United States
Securities and Exchange Commission
 Washington, D.C. 20549
Form 10-K
 Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Fiscal Year Ended September 30, 1996
Commission File Number 1-3880
National Fuel Gas Company
 (Exact name of registrant as specified in its charter)

           New Jersey                                          13-1086010
  (State or other jurisdiction of                           (I.R.S. Employer
  incorporation or organization)                           Identification No.)

       10 Lafayette Square                                       14203
        Buffalo, New York                                      (Zip Code)
(Address of principal executive offices)

                                 (716) 857-6980	

Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:

                                                            Name of each
                                                              exchange
   Title of each class                                   on which registered
Common Stock, $1 Par Value, and                        New York Stock Exchange
Common Stock Purchase Rights	

Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by nonaffiliates of the registrant amounted to $1,559,340,000 as of November 30, 1996.
Common Stock, $1 Par Value, outstanding as of November 30, 1996:
37,992,960 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Shareholders for 1996 are incorporated by reference into Part I of this report. Portions of the registrant's definitive Proxy Statement for the Annual Meeting of Shareholders to be held February 20, 1997 are incorporated by reference into Part III of this report.

National Fuel Gas Company
Form 10-K Annual Report
For the Fiscal Year Ended September 30, 1996

                                Table of Contents
                                                                         Page
                                                                         ----
Part I
- ------
Item  1.  Business
            The Company and its  Subsidiaries                             15
            Rates and  Regulation                                         16
            The Utility Segment                                           17
            The Pipeline and Storage Segment                              17
            The Exploration and Production Segment                        18
            The Other Nonregulated Segment                                18
            Sources and Availability of Raw Materials                     19
            Competition                                                   19
            Seasonality                                                   21
            Capital Expenditures                                          21
            Environmental Matters                                         21
            Miscellaneous                                                 21
            Executive Officers of the Company                             22

Item  2.  Properties
            General Information on Facilities                             23
            Exploration and Production Activities                         23

Item  3.  Legal Proceedings                                               25

Item  4.  Submission of Matters to a Vote of Security Holders             25

Part II
- -------
Item  5.  Market for the Registrant's Common Stock and Related
          Shareholder Matters                                             25

Item  6.  Selected Financial Data                                         26

Item  7.  Management's Discussion and Analysis of Financial
          Condition and Results of Operations                             27

Item  8.  Financial Statements and Supplementary Data                     45

Item  9.  Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure                             73

Part III
- --------
Item 10.  Directors and Executive Officers of the Registrant              73

Item 11.  Executive Compensation                                          74

Item 12.  Security Ownership of Certain Beneficial Owners and
          Management                                                      74

Item 13.  Certain Relationships and Related Transactions                  74

Part IV
- -------
Item 14.  Exhibits, Financial Statement Schedules and Reports on
          Form 8-K                                                        75

Signatures                                                                78
- ----------	

This combined Annual Report to Shareholders/Form 10-K contains "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements should be read with the cautionary statements included in this combined Annual Report to Shareholders/Form 10-K at Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" (MD&A), under the heading "Safe Harbor for Forward-Looking Statements." Forward-looking statements are all statements other than statements of historical fact, including, without limitation, those statements that are designated with a "1" following the statement, as well as those statements that are identified by the use of the words "anticipates," "estimates," "expects," "intends," "plans," "predicts," "projects," and similar expressions.
PART I
ITEM 1 Business
The Company and its Subsidiaries
National Fuel Gas Company (the Company or Registrant), a registered holding company under the Public Utility Holding Company Act of 1935, as amended (the Holding Company Act), was organized under the laws of the State of New Jersey in 1902. The Company is engaged in the business of owning and holding securities issued by its subsidiary companies. Except as otherwise indicated below, the Company owns all of the outstanding securities of its subsidiaries. Reference to "the Company" in this report means the Registrant or the Registrant and its subsidiaries collectively, as appropriate in the context of the disclosure.
The Company is an integrated natural gas operation consisting of three major business segments:
1. The Utility segment is carried out by National Fuel Gas Distribution Corporation (Distribution Corporation), a New York corporation. Distribution Corporation sells natural gas and provides natural gas transportation services through a local distribution system located in western New York and northwestern Pennsylvania (principal metropolitan areas: Buffalo, Niagara Falls and Jamestown, New York; Erie and Sharon, Pennsylvania).
2. The Pipeline and Storage segment is carried out by National Fuel Gas Supply Corporation (Supply Corporation), a Pennsylvania corporation. Supply Corporation provides interstate natural gas transportation and storage services for affiliated and nonaffiliated companies through (i) an integrated gas pipeline system extending from southwestern Pennsylvania to the New York-Canadian border at the Niagara River, and (ii) 30 underground natural gas storage fields owned and operated by Supply Corporation and four other underground natural gas storage fields operated jointly with various major interstate gas pipeline companies.
3. The Exploration and Production segment is carried out by Seneca Resources Corporation (Seneca), a Pennsylvania corporation. Seneca is engaged in the exploration for, and the development and purchase of, natural gas and oil reserves in the Gulf Coast of Texas and Louisiana, in California and in the Appalachian region of the United States.
The Other Nonregulated segment is carried out by the following subsidiaries:
* National Fuel Resources, Inc. (NFR), a New York corporation engaged in the marketing and brokerage of natural gas and the performance of energy management services for utilities and end-users located in the northeastern and midwestern United States;
* Leidy Hub, Inc. (Leidy), a New York corporation engaged in providing various natural gas hub services to customers in the northeastern, mid-Atlantic, Chicago and Los Angeles areas of the United States and Ontario, Canada, through (i) Leidy's 50% ownership of Ellisburg-Leidy Northeast Hub Company (a Pennsylvania general partnership) and (ii) Leidy's 14.5% ownership of Enerchange, L.L.C. (Enerchange) (a Delaware limited liability company which in turn owns 50% of QuickTrade, L.L.C., another Delaware limited liability company);

* Horizon Energy Development, Inc. (Horizon), a New York corporation formed in 1995 to engage in foreign and domestic energy projects through investment as a sole or partial owner in various business entities including Beheer-en-Beleggingsmaatschappij Bruwabel B.V. (Bruwabel), a Dutch company whose principal assets are a power development group and a district heating plant located in the eastern part of the Czech Republic;
* Seneca is also engaged in the marketing of timber from its Pennsylvania land holdings;
* Highland Land & Minerals, Inc. (Highland), a Pennsylvania corporation which operates a sawmill and kiln in Kane, Pennsylvania;
* Data-Track Account Services, Inc. (Data-Track), a New York corporation which provides collection services (principally issuing collection notices) for the Company's subsidiaries (principally Distribution Corporation); and
* Utility Constructors, Inc. (UCI), a Pennsylvania corporation which discontinued its operations (primarily pipeline construction) in 1995 and whose affairs are being wound down.
Financial information about each of the Company's business segments can be found in Item 8 at Note I "Business Segment Information." No single customer, or group of customers under common control, accounted for more than 10% of the Company's consolidated revenues in 1996. All references to years in this report are to the Company's fiscal year ended September 30 unless otherwise noted.
The discussion of the Company's business segments as contained in the Letter to Shareholders, which is included in the paper copy of the Company's combined Annual Report to Shareholders/Form 10-K, is included in this electronic filing as Exhibit 13 and incorporated herein by reference.
Rates and Regulation
The Company is subject to regulation by the Securities and Exchange Commission (SEC) under the broad regulatory provisions of the Holding Company Act, including provisions relating to issuance of securities, sales and acquisitions of securities and utility assets, intra-Company transactions and limitations on diversification. The SEC has recommended legislation to repeal conditionally the Holding Company Act, in conjunction with legislation which would allow the various state regulatory commissions to have access to such books and records of companies in a holding company system as would be necessary for effective regulation, and allow for federal audit authority and oversight of affiliate transactions. However, the additional proposed access to Company books and records by state regulatory commissions would correspondingly increase the amount of regulatory burden at the state level. In addition, recent SEC rule changes, and proposed rule changes, if implemented, have reduced and could reduce further the number of applications filed under the Holding Company Act, exempt routine financings and expand diversification opportunities. The Company is unable to predict at this time what the ultimate outcome of legislative and/or regulatory changes will be, and therefore what the impact on the Company might be.1
The Utility segment's rates, services and other matters are regulated by the Public Service Commission of the State of New York (PSC) with respect to services provided within New York, and by the Pennsylvania Public Utility Commission (PaPUC) with respect to services provided within Pennsylvania. For additional discussion of the Utility segment's rates and regulation, see Item 7 under the heading "Rate Matters," and Item 8 at Note B-Regulatory Matters. The discussion under Item 8 at Note B-Regulatory Matters, includes a description of the regulatory assets and liabilities reflected on the Company's consolidated balance sheets in accordance with applicable accounting standards. To the extent that the criteria set forth in such accounting standards are not met by the operations of the Utility segment or the Pipeline and Storage segment, as the case may be, the related regulatory assets and liabilities would be eliminated from the Company's consolidated balance sheets and such accounting treatment would be discontinued. The Company is not currently facing any requirement to discontinue such accounting standards.1

The Pipeline and Storage segment's rates, services and other matters are regulated by the Federal Energy Regulatory Commission (FERC). For additional discussion of the Pipeline and Storage segment's rates and regulation, see Item 7 under the heading "Rate Matters," and Item 8 at Note B-Regulatory Matters.
This report occasionally refers collectively to the Utility segment and the Pipeline and Storage segment as the Regulated Operations.
In addition, the Company is subject to the same federal, state and local regulations on various subjects as other companies doing business in the same locations.
The Company's operations other than Supply Corporation and Distribution Corporation are not regulated as to prices or rates for services. Accordingly, this report occasionally refers collectively to the Exploration and Production segment and the Other Nonregulated segment as the Nonregulated Operations.
The Utility Segment
The Utility segment contributed approximately 51% of the Company's operating income before income taxes in 1996.
Additional discussion of the Utility segment appears in the Letter to Shareholders contained in this combined Annual Report to Shareholders/Form 10-K, below under the headings "Sources and Availability of Raw Materials" and "Competition," in Item 7 "MD&A," and in Item 8 at Notes B-Regulatory Matters, H-Commitments and Contingencies and I-Business Segment Information.
The Pipeline and Storage Segment
The Pipeline and Storage segment contributed approximately 33% of the Company's operating income before income taxes in 1996.
The Pipeline and Storage segment currently has service agreements for substantially all of its firm transportation capacity, which totals approximately 1,896 million cubic feet (MMcf) per day. The Utility segment has contracted for approximately 1,126 MMcf per day or 59% of that capacity until 2003 and continuing year-to-year thereafter. An additional 22% of that capacity is subject to firm contracts with nonaffiliated customers until 2003 or later.
The Pipeline and Storage segment has available for sale to customers approximately 61.6 billion cubic feet (Bcf) of firm storage capacity. The Utility segment has contracted for 26.0 Bcf or 42% of that capacity, in service agreements with initial terms of approximately 7 to 10 years and continuing year-to-year thereafter, effective beginning in 1993 (23.3 Bcf - 10 years), 1996 (2.0 Bcf - 10 years) and 1997 (0.7 Bcf - 7 years).
Nonaffiliated customers are contracted for the remaining firm storage capacity.
The primary terms of current firm storage service agreements representing 23.3 Bcf of the firm storage capacity contracted for by nonaffiliated customers expired in 1995. Service continues year-to-year and can be terminated by the customer on one year's notice. Five of these customers terminated or reduced contracts effective March 31, 1996. The resulting 3.3 Bcf of storage capacity was marketed and is under firm contracts, at discounted rates, with new customers until at least March 31, 1999. Three additional customers terminated contracts effective March 31, 1997 resulting in 2.1 Bcf of available storage capacity. Approximately 1.0 Bcf of this capacity is under contract, at discounted rates, with a new customer until March 31, 2001. The Pipeline and Storage segment is actively marketing the remaining 1.1 Bcf of available capacity.
Additional discussion of the Pipeline and Storage segment appears in the Letter to Shareholders contained in this combined Annual Report to Shareholders/Form 10-K, below under the headings "Sources and Availability of

Raw Materials" and "Competition," Item 7 "MD&A," and Item 8 at Notes B-Regulatory Matters, H-Commitments and Contingencies and I-Business Segment Information.
The Exploration and Production Segment
The Exploration and Production segment contributed approximately 21% of the Company's operating income before income taxes in 1996.
Additional discussion of the Exploration and Production segment appears in the Letter to Shareholders contained in this combined Annual Report to Shareholders/Form 10-K, below under the heading "Competition," Item 7 "MD&A," and Item 8 at Notes F-Financial Instruments, I-Business Segment Information and L-Supplementary Information for Oil and Gas Producing Activities.
The Other Nonregulated Segment
The Other Nonregulated segment reduced the Company's operating income before income taxes by approximately 4% in 1996. Corporate operations also reduced the Company's operating income before income taxes by approximately 1%.
Additional discussion of the Other Nonregulated segment appears in the Letter to Shareholders contained in this combined Annual Report to Shareholders/Form 10-K, below under the headings "Sources and Availability of Raw Materials" and "Competition," Item 7 "MD&A," and Item 8 at Notes F-Financial Instruments and I-Business Segment Information.
Sources and Availability of Raw Materials
Natural gas is the principal raw material for the Utility segment and some of the subsidiaries in the Other Nonregulated segment, as discussed below. The Pipeline and Storage segment transports and stores gas owned by its customers, whose gas originates in the southwestern United States, Canada and Appalachia. Highland and Seneca's timber operations rely to a large degree upon timber located on Seneca's lands, so that source and availability are not issues. The Exploration and Production segment seeks to discover and produce raw materials (natural gas, oil and hydrocarbon liquids) as described in the Letter to Shareholders contained in this combined Annual Report to Shareholders/Form 10-K, Item 7 "MD&A" and Item 8 at Notes I-Business Segment Information and L Supplementary Information for Oil and Gas Producing Activities.
In 1996, the Utility segment purchased 149.5 Bcf of gas. Gas purchases from various producers and marketers in the southwestern United States under long-term (two years or longer) contracts accounted for 70% of these purchases. Purchases of gas in Canada under long-term contracts, purchases of gas in Canada and the United States on the spot market (contracts of less than a year) and purchases from Appalachian producers accounted for 3%, 24% and 3%, respectively, of the Utility segment's 1996 gas purchases. Gas purchases from Vastar Resources, Inc. and Natural Gas Clearinghouse (southwest gas under long-term contract) represented 13% and 11%, respectively, of total 1996 gas purchases by the Utility segment. No other producer or marketer provided the Utility segment with 10% or more of its gas requirements in 1996. A portion of the Utility segment's gas purchase agreements with nonaffiliated gas producers require payment of fixed monthly charges. These charges are tied to various indices. At September 30, 1996, the projected aggregate amount of such required future payments, based on current indices, is approximately $10.8 million annually for the next five years.1
To move its gas from the point of purchase to its distribution system in New York and Pennsylvania, the Utility segment purchases contracted firm transportation and storage services from various interstate pipeline companies including Supply Corporation. These contracts provide for payment of a demand or reservation charge for contracted capacity and storage. At September 30, 1996, the projected aggregate amounts of such required future payments to nonaffiliated companies, based on current FERC approved rates, where applicable, are approximately $98.1 million and $2.4 million annually for the next five years, for pipeline capacity and storage service, respectively.1

The Other Nonregulated segment needs natural gas for NFR's marketing and Leidy's hub services, but is relatively indifferent as to the source.
Competition
Competition in the natural gas industry exists among providers of natural gas, as well as between natural gas and other sources of energy. The continuing deregulation of the natural gas industry should enhance the competitive position of natural gas relative to other energy sources by removing some of the regulatory impediments to adding customers and responding to market forces.1 In addition, the environmental advantages of natural gas compared with other fuels should increase the role of natural gas as an energy source.1 Moreover, natural gas is abundantly available in North America, which makes it a dependable alternative to imported oil.
The electric industry is moving toward a more competitive environment as a result of the federal Energy Policy Act of 1992 and initiatives undertaken by the FERC and various states. It is unclear at this point what impact this restructuring will have on the Company.1
The Company competes on the basis of price, service and reliability, product performance and other factors. Sources and providers of energy, other than those described under this "Competition" heading, do not compete with the Company to any significant extent.
Competition: The Utility Segment
The changes precipitated by the FERC's restructuring of the gas industry in Order No. 636 are redefining the roles of the gas utility industry and the state regulatory commissions. The PSC issued an order in 1995 providing for the Utility segment to implement unbundling of its services. The Utility segment has implemented most of the provisions contained in the PSC's 1995 order, and now offers unbundled, flexible services to its residential, commercial and industrial customers. At present, these provisions are not advantageous to the residential customers because of high cost and the resulting lack of interest by gas marketers in offering residential gas sales. In large part, the high cost is due to the significant customer protections required of utilities which are then passed along in rates. Such protections include sufficient contracts to purchase, transport and store natural gas in the event that it is needed by residential customers.
Competition for large-volume customers continues, with local producers or pipeline companies attempting to sell or transport gas directly to end-users located within the Utility segment's service territories (i.e., bypass). In addition, competition continues with fuel oil suppliers, and may increase with electric utilities making retail energy sales.1
Responding to those developments, the Utility segment is now better able to compete, through its unbundled flexible services, in its most vulnerable markets (the large commercial and industrial markets). The Utility segment continues to (i) develop or promote new sources and uses of natural gas and/or new services, rates and contracts and (ii) emphasize and provide high quality service to its customers.
Competition: The Pipeline and Storage Segment The Pipeline and Storage segment competes for market growth in the natural gas market with other pipeline companies transporting gas in the northeastern United States and with other companies providing gas storage services. The Pipeline and Storage segment has some unique characteristics which enhance its competitive position. Its facilities are located adjacent to Canada and the northeastern United States, and provide part of the link between gas-consuming regions of the northeastern United States and gas-producing regions of Canada and the southwestern, southern and midwestern regions of the United States. This location offers the opportunity for increased transportation and storage services in the future.1

Competition: The Exploration and Production Segment The Exploration and Production segment competes with other gas and oil producers, and with fuel oil and electricity wholesalers and producers, with respect to its sales of oil and gas. The Exploration and Production segment also competes, by competitive bidding and otherwise, with other oil and gas exploration and production companies of various sizes for leases and drilling rights for exploration and development prospects.
To compete in this environment, the Exploration and Production segment originates and acts as operator on most prospects, minimizes risk of exploratory efforts through partnership-type arrangements, applies the latest technology for both exploratory studies and drilling operations and focuses on market niches that suit its size, operating expertise and financial criteria.
Competition: The Other Nonregulated Segment In the Other Nonregulated segment, NFR competes with other gas marketers and energy management services providers. Leidy competes with other natural gas hub service providers. Highland competes with other sawmills in northwestern Pennsylvania. Horizon competes with other entities seeking to develop foreign and domestic energy projects.
Seasonality
Variations in weather conditions can materially affect the volume of gas delivered by the Utility segment, as virtually all of its residential and commercial customers use gas for space heating. The effect on the Utility segment in New York is mitigated by a weather normalization clause which is designed to adjust the rates of retail customers to reflect the impact of deviations from normal weather. Weather that is more than 2.2% warmer than normal results in a surcharge being added to customers' current bills, while weather that is more than 2.2% colder than normal results in a refund being credited to customers' current bills.
The Pipeline and Storage segment's volumes transported and stored may vary materially depending on weather, without materially affecting its earnings. The Pipeline and Storage segment's rates are based on a straight fixed-variable rate design which allows recovery of all fixed costs in fixed monthly reservation charges. Variable charges based on volumes are designed only to reimburse the variable costs caused by actual transportation or storage of gas.
Capital Expenditures
A discussion of capital expenditures by business segment is included in Item 7 under the heading "Investing Cash Flow," subheading "Capital Expenditures."
Environmental Matters
A discussion of material environmental matters involving the Company is included in Item 8, Note H-Commitments and Contingencies.
Miscellaneous
The Company had 2,843 full-time employees at September 30, 1996, a decrease of 2.8% from the 2,925 employed at September 30, 1995.
Agreements covering employees in collective bargaining units in New York were last renegotiated in October 1994 and are scheduled to expire in February 1998. Agreements covering most employees in collective bargaining units in Pennsylvania were renegotiated, effective April and May 1996, and are scheduled to expire in April and May 1999.
The Company has numerous county and municipal franchises under which it uses public roads and certain other rights-of-way and public property for the location of facilities. The Company has regularly renewed such franchises at expiration and expects no difficulty in continuing to renew them.1

Executive Officers of the Company*

                     Age as of  Current Company             Date Elected To
         Name         9/30/96      Positions               Current Positions
         ----        ---------  ---------------            -----------------
Bernard J. Kennedy       65     Chairman of the
                                Board of Directors.        March 21, 1989
                                Chief Executive
                                Officer.                   August 1, 1988
                                President.                 January 1, 1987
                                Director.                  March 29, 1978

Philip C. Ackerman       52     Director.                  March 16, 1994
                                Senior Vice President.     June 1, 1989
                                President of
                                Distribution Corporation.  October 1, 1995
                                President of Seneca until
                                 October 1, 1996.          June 1, 1989
                                Executive Vice President
                                 of Supply Corporation.    October 1, 1994
                                President of Horizon.      September 13, 1995
                                President of certain
                                 other subsidiaries of
                                 the Company from prior
                                 to 1991.

Richard Hare             58     President of Supply
                                 Corporation.              June 1, 1989
                                Senior Vice President of
                                 Penn-York Energy Corpor-
                                 ation until its merger
                                 into Supply Corporation
                                 on July 1, 1994.          June 1, 1989

James A. Beck            49     President of Seneca.       October 1, 1996**

Joseph P. Pawlowski      55     Treasurer.                 December 11, 1980
                                Senior Vice President of
                                 Distribution Corporation. February 20, 1992
                                Treasurer of
                                 Distribution Corporation. January 1, 1981
                                Treasurer of
                                 Supply Corporation.       June 1, 1985
                                Secretary of
                                 Supply Corporation.       October 1, 1995
                                Officer of certain other
                                 subsidiaries of the
                                 Company from prior
                                 to 1991.

Gerald T. Wehrlin        58     Controller.                December 11, 1980
                                Senior Vice President of
                                 Distribution Corporation. April 1, 1991
                                Controller of
                                 Distribution Corporation. January 1, 1981
                                Controller of Seneca.      September 1, 1981
                                Secretary and Treasurer
                                 of Leidy.                 September 1, 1993
                                Secretary and Treasurer
                                 of Horizon.               September 13, 1995
                                Officer of certain other
                                 subsidiaries of the
                                 Company from prior
                                 to 1991.

Walter E. DeForest       55     Senior Vice President of	

Distribution Corporation. August 1, 1993 President of Leidy. September 1, 1993

                     Age as of  Current Company             Date Elected To
         Name         9/30/96      Positions               Current Positions
         ----        ---------  ---------------            -----------------

Bruce H. Hale            47     Senior Vice President of
                                 Distribution Corporation. April 1, 1991 through
                                                           February 20, 1992,
                                                           and again on
                                                           January 1, 1993***
                                Vice President of Horizon. September 13, 1995

Dennis J. Seeley         53     Senior Vice President of
                                 Supply Corporation.       January 1, 1993

David F. Smith           43     Senior Vice President of	

Distribution Corporation. January 1, 1993 Secretary of Distribution Corporation. June 20, 1986 Officer of certain other subsidiaries of the Company from prior to 1991.
* The Company has been advised that there are no family relationships among any of the officers listed, and that there is no arrangement or understanding among any one of them and any other persons pursuant to which he was elected as an officer.
** Vice President of Seneca from January 1, 1994 through April 30, 1995, Executive Vice President of Seneca from May 1, 1995 through September 30, 1996.
*** Senior Vice President of Supply Corporation from February 21, 1992 through December 31, 1992.
ITEM 2 PROPERTIES
General Information on Facilities
The investment of the Company in net property, plant and equipment was $1,709.6 million at September 30, 1996. Approximately 76% of this investment is in the Utility and Pipeline and Storage segments, which are primarily located in western New York and western Pennsylvania. The remaining investment in property, plant and equipment is mainly in the Exploration and Production segment, which is primarily located in the Gulf Coast, southwestern, western and Appalachian regions of the United States. During the past five years, the Company has made significant additions to plant in order to expand and improve transmission and distribution facilities for both retail and transportation customers and to augment the reserve base of oil and gas. Net plant has increased $395.9 million, or 30%, since 1991.
The Utility segment has the largest net investment in property, plant and equipment, compared with the Company's other business segments. Its net investment in its gas distribution network (including 14,764 miles of distribution pipeline) and its services represent approximately 58% and 27%, respectively, of the Utility segment's net investment of $855.2 million.
The Pipeline and Storage segment represents a net investment of $452.3 million in transmission and storage facilities at September 30, 1996. Transmission pipeline, with a net cost of $143.9 million, represents 32% of this segment's total net investment and includes 2,747 miles of pipeline required to move large volumes of gas throughout its service area. Storage facilities consist of 34 storage fields, 4 of which are jointly operated with certain pipeline suppliers, and 494 miles of pipeline. Included in the storage facilities net investment is $85.3 million of gas stored underground-

noncurrent, representing the cost of the gas required to maintain pressure levels for normal operating purposes as well as gas maintained for system balancing and other purposes, including that needed for no-notice transportation service. The Pipeline and Storage segment has 31 compressor stations with 73,450 installed compressor horsepower.
The Exploration and Production segment had a net investment in properties amounting to $376.0 million at September 30, 1996. Of this amount, Seneca's net investment in oil and gas properties in the Gulf Coast/West Coast regions was $319.0 million, and Seneca's net investment in oil and gas properties in the Appalachian region aggregated $57.0 million.
The Regulated Operations' facilities provided the capacity to meet its 1996 peak day sendout, including transportation service, of 1,982 MMcf, which occurred on February 4, 1996. Withdrawals from storage provided approximately 42% of the requirements on that day.
Company maps, which are included on the inside fold out cover of the paper copy of the combined Annual Report to Shareholders/Form 10-K, are narratively described in the Appendix to this electronic filing and are incorporated herein by reference.
Exploration and Production Activities
The information that follows is disclosed in accordance with SEC regulations, and relates to the Company's oil and gas producing activities. A further discussion of oil and gas producing activities is included in Item 8, Note L-Supplementary Information for Oil and Gas Producing Activities. Note L sets forth proved developed and undeveloped reserve information for Seneca. Supply Corporation holds reserves related to held for future use storage wells. Information on such reserves is included on Supply Corporation's Form 2 "Annual Report of Natural Gas Companies" and Form 15 "Annual Report of Gas Supply" filed with the FERC.
Seneca is not regulated by the FERC, and thus is not required to file Forms 2 and 15. Seneca's oil and gas reserves reported in Note L as of September 30, 1996, were estimated by Seneca's qualified geologists and engineers and were audited by independent petroleum engineers from Ralph E. Davis, Inc.
The following is a summary of certain oil and gas information taken from Seneca's records:

Production

For the Year Ended September 30                    1996      1995      1994
- -------------------------------                    ----      ----      ----

Average Sales Price per Mcf of Gas                $ 2.35    $ 1.67    $ 2.18

Average Sales Price per Barrel of Oil             $19.50    $16.16    $14.86

Average Production (Lifting) Cost per Mcf
  Equivalent of Gas and Oil Produced              $ 0.31    $ 0.44    $ 0.45

Productive Wells

At September 30, 1996                     Gas          Oil
- ---------------------                     ---          ---

Productive Wells - gross                 2,054         285
                 - net                   1,931         215

Developed and Undeveloped Acreage

At September 30, 1996
- ---------------------

Developed Acreage   - gross     602,684
                    - net       533,535

Undeveloped Acreage - gross     602,706
                    - net       563,827	

Drilling Activity

                                          Productive              Dry
                                      ------------------   ------------------
For the Year Ended September 30       1996   1995   1994   1996   1995   1994
                                      ----   ----   ----   ----   ----   ----

Net Wells Completed - Exploratory       3      5      5      7      0      4
                    - Development       7      6      8      0      0      0

Present Activities

At September 30, 1996
Wells in Process of Drilling - gross    4
                             - net      2	

There are currently no waterflood projects or pressure maintenance operations of material importance.
ITEM 3 Legal Proceedings
None
ITEM 4 Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the fourth quarter of 1996.
PART II
ITEM 5 Market for the Registrant's Common Stock and Related Shareholder Matters
Information regarding the market for the Registrant's common stock and related shareholder matters appears in Note D-Capitalization and Note K-Market for Common Stock and Related Shareholder Matters (unaudited), under Item 8 of this Form 10-K, and reference is made thereto.

ITEM 6 Selected Financial Data

Year Ended September 30:                1996        1995       1994        1993         1992
- -----------------------                 ----        ----       ----        ----         ----

Summary of Operations (Thousands)
Operating Revenues                  $1,208,017    $975,496  $1,141,324  $1,020,382    $920,450
                                    ----------    --------  ----------  ----------    --------
Operating Expenses:
  Purchased Gas                        477,357     351,094     497,687     409,005     363,690
  Operation and Maintenance            309,206     292,505     291,390     283,230     263,084
  Property, Franchise and Other
    Taxes                               99,456      91,837     103,788      95,393      89,158
  Depreciation, Depletion and
    Amortization                        98,231      71,782      74,764      69,425      55,726
  Income Taxes - Net                    66,321      43,879      47,792      41,046      35,231
                                     ---------    --------  ----------  ----------    --------
                                     1,050,571     851,097   1,015,421     898,099     806,889
                                     ---------    --------  ----------  ----------    --------
Operating Income                       157,446     124,399     125,903     122,283     113,561
Other Income                             3,869       5,378       3,656       4,833       5,790
                                     ---------    --------  ----------  ----------    --------
Income Before Interest Charges         161,315     129,777     129,559     127,116     119,351
Interest Charges                        56,644      53,883      47,124      51,899      59,041
                                     ---------    --------  ----------  ----------    --------
Income Before Cumulative Effect        104,671      75,894      82,435      75,217      60,310
Cumulative Effect of Changes in
  Accounting                                 -           -       3,237           -           -
                                     ---------    --------  ----------  ----------    --------
Net Income Available for Common
  Stock                               $104,671    $ 75,894  $   85,672  $   75,217    $ 60,310
                                      ========    ========  ==========  ==========    ========
Per Common Share Data
  Earnings                               $2.78       $2.03      $2.32*       $2.15       $1.94
  Dividends Declared                     $1.65       $1.60      $1.56        $1.52       $1.48
  Dividends Paid                         $1.64       $1.59      $1.55        $1.51       $1.47
  Dividend Rate at Year-End              $1.68       $1.62      $1.58        $1.54       $1.50
At September 30:
Number of Common Shareholders           21,640      21,429      22,465      22,893      23,218
                                        ======    ========  ==========  ==========    ========
Net Property, Plant and Equipment (Thousands)
Regulated:
  Utility                           $  855,161  $  822,764  $  787,794  $  754,466  $  719,755
  Pipeline and Storage                 452,305     463,647     443,622     436,547     423,383
                                    ----------  ----------  ----------  ----------  ----------
                                     1,307,466   1,286,411   1,231,416   1,191,013   1,143,138
                                    ----------  ----------  ----------  ----------  ----------
Nonregulated:
  Exploration and Production           375,958     339,950     295,418     273,470     261,446
  Other                                 26,167      22,690      18,579      16,209      11,670
                                    ----------  ----------  ----------  ----------  ----------
                                       402,125     362,640     313,997     289,679     273,116
                                    ----------  ----------  ----------  ----------  ----------
Corporate                                   15         131         137         122         128
                                    ----------  ----------  ----------  ----------  ----------
Total Net Plant                     $1,709,606  $1,649,182  $1,545,550  $1,480,814  $1,416,382
                                    ==========  ==========  ==========  ==========  ==========

Total Assets (Thousands)            $2,149,772  $2,036,823  $1,980,806  $1,801,540  $1,760,830
                                    ==========  ==========  ==========  ==========  ==========
Capitalization (Thousands)
Common Stock Equity                 $  855,998  $  800,588  $  780,288  $  736,245  $  632,333
Long-Term Debt, Net of Current
  Portion                              574,000     474,000     462,500     478,417     479,500
                                    ----------  ----------  ----------  ----------  ----------
Total Capitalization                $1,429,998  $1,274,588  $1,242,788  $1,214,662  $1,111,833
                                    ==========  ==========  ==========  ==========  ==========	

* 1994 includes Cumulative Effect of Changes in Accounting of $0.09. See Notes A and G to Consolidated Financial Statements.
ITEM 7 Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
1996 Compared with 1995
National Fuel's earnings were $104.7 million, or $2.78 per common share, in 1996. This compares with earnings of $75.9 million, or $2.03 per common share, in 1995.

The earnings increase in 1996 was attributable to higher earnings of the Company's Exploration and Production, Utility, and Pipeline and Storage segments, partly offset by lower earnings of the Other Nonregulated segment.
Exploration and Production earnings increased because of significant increases in natural gas and oil production combined with higher gas and oil prices. The earnings increase of the Utility segment reflects the positive impact of colder weather, new rates that became effective in September 1995 in both the New York and Pennsylvania jurisdictions, and the results of management's emphasis on controlling operation and maintenance expense. Also, purchased gas expense adjustments in the Utility segment's New York jurisdiction increased 1996 earnings. The Pipeline and Storage segment's earnings increase was attributable to the February 1996 Federal Energy Regulatory Commission (FERC) approval of Supply Corporation's rate case, which became effective on April 1, 1996 retroactive to June 1, 1995. In addition, 1995 Pipeline and Storage earnings included a reserve for previously deferred preliminary survey and investigation charges for the Laurel Fields Storage Project. Partly offsetting the increased earnings of the Pipeline and Storage segment were lower revenues related to unbundled pipeline sales and open access transportation. A special early retirement offer (SERO) to certain salaried, non-union hourly and union employees of both the Utility and Pipeline and Storage segments resulted in a reduction to 1996 earnings for both segments. The decrease in earnings of the Other Nonregulated segment was mainly attributable to withdrawing from an international energy project, which resulted in the expensing of certain pre-operating costs, as well as discontinuance of operations at the Company's pipeline construction subsidiary in 1995.
1995 Compared with 1994
National Fuel's earnings were $75.9 million, or $2.03 per common share, in 1995. This compares with earnings of $82.4 million, or $2.23 per common share in 1994 (before the cumulative effect of the mandated changes in accounting for income taxes and post-employment benefits, which added a net $3.2 million, or $0.09 per common share of earnings in 1994).
The earnings decrease in 1995 was attributable to lower earnings of the Company's Exploration and Production and Utility segments, partly offset by higher earnings of the Pipeline and Storage segment, Other Nonregulated segment, and Corporate operations.
Exploration and Production earnings declined because of low gas prices coupled with management's decision, based on those low gas prices, to delay Gulf Coast activity causing reduced levels of gas and oil production. The Utility segment's earnings suffered from the warm weather and the impact of lower normalized usage per residential and commercial account. Additionally, the Utility segment's New York jurisdiction recorded additional purchased gas expense associated with lost and unaccounted-for gas. The Pipeline and Storage segment earnings reflect increased revenues associated with unbundled pipeline sales and open access transportation. This increase in earnings was partly offset by higher operating and interest expense as well as the recording of a reserve for previously deferred preliminary survey and investigation charges for the Laurel Fields Storage Project. Increased earnings of the Company's Other Nonregulated segment resulted mainly from a gain on the sale of equipment, net of accrued expenses, by the Company's pipeline construction subsidiary. This sale pertained to a strategic decision to discontinue the operations of this subsidiary. The Company's gas marketing subsidiary also increased earnings on a year-to-year basis as a result of increased margins and an increase in customers. In addition, Corporate operations benefited from cost saving measures, including the relocation of corporate headquarters.

Operating Revenues
Year Ended September 30 (Thousands)           1996         1995       1994
- -----------------------------------------------------------------------------
Utility
  Retail Revenues:
    Residential                            $  678,395    $569,603  $  677,068
    Commercial                                165,824     137,869     177,249
    Industrial                                 25,648      18,269      31,096
- -----------------------------------------------------------------------------
                                              869,867     725,741     885,413
  Off-System Sales                             30,907      18,255       6,930
  Transportation                               49,180      37,183      34,419
  Other                                         4,372       4,885       4,911
- -----------------------------------------------------------------------------
                                              954,326     786,064     931,673
- -----------------------------------------------------------------------------
Pipeline and Storage
  Storage Service                              67,975      59,826      58,971
  Transportation                               92,401      88,766      90,416
  Other                                        16,177      15,995       3,734
- -----------------------------------------------------------------------------
                                              176,553     164,587     153,121
- -----------------------------------------------------------------------------
Exploration and Production                    114,462      56,232      70,261
Other Nonregulated                             68,930      57,075      72,036
- -----------------------------------------------------------------------------
                                              183,392     113,307     142,297
- -----------------------------------------------------------------------------
Less:  Intersegment Revenues                  106,254      88,462      85,767
- -----------------------------------------------------------------------------

Total Operating Revenues                   $1,208,017    $975,496  $1,141,324
=============================================================================

Operating Income (Loss) Before Income
  Taxes
Year Ended September 30 (Thousands)            1996        1995        1994
- -----------------------------------------------------------------------------
Utility                                      $115,257    $ 83,774    $ 90,584
Pipeline and Storage                           72,914      67,884      62,302
Exploration and Production                     46,408      16,404      21,767
Other Nonregulated                             (8,581)      3,021       2,505
Corporate                                      (2,231)     (2,805)     (3,463)
- -----------------------------------------------------------------------------

Total Operating Income Before Income
  Taxes                                      $223,767    $168,278    $173,695
=============================================================================

System Natural Gas Volumes
Year Ended September 30 (billion cubic feet)     1996      1995      1994
- -------------------------------------------------------------------------
Regulated Gas Sales
   Residential                                   90.7      79.9      90.6
   Commercial                                    24.9      22.2      26.9
   Industrial                                     6.0       4.8       6.5
   Off-System                                    11.1       9.4       3.3
- -------------------------------------------------------------------------
                                                132.7     116.3     127.3
- -------------------------------------------------------------------------
Nonregulated Gas Sales
   Gas Sales for Resale                             -       0.4       0.3
   Production (equivalent billion cubic feet)    49.2      25.4      29.5
- -------------------------------------------------------------------------
                                                 49.2      25.8      29.8
- -------------------------------------------------------------------------
Total Gas Sales                                 181.9     142.1     157.1
- -------------------------------------------------------------------------
Transportation
  Utility                                        58.2      52.8      52.2
  Pipeline and Storage                          325.0     290.8     296.6
  Nonregulated                                    0.6       2.5       1.4
- -------------------------------------------------------------------------
                                                383.8     346.1     350.2
- -------------------------------------------------------------------------
Marketing Volumes                                20.5      18.8      18.2
- -------------------------------------------------------------------------
Less Intersegment Volumes:
  Transportation                                156.7     154.2     164.8
  Production                                      4.8       5.0       2.5
  Gas Sales                                       0.8         -       0.1
  Marketing                                       0.1         -         -
- -------------------------------------------------------------------------
                                                162.4     159.2     167.4
- -------------------------------------------------------------------------
Total System Natural Gas Volumes                423.8     347.8     358.1
=========================================================================	

Utility
Operating Revenues
1996 Compared with 1995
Operating revenues increased $168.3 million in 1996 compared with 1995. This increase reflects general rate increases of $14.2 million and $6.0 million, respectively, in the New York and Pennsylvania rate jurisdictions, effective in September 1995. The increase also reflects the recovery of increased gas costs mainly because of higher gas sales of 16.4 billion cubic feet (Bcf) as well as a 25% increase in the average cost of purchased gas (see discussion of purchased gas below under the heading "Purchased Gas"). In addition, higher transportation volumes of 5.4 Bcf contributed to the increase in operating revenues. The increase in gas sales and transportation volumes can be attributed mainly to weather in Distribution Corporation's service territory that was, on average, 16.7% colder than the prior year. Transportation volumes also increased as a result of new customers and increased production at various manufacturing facilities in Distribution Corporation's service territory which more than offset lower transportation volumes to a cogeneration customer. The increase in off-system sales reflects the continued utilization of available capacity on the upstream pipelines serving Distribution Corporation and other customers from the southwestern to northeastern regions of the United States. Distribution Corporation, in each of its jurisdictions, has a mechanism whereby it retains a portion of the margin on these off-system sales.
1995 Compared with 1994
Operating revenues decreased $145.6 million in 1995 compared with 1994. This decrease reflects the recovery of decreased gas costs mainly because of lower gas sales of 11.0 Bcf as well as a 15% decline in the average cost of purchased gas.
The decline in residential and commercial gas sales of 15.4 Bcf can be attributed mainly to weather in Distribution Corporation's service territory that was, on average, 12.3% warmer than 1994. The decline in industrial volumes of 1.7 Bcf reflects lower sales to a cogeneration customer. These declines were partly offset by an increase in off-system gas sales of 6.1 Bcf.
Operating Income
1996 Compared with 1995
Operating income before income taxes increased $31.5 million in 1996 compared with 1995. The increase reflects higher gas revenue, as discussed above. It also reflects certain purchased gas cost adjustments associated with lost and unaccounted-for gas in Distribution Corporation's New York jurisdiction. In the New York jurisdiction, an annual reconciliation of purchased gas costs is performed in August of each year. Based on this reconciliation, an amount is determined that is either over or under the amount that is allowed to be recovered by the Public Service Commission of the State of New York (PSC). Any amount over the recoverable amount increases purchased gas expense and any amount under the recoverable amount decreases purchased gas expense. In 1995, this reconciliation resulted in an additional $4.3 million of purchased gas expense. However, based upon a recently completed thorough review by the Company, it was determined that the estimated additional purchased gas expense recognized in 1995 was overstated by $6.5 million. Therefore, purchased gas expense for 1996 was reduced to reflect this adjustment. In 1996, the annual reconciliation of purchased gas costs also resulted in the recognition of purchased gas expense for excess lost and unaccounted-for gas. The amount charged to purchased gas expense in 1996 based on the 1996 reconciliation was $2.3 million. The net impact of these purchased gas cost adjustments was to reduce 1996 purchased gas expense by $4.2 million.
Offsetting the net increases discussed above was the impact of the SERO offered to certain salaried, non-union hourly and union employees of Distribution Corporation. The SERO resulted in additional operating expenses in the Utility segment of $6.4 million in 1996. The SERO was undertaken as a means to reduce future costs.

The impact of weather on Distribution Corporation's New York rate jurisdiction is tempered by a weather normalization clause (WNC). The WNC in New York, which covers the eight-month period from October through May, has had a stabilizing effect on pretax operating income and earnings for the New York rate jurisdiction. In addition, in periods of colder than normal weather, the WNC benefits Distribution Corporation's New York customers. In 1996, the WNC in New York resulted in a benefit to customers of $10.6 million as weather, overall, was colder than normal for the period of October 1995 through May 1996. Since the Pennsylvania rate jurisdiction does not have a WNC, uncontrollable weather variations directly impact pretax operating income and earnings. In the Pennsylvania service territory, weather was 17.1% colder than last year and 8.1% colder than normal. The colder weather in 1996 compared with 1995 had a positive impact on the Pennsylvania rate jurisdiction's pretax operating income of approximately $7.6 million, of which approximately $3.9 million relates to colder than normal weather in 1996 and approximately $3.7 million is because 1995 was warmer than normal.
1995 Compared with 1994
Operating income before income taxes decreased $6.8 million in 1995 compared

with 1994. This decrease reflects the lower gas sales,  discussed above, coupled
with higher  operating  expenses.  Although  Distribution  Corporation  received
general rate  increases in New York and  Pennsylvania  in July 1994 and December
1994, respectively, the weather related reduction in volumes sold, especially in
the   Pennsylvania   jurisdiction,   negatively   impacted   margins.   In  both
jurisdictions,  lower  normalized  usage per residential and commercial  account
than was established in the ratemaking  process also contributed to lower pretax
operating income. In addition,  Distribution Corporation's annual reconciliation
of purchased  gas costs in its New York  jurisdiction,  performed in August each
year,  determined  an amount of lost and  unaccounted-for  gas in excess of that
allowed to be recovered by the PSC. The Utility segment recognized an additional
$4.3 million of purchased gas expense as a result of this reconciliation.

         In 1995, the WNC in New York preserved  pretax operating income of $8.2
million as  weather,  overall,  was warmer than normal for the period of October
1994 through May 1995. In the Pennsylvania service territory,  weather was 14.2%
warmer  than 1994 and 5.8%  warmer  than  normal.  The  warmer  weather  in 1995
compared with 1994 had a negative impact on pretax operating income and earnings
for the Pennsylvania rate jurisdiction.

Degree Days
                                                             Percent Colder
                                                             (Warmer) Than
                                                           -------------------
Year Ended September 30         Normal     Actual          Normal    Last Year
- ------------------------------------------------------------------------------
  1996:  Buffalo                6,728      7,203            7.1%      16.5%
         Erie                   6,258      6,764            8.1%      17.1%
- ------------------------------------------------------------------------------
  1995:  Buffalo                6,693      6,181           (7.6%)    (11.4%)
         Erie                   6,128      5,774           (5.8%)    (14.2%)
- ------------------------------------------------------------------------------
  1994:  Buffalo                6,710      6,975            3.9%       3.6%
         Erie                   6,202      6,726            8.4%       9.6%
- ------------------------------------------------------------------------------	

Purchased Gas
The cost of purchased gas is by far the Company's single largest operating expense. Annual variations in purchased gas costs can be attributed directly to changes in gas sales volumes, the price of gas purchased and the operation of purchased gas adjustment clauses.
Currently, Distribution Corporation has contracted for long-term firm transportation capacity with Supply Corporation and five other upstream pipeline companies, for long-term gas supplies with a combination of producers and marketers and for storage service with Supply Corporation and three nonaffiliated companies. In addition, Distribution Corporation can satisfy a portion of its gas requirements through spot market purchases. Changes in wellhead prices have a direct impact on the cost of purchased gas. Distribution Corporation's average cost of purchased gas, including the cost of transportation and storage, was $3.98 per thousand cubic feet (Mcf) in 1996, an increase of 25% from the average cost of $3.19 per Mcf in 1995. The average cost of purchased gas in 1995 was 15% lower than the $3.74 per Mcf in 1994.

Pipeline and Storage
Operating Revenues
1996 Compared with 1995
Operating revenues increased $12.0 million in 1996 compared with 1995. Higher transportation and storage revenues reflect the impact of a $6.0 million rate increase effective on April 1, 1996 retroactive to June 1, 1995. The retroactive rates added approximately $2.0 million to revenues in 1996 that relate to 1995. Higher volumes of gas transported as well as certain surcharge adjustments also increased revenues in 1996. Other operating revenues increased only slightly, but include an increase of approximately $4.6 million related to cashouts (a cash resolution of a gas imbalance whereby a customer pays Supply Corporation for gas it receives in excess of amounts delivered into Supply Corporation's system by the customer's shipper). Cashout revenues are offset by purchased gas expense. A decrease of approximately $4.4 million related to unbundled pipeline sales and open access transportation reduced other operating revenue for the year.
1995 Compared with 1994
Operating revenues increased $11.5 million in 1995 compared with 1994. The increase reflects the application of a final rule issued by the FERC in September 1995, which addressed and clarified financial reporting aspects for unbundled pipeline sales and open access transportation.
Operating Income
1996 Compared with 1995
Operating income before income taxes increased $5.0 million in 1996 compared with 1995. This increase reflects the revenue increase discussed above as well as the recording of a $3.7 million reserve in the fourth quarter of 1995 for previously deferred preliminary survey and investigation charges for the Laurel Fields Storage Project, as discussed below. Partly offsetting the increase was the impact of higher operating expenses, including the SERO offered to certain salaried, non-union hourly and union employees of Supply Corporation. The SERO resulted in additional operating expenses in the Pipeline and Storage segment of $1.8 million in 1996. The SERO was undertaken as a means to reduce future costs.
1995 Compared with 1994
Operating income before income taxes increased $5.6 million in 1995 compared with 1994. This increase reflects the increase in operating revenues discussed above, offset in part by higher operating expenses and the recording of a reserve in the amount of $3.7 million for previously deferred preliminary survey and investigation charges for the Laurel Fields Storage Project. This project was delayed as there was not sufficient interest to proceed with the project at the time.
Exploration and Production
Operating Revenues
1996 Compared with 1995
Operating revenues increased $58.2 million in 1996 compared with 1995. This increase reflects higher natural gas and oil production coupled with increased prices for both. As indicated in the tables below, natural gas production rose to a level of 38.8 Bcf, an 85% increase over the prior year. Oil production of 1,742,000 barrels (bbls) was more than twice the prior year production. Last year, natural gas and oil production was delayed when prices were low in order to preserve the value received for reserves. Increased production continues to be driven by this segment's Gulf Coast program. Offshore finds at West Cameron 552 and Vermilion 252 and the acquisition of West Delta Block 30 in September 1995 are the major contributors to production increases for the year. In the West Coast program, the production increases are primarily a result of the 1995 Hamp Lease acquisition in California. Weighted average prices received for this segment's natural gas production increased by $0.68 per Mcf to $2.35 per Mcf and the weighted average prices received for oil production increased $3.34

per bbl to $19.50 per bbl. These prices do not reflect gains and losses from hedging activities. For 1996, this segment recognized a pre-tax loss on hedging of approximately $11.8 million compared with a pre-tax gain of $6.9 million in 1995. Gains or losses on hedging activities are offset by lower or higher prices received for actual natural gas and crude oil production. The Company utilizes its hedging program to manage a portion of the market risk associated with fluctuations in the price of natural gas and crude oil thereby providing more stability to the operating results of this business segment.
1995 Compared with 1994
Operating revenues decreased $14.0 million in 1995 compared with 1994. This decrease reflects lower natural gas prices and management's decision to delay production activity in its Gulf Coast operations based on the decrease in prices. Natural gas production decreased 2.3 Bcf, or 10%, 2.0 Bcf of which occurred in the Gulf Coast operations. In addition, the weighted average price received for natural gas in 1995 decreased $0.51 per Mcf, or 23%. Oil production was down 291,000 barrels, or 28%. This drop reflects natural depletion and lower condensate production related to decreased gas production. Although the weighted average price received for oil in 1995 increased 9%, this was not enough to offset the lower production level. The fluctuations in prices noted above do not include the impact of hedging activities. A pre-tax gain of approximately $6.9 million was recognized from hedging activities in 1995.

Production Volumes
Year Ended September 30           1996      1995      1994
- -----------------------------------------------------------

Gas Production
(million cubic feet)
  Gulf Coast                     32,355    14,294    16,296
  West Coast                        990       840       706
  Appalachia                      5,422     5,808     6,271
- -----------------------------------------------------------
                                 38,767    20,942    23,273
===========================================================

Oil Production
(thousands of barrels)
  Gulf Coast                      1,195       287       615
  West Coast                        533       433       404
  Appalachia                         14        19        11
- -----------------------------------------------------------
                                  1,742       739     1,030
===========================================================

Weighted Average Prices
Year Ended September 30           1996      1995      1994
- ----------------------------------------------------------

Weighted Average Gas Price/Mcf
  Gulf Coast                      $2.33     $1.56     $2.03
  West Coast                      $1.25     $1.33     $1.58
  Appalachia                      $2.65     $2.01     $2.65
  Weighted Average Price          $2.35     $1.67     $2.18
- ------------------------------------------------------------

Weighted Average Oil Price/bbl
  Gulf Coast                     $20.45    $16.94    $15.54
  West Coast                     $17.41    $15.66    $13.79
  Appalachia                     $18.43    $15.72    $15.92
  Weighted Average Price         $19.50    $16.16    $14.86

Operating Income	

1996 Compared with 1995
Operating income before income taxes increased $30.0 million in 1996 compared with 1995. This increase reflects the higher operating revenues discussed above, partly offset by higher depletion expense, which is directly related to higher revenues. Higher other operating expense (lease operating expenses and production taxes) due to increased production also partly offset the increase in revenues.

1995 Compared with 1994
Operating income before income taxes decreased $5.4 million in 1995 compared with 1994. This decrease reflects the lower revenues discussed above, partly offset by lower depletion expense. Lower other operating expense (lease operating expenses and production taxes) also partly offset the decrease in revenues.
Other Nonregulated
Operating Revenues
1996 Compared with 1995
Operating revenues increased $11.9 million in 1996 compared with 1995. The increase primarily reflects higher operating revenues from NFR, the Company's gas marketing subsidiary, largely because of an increase in marketing volumes and higher natural gas prices. Offsetting this increase was a decrease in operating revenues from UCI, the Company's discontinued pipeline construction subsidiary.
1995 Compared with 1994
Operating revenues decreased $15.0 million in 1995 compared with 1994. This decrease reflects lower operating revenues from UCI as a result of management's decision to discontinue its pipeline construction operations. The decrease also reflects lower revenues from NFR largely because of lower natural gas prices in 1995 compared with 1994.
Operating Income
1996 Compared with 1995
The Other Nonregulated segment experienced an operating loss before income taxes of $8.6 million in 1996 compared with operating income before income taxes of $3.0 million in 1995. Horizon, the Company's foreign and domestic energy projects subsidiary, was the main factor in this decrease. In August 1996, Horizon withdrew from participation in the development of a 151 megawatt power plant near Kabirwala, Punjab Province, in east-central Pakistan (Kabirwala Project). As a result of this withdrawal, certain pre-operating costs were charged to earnings. Total pre-tax charges in 1996 associated with the Kabirwala Project were approximately $9.0 million. UCI also experienced a significant decrease in operating income before income taxes as a result of discontinuing its pipeline construction operations late in 1995. NFR experienced an increase in operating income before income taxes based primarily on increased volumes marketed.
1995 Compared with 1994
Operating income before income taxes increased $0.5 million in 1995 compared with 1994. This increase can be attributed to improved performance by NFR as a result of improved margins and an increase in customers combined with better performance by UCI prior to the discontinuance of its pipeline construction operations.
Income Taxes, Other Income and Interest Charges
Income Taxes
Income taxes increased $22.4 million in 1996 mainly because of an increase in pretax income. The opposite was true in 1995 as income taxes decreased because of a decrease in pretax income. Income taxes in 1996 and 1995 reflect lower
Section 29 nonconventional fuel tax credits. These credits, which relate to production from qualified gas wells drilled by December 31, 1992, decreased to $0.5 million in 1996 from $0.9 million in 1995 and $1.7 million in 1994. These credits are a direct reduction of income tax expense.
Other Income
Other income decreased $1.5 million in 1996, primarily because other income in 1995 reflected a gain of $2.5 million recorded by UCI on the sale of its pipeline construction equipment. The sale of the equipment resulted from management's decision to discontinue its pipeline construction operations.

Interest Charges
Interest on long-term debt did not change significantly in 1996 and increased $4.2 million in 1995. Although there was a higher average amount of long-term debt outstanding in 1996 compared with 1995, this was offset by a lower average interest rate. The increase in 1995 can be attributed to a higher average amount of long-term debt in 1995 compared with 1994.
Other interest charges increased $2.8 million and $2.6 million, respectively, in 1996 and 1995. The increase in 1996 resulted primarily from a higher average balance of outstanding short-term borrowings offset partly by a lower weighted average interest rate on such borrowings. The increase in 1995 resulted primarily from an increase in the weighted average interest rate on short-term borrowings, partly offset by lower average outstanding balances. Additionally, both 1996 and 1995 experienced an increase in interest expense as a result of interest on Amounts Payable to Customers.
Capital Resources and Liquidity
The primary sources and uses of cash during the last three years are summarized in the following condensed statement of cash flows:

Sources (Uses) of Cash
Year Ended September 30 (in millions)      1996      1995     1994
- -------------------------------------------------------------------
Provided by Operating Activities          $168.5    $174.4   $199.8
Capital Expenditures                      (171.6)   (182.8)  (135.1)
Short-Term Debt, Net Change                 52.1      35.1    (84.3)
Long-Term Debt, Net Change                  11.2       3.1     79.5
Issuance of Common Stock                     9.0       2.5      9.1
Common Dividends                           (61.2)    (59.2)   (57.2)
Other Investing Activities                  (1.4)     10.6      3.6
- -------------------------------------------------------------------
Net Increase (Decrease) in Cash
  and Temporary Cash Investments            $6.6    $(16.3)  $ 15.4
===================================================================	

Operating Cash Flow
Internally generated cash from operating activities consists of net income available for common stock, adjusted for noncash expenses, noncash income and changes in operating assets and liabilities. Noncash items include depreciation, depletion and amortization, deferred income taxes and allowance for funds used during construction. In 1994, noncash items also included the cumulative effect of required changes in accounting for income taxes and post-employment benefits.
Cash provided by operating activities in the Utility and Pipeline and Storage segments may vary substantially from year to year because of the impact of rate cases. In the Utility segment, supplier refunds, over- or under-recovered purchased gas costs and weather also significantly impact cash flow. The Company considers supplier refunds and over-recovered purchased gas costs as a substitute for short-term borrowings. The impact of weather on cash flow is tempered in the Utility segment's New York rate jurisdiction by its WNC and in the Pipeline and Storage segment by Supply Corporation's straight fixed-variable (SFV) rate design.
Net cash provided by operating activities totalled $168.5 million in 1996, a decrease of $5.9 million compared with the $174.4 million provided by operating activities in 1995. This decrease reflects higher receivable balances, mainly in the Utility and Exploration and Production segments, and a decrease in amounts owed to customers in the Utility segment. These are offset partly by higher net income and higher payable balances in the Utility and Exploration and Production segments.

Investing Cash Flow
Capital Expenditures
Capital expenditures totalled $171.6 million in 1996. The table below presents these expenditures by business segment:

Year Ended September 30 (in millions)        1996
- -------------------------------------------------
Utility                                    $ 63.7
Pipeline and Storage                         22.3
Exploration and Production                   83.6
Other Nonregulated                            3.2
- -------------------------------------------------
                                            172.8
- -------------------------------------------------
Intersegment Elimination                     (1.2)
- -------------------------------------------------
                                           $171.6
=================================================	

Most of the Utility segment's capital expenditures were for the replacement of mains and main extensions, as well as for the replacement of service lines and, to a minor extent, the installation of new services.
The bulk of the Pipeline and Storage segment's capital expenditures were made for additions, improvements and replacements to this segment's transmission and storage systems.
The Exploration and Production segment spent approximately $60.2 million on its offshore program in the Gulf of Mexico, including offshore lease acquisitions and drilling and construction expenditures. Lease acquisitions included the acquisition of Galveston Block 225, Vermilion 309, and Viosca Knoll 432 through federal lease sales.
Approximately $23.4 million was spent on the Exploration and Production segment's onshore program, including horizontal drilling in central Texas and recompletion activity in California.
Finding and development costs, which exclude the effect of property purchases and sales and provides an indicator of the efficiency and performance of a company's drilling program, were $1.25 per Mcf equivalent in 1996. Going back to 1991, the inception of Seneca's offshore program, the six-year average of finding and development costs is $0.98 per Mcf equivalent.
Other Nonregulated capital expenditures consisted primarily of timberland purchases.
The Company's estimated capital expenditures for the next three years

are:1

Year Ended September 30 (in millions)      1997       1998      1999
- --------------------------------------------------------------------
Utility                                   $61.9      $57.9     $56.9
Pipeline and Storage                       31.6       28.0      20.5
Exploration and Production                116.2      116.0     115.9
Other Nonregulated                          4.3        4.3       4.3
- --------------------------------------------------------------------
                                         $214.0     $206.2    $197.6
====================================================================	

Estimated expenditures for the Utility segment during the next three years will be concentrated in the areas of main replacements and extensions, service line replacements and, to a minor extent, the installation of new services.1
Estimated expenditures for the Pipeline and Storage segment in 1997 will be concentrated in the reconditioning of storage wells and the replacement of storage and transmission lines.1 Approximately $6.4 million is included in the 1997 budget for the proposed 1997 Niagara Expansion Project, which would provide approximately 47.3 million cubic feet (MMcf) per day of firm winter capacity and 21.0 MMcf per day of firm non-winter capacity from the Niagara Falls, New York import point to interconnections at Leidy and Wharton, Pennsylvania.1 An additional $4.9 million is included in the 1998 budget for this proposed project.1 An open season was recently completed to ascertain

customer interest in the proposed 1998/1999 Niagara Expansion Project, which would expand transportation capacity from the Canadian border at Niagara Falls, New York, to Leidy, Pennsylvania, by 250 - 500 MMcf per day.1 The preliminary interest indicated the Company is substantially oversubscribed for such a project. At an expansion level of 500 MMcf per day, the total project cost is estimated to be approximately $240 million over a two-year period.1 However, no amount has been included in the budget for this proposed project as the timing of the "go-ahead" will depend on several factors, the major one being the number of signed precedent agreements received as a result of the open season.1
Estimated capital expenditures in 1997 for the Exploration and Production segment are approximately 39% higher than capital spending in 1996 as the Company sees significant opportunities for growth in this segment.1 These expenditures will be directed mainly toward developing Seneca's Gulf Coast offshore prospects, reserve acquisitions and significantly expanding exploration activities.1 In late September 1996, Seneca was the high bidder on five of twelve bids placed at the federal Western Gulf of Mexico Sale 161. Two of those leases have been awarded. In October 1996, Seneca was the successful bidder on five state tracts in Texas state waters. At the State of Louisiana lease sale held in October 1996, Seneca's bid on 1,229.55 acres in the Eugene Island area was accepted.
The Company's capital expenditure program is under continuous review. The amounts are subject to modification for opportunities such as the acquisition of attractive oil and gas properties or storage facilities and the expansion of transmission line capacities. While the majority of capital expenditures in the Utility segment are necessitated by the continued need for replacement and upgrading of mains and service lines, the magnitude of future capital expenditures in the Company's other business segments depends, to a large degree, upon market conditions.1
Other Investing Activities
Other cash provided by or used in investing activities reflects cash received on the sale of the Company's investment in property, plant and equipment and cash used for other investments.
The Company is continuing to pursue investment opportunities in the international arena.1 On June 25, 1996, Horizon purchased Beheer-en-Beleggingsmaatschappij Bruwabel B.V. (Bruwabel). Bruwabel is a Dutch company that in turn directly or indirectly owns three Czech corporations. Bruwabel's principal assets are a power development group, which is involved in development initiatives for the conversion of district heating plants into cogeneration facilities, and a district heating plant located in the eastern part of the Czech Republic. Horizon plans to convert the heating plant to a combined-cycle cogeneration facility, with electrical output of up to 50 Megawatts.1
In November 1996, Supply Corporation entered into a Memorandum of Understanding (the MOU) with Green Canyon Gathering Company, a subsidiary of Tenneco Energy, regarding a project to develop, construct, own and operate natural gas gathering and processing facilities offshore and onshore Louisiana (the Project). The total cost of the Project is estimated at approximately $200 million.1 The MOU provides for the parties to (i) share past and future development costs for the Project through January 1, 1997, and thereafter as agreed by the parties, (ii) negotiate toward definitive agreements to be signed about January 1, 1997, to form one or more 50-50 partnerships, and (iii) negotiate toward definitive agreements to finance, develop, build, own and operate the Project. If the definitive agreements are not executed, or if the Project is not constructed, Supply Corporation's share of the development costs through January 1, 1997 is estimated not to exceed $2 million, for which it is unlikely Supply Corporation would be reimbursed.1 Supply Corporation intends to use short-term borrowings to finance construction of the Project.1
Financing Cash Flow
In order to meet the Company's capital requirements, cash from external sources must periodically be obtained through short-term bank loans and

commercial paper, as well as through issuances of long-term debt and equity securities. The Company expects these traditional sources of cash to continue to supplement its internally generated cash during the next several years.1
The Company retired $88.5 million of maturing medium-term notes during 1996. In December 1995, the Company retired $38.5 million of 8.90% medium-term notes and $20.0 million of 8.875% medium-term notes. In September 1996, the Company retired $30.0 million of 4.53% medium-term notes. Short-term borrowings were used to retire these notes.
In March 1996, the Company issued $100.0 million of 5.58% medium-term notes due in March 1999. After reflecting underwriting discounts and commissions, the net proceeds to the Company amounted to $99.7 million.
The Company's embedded cost of long-term debt was 7.0% and 7.3% at September 30, 1996 and 1995, respectively.
Consolidated short-term debt increased $52.1 million during 1996. The Company continues to consider short-term bank loans and commercial paper important sources of cash for temporarily financing capital expenditures, gas-in-storage inventory, unrecovered purchased gas costs, exploration and development expenditures and other working capital needs. In addition, the Company considers supplier refunds and over-recovered purchased gas costs as a substitute for short-term debt. Fluctuations in these items can have a significant impact on the amount and timing of short-term debt.
The Company's present liquidity position is believed to be adequate to satisfy known demands.1 Under the Company's covenants contained in its indenture covering its long-term debt, as amended, the Company would have been permitted to issue up to a maximum of approximately $689.0 million in additional long-term unsecured indebtedness at September 30, 1996, in light of then current long-term interest rates. In addition, at September 30, 1996, the Company had regulatory authorizations and unused short-term credit lines that would have permitted it to borrow an additional $400.3 million of short-term debt.
The Company currently has authorization from the Securities and Exchange Commission (SEC) under the Public Utility Holding Company Act of 1935, as amended, to issue and sell up to $150.0 million of debentures and/or medium-term notes. The amounts and timing of the issuance and sale of these debentures and/or medium-term notes will depend on market conditions and the requirements of the Company.1 The Company expects that it will issue new debentures and/or medium-term notes late in calendar 1997 to retire $50.0 million of 6.42% medium-term notes maturing in November 1997.1
The Company, through Seneca, has entered into certain price swap agreements to manage a portion of the market risk associated with fluctuations in the market price of natural gas and crude oil. These price swap agreements are not held for trading purposes. During 1996, Seneca utilized natural gas and crude oil price swap agreements with notional amounts of 23.0 equivalent Bcf and 1,071,000 equivalent bbl, respectively. These hedging activities resulted in the recognition of a pre-tax loss of approximately $11.8 million. This loss was offset by higher prices received for actual natural gas and crude oil production.
At September 30, 1996, Seneca had natural gas price swap agreements outstanding with a notional amount of approximately 35.7 equivalent Bcf at prices ranging from $1.71 per Mcf to $2.10 per Mcf. The weighted average fixed price of these swap agreements is approximately $1.93 per Mcf. Seneca also had crude oil price swap agreements outstanding at September 30, 1996 with a notional amount of 1,818,000 equivalent bbl at prices ranging from $17.40 per bbl to $18.71 per bbl. The weighted average fixed price of these swap agreements is approximately $17.96 per bbl.
In addition, the Company has SEC authority to enter into certain interest rate swap agreements. For further discussion of the Company's derivative financial instruments, see disclosure in Note F - Financial Instruments under the heading "Derivative Financial Instruments" in Item 8 of this report.

