<PAGE>
RULE NO. 424(b)(3)
REGISTRATION NO. 333-90763
[LOGO OF IEI INDIANA ENERGY]
[LOGO OF SIGCORP]
PROPOSED MERGER--YOUR VOTE IS IMPORTANT
Dear Shareholder:
This Joint Proxy Statement/Prospectus provides a detailed explanation of the
proposed merger of Indiana Energy, Inc. and SIGCORP, Inc. The merger is
structured so that Indiana Energy and SIGCORP will both be merged into Vectren
Corporation. The boards of directors of Vectren, Indiana Energy and SIGCORP
have each agreed on a merger.
If you are an Indiana Energy shareholder, you will receive 1 share of
Vectren common stock for each share of Indiana Energy common stock you own. If
you are a SIGCORP shareholder, you will receive 1.333 shares of Vectren common
stock for each share of SIGCORP common stock you own. If the merger is
completed, former Indiana Energy shareholders will own 48.6% of Vectren, and
former SIGCORP shareholders will own 51.4% of Vectren.
The merger cannot be completed without the approval of a majority of the
outstanding shares of Indiana Energy and SIGCORP.
This document provides you with detailed information about the proposed
merger. Please read this entire document carefully. You may obtain additional
information about Indiana Energy and SIGCORP from documents filed with the
Securities and Exchange Commission.
The boards of directors of Indiana Energy and SIGCORP have each approved the
merger agreement and have concluded that the merger is in the best interests of
Indiana Energy and SIGCORP shareholders. Accordingly, each of the boards of
directors unanimously recommends that you vote in favor of the merger proposal.
Vectren intends to apply to list its common shares on the New York Stock
Exchange under the symbol "VVC." If the Vectren common shares are not approved
for listing on the New York Stock Exchange, the merger may not occur.
Please be sure to read the "Risk Factors" section beginning on page 11 as
well as other risks included in "Forward-Looking Statements May Prove
Inaccurate" on page 14 for a discussion of risks which should be considered by
stockholders with respect to the merger.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the merger or determined if the document
is accurate or complete. Any representation to the contrary is a criminal
offense.
Sincerely yours,
/s/ Ronald G. Reherman
Ronald G. Reherman /s/ Niel C. Ellerbrook
Chairman and Chief Niel C. Ellerbrook
Executive Officer of President and Chief
SIGCORP, Inc. Executive Officer of
November 12, 1999 Indiana Energy, Inc.
November 12, 1999
The date of this Joint Proxy Statement/Prospectus is November 12, 1999, and
it is first mailed to shareholders of Indiana Energy and SIGCORP on November
15, 1999.
<PAGE>
[LOGO OF IEI INDIANA ENERGY]
INDIANA ENERGY, INC.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 17, 1999
TO THE SHAREHOLDERS OF INDIANA ENERGY, INC.:
Indiana Energy, Inc. will hold a special meeting of shareholders at its
principal office, 1630 North Meridian Street, Indianapolis, Indiana 46202, on
December 17, 1999, at 9:00 a.m. (local time), for the following purposes:
1. To consider and vote upon a proposal to approve and adopt an Agreement
and Plan of Merger among Indiana Energy, SIGCORP, Inc. and Vectren
Corporation, each an Indiana corporation, and the transactions contemplated by
the merger agreement. The merger agreement provides for the merger of each of
Indiana Energy and SIGCORP into Vectren, all as described in the accompanying
Joint Proxy Statement/Prospectus, and provides for the Indiana Energy common
shares and SIGCORP common shares to be converted into the right to receive
Vectren common shares.
2. To transact any other business as may properly come before the meeting,
or any adjournment of the meeting.
The board of directors has fixed the close of business on October 25, 1999,
as the record date for determining the shareholders entitled to notice of and
to vote at the special meeting and at any adjournment of the special meeting.
It is important that your shares are represented at the special meeting.
Approval and adoption of the merger agreement require the affirmative vote of
the holders of a majority of the outstanding Indiana Energy common shares.
Whether or not you now expect to be present at the meeting, please fill in,
date and sign the enclosed proxy and return it promptly to us in the
accompanying addressed envelope. If you sign and return your proxy card
without specifying the manner in which you would like your shares to be voted,
your shares will be voted for approval and adoption of the merger agreement.
The enclosed envelope requires no stamp if mailed in the United States. You
have the unconditional right to revoke your proxy at any time before we
exercise the authority granted by it.
By order of the board of directors
Indiana Energy, Inc.
/s/ Anthony E. Ard
Anthony E. Ard
Secretary and Senior Vice President
Indianapolis, Indiana
November 12, 1999
The Board of Directors of Indiana Energy has unanimously approved the
merger agreement and unanimously recommends that shareholders of Indiana
Energy vote FOR approval and adoption of the merger agreement.
<PAGE>
SIGCORP, INC.
[LOGO OF SIGCORP, INC.] 20 N. W. Fourth Street
Evansville, Indiana 47741-0001
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 17, 1999
TO THE SHAREHOLDERS OF SIGCORP, INC.:
SIGCORP, Inc. will hold a special meeting of shareholders at its Norman P.
Wagner Operations Center, 10 N. Main Street, Evansville, Indiana 47741 on
December 17, 1999, at 2:00 p.m. (local time), for the following purposes:
1. To consider and vote upon a proposal to approve and adopt an Agreement
and Plan of Merger among SIGCORP, Indiana Energy, Inc. and Vectren
Corporation, each an Indiana corporation, and the transactions contemplated by
the merger agreement. The merger agreement provides for the merger of each of
SIGCORP and Indiana Energy into Vectren, all as described in the accompanying
Joint Proxy Statement/Prospectus, and provides for the SIGCORP common shares
and Indiana Energy common shares to be converted into the right to receive
Vectren common shares.
2. To transact any other business as may properly come before the meeting,
or any adjournment of the meeting.
The board of directors has fixed the close of business on October 25, 1999,
as the record date for determining the shareholders entitled to notice of and
to vote at the special meeting and at any adjournment of the special meeting.
It is important that your shares be represented at the special meeting.
Approval and adoption of the merger agreement require the affirmative vote of
the holders of a majority of the outstanding SIGCORP common shares. Whether or
not you now expect to be present at the meeting, please fill in, date and sign
the enclosed proxy and return it promptly to us in the accompanying addressed
envelope. If you sign and return your proxy card without specifying the manner
in which you would like your shares to be voted, your shares will be voted for
approval and adoption of the merger agreement. The enclosed envelope requires
no stamp if mailed in the United States. You have the unconditional right to
revoke your proxy at any time before we exercise the authority granted by it.
By order of the board of directors
Sigcorp, Inc.
/s/ Timothy L. Burke
Timothy L. Burke
Secretary and Treasurer
Evansville, Indiana
November 12, 1999
The Board of Directors of SIGCORP has unanimously approved the merger
agreement and unanimously recommends that shareholders of SIGCORP vote FOR
approval and adoption of the merger agreement.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
WHERE YOU CAN FIND MORE INFORMATION........................................ i
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................... iii
WHO CAN HELP ANSWER MY OTHER QUESTIONS?.................................... iv
HOW DO I ACCESS A LIVE BROADCAST OF THE SPECIAL MEETINGS ON THE INTERNET?.. iv
SUMMARY.................................................................... 1
SELECTED HISTORICAL FINANCIAL DATA......................................... 6
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA OF VECTREN CORPORATION......... 8
COMPARATIVE PER SHARE INFORMATION.......................................... 9
COMPARATIVE MARKET PRICES AND DIVIDENDS.................................... 10
RISK FACTORS............................................................... 11
Risks relating to the merger............................................. 11
Risks relating to operations............................................. 12
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE............................ 14
MEETINGS, VOTING AND PROXIES............................................... 15
Indiana Energy Special Meeting of Shareholders........................... 15
SIGCORP Special Meeting of Shareholders.................................. 16
THE COMPANIES.............................................................. 18
Indiana Energy........................................................... 18
SIGCORP.................................................................. 18
Vectren.................................................................. 19
THE MERGER................................................................. 20
Background............................................................... 20
Recommendation of Indiana Energy Board of Directors; Reasons of Indiana
Energy for the Merger................................................... 22
Opinion of Financial Advisor to Indiana Energy........................... 24
Recommendation of SIGCORP Board of Directors; Reasons of SIGCORP for the
Merger.................................................................. 28
Opinion of Financial Advisor to SIGCORP.................................. 30
Conflicts of Interest.................................................... 35
Options.................................................................. 37
Dissenters' Rights....................................................... 38
New York Stock Exchange Listing of Vectren Common Shares................. 38
Delisting and Deregistration of Indiana Energy Common Shares and SIGCORP
Common Shares........................................................... 38
Federal Securities Law Consequences...................................... 38
REGULATORY MATTERS......................................................... 39
RECENT DEVELOPMENTS........................................................ 41
MANAGEMENT AND OPERATIONS OF VECTREN AFTER THE MERGER...................... 42
THE MERGER AGREEMENT....................................................... 43
The Merger............................................................... 43
Conversion of Securities................................................. 43
Conversion of Options.................................................... 43
Conversion of Restricted Stock........................................... 43
Exchange of Stock Certificates........................................... 44
Representations and Warranties........................................... 44
Covenants of Indiana Energy and SIGCORP.................................. 45
Conditions to the Merger................................................. 48
Termination.............................................................. 49
Termination Fees and Cross Options....................................... 50
Amendment and Waiver..................................................... 51
</TABLE>
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<TABLE>
<S> <C>
ACCOUNTING TREATMENT....................................................... 51
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES..................... 51
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION........................ 53
DESCRIPTION OF VECTREN CAPITAL SHARES...................................... 60
General Matters.......................................................... 60
Common Shares............................................................ 60
Preferred Shares......................................................... 60
Shareholder Rights Agreement............................................. 60
Indiana Statutes......................................................... 61
Transfer Agent and Registrar............................................. 61
COMPARISON OF RIGHTS OF INDIANA ENERGY SHAREHOLDERS, SIGCORP SHAREHOLDERS
AND VECTREN SHAREHOLDERS.................................................. 62
Right to Call Special Meetings........................................... 62
Quorum for Shareholder Meetings.......................................... 62
Supermajority Voting Provisions.......................................... 62
Size of the Board........................................................ 63
Nominations for Director by Shareholders................................. 63
Notice of Shareholder Business........................................... 64
Shareholder Rights Agreement............................................. 64
Fiscal Year End.......................................................... 65
SHAREHOLDER PROPOSALS...................................................... 65
LEGAL MATTERS.............................................................. 65
EXPERTS.................................................................... 65
WHERE YOU CAN FIND DEFINITIONS OF TERMS USED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS...................................................... 66
APPENDIX A
Agreement and Plan of Merger............................................. A-1
APPENDIX B
Articles of Incorporation of Vectren Corporation......................... B-1
APPENDIX C
By-Laws of Vectren Corporation........................................... C-1
APPENDIX D
Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated............ D-1
APPENDIX E
Opinion of Goldman, Sachs & Co........................................... E-1
</TABLE>
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Indiana Energy and SIGCORP file annual, quarterly and special reports and
other information with the SEC. You may read and copy any reports, statements
or other information we file at the SEC's public reference rooms in
Washington, D.C. at 450 Fifth Street, N.W., Washington, D.C. 20549, in New
York, New York at 7 World Trade Center, 13th Floor and in Chicago, Illinois at
Suite 1400, Citicorp Center, 500 West Madison Street. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at http://www.sec.gov.
