan Agreement/Payroll Deduction Form and Promissory Note. 4. Submit paid itemized/dated receipt (or itemized/dated quotation list) and signed Loan Agreement/Payroll Deduction Form and Promissory Note to Information Services (Debbie Kupczyk, Main 4) for review and approval. -------- Please note: -An employee's application for a loan under the program will be assigned a priory number (up to #215) once it is received in Information Services -Forms must be submitted within 30 calendar days of the quote or purchase date to maintain system price integrity 5. Information Services will review the forms for compliance and modify as necessary. The employee will be notified regarding changes and eligibility. 6. Payroll Department will distribute the check to the employee, payable to vendor or employee in the case of reimbursement. The employee has 60 calendar days to purchase the system or forfeit their loan eligibility. ATTACHMENT I NATIONAL FUEL EMPLOYEE COMPUTER PURCHASE PROGRAM LISTING OF APPROVED HARDWARE AND SOFTWARE - ----------------------------------------- Purchases of new personal computer equipment and software may be made from any vendor or manufacturer, including mail-order companies. Purchase of used hardware or software is not eligible for inclusion under the program. All personal computer equipment that is game-related is also excluded from the ECPP.
APPROVED HARDWARE ITEMS NOT INCLUDED IN THE PROGRAM - -System units (desktops or laptops) -PDA's (personal digital assistants) - -Additional memory (RAM) -Joysticks - -Monitors -Fax machines - -Printers -Phones - -Mice, trackballs, etc. -Pagers, calculators - -Disk drives, floppy drives, tape back-up units -Consumables: paper, toner cartridges, diskettes, etc. - -Sound cards -Network interface cards - -Scanners -Hubs, routers, bridges and other LAN (local area - -Modems, fax/modems network) equipment - -Video and graphics boards -Mousepads - -Speakers -CD/diskette storage boxes - -CD-ROM drives -Computer furniture - -Keyboards
All personal productivity, business, and educational software is eligible for inclusion in the program. Games are not eligible for the program. APPROVED SOFTWARE - -Operating systems such as DOS, WINDOWS, and WINDOWS 95 - -Word processing, spreadsheets, database, project management - -Graphics packages and desktop publishing programs - -Utilities, like memory expanders, uninstall programs, file management aids, virus scanners, etc. - -Business oriented programs such as general accounting, tax preparation, inventory, CAD/CAM - -Compilers and programming tools - -Personal finance programs - -Internet browsers Note: 1. For those products ordered through a mail-order company, shipping and handling costs can be included in the loan amount. 2. Other services costs, such as: extended maintenance, training setup/configuration, monthly charges for commercial on-line services (AOL, Compuserve, MSN), and subscription fees are not eligible for the ECPP. 3. The purchase of duplicate and/or multiple hardware or software equipment will not be approved under the program. 4. Sales tax can also be included in the loan amount. ATTACHMENT II NATIONAL FUEL EMPLOYEE COMPUTER PURCHASE PROGRAM LISTING OF VENDORS OFFERING DISCOUNTS - -------------------------------------
NEW YORK - -------------------------- --------------------------- ------------------------------------ ---------------------------- VENDOR ADDRESS CONTACT DISCOUNT - -------------------------- --------------------------- ------------------------------------ ---------------------------- - -------------------------- --------------------------- ------------------------------------ ---------------------------- Computer City 2309 Eggert Road Walt Bielinski (716) 838-8446 $50-$250 Based on model & Tonawanda, NY 14150 Or manufacturer Mike Palato (716) 838-8444 - -------------------------- --------------------------- ------------------------------------ ---------------------------- - -------------------------- --------------------------- ------------------------------------ ---------------------------- Technical 121 Hamburg Street Howard Richardson $25-$100 Based on model & Concepts East Aurora, NY 14052 (716) 655-0055, ext. 109 manufacturer International - -------------------------- --------------------------- ------------------------------------ ---------------------------- PENNSYLVANIA - -------------------------- --------------------------- ------------------------------------ ---------------------------- VENDOR ADDRESS CONTACT DISCOUNT - -------------------------- --------------------------- ------------------------------------ ---------------------------- - -------------------------- --------------------------- ------------------------------------ ---------------------------- Erie Computer 4509 West 26th Street Art Leopold 4-5% Based on model & Erie, PA 16506 (814) 838-6386 manufacturer - -------------------------- --------------------------- ------------------------------------ ---------------------------- - -------------------------- --------------------------- ------------------------------------ ---------------------------- Office Machines Service 2016 Peach Street Larry or Daria Reymore 4-5% Based on model & & Support Erie, PA 16502 (814) 453-5867 manufacturer - -------------------------- --------------------------- ------------------------------------ ---------------------------- MAIL ORDER - -------------------------- --------------------------- ------------------------------------ ---------------------------- VENDOR CONTACT DISCOUNT - -------------------------- --------------------------- ------------------------------------ ---------------------------- - -------------------------- --------------------------- ------------------------------------ ---------------------------- Gateway 2000 610 Gateway Drive Anton Fasenmyer 1% on professional systems P.O. Box 2000 (800) 846-2036, ext. 55022 North Sioux City, SD 57049-2000 - -------------------------- --------------------------- ------------------------------------ ----------------------------
Employees will be required to present National Fuel identification to participating LOCAL vendors to qualify for discounts. APPROVER INITIALS: --------------- ----------------- Date of Hire ---------------- ---------------- HR ---------------- ---------------- IS ---------------- ---------------- AP ---------------- ---------------- PYRL ---------------- ---------------- NATIONAL FUEL EMPLOYEE COMPUTER PURCHASE PROGRAM LOAN AGREEMENT/PAYROLL DEDUCTION FORM - ------------------------------------------------------------------------------ NAME (print):______________ EMPLOYEE# _______ RC/ACTIVITY #_____________ NFG COMPANY: (|_| NYD, |_| PAD, |_| SPLY) AMOUNT OF LOAN: $______________ NAME OF SELLER: _____________________________ ITEMIZED REQUEST (check one): |_| Paid Receipt (check payable to employee) |_| Quotation (check payable to seller) In consideration of National Fuel granting an interest free loan to me, for a term of 3 years, in the amount as stated above, and for the express purpose of acquiring personal computer equipment and/or software for my personal use, I hereby agree to reimburse National Fuel the amount of $_______________ over thirty-six consecutive months through payroll deductions in amounts equal to $ _____________ per pay period and a final payment of $______________, which is the remaining balance. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CONDITIONS FOR LOAN - ------------------------------------------------------------------------------- The Company does not assume and hereby expressly disclaims any obligation or liability with respect to service of or warranties (expressed or implied, including merchantability and fitness) related to the product(s) described herein. The Company shall not be responsible for the installation, service, and repair of the item(s). The Company reserves the right to conduct credit worthiness checks and to deny loans for credit troubled employees. I certify that I have read the National Fuel Employee Computer Purchase Program terms and I accept the terms and conditions included therein and certify that the attached PC hardware/software items listed in the receipt or quotation will be used for my personal and/or immediate family use. - ------------------------- ------------------------- ------------------ EMPLOYEE NAME (PRINT) EMPLOYEE SIGNATURE DATE - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PAYROLL DEDUCTION AUTHORIZATION I hereby authorize and direct the Company to deduct from my salary or wages each pay period, a