The Company's credit risk is the risk of loss that the Company would incur as a result of nonperformance by counterparties pursuant to the terms of their contractual obligations related to investments, such as temporary cash investments and cash surrender values of insurance contracts, and derivative financial instruments. The Company does not anticipate any material impact to its financial position, results of operations or cash flow as a result of nonperformance by counterparties.1 See further discussion in Note F-Financial Instruments under the heading "Credit Risk" in Item 8 of this report.
The Company is involved in litigation arising in the normal course of its business. In addition to the regulatory matters discussed in Note B - Regulatory Matters, in Item 8 of this report, the Company is involved in other regulatory matters arising in the normal course of business that involve rate base, cost of service and purchased gas cost issues. While the resolution of such litigation or other regulatory matters could have a material effect on earnings and cash flows in the year of resolution, neither this litigation nor these other regulatory matters are expected to materially change the Company's present liquidity position nor have a material adverse effect on the financial condition of the Company at this time.1
Rate Matters
Utility Operation
New York Jurisdiction
In November 1995, Distribution Corporation filed in its New York jurisdiction a request for an annual rate increase of $28.9 million with a requested return on equity of 11.5%. A two-year settlement with the parties in this rate proceeding has been approved by the PSC. The settlement calls for annual base rate increases of $7.2 million in each of fiscal years beginning October 1, 1996 and 1997 with no specified rate of return on equity. Generally, earnings above a 12% return on equity (excluding certain items and determined on a cumulative basis over the three years ending September 30, 1998) will be shared equally between shareholders and ratepayers. However, the settlement includes a number of incentives which would impact return on equity. Distribution Corporation may earn a maximum of 25 basis points or incur a maximum penalty of 50 basis points on common equity based on its customer service. The incentives relate to customer satisfaction, customer complaints, appointments, new service installations, telephone response, adjusted bills and estimated meter readings. In addition, there is a gas cost incentive mechanism designed to compare Distribution's spot gas purchases to monthly gas cost targets. Certain costs above the targets and savings below the targets will be shared equally between Distribution Corporation and its customers.
In October 1994, Distribution Corporation filed in its New York jurisdiction a request for an annual rate increase of $56.5 million with a requested return on equity of 12.85%. In September 1995, the PSC issued an order authorizing a base rate increase of $14.2 million with a return on equity of 10.4%. The new rates became effective as of September 20, 1995. The order included certain incentive mechanisms that allowed the PSC to administer penalties determined by Distribution Corporation's ability to maintain required performance levels. The incentives related to: response time to customer inquiries and complaints; billing accuracy; keeping appointments for service; and efficiency in the installation of new service lines. Distribution Corporation did not incur any penalties as a result of these incentive mechanisms.
Pennsylvania Jurisdiction
Distribution Corporation currently does not have a rate case on file with the Pennsylvania Public Utility Commission (PaPUC). Management will continue to monitor its financial position in the Pennsylvania jurisdiction to determine the necessity of filing a rate case in the future.
On March 15, 1995, Distribution Corporation filed in its Pennsylvania jurisdiction a request for an annual rate increase of $22.0 million with a return on equity of 13.25%. In September 1995, the PaPUC approved a settlement authorizing a base rate increase of $6.0 million with no specified rate of return on equity. The new rates became effective as of September 27, 1995.

General rate increases in both the New York and Pennsylvania jurisdictions do not reflect the recovery of purchased gas costs. Such costs are recovered through operation of the purchased gas adjustment clauses.
State Regulatory Environment
The New York and Pennsylvania regulatory commissions have instituted several generic proceedings related to, among other things, restructuring in response to the FERC's Order 636. Distribution Corporation is working closely with the state regulatory commissions to resolve the complexities of industry restructuring. The more significant proceedings, all of which are still pending, are discussed below:
New York
Finance Proceeding. The purpose of this proceeding is to develop a uniform method for calculating a utility's rate of return on equity.
Ratesetting Proceeding. This proceeding is intended to develop guidelines for settlements, incentive ratemaking and multi-year rate filings, in addition to the traditional single-year procedure. Thus, a menu of options would be available for each utility to select the appropriate ratemaking proposal.
Generic Restructuring Proceeding. This proceeding is examining the appropriate retail or end-use impacts resulting from the FERC's Order 636 pipeline restructuring. On March 28, 1996, the PSC issued an order directing the state's LDC's, including Distribution Corporation, to file additional tariff amendments regarding this proceeding. On April 30, 1996, Distribution Corporation submitted a filing, effective May 1, 1996 on a temporary basis, proposing to amend its services to provide a framework for small customer aggregation in compliance with the PSC's March 28, 1996 Order (Distribution Corporation already offers unbundled, flexible service to its commercial and industrial customers). The changes provide the option for all customers to choose from whom they want to buy gas, which could be Distribution Corporation, another utility, or a non-utility supplier or marketer. If a customer purchases gas from a supplier other than Distribution Corporation, the supplier would obtain and transport the gas to Distribution Corporation's pipeline system and Distribution Corporation would then deliver the gas to the customer. Distribution Corporation would continue to be responsible for maintaining its pipelines and responding to safety calls, but billing and other traditional services would be assumed by the alternate supplier. On September 12, 1996, the PSC issued an order approving the April 30, 1996 filing, subject to additional changes. Further revisions were filed as directed for an effective date of October 1, 1996. Additional changes in retail services are anticipated as this proceeding continues.1
Generic Affordability/Gas Cost Incentive Proceeding. This proceeding was established to investigate the development of guidelines for "affordable" natural gas utility service and, on a separate track, an appropriate gas cost incentive mechanism. However, guidelines on affordability and gas cost incentive mechanisms are currently being addressed by the PSC on a case-by-case basis.
Pennsylvania
FERC Order 636 Proceedings. The PaPUC has thus far responded to the FERC's Order 636 with three generic proceedings addressing different operational areas. They are proceedings on transportation services, gas procurement practices (including a gas purchase incentive mechanism) and capacity release. Distribution Corporation has already implemented many of the proposed changes in previous rate cases and expects that additional changes will not significantly alter current operations.1
Pipeline and Storage
For a discussion of Supply Corporation's gathering rates, refer to Note B - Regulatory Matters in Item 8 of this report.
On October 31, 1994, Supply Corporation filed for an annual rate increase of $21.0 million, with a requested return on equity of 12.6%. In

February 1996, the FERC approved a settlement authorizing an annual rate increase of approximately $6.0 million with a return on equity of 11.3%. The new rates were put into effect on April 1, 1996, retroactive to June 1, 1995. With this settlement, Supply Corporation agreed not to seek recovery for increased cost of service until April 1, 1998.
As part of the settlement discussed above, Supply Corporation also agreed not to seek recovery of revenues related to certain terminated service from other storage customers until April 1, 2000, as long as the terminations were not greater than approximately 30% of the terminable service. Supply Corporation did receive notification of the termination of 3.3 Bcf of such service, effective March 31, 1996. However, Supply Corporation has successfully obtained executed contracts for all 3.3 Bcf at discounted prices. Such discounts will not have a material impact on the results of operations for Supply Corporation.1 An open season was recently completed concerning an additional 2.1 Bcf of such storage service, which will become available on April 1, 1997. Supply Corporation obtained executed contracts for 1.0 Bcf of this storage service at discounted prices and will continue to market the remaining 1.1 Bcf. Management does not anticipate a problem in marketing the remaining 1.1 Bcf.1
Other Matters
Environmental Matters
The Company is subject to various federal, state and local laws and regulations relating to the protection of the environment. The Company has established procedures for on-going evaluation of its operations to identify potential environmental exposures and assure compliance with regulatory policies and procedures.
It is the Company's policy to accrue estimated environmental clean-up costs when such amounts can reasonably be estimated and it is probable that the Company will be required to incur such costs. Distribution Corporation has estimated that clean-up costs related to several former manufactured gas plant sites and several other waste disposal sites are in the range of $8.7 million to $10.1 million.1 At September 30, 1996, Distribution Corporation has recorded the minimum liability of $8.7 million. The ultimate cost to Distribution Corporation with respect to the remediation of these sites will depend on such factors as the remediation plan selected, the extent of the site contamination, the number of additional potentially responsible parties at each site and the portion, if any, attributed to Distribution Corporation.1 The Company is currently not aware of any material additional exposure to environmental liabilities. However, adverse changes in environmental regulations or other factors could impact the Company.
In New York and Pennsylvania, Distribution Corporation is recovering site investigation and remediation costs in rates. For further discussion, see disclosure in Note H - Commitments and Contingencies under the heading "Environmental Matters" in Item 8 of this report.
Effects of Inflation
Although the rate of inflation has been relatively low over the past few years, and thus has benefited both the Company and its customers, the Company's operations remain sensitive to increases in the rate of inflation because of its capital spending and the regulated nature of two of its major operating segments.
Delays inherent in the ratemaking process prevent the Company from obtaining immediate recovery of increased operating costs. Also, while the ratemaking process gives no recognition to the current cost of replacing property, plant and equipment, based on past practices the Company believes that it will be allowed to earn on the increased cost of its net investment when replacement of facilities occurs.1
Safe Harbor for Forward-Looking Statements
The Company is including the following cautionary statement in this combined Annual Report to Shareholders/Form 10-K to make applicable and take advantage

of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. From time to time, the Company may publish or otherwise make available forward-looking statements of this nature. All such subsequent forward-looking statements, whether written or oral and whether made by or on behalf of the Company, are also expressly qualified by these cautionary statements. Certain statements contained herein, including those which are designated with a "1", are forward-looking statements and accordingly involve risks and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The forward-looking statements contained herein are based on various assumptions, many of which are based, in turn, upon further assumptions. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitation, management's examination of historical operating trends, data contained in the Company's records and other data available from third parties, but there can be no assurance that management's expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors and matters discussed elsewhere herein, the following are important factors that, in the view of the Company, could cause actual results to differ materially from those discussed in the forward-looking statement:
1. Changes in economic conditions, demographic patterns and weather conditions
2. Changes in the availability and/or price of natural gas and oil
3. Inability to obtain new customers or retain existing ones
4. Significant changes in competitive factors affecting the Company
5. Governmental/regulatory actions and initiatives, including those affecting financings, allowed rates of return, industry and rate structure, franchise renewal, and environmental/safety requirements
6. Unanticipated impacts of restructuring initiatives in the natural gas and electric industries
7. Significant changes from expectations in actual capital expenditures and operating expenses and unanticipated project delays
8. Occurrences affecting the Company's ability to obtain funds from operations, debt or equity to finance needed capital expenditures and other investments
9. Ability to successfully identify and finance oil and gas property acquisitions and ability to operate existing and any subsequently acquired properties
10. Ability to successfully identify, drill for and produce economically viable natural gas and oil reserves
11. Inability of the various counterparties to meet their obligations with respect to the Company's financial instruments
12. Regarding foreign operations - changes in foreign trade and monetary policies, laws and regulations related to foreign operations, political and governmental changes, inflation and exchange rates, taxes and operating conditions
13. Significant changes in tax rates or policies or in rates of inflation or interest
14. Significant changes in the Company's relationship with its employees and the potential adverse effects if labor disputes or grievances were to
occur

15. Changes in accounting principles and/or the application of such principles to the Company
The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

ITEM 8  Financial Statements and Supplementary Data

Index to Financial Statements
- -----------------------------
                                                                         Page
                                                                         ----
Financial Statements:

  Report of Independent Accountants                                       46

  Consolidated Statements of Income and Earnings Reinvested
   in the Business, three years ended September 30, 1996                  47

  Consolidated Balance Sheets at September 30, 1996 and 1995            48 - 49

  Consolidated Statement of Cash Flows, three years ended
   September 30, 1996                                                     50

  Notes to Consolidated Financial Statements                            51 - 72

  Financial Statement Schedules:
   For the three years ended September 30, 1996

     II-Valuation and Qualifying Accounts                                 73	

All other schedules are omitted because they are not applicable or the required information is shown in the Consolidated Financial Statements or Notes thereto.
Supplementary Data
Supplementary data that is included in Note J - Quarterly Financial Data (unaudited) and Note L - Supplementary Information for Oil and Gas Producing Activities, appears under this Item, and reference is made thereto.
Report of Management
Management is responsible for the preparation and integrity of the Company's financial statements. The financial statements have been prepared in accordance with generally accepted accounting principles consistently applied, and necessarily include some amounts that are based on management's best estimates and judgment.
The Company maintains a system of internal accounting and administrative controls and an ongoing program of internal audits that management believes provide reasonable assurance that assets are safeguarded and that transactions are properly recorded and executed in accordance with management's authorization. The Company's financial statements have been examined by our independent accountants, Price Waterhouse LLP, which also conducts a review of internal controls to the extent required by generally accepted auditing standards.
The Audit Committee of the Board of Directors, composed solely of outside directors, meets with management, internal auditors and Price Waterhouse LLP to review planned audit scope and results and to discuss other matters affecting internal accounting controls and financial reporting. The independent accountants have direct access to the Audit Committee and periodically meet with it without management representatives present.

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 accompanying index present fairly, in all material respects, the financial position of National Fuel Gas Company and its subsidiaries at September 30, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1996, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
As discussed in Notes A and G to the consolidated financial statements, the Company adopted the new accounting standards for postretirement benefits other than pensions, income taxes and other postemployment benefits in fiscal 1994.
PRICE WATERHOUSE LLP
Buffalo, New York
October 30, 1996, except as to Note H, which is as of November 8, 1996

National Fuel Gas Company
Consolidated Statements of Income and Earnings
Reinvested in the Business

Year Ended September 30 (Thousands of
  Dollars, Except Per Common Share
  Amounts)                                     1996         1995         1994
                                               ----         ----         ----
Income
Operating Revenues                          $1,208,017   $  975,496   $1,141,324
                                            ----------   ----------   ----------

Operating Expenses
   Purchased Gas                               477,357      351,094      497,687
   Operation                                   283,844      266,786      260,411
   Maintenance                                  25,362       25,719       30,979
   Property, Franchise and Other Taxes          99,456       91,837      103,788
   Depreciation, Depletion and Amortization     98,231       71,782       74,764
   Income Taxes - Net                           66,321       43,879       47,792
                                            ----------   ----------   ----------
                                             1,050,571      851,097    1,015,421
                                            ----------   ----------   ----------

Operating Income                               157,446      124,399      125,903
Other Income                                     3,869        5,378        3,656
                                            ----------   ----------   ----------
Income Before Interest Charges                 161,315      129,777      129,559
                                            ----------   ----------   ----------

Interest Charges
   Interest on Long-Term Debt                   40,872       40,896       36,699
   Other Interest                               15,772       12,987       10,425
                                            ----------   ----------   ----------
                                                56,644       53,883       47,124
                                            ----------   ----------   ----------

Income Before Cumulative Effect                104,671       75,894       82,435
Cumulative Effect of Changes in
 Accounting                                          -            -        3,237
                                            ----------   ----------   ----------

Net Income Available for Common Stock          104,671       75,894       85,672

Earnings Reinvested in the Business
Balance at Beginning of Year                   380,123      363,854      335,907
                                            ----------   ----------   ----------
                                               484,794      439,748      421,579

Dividends on Common Stock                       61,920       59,625       57,725
                                            ----------   ----------   ----------

Balance at End of Year                      $  422,874   $  380,123   $  363,854
                                            ==========   ==========   ==========

Earnings Per Common Share
Income Before Cumulative Effect                  $2.78        $2.03        $2.23
Cumulative Effect of Changes in
 Accounting                                          -            -          .09
                                            ----------   ----------   ----------

Net Income Available for Common Stock            $2.78        $2.03        $2.32
                                            ==========   ==========   ==========

Weighted Average Common Shares Outstanding  37,613,305   37,396,875   37,046,249
                                            ==========   ==========   ==========	

See Notes to Consolidated Financial Statements

National Fuel Gas Company
Consolidated Balance Sheets

At September 30 (Thousands of Dollars)                  1996            1995
                                                        ----            ----
Assets
Property, Plant and Equipment                        $2,471,063      $2,322,335
  Less - Accumulated Depreciation,
  Depletion and Amortization                            761,457         673,153
                                                     ----------      ----------
                                                      1,709,606       1,649,182
                                                     ----------      ----------
Current Assets
  Cash and Temporary Cash Investments                    19,320          12,757
  Receivables - Net                                      96,740          75,933
  Unbilled Utility Revenue                               20,778          20,838
  Gas Stored Underground                                 34,727          25,589
  Materials and Supplies - at average cost               21,544          24,374
  Prepayments                                            27,872          29,753
                                                     ----------      ----------
                                                        220,981         189,244
                                                     ----------      ----------

Other Assets
  Recoverable Future Taxes                               88,832          92,574
  Unamortized Debt Expense                               25,193          26,976
  Other Regulatory Assets                                57,086          37,040
  Deferred Charges                                        7,377           8,653
  Other                                                  40,697          33,154
                                                     ----------      ----------
                                                        219,185         198,397
                                                     ----------      ----------

                                                     $2,149,772      $2,036,823
                                                     ==========      ==========	

See Notes to Consolidated Financial Statements

National Fuel Gas Company
Consolidated Balance Sheets

At September 30 (Thousands of Dollars)                  1996            1995
                                                        ----            ----
Capitalization and Liabilities
Capitalization:
Common Stock Equity
  Common Stock, $1 Par Value
    Authorized  - 100,000,000 Shares; Issued and
    Outstanding - 37,851,655 Shares and 37,434,363
    Shares, Respectively                             $   37,852      $   37,434
  Paid In Capital                                       395,272         383,031
  Earnings Reinvested in the Business                   422,874         380,123
                                                     ----------      ----------
Total Common Stock Equity                               855,998         800,588
Long-Term Debt, Net of Current Portion                  574,000         474,000
                                                     ----------      ----------
Total Capitalization                                  1,429,998       1,274,588
                                                     ----------      ----------

Current and Accrued Liabilities
  Notes Payable to Banks and
    Commercial Paper                                    199,700         147,600
  Current Portion of Long-Term Debt                           -          88,500
  Accounts Payable                                       64,610          53,842
  Amounts Payable to Customers                            4,618          51,001
  Other Accruals and Current Liabilities                 82,520          60,440
                                                     ----------      ----------
                                                        351,448         401,383
                                                     ----------      ----------
Deferred Credits
  Accumulated Deferred Income Taxes                     281,207         280,441
  Taxes Refundable to Customers                          21,005          21,601
  Unamortized Investment Tax Credit                      12,711          13,380
  Other Deferred Credits                                 53,403          45,430
                                                     ----------      ----------
                                                        368,326         360,852
                                                     ----------      ----------
Commitments and Contingencies                                 -               -
                                                     ----------      ----------

                                                     $2,149,772      $2,036,823
                                                     ==========      ==========	

See Notes to Consolidated Financial Statements

National Fuel Gas Company
Consolidated Statement of Cash Flows

Year Ended September 30 (Thousands of Dollars)                 1996       1995       1994
                                                               ----       ----       ----
Operating Activities
  Net Income Available for Common Stock                      $104,671   $ 75,894   $ 85,672
  Adjustments to Reconcile Net Income to Net Cash
    Provided by Operating Activities
      Cumulative Effect of Changes in Accounting                    -          -     (3,237)
      Depreciation, Depletion and Amortization                 98,231     71,782     74,764
      Deferred Income Taxes                                     3,907      8,452      4,853
      Other                                                     4,540        275      5,780
      Change in:
        Receivables and Unbilled Utility Revenue              (20,747)    16,034        863
        Gas Stored Underground and Materials and Supplies      (6,308)     5,733    (15,539)
        Unrecovered Purchased Gas Costs                             -          -     20,772
        Prepayments                                             1,881     (9,144)    (3,017)
        Accounts Payable                                       10,768    (14,451)    23,774
        Amounts Payable to Customers                          (46,383)    12,287     (2,062)
        Other Accruals and Current Liabilities                 18,200     (1,305)     3,072
        Other Assets and Liabilities - Net                       (291)     8,804      4,119
                                                             --------   --------   --------

Net Cash Provided by Operating Activities                     168,469    174,361    199,814
                                                             --------   --------   --------

Investing Activities
  Capital Expenditures                                       (171,567)  (182,826)  (135,084)
  Other                                                        (1,366)    10,646      3,586
                                                             --------   --------   --------

Net Cash Used in Investing Activities                        (172,933)  (172,180)  (131,498)
                                                             --------   --------   --------

Financing Activities
  Change in Notes Payable to Banks and Commercial
    Paper                                                      52,100     35,100    (84,300)
  Net Proceeds from Issuance of Long-Term Debt                 99,650     99,099     99,415
  Reduction of Long-Term Debt                                 (88,500)   (96,000)   (19,917)
  Proceeds from Issuance of Common Stock                        8,956      2,555      9,064
  Dividends Paid on Common Stock                              (61,179)   (59,194)   (57,157)
                                                             --------   --------   --------

Net Cash Provided by (Used in) Financing Activities            11,027    (18,440)   (52,895)
                                                             --------   --------   --------

Net Increase (Decrease) in Cash and
  Temporary Cash Investments                                    6,563    (16,259)    15,421

Cash and Temporary Cash Investments at Beginning of Year       12,757     29,016     13,595
                                                             --------   --------   --------

Cash and Temporary Cash Investments at End of Year           $ 19,320   $ 12,757   $ 29,016
                                                             ========   ========   ========	

See Notes to Consolidated Financial Statements

National Fuel Gas Company
Notes to Consolidated Financial Statements
Note A - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. All significant intercompany balances and transactions have been eliminated where appropriate. The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassification
Certain prior year amounts have been reclassified to conform with current year presentation.
Regulation
Two of the Company's principal subsidiaries, Distribution Corporation and Supply Corporation, are subject to regulation by state and federal authorities having jurisdiction. Distribution Corporation and Supply Corporation have accounting policies which conform to generally accepted accounting principles, as applied to regulated enterprises, and are in accordance with the accounting requirements and ratemaking practices of the regulatory authorities. Reference is made to Note B for further discussion of regulatory matters.
Revenues
Revenues are recorded as bills are rendered, except that service supplied but not billed is reported as "Unbilled Utility Revenue" and is included in operating revenues for the year in which service is furnished.
Unrecovered Purchased Gas Costs and Refunds Distribution Corporation's rate schedules contain clauses that permit adjustment of revenues to reflect price changes from the cost of purchased gas included in base rates. Differences between amounts currently recoverable and actual adjustment clause revenues, as well as other price changes and pipeline and storage company refunds not yet includable in adjustment clause rates, are deferred and accounted for as either unrecovered purchased gas costs or amounts payable to customers.
Property, Plant and Equipment
The principal assets, consisting primarily of gas plant in service, are recorded at the historical cost when originally devoted to service in the regulated businesses, as required by regulatory authorities. Such cost includes an Allowance for Funds Used During Construction (AFUDC), which is defined in applicable regulatory systems of accounts as the net cost of borrowed funds used for construction purposes and a reasonable rate on other funds when so used. The rates used in the calculation of AFUDC are determined in accordance with guidelines established by regulatory authorities.
Included in property, plant and equipment is the cost of gas stored underground - noncurrent, representing the volume of gas required to maintain pressure levels for normal operating purposes as well as gas volumes maintained for system balancing and other purposes, including those needed for no-notice transportation service.
Maintenance and repairs of property and replacements of minor items of property are charged directly to maintenance expense. The original cost of the regulated subsidiaries' property, plant and equipment retired, and the cost of removal less salvage, are charged to accumulated depreciation.

Oil and gas exploration and development costs are capitalized under the full-cost method of accounting as prescribed by the Securities and Exchange Commission (SEC). All costs directly associated with property acquisition, exploration and development activities are capitalized, with the principal limitation that such capitalized amounts not exceed the present value of estimated future net revenues from the production of proved gas and oil reserves plus the lower of cost or market of unevaluated properties, net of related income tax effect (the full-cost ceiling). The present value of estimated future net revenues is computed based on end-of-year prices adjusted for contracted price changes. At September 30, 1996, Seneca's capitalized costs under the full-cost method of accounting were well below the full-cost ceiling. There are certain factors, including price declines, which could lower the full-cost ceiling and cause an impairment of Seneca's oil and gas assets.
Depreciation, Depletion and Amortization Depreciation, depletion and amortization are computed by application of either the straight-line method or the gross revenue method, in amounts sufficient to recover costs over the estimated service lives of property in service, and for oil and gas properties, over the period of estimated gross revenues from proved reserves. The costs of unevaluated oil and gas properties are excluded from this calculation. For timber properties, depletion, determined on a property by property basis, is charged to operations based on the annual amount of timber cut in relation to the total amount of recoverable timber. The provisions for depreciation, depletion and amortization, including amounts capitalized or charged to other operating accounts, were $98.4 million in 1996, $73.1 million in 1995 and $75.7 million in 1994, and were equivalent to 4.4% in 1996, 3.5% in 1995 and 3.9% in 1994 of average depreciable property, plant and equipment for those years.
Gas Stored Underground - Current
Gas stored underground - current is carried at lower of cost or market, on a last-in, first-out (LIFO) method. Under present regulatory practice, the liquidation of a LIFO layer is reflected in future gas cost adjustment clauses. Based upon the average price of spot market gas purchased in September 1996, including transportation costs, the current cost of replacing the inventory of gas stored underground-current exceeded the amount stated on a LIFO basis by approximately $19.0 million at September 30, 1996.
Unamortized Debt Expense
Costs associated with the issuance of debt by the Company are deferred and amortized over the lives of the related issues. Costs associated with the reacquisition of debt related to rate-regulated subsidiaries are deferred and amortized over the remaining life of the issue or the life of the replacement debt in order to match regulatory treatment.
Foreign Currency Translation
The functional currency for the Company's foreign operations is the applicable local currency. The translation from the applicable foreign currency to U. S. dollars is performed for balance sheet accounts using current exchange ratios in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate during the period. The gain which resulted from foreign currency translation during 1996 was immaterial.
Income Taxes
The Company and its domestic subsidiaries file a consolidated federal income tax return. Investment Tax Credit, prior to its repeal in 1986, was deferred and is being amortized over the estimated useful lives of the related property, as required by regulatory authorities having jurisdiction.
On October 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109), which changed the method of accounting for income taxes. The cumulative effect of this change increased net income for 1994 by $3.8 million as a result of the reduction in deferred income taxes associated with the Company's nonregulated operations.

Financial Instruments
The Company, in its Exploration and Production segment, utilizes price swap agreements to manage a portion of the market risk associated with fluctuations in the price of natural gas and crude oil. Gains or losses from these price swap agreements are reflected in operating revenues on the Consolidated Statement of Income at the time of settlement with the other parties. Reference is made to Note F - Financial Instruments, for further discussion of financial instruments.
Consolidated Statement of Cash Flows
For purposes of the Consolidated Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity of generally three months or less to be cash equivalents. Interest paid in 1996, 1995 and 1994 was $54.8 million, $53.5 million and $46.2 million, respectively. Net income taxes paid in 1996, 1995 and 1994 were $60.8 million, $34.6 million and $37.6 million, respectively.
In December 1993, the Company entered into a non-cash investing activity whereby it issued shares of Company common stock for $3.2 million of natural gas production assets.
Earnings Per Common Share
Earnings per common share are calculated using the weighted average number of shares outstanding during each fiscal year. Common stock equivalents in the form of stock options do not have a material dilutive effect on earnings per common share.
Note B - Regulatory Matters
Regulatory Assets and Liabilities
Distribution Corporation and Supply Corporation have incurred various costs and received various credits which have been reflected as regulatory assets and liabilities on the Company's consolidated balance sheets. Accounting for such costs and credits as regulatory assets and liabilities is in accordance with SFAS 71, "Accounting for the Effect of Certain Types of Regulation" (SFAS 71). This statement sets forth the application of generally accepted accounting principles for those companies whose rates are established by or are subject to approval by an independent third-party regulator. Under SFAS 71, regulated companies defer costs and credits on the balance sheet as regulatory assets and liabilities when it is probable that those costs and credits will be allowed in the ratesetting process in a period different from the period in which they would have been reflected in income by an unregulated company. These deferred regulatory assets and liabilities are then flowed through the income statement in the period in which the same amounts are reflected in rates. Distribution Corporation and Supply Corporation have recorded the following regulatory assets and liabilities:

At September 30 (Thousands)                                 1996       1995
                                                            ----       ----

Regulatory Assets:
Recoverable Future Taxes (Note C)                         $ 88,832   $ 92,574
Unamortized Debt Expense (Note A)                           20,319     22,035
Pension and Post-Retirement Benefit Costs (Note G)          22,259     18,412
Order 636 Transition Costs*                                 14,256     12,358
Gathering Plant                                              9,868          -
Environmental Clean-up (Note H)                              8,144      7,475
Other                                                        2,559     (1,205)
                                                          --------   --------
     Total Regulatory Assets                               166,237    151,649
                                                          --------   --------

Regulatory Liabilities:
Amounts Payable to Customers (Note A)                        4,618     51,001
Taxes Refundable to Customers (Note C)                      21,005     21,601
Other                                                        6,881      8,628
                                                          --------   --------
     Total Regulatory Liabilities                           32,504     81,230
                                                          --------   --------

Net Regulatory Position                                   $133,733   $ 70,419
                                                          ========   ========	

* Exclusive of amounts being collected through gas costs. Such amounts are included in unrecovered purchased gas costs or amounts payable to customers.

If for any reason, including deregulation, a change in the method of regulation, or a change in competitive environment, Distribution Corporation and/or Supply Corporation ceases to meet the criteria for application of SFAS 71 for all or part of their operations, the regulatory assets and liabilities related to those portions ceasing to meet such criteria would be eliminated from the balance sheet and included in income of the period in which the discontinuance of SFAS 71 occurs. Such amounts would be classified as an extraordinary item. Distribution Corporation and Supply Corporation are not currently facing a requirement to discontinue SFAS 71.
Order 636 Transition Costs
As a result of the industrywide restructuring under the Federal Energy Regulatory Commission's (FERC) Order 636, Distribution Corporation is incurring transition costs billed by Supply Corporation and other upstream pipeline companies.
As of September 30, 1996, Distribution Corporation's estimate of its exposure to outstanding transition cost claims to nonaffiliated companies is in the range of $9.6 million to $26.6 million. The estimated maximum exposure has been significantly reduced as a result of a preliminary settlement by one of Distribution Corporation's upstream pipeline companies. In addition, estimated maximum exposure continues to decline as transition costs are incurred and paid. At September 30, 1996, Distribution Corporation has recorded the minimum liability and corresponding regulatory asset of $9.6 million. In addition, Distribution Corporation's estimated share of Supply Corporation's $9.9 million of gathering plant at September 30, 1996 is approximately $9.2 million. See further discussion under "Gathering Rates" below. Distribution Corporation is currently recovering transition costs from its sales and transportation customers in New York and Pennsylvania.
Gathering Rates
The FERC has directed Supply Corporation to fully unbundle the production and gathering cost of service from the transmission cost of service, and to establish a separate gathering rate. A Stipulation and Agreement complying with the FERC's directives under its restructuring orders was filed by Supply Corporation and was approved by the FERC in February 1996. As approved, the Stipulation and Agreement permits Supply Corporation to fully recover its net investment in production and gathering plant, as well as its production and gathering cost of service. A portion of Supply Corporation's net investment in production and gathering plant is being recovered over a five-year period. The unamortized portion amounts to approximately $9.9 million at September 30, 1996 and is included in Other Regulatory Assets on the Consolidated Balance Sheets.
Note C - Income Taxes
The components of federal and state income taxes included in the Consolidated Statement of Income are as follows:

Year Ended September 30 (Thousands)                  1996     1995     1994
                                                     ----     ----     ----

Operating Expenses:
  Current Income Taxes -
    Federal                                         $55,148  $30,522  $36,630
    State                                             7,266    4,905    6,309

  Deferred Income Taxes                               3,907    8,452    4,853
                                                    -------  -------   ------
                                                     66,321   43,879   47,792

Other Income:
  Deferred Investment Tax Credit                       (665)    (672)    (682)

Cumulative Effect of Changes in Accounting:
  Adoption of SFAS 109                                    -        -   (3,826)
  Tax Effect of Adoption of SFAS 112                      -        -     (425)
                                                    -------  -------   ------

Total Income Taxes                                  $65,656  $43,207  $42,859
                                                    =======  =======  =======	

Total income taxes as reported differ from the amounts that were computed by applying the federal income tax rate to income before income taxes. The following is a reconciliation of this difference:

Year Ended September 30 (Thousands)              1996       1995       1994
                                                 ----       ----       ----

Net Income Available for Common Stock          $104,671   $ 75,894   $ 85,672
Total Income Taxes                               65,656     43,207     42,859
                                               --------   --------   --------

Income Before Income Taxes                     $170,327   $119,101   $128,531
                                               ========   ========   ========

Income Tax Expense, Computed at Federal
  Statutory Rate of 35%                         $59,614    $41,685    $44,986
Increase (Reduction) in Taxes Resulting from:
  Current State Income Taxes,
    Net of Federal Income Tax Benefit             4,723      3,188      4,101
  Depreciation                                    2,499      2,397      2,174
  Adoption of SFAS 109                                -          -     (3,826)
  Miscellaneous                                  (1,180)    (4,063)    (4,576)
                                                -------    -------    -------

Total Income Taxes                              $65,656    $43,207    $42,859
                                                =======    =======    =======	

Significant components of the Company's deferred tax liabilities and assets were as follows:

At September 30 (Thousands)                        1996            1995
                                                   ----            ----
Deferred Tax Liabilities:
  Excess of Tax Over Book Depreciation           $182,271        $185,595
  Exploration and Intangible Well
    Drilling Costs                                 98,293          84,380
  Other                                            67,030          67,831
                                                 --------        --------
    Total Deferred Tax Liabilities                347,594         337,806
                                                 ========        ========

Deferred Tax Assets:
  Overheads Capitalized for Tax Purposes          (16,289)        (11,766)
  Other                                           (50,098)        (45,599)
                                                 --------        --------
    Total Deferred Tax Assets                     (66,387)        (57,365)
                                                 ========        ========

    Total Net Deferred Income Taxes              $281,207        $280,441
                                                 ========        ========	

SFAS 109 requires the recognition of regulatory liabilities representing the reduction of previously recorded deferred income taxes associated with rate-regulated activities that are expected to be refundable to customers. These amounted to $21.0 million and $21.6 million at September 30, 1996 and 1995, respectively. Also, SFAS 109 requires the recognition of additional deferred income taxes not previously recorded because of prior ratemaking practices. Substantially all of these deferred taxes relate to property, plant and equipment and related investment tax credits and will be amortized consistent with the depreciation and amortization of these accounts. The additional deferred taxes and corresponding regulatory assets, representing future amounts collectible from customers in the ratemaking process, amounted to $88.8 million and $92.6 million at September 30, 1996 and 1995, respectively.

Note D - Capitalization
Summary of Changes in Common Stock Equity Earnings Paid Reinvested Common Stock In in the (Thousands, Except Per Share Amounts) Shares Amount Capital Business

                                         ------  ------  -------  ----------

Balance at September 30, 1993            36,661 $36,661 $363,677   $335,907
Net Income Available for Common Stock                                85,672
Dividends Declared on Common Stock
  ($1.56 Per Share)                                                 (57,725)
Common Stock Issued:
  Acquisition of Natural Gas
    Production Assets                       108     108    3,523
  Stock Option and Stock Award Plans        164     164    1,163
  401(k) Plans                              136     136    4,234
  Customer Stock Purchase Plan              209     209    6,559
                                         ------ ------- --------  ---------

Balance at September 30, 1994            37,278  37,278  379,156    363,854
Net Income Available for Common Stock                                75,894
Dividends Declared on Common Stock
  ($1.60 Per Share)                                                 (59,625)
Common Stock Issued:
  Stock Option and Stock Award Plans         22      22      377
  401(k) Plans                               88      88    2,310
  Customer Stock Purchase Plan               46      46    1,188
                                         ------ ------- --------  ---------

Balance at September 30, 1995            37,434  37,434  383,031    380,123
Net Income Available for Common Stock                               104,671
Dividends Declared on Common Stock
  ($1.65 Per Share)                                                 (61,920)
Common Stock Issued:
  Stock Option and Stock Award Plans        126     126    2,490
  Dividend Reinvestment and Stock
    Purchase Plan                           134     134    4,460
  401(k) Plans                              124     124    4,128
  Customer Stock Purchase Plan               34      34    1,163
                                         ------ ------- --------  ---------

Balance at September 30, 1996            37,852 $37,852 $395,272   $422,874*
                                         ====== ======= ========   ========	

* The availability of consolidated earnings reinvested in the business for dividends payable in cash is limited under terms of the indentures covering long-term debt. At September 30, 1996, $348.5 million of accumulated earnings was free of such limitations.
Common Stock
The Company has various plans which allow shareholders, customers and employees to purchase shares of Company common stock. The Dividend Reinvestment and Stock Purchase Plan allows shareholders to reinvest cash dividends and/or make cash investments in the Company's common stock. The Customer Stock Purchase Plan provides residential customers the opportunity to acquire shares of Company common stock without the payment of any brokerage commission or service charges in connection with such acquisitions. The 401(k) Plans allow employees the opportunity to invest in Company common stock, in addition to a variety of other investment alternatives. At the discretion of the Company, shares purchased under these plans are either original issue shares purchased directly from the Company or shares purchased on the open market by an agent.
Shareholder Rights Plan
On March 19, 1996, the Company's Board of Directors adopted a shareholder rights plan, the adoption of which was subsequently approved by the SEC, pursuant to the Public Utility Holding Company Act of 1935, as amended (the Holding Company Act). On June 13, 1996, the Company's Board of Directors declared a dividend of one right (Right) for each share of common stock held by the shareholders of record on July 31, 1996.

The Rights become exercisable ten days after an acquirer (a) announces it has acquired or has the right to acquire 10% or more of the Company's voting stock, or (b) announces a tender offer which would result in it owning 10% or more of the Company's voting stock. If the Rights become exercisable, each Company stockholder, except an acquirer, will be able to exercise a Right and receive common stock (or, in certain cases, cash, property or other securities) of the Company, or common stock of the acquirer, having a market value equal to twice the Right's then current purchase price. If a Right were currently exercisable, it would entitle a Company stockholder, other than an acquirer, to purchase $130 worth of Company common stock (or the common stock of the acquirer) for $65. All Rights expire on July 31, 2006.
The Board of Directors is able to exchange the Rights at an exchange ratio of one share of common stock per Right. It also is able to redeem, in whole but not in part, the Rights at a price of $0.01 per Right anytime until ten days after an acquirer announces that it has acquired or has the right to acquire 10% or more of the Company's voting stock.
Stock Option and Stock Award Plans
The Company's 1993 Award and Option Plan (1993 Plan) provides for the issuance of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, performance units and performance shares to key employees. The 1983 Incentive Stock Option Plan (1983 Plan) provided for the issuance of incentive stock options to key employees. The 1984 Stock Plan (1984 Plan) provided for awards of restricted stock, nonqualified stock options and stock appreciation rights to key employees. Stock options under all three plans have exercise prices equal to the average market price of Company common stock on the date of grant, and generally no option is exercisable less than one year or more than ten years after the date of each grant.
In October 1995, the Financial Accounting Standards Board issued SFAS 123, "Accounting for Stock-Based Compensation," (SFAS 123). In 1996, the Company adopted the disclosure provision of SFAS 123 but opted to remain under the expense recognition provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees," in accounting for its stock option and stock award plans. For the fiscal years ended September 30, 1996, 1995 and 1994, no compensation expense was recognized for options granted under these plans. Compensation expense related to stock appreciation rights and restricted stock under these stock plans was $6.7 million, $1.4 million and $(0.3) million for the fiscal years ended September 30, 1996, 1995 and 1994, respectively. Had compensation expense for stock options granted under the Company's stock plans been determined based on fair value at the grant dates consistent with the method of SFAS 123, the Company's net income and earnings per share would have been reduced to the pro forma amounts below:

                                                     1996
- -------------------------------------------------------------------------------
Net Income:
     As reported                                     $104,671,000
     Pro Forma                                       $104,322,000

Earnings per Common Share:
     As reported                                     $2.78
     Pro Forma                                       $2.77	

The above pro forma amounts relate only to options granted since the beginning of 1996. Had SFAS 123 been effective prior to 1996, the fair value of options granted in 1995 but vesting in 1996 would have further reduced 1996 pro forma net income and earnings per share by $1,039,000 and $0.03, respectively.

Transactions involving option shares for all three plans are summarized as follows:

                                           Number of
                                         Shares Subject     Weighted Average
                                           to Option         Exercise Price
- ----------------------------------------------------------------------------
Outstanding at September 30, 1993            955,846             $25.10
Granted in 1994                              272,000             $31.63
Exercised in 1994*                           (60,509)            $21.61
- ----------------------------------------------------------------------------
Outstanding at September 30, 1994          1,167,337             $26.80
Granted in 1995                              362,100             $27.94
Exercised in 1995*                           (17,615)            $19.46
Forfeited in 1995                            (11,532)            $31.00
- ----------------------------------------------------------------------------
Outstanding at September 30, 1995          1,500,290             $27.13
Granted in 1996                              487,750             $34.44
Exercised in 1996*                          (195,321)            $22.72
Forfeited in 1996                            (19,468)            $27.90
- ----------------------------------------------------------------------------
Outstanding at September 30, 1996          1,773,251             $29.62
- ----------------------------------------------------------------------------
Shares exercisable at September 30, 1996   1,285,501             $27.79
Shares available for future
  grant at September 30, 1996**              314,377
Weighted average fair value of
  options granted during 1996                  $5.58
- ----------------------------------------------------------------------------	

* In connection with exercising these options, 77,679; 3,192; and 18,088 shares were surrendered and canceled during 1996, 1995 and 1994, respectively. ** Including shares available for restricted stock grants.
The weighted average fair value of options granted in 1996 was estimated on the date of grant using a binomial option pricing model which is a modification of the Black-Scholes option pricing model, with the following weighted average assumptions: quarterly dividend yield of 1.22%, annual expected return of 12.83%, annual standard deviation (volatility) of 15.62%, risk free rate of 6.28%, and expected term of 5.5 years.
The following table summarizes information about options outstanding at September 30, 1996:

                     Options Outstanding                             Options Exercisable
- --------------------------------------------------------------  -----------------------------
                   Number     Weighted Average    Weighted        Number
   Range of      Outstanding     Remaining         Average      Exercisable  Weighted Average
Exercise Prices  at 9/30/96   Contractual Life  Exercise Price  at 9/30/96    Exercise Price
- ---------------  -----------  ----------------  --------------  -----------  ----------------

$18.00 - $25.19     460,516      4.7 years          $23.82       460,516          $23.82
$27.94 - $36.81   1,312,735      8.6 years          $31.66       824,985          $30.01

- ---------------------------------------------------------------------------------------------	

         On October 11, 1996, an additional 280,000 stock options were granted
at an exercise price per share of $36.75.

         The  Company's  Board of  Directors is expected to adopt the 1997 Award
and Option Plan (1997 Plan) at its December 13, 1996 meeting. The 1997 Plan will
have the same  basic  provisions  as the 1993 Plan.  The total  number of shares
available for grant under the 1997 Plan will be 1.8 million.

         Restricted   stock  is  subject   to   restrictions   on  vesting   and
transferability.  Restricted  stock  awards  entitle  the  participants  to full
dividend and voting rights.  The market value of restricted stock on the date of
the award is being  recorded as  compensation  expense  over the periods  during
which the vesting  restrictions  exist.  Certificates  for shares of  restricted
stock awarded  under the  Company's  1984 and 1993 Plans are held by the Company
during the periods in which the restrictions on vesting are effective.

         The following table summarizes the awards of restricted stock over the
past three years:
                                          1996        1995        1994
- -------------------------------------------------------------------------------
Shares of Restricted Stock Awarded        8,000       8,000      121,494

Weighted Average Market Price of
  Stock on Award Date                    $36.81      $26.00      $34.15
- -------------------------------------------------------------------------------	

As of September 30, 1996, 134,578 shares of non-vested restricted stock were outstanding. Vesting restrictions will lapse on 126,578 of these shares on January 2 of each year as follows: 1997 - 18,916 shares; 1998 - 18,916 shares; 1999 - 20,916 shares; 2000 - 22,916 shares; 2001 - 24,914 shares; 2002 - 8,000 shares; 2003 - 6,000 shares; 2004 - 4,000 shares; and 2005 - 2,000 shares. For restricted stock awarded before 1996, the restrictions on transferability do not lapse until the earliest of (a) six years from the date the vesting restrictions lapse; (b) the recipient's attainment of age 65; or (c) the recipient's death. For restricted stock awarded in 1996, all restrictions will lapse respecting one-fourth of such shares on each September 26, 2003 through 2006.
Redeemable Preferred Stock
As of September 30, 1996, there were 3,200,000 shares of $25 par value Cumulative Preferred Stock authorized but unissued.
Long-Term Debt
The outstanding long-term debt is as follows:

At September 30 (Thousands)                  1996        1995
                                             ----        ----
Debentures:
  7-3/4% due February 2004                 $125,000    $125,000

Medium-Term Notes:
  8.875% due December 1995                        -      20,000
  8.90% due December 1995                         -      38,500
  4.53% due September 1996                        -      30,000
  6.42% due November 1997                    50,000      50,000
  6.08% due July 1998                        50,000      50,000
  5.58% due March 1999                      100,000           -
  7.25% due July 1999                        50,000      50,000
  6.60% due February 2000                    50,000      50,000
  7.395% due March 2023                      49,000      49,000
  8.48% due July 2024*                       50,000      50,000
  7.375% due June 2025                       50,000      50,000
                                           --------    --------

                                            574,000     562,500
Less Current Portion                              -      88,500
                                           --------    --------

                                           $574,000    $474,000
                                           ========    ========	

* Callable beginning July 1999.
The aggregate principal amounts of long-term debt maturing for the next five years are: none in 1997, $100.0 million in 1998, $150.0 million in 1999, $50.0 million in 2000 and none in 2001.
The Company currently has authorization from the SEC under the Holding Company Act to issue and sell up to $150.0 million of debentures and/or medium-term notes. The amounts and timing of the issuance and sale of these debentures and/or medium-term notes will depend on market conditions and the requirements of the Company.
Note E - Short-Term Borrowings
The Company maintains uncommitted or discretionary lines of credit with certain financial institutions for general corporate purposes. These lines are utilized primarily as a means of financing, on an interim basis, various working capital requirements and capital expenditures of the Company, including the Company's oil and gas exploration and development program and the purchase and storage of gas. Borrowings under these lines of credit are made at competitive money market rates, and the Company currently is authorized to borrow up to $600.0 million thereunder. These credit lines, which are callable at the option of the financial institutions, are reviewed on an annual basis.
The Company also has authorization to issue as much as $300.0 million of commercial paper from time to time, but is not likely to exceed $105.0 million. In no event may its borrowings under its discretionary lines of credit, or through the issuance of commercial paper, exceed $600.0 million in the aggregate.

Additionally, the Company has entered into an agreement that establishes a 364-day committed revolving credit arrangement with five commercial banks, under which it may borrow as much as $105.0 million. This arrangement may be utilized for general corporate purposes, primarily to support the issuance of commercial paper. The Company pays a fee to maintain this arrangement, and may borrow through this arrangement under four interest rate options. If amounts are borrowed under this arrangement, the $600.0 million available for borrowing under the discretionary lines of credit is correspondingly reduced. No borrowings under this arrangement were outstanding at September 30, 1996.
At September 30, 1996, the Company had outstanding notes payable to banks and commercial paper of $109.7 million and $90.0 million, respectively. At September 30, 1995, the Company had outstanding notes payable to banks and commercial paper of $52.6 million and $95.0 million, respectively.
The weighted average interest rate on notes payable to banks was 5.63% and 6.15% at September 30, 1996 and 1995, respectively. The weighted average interest rate on commercial paper was 5.56% and 5.85% at September 30, 1996 and 1995, respectively.
Note F - Financial Instruments
Fair Values
The fair market value of the Company's long-term debt is estimated based on quoted market prices of similar issues having the same remaining maturities, redemption terms and credit ratings. Based on these criteria, the fair market value of long-term debt, including current portion, was as follows:

At September 30 (Thousands)               1996                    1995
                                  -------------------     -------------------
                                  Carrying     Fair       Carrying     Fair
                                   Amount      Value       Amount      Value
                                  --------     -----      --------     -----

Long-Term Debt                    $574,000   $572,001     $562,500   $570,236
                                  ========   ========     ========   ========	

The fair value amounts are not intended to reflect principal amounts that the Company will ultimately be required to pay.
Temporary cash investments, notes payable to banks and commercial paper are stated at amounts which approximate their fair value due to the short-term maturities of those financial instruments. Investments in life insurance are stated at their cash surrender values as discussed below.
Investments
Other assets consist principally of cash surrender values of insurance contracts. The cash surrender values of these insurance contracts amounted to $31.6 million and $28.2 million at September 30, 1996 and 1995, respectively. The insurance contracts were established as a funding mechanism for various benefit obligations the Company has to certain employees.
Derivative Financial Instruments
The Company, in its Exploration and Production segment, has entered into certain price swap agreements to manage a portion of the market risk associated with fluctuations in the price of natural gas and crude oil thereby providing more stability to the operating results of that business segment. These agreements are not held for trading purposes. The price swap agreements call for the Company to receive monthly payments from (or make payment to) other parties based upon the difference between a fixed and a variable price as specified by the agreement. The variable price is either a crude oil price quoted on the New York Mercantile Exchange or a quoted natural gas price in "Inside FERC." These variable prices are highly correlated with the market prices received by the Company for its natural gas and crude oil production.

The following summarizes the Company's activity under price swap agreements during 1996, 1995 and 1994:

Year Ended September 30                 1996             1995             1994
                                   ---------------  ---------------  ---------------

Natural Gas Swap Agreements:
  Notional Amount - Equivalent
    Billion Cubic Feet (Bcf)                  23.0             16.3              8.0
  Range of Fixed Prices per
    Thousand Cubic Feet (Mcf)        $1.71 - $3.05    $1.74 - $2.39    $2.17 - $2.39
  Weighted Average Fixed Price
    per Mcf                                  $1.91            $2.03            $2.30
  Range of Variable Prices
    per Mcf                          $1.67 - $3.43    $1.36 - $1.77    $1.44 - $2.44
  Weighted Average Variable Price
    per Mcf                                  $2.31            $1.59            $2.05
  Gain (Loss)                          $(9,231,000)      $7,157,000       $1,986,000

Crude Oil Swap Agreements:
  Notional Amount - Equivalent
    Barrels (bbl)                        1,071,000          686,000                -
  Range of Fixed Prices per bbl    $17.40 - $19.25  $16.68 - $19.60                -
  Weighted Average Fixed Price
    per bbl                                 $18.22           $18.01                -
  Range of Variable Prices per
    bbl                            $17.40 - $23.93  $17.16 - $19.89                -
  Weighted Average Variable Price
    per bbl                                 $20.72           $18.35                -
  Loss                                 $(2,606,000)      $(221,000)                -	

The Company had the following swap agreements outstanding at September 30, 1996:
Natural Gas Swap Agreements:
Notional Amount Range of Fixed Weighted Average Fixed

Fiscal Year   (Equivalent Bcf)   Prices per Mcf       Price per Mcf
-----------   ----------------   --------------   ----------------------
   1997             24.9         $1.71 - $2.10            $1.92
   1998              9.7         $1.77 - $2.06            $1.94
   1999              1.1         $2.00                    $2.00
                    ----
                    35.7
                    ====	

Crude Oil Swap Agreements:
Notional Amount Range of Fixed Weighted Average Fixed

Fiscal Year   (Equivalent bbl)   Prices per bbl       Price per bbl
----------    ----------------   --------------   ----------------------
   1997          1,371,000       $17.40 - $18.71         $18.00
   1998            447,000       $17.50 - $18.71         $17.81
                 ---------
                 1,818,000
                 =========	

Gains or losses from these price swap agreements are reflected in operating revenues on the Consolidated Statement of Income at the time of settlement with the other parties. At September 30, 1996, the Company had unrecognized losses of approximately $10.2 million related to price swap agreements which are offset by corresponding unrecognized gains from the Company's anticipated natural gas and crude oil production over the terms of the price swap agreements.
The Company has SEC authority to enter into interest rate swaps and other derivative instruments associated with long-term borrowings up to a notional amount of $350.0 million at any one time outstanding. All such interest rate swaps and other derivative instruments must be directly related to then outstanding long or short-term debt, at the time they are entered into. The Company also has SEC authority to enter into interest rate and currency exchange agreements associated with short-term borrowings covering a total principal amount of $300.0 million. No such agreements were entered into during the year ended September 30, 1996 and none are currently outstanding.
Credit Risk
Credit risk relates to the risk of loss that the Company would incur as a result of nonperformance by counterparties pursuant to the terms of their

contractual obligations. The Company is at risk in the event of nonperformance by counterparties on investments, such as temporary cash investments and cash surrender values of insurance contracts, and on its derivative financial instruments. The counterparties to the Company's investments and derivative financial instruments are investment grade financial institutions. Furthermore, the Company has guarantees from counterparty affiliates covering its natural gas and crude oil derivative financial instruments in those instances where the Company is not dealing directly with the majority affiliate of the counterparty group. Accordingly, the Company does not anticipate any material impact to its financial position, results of operations or cash flow as a result of nonperformance by counterparties.
Note G - Retirement Plan and Other Post-Employment Benefits
Retirement Plan
The Company has a tax-qualified, noncontributory, defined-benefit retirement plan (Plan) that covers substantially all employees of the Company. The Plan uses years of service, age at retirement and earnings of employees to determine benefits.
The Company's policy is to fund at least an amount necessary to satisfy the minimum funding requirements of applicable laws and regulations and not more than the maximum amount deductible for federal income tax purposes. Plan funding is subject to annual review by management and its consulting actuary. Plan assets primarily consist of equity and fixed income investments and units in commingled funds.
For financial reporting purposes, the regulated subsidiaries record the difference between the amounts of pension cost recoverable in rates and the amounts of pension cost determined by the actuary under SFAS 87, "Employers' Accounting for Pensions," as deferred pension assets. The amounts deferred are expected to be recovered in rates as contributions are made to the Plan. Pension cost in 1996 reflects the amount recovered from customers in rates during the year.
In September 1996, the Company completed its special early retirement offer (SERO) for certain salaried, non-union hourly and union employees of Distribution Corporation and Supply Corporation. As a result, the Company recorded SERO expense in 1996 of $8.2 million ($5.2 million after-tax), comprised of special termination benefits and severance pay. The special termination benefits portion of SERO expense is included in pension cost.
The components of pension cost were as follows:

Year Ended September 30 (Thousands)               1996       1995       1994
                                                  ----       ----       ----

Service Cost                                    $11,049    $ 9,680    $10,441
Interest Cost                                    31,422     28,338     26,532
Actual Return on Plan Assets                    (48,022)   (47,591)   (16,212)
Net Amortization and Deferral                    10,414      9,722    (20,623)
Special Termination Benefits                      6,986          -          -
                                                -------    -------    -------
Pension Cost                                    $11,849    $   149    $   138
                                                =======    =======    =======	

The projected benefit obligation was determined using an assumed discount rate of 8% for 1996 and 1995, and 8.5% for 1994. The assumed rate of compensation increase was 5% for all three years. The expected long-term rate of return on Plan assets was 8.5% for all three years.

A reconciliation of the Plan's funded status as determined by the Company's consulting actuary is presented in the following table:

At September 30 (Thousands)                              1996          1995
                                                         ----          ----

Actuarial Present Value of:
  Vested Benefit Obligation                            $317,049      $287,470
                                                       ========      ========

  Accumulated Benefit Obligation                       $367,612      $333,597
                                                       ========      ========

  Projected Benefit Obligation                         $432,753      $404,157

Plan Assets at Fair Value                               431,828       399,608
                                                       --------      --------
Funded Status                                              (925)       (4,549)
Unrecognized Net Asset                                  (26,278)      (33,335)
Unrecognized Prior Service Cost                          11,947        12,446
Unrecognized Net Loss (Gain)                            (15,111)        5,419
                                                       --------      --------
Pension Liability                                      $(30,367)     $(20,019)
                                                       ========      ========	

Other Post-Retirement Benefits
In addition to providing retirement plan benefits, the Company provides health care and life insurance benefits for substantially all retired employees under a post-retirement benefit plan (Post-Retirement Plan).
The Company has established Voluntary Employees' Beneficiary Association (VEBA) trusts for collectively bargained employees and non-bargaining employees. The VEBA trusts are similar to the Company's Retirement Plan trust. Contributions to the VEBA trusts are tax deductible, subject to limitations contained in the Internal Revenue Code and regulations. Contributions to the VEBA trusts are made to fund employees' post-retirement health care and life insurance benefits, as well as benefits as they are paid to current retirees. Post-Retirement Plan assets primarily consist of equity and fixed income investments and money market funds.
Distribution Corporation and Supply Corporation represent virtually all of the Company's total post-retirement benefit costs. Distribution Corporation and Supply Corporation are fully recovering their net periodic post-retirement benefit costs in accordance with the Public Service Commission of the State of New York (PSC) and the Pennsylvania Public Utility Commission (PaPUC) and FERC authorization, respectively. In accordance with regulatory guidelines, the difference between the amounts of post-retirement benefit costs recoverable in rates and the amounts of post-retirement benefit costs determined by the actuary under SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," are deferred in each jurisdiction as either a regulatory asset or liability, as appropriate.
The Company has elected to amortize the initial accumulated liability at October 1, 1993 to post-retirement benefit cost on a straight-line basis over a 20-year period.
The components of post-retirement benefit cost were as follows:

Year Ended September 30 (Thousands)                 1996     1995     1994
                                                    ----     ----     ----

Service Cost                                       $ 3,926  $ 3,394  $ 3,974
Interest Cost                                       14,391   13,027   13,714
Actual Return on Post-Retirement Plan Assets        (9,072)  (4,613)  (1,035)
Net Amortization and Deferral                       11,830   12,592    6,877
                                                   -------  -------  -------
Post-Retirement Benefit Cost                       $21,075  $24,400  $23,530
                                                   =======  =======  =======	

The weighted average assumed discount rate used in determining the accumulated post-retirement benefit obligation was 8% for 1996 and 1995, and 8.5% for 1994. The average assumed annual rate of salary increase for the applicable life insurance plans was 5% for all three years. The expected long-term rate of return on Post-Retirement Plan assets was 8.5% for all three years.