Vectren has filed a Registration Statement on Form S-4 to register with the
SEC the Vectren common shares to be issued to shareholders of Indiana Energy
and SIGCORP in the merger. This Joint Proxy Statement/ Prospectus is a part of
that Registration Statement and constitutes the prospectus of Vectren as well
as the proxy statements of Indiana Energy and SIGCORP for the Indiana Energy
special meeting and the SIGCORP special meeting. As allowed by SEC rules, this
Joint Proxy Statement/Prospectus does not contain all the information you can
find in the Registration Statement or the exhibits to the Registration
Statement.
Documents we have incorporated by reference in this Joint Proxy
Statement/Prospectus
The SEC allows us to "incorporate by reference" information into this Joint
Proxy Statement/Prospectus, which means that we can disclose important
information to you by referring you to another document filed separately with
the SEC. The information that we are incorporating by reference is deemed to
be part of this Joint Proxy Statement/Prospectus, except for any information
superseded by information in this Joint Proxy Statement/Prospectus. This Joint
Proxy Statement/Prospectus incorporates by reference the documents listed
below that we have previously filed with the SEC. These previously filed
documents contain important information about Indiana Energy and SIGCORP and
their finances.
<TABLE>
<CAPTION>
Indiana Energy SEC Filings (File No. 1-
09091) Period
------------------------------------------- ---------------------------------
<C> <S>
Annual Report on Form 10-K Year ended September 30, 1998
Quarters ended December 31, 1998,
Quarterly Reports on Form 10-Q and
March 31 and June 30, 1999
Current Reports on Form 8-K Filed on October 9, October 13
and October 30, 1998, and on
January 27, April 22, April 30,
June 15, June 17, July 30 and
October 29, 1999
<CAPTION>
SIGCORP SEC Filings (File No. 1-11603) Period
------------------------------------------- ---------------------------------
<C> <S>
Annual Report on Form 10-K Year ended December 31, 1998
Annual Report on Form 10-K/A Filed November 3, 1999, amending
Form 10-K
for the year ended December 31,
1998
Quarterly Reports on Form 10-Q Quarters ended March 31, June 30,
1999 and September 30, 1999
Current Reports on Form 8-K Filed on June 16 and November 4,
1999
</TABLE>
We are also incorporating by reference additional documents that we file
with the SEC between the date of this Joint Proxy Statement/Prospectus and the
date of the Indiana Energy special meeting and the SIGCORP special meeting.
Indiana Energy has supplied the information contained or incorporated by
reference in this Joint Proxy Statement/Prospectus relating to Indiana Energy
and SIGCORP has supplied the information relating to SIGCORP.
You can obtain any of the documents we have incorporated by reference from
us or from the SEC. Documents incorporated by reference are available from us
without charge, excluding all exhibits unless we have specifically
incorporated by reference an exhibit in this Joint Proxy Statement/Prospectus.
You may obtain
i
<PAGE>
documents incorporated by reference in this Joint Proxy Statement/Prospectus
by requesting them in writing or by telephone from the appropriate Company at
the following addresses:
Indiana Energy, Inc. SIGCORP, Inc.
1630 North Meridian Street 20 N.W. Fourth Street
Indianapolis, Indiana 46202 Evansville, Indiana 47741
Tel. No. (317) 926-3351 Tel. No. (812) 465-5300
If you would like to request documents from us, please do so by December
10, 1999 to receive them before the special meetings.
Indiana Energy and SIGCORP each maintain a web site on which you can
acquire some of the documents incorporated by reference in this Joint Proxy
Statement/Prospectus. Indiana Energy's web site is at http://www.indiana-
energy.com and SIGCORP's web site is at http://www.sigcorpinc.com.
Please complete the enclosed proxy card and mail it in the enclosed
postage-paid envelope as soon as possible.
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: What are the benefits of the
merger?
A: We believe the merger will
allow both Indiana Energy and
SIGCORP to realize important
benefits and increase
shareholder value. The merger
should enable the combined
companies to increase
profitability through increased
market penetration, cost
savings, operational
efficiencies, economies of
scale and other synergies. In
addition, the merger will even
out the seasonality of Indiana
Energy's and SIGCORP's
businesses.
Q: What do I need to do now?
A: After you read and consider
carefully the information
contained in this document,
please fill out and sign your
proxy card. Then mail your
signed proxy card in the
enclosed return envelope as
soon as possible so that your
shares may be represented at
your special meeting.
Q: If my shares are held in
"street name" by my broker,
will my broker vote my shares
for me?
A: Your broker will vote your
shares only if you provide
instructions on how to vote.
You should follow the
directions provided by your
broker regarding how to
instruct your broker to vote
your shares.
Q: Can I change my vote or revoke
my proxy after I have mailed my
signed proxy card?
A: You can change your vote or
revoke your proxy at any time
before your proxy is voted at
the Indiana Energy special
meeting or the SIGCORP special
meeting. You can do this in one
of three ways. First, you can
send a written notice stating
that you would like to revoke
your proxy. Second, you can
complete and submit a new proxy
card. If you choose either of
these methods, you must submit
your notice of revocation or
your new proxy card to Indiana
Energy or SIGCORP, as the case
may be, before the vote on the
merger agreement at the special
meeting. Third, you can attend
the Indiana Energy special
meeting or the SIGCORP special
meeting and vote in person.
Simply attending the meeting,
however, will not revoke your
proxy. If you have instructed a
broker to vote your shares, you
must follow directions received
from your broker to change your
vote.
Q: What will happen if I don't
vote?
A: If you do not vote, it is, in
effect, a vote against the
merger. Abstentions are also
considered votes against the
merger. If you sign and return
your proxy card without marking
your choice, your shares will
be voted for the merger.
Q: If I am an Indiana Energy or
SIGCORP shareholder, should I
send in my stock certificates
now?
A: No. Upon the consummation of
the transaction we will send
you a transmittal letter that
will instruct you to send in
your stock certificates to
Indiana Energy's or SIGCORP's
exchange agent.
Q: When do you expect the merger
to be completed?
A: We are working toward
completing the merger as soon
as possible. For the merger to
occur, it must be approved by
both the Indiana Energy
shareholders and the SIGCORP
shareholders. If both the
Indiana Energy shareholders and
SIGCORP shareholders approve
the merger, there are
regulatory approvals that still
must be obtained. We hope to
complete the merger before
March 31, 2000.
Q: What are the tax considerations
of the merger?
A: Neither Indiana Energy nor
SIGCORP will recognize gain or
loss as a result of the merger.
Indiana Energy and SIGCORP
shareholders who receive
Vectren common shares in the
merger will not recognize gain
or loss as a result of the
merger (except with respect to
any cash received in lieu of
any fractional shares). To
review the tax considerations
of the merger in greater
detail, see "MATERIAL UNITED
STATES FEDERAL INCOME TAX
CONSEQUENCES."
iii
<PAGE>
WHO CAN HELP ANSWER MY OTHER QUESTIONS?
If you have more questions about the merger, you should contact the
solicitation agents:
for Indiana Energy: for SIGCORP:
Corporate Investor Communications, Inc. D.F. King & Co., Inc.
111 Commerce Road 77 Water Street
Carlstadt, New Jersey 07072-2586 New York, New York 10005
Call toll free (877) 842-2413 Call toll free (800) 735-3107
Banks and Brokers Call (201) 896-1900
HOW DO I ACCESS A LIVE BROADCAST OF THE SPECIAL MEETINGS ON THE INTERNET?
Indiana Energy SIGCORP
Shareholders of Indiana Energy may Shareholders of SIGCORP may access a
access a live broadcast of the live broadcast of the SIGCORP annual
Indiana Energy special meeting at meeting at SIGCORP's website,
Indiana Energy's website, http://www.sigcorpinc.com.
http://www.indiana-energy. com.
iv
<PAGE>
SUMMARY
This summary highlights selected information from this document and may not
contain all of the information that is important to you. To understand the
merger more fully and for a more complete description of the legal terms of the
merger, you should carefully read this entire document and the documents to
which we have referred you. See "WHERE YOU CAN FIND MORE INFORMATION." Unless
the context requires otherwise, we use the terms "Indiana Energy" to refer to
Indiana Energy, Inc. and all of its subsidiaries, "SIGCORP" to refer to
SIGCORP, Inc. and all of its subsidiaries and "Vectren" to refer to Vectren
Corporation.
For your convenience in reading this Joint Proxy Statement/Prospectus, we
have included a list of frequently used terms and a reference to the pages on
which these used terms are defined. See "WHERE YOU CAN FIND DEFINITIONS OF
TERMS USED IN THIS JOINT PROXY STATEMENT/PROSPECTUS."
The Companies
Indiana Energy, Inc.
1630 North Meridian Street
Indianapolis, Indiana 46202
(317) 926-3351
Indiana Energy is a public utility holding company. Its gas public utility
subsidiary, Indiana Gas Company, Inc., provides natural gas distribution
services to a service area within Indiana having a population of approximately
2 million.
Indiana Energy also engages in the sale, purchase and interchange of gas and
energy with other gas companies and power producers.
Indiana Energy also conducts nonregulated businesses through ten other
subsidiaries.
SIGCORP, Inc.
20 N.W. Fourth Street
Evansville, Indiana 47741
(812) 465-5300
SIGCORP is a public utility holding company with eleven wholly-owned
subsidiaries, including its principal subsidiary, Southern Indiana Gas and
Electric Company, a gas and electric utility ("SIGECO"), and ten nonregulated
subsidiaries in Indiana. Through SIGECO, SIGCORP generates, transmits,
distributes and sells electric energy and distributes and sells natural gas in
a service area covering ten counties in southwestern Indiana.
Vectren Corporation
20 N.W. Fourth Street
Evansville, Indiana 47741
(812) 465-5300
Vectren was recently created solely to effect the merger of Indiana Energy
and SIGCORP into Vectren and carry on the combined business of Indiana Energy
and SIGCORP after the merger. Before the merger, it will have no operations. If
the merger was completed today, Vectren would have a market territory covering
nearly two-thirds of the State of Indiana and a customer base of 650,000.
Our Reasons For the Merger
The merger is a natural alliance of two companies with complementary
products and services. We believe the merger will create a company that is
better positioned to compete in the energy industry and expect the merger to
enhance long-term value to shareholders while providing customers with reliable
service at more stable and competitive prices. We expect to achieve these
results by:
. offering a broader array of products and services;
. eliminating duplicative activities;
. reducing operating expenses and cost of capital;
. eliminating or postponing some capital expenditures; and
. enhancing purchasing capabilities for goods and services.
The Special Meetings
Indiana Energy Special Meeting. The Indiana Energy special meeting of
shareholders is scheduled to be held on December 17, 1999 at 9:00 a.m. (local
time), at the principal office of Indiana Energy, 1630 North Meridian Street,
Indianapolis, Indiana 46202.
<PAGE>
Shareholders of Indiana Energy will be asked to consider and vote upon a
proposal to approve and adopt a merger agreement under which Indiana Energy and
SIGCORP will merge into Vectren, with each Indiana Energy common share being
converted into the right to receive one Vectren common share (the "Indiana
Energy Ratio").
SIGCORP Special Meeting. The SIGCORP special meeting is scheduled to be held
on December 17, 1999 at 2:00 p.m. (local time), at its Norman P. Wagner
Operations Center, 10 N. Main Street, Evansville, Indiana 47741. Shareholders
of SIGCORP will be asked to consider and vote upon a proposal to approve and
adopt a merger agreement under which SIGCORP and Indiana Energy will merge into
Vectren, with each SIGCORP common share being converted into the right to
receive 1.333 Vectren common shares (the "SIGCORP Ratio").