sum of money as stated above and apply said sum to the balance due under this agreement. I understand and agree that if any balance remains on my purchase account upon termination of employment with the Company or an unpaid leave of absence, such balance shall be deducted from any sums due me from the Company, and if it is determined that my final pay is less than this balance, I shall provide lump sum cash payment of such balance on or before my last workday. Payroll deduction will commence with the first paycheck following receipt of this Agreement in the Payroll Department. ------------------------------ ------------------ EMPLOYEE SIGNATURE DATE - ------------------------------------------------------------------------------- PROMISSORY NOTE TERMS --------------------- The undersigned individual ("Purchaser"), for value received, promises to pay National Fuel Gas Company or any of its subsidiaries (collectively "the Company") the sum stated in the Employee Computer Purchase Program Loan Agreement in installments, as described, and in the same amount (except the last installment with shall be unpaid balance) on the same day of each month thereafter until paid. Upon default, the remaining unpaid balance shall accrue interest at a compounded annual rate equal to the maximum lawful rate of interest at the date of default, until paid in full. This Note shall, at the option of the Company, become immediately due and payable, upon the happening of any one of the following specified events; (1) failure to pay any amount as herein agreed; (2) default in the performance of any other obligation to the Company evidenced by this Note; and (3) upon Purchaser's death, retirement, or other separation or leave of employment. The Purchaser hereby gives to the Company the right of setoff with respect to the balance or all sums of money at any time held for the credit of the Purchaser. The Purchaser hereby authorizes and empowers any attorney of any court of record within the United States or elsewhere to appear for Purchaser and, with or without complaint filed, confess judgment as of any term against Purchaser in favor of Company for the amount of the indebtedness, together with costs of suit and attorney's fee for collection in the amount of twenty-five percent (25%) of the indebtedness or $500, whichever is greater, provided the attorney's fee shall not exceed the amount permitted by law, with release of errors, without any stay of execution or right of appeal. No single exercise of the foregoing power to confess judgment shall be deemed to exhaust the power, whether or not any such execution shall be held by any court to be voidable or void, but the power shall continue undiminished and it may be exercised from time to time as often as the Company shall elect, until such time as the Company shall have received payment in full of the indebtedness and costs. The Purchaser waives any rights under all laws exempting real or personal property from execution. The Company may assign and transfer this Note to any other person, firm, or corporation and may assign, transfer, deliver, and repledge the aforesaid collateral or any part thereof to the assignee or transferee of this Note, who shall thereupon become vested with all the powers and rights above given to the Company in respect thereof, and the Company shall thereafter be forever released and discharged from all responsibility or liability to the undersigned for or on account of the collateral so assigned, transferred, or delivered. No delay on the part of the Company in exercising any power or right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any power or right allowed by law or granted hereunder preclude other or further exercise thereof or the exercise of any other power or right; nor shall the Company be liable for exercising or failing to exercise any such power or right. None of the terms or provisions of this Note may be excluded, modified, or amended, except by a written instrument expressly referring thereto and setting forth the provision so excluded, modified or amended. WITNESS the due execution hereof with the intent to be legally bound the _____ day of __________, 19____. - ------------------------- -------------------- Purchaser/Employee Signature Date Print