The annual rate of increase in the per capita cost of covered medical care benefits for the active participants and medical plans available to new retirees was assumed to be 13% for 1994, 12% for 1995 and 11% for 1996; this rate was assumed to decrease gradually to 5.5% by the year 2003 and remain at that level thereafter. The annual rate of increase in the per capita cost of covered medical care benefits for the medical plans not available to new retirees was assumed to be 8% for 1994, 7% for 1995, and 6% for 1996. The annual rate of increase in the per capita cost of covered prescription drug benefits was assumed to be 14% for 1994 and 10% for 1995 and 1996. This rate was assumed to decrease gradually to 5.5% by the year 2003 and remain level thereafter. The annual rate increase in the per capita Medicare Part B Reimbursement was assumed to be 12.3% for 1994, 12.2% for 1995, 12% for 1996, 3.1% for 1997 and 5.5% for each year thereafter.
A reconciliation of the Post-Retirement Plan's funded status as determined by the Company's consulting actuary is in the following table:

At September 30 (Thousands)                               1996        1995
                                                          ----        ----

Accumulated Post-Retirement Benefit Obligation:
  Inactives                                            $111,970     $ 76,272
  Actives Fully Eligible                                 25,363       36,223
  Actives Not Yet Fully Eligible                         74,715       70,620
                                                       --------     --------
                                                        212,048      183,115
Fair Value of Post-Retirement Plan Assets                73,059       48,678
                                                       --------     --------
Funded Status                                          (138,989)    (134,437)
Unrecognized Transition Obligation                      132,055      141,561
Unrecognized Net Loss (Gain)                              4,510       (8,930)
                                                       --------     --------
Post-Retirement Liability                              $ (2,424)    $ (1,806)
                                                       ========     ========	

The health care cost trend rate assumptions used to calculate the per capita cost of covered medical care benefits have a significant effect on the amounts reported. If the health care cost trend rates were increased by 1% in each year, the accumulated post-retirement benefit obligation as of October 1, 1995, would be increased by $27.6 million. This 1% change would also increase the aggregate of the service and interest cost components of net periodic post-retirement benefit cost for 1996 by $3.2 million.
Post-Employment Benefits
In November 1992, the FASB issued SFAS 112, "Employers' Accounting for Postemployment Benefits" (SFAS 112), which establishes standards of financial accounting and reporting for benefits, such as salary continuation, severance pay, workers' compensation and other disability-related benefits, provided to former or inactive employees subsequent to employment but prior to retirement. The Company adopted SFAS 112 in the fourth quarter of 1994. The Consolidated Statement of Income for 1994 includes a charge of $0.6 million, net of income taxes, as a cumulative effect of a change in accounting principle.
Note H - Commitments and Contingencies
Leases
The Company has entered into lease agreements, principally for the use of office space, business machines, transportation equipment and meters. The Company's policy is to treat all leases as operating leases for both accounting and ratemaking purposes. Total lease expense approximated $16.9 million in 1996, $16.3 million in 1995 and $17.2 million in 1994. At September 30, 1996, the future minimum payments under the Company's lease agreements for the next five years are: $13.4 million in 1997, $10.0 million in 1998, $6.8 million in 1999, $4.9 million in 2000 and $3.4 million in 2001. The aggregate future minimum lease payments attributable to later years is $10.1 million.
Obligations Under Firm Contracts
Distribution Corporation has agreements with five nonaffiliated upstream pipeline companies that provide for the availability of needed pipeline transportation capacity for periods that extend through 2004. These

agreements provide for payment of a demand or reservation charge, at FERC-approved rates, for contracted capacity. Distribution Corporation has various gas purchase agreements with nonaffiliated gas producers that require payment of fixed monthly charges. These charges are tied to various indices. These agreements have average terms that range from three to five years. Additionally, Distribution Corporation has agreements with three nonaffiliated companies for gas storage services through 2006 that require payment of a demand charge, for contracted storage. At September 30, 1996, the projected aggregate amounts of such required future payments, based on current FERC-approved rates and current indices, where applicable, are approximately $98.1 million, $10.8 million, and $2.4 million annually for the next five years, for pipeline capacity, gas purchases, and storage service, respectively. Additionally, these agreements call for the payment of commodity charges based upon actual quantities shipped, purchased and stored.
These obligations under firm contracts are considered purchased gas costs, subject to state commission review, and are being recovered in customer rates through the inclusion in Distribution Corporation's rate schedules.
For the fiscal year ended September 30, 1996, total gross costs incurred under these contracts, including commodity charges on actual quantities shipped, purchased and stored, amounted to $365.2 million.
Environmental Matters
The Company is subject to various federal, state and local laws and regulations relating to the protection of the environment. The Company has established procedures for the on-going evaluation of its operations to identify potential environmental exposures and assure compliance with regulatory policies and procedures.
Distribution Corporation has incurred and is incurring clean-up costs at several former manufactured gas plant sites in New York and Pennsylvania. Distribution Corporation has been designated by the New York Department of Environmental Conservation (DEC) as a potentially responsible party (PRP) with respect to one of these sites in New York, and is also engaged in litigation with the DEC and the party who bought the site from Distribution Corporation's predecessor.
Distribution Corporation is also currently identified by the DEC or the federal Environmental Protection Agency as one of a number of companies considered to be PRPs with respect to several waste disposal sites in New York which were operated by unrelated third parties. The PRPs are alleged to have contributed to the materials that may have been collected at such waste disposal sites by the site operators. The ultimate cost to Distribution Corporation with respect to the remediation of these sites will depend on such factors as the remediation plan selected, the extent of the site contamination, the number of additional PRPs at each site and the portion, if any, attributed to Distribution Corporation.
It is the Company's policy to accrue estimated environmental clean-up costs when such amounts can reasonably be estimated and it is probable that the Company will be required to incur such costs. Distribution Corporation has estimated that clean-up costs related to the above noted sites are in the range of $8.7 million to $10.1 million. At September 30, 1996, Distribution Corporation has recorded the minimum liability of $8.7 million. The Company is currently not aware of any material additional exposure to environmental liabilities. However, adverse changes in environmental regulations or other factors could impact the Company.
In New York and Pennsylvania, Distribution Corporation is recovering site investigation and remediation costs in rates. Accordingly, the Consolidated Balance Sheet at September 30, 1996, includes related regulatory assets in the amount of approximately $8.1 million.
Memorandum of Understanding - Green Canyon Project In November 1996, Supply Corporation entered into a Memorandum of Understanding (the MOU) with Green Canyon Gathering Company, a subsidiary of

Tenneco Energy, regarding a project to develop, construct, own and operate natural gas gathering and processing facilities offshore and onshore Louisiana (the Project). The total cost of the Project is estimated at approximately $200 million. The MOU provides for the parties to (i) share past and future development costs for the Project through January 1, 1997, and thereafter as agreed by the parties, (ii) negotiate toward definitive agreements to be signed about January 1, 1997, to form one or more 50-50 partnerships, and (iii) negotiate toward definitive agreements to finance, develop, build, own and operate the Project. If the definitive agreements are not executed, or if the Project is not constructed, Supply Corporation's share of the development costs through January 1, 1997 is estimated not to exceed $2 million, for which it is unlikely Supply Corporation would be reimbursed. Supply Corporation intends to use short-term borrowings to finance construction of the Project.
Other
The Company is involved in litigation arising in the normal course of its business. In addition to the regulatory matters discussed in Note B - Regulatory Matters, the Company is involved in other regulatory matters arising in the normal course of business that involve rate base, cost of service and purchased gas cost issues. While the resolution of such litigation or other regulatory matters could have a material effect on earnings and cash flows in the year of resolution, none of this litigation, and none of these other regulatory matters, are expected to have a material adverse effect on the financial condition of the Company at this time.
Note I - Business Segment Information
The Company includes operations which are rate-regulated (regulated) and operations which are not regulated as to their rates (nonregulated). The regulated operations fall primarily within two business segments: Utility and Pipeline and Storage. The nonregulated operations consist principally of the Exploration and Production business segment. The Other Nonregulated segment consists primarily of the Company's sawmill and dry kiln operations, natural gas marketing operations, natural gas hub operations, investment in foreign and domestic energy projects and pipeline construction operations (which were discontinued during 1995, the effect of which was immaterial to the Company).
The Utility segment is regulated by the PSC and the PaPUC and is carried out by Distribution Corporation. Distribution Corporation sells and transports gas to retail customers located in western New York and northwestern Pennsylvania. It also provides off-system sales to customers located in regions through which the upstream pipelines serving Distribution Corporation pass (i.e., from the southwestern to northeastern regions of the United States). The Pipeline and Storage segment is regulated by the FERC and is carried out by Supply Corporation. Supply Corporation transports and stores natural gas for utilities and pipeline companies in the northeastern United States markets. In 1996, 1995 and 1994, 51%, 48% and 52%, respectively, of Supply Corporation's revenue was from affiliated companies, mainly Distribution Corporation.
Seneca is engaged in exploration for, and development and purchase of, oil and natural gas reserves in the Gulf Coast, and the southwestern, western and Appalachian regions of the United States. Seneca's production is, for the most part, sold to purchasers located in the vicinity of its wells. Highland operates a sawmill and dry kiln operation in Pennsylvania. NFR is engaged in the marketing and brokerage of natural gas and performs energy management services for utilities and end-users in the northeastern United States markets. Leidy's activities center around its investment in natural gas hub operations, providing services to customers in the northeastern, mid-Atlantic, Chicago and Los Angeles areas of the United States and Ontario, Canada. Horizon is engaged in the investigation and development of foreign and domestic energy projects and presently operates a district heating plant and a power development group in the Czech Republic. UCI was engaged in the Company's pipeline construction operations prior to the discontinuance of its business in the third quarter of fiscal 1995.

The data presented in the tables below reflect the Company's regulated and nonregulated business segments for the three years ended September 30, 1996. Total operating revenues by segment include both revenues from nonaffiliated customers and intersegment revenues. Operating income is total operating revenues less operating expenses, not including income taxes. The elimination of significant intercompany balances and transactions, if appropriate, is made in order to reconcile segment information with consolidated amounts. Identifiable assets of a segment are those assets that are used in the operations of that segment. Corporate assets are principally cash and temporary cash investments, receivables, deferred charges and cash surrender values of insurance contracts.

Year Ended September 30 (Thousands)       1996          1995          1994
                                          ----          ----          ----
Operating Revenues
Regulated:
  Utility                              $  954,326      $786,064    $  931,673
  Pipeline and Storage                    176,553       164,587       153,121
                                       ----------      --------    ----------
                                        1,130,879       950,651     1,084,794
                                       ----------      --------    ----------

Nonregulated:
  Exploration and Production              114,462        56,232        70,261
  Other                                    68,930        57,075        72,036
                                       ----------      --------    ----------
                                          183,392       113,307       142,297
                                       ----------      --------    ----------

  Intersegment Revenues*                 (106,254)      (88,462)      (85,767)
                                       ----------      --------    ----------
                                       $1,208,017      $975,496    $1,141,324
                                       ==========      ========    ==========	

* Represents primarily Pipeline and Storage revenue from the Utility segment.

Operating Income (Loss) Before
  Income Taxes

Regulated:
  Utility                                $115,257      $ 83,774      $ 90,584
  Pipeline and Storage                     72,914        67,884        62,302
                                         --------      --------      --------
                                          188,171       151,658       152,886
                                         --------      --------      --------

Nonregulated:
  Exploration and Production               46,408        16,404        21,767
  Other                                    (8,581)        3,021         2,505
                                         --------      --------      --------
                                           37,827        19,425        24,272
                                         --------      --------      --------

Corporate                                  (2,231)       (2,805)       (3,463)
                                         --------      --------      --------

                                         $223,767      $168,278      $173,695
                                         ========      ========      ========

Identifiable Assets
At September 30 (Thousands)
Regulated:
  Utility                              $1,154,364    $1,098,757    $1,105,202
  Pipeline and Storage                    515,569       512,546       498,798
                                       ----------    ----------    ----------
                                        1,669,933     1,611,303     1,604,000
                                       ----------    ----------    ----------

Nonregulated:
  Exploration and Production              396,077       351,262       311,037
  Other                                    38,955        33,734        33,357
                                       ----------    ----------    ----------
                                          435,032       384,996       344,394
                                       ----------    ----------    ----------

Corporate                                  44,807        40,524        32,412
                                       ----------    ----------    ----------

                                       $2,149,772    $2,036,823    $1,980,806
                                       ==========    ==========    ==========	

Year Ended September 30 (Thousands)       1996          1995          1994
                                          ----          ----          ----

Depreciation, Depletion and Amortization
Regulated:
  Utility                                 $31,491       $30,052       $28,216
  Pipeline and Storage                     19,942        19,320        17,516
                                          -------       -------       -------
                                           51,433        49,372        45,732
                                          -------       -------       -------

Nonregulated:
  Exploration and Production               46,042        21,201        27,496
  Other                                       752         1,203         1,530
                                          -------       -------       -------
                                           46,794        22,404        29,026
                                          -------       -------       -------

Corporate                                       4             6             6
                                          -------       -------       -------

                                          $98,231       $71,782       $74,764
                                          =======       =======       =======

Capital Expenditures
Regulated:
  Utility                                $ 63,730      $ 64,844      $ 61,715
  Pipeline and Storage                     22,260        38,678        20,472
                                         --------      --------      --------
                                           85,990       103,522        82,187
                                         --------      --------      --------

Nonregulated:
  Exploration and Production               83,554        69,741        52,458
  Other                                     3,189         9,563         3,603
                                         --------      --------      --------
                                           86,743        79,304        56,061
                                         --------      --------      --------

Corporate                                       -             -            20
                                         --------      --------      --------

Intersegment Elimination                   (1,166)            -             -
                                         --------      --------      --------

                                         $171,567      $182,826      $138,268
                                         ========      ========      ========	

Note J - Quarterly Financial Data (unaudited)
In the opinion of management, the following quarterly information includes all adjustments necessary for a fair statement of the results of operations for such periods. Earnings per common share are calculated using the weighted average number of shares outstanding during each quarter. The total of all quarters may differ from the earnings per common share shown on the Consolidated Statement of Income, which is based on the weighted average number of shares outstanding for the entire fiscal year. Because of the seasonal nature of the Company's heating business, there are substantial variations in operations reported on a quarterly basis.
Financial data for the quarter ended September 30, 1996 reflects the after-tax net benefit of gas cost reconciliation adjustments of $2.7 million or $0.07 per share, and the reversal of estimated lost and unaccounted-for gas accrued in prior quarters of 1996 of $4.6 million, after-tax, or $0.12 per share. These items were offset by an after-tax charge to earnings of $5.2 million, or $0.14 per share, related to a special early retirement offer to certain salaried, non-union hourly and union employees of Distribution Corporation and Supply Corporation. In addition, Horizon recognized a fourth quarter after-tax charge to earnings of $3.8 million, or $0.10 per share, related to its decision to withdraw from participation in the development of a 151 megawatt power plant near Kabirwala, Punjab Province, in east-central Pakistan.
Financial data for the quarter ended September 30, 1995 reflects an after-tax charge of $2.8 million, or $0.07 per share, related to Distribution Corporation's recording of estimated gas costs for lost and unaccounted-for gas in excess of that allowed to be recovered in rates. In addition, the quarter ended September 30, 1995 includes an after-tax charge of $2.2 million recorded by Supply Corporation establishing a reserve for previously deferred preliminary survey and investigation charges related to a storage project.

                                                  Net Income    Earnings
                                                 Available for    Per
Quarter                    Operating  Operating     Common       Common
 Ended                     Revenues    Income       Stock         Share
- -------                    ---------  ---------  -------------  --------

1996   (Thousands, except earnings per common share)
- ------------------------------------------------------------------------

12/31/95                    $316,328   $46,344      $32,392      $ .87
 3/31/96                    $492,376   $69,631      $55,692      $1.48
 6/30/96                    $239,330   $29,687      $17,310      $ .46
 9/30/96                    $159,983   $11,784      $  (723)     $(.02)

1995   (Thousands, except earnings per common share)
- ------------------------------------------------------------------------

12/31/94                    $279,332   $43,288      $30,571      $ .82
 3/31/95                    $378,762   $56,457      $43,307      $1.16
 6/30/95                    $193,461   $18,987      $ 8,981      $ .24
 9/30/95                    $123,941   $ 5,667      $(6,965)     $(.19)	

Note K - Market for Common Stock and Related Shareholder Matters (unaudited)
At September 30, 1996, there were 21,640 holders of National Fuel Gas Company common stock. The market for the common stock is the New York Stock Exchange. Information related to restrictions on the payment of dividends can be found in Note D - Capitalization. The quarterly price ranges and quarterly dividends declared for the fiscal years ended September 30, 1996 and 1995, are shown below:

                                         Price Range           Dividends
Quarter Ended                          High       Low          Declared
- -------------                          ----       ---          ---------

    1996
    ----

  12/31/95                            $33-7/8    $28-1/2         $.405
   3/31/96                            $34-7/8    $31-3/8         $.405
   6/30/96                            $36-3/8    $33-3/4         $.42
   9/30/96                            $38        $33-3/8         $.42

    1995
    ----

  12/31/94                            $30        $25-1/4         $.395
   3/31/95                            $28-1/2    $25             $.395
   6/30/95                            $30-3/4    $27-1/2         $.405
   9/30/95                            $29-5/8    $26-1/2         $.405	

Note L - Supplementary Information for Oil and Gas Producing Activities
The following supplementary information is presented in accordance with SFAS 69, "Disclosures about Oil and Gas Producing Activities," and related SEC accounting rules.
Capitalized Costs Relating to Oil and Gas Producing Activities

At September 30 (Thousands)                          1996           1995
                                                     ----           ----

Capitalized Costs Subject to Amortization          $570,815       $495,802
Capitalized Acquisition Costs Excluded
  from Amortization                                  35,627         28,565
                                                   --------       --------
                                                    606,442        524,367

Less - Accumulated Depreciation, Depletion
  and Amortization                                  233,743        188,241
                                                   --------       --------

                                                   $372,699       $336,126
                                                   ========       ========	

Certain costs excluded from amortization represent unevaluated properties that require additional drilling to determine the existence of oil

and gas reserves. The remaining costs, incurred during and prior to 1996, consist of individually insignificant oil and gas leases still early in their primary terms and individually insignificant unproved perpetual oil and gas rights.
Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development

Activities

Year Ended September 30 (Thousands)              1996       1995       1994
                                                 ----       ----       ----

Property Acquisition Costs:
  Proved                                       $ 4,632     $13,186    $ 5,109
  Unproved                                      12,879      12,119      3,106
Exploration Costs                               33,191      18,588     17,855
Development Costs                               32,747      25,161     25,102
Other                                              230         559        259
                                               -------     -------    -------
                                               $83,679     $69,613    $51,431
                                               =======     =======    =======

Results of Operations for Producing Activities

Year Ended September 30 (Thousands)              1996       1995       1994
                                                 ----       ----       ----

Operating Revenues:
  Natural Gas (includes revenues from sales
    to affiliates of $11,872, $8,650 and
    $5,456, respectively)                     $ 91,018     $34,849    $50,803
  Oil, Condensate and Other Liquids             33,978      11,948     15,307
                                              --------     -------    -------

Total Operating Revenues                       124,996      46,797     66,110

Production/Lifting Costs                        15,196      11,215     13,177

Depreciation, Depletion and Amortization
  ($0.36, $0.44 and $0.41, respectively, per
  dollar of operating revenues)                 45,502      20,528     26,992

Income Tax Expense                              22,069       4,301      7,907
                                              --------     -------    -------

Results of Operations for Producing
  Activities (excluding corporate overheads
  and interest charges)                       $ 42,229     $10,753    $18,034
                                              ========     =======    =======	

Reserve Quantity Information (unaudited)
The Company's proved oil and gas reserves are located in the United States. The estimated quantities of proved reserves disclosed in the table below are based upon estimates by qualified Company geologists and engineers and are audited by independent petroleum engineers. Such estimates are inherently imprecise and may be subject to substantial revisions as a result of numerous factors including, but not limited to, additional development activity, evolving production history, and continual reassessment of the viability of production under varying economic conditions.

                                      Gas                        Oil
Year Ended                            MMcf                       Mbbl
                             ----------------------      --------------------
September 30                 1996     1995     1994      1996    1995    1994
                             ----     ----     ----      ----    ----    ----

Proved Developed and
Undeveloped Reserves:

  Beginning of Year         221,459  247,447  175,051   22,865  17,495  18,519

    Extensions and
      Discoveries            29,161    9,912   94,733    5,701   3,863   1,666

    Revisions of
      Previous Estimates     (3,442) (21,046)  (2,075)  (1,173)    (60) (1,660)

    Production              (38,767) (20,942) (23,273)  (1,742)   (739) (1,030)

    Sales of Minerals in
      Place                  (1,532)  (4,685)     (32)     (27)   (474)      -

    Purchases of Minerals
      in Place and Other        203   10,773    3,043      125   2,780       -
                            -------  -------  -------   ------  ------  ------

  End of Year               207,082  221,459  247,447   25,749  22,865  17,495
                            =======  =======  =======   ======  ======  ======

Proved Developed Reserves:

  Beginning of Year         162,504  179,291  134,712   14,937  10,110  10,801
                            =======  =======  =======   ======  ======  ======

  End of Year               163,537  162,504  179,291   14,043  14,937  10,110
                            =======  =======  =======   ======  ======  ======	

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves (unaudited)
The Company cautions that the following presentation of the standardized measure of discounted future net cash flows is intended to be neither a measure of the fair market value of the Company's oil and gas properties, nor an estimate of the present value of actual future cash flows to be obtained as a result of their development and production. It is based upon subjective estimates of proved reserves only and attributes no value to categories of reserves other than proved reserves, such as probable or possible reserves, or to unproved acreage. Furthermore, it is based on year-end prices and costs adjusted only for existing contractual changes, and it assumes an arbitrary discount rate of 10%. Thus, it gives no effect to future price and cost changes certain to occur under the widely fluctuating political and economic conditions of today's world.
The standardized measure is intended instead to provide a somewhat better means for comparing the value of the Company's proved reserves at a given time with those of other oil- and gas-producing companies than is provided by a simple comparison of raw proved reserve quantities.

Year Ended September 30 (Thousands)              1996       1995       1994
                                                 ----       ----       ----

Future Cash Inflows                           $1,003,280  $738,711   $705,874
Less:
  Future Production and Development Costs        294,778   272,268    252,901
  Future Income Tax Expense at
    Applicable Statutory Rate                    221,956   129,055    131,060
                                              ----------  --------   --------
Future Net Cash Flows                            486,546   337,388    321,913
Less:
  10% Annual Discount for Estimated
    Timing of Cash Flows                         157,302    92,120    106,647
                                              ----------  --------   --------
Standardized Measure of Discounted Future
    Net Cash Flows                            $  329,244  $245,268   $215,266
                                              ==========  ========   ========	

The principal sources of change in the standardized measure of discounted future net cash flows were as follows:

Year Ended September 30 (Thousands)              1996       1995       1994
                                                 ----       ----       ----

Standardized Measure of Discounted Future
  Net Cash Flows at Beginning of Year          $245,268   $215,266   $209,655
    Sales, Net of Production Costs             (109,801)   (35,582)   (52,933)
    Net Changes in Prices, Net of
      Production Costs                          147,330     10,757    (48,149)
    Purchases of Minerals in Place                  770     18,602      2,793
    Sales of Minerals in Place                   (1,141)    (5,688)       (29)
    Extensions and Discoveries                   93,864     47,236     96,134
    Changes in Estimated Future
      Development Costs                         (53,630)   (50,366)   (36,466)
    Previously Estimated Development
      Costs Incurred                             42,780     39,833     22,941
    Net Change in Income Taxes at
      Applicable Statutory Rate                 (52,613)    (6,838)     3,098
    Revisions of Previous Quantity
      Estimates                                 (15,491)   (20,934)   (11,042)
    Accretion of Discount and Other              31,908     32,982     29,264
                                               --------   --------   --------
Standardized Measure of Discounted
  Future Net Cash Flows at End of Year         $329,244   $245,268   $215,266
                                               ========   ========   ========	

NATIONAL FUEL GAS COMPANY AND SUBSIDIARIES
Schedule II - Valuation and Qualifying Accounts
(Thousands)

                                       Additions
                                ----------------------
                    Balance at  Charged to  Charged to              Balance at
                    Beginning   Costs and     Other     Deductions    End of
Description         of Period    Expenses    Accounts     (Note)      Period
- -----------         ----------  ----------  ----------  ----------  ----------

Year Ended September 30, 1996
- -----------------------------

Reserve for Doubtful
 Accounts             $5,924     $15,191      $    -      $13,443     $7,672
                      ======     =======      ======      =======     ======

Year Ended September 30, 1995
- -----------------------------

Reserve for Doubtful
 Accounts             $5,055     $15,187      $    -      $14,318     $5,924
                      ======     =======      ======      =======     ======

Year Ended September 30, 1994
- -----------------------------

Reserve for Doubtful
 Accounts             $5,739     $11,443      $    -      $12,127     $5,055
                      ======     =======      ======      =======     ======	

Note - Amounts represent net accounts receivable written-off.
ITEM 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
ITEM 10 Directors and Executive Officers of the Registrant
The information required by this item concerning the directors of the Company is omitted pursuant to Instruction G of Form 10-K since the Company's definitive Proxy Statement for its February 20, 1997 Annual Meeting of Shareholders will be filed with the SEC not later than 120 days after September 30, 1996. The information provided in such definitive Proxy Statement is incorporated herein by reference. Information concerning the Company's executive officers can be found in Part I, Item 1, of this report.
ITEM 11 Executive Compensation
The information required by this item is omitted pursuant to Instruction G of Form 10-K since the Company's definitive Proxy Statement for its February 20, 1997 Annual Meeting of Shareholders will be filed with the SEC not later than 120 days after September 30, 1996. The information provided in such definitive Proxy Statement is incorporated herein by reference.
ITEM 12 Security Ownership of Certain Beneficial Owners and Management
The information required by this item is omitted pursuant to Instruction G of Form 10-K since the Company's definitive Proxy Statement for its February 20, 1997 Annual Meeting of Shareholders will be filed with the SEC not later than 120 days after September 30, 1996. The information provided in such definitive Proxy Statement is incorporated herein by reference.

ITEM 13 Certain Relationships and Related Transactions
At September 30, 1996, the Company knows of no relationships or transactions required to be disclosed pursuant to Item 404 of Regulation S-K.
PART IV
ITEM 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Financial Statement Schedules All financial statement schedules filed as part of this report are included in Item 8 of this Form 10-K and reference is made thereto.
(b) Reports on Form 8-K None
(c) Exhibits

 Exhibit
 Number              Description of Exhibits

 3(i)                Articles of Incorporation:

    *                Restated  Certificate  of  Incorporation  of
                     National  Fuel Gas Company,  dated March 15,
                     1985  (Exhibit  10-OO,  Form 10-K for fiscal
                     year ended September 30, 1991 in File No.
                     1-3880)

    *                Certificate   of   Amendment   of   Restated
                     Certificate  of  Incorporation  of  National
                     Fuel  Gas  Company,   dated  March  9,  1987
                     (Exhibit  3.1,  Form  10-K for  fiscal  year
                     ended September 30, 1995 in File No. 1-3880)

    *                Certificate   of   Amendment   of   Restated
                     Certificate  of  Incorporation  of  National
                     Fuel Gas  Company,  dated  February 22, 1988
                     (Exhibit  3.2,  Form  10-K for  fiscal  year
                     ended September 30, 1995 in File No. 1-3880)

    *                Certificate of Amendment of Restated
                     Certificate of Incorporation, dated March
                     17, 1992 (Exhibit EX-3(a), Form 10-K for
                     fiscal year ended September 30, 1992 in File
                     No. 1-3880)

3(ii)                By-Laws:

    *                National Fuel Gas Company By-Laws as amended
                     through June 9, 1994 (Exhibit 3.1, Form 10-K
                     for fiscal year ended  September 30, 1994 in
                     File  No.   1-3880)  (See  Exhibit  3.1  for
                     amendment  intended to become  effective  in
                     January 1997)

  3.1                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

  (4)                Instruments Defining the Rights of Security
                     Holders, Including 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)	

   *                Ninth  Supplemental  Indenture  dated  as of
                    January 1, 1990,  to  Indenture  dated as of
                    October  15,  1974,  between the Company and
                    The Bank of New York (formerly  Irving Trust
                    Company)  (Exhibit  EX-4.4,  Form  10-K  for
                    fiscal year ended September 30, 1992 in File
                    No. 1-3880)

   *                Tenth  Supplemental  Indenture  dated  as of
                    February 1, 1992,  to Indenture  dated as of
                    October  15,  1974,  between the Company and
                    The Bank of New York (formerly  Irving Trust
                    Company)   (Exhibit  4(a),  Form  8-K  dated
                    February 14, 1992 in File No. 1-3880)

   *                Eleventh Supplemental  Indenture dated as of
                    May  1,  1992,  to  Indenture  dated  as  of
                    October  15,  1974,  between the Company and
                    The Bank of New York (formerly  Irving Trust
                    Company)   (Exhibit  4(b),  Form  8-K  dated
                    February 14, 1992 in File No. 1-3880)

   *                Twelfth  Supplemental  Indenture dated as of
                    June  1,  1992,  to  Indenture  dated  as of
                    October  15,  1974,  between the Company and
                    The Bank of New York (formerly  Irving Trust
                    Company)  (Exhibit 4(c), Form 8-K dated June
                    18, 1992 in File No. 1-3880)

   *                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)

 4.1                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)

   *                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)

(10)                Material Contracts:

(ii) (B)            Contracts upon which Registrant's business
                    is substantially dependent:

10.1                Service Agreement No. 830016 with Texas
                    Eastern Transmission Corporation, under Rate
                    Schedule FT-1, dated November 2, 1995

10.2                Service Agreement No. 830017 with Texas
                    Eastern Transmission Corporation, under
                    Rate Schedule FT-1, dated November 2, 1995

10.3                Service Agreement with Texas Eastern
                    Transmission Corporation, under Rate
                    Schedule CDS, dated November 2, 1995

10.4                Service  Agreement between National Fuel Gas
                    Distribution  Corporation  and National Fuel
                    Gas Supply Corporation,  under Rate Schedule
                    FSS,  dated April 3, 1996  [Portions of this
                    agreement  are  subject  to  a  request  for
                    confidential treatment under Rule 24b-2]	

10.5                Service Agreement with St. Clair Pipelines
                    Ltd., dated January 29, 1996 [Portions of
                    this agreement are subject to a request for
                    confidential treatment under Rule 24b-2]

   *                Service Agreement with Empire State Pipeline
                    under Rate  Schedule FT, dated  December 15,
                    1994 [Portions of this agreement are subject
                    to confidential  treatment under Rule 24b-2]
                    (Exhibit  10.1,  Form 10-K for  fiscal  year
                    ended   September  30,  1995,  in  File  No.
                    1-3880)

   *                Service  Agreement between National Fuel Gas
                    Distribution  Corporation  and National Fuel
                    Gas Supply  Corporation  under Rate Schedule
                    ESS dated August 1, 1993 (Exhibit 10.2, Form
                    10-K for  fiscal  year ended  September  30,
                    1995, in File No. 1-3880)

   *                Service  Agreement between National Fuel Gas
                    Distribution  Corporation  and National Fuel
                    Gas Supply  Corporation  under Rate Schedule
                    ESS dated  September 19, 1995 (Exhibit 10.3,
                    Form 10-K for fiscal  year  ended  September
                    30, 1995, in File No. 1-3880)

   *                Service  Agreement between National Fuel Gas
                    Distribution  Corporation  and National Fuel
                    Gas Supply  Corporation  under Rate Schedule
                    EFT dated August 1, 1993 (Exhibit 10.4, Form
                    10-K for  fiscal  year ended  September  30,
                    1995, in File No. 1-3880)

   *                Amendment dated as of May 1, 1995 to Service
                    Agreement    between   National   Fuel   Gas
                    Distribution  Corporation  and National Fuel
                    Gas Supply  Corporation  under Rate Schedule
                    EFT dated August 1, 1993 (Exhibit 10.5, Form
                    10-K for  fiscal  year ended  September  30,
                    1995, in File No. 1-3880)

   *                Service Agreement with  Transcontinental Gas
                    Pipe Line Corporation under Rate Schedule FT
                    dated  August 1, 1993  (Exhibit  10.6,  Form
                    10-K for  fiscal  year ended  September  30,
                    1995, in File No. 1-3880)

   *                Service Agreement with  Transcontinental Gas
                    Pipe Line Corporation under Rate Schedule FT
                    dated  October 1, 1993 (Exhibit  10.7,  Form
                    10-K for  fiscal  year ended  September  30,
                    1995, in File No. 1-3880)

   *                Service    Agreement   with   Columbia   Gas
                    Transmission Corporation under Rate Schedule
                    FTS,  dated  November  1, 1993 and  executed
                    February 13, 1994 (Exhibit  10.1,  Form 10-K
                    for fiscal year ended  September 30, 1994 in
                    File No. 1-3880)

   *                Service    Agreement   with   Columbia   Gas
                    Transmission Corporation under Rate Schedule
                    FSS,  dated  November  1, 1993 and  executed
                    February 13, 1994 (Exhibit  10.2,  Form 10-K
                    for fiscal year ended  September 30, 1994 in
                    File No. 1-3880)

   *                Service    Agreement   with   Columbia   Gas
                    Transmission Corporation under Rate Schedule
                    SST,  dated  November  1, 1993 and  executed
                    February 13, 1994 (Exhibit  10.3,  Form 10-K
                    for fiscal year ended  September 30, 1994 in
                    File No. 1-3880)	

    *                Gas Transportation  Agreement with Tennessee
                     Gas  Pipeline  Company  under Rate  Schedule
                     FT-A  (Zone  4),  dated  September  1,  1993
                     (Exhibit  10.1,  Form 10-K for  fiscal  year
                     ended September 30, 1993 in File No. 1-3880)

    *                Gas Transportation  Agreement with Tennessee
                     Gas  Pipeline  Company  under Rate  Schedule
                     FT-A  (Zone  5),  dated  September  1,  1993
                     (Exhibit  10.2,  Form 10-K for  fiscal  year
                     ended September 30, 1993 in File No. 1-3880)

    *                Service   Agreement  with  CNG  Transmission
                     Corporation  under Rate  Schedule  FT, dated
                     October 1, 1993 (Exhibit 10.5, Form 10-K for
                     fiscal year ended September 30, 1993 in File
                     No. 1-3880)

    *                Service   Agreement  with  CNG  Transmission
                     Corporation  under Rate Schedule GSS,  dated
                     October 1, 1993 (Exhibit 10.6, Form 10-K for
                     fiscal year ended September 30, 1993 in File
                     No. 1-3880)

(iii)                Compensatory plans for officers:

    *                Employment Agreement, dated September 17,
                     1981, with Bernard J. Kennedy (Exhibit 10.4,
                     Form 10-K for fiscal year ended September
                     30, 1994 in File No. 1-3880)

 10.6                Ninth Extension to Employment Agreement with
                     Bernard J. Kennedy, dated September 19, 1996

    *                National  Fuel Gas  Company  1983  Incentive
                     Stock Option  Plan,  as amended and restated
                     through  February  18, 1993  (Exhibit  10.2,
                     Form  10-Q for the  quarterly  period  ended
                     March 31, 1993 in File No. 1-3880)

    *                National  Fuel Gas Company  1984 Stock Plan,
                     as amended and restated through February 18,
                     1993  (Exhibit  10.3,   Form  10-Q  for  the
                     quarterly  period  ended  March 31,  1993 in
                     File No. 1-3880)

 10.7                Amendment to the National Fuel Gas Company
                     1984 Stock Plan, dated December 11, 1996

    *                National  Fuel Gas  Company  1993  Award and
                     Option   Plan,   dated   February  18,  1993
                     (Exhibit  10.1,  Form 10-Q for the quarterly
                     period  ended  March  31,  1993 in File  No.
                     1-3880)

 10.8                Amendment to National Fuel Gas Company 1993
                     Award and Option Plan, dated December 11,
                     1996

    *                Amendment to National  Fuel Gas Company 1993
                     Award and Option  Plan,  dated  October  27,
                     1995  (Exhibit  10.8,  Form 10-K for  fiscal
                     year ended September 30, 1995 in File No.
                     1-3880)

 10.9                National Fuel Gas Company 1997 Award and
                     Option Plan

    *                Change in Control Agreement, dated May 1,
                     1992, with Philip C. Ackerman (Exhibit
                     EX-10.4, Form 10-K for fiscal year ended
                     September 30, 1992 in File No. 1-3880)

    *                Change in Control Agreement, dated May 1,
                     1992, with Richard Hare (Exhibit EX-10.5,
                     Form 10-K for fiscal year ended September
                     30, 1992 in File No. 1-3880)	

    *                Agreement, dated August 1, 1989, with
                     Richard Hare (Exhibit 10-Q, Form 10-K for
                     fiscal year ended September 30, 1989 in File
                     No. 1-3880)

    *                National    Fuel   Gas   Company    Deferred
                     Compensation  Plan,  as amended and restated
                     through May 1, 1994 (Exhibit 10.7, Form 10-K
                     for fiscal year ended  September 30, 1994 in
                     File No. 1-3880)

 10.10               Amendment to the National Fuel Gas Company
                     Deferred Compensation Plan, dated September
                     19, 1996

    *                Amendment  to  National   Fuel  Gas  Company
                     Deferred  Compensation Plan, dated September
                     27, 1995 (Exhibit 10.9, Form 10-K for fiscal
                     year ended September 30, 1995 in File No.
                     1-3880)

    *                Split Dollar Death Benefits Agreement, dated
                     April  1,  1991,  with  Philip  C.  Ackerman
                     (Exhibit  10.10,  Form 10-K for fiscal  year
                     ended September 30, 1994 in File No.
                     1-3880)

10.11                Amendment to April 1, 1991 Death Benefits
                     Agreement, dated January 8, 1996, with
                     Philip C. Ackerman

    *                Split Dollar Death Benefits Agreement, dated
                     April 1, 1991, with Richard Hare (Exhibit
                     10.9, Form 10-K for fiscal year ended
                     September 30, 1994 in File No. 1-3880)

10.12                Amendment to April 1, 1991 Death Benefits
                     Agreement, dated January 8, 1996, with
                     Richard Hare

    *                Executive Death Benefits Agreement, dated
                     April 1, 1991, with William J. Hill (Exhibit
                     EX-10.8, Form 10-K for fiscal year ended
                     September 30, 1992 in File No. 1-3880)

    *                Death Benefits Agreement, dated August 28,
                     1991, with Bernard J. Kennedy (Exhibit
                     10-TT, Form 10-K for fiscal year ended
                     September 30, 1991 in File No. 1-3880)

    *                Amendment to Death Benefit Agreement of
                     August 28, 1991, with Bernard J. Kennedy,
                     dated March 15, 1994 (Exhibit 10.11, Form
                     10-K for fiscal year ended September 30,
                     1995 in File No. 1-3880)

    *                National Fuel Gas Company and  Participating
                     Subsidiaries  Executive  Retirement  Plan as
                     amended  and  restated  through  November 1,
                     1995  (Exhibit  10.10,  Form 10-K for fiscal
                     year ended  September  30,  1995 in File No.
                     1-3880)

10.13                National Fuel Gas Company and Participating
                     Subsidiaries 1996 Executive Retirement Plan
                     Trust Agreement (II) dated May 10, 1996

    *                Summary of Annual at Risk Compensation
                     Incentive Program (Exhibit 10.10, Form 10-K
                     for fiscal year ended September 30, 1993 in
                     File No. 1-3880)

10.14                Administrative Rules with Respect to at Risk
                     Awards under the 1993 Award and Option Plan

10.15                Administrative Rules of the Compensation
                     Committee of the Board of Directors of
                     National Fuel Gas Company as amended through
                     December 11, 1996	

    *                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
                     (Exhibit  10-UU,  Form 10-K for fiscal  year
                     ended September 30, 1991 in File No. 1-3880)

10.16                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

 (12)                Computation of Ratio of Earnings to Fixed
                     Charges

 (13)                Letter to Shareholders as contained in the
                     1996 Annual Report and incorporated by
                     reference into this Form 10-K	

(21) Subsidiaries of the Registrant:

See Item 1 of Part I of this Annual Report

                    on Form 10-K

(23)                Consents of Experts and Counsel:

23.1                Consent of Ralph E. Davis Associates, Inc.

23.2                Consent of Independent Accountants

(27)                Financial Data Schedules

(99)                Additional Exhibits:

99.1                Report of Ralph E. Davis Associates, Inc.	

All other exhibits are omitted because they are not applicable or the required information is shown elsewhere in this Annual Report on Form 10-K.
* Incorporated herein by reference as indicated.

Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
National Fuel Gas Company
 (Registrant)

                                              By      /s/ B. J. Kennedy
                                                -------------------------------
                                                          B. J. Kennedy
                                               Chairman of the Board, President
Date:  December 13, 1996                          and Chief Executive Officer
     -------------------	

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

     Signature                                          Title
     ---------                                          -----

/s/ B. J. Kennedy                               Chairman of the Board,
------------------------
    B. J. Kennedy                             President,  Chief Executive
                                                 Officer and Director
Date:  December 13, 1996
     -------------------

/s/ P. C. Ackerman                         Senior Vice President, Principal
------------------------
    P. C. Ackerman                          Financial Officer and Director

Date:  December 13, 1996
     -------------------

/s/ R. T. Brady                                        Director
------------------------
    R. T. Brady

Date:  December 13, 1996
     -------------------

/s/ W. J. Hill                                         Director
------------------------
    W. J. Hill

Date:  December 13, 1996
     -------------------

/s/ L. F. Kahl                                         Director
------------------------
    L. F. Kahl

Date:  December 13, 1996
     -------------------

/s/ B. S. Lee                                          Director
------------------------
    B. S. Lee

Date:  December 13, 1996
     -------------------

/s/ E. T. Mann                                         Director
------------------------
    E. T. Mann

Date:  December 13, 1996
     -------------------	

/s/ G. L. Mazanec                                      Director
------------------------
    G. L. Mazanec

Date:  December 13, 1996
     -------------------

/s/ L. Rochwarger                                      Director
------------------------
    L. Rochwarger

Date:  December 13, 1996
     -------------------

/s/ G. H. Schofield                                    Director
------------------------
    G. H. Schofield

Date:  December 13, 1996
     -------------------

/s/ J. P. Pawlowski                             Treasurer and Principal
------------------------
    J. P. Pawlowski                               Accounting Officer

Date:  December 13, 1996
     -------------------

/s/ A. M. Cellino                                     Secretary
------------------------
    A. M. Cellino

Date:  December 13, 1996
     -------------------

/s/ G. T. Wehrlin                                     Controller
------------------------
    G. T. Wehrlin

Date:  December 13, 1996
     -------------------	

APPENDIX TO ITEM 2 - PROPERTIES
Four maps outlining the Company's operating areas at September 30, 1996 are included on the inside foldout cover of the paper format version of the Company's combined Annual Report to Shareholders/Form 10-K, but are not included in this electronic filing. The first map identifies the Company's Utility Operating area (i.e., Distribution Corporation's service area). The second map identifies the Company's Pipeline and Storage operating area (i.e., Supply Corporation's storage areas and pipelines). The third map identifies the Company's Exploration and Production operating area (i.e., Seneca Resources' operating area). The fourth map identifies the geographic location of the Company's Other Nonregulated operating areas (i.e., NFR's marketing office, Horizon's Czech Republic operations and Highland's sawmill operations).
APPENDIX TO ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION - GRAPHS
A. The Revenue Dollar - 1996
Two pie graphs detailing the revenue dollar in 1996: where it came from and where it went to, broken down as follows:
Where it came from:
$ .560 Residential Sales
.182 Commercial, Industrial and Off-System Sales .094 Oil and Gas Revenues
.067 Transportation Revenues
.049 Marketing Revenues
.032 Storage Service Revenues
.016 Other Revenues
$1.000 Total
Where it went to:
$ .394 Gas Purchased
.157 Wages, Including Benefits
.136 Taxes
.098 Other Materials and Services .081 Depreciation
.051 Dividends - Common Stock
.047 Interest
.036 Reinvested in the Business
$1.000 Total
B. Capital Expenditures
A bar graph detailing capital expenditures (millions of dollars) for the years 1992 through 1996, broken down as follows:

                               1992     1993     1994     1995     1996
                               ----     ----     ----     ----     ----
Other Nonregulated            $  7.2   $  6.2   $  3.6   $  9.6   $  3.2
Pipeline and Storage            58.7     27.4     20.5     38.7     22.2
Utility                         65.7     61.8     61.7     64.8     62.6
Exploration and Production      26.3     36.5     52.5     69.7     83.6
                              ------   ------   ------   ------   ------
                              $157.9   $131.9   $138.3   $182.8   $171.6	

APPENDIX TO ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION - GRAPHS (Concluded)
C. Capitalization Ratios
A bar graph detailing capitalization (percentage) for the years 1992 through 1996, broken down as follows:

            Debt (%)        Equity (%)
1992          54.5             45.5
1993          47.8             52.2
1994          46.2             53.8
1995          47.0             53.0
1996          47.5             52.5	

D. Book Value Per Common Share
A bar graph detailing book value per common share (dollars) for the years 1992 through 1996, as follows:
1992 - $18.68

1993 -  20.08
1994 -  20.93
1995 -  21.39
1996 -  22.61	

Exhibit Index

3.1       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

4.1       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)

10.1      Service   Agreement  No.   830016  with  Texas  Eastern   Transmission
          Corporation, under Rate Schedule FT-1, dated November 2, 1995

10.2      Service   Agreement  No.   830017  with  Texas  Eastern   Transmission
          Corporation, under Rate Schedule FT-1, dated November 2, 1995

10.3      Service Agreement with Texas Eastern Transmission  Corporation,  under
          Rate Schedule CDS, dated November 2, 1995

10.4      Service Agreement  between National Fuel Gas Distribution  Corporation
          and National  Fuel Gas Supply  Corporation,  under Rate  Schedule FSS,
          dated  April 3, 1996  [Portions  of this  agreement  are  subject to a
          request for confidential treatment under Rule 24b-2]

10.5      Service  Agreement with St. Clair  Pipelines  Ltd.,  dated January 29,
          1996  [Portions  of  this  agreement  are  subject  to a  request  for
          confidential treatment under Rule 24b-2]

10.6      Ninth Extension to Employment Agreement with Bernard J. Kennedy, dated
          September 19, 1996

10.7      Amendment  to the  National  Fuel Gas Company  1984 Stock Plan,  dated
          December 11, 1996.

10.8      Amendment  to National  Fuel Gas Company  1993 Award and Option  Plan,
          dated December 11, 1996

10.9      National Fuel Gas Company 1997 Award and Option Plan

10.10     Amendment to the National Fuel Gas Company Deferred Compensation Plan,
          dated September 19, 1996

10.11     Amendment to April 1, 1991 Death Benefits Agreement,  dated January 8,
          1996, with Philip C. Ackerman

10.12     Amendment to April 1, 1991 Death Benefits Agreement,  dated January 8,
          1996, with Richard Hare

10.13     National  Fuel  Gas  Company  and   Participating   Subsidiaries  1996
          Executive Retirement Plan Trust Agreement (II) dated May 10, 1996

10.14     Administrative  Rules with  Respect to at Risk  Awards  under the 1993
          Award and Option Plan

10.15     Administrative  Rules of the  Compensation  Committee  of the Board of
          Directors of National Fuel Gas Company as amended through December 11,
          1996

10.16     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

(12)      Computation of Ratio of Earnings to Fixed Charges

(13)      Letter to  Shareholders  as  contained  in the 1996 Annual  Report and
          incorporated by reference into this Form 10-K

23.1      Consent of Ralph E. Davis Associates, Inc.

23.2      Consent of Independent Accountants

27.1      Financial Data Schedule for 12 months ending September 30, 1996

27.2      Financial  Data  Schedule  for 12 months  ending  September  30, 1995,
          Restated

27.3      Financial  Data  Schedule  for 12 months  ending  September  30, 1994,
          Restated

99.1      Report of Ralph E. Davis Associates, Inc.	

EXCERPT FROM MINUTES OF
BOARD OF DIRECTORS MEETING
September 19, 1996
Whereupon, after discussion, upon motion duly made by Mr. Ackerman and seconded by Mr. Mann, the following resolutions were unanimously adopted:
RESOLVED: That, with respect to the National Fuel Gas Company Retirement Plan for Non-Employee Directors ("Directors' Retirement Plan"), which was previously adopted by this Board on December 5, 1991 (i) all accruals of benefits thereunder shall cease as of December 31, 1996, or as of February 20, 1997 in the case of Mr. Rochwarger; (ii) all current Company directors who are not vested under the Directors' Retirement Plan shall become immediately vested;(iii) all current directors who subsequently retire shall receive benefits under the Directors' Retirement Plan, based upon their accrued benefits, and payable in accordance with the current terms thereof; and (iv) all persons who become directors of the Company on or after September 19, 1996 shall being ineligible for any benefits under the Directors Retirement Plan; and it is
FURTHER RESOLVED: That non-employee directors shall be paid $500 for each special consultation as a director that is with or at the request of the Company's chief executive officer; and it is
FURTHER RESOLVED: That the Board's current guidelines, whereby directors should purchase the greater of 100 shares of Company stock or Company stock costing at least $3,000 per calendar year, are hereby revoked, and that any past failures to comply with these guidelines are hereby excused; and it is
FURTHER RESOLVED: That, effective January 1, 1997, the Board retainer policy for non-employees directors (except Mr. Rochwarger, who shall continue to receive a retainer pursuant to current policy, until he retires from the Board) shall be as follows: (i) such directors shall receive a quarterly retainer, payable as of the first business day of each calendar quarter, of $3,000, payable by check, plus 100 shares of Company common stock; (ii) the first payment of stock shall be delayed in the unlikely event that the regulatory approvals (as described below) are delayed; (iii) the payments described above shall, to the extent practicable, be prorated for a quarter during which a non-employee director has only partial service; and (iv) the shares of Company common stock thereby issued to non-employee directors shall not be transferable by directors until the later of two years after the issuance of the shares or six months after the director's cessation of service as a director; and it is
FURTHER RESOLVED: That the stock certificates representing such shares shall bear thereon a legend that shall read substantially as follows: "Transfer of the shares of common stock represented by this certificate cannot occur until the later of two years from the date of the certificate or six months after the owner ceases to serve as a director of National Fuel Gas Company."; and it is
FURTHER RESOLVED: That 100,000 shares of common stock, either original issue shares or treasury shares, be, and hereby are, reserved for issuance to non-employee Company directors pursuant to the amended retainer policy for such directors as heretofore approved by these resolutions; and it is
FURTHER RESOLVED: That the Board shall, on an annual basis, monitor the Company common stock component of the amended retainer policy for non-employee Company directors approved by these resolutions, and shall make such adjustments, if any, therein as the Board, in its discretion, may deem appropriate in light of then existing circumstances (including, but not limited to, the then existing market value of the Company common stock); and it is
FURTHER RESOLVED: That the officers and counsel of the Company be, and hereby are, authorized and empowered to prepare and file all documents and take all other actions as they may deem necessary or appropriate to accomplish the intents and purposes of the foregoing resolutions, including the filing of an application or declaration on Form U-1 with the Securities and Exchange Commission, and a listing application with the New York Stock Exchange, under which filings 100,000 shares shall be allocated for the provision of Company common stock to non-employee directors, and all documents necessary concerning stockholder approval of the issuance of Company common stock to such directors, and that they shall be authorized to make such modifications to the share allocations as they shall deem appropriate, and to the policy as set forth in the foregoing resolutions as may be necessitated by such bodies; and it is
FURTHER RESOLVED: That, effective January 1, 1997, Article II, Paragraph 9 of the By-Laws of the Company be amended to read as follows:
A. Except with respect to directors whose service as such ceases on or before February 20, 1997, who will continue to receive the previously-effective Director compensation until such time, each Director who is not a regular full-time employee of the Corporation or one or more of its subsidiaries, shall be paid an annual fee of $12,000 in cash and 400 shares of the common stock of the Corporation, payable in equal quarterly increments, in advance (i.e., as of the first business day of the quarter). There will be a proration of payments during quarters in which such Director has only partial service. Each such Company stock certificate will be nontransferable until the later of two years from issuance or six months after such Directors' cessation of service.
B. Each Director of the Corporation who is not a regular full-time employee of the Corporation or one or more of its subsidiaries shall also receive a fee of $1,000 for attendance at any meeting of the Board of Directors and a fee of $800 for attendance at any meeting of any committee of the Board of Directors, except that if a Director participates in a committee meeting by telephone, the fee shall be $500. Each Director shall be reimbursed for the travel expenses incurred by him or her in attending any meeting of the Board of Directors or any committee of the Board of Directors.

NATIONAL FUEL GAS COMPANY
TO
THE BANK OF NEW YORK
 (formerly Irving Trust Company)

TRUSTEE
FIFTEENTH SUPPLEMENTAL INDENTURE
Dated as of September 1, 1996
TO
INDENTURE
Dated as of October 15, 1974
A Series of Debentures designated
MEDIUM-TERM NOTES, SERIES D
due from nine months to 40 years from date of issue

FIFTEENTH SUPPLEMENTAL INDENTURE dated as of September 1, 1996, made and entered into by and between NATIONAL FUEL GAS COMPANY, a corporation of the State of New Jersey, with its Post Office address at 10 Lafayette Square, Buffalo, New York 14203 (hereinafter sometimes called the Company), party of the first part, and THE BANK OF NEW YORK (formerly Irving Trust Company), a corporation of the State of New York, whose Post Office address is 101 Barclay Street, New York, New York 10286 (hereinafter sometimes called the Trustee), party of the second part, as Trustee under the Indenture dated as of October 15, 1974 executed and delivered by the Company:
WHEREAS the aforesaid Indenture dated as of October 15, 1974 (herein with all indentures supplemental thereto called the Indenture) provides for the issuance of fully registered debentures in one or more series (hereinafter called the Debentures), unlimited in aggregate principal amount; and
WHEREAS the Indenture provides that the Company and the Trustee may enter into indentures supplemental thereto for the purpose of setting forth the terms and provisions of each series of Debentures from time to time issued; and
WHEREAS the Company has determined to create the thirteenth series of Debentures, and all things necessary to make this Fifteenth Supplemental Indenture a valid, binding and legal instrument supplemental to the Indenture have been performed and the issuance of said thirteenth series of Debentures, subject to the terms of the Indenture, has been in all respects duly authorized;
NOW, THEREFORE, THIS INDENTURE WITNESSETH: that in order to set forth the terms and provisions of said thirteenth series of Debentures and in consideration of the premises and of the purchase and acceptance of said Debentures by the Holders thereof, and in consideration of the sum of One Dollar by the Trustee to the Company paid, receipt whereof is hereby acknowledged, the Company hereby agrees and provides, for the equal and proportionate benefit of the respective holders from time to time of the Debentures, as follows:
ARTICLE ONE
THIRTEENTH SERIES OF DEBENTURES
SECTION 1. There shall be a series of Debentures designated "Medium-Term Notes, Series D" (herein sometimes referred to as the 'Thirteenth Series"), due from nine months to 40 years from the date of issue, limited to an aggregate principal amount of Five Hundred Million Dollars ($500,000,000) except as otherwise provided in the Indenture.
2

The form of the Debentures of the Thirteenth Series, which shall be established by Resolution of the Board of Directors, shall contain suitable provisions with respect to the matters hereinafter specified.
SECTION 2. Each Debenture of the Thirteenth Series shall mature on such date not less than nine months nor more than 40 years from the date of issue; shall bear interest at such rate or rates (which may be either fixed or variable), payable semi-annually on the first day of such months in each year (each an interest payment date) and at maturity and shall have such other terms and provisions not inconsistent with the Indenture as the Board of Directors may determine in accordance with a Resolution filed with the Trustee referring to this Fifteenth Supplemental Indenture; and the principal of, and the premium, if any, and the interest on, each said Debenture shall be paid at the office or agency of the Company in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts; provided, that, at the option of the Company, interest may be payable by check mailed to the address of the person entitled thereto as such address shall appear on the Debenture register or by a federal wire transfer to such person in accordance with written instructions received by the Company from such person. Debentures of the Thirteenth Series of a designated interest rate, interest payment dates and maturity authenticated for original issue shall be dated the date of authentication and shall bear interest from the Original Interest Accrual Date hereinafter specified.
Notwithstanding the foregoing, so long as there is no existing default in the payment of interest on the Debentures, all Debentures of the Thirteenth Series authenticated by the Trustee after the Record Date hereinafter specified for any interest payment date and prior to such interest payment date (unless the Issue Date is after such Record Date) shall be dated the date of authentication but shall bear interest from such interest payment date, subject to the provisos and exceptions of Section 2.02 of the Indenture, and the person in whose name any Debenture is registered at the close of business on any Record Date with respect to any interest payment date shall be entitled to receive the interest payable on such interest payment date notwithstanding the cancellation of such Debenture upon any transfer or exchange thereof subsequent to such Record Date and on or prior to such interest payment date, subject to the provisos and exceptions of Section 2.02 and all as provided in Section 2.02, provided that interest payable on the maturity date will be payable to the person to whom the principal of the Debenture shall be payable. If the Issue Date of the Debentures of the Thirteenth Series of a designated interest rate, interest payment dates and maturity is after such Record Date and prior to the next succeeding interest payment date, such Debentures shall bear interest from the Original Interest Accrual Date but payment of interest shall commence on the second interest payment date succeeding the Issue Date. Ile Record Date for the interest payable on an interest payment date on the Debentures of the Thirteenth Series is the fifteenth day of the month next preceding such interest payment date.
3

"Original Interest Accrual Date" with respect to Debentures of the Thirteenth Series of a designated interest rate, interest payment dates and maturity shall mean the date of the first authentication of Debentures of such designated interest rate, interest payment dates and maturity unless the Board of Directors shall deter-mine another date from which interest shall accrue in accordance with a Resolution filed with the Trustee referring to this Fifteenth Supplemental Indenture, then such other date for Debentures of such designated interest rate, interest payment dates and maturity. "Issue Date" with respect to Debentures of the Thirteenth Series of a designated interest rate, interest payment dates and maturity shall mean the date of the first authentication of Debentures of such designated interest rate, interest payment dates and maturity.
SECTION 3. Each Debenture of the Thirteenth Series may be redeemable at the option of the Company in whole at any time, or in part from time to time, prior to maturity, as the Board of Directors may determine in accordance with a Resolution filed with the Trustee referring to this Fifteenth Supplemental Indenture.
Redemption of any Debentures of the Thirteenth Series shall be made in accordance with the provisions of Sections 5.02, 5.03 and 5.04 of the Indenture.
ARTICLE TWO
MISCELLANEOUS PROVISIONS
SECTION 4. The holders of Debentures of the Thirteenth Series consent that the Company may, but shall not be -obligated to, fix a record date for the purpose of determining the holders of Debentures of the Thirteenth Series entitled to consent to any amendment, supplement or waiver to or under the Indenture. If a record date is fixed, those persons who were holders at such record date (or their duly designated proxies), and only those persons, shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such persons continue to be holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date.
SECTION 5. The recitals of fact contained in this Fifteenth Supplemental Indenture and in the Debentures of the Thirteenth Series (other than the certificate of authentication) shall be taken as the statements of the Company and the Trustee assumes no responsibility for the correctness of the same. The Trustee makes no representations as to the validity of this Fifteenth Supplemental Indenture or of the Debentures of the Thirteenth Series.
SECTION 6. The titles of the several Articles of this Fifteenth Supplemental Indenture shall not be deemed to be any part hereof.
SECTION 7. This Fifteenth Supplemental Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
4

IN WITNESS WHEREOF, said NATIONAL FUEL GAS COMPANY has caused this instrument to be executed in its corporate name by its Chairman of the Board, President or a Vice President, and its corporate seal to be hereunto affixed and to be attested by its Secretary or an Assistant Secretary, and said THE BANK OF NEW YORK (formerly Irving Trust Company) has caused this instrument to be executed in its corporate name by one of its Vice Presidents or one of its Assistant Vice Presidents, and its corporate seal to be hereunto affixed and to be attested by one of its Assistant Treasurers, all as of September 1, 1996.
NATIONAL FUEL GAS COMPANY

                                        BY /s/ P. C. Ackerman
                                          -------------------------------------

Attest:	

/a/ A. M. Cellino
THE BANK OF NEW YORK

                                        BY /s/ Remo J. Reale
                                          -------------------------------------

Attest:

/s/ Byron Marino
- ---------------------------------	

5

STATE OF NEW YORK )
COUNTY OF ERIE ) SS:
On the 30th day of September, in the year 1996, before me personally came P. C. Ackerman, to me known, who, being by me duly sworn, did depose and say that he resides at 20 South Meadow Drive, Orchard Park, New York, 14127 ; that he is the Senior Vice President of NATIONAL FUEL GAS COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument bearing the corporate name of said corporation is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation; and that he signed his name thereto by like order.

/s/ Curtis W. Lee
---------------------------------------
Curtis W. Lee
NOTARY PUBLIC, State of New York
Qualified in Erie County
Commission Expires March 30, 1997	

6

STATE OF NEW YORK )
COUNTY OF NEW YORK ) SS:
On the 30th day of September, in the year 1996, before me personally came Remo J. Reale, to me known, who, being by me duly sworn, did depose and say that he resides at I 1 1 Jackson Street, Garden City, NY 1 1530; that he is an Assistant Vice President of THE BANK OF NEW YORK (formerly Irving Trust Company), one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument bearing the corporate name of said corporation is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation; and that he signed his name thereto by like order.