Our Recommendations to Shareholders
Indiana Energy
The board of directors of Indiana Energy has carefully reviewed the merger.
The Indiana Energy board believes that the merger is in your best interests and
unanimously recommends that you vote for the proposal to approve and adopt the
merger agreement and the transactions it contemplates.
SIGCORP
The board of directors of SIGCORP has carefully reviewed the merger. The
SIGCORP board believes that the merger is in your best interests and
unanimously recommends that you vote for the proposal to approve and adopt the
merger agreement and the transactions it contemplates.
Opinions of Financial Advisors
Indiana Energy
The Indiana Energy board has received an opinion from Merrill Lynch, Pierce,
Fenner & Smith Incorporated, dated as of June 11, 1999, as to the fairness,
from a financial point of view, of the exchange ratio in the merger of one
Vectren common share for each Indiana Energy common share.
A copy of the fairness opinion of Merrill Lynch is attached to this Joint
Proxy Statement/Prospectus as Appendix D. We urge you to read this opinion
carefully.
SIGCORP
The SIGCORP board has received an opinion from Goldman, Sachs & Co. as to
the fairness from a financial point of view to the holders of SIGCORP common
shares of the exchange ratio in the merger of 1.333 Vectren common shares for
each SIGCORP common share.
A copy of the fairness opinion of Goldman Sachs is attached to this Joint
Proxy Statement/Prospectus as Appendix E. We urge you to read this opinion
carefully.
Required Votes
To complete the merger, the merger agreement must be approved by holders of
a majority of the outstanding shares of each of Indiana Energy and SIGCORP.
Management and Board of Directors of Vectren following the Merger
Upon completion of the merger, Niel C. Ellerbrook, who is the President and
Chief Executive Officer of Indiana Energy, will be Chairman of the Board and
Chief Executive Officer of Vectren. Andrew E. Goebel, who is the President and
Chief Operating Officer of SIGCORP, will be President and Chief Operating
Officer of Vectren. The board of directors of Vectren will consist of 16
members. Eight members will be designated by the Indiana Energy board and eight
will be designated by the SIGCORP board.
Conditions to the Merger
We are working toward completing the proposed merger as soon as possible. We
currently hope to complete the merger before March 31, 2000. However, there are
several conditions to the merger that must be satisfied before the merger can
be completed. In the event that any one of these conditions is not satisfied or
to the extent possible, waived, the merger may not occur.
2
<PAGE>
Among others, these conditions include the following:
. the necessary approvals of both the Indiana Energy shareholders and the
SIGCORP shareholders;
. the SEC having declared the Registration Statement on Form S-4 effective for
the Vectren common shares to be issued in the merger and the New York Stock
Exchange having approved the listing of these shares on the New York Stock
Exchange;
. the approval or authorization of federal and state agencies having
jurisdiction over the merger, including the SEC, the Federal Energy
Regulatory Commission and, to the extent required, the Indiana Utility
Regulatory Commission;
. each company's accountants agreeing that the transaction qualifies for
pooling-of-interests treatment under applicable accounting rules; and
. each company's lawyers agreeing that the transaction will be tax free to
shareholders receiving only Vectren common shares in the merger.
If either Indiana Energy or SIGCORP waives a material condition to the
merger, it will then consider resoliciting your approval of the merger. Whether
the boards of directors of Indiana Energy and SIGCORP decide to resolicit
proxies from you will depend upon applicable law and whether the respective
boards believe that shareholders could reasonably be expected to want to know,
before signing a proxy, that the condition has been waived.
Termination of the Merger Agreement
We can agree to terminate the merger agreement by mutual written consent,
and either of us can terminate the merger agreement if any of the following
occurs:
. the other party materially breaches the merger agreement;
. a court or other governmental authority permanently prohibits the merger;
. the board of directors of either party determines that its fiduciary
obligations require acceptance of an offer from a third party to enter into a
takeover transaction;
. the board of directors of the other party modifies or repeals its resolution
approving the merger or adopts a resolution inconsistent with the merger
agreement, or fails to reaffirm its recommendation to its shareholders upon
request;
. we do not complete the merger by June 11, 2000 (or December 31, 2000 if
certain conditions are met);
. we do not receive the required shareholder approvals;
. the business of the other party materially changes for the worse; or
. a law, order, rule or regulation is adopted by a governmental authority which
has the effect, for the party, of prohibiting the merger.
Termination Fees
The merger agreement generally requires Indiana Energy or SIGCORP to pay to
the other a fee of $3 million for out-of-pocket expenses if the merger
agreement is terminated because of its material breach of a representation,
warranty, covenant or agreement.
In addition, the merger agreement generally requires Indiana Energy or
SIGCORP to pay to the other a termination fee of $35 million if (i) the merger
agreement terminates under certain circumstances and it has received an offer
to enter into an acquisition transaction with a third party and (ii) within two
years after the termination, it agrees to enter into or completes an
acquisition transaction with a third party. The total amount of fees and
expenses a terminating party may be liable for is $41 million, including
expenses relating to the options granted by each company to the other.
Options
Indiana Energy and SIGCORP have each granted options to the other to
purchase its shares. Upon exercise of the options, the exercising company would
own up to 16.6% of the outstanding common shares of the other company.
Regulatory Matters
We have filed an application with the FERC, seeking approval of the merger.
3
<PAGE>
We will file an application with the SEC seeking authorization of the
merger under The Public Utility Holding Company Act of 1935. Following
completion of the merger, Vectren believes it will be entitled to an exemption
from registration under the 1935 Act. The companies are currently exempt from
the registration and most other requirements of the 1935 Act.
The Hart-Scott-Rodino Antitrust Improvement Act of 1976 prohibits us from
completing the merger until after we have furnished information and materials
to the Antitrust Division of the U.S. Department of Justice and the Federal
Trade Commission and a required waiting period has ended. Both agencies have
the authority to challenge the merger on antitrust grounds before or after the
merger is completed.
Accounting Treatment
We expect the merger to be accounted for as a "pooling of interests" in
accordance with generally accepted accounting principles.
Dissenters' Rights
Neither Indiana Energy nor SIGCORP shareholders have dissenters' rights
with respect to the merger.
Material United States Federal Income Tax Consequences
Indiana Energy and SIGCORP intend that the merger be treated for federal
income tax purposes as a reorganization as defined in Section 368(a) of the
Internal Revenue Code of 1986, as in effect on the date of this Joint Proxy
Statement/Prospectus, and the obligation of Indiana Energy and SIGCORP to
complete the merger is conditioned on the receipt at the effective time of the
merger of opinions of Simpson Thacher & Bartlett, special counsel to Indiana
Energy, and Winthrop, Stimson, Putnam & Roberts, special counsel to SIGCORP,
stating that the merger will be treated as a reorganization as defined in
Section 368(a) of the Code, and that Indiana Energy, SIGCORP, Vectren and the
holders of common shares of Indiana Energy or SIGCORP who exchange their
shares for Vectren common shares will recognize no gain or loss (other than
with respect to the receipt of cash in lieu of fractional shares) for federal
income tax purposes as a result of the merger.
We urge Indiana Energy and SIGCORP shareholders to consult with a tax
advisor for a full understanding of the tax consequences to them of the
proposed merger. Under federal, state, local and foreign tax laws, some
shareholders may be subject to special treatment that is not explained in this
Joint Proxy Statement/ Prospectus.
Dividends After the Merger
After giving effect to the Indiana Energy Ratio and the SIGCORP Ratio we
expect the amounts received as dividends by the Vectren shareholders after the
completion of the merger will be similar to amounts they received prior to the
merger. However, Vectren dividends will be determined by the Vectren board.
For example, assuming the declaration of a dividend of $0.2425 per share by
Vectren, on an equivalent pro forma basis a holder of 100 Indiana Energy
common shares would receive $24.25 and a holder of 100 SIGCORP common shares
would receive $32.25 (based on 133 shares of Vectren). The determination of
dividends by the Vectren board will depend on business conditions, the
financial position and earnings of Vectren and other factors.
Vectren Articles of Incorporation and By-Laws
The merger agreement provides that, following the merger, the articles of
incorporation of Vectren and the by-laws of Vectren will be in the forms that
are attached to this Joint Proxy Statement/Prospectus as Appendices B and C.
Conflicts of Interest
The merger agreement provides that Vectren will honor employment and/or
severance agreements entered into by Indiana Energy or SIGCORP before the date
of the merger agreement. Vectren will offer to enter into employment
agreements with some current employees of Indiana Energy and SIGCORP. Vectren
will generally indemnify and provide liability insurance to the present
officers and directors of Indiana Energy and SIGCORP.
4
<PAGE>
Security Ownership of Managements
Indiana Energy. At the record date for the Indiana Energy special meeting,
the directors and executive officers of Indiana Energy and their affiliates
held 2,819,416 Indiana Energy common shares, or 9.46% of the outstanding
shares.
SIGCORP. At the record date for the SIGCORP special meeting, the directors
and executive officers of SIGCORP and their affiliates held 88,613 SIGCORP
common shares, or less than 1% of the outstanding shares.
5
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
We are providing the following historical financial information to aid you
in your analysis of the financial aspects of the proposed merger. We have
derived this information from audited financial statements for the fiscal years
ended September 30, 1994 through 1998 and unaudited financial statements for
the twelve months ended September 30, 1999 in the case of Indiana Energy, and
audited financial statements for the fiscal years ended December 31, 1994
through 1998 and unaudited financial statements for the nine months ended
September 30, 1999 in the case of SIGCORP. Due to the seasonal factors,
including weather conditions, that affect SIGCORP's operations, the results of
operations for SIGCORP for the nine months ended September 30, 1999 are not
necessarily indicative of the results that may be expected by SIGCORP for the
entire year.
This information is only a summary and you should read it in conjunction
with the historical financial statements and related notes which have been
filed with the SEC. See "WHERE YOU CAN FIND MORE INFORMATION."
Indiana Energy, Inc.
<TABLE>
<CAPTION>
Year Ended September 30,
-----------------------------------------------------
1999 1998 1997(1) 1996 1995 1994
-------- -------- -------- -------- -------- --------
(In Thousands, Except per Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Operating Revenues....... $420,463 $466,434 $530,559 $543,426 $405,552 $475,297
Operating Income......... 69,466 68,968 36,751 81,687 65,572 67,151
Net Income............... 41,751 40,204 20,503 42,201 32,956 34,441
Basic and Diluted
Earnings Per Average
Share of Common Stock
(2)..................... 1.40 1.33 0.68 1.41 1.10 1.15
Dividends Per Share of
Common Stock (2)........ 0.94 0.90 0.86 0.83 0.80 0.77
<CAPTION>
As of
-----------------------------------------------------
September 30,
-----------------------------------------------------
1999 1998 1997 1996 1995 1994
-------- -------- -------- -------- -------- --------
(In Thousands, Except per Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets............. 777,378 712,350 690,845 682,463 663,397 656,645
Long-term Debt (including
current maturities)..... 183,363 193,608 193,063 178,335 176,563 158,979
Common Shareholders'
Equity.................. 311,625 305,431 292,597 296,322 280,715 271,245
Book Value Per Share (2). 10.46 10.16 9.72 9.89 9.33 9.02
</TABLE>
- --------
(1) Reflects the recording of restructuring costs of $39.5 million ($24.5
million after-tax or $.81 per common share) in fiscal 1997.
(2) Adjusted to reflect the four-for-three stock split October 2, 1998.
6
<PAGE>
SIGCORP, Inc.