Name: ______________________________ TO BE SUBMITTED WITH ITEMIZED/DATED RECEIPT OR ITEMIZED/DATED QUOTATION LIST EX-99 19 ORGANIZATION CHART OF TEPLARNA KROMERIZ Exhibit H-1 National Fuel Gas Company Organization Chart of Foreign Utility Company Ownership (FUCO) As of September 30, 1998 --------------------------- National Fuel Gas Company --------------------------- 100% ---------------------------------- Horizon Energy Development, Inc. ---------------------------------- 100% ------------------------------- Horizon Energy Holdings, Inc. ------------------------------- 100% --------------------------------- Horizon Energy Development B.V. --------------------------------- 100% --------------------------- Power Development, s.r.o. --------------------------- 100% ------------------------- Teplarna Kromeriz, a.s. (FUCO) ------------------------- Note: Percents reported represent percent of voting power as of September 30, 1998 EX-99 20 ORGANIZATION CHART OF SEVEROCESKE TEPLARNY Exhibit H-2 National Fuel Gas Company Organization Chart of Foreign Utility Company Ownership (FUCO) As of September 30, 1998 --------------------------- National Fuel Gas Company --------------------------- 100% ---------------------------------- Horizon Energy Development, Inc. ---------------------------------- 100% ------------------------------- Horizon Energy Holdings, Inc. ------------------------------- 100% --------------------------------- Horizon Energy Development B.V. --------------------------------- 82.7% ---------------------------- Severoceske teplarny, a.s. (FUCO) ---------------------------- 70% ------------------------ Teplarna Liberec, a.s. (FUCO) ------------------------ Note: Percents reported represent percent of voting power as of September 30, 1998 EX-99 21 ORGANIZATION CHART OF PRVNI Exhibit H-3 National Fuel Gas Company Organization Chart of Foreign Utility Company Ownership (FUCO) As of September 30, 1998 --------------------------- National Fuel Gas Company --------------------------- 100% ---------------------------------- Horizon Energy Development, Inc. ---------------------------------- 100% ------------------------------- Horizon Energy Holdings, Inc. ------------------------------- 100% --------------------------------- Horizon Energy Development B.V. --------------------------------- 86.2% --------------------------------------- Prvni severozapadni teplarenska, a.s. (FUCO) --------------------------------------- Note: Percents reported represent percent of voting power as of September 30, 1998 EX-99 22 SCT FINANCIAL STATEMENTS Exhibit I-1 Auditor's Statement Auditors Report for Shareholders of the Joint-Stock Company Severoceske teplarny, a.s. We have audited the financial statements of the joint-stock company Severoceske teplarny, a. s. for the year ended December 31, 1997. The Board of Directors of the Company is responsible for the preparation of the financial statements and for maintaining accounting which is complete, supportable and correct. Our responsibility is to express an opinion on the financial statements taken as a whole, based on our audit performed in accordance with the Czech National Council Act No. 524/1992 Coll., on Auditors and the Chamber of Auditors of the Czech Republic, and with the Auditing Guidelines issued by the Chamber of Auditors of the Czech Republic. The auditing guidelines require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement. Our audit includes an examination of the evidence supporting the financial statements. Our audit also includes assessing whether the accounting policies used and significant estimates made by management are fair and suitable, as well as evaluating the overall presentation of the financial statements. Our audit procedures were carried out on a test basis and with regard to the principle of materiality. We believe that our audit provides a reasonable basis for expressing our opinion. In our opinion, the financial statements present fairly, in all material aspects, the assets, liabilities, equity and financial position of the joint-stock company Severoceske teplarny, a. s., as of December 31, 1997 and the financial results for the year then ended in accordance with valid acts and relevant with valid acts and relevant accounting legislation. Dated in Prague, April 27, 1998 Auditing Company: Responsible Auditor: Consultas - Audit, s.r.o. Prof. Jaroslav Suva (SIGNATURE) License No. 87 License Decree No. 234 SEVEROCESKE TEPLARNY, a.s. FINANCIAL STATEMENTS - BALANCE SHEET ASSETS 12/31/97 12/31/96 ------ --------- --------- (CZK 000's) --------------------------- Total Assets 1,929,188 1,901,431 ========= ========= Intang. & Tang. Assets & Invest. 