/s/ Susan Fields
--------------------------------------
Susan Fields
NOTARY PUBLIC, State of New York
(No. 31-4980055)
Qualified in New York County
Commission Expires April 8, 1997	

7

NATIONAL FUEL GAS COMPANY
 and
MARINE MIDLAND BANK, Rights Agent
RIGHTS AGREEMENT
Dated as of June 12, 1996

                                TABLE OF CONTENTS

                                                                           Page
RIGHTS AGREEMENT
Section 1.            Certain Definitions....................................1
Section 2.            Appointment of Rights Agent............................6
Section 3.            Issue of Right Certificates............................6
Section 4.            Form of Right Certificates.............................8
Section 5.            Countersignature and Registration......................9
Section 6.            Transfer, Split Up, Combination and
                      Exchange of Right Certificates;
                      Mutilated, Destroyed, Lost or Stolen
                      Right Certificates.....................................9
Section 7.            Exercise of Rights; Purchase Price;
                      Expiration Date of Rights.............................10
Section 8.            Cancellation and Destruction of
                      Right Certificates....................................12
Section 9.            Reservation and Availability of
                      Shares of Common Stock................................12
Section 10.           Common Stock Record Date..............................14
Section 11.           Adjustment of Purchase Price, Number
                      of Shares or Number of Rights.........................14
Section 12.           Certificate of Adjusted Purchase
                      Price or Number of Shares.............................21
Section 13.           Consolidation, Merger or Sale or
                      Transfer of Assets or Earning Power...................21
Section 14.           Fractional Rights and Fractional
                      Shares................................................23
Section 15.           Rights of Action......................................24
Section 16.           Agreement of Right Holders............................24
Section 17.           Right Certificate Holder Not Deemed a
                      Stockholder...........................................25
Section 18.           Concerning the Rights Agent...........................25
Section 19.           Merger or Consolidation or Change of
                      Name of Rights Agent..................................26
Section 20.           Duties of Rights Agent................................27
Section 21.           Change of Rights Agent................................29
Section 22.           Issuance of New Right Certificates....................30
Section 23.           Redemption and Termination............................30
Section 24.           Exchange..............................................31
Section 25.           Notice of Certain Events..............................32
Section 26.           Notices...............................................33
Section 27.           Supplements and Amendments............................33
Section 28.           Successors............................................34
Section 29.           Determinations and Actions by the
                      Board of Directors....................................34
Section 30.           Benefits of This Agreement............................35
Section 31.           Severability..........................................35
Section 32.           Governing Law.........................................35
Section 33.           Counterparts..........................................35
Section 34.           Descriptive Headings..................................35
Exhibit A - Form of Right Certificate.............................A-1
           Form of Assignment.....................................A-5
           Certificate............................................A-6
           Notice.................................................A-7
           Form of Election to Purchase...........................A-8
Exhibit B - Summary of Rights to Purchase
           Common Stock...........................................B-1

RIGHTS AGREEMENT	

Rights Agreement, dated as of June 12, 1996 (the "Agreement"), between National Fuel Gas Company, a New Jersey corporation (the "Company"), and Marine Midland Bank, a trust company organized under the laws of the State of New York (the "Rights Agent").
W I T N E S S E T H
WHEREAS, the Board of Directors of the Company on March 19, 1996 ("Rights Dividend Declaration Date") authorized and declared a dividend distribution (the "Distribution") of one Right for each share of Common Stock, $1.00 par value, of the Company (the "Common Stock") outstanding at the close of business on July 31, 1996 (the "Record Date") and has further authorized and directed the issuance of one Right (as such number may hereinafter be adjusted pursuant to the provisions of Section 11(i) hereof) for each share of Common Stock issued (whether originally issued or delivered from the Company's treasury stock) between the Record Date and the earlier of the Distribution Date or the Expiration Date (as such terms are hereinafter defined), each Right initially representing the right to purchase one-half of one share of Common Stock, upon the terms and subject to the conditions hereinafter set forth (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates and Associates (as such terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of securities of the Company constituting a Substantial Block (as such term is hereinafter defined), but shall not include (i) the Company, any Subsidiary (as such term is hereinafter defined) of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company or any Person organized, appointed or established by the Company or any Subsidiary of the Company for or pursuant to the terms of any such plan, (ii) any Person who or which, together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of a Substantial Block solely as a result of a change in the aggregate number of shares of Voting Stock (as such term is hereinafter defined) outstanding since the last date on which such Person acquired Beneficial Ownership of any shares of the Voting Stock constituting all or a portion of such Substantial Block; and
(iii) any Person who or which, together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of a Substantial Block in the good faith belief that such acquisition would not (x) cause such Person and its Affiliates and Associates to become the Beneficial Owner of a Substantial Block and such Person relied in good faith in computing the percentage of its voting power on publicly filed reports or documents of the Company which are inaccurate or out-of-date or (y) otherwise cause a Distribution Date or the adjustment provided for in Section 11(a) to occur. Notwithstanding clause (ii) or (iii) of the prior sentence, if any Person that is not an Acquiring Person due to such clause (ii) or (iii) does not cease to be the Beneficial Owner of a Substantial Block by the close of business on the fifth Business Day (as such term is hereinafter defined) after notice from the Company (the date of notice being the first Business Day) that such Person is the Beneficial Owner of a Substantial Block, such Person shall, at the end of such five Business Day period, become an Acquiring Person (and such clause (ii) or (iii) shall no longer apply to such Person). For purposes of this definition, the determination whether any Person acted in "good faith" shall be conclusively determined by the Board of Directors of the Company, acting by a vote of those directors of the Company whose approval would be required to redeem the Rights under Section 23.
(b) "Act" shall have the meaning set forth in Section 9(c) hereof.
(c) "Adjustment Shares" shall have the meaning set forth in Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date hereof.
(e) "Agreement" shall have the meaning set forth in the introduction hereto.
(f) A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities:
(i) which such Person or any of such Person's Affiliates or Associates has, directly or indirectly, the right to acquire (whether such right is exercisable immediately or only after the passage of time or upon the occurrence of an event) pursuant to any agreement, arrangement or understanding (whether or not in writing), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," (1) securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange, (2) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event (as such term is hereinafter defined), or
(3) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event, which Rights were acquired by such Person or any of such Person's Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(a) hereof ("Original Rights") or pursuant to Section 11(i) or Section 22 hereof in connection with an adjustment made with respect to Original Rights; or
(ii) which such Person or any of such Person's Affiliates or Associates has, directly or indirectly, the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this subparagraph (ii) if the agreement, arrangement or understanding to vote such security (1) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act and (2) is not then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to subparagraph (ii) of this paragraph (f)) or disposing of any securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall cause a Person ordinarily engaged in business as an underwriter of securities to be the "Beneficial Owner" of, or to "beneficially own," any securities acquired in a bona fide firm commitment underwriting pursuant to an underwriting agreement with the Company.
(g) "Business Day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.
(h) "Certification" shall have the meaning set forth in Section 18 hereof.
(i) "Close of business" on any given day shall mean 5:00 P.M., Buffalo, New York time, on such day; provided, however, that if such day is not a Business Day, it shall mean 5:00 P.M., Buffalo, New York time, on the next succeeding Business Day.
(j) "Common Stock," when used with reference to the Company, shall mean the shares of common stock, $1.00 par value, of the Company. "Common Stock," when used with reference to any Person other than the Company, shall mean either the capital stock with the greatest voting power of such other Person or, if such Person is a Subsidiary of another Person, the equity securities or other equity interest having power to control or direct the management of such Person.
(k) "Common Stock Equivalent" shall have the meaning set forth in Section 11(a)(iii).
(l) "Company" shall have the meaning set forth in the introduction hereto.
(m) "Current Market Price" shall have the meaning set forth in Section 11(d) hereof.
(n) "Current Value" shall have the meaning set forth in Section 11(a)(iii) hereof.
(o) "Distribution" shall have the meaning set forth in the recitals hereto.
(p) "Distribution Date" shall have the meaning set forth in Section 3(a) hereof.
(q) "Equivalent Common Stock" shall have the meaning set forth in Section 11(b) hereof.
(r) "Exchange Act" shall have the meaning set forth in the definitions of "Affiliate" and "Associate" above.
(s) "Exchange Ratio" shall have the meaning set forth in Section 24(a) hereof.
(t) "Expiration Date" shall have the meaning set forth in Section 7(a) hereof.
(u) "Final Expiration Date" shall have the meaning set forth in Section 7(a) hereof.
(v) "Independent Director" shall mean any member of the Board of Directors of the Company, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative or nominee of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the date hereof, and any successor of an Independent Director while such successor is a member of the Board, who is not an Acquiring Person or an Affiliate or Associate of an Acquiring Person, or a representative or nominee of an Acquiring Person or of any such Affiliate or Associate, and is recommended or elected to succeed the Independent Director by a majority of the Independent Directors.
(w) "Original Rights" shall have the meaning set forth in the definition of "Beneficial Owner" above.
(x) "Person" shall mean any individual, firm, corporation, limited liability company, partnership (general, limited or limited liability), trust or other entity, and shall include any successor (by merger or otherwise) of such entity.
(y) "Principal Party" shall have the meaning set forth in Section 13(b) hereof.
(z) "Purchase Price" shall have the meaning set forth in Section 4(a) hereof.
(aa) "Record Date" shall have the meaning set forth in the recitals hereto.
(bb) "Redemption Price" shall have the meaning set forth in Section 23(a) hereof.
(cc) "Right Certificate" shall have the meaning set forth in Section 3(a) hereof.
(dd) "Rights" shall have the meaning set forth in the recitals hereto.
(ee) "Rights Agent" shall have the meaning set forth in the introduction hereto.
(ff) "Rights Dividend Declaration Date" shall have the meaning set forth in the recitals hereto.
(gg) "Section 11(a)(ii) Event" shall mean any event described in Section 11(a)(ii).
(hh) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth in Section 11(a)(iii).
(ii) "Section 13 Event" shall mean any event described in Section 13(a).
(jj) "Shares Acquisition Date" shall mean the first date of public announcement (which, for purposes of this definition, includes a report filed pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such.
(kk) "Spread" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(ll) "Subsidiary" shall mean, with reference to any Person, any corporation (or other entity) of which an amount of voting securities (or comparable ownership interests) sufficient to elect at least a majority of the directors (or comparable individuals) of such corporation (or other entity) is beneficially owned or otherwise controlled, directly or indirectly, by such Person.
(mm) "Substantial Block" shall mean a number of shares of Voting Stock which have 10% or more of the aggregate voting power of all outstanding shares of Voting Stock.
(nn) "Substitution Period" shall have the meaning set forth in Section 11(a)(iii) hereof.
(oo) "Summary of Rights" shall have the meaning set forth in Section 3(b) hereof.
(pp) "Trading Day" shall have the meaning set forth in Section 11(d) hereof.
(qq) "Triggering Event" shall mean any Section
11(a)(ii) Event or Section 13 Event.
(rr) "Voting Stock," as of the date of any determination, shall mean the shares of Common Stock, $1.00 par value, then outstanding and any other shares of capital stock of the Company which are entitled to vote generally in the election of directors.
Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company shall act as Co-Rights Agent and may from time to time appoint such other Co-Rights Agents as it may deem necessary or desirable upon ten calendar days' written notice to the Rights Agent. In no event shall the Rights Agent have any duty to supervise or in any way be liable for such Co-Rights Agents.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i) the close of business on the tenth calendar day after the Shares Acquisition Date (or, if the tenth day after the Shares Acquisition Date occurs before the Record Date, the close of business on the Record Date) or (ii) the close of business on the tenth calendar day after the date of the commencement of, or of the first public announcement of the intention of any Person (other than the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company or any Person organized, appointed or established by the Company or any Subsidiary of the Company for or pursuant to the terms of any such plan) to commence, a tender or exchange offer if, upon consummation thereof, such Person would become an Acquiring Person (the earlier of the dates in subsection (i) and (ii) hereof being herein referred to as the "Distribution Date") (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for the Common Stock registered in the names of the holders of the Common Stock (which certificates for Common Stock shall be deemed also to be Right Certificates) and not by separate Right Certificates, and (y) the right to receive Right Certificates will be transferable only in connection with the transfer of Common Stock. As soon as practicable after receipt by the Rights Agent of written notice from the Company of the Distribution Date, the Rights Agent, at the Company's expense, will send by first-class, postage prepaid mail, to each record holder of Common Stock as of the close of business on the Distribution Date, at the address of such holder shown on the records of the Company, a Right Certificate, in substantially the form of Exhibit A hereto (a "Right Certificate"), evidencing one Right for each share of Common Stock so held, subject to adjustment as provided herein. As of the Distribution Date, the Rights will be evidenced solely by such Right Certificates.
(b) As soon as practicable following the Record Date, the Company will send a copy of a Summary of Rights to Purchase Common Stock, in substantially the form attached hereto as Exhibit B (the "Summary of Rights"), by first-class, postage prepaid mail, to each record holder of Common Stock as of the close of business on the Record Date, at the address of such holder shown on the records of the Company. With respect to certificates for Common Stock outstanding as of the Record Date, until the Distribution Date, the Rights will be evidenced by such certificates for Common Stock, and the registered holders of Common Stock shall also be the registered holders of the associated Rights. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any of the certificates for Common Stock outstanding on the Record Date shall also constitute the transfer of the Rights associated with Common Stock represented by such certificate.
(c) Rights shall be issued in respect of all shares of Common Stock issued after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date (as such term is defined in Section 7), or, in certain circumstances provided in Section 22 hereof, after the Distribution Date. Certificates representing such shares of Common Stock shall have impressed on, printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Rights Agreement between National Fuel Gas Company and Marine Midland Bank dated as of June 12, 1996 (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of National Fuel Gas Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. National Fuel Gas Company will mail to the holder of this certificate a copy of the Rights Agreement as in effect on the date of mailing without charge within five Business Days after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights beneficially owned by an Acquiring Person may become null and void.
After the due execution of any supplement or amendment to this Agreement in accordance with the terms hereof, the reference to this Agreement in the foregoing legend shall mean the Agreement as so supplemented or amended. Until the Distribution Date, the Rights associated with Common Stock represented by certificates containing the foregoing legend shall be evidenced by such certificates alone, and the surrender for transfer of any of such certificates shall also constitute the transfer of the Rights associated with Common Stock represented by such certificates. In the event that the Company purchases or acquires any shares of Common Stock after the Record Date but prior to the Distribution Date, any Rights associated with such Common Stock shall be deemed canceled and retired so that the Company shall not be entitled to exercise any Rights associated with the shares of Common Stock which are no longer outstanding. The failure to print the foregoing legend on any such Common Stock certificate or any other defect therein shall not affect in any manner whatsoever the application or interpretation of the provisions of Section 7(e) hereof.
Section 4. Form of Right Certificates. (a) The Right Certificates (and the forms of election to purchase shares and of assignment to be printed on the reverse thereof) shall be substantially the same as Exhibit A hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. The Right Certificates shall be in machine-printable format and in a form reasonably satisfactory to the Rights Agent. Subject to the provisions of
Section 11 and Section 22 hereof, the Right Certificates, whenever distributed, shall be dated as of the Record Date, shall show the date of countersignature, and on their face shall entitle the holders thereof to purchase such number of shares of Common Stock (or following a Triggering Event, other securities, cash or other assets, as the case may be) as shall be set forth therein at the price set forth therein (such exercise price per share of Common Stock, the "Purchase Price"), but the number of such shares and the Purchase Price shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person with whom such Acquiring Person has any continuing agreement, arrangement or understanding (whether or not in writing) regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding (whether or not in writing) which has as a primary purpose or effect the avoidance of Section 7(e) hereof; and any Right Certificate issued pursuant to
Section 6 or Section 11 hereof, upon transfer, exchange, replacement or adjustment of any other Right Certificate referred to in this sentence, shall contain (to the extent feasible) the following legend, modified as applicable to apply to such Person:
The Rights represented by this Right Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). Accordingly, this Right Certificate and the Rights represented hereby may become null and void in the circumstances specified in Section 7(e) of such Agreement.
Section 5. Countersignature and Registration. The Right Certificates shall be executed on behalf of the Company by one of its authorized officers either manually or by facsimile signature. The Right Certificates shall be countersigned by an authorized signatory of the Rights Agent either manually or by facsimile signature and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent, issued and delivered with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer.
In case any authorized signatory of the Rights Agent who shall have countersigned any of the Right Certificates shall cease to be such signatory before delivery by the Company, such Right Certificates, nevertheless, may be issued and delivered by the Company with the same force and effect as though the person who countersigned such Right Certificates had not ceased to be such signatory; and any Right Certificates may be countersigned on behalf of the Rights Agent by any person who, at the actual date of the countersignature of such Right Certificate, shall be a proper signatory of the Rights Agent to countersign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such a signatory.
Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its office designated for such purpose, books for registration and transfer of the Right Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Right Certificates issued hereunder, the number of Rights evidenced on its face by each of the Right Certificates, the date of each of the Right Certificates and the date of countersignature of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of Section 14 hereof, at any time after the close of business on the Distribution Date, and at or prior to the close of business on the Expiration Date, any Right Certificate or Right Certificates may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to purchase a like number of shares of Common Stock (or following a Triggering Event, other securities, cash or other assets, as the case may be) as the Right Certificate or Right Certificates surrendered then entitled such holder (or, in the case of a transfer, such former holder) to purchase. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the office of the Rights Agent designated for such purpose, along with a signature guarantee and such other and further documentation as the Rights Agent may reasonably request. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Right Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Right Certificate and shall have provided such additional evidence, as the Company shall reasonably request, of the identity of the Beneficial Owner, Affiliates or Associates of such Beneficial Owner or holder, or of any other Person with which such holder or any of such holder's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting or disposing of securities of the Company. Thereupon the Rights Agent shall, subject to Section 14 and Section 20(k) hereof, countersign and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company may require payment from a Right Certificates holder of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, along with a signature guarantee and such other and further documentation as the Rights Agent may reasonably request, and if requested by the Company, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for delivery to the registered owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights. (a) Subject to Section 7(e) hereof, the registered holder of any Right Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein, including, without limitation, the restrictions on exercisability set forth in Sections 9 (c) , 11 (a) (iii) , 23
(a) and 24 (b) hereof) in whole or in part at any time after the Distribution Date upon surrender of the Right Certificate, with the form of election to purchase on the reverse side thereof duly executed, to the Rights Agent at the designated office of the Rights Agent, together with payment of the aggregate Purchase Price for the total number of shares of Common Stock (or other securities, cash or other assets, as the case may be) as to which the Rights are then exercisable, at or prior to the earliest of (i) the close of business on July 31, 2006 (the "Final Expiration Date"), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof or (iii) the time at which all exercisable Rights are exchanged as provided in Section 24 hereof, (such earliest date being herein referred to as the "Expiration Date").
(b) The Purchase Price for each full share of Common Stock pursuant to the exercise of a Right shall initially be$130.00 (being $65.00 per half share of Common Stock), shall be subject to adjustment from time to time as provided in Sections 11 and 13 hereof and shall be payable in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of election to purchase and the certificate duly executed and completed, accompanied by payment of the Purchase Price for the number of shares of Common Stock (or other securities, cash or other assets, as the case may be) to be purchased and an amount equal to any applicable transfer tax, the Rights Agent shall thereupon, subject to Section 20(k), promptly (i) requisition from the Company certificates for the total number of shares of Common Stock to be purchased, (ii) when appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of fractional shares in accordance with Section 14, (iii) promptly after receipt of such certificates, cause the same to be delivered to or upon the order of the registered holder of such Right Certificate, registered in such name or names as may be designated by such holder and (iv) when appropriate, after receipt promptly deliver such payment to or upon the order of the registered holder of such Right Certificate. The payment of the Purchase Price must be made by certified bank check or bank draft or money order payable to the order of the Company or the Rights Agent. In the event that the Company is obligated to issue securities, distribute property or make payment pursuant to section 11(a)(iii) hereof, the Company will make all arrangements necessary so that check, property or securities are available for issuance, distribution or payment by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall exercise less than all the Rights evidenced thereby, a new Right Certificate evidencing Rights equivalent to the Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such Right Certificate or to his duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person to holders of equity interests in such Acquiring Person or to any Person which whom the Acquiring Person has any continuing agreement, arrangement or understanding (whether or not in writing) regarding the transferred Rights or (B) a transfer which the Board of Directors of the Company has determined is part of a plan, arrangement or understanding (whether or not in writing) which has as a primary purpose or effect the avoidance of this section 7(e), shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to insure that the provisions of this Section 7(e) and Section 4(b) hereof are complied with, but shall have no liability to any holder of Right Certificates or other Person as a result of its failure to make any determinations with respect to an Acquiring Person, or any of its Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Right Certificate surrendered for such exercise, and (ii) provided such additional evidence of the identity of the Beneficial Owner, Affiliates or Associates of such Beneficial Owner or holder, or of any other Person with which such holder or any of such holder's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting or disposing of any securities of the Company as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all canceled Right Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of Common Stock. (a) The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued shares of Common Stock (and following the occurrence of a Triggering Event, out of its authorized and unissued other securities), or out of its authorized and issued shares of Common Stock (and, following the occurrence of a Triggering Event, out of its authorized and issued other securities) held in its treasury, the number of shares of Common Stock (and, following the occurrence of a Triggering Event, other securities) that will be sufficient to permit the exercise in full of all outstanding Rights (it being understood that any of the foregoing shares or securities may also be reserved for other purposes) or will take such other steps as are appropriate to assure that the number of such shares or securities (or their equivalents) sufficient to permit the exercise in full of all outstanding Rights will be available upon such exercise.
(b) So long as the shares of Common Stock (and, following the occurrence of a Triggering Event, other securities) issuable upon the exercise of Rights may be listed on any national securities exchange, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable (but only to the extent that it is reasonably likely that the Rights will be exercised), all shares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as practicable following the first occurrence of a Section
11(a)(ii) Event, or as soon as required by law, as the case may be, a registration statement under the Securities Act of 1933, as amended (the "Act"), with respect to the securities purchasable upon exercise of the Rights on an appropriate form, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, and (B) the Expiration Date. The Company will also take such action as may be appropriate under the blue sky laws of the various states. The Company may temporarily suspend, for a period of time not to exceed ninety (90) days after the date set forth in clause
(i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement and shall give simultaneous written notice to the Rights Agent stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement and notice to the Rights Agent at such time as the suspension is no longer in effect. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualifications in such jurisdiction shall have been obtained.
(d) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all shares of Common Stock (and following the occurrence of a Triggering Event, other securities) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable.
(e) he Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any shares of the Common Stock (or other securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be required (a) to pay any transfer tax which may be payable in respect of any transfer involved in the transfer or delivery of Right Certificates or the issuance or delivery of certificates for Common Stock (or other securities, as the case may be) in a name other than that of the registered holder of the Right Certificate evidencing Rights surrendered for exercise or (b) to issue or deliver any certificates for a number of shares of Common Stock (or other securities, as the case may be) upon the exercise of any Rights until any such tax shall have been paid (any such tax being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company's satisfaction that no such tax is due.
Section 10. Common Stock Record Date. Each Person in whose name any certificate for any number of shares of Common Stock (or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of the shares of Common Stock (or other securities, as the case may be) represented thereby on, and such certificate shall be dated the date upon which the Right Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and any applicable transfer taxes) was made and shall show the date of countersignature; provided, however, that if the date of such surrender and payment is a date upon which Common Stock (or other securities, as the case may be) transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares on, and such certificate shall be dated, the next succeeding Business Day on which the Common Stock (or other securities, as the case may be) transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder of a Right Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The Purchase Price, the number of shares covered by each Right and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this Agreement (A) declare a dividend on the Common Stock payable in shares of the Common Stock, (B) subdivide the outstanding Common Stock, (C) combine the outstanding Common Stock into a smaller number of shares or (D) issue any shares of its capital stock in a reclassification of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, combination or reclassification, and the number and kind of shares of Common Stock or capital stock, as the case may be, issuable on such date, shall be proportionately adjusted so that the holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of shares of capital stock which, if such Right had been exercised immediately prior to such date and at a time when Common Stock (or other securities) transfer books of the Company were open, he or she would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, combination or reclassification. If an event occurs which would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event any Person, alone or together with its Affiliates and Associates, becomes at any time after the Rights Dividend Declaration Date, an Acquiring Person except as the result of a transaction set forth in Section 13(a) hereof, then, prior to the later of (x) the date on which the Company's rights of redemption pursuant to Section 23(a) expire, or (y) five (5) days after the date of the first occurrence of a Section 11(a)(ii) Event, proper provision shall be made so that each holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have a right to receive, upon exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of shares of Common Stock of the Company as shall equal the result obtained by (x) multiplying the then current Purchase Price for a full share of Common Stock by the number of shares of Common Stock for which a Right is then exercisable and dividing that product by (y) 50% of the Current Market Price per share of Common Stock of the Company (determined pursuant to Section 11(d)) on the date of the occurrence of the event described above in this subparagraph
(ii) (such number of shares is hereinafter referred to as the "Adjustment Shares"), provided that the Purchase Price and the number of Adjustment Shares shall be further adjusted as provided in this Agreement to reflect any events occurring after the date of such first occurrence.
(iii) In the event that the number of shares of Common Stock which are authorized by the Company's certificate of incorporation but not outstanding or reserved for issuance for purposes other than upon exercise of the Rights is not sufficient to permit the exercise in full of the Rights in accordance with the foregoing subparagraph (ii), the Company shall (A) determine the excess of (1) the value of the Adjustment Shares issuable upon the exercise of a Right (the "Current Value") over (2) the Purchase Price (such excess, the "Spread"), and (B) with respect to each Right, make adequate provision to substitute for the Adjustment Shares, upon exercise of the Rights and payment of the applicable Purchase Price, (1) payment by check, (2) a reduction in the Purchase Price, (3) other equity securities of the Company (including, without limitation, shares of preferred stock which a majority of the Independent Directors and the Board of Directors of the Company have deemed to have the same value as shares of Common Stock (such shares of preferred stock, "Common Stock Equivalents")), (4) debt securities of the Company, (5) other assets, or (6) any combination of the foregoing, having an aggregate value equal to the Current Value, where such aggregate value has been determined by a majority of the Independent Directors and the Board of Directors of the Company based upon the advice of a nationally recognized investment banking firm selected by the Board of Directors of the Company; provided, however, that if the Company shall not have made adequate provision to deliver value pursuant to clause (B) above within thirty (30) days following the later of (x) the first occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company's rights of redemption pursuant to Section 23(a) expire (the later of (x) and (y) being referred to herein as the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, shares of Common Stock (to the extent available) and then, if necessary, cash, which shares and/or cash have an aggregate value equal to the Spread. If the Board of Directors of the Company shall determine in good faith that it is likely that sufficient additional shares of Common Stock could be authorized for issuance upon exercise in full of the Rights, the thirty (30) day period set forth above may be extended to the extent necessary, but not more than ninety (90) days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the authorization of such additional shares (such period, as it may be extended, the "Substitution Period"). To the extent that the Company determines that some action need be taken pursuant to the first and/or second sentences of this subparagraph (iii), the Company (x) shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights, and (y) may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek any authorization of additional shares and/or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement and shall give concurrent written notice to the Rights Agent stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement and notice to the Rights Agent at such time as the suspension is no longer in effect. For purposes of this subparagraph (iii), the value of the Common Stock shall be the Current Market Price (as determined pursuant to Section 11(d) hereof) per share of Common Stock on the Section 11
(a) (ii) Trigger Date and the value of any Common Stock Equivalent shall be deemed to be the same as the value of Common Stock on such date. The Company shall give the Rights Agent notice of the selection of any Common Stock Equivalent under this subparagraph (iii).
(b) In case the Company shall fix a record date for the issuance of rights, options or warrants to all holders of Common Stock entitling them (for a period expiring within 45 calendar days after such record date) to subscribe for or purchase Common Stock (or securities having substantially the same rights, privileges and preferences as the shares of Common Stock ("Equivalent Common Stock") or convertible into Common Stock or Equivalent Common Stock) at a price per share of Common Stock or Equivalent Common Stock (or having a conversion price per share, if a security convertible into Common Stock or Equivalent Common Stock) less than the Current Market Price (as defined in Section 11(d) per share of Common Stock or Equivalent Common Stock, as the case may be) on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, of which the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares of Common Stock or Equivalent Common Stock which the aggregate offering price of the total number of shares of Common Stock or Equivalent Common Stock so to be offered (and/or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current Market Price and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock and/or Equivalent Common Stock to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid by delivery of consideration part or all of which shall be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent. Shares of Common Stock owned by or held for the account of the Company shall not be deemed outstanding for the purpose of any such computation. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that such rights, options or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of evidences of indebtedness or assets (other than a regular periodic cash dividend or a dividend payable in Common Stock) or subscription rights or warrants (excluding those referred to in
Section 11(b)), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, of which the numerator shall be the Current Market Price per share of Common Stock (as defined in Section 11(d)) on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent) of the portion of the assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants applicable to one share of Common Stock and of which the denominator shall be such Current Market Price per share of Common Stock. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Purchase Price shall again be adjusted to be the Purchase Price which would then be in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii), the "Current Market Price" per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the thirty (30) consecutive Trading Days (as such term is hereinafter defined in this paragraph
(d)) immediately prior to such date and, for purposes of computations made pursuant to Section 11(a)(iii) hereof, the Current Market Price per share of Common Stock on any date shall be deemed to be the average of the daily closing prices per share of such Common Stock for the ten (10) consecutive Trading Days immediately following such date; provided, however, that in the event that the Current Market Price per share of Common Stock is determined during the period following the announcement by the issuer of such Common Stock of (A) a dividend or distribution on such Common Stock payable in shares of such Common Stock or securities convertible into shares of such Common Stock (other than the Rights) or (B) any subdivision, combination or reclassification of such Common Stock, and prior to the expiration of the requisite 30 Trading Day or 10 Trading Day period, as set forth above, after the ex-dividend date for such dividend or distribution or the record date for such subdivision, combination or reclassification, then, and in each such case, the Current Market Price shall be appropriately adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the shares of the Common Stock are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of the Common Stock are listed or admitted to trading or, if the shares of the Common Stock are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in use, or, if on any such date the shares of Common Stock are not quoted by such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in Common Stock selected by the Board of Directors of the Company. If on any such date no market maker is making a market in the Common Stock, the fair value of such shares on such date shall be as determined in good faith by the Independent Directors if the Independent Directors constitute a majority of the Board of Directors or, in the event the Independent Directors do not constitute a majority of the Board of Directors, by an independent investment banking firm selected by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the shares of Common Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Common Stock are not listed or admitted to trading on any national securities exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on which banking institutions in the State of New York are not authorized or obligated by law or executive order to close. If the Common Stock is not publicly held or not so listed or traded, "Current Market Price" per share shall mean the fair value per share as determined in good faith by the Independent Directors if the Independent Directors constitute a majority of the Board of Directors or, in the event the Independent Directors do not constitute a majority of the Board of Directors, by an independent investment banking firm selected by the Board of Directors, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a share of Common Stock. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three years from the date of the transaction which mandates such adjustment or (ii) the Expiration Date.
(f) If, as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than shares of Common Stock, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in
Section 11(a) through (p), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to Common Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of shares of Common Stock purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in Section 11(i), upon each adjustment of the Purchase Price as a result of the calculations made in Section 11(b) and (c), each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of shares (calculated to the nearest tenth-thousandth) obtained by (i) multiplying
(x) the number of shares covered by a Right immediately prior to this adjustment by (y) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in substitution for any adjustment in the number of shares of Common Stock purchasable upon the exercise of a Right. Each of the Rights outstanding after such adjustment of the number of Rights shall be exercisable for the number of shares of Common Stock for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after the adjustment of the Purchase Price. The Company shall make a public announcement and shall give simultaneous written notice to the Rights Agent of its election to adjust the number of Rights, indicating the record date for the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Right Certificates have been issued, shall be at least 10 days later than the date of the public announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights pursuant to this subparagraph (i), the Company shall, as promptly as practicable, cause to be distributed to holders of Right Certificates on such record date Right Certificates evidencing, subject to Section 14, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Right Certificates held by such holders prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Right Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Right Certificates so to be distributed shall be issued, executed and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Right Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the number of shares of Common Stock issuable upon the exercise of the Rights, the Right Certificates theretofore and thereafter issued may continue to express the Purchase Price per share and the number of shares which were expressed in the initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the Purchase Price below the then par value, if any, of a share of Common Stock issuable upon exercise of the Rights, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue such number of fully paid and nonassessable shares of such Common Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the holder of any Right exercised after such record date of the number of shares of Common Stock and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of shares of Common Stock and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided, however, that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that the Board of Directors of the Company shall determine to be advisable in order that any consolidation or subdivision of shares of Common Stock, issuance wholly for cash of any shares of Common Stock at less than the Current Market Price, issuance wholly for cash of the Common Stock or securities which by their terms are convertible into or exchangeable for Common Stock, stock dividends or issuance of rights, options or warrants referred to hereinabove in this Section 11 hereafter made by the Company to holders of its Common Stock shall not be taxable to such stockholders.
(n) The Company covenants and agrees that, after the Distribution Date, it will not, except as permitted by Sections 23, 24 and 27 hereof, take (nor will it permit any of its Subsidiaries to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that it shall not, at any time after the Distribution Date, (i) consolidate with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(n)), (ii) merge with or into any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(n)), or (iii) sell or transfer (or permit any of its Subsidiaries to sell or transfer), in one or more transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with
Section 11(n)) if (x) at the time of or immediately after such consolidation, merger or sale there are any rights, warrants or other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) prior to, simultaneously with or immediately after such consolidation, merger or sale, the stockholders of the Person who constitutes, or would constitute, the "Principal Party" for purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates.
(p) Notwithstanding anything in this Agreement to the contrary, prior to the Distribution Date, the Company may, in lieu of making any adjustment to the Purchase Price, the number of shares of Common Stock eligible for purchase on exercise of each Right or the number of Rights outstanding, which adjustment would otherwise be required by Section 11(a)(i), 11(b), 11(c), 11(h) or 11(i), make such other equitable adjustment or adjustments thereto as the Board of Directors (whose determination shall be conclusive) deems appropriate in the circumstances and not inconsistent with the objectives of the Board of Directors in adopting this Agreement and such Sections.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Sections 11 and 13, the Company shall (a) promptly prepare a certificate setting forth such adjustment, a brief statement of the facts accounting for such adjustment and the adjusted Purchase Price, (b) promptly file with the Rights Agent and with each transfer agent for the Common Stock a copy of such certificate and (c) mail a brief summary thereof to each holder of a Right Certificate in accordance with
Section 26. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power. (a) In the event that, following the Shares Acquisition Date, directly or indirectly, (x) the Company shall consolidate with, or merge with or into, any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(n)) and the Company shall not be the continuing or surviving corporation of such consolidation or merger, (y) any Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(n)) shall consolidate, merge with or into the Company and the Company shall be the continuing or surviving corporation of such consolidation or merger and in connection with such consolidation or merger, all or part of the Common Stock shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (z) the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one or more transactions, assets or earning power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any other Person or Persons (other than the Company or any of its Subsidiaries in one or more transactions each of which complies with Section 11(n) hereof), then, and in each such case, proper provision shall be made so that (i) each holder of a Right (except as provided in Section 7(e)) shall thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of validly issued, fully paid, nonassessable and freely tradable shares of Common Stock of the Principal Party (as hereinafter defined) , not subject to any liens, encumbrances, rights of call or first refusal, or other adverse claims as shall be equal to the result obtained by (1) multiplying the then current Purchase Price for a full share of Common Stock by the number of shares of Common Stock for which a Right is exercisable immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a) (ii) Event has occurred prior to the first occurrence of a Section 13 Event, multiplying the number of such shares for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a) (ii) Event by the Purchase Price for a full share of Common Stock in effect immediately prior to such first occurrence), and dividing that product (which, following the first occurrence of a Section 13 Event, shall be referred to as the "Purchase Price" for each Right and for all purposes of this Agreement) by
(2) 50% of the Current Market Price per share of the Common Stock of such Principal Party (determined in the manner described in Section 11 (d) ) on the date of consummation of such consolidation, merger, sale or transfer; (ii) the Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of
Section 11 shall thereafter apply to such Principal Party, (iv) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of shares of its Common Stock in accordance with Section 9) in connection with such consummation as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to the shares of its Common Stock thereafter deliverable upon the exercise of the Rights, and (v) the provisions of Section 11(a)(ii) hereof shall be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(1) in the case of any transaction described in
(x) or (y) of the first sentence of Section 13(a), the Person that is the issuer of any securities into which shares of Common Stock of the Company are converted in such merger or consolidation and, if no securities are so issued, the Person that is the other party to the merger or consolidation; and
(2) in the case of any transaction described in
(z) of the first sentence in Section 13(a), the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions; provided, however, that in any such case, (x) if the Common Stock of such Person is not at such time and has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another corporation the Common Stock of which is and has been so registered, "Principal Party" shall refer to such other corporation and (y) if such Person is a Subsidiary, directly or indirectly, of more than one corporation, the Common Stocks of two or more of which are and have been so registered, "Principal Party" shall refer to whichever of such corporations is the issuer of the Common Stock having the greatest market value.
(3) The Company shall not consummate any Section 13 Event unless the Principal Party shall have a sufficient number of authorized shares of its Common Stock which are neither outstanding nor reserved for issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement providing for the terms set forth in paragraphs (a) and (b) of this Section 13 and further providing that, as soon as practicable after the date of any consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party
(i) will prepare and file a registration statement under the Act with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, will use its best efforts to cause such registration statement to become effective as soon as practicable after such filing and will use its best efforts to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Date; and
(ii) will deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all respects with the requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive Section 13 Events. In the event that a Section 13 Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which have not theretofore been exercised shall thereafter become exercisable in the manner described in
Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. In lieu of such fractional Rights, the Company shall pay to the registered holders of the Right Certificates with regard to which such fractional Rights would otherwise be issuable an amount in cash equal to the same fraction of the current market value of a whole Right. For the purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price for any day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or, if the Rights are not listed or admitted to trading on the New York Stock Exchange, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading or, if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by NASDAQ or such other system then in use, or, if on any such date the Rights are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights selected by the Board of Directors of the Company. If on any such date no such market maker is making a market in the Rights, the fair value of the Rights on such date, as determined in good faith by the Board of Directors of the Company, shall be used.
(b) The Company shall not be required to issue fractions of shares of Common Stock or Common Stock Equivalents upon exercise or exchange of the Rights or to distribute certificates which evidence fractional shares. In lieu of fractional shares of Common Stock or Common Stock Equivalents, the Company may pay to the registered holders of Right Certificates at the time the Rights evidenced thereby are exercised or exchanged as herein provided an amount in cash equal to the same fraction of the current market value of Common Stock or Common Stock Equivalents. For purposes of this Section
14(b), the current market value of one share of Common Stock shall be the closing price of a share of Common Stock (as determined pursuant to Section
11(d)) for the Trading Day immediately prior to the date of such exercise or exchange, as the case may be, and the current market value of any Common Stock Equivalent shall be the same as the current market value of the Common Stock on such date.
(c) The holder of a Right by the acceptance of the Right expressly waives his right to receive any fractional Rights or any fractional shares upon exercise or exchange of a Right, except as otherwise permitted by this Section 14.
Section 15. Rights of Action. All rights of action in respect of this Agreement are vested in the respective registered holders of the Right Certificates (and, prior to the Distribution Date, the registered holders of the Common Stock); and any registered holder of any Right Certificate (or, prior to the Distribution Date, of the Common Stock), without the consent of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution Date, of the Common Stock), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Right Certificate in the manner provided in such Right Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates will be transferable only on the registry books of the Rights Agent if surrendered at the office of the Rights Agent designated for such purpose, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed, along with a signature guarantee and such other and further documentation as the Rights Agent may reasonably request;
(c) subject to Section 6 and Section 7(f) hereof, the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Stock certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated Common Stock certificate made by anyone other than the Company or the Rights Agent) for all purposes whatever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary;
(d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, that the Company must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the holder of the number of shares of Common Stock or any other securities of the Company that may at any time be issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate shall have been exercised or exchanged for Common Stock in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent. The agreements set forth in this Section 18 shall survive termination of the Agreement and the payments of all amounts hereunder. The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or expense, incurred without negligence, bad faith or willful misconduct on the part of the Rights Agent (including the reasonable fees and expenses of counsel), for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Right Certificate or certificate for Common Stock or other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, instruction, adjustment notice, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons.
In addition to the foregoing, the Rights Agent shall be protected and shall incur no liability for, or in respect of, any action taken or omitted by it in connection with its administration of this Agreement in reliance upon (i) the proper execution of the certification appended to the Form of Assignment and the Form of Election to Purchase included as part of Exhibit B hereto (the "Certification"), unless the Rights Agent shall have actual knowledge that, as executed, the Certification is untrue or (ii) the non-execution or failure to complete the Certification including, without limitation, any refusal to honor any otherwise permissible assignment or election by reason of such nonexecution or failure.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any corporation into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any corporation succeeding to the corporate trust business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor Rights Agent under the provisions of Section 21. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the President, any Senior Vice President, any Vice President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own negligence, bad faith or willful misconduct. The issuance or non-issuance of a Right Certificate or Common Stock or other security issued in lieu of Common Stock in accordance with instructions given to the Rights Agent by the Company pursuant to Section 20(k) hereof or in accordance with the terms hereof shall not constitute negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be responsible for any adjustment required under the provisions of Section 11 or 13 or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Right Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Right Certificate or as to whether any shares of Common Stock will, when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and deliver, or cause to be performed, executed, acknowledged and delivered, all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder and certificates delivered pursuant to any provision hereof from any one of the Chairman of the Board, the President, any Senior Vice President, any Vice President, the Secretary or the Treasurer of the Company, and is authorized to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. An application by the Rights Agent for instructions may set forth in writing any action proposed to be taken or omitted by the Rights Agent with respect to its duties and obligations under this Agreement and the date on and/or after which such action shall be taken, and the Rights Agent shall not be liable for any action taken or omitted in accordance with a proposal included in any such application on or after the date specified therein (which date shall not be less than one Business Day after the Company receives such application) without the consent of the Company unless, prior to taking or omitting such action, the Rights Agent has received written instructions in response to an application specifying the actions to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company, or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either by itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct; provided, however, that reasonable care was exercised in the selection thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, either has not been completed or does not indicate an affirmative response, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting the Company. The Company shall give the Rights Agent prompt written instructions as to the action to be taken regarding the Right Certificates involved. The Rights Agent shall not be liable for acting in accordance with such instructions.
Section 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the Company by registered or certified mail, and, at the Company's expense, to the holders of the Right Certificates by first class mail. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Common Stock by registered or certified mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the Company shall become the temporary Rights Agent and the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States or of the State of New York (or of any other state of the United States so long as such corporation is authorized to do business as a banking institution in the State of New York), in good standing, having a principal office in the State of New York, which is authorized under such laws to exercise corporate trust powers, is subject to supervision or examination by federal or state authority, and has at the time of its appointment as Rights Agent a combined capital and surplus of at least $25 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Stock, and mail a notice thereof in writing to the registered holders of the Right Certificates. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. Precedessor Rights Agent shall be released and discharged from any and all further responsibility incurred after its termination as Rights Agent.
Section 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right Certificates evidencing Rights in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Right Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of shares of Common Stock following the Distribution Date and prior to the redemption or expiration of the Rights, the Company (a) shall, with respect to shares of Common Stock so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, or upon the exercise, conversion or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Right Certificates representing the appropriate number of Rights in connection with such issuance or sale; provided, however, that (i) no such Right Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Right Certificate would be issued, and (ii) no such Right Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.
Section 23. Redemption and Termination. (a) The Board of Directors of the Company may, at its option, at any time prior to the earlier of (x) the close of business on the tenth day following the Shares Acquisition Date (or if the Shares Acquisition Date shall have occurred prior to the Record Date, the close of business on the tenth day following the Record Date), or (y) the Final Expiration Date, redeem all but not less than all of the then outstanding Rights at a redemption price of $.01 per Right as appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the "Redemption Price"), and the Company may, at its option, pay the Redemption Price either in shares of its Common Stock (valued at their Current Market Price as defined in Section 11(d) on the date of the redemption), other securities, cash or other assets; provided, however, that if the Board of Directors of the Company authorizes redemption of the Rights in either of the circumstances set forth in clauses (x) or (y) below then there must be Independent Directors in office and such authorization shall require the concurrence of a majority of the Independent Directors: (x) such authorization occurs on or after the Shares Acquisition Date or (y) such authorization occurs on or after the date of a change (resulting from a proxy or consent solicitation) in the composition of a majority of the Board of Directors of the Company from the Board that was in office at the commencement of such solicitation if any Person who is a participant in such solicitation has stated (or if upon the commencement of such solicitation a majority of the Board of Directors of the Company has determined in good faith) that such Person (or any of its Affiliates or Associates) intends to take, or may consider taking, any action which would result in such Person becoming an Acquiring Person or which would cause the occurrence of a Triggering Event. Notwithstanding anything contained in this Agreement to the contrary, the Rights shall not be exercisable after the first occurrence of a Section 11(a)(ii) Event until such time as the Company's right of redemption hereunder has expired.
(b) In deciding whether or not to exercise the Company's right of redemption hereunder, the Board of Directors of the Company shall act in good faith, in a manner they reasonably believe to be in the best interests of the Company and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances, and they may consider the long-term and short-term effects of any action upon employees, customers and creditors of the Company and upon communities in which offices or other establishments of the Company are located, and all other pertinent factors.
(c) Immediately upon the action of the Board of Directors of the Company ordering the redemption of the Rights, and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the holders of Rights shall be to receive the Redemption Price for each Right held. Within 10 days after the action of the Board of Directors ordering the redemption of the Rights, the Company shall give notice of such redemption to the holders of the then outstanding Rights by mailing such notice to the Rights Agent and to all such holders at their last addresses as they appear upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry books of the Transfer Agent for the Common Stock. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may redeem, acquire or purchase for value any Rights at any time in any manner other than that specifically set forth in this Section 23, and other than in connection with the repurchase of Common Stock prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at its option (provided that there are then Independent Directors in office and a majority of the Independent Directors concur), at any time and from time to time on or after a Section 11(a)(ii) Event, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 7(e) hereof) for shares of Common Stock at an exchange ratio of one share of Common Stock per Right, appropriately adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date of this Agreement (such exchange ratio being hereinafter referred to as the "Exchange Ratio").
(b) Immediately upon the action of the Board of Directors of the Company ordering the exchange of any Rights pursuant to subsection (a) of this Section 24 and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a holder of such Rights shall be to receive that number of shares of Common Stock equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of any such exchange; provided, however, that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company promptly shall mail a notice of any such exchange to all of the holders of such Rights at their last addresses as they appear upon the registry books of the Rights Agent. Any notice which is mailed in the manner herein provided shall be deemed given, whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange will be effected and, in the event of any partial exchange, the number of Rights which will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights which have become void pursuant to the provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common Stock issued but not outstanding, or authorized but unissued to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company shall take all such action as may be necessary to authorize additional shares of Common Stock or for issuance upon exchange of the Rights, subject, however, to Section 24(d) hereof.
(d) In any exchange pursuant to this Section 24, the Company, at its option, may substitute for any share of Common Stock exchangeable for a Right (i) Common Stock Equivalents (ii) cash, (iii) debt securities of the Company, (iv) other assets, or (v) any combination of the foregoing, having an aggregate value which a majority of the Independent Directors and the Board of Directors of the Company shall have determined in good faith to be equal to the Current Market Price of one share of Common Stock (determined pursuant to Section 11(d) hereof) on the Trading Day immediately preceding the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. In case the Company shall propose at any time following the Distribution Date (a) to pay any dividend payable in stock of any class to the holders of Common Stock or to make any other distribution to the holders of Common Stock (other than a regular periodic cash dividend), or (b) to offer to the holders of Common Stock rights or warrants to subscribe for or to purchase any additional shares of Common Stock or shares of stock of any class or any other securities, rights or options, or (c) to effect any reclassification of Common Stock (other than a reclassification involving only the subdivision of outstanding Common Stock), or
(d) to effect any consolidation or merger into or with any other Person (other than a Subsidiary of the Company in a transaction which complies with Section 11(n) hereof), or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of more than 50% of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to, any other Person or Persons (other than the Company and/or any of its Subsidiaries in one or more transactions each of which complies with Section 11(n) hereof), or (e) to effect the liquidation, dissolution or winding up of the Company, then, in each such case, the Company shall give to the Rights Agent and to each holder of a Right, in accordance with
Section 26, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or Rights, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the holders of the Common Stock, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (a) or (b) above at least twenty (20) days prior to the record date for determining holders of the Common Stock for purposes of such action, and in the case of any such other action, at least twenty (20)) days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Common Stock, whichever shall be the earlier.
In case a Section 11(a)(ii) Event shall occur, then, in any such case, the Company shall as soon as practicable thereafter give to the Rights Agent and to each holder of a Right, to the extent feasible and in accordance with Section 26 a notice of the occurrence of such event, which shall specify the event and the consequences of the event to holders of Rights under
Section 11(a)(ii).
Section 26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (unless and until another address is filed in writing with the Rights Agent) as follows:
National Fuel Gas Company 10 Lafayette Square Buffalo, New York 14203 Attention: Corporate Secretary
Subject to the provisions of Section 21, any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows:
Marine Midland Bank 140 Broadway
12th Floor
Corporate Trust Services New York, New York 10005-1180
Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments. Prior to the earlier of the Distribution Date or the Shares Acquisition Date and subject to the penultimate sentence of this Section 27, the Company may from time to time supplement or amend this Agreement in writing without the approval of any holders of Right Certificates. From and after the earlier of the Distribution Date or the Shares Acquisition Date, and subject to the penultimate sentence of this Section 27, the Company may from time to time supplement or amend this Agreement in writing without the approval of any holders of Right Certificates in order (i) to cure any ambiguity, (ii) to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, (iii) to lengthen the time period during which the Rights may be redeemed following the Shares Acquisition Date for up to an additional twenty days beyond the time period set forth in Section 23 (a) (provided, however, that any such lengthening shall be effective only if there are Independent Directors and shall require the concurrence of a majority of such Independent Directors) or (iv) to change or supplement the provisions hereunder in any manner which the Company may deem necessary or desirable and which shall not adversely affect the interests of the holders of Right Certificates (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person). Upon the delivery of a certificate from an appropriate officer of the Company which states that the proposed supplement or amendment is in compliance with the terms of this Section 27, the Rights Agent shall execute such supplement or amendment unless the Rights Agent shall have determined in good faith that such supplement or amendment would adversely affect its interests under this Agreement. Notwithstanding anything in this Agreement to the contrary, no supplement or amendment shall be made on or after the Distribution Date which changes the Redemption Price, the Final Expiration Date, the Purchase Price or the number of shares of Common Stock for which a Right is then exercisable. Prior to the earlier of the Shares Acquisition Date or the Distribution Date, the interests of the holders of Rights shall be deemed coincident with the interests of the holders of Common Stock.
Section 28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of Directors. For all purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial owner, shall be made in accordance with the provisions of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board of Directors of the Company (and, where specifically provided for herein, the Independent Directors) shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board or the Company (or, as expressly provided, the Independent Directors), or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations, interpretations and determinations (including, for the purpose of clause (ii) below, all omissions with respect to the foregoing) which are done or made by the Board (or, as provided for, by the Independent Directors) in good faith, shall (i) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Right Certificates and all other parties, and (ii) not subject the Board or the Independent Directors to any liability to the holders of the Right Certificates.
Section 30. Benefits of This Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, the Common Stock) any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and, prior to the Distribution Date, registered holders of the Common Stock).
Section 31. Severability. If any term, provision, covenant, or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated; provided, however, that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant or restriction is held by such court or authority to be invalid, void or unenforceable and the Board of Directors of the Company determines in its good faith judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in
Section 23, hereof, if then expired, shall be reinstated and shall not expire until the close of business on the tenth day following the date of such determination by the Board of Directors.
Section 32. Governing Law. This Agreement and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State. Notwithstanding anything to the contrary contained herein, any dispute regarding the carrying out of its obligations hereunder by the Rights Agent shall be governed by the laws of New York.
Section 33. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
Section 34. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their respective corporate seals to be hereunto affixed and attested, all as of the day and year first above written.
[SEAL]
NATIONAL FUEL GAS COMPANY

                                          By: /s/ Philip C. Ackerman
                                             ----------------------------------
                                             Name: Philip C. Ackerman
                                             Title: Senior Vice President

Attest:
By: /s/ Anna Marie Cellino
   ---------------------------------
   Name: Anna Marie Cellino
   Title: Secretary	

[SEAL]
MARINE MIDLAND BANK

                                          By: /s/ Carmela Ehret
                                             ----------------------------------
                                             Name: Carmela Ehret
                                             Title: Vice President

Attest:
By: /s/ Metin Caner
   ---------------------------------
   Name: Metin  Caner
   Title: Vice President	

EXHIBIT A
[Form of Right Certificate]
Certificate No. R- Rights
NOT EXERCISABLE AFTER JULY 31, 2006 OR EARLIER IF NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS MAY NOT BE EXERCISABLE AND THE RIGHTS AGREEMENT MAY BE AMENDED WITHOUT THE APPROVAL OF THE RIGHTS OWNERS.
NATIONAL FUEL GAS COMPANY
Right Certificate
This certifies that , or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agreement dated as of June 12, 1996 (the "Rights Agreement") between National Fuel Gas Company, a New Jersey corporation (the "Company") and _______________________ (the "Rights Agent"), to purchase from the Company at any time after the Distribution Date (as such term is defined in the Rights Agreement) and prior to 5:00 P.M. (Buffalo, New York time) on July 31, 2006 at the designated office of the Rights Agent, or its successors as Rights Agent, in _____________, New York, one-half of one fully paid, nonassessable share of the Common Stock, $1.00 par value (the "Common Stock"), of the Company, at a purchase price of $130.00 per share (the "Purchase Price"), being $65.00 per half share, upon presentation and surrender of this Right Certificate with the Form of Election to Purchase and related certificate duly executed, along with a signature guarantee and such other and further documentation as the Rights Agent may reasonably request. The number of Rights evidenced by this Right Certificate (and the number of shares which may be purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above, are the number and Purchase Price as of 1996, based on the Common Stock of the Company as constituted at such date.
A-1
Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Right Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement) , (ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a person who after such transfer, became an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such
Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of Common Stock (or, in certain circumstances, other securities) which may be purchased upon the exercise of the Rights evidenced by this Right Certificate are subject to modification and adjustment upon the happening of certain events, including Triggering Events (as such term is defined in the Rights Agreement).
This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agreement are on file at the above-mentioned office of the Rights Agent, and at the executive offices of the Company.
This Right Certificate, with or without other Right Certificates, upon surrender at the designated office of the Rights Agent, along with a signature guarantee and such other and further documentation as the Rights Agent may reasonably request, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of shares of Common Stock as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof, along with a signature guarantee and such other and further documentation as the Rights Agent may
A-2
reasonably request, another Right Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate (a) may be redeemed by the Company at its option at a redemption price of $.01 per Right prior to the earlier of the close of business on (i) the tenth day following the Shares Acquisition Date and (ii) the Final Expiration Date or (b) may be exchanged in whole or in part for shares of Common Stock and/or other securities, cash or other assets of the Company deemed to have the same value as shares of Common Stock, at any time after a Section
11(a)(ii) Event. The Rights Agreement may be amended without the approval of the holders of the Rights as and to the extent set forth therein.
No fractional shares of Common Stock will be issued upon the exercise or exchange of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of the Common Stock or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Right Certificate shall have been exercised or exchanged for Common Stock as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.
A-3
WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of 1996.

[SEAL]                                   NATIONAL FUEL GAS COMPANY

                                         By:
                                            -----------------------------------
                                            Name
                                            Title	

ATTEST:
By:
 Name:
Title:
Countersigned:
-------------------------------------,
as Rights Agent
By:
 Authorized Signature
Date:
A-4
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT

(To be executed by the registered holder if such holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED hereby sells,

assigns and transfers unto

(please print name and address of transferee)

this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution.

Dated:

Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
A-5
CERTIFICATE

The undersigned hereby certifies by checking the appropriate space that:
Exercising this Right Certificate will will not enable the undersigned, its Affiliates, its Associates and/or any other Person with which the undersigned or any of the undersigned's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting or disposing of securities of the Company to obtain, individually or in the aggregate, beneficial ownership of Common Stock or other securities that have 10% or more of the aggregate voting power of the outstanding shares of the Common Stock and other securities having voting power.
Dated: ----------------------------------------- -------------------------- Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
A-6
NOTICE
The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever.
A-7
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights evidenced by the Right Certificate.)
To National Fuel Gas Company:
The undersigned hereby irrevocably elects to exercise Rights represented by this Right Certificate to purchase the shares of Common Stock issuable upon the exercise of such Rights (or such other securities of the Company or of any other Person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of:
Please insert social security or other taxpayer identifying number

(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new Right Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to:
Please insert social security or other taxpayer identifying number

(Please print name and address)

Dated:
----------------, --------

Signature
Signature Guaranteed:
 (Signatures must be guaranteed.)
A-8

SUMMARY OF RIGHTS TO PURCHASE COMMON STOCK EXHIBIT B
On June 13, 1996, the Board of Directors of National Fuel Gas Company (the "Company") declared a dividend distribution of one Right for each outstanding share of Common Stock, $1.00 par value, of the Company (the "Common Stock") to stockholders of record at the close of business on July 31, 1996 (the "Record Date"). The Rights are to be issued pursuant to a shareholder rights plan which was approved by the Board of Directors on March 19, 1996. Each Right entitles the registered holder to purchase from the Company one-half of one share of common Stock at a price of $130 per share (the "Purchase Price"), being $65.00 per half share, subject to adjustment. The description and terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement") between the Company and Marine Midland Bank, as Rights Agent (the "Rights Agent").
Distribution Date; Transfer of Rights
Until the earlier to occur of (i) ten days following the date (the "Shares Acquisition Date") of the public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of Common Stock or other voting securities ("Voting Stock") that have 10% or more of the voting power of the outstanding shares of Voting Stock or (ii) ten days following the commencement or announcement of an intention to make a tender offer or exchange offer the consummation of which would result in such person acquiring, or obtaining the right to acquire, beneficial ownership of Voting Stock having 10% or more of the voting power of the outstanding shares of Voting Stock (the earlier of such dates being called the "Distribution Date"), the Rights will be evidenced, with respect to any of the Company's Common Stock certificates outstanding as of the Record Date, by such Common Stock certificate. The Rights Agreement provides that, until the Distribution Date, the Rights will be transferred with and only with the Company's Common Stock. Until the Distribution Date (or earlier redemption or expiration of the Rights), new Common Stock certificates issued after the Record Date upon transfer or new issuance of the Company's Common Stock will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any of the Company's Common Stock certificates outstanding as of the Record Date will also constitute the transfer of the Rights associated with the Common Stock represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record of the Company's Common Stock as of the close of business on the Distribution Date and such separate Right Certificates alone will evidence the Rights.
B-1
The Rights are not exercisable until the Distribution Date. The Rights will expire at the close of Business on July 31, 2006, unless earlier redeemed or exchanged by the Company as described below.
Exercise of Rights for Common Stock of the Company
Subject to redemption or exchange of the Rights, at any time following the Distribution Date, each holder of a Right will thereafter have the right to receive, upon exercise, Common Stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the Purchase Price of the Right then in effect. Notwithstanding any of the foregoing, following the occurrence of such event set forth in this paragraph, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will be null and void.
Exercise of Rights for Shares of the Acquiring Company
In the event that, at any time following the Shares Acquisition Date,
(i) the Company is acquired in a merger or other business combination transaction, or (ii) 50% or more of the Company's assets or earning power is sold or transferred, each holder of a Right (except Rights which previously have been voided as set forth above) shall thereafter have the right to receive, upon exercise, Common Stock of the acquiring company having a value equal to two times the Purchase Price of the Right then in effect.
Adjustments to Purchase Price
The Purchase Price payable, and the number of shares of Common Stock (or other securities, as the case may be) issuable upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Common Stock, (ii) upon the grant to holders of the Common Stock of certain rights or warrants to subscribe for or purchase shares of the Common Stock or convertible securities at less than the then Current Market Price of the Common Stock or (iii) upon the distribution to holders of the Common Stock of evidences of indebtedness or assets (excluding regular periodic cash dividends or dividends payable in the Common Stock) or of subscription rights or warrants (other than those referred to above). Prior to the Distribution Date, the Board of Directors of the Company may make such equitable adjustments as it deems appropriate in the circumstances in lieu of any adjustment otherwise required by the foregoing.
With certain exceptions, no adjustment in the Purchase Price will be required until the earlier of (i) three years from the date of the event giving rise to such adjustment or (ii) the time
B-2
at which cumulative adjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares of Common Stock will be issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the Common Stock on the last trading date prior to the date of exercise.
Redemption and Exchange of Rights
At any time prior to 5:00 P.M. Buffalo, New York time on the tenth day following the Shares Acquisition Date, the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption Price"). Under certain circumstances set forth in the Rights Agreement, the decision to redeem shall require the concurrence of a majority of the Independent Directors. Immediately upon the action of the Board of Directors of the Company electing to redeem the Rights with, if required, the concurrence of the Independent Directors, the Company shall make announcement thereof, and upon such action, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.
At any time after the occurrence of the event set forth under the heading "Exercise of Rights for Common Stock of the Company" above, the Board of Directors may exchange the Rights (other than Rights owned by an Acquiring Person, which have become void), in whole or in part, at an exchange ratio of one share of Common Stock, and/or other securities, cash or other assets deemed to have the same value as one share of Common Stock, per Right, subject to adjustment.
Until a Right is exercised or exchanged for Common Stock, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Common Stock or other consideration of the Company or for the stock of the Acquiring Person as set forth above, or are exchanged as provided in the preceding paragraph.
Amendments to Terms of the Rights
Any of the provisions of the Rights Agreement may be amended by the Board of Directors of the Company without the consent of the holders of the Rights prior to the Distribution Date. Thereafter, the provisions of the Rights Agreement may be amended by the Board of Directors in order to cure any ambiguity, defect or inconsistency, or to make changes which do not adversely affect the interests of holders of Rights (excluding the interest of any Acquiring Person); provided, however, that no supplement or amendment may be made on or
B-3
after the Distribution Date which changes those provisions relating to the principal economic terms of the Rights. The Board of Directors may also, with the concurrence of a majority of the Independent Directors, extend the redemption period for up to an additional 20 days.
The term "Independent Directors" means any member of the Board of Directors of the Company who was a member of the Board prior to the date of the Rights Agreement, and any person who is subsequently elected to the Board if such person is recommended or approved by a majority of the Independent Directors but shall not include an Acquiring Person or any representative thereof.
A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated June 12, 1996. A copy of the Rights Agreement is available free of charge form the Company. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference.
B-4

Contract #: 830016
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
This Service Agreement, made and entered into this 2nd day of November, 1995, by and between TEXAS EASTERN TRANSMISSION CORPORATION, a Delaware Corporation (herein called "Pipeline") and NATIONAL FUEL GAS DISTRIBUTION CORPORATION (herein called "Customer", whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline currently are parties to executed service agreements under Pipeline's Rate Schedules FT-1, and CDS (Pipeline Contract Nos. 800339, 800363 and 800340); and
WHEREAS, Customer and Pipeline have agreed to reform Customer's service agreements by, inter alia, extending the term of certain of Customer's service agreements; and
WHEREAS, Customer and Pipeline desire to enter into this Service Agreement to supersede Customer's existing Rate Schedule FT-1 service agreement (Pipeline Contract No. 800339);
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties do covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of Pipeline's Rate Schedule FT-1, and of the General Terms and Conditions, transportation service hereunder will be firm. Subject to the terms, conditions and limitations hereof and of Pipeline's Rate Schedule FT-1, Pipeline agrees to deliver for Customer's account quantities of natural gas up to the following quantity:
Maximum Daily Quantity (MDQ) 52,652 dth
Pipeline shall receive for Customer's account, at those points on Pipeline's system as specified in Article IV herein or available to Customer pursuant to Section 14 of the General Terms and Conditions (hereinafter referred to as Point(s) of Receipt) for transportation hereunder daily quantities of gas up to customer's MDQ, plus Applicable Shrinkage. Pipeline shall transport and deliver for Customer's account, at those points on Pipeline's system as specified in Article IV herein or available to Customer pursuant to Section 14 of the General Terms and Conditions (hereinafter referred to as Point(s) of Delivery), such daily quantities tendered up to such Customer's MDQ.
Pipeline shall not be obligated to, but may at its discretion, receive at any Point of Receipt on any day a quantity of gas in excess of the applicable Maximum Daily Receipt obligation (MDRO), plus Applicable Shrinkage, but shall not receive in the aggregate at all Points of Receipt on any day a

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
quantity of gas in excess of the applicable MDQ, plus Applicable Shrinkage. Pipeline shall not be obligated to, but may at its discretion, deliver at any Point of Delivery on any day a quantity of gas in excess of the applicable Maximum Daily Delivery Obligation (MDDO), but shall not deliver in the aggregate at all Points of Delivery on any day a quantity of gas in excess of the applicable MDQ.
In addition to the MDQ and subject to the terms, conditions and limitations hereof, Rate Schedule FT-1 and the General Terms and Conditions, Pipeline shall deliver within the Access Area under this and all other service agreements under Rate Schedules CDS, FT-1, and/or SCT, quantities up to Customer's Operational Segment Capacity Entitlements, excluding those Operational Segment Capacity Entitlements scheduled to meet Customer's MDQ, for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on the later of: (1) November 1, 1995 or (ii) the date on which Customer has executed all of Pipeline's Contract Nos. 830016, 830017 and 820004, and shall continue in force and effect until October 31, 2000 and year to year thereafter unless this Service Agreement is terminated as hereinafter provided. This Service Agreement may be terminated by either Pipeline or Customer upon two (2) years prior written notice to the other specifying a termination date of any year occurring on or after the expiration of the primary term. Subject to Section 22 of Pipeline's General Terms and Conditions and without prejudice to such rights, this Service Agreement may be terminated at any time by Pipeline in the event Customer fails to pay part or all of the amount of any bill for service hereunder and such failure continues for thirty (30) days after payment is due; provided, Pipeline gives thirty (30) days prior written notice to Customer of such termination and provided further such termination shall not be effective if, prior to the date of termination, Customer either pays such outstanding bill or furnishes a good and sufficient surety bond guaranteeing payment to Pipeline of such outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT TERM OR THE PROVISION OF A TERMINATION NOTICE BY CUSTOMER TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION. PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE TERMINATION.
Any portions of this Service Agreement necessary to correct or cash-out imbalances under this Service Agreement as required by the General Terms and Conditions of pipeline's FERC Gas Tariff, the General Terms and Conditions of
2

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
Pipeline's FERC Gas Tariff, Volume No. 1, shall survive the other parts of this Service Agreement until such time as such balancing has been accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain subject to the applicable provisions of Rate Schedule FT-1 and of the General Terms and Conditions of Pipeline's FERC Gas Tariff on file with the Federal Energy Regulatory Commission, all of which are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered hereunder and for the availability of such service in the period stated, the applicable prices established under Pipeline's Rate Schedule FT-1 as filed with the Federal Energy Regulatory Commission, and as same may hereafter be legally amended or superseded.
Customer agrees that Pipeline shall have the unilateral right to file with the appropriate regulatory authority and make changes effective in (a) the rates and charges applicable to service pursuant to Pipeline's Rate Schedule FT-1, (b) Pipeline's Rate Schedule FT-1 pursuant to which service hereunder is rendered or (c) any provision of the General Terms and Conditions applicable to Rate Schedule FT-1. Notwithstanding the foregoing, Customer does not agree that Pipeline shall have the unilateral right without the consent of Customer subsequent to the execution of this Service Agreement and Pipeline shall not have the right during the effectiveness of this Service Agreement to make any filings pursuant to Section 4 of the Natural Gas Act to change the MDQ specified in Article I, to change the term of the agreement as specified in Article II, to change Point(s) of Receipt specified in Article IV, to change the Point(s) of Delivery specified in Article IV, or to change the firm character of the service hereunder. Pipeline agrees that Customer may protest or contest the aforementioned filings, and Customer does not waive any rights it may have with respect to such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which Pipeline shall receive and deliver gas, respectively, shall be specified in Exhibit(s) A and B of the executed service agreement. Customer's Zone Boundary Entry Quantity and Zone Boundary Exit Quantity for each of Pipeline's zones shall be specified in Exhibit C of the executed service agreement.
3

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
Exhibit (s) A, B and C are hereby incorporated as part of this Service Agreement for all intents and purposes as if fully copied and set forth herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account shall conform to the quality specifications set forth in Section 5 of Pipeline's General Terms and Conditions. Customer agrees that in the event Customer tenders for service hereunder and Pipeline agrees to accept natural gas which does not comply with Pipeline's quality specifications, as expressly provided for in
Section 5 of Pipeline's General Terms and Conditions, Customer shall pay all costs associated with processing of such gas as necessary to comply with such quality specifications. Customer shall execute or cause its supplier to execute, if such supplier has retained processing rights to the gas delivered to Customer, the appropriate agreements prior to the commencement of service for the transportation and processing of any liquefiable hydrocarbons and any PVR quantities associated with the processing of gas received by Pipeline at the Point(s) of Receipt under such Customer's service agreement. In addition, subject to the execution of appropriate agreements, Pipeline is willing to transport liquids associated with the gas produced and tendered for transportation hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms and Conditions of Pipeline's FERC Gas Tariff, any notice, request, demand, statement, bill or payment provided for in this Service Agreement, or any notice which any party may desire to give to the other, shall be in writing and shall be considered as duly delivered when mailed by registered, certified, or regular mail to the post office address of the parties hereto, as the case may be, as follows:
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court Houston, TX 77056-5310
(b) Customer: NATIONAL FUEL GAS DISTRIBUTION CORPORATION
10 Lafayette Square Room 1200 Buffalo, NY 14203
or such other address as either party shall designate by formal written notice.
4

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or consolidation to the properties, substantially as an entirety, of Customer, or of Pipeline, as the case may be, shall be entitled to the rights and shall be subject to the obligations of its predecessor in title under this Service Agreement; and either Customer or Pipeline may assign or pledge this Service Agreement under the provisions of any mortgage, deed of trust, indenture, bank credit agreement, assignment, receivable sale, or similar instrument which it has executed or may execute hereafter; otherwise, neither Customer nor Pipeline shall assign this Service Agreement or any of its rights hereunder unless it first shall have obtained the consent thereto in writing of the other; provided further, however, that neither Customer nor Pipeline shall be released from its obligations hereunder without the consent of the other. In addition, Customer may assign its rights to capacity pursuant to Section 3.14 of the General Terms and Conditions. To the extent Customer so desires, when it releases capacity pursuant to Section 3.14 of the General Terms and Conditions, Customer may require privity between Customer and the Replacement Customer, as further provided in the applicable Capacity Release Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement shall be in Accordance with the laws of the State of Texas without recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties are subject to all present and future valid laws with respect to the subject matter, State and Federal, and to all valid present and future orders, rules, and regulations of duly constituted authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This service Agreement supersedes and cancels, as of the effective date of this Service Agreement, the contracts) between the parties hereto as described below:
Service Agreement(s) dated July 26, 1993 between Pipeline and Customer under Pipeline's Rate Schedule FT-1 (Pipeline's contract No;. 800339).
5

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
IN WITNESS WHEREOF, the parties hereto have caused this Service Agreement to be signed by their respective Presidents, Vice Presidents or other duly authorized agents and their respective corporate seals to be hereto affixed and attested by their respective Secretaries or Assistant Secretaries, the day and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION

                                        By /s/ Robert B. Evans
                                          -------------------------------------
                                          Vice President

ATTEST:

/s/ Robert W. Reed
- ----------------------------------------
ROBERT W. REED
CORPORATE SECRETARY	

NATIONAL FUEL GAS DISTRIBUTION
CORPORATION

                                        By /s/ Philip C. Ackerman
                                          -------------------------------------
                                          Philip C. Ackerman
                                          President
ATTEST:

/s/ David F. Smith
- ----------------------------------------
David F. Smith
Secretary	

6

Contract #: 830016

                         EXHIBIT A, TRANSPORTATION PATHS
                  FOR BILLING PURPOSES, DATED NOVEMBER 2, 1995
                TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
        BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
            NATIONAL FUEL GAS DISTRIBUTION CORPORATION ("Customer"),
                              DATED July 26, 1993:

(1)  Customer's firm Point(s) of Receipt:

                                             Maximum Daily
                                             Receipt
                                             obligation (plus
Point of                                     Applicable         Measurement
Receipt  Description                         Shrinkage) (dth)   Responsibilities   Owner     Operator

72655    TOMCAT - CALHOUN CO., TX  CALHOUN   10,024             TRANSCO            TRANSCO   TRANSCO
         Co. , TX

(2)  Customer shall have  Pipeline's  Master Receipt Point List ("MRPL").
     Customer  hereby agrees that Pipeline's KRPL as revised and published by
     Pipeline from time to time is incorporated herein by", reference.	