<TABLE>
<CAPTION>
Nine
Months
Ended Year Ended December 31,
September 30, ---------------------------------------------
1999 1998 1997 1996 1995 1994
------------- --------- -------- -------- -------- --------
(In Thousands, Except per Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Operating Revenues...... $440,044 $557,111 $433,237 $404,738 $360,771 $330,899
Operating Income........ 72,291 86,079 85,582 82,717 72,401 70,779
Net Income Before
Cumulative Effect of
Accounting Change (1).. 41,038 50,476 46,140 43,264 38,525 39,920
Net Income.............. 41,038 50,476 46,140 43,264 44,819 39,920
Earnings Per Average
Share of Common Stock
(2):
Before Cumulative Effect
of Accounting Change
(1).................... 1.74 2.14 1.95 1.83 1.63 1.69
Cumulative Effect of
Accounting Change...... -- -- -- -- 0.27 --
Basic Earnings Per
Share.................. 1.74 2.14 1.95 1.83 1.90 1.69
Diluted Earnings Per
Share.................. 1.73 2.12 1.95 1.83 1.90 1.69
Dividends Per Share of
Common Stock (2)....... 0.93 1.21 1.18 1.15 1.13 1.10
<CAPTION>
As of
-----------------------------------------------------------
December 31,
September 30, ---------------------------------------------
1999 1998 1997 1996 1995 1994
------------- --------- -------- -------- -------- --------
(In Thousands, Except per Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets............ 1,096,415 1,029,518 990,023 952,720 923,981 917,310
Long-term Debt
(including current
maturities and bonds
subject to tender)..... 338,094 303,471 317,902 293,788 298,846 303,413
Preferred Stock of
Subsidiary............. 19,282 19,398 19,514 19,514 19,514 19,605
Common Shareholders'
Equity................. 389,462 370,963 349,163 330,924 314,882 296,576
Book Value Per Share
(2).................... 16.48 15.70 14.77 14.00 13.33 12.55
</TABLE>
- --------
(1) Beginning in fiscal 1995, SIGCORP recognizes utility revenues for energy
delivered but not billed (unbilled revenue); it previously recognized
utility revenues only when billed.
(2) Adjusted to reflect the three-for-two stock split March 27, 1997.
7
<PAGE>
SELECTED UNAUDITED PRO FORMA FINANCIAL DATA OF VECTREN CORPORATION
We expect that the merger of Indiana Energy and SIGCORP into Vectren will be
accounted for as a pooling of interests. Accordingly, we have stated the
financial statements of Vectren for all periods presented to include the
assets, liabilities, shareholders' equity and results of operations of each of
Indiana Energy and SIGCORP.
The following presents selected unaudited pro forma financial information of
Vectren that reflects the pooling of interests method of accounting and allows
you to see what Vectren's restated historical financial statements for the
periods presented will look like after the merger. Indiana Energy's fiscal year
ends on September 30. SIGCORP's fiscal year ends on December 31. The pro forma
financial data for the years ended December 31, 1996-1998 reflects fiscal years
ended December 31 for SIGCORP and September 30 for Indiana Energy. The
financial data for the nine months ended September 30, 1999 are the results of
the nine months ended September 30, 1999 for Indiana Energy and SIGCORP.
Due to the seasonal factors, including weather conditions, that affect
Indiana Energy's and SIGCORP's operations, the pro forma results of operations
for interim periods are not indicative of the pro forma results of operations
for an annual period.
We have calculated the pro forma per share amounts using the exchange ratios
of one Vectren common share for each Indiana Energy common share and 1.333
Vectren common shares for each SIGCORP common share.
The companies may have performed differently had they actually been combined
during the periods presented. You should not rely on the unaudited pro forma
combined financial information as being indicative of either the historical
results that would have been achieved or the future results that we will
experience after the merger is completed. It is also important that you read
the "UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS" that we have included
in this Joint Proxy Statement/Prospectus.
Vectren Corporation
<TABLE>
<CAPTION>
Nine Months Fiscal Year Ended December
Ended 31,
September 30, ----------------------------
1999 1998 1997(1) 1996
------------- ---------- -------- --------
(In Thousands, Except per Share Amounts)
<S> <C> <C> <C> <C>
Income Statement Data:
Operating Revenues.................. $735,266 $1,023,545 $963,796 $948,164
Operating Income.................... 117,945 155,047 122,333 164,404
Net Income.......................... 68,513 90,680 66,643 85,465
Basic and Diluted Earnings Per
Average Share of Common Stock...... 1.12 1.47 1.08 1.39
Dividends Per Share of Common Stock. 0.70 0.90 0.87 0.85
<CAPTION>
As of
September 30,
1999
-------------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Total Assets........................ 1,868,876
Long-Term Debt (including current
maturities and bonds subject to
tender)............................ 521,457
Preferred Stock of Subsidiary....... 19,282
Common Shareholders' Equity......... 692,087
Book Value Per Share................ 11.28
</TABLE>
- --------
(1) Reflects Indiana Energy's fiscal 1997 restructuring costs of $39.5 million
($24.5 million after-tax) or $.40 per Vectren pro forma common share.
8
<PAGE>
COMPARATIVE PER SHARE INFORMATION
The following table summarizes the per share information for Vectren,
SIGCORP and Indiana Energy on a pro forma, equivalent pro forma and historical
basis. The pro forma and equivalent pro forma per share amounts give effect to
the conversion of each SIGCORP common share outstanding into 1.333 Vectren
common shares. The Indiana Energy Equivalent Pro Forma is not shown because it
is the same as the Vectren Pro Forma due to the one-for-one share exchange
ratio for Indiana Energy common shares.
Indiana Energy's fiscal year ends on September 30. SIGCORP's fiscal year
ends on December 31. The pro forma and equivalent pro forma per share data for
the years ended December 31, 1994-1998 reflects fiscal years ended December 31
for SIGCORP and September 30 for Indiana Energy. The pro forma and equivalent
pro forma per share data for the nine months ended September 30, 1999 reflect
the results of the nine months ended September 30, 1999 for Indiana Energy and
SIGCORP.
<TABLE>
<CAPTION>
Nine Months
Ended Fiscal Year Ended December 31,
September 30, -----------------------------------
1999 1998 1997(1) 1996 1995 1994
------------- ------ ------- ------ ------ ------
(In Thousands, Except per Share Amounts)
<S> <C> <C> <C> <C> <C> <C>
VECTREN PRO FORMA
Earnings per average common
share:
Basic..................... $ 1.12 $ 1.47 $ 1.08 $ 1.39 $ 1.26 $ 1.21
Diluted................... 1.12 1.47 1.08 1.39 1.26 1.21
Dividends per common share
(2)........................ 0.70 0.90 0.87 0.85 0.82 0.80
Book value per common share. 11.28 10.99 10.42 10.20 9.67 9.22
SIGCORP EQUIVALENT PRO FORMA
Earnings per average common
share:
Basic..................... 1.49 1.96 1.44 1.85 1.68 1.61
Diluted................... 1.49 1.96 1.44 1.85 1.68 1.61
Dividends per common share
(2)........................ 0.93 1.20 1.16 1.13 1.09 1.07
Book value per common share. 15.04 14.65 13.89 13.60 12.89 12.29
SIGCORP HISTORICAL
Earnings per average common
share:
Basic..................... 1.74 2.14 1.95 1.83 1.90 1.69
Diluted................... 1.73 2.12 1.95 1.83 1.90 1.69
Dividends per common share.. 0.93 1.21 1.18 1.15 1.13 1.10
Book value per common share. 16.48 15.70 14.77 14.00 13.33 12.55
<CAPTION>
Nine Months
Ended Fiscal Year Ended September 30,
September 30, -----------------------------------
1999 1998 1997(2) 1996 1995 1994
------------- ------ ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
INDIANA ENERGY HISTORICAL
Earnings per average common
share:
Basic..................... .92 1.33 0.68 1.41 1.10 1.15
Diluted................... .92 1.33 0.68 1.41 1.10 1.15
Dividends per common share.. 0.71 0.90 0.86 0.83 0.80 0.77
Book value per common share. 10.46 10.16 9.72 9.89 9.33 9.02
</TABLE>
- --------
(1) Reflects Indiana Energy's fiscal 1997 restructuring costs of $39.5 million
($24.5 million after-tax) or $.81 per Indiana Energy historical common
share, $.40 per Vectren pro forma common share and $.53 per SIGCORP
equivalent pro forma common share.
(2) We expect the going forward dividend for Vectren will be $.2425 per share,
per quarter and on a SIGCORP equivalent share basis will be $.3233 per
share, per quarter.
9
<PAGE>
COMPARATIVE MARKET PRICES AND DIVIDENDS
Indiana Energy common shares are traded on the New York Stock Exchange under
the symbol "IEI." SIGCORP common shares are traded on the New York Stock
Exchange under the symbol "SIG." The following table shows the high and low
prices of, and dividends paid on, Indiana Energy common shares and SIGCORP
common shares based on publicly available reports. The amounts below have been
adjusted to reflect Indiana Energy's four-for-three stock split October 2,
1998, and SIGCORP's three-for-two stock split March 27, 1997.
<TABLE>
<CAPTION>
Indiana Energy SIGCORP
----------------------- -----------------------
High Low Dividends High Low Dividends
Calendar Year ------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
1996
First Quarter................ $19.97 $17.63 $0.21 $24.63 $21.88 $0.29
Second Quarter............... 22.03 17.16 0.21 23.25 21.88 0.29
Third Quarter................ 21.09 17.91 0.21 23.75 22.13 0.29
Fourth Quarter............... 19.22 16.97 0.21 23.88 22.00 0.29
1997
First Quarter................ 20.44 17.16 0.21 24.56 22.56 0.30
Second Quarter............... 20.06 17.34 0.21 26.94 21.88 0.30
Third Quarter................ 22.36 18.19 0.22 26.94 24.13 0.30
Fourth Quarter............... 25.69 20.34 0.22 30.13 24.94 0.30
1998
First Quarter................ 24.66 21.19 0.22 32.31 27.31 0.30
Second Quarter............... 23.81 21.61 0.22 32.38 28.06 0.30
Third Quarter................ 25.13 19.59 0.23 33.44 30.25 0.30
Fourth Quarter............... 26.38 21.50 0.23 36.56 32.81 0.30
1999
First Quarter................ 24.63 18.94 0.23 36.31 26.25 0.31
Second Quarter............... 22.94 18.06 0.23 31.50 26.13 0.31
Third Quarter................ 21.81 19.63 0.24 28.75 24.69 0.31
Fourth Quarter (through
November 9, 1999)........... 21.38 19.25 -- 26.69 25.00 --
</TABLE>
The following table shows the last reported sale prices of Indiana Energy
common shares and SIGCORP common shares on June 11, 1999 (the last trading day
before the execution of the merger agreement) and on November 9, 1999 (the most
recent practicable date before the date of this Joint Proxy
Statement/Prospectus), and the equivalent pro forma price of SIGCORP common
shares giving effect to the exchange ratio of the 1.333 Vectren common shares
for each SIGCORP common share.
<TABLE>
<CAPTION>
SIGCORP
INDIANA ENERGY SIGCORP PRO FORMA
COMMON SHARES COMMON SHARES EQUIVALENT
-------------- ------------- ----------
<S> <C> <C> <C>
June 11, 1999........................... $22.56 $29.50 $30.08
November 9, 1999........................ $20.44 $26.00 $27.25
</TABLE>
We urge you to obtain current market information for Indiana Energy and
SIGCORP common shares. We can give no assurance as to the market prices of
Indiana Energy or SIGCORP common shares at the time of the merger.