1,620,930 1,526,491 --------- --------- Intangible Assets 1,877 1,475 --------- --------- Software 770 1,475 Advances for Intangibles 1,107 - --------- --------- Tangible Assets 1,347,758 1,261,144 --------- --------- Land 34,516 29,813 Building, Halls & Constructions 949,650 874,162 Sep. Movab. Items & Groups of Mov. Items 315,301 233,648 Other Tangible Assets 20 20 Tangibles in Progress 46,488 98,029 Advances for Tangibles 1,838 25,532 Adjustment to Acquired Property (55) (60) --------- --------- Financial Investment 271,295 263,872 --------- --------- Major. Sharehol. & Particip. Inter. (50%) 210,051 209,951 Subst. Sharhol. & Partic. Inter. (20-50%) 44,133 34,233 Intergroup Loans 7,733 10,310 Other Loans & Financial Investment 9,378 9,378 --------- --------- Current Assets 304,511 297,169 --------- --------- Inventory 48,764 37,401 --------- --------- Materials 42,343 30,893 Work in Progress & Semi-Finished Product. 6,421 6,508 --------- --------- Long-Term Receivables 4,179 4,583 --------- --------- Trade and Other Receivables 4,030 4,417 Other Receivables 149 166 --------- --------- Short-Term Receivables 152,886 151,580 --------- --------- Trade Receivables 79,326 104,462 Receivables From Taxes & Subsidies 9,369 13,881 Receiv. From Related Comp. (Sharehol. 50%) - 30,000 Receiv. From Related Comp. (Sharehol. 20-50%) 61,000 - Other Receivables 3,191 3,237 --------- --------- Financial Accounts 98,682 103,605 --------- --------- Cash 260 3,211 Bank Accounts 98,422 100,394 --------- --------- Other Assets 3,747 77,771 --------- --------- Temporary Accounts of Assets 3,741 10,354 --------- --------- Prepaid Expenses 3,701 10,109 Unbilled Revenue 40 245 --------- --------- Contingencies-Gain 6 67,417 SEVEROCESKE TEPLARNY, a.s. FINANCIAL STATEMENTS - BALANCE SHEET 12/31/97 12/31/96 --------- -------- (CZK 000's) ---------------------------- Total Capital & Liabilities 1,929,188 1,901,431 ========= ========= Capital 1,662,408 1,593,143 --------- --------- Basic Capital 1,133,279 1,133,279 Capital Funds 25,109 24,702 --------- --------- Funds Created From Profit 117,310 110,702 --------- --------- Legal Reserve Fund 114,915 108,664 Statutory and Other Funds 2,395 2,038 --------- --------- Retained Earnings 259,450 199,433 Profit and Loss of Current Accounting Period 127,260 125,027 --------- --------- Liabilities 262,767 295,200 --------- --------- Reserves 24,108 20,414 --------- --------- Legal Reserves (i.e. Tax Deductible) 21,108 20,414 Other Reserves 3,000 - --------- --------- Long-Term Liabilities 2,219 3,024 --------- --------- Short-Term Liabilities 77,814 131,930 --------- --------- Trade Payables 38,445 95,296 Payables to Partners and Associations 506 281 Payables to Employees 1,267 1,547 Social Security Payable 3,115 3,643 Taxes Payable 1,247 1,605 Deferred Taxes 18,423 15,006 Other Payables 14,811 14,552 --------- --------- Bank Loans and Short Term Notes 158,626 139,832 --------- --------- Long-Term Bank Loans 158,626 129,832 Short-Term Bank Loans - 10,000 --------- --------- Other Liabilities-Temporary Accounts of Liabilities 4,013 13,088 --------- --------- Accruals 70 9,418 --------- --------- Accruals 45 9,418 Deferred Income 25 - --------- --------- Contingencies-Loss 3,943 3,670 SEVEROCESKE TEPLARNY, a.s. FINANCIAL STATEMENTS - PROFIT AND LOSS STATEMENT 12/31/97 12/31/96 -------- -------- (CZK 000's) --------------------------- Operation Revenues (A) 850,171 865,917 ------- ------- Revenues From Finished Products and Services 816,607 831,261 Changes in Inventory (87) 6,508 Capitalization (Of Own Work) 33,651 28,148 ------- ------- Consumption From Operation (B) 349,282 333,874 ------- ------- Consumption of Material and Energy 246,325 229,071 Services 102,957 104,803 ------- ------- Value Added (A)-(B)=(C) 500,889 532,043 ------- ------- Personnel Expenses 98,798 101,068 ------- ------- Wages & Salaries & Earn. Of