Customer hereby agrees to comply with the Receipt Pressure obligation as set forth in Section 6 of.Pipeline's General Terms and Conditions at such Point(s) of Receipt.

                                                    Transportation
Transportation Path                                 Path Quantity (Dth/D)
-------------------                                 ---------------------
      MI to M2                                              52652	

SIGNED FOR IDENTIFICATION

PIPELINE:  /s/ Robert B. Evans
         -----------------------------------------------------

CUSTOMER: /s/ Philip C. Ackerman
         -----------------------------------------------------

SUPERSEDES EXHIBIT A DATED:  7/26/93
                           -----------------------------------	

A-1

Contract #: 830016

             EXHIBIT B, POINT(S) OF DELIVERY, DATED NOVEMBER 2, 1995
                TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
         BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline") AND
            NATIONAL FUEL GAS DISTRIBUTION CORPORATION ("Customer"),
                              DATED July 26, 1993:

                                     Maximum
                                     Daily
    Point of                         Delivery    Delivery Pressure         Measurement
    Delivery  Description            Obligation  Obligation                Responsibilities  Owner    Operator
    --------  -----------            ----------  ----------                ----------------  -----    --------
                                     (dth)

1.  70015     NATIONAL FUEL -        52,652      As provided in Section 6  TX EAST           TX EAST  NATL FUL
              BRISTORIA, PA  GREENE              of the General Terms and  TRAN   TRAN       SUP
              CO., PA                            Conditions of Pipeline's
                                                 FERC Gas Tariff	

SIGNED FOR IDENTIFICATION

PIPELINE:  /s/ Robert B. Evans
         -----------------------------------------------------

CUSTOMER:  /s/ Philip C. Ackerman
         -----------------------------------------------------

SUPERSEDES EXHIBIT B DATED:  7/26/93
                           -----------------------------------	

B-1

Contract #: 830016

    EXHIBIT C, ZONE BOUNDARY ENTRY QUANTITY AND ZONE BOUNDARY EXIT QUANTITY,
    DATED NOVEMBER 2, 1995, TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
         BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("PIPELINE") AND
 NATIONAL FUEL GAS DISTRIBUTION CORPORATION ("CUSTOMER"), DATED July 26, 1993:

                          ZONE BOUNDARY ENTRY QUANTITY
                                      Dth/D

                                       To
                                       --

============================================================================================================
  FROM   STX   ETX   WLA   ELA   Ml-24   Ml-30   M1-TXG   M1-TGC   M2-24   M2-30   M2-TXG   M2-TGC   M2   M3
============================================================================================================

============================================================================================================
STX                                                       1596
============================================================================================================
ETX                              5160            2415
============================================================================================================
WLA                                              735      1596
============================================================================================================
ELA                                      41841
============================================================================================================
Ml-24                                                              5160
============================================================================================================
Ml-30                                                                      41841
============================================================================================================
M1-TXG                                                                             3150
============================================================================================================
M1-TGC                                                                                      3192
============================================================================================================
M2-24
============================================================================================================
M2-30
============================================================================================================
M2-TXG
============================================================================================================
M2-TGC
============================================================================================================
M2
============================================================================================================
M3
============================================================================================================	

C-1

Contract #: 830016

                              EXHIBIT C (Continued)
                   NATIONAL FUEL GAS DISTRIBUTION CORPORATION

                           ZONE BOUNDARY EXIT QUANTITY
                                      Dth/D

                                       To
                                       --

============================================================================================================
  FROM   STX   ETX   WLA   ELA   Ml-24   Ml-30   M1-TXG   M1-TGC   M2-24   M2-30   M2-TXG   M2-TGC   M2   M3
============================================================================================================

============================================================================================================
STX
============================================================================================================
ETX
============================================================================================================
WLA
============================================================================================================
ELA
============================================================================================================
Ml-24                                                              5160
============================================================================================================
Ml-30                                                                      41841
============================================================================================================
M1-TXG                                                                             3150
============================================================================================================
M1-TGC                                                                                      3192
============================================================================================================
M2-24
============================================================================================================
M2-30
============================================================================================================
M2-TXG
============================================================================================================
M2-TGC
============================================================================================================
M2
============================================================================================================
M3
============================================================================================================	

SIGNED FOR IDENTIFICATION

PIPELINE:  /s/ Robert B. Evans
         ------------------------------------------------------

CUSTOMER: /s/ Philip C. Ackerman
         ------------------------------------------------------

SUPERSEDES EXHIBIT C DATED  7/26/93
                          -------------------------------------	

C-2

Contract #: 830017
SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
This Service Agreement, made and entered into this 2nd day of November, 1995, by and between TEXAS EASTERN TRANSMISSION CORPORATION, a Delaware Corporation (herein called "Pipeline") and NATIONAL FUEL GAS DISTRIBUTION CORPORATION (herein called "Customer", whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline currently are parties to executed service agreements under Pipeline's Rate Schedules FT-1, and CDS (Pipeline Contract Nos. 800339, 800363 and 800340); and
WHEREAS, Customer and Pipeline have agreed to reform Customer's service agreements by, inter alia, extending the term of certain of Customer's service agreements; and
WHEREAS, Customer and Pipeline desire to enter into this Service Agreement to supersede Customer's existing Rate Schedule FT-1 service agreement (Pipeline Contract No. 800363);
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties do covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of Pipeline's Rate Schedule FT-1, and of the General Terms and Conditions, transportation service hereunder will be firm. Subject to the terms, conditions and limitations hereof and of Pipeline's Rate Schedule FT-1, Pipeline agrees to deliver for Customer's account quantities of natural gas up to the following quantity:
Maximum Daily Quantity (MDQ) 44,313 dth
Pipeline shall receive for Customer's account, at those points on Pipeline's system as specified in Article IV herein or available to Customer pursuant to Section 14 of the General Terms and Conditions (hereinafter referred to as Point(s) of Receipt) for transportation hereunder daily quantities of gas up to Customer's MDQ, plus Applicable Shrinkage. Pipeline shall transport and deliver for Customer's account, at those points on Pipeline's system as specified in Article IV herein or available to Customer pursuant to Section 14 of the General Terms and Conditions (hereinafter

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
referred to as Point(s) of Delivery) such daily quantities tendered up to such Customer's MDQ.
Pipeline shall not be obligated to, but may at its discretion, receive at any Point of Receipt on any day a quantity of gas in excess of the applicable Maximum Daily Receipt Obligation (MDRO), plus Applicable Shrinkage, but shall not receive in the aggregate at all Points of Receipt on any day a quantity of gas in excess of the applicable MDQ, plus Applicable Shrinkage. Pipeline shall not be obligated to, but may at its discretion, deliver at any Point of Delivery on any day a quantity of gas in excess of the applicable Maximum Daily Delivery Obligation (MDDO), but shall not deliver in the aggregate at all Points of Delivery on any day a quantity of gas in excess of the applicable MDQ.
In addition to the MDQ and subject to the terms, conditions and limitations hereof, Rate Schedule FT-1 and the General Terms and Conditions, Pipeline shall deliver within the Access Area under this and all other service agreements under Rate Schedules CDS, FT-1, and/or SCT, quantities up to Customer's Operational Segment Capacity Entitlements, excluding those Operational Segment Capacity Entitlements scheduled to meet Customer's MDQ, for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on the later of: (1) November 1, 1995 or (ii) the date on which Customer has executed all of Pipeline's Contract Nos. 830016, 830017 and 820004, and shall continue in force and effect until October 31, 2001 and year to year thereafter unless this Service Agreement is terminated as hereinafter provided. This Service Agreement may be terminated by either Pipeline or Customer upon two (2) years prior written notice to the other specifying a termination date of any year occurring on or after the expiration of the primary term. Subject to Section 22 of Pipeline's General Terms and Conditions and without prejudice to such rights, this Service Agreement may be terminated at any time by Pipeline in the event Customer fails to pay part or all of the amount of any bill for service hereunder and such failure continues for thirty (30) days after payment is due; provided, Pipeline gives thirty (30) days prior written notice to Customer of such termination and provided further such termination shall not be effective if, prior to the date of termination, Customer either pays such outstanding bill or furnishes a good and sufficient surety bond guaranteeing payment to Pipeline of such outstanding bill.
2

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT TERM OR THE PROVISION OF A TERMINATION NOTICE BY CUSTOMER TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION. PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE TERMINATION.
Any portions of this Service Agreement necessary to correct or cash-out imbalances under this Service Agreement as required by the General Terms and Conditions of Pipeline's FERC Gas Tariff, Volume No. 1, shall survive the other parts of this Service Agreement until such time as such balancing has been accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain subject to the applicable provisions of Rate Schedule FT-1 and of the General Terms and Conditions of Pipeline's FERC Gas Tariff on file with the Federal Energy Regulatory Commission, all of which are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered hereunder and for the availability of such service in the period stated the applicable prices established under Pipeline's Rate Schedule FT-1 as filed with the Federal Energy Regulatory commission, and as same may hereafter be legally amended or superseded.
Customer agrees that Pipeline shall have the unilateral right to file with the appropriate regulatory authority and make changes effective in (a) the rates and charges applicable to service pursuant to Pipeline's Rate Schedule FT-1, (b) Pipeline's Rate Schedule FT-1 pursuant to which service hereunder is rendered or (c) any provision of the General Terms and Conditions applicable to Rate Schedule FT-1. Notwithstanding the foregoing, Customer does not agree that Pipeline shall have the unilateral right without the consent of Customer subsequent to the execution of this Service Agreement and Pipeline shall not have the right during the effectiveness of this Service Agreement to make any filings pursuant to Section 4 of the Natural Gas Act to
3

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
change the MDQ specified in Article I, to change the term of the service agreement as specified in Article II, to change Point(s) of Receipt specified in Article IV, to change the Point (s) of Delivery specified in Article IV, or to change the firm character of the service hereunder. Pipeline agrees that Customer may protest or contest the aforementioned filings, and Customer does not waive any rights it may have with respect to such filings.
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point(s) of Receipt and Point(s) of Delivery at which Pipeline shall receive and deliver gas, respectively, shall be specified in Exhibit(s) A and B of the executed service agreement.
Customer's Zone Boundary Entry Quantity and Zone Boundary Exit Quantity for each of Pipeline's zones shall be specified in Exhibit C of the executed service agreement.
Exhibit(s) A, B and C are hereby incorporated as part of this Service Agreement for all intents and purposes as if fully copied and set forth herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account shall conform to the quality specifications set forth in Section 5 of Pipeline's General Terms and Conditions. Customer agrees that it the event Customer tenders for service hereunder and Pipeline agrees to accept natural gas which does not comply with Pipeline's quality specifications, as expressly provided for in
Section 5 of Pipeline's General Terms and Conditions, Customer shall pay all costs associated with processing of such gas as necessary to comply with such quality specifications. Customer shall execute or cause its supplier to execute, if such supplier has retained processing rights to the gas delivered to Customer, the appropriate agreements prior to the commencement of service for the transportation and processing of any liquefiable hydrocarbons and any PVR quantities associated with the processing of gas received by Pipeline at the Point(s) of Receipt under such Customer's service agreement. In addition, subject to the execution of appropriate agreements, Pipeline is willing to transport liquids associated with the gas produced and tendered for transportation hereunder.
4

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms and Conditions of Pipeline's FERC Gas Tariff, any notice, request, demand, statement, bill or payment provided for in this Service Agreement, or any notice which any party may desire to give to the other, shall be in writing and shall be considered as duly delivered when mailed by registered, certified, or regular mail to the post office address of the parties hereto, as the case may be, as follows:
(a) Pipeline: Texas Eastern Transmission Corporation 5400 Westheimer Court Houston, Texas 77056-5310
(b) Customer: NATIONAL FUEL GAS DISTRIBUTION 10 LAYFAYETTE SQUARE BUFFALO, NY 14203
or such other address as either party shall designate by formal written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or consolidation to the properties, substantially as an entirety, of Customer, or of Pipeline, as the case may be, shall be entitled to the rights and shall be subject to the obligations of its predecessor in title under this Service Agreement; and either Customer or Pipeline may assign or pledge this Service Agreement under the provisions of any mortgage, deed of trust, indenture, bank credit agreement, assignment, receivable sale, or similar instrument which it has executed or may execute hereafter; otherwise, neither Customer nor Pipeline shall assign this Service Agreement or any of its rights hereunder unless it first shall have obtained the consent thereto in writing of the other; provided further, however, that neither Customer nor Pipeline shall be released from its obligations hereunder without the consent of the other. In addition, Customer may assign its rights to capacity pursuant to Section 3.14
5

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
of the General Terms and Conditions. To the extent Customer so desires, when it releases capacity pursuant to Section 3.14 of the General Terms and Conditions, Customer may require privity between Customer and the Replacement Customer, as further provided in the applicable Capacity Release Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement shall be in accordance with the laws of the State of Texas without recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties are subject to all present and future valid laws with respect to the subject matter, State and Federal, and to all valid present and future orders, rules, and regulations of duly constituted authorities having jurisdiction.
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the effective date of this Service Agreement, the contracts) between the parties hereto as described below:
Service Agreement(s) dated, September 24, 1993 between Pipeline and Customer under Pipeline's Rate Schedule FT-1 (Pipeline's contract No. 800363).
6

SERVICE AGREEMENT
FOR RATE SCHEDULE FT-1
 (Continued)
IN WITNESS WHEREOF, the parties hereto have caused this Service Agreement to be signed by their respective Presidents, Vice Presidents or other duly authorized agents and their respective corporate seals to be hereto affixed and attested by their respective Secretaries or Assistant Secretaries, the day and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION

                                       By /s/ Robert B. Evans
                                         --------------------------------------
                                          Vice President

ATTEST:

/s/ Robert W. Reed
- ------------------------------------
ROBERT W. REED
CORPORATE SECRETARY	

NATIONAL FUEL GAS DISTRIBUTION

                                       By /s/ Philip C. Ackerman
                                         --------------------------------------
                                          Philip C. Ackerman
                                          President

ATTEST:

/s/ David F. Smith
- -----------------------------------
David F. Smith
Secretary	

7

Contract # 830017

   EXHIBIT A, TRANSPORTATION PATH FOR BILLING PURPOSES DATED NOVEMBER 2, 1995
                TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
        BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
            NATIONAL FUEL GAS DISTRIBUTION CORPORATION ("Customer") ,
                            DATED September 24, 1993:

(1)   Customer's firm Point(s) of Receipt:

                                                 Maximum Daily
                                                 Receipt
                                                 Obligation (plus
Point of                                         Applicable            Measurement
Receipt    Description                           Shrinkage)  (dth)     Responsibilities      Owner         Operator
- --------   -----------                           -----------------     ----------------      -----         --------

70028      SOUTHERN NATURAL (FROM T.E.) -          110  *              TX EAST TRAN          TX EAST       SOTHN NAT GS
           KOSCIUSKO, MS                                                                      TRAN

70217      UNITED GAS KOSCIUSKO, MS ATTALA       2,432  *              UNIT GAS PL           UNIT GAS      UNIT GAS PL
           Co., MS                                                                            PL

72601      SEAGULL SHORELINE SYSTEM -            1,663                 SEAGULL SHOR          SEAGULL       SEAGULL SHOR
           MATAGORDA CO., TX.  MATAGORDA                                                      SHOR
           CO., TX

72655      TOMCAT - CALHOUN CO., TX CALHOUN      2,516                 TRANSCO               TRANSCO       TRANSCO
           CO., TX	

* Included in Firm Receipt Point Entitlements as set forth in Section 14 of Pipeline's General Terms and Conditions at the Kosciusko, Mississippi Point of Receipt.
(2) Customer shall have Pipeline' s Master Receipt Point List ("MRPL"). Customer hereby agree that Pipeline's MRPL as revised and published by Pipeline from time to time is incorporated herein by reference.
Customer hereby agrees to comply with the Receipt Pressure obligation as set forth in Section 6 of Pipeline's General Terms and Conditions at such Point(s) of Receipt.
A-1

Contract # 830017
EXHIBIT A, continued
NATIONAL FUEL GAS DISTRIBUTION CORPORATION

                          Transportation
Transportation Path    Path Quantity (Dth/p)
-------------------    ---------------------

Ml to M2                      44,313	

SIGNED FOR IDENTIFICATION

PIPELINE:  /s/ Robert B. Evans
         -----------------------------------

CUSTOMER:  /s/ Philip C. Ackearman
         -----------------------------------

SUPERSEDES EXHIBIT A DATED:  9/24/93
                           -----------------	

A-2

Contract #:830017

            EXHIBIT B, POINT (S) OF DELIVERY, DATED NOVEMBER 2, 1995
                TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
        BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
             NATIONAL FUEL GAS DISTRIBUTION CORPORATION ("Customer")
                            DATED September 24, 1993:

                                        Maximum
                                        Daily
   Point of                             Delivery     Deliver  Pressure           Measurement
   Delivery  Description                Obligation   Obligation                  Responsibilities   Owner       Operator
   --------  -----------                ----------   ----------                  ----------------   -----       --------
                                          (dth)
1.   70004   CNG TRANSMISSION -                      As provided in Section 6    TX EAST TRAN       TX EAST     TX EAST
             CLARINGTON, OH MONROE                   of the General Terms and                       TRAN        TRAN
             CO., OH                                 Conditions of Pipeline's
                                                     FERC Gas Tariff

2.   70051   CNG TRANSMISSION  -                     As provided in Section 6    TX EAST TRAN       TX EAST     CNG TRANS
             SOMERSET, PA  SOMERSET                  of the General Terms and                       TRAN
             CO.,  PA                                Conditions of Pipeline's
                                                     FERC Gas Tariff

3.   70372   CNG  RANSMISSION  -                     At the operating  pressure  TX EAST TRAN       TX EAST     CNG TRANS
             MOUNDSVILLE, WV MARSHALL                existing at the point of                       TRAN
             Co.,  WV                                delivery

4.   70450   CNG TRANSMISSION  -                     At the operation pressure   TX EAST TRAN       TX EAST     CNG TRANS
             SUMMERFIELD,OH  NOBLE                   existing at the point of                       TRAN
             CO.,   OH                               Delivery

5.   70471   CNG TRANSMISSON -                       200 pounds per square       TX EAST TRAN       TX FAST     CNG TRANS
             WOODSFIELD,   OH   MONROE               inch gauge                                     TRAN
             CO.,   OH

6.   70983   CNG  TRANSMISSION  -                    300 pounds per square       CNG TRANS          CNG         CNG TRANS
             POWHATAN  POINT,  OH                    inch gauge                                     TRANS
             MONROE CO., OH

7.   72533   DAMSON (PEOPLES) MM -                   At the operating pressure   PEOPLES            PEOPLES     DAMSON
             SOMERSET,   PA   SOMERSET               existing at the point of    NG(PA)             NG(PA)      OIL
             CO.,   PA                               Delivery

8.   75037   CNG                                     As provided in Section 6    TX EAST TRAN       TX EAST     CNG TRANS
             TRANSMISSION-WAYNESBURG                 Of the General Terms and                       TRAN
             PA(D70037) GREENE CO., PA               Conditions of Pipeline's
                                                     FERC Gas Tariff

9.   75082   TETCO - OAKFORD STORAGE,                575 pounds per square       CNG TRANS          TX EAST     CNG TRANS
             PA-(D70082/R76082)                      inch gauge                                     TRAN
             WESTMORELAND CO., PA	

B-1

Contract #: 830017

                   EXHIBIT B, POINT(S) OF DELIVERY (Continued)
                   NATIONAL FUEL GAS DISTRIBUTION CORPORATION

                                        Maximum
                                        Daily
   Point of                             Delivery     Deliver Pressure            Measurement
   Delivery  Description                Obligation   Obligation                  Responsi bilities  Owner       Operator
   --------  -----------                ----------   ----------                  -----------------  -----       --------
                                          (dth)
10.  79921   COMPRESSOR STATION 21A                  At any pressure provided    TX EAST TRAN       TX EAST     CNG TRANS
             (UNIONTOWN)  FAYETTE CO                 by Texas Eastern not to                        TRAN
             PA                                      exceed 1 000 pounds per
                                                     square inch gauge

11.  79855   CNG - NATIONAL FUEL          44,313     N/A                         N/A                N/A         N/A
             DISTRIBUTION FOR
             NOMINATION PURPOSES	

provided, however, that all service under this Service Agreement shall be within the limitations set forth in the Dispatching Agreement dated September 24, 1993 between Pipeline, Customer and CNG Transmission Corporation.
SIGNED FOR IDENTIFICATION:

PIPELINE:  /s/ Robert B. Evans
         ---------------------------------

CUSTOMER:  /s/ Philip C. Ackerman
         ---------------------------------

SUPERSEDES EXHIBIT B DATED  9/24/93
                          ----------------	

B-2

Contract #:830017

    EXHIBIT C, ZONE BOUNDARY ENTRY QUANTITY AND ZONE BOUNDARY EXIT QUANTITY,
    DATED NOVEMBER 2, 1995, TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE FT-1
         BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("PIPELINE") AND
            NATIONAL FUEL GAS DISTRIBUTION CORPORATION ("CUSTOMER"),
                           DATED September 24, 1993:

                          ZONE BOUNDARY ENTRY QUANTITY
                                      Dth/D
                                       To

==============================================================================================================
FROM     STX    ETX    WLA   ELA  Ml-24   Ml-30   M1-TXG  M1-TGC   M2-24   M2-30   M2-TXG    M2-TGC    M2   M3
==============================================================================================================

==============================================================================================================
STX                                                       1718
==============================================================================================================
ETX                               4610            2600
==============================================================================================================
WLA                                               531     1152
==============================================================================================================
ELA                                       34313
==============================================================================================================
Ml-24                                                              4610
==============================================================================================================
Ml-30                                                                      34313
==============================================================================================================
M1-TXG                                                                             3131
==============================================================================================================
M1-TGC                                                                                       2870
==============================================================================================================
M2-24
==============================================================================================================
M2-30
==============================================================================================================
M2-TXG
==============================================================================================================
M2-TGC
==============================================================================================================
M2
==============================================================================================================
M3
==============================================================================================================	

C-1

Contract #:830017

                              EXHIBIT C (Continued)
                   NATIONAL FUEL GAS DISTRIBUTION CORPORATION

                           ZONE BOUNDARY EXIT QUANTITY
                                      Dth/D

                                       To

========================================================================================================
FROM   STX   ETX  WLA   ELA   Ml-24   Ml-30  M1-TXG  M1-TGC   M2-24    M2-30    M2-TXG   M2-TGC  M2   M3
========================================================================================================

========================================================================================================
STX
========================================================================================================
ETX
========================================================================================================
WLA
========================================================================================================
ELA
========================================================================================================
Ml-24                                                         4610
========================================================================================================
Ml-30                                                                  34313
========================================================================================================
M1-TXG                                                                          3131
========================================================================================================
M1-TGC                                                                                   2870
========================================================================================================
M2-24
========================================================================================================
M2-30
========================================================================================================
M2-TXG
========================================================================================================
M2-TGC
========================================================================================================
M2
========================================================================================================
M3
========================================================================================================	

SIGNED FOR IDENTIFICATION

PIPELINE:  /s/ Robert B. Evans
         ------------------------------------------------------

CUSTOMER:  /s/ Philip C. Ackerman
         ------------------------------------------------------

SUPERSEDES EXHIBIT C DATED  9/24/93
                          -------------------------------------	

C-2

Contract #: 820004
SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
This Service Agreement, made and entered into this 2nd day of November, 1995 by and between TEXAS EASTERN TRANSMISSION CORPORATION, a Delaware Corporation (herein called "Pipeline") and NATIONAL FUEL GAS DISTRIBUTION CORPORATION (herein called "Customer", whether one or more),
W I T N E S S E T H:
WHEREAS, Customer and Pipeline currently are parties to executed service agreements under Pipeline's Rate Schedules FT-1, and CDS (Pipeline Contract Nos. 800339, 800363 and 800340); and
WHEREAS, Customer and Pipeline have agreed to reform Customer's service agreements by, inter alia, extending the term of certain of Customer's service agreements; and
WHEREAS, Customer and Pipeline desire to enter into this Service Agreement to supersede Customer's existing Rate Schedule CDS service agreement (Pipeline Contract No. 800340);
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, the parties do covenant and agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
Subject to the terms, conditions and limitations hereof, of Pipeline's Rate Schedule CDS, and of the General Terms and Conditions, transportation service hereunder will be firm. Subject to the terms, conditions and limitations hereof and of Sections 2.3 and 2.4 of Pipeline's Rate Schedule CDS, Pipeline shall deliver to there points on pipeline's system as specified in Article IV herein or available to Customer pursuant to Section 14 of the General Terms and Conditions (hereinafter referred to as Point(s) of Delivery), for Customer's account, as requested for any day, natural gas quantities up to Customer's MDQ. Customer's MDQ is as follows:
Maximum Daily Quantity (MDQ) 20,000 dth
Subject to variances as may be permitted by' Sections 2.4 of Rate Schedule CDS or the General Terms and Conditions, Customer shall deliver to Pipeline and Pipeline shall receive, for Customer's account, at those points on Pipeline's system as specified in Article IV herein or available to Customer pursuant to Section 14 of the General Terms and Conditions (hereinafter referred to as Point(s) of Receipt) daily quantities of gas equal to the daily quantities delivered to Customer pursuant to this Service Agreement up to Customer's MDQ, plus Applicable Shrinkage as specified in the General Terms and Conditions.

SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
 (Continued)
Pipeline shall not be obligated to, but may at its discretion, receive at any Point of Receipt on any day a quantity of gas in excess of the applicable Maximum Daily Receipt Obligation (MDRO), plus Applicable Shrinkage, but shall not receive in the aggregate at all Points of Receipt on any day a quantity of gas in excess of the applicable MDQ, plus Applicable Shrinkage. Pipeline shall not be obligated to, but may at its discretion, deliver at any Point of Delivery on any day a quantity of gas in excess of the applicable Maximum Daily Delivery Obligation (MDDO), but shall not deliver in the aggregate at all Points of Delivery on any day a quantity of gas in excess of the MDQ.
In addition to the MDQ and subject to the terms, conditions and limitations hereof, Rate Schedule CDS and the General Terms and Conditions, Pipeline shall deliver within the Access Area under this and all other service agreements under Rate Schedules CDS, FT-1, and/or SCT, quantities up to Customer's Operational Segment Capacity Entitlements, excluding those Operational Segment Capacity Entitlements scheduled to meet Customer's MDQ, for Customer's account, as requested on any day.
ARTICLE II
TERM OF AGREEMENT
The term of this Service Agreement shall commence on the later of: (1) November 1, 1995 or (ii) the date on which Customer has executed all of Pipeline's Contract Nos. 830016, 830017 and 820004, and shall continue in force and effect until October 31, 2005 and year to year thereafter unless this Service Agreement is terminated as hereinafter provided. This Service Agreement may be terminated by either Pipeline or Customer upon two (2) years prior written notice to the other specifying a termination date of any year occurring on or after the expiration of the primary term. subject to Section 22 of Pipeline's General Terms and Conditions and without prejudice to such rights, this Service Agreement may be terminated at any time by Pipeline in the event Customer fails to pay part or all of the amount of any bill for service hereunder and such failure continues for thirty (30) days after payment is due; provided, Pipeline gives thirty (30) days prior written notice to Customer of such termination and provided further such termination shall not be effective if, prior to the date of termination, Customer either pays such outstanding bill or furnishes a good and sufficient surety bond guaranteeing payment to Pipeline of such outstanding bill.
THE TERMINATION OF THIS SERVICE AGREEMENT WITH A FIXED CONTRACT TERM OR THE PROVISION OF A TERMINATION NOTICE BY CUSTOMER TRIGGERS PREGRANTED ABANDONMENT UNDER SECTION 7 OF THE NATURAL GAS ACT AS OF THE EFFECTIVE DATE OF THE TERMINATION. PROVISION OF A TERMINATION NOTICE BY PIPELINE ALSO TRIGGERS
2

SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
 (Continued)
CUSTOMER'S RIGHT OF FIRST REFUSAL UNDER SECTION 3.13 OF THE GENERAL TERMS AND CONDITIONS ON THE EFFECTIVE DATE OF THE TERMINATION.
Any portions of this Service Agreement necessary to correct or cash-out imbalances under this Service Agreement as required by the General Terms and Conditions of Pipeline's FERC Gas Tariff, Volume No. 1, shall survive the other parts of this Service Agreement until such time as such balancing has been accomplished.
ARTICLE III
RATE SCHEDULE
This Service Agreement in all respects shall be and remain subject to the applicable provisions of Rate Schedule CDS and of the General Terms and Conditions of Pipeline's FERC Gas Tariff on file with the Federal Energy Regulatory Commission, all of which are by this reference made a part hereof.
Customer shall pay Pipeline, for all services rendered hereunder and for the availability of such service in the period stated, the applicable prices established under Pipeline's Rate Schedule CDS as filed with the Federal Energy Regulatory Commission, and as same may hereafter be legally amended or superseded.
Customer agrees that Pipeline shall have the unilateral right to file with the appropriate regulatory authority and make changes effective in (a) the rates and charges applicable to service pursuant to Pipeline's Rate Schedule CDS, (b) Pipeline's Rate Schedule CDS pursuant to which service hereunder is rendered or (c) any provision of the General Terms and Conditions applicable to Rate Schedule CDS. Notwithstanding the foregoing, customer does not agree that Pipeline shall have the unilateral right without the consent of Customer subsequent to the execution of this Service Agreement and Pipeline shall not have the right during the effectiveness of this Service Agreement to make any filings pursuant to Section 4 of the Natural Gas Act to change the MDQ specified in Article I, to change the term of the agreement as specified in Article II, to change Point(s) of Receipt specified in Article IV, to change the Point(s) of Delivery specified in Article IV, or to change the firm character of the service hereunder. Pipeline agrees that Customer may protest or contest the aforementioned filings, and Customer does not waive any rights it may have with respect to such filings.
3

SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
 (Continued)
ARTICLE IV
POINT(S) OF RECEIPT AND POINT(S) OF DELIVERY
The Point (s) of Receipt and Point (s) of Delivery at which Pipeline shall receive and deliver gas, respectively, shall be specified in Exhibit(s) A and B of the executed service agreement. Customer's Zone Boundary Entry Quantity and Zone Boundary Exit Quantity for each of Pipeline's zones shall be specified in Exhibit C of the executed service agreement.
Exhibit(s) A, B and C. are hereby incorporated as part of this Service Agreement for all intents and purposes as if fully copied and set forth herein at length.
ARTICLE V
QUALITY
All natural gas tendered to Pipeline for Customer's account shall conform to the quality specifications set forth in Section 5 of Pipeline's General Terms and Conditions. Customer agrees that in the event Customer tenders for service hereunder and Pipeline agrees to accept natural gas which does not comply with Pipeline's quality specifications, as expressly provided for in
Section 5 of Pipeline's General Terms and Conditions, Customer shall pay all costs associated with processing of such gas as necessary to comply with such quality specifications. Customer shall execute or cause its supplier to execute, if such supplier has retained processing rights to the gas delivered to Customer, the appropriate-agreements prior to the commencement of service for the transportation and processing of any liquefiable hydrocarbons and any PVR quantities associated with the processing of gas received by Pipeline at the Point(s) of Receipt under such Customer's service agreement. In addition, subject to the execution of appropriate agreements, Pipeline is willing to transport liquids associated with the gas produced and tendered for transportation hereunder.
ARTICLE VI
ADDRESSES
Except as herein otherwise provided or as provided in the General Terms and Conditions of Pipeline's FERC Gas Tariff, any notice, request, demand, statement, bill or payment provided for in this Service Agreement, or any notice which any party may desire to give to the other, shall be in writing and shall be considered as duly delivered when mailed by registered, certified, or regular mail to the post office address of the parties hereto, as the case may be, as follows:
4

SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
 (Continued)
(a) Pipeline: TEXAS EASTERN TRANSMISSION CORPORATION
5400 Westheimer Court Houston, TX 77056-5310
(b) Customer: NATIONAL FUEL GAS DISTRIBUTION CORPORATION 10 LAFAYETTE SQUARE ROOM 1200 BUFFALO, NY 14203
or such other address as either party shall designate by formal written notice.
ARTICLE VII
ASSIGNMENTS
Any Company which shall succeed by purchase, merger, or consolidation to the properties, substantially as an entirety, of Customer, or of Pipeline, as the case may be, shall be entitled to the rights and shall be subject to the obligations of its predecessor in title under this Service Agreement; and either Customer or Pipeline may assign or pledge this Service Agreement under the provisions of any mortgage, deed of trust, indenture, bank credit agreement, assignment, receivable sale, or similar instrument which it has executed or may execute hereafter; otherwise, neither Customer nor Pipeline shall assign this Service Agreement or any of its rights hereunder unless it first shall have obtained the consent thereto in writing of the other; provided further, however, that neither Customer nor Pipeline shall be released from its obligations hereunder without the consent of the other. In addition, Customer may assign its rights to capacity pursuant to Section 3.14 of the General Terms and Conditions. To the extent Customer so desires, when it releases capacity pursuant to Section 3.14 of the General Terms and Conditions, Customer may require privity between Customer and the Replacement Customer, as further provided in the applicable Capacity Release Umbrella Agreement.
ARTICLE VIII
INTERPRETATION
The interpretation and performance of this Service Agreement shall be in accordance with the laws of the State of Texas without recourse to the law governing conflict of laws.
This Service Agreement and the obligations of the parties are subject to all present and future valid laws with respect to the subject matter, State and Federal, and to all valid present and future orders, rules, and regulations of duly constituted authorities having jurisdiction.
5

SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
 (Continued)
ARTICLE IX
CANCELLATION OF PRIOR CONTRACT(S)
This Service Agreement supersedes and cancels, as of the effective date of this Service Agreement, the contracts) between the parties hereto as described below:
Service Agreement(s) dated, August 1, 1993 between Pipeline and Customer under Pipeline's Rate Schedule CDS (Pipeline's Contract No. 800340).
6

SERVICE AGREEMENT
FOR RATE SCHEDULE CDS
 (Continued)
IN WITNESS WHEREOF, the parties hereto have caused this Service Agreement to be signed by their respective Presidents, Vice Presidents or other duly authorized agents and their respective corporate seals to be hereto affixed and attested by their respective Secretaries or Assistant Secretaries, the day and year first above written.
TEXAS EASTERN TRANSMISSION CORPORATION

                                       By /s/ Robert B. Evans
                                         --------------------------------------
                                          Vice President

ATTEST:

/s/ Robert W. Reed
- ---------------------------------------
ROBERT W. REED
CORPORATE SECRETARY	

NATIONAL FUEL GAS DISTRIBUTION
CORPORATION

                                       By /s/ Philip C. Ackerman
                                         --------------------------------------
                                          Philip C. Ackerman
                                          President
ATTEST:

/s/ David F. Smith
- ---------------------------------------
David F. Smith
Secretary	

7

Contract #:820004

                         EXHIBIT A, TRANSPORTATION PATHS
                  FOR BILLING PURPOSES, DATED NOVEMBER 2, 1995
                TO THE SERVICE AGREEMENT UNDER RATE, SCHEDULE CDS
        BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
            NATIONAL FUEL GAS DISTRIBUTION CORPORATION ("Customer"),
                              DATED August 1, 1993:

(1)     Customer's firm Point(s) of Receipt:

                                              Maximum Daily
                                              Receipt
                                              Oligation (plus
Point of                                      Applicable          Measurement
Receipt   Description                         Shrinkage)  (dth)   Responsibilities   Owner     Operator
- -------   -----------                         -----------------   ----------------   -----     --------

72655     TOMCAT - CALHOUN CO., TX  CALHOUN   4,107               TRANSCO            TRANSCO   TRANSCO
          CO., TX	

(2) Customer shall have Pipeline's Master Receipt Point List ("MRPL"). Customer hereby agrees that Pipeline's MRPL as revised and published by Pipeline from time to time is incorporated herein by reference.
Customer hereby agrees to comply with the Receipt Pressure Obligation as set forth in Section 6 of Pipeline's General Terms and Conditions at such Point (s) of Receipt.

                                         Transportation
Transportation Path                      Path Quantity (Dth/D)
-------------------                      ---------------------

     Ml to M2                                   20,000	

SIGNED FOR IDENTIFICATION

PIPELINE: /s/ Robert B. Evans
         ------------------------------------------------

CUSTOMER: /s/ Philip C. Ackerman
         ------------------------------------------------

SUPERSEDES EXHIBIT A DATED:  8/1/93
                           ------------------------------	

A-1

Contract #:820004

            EXHIBIT B, POINT (S) OF DELIVERY, DATED NOVEMBER 2, 1995
                TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE CDS
        BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION ("Pipeline"), AND
            NATIONAL FUEL GAS DISTRIBUTION CORPORATION ("Customer"),
                              DATED August 1, 1993:

                                            Maximum
                                            Daily        Delivery
    Point of                                Delivery     Pressure     Measurement
    Delivery   Description                  Oligation    Obligation   Responsibilities   Owner     Operator
    --------   -----------                  ----------   ----------   ----------------   -----     --------
                                                           (dth)
1.  70015      NATIONAL FUEL - BRISTORIA,   20,000       AS PROVIDED  TX EAST TRAN       TX EAST   NATL FUL SUP
               PA  GREENE CO. , PA                       IN SECTION 6                    TRAN
                                                         OF THE
                                                         GENERAL
                                                         TERMS AND
                                                         CONDITIONS
                                                         OF
                                                         PIPELINE'S
                                                         FERC GAS
                                                         TARIFF	

SIGNED FOR IDENTIFICATION

PIPELINE: /s/ Robert B. Evans
         --------------------------------------------------

CUSTOMER:  /s/ Philip C. Ackerman
         --------------------------------------------------

SUPERSEDES EXHIBIT B DATED  8/1/93
                          ---------------------------------	

B-1

Contract#:820004

    EXHIBIT C, ZONE BOUNDARY ENTRY QUANTITY AND ZONE BOUNDARY EXIT QUANTITY,
     DATED NOVEMBER 2, 1995 TO THE SERVICE AGREEMENT UNDER RATE SCHEDULE CDS
        BETWEEN TEXAS EASTERN TRANSMISSION CORPORATION (-'PIPELINE") AND
 NATIONAL FUEL GAS DISTRIBUTION CORPORATION ("CUSTOMER"), DATED August 1, 1993:

                          ZONE BOUNDARY ENTRY QUANTITY
                                      Dth/D

                                       To

============================================================================================================
FROM      STX  ETX   WLA   ELA   Ml-24   Ml-30   M1-TXG   M1-TGC   M2-24   M2-30   M2-TXG   M2-TGC   M2   M3
============================================================================================================
============================================================================================================
STX                                                       606
============================================================================================================
ETX                              1960            917
============================================================================================================
WLA                                              279      606
============================================================================================================
ELA                                      15893
============================================================================================================
Ml-24                                                              1960
============================================================================================================
Ml-30                                                                      15893
============================================================================================================
M1-TXG                                                                             1196
============================================================================================================
M1-TGC                                                                                      1212
============================================================================================================
M2-24
============================================================================================================
M2-30
============================================================================================================
M2-TXC
============================================================================================================
M2-TGC
============================================================================================================
M2
============================================================================================================
M3
============================================================================================================	

C-1

Contract #:820004

                              EXHIBIT C (Continued)
                   NATIONAL FUEL GAS DISTRIBUTION CORPORATION

                           ZONE BOUNDARY EXIT QUANTITY
                                      Dth/D

                                       To

============================================================================================================
  FROM   STK   ETX   WLA   ELA   M1-24   Ml-30   M1-TXG   M1-TGC   M2-24   M2-30   M2-TXG   M2-TGC   M2   M3
============================================================================================================

============================================================================================================
STX
============================================================================================================
ETX
============================================================================================================
WLA
============================================================================================================
ELA
============================================================================================================
Ml-24                                                              1960
============================================================================================================
Ml-30                                                                      15893
============================================================================================================
M1-TXG                                                                             1196
============================================================================================================
M1-TGC                                                                                      1212
============================================================================================================
M2-24
============================================================================================================
M2-30
============================================================================================================
M2-TXG
============================================================================================================
M2-TGC
============================================================================================================
M2
============================================================================================================
M3
============================================================================================================	

SIGNED FOR IDENTIFICATION:

PIPELINE: /s/ Robert B. Evans
         ------------------------------------------------------

CUSTOMER:  /s/ Philip C. Ackerman
          -----------------------------------------------------

SUPERCEDES EXHIBIT C DATED  8/1/93
                          -------------------------------------	

C-2

CONFIDENTIAL TREATMENT OF BRACKETED MATERIAL REQUESTED PURSUANT TO RULE 24b-2
SERVICE AGREEMENT #001715
 (FSS Service)
AGREEMENT made this 3rd day of April, 1996, by and between National Fuel Gas Supply Corporation, a Pennsylvania corporation, hereinafter called "Transporter," and National Fuel Gas Distribution Corporation, hereinafter called "Shipper."
WITNESSETH: That in consideration of the mutual covenants herein contained, the parties hereto agree that Transporter will store natural gas for Shipper during the term, at the rates and on the terms and conditions hereinafter provided.
ARTICLE I
Quantities
Beginning on the date on which storage service is commenced hereunder and thereafter for the remaining term of this Agreement, and subject to the provisions of Transporter's FSS Rate Schedule, Transporter agrees to receive, cause to be injected into storage for Shipper's account, store, withdraw from storage, and deliver to Shipper quantities of natural gas as follows:
Maximum Storage Quantity (MSQ) of 698,720 Dekatherms (Dth) Maximum Daily Injection Quantity (Contract MDIQ) of 3,882 Dth Maximum Daily Withdrawal Quantity (Contract MDWQ) of 6,352 Dth
ARTICLE II
Rate

Unless otherwise mutually agreed in a written amendment to this Agreement, for the service provided by Transporter hereunder, Shipper shall pay Transporter the maximum rate provided under Rate Schedule FSS set forth in Transporter's effective FERC Gas Tariff. In the event that the Transporter places on file with the Federal Energy Regulatory Commission ("Commission") another rate schedule which may be applicable to transportation service rendered hereunder, then Transporter, at its option, may from and after the effective date of such rate schedule, utilize such rate schedule in performance of this Agreement. Such a rate schedule(s) or superseding rate schedule(s) and any revisions thereof which shall be filed and become effective shall apply to and be a part of this Agreement. Transporter shall have the right to propose, file and make effective with the Commission, or other body having jurisdiction, changes and revisions of any effective rate schedule(s), or to propose, file, and make effective superseding rate schedules, for the purpose of changing the rate, charges, and other provisions thereof effective as to Shipper.

ARTICLE III
Term of Agreement
This Agreement shall be effective as of April 1, 1997 and shall continue in effect for a primary term ending March 31, 2004, and shall continue in effect from year to year thereafter until terminated by either Transporter or Shipper upon not less than 18 months prior written notice to the other specifying as a termination date the end of such primary term or any subsequent anniversary thereof.
The Injection Period shall be from April I to October 31 and the Withdrawal Period shall be from November I to March 3 1. The Injection and Withdrawal Periods shall constitute the Storage Period.
ARTICLE IV
Receipt and Delivery Points
The Point(s) of Receipt for all gas that may be received for Shipper's account for storage by Transporter shall be the Transporter's System Storage.
The Point(s) of Delivery for all gas to be delivered by Transporter for Shipper's account shall be the Transporter's System Storage.
ARTICLE V
Incorporation By Reference of Tariff Provisions
To the extent not inconsistent with the terms and conditions of this agreement, the provisions of Rate Schedule FSS, or any effective superseding rate schedule or other-wise applicable rate schedule, including any provisions of the General Terms and Conditions incorporated therein, and any revisions thereof that may be made effective hereafter are hereby made applicable to and a part hereof by reference.
ARTICLE VI
Miscellaneous
1. No change, modification or alteration of this Agreement shall be or become effective until executed in writing by the parties hereto, and no course of dealing between the parties shall be construed to alter the terms hereof, except as expressly stated herein.

2. No waiver by any party of any one or more defaults by the other in the performance of any provisions of this Agreement shall operate or be construed as a waiver of any other default or defaults, whether of a like or of a different character.
3. Any company which shall succeed by purchase, merger or consolidation of the gas related properties, substantially as an entirety, of Transporter or of Shipper, as the case may be, shall be entitled to the rights and shall be subject to the obligations of its predecessor in title under this Agreement. Either party may, without relieving itself of its obligations under this Agreement, assign any of its rights hereunder to a company with which it is affiliated, but otherwise, no assignment of this Agreement or of any of the rights or obligations hereunder shall be made unless there first shall have been obtained the consent thereto in writing of the other party. Consent shall not be unreasonably withheld.
4. Except as herein otherwise provided, any notice, request, demand, statement or bill provided for in this Agreement, or any notice which either party may desire to give the other, shall be in writing and shall be considered as duly delivered when mailed by registered or certified mail to the Post Office address of the parties hereto, as the case may be, as follows:

Transporter:          National Fuel Gas Supply Corporation
                      Gas Supply - Transportation
                      Room 1200
                      10 Lafayette Square
                      Buffalo, New York 14203

Shipper:              National Fuel Gas Distribution Corporation
                      Gas Accounting Department, Room 1300
                      10 Lafayette Square
                      Buffalo, New York 14203	

or at such other address as either party shall designate by formal written notice. Routine communications, including monthly statements, shall be considered as duly delivered when mailed by either registered, certified, or ordinary mail, electronic communication, or telecommunication.
5. This Agreement and the respective obligations of the parties hereunder are subject to all present and future valid laws, orders, rules and regulations of constituted authorities having jurisdiction over the parties, their functions or gas supply, this Agreement or any provision hereof. Neither party shall be held in default for failure to perform hereunder if such failure is due to compliance with laws, orders, rules or regulations of any such duly constituted authorities.
6. The subject headings of the articles of this Agreement are inserted for the purpose of convenient reference and are not intended to be a part of the Agreement nor considered in any interpretation of the same.

7. No presumption shall operate in favor of or against either party hereto as a result of any responsibility either party may have had for drafting this Agreement.
8. The interpretation and performance of this Agreement shall be in accordance with the laws of the State of New York, without recourse to the law regarding the conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective Presidents or Vice Presidents thereunto duly authorized and their respective corporate seals to be hereto affixed and attested by their respective Secretaries and Assistant Secretaries, the day and year first above written.
NATIONAL FUEL GAS SUPPLY CORPOPATION
 (Transporter)
Attest:

/s/ J. P. Pawlowski                 By: /s/ John R. Pustulka
- -----------------------------          ---------------------------------------
          Secretary
      (Corporate Seal)              Title Vice President
                                         -------------------------------------	

NATIONAL FUEL GAS DISTRIBUTION CORP.
 (Shipper)
Attest:

/s/ David F. Smith                  By: /s/ Philip C. Ackerman
- ------------------------------         ---------------------------------------
          Secretary                         P. C. Ackerman
      (Corporate Seal)              Title:  President
                                          ------------------------------------	

CONFIDENTIAL TREATMENT OF BRACKETED MATERIAL REQUESTED PURSUANT TO RULE 24b-2
Amendment I
Amendment to FSS Service Agreement #001715 between National Fuel Gas Supply Corporation ("Transporter") and National Fuel Gas Distribution Corporation ("Shipper")
Effective: April 1, [XXXX] to March 31, [XXXX]
1. The following rates will be applied to all Storage Service provided within the Quantity Limits set forth in Article I of this Service Agreement:

Capacity Demand                               [XXXXXXX]
Deliverability Demand                         [XXXXXXX]
Injection/Withdrawal Commodity                [XXXXXXX]	

Applicable surcharges will be added to the rates shown above, except that Transporter shall discount the GRI surcharge to the extent that it can do so without decreasing its retained revenues. Transporter shall apply maximum Surface Operating Allowance.
2. The parties shall keep the terms of this rate amendment confidential and shall not disclose such terms to any other party, except as required by applicable law, regulation or legal process.
National Fuel Gas Supply Corporation

By: /s/ John R. Pustulka
   ---------------------------------------
Title:  Vice President
      ------------------------------------	

National Gas Distribution Corporation

By: /s/ W. E. DeForest
   ---------------------------------------
        W. E. DeForest
Title:  Sr. Vice President
      ------------------------------------	

CONFIDENTIAL TREATMENT OF BRACKETED MATERIAL REQUESTED PURSUANT TO RULE 24b-2
CONFIDENTIAL
Contract No. SC-DR-014
DELIVERY AND REDELIVERY SERVICES CONTRACT
BETWEEN
ST. CLAIR PIPELINES LTD.
 (SCPL)
- and -
NATIONAL FUEL GAS DISTRIBUTION CORPORATION
 (Customer)
DATED: January 29, 1996
Schedule "A"
delredel.nfg

DELIVERY AND REDELIVERY SERVICES CONTRACT
CONTENTS
ARTICLE I INTERPRETATION
 ARTICLE II GENERAL TERMS & CONDITIONS ARTICLE III CONDITIONS PRECEDENT ARTICLE IV TERM OF CONTRACT ARTICLE V DELIVERY AND REDELIVERY ARTICLE VI FORCE MAJEURE
ARTICLE VII CHARGES AND RATES ARTICLE VIII DELIVERY AND REDELIVERY PRESSURES ARTICLE IX MEASUREMENT AND QUALITY ARTICLE X NOMINATIONS
ARTICLE XI REPRESENTATIONS ARTICLE XII HARDSHIP PROVISION ARTICLE XIII MISCELLANEOUS PROVISIONS

THIS DELIVERY AND REDELIVERY SERVICES CONTRACT (the "Contract") dated as of the 29th day of January, 1996,
BETWEEN:
ST. CLAIR PIPELINES LTD., a company incorporated under the laws of the Dominion of Canada; (hereinafter referred to as "SCPL")
PARTY OF THE FIRST PART
- and -
NATIONAL FUEL GAS DISTRIBUTION CORPORATION, a company
 incorporated under the laws of the State of New York;
(hereinafter referred to as "Customer")
PARTY OF THE SECOND PART
(herein referred to collectively as the "Parties")
WHEREAS, SCPL provides certain gas delivery and redelivery services in southwestern Ontario and in the United States of America;
AND WHEREAS, Customer operates a gas utility, which is subject to the jurisdiction of the New York State Public Service Commission ("PSC"), the Pennsylvania Public Utilities Commission ("PUC") and directly or indirectly to decisions and/or mandates of the Federal Energy Regulatory Commission ("FERC"), and desires SCPL to provide natural gas delivery and redelivery services (the "Service") as defined herein;
NOW THEREFORE, this Contract witnesses that, in consideration of the mutual covenants and agreements herein contained, and the exchange of One ($ 1.00) Dollar between the Parties hereto, the payment and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

2
ARTICLE I - INTERPRETATION
1.01 Definitions: Capitalized terms and certain other terms used in this Contract and not specifically defined shall have the meaning set forth in Schedule 'A' hereto unless the context hereof otherwise clearly requires.
1.02 Divisions, Headings and Index: The division of this Contract into articles sections and subsections, and the insertion of headings and any table of contents or index provided are for convenience of reference only, and shall not affect the construction or interpretation hereof.
1.03 Industry Usage: Words, phrases or expressions which are not defined herein and which, in the usage or custom of the business of the transportation, storage, and distribution or sale of natural gas have an accepted meaning shall have that meaning.
1.04 Extended Meaning: Unless the context otherwise requires, words importing the singular include the plural and vice versa, and words importing gender include all genders. The words "herein", "hereunder" and words of similar import, unless specifically stated otherwise, refer to the entirety of this Contract, including the Schedules incorporated into this Contract, and not only to the section in which such use occurs.
1.05 Conflict: In the event of any conflict between the provisions of this Contract and those of Schedule "A" attached to it, the provisions of this Contract shall prevail.
1.06 Measurements: Units set out herein are in thermal measurement (ie. dekatherms - Dth).
1.07 Currency: All reference to dollars in this Contract shall mean United States dollars.
ARTICLE II - GENERAL TERMS & CONDITIONS
2.01 The General Terms & Conditions contained in Schedule "A" hereto are hereby

3
incorporated into and form an integral part of this Contract.
ARTICLE III - CONDITIONS PRECEDENT
3.01 The following conditions precedent shall be satisfied or, waived by mutual agreement, before the commencement of service obligations hereunder: (a) Each Party shall have obtained any and all governmental, regulatory, and other prior approvals or authorizations that are required to enable it to perform its obligations as contemplated herein; and
(b) Customer may be required to provide SCPL with the requisite security or financial assurances reasonably necessary to ensure its ability to honor the provisions of this Contract. Such security or financial assurances will be reasonable and in a form and amount acceptable to SCPL; and (c) SCPL shall be required to provide Customer with a parental guarantee which is reasonable and in a form and amount acceptable to Customer, by February 29, 1996.
3.02 SCPL and Customer shall each use due diligence and reasonable efforts to satisfy and fulfill their respective conditions precedent specified in Section 3.01 and each Party shall notify the other forthwith in writing of their respective fulfillment or waiver of such conditions.
3.03 In the event that the conditions precedent as specified in Section 3.01 are not satisfied, or waived by the Party deriving the benefit from that condition precedent or extended by mutual agreement by February 29, 1996, then the Parties hereto shall, upon thirty (30) days written notice by either Party, be released from all their obligations hereunder, and this Contract shall thereupon be terminated.

4
ARTICLE IV - TERM OF CONTRACT
4.01 This Contract shall be effective as of the date of execution hereof, however, the service obligations, terms and conditions hereunder shall, subject to Article HI, commence on the later of April 1, 1996, or the day following the date that the conditions precedent in Section 3.01 are satisfied or waived (the "Commencement Date') and shall continue in full force and effect until March 31, 2006 or such earlier date as may be permitted under the terms of this Contract (the "Termination Date"). The Parties agree to further divide the term, as may be referenced in this Contract, into an "Interim Period" which shall refer to the period beginning on the Commencement Date and ending on March 31 of any contract year (the 'Transition Date'), subject to customer having provided 18 months prior notice of its election to terminate the Interim Period, and a "Remaining Period" which shall refer to the period commencing on the day following the Transition Date and ending on the Termination Date.
4.02 Without limiting the generality of the foregoing, this Contract may be terminated in accordance with Section XII of the General Terms & Conditions.
ARTICLE V - DELIVERY AND REDELIVERY
5.01 Customer shall deliver to SCPL and SCPL shall redeliver to Customer up to 274,120 Dth of gas (the 'Interim Service Quantity") during the Interim Period of this Contract as defined in Section 4.01. Customer agrees to deliver and SCPL agrees to accept the Interim Service Quantity at the Point of Delivery/Redelivery set out in Clause 5.05 hereof, during any one of the seven months during the period April through and including October (the 'Delivery Month"), each year of the Interim Period. Customer is to provide notice to SCPL, of its intention to deliver, on or before the 24th day of the month, or such other date as mutually agreed to by the Parties, preceding the desired Delivery Month. Subject to Clause 10.01, Customer may deliver, in the Delivery Month, a daily quantity not to exceed 274,120 Dth divided by the number of days in the Delivery Month (the "Interim Delivery Quantity').

5
CONFIDENTIAL TREATMENT OF BRACKETED MATERIAL REQUESTED PURSUANT TO RULE 24b-2
At any time during the Interim Period, the quantity delivered to SCPL that has not been redelivered to Customer, up to the Interim Service Quantity, shall be referred to as "Customer's Interim Account Balance".
For an additional charge of [XXXXXXXXX] as set out in Section 7.03, Customer may deliver to SCPL during the period December 1 through March 31 (the "Redelivery Period"), a quantity up to 274,120 Dth, each year of the Interim Period, at a daily quantity equal to the lesser of-
a) up to 27, 412 Dth- and,
b) the Interim Service Quantity less Customer's Interim Account Balance, provided further, that Customer provides notice to SCPL on or before October 1 during the Interim Period to increase the quantity which Customer may deliver to SCPL during the Redelivery Period by an additional amount equal to 274,120 Dth, (the "Election Notice"), then Customer shall pay to SCPL an amount equal to [XXXXXXXXX] for such additional quantity pursuant to Section 7.04, plus the charge pursuant to Section 7.03.
5.02 SCPL agrees to redeliver to Customer, during the Interim Period, at the Point of Delivery/Redelivery, during the Redelivery Period, as nominated by Customer in accordance with Article X, a firm daily quantity of up to 27,412 Dth (the "Redelivery Quantity") for up to a total of 20 days ("Obligated Redelivery Days"). However, if Customer has delivered an Election Notice, in accordance with Section 5.01, the Obligated Redelivery Days shall increase to 30 days during the following Redelivery Period only. Provided further that SCPL shall not be obligated to redeliver on any day a quantity greater than the Customer's Interim Account Balance. SCPL also agrees to redeliver on a reasonable efforts basis any quantities not redelivered on the Obligated Redelivery Days.
5.03 Customer shall deliver and SCPL shall redeliver to Customer up to 2,540,000 Dth of gas (the "Service Quantity") during the Remaining Period of this Contract as defined in Section 4.01. Customer agrees to deliver and SCPL agrees to accept the Service Quantity at the Point of Delivery/Redelivery set out in Clause 5.05 hereof, during the period April through and including October (the "Delivery Period"), each year of the Remaining Period. Subject to

6
Clause 10.01, Customer may deliver, in the Delivery Period, a daily quantity not to exceed 12,700 Dth (the "Delivery Quantity").
At any time during the Remaining Period, the quantity delivered to SCPL that has not been redelivered to Customer, up to the Service Quantity, shall be referred to as "Customer's Account Balance".
5.04 SCPL agrees to redeliver to Customer, during the Remaining Period, at the Point of Delivery/Redelivery, during the Redelivery Period, as nominated by Customer in accordance with Article X, the Redelivery Quantity for up to a total of 93 days ("the Redelivery Days"). Provided further that SCPL shall not be obligated to redeliver on any day a quantity greater than the Customer's Account Balance. SCPL also agrees to redeliver on a reasonable efforts basis any quantities not redelivered on the Redelivery Days.
5.05 All gas delivered by Customer and redelivered by SCPL pursuant to this Contract shall be delivered and redelivered on Empire (the "Transporter") at the interconnection between TCPL and Empire, or at any other point(s) agreed to by Customer and SCPL, (the "Point of Delivery/Redelivery").
5.06 SCPL shall have the right to commingle gas delivered or redelivered hereunder with gas owned by SCPL or gas being delivered and/or redelivered by SCPL for other customers.
5.07 It is Customer's responsibility to schedule its redeliveries to ensure that Customer's Interim Account Balance or Customer's Account Balance, as applicable, equals zero at the end of the Redelivery Period. Any balance remaining will serve to reduce the Interim Service Quantity, or Service Quantity, as applicable, to be delivered in the following Delivery Period by that same quantity.
5.08 In the event that Customer's Interim Account Balance or Customer's Account Balance, as applicable, is greater than zero on the Termination Date, Customer is responsible for and

7
agrees to pay all reasonable charges incurred by SCPL. Notwithstanding, SCPL and Customer agree to co-operate to remedy the situation.
5.09 Subject only to (i) the occurrence of a force majeure event; and/or (ii) the operating tolerances as set out in Transporter's tariff, SCPL warrants that it will redeliver to Customer one hundred percent (100%) of the quantity of gas on each day as nominated by Customer during the term hereof (the "Redelivery Warranty"). In addition to all other rights and remedies that may accrue to Customer hereunder, in the event that on any day during the term hereof SCPL should breach the Redelivery Warranty, SCPL shall pay to Customer an amount equal to the product of- a) the quantity of such gas not redelivered, times b) the sum of the average price reported in Gas Daily under Canadian Gas (or such mutually agreed upon index, should the aforementioned no longer be available), for deliveries at Niagara on that same day plus $2.00 (U.S.) per Dth.
5.10 Notwithstanding any other provisions of this Contract, neither Party shall be liable or otherwise be responsible to the other for consequential, incidental or punitive damages which arise out of or relate to this Contract or the performance or breach thereof.
5.11 If, as a result of some act or omission by SCPL, Customer incurs a penalty charge under the provisions of Transporter's tariff, then SCPL shall reimburse Customer upon being invoiced for any such charges. However, anything else herein to the contrary notwithstanding, SCPL shall not incur any charges, penalties or assessments under this Contract (including but not limited to any charges, penalties or assessments that would otherwise accrue by virtue of the provisions of this Article V) by reason of any imbalance in deliveries and redeliveries hereunder, if such imbalances are (i) within the daily or monthly imbalance tolerance levels (as applicable) in effect from time to time under Transporter's tariff; or (ii) the result of any act or omission by Customer, provided however, that upon knowledge of any potential imbalance situation by Customer or SCPL, both Customer and SCPL shall endeavor to correct any such imbalances as soon as is reasonably and commercially practicable.