10
<PAGE>
RISK FACTORS
You should read and consider carefully each of the following factors, as
well as the other information contained in, attached to or incorporated by
reference in this document, before you vote on the merger.
Risks relating to the merger
Regulatory approval of the merger may take longer than anticipated, and may
require the divestiture of divisions, operations or assets of Vectren or
require Vectren to satisfy other conditions which may have a material adverse
effect on Vectren.
We cannot complete the merger until the expiration or termination of the
applicable waiting period under the HSR Act and the making of filings with and
notices to, and the receipt of consents, orders and approvals from, the SEC
and the FERC. The regulatory agencies may require the divestiture of
divisions, operations or assets of Vectren. Required divestitures or other
conditions, if any, may have a material adverse effect on the business,
financial condition or results of operations of Vectren or cause the
abandonment of the merger by Indiana Energy and SIGCORP. We estimate that the
required approvals will be obtained within 4 to 6 months from the date of this
Joint Proxy Statement/Prospectus, but may take longer.
Vectren may not fully achieve cost savings and other benefits Vectren expects
to be realized as a result of the merger, or may not achieve the benefits
within the time frames Vectren expects.
In approving and recommending the merger agreement, each of the Indiana
Energy board and the SIGCORP board considered the cost savings, operating
efficiencies and other synergies expected to result from the combination of
the two companies. See "THE MERGER--Recommendations of the Indiana Energy
Board of Directors; Reasons of Indiana Energy for the Merger" and "--
Recommendations of the SIGCORP Board of Directors; Reasons of SIGCORP for the
Merger." We can give no assurance that the cost savings and other benefits
expected to be realized as a result of the merger will be fully achieved or
achieved within the expected time frames.
Costs or operational difficulties related to integrating the operations of
Indiana Energy with those of SIGCORP may be greater than expected.
The merger involves the integration of two public utility holding companies
that previously have operated independently and that target different
customers and geographic areas. The integration of the businesses of Indiana
Energy and SIGCORP will place new challenges on Vectren's management and we
can give no assurance that the integration will be implemented successfully.
In addition, the merger constitutes the largest combination undertaken by
either Indiana Energy or SIGCORP. We can give no assurance that Vectren will
be able to integrate the businesses of Indiana Energy and SIGCORP without
experiencing greater costs or operational difficulties than expected by
Vectren.
Integrating the Year 2000 compliance efforts may present significant
operational challenges and Vectren may not be able to complete the
integration prior to the completion of the merger, which may result in
greater costs than expected by Vectren.
Each of Indiana Energy and SIGCORP has undertaken efforts to address the
Year 2000 problem with respect to its information systems and computer
controlled or assisted operations. Integration after the merger of the two
companies' efforts to become Year 2000 compliant may present significant
operational challenges. We can give no assurance that Vectren will complete
this integration prior to the completion of the merger or that failure to
complete the integration will not result in greater costs than expected by
Vectren.
11
<PAGE>
Because the market price of Indiana Energy and SIGCORP shares may fluctuate
and the Indiana Energy Ratio and the SIGCORP Ratio are fixed, we can give no
assurance of the relative value of the consideration the Indiana Energy and
SIGCORP shareholders will receive.
The relative share price of the Indiana Energy common shares and the
SIGCORP common shares at the effective time of the merger may vary
significantly from the prices as of the date of the merger agreement, the date
of this Joint Proxy Statement/Prospectus or the date of the Indiana Energy or
SIGCORP special meeting. These variances may be due to changes in the
businesses, operations, results and prospects of Indiana Energy and SIGCORP,
market assessments of the likelihood that the merger will be completed and the
timing of the completion of the merger, the effect of any conditions or
restrictions imposed on or proposed with respect to the combined company by
regulatory agencies in connection with or following the merger, general market
and economic conditions, and other factors. For example, between July 1, 1998
and June 30, 1999, the closing price of the Indiana Energy common shares
ranged from a high of $25.625 to a low of $18.438, and the closing price of
the SIGCORP common shares ranged from a high of $36.563 to a low of $26.500.
In addition, the stock market generally has experienced significant price and
volume fluctuations. The Indiana Energy Ratio and the SIGCORP Ratio were fixed
without any minimum or maximum value per share restrictions. We can give no
assurance as to the market price of the Indiana Energy common shares or
SIGCORP common shares at the effective time of the merger, and therefore we
can give no assurance as to the value of the consideration the Indiana Energy
shareholders and the SIGCORP shareholders will receive in the merger.
Risks relating to operations
Vectren may experience unanticipated changes to supply costs or availability
due to operational problems.
The continued operation of public utilities involves many risks, including
the breakdown or failure of transportation systems, transmission lines or
other equipment or processes and performance below expected levels of output
or efficiency. These risks could result in unanticipated costs for maintenance
or repairs. Other risks include higher demand periods or shortages in demand
and environmental or pipeline incidents, which could affect availability and
supply costs. Although from time to time each of Indiana Energy and SIGCORP
has experienced breakdowns, failures and incidents, such breakdowns, failures
and incidents have not had a material adverse effect on the operation of the
Indiana Energy or SIGCORP facilities or on the results of operations of either
company. Although Vectren's facilities will contain some redundancies and
back-up mechanisms, we can give no assurance that any such breakdown or
failure would not affect the availability or cost of providing services to its
customers. In addition, although Vectren intends to maintain insurance to
protect against these operating risks, we cannot assure that such insurance
will continue to be available at commercially reasonable terms, or, if
available, that the proceeds of such insurance would be adequate to cover lost
revenues or increased expenses.
Vectren may face increased competition, which may affect Vectren's future
earnings.
The merger will combine two companies that to a large extent share a common
regulatory environment and currently are affected by a number of similar
factors, including deregulation and increased competition. The utility
industry has been undergoing dramatic structural change for several years,
resulting in increasing competitive pressures faced by electric and gas
utility companies, including Indiana Energy and SIGCORP. Increased competition
may create greater risks to the stability of utility earnings generally and
may in the future reduce Vectren's earnings from retail electric and gas
sales. In a deregulated environment, formerly regulated utility companies that
are not responsive to a competitive energy marketplace may suffer erosion in
market share, revenues and profits as competitors gain access to their service
territories. We cannot assure that increased competition will not have a
material adverse effect on Vectren's business, financial condition or results
of operations.
12
<PAGE>
General economic, business or weather conditions may result in unanticipated
costs or decreases in Vectren's revenues.
General economic or business conditions may affect demand for energy or may
result in increased supply costs for Vectren. The business of Vectren will be
seasonal, with greater demand for natural gas in the winter months and greater
demand for electricity in the summer months. Unusually warm winters or
unusually cool summers may reduce demand for energy and have a material
adverse effect on Vectren's financial condition or results of operations.
Vectren may experience weather conditions that could affect availability and
cost.
Vectren's facilities and equipment are subject to severe weather
conditions, including heavy snowfall, tornados and floods. Each of Indiana
Energy and SIGCORP has experienced these conditions, and has recovered without
a material adverse effect on its facilities or results of operations. While
Vectren's facilities and equipment are built to withstand strong adverse
weather conditions, we cannot assure that damage caused by adverse weather
will not have a material adverse effect on Vectren's facilities. Such damage
may, in turn, have a material adverse effect on Vectren's business, financial
condition or results of operations. In addition, Vectren will maintain what it
believes to be adequate insurance protection. However, we cannot assure that
property damage insurance will be adequate to cover all potential losses
sustained in the event of catastrophic weather conditions or that such
insurance will continue to be available to Vectren on commercially reasonable
terms.
Vectren is subject to complex government regulation which affects the cost
involved in operating the business.
Vectren will be subject to complex and stringent energy, environmental and
other governmental laws and regulations at the federal, state and local levels
in connection with the development, ownership and operation of its business.
Federal laws and regulations govern transactions by electrical and gas utility
companies, the types of fuel which may be utilized by an electric generating
plant, the type of energy which may be produced by such a plant and the
ownership of a plant. State utility regulatory commissions must approve the
rates and, in some instances, other terms and conditions under which public
utilities purchase electric power from independent producers and sell retail
electric power. Under circumstances where specific exemptions are otherwise
unavailable, state utility regulatory commissions may have broad jurisdiction
over non-utility electric power plants. Energy producing companies, including
Vectren, also are subject to federal, state and local laws and administrative
regulations which govern the emissions and other substances produced,
discharged or disposed of by a plant and the geographical location, zoning,
land use and operation of a plant. Applicable federal environmental laws
typically have both state and local enforcement and implementation provisions.
These environmental laws and regulations generally require that a wide variety
of permits and other approvals be obtained before the commencement of
construction or operation of an energy-producing facility and that the
facility then operates in compliance with such permits and approvals. While we
believe that Vectren will be in compliance with such permits and approvals, we
cannot assure that this will be the case. In addition, we cannot assure that
the cost of maintaining these permits and approvals will not have a material
adverse effect on Vectren's business, financial condition or results of
operations.
Changes in laws, regulations or policies governing the electric and gas
utility industries may adversely affect Vectren by increasing costs.
Changes in legislative, regulatory or policy requirements governing the
electric and gas utility industries may result in unanticipated costs or
capital expenditures. We can give no assurance that changes in legislation,
regulation or policies will not have a material adverse effect on Vectren's
business, financial condition or results of operations.
13
<PAGE>
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
This document (including information we have incorporated into this
document by reference) contains forward-looking statements that are subject to
risks and uncertainties. You should not place undue reliance on those
statements because they only speak as of the date of this document. Forward-
looking statements include information concerning possible or assumed future
results of operations of Indiana Energy, SIGCORP and Vectren, including
forecasts, projections and descriptions of expected cost savings or other
anticipated synergies related to the merger. These statements often include
words such as "believe," "expect," "anticipate," "intend," "plan," "estimate,"
or similar expressions. These statements are based on assumptions that the
companies have made in light of their experience in the industry as well as
their perceptions of historical trends, current conditions, expected future
developments and other factors they believe are appropriate in the
circumstances. As you read and consider this document, you should understand
that these statements are not guarantees of performance or results. They
involve risks, uncertainties and assumptions. Although each company believes
that its forward-looking statements are based on reasonable assumptions, you
should be aware that many factors could affect the actual financial results or
results of operations of Indiana Energy, SIGCORP or Vectren and could cause
actual results to differ materially from those in the forward-looking
statements. These factors include:
. the merger not being completed;
. expected synergies, economies of scale and cost savings from the merger
not being fully realized or not being realized within the expected time
frames;
. costs or operational difficulties related to integrating the operations
of Indiana Energy with those of SIGCORP being greater than expected;
. general economic, business or weather conditions affecting the energy
industry, either nationally or regionally, being less favorable than
expected;
. unusual maintenance or repairs;
. unanticipated changes to supply costs or availability due to higher
demand, shortages, transportation problems, and environmental or pipeline
incidents;
. increased competition in the energy industry;
. the inability of Vectren and its vendors, suppliers and customers to
achieve Year 2000 readiness;
. regulatory authorities making adverse determinations regarding the
merger; and
. implementation of or changes in the laws, regulations or policies
governing the electric and gas utility industries that could negatively
affect the industries.
All future written and oral forward-looking statements by the companies or
persons acting on their behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to above. Except for their
ongoing obligations to disclose material information as required by the
federal securities laws, neither Indiana Energy, SIGCORP nor Vectren has any
obligation or intention to release publicly any revisions to any forward-
looking statements to reflect events or circumstances in the future or to
reflect the occurrence of unanticipated events. You should also read carefully
the factors described in the "RISK FACTORS" section of this document.