Part & Coop. Members 70,595 72,035 Bonus. To Mem. Of Exec. Bodies of Companies & Coop. 1,815 2,315 Social Insurance & Other Expenses 24,559 25,000 Statutory Social Expenses 1,829 1,718 ------- ------- Taxes and Fees 2,204 1,410 Amortization of Intangibles and Depreciation of Tangibles 72,867 68,827 Rev. From Intangibles & Tangible Assets & Material Sold (+) 28,186 26,479 Net Book Value of Intangible, Tangibles and Material Sold (-) 20,552 51,166 Reversal of Reserves & Prepaid Expenses (+) 19,219 - Creation of Reserves & Prepaid Expenses (-) 22,913 20,414 Reversal of Provisions (+) 4,456 4,558 Creation of Provisions (-) 3,188 2,725 Other Operational Revenues (+) 796 1,157 Other Operational Expenses (-) 152,544 140,647 ------- ------- Net Operating Results (D) 180,480 177,980 ------- ------- Revenues From Sales of Securities and Deposits (+) - 1,156 Sold Securities and Deposits (-) - 494 Revenues from Financial Investments (+) 1,018 4,123 Interest Revenues (+) 24,442 6,836 Interest Expenses (-) 18,182 5,853 Other Financial Revenues (+) 151 2,977 Other Financial Expenses (-) 4,404 4,535 ------- ------- Transfer of Financial Revenues Transfer of Financial Expenses Net Result From Financial Activities (E) 3,025 4,210 ------- ------- Income Taxes on Normal Activity (F) 53,745 59,913 ------- ------- Due 50,329 54,803 Deferred 3,416 5,110 ------- ------- Net Results After Taxes From Normal Activities (D)+(E)-(F)=(G) 129,760 122,277 ------- ------- Extraordinary Revenues (+) 2,468 4,939 Extraordinary Expenses (-) 4,968 431 ------- ------- Income Tax on Extraordinary Activity - 1,758 ------- ------- Due - 1,758 Deferred - - ------- ------- Net Result From Extraordinary Activities (H) (2,500) 2,750 ------- ------- Income Distribution to Partners Net Income (Net Loss) for the Account Period (G)-(H) 127,260 125,027 ======= ======= Result of Operations Before Tax 181,005 186,698 ======= =======
SEVEROCESKE TEPLARNY, a.s. CASH FLOW STATEMENT 12/31/97 -------- Cash and Cash Equivalents at the Beginning of the Accounting Period (A) 103,605 ------- Profit/Loss From Normal Activity Before Taxes (B) 183,505 ------- Adjustment by Non-Cash Transactions (C) 127,896 ------- Depreciation of Fixed Assets 73,928 Change in Provisions, Reserves and Change in Prepayments and Accruals 67,695 (Profit) Loss From Sale of Fixed Assets (6,449) Dividends and Profit Revenues (1,018) Interest Expense (6,260) ------- Net Cash Flow From Operational Activity (B)+(C)=(D) 311,401 ------- Change in Working Capital (E) (78,318) ------- Change in Receivables From Operational Activities (9,388) Change in Short-Term Payables From Operational Activities (59,667) Change in Inventories Balance (9,263) ------- Net Cash Flow From Oper. Activity Before Taxes (D)+(E)=(F) 233,083 ------- Interest Paid (G) (18,182) Interest Received (H) 24,334 Tax on Normal Activity and Additional Tax of Prior Years (I) (45,055) Revenues and Expenses Related to Extraordinary Items (J) (2,500) ------- Net Cash Flow From Operational Activity (F)+(G)+(H)+(I)+(J)=(K) 191,680 ------- Fixed Asset Acquisition (145,834) Sale of Fixed Assets 14,966 Loans to Related Parties 2,578 ------- Net Cash Flow From Investment Activity (L) (128,290) ------- Change in Long-Term and Short-Term Liabilities (M) (10,805) ------- Impact of Changes in Equity (N) (58,526) ------- Direct Payments Debited to Funds (1,803) Paid-out Dividends and Profit Shares (56,723) ------- Dividends and Profit Shares Received (O) 1,018 ------- Net Cash Flow From Financial Activity (M)+(N)+(O)=(P) (68,313) ------- Net Increase/Decrease in Cash (K)+(L)+(P)=(Q) (4,923) ------- Cash and Cash Equivalents as the End of the Accounting Period (A)+(Q) 98,682 =======