8
CONFIDENTIAL TREATMENT OF BRACKETED MATERIAL REQUESTED PURSUANT TO RULE 24b-2
ARTICLE VI - FORCE MAJEURE
6.01 An event of force majeure, as defined in Schedule "A' attached hereto, will excuse a delay in the redelivery of the gas hereunder on a day for day basis, but it will not eliminate SCPL's obligation to redeliver the quantity nominated. SCPL confirms that Customer shall be treated equally, with respect to any interruption due to force majeure, with all other firm obligations of SCPL at the Point of Delivery/Redelivery and that all interruptible deliveries of SCPL shall be interrupted in advance of Customer's interruption,
6.02 The settlement of strikes or lockouts shall be entirely within the discretion of the Party having the difficulty, and the above requirement that any force majeure event shall be remedied with all reasonable dispatch shall not require the settlement of strikes or lockouts by acceding to the demands of any opposing party when such course is inadvisable in the discretion of the Party having the difficulty.
ARTICLE VII - CHARGES AND RATES
7.01 The charges to be billed and paid for by Customer for the Service during the Interim Period shall be [XXXXXXXXXXX], per year for the Interim Service Quantity.
7.02 The charges to be billed and paid for by Customer for the Service during the Remaining Period shall be [XXXXXXXXXX], per year for the Service Quantity.
7.03 For all quantities delivered by Customer during the Redelivery Period, an additional charge of [XXXXXXXXXXXXX] shall be billed for such quantities.
7.04 In addition to the charge set out in Section 7.03, Customer shall be billed and pay an incremental charge of [XXXXXXXXX] for the Interim Service Quantity in the month following SCPL's receipt of Customer's Election Notice.

9
7.05 Notwithstanding Articles VIII and IX of the General Terms & Conditions, billing for the charges set out in Sections 7.01 and 7.02 shall be made in equal monthly invoices by SCPL to Customer by the 10th day of each month, and Customer shall pay the invoice by the 25th day of each month.
7.06 Prices exclude any applicable taxes, royalties or levies imposed currently or subsequently to the commencement of this Contract. SCPL agrees to pay or cause to be paid all taxes and assessments levied only on the gas downstream of the Point of Delivery/Redelivery upon delivery by Customer and upstream of the Point of Delivery/Redelivery upon redelivery by SCPL, and to pay or cause to be paid to the parties entitled thereto all royalties, overriding royalties or like charges against said gas or the value thereof.
ARTICLE VII - DELIVERY AND REDELIVERY PRESSURES
8.01 Delivery of gas to SCPL for the account of Customer, at the Point of Delivery/Redelivery, shall be made at a pressure sufficient to affect deliveries to Transporter.
8.02 Redelivery of gas by SCPL for the account of Customer, at the Point of Delivery/Redelivery shall be made at a pressure sufficient to affect deliveries to the Transporter.
ARTICLE IX - MEASUREMENT AND QUALITY
9.01 The gas delivered and redelivered hereunder shall meet any and all gas quality requirements as provided by Transporter's gas tariff. In the event that the gas tendered for delivery or redelivery hereunder fails to meet any of the requirements necessary under Transporter's tariff, the receiving Party shall have the right to refuse to accept any gas so tendered for the duration of time the gas fails to meet those gas quality requirements. Any gas refused pursuant to this Section shall be considered gas not delivered or redelivered and shall be treated as such pursuant to Article V herein.

10
9.02 For purposes of billing Customer for gas delivered hereunder, the quantities of gas delivered hereunder shall be determined by the metering equipment owned, operated and installed by Transporter at the Point of Delivery/Redelivery hereunder in accordance with the applicable provisions of Transporter's gas tariff in effect from time to time, if applicable.
9.03 In the event of an error in metering or a meter failure, then SCPL shall ask Customer or Customer's agent to invoke its rights as customer under its contracts with Transporter. Customer shall exercise due diligence in the enforcement of any inspection and/or verification rights and procedures which Customer or Customer's agent may have in relation to the meters owned and operated by Transporter at the Point of Delivery/Redelivery.
ARTICLE X - NOMINATIONS
10.01 Nominations for delivery or redelivery of gas made by Customer must be made in writing before 9:00 a.m. (Eastern Time) on the day before delivery or redelivery is to occur, except that each such nomination must be made earlier if necessary under the nomination procedures of Transporter of such gas. The Parties recognize that on any day, deliveries of gas hereunder may vary within the operating tolerances as set out in Transporter's tariff, but each Party will cooperate with the other to assure equal daily deliveries and that such deliveries will be in balance for the Delivery Period and the Redelivery Period. Customer and SCPL shall use reasonable efforts to accept/provide quantities greater than the Interim Delivery Quantity, the Delivery Quantity and the Redelivery Quantity, if requested.
10.02 If, in SCPL's sole opinion, operating conditions permit, a change in Customer's Nomination may be accepted after 9:00 a.m. (Eastern Standard Time). The daily quantity of gas nominated by Customer will be, delivered to SCPL or redelivered to Customer at rates of flow that are as nearly constant as possible.
10.03 A nomination for a daily quantity of gas on any day shall remain in effect and apply to subsequent days unless and until SCPL receives a new nomination from Customer or unless SCPL gives Customer written notice that it is not acceptable in accordance with Section 10.01.

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ARTICLE XI - REPRESENTATIONS
11.01 Parties' Representations: The Parties represent that each will, if required, maintain, or have maintained on its behalf, such certificates, permits, licenses and authorizations from regulatory bodies or other governmental agencies in the U.S.A. and Canada, as the case may be, as are necessary to enable the Parties, or others designated by the Parties, to deliver/redeliver at the Point of Delivery/Redelivery, the quantities of gas to be delivered/redelivered under this Contract.
11.02 Financial Representations: A "Credit Event" shall be deemed to have occurred with respect to Customer if National Fuel Gas Company's credit rating fails to meet both of the ratings in both of the indices set out in this Section
11.03. A "Credit Event" shall be deemed to have occurred with respect to SCPL if Westcoast Energy Inc.'s credit rating fails to meet both of the ratings in both of the indices set out in 11.03:
11.03 Credit Indices:

Index                                      Rating

Standard and Poor's                        BBB -
"Corporate and Municipal Ratings"

Moody's ,                                  Baa3
"Long Term Debt Ratings"	

11.04 The Party experiencing a Credit Event shall, upon the other Party's election, furnish security in a form and amount satisfactory to the other Party, within ten (10) days of such election. If the Party experiencing a Credit Event fails to provide the above, then the other Party shall have the right to terminate or cancel the Contract upon thirty (30) days prior written notice.

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ARTICLE XII - HARDSHIP PROVISION
12.01 "Event of Change" means a material event which comes about as a result of changes in legislation, regulation or administrative policy, including opinions, decisions and enactments, which have become final and non-appealable, of any applicable government, governmental agency, or instrumentality ("Government") which shall include, but not be limited to, the PSC, the PUC and the FERC, which changes were not in effect at the time of execution hereof and are not specifically and exclusively directed at a Party, save and except for costs that have specifically been disallowed by Government for inclusion in Customer's rates, whether relating to export and import requirements, taxes or other levies, environmental regulation, or regulation of the trade, transportation, or supply of gas or hydrocarbons, and results in economic loss to a Party to the extent that it is impracticable for it to make any profit on the transactions contemplated by this Contract, as a result of the Event of Change ("Financial Hardship'), provided that the term Event of Change does not include (i) events caused by a default or financial difficulty, lack of funds, wilful misconduct or negligence of a Party to this Contract, (ii) changes not imposed by Government in the market for, or the price of, gas or the services to be provided hereunder, (iii) any disputes with a third Party, or (iv) any change in rates or rate structure of any service provider being utilized by SCPL in providing service hereunder to Customer.
12.02 If an Event of Change occurs, then the Party affected by a Financial Hardship hereunder may, on three (3) month's prior written notice (subject to the terms of Section 12.05 hereof), terminate this Contract, so that each Party has no further obligations to the other except for such obligations which were outstanding at the expiration of the notice period, including without being limited to (i) obligations with respect to gas which, at the time of expiration of the notice, has not been redelivered, and (ii) indebtedness or potential liabilities outstanding at the expiration of the notice period.
12.03 Together with the notice required above, the Party declaring the Financial Hardship must provide substantial evidence and support for its claim of Financial Hardship. The Party

13
receiving the said notice is entitled to request and receive such additional information as may reasonably be required to confirm the Financial Hardship, or may upon request conduct an audit of all applicable books of the other Party.
12.04 The Parties hereto agree and acknowledge that they shall reduce the notice period where reasonably possible, however, the Party receiving the notice shall not be required to do so at its expense.
12.05 Unless directed to do so by any regulatory authority having jurisdiction, Customer shall not make, cause to be made, or assist any other party in making any filing with or in any way seek any action by any regulatory authority, or court or other body having jurisdiction, which would directly cause the disallowance of costs relating to this Contract by Government for inclusion in Customer's rates.
ARTICLE XIII - MISCELLANEOUS PROVISIONS
13.01 Assignment: Customer may during the term of this Contract, and upon notice to SCPL, temporarily release all or part of Customer's entitlement hereunder, as set out in Article V (the "Assigned Capacity")' and the corresponding rights and obligations, to a third party ("the Assignee"). Notwithstanding such assignment, Customer shall remain obligated to SCPL to perform and observe the covenants and obligations contained herein, in regard to the Assigned Capacity, to the extent that the Assignee fails to do so. Customer shall not fully assign this Contract, without prior written consent by SCPL, which shall not be unreasonably withheld provided Assignee meets all of SCPL's criteria for a counterparty under this Contract, thereby replacing Customer and permitting Customer to terminate its further covenants and obligations under this Contract. Nothing herein contained shall prevent or restrict either Party from fully assigning this Contract to an affiliate for the purposes of a corporate restructuring, without consent, or from pledging, granting a security interest in, or assigning as collateral all or any portion of such Party's interest to secure any debt or obligation of such Party under any mortgage, deed of trust, security agreement or similar instrument.

14
13.02 Notices: Subject to the express provisions of this Contract, all communications provided for or permitted hereunder shall be in writing, personally delivered to an officer or other responsible employee of the addressee or sent by registered mail, charges prepaid, or by telecopy or other means of recorded telecommunication, charges prepaid, to the applicable address set forth below or to such other address as either Party hereto may from time to time designate to the other in such manner, provided that no communication shall be sent by mail pending any threatened, or during any actual, postal strike or other disruption of the postal service. Any personal communication delivered shall be deemed to have been validly and effectively received on the date of such delivery. Any communication so sent by telecopy or other means of telecommunication shall be deemed to have been validly and effectively received on the business day following the day on which it is sent. Any communication so sent by mail shall be deemed to have been validly and effectively received on the seventh business day following the day on which it is post marked.
Communications to the Parties hereto shall be directed as follows:

IF TO CUSTOMER:          National Fuel Gas Distribution Corporation
                         10 Lafayette Square
                         Buffalo, New York 14203

Nominations:             Attention: Contract Administration
                         Telephone: (716) 857-7233
                         Telecopier: (716) 857-7823

IF TO SCPL:              St. Clair Pipelines Ltd.
                         50 Keil Drive North
                         Chatham, Ontario N7M 5Ml

Nominations:             Attention: Manager, Gas Control
                         Telephone: (519) 436-4524
                         Telecopier: (519) 436-4566

Other:                   Attention: Manager, Product Development
                         Telephone: (519) 436-4601
                         Telecopier: (519) 436-4694	

15
Each Party may from time to time change its address for the purpose of this
Section by giving notice of such change to the other Party in accordance with this Section.
13.03 Possession of Gas: SCPL accepts no responsibility for any gas prior to such gas being delivered to SCPL at the Point of Delivery/Redelivery or after its redelivery by SCPL at the Point of Delivery/Redelivery. As between the Parties hereto, SCPL shall be deemed to be in control and possession of and responsible for all such gas from the time that such gas is delivered to SCPL by Customer at the Point of Delivery/Redelivery until such gas is redelivered to Customer by SCPL at the Point of Delivery/Redelivery.
13.04 Title to Gas: Each Party represents and warrants to the other that it shall have good and marketable title to all gas delivered to the other, pursuant to the terms of Article V of this Contract, free and clear of any lien, mortgage, security interest or other encumbrance whatsoever against such gas and each Party hereby agrees to transfer complete title and interest to the gas at the Point of Delivery/Redelivery, as applicable. Each Party further agrees to indemnify and save the other harmless from all suits, actions, debts, accounts, damages, costs, losses and expenses arising from or out of claims of any or all third parties to such gas or on account of royalties, taxes, license fees, or other charges thereon.
13-05 Counterparts: This Contract may be executed in any number of counterparts, each of which when so executed shall be deemed to be an originally executed copy, and it shall not be necessary in making proof of this Contract to produce all of such counterparts.
13.06 Amendments and Waivers: No amendment or waiver of any provision of this Contract nor consent to any departure by either Party hereto shall in any event be effective unless the same shall be in writing and signed by each of Customer and SCPL and then such waiver or consent shall be effective only in the specific instance and for the specified purpose for which it was given. No failure on the part of Customer or SCPL to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy under this Contract shall operate as a waiver thereof.

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13.07 Severability: If any provision hereof is invalid or unenforceable in any jurisdiction, to the fullest extent permitted by law, (a) the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be construed in order to carry out the intention of the Parties as nearly as possible and (b) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any provision in any other jurisdiction.
13.08 Law of Contract: The Parties agree that this Contract is made pursuant to all applicable laws of the Province of Ontario, Canada and the State of New York, United States of America. The Parties further agree that the terms and conditions hereof, and subsequent performance hereunder, shall be construed under and governed by the laws of the Province of Ontario, Canada and/or the State of New York, United States of America, and/or any federal laws that may apply to an agreement between organizations of different countries.
13.09 Time of Essence: Time shall be of the essence hereof.
13.10 Entire Contract: This Contract constitutes the entire agreement between the Parties hereto pertaining to the subject matter hereof. This Contract supersedes any prior or contemporaneous agreements, understandings, negotiations or discussions, whether oral or written, of the Parties in respect of the subject matter hereof.
THIS CONTRACT SHALL BE BINDING UPON and shall enure to the benefit of the Parties hereto and their respective successors and permitted and lawful assigns.

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IN WITNESS WHEREOF this Contract has been properly executed by the Parties hereto by their duly authorized officers as of the date first above written.
ST. CLAIR PIPELINES LTD.

By: /s/ James Anderson
   -----------------------------
Title: President
       -------------------------

By: /s/ Brian P. Gabel
   -----------------------------
Title: Vice President
       -------------------------	

NATIONAL FUEL GAS DISTRIBUTION CORPORATION

By: /s/ Philip C. Ackerman
   -----------------------------
Title: President
      --------------------------	

Schedule "A" General Terms & Conditions Contract No. SC-DR-014

                                        SCHEDULE "A"
                           to Contract No. SC-DR-014
GENERAL TERMS & CONDITIONS	

IA. DEFINITIONS
Except where the context expressly requires or states another meaning, the following terms, if and when used in these General Terms & Conditions and in any contract into which these General Terms & Conditions are incorporated, shall be construed to have the following meanings:
1. "British Thermal Unit" and "BTU" shall mean the amount of heat required to raise the temperature of one pound of water one degree Fahrenheit at 60 degrees Fahrenheit;
2. "contract year"' shall mean a period of three hundred and sixty-five
(365) consecutive days, beginning on the day agreed upon by SCPL and Customer as set forth in the Contract, or on any anniversary of such date; provided, however, that any such period which contains a date of February 29 shall consist of three hundred and sixty-six (366) consecutive days;
3. "Customer", wherever it appears herein, shall also include Customer's Agent(s);
4. "day" shall mean a period of twenty-four (24) consecutive hours beginning at 8:00 A.M. Eastern Standard time. The reference date for any day shall be the calendar date upon which the twenty-four (24) hour period shall commence;
5. "dekatherm" or "Dth" shall mean a heating value of 1,000,000 BTU's (approximately equal to 1 Mcf);
6. "delivery" shall mean any gas that is delivered by Customer to SCPL;
7. "Empire' shall mean Empire State Pipeline;
8. "firm" shall mean service not subject to curtailment or interruption except under Articles XI and XII of this Schedule "A';
9. "gas" shall mean gas as defined in the Ontario Energy Board Act, R.S.O. 1980, c. 332, as amended, supplemented or reenacted from time to time;
10. "interruptible service" shall mean service subject to curtailment or interruption, after notice, at any time;
11. "limited interruptible service" shall mean gas service subject to interruption or curtailment on a limited number of days as specified in the Contract;
12. "month" shall mean the period beginning at 8:00 A.M. Eastern Standard time on the first day of a calendar month and ending at 8:00 A.M. Eastern Standard time on the first day of the following calendar month;
13. "NEB" means the National Energy Board (Canada);
14. "OEB" means the Ontario Energy Board;
15. "redelivery" shall mean any gas that is delivered by SCPL into Customer's facilities or for Customer's account;
16. "TCPL" means TransCanada PipeLines Limited;
17. "Union" means Union Gas Limited.

IB. ADDITIONAL DEFINITIONS
The following terms, if and when used in these General Terms & Conditions and in the Delivery and Redelivery Service Contract between St. Clair Pipelines Ltd. and National Fuel Gas Distribution Corporation, dated January 15, 1996, Contract No. SC-DR-014 ("the "Contract"), shall be construed to have the following meanings:
1. "PSC" shall mean the New York State Public Service Commission;
2. "PUC" shall mean the Pennsylvania Public Utilities Commission;
3. "FERC" shall mean the Federal Energy Regulatory Commission;
4. "Commencement Date" shall have the meaning ascribed to it in Article IV of the Contract;
5. "Termination Date" shall have the meaning ascribed to it in Article IV of the Contract;
6. "Interim Period" shall have the meaning ascribed to it in Article IV of the Contract;
7. "Transition Date" shall have the meaning ascribed to it in Article IV of the Contract;
8. "Remaining Period" shall have the meaning ascribed to it in Article IV of the Contract;
9. "Interim Service Quantity" shall have the meaning ascribed to it in Article V of the Contract;
10. "Delivery Month" shall have the meaning ascribed to it in Article V of the Contract;
11. "Interim Delivery Quantity" shall have the meaning ascribed to it in Article V of the Contract;
12. "Customer's Interim Account Balance" shall have the meaning ascribed to it in Article V of the Contract;
13. "Redelivery Period" shall have the meaning ascribed to it in Article V of the Contract;
14. "Election Notice" shall have the meaning ascribed to it in Article V of the Contract;
15. "Redelivery Quantity" shall have the meaning ascribed to it in Article V of the Contract;
16. "Obligated Redelivery Days" shall have the meaning ascribed to it in Article V of the Contract;
17. "Service Quantity" shall have the meaning ascribed to it in Article V of the Contract;
18. "Delivery Period" shall have the meaning ascribed to it in Article V of the Contract;
19. "Delivery Quantity" shall have the meaning ascribed to it in Article V of the Contract;
20. "Customer's Account Balance" shall have the meaning ascribed to it in Article V of the Contract;
21. "Redelivery Days" shall have the meaning ascribed to it in Article V of the Contract;
22. "Transporter" shall have the meaning ascribed to it in Article V of the Contract;

23. "Point of Delivery/Redelivery" shall have the meaning ascribed to it in Article V of the Contract;
24. "Redelivery Warranty" shall have the meaning ascribed to it in Article V of the Contract;
25. "Event of Change" shall have the meaning ascribed to it in Article XII of the Contract;
26. "Government" shall have the meaning ascribed to it in Article XII of the Contract;
27. "Financial Hardship" shall have the meaning ascribed to it in Article XII of the Contract;
28. "Assigned Capacity" shall have the meaning ascribed to it in Article XIII of the Contract;
29. "Assignee" shall have the meaning ascribed to it in Article XIII of the Contract;
II. QUALITY
Not Applicable.
III. MEASUREMENT
Not Applicable.
IV. POINT OF DELIVERY AND POINT OF REDELIVERY
1. Unless otherwise specified in the Contract, the point or points of delivery for all gas to be covered hereunder shall be on the outlet side of the measuring stations located at or near the point or points of connection specified in the Contract, where SCPL takes possession of the gas. Whenever the phrase "delivery point" appears herein, it shall mean Point of Delivery as defined in this Article IV.
2. Unless otherwise specified in the Contract, the point or points of redelivery for all gas to be covered hereunder shall be on the outlet side of the measuring stations located at or near the point or points of connection as specified in the Contract where Customer takes possession of the gas. Whenever the phrase "redelivery point" shall appear herein, it shall mean Point of Redelivery as defined in this Article IV.
V. POSSESSION OF AND RESPONSIBILITY FOR GAS
Not Applicable.
VI. FACILITIES ON CUSTOMER'S PROPERTY
Not Applicable.
VII. MEASURING EQUIPMENT
Not Applicable.

VIII. BILLING
1. Monthly Billing Date: SCPL shall render bills on or before the 10th day of each month for all gas delivered and/or redelivered and gas services furnished during the preceding month. Such charges may be based on estimated quantities, if actual quantities are unavailable in time to prepare the billing. SCPL shall provide, in a succeeding month's billing, an adjustment based on any difference between actual quantities and estimated quantities. If presentation of a bill to Customer is delayed after the 10th day of the month, then the time of payment shall be extended accordingly, unless Customer is responsible for such delay.
2. Right of Examination: Both SCPL and Customer shall have the right to examine at any reasonable time the books, records and charts of the other to the extent necessary to verify the accuracy of any statement, chart or computation made under or pursuant to the provisions of the Contract.
IX. PAYMENTS
1. Monthly Payments: Customer shall pay directly into SCPL's account at the Canadian Imperial Bank of Commerce, MaiN Branch, Commerce Court, Toronto, Ontario by electronic funds transfer to transit 00002, account 04-9511 5.
2. Remedies for Nonpayment: Should Customer fail to pay all of the amount of any bill as herein provided when such amount is due, Customer shall pay to SCPL interest on the unpaid portion of the bill accruing at a rate per annum equal to the minimum commercial lending rate of SCPL's principal banker in effect from time to time from the due date until the date of payment. If such failure to pay continues for thirty (30) days after payment is due, SCPL, in addition to any other remedy it may have under the Contract may, upon ten (1 0) days notice, suspend further delivery of gas until such amount is paid, provided however, that if Customer, in good faith shall dispute the amount of any such bill or part thereof and shall pay to SCPL such amounts as it concedes to be correct, then SCPL shall not be entitled to suspend further delivery of gas because of such nonpayment unless and until default be made in the payment for any further gas redelivered to Customer hereunder. Notwithstanding the foregoing paragraph, this does not relieve Customer from the obligation to continue its deliveries of gas to SCPL under the terms of any agreement, where Customer has contracted to deliver specified quantities of gas to SCPL.
3. Billing Adjustments: If it shall be found that at any time or times Customer has been overcharged or undercharged in any form whatsoever under the provisions of the Contract and Customer shall have actually paid the bills containing such overcharge or undercharge, SCPL shall refund the amount of any such overcharge and interest shall accrue from and including the first day of such overcharge as paid to the date of refund and shall be calculated but not compounded at a rate per annum determined each day during the calculation period to be equal to the minimum commercial lending rate of SCPL's principal banker, and the Customer shall pay the amount of any such undercharge, but without interest. In the event SCPL renders a bill to Customer based upon measurement estimates, the required adjustment to reflect actual measurement shall be made on the bill next following the determination of such actual measurement, without any charge of interest. In the event an error is discovered in the amount billed in any statement rendered by SCPL, such error shall be adjusted by SCPL. Such overcharge, undercharge or error shall be adjusted by SCPL on the bill next following its determination (where the term "bill' next following shall mean a bill rendered at least fourteen (1 4) days

after the day of its determination), provided that claim therefore shall have been made within six (6) years from the date of the incorrect billing. In the event any refund is issued with Customer's gas bill, the aforesaid date of refund shall be deemed to be the date of the issue of invoice.
X. ARBITRATION
Not Applicable.
XI. FORCE MAJEURE
The term "force majeure" as used herein shall mean acts of God, strikes, lockouts or any other industrial disturbance, acts of the public enemy, sabotage, wars, blockades, insurrections, riots, epidemics, landslides, lightening, earthquakes, fires, storms, floods, washouts, arrests and restraints of governments and people, civil disturbances, explosions, breakage or accident to machinery or lines of pipe, freezing of wells or lines of pipe, inability to obtain materials, supplies, permits or labour, any laws, orders, rules, regulations, acts or restraints of any governmental body or authority (civil or military), any act or omission that is excused by any event or occurrence of the character herein defined as constituting force majeure, any act or omission by parties not controlled by the party having the difficulty and any other similar cases not within the control of the party claiming suspension and which by the exercise of due diligence such party is unable to prevent or overcome. In the event that either the Customer or SCPL is rendered unable, in whole or in part, by force majeure, to perform or comply with any obligation or condition of the Contract, such party shall give notice and full particulars of such force majeure in writing delivered by hand, telegraph, telex or other direct written electronic means to the other party as soon as possible after the occurrence of the cause relied on and subject to the provision of this Article.
Neither party shall be entitled to the benefit of the provisions of force majeure hereunder if any or all of the following circumstances prevail: the failure resulting in a condition of force majeure was caused by the negligence of the party claiming suspension; the failure was caused by the party claiming suspension where such party failed to remedy the condition by making all reasonable efforts (short of litigation, if such remedy would require litigation); the party claiming suspension failed to resume the performance of such condition obligations with reasonable dispatch; the failure was caused by lack of funds; the party claiming suspension did not as soon as possible after determining or within a period within which it should acting reasonably have determined that the occurrence was in the nature of force majeure and would affect its ability to observe or perform any of its conditions or obligations under the Contract give to the other party the notice required hereunder.
The party claiming suspension shall likewise give notice as soon as possible after the force majeure condition is remedied, to the extent that the same has been remedied, and that such party has resumed or is then in a position to resume the performance of the obligations and conditions of the Contract.
XII. DEFAULT AND TERMINATION
In case of the breach or nonobservance or nonperformance on the part of either party hereto of any covenant, proviso, condition, restriction or stipulation contained in the Contract (but not including herein failure to take or make delivery or redelivery in whole or in part of the gas delivered or redelivered hereunder occasioned by any of the reasons provided for in Article XI hereof) which ought to be observed or performed by such party and which has not been waived by the other party, then and in every such case and as often as the same may happen, such last mentioned party may give written notice to the party first

mentioned requiring it to remedy such default and in the event of such first mentioned party failing to remedy the same within a period of thirty (30) days from receipt of such notice, the other party may at its sole option declare the Contract to be terminated and thereupon the Contract shall become and be terminated and be null and void for all purposes other than and except as to any liability of the first mentioned party under the same incurred before and subsisting at the day when the Contract is declared by the other party to be terminated as aforesaid. The right hereby conferred upon each party shall be in addition to, and not in derogation of or in substitution for, any other right or remedy which the parties respectively at law or in equity shall or may possess.
In the event this Contract is terminated, such termination shall be without prejudice to any rights or obligations of the parties accruing prior to such termination, including but not limited to: (i) Customer's right to receive gas for which it has delivered to SCPL but has not redelivered, prior to the time of termination; and (ii) SCPL's right to collect any amounts then due SCPL for service rendered to Customer prior to the time of such termination or release.
XIII. MODIFICATION
Any modification of the terms and provisions of the Contract shall be in writing and shall be signed by all parties to the Contract.
XIV. NONWAIVER AND FUTURE DEFAULT
No waiver by either SCPL or Customer of any one or more defaults by the other in the performance of any provisions of the Contract shall operate or be construed as a waiver of any future default or defaults, whether of a like or a different character.
XV. LAWS, REGULATIONS AND ORDERS
The Contract and the respective rights and obligations of the parties hereto are subject to all present and future valid laws, orders, rules and regulations of any competent legislative body, or duly constituted authority now or hereafter having jurisdiction and the Contract shall be varied and amended to comply with or conform to any valid order or direction of any board, tribunal or administrative agency which affects any of the provisions of the Contract.

A D D E N D U M
NINTH EXTENSION TO EMPLOYMENT AGREEMENT
Paragraph 5 of the five-year Employment Agreement between NATIONAL FUEL GAS COMPANY ("Employer") and BERNARD J. KENNEDY ("Employee"), which was executed on September 17, 1981, and originally terminated on December 31, 1986 ("Agreement"), anticipated its extension at the end of three years, and each year thereafter. Pursuant thereto, extensions to such agreement were executed by the parties on September 20, 1984, September 18, 1985, September 16, 1986, September 11, 1987, September 12, 1988, September 19, 1989, September 20, 1990 and September 20, 1991. The last extension extended the Agreement to September 1, 1996. Accordingly, Employer and Employee hereby agree to the further extension of this Agreement from September 1, 1996 until September 1, 1999.

DATED:    September 19, 1996
          ------------------

                                       NATIONAL FUEL GAS COMPANY

                                       By /s/ P. C. Ackerman
                                         ------------------------------
                                         P. C. Ackerman
                                         Vice President of Employer

                                         /s/ Bernard J. Kennedy
                                         ------------------------------
                                         Bernard J. Kennedy
                                         Employee	

AMENDMENT TO
NATIONAL FUEL GAS COMPANY
1984 STOCK PLAN
I, Bernard J. Kennedy, pursuant to the authorization granted by the National Fuel Gas Company Board of Directors on September 19, 1996, do hereby execute the following amendment to the National Fuel Gas Company 1984 Stock Plan (the "1984 Plan"), effective September 19, 1996.
1. Section 5(c)(v) of the 1984 Plan is hereby amended (which amendment also applies to all outstanding nonqualified stock options or SARs under the Plan as approved by the Compensation Committee of the Board of Directors on September 19, 1996) to read as follows:
"No Option under the Plan shall be subject in any manner to alienation, anticipation, sale, transfer (except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order), assignment, pledge or encumbrance, except that all awards of nonqualified stock options or SARs shall be transferable without consideration, subject to all the terms and conditions to which such nonqualified stock options or SARs are otherwise subject, to
(i) members of a Key Employee's immediate family as defined in Rule 16a-1 promulgated under the Exchange Act, or any successor rule or regulation, (ii) trusts for the exclusive benefit of the Key Employee or such immediate family members or (iii) entities which are wholly-owned by the Key Employee or such immediate family members, provided that (x) there may be no consideration for any such transfer, and (y) subsequent transfers of transferred Options shall be prohibited except those by will or the laws of descent and distribution. Following transfer, any such Options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, and except as provided in the next sentence, the term "Key Employee" shall be deemed to refer to the transferee. The events of termination of employment under Section 6 hereof shall continue to be applied with reference to the original Key Employee and following the termination of employment of the original Key Employee, the

Options shall be exercisable by the transferee only to the extent, and for the periods specified in Section 6, that the original Key Employee could have exercised such Option. Except as expressly permitted by this paragraph, an Option shall be exercisable during the Key Employee's lifetime only by him."
2. Section 15 is hereby amended (which amendment also applies to all outstanding Awards under the Plan as approved by of the Compensation Committee of the Board of Directors on September 19, 1996) to read as follows:
"At the time a Key Employee is taxable with respect to Options, SARs or Restricted Stock granted hereunder, or the exercise or surrender of the same, the Company shall have the right to withhold from amounts payable to the Key Employee under the Plan or from other compensation payable to the Key Employee in its sole discretion, or require the Key Employee to pay to it, an amount sufficient to satisfy all federal, state and/or local withholding tax requirements. A Key Employee may pay, in whole or in part, such tax withholding amounts by requesting that the Company withhold such amounts of taxes from the amounts owed to the Key Employee or by delivering as payment to the Company, shares of Common Stock having a Fair Market Value less than or equal to the amount of such required withholding taxes.
NATIONAL FUEL GAS COMPANY

December 11, 1996          /s/ Bernard J. Kennedy
- ------------------         ----------------------------------------------------
Dated                      Bernard J. Kennedy
                           President, Chief Executive Officer
                           and Chairman of the Board of
                           Directors	

AMENDMENT TO
NATIONAL FUEL GAS COMPANY
1993 AWARD AND OPTION PLAN
I, Bernard J. Kennedy, pursuant to the authorization granted by the National Fuel Gas Company Board of Directors on September 19, 1996, do hereby execute the following amendment to the National Fuel Gas Company 1993 Award and Option Plan (the "1993 Plan"), effective September 19, 1996.
1. Section 2.10 is amended to read as follows:
"Committee means the Compensation Committee of the Board, or such other committee designated by the Board as authorized to administer the Plan. The Committee shall consist of not less than two (2) members of the Board, each of whom shall be a Disinterested Board Member. A Disinterested Board Member means a member who (a) is not a current employee of the Company or a Subsidiary, (b) is not a former employee of the Company or a Subsidiary who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, (c) has not been an officer of the Company, (d) does not receive remuneration from the Company or a Subsidiary, either directly or indirectly, in any capacity other than as a director and (e) does not possess an interest in any other transaction, and is not engaged in a business relationship, for which disclosure would be required pursuant to Item 404(a) or (b) of Regulation S-K under the Securities Act of 1933, as amended. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to conform to the requirements of Section 162(m) of the Code and Rule 16b-3 promulgated under the Exchange Act."
2. Section 5 is amended to add the following sentence immediately after the first sentence of Section 5:
Awards covering no more than 300,000 shares of Common Stock (subject to adjustment as provided in paragraph 18) may be granted to any Participant in any fiscal year of the Company.
3. Section 17, is hereby amended (which amendment also applies to all outstanding nonqualified stock options and SARs under the Plan as approved by the Compensation Committee of the Board of Directors on September 19, 1996) to read as follows:
"No Award under the Plan shall be subject in any manner to alienation, anticipation, sale, transfer (except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order), assignment, pledge or encumbrance, except that all awards of nonqualified stock options or SAR's shall be transferable without consideration, subject to all the terms and conditions to which such nonqualified stock options or SARs are otherwise subject, to
(i) members of a Participant's immediate family as defined in Rule 16a-1 promulgated under the Exchange Act, or any successor rule or regulation, (ii) trusts for the exclusive benefit of the Participant or such immediate family members or
(iii) entities which are wholly-owned by the Participant or such immediate family members, provided that (x) there may be no consideration for any such transfer, and (y) subsequent transfers of transferred options shall be prohibited except those by will or the laws of descent and distribution. Following transfer, any such options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, and except as provided in the next sentence, the term "Participant" shall be deemed to refer to the transferee. The events of termination of employment under Section 16(c) hereof shall continue to be applied with reference to the original Participant and following the termination of employment of the original Participant, the options shall be exercisable by the transferee only to the extent, and for the periods specified in Section 16(c), that the original Participant could have exercised such option. Except as expressly permitted by this paragraph, an Award shall be exercisable during the Participant's lifetime only by him."
4. Section 19 is hereby amended (which amendment also applies to all outstanding Awards as approved by the Compensation Committee of the Board of Directors on September 19, 1996) to read as follows:
"The Company shall be entitled to deduct from any payment under the Plan, regardless of the form of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment or may require the participant to pay to it such tax prior to and as a condition of the making of such payment. A Participant may pay the amount of taxes required by law to be withheld from an Award by requesting that the Company withhold from any payment of Common Stock due as a result of such Award, or by delivering to the Company, shares of Common Stock having a Fair Market Value less than or equal to the amount of such required withholding taxes."
5. Section 24 is hereby amended to read as follows:
"The Board may suspend or terminate the Plan at any time. In addition, the Board may, from time to time, amend the Plan in any manner, provided, however, that any such amendment may be subject to stockholder approval (i) at the discretion of the Board and (ii) to the extent that shareholder approval may be required by law, including, but not limited to, the requirements of Rule 16b-3 under the Exchange Act, or any successor rule or regulation.
6. Section 25(h) is deleted, Section 25(i) is renumbered as
Section 25(h) and 25(j) is renumbered as 25(i).
NATIONAL FUEL GAS COMPANY

/s/ December 11, 1996                        /s/ Bernard J. Kennedy
- ---------------------                        ----------------------------------
Dated                                        Bernard J. Kennedy
                                             President, Chief Executive Officer
                                             and Chairman of the Board of
                                             Directors	

NATIONAL FUEL GAS COMPANY
1997 AWARD AND OPTION PLAN
1. Purpose
The purpose of the Plan is to advance the interests of the Company and its stockholders, by providing a long-term incentive compensation program that will be an incentive to the Key Employees of the Company and its Subsidiaries whose contributions are important to the continued success of the Company and its Subsidiaries, and by enhancing their ability to attract and retain in their employ highly qualified persons for the successful conduct of their businesses.
2. Definitions
2.1 "Acceleration Date" means (i) in the event of a Change in Ownership, the date on which such change occurs, or (ii) with respect to a Participant who is eligible for treatment under paragraph 25 hereof on account of the termination of his employment following a Change in Control, the date on which such termination occurs.
2.2 "Award" means any form of stock option, stock appreciation right, Restricted Stock, performance unit, performance share or other incentive award granted by the Committee to a Participant under the Plan pursuant to such terms and conditions as the Committee may establish. An Award may be granted singly, in combination or in the alternative.
2.3 "Award Notice" means a written notice from the Company to a Participant that sets forth the terms and conditions of an Award in addition to those established by this Plan and by the Committee's exercise of its administrative powers.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means (i) the willful and continued failure by a Key Employee to substantially perform his duties with his employer after written warnings specifically identifying the lack of substantial performance are delivered to him by his employer, or (ii) the willful engaging by a Key Employee in illegal conduct which is materially and demonstrably injurious to the Company or a Subsidiary.
2.7 "Change in Control Price" means, in respect of a Change in Control, the highest closing price per share paid for the purchase of Common Stock on the New York Stock Exchange, another national stock exchange or the National Association of Securities Dealers Automated Quotation System during the ninety (90) day period ending on the date the Change in Control occurs, and in respect of a Change in Ownership, the highest closing price per share paid for the purchase of Common Stock on the New York Stock Exchange, another national stock exchange or the National Association of Securities Dealers Automated Quotation System during the ninety (90) day period ending on the date the Change in Ownership occurs.
2.8 "Change in Ownership" means a change which results directly or indirectly in the Company's Common Stock ceasing to be actively traded on a national securities exchange or the National Association of Securities Dealers Automated Quotation System.
2.9 "Code" means the Internal Revenue Code of 1986, as amended from time to time.
2.10 "Committee" means the Compensation Committee of the Board, or such other committee designated by the Board, authorized to administer the Plan. The Committee shall consist of not less than two (2) members of the Board, each of whom shall be a Disinterested Board Member. A "Disinterested Board Member" means a member who (a) is not a current employee of the Company or a Subsidiary, (b) is not a former employee of the Company or a Subsidiary who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, (c) has not been an officer of the Company (d) does not receive remuneration from the Company or a Subsidiary, either directly or indirectly, in any capacity other than as a director and (e) does not possess an interest in any other transaction, and is not engaged in a business relationship, for which disclosure would be required pursuant to Item 404(a) or (b) of Regulation S-K under the Securities Act of 1933, as amended. The term Disinterested Board Member shall be interpreted in such manner as shall be necessary to conform to the requirements of Section 162(m) of the Code and Rule 16b-3 promulgated under the Exchange Act.
2.11 "Common Stock" means the common stock of the Company.
2.12 "Company" means National Fuel Gas Company.
2.13 "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.
2.14 "Fair Market Value" of a share of Common Stock on any date means the average of the high and low sales prices of a share of Common Stock as reflected in the report of consolidated trading of New York Stock Exchange-listed securities for that date (or, if no such shares were publicly traded on that date, the next preceding date that such shares were so traded) published in The Wall Street Journal or in any other publication selected by the Committee; provided, however, that if shares of Common Stock shall not have been publicly traded for more than ten (10) days immediately preceding such date, then the Fair Market Value of a share of Common Stock shall be determined by the Committee in such manner as it may deem appropriate.
2.15 "Good Reason" means a good faith determination made by a Participant that there has been any (i) material change by the Company of the Participant's functions, duties or responsibilities which change could cause the Participant's position with the Company to become of less dignity, responsibility, importance, prestige or scope, including, without limitation, the assignment to the Participant of duties and responsibilities inconsistent with his positions, (ii) assignment or reassignment by the Company of the Participant without the Participant's consent, to another place of employment more than 30 miles from the Participant's current place of employment, or (iii) reduction in the Participant's total compensation or benefits or any component thereof, provided in each case that the Participant shall specify the event relied upon for such determination by written notice to the Board at any time within six months after the occurrence of such event.
2.16 "Key Employee" means an officer or other key employee of the Company or a Subsidiary as determined by the Committee.
2.17 "Participant" means any individual to whom an Award has been granted by the Committee under this Plan.
2.18 "Plan" means the National Fuel Gas Company 1997 Award and Option Plan.
2.19 "Restricted Stock" means an Award granted pursuant to paragraph 10 hereof.
2.20 "Subsidiary" means a corporation or other business entity in which the Company directly or indirectly has an ownership interest of eighty percent (80%) or more.
2.21 "Unit" means a bookkeeping entry used by the Company to record and account for the grant of the following Awards until such time as the Award is paid, cancelled, forfeited or terminated, as the case may be: Units of Common Stock, performance units, and performance shares which are expressed in terms of Units of Common Stock.
3. Administration
The Plan shall be administered by the Committee. The Committee shall have the authority to: (a) interpret the Plan; (b) establish such rules and regulations as it deems necessary for the proper administration of the Plan;
(c) select Key Employees to receive Awards under the Plan; (d) determine the form of an Award, whether a stock option, stock appreciation right, Restricted Stock, performance unit, performance share, or other incentive award established by the Committee in accordance with (h) below, the number of shares or Units subject to the Award, all the terms and conditions of an Award, including the time and conditions of exercise or vesting; (e) determine whether Awards would be granted singly, in combination or in the alternative; (f) grant waivers of Plan terms and conditions, provided that any such waiver granted to an executive officer of the Company shall not be inconsistent with Section 16 of the Exchange Act and the rules promulgated thereunder; (g) accelerate the vesting, exercise or payment of any Award or the performance period of an Award when any such action would be in the best interest of the Company; (h) establish such other types of Awards, besides those specifically enumerated in paragraph 2.2 hereof, which the Committee determines are consistent with the Plan's purposes; and (i) take any and all other action it deems advisable for the proper administration of the Plan. The Committee shall also have the authority to grant Awards in replacement of Awards previously granted under this Plan or any other executive compensation or stock option plan of the Company or a Subsidiary. All determinations of the Committee shall be made by a majority of its members, and its determinations shall be final, binding and conclusive. The Committee, in its discretion, may delegate its authority and duties under the Plan to the Chief Executive Officer or to other senior officers of the Company to the extent permitted by Section 16 of the Exchange Act and notwithstanding any other provision of this Plan or an Award Notice, under such conditions as the Committee may establish; provided, however, that only the Committee may select and grant Awards and render other decisions as to the timing, pricing and amount of Awards to Participants who are subject to Section 16 of the Exchange Act.
4. Eligibility
Any Key Employee is eligible to become a Participant of the Plan.
5. Shares Available
(a) The maximum number of shares of Common Stock, $1.00 par value, of the Company which shall be available for grant of Awards under the Plan (including incentive stock options) during its term shall not exceed 1,800,000; subject to adjustment as provided in paragraph 18. Awards covering no more than 300,000 shares of Common Stock of the Company may be granted to any Participant in any fiscal year subject to adjustment as provided in paragraph 18.
(b) Any shares of Common Stock related to Awards which terminate by expiration, forfeiture, cancellation or otherwise without the issuance of such shares, are settled in cash in lieu of Common Stock, or are exchanged with the Committee's permission for Awards not involving Common Stock, shall be available again for grant under the Plan, provided, however, that if dividends or dividend equivalents pursuant to paragraph 14, or other benefits of share ownership (not including the right to vote the shares) have been received by the Participant in respect of an Award prior to such termination, settlement or exchange, the shares which were the subject of the Award shall not again be available for grant under the Plan. Further, any shares of Common Stock which are used by a Participant for the full or partial payment to the Company of the purchase price of shares of Common Stock upon exercise of a stock option, or for any withholding taxes due as a result of such exercise, shall again be available for Awards under the Plan. Similarly, shares of Common Stock with respect to which an Alternative SAR has been exercised and paid in cash shall again be available for grant under the Plan. Shares to which independent or combination SARs relate shall not count against the 1,800,000 share limit set forth in this paragraph 5.
(c) The shares of Common Stock available for issuance under the Plan may be authorized and unissued shares or treasury shares.
6. Term
The Plan shall become effective as of December 13, 1996 subject to its approval by the Company's stockholders at the 1997 Annual Meeting of Stockholders and subject to the approval of the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935, as amended. No Awards shall be exercisable or payable before these approvals of the Plan have been obtained and all Awards made prior to approval of the Plan by the Company's stockholders and approval of the Plan by the Securities and Exchange Commission under the Public Utility Holding Company Act of 1935, as amended, are contingent upon such approval. Awards shall not be granted pursuant to the Plan after December 12, 2006.
7. Participation
The Committee shall select Participants, determine the type of Awards to be made, and establish in the related Award Notices the applicable terms and conditions of the Awards in addition to those set forth in this Plan and the administrative rules issued by the Committee.
8. Stock Options
(a) Grants. Awards may be granted in the form of stock options. These stock options may be incentive stock options within the meaning of Section 422 of the Code or non-qualified stock options (i.e., stock options which are not incentive stock options), or a combination of both.
(b) Terms and Conditions of Options. Unless the Award Notice provides otherwise, an option shall be exercisable in whole or in part. The price at which Common Stock may be purchased upon exercise of a stock option shall be established by the Committee, but such price shall not be less than the Fair Market Value of the Common Stock on the date of the stock option's grant. An Award Notice evidencing a stock option may, in the discretion of the Committee, provide that a Participant who pays the option price of a stock option by an exchange of shares of Common Stock previously owned by the Participant shall automatically be issued a new stock option to purchase additional shares of Common Stock equal to the number of shares of Common Stock so exchanged. Such new stock option shall have an option price equal to the Fair Market Value of the Common Stock on the date such new stock option is issued and shall be subject to such other terms and conditions as the Committee deems appropriate. Unless the Award Notice provides otherwise, each incentive stock option shall first become exercisable on the first anniversary of its date of grant, and each non-qualified stock option shall first become exercisable on the first anniversary of its date of grant, or, if earlier (i) on the date of the Participant's death occurring after the date of grant, (ii) six months after the date of grant, if the Participant has voluntarily resigned on or after his 60th birthday, after the date of grant, and before such six months, or (iii) on the date of the Participant's voluntary resignation on or after his 60th birthday and at least six months after the date of grant. Unless the Award Notice provides otherwise, each non-qualified stock option shall expire on the day after the tenth anniversary of its date of grant, and incentive stock options and non-qualified stock options granted in combination may be exercised separately.
(c) Restrictions Relating to Incentive Stock Options. Stock options issued in the form of incentive stock options shall, in addition to being subject to all applicable terms and conditions established by the Committee, comply with Section 422 of the Code. Accordingly, the aggregate Fair Market Value (determined at the time the option was granted) of the Common Stock with respect to which incentive stock options are exercisable for the first time by a Participant during any calendar year (under this Plan or any other plan of the Company or any of its Subsidiaries) shall not exceed $100,000 (or such other limit as may be required by the Code). Unless the Award Notice provides a shorter period, each incentive stock option shall expire on the tenth anniversary of its date of grant. The number of shares of Common Stock that shall be available for incentive stock options granted under the Plan is 1,800,000.
(d) Exercise of Option. Upon exercise, the option price of a stock option may be paid in cash, shares of Common Stock, shares of Restricted Stock, a combination of the foregoing, or such other consideration as the Committee may deem appropriate. The Committee shall establish appropriate methods for accepting Common Stock, whether restricted or unrestricted, and may impose such conditions as it deems appropriate on the use of such Common Stock to exercise a stock option. The Committee, in its sole discretion, may establish procedures whereby a Participant to the extent permitted by and subject to the requirements of Rule 16b-3 under the Exchange Act, Regulation T issued by the Board of Governors of the Federal Reserve System pursuant to the Exchange Act, federal income tax laws, and other federal, state and local tax and securities laws, can exercise an option or a portion thereof without making a direct payment of the option price to the Company. If the Committee so elects to establish a cashless exercise program, the Committee shall determine, in its sole discretion and from time to time, such administrative procedures and policies as it deems appropriate. Such procedures and policies shall be binding on any Participant wishing to utilize the cashless exercise program.
9. Stock Appreciation Rights
(a) Grants and Valuation. Awards may be granted in the form of stock appreciation rights ("SARs"). SARs may be granted singly ("Independent SARs"), in combination with all or a portion of a related stock option under the Plan ("Combination SARs"), or in the alternative ("Alternative SARs"). Combination or Alternative SARs may be granted either at the time of the grant of related stock options or at any time thereafter during the term of the stock options. Combination SARs shall be subject to paragraph 9(b) hereof. Alternative SARs shall be subject to paragraph 9(c) hereof. Independent SARs shall be subject to paragraph 9(d) hereof. Unless this Plan or the Award Notice provides otherwise, SARs shall entitle the recipient to receive a payment equal to the appreciation in the Fair Market Value of a stated number of shares of Common Stock from the award date to the date of exercise. In the case of SARs granted in combination with, or in the alternative to, stock options, the appreciation in value is from the option price of such related stock option to the Fair Market Value on the date of exercise of such SARs. Unless this Plan or the Award Notice provides otherwise, SARs granted in conjunction with stock options shall be Combination SARs, and all SARs shall be exercisable between one year and ten years and one day after the date of their award.
(b) Terms and Conditions of Combination SARs. Both the stock options granted in conjunction with Combination SARs and the Combination SARs may be exercised. Combination SARs shall be exercisable only to the extent the related stock option is exercisable, and the base from which the value of the Combination SARs is measured at its exercise shall be the option price of the related stock option. Combination SARs may be exercised either together with the related stock option or separately. If a Participant exercises a Combination SAR or related stock option, but not both, the other shall remain outstanding and shall remain exercisable during the entire exercise period.
(c) Terms and Conditions of Alternative SARs. Either the stock options granted in the alternative to Alternative SARs or the Alternative SARs may be exercised, but not both. Alternative SARs shall be exercisable only to the extent that the related stock option is exercisable, and the base from which the value of the Alternative SARs is measured at its exercise shall be the option price of the related stock option. If related stock options are exercised as to some or all of the shares covered by the Award, the related Alternative SARs shall be cancelled automatically to the extent of the number of shares covered by the stock option exercise. Upon exercise of Alternative SARs as to some or all of the shares covered by the Award, the related stock option shall be cancelled automatically to the extent of the number of shares covered by such exercise, and such shares shall again be eligible for grant in accordance with paragraph 5 hereof.
(d) Terms and Conditions of Independent SARs. Independent SARs shall be exercisable in whole or in such installments and at such time as may be determined by the Committee. The base price from which the value of an Independent SAR is measured shall also be determined by the Committee; provided, however, that such price shall not be less than the Fair Market Value of the Common Stock on the date of the grant of the Independent
SAR.
(e) Deemed Exercise. The Committee may provide that a SAR shall be deemed to be exercised at the close of business on the scheduled expiration date of such SAR, if at such time the SAR by its terms remains exercisable and, if so exercised, would result in a payment to the holder of such SAR.
10. Restricted Stock
(a) Grants. Awards may be granted in the form of Restricted Stock. Shares of Restricted Stock shall be awarded in such amounts and at such times during the term of the Plan as the Committee shall determine.
(b) Award Restrictions. Restricted Stock shall be subject to such terms and conditions as the Committee deems appropriate, including restrictions on transferability and continued employment. The Committee may modify or accelerate the delivery of shares of Restricted Stock under such circumstances as it deems appropriate.
(c) Rights as Stockholders. During the period in which any shares of Restricted Stock are subject to the restrictions imposed under paragraph 10(b), the Committee may, in its discretion, grant to the Participant to whom shares of Restricted Stock have been awarded all or any of the rights of a stockholder with respect to such shares, including, but not by way of limitation, the right to vote such shares and to receive dividends.
(d) Evidence of Award. Any shares of Restricted Stock granted under the Plan may be evidenced in such manner as the Committee deems appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates.
11. Performance Units
(a) Grants. Awards may be granted in the form of performance units. Performance units shall refer to the Units valued by reference to designated criteria established by the Committee, other than Units which are expressed in terms of Common Stock.
(b) Performance or Service Criteria. Performance units shall be contingent on the attainment during a performance period of certain performance and/or service objectives. The length of the performance period, the performance or service objectives to be achieved, and the extent to which such objectives have been attained shall be conclusively determined by the Committee in the exercise of its absolute discretion. Performance and service objectives may be revised by the Committee during the performance period, in order to take into consideration any unforeseen events or changes in circumstances.
12. Performance Shares
(a) Grants. Awards may be granted in the form of performance shares. Performance shares shall refer to shares of Common Stock or Units which are expressed in terms of Common Stock, including shares of phantom stock.
(b) Performance or Service Criteria. Performance shares shall be contingent upon the attainment during a performance period of certain performance or service objectives. The length of the performance period, the performance or service objectives to be achieved, and the extent to which such objectives have been attained shall be conclusively determined by the Committee in the exercise of its absolute discretion. Performance and service objectives may be revised by the Committee during the performance period, in order to take into consideration any unforeseen events or changes in circumstances.
13. Payment of Awards
At the discretion of the Committee, payment of Awards may be made in cash, Common Stock, a combination of cash and Common Stock, or any other form of property as the Committee shall determine.
14. Dividends and Dividend Equivalents
If an Award is granted in the form of Restricted Stock, stock options, or performance shares, or in the form of any other stock-based grant, the Committee may, at any time up to the time of payment, include as part of an Award an entitlement to receive dividends or dividend equivalents, subject to such terms and conditions as the Committee may establish. Dividends and dividend equivalents shall be paid in such form and manner (i.e., lump sum or installments), and at such time as the Committee shall determine. All dividends or dividend equivalents which are not paid currently may, at the Committee's discretion, accrue interest, be reinvested into additional shares of Common Stock or, in the case of dividends or dividend equivalents credited in connection with performance shares, be credited as additional performance shares and paid to the Participant if and when, and to the extent that, payment is made pursuant to such Award.
15. Deferral of Awards
At the discretion of the Committee, the receipt of the payment of shares of Restricted Stock, performance shares, performance units, dividends, dividend equivalents, or any portion thereof, may be deferred by a Participant until such time as the Committee may establish. All such deferrals shall be accomplished by the delivery of a written, irrevocable election by the Participant prior to such time payment would otherwise be made, on a form provided by the Company. Further, all deferrals shall be made in accordance with administrative guidelines established by the Committee to ensure that such deferrals comply with all applicable requirements of the Code and its regulations. Deferred payments shall be paid in a lump sum or installments, as determined by the Committee. The Committee may also credit interest, at such rates to be determined by the Committee, on cash payments that are deferred and credit dividends or dividend equivalents on deferred payments denominated in the form of Common Stock.
16. Termination of Employment
(a) General Rule. Subject to paragraph 20, if a Participant's employment with the Company or a Subsidiary terminates for a reason other than death, disability, retirement, or any approved reason, all unexercised, unearned or unpaid Awards shall be cancelled or forfeited as the case may be, unless otherwise provided in this paragraph or in the Participant's Award Notice. The Committee shall have the authority to promulgate rules and regulations to (i) determine what events constitute disability, retirement, or termination for an approved reason for purposes of the Plan, and (ii) determine the treatment of a Participant under the Plan in the event of his death, disability, retirement, or termination for an approved reason.
(b) Incentive Stock Options. Unless the Award Notice provides otherwise, any incentive stock option which has not theretofore expired, shall terminate upon termination of the Participant's employment with the Company whether by death or otherwise, and no shares of Common Stock may thereafter be purchased pursuant to such incentive stock option, except that:
(i) Upon termination of employment (other than by death), a Participant may, within three months after the date of termination of employment, purchase all or part of any shares of Common Stock which the Participant was entitled to purchase under such incentive stock option on the date of termination of employment.
(ii) Upon the death of any Participant while employed with the Company or within the three-month period referred to in paragraph 16(b)(i) above, the Participant's estate or the person to whom the Participant's rights under the incentive stock option are transferred by will or the laws of descent and distribution may, within one year after the date of the Participant's death, purchase all or part of any shares of Common Stock which the Participant was entitled to purchase under such incentive stock option on the date of death.
Notwithstanding anything in this paragraph 16(b) to the contrary, the Committee may at any time within the three-month period after the date of termination of a Participant's employment, with the consent of the Participant, the Participant's estate or the person to whom the Participant's rights under the incentive stock options are transferred by will or the laws of descent and distribution, extend the period for exercise of the Participant's incentive stock options to any date not later than the date on which such incentive stock options would have otherwise expired absent such termination of employment. Nothing in this paragraph 16(b) shall authorize the exercise of an incentive stock option after the expiration of the exercise period therein provided, nor later than ten years after the date of grant.
(c) Non-Qualified Stock Options. Unless the Award Notice provides otherwise, any non-qualified stock option which has not theretofore expired shall terminate upon termination of the Participant's employment with the Company, and no shares of Common Stock may thereafter be purchased pursuant to such non-qualified stock option, except that:
(i) Upon termination of employment for any reason other than death, discharge by the Company for cause, or voluntary resignation of the Participant prior to age 60, a Participant may, within five years after the date of termination of employment, or any such greater period of time as the Committee, in its sole discretion, deems appropriate, exercise all or part of the non-qualified stock option which the Participant was entitled to exercise on the date of termination of employment or subsequently becomes eligible to exercise pursuant to paragraph 8(b) above.
(ii) Upon the death of a Participant while employed with the Company or within the period referred to in paragraph 16(c)(i) above, the Participant's estate or the person to whom the Participant's rights under the non-qualified stock option are transferred by will or the laws of descent and distribution may, within five years after the date of the Participant's death while employed, or within the period referred to in paragraph 16(c)(i) above, exercise all or part of the non-qualified stock option which the Participant was entitled to exercise on the date of death.
Nothing in this paragraph 16(c) shall authorize the exercise of a non-qualified stock option later than the exercise period set forth in the Award Notice.
17. Nonassignability
No Award under the Plan shall be subject in any manner to alienation, anticipation, sale, transfer (except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order), assignment, pledge, or encumbrance, except that, unless the Committee specifies otherwise, all awards of non-qualified stock options or SARs shall be transferable without consideration, subject to all the terms and conditions to which such non-qualified stock options or SARs are otherwise subject, to (i) members of a Participant's immediate family as defined in Rule 16a-1 promulgated under the Exchange Act, or any successor rule or regulation, (ii) trusts for the exclusive benefit of the Participant or such immediate family members or (iii) entities which are wholly-owned by the Participant or such immediate family members, provided that (x) there may be no consideration for any such transfer, and (y) subsequent transfers of transferred options shall be prohibited except those by will or the laws of descent and distribution. Following transfer, any such options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, and except as provided in the next sentence, the term "Participant" shall be deemed to refer to the transferee. The events of termination of employment of Section 16(c) hereof shall continue to be applied with reference to the original Participant and following the termination of employment of the original
Participant, the options shall be exercisable by the transferee only to the extent, and for the periods specified in Section 16(c), that the original Participant could have exercised such option. Except as expressly permitted by this paragraph, an Award shall be exercisable during the Participant's lifetime only by him.
18. Adjustment of Shares Available
(a) Changes in Stock. In the event of changes in the Common Stock by reason of a Common Stock dividend, stock split, reverse stock-split or other combination, appropriate adjustment shall be made by the Committee in the aggregate number of shares available under the Plan, the number of shares with respect to which Awards may be granted to any Participant in any fiscal year, and the number of shares, SARs, performance shares, Common Stock units and other stock-based interests subject to outstanding Awards, without, in the case of stock options, causing a change in the aggregate purchase price to be paid therefor. Such proper adjustment as may be deemed equitable may be made by the Committee in its discretion to give effect to any other change affecting the Common Stock.
(b) Changes in Capitalization. In case of a merger or consolidation of the Company with another corporation, a reorganization of the Company, a reclassification of the Common Stock of the Company, a spin-off of a significant asset, or other changes in the capitalization of the Company, appropriate provision shall be made for the protection and continuation of any outstanding Awards by either (i) the substitution, on an equitable basis, of appropriate stock or other securities or other consideration to which holders of Common Stock of the Company will be entitled pursuant to such transaction or succession of transactions, or (ii) by appropriate adjustment in the number of shares issuable pursuant to the Plan, the number of shares covered by outstanding Awards, the option price of outstanding stock options, the exercise price of outstanding SARs, the performance or service criteria or performance period of outstanding performance units, and the performance or service criteria or performance period of outstanding performance shares, as deemed appropriate by the Committee.
19. Withholding Taxes
The Company shall be entitled to deduct from any payment under the Plan, regardless of the form of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment or may require the participant to pay to it such tax prior to and as a condition of the making of such payment. Subject to the administrative guidelines established by the Committee, a Participant may pay the amount of taxes required by law to be withheld from an Award, in whole or in part, by requesting that the Company withhold from any payment of Common Stock due as a result of such Award, or by delivering to the Company, shares of Common Stock having a Fair Market Value less than or equal to the amount of such required withholding taxes.
20. Noncompetition Provision
Notwithstanding anything contained in this Plan to the contrary, unless the Award Notice specifies otherwise, a Participant shall forfeit all unexercised, unearned, and/or unpaid Awards, including Awards earned but not yet paid, all unpaid dividends and dividend equivalents, and all interest, if any, accrued on the foregoing if, (i) in the opinion of the Committee, the Participant, without the written consent of the Company, engages directly or indirectly in any manner or capacity as principal, agent, partner, officer, director, employee, or otherwise, in any business or activity competitive with the business conducted by the Company or any Subsidiary; or
(ii) the Participant performs any act or engages in any activity which in the opinion of the Committee is inimical to the best interests of the Company. In addition, the Committee may, in its discretion, condition the deferral of any Award, dividend, or dividend equivalent under paragraph 15 hereof on a Participant's compliance with the terms of this paragraph 20, and cause such a Participant to forfeit any payment which is so deferred if the Participant fails to comply with the terms hereof.
21. Amendments to Awards
The Committee may at any time unilaterally amend any unexercised, unearned, or unpaid Award, including Awards earned but not yet paid, to the extent it deems appropriate; provided, however, that any such amendment which is adverse to the Participant shall require the Participant's consent.
22. Regulatory Approvals and Listings
Notwithstanding anything contained in this Plan to the contrary, the Company shall have no obligation to issue or deliver certificates of Common Stock evidencing Awards resulting in the payment of Common Stock prior to (a) the obtaining of any approval from any governmental agency which the Company shall, in its sole discretion, determine to be necessary or advisable,
(b) the admission of such shares to listing on the stock exchange on which the Common Stock may be listed, and (c) the completion of any registration or other qualification of said shares under any state or federal law or ruling of any governmental body which the Company shall, in its sole discretion, determine to be necessary or advisable.
23. No Right to Continued Employment or Grants
Participation in the Plan shall not give any Key Employee any right to remain in the employ of the Company or any Subsidiary. The Company or, in the case of employment with a Subsidiary, the Subsidiary, reserves the right to terminate any Key Employee at any time. Further, the adoption of this Plan shall not be deemed to give any person any right to be selected as a Participant or to be granted an Award.
24. Amendment
The Board may suspend or terminate the Plan at any time. In addition, the Board may, from time to time, amend the Plan in any manner, provided however, that any such amendment may be subject to stockholder approval
(i) at the discretion of the Board and (ii) to the extent that shareholder approval may be required by law, including, but not limited to, the requirements of Rule 16b-3 under the Exchange Act, or any successor rule or regulation.
25. Change in Control and Change in Ownership
(a) Background. All Participants shall be eligible for the treatment afforded by this paragraph 25 if there is a Change in Ownership or if their employment terminates within two years following a Change in Control, unless the termination is due to (i) death; (ii) disability entitling the Participant to benefits under his employer's long-term disability plan; (iii) Cause; (iv) resignation by the Participant other than for Good Reason; or (v) retirement entitling the Participant to benefits under his employer's retirement plan.
(b) Vesting and Lapse of Restrictions. If a Participant is eligible for treatment under this paragraph 25, (i) all of the terms and conditions in effect on any unexercised, unearned, unpaid or deferred Awards shall immediately lapse as of the Acceleration Date; (ii) no other terms or conditions shall be imposed upon any Awards on or after such date, and in no event shall any Award be forfeited on or after such date; and (iii) all of his unexercised, unvested, unearned and/or unpaid Awards or any other outstanding Awards shall automatically become one hundred percent (100%) vested immediately upon such date.
(c) Dividends and Dividend Equivalents. If a Participant is eligible for treatment under this paragraph 25, all unpaid dividends and dividend equivalents and all interest accrued thereon, if any, shall be treated and paid under this paragraph 25 in the identical manner and time as the Award under which such dividends or dividend equivalents have been credited. For example, if upon a Change in Ownership, an Award under this paragraph 25 is to be paid in a prorated fashion, all unpaid dividends and dividend equivalents with respect to such Award shall be paid according to the same formula used to determine the amount of such prorated Award.
(d) Treatment of Performance Units and Performance Shares. If a Participant holding either performance units or performance shares is eligible for treatment under this paragraph 25, the provisions of this paragraph (d) shall determine the manner in which such performance units and/or performance shares shall be paid to him. For purposes of making such payment, each "current performance period" (defined to mean a performance period or term of a performance unit or performance share which period or term has commenced but not yet ended), shall be treated as terminating upon the Acceleration Date, and for each such "current performance period" and each "completed performance period" (defined to mean a performance period or term of a performance unit or performance share which has ended but for which the Committee has not, on the Acceleration Date, made a determination as to whether and to what degree the performance or service objectives for such period have been attained), it shall be assumed that the performance or service objectives have been attained at a level of one hundred percent (100%) or the equivalent thereof. If the Participant is participating in one or more "current performance periods," he shall be considered to have earned and, therefore, to be entitled to receive, a prorated portion of the Awards previously granted to him for each such performance period. Such prorated portion shall be determined by multiplying the number of performance shares or performance units, as the case may be, granted to the Participant by a fraction, the numerator of which is the total number of whole and partial years (with each partial year being treated as a whole year) that have elapsed since the beginning of the performance period, and the denominator of which is the total number of years in such performance period. A Participant in one or more "completed performance periods" shall be considered to have earned and, therefore, be entitled to receive all the performance shares and performance units previously granted to him during each performance period.
(e) Valuation of Awards. If a Participant is eligible for treatment under this paragraph 25, his Awards (including those earned as a result of the application of paragraph 25(d) above) shall be valued and cashed out on the basis of the Change in Control Price.
(f) Payment of Awards. If a Participant is eligible for treatment under this paragraph 25, whether or not he is still employed by the Company or a Subsidiary, he shall be paid, in a single lump sum cash payment, as soon as practicable but in no event later than 90 days after the Acceleration Date, for all outstanding Units of Common Stock, Independent and Combination SARs, stock options (including incentive stock options), performance units (including those earned as a result of the application of paragraph 25(d) above), and performance shares (including those earned as a result of paragraph 25(d) above), and all other outstanding Awards, including those granted by the Committee pursuant to its authority under paragraph 3(h) hereof.
(g) Deferred Awards. If a Participant is eligible for treatment under this paragraph 25, all deferred Awards for which payment has not been received as of the Acceleration Date shall be paid in a single lump sum cash payment as soon as practicable, but in no event later than 90 days after such date. For purposes of making such payment, the value of all Awards which are stock-based shall be determined by the Change in Control Price.
(h) Miscellaneous. Upon a Change in Control or a Change in Ownership, (i) the provisions of paragraphs 16, 20 and 21 hereof shall become null and void and of no force and effect insofar as they apply to a Participant who has been terminated under the conditions described in (a) above; and (ii) no action shall be taken which would affect the rights of any Participant or the operation of the Plan with respect to any Award to which the Participant may have become entitled hereunder on or prior to the date of the Change in Control or Change in Ownership or to which he may become entitled as a result of such Change in Control or Change in Ownership.
(i) Legal Fees. The Company shall pay all legal fees and related expenses incurred by a Participant in seeking to obtain or enforce any payment, benefit or right he may be entitled to under the Plan after a Change in Control or Change in Ownership; provided, however, the Participant shall be required to repay any such amounts to the Company to the extent a court of competent jurisdiction issues a final and non-appealable order setting forth the determination that the position taken by the Participant was frivolous or advanced in bad faith.
26. No Right, Title or Interest in Company Assets
No Participant shall have any rights as a stockholder as a result of participation in the Plan until the date of issuance of a stock certificate in his name, and, in the case of Restricted Stock, stock options, performance shares or any other stock-based grant, such rights are granted to the Participant under paragraph 10(c) hereof. To the extent any person acquires a right to receive payments from the Company under this Plan, such rights shall be no greater than the rights of an unsecured creditor of the Company.