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MEETINGS, VOTING AND PROXIES
Indiana Energy Special Meeting of Shareholders
Purpose of Indiana Energy Special Meeting. The purpose of the Indiana
Energy special meeting is to consider and vote upon a proposal to approve the
merger agreement, which provides for Indiana Energy and SIGCORP to merge into
Vectren. Each Indiana Energy shareholder will be entitled to receive, for each
Indiana Energy common share held by the shareholder, one Vectren common share,
and each SIGCORP shareholder will be entitled to receive, for each SIGCORP
common share held by the shareholder, 1.333 Vectren common shares.
The Indiana Energy board has unanimously approved the merger agreement and
unanimously recommends that Indiana Energy shareholders vote for the approval
of the merger agreement. The completion of the merger is conditioned upon
approval of the merger agreement by Indiana Energy shareholders.
Date, Place and Time; Record Date. The Indiana Energy special meeting is
scheduled to be held on December 17, 1999, at 9:00 a.m., local time, at the
principal office of Indiana Energy, 1630 North Meridian Street, Indianapolis,
Indiana 46202. Holders of Indiana Energy common shares will be entitled to one
vote for each Indiana Energy common share held of record as of October 25,
1999. At the close of business on the Indiana Energy Record Date, 29,804,590
Indiana Energy common shares were issued and outstanding and entitled to vote.
Voting Rights. A majority of shares issued and outstanding and entitled to
vote, present in person or by proxy, will constitute a quorum for the
transaction of business at the Indiana Energy special meeting. Abstentions and
broker non-votes (proxies from brokers or nominees indicating that they have
not received voting instructions from the beneficial owners or other persons
entitled to vote shares) will be considered present for the purpose of
establishing a quorum. In determining whether the proposals have received the
requisite number of affirmative votes, abstentions and broker non-votes will
have the same effect as votes cast against approval. The affirmative vote of a
majority of the votes entitled to be cast is required for approval of the
merger agreement.
Indiana Energy shareholders are not entitled to dissenters' rights under
Indiana law because the Indiana Energy common shares are listed on the New
York Stock Exchange.
Proxies. The Indiana Energy board is soliciting proxies. All shares
represented by properly executed proxies received in time for the Indiana
Energy special meeting will be voted in accordance with the instructions
specified in the proxies. If no instructions are specified, the shares will be
voted FOR approval of the merger agreement. Holders of proxies will be
authorized to vote the shares represented by the proxies in their discretion
as to any matters incident to the conduct of the Indiana Energy special
meeting.
A shareholder giving a proxy may revoke it at any time before it is voted.
Proxies may be revoked by (a) filing with the Secretary of Indiana Energy a
written notice of revocation bearing a later date than the proxy; (b) duly
executing a later-dated proxy relating to the same shares and delivering it to
the Secretary of Indiana Energy before the taking of the vote at the Indiana
Energy special meeting; or (c) attending the Indiana Energy special meeting
and voting in person. Attendance at the Indiana Energy special meeting will
not by itself revoke a proxy.
Indiana Energy will pay the expenses of soliciting proxies for the Indiana
Energy special meeting (except that Indiana Energy and SIGCORP will share
equally in expenses incurred in connection with the printing and mailing of
this Joint Proxy Statement/Prospectus) and will reimburse banks, brokerage
firms, nominees, fiduciaries and other custodians for expenses of forwarding
solicitation materials to beneficial owners of voting shares. The solicitation
is being made by mail and may also be made in person or by letter, telephone,
telecopy, telegram or other means of communication by directors, officers and
employees of Indiana Energy and its subsidiaries who will not be additionally
compensated therefor. In addition, Corporate Investor Communications, Inc.
("CIC") has been retained by Indiana Energy to assist in the solicitation of
proxies and
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will be paid a fee not to exceed $8,000 plus reimbursement for reasonable out-
of-pocket expenses. In these efforts, CIC has conducted the required broker
search process and will make targeted telephone solicitations of major
shareholders. CIC will follow up the calls with reminder mailings.
The Indiana Energy special meeting may be adjourned to another date or place
for any proper purpose.
SIGCORP Special Meeting of Shareholders
Purpose of SIGCORP Special Meeting. The purpose of the SIGCORP special
meeting is to consider and vote upon a proposal to approve the merger
agreement. The merger agreement provides that SIGCORP and Indiana Energy will
be merged into Vectren and each SIGCORP shareholder will be entitled to receive
1.333 Vectren common shares for each SIGCORP common share held by the
shareholder. To the extent that the SIGCORP Ratio results in fractional shares,
cash will be paid in lieu of issuing a fractional share.
The SIGCORP board has unanimously approved the merger agreement and
unanimously recommends that SIGCORP shareholders vote for the approval of the
merger agreement. The completion of the merger is conditioned upon approval of
the merger agreement by SIGCORP shareholders.
Date, Place and Time; Record Date. The SIGCORP special meeting is scheduled
to be held on December 17, 1999, at 2:00 p.m., local time, at its Norman P.
Wagner Operations Center, 10 N. Main Street, Evansville, Indiana 47741. Holders
of SIGCORP common shares will be entitled to one vote for each SIGCORP common
share held of record as of October 25, 1999. At the close of business on the
SIGCORP Record Date, 23,630,568 SIGCORP common shares were issued and
outstanding and entitled to vote.
Voting Rights. A majority of shares issued and outstanding and entitled to
vote, present in person or by proxy, will constitute a quorum for the
transaction of business at the SIGCORP special meeting. Abstentions and broker
non-votes (proxies from brokers or nominees indicating that they have not
received voting instructions from the beneficial owners or other persons
entitled to vote shares) will be considered present for the purpose of
establishing a quorum. In determining whether the proposals have received the
requisite number of affirmative votes, abstentions and broker non-votes will
have the same effect as votes cast against approval. The affirmative vote of a
majority of the votes entitled to be cast is required for approval of the
merger agreement.
SIGCORP shareholders do not have dissenters' rights under Indiana law
because the SIGCORP common shares are listed on the New York Stock Exchange.
Proxies. Proxies are being solicited on behalf of the SIGCORP board. All
shares represented by properly executed proxies received in time for the
SIGCORP special meeting will be voted in accordance with the instructions
specified in the proxies. If no instructions are specified, the shares will be
voted FOR approval of the merger agreement. Holders of proxies will be
authorized to vote the shares represented by the proxies in their discretion as
to any matters incident to the conduct of the SIGCORP special meeting.
A shareholder giving a proxy may revoke it at any time before it is voted.
Proxies may be revoked by (a) filing with the Secretary of SIGCORP a written
notice of revocation bearing a later date than the proxy; (b) duly executing a
later-dated proxy relating to the same shares and delivering it to the
Secretary of SIGCORP before the taking of the vote at the SIGCORP special
meeting; or (c) attending the SIGCORP special meeting and voting in person.
Attendance at the SIGCORP special meeting will not by itself revoke a proxy.
SIGCORP will pay the expenses of soliciting proxies for the SIGCORP special
meeting, if any (except that SIGCORP and Indiana Energy will share equally in
expenses incurred in connection with the printing and mailing of this Joint
Proxy Statement/Prospectus) and will reimburse banks, brokerage firms,
nominees, fiduciaries and other custodians for expenses of forwarding
solicitation materials to beneficial owners of voting shares. The solicitation
is being made by mail and may also be made in person or by letter, telephone,
telecopy, telegram or other means of communication by directors, officers and
employees of SIGCORP and its subsidiaries
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who will not be additionally compensated therefor. In addition, D.F. King &
Co., Inc. has been retained by SIGCORP to assist in the solicitation of
proxies and will be paid a fee not to exceed $8,000, plus reimbursement for
reasonable out-of-pocket expenses. In these efforts, D.F. King has conducted
the required broker search process and will make targeted telephone
solicitations of major shareholders. D.F. King will follow up the calls with
reminder mailings.
The SIGCORP special meeting may be adjourned to another date or place for
any proper purpose.
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THE COMPANIES
Indiana Energy
Indiana Energy is a public utility holding company with subsidiaries and
affiliates engaged in natural gas distribution, gas portfolio administrative
services and marketing of natural gas, electric power and related services. It
was incorporated under Indiana law on October 24, 1985. Indiana Energy has 14
subsidiaries, including ten nonregulated direct or indirect subsidiaries, a
not-for-profit foundation and three utility subsidiaries, as well as
investments in four nonregulated joint ventures.
Indiana Gas
Indiana Gas, the principal subsidiary and business entity of Indiana
Energy, is an operating public utility engaged in the business of providing
gas utility service in the state of Indiana.
During fiscal 1998, Indiana Gas supplied gas to about 489,000 residential,
small commercial and contract (large commercial and industrial) customers in
281 communities in 48 of the 92 counties in the state of Indiana. Its service
area has a population of approximately 2 million and contains diversified
manufacturing and agriculture-related enterprises. The principal industries
served include pharmaceuticals, automotive parts and accessories, feed, flour
and grain processing, metal castings, aluminum products, gypsum products,
electrical equipment, metal specialties and glass.
The largest communities served include Muncie, Anderson, Lafayette-West
Lafayette, Bloomington, Terre Haute, Marion, New Albany, Columbus,
Jeffersonville, New Castle and Richmond. While Indiana Gas does not provide
utility services in Indianapolis, it does serve the counties and communities
which border that city.
IGC Energy, Inc., an indirect subsidiary of Indiana Energy, and Citizens
By-Products Coal Company, a wholly owned subsidiary of Citizens Gas and Coke
Utility, each owns 50% of ProLiance Energy, LLC. ProLiance provides natural
gas and related services to Indiana Gas, Citizens Gas, and other utilities and
customers in Indiana and the Midwest. ProLiance also buys electricity on the
wholesale market and then resells it to marketers, utilities and other
customers.
The principal executive offices of Indiana Energy are located at 1630 North
Meridian Street, Indianapolis, Indiana 46202, and its telephone number is
(317) 926-3351.
SIGCORP
SIGCORP is a public utility holding company incorporated October 19, 1994
under Indiana law. SIGCORP has 11 wholly-owned subsidiaries, including its
principal subsidiary, SIGECO, a gas and electric utility, and ten nonregulated
subsidiaries.
SIGECO
SIGECO is an operating public utility incorporated June 10, 1912, under the
laws of the State of Indiana, engaged in the generation, transmission,
distribution and sale of electric energy, and the distribution and sale of
natural gas in a service area which covers ten counties in southwestern
Indiana.
Electric service is supplied directly to Evansville and 74 other cities,
towns and communities, and adjacent rural areas. Wholesale electric service is
supplied to an additional five communities. At December 31, 1998, SIGECO
served 124,340 electric customers.
At December 31, 1998, SIGECO supplied gas service to 108,335 customers in
Evansville and 64 other nearby communities and their environs.
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The principal executive offices of SIGCORP are located at 20 N.W. Fourth
Street, Evansville, Indiana 47741, and its telephone number is (812) 465-5300.
Vectren
Vectren is an Indiana corporation organized on June 10, 1999, solely for
the purposes of effecting the merger and carrying on the combined businesses
of Indiana Energy and SIGCORP after the merger. Vectren will not conduct any
other business before the consummation of the merger.
The principal executive offices of Vectren are located at 20 N.W. Fourth
Street, Evansville, Indiana 47741 Indiana 46202, and its telephone number is
(812) 465-5300.
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THE MERGER
Background
The energy industry is undergoing consolidation and diversification of
services. Each company has considered mergers and acquisitions as part of its
strategic planning.