EX-99 23 TL FINANCIAL STATEMENTS Exhibit I-2 Auditors Report To Shareholders of Teplarna Liberec, A. S. We have audited the financial statements of Teplarna Liberec, a.s. and its annual report for the year ended December 31, 1997. The Board of Directors is responsible for the preparation of the financial statements and for maintaining accounting which is complete, supportable and correct. Our responsibility is to express an opinion on the financial statements taken as a whole, based on our audit performed in accordance with the CNR Act No. 524/1992 Coll., on Auditors and the Chamber of Auditors of the Czech Republic and the auditing guidelines issued by the Chamber of Auditors. The auditing guidelines require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatements. Our audit includes an examination of the evidence supporting the financial statements. Our audit also includes assessing whether the accounting policies used and significant estimates made by management are fair and suitable, as well as evaluating the overall presentation of the financial statements. Our audit procedures were carried out on a test basis and with regard to the principle of materiality. We believe that our audit provides a reasonable basis for expressing our opinion. In our opinion, the financial statements present fairly, in all material aspects, the assets, liabilities, equity and financial position of Teplarna Liberec,a.s. as of December 31, 1997 and the financial results for the year ended in accordance with valid acts and relevant accounting legislation. We have examined whether the historical financial information included in the annual report of the Company, for the year ended December 31, 1997, is consistent with the audited financial statements of the Company. In our opinion, this information is in all material respects consistent with the audited financial statements. Prague, March 30, 1998 Statutory Auditor: Auditing Company: Prof. Jaroslav Suva Consultas-Audit, s.r.o. License No. 234 License No. 87 TEPLARNA LIBEREC, a.s. FINANCIAL STATEMENTS - BALANCE SHEET ASSETS 12/31/97 12/31/96 -------- -------- (CZK 000's) Total Assets 589,925 656,038 ======= ======= Fixed Assets 381,388 371,863 ------- ------- Intangible Assets 396 417 ------- ------- Software 311 417 Patents, Copyrights, Trademarks, Tradenames 85 - ------- ------- Fixed (Tangible) Assets 380,542 357,758 ------- ------- Plant (Buildings, Halls and Construction) 121,149 115,857 Land 7,052 6,806 Capital Equipment 251,005 228,753 Acquisition of Fixed Asset in Progress 1,278 6,342 Deposits Towards Fixed Acquisitions 58 - ------- ------- Investments (Financial Assets) 450 13,688 ------- ------- Investments (With Passive Interest) - 13,088 Other Investments 450 600 ------- ------- Current Assets 202,743 284,112 ------- ------- Inventory 71,088 54,655 ------- ------- Raw Materials 68,058 54,655 Merchandise 3,030 - ------- ------- Accounts Receivable 76,769 190,702 ------- ------- Accounts Receivable 58,679 110,480 Receivable - Taxes 18,024 9,932 Other Accounts Receivable 66 70,290 ------- ------- Current Liquid Assets 54,886 38,755 ------- ------- Petty Cash and Deposits in Transit 95 112 Cash in Bank 54,791 38,643 ------- ------- Other Assets - Temporary Debit Accounts 5,794 63 ------- ------- Accruals 5,719 63 ------- ------- Pre-Paid Expenses 273 33 Unbilled Revenue 5,446 30 ------- ------- Contingencies and Estimate Pre-Paid Items (Debit Balance) 75 - TEPLARNA LIBEREC, a.s. FINANCIAL STATEMENTS - BALANCE SHEET LIABILITIES AND OWNER'S EQUITY 12/31/97 12/31/96 -------- -------- (CZK 000's) Total Liabilities and Owner's Equity 589,925 656,038 ======= ======= Owner's Equity 522,044 511,414 ------- ------- Capital Stock at Par 500,000 500,000 Restricted Retained Earnings 1,486 1,154 ------- ------- Statutory Reserve Account 1,486 1,154 ------- ------- Retained Earnings 8,928 3,637 Net Income or Net Loss 11,630 6,623 ------- ------- External Sources (Of Money) 58,931 136,755 ------- ------- Reserves 3,854 4,075 ------- ------- Tax Deductible Reserves - 4,075 Other Reserves 3,854 - ------- ------- Liabilities to Subsidiaries 7,733 10,310 ------- ------- Current Liabilities 47,344 78,370 ------- ------- Accounts Payable 43,188 43,849 Payroll Payable 1,015 866 Social Security Payable 1,270 1,166 Taxes Payable 322 330 Deferred Taxes Payable 416 1,179 Payable to Subsidiaries - 30,000 Other Payables 1,133 980 ------- ------- Bank Loans - 44,000 ------- ------- Other Liabilities and Equity - Closing Accounts 8,950 7,869 ------- ------- Accrual Accounts 3,097 4,261 ------- ------- Accrued Expenses 3,097 4,037 Unearned Revenue - 224 ------- ------- Contingencies and Estimated Accrued Items (Credit Balance) 5,853 3,608 TEPLARNA LIBEREC, a.s. FINANCIAL STATEMENTS - INCOME STATEMENT 12/31/97 12/31/96 -------- -------- (CZK 000's) Revenue (From Sale of Merchandise) 1,200 Cost