AMENDMENT TO THE
NATIONAL FUEL GAS COMPANY
DEFERRED COMPENSATION PLAN
I, Bernard J. Kennedy, pursuant to the authorization granted by the National Fuel Gas Company Board of Directors on September 19, 1996, do hereby execute the following amendment to the National Fuel Gas Company Deferred Compensation Plan for Non-Union Employees (the "DCP"), effective September 19, 1996.
Section 9.2 of the DCP is hereby amended as follows:
Paragraph (b) is deleted and Paragraphs (c) - (e) are hereby relabeled as paragraphs (b) - (d).
NATIONAL FUEL GAS COMPANY

September 19, 1996                     /s/ Bernard J. Kennedy
- ------------------                     --------------------------------------
Dated                                  Bernard J. Kennedy
                                       President, Chief Executive Officer and
                                       Chairman of the Board of Directors	

AMENDMENT TO
DEATH BENEFITS AGREEMENT
National Fuel Gas Company ("Company"), by action of its Board of Directors at its September 15, 1993 meeting, authorized the president of the Company to amend certain existing executive benefit agreements to reflect compensation that has been or will be provided under the Company's Annual At Risk Compensation Incentive Program ("AARCIP"). Accordingly, the Company, and Philip C. Ackerman ("Executive"), do hereby revoke the Amendment to Death Benefits Agreement dated March 15, 1994, previously executed by the parties hereto, and substitute therefor this Amendment to Death Benefits Agreement. By this action, the parties hereby amend the death benefits agreement, dated April 1, 1991, respecting the Executive ("Agreement"), as follows:
1. The following language shall be added at the end of the third sentence of Article I, paragraph (a) of the Agreement:
"(as is further described in Article II)."
2. Article II, paragraph (a) of the Agreement is hereby amended and restated to read as follows:
"(a) After the death of the Executive, if the Policy (as defined in Article III) has not split (see Article IV) before Executive's death, and death occurs while the Executive is employed by the Company, the Policy shall pay to the Beneficiary (i) 24 times the base monthly salary provided by the Company to the Executive ("Base Monthly Salary") at the time of Executive's death, plus two times the most recent annual award under the Company's Annual At Risk Compensation Incentive Program (AARCIP), or (ii) 24 times the Base Monthly Salary for the month prior to the Executive's commencement of retirement, plus two times the most recent annual award to the Executive under the AARCIP. If the Executive has retired on disability retirement and becomes reemployed by the Company, or if the Executive otherwise becomes reemployed by the Company, the second date of commencement of retirement shall be used for purposes of computing benefits. The Company shall then be entitled to recover, out of the Policy's proceeds and directly from the Policy's insurer, the total of the premiums paid by the Company on the Policy, less any distributions to the Company (including loans) on the Policy."
3. Article II, paragraph (c) of the Agreement is amended and restated to read as follows:
"An example of the Company's recovery from the Policy's proceeds hereunder is as follows. Assume that the Company had paid a total of $350,000 in premiums on the Policy, at the time Executive died, and the Policy paid death benefits of

Page 2
$2,000,000, and the Executive's salary were $50,000 per month. Beneficiary would receive 24 times that amount, or $1,200,000. And, if the most recent award to the Executive under the AARCIP were $100,000, Beneficiary would receive two times that amount, or $200,000. The Company would receive the $350,000 in premiums and the $250,000 excess, or $600,000 in total."
In all other respects, the Agreement, and subsequent amendments or addenda thereto, shall remain unchanged.
In WITNESS WHEREOF, the parties hereto have executed this amendment at Buffalo, New York, on the 8th day of January, 1996.
NATIONAL FUEL GAS COMPANY

/s/ Robert J. Dauer                 By: /s/ Bernard J. Kennedy
- ------------------------------         ----------------------------------------
Witness                                Bernard J. Kennedy
                                       Chairman of the Board of Directors,
                                       President, and Chief Executive Officer	

EXECUTIVE

/s/ Robert J. Dauer                 By: /s/ Philip C. Ackerman
- ------------------------------         ----------------------------------------
Witness                                Philip C. Ackerman	

AMENDMENT TO
DEATH BENEFITS AGREEMENT
National Fuel Gas Company ("Company"), by action of its Board of Directors at its September 15, 1993 meeting, authorized the president of the Company to amend certain existing executive benefit agreements to reflect compensation that has been or will be provided under the Company's Annual At Risk Compensation Incentive Program ("AARCIP"). Accordingly, the Company, and Richard Hare ("Executive"), do hereby revoke the Amendment to Death Benefits Agreement dated March 15, 1994, previously executed by the parties hereto, and substitute therefor this Amendment to Death Benefits Agreement. By this action, the parties hereby amend the death benefits agreement, dated April 1, 1991, respecting the Executive ("Agreement"), as follows:
1. The following language shall be added at the end of the third sentence of Article I, paragraph (a) of the Agreement:
"(as is further described in Article II)."
2. Article II, paragraph (a) of the Agreement is hereby amended and restated to read as follows:
"(a) After the death of the Executive, if the Policy (as defined in Article III) has not split (see Article IV) before Executive's death, and death occurs while the Executive is employed by the Company, the Policy shall pay to the Beneficiary (i) 24 times the base monthly salary provided by the Company to the Executive ("Base Monthly Salary") at the time of Executive's death, plus two times the most recent annual award under the Company's Annual At Risk Compensation Incentive Program (AARCIP), or (ii) 24 times the Base Monthly Salary for the month prior to the Executive's commencement of retirement, plus two times the most recent annual award to the Executive under the AARCIP. If the Executive has retired on disability retirement and becomes reemployed by the Company, or if the Executive otherwise becomes reemployed by the Company, the second date of commencement of retirement shall be used for purposes of computing benefits. The Company shall then be entitled to recover, out of the Policy's proceeds and directly from the Policy's insurer, the total of the premiums paid by the Company on the Policy, less any distributions to the Company (including loans) on the Policy."
3. Article II, paragraph (c) of the Agreement is amended and restated to read as follows:
"An example of the Company's recovery from the Policy's proceeds hereunder is as follows. Assume that the Company had paid a total of $350,000 in premiums on the Policy, at the time Executive died, and the Policy paid death benefits of

Page 2
$2,000,000, and the Executive's salary were $50,000 per month. Beneficiary would receive 24 times that amount, or $1,200,000. And, if the most recent award to the Executive under the AARCIP were $100,000, Beneficiary would receive two times that amount, or $200,000. The Company would receive the $350,000 in premiums and the $250,000 excess, or $600,000 in total."
In all other respects, the Agreement, and subsequent amendments or addenda thereto, shall remain unchanged.
In WITNESS WHEREOF, the parties hereto have executed this amendment at Buffalo, New York, on the 8th day of January, 1996.
NATIONAL FUEL GAS COMPANY

/s/ Robert J. Dauer                 By: /s/ Bernard J. Kennedy
- ------------------------------         ----------------------------------------
Witness                                Bernard J. Kennedy
                                       Chairman of the Board of Directors,
                                       President, and Chief Executive Officer	

EXECUTIVE

/s/ Robert J. Dauer                 By: /s/ Richard Hare
- ------------------------------         ----------------------------------------
Witness                                Richard Hare	

NATIONAL FUEL GAS COMPANY AND PARTICIPATING SUBSIDIARIES
1996 EXECUTIVE RETIREMENT PLAN TRUST AGREEMENT (II)

                                TABLE OF CONTENTS

SECTION 1.  Establishment and Title of the Trust..............................2

SECTION 2.  Acceptance by the Trustee.........................................3

SECTION 3.  Limitation on Use of Funds........................................3

SECTION 4.  Duties and Powers of the Trustee with Respect to Investments......6

SECTION 5.  Additional Powers and Duties of the Trustee.......................9

SECTION 6.  Payments by the Trustee..........................................12

SECTION 7.  Third Parties....................................................16

SECTION 8.  Taxes, Expenses and Compensation.................................16

SECTION 9.  Administration and Records.......................................17

SECTION 10. Removal or Resignation of the Trustee and
            Designation of Successor Trustee.................................19

SECTION 11. Enforcement of Trust Agreement and Legal.........................21

SECTION 12. Change in Control Defined........................................21

SECTION 13. Termination......................................................23

SECTION 14. Amendments.......................................................23

SECTION 15. Non-alienation...................................................24

SECTION 16. Communications...................................................24

SECTION 17. Miscellaneous Provisions.........................................25

EXHIBIT A....................................................................28	

NATIONAL FUEL GAS COMPANY AND PARTICIPATING SUBSIDIARIES
1996 EXECUTIVE RETIREMENT PLAN TRUST AGREEMENT (II)
This TRUST AGREEMENT, made and entered into as of May 10, 1996, by NATIONAL FUEL GAS COMPANY, a corporation organized under the laws of the State of New Jersey, hereinafter referred to as the "Company", and MARINE MIDLAND BANK, N. A., a New York banking corporation, hereinafter referred to as the "Trustee"
W I T N E S S E T H:
WHEREAS, the Company had established an excess benefit plan, within the meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), called the National Fuel Gas Company and Subsidiaries Supplemental Executive Retirement Plan (the "SERP"), for the benefit of certain employees;
WHEREAS, the Company subsequently established an unfunded plan of deferred compensation under Section 201(2) of ERISA, which it has called the National Fuel Gas Company and Participating Subsidiaries 1996 Executive Retirement Plan (II) (the "Plan"), and has amended the Plan, so that the Plan provides benefits in addition to and inclusive of those provided under the SERP; and consequently, the SERP has been terminated effective April 25, 1988; WHEREAS, the Plan provides for the Company to pay all benefits from its general assets and does not require it to pay benefits from the assets of any trust or special or separate fund established by the Company to assure such payments;
WHEREAS, the Company had established a revocable trust fund to aid it in meeting its obligations under the SERP, and desires to amend such trust to aid it in meeting its obligations under the Plan;

WHEREAS, the Company is concerned that benefits may not be paid under the Plan in the event of a Change in Control, as defined below, and wishes to assure payment in such event;
WHEREAS, the Company intends to make contributions to said trust fund to aid it in meeting its obligations under the Plan, unless and until said trust fund is revoked by the Company, in which event it shall be returned to the Company, and to provide for the payment of benefits in the event of a Change in Control, in which event said trust fund shall immediately become irrevocable, and such contributions shall be held by the Trustee, and invested, reinvested and distributed, all in accordance with the provisions of this Trust Agreement;
WHEREAS, the Trustee shall be under no duty to determine whether the amount of any contributions is in accordance with the Plan or to collect or enforce payment of any contribution; WHEREAS, the trust established by this Trust Agreement is intended to be a "grantor trust" with the result that the corpus and income of said trust are treated as assets and income of the Company pursuant to Sections 671 through 679 of the Internal Revenue Code of 1986 (the "Code"); and WHEREAS, upon the occurrence of a Change in Control, but not at any time prior thereto, said trust is intended to become a funded "employee benefit plan", as defined in Section 3(3) of ERISA.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and the Trustee declare and agree as follows:

SECTION 1. Establishment and Title of the Trust.
1.1 The Company hereby establishes with the Trustee a Trust to be known as the "National Fuel Gas Company and Participating Subsidiaries 1996 Executive Retirement Plan Trust (II)" (hereinafter referred to as the "Trust"), consisting of such sums of money and other property acceptable to the Trustee as from time to time shall be paid or delivered to the Trustee. All such money and other property, all investments and reinvestments made therewith or proceeds thereof and all earnings and profits thereon, less all payments and charges as authorized herein, are hereinafter referred to as the "Trust Fund". The Trust Fund shall be held by the Trustee IN TRUST and shall be dealt with in accordance with the provisions of this Trust Agreement; provided, however, that the Company shall at all times have the power to reacquire the Trust Fund by substituting readily marketable securities of an equivalent value, net of any costs of disposition, and such other property shall, following such substitution, constitute the Trust Fund. Upon the occurrence of a Change in Control, as defined below, but not at any time prior thereto, the Trust Fund shall, subject to Section 3.2, be held for the exclusive purpose of providing payments to Members and defraying reasonable expenses of administration in accordance with the provisions of this Trust Agreement until all such payments required by this Trust Agreement have been made.
SECTION 2. Acceptance by the Trustee.
2.1 The Trustee accepts the Trust established under this Trust Agreement on the terms and subject to the provisions set forth herein, and it agrees to discharge and perform fully and faithfully all of the duties and obligations imposed upon it under this Trust Agreement.

SECTION 3. Limitation on Use of Funds.
3.1 Prior to the occurrence, if any, of a Change in Control, as defined below, all or any part of the Trust Fund shall be recoverable by the Company and may be used for any lawful purpose of the Company without regard to the interests of the Members of the Plan (as the term Members is therein defined), and the Members shall have no right to any part of the Trust Fund. However, immediately upon the occurrence, if any, of a Change in Control, no part of the corpus or income of the Trust Fund shall be recoverable by the Company, used to provide for borrowing from any lender, or used for any purpose other than for the exclusive purpose of providing payments to Members in accordance with the provisions of this Trust Agreement until all such payments required by this Trust Agreement have been made; provided, however, that (i) nothing in this Section 3.1 shall be deemed to limit or otherwise prevent the payment from the Trust Fund of expenses and other charges to the extent provided for in Sections 8 and 17 of this Trust Agreement and (ii) the Trust Fund shall at all times be subject to the claims of creditors of the Company and its subsidiaries to the extent provided for in Section 3.2 of this Trust Agreement. Notwithstanding any occurrence of a Change in Control, the Company shall at all times have the power to reacquire the Trust Fund by substituting readily marketable securities of an equivalent value, net of any costs of disposition, and such other property shall, following such substitution, constitute the Trust Fund.
3.2(a) In the event that the Company is either Bankrupt or Insolvent on or after the occurrence of a Change in Control, as those terms are defined below, the Trustee shall suspend all payments to Members and apply the Trust Fund for the benefit of the creditors of the Company only as

directed by the United States Bankruptcy Court or other court of competent jurisdiction ("Bankruptcy Court"), and shall, to the maximum extent permitted by applicable law, be fully protected in doing so.
(b) For purposes of this Trust Agreement, the Company shall be deemed to be "Bankrupt" if the Trustee has received a copy of a petition, duly filed by the Company with the Bankruptcy Court, for commencement of a voluntary case pursuant to Section 301 of the Bankruptcy Reform Act of 1978, as amended ("BRA") or a petition, duly filed against the Company with the Bankruptcy Court for commencement of an involuntary case pursuant to Section 303 of the BRA, together with a copy of the Certificate of Filing, acknowledging such filing. Notwithstanding the foregoing provision of this Section 3.2(b), the Company shall be deemed to be no longer Bankrupt if the Trustee has received a copy of an order, duly issued by the Bankruptcy Court and filed with the clerk thereof, dismissing such voluntary or involuntary case. The Company shall deliver to the Trustee a copy of any such bankruptcy petition, Certificate of Filing or order of dismissal within one business day after the date such petition was duly filed with the Bankruptcy Court or clerk thereof.
(c) For purposes of this Trust Agreement, the Company shall be deemed to be "Insolvent" if the Trustee has received a copy of: (i) a written certification, approved by at least two-thirds of the members of the Board of Directors of the Company and agreed and attested to, under penalties of perjury, by the Chief Executive Officer of the Company, to the effect that the Company is not paying its debts (other than debts that are the subject of a bona fide dispute) as they become due or (ii) a written certification by another party, under penalties of perjury, that the Company is not paying its debts (other than such disputed debts) as they become due. Notwithstanding

the foregoing provisions of this Section 3.2(c), the Company shall be deemed to be no longer Insolvent if the Trustee has received a copy of the Company's most recent quarterly (unaudited) condensed consolidated balance sheet ("Interim Report"), or of its most recent annual (audited) consolidated balance sheet ("Annual Report"), reporting that the Company's total assets exceed its total liabilities and its current assets exceed its current liabilities as of a date on or after the date of such written certification. The Company shall deliver to the Trustee a copy of each Quarterly Report and Annual Report and of any certification approved by the Board of Directors under the procedures set forth above in this Section 3.2(c) within one business day after the date such report is released to anyone not employed by, or affiliated with, the Company or the date such certification is approved.
SECTION 4. Duties and Powers of the Trustee with Respect to Investments.
4.1 The Trustee shall invest and reinvest the principal and income of the Trust Fund and keep the Trust Fund invested, without distinction between principal and income, in any property, whether real, personal or mixed, and wherever situate and whether or not productive of income, including, without limitations municipal bonds, capital, common and preferred stocks and personal, corporate and governmental or other obligations, whether secured or unsecured, and including any collective or part interest therein or trust and participating certificates or other evidences of ownership, part ownership, or part interest thereof, all without being limited or restricted to investment of a character authorized for trustees or other fiduciaries

under any present or future laws and without regard to the proportion any such property may bear to the entire amount of the Trust Fund.
4.2 The Trustee, in its discretion, may keep such portion of the Trust Fund in cash equivalents or savings account certificates of deposit and other types of time or demand deposits with any domestic financial institution operated, maintained by, or affiliated with the Trustee which bear a reasonable rate of interest, or in securities of the United States or any agency or instrumentality thereof, or in other short-term fixed income investments, including, without limitation, commercial paper, as the Trustee may from time to time determine to be in the best interests of the Trust Fund; provided, however, that each such investment shall have a stated maturity of twelve (12) months or less from the date of purchase by the Trustee.
4.3 Except as otherwise required by applicable law, all assets of the Plan may be commingled for investment purposes.
4.4(a) The Company may, at any time prior to a Change in Control, direct the Trustee in writing to segregate all or a specified portion of the Trust Fund into a separate fund (the "Directed Fund") and invest it in accordance with the directions of one or more Investment Managers (as defined below) appointed by the Company. Any Investment Manager so appointed shall be
(i) an investment adviser registered as such under the Investment Advisers Act of 1940, (ii) a bank, (iii) an insurance company qualified to perform investment management service, under the laws of more than one state of the United States,
(iv) the Company or (v) any other person acceptable to the Trustee. Unless the Company is the Investment Manager, the Company shall deliver to the Trustee a copy of the instruments appointing the Investment

Manager and evidencing the Investment Manager's acceptance of such appointment. To the maximum extent permitted by applicable law, the Trustee shall be protected in assuming that the appointment of an Investment Manager remains in effect until it is otherwise notified in writing by the Company.
(b) The Trustee shall invest and reinvest the Directed Fund only to the extent and in the manner directed by the Investment Manager in writing, including an investment in any open-end or closed-end investment company or companies, as defined in the Investment Company Act of 1940. In performing its investment duties, the Investment Manager shall have, with respect to the Directed Fund, all of the powers of the Trustee listed in Sections 4 and 5 (other than paragraphs (i) and (1) of Section 5, unless the Company is the Investment Manager). If the Trustee does not receive written instructions from an Investment Manager with respect to the Directed Fund, the Trustee shall, after providing notice to the Investment Manager, invest such amounts in short-term securities of the United States or any agency or instrumentality thereof or in one or more investment companies commonly known as "money market" funds, whether or not managed by Trustee and/or its affiliates, and with the consent of the Company, in a common fund maintained by the Trustee for short-term investments. If the Investment Manager resigns, is removed, is no longer qualified to serve as an Investment Manager under applicable law or upon a Change in Control, the Trustee shall reassume complete investment responsibility for the Directed Fund unless and until prior to a Change in Control, a new qualified Investment Manager is appointed by the Company. Upon a Change in Control, the Trustee shall notify the Investment Manager in writing that it is reassuming complete investment responsibility for the Directed Fund.

(c) Any Investment Manager may, from time to time and at any time prior to a Change in Control, issue orders for the purchase or sale of securities directly to a broker or dealer and the Trustee, upon written request from the Investment Manager, shall execute and deliver appropriate trading authorization. Written notification of the issuance of each such order shall be given promptly to the Trustee by the Investment Manager, and the execution of each such order shall be confirmed by the broker to the Investment Manager and to the Trustee. Such notification shall be authority to the Trustee to receive securities purchased against payment therefor and to deliver securities sold against receipt of the proceeds therefrom as the case may be. Unless the Trustee participates knowingly in, or knowingly undertakes to conceal, an act or omission of the Investment Manager, knowing such act or omission to be a breach of the Investment Manager's responsibilities with respect to the Trust, the Trustee shall not be liable for any act or omission of the Investment Manager and shall not be under any obligation to invest or otherwise manage the assets of the Plan that are subject to the management of the Investment Manager and, to the maximum extent permitted by applicable law, the Trustee shall have no liability or responsibility for acting or not acting in accordance with any written direction of the Investment Manager or, subject to Section 4.4(b), failing to act in the absence of any such direction. The Company agrees, to the extent permitted by applicable law, to indemnify the Trustee and hold it harmless from and against any claim or liability that may be asserted against it, otherwise than on account of the Trustee's own negligence or willful misconduct, by reason of the Trustee's taking or refraining from taking any action in accordance with this Section 4.4, including, without limiting the generality of the foregoing, any claim or

liability that may be asserted against the Trustee on account of failure to receive securities purchased, or failure to deliver securities sold, pursuant to orders issued by the Investment Manager directly to a broker or dealer.
SECTION 5. Additional Powers and Duties of the Trustee.
5.1 The Trustee shall have the following additional powers and authority with respect to all property constituting a part of the Trust Fund:
(a) To sell, exchange or transfer any such property at public or private sale for cash or on credit and grant options for the purchase or exchange thereof.
(b) To participate in any plan or reorganization, consolidation, merger, combination, liquidation or other similar plan relating to any such property, and to consent to or oppose any such plan or any action thereunder or any contract, lease, mortgage, purchase, sale or other action by any corporation or other entity.
(c) To deposit any such property with any protective, reorganization or similar committee; to delegate discretionary power to any such committee; and to pay part of the expenses and compensation of any such committee and any assessments levied with respect to any property so deposited.
(d) To exercise any conversion privilege or subscription right available in connection with any such property; to oppose or to consent to the reorganization, consolidation, merger or

readjustment of the finances of any corporation company or association, or to the sale, mortgage, pledge or lease of the property or any of the securities which may at any time be held in the Trust Fund and to do any act with reference thereto, including the exercise of options, the making of agreements or subscriptions and the payment of expenses, assessments or subscriptions, which may be deemed necessary or advisable in connection therewith, and to hold and retain any securities or other property which it may so acquire.
(e) To commence or defend suits or legal proceedings and to represent the Trust in all suits or legal proceedings; to settle, compromise or submit to arbitration, any claims, debts or damages, due or owing to from the Trust.
(f) To exercise, personally or by general or limited power of attorney, any right, including the right to vote, appurtenant to any securities or other such property.
(g) Subject to Section 5.1(k), to borrow money from any lender in such amounts and upon such terms and conditions as shall be deemed advisable or proper to carry out the purposes of the Trust and to pledge any securities or other property for the repayment of any such loan.
(h) To hold any mortgage in its own name or in the name of a nominee, with or without the addition of words indicating that such mortgage is held in a fiduciary capacity, and to

cause to be formed a corporation, partnership, trust or other entity to hold title to any mortgage with the aforesaid powers, all upon such terms and conditions as may be deemed advisable; to renew or extend or participate in the renewal or extension of any mortgage, and to agree to a reduction in the rate of interest on any mortgage or to any other modification or change in the terms of any mortgage or of any guarantee pertaining thereto, in any manner and of any guarantee pertaining thereto, in any manner and to any extent that may be deemed advisable for the protection of the Trust or the preservation of any covenant or condition of any mortgage or in the performance of any guarantee, or to enforce any default in such manner and to such extent as may be deemed advisable; and to exercise and enforce any and all rights of foreclosure, to bid on any property on foreclosure, to take a deed in lieu of foreclosure with or without paying a consideration therefor and in connection therewith to release the obligation on the bond secured by such mortgage, and to exercise and enforce in any action, suit or proceeding at law or in equity any rights or remedies in respect of any such mortgage or guarantee.
(i) To engage any legal counsel, including counsel to the Company, or any other suitable agents, to consult with such counsel or agents with respect to the construction of this Trust Agreement, the duties of the Trustee hereunder, the

transactions contemplated by this Trust Agreement or any act which the Trustee proposes to take or omit, to rely upon the advice of such counsel or agents, and to pay its reasonable fees, expenses and compensation from the Trust unless paid by the Company.
(j) To register any securities held by it in its own name or in the name of any custodian of such property or of its nominee, including the nominee of any system for the central handling of securities, with or without the addition of words indicating that such securities are held in a fiduciary capacity, to deposit or arrange for the deposit of any such securities with such a system and to hold any securities in bearer form.
(k) Upon the written direction of the Company, to enter into or assume any contract or policy with an insurance company or companies for the purpose of investment, insurance coverage or otherwise, to pay from the Trust Fund premiums, assessments, dues, charges and interest, if any, with respect to such contracts or policies, to exercise any and all of the rights, options or privileges (including, but not limited to, the right to borrow) under such contracts or policies, to otherwise take such actions that may be available under such contracts or policies; provided, however, that the Trustee shall be the sole owner of all such contracts held as assets of the Trust Fund and provided, further, that upon the occurrence of a Change in

Control, the Trustee shall, regardless of whether it has received the written direction of the Company,
(i) cease borrowing additional amounts on all such contracts or policies and (ii) take all necessary or appropriate action with respect to such contracts or policies to liquidate the Trust Fund in accordance with Section 6.4.
(l) To make, execute and deliver, as Trustee, any and all deeds, leases, notes, bonds, guarantees, mortgages, conveyances, contracts, waivers, releases or other instruments in writing necessary or proper for the accomplishment of any of the foregoing powers.
SECTION 6. Payments by the Trustee.
6.1 The establishment of the Trust and the payment or delivery to the Trustee of money or other property acceptable to the Trustee shall not vest in any Member any right, title or interest in and to any assets of the Trust Fund or any payments except upon the occurrence, if any, of a Change in Control, as defined in Section 12.1 below, in which event the right, title and interest of a Member in any assets of the Trust Fund shall be determined solely pursuant to Section 6.4 of this Trust Agreement.
6.2 The Company shall from time to time provide the Trustee with a list of Members, indicating an amount payable to each Member upon such Member's termination of employment for any reason following the occurrence, if any, of a Change in Control, as of the dates therein indicated and subject to adjustments as therein indicated. This document shall be called the "Payment

Schedule". Prior to the occurrence, if any, of a Change in Control, the Company may from time to time add or delete Members or change the amounts payable to Members by substituting a new Payment Schedule. In the event of the occurrence of a Change in Control, the Company may not modify, revoke or alter the Payment Schedule, or substitute a new Payment Schedule, if the effect of such modification, revocation, alteration or substitution would be to delete, or reduce the amount payable to, any Member, or by adding, or increasing the amount payable to, any Member, reduce the ratio which the aggregate fair market value of the Trust Fund bears to the aggregate amount payable to Members below one.
6.3 Prior to the occurrence, if any, of a Change in Control, and with respect to any amounts remaining in the Trust Fund after the payments required by Section 6.4 of this Trust Agreement following the occurrence of a Change in Control have been made, the Trustee shall make such payments from the Trust Fund at such time or times to such person or persons, including the Company, at such addresses and in such amounts-and for such purposes as the Company shall specify; the Trustee shall not make any such payments from the Trust Fund without the written direction of the Company (except as may otherwise be required by a court having competent jurisdiction) even though it may be informed from another source (including a Member) that payments are due under the Plan. The Trustee shall, to the maximum extent permitted by applicable law, be fully protected in acting upon any such written direction of the Company (or the failure to give such written direction) pursuant to this Section 6.3, and shall have no duty to determine the rights of any person in the Trust Fund or under the Plan or to inquire into the right or power of the Company to grant any payment to a Member or to direct any such payment.

6.4(a) In the event of the occurrence of a Change in Control, the amount specified, and/or determined from the formulae and adjustments contained, in the Payment Schedule then in effect, shall, subject to Section 6.4(d), be paid by the Trustee to each Member listed thereon as a former employee of the Company (or to the Beneficiary designated on the Payment Schedule or, absent such a designation, to the legal representative of his or her estate if the Member shall not then be living) in a cash lump sum, all as further indicated in the Plan. The Trustee shall file with the Company a written report of such payment within 15 days after making the payment.
(b) In the event of the termination, for any reason and at any time following the occurrence of a Change in Control, of the Company's employment of any Member listed on the Payment Schedule as an employee of the Company, the amount specified, and/or determined from the formulae and adjustments contained, in the Payment Schedule then in effect, shall, subject to
Section 6.4(d), be paid by the Trustee to the Member (or to the Beneficiary designated on the Payment Schedule or, absent such a designation, to the legal representative of his or her estate, if the Member shall not then be living) in a cash lump sum, all as further indicated in the Plan, against delivery by the Member to the Trustee of two duly executed and notarized Affidavits and Receipts in substantially the form attached hereto as Exhibit A (or delivery by the Beneficiary designated on the Payment Schedule or, absent such a designation, to the legal representative of the Member's estate, if the Member shall not then be living, of two copies of the Member's death certificate). The Trustee shall send one Affidavit and Receipt (or one copy of the death certificate) to the Company within 15 days after payment is made to each such Member.

(c) Notwithstanding anything contained in Section 6.4(a) or 6.4(b) to the contrary, if, at any time after the occurrence, if any, of a Change in Control, the Trust finally is determined by the Internal Revenue Service (the "IRS") not to be a "grantor trust" with the result that the income of the Trust Fund is not treated as income of the Company pursuant to Sections 671 through 679 of the Code, or if a tax is finally determined by the IRS or by counsel to the Trustee, to be payable by one or more Members in respect of any right, title or interest in any assets of the Trust Fund prior to termination of employment with the Company, then the amount specified, and/or determined from the formulae and adjustment contained, in the Payment Schedule then in effect, shall, subject to Section 6.4(d), be paid by the Trustee in a cash lump sum as soon as practicable to each Member thereon, regardless of whether such Member's employment with the Company has terminated and without the necessity of presentation of an Affidavit and Receipt (or death certificate).
(d) If the Trustee holds life insurance contracts or policies on the life of any Member, the Member may elect (with the consent of the Company)- in writing under procedures adopted by the Trustee to have such contracts or policies assigned to him or her and distributed to such Member in satisfaction of that portion of the cash lump sum payment the Member would otherwise be entitled under Section 6.4(a), 6.4(b) or 6.4(c) that such contracts or policies represent. Subject to and to the extent consistent with the foregoing sentence of this Section 6.4(d), if the Trustee determines that the Trust Fund is insufficient to provide for payment to one or more Members of the full amount in accordance with the foregoing provisions of this Section 6.4, the amount to be paid to each such Member at that time shall be reduced in proportion to the ratio which the aggregate fair market value of the Trust

Fund bears to the aggregate amount otherwise payable at that time to such Members, and any Member who thereafter presents an Affidavit and Receipt (or on behalf of whom a death certificate is thereafter presented) to the Trustee shall not be entitled to any payment from the Trust Fund.
(e) The Trustee shall, to the maximum extent permitted by applicable law, be fully protected in making payments pursuant to this Section 6.4.
6.5 The Trustee shall deduct from each payment under Section 6.3 or 6.4 any federal, state or local withholding or other taxes or charges which the Trustee is from time to time required to deduct under applicable laws with respect to payments to a Member or Beneficiary.
SECTION 7. Third Parties.
7.1 A third party dealing with the Trustee shall not be required to make inquiry as to the authority of the Trustee to take any action nor be under any obligation to follow the proper application by the Trustee of the proceeds of sale of any property sold by the Trustee or to inquire into the validity or propriety of any act of the Trustee.
SECTION 8. Taxes, Expenses and Compensation.
8.1 The Company shall from time to time pay taxes of any and all kinds whatsoever which at any time are lawfully levied or assessed upon or become payable in respect of the Trust Fund, the income or any property forming a part thereof, or any security transaction pertaining thereto. To the extent that any taxes lawfully levied or assessed upon the Trust Fund are not paid by the Company, the Trustee shall pay such taxes out of the Trust Fund, provided, however, that in the event of the occurrence of a Change in

Control, no taxes (other than applicable withholding taxes and charges pursuant to Section 6.5 and such other taxes relating to the Trust Fund for which the Trustee has been assessed by the appropriate federal, state or local taxing authority) shall be paid from the Trust Fund. The Trustee shall contest the validity of such taxes in any manner deemed appropriate by the Company or its counsel, but at Company expense, or the Company may itself contest the validity of any such taxes.
8.2 Any other reasonable expenses incurred by the Trustee in the performance of its duties under this Trust Agreement, including brokerage commissions, shall be charged against and paid from the Trust Fund to the extent that the Company does not elect to pay such expenses.
8.3 The Company will pay the Trustee such reasonable compensation for its services-as may be agreed upon in writing from time to time by the Company and the Trustee. Such compensation shall be charged against and paid from the Trust Fund to the extent the Company does not pay such compensation.
SECTION 9. Administration and Records.
9.1 The Trustee shall keep or cause to be kept accurate and detailed accounts of any investments, receipts, disbursements and other transactions hereunder, and all accounts, books and records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Company. All such accounts, books and records shall be preserved (in original form, or on microfilm, magnetic tape or any other similar process) for such period as the Trustee may determine, but the Trustee may only destroy such accounts, books and records after first notifying the

Company in writing of its intention to do so and transferring to the Company any of such accounts, books and records requested.
9.2 Within 60 days after the close of each calendar year, and within 60 days after the removal or resignation of the Trustee or the termination of the Trust, the Trustee shall file with the Company a written account setting forth all investments, receipts, disbursements and other transactions effected by it during the preceding calendar year or during the period from the close of the preceding calendar year to the date of such removal, resignation or termination, including a description of all investments and securities purchased and sold with the cost or net proceeds of such purchases or sales and showing all cash, securities and other property held at the end of such calendar year or other period. Upon the expiration of 90 days from the date of filing such annual or other account, the Trustee shall, to the maximum extent permitted by applicable law, be forever released and discharged from all liability and accountability with respect to the propriety of its acts and transactions shown in such account except with respect to any such acts or transactions as to which the Company shall within such 90-day period file with the Trustee written objections.
9.3 The Trustee shall from time to time permit an independent public accountant selected by the Company (except one to whom the Trustee has reasonable objection) to have access during ordinary business hours to such records as may be necessary to audit the Trustee's accounts.
9.4 As of the last day of each calendar year, the fair market value of the assets held in the Trust Fund shall be determined. The Trustee shall file with the Company the written report of the determination of such fair market value of the assets held in the Trust Fund.

9.5 Nothing contained in this Trust Agreement shall be construed as depriving the Trustee or the Company of the right to have a judicial settlement of the Trustee's accounts, and upon any proceeding for a judicial settlement of the Trustee's accounts or for instructions the only necessary party thereto in addition to the Trustee shall be the Company.
9.6 In the event of the removal or resignation of the Trustee, the Trustee shall deliver to the successor trustee all records which shall be required by the successor trustee to enable it to carry out the provisions of this Trust Agreement.
9.7 In addition to any returns required of the Trustee by law, the Trustee shall prepare and file such tax reports and other returns as the Company and the Trustee may from time to time agree.
SECTION 10. Removal or Resignation of the Trustee and Designation of Successor Trustee.
10.1 At any time prior to the occurrence, if any, of a Change in Control, as defined below, the Company may remove the Trustee with or without cause, upon at least 60 days' notice in writing to the Trustee. At any time after the occurrence of a Change in Control, the Trustee may not be removed except by order of a court having competent jurisdiction.
10.2 The Trustee may resign at any time upon at least 60 days' notice in writing to the Company.
10.3 In the event of such removal or resignation, the Trustee shall duly file with the Company a written account as provided in Section 9.2 above for the period since the last previous annual accounting, listing the investments of the Trust and any uninvested cash balance thereof, and setting forth all receipts, disbursements, distributions and other transactions

respecting the Trust not included in any previous account, and if written objections to such account are not filed as provided in Section 9.2, the Trustee shall, to the maximum extent permitted by applicable law, be forever released and discharged from all liability and accountability with respect to the propriety of its acts and transactions shown in such account.
10.4 Within 60 days after any such notice of removal or resignation of the Trustee, the Company shall designate a successor Trustee qualified to act hereunder; provided, however, if the Trustee resigns at any time on or after the occurrence of a Change in Control, then the successor Trustee qualified to act hereunder shall be any bank, trust company or other financial institution that may serve as Trustee under applicable law that is acceptable to at least fifty percent (50%) of the members of the Company's board of directors immediately before the Change in Control then living and readily available and willing to make such decision. Each such successor Trustee, during such period as it shall act as such, shall have the powers and duties herein conferred upon an individual Trustee, and the word "Trustee" wherever used herein, except where the context otherwise requires, shall be deemed to include any successor Trustee. Upon designation of a successor Trustee and delivery to the resigned or removed Trustee of written acceptance by the successor Trustee of such designation, such resigned or removed Trustee shall promptly assign, transfer, delivery and pay over to such Trustee, in conformity with the requirements of applicable law, the funds and properties in its control or possession then constituting the Trust Fund.

SECTION 11. Enforcement of Trust Agreement and Legal Proceedings.
11.1 The Company shall have the right to enforce any provision of this Trust Agreement, and, on or after the occurrence, if any, of a Change in Control, as defined below, any Member shall have the right as a beneficiary of the Trust to enforce any provision of this Trust Agreement that affects the right, title and interest of such Member in the Trust. Except to the extent provided in Section 3.2 or as otherwise required by applicable law, in any actions or proceedings affecting the Trust, the only necessary parties shall be the Company, the Trustee and, on or after the occurrence of a Change in Control, the Members and, except as otherwise required by applicable law, no other person shall be entitled to any notice or service of process. Any judgment entered in such an action or proceeding shall, to the maximum extent permitted by applicable law, be binding and conclusive on all persons having or claiming to have any interest in the Trust.
11.2 In the event the Trustee receives notification pursuant to Section 3.2 that the Company is Bankrupt or Insolvent, the Trustee shall promptly give notice thereof in writing to all Members listed on the Payment Schedule then in effect as soon as it is reasonably practicable.
SECTION 12. Change in Control Defined.
12.1 The term, "Change in Control", shall mean the happening of any of the following:
(a) The acquisition by any party or parties of the beneficial ownership of 30% or more of the voting shares of the Company; or

(b) The occurrence of a transaction requiring shareholders' approval for the acquisition of the Company through purchase of stock or assets, or by merger, or otherwise; or
(c) The election during any period of 24 months, or less, of 40% or more, of the members of the Board of Directors of the Company (the "Board"), without the approval of three-fourths of the Board members as constituted at the beginning of the period. Notwithstanding the foregoing definition, no Change in Control shall be deemed to have occurred for purposes of this Trust Agreement unless and until the Trustee has actual knowledge from a reliable source, not including a Member acting in his or her individual capacity, of such Change in Control. For this purpose, a written notarized statement that a Change in Control has occurred that is delivered to the Trustee and is signed by at least fifty percent (50%) of the individuals then living who were members of the Company's board of directors as of any date during the one-year period ending on the date such notice is received by the Trustee shall be deemed to be actual knowledge from a reliable source, and a report filed with the Securities and Exchange Commission, a public statement issued by the Company, or a periodical of general circulation, including but not limited to The New York Times or The Wall Street Journal, shall be deemed to be a

reliable source, regardless of the manner in which such report of a Change in Control is made known to the Trustee.
SECTION 13. Termination.
13.1 Prior to the occurrence, if any, of a Change in Control, and with respect to any amounts remaining in the Trust Fund after the payments required by Section 6.4 of this Trust Agreement following the occurrence of a Change in Control have been made, the Company may terminate this Trust without the approval of any Member at any time upon 30 days' notice in writing to the Trustee. Upon receipt by the Trustee of such notice of termination of the Trust, the Trustee shall, with reasonable promptness after receipt of any such notice, arrange for the orderly distribution of the Trust property, or such remaining amounts thereof, in accordance with the written instructions of the Company which shall be given in conformity with the provisions of applicable law.
SECTION 14. Amendments.
14.1 At any time prior to the occurrence of a Change in Control, the Company may from time to time amend or modify, in whole or in part, any or all of the provisions of this Trust Agreement with the written consent of the Trustee but without the consent of any Member.
14.2 At any time on or after the occurrence of a Change in Control, the Trust may not be amended by the Company or its successor except as may be required by applicable law.
14.3 The Company and the Trustee shall execute such supplements to, or amendments of, this Trust Agreement as shall

be necessary to give effect to any such amendment or modification.
SECTION 15. Non-alienation.
15.1 Except as provided in Section 3.2 or insofar as applicable law may otherwise require, (i) no amount payable to or in respect of any Member at any time under the Trust shall be subject in any manner to alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind, and any attempt to so alienate, sell, transfer, assign, pledge, attach, charge or otherwise encumber any such amount, whether presently or thereafter payable, shall be void; and (ii) the Trust Fund shall in no manner be liable for or subject to the debts or liabilities of any Member.
SECTION 16. Communications.
16.1 Communications to the Company shall be addressed to the Company at 10 Lafayette Square, Buffalo, New York, 14203, Attention: General Counsel; provided, however, that upon the Company's written request, such communications shall be sent to such other address as the Company may specify.
16.2 Communications to the Trustee shall be addressed to it at One Marine Midland Center, Buffalo, New York, 14203, provided, however, that upon the Trustee's written request, such communications shall be sent to such other address as the Trustee may specify.
16.3 No communication shall be binding on the Trustee until it is received by the Trustee, and no communication shall be binding on the Company until it is received by the Company.
16.4 Any action of the Company pursuant to this Trust Agreement, including all orders, requests, directions, instructions, approvals and

objections of the Company to the Trustee, shall be in writing signed on behalf of the Company by any duly authorized officer of the Company. The Trustee may rely on, and will be fully protected with respect to any such action taken or omitted in reliance on, any information, order, request, direction, instruction, approval, objection list and Payment Schedule delivered to the Trustee by the Company or, to the extent applicable under this Trust Agreement, by a Member or the legal representatives of his or her estate.
SECTION 17. Miscellaneous Provisions.
17.1 This Trust Agreement shall be binding upon and inure to the benefit of the Company and the Trustee and their respective successors and assigns.
17.2 The Company shall pay and shall protect, indemnify and save harmless the Trustee and its officers, employees and agents from and against any and all losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, damages, costs and expenses (including, without limitation, attorneys' fees and expenses) of any nature arising from or relating to any action by or any failure to act by the Trustee, its officers, employees and agents or the transactions contemplated by this Agreement, including, but not limited to, any claim made by a Member or his or her Beneficiary with respect to payments made or to be made by the Trustee, any claim made, whether before or after a Change in Control, by the Company or its successor, whether pursuant to a sale of assets, merger, consolidation, liquidation or otherwise, that this Trust Agreement is invalid or ultra vires, except to the extent that any such loss, liability, action, suit, judgment, demand, damage, cost or expense has been determined by final judgment of a

court of competent jurisdiction to be the result of the gross negligence or willful misconduct of the Trustee, its officers, employees or agents. To the extent that the Company has not fulfilled its obligations under the foregoing provisions of this Section, the Trustee shall be reimbursed out of the assets of the Trust Fund or may set up reasonable reserves for the payment of such obligations. To the maximum extent permitted by applicable law, no personal liability whatsoever shall attach to or be incurred by any employee, officer or director of the Company, as such, under or by reason of the terms or conditions contained in or implied from this Trust Agreement.
17.3 The Trustee assumes no obligation or responsibility with respect to any action required by this Trust Agreement on the part of the Company.
17.4 Any corporation into which the Trustee may be merged or with which it may be consolidated, or any corporation resulting from any merger, reorganization or consolidation to which the Trustee may be a party, or any corporation to which all or substantially all the trust business of the Trustee may be transferred shall be the successor of the Trustee hereunder without the execution or filing of any instrument or the performance of any act.
17.5 Titles to the Sections of this Trust Agreement are included for convenience only and shall not control the meaning or interpretation of any provision of this Trust Agreement.
17.6 To the maximum extent consistent with ERISA, this Trust Agreement and the Trust established hereunder shall be governed by and construed, enforced and administered in accordance with the laws of the State of New York and the Trustee shall be liable to account only in the courts of that state.

17.7 This Trust Agreement may be executed in any number of counterparts, each of which shall be deemed to be the original although the others shall not be produced.
IN WITNESS WHEREOF, this Trust Agreement has been duly executed by the parties hereto as of the day and year first above written.
NATIONAL FUEL GAS COMPANY

                                   By: /s/ Philip C. Ackerman
                                      -----------------------------------------
                                   Name: Philip C. Ackerman
                                        ---------------------------------------
                                   Title: Vice President
                                         --------------------------------------
Attest:
/s/ A. M. Cellino
- -------------------------
Secretary	

MARINE MIDLAND BANK, N. A.
as TRUSTEE

                                   By: /s/ Susan Wesolowski
                                      -----------------------------------------
                                   Name: Susan Wesolowski
                                        ---------------------------------------
                                   Title: Vice President - Trust Administration
                                         --------------------------------------
Attest:
/s/ Joseph M. Rizzuto
- -------------------------
Trust Officer	

EXHIBIT A
AFFIDAVIT AND RECEIPT
I, __________________________, under penalties of perjury, do hereby solemnly state:
That I make this Affidavit in order to induce the Trustee of the National Fuel Gas Company and Participating Subsidiaries Executive Retirement Plan Trust to pay me $______________ pursuant to its terms: and That my employment with the National Fuel Gas Company or any of its subsidiaries was terminated on ___________________.

Participant

STATE OF                            )
                                    )  SS:
COUNTY OF                           )

                  On the _______ day of  ___________________,  19____  before me	

personally came _________________________ to me known, who, being by me duly sworn, did depose and say that __he resides at
- ----------------------------------------------------, and that the statements herein are all materially correct.

Notary Public

STATE OF NEW YORK          )
                           )  SS:
COUNTY OF ERIE             )

                  On the 3rd day of May,  1996, before me personally came	

P. C. Ackerman, to me known, who, being by me duly sworn, did depose and say that he resides in the town of Orchard Park, New York; that he is the Senior Vice President of NATIONAL FUEL GAS COMPANY, one of the corporations described in and which executed the foregoing instrument; and that he signed his name thereto by order of the Board of Directors of said corporation.

/s/ Sarah J. Mugel
------------------------------------------
Notary Public	

STATE OF NEW YORK                   )
                                    )  SS:
COUNTY OF ERIE                      )

                  On the 13th day of May,  1996, before me personally came	

me personally came Susan Wesolowski to me known, who, being by me duly sworn, did depose and say that she resides in Getzville, NY; that she is a Vice President of MARINE MIDLAND BANK, one of the corporations described in and which executed the foregoing instrument; and that she signed his/her name thereto by order of the Board of Directors of said corporation.

/s/ Barbara J. Caldwell
-------------------------------------------
Notary Public	

ADMINISTRATIVE RULES WITH RESPECT TO
AT RISK AWARDS UNDER THE 1993 AWARD AND OPTION PLAN
1. DEFINITIONS
As used with respect to At Risk Awards, the following terms shall have the following meanings:
(a) "At Risk Award" means an award granted by the Committee to a Participant under the 1993 Plan, and entitling the Participant to a cash payment based upon the extent to which specified Performance Goals are attained for a specified Performance Period, pursuant to such terms and conditions as the Committee may establish in an Award Notice. No Eligible Employee may receive more than one At Risk Award under the 1993 Plan in any fiscal year. In no event will the maximum value of any At Risk Award to any Eligible Employee in any fiscal year exceed 50% of that employee's base salary for that fiscal year. An At Risk Award may be granted singly, in combination or in the alternative with other Awards granted under the 1993 Plan or other Company benefit plans.
(b) "Committee" means the Compensation Committee of the Board, or such other committee designated by the Board as authorized to administer the 1993 Plan with respect to At Risk Awards. The Committee shall consist of not less than two members, each of whom shall be "outside directors" as defined by
Section 162(m) of the Code and the rules, regulations and interpretations promulgated thereunder, as amended from time to time.
(c) "Eligible Employee" means those employees of the Company or its Subsidiaries who are expected to constitute "covered employees" within the meaning of Section 162(m) of the Code for the applicable fiscal year(s), and any other Key Employee to whom an At Risk Award has been granted by the Committee.
(d) "Performance Period" means the period established by the Committee in the Award Notice, for measurement of the extent to which a Performance Goal has been satisfied.
(e) "Performance Goal" means the performance objectives of earnings per share, Subsidiary net income and customer service/other goals, established by the Committee for each Eligible Employee who receives an At Risk Award.
(f) "1993 Plan" means the National Fuel Gas Company 1993 Award and Option Plan as approved by the stockholders at the 1993 Annual Meeting of Stockholders, as amended from time to time.
2. ADMINISTRATION
Within the limits of the 1993 Plan, with respect to At Risk Awards the Committee is given full authority to (a) make reasonable, good faith interpretations of the Plan and of Section 162(m) of the Code, to the extent not addressed by regulation, proposed regulation or publicly available interpretation of the Internal Revenue Service; (b) determine who shall be Eligible Employees and select Eligible Employees to receive At Risk Awards; (c) determine all the other terms and conditions of an At Risk Award, including the time or times of making At Risk Awards to Eligible Employees, the Performance Period, Performance Goals, and levels of At Risk Awards to be earned in relation to levels of achievement of the Performance Goals, and such other measures as may be necessary or desirable to achieve the purposes of the 1993 Plan; (d) determine whether At Risk Awards are to be granted singly, in combination or in the alternative with other Awards under the 1993 Plan or awards under other Company benefit plans; (e) grant waivers of 1993 Plan terms and conditions, provided that any such waiver shall not be inconsistent with Section 162(m) of the Code and the rules, regulations and interpretations promulgated thereunder, as amended from time to time; and (f) accelerate the vesting, exercise or payment of any At Risk Award or the Performance Period of an At Risk Award when any such action would not cause compensation paid or payable under such At Risk Award to cease to be deductible by the Company for federal income tax purposes. The Committee shall also have the authority to grant At Risk Awards in replacement of Awards previously granted under the 1993 Plan or awards under any other executive compensation or stock option plan of the Company or a Subsidiary.
All determinations of the Committee shall be made by a majority of its members, and its determinations shall be final, binding and conclusive. The Committee, in its discretion, may delegate its authority and duties under the 1993 Plan with respect to At Risk Awards to the Company's Chief Executive Officer or to other senior officers of the Company, but only to the extent, if any, permitted by Section 162(m) of the Code and notwithstanding any other provision of the 1993 Plan or an Award Notice, under such conditions as the Committee may establish.
3. GRANT OF AT RISK AWARDS
At Risk Awards may be made for each of the fiscal years of the Company commencing with the 1995 fiscal year; provided, however, that At Risk Awards for a fiscal year may only be made within the time allowed under Section 162(m) of the Code and the rules, regulations and interpretations promulgated thereunder, as amended from time to time, applicable to such fiscal year.
4. PAYMENT OF AT RISK AWARDS
Each At Risk Award granted to an Eligible Employee shall entitle such Eligible Employee to receive a cash payment based upon the extent to which such Eligible Employee's Performance Goals for a particular Performance Period are attained, as specified by the Committee in the Award Notice and certified in writing by the Committee that such Eligible Employee's Performance Goals have been attained. Payment of earned At Risk Awards shall be made in cash promptly after such certification.
5. TERMINATION OF EMPLOYMENT, RETIREMENT, OR DEATH OF PARTICIPANT
(a) General Rule. Subject to Section 16 of the 1993 Plan, if an Eligible Employee's employment with the Company or a Subsidiary terminates for a reason other than death, disability, retirement, or any approved reason, all unearned or unpaid At Risk Awards shall be canceled or forfeited as the case may be, unless otherwise provided in this Section or in the Eligible Employee's Award Notice.
(b) In the event of the disability, retirement or termination for an approved reason of an Eligible Employee during a Performance Period, his participation shall be deemed to continue to the end of the Performance Period, and he shall be paid a percentage of the amount earned, if any, according to the terms of the At Risk Award, proportionate to his period of active service during that Performance Period.
(c) In the event of the death of an Eligible Employee during a Performance Period, the Eligible Employee's designated beneficiary (or if none, then the Eligible Employee's estate) shall be paid an amount proportionate to the period of active service during the Performance Period, based upon the maximum amount which could have been earned under the At Risk Award.
6. AMENDMENTS TO AT RISK AWARDS
The Committee may, at any time, unilaterally amend any unearned or unpaid At Risk Award, including At Risk Awards earned but not yet paid, to the extent it deems appropriate; provided, however, that any such amendment which is adverse to the Eligible Employee shall require the Eligible Employee's consent; and provided further, however, that the Committee shall have no authority to make any amendment which would cause compensation paid or payable under the At Risk Award to cease to be deductible by the Company for federal income tax purposes.
7. AMENDMENT TO RULES
Subject to the stockholder approval requirements of Section 162(m) of the Code, the Committee may, from time to time, amend these Administrative Rules with respect to At Risk Awards in any manner.
8. CHANGE IN CONTROL AND CHANGE IN OWNERSHIP
If an Eligible Employee holding an At Risk Award is eligible for treatment under Section 25 of the 1993 Plan, the provisions of this paragraph shall determine the manner in which such At Risk Award shall be paid to him. For purposes of making such payment, each "current performance period" (defined to mean a Performance Period which period has commenced but not yet ended), shall be treated as terminating upon the Acceleration Date, and for each such "current performance period" and each "completed performance period" (defined to mean a Performance Period which has ended but for which the Committee has not, on the Acceleration Date, made a determination as to whether and to what degree the Performance Goals for such period have been attained), it shall be assumed that the Performance Goals have been attained at a level of 100% or the equivalent thereof. If the Eligible Employee is participating in one or more "current performance periods," he shall be considered to have earned and, therefore, to be entitled to receive, a prorated portion of the At Risk Awards previously granted to him for each such Performance Period. Such prorated portion shall be determined by multiplying 100% of the At Risk Award granted to the Eligible Employee by a fraction, the numerator of which is the total number of whole and partial years (with each partial year being treated as a whole year) that have elapsed since the beginning of the Performance Period, and the denominator of which is the total number of years in such Performance Period. An Eligible Employee in one or more "completed performance periods" shall be considered to have earned and, therefore, be entitled to receive 100% of the At Risk Awards previously granted to him during each Performance Period.
9. SAVINGS PROVISION
These Administrative Rules with respect to At Risk Awards are intended to comply with all the applicable conditions of Section 162(m) of the Code, so that compensation paid or payable hereunder shall constitute qualified "performance-based compensation" thereunder. To the extent any provision of these Administrative Rules with respect to At Risk Awards or any action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law.
10. EFFECTIVE DATE
Upon approval by the stockholders of the Company as required by Section 162(m) of the Code, these Administrative Rules with respect to At Risk Awards shall become effective as of December 7, 1994.