On September 27, 1996, the Indiana Energy board met and discussed a
strategic plan for growth through mergers and acquisitions. The Indiana Energy
board identified five entities as possible merger partners or targets for
acquisition, with SIGCORP the most promising of the five because:
. a transaction with SIGCORP presented the fewest regulatory hurdles;
. the utility facilities were in relatively close proximity;
. the earnings of the principal utility operations of the two companies
seasonally complemented each other; and
. the management of Indiana Energy had enjoyed a good working relationship
with the management of SIGCORP.
Since September 27, 1996, Indiana Energy has not given material
consideration to potential merger partners other than SIGCORP.
The Indiana Energy board then recommended that Indiana Energy's officers
contact the officers of SIGCORP to discuss a possible merger. In September
1996, Mr. L.A. Ferger, Indiana Energy's then Chief Executive Officer, called
Mr. Ronald G. Reherman, SIGCORP's Chief Executive Officer, and a meeting was
scheduled between Indiana Energy and SIGCORP for October 1996.
In October 1996, Mr. Ferger, Mr. Reherman, Mr. Niel Ellerbrook, then
Indiana Energy's Vice President, Treasurer and Chief Financial Officer, and
Mr. Andrew E. Goebel, then Senior Vice President and Chief Financial Officer
of SIGCORP, met and discussed the possible merger of Indiana Energy and
SIGCORP. They agreed to engage Deloitte Consulting LLC to assist the
managements of Indiana Energy and SIGCORP in their analysis of the potential
synergies that might result from the potential merger, as well as investment
bankers and attorneys to consider various issues relating to a merger, all of
whom were then engaged. Indiana Energy engaged Merrill Lynch as its investment
banker and Sommer & Barnard, PC and Simpson Thacher & Bartlett as its
attorneys. SIGCORP retained Goldman Sachs as its investment banker and
Winthrop, Stimson, Putnam & Roberts as its attorneys.
The services to be provided by Deloitte & Touche Consulting LLC included:
. identification of required data;
. identification by activity and quantification of potential cost savings;
. identification of potential additional cost savings which may not be
quantifiable; and;
. identification and quantification of potential costs to achieve the
identified potential cost savings.
On November 1, 1996, Mr. Ferger presented the Indiana Energy board with a
preliminary status report of the continuing negotiations and an evaluation of
the proposed merger of Indiana Energy and SIGCORP. The Indiana Energy board
found the report favorable and as a result, on November 4, 1996, Indiana
Energy and SIGCORP executed a Confidentiality and Standstill Agreement under
which the parties continued their discussions.
In December 1996, Indiana Energy and SIGCORP continued their merger
discussions. The primary focus of those discussions was the identity of the
Chief Executive Officer of the new company, the location of the new company's
corporate headquarters and the potential synergies resulting from the merger.
On January 22, 1997, the Indiana Energy board met and approved management's
recommendation to terminate merger discussions with SIGCORP because the
differences between Indiana Energy and SIGCORP appeared to be irreconcilable.
At that time, the companies could not agree regarding the location of the
headquarters of the new company, and the energy marketplace had not yet
evolved to the point where either party had concluded that a combination was
necessary for the continued success of the companies. Indiana Energy advised
SIGCORP's management of the decision and the parties mutually agreed to
formally terminate merger discussions. The parties notified the advisors
engaged to assist them and instructed the advisors to discontinue all work
related to the merger discussions.
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A second round of merger discussions between Indiana Energy and SIGCORP
commenced in September 1997, when Mr. Ferger contacted Mr. Reherman to discuss
reestablishing merger negotiations. Mr. Reherman indicated that he would not
consider the resumption of merger discussions without obtaining the support
and approval of both companies' boards of directors.
Consequently, the Indiana Energy board met on September 22, 1997, and the
SIGCORP board met in October 1997. Each board decided in favor of commencing a
second round of merger discussions.
Indiana Energy and SIGCORP started the second round of merger negotiations
and began due diligence in October 1997. The parties undertook negotiations
and due diligence until December 1997 when the parties, by mutual agreement,
again terminated their merger discussions. The companies could not agree on
the location of the headquarters of the new company and the energy marketplace
still had not yet evolved to the point where either party had concluded that a
combination was necessary for the continued success of the companies.
No merger discussions were held between Indiana Energy and SIGCORP in 1998.
However, a third round of merger discussions commenced in 1999. Mr. Ellerbrook
and Mr. Goebel met in person on February 4, 1999 with the intent of discussing
whether a merger between the two companies would be mutually beneficial. A
merger between the companies was seen as a means of meeting the challenges
caused by continued industry deregulation and as a means of possibly
increasing the companies' shareholder values. Mr. Ellerbrook and Mr. Goebel
determined that, in light of the ongoing changes in the energy marketplace, a
business combination would contribute to the continued success of the
companies. Accordingly, Mr. Ellerbrook and Mr. Goebel decided to start a third
round of merger discussions initially focusing their energies on negotiating
through the matters that had caused merger discussions to be formally
terminated twice in the past, including the resolution of the location of the
headquarters for the new company.
On March 10, 1999, the Executive Committee of the SIGCORP board met and
determined that it would be beneficial for the parties to reengage Deloitte
Consulting LLC to assist management in updating the synergies analysis that
had been prepared by management in connection with the prior merger
discussions. Deloitte was not engaged to prepare and did not provide, any
report, opinion or appraisal, whether written or oral, for or to the
managements or the boards of directors of Indiana Energy or SIGCORP.
On March 17, 1999, Mr. Ellerbrook and Mr. Goebel met again to further
discuss a business combination. Having previously reached the conclusion that
a combination of the companies would contribute to the continued success of
the companies, at this meeting they determined that the two primary and
remaining issues to be resolved were the location of the new company's
corporate headquarters and the identity of its Chief Executive Officer. The
parties agreed to recommend to their respective boards of directors the
following: the new company's corporate headquarters would be located in
Evansville, Indiana, the location of SIGCORP's current headquarters, and the
new company would be headed by Mr. Ellerbrook. Ellerbrook and Goebel further
agreed to meet collectively with a few members of each company's board of
directors to further discuss the proposed merger.
On March 26, 1999, Mr. Ellerbrook, Mr. Goebel and Mr. Carl L. Chapman,
Senior Vice President and Chief Financial Officer of Indiana Energy, met and
agreed to reengage Deloitte Consulting LLC to assist management in updating
the managements' synergies analysis. At that meeting the attendees also
confirmed that the parties' strategic plans for growth were remarkably
similar. On April 6, 1999, the parties executed a Confidentiality and
Standstill Agreement under which negotiations were to proceed.
On April 16, 1999, Mr. Goebel, Mr. Chapman and Mr. Richard G. Lynch,
SIGCORP's Vice President of Human Resources, met with the consultant and
reviewed the progress of the updating of the prior synergies analysis.
On April 20, 1999, Mr. Ellerbrook and Mr. Goebel met with selected members
of each company's board of directors (specifically, Mr. Robert L. Koch II, Mr.
Richard W. Shymanski and Mr. Donald E. Smith from SIGCORP and Mr. Anton H.
George, Mr. J. Timothy McGinley and Ms. Jean L. Wojtowicz from Indiana
Energy). At this meeting Mr. Ellerbrook, Mr. Goebel and the board members
discussed the updated synergies analysis as well as the strategic benefits of
the merger and concluded that negotiations should go forward.
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On April 23, 1999, the Executive Committee of the SIGCORP board held a
meeting at which the Committee resolved in favor of continuing merger
negotiations.
On April 27, 1999, the SIGCORP board met and approved the engagement of the
consultant to assist management in performing a full and current synergies
analysis. On April 30, 1999, the Indiana Energy board held a meeting at which
the Indiana Energy board approved the engagement of the consultant to assist
management in performing a full and current synergies analysis.
On each of May 6, 10, 13 and 25, 1999, Mr. Ellerbrook and Mr. Goebel met to
discuss various issues affecting the merger, including the structure of the
post-merger board of directors and the new company's management structure.
These negotiations were also held through various telephone conferences in the
same time period.
On May 18, 1999, the SIGCORP board met and authorized the hiring of various
professionals, including attorneys and investment bankers, to proceed with the
merger and proposed a schedule of approving and executing a definitive
agreement by June 11, 1999. After this meeting, members of Indiana Energy's
management and SIGCORP's management continued discussions regarding the merger
telephonically. Also on May 18, 1999, Mr. Jerome A. Benkert, Indiana Energy's
Vice President and Controller, Mr. Chapman, Mr. Ellerbrook, Mr. Goebel, Mr.
Timothy Burke, SIGCORP's Secretary/Treasurer, and Mr. Lynch met with
investment bankers in Indianapolis to discuss business valuation issues.
On June 4, 1999, the Indiana Energy board met and discussed various issues
affecting the merger. Additional presentations were made to the Indiana Energy
board by counsel, investment bankers and the management, with the assistance
of Deloitte Consulting LLC. The Indiana Energy board decided to reconvene on
June 11, 1999 to approve or disapprove the definitive agreement. On June 7,
1999, the SIGCORP board met and discussed various issues affecting the merger.
Additional presentations were made to the SIGCORP board by outside counsel,
investment bankers and management with the assistance of Deloitte Consulting
LLC. The SIGCORP board decided to reconvene on June 11, 1999 to approve or
disapprove the definitive agreement.
On June 8, 1999, an ad hoc committee of the board of Indiana Energy met
with a compensation consultant regarding Vectren.
On June 11, 1999, the Indiana Energy board met and the SIGCORP board met
and each approved the form of definitive agreement which was executed by the
parties as of that date.
Recommendation of Indiana Energy Board of Directors; Reasons of Indiana Energy
for the Merger
At a meeting of the Indiana Energy board on June 11, 1999, the Indiana
Energy board received and considered the presentations of Indiana Energy's
management and its outside financial and legal advisors regarding the proposed
merger and then voted to approve the merger agreement.
In reaching its determination, the Indiana Energy board considered the
following material factors:
. the Indiana Energy board's review and analysis of Indiana Energy's
current and future condition, current earnings and earnings prospects,
and the belief, based upon analysis of cost savings and operating
synergies estimated to result from the transactions contemplated by the
merger agreement prepared by the managements of SIGCORP and Indiana
Energy, that a combined company will have an improved future condition
and earnings prospects;
. the analyses and recommendation of the merger by Indiana Energy's
management, the financial analyses of its financial advisor, Merrill
Lynch, including the opinion of Merrill Lynch as to the fairness to the
shareholders of Indiana Energy of the Indiana Energy Ratio from a
financial point of view (see "--Opinion of Financial Advisor to Indiana
Energy");
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. the competitive business environment and changing regulatory environment
facing the energy industry and the belief by the Indiana Energy board
that in order for Indiana Energy to be a successful participant in that
industry, it must be able to offer a broad array of services and products
to its customers, made increasingly possible by combination with another
company;
. that the merger would result in a balanced revenue mix, which should even
out the seasonality of Indiana Energy's and SIGCORP's businesses;
. that the merger would present Vectren with a number of opportunities for
increasing profitability through significant cost savings, operational
efficiencies, economies of scale, stronger market position and other
synergies stemming from the combination of the companies;
. the similarity of corporate cultures of Indiana Energy and SIGCORP;
. the belief that Indiana Energy's customers will benefit in the long term
from improved service and lower costs as a result of economies of scale
and operating efficiencies of a larger, combined company;
. the structure of the transaction, including the expected accounting
treatment of the merger as a pooling of interests;
. the terms of the merger agreement, including the amount and the form of
consideration, the parties' representations, warranties, covenants and
agreements, and the conditions to their respective obligations contained
in the merger agreement;
. that the merger would combine two companies with strong balance sheets
and superior credit ratings;
. that the merger should improve liquidity of Vectren's common stock and
provide greater access to capital markets;
. that the merger would enlarge the customer base, resulting in the ability
to spread marketing and administrative costs;
. the tax treatment of the merger, particularly that most shareholders of
Indiana Energy will recognize no gain or loss as a result of the
consummation of the merger; and
. the Indiana Energy board's belief that the merger, by reducing costs and
permitting the development of new services the separate entities could
not so easily provide, will provide customer benefits that will enhance
economic development in Indiana, and as a result, increase demand for
Vectren's services.