of Goods Sold (Merchandise) 1,154 - ------- ------- Gross Profit on Merchandise Sold (A) 46 - ------- ------- Revenue (From Sale of Manufactured Goods) (B) 608,105 661,877 ------- ------- Revenue (From Sale of Manufactured Goods and/or Services) 608,037 661,785 Self-Constructed Asset Revenue 68 92 ------- ------- Cost of Materials Used in Manufacturing (C) 521,106 530,986 ------- ------- Raw Materials and Utilities Used 313,749 333,107 Services Used 207,357 197,879 ------- ------- Gross Profit on Sales (A)+(B)-(C) 87,045 130,891 ------- ------- Payroll 39,875 41,780 ------- ------- Wages and Salaries 27,730 28,770 Board Member Fees and Bonuses 910 1,350 Social Security Expenses 9,674 10,063 Fringe Benefits 1,561 1,597 ------- ------- Taxes and Fees 43 10,411 Amortization of Intangible and Depreciation of Tangible Fixed Assets 23,806 22,100 Moneys Received From Sale of Fixed Assets and Raw Materials (+) 633 2,780 Net Book Value of Disposed Fixed Assets or Raw Materials (-) 495 2,617 Clearing of Reserves & Accrued Revenue (+) 8,150 - Creation of Reserves & Accrued Expenses (-) 7,929 4,075 Clearing of Gains on Assets to Operating Revenue (+) 3,140 282 Clearing of Losses on Assets to Operating Expense (-) 10,806 6,938 Other Operating Gains (Revenues)(+) 2,971 2,149 Other Operating Expenses (-) 11,746 14,414 ------- ------- Operating Income (D) 7,239 33,767 ------- ------- Moneys Received From Sale of Securities Or Direct Investments (+) 9,768 70,206 Cost (Purchase Price) of Securities and Direct Investments Sold (-) 13,088 94,072 Gains on Investments (+) 99 3,579 Interest Income (+) 12,064 3,728 Interest Expense (-) 3,754 5,239 Other Gains on Investments (+) - 4 Other Expenses on Investments (-) 2,029 2,113 ------- ------- Profit/loss From Financial Operations (E) 3,060 (23,907) ------- ------- Income Tax (F) (751) 3,122 ------- ------- Payable 12 2,102 Deferred (763) 1,020 ------- ------- Income From Operations (D)+(E)-(F)=(G) 11,050 6,738 ------- ------- Unusual and/or Extraordinary Gain/Income (+) 643 348 Unusual and/or Extraordinary Loss/Expenses (-) 63 463 ------- ------- Unusual Profit/Loss (H) 580 (115) ------- ------- Net Income/Loss for Fiscal Period (G)+(H) 11,630 6,623 ======= ======= Income Before Tax 10,879 9,745 ======= ======= TEPLARNA LIBEREC, a.s. CASH FLOW STATEMENT The Company's 1997 cash flow statement was prepared in accordance with the Ordinance of the Ministry of Finance of the Czech Republic, reg. No. 281/71701/95 as of December 21, 1995, as amended. 12/31/97 -------- Cash and Cash Equivalents at the Beginning of the Accounting Period (A) 38,755 ------- Profit/Loss From Normal Activity Before Taxes (B) 10,299 ------- Adjustments by Non-Cash Transactions (C) 21,427 ------- Depreciation of Fixed Assets 23,641 Change in Provisions, Reserves and Change in Prepayments and Accruals 2,795 (Profit) Loss From Sale of Fixed Assets 3,302 Interest Expense (8,311) Net Cash Flow From Operational Activity Before Taxes and Before Changes in Working Capital and ------- Extraordinary Items (B)+(C)=(D) 31,726 ------- Change in Working Capital (E) (51,571) ------- Change in Receivables From Operational Activities 39,321 Change in Short-Term Payables From Operational Activities (73,518) Change in Inventories Balance (17,374) ------- Net Cash Flow From Operational Activity Before Taxes and Extraordinary Items (D)+(E)=(F) (19,845) ------- Interest Paid (G) (4,511) Interest Received (H) 12,046 Tax on Normal Activity and Additional Tax of Prior Years (I) (2,134) Revenues and Expenses Related to Extraordinary Items (J) 580 ------- Net Cash Flow From Operational Activity (F)+(G)+(H)+(I)+(J)=(K) (13,864) ------- Fixed Asset Acquisition (46,454) Sale of Fixed Assets 80,026 ------- Net Cash Flow From Investment Activity (L) 33,572 ------- Change in Long-Term and Short-Term Liabilities (2,577) Paid-Out Dividends and Profit Shares (1,000) ------- Net Cash Flow From Financial Activity (M) (3,577) ------- Net Increase/Decrease in Cash (K)+(L)+(M)=(N) 16,131 ------- Cash and Cash Equivalents at the End of the Accounting Period (A)+(N) 54,886 ======= Comments: Items included in the cash and cash equivalents: cash including stamps And vouchers, cash in bank, cash in transit. In Liberec, March 18, 1998 -----END PRIVACY-ENHANCED MESSAGE-----