ADMINISTRATIVE
RULES OF THE
COMPENSATION COMMITTEE
OF THE
BOARD OF DIRECTORS
OF
NATIONAL FUEL GAS COMPANY
Adopted 12/4/93 1993,
Retroactively to February 18, 1993
As Amended through December 11, 1996
I. MEETINGS
Each meeting ("Meeting") of the Compensation Committee
("Committee") of the Board of Directors of National Fuel Gas Company ("Company")
shall be held as indicated in notice made in accordance with these rules. Notice of each Meeting, stating the place, date and hour thereof, shall be given to each member of the Committee ("Member") by mailing written notice not less than five days before the Meeting to each Member, or by telegraphing, telephoning or delivering oral or written notice to each Member personally not less than one day before the Meeting.
Any one or more Members of the Committee may participate in a Meeting by means of a conference telephone or similar equipment. Participation by such means shall constitute presence in person at a Meeting.
The Committee may also take action by unanimous written consent.
II. QUORUM AND VOTING; DELEGATION At all Meetings a quorum shall be required for the transaction of business and shall consist of a majority of the entire Committee. The majority vote of the Members at a Meeting at which a quorum is present shall decide any question that may come before the meeting.
Consistently with limitations imposed by the Plans, the Committee may delegate in these rules or by resolution any or all of its authority to the Chief Executive Officer, to the Secretary and to any other officer of the Company (individually, "Delegate"), so long as the Delegate has no potential conflict of interest which would cause him not to exercise his good faith independent business judgment in respect of a delegated matter, and so long as such delegation would not result in the requirement under applicable law that the Delegate's name appear beneath the Committee's report required to be included in Company filings with the Securities and Exchange Commission. Subject to such limitations, the Committee hereby delegates the power to implement its decisions to appropriate officers of the Company.
III. GRANTS AND AWARDS UNDER THE PLANS The following rules and regulations shall apply with respect to grants and awards of stock options, stock appreciation rights ("SARs") and shares of restricted stock ("Restricted Stock") under the Company's 1993 Award and Option Plan ("1993 Plan"), 1984 Stock Plan ("1984 Plan") and 1983 Incentive Stock Option Plan ("1983 Plan") (collectively, the "Plans") These rules also address other Awards under the 1993 Plan.
Any capitalized term not defined in these rules shall have the same meaning as in the applicable Plan. The following rules are intended to supplement the Plans and, to the extent that any rule is determined to be inconsistent with any Plan, the Plan shall control.
These rules may be amended by the Committee at any time and from time to time. Except to the extent otherwise specified in the particular Award Notice or at the time these rules are amended, any grant or award under the Plans shall be subject to these rules as in effect on the date of the grant or award.
A. GENERAL RULES REGARDING AWARDS UNDER THE 1993, 1984 and 1983 PLANS
 1. Making of An Award
An Award within the meaning of these rules occurs upon the grant by the Committee of any stock option, SAR, Restricted Stock, performance unit, performance share or other incentive award. An Award Notice within the meaning of these rules means a written notice from the Company to a Participant that sets forth the terms and conditions of an Award in addition to those established in the applicable Plan and by the Committee's exercise of its administrative powers.
2. Contemporaneous Awards
An Award of one type granted contemporaneously with an Award of any other type shall be treated as having been granted in combination, and not in the alternative, with the Award of the other type.
3. Stock-based Awards
a. Source. Stock-based Awards, to the extent actually paid in Common Stock, shall reduce treasury shares first and thereafter authorized but unissued shares.
b. Cash Dividends and Cash Dividend Equivalents.
(i) Stock-Based Awards Other Than Restricted Stock. Each stock-based Award does not carry with it the entitlement to receive cash dividends or cash dividend equivalents until a stock option is exercised or other stockbased Award is earned, prior to or on the record date for determination of stockholders entitled to receive such cash dividend.
(ii) Restricted Stock Awards. Notwithstanding clause (i) of this paragraph (b) or Section 26 of the 1993 Plan, dividends shall be payable with respect to each outstanding Award of Restricted Stock whether or not the restrictions in such Award have been satisfied.
c. Payment. Payment of stock-based Awards (other than SARs and performance shares, which shall be paid in cash) shall be made with Common Stock.
4. Withholding Taxes
At the time a Key Employee is taxable with respect to Options, SARs or Restricted Stock granted under the Plans, or the exercise or surrender of the same, the Company shall have the right to withhold from amounts payable to the Key Employee under the Plan or from other compensation payable to the Key Employee in its sole discretion, or require the Key Employee to pay to it, an amount sufficient to satisfy all federal, state and/or local withholding tax requirements. A Key Employee may pay, in whole or in part, such tax withholding amounts by requesting that the Company withhold such amounts of taxes from the amounts owed to the Key Employee or by delivering as payment to the Company, shares of Common Stock having a Fair Market Value less than or equal to the amount of such required withholding taxes.
5. Deferral of Payment
The Committee intends to permit Participants to elect, at any time prior to one year before the date of exercise, to defer the receipt of payment of Awards that are payable in cash; provided, however, that
(1) under the then applicable income tax rules the Participant is not in constructive receipt of, and subject to income tax on, the payment prior to its actual receipt, (2) such deferral does not result in any of the Plans being subject to the Employee Retirement Income Security Act of 1974, as amended, and
(3) if the Participant is an Executive Officer, such election shall comply with Rule 16b-3 promulgated pursuant to the Securities Exchange Act of 1934, as then in effect.
B. STOCK OPTIONS UNDER THE 1993, 1984 AND 1983 PLANS
1. Designation
The Award Notice setting forth the terms and conditions of a grant of a stock option shall indicate the applicable Plan under which the stock option is granted and whether the stock option is an incentive stock option (within the meaning of Section 422 of the Code) or a non-qualified stock option.
2. Price The price at which Common Stock may be purchased upon exercise of a stock option shall be the Fair Market Value of the Common Stock on the date of the Award.
3. Exercise Period/Duration
a. Non-Qualified Stock Options Under the 1993 Plan. A non-qualified stock option granted under the 1993 Plan first may be exercised twelve months after the date of grant, or, if earlier, on the date of the optionee's death.
b. Incentive Stock Options Under the 1993 Plan. An incentive stock option granted under the 1993 Plan first may be exercised twelve months after the date of grant, or, if earlier, on the date of the optionee's death.
4. Death or Other Termination of Employment
a. Definitions. For purposes of these rules, the following terms shall have the following meanings:
(i) "Disability" shall mean that the Participant is eligible to receive disability benefits under Article VIII of The National Fuel Gas Company Retirement Plan ("Retirement Plan"), as from time to time amended.
(ii) "Retirement" shall mean that the Participant has commenced receiving retirement benefits under the Retirement Plan at or after attaining age 65.
b. Non-Qualified Stock Options Under the 1993 Plan. With respect to the President and Chief Executive Officer of the Company and the Presidents of each Principal Subsidiary, if termination of employment occurs by reason of death, Disability or Retirement, each non-qualified option awarded under the 1993 Plan shall remain exercisable for the balance of its unexpired term. If termination of any such officer occurs for any other reason, each such non-qualified option shall lapse unless extended by the Committee in its discretion. For purposes of these rules, "Subsidiary" means a corporation or other business entity in which the Company directly or indirectly has an ownership interest of eighty percent (80%) or more, and "Principal Subsidiary" means a Subsidiary that has a net income of at least $5,000,000 as of the end of the most recent fiscal year.
For all other Participants, if termination of employment occurs by reason of death, Disability or Retirement, each non-qualified option awarded under the 1993 Plan shall remain exercisable for five years from such termination or the balance of its unexpired term, whichever is less. If termination occurs for any other reason, each such non-qualified option shall lapse unless extended by the Committee in its discretion.
c. Incentive Stock Options Under the 1993 Plan. Pursuant to Section 16(a) of the 1993 Plan, the Committee hereby establishes that with respect to an incentive stock option granted under the 1993 Plan which has not theretofore expired, upon termination of employment by reason of the optionee's Disability, the optionee may within one year after the date of termination of employment, exercise all or part of the incentive stock option which the optionee was entitled to exercise on the date of termination of employment.
d. Extension of Incentive Stock Options Under the 1993 and 1983 Plans. Pursuant to the last paragraph of 16(b) of the 1993 Plan and the last paragraph of 7 of the 1983 Plan, the Committee hereby determines that:
(i) with respect to the President and Chief Executive Officer of the Company and the Presidents of each Principal Subsidiary, if termination of employment occurs by reason of death, Disability or Retirement, another officer of the Company shall, within thirty days of such termination, offer in writing to extend the period during which any incentive stock option granted to such optionee under the 1993 Plan or the 1983 Plan may be exercised to the date on which the incentive stock option would have otherwise expired absent such termination of employment;
(ii) if termination of any such officer's employment occurs for any other reason, another officer of the Company, if the Committee so authorizes, shall, within thirty days of such termination, offer in writing to extend the period during which any incentive stock option granted to such optionee may be exercised to the date specified in the offer, which shall not be later than the date on which the incentive stock option would have otherwise expired absent such termination of employment;
(iii) with respect to all Participants other than the President and Chief Executive Officer of the Company and the Presidents of each Principal Subsidiary, if termination of employment occurs by reason of death, Disability or Retirement, an officer of the Company other than such Participant shall, within thirty days of such termination, offer in writing to extend the period during which any incentive stock option granted to such optionee under the 1993 Plan or the 1983 Plan may be exercised, to the date which is the earlier of five years from such termination or the balance of the unexpired term of such incentive stock option; and
(iv) if termination of such Participant's employment occurs for any other reason, an officer of the Company other than such Participant, if the Committee so authorizes, shall, within thirty days of such termination, offer to extend the period during which any incentive stock option granted to such optionee may be exercised to the date specified in the offer, which shall not be later than the earlier of five years from such termination of employment or the date on which the incentive stock option would have otherwise expired absent such termination of employment.
The written offer shall notify the optionee, or the optionee's estate or the person to whom the optionee's rights under the incentive stock option are transferred by will or the laws of descent and distribution, of the right to accept the offer by consenting to the extension, in writing, within thirty days of the offer. If such consent is timely received the incentive stock option may be exercised during the period specified in the offer, but not later than the expiration of the exercise period specified in the Award Notice.
5. Mechanics of Exercise
To exercise a stock option, the Participant shall notify an appropriate officer of the Company in writing, indicating how the exercise price is to be paid and any other appropriate information. The Committee hereby delegates to appropriate officers of the Company the authority to establish and revise appropriate procedures with respect to the exercise of stock options and the equitable adjustment of outstanding stock options.
6. Reload No optionee shall automatically upon exercise be issued a new stock option. However, if the Award Notice provides for the issuance of such new stock option, the new stock option shall have an option price equal to the Fair Market Value of the Common Stock on the date the new stock option is issued and shall otherwise be subject, as nearly as possible, to the same terms and conditions as the exercised stock option.
C. SARs UNDER THE 1984 AND 1993 PLANS
1. 1984 Plan
SARs granted under the 1984 Plan may be granted only along with granting a non-qualified stock option. The recipient may exercise the SAR independently of and in addition to the non-qualified stock option, and may exercise the SAR before (but not before the option with which the SAR was granted has become exercisable under Section 5 (c) (ii) of the 1984 Plan), at the same time as, or after the recipient exercises the stock option with which the SAR was granted, but not later than the expiration of the term of the stock option. Each SAR shall be deemed to be exercised at the close of business on the scheduled expiration date of such SAR if at such time the SAR by its terms remains exercisable and if so exercised would result in a payment to the holder of such SAR.
2. 1993 Plan
The base price of an Independent SAR shall be the Fair Market Value of the Common Stock on the date of the grant of the Independent SAR, and shall otherwise be subject to the terms and conditions imposed by the 1993 Plan and these rules upon nonqualified stock options. Each SAR shall be deemed to be exercised at the close of business on the scheduled expiration date of such SAR if at such time the SAR by its terms remains exercisable and if so exercised would result in a payment to the holder of such SAR.
D. RESTRICTED STOCK UNDER THE 1984 AND 1993 PLANS
1. Restrictions on Transferability; Vesting
The restrictions on transferability and vesting and all other terms and conditions of Restricted Stock granted under the 1993 and 1984 Plans, shall be specified in the Award Notice. All shares of Restricted Stock shall be subject to the Participant's continued employment with the Company or a Subsidiary until vesting. The Committee may accelerate the vesting of Restricted Stock on its own motion as it deems appropriate and in the best interests of the Company.
3. Mechanics of Grant
The Committee hereby delegates to appropriate officers of the Company the authority to establish and revise appropriate procedures with respect to the issuance of certificates presenting Restricted Stock, the payment of dividends thereon, and the equitable adjustment of outstanding Restricted Stock.
E. PERFORMANCE UNITS AND PERFORMANCE SHARES UNDER THE 1993 PLAN
The performance period and performance objectives of a performance unit or performance share granted under the 1993 Plan shall be specified in the Award Notice. The Committee shall consider any written submission from a Participant, regarding revision of the performance period and/or performance objectives of an Award on the basis of events which may have been unforeseen by the Committee, or circumstances which have changed since the Award, and may consider such matters on its own motion. Upon such consideration, the Committee shall revise such performance period and/or performance objectives when such revision is determined to be in the best interests of the Company and consistent with the purposes of the 1993 Plan.

CHANGE IN CONTROL AGREEMENT
BETWEEN
[NAME OF SUBSIDIARY]
AND
NATIONAL FUEL GAS COMPANY
AND
[NAME OF EXECUTIVE]

THIS AGREEMENT, effective this [1st day of May, 1992,] [16 day of March, 1995], by and between [NAME OF SUBSIDIARY], a [NAME OF STATE] corporation (the "Company") and National Fuel Gas Company, a New Jersey corporation ("National") and [NAME OF EXECUTIVE] (the "Executive").
W I T N E S S E T H T H A T:
WHEREAS, the Company wishes to attract and retain well-qualified executive and key personnel and to assure the continuity of management in the event of any actual or threatened Change of Control (as defined below) of National, which owns 100% of the Capital Stock of the Company; WHEREAS, the Executive is a valuable employee of the Company, an integral part of its management team and a key participant in the decision making process relative to short-term and long-term planning and policy for the Company;
WHEREAS, the Company wishes to encourage the Executive to continue his career and services with the Company for the period during and after an actual or threatened Change in Control; and WHEREAS, the Board, at its meeting on December 5, 1991, determined upon recommendation of the Compensation Committee of the Board that it would be in the best interests of the Company, National and its shareholders to assure continuity in the management of the Company in the event of a Change in Control by entering into this Change in Control Agreement with the Executive; and
WHEREAS, this Change of Control Agreement is intended to supersede a similar agreement dated June 1, 1988 which was entered into by the Executive; and
WHEREAS, this Change of Control Agreement is intended to reduce the Executive's severance payments from those provided for in the 1988 Agreement, if such reduction provides a greater after-tax benefit to the Executive, in which case the pre-tax and after-tax outlays of the Company will also be substantially reduced.
NOW, THEREFORE, it is hereby agreed by and between the parties hereto as follows:
1. Effective Date. The Effective Date of this Agreement shall be the date on which a Change of Control (as defined in Section 2) of National occurs.
2. Definitions.
"Board" shall mean the Board of Directors of National. "Cause" shall mean the Executive's gross misconduct, fraud or dishonesty, which has resulted or is likely to result in material economic damage to the Company or National, as determined in good faith by a vote of at least two-thirds of the non-employee directors of National at a meeting of the Board at which the Executive is provided an opportunity to be heard.
"Change in Control" shall mean:
(i) either (a) receipt by the Company or National of a report on Schedule 13D, or an amendment to such a report, filed with the Securities and Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act of 1934 (the "1934 Act") disclosing that any person (as such term is used in Section 13(d) of the 1934 Act) ("Person"), is the beneficial owner, directly or indirectly, of twenty (20) percent or more of the outstanding stock of National or (b) actual knowledge by the Company or National of facts, on the basis of which any Person is required to file such a report on Schedule 13D, or to make an amendment to such a report, with the SEC (or would be required to file such a report or amendment upon the lapse of the applicable period of time specified in Section 13(d) of the 1934 Act) disclosing that such Person is the beneficial owner, directly or indirectly, of twenty (20) percent or more of the outstanding stock of National;
(ii) purchase by any Person, other than National or a wholly-owned subsidiary of National, of shares pursuant to a tender or exchange offer to acquire any stock of National (or securities convertible into stock) for cash, securities or any other consideration provided that, after consummation of the offer, such Person is the beneficial owner (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of twenty (20) percent or more of the outstanding stock of National (calculated as provided in paragraph (d) of Rule l3d-3 under the 1934 Act in the case of rights to acquire stock);
(iii) approval by the shareholders of National of (a) any consolidation or merger of National in which National is not the continuing or surviving corporation or pursuant to which shares of stock of National would be converted into cash, securities or other property, other than a consolidation or merger of National in which holders of its stock immediately prior to the consolidation or merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the consolidation or merger as immediately before, or (b) any consolidation or merger in which National is the continuing or surviving corporation but in which the common shareholders of National immediately prior to the consolidation or merger do not hold at least a majority of the outstanding common stock of the continuing or surviving corporation (except where such holders of common stock hold at least a majority of the common stock of the corporation which owns all of the common stock of National), or (c) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of National; or
(iv) a change in the majority of the members of the Board within a 24-month period unless the election or nomination for election by National's shareholders of each new director was approved by the vote of at least two-thirds of the directors then still in office who were in office at the beginning of the 24-month period. "Disability" shall have the same meaning as under the Company's long-term disability insurance program as in effect at the time of the Executive's disability. "Employment Period" shall mean the period beginning on the Effective Date and ending on the earlier of (i) 36 full calendar months following the Effective Date, or (ii) the date on which the Executive attains age 65. "Good Reason" shall mean a good faith determination made by the Executive that there has been any (i) material change by the Company of the Executive's functions, duties or responsibilities which change would cause the Executives' position with the Company to become of less dignity, responsibility, importance, prestige or scope, including, without limitation, the assignment to the Executive of duties and responsibilities inconsistent with his positions,
(ii) assignment or reassignment by the Company of the Executive without the Executive's consent, to another place of employment more than 30 miles from the Executive's current place of employment, or (iii) reduction in the Executive's total compensation or benefits or any component thereof, provided in each case that the Executive shall specify the event relied upon for such determination by written notice to the Board at any time within six months after the occurrence of such event. "Severance" shall mean the termination of employment of the Executive prior to the end of the Employment Period (i) by the Company for any reason other than death, Disability, or Cause, or (ii) by the Executive for Good Reason.
3. Term of Agreement. This Agreement shall be effective as of the date above written and shall continue thereafter until the first to occur of (i) 36 full calendar months following the Effective Date, or (ii) the date on which the Executive attains age 65. The Executive agrees that during the Term of Agreement he shall devote all his business activities exclusively to his duties with the Company and perform such duties professionally, faithfully, effectively, intelligently and efficiently.
4. Compensation, Employee Benefits, Perquisites. The Executive shall receive the following as compensation during the Employment Period:
(a) An annual salary which is not less than his annual salary immediately prior to the first day of the Employment Period, plus annual increases at least equal to the greater of the average percentage increase in the compensation of salaried employees of National and its subsidiaries who are not executives and the percentage increase in the Consumer Price Index.
(b) Eligibility to participate in the incentive compensation plans or programs of National and the Company, including but not limited to bonus and stock option plans, which will provide the Executive with the opportunity to receive additional compensation equal to the greater of (i) the opportunities provided by the Company and National to comparable level executives, or (ii) the opportunities provided under those plans or programs in which the Executive participated immediately prior to the first day of the Employment Period.
(c) Employee benefits and perquisites which are the greater of
(i) such employee benefits and perquisites provided to comparable level executives of the Company and National, or (ii) those employee benefits and perquisites that the Executive was entitled to receive immediately prior to the first day of the Employment Period.
5. Severance Payments. In the event of the Executive's Severance, the Company shall, within 180 days (except as provided in paragraph 5(a)) from the date of the Executive's Severance, pay and provide to the Executive or, if the Executive has died before receiving all payments to which he has become entitled hereunder, the estate of the Executive, the following:
(a) A lump sum cash payment equal to the Executive's accrued but unpaid salary and accrued but unused vacation pay shall be made within 30 days from the date of the Executive's Severance.
(b) A lump sum payment equal to all deferred or incentive compensation owed to the Executive through the date of the Executive's Severance, including, but not limited to, the cash value of any restricted stock, stock options or stock appreciation rights which were forfeited by the Executive upon the Executive's Severance.
(c) A lump sum cash payment equal to 2.99 times the Executive's base annual salary immediately prior to the Executive's Severance, provided, however, that if the Executive is age 62 or older, such payment shall be multiplied by a fraction the numerator of which is the number of months (including fractions of a month) from the date of the Executive's Severance to the date of the first day of the calendar month coincident with or next following the date the Executive will have attained age 65, and the denominator of which is 36.
(d) For a period commencing with the date of the Executive's Severance, and ending on the first to occur of (i) 36 months thereafter, or (ii) the Executive's attainment of age 65, the Executive shall be eligible to participate in the welfare benefit plans (within the meaning of Sections 3(1) of the Employee Retirement Income Security Act of 1974, as amended), of the Company or National, as if the Executive were still employed during such period, at the same level of benefits and at the same dollar cost to the Executive as is available to comparable level executives generally, and if and to the extent that equivalent benefits shall not or may not be payable or provided under any such plan, the Company shall pay or provide equivalent benefits on an individual basis. The benefits provided in accordance with this paragraph shall be secondary to any comparable benefits provided by another employer.
(e) Notwithstanding anything contained herein, should the Executive receive any compensation that is subject to Federal income taxation with respect to employment by another entity or employer, or as a result of a consulting agreement or arrangement, for the Employment Period, payments made pursuant to this Agreement shall be correspondingly reduced on a dollar for dollar basis, and, if necessary, the Executive agrees to make restitution to the Company of such amounts.
(f) In the event it shall be determined by Independent Tax Counsel that any payment or benefit hereunder that constitutes a "parachute payment," as defined in section 280G of the Code, would be subject to the excise tax imposed by section 4999 of the Code ("Excise Tax"), then the payment made pursuant to paragraphs 5(b)-5(e) shall be reduced if such reduction would produce a greater after-tax benefit to the Executive than would have been produced had the Excise Tax been imposed. "Independent Tax Counsel" shall mean a lawyer or accountant with expertise in the area of executive compensation tax law, who shall be selected by the Executive and shall be reasonably acceptable to the Company, and whose reasonable fees and disbursements shall be paid by the Company.
6. Source of Payments. All payments provided for in paragraph 3 above shall be paid in cash from the general funds of the Company or National; provided, however, that such payments shall be reduced by the amount of any payments made to the Executive or his dependents, beneficiaries or estate from any trust or special or separate fund established by the Company or National to assure such payments. The Company or National shall not be required to establish a special or separate fund or other segregation of assets to assure such payments, and, if the Company or National shall make any investments to aid it in meeting its obligations hereunder, the Executive shall have no right, title or interest whatever in or to any such investments except as may otherwise be expressly provided in a separate written instrument relating to such investments. Nothing contained in this Agreement, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind or a fiduciary relationship, between the Company or National and the Executive or any other person. To the extent that any person acquires a right to receive payments from the Company or National such right shall be no greater than the right of an unsecured creditor of the Company or National.
7. Arbitration of Disputes.
(a) In the event that any dispute, controversy or claim arises between the Company or National and the Executive with respect to the subject matter of this Agreement and the enforcement of rights hereunder, such dispute, controversy or claim shall be submitted to a panel of three arbitrators for binding resolution. The panel shall be selected in accordance with the rules of the American Arbitration Association (the "AAA"). The determination reached in such arbitration shall be final and binding on both parties without any right of appeal or further dispute. Execution of the determination by such arbitration panel may be sought in any court of competent jurisdiction. The arbitrators shall not be bound by judicial formalities and may abstain from following the strict rules of evidence and shall interpret this Agreement as an honorable engagement and not merely as a legal obligation. Unless otherwise agreed by the parties, any such arbitration shall take place in Buffalo, New York, and shall be conducted in accordance with the Rules of the AAA.
(b) In the event of the occurrence of any proceeding (including the appeal of an arbitration decision) between the Company or National and the Executive with respect to the subject matter of this Agreement and the enforcement of rights hereunder, the Company or National shall reimburse the Executive for all reasonable costs and expenses relating to such proceeding, including reasonable attorneys' fees and expenses, regardless of the final outcome, unless the arbitration panel determines that recovery by the Executive of all or a part of such fees, costs and expenses would be unjust. In no event shall the Executive reimburse the Company for any of the costs and expenses relating to such litigation or other proceeding. The obligation of the Company or National under this paragraph 7 shall survive the termination for any reason of this Agreement (whether such termination is by the Company or the Executive, upon the expiration of this Agreement or otherwise.)
8. Income Tax Withholding. The Company or National may withhold from any payments made under this Agreement all Federal, state or other taxes as shall be required pursuant to any law or governmental regulation or ruling.
9. Entire Understanding. This Agreement contains the entire understanding between the Company, National and the Executive with respect to the subject matter hereof and supersedes any prior Change in Control agreement between the Company, National and the Executive, including the Change of Control Agreement with the Executive dated June 1, 1988.
10. Severability. If, for any reason, any one or more of the provisions or part of a provision contained in this Agreement shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement not held so invalid, illegal or unenforceable, and each other provision or part of a provision shall to the full extent consistent with law continue in full force and effect.
11. Consolidation, Merger, or Sale of Assets. If the Company or National consolidates or merges into or with, or transfers all or substantially all of its assets to, another corporation, the terms "the Company" and "National", as used herein, shall mean such other corporations and this Agreement shall continue in full force and effect.
12. Notices. All notices, requests, demands and other communications required or permitted hereunder shall be given in writing and shall be deemed to have been duly given if delivered or mailed, postage prepaid, first class as follows:
(a) to the Company:

National Fuel Gas Distribution Corporation
10 Lafayette Square
Buffalo, NY 14203
Attention: Corporate Secretary
(b) to National:
National Fuel Gas Company 10 Lafayette Square Buffalo, NY 14203 Attention: Corporate Secretary
(c) to the Executive:
[NAME OF EXECUTIVE]
[ADDRESS OF EXECUTIVE]
or to such other address as either party shall have previously specified in writing to the other.
13. No Attachment. Except as required by law, neither this Agreement, in whole or in part, nor any right to receive payments under this Agreement, shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.
14. Binding Agreement. This Agreement shall be binding upon, and shall inure to the benefit of, the Executive, the Company and National and their respective permitted successors and assigns.
15. Modification and Waiver. This Agreement may be canceled prior to the Effective Date by the Company, National or the Executive upon the delivery of at least thirty (30) days' written advance notice to the other parties. Otherwise, this Agreement may not be canceled, rescinded, modified or amended except by an instrument in writing signed by the parities hereto. No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement except by written instrument signed by the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.
16. Headings of No Effect. The paragraph headings contained in this Agreement are included solely for convenience of reference and shall not in any way affect the meaning or interpretation of any of the provisions of this Agreement.
17. Governing Law. This Agreement and its validity, interpretation, performance, and enforcement shall be governed by the laws of the State of [NAME OF STATE] without giving effect to the choice of law provisions in effect in such State.
IN WITNESS WHEREOF, the Company and National have caused this Agreement to be executed by their officers thereunto duly authorized, and the Executive has signed this Agreement, all as of the date first above written.
[NAME OF SUBSIDIARY]

By: /s/___________________________________

             NATIONAL FUEL GAS COMPANY

By: /s/___________________________________

                [NAME OF EXECUTIVE]

By: /s/___________________________________	

EXHIBIT 12

                             COMPUTATION OF RATIO OF
                            EARNINGS TO FIXED CHARGES
                                    UNAUDITED

                                                          Fiscal Year Ended September 30
                                                   ---------------------------------------------

                                                     1996     1995     1994     1993      1992
                                                   ---------------------------------------------

EARNINGS:

Income Before Interest Charges (2)                 $159,599 $128,061 $127,885 $125,742  $118,222
Allowance for Borrowed Funds Used in Construction       205      195      209      174     1,088
Federal Income Tax                                   55,148   30,522   36,630   21,148    17,680
State Income Tax                                      7,266    4,905    6,309    2,979     3,426
Deferred Inc. Taxes - Net (3)                         3,907    8,452    4,853   16,919    14,125
Investment Tax Credit - Net                            (665)    (672)    (682)    (693)     (706)
Rentals (1)                                           5,640    5,422    5,730    5,621     5,857
                                                   ---------------------------------------------

                                                   $231,100 $176,885 $180,934 $171,890  $159,692
                                                   =============================================

FIXED CHARGES:

Interest & Amortization of Premium and
   Discount of Funded Debt                          $40,872  $40,896  $36,699  $38,507   $39,949
Interest on Commercial Paper and
   Short-Term Notes Payable                           7,872    6,745    5,599    7,465    12,093
Other Interest (2)                                    6,389    4,721    3,361    4,727     6,958
Rentals (1)                                           5,640    5,422    5,730    5,621     5,857
                                                   ---------------------------------------------

                                                    $60,773  $57,784  $51,389  $56,320   $64,857
                                                   =============================================

RATIO OF EARNINGS TO FIXED CHARGES                     3.80     3.06     3.52     3.05      2.46	

Notes:
(1) Rentals shown above represent the portion of all rentals (other than delay rentals) deemed representative of the interest factor.
(2) Fiscal 1996, 1995, 1994, 1993 and 1992 reflect the reclassification of $1,716, $1,716, $1,674, $1,374 and $1,129, respectively, representing the loss on reacquired debt amortized during each period, from Other Interest Charges to Operation Expense.
(3) Deferred Income Taxes - Net for fiscal 1994 excludes the cumulative
effect of changes in accounting.

Letter to Shareholders
We are proud to bring you this 1996 Annual Report. Truly, it has been an outstanding year highlighted by:
o An earnings increase to $104.7 million, or $2.78 per share - up 38% from last year's $75.9 million, or $2.03 per share.
o A dividend increase in June of 3.7%, to $1.68 on an annual basis. Our record now stands at 26 years of consecutive increases and 94 years of uninterrupted payments.
o Total system gas volumes of 423.8 Bcf equivalent, a company record.
o Total production of 49.2 Bcf equivalent, a 94% increase.
o A 28% increase in our stock price to $36.75 at year end. At the time of this writing, the price has reached the low $40's.
o A total return on shareholder investment (with dividends reinvested) for the fiscal year of 33.7%, comparing very favorably with the S&P 500 and Dow Jones Industrial indices. The 38% jump in this year's earnings results from a superb performance by each of our established segments, partly offset by the costs associated with our efforts to develop a new international business. In addition, there were two special items in earnings this year. First, as part of our continued restructuring efforts in our regulated businesses, last August we offered a Special Early Retirement Offer (SERO) to certain employees of our Utility and Pipeline and Storage subsidiaries. Of the approximately 400 people eligible, 236 accepted and retired, effective October 1, 1996. Our 1996 earnings reflect an after-tax charge of $5.2 million, or $.14 per share, related to costs associated with the SERO. The second is a credit related to gas costs. In 1995 the New York Utility division recognized an after-tax charge of $2.8 million of purchased gas expense in excess of that recoverable in rates. In fiscal 1996, we determined that this amount was overstated by $4.2 million after-tax, or $.11 per share. However, the 1996 annual reconciliation of gas costs resulted in an after-tax charge of $1.5 million, or $.04 per share. Thus, the net impact on 1996 earnings of all gas cost reconciliations was a positive $.07 per share.
Growing Value
We have made "growing value" the theme of this year's Annual Report. Our pledge to you is to continue to focus our energies not only on increasing the size of your Company, but also on enhancing its value per share.1 Utility
In our Utility segment pre-tax operating income rose 38% to $115.3 million. The principal factors helping this segment's results were new rates effective September 1995 in both our Pennsylvania and New York jurisdictions, our ongoing efforts to control expenses, the gas cost credit noted above, and weather in our Pennsylvania jurisdiction where it was 17.1% colder than the prior year and 8.1% colder than normal. In New York there was little impact on results due to the cold. Rather, our weather normalization clause mitigated the impact of weather by decreasing our customers' bills by $10.6 million. A $4.1 million, or $.11 per share, after-tax charge was also recorded for the SERO.
A significant achievement in 1996 was a two-year settlement of our New York rate case. Elements of the settlement include our agreement to limit rate increases to 1.1% for each of the fiscal years commencing October 1, 1996 and October 1, 1997. The settlement also includes a number of incentives. The Company may earn a maximum of 25 basis points, or incur a maximum penalty of 50 basis points, of return on common equity based on various measurements of customer service. In addition, there is a gas cost incentive mechanism designed to compare the Company's spot gas purchases to monthly gas cost targets. Earnings, excluding the customer service incentive, will be based on a target of a 12% return on common equity for each of the fiscal years ending 1996, 1997 and 1998. The measurement will be on a cumulative basis over the three years. Earnings above the target will be shared 50-50 with customers.
The adage holds that no news is good news. This year we did not file a rate case in Pennsylvania. As in New York, we have emphasized cost control in this jurisdiction and our efforts are bearing fruit. In each state our rates in 1996 remained below the state average for comparable utilities.
Given the increasingly competitive nature of our industry, it is important for us to focus on providing reasonably priced, customer-friendly service, rather than on litigating major regulatory proceedings. We believe that the public utility commissions in both New York and Pennsylvania have given us the opportunity to move forward in the current competitive environment and, consequently, we intend to avoid large protracted rate cases.1 Our goals in the Utility Operation are:1
o To continue to aggressively control costs while maintaining excellent customer service.
o To make our system even more user-friendly to those desiring to sell gas on it.
o To seek profit-generating opportunities. To meet the first objective, we continue to cast a critical eye on all of our internal processes. Ongoing restructuring enabled us to reduce employment significantly through the already discussed SERO, thereby increasing our efficiency by 17% to 378 customers served per employee. At the same time we are maintaining excellent performance in customer service, including timely appointments and telephone response. In addition, we were able to decrease our capital expenditures in 1996 by $1.1 million from fiscal 1995 and plan a further $1.8 million reduction in fiscal 1997.1 Another ongoing initiative is a proposed low-income gas purchase and transportation pilot program with the Erie County, New York Department of Social Services. This innovative program seeks to reduce costs for the county, payment-troubled customers and our utility alike.1 Review of our proposal is occurring at the state level in the context of welfare reform.
Restructuring the Utility
In a March 28, 1996 order, the New York Public Service Commission (PSC) adopted a generic framework for all local gas distribution companies within the state to allow their customers to purchase gas from sources other than a utility. Following that order, we placed tariff provisions in effect as of May 1, 1996, toward that end. At present, however, a non-utility choice is not advantageous to residential customers because of its cost. In large part, the high cost is due to the significant customer protections required of utilities by the PSC which are then passed along in rates. We will continue to work with the PSC on removing impediments to more efficient natural gas service in order to achieve cost savings for our customers.1 In Pennsylvania, restructuring is now being evaluated via individual gas company pilot programs. Given the recent passage of legislation to restructure the electric industry, it is possible that future legislation could pass with respect to the natural gas industry.1
To test our customers' interest in purchasing gas from gas marketers, the Company is proposing a residential pilot program within both jurisdictions and hopes to have it in place in fiscal 1997.1 Unlike most pilots underway around the country, our program, if approved, would provide a unique opportunity to test competition in an environment where the utility no longer acts as a merchant of gas.1
Revenue Enhancement
This year, our industrial and commercial volumes increased by approximately 7% and 6%, respectively, after removing the impact of weather. We attribute this result to an increasingly healthy business climate in the Western New York region. The Buffalo-Niagara Falls, New York unemployment rate for October 1996 was 4.6%, comparing favorably with the 4.9% national rate. Recent positive economic news includes the selection of Buffalo, New York over Tennessee as the site for manufacturing and distribution operations of a Canadian furniture company. To pursue growth, we have augmented our sales efforts with a technical services group which advises customers on energy options. Areas covered range from educating transportation customers on effective purchasing methods to the rendering of advice on re-engineering of industrial processes to utilize natural gas.
Pipeline and Storage
In this regulated business, pre-tax operating income increased by 7% to $72.9 million in 1996. The rise was mostly due to new rates which went into effect on April 1, 1996, retroactive to June 1, 1995. The portion attributable to fiscal 1995 amounted to $1.2 million after-tax, or $.03 per share. In 1996 this segment saw lower revenues from unbundled pipeline sales and open-access transportation than in 1995. Moreover, the SERO resulted in an after-tax charge of approximately $1.1 million, or $.03 per share. In addition, 1995 earnings were reduced by approximately $2.2 million after-tax, or $.06 per share, for certain preliminary costs related to a storage project.
The Federal Energy Regulatory Commission's (FERC) approval of two Pipeline and Storage settlements in February sets the stage for our future. The settlement of our rate case provided an increase in revenues of approximately $6.0 million and established rates until at least April 1, 1998. Like our Utility segment, it is the goal of this segment to avoid filing a rate case for as long as possible.1 The settlement provides us with essential flexibility. For instance, we now benefit from 100% of interruptible transportation and storage revenues. Previously the portion we retained was just 10%. We also agreed to be at risk for marketing a portion of unsubscribed storage service. Such risk is ultimately part of the competitive world and we do not anticipate any problem marketing storage turned back to us.1 Offers were accepted on 3.3 Bcf of storage service effective April 1, 1996, albeit at discounted rates. Currently, we are marketing 1.1 Bcf of storage subject to contracts that expire in March 1997. Of note, over 80% of our combined 1996 transportation and storage revenues related to contracts of five or more years. In February the FERC also approved a settlement that will allow a five-year transition to fully unbundled gathering rates and recovery of our investment with respect to our Appalachian gathering system.
By laying these regulatory matters to rest, we can now focus all of our energies on the growth of our business. Our approach is twofold:1
o To exploit our existing location between Canada and the energy-hungry East Coast markets.
o To expand into new geographic areas through acquisitions and joint ventures. An exciting business opportunity in our existing territory is our proposed 1998/1999 Niagara Expansion Project. An open season was held this fall to ascertain customer interest in expanding transportation capacity from the Canadian border at Niagara Falls, New York to Leidy, Pennsylvania by 250 - 500 MMcf per day. (This translates to 91.3 Bcf to 182.5 Bcf per year of incremental Canadian gas transportation. In 1996, transportation of Canadian volumes totaled
114.8 Bcf.) The project, if completed, will allow customers to coordinate transportation with TransCanada PipeLines Limited to create a continuous transportation path from the producing regions in western Canada to the Ellisburg-Leidy Hub and the Eastern Seaboard markets it serves.1 Preliminary interest is highly promising. Should we expand our Canadian transportation by 500 MMcf per day, our total additional investment is expected to be about $240 million over a two-year period.1 Moreover, one of our nonregulated subsidiaries, Leidy Hub, Inc., continues to promote the Ellisburg-Leidy Hub which connects our system with all major pipelines serving the Northeast markets. We believe that by increasing trading activity at the hub, we can increase investment opportunities for our pipeline and storage business.1 With respect to new locales, we are pursuing a 50-50 partnership with Tenneco Energy to develop the Green Canyon Gathering System project. Our partnership would construct, own and operate a 24-inch, 153-mile offshore pipeline to gather natural gas from the Gulf of Mexico.1 It also intends to build a natural gas processing plant at the terminal end of the pipeline in Louisiana that can process 300 MMcf of gas per day.1 With capacity of approximately 515 MMcf per day, the pipeline would be able to access 3.4 trillion cubic feet of estimated reserves and would connect to five onshore pipelines in southern Louisiana.1 The project is expected to cost approximately $200 million and be in service in late 1997.1 We are, of course, open to other opportunities wherever located and will pursue these as they are identified.1 Exploration and Production Significant growth in production volumes of both natural gas and oil, as well as improved prices for both commodities, created a near tripling of operating income before income taxes to $46.4 million in fiscal 1996. Seneca Resources Corporation's (Seneca) Gulf Coast program continues to drive this segment's achievements. Offshore finds at West Cameron 552 and Vermilion 252, discussed in our last two annual reports, are the major contributors to production increases for the year. Total production volumes nearly doubled to 49.2 Bcf equivalent from 25.4 Bcf equivalent last year. Natural gas production rose by 85% to 38.8 Bcf from
20.9 Bcf in 1995. Oil production of 1,742,000 barrels was more than twice the prior year production of 739,000 barrels. Weighted average prices for natural gas rose $.68 to $2.35 per Mcf. Oil prices climbed $3.34 to $19.50 per barrel. You may remember that last year we delayed production when prices were low to preserve the value of our reserves for our shareholders. We are pleased to have reaped the benefits of the higher prices in 1996. We continue to see this segment as an area of significant growth.1 Our team in Houston is, in our opinion, one of the best. On this score, we believe that the 1996 results speak for themselves. In addition to the dramatic 94% increase in production, we particularly take pride in our productivity. Our ability to hold the line on costs is an important contributor to the bottom line. This control is clearly reflected in this year's drop to $.31 per Mcf equivalent for lifting cost and to $.12 per Mcf equivalent for general and administrative costs. Overall, extensions and discoveries added 63.4 Bcf equivalent to reserves in 1996. Including purchases and revisions, our reserve replacement rate was 109%. While below our goal of 150%, our reserve base is still growing. Looking forward to fiscal 1997, based on reserve additions and existing production, our goal is a 10-20% increase over 1996 production volumes of 49.2 Bcf equivalent.1 In this regard, a very pleasing result has been the ongoing performance of West Cameron 552. Current daily production from that field is running at 59 MMcf of natural gas and 650 barrels of oil, with no recompletions to access new reservoirs.
Gulf Coast Emphasis
Our most significant recent discovery is on West Cameron 182. A first exploratory well encountered three productive sands and indicated 94 feet of net pay. We have booked 20.7 Bcf equivalent of reserves, mostly natural gas, related to this discovery. We also added 33.0 Bcf equivalent to reserves (29.2 Bcf equivalent of which is oil) related to Main Pass 256/257, a block we purchased in 1995. Three-dimensional (3-D) seismic data enabled us to identify these additional reserves. We anticipate developmental drilling on two wells here in fiscal 1997.1 On the West Delta 31 and 32 Blocks purchased in 1995, we are moving forward with exploratory drilling. We continue to believe that the West Delta blocks shows significant promise of additional reserves.1 Total offshore drilling for 1997 is currently estimated at 16 wells - 12 gas and 4 oil.1 Onshore in Texas we maintained our 100% success rate in the North East Clay trend with six wells drilled in 1996. In fiscal 1997, we intend to expand our drilling into new horizons in the North East Clay field, as well as in West Texas, Mississippi and Alabama.1 Many of these 19 planned wells have been evaluated using 3-D seismic data.
California
Planned 1996 drilling in California was pushed into fiscal 1997 largely due to permitting delays. Two wildcats already drilled this autumn were dry holes. In addition, we intend to drill two developmental wells in 1997, one in Temescal and one on our HAMP Lease acreage.1
East
In 1996 our East Division drilled five exploratory wells in Ohio. None were successful. We continue to evaluate the over 900,000 acres of mineral leases and fee properties in our possession.1 Our natural resource holdings include oil, gas, some coal and a significant amount of timber (primarily furniture-quality cherry and oak.) Revenues from the sale of timber are reported separately in the Other Nonregulated segment.
Hedging Activity
Seneca engages in hedging activity to manage a portion of the market risk associated with fluctuations in the price of natural gas and crude oil. In fiscal 1996 payments on hedges totaled $11.8 million. This "loss" was offset by the higher prices received for actual production. On September 30, 1996, Seneca had hedged for fiscal 1997, 24.9 Bcf of gas at a weighted average price of $1.92 per Mcf, and 1,371,000 barrels of oil at a weighted average price of $18.00 per barrel.
Moving Forward
Our goal is to increase reserves and production through exploration.1 Our internal technological expertise is substantial. We have nine geologists and geophysicists at eight workstations identifying our next prospects. We possess 3-D seismic data on approximately 3,500 square miles, and have two-dimensional seismic data on about 274,000 linear miles. Over the next three years, we plan to spend about $25 million for additional 3-D seismic data.1 To date we have successfully built an inventory of 27 undrilled prospects in the Gulf of Mexico, representing two to three years of drilling activity.1 Other Nonregulated activities
Our pursuit of international opportunities is the main cause of a decline in the results of our Other Nonregulated segment in 1996. Overall, pre-tax operating income was down by $11.6 million compared to fiscal 1995. In August our international subsidiary, Horizon Energy Development, Inc. (Horizon), withdrew from participation in the development of a 151-megawatt power plant near Kabirwala in east-central Pakistan. Total costs associated with the project totaled $.16 per share in 1996. There were no material costs or expenses deferred on the books at year end for this or any other project being considered by Horizon.
The decline in this segment also reflects the one-time gain in the prior fiscal year from the sale of the equipment of Utility Constructors, Inc., our pipeline construction subsidiary. Revenues were also lower in our timber operations because of softness in the market. Partially offsetting these declines, our energy marketing subsidiary, National Fuel Resources (NFR), reported stronger results on increased volumes.
None of our Other Nonregulated subsidiaries is, at this point, a large contributor toward earnings. However, with the one exception of Horizon, all of these businesses are profitable - and, without exception, all are part of our future growth strategy.1
Energy Marketing
NFR continues the geographic expansion of its business. It recently opened new offices in Chicago, Illinois and Greenville, Pennsylvania. Our New Jersey office now has been in operation for one year. In September we increased that office's customer base by acquiring the rights to all of Chevron USA Inc.'s New Jersey retail natural gas sales contracts.
Fiscal 1996 also marked our entry into residential marketing. NFR has been selected as the gas supplier by approximately 500 residential customers in Bay State Gas Company's customer choice pilot program in Massachusetts. Through participation in this pilot program, NFR is preparing itself for the opportunities which will come with fully competitive residential markets. Moreover, it is developing an electric marketing operation, subject to regulatory approval. Upon approval NFR intends to become a full service energy provider for retail customers.1
International Opportunities
The mission of Horizon is to evaluate possible roles for the Company in the international arena.1 Throughout the last year, we have examined many possibilities in that quest and reached some conclusions. For instance, as already discussed, we withdrew from a project in Pakistan and have no further plans with respect to that country.1
An area in which we have a significant interest is Eastern Europe.1 The general costs of running a business in this region are less than in the West and, following the end of the Cold War, there is a real need for expertise and funding to build infrastructure. In June, Horizon purchased Beheer-en-Beleggingmaatschappij Bruwabel B. V. (Bruwabel). Bruwabel is a Dutch company whose principal assets are a power development group and a small district-heating plant located in the Czech Republic. Horizon plans to convert the heating plant to a combined-cycle cogeneration facility, with electrical output of up to 50 megawatts.1
Dividend Increase
Fiscal 1996 marked our 26th consecutive year of dividend increases and the 94th year of uninterrupted dividend payments. This year we raised the annual dividend rate by 3.7% to $1.68 from $1.62. It was a greater increase than in recent years and a rate of increase higher than inflation. The current success of our Company and its future prospects enabled us to do this.1 Financing Plans
Reflecting our belief in its growth prospects, over half of our $214.0 million 1997 capital budget, or $116.2 million, is targeted for our Exploration and Production segment, particularly in the Gulf Coast region.1 Utility capital expenditures are budgeted at $61.9 million, and will be used mostly to replace main and service lines.1 The $31.6 million allocated for our Pipeline and Storage segment largely covers the reconditioning of storage wells and replacement of storage and transmission lines.1 Cash flow from operations combined with short-term debt is expected to cover these expenditures.1 We also expect to issue new debentures or medium-term notes late in calendar 1997, to retire $50 million of 6.42% medium-term notes maturing in November 1997.1 The current budget does not include monies for the 1998/1999 Niagara Expansion Project or the Green Canyon Gathering System project. Other debt and equity issuances will be considered, as necessary, to finance these and any additional projects.1 Personnel Changes
George L. Mazanec joined our Board of Directors in October. Mr. Mazanec has more than 30 years of experience in the energy industry, most recently as a member of PanEnergy Corporation's Board of Directors and its Policy Committee. David N. Campbell resigned as a Director this summer. We wish him well. John M. Brown retired as a Director in February. Jack had more than 40 years of service with our Company when he retired as Vice Chairman in 1989. We will miss his contribution. James A. Beck was named President of Seneca Resources Corporation. Jim has more than 20 years of experience in the oil and gas business, the most recent seven years with us. In addition, Philip A. Turek, Vice President of National Fuel Gas Supply Corporation, and Robert P. Borneman, Vice President of National Fuel Gas Distribution Corporation, retired effective October 1, 1996. Finally, as our greatest strength has always been our employees, we would like to thank all of this year's retirees for their years of commitment and contribution to our Company.
Recognition
We are proud to place these 1996 results before you and are pleased at the market's recognition of the value we have created. While the price of many natural gas company stocks (and probably our own) appears to be partly fueled by the wave of recent electric-gas mergers, we believe the recent run-up in our stock is supported by the strong performance of our business. Our return on equity is up, system volumes are up, production is up and there are ongoing earnings opportunities in all of our segments.1 We should note that we are closely watching restructuring events in the electric industry. As always, we will carefully evaluate all opportunities that present themselves, and will only pursue those that are additive to the long-term value of the Company and its shareholders.1

     /s/ Bernard J. Kennedy
     Bernard J. Kennedy
     Chairman of the Board, President and Chief Executive Officer
     /s/ Philip C. Ackerman
     Philip C. Ackerman
     Senior Vice President
     December 13, 1996
     1 This document  contains  "forward  looking  statements" as defined by the
Private Securities  Litigation Reform Act of 1995.  Forward looking  statements,
including  those  designated  by a "1,"  should  be  read  with  the  cautionary
statements  included  in the  Annual  Report on Form  10-K at Item 7,  under the
heading "Safe Harbor for Forward-Looking Statements."	

APPENDIX TO EXHIBIT 13 - This appendix contains a narrative description of image and graphic information as contained in the Letter to Shareholders included in the paper copy of the Company's combined Annual Report to Shareholders/Form 10-K.
1.) Image - Picture of Bernard J. Kennedy, Chairman of the Board, President and Chief Executive Officer, and Philip C. Ackerman, Senior Vice President.
2.) Graph - Total Return
Bar graph showing National Fuel Gas Company's total return (percent) for fiscal year 1996 as compared with the S&P 500 and Dow Jones Industrial Average as follows:

        Dow Jones Industrial Average    25.6%
        National Fuel Gas Company       33.7%
        S&P 500                         20.2%

3.)     Graph - Percent Colder	

Bar graph showing fiscal 1996 percent colder than last year and colder than normal (based on degree days) for Buffalo, New York and Erie, Pennsylvania, as follows:

                Percent Colder Than
                Last Year     Normal
                ---------     ------

Buffalo, NY       16.5%        7.1%
Erie, PA          17.1%        8.1%	

4.) Image - Illustration of residential houses, with the following caption:
Unlike most pilots underway around the country, our program, if approved, would provide a unique opportunity to test competition in an environment where the utility no longer acts as a merchant of gas.1
5.) Graph - Utility Rates
Bar graph showing the Company's utility rates lower than the state average for the year ended September 1996, as follows:

                          National Fuel         State Average
                          -------------         -------------

Average cost per Mcf
 for year ended
 September 1996:

     New York                 $7.96                 $8.58
     Pennsylvania             $6.35                 $6.85	

6.) Graph - Utility Customers Served
Bar graph showing utility customers served per employee for Distribution Corporation's combined New York and Pennsylvania jurisdictions for 1992 through 1996, as follows:

                        9/92   9/93   9/94   9/95   10/96
                        ----   ----   ----   ----   -----

Utility
 Customers
 Served Per
 Employee               296    303    319    324     378	

7.) Image - Map of northeastern United States and Canada with arrow pointing to the Pipeline and Storage segment's operating location.
8.) Image - Illustration of natural gas pipeline, with the folowing caption: Like our Utility segment, it is the goal of this segment to avoid filing a rate case for as long as possible.1
9.) Graph - Transportation and Storage Service Revenues
Pie graph of the Pipeline and Storage segment's transportation and storage service revenues of $160.4 million, by contract length (in percents) for 1996, broken down as follows:

Less than One Year           4%
One to Five Years           15
Greater than Five Years     81
                           ----
                           100%	

10.) Image - Illustration of offshore drilling, with the following caption:
Our goal is to increase reserves and production through exploration ... we have successfully built an inventory of 27 undrilled prospects in the Gulf of Mexico, representing two to three years of drilling activity.1
11.) Graph - Oil and Gas Production
Bar graph showing oil and gas production (in billion cubic feet (Bcf) equivalent), for the years 1992 through 1996, as follows:

          1992    1993    1994    1995    1996
          ----    ----    ----    ----    ----

Gas       12.1    19.9    23.3    21.0    38.8

Oil        3.8     5.0     6.2     4.4    10.4
          ----    ----    ----    ----    ----

          15.9    24.9    29.5    25.4    49.2	

12.) Graph - Seneca Resources General and Administrative Costs
Bar graph showing Seneca Resources general and administrative costs in dollars per Mcf equivalent for 1992 through 1996, as follows:

                                      1992    1993    1994    1995    1996
                                      ----    ----    ----    ----    ----

                                      $.28    $.25    $.22    $.24    $.12

13.)     Graph - Lifting Cost	

Bar graph showing lifting costs (in dollars per thousand cubic feet (Mcf) equivalent) for the years 1992 through 1996, as follows:

                                      1992    1993    1994    1995    1996
                                      ----    ----    ----    ----    ----

                                      $.62    $.54    $.45    $.44    $.31

14.)     Graphs - Oil and Gas Prices	

Two bar graphs showing weighted average oil and gas prices (in dollars) for the years 1992 through 1996, as follows:

                             1992    1993    1994    1995    1996
                             ----    ----    ----    ----    ----

Gas (per Mcf)                $1.97   $2.20   $2.18   $1.67   $2.35

Oil (per bbl)               $17.11  $16.78  $14.86  $16.16  $19.50	

15.) Image - Illustration of a globe showing parts of North America, Europe and Africa with United States flag and Czech Republic flag overlaying portions of the globe.
16.) Graph - Annual Dividend Rate
Bar Graph showing the annual dividend rate per share at year end (in dollars per share) for 1986 through 1996 as follows:
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
$1.14 $1.20 $1.26 $1.34 $1.42 $1.46 $1.50 $1.54 $1.58 $1.62 $1.68

17.) Graph - Stock Price Performance
A line graph showing the Company's weekly closing stock price per share from September 30, 1996 through December 13, 1996, as follows:

9/30/96                 $36.75
10/4/96                 $37.375
10/11/96                $36.875
10/18/96                $37.75
10/25/96                $37.25
11/1/96                 $37.375
11/8/96                 $39.50
11/15/96                $42.75
11/22/96                $42.375
11/29/96                $42.625
12/6/96                 $42.00
12/13/96                $41.375	

RALPH E. DAVIS ASSOCIATES, INC.
Consultants-Petroleum and Natural Gas
3555 Timmons Lane - Suite 1105
Houston, Texas 77027
(713) 622-8955
CONSENT OF ENGINEER
We hereby consent to the reproduction of our audit report dated October 14, 1996, and to the reference to our estimate dated October 1, 1996, appearing in this National Fuel Gas Company Annual Report on Form 10-K.
We also consent to the incorporation by reference in (i) the Registration Statement (Form S-8, No. 2-95439), as amended, relating to the National Fuel Gas Company 1983 Incentive Stock Option Plan and the National Fuel Gas Company 1984 Stock Plan, and in the related Prospectuses, (ii) the Registration Statements (Form S-8, No. 33-28037, No. 333-3055, and Nos. 2-97641, 33-17341 and 333-3057), as amended, relating to the National Fuel Gas Company Tax-Deferred Savings Plan and the National Fuel Gas Company Tax-Deferred Savings Plan for Non-Union Employees, respectively, and in the related Prospectuses,
(iii) the Registration Statement (Form S-3, No. 33-49401), as amended, relating to $350,000,000 of National Fuel Gas Company debentures and/or medium term notes and in the related Prospectus, (iv) the Registration Statement (Form S-3, No. 333-03803), as amended, relating to $500,000,000 of National Fuel Gas Company debentures and/or medium term notes and, in the related Prospectus, (v) the Registration Statement (Form S-3, No. 33-51881), as amended, relating to the National Fuel Gas Company Dividend Reinvestment and Stock Purchase Plan, and in the related Prospectuses, (vi) the Registration Statement (Form S-3, No. 33-36868), as amended, relating to the National Fuel Gas Company Customer Stock Purchase Plan, and in the related Prospectus, and (vii) the Registration Statement (Form S-8, No. 33-49693), as amended, relating to the National Fuel Gas Company 1993 Award and Option Plan, and in the related Prospectus; of the reproduction of our report dated October 14, 1996, appearing in this National Fuel Gas Company Annual Report on Form 10-K.
RALPH E. DAVIS ASSOCIATES, INC.

                                     /s/ Allen C. Barron
                                     -------------------------------
                                     Allen C. Barron, P.E.
                                     Vice President

Houston, Texas
October 31, 1996	

CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (No. 33-51881), Form S-3 (No. 33-49401), Form S-3 (No. 33-36868), Form S-3 (No. 333-03803), Form S-8 (No. 2-94539), Form S-8 (No. 33-49693), Form S-8 (No. 333-03057), and Form S-8 (No. 333-03055) of National Fuel Gas Company of our report dated October 30, 1996, except as to Note H, which is as of November 8, 1996, appearing on page 46 of this Form 10-K.
PRICE WATERHOUSE LLP
Buffalo, New York
December 18, 1996

ARTICLE 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.	
MULTIPLIER: 1,000	

		
PERIOD TYPE	12 MOS	
FISCAL YEAR END	SEP 30 1996	
PERIOD START	OCT 01 1995	
PERIOD END	SEP 30 1996	
BOOK VALUE	PER BOOK	
TOTAL NET UTILITY PLANT	1,709,606	
OTHER PROPERTY AND INVEST	0	
TOTAL CURRENT ASSETS	220,981	
TOTAL DEFERRED CHARGES	7,377	
OTHER ASSETS	211,808	
TOTAL ASSETS	2,149,772	
COMMON	37,852	
CAPITAL SURPLUS PAID IN	395,272	
RETAINED EARNINGS	422,874	
TOTAL COMMON STOCKHOLDERS EQ	855,998	
PREFERRED MANDATORY	0	
PREFERRED	0	
LONG TERM DEBT NET	574,000	
SHORT TERM NOTES	109,700	
LONG TERM NOTES PAYABLE	0	
COMMERCIAL PAPER OBLIGATIONS	90,000	
LONG TERM DEBT CURRENT PORT	0	
PREFERRED STOCK CURRENT	0	
CAPITAL LEASE OBLIGATIONS	0	
LEASES CURRENT	0	
OTHER ITEMS CAPITAL AND LIAB	520,074	
TOT CAPITALIZATION AND LIAB	2,149,772	
GROSS OPERATING REVENUE	1,208,017	
INCOME TAX EXPENSE	66,321	
OTHER OPERATING EXPENSES	984,250	
TOTAL OPERATING EXPENSES	1,050,571	
OPERATING INCOME LOSS	157,446	
OTHER INCOME NET	3,869	
INCOME BEFORE INTEREST EXPEN	161,315	
TOTAL INTEREST EXPENSE	56,644	
NET INCOME	104,671	
PREFERRED STOCK DIVIDENDS	0	
EARNINGS AVAILABLE FOR COMM	104,671	
COMMON STOCK DIVIDENDS	61,920	
TOTAL INTEREST ON BONDS	40,872	
CASH FLOW OPERATIONS	168,469	
EPS PRIMARY	2.78	
EPS DILUTED	2.78	

ARTICLE 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 AND SCHEDULES	
RESTATED:	
MULTIPLIER: 1,000	

		
PERIOD TYPE	12 MOS	
FISCAL YEAR END	SEP 30 1995	
PERIOD START	OCT 01 1994	
PERIOD END	SEP 30 1995	
BOOK VALUE	PER BOOK	
TOTAL NET UTILITY PLANT	1,649,182	
OTHER PROPERTY AND INVEST	0	
TOTAL CURRENT ASSETS	189,244	
TOTAL DEFERRED CHARGES	8,653	
OTHER ASSETS	189,744	
TOTAL ASSETS	2,036,823	
COMMON	37,434	
CAPITAL SURPLUS PAID IN	383,031	
RETAINED EARNINGS	380,123	
TOTAL COMMON STOCKHOLDERS EQ	800,588	
PREFERRED MANDATORY	0	
PREFERRED	0	
LONG TERM DEBT NET	474,000	
SHORT TERM NOTES	52,600	
LONG TERM NOTES PAYABLE	0	
COMMERCIAL PAPER OBLIGATIONS	95,000	
LONG TERM DEBT CURRENT PORT	88,500	
PREFERRED STOCK CURRENT	0	
CAPITAL LEASE OBLIGATIONS	0	
LEASES CURRENT	0	
OTHER ITEMS CAPITAL AND LIAB	526,135	
TOT CAPITALIZATION AND LIAB	2,036,823	
GROSS OPERATING REVENUE	975,496	
INCOME TAX EXPENSE	43,879	
OTHER OPERATING EXPENSES	807,218	
TOTAL OPERATING EXPENSES	851,097	
OPERATING INCOME LOSS	124,399	
OTHER INCOME NET	5,378	
INCOME BEFORE INTEREST EXPEN	129,777	
TOTAL INTEREST EXPENSE	53,883	
NET INCOME	75,894	
PREFERRED STOCK DIVIDENDS	0	
EARNINGS AVAILABLE FOR COMM	75,894	
COMMON STOCK DIVIDENDS	59,625	
TOTAL INTEREST ON BONDS	40,896	
CASH FLOW OPERATIONS	174,361	
EPS PRIMARY	2.03	
EPS DILUTED	2.03	

ARTICLE UT	
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NATIONAL FUEL GAS COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.	
RESTATED:	
MULTIPLIER: 1,000	

		
PERIOD TYPE	12 MOS	
FISCAL YEAR END	SEP 30 1994	
PERIOD START	OCT 01 1993	
PERIOD END	SEP 30 1994	
BOOK VALUE	PER BOOK	
TOTAL NET UTILITY PLANT	1,545,550	
OTHER PROPERTY AND INVEST	0	
TOTAL CURRENT ASSETS	218,126	
TOTAL DEFERRED CHARGES	15,797	
OTHER ASSETS	201,333	
TOTAL ASSETS	1,980,806	
COMMON	37,278	
CAPITAL SURPLUS PAID IN	379,156	
RETAINED EARNINGS	363,854	
TOTAL COMMON STOCKHOLDERS EQ	780,288	
PREFERRED MANDATORY	0	
PREFERRED	0	
LONG TERM DEBT NET	462,500	
SHORT TERM NOTES	102,500	
LONG TERM NOTES PAYABLE	0	
COMMERCIAL PAPER OBLIGATIONS	10,000	
LONG TERM DEBT CURRENT PORT	96,000	
PREFERRED STOCK CURRENT	0	
CAPITAL LEASE OBLIGATIONS	0	
LEASES CURRENT	0	
OTHER ITEMS CAPITAL AND LIAB	529,518	
TOT CAPITALIZATION AND LIAB	1,980,806	
GROSS OPERATING REVENUE	1,141,324	
INCOME TAX EXPENSE	47,792	
OTHER OPERATING EXPENSES	967,629	
TOTAL OPERATING EXPENSES	1,015,421	
OPERATING INCOME LOSS	125,903	
OTHER INCOME NET	3,656	
INCOME BEFORE INTEREST EXPEN	129,559	
TOTAL INTEREST EXPENSE	47,124	
NET INCOME	85,672	
PREFERRED STOCK DIVIDENDS	0	
EARNINGS AVAILABLE FOR COMM	85,672	
COMMON STOCK DIVIDENDS	57,725	
TOTAL INTEREST ON BONDS	0	
CASH FLOW OPERATIONS	199,814	
EPS PRIMARY	2.32	
EPS DILUTED	2.32	

RALPH E. DAVIS ASSOCIATES, INC.
CONSULTANTS-PETROLEUM AND NATURAL GAS
3555 TIMMONS LANE-SUITE 1105
HOUSTON, TEXAS 77027
 (713) 622-8955
October 14, 1996
Seneca Resources Corporation
333 Clay Street, Suite 4150
Houston, Texas 77002
Attention: Mr. Don A. Brown
Vice President
Re: Oil, Condensate and Natural Gas Reserves, Seneca Resources Corporation As of October 1, 1996
Gentlemen:
At your request, the firm of Ralph E. Davis Associates, Inc. has audited an evaluation of the proved oil, condensate and natural gas reserves on leaseholds in which Seneca Resources Corporation has certain interests. This report presents a summary of the Proved Developed (producing and non-producing) and Proved Undeveloped reserves anticipated to be produced from Seneca Resources' interest.
Liquid volumes are expressed in thousands of barrels (MBbls) of stock tank oil. Gas volumes are expressed in millions of standard cubic feet (MMSCF) at the official temperature and pressure bases of the areas wherein the gas reserves are located.
The summarized results of the reserve audit are as follows:

Seneca Resources Corp. RALPH E. DAVIS ASSOCIATES, INC. Mr. Don A. Brown
October 14, 1996
Page 2
Estimated Proved Reserves
Net to Seneca Resources Corporation
As of October 1, 1996

                                            Proved Reserves
                           ------------------------------------------------
                                   Developed
                           -------------------------
Remaining  Reserves        Producing   Non-Producing   Undeveloped   Total
- -------------------        ---------   -------------   -----------   -----

GulfCoastdvision:
- ----------------
Oil/Condensate, MBbls         3,699         1,442         5,943      11,084
Gas, MMSCF                   23,353        54,348        30,090     107,791

WestCoastDivision:
- -----------------
Oil/Condensate, MBbls         5,875         2,875         5,762      14,512
Gas, MMSCF                   10,715         6,628        13,455      30,798

EastCoastDivision:
- -----------------
Oil/Condensate, MBbls           152             0             0         152
Gas, MMSCF                   68,049           443             0      68,492

TOTAL:
- -----
Oil/Condensate, MBbls         9,726         4,317        11,705      25,748
Gas,MMSCF                   102,117        61,419        43,545     207,081	

DISCUSSION:
The scope of this study was to audit the proved reserves attributable to the interests of Seneca Resources Corporation. Reserve estimates were prepared by Seneca using acceptable evaluation principals for each source. The quantities presented herein are estimated reserves of oil, condensate and natural gas that geologic and engineering data demonstrate can be recovered from known reservoirs under existing economic conditions with reasonable certainty.
Ralph E. Davis Associates, Inc. has audited the reserve estimates, the data incorporated into preparing the estimates and the methodology used to evaluate the reserves. Certain changes to either individual reserve estimates or the categorization of reserves were suggested by Ralph E. Davis Associates, Inc. and accepted by Seneca Resources. It is our opinion that the reserves presented herein meet all the criteria of Proved Reserves.

Seneca Resources Corp. RALPH E. DAVIS ASSOCIATES, INC. Mr. Don A. Brown
October 14, 1996
Page 3
Neither Ralph E. Davis Associates, Inc. nor any of its employees have any interest in Seneca Resources Corporation or the properties reported herein. The employment and compensation to make this study are not contingent on our estimate of reserves.
We appreciate the opportunity to be of service to you in this matter, and will be glad to address any questions or inquiries you may have.
Very truly yours,
RALPH E. DAVIS ASSOCIATES, INC.

/s/ Allen C. Barron

Allen C. Barron, P. E.
Vice President