In view of the factors considered by the Indiana Energy board in connection
with its evaluation of the merger and the complexity of the factors, the
Indiana Energy board did not consider it practicable to, nor did it attempt
to, quantify, rank or otherwise assign relative weights to the specific
factors it considered in reaching its decision. In addition, the Indiana
Energy board did not undertake to make any specific determination as to
whether any particular factor (or any aspect of any particular factor) was
determinative to its ultimate conclusion, but rather conducted a discussion of
the factors described above, including asking questions of Indiana Energy's
management and legal and financial advisors, and reached a general consensus
that the merger was advisable and in the best interests of Indiana Energy and
Indiana Energy's shareholders. In considering the factors described above,
individual members of the Indiana Energy board may have given different weight
to different factors.
Based on these factors, the Indiana Energy board unanimously recommends
that Indiana Energy shareholders vote "FOR" approval of the merger agreement.
In considering the recommendation of the Indiana Energy board with respect
to the merger agreement, Indiana Energy shareholders should be aware that
members of Indiana Energy's management and the Indiana Energy board have
interests in the merger that are different from, or in addition to, the
interests of shareholders of Indiana Energy generally and that could
potentially represent conflicts of interest. The Indiana Energy board was
aware of these interests and considered them, among other matters, in
approving the merger agreement. See "--Conflicts of Interest."
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Opinion of Financial Advisor to Indiana Energy
On June 11, 1999, Merrill Lynch, Pierce, Fenner & Smith Incorporated
delivered its opinion to the Indiana Energy board to the effect that, as of
that date, and based upon the assumptions made, matters considered and limits
of review specified in that opinion, the proposed exchange ratio in the merger
was fair from a financial point of view to the holders of Indiana Energy
common shares.
The Merrill Lynch opinion attached as Appendix D to this document sets
forth the assumptions made, matters considered and the limitations on the
scope of review undertaken by Merrill Lynch. Each holder of Indiana Energy
common shares is urged to read the Merrill Lynch opinion attached as Appendix
D in its entirety. The Merrill Lynch opinion was intended for the use and
benefit of the Indiana Energy board, was directed only to the fairness of the
Indiana Energy Ratio from a financial point of view to the holders of Indiana
Energy common shares, did not address the merits of the underlying decision by
Indiana Energy to engage in the merger and does not constitute a
recommendation to any shareholder as to how that shareholder should vote on
the proposed merger or any related matter. The Indiana Energy Ratio was
determined on the basis of negotiations between Indiana Energy and SIGCORP and
was approved by the Indiana Energy board. The summary of the Merrill Lynch
opinion is qualified in its entirety by reference to the full text of the
opinion attached as Appendix D.
In arriving at its opinion, Merrill Lynch:
1. reviewed certain publicly available business and financial
information relating to Indiana Energy and SIGCORP that it deemed to be
relevant;
2. reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets, liabilities and prospects of
Indiana Energy and SIGCORP, as well as the amount and timing of the cost
savings and related expenses and synergies expected to result from the
merger furnished to it by Indiana Energy and SIGCORP, respectively;
3. conducted discussions with members of senior management and
representatives of Indiana Energy and SIGCORP concerning the matters
described in clauses 1 and 2 above, as well as their respective businesses
and prospects before and after giving effect to the merger and the cost
savings and related expenses and synergies expected to result from the
merger;
4. reviewed the market prices and valuation multiples for Indiana Energy
common shares and SIGCORP common shares and compared them with those of
certain publicly traded companies that it deemed to be relevant;
5. reviewed the results of operations of Indiana Energy and SIGCORP and
compared them with those of certain publicly traded companies that it
deemed to be relevant;
6. participated in discussions and negotiations among representatives of
Indiana Energy and SIGCORP and their financial and legal advisors;
7. reviewed the potential pro forma impact of the merger;
8. reviewed a draft of the merger agreement dated June 10, 1999; and
9. reviewed other financial studies and analyses and took into account
other matters that it deemed necessary, including Merrill Lynch's
assessment of general economic, market and monetary conditions.
In preparing its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to
Merrill Lynch, discussed with or reviewed by or for Merrill Lynch, or publicly
available. Merrill Lynch did not assume any responsibility for independently
verifying this information or for undertaking an independent evaluation or
appraisal of any of the assets or liabilities of Indiana Energy or SIGCORP and
was not furnished with any independent evaluation or appraisal. In addition,
Merrill Lynch did not assume any obligation to conduct any physical inspection
of the properties or facilities of Indiana Energy or SIGCORP. With respect to
the financial forecast information and the cost savings and related expenses
24
<PAGE>
and synergies expected to result from the merger furnished to or discussed
with Merrill Lynch by Indiana Energy or SIGCORP, Merrill Lynch assumed that
they were reasonably prepared and reflected the best currently available
estimates and judgment of Indiana Energy's and SIGCORP's management as to the
expected future financial performance of Indiana Energy and SIGCORP, as the
case may be, and as to the expected cost savings and synergies. Merrill Lynch
further assumed that the merger will be free of federal income tax to Indiana
Energy, SIGCORP, and Vectren and the respective holders of Indiana Energy
common shares and SIGCORP common shares and that the merger will be accounted
for as a pooling-of-interests.
Merrill Lynch's opinion was necessarily based on market, economic and other
conditions as they existed and could be evaluated on, and on the information
made available to Merrill Lynch, as of the date of the Merrill Lynch opinion.
Merrill Lynch assumed that in the course of obtaining the necessary regulatory
or other consents or approvals (contractual or otherwise) for the merger, no
restrictions, including any divestiture requirements or amendments or
modifications, would be imposed that would have a material adverse effect on
the contemplated benefits of the merger.
In preparing its opinion with respect to the fairness of the Indiana Energy
Ratio, Merrill Lynch was not authorized by Indiana Energy or the Indiana
Energy board to solicit, nor did Merrill Lynch solicit, third-party
indications of interest for the acquisition of all or any part of Indiana
Energy. Merrill Lynch expressed no opinion as to the prices at which Indiana
Energy common shares, SIGCORP common shares, or Vectren common shares would
trade following the announcement or consummation of the merger.
The following is a summary of the material portions of the financial and
comparative analyses performed by Merrill Lynch which were presented to the
Indiana Energy board in connection with the Merrill Lynch opinion:
Comparable Public Company Analysis. Using publicly available information,
Merrill Lynch compared selected historical stock, financial and operating
ratios for Indiana Energy and SIGCORP with corresponding data of similar
publicly traded companies. These companies were selected by Merrill Lynch
based upon Merrill Lynch's views as to the comparability of the financial and
operating characteristics of these companies to Indiana Energy and SIGCORP,
respectively.
The companies included in the Indiana Energy comparable company analysis
were:
1. Atmos Energy Corporation;
2. Eastern Enterprises;
3. New Jersey Resources Corporation;
4. Northwest Natural Gas Company;
5. Piedmont Natural Gas Co., Inc.;
6. Washington Gas Light Co.; and
7. WICOR, Inc.
The companies included in the SIGCORP comparable company analysis were:
1. Black Hills Corporation;
2. Cinergy Corp.,
3. DPL Inc.;
4. LG & E Energy Corp.;
5. NiSource Inc.; and
6. WPS Resources Corp.
Merrill Lynch then reviewed publicly available information of these
companies to compare financial information and multiples of market value of
these companies to Indiana Energy's and SIGCORP's respective (i) 1999
estimated earnings per share as of March 31, 1999, (ii) 2000 estimated
earnings per share, and (iii) book value per share (referred to as "LTM book
value"), all as of June 9, 1999. The earnings estimates were obtained from
Institutional Brokers Estimate System, a data service that monitors and
publishes a compilation of earnings
25
<PAGE>
estimates produced by selected research analysts on companies of interest to
investors. Merrill Lynch determined that the relevant range of these
comparable public company multiples were as follows:
<TABLE>
<CAPTION>
Indiana
Energy SIGCORP
----------- -----------
Market Value as a Multiple of: Low High Low High
------------------------------ ----- ----- ----- -----
<S> <C> <C> <C> <C>
1999 estimated EPS................................ 15.0x 16.5x 13.0x 15.0x
2000 estimated EPS................................ 12.5x 14.5x 12.5x 14.0x
LTM book value.................................... 1.70x 2.10x 2.00x 2.40x
</TABLE>
Merrill Lynch then calculated ranges of implied exchange ratios by
comparing the lowest estimated valuation of SIGCORP common shares to the
highest estimated valuation of Indiana Energy common shares and the highest
estimated valuation of SIGCORP common shares to the lowest estimated valuation
of Indiana Energy common shares. The resulting ranges of implied exchange
ratios were as follows (as compared to the SIGCORP Ratio in the merger of
1.333 Vectren common shares for each SIGCORP common share):
Implied Exchange Ratios
<TABLE>
<CAPTION>
Market Value as a Multiple of: Low High
------------------------------ ------ ------
<S> <C> <C>
1999 estimated EPS.......................................... 1.178x 1.493x
2000 estimated EPS.......................................... 1.178x 1.531x
LTM book value.............................................. 1.383x 2.053x
</TABLE>
Discounted Cash Flow Analysis. Merrill Lynch performed a discounted cash
flow, or "DCF," analysis for Indiana Energy and SIGCORP, using projections
provided by the respective managements of the two companies. The discounted
cash flow for Indiana Energy was calculated assuming discount rates ranging
from 7.50% to 8.50% and comprised the sum of the present values of:
1. the projected cash flows for the years 2000 through 2003; and
2. the 2003 terminal value based upon a range of multiples of (i) from
13.0x to 15.0x estimated 2003 net income; (ii) from 1.70x to 2.10x
estimated 2003 book value; and (iii) from 7.0x to 8.0x estimated 2003
earnings before interest, taxes, depreciation and amortization, which is
referred to as "EBITDA."
The discounted cash flow analysis for SIGCORP was calculated assuming
discount rates ranging from 7.25% to 8.25% and comprised the sum of the
present values of:
1. the projected cash flows for the years 2000 through 2003; and
2. the 2003 terminal value based upon a range of multiples of (i) from
13.0x to 15.0x estimated 2003 net income; (ii) from 1.80x to 2.20x
estimated 2003 book value; and (iii) from 7.5x to 8.5x estimated 2003
EBITDA.
Merrill Lynch then calculated ranges of implied exchange ratios by
comparing the lowest estimated valuation of SIGCORP common shares to the
highest estimated valuation of Indiana Energy common shares and the highest
estimated valuation of SIGCORP common shares to the lowest estimated valuation
of Indiana Energy common shares. The resulting ranges of implied exchange
ratios were as follows (as compared to the SIGCORP Ratio in the merger of
1.333 Vectren common shares for each SIGCORP common share):
Implied Exchange Ratios
<TABLE>
<CAPTION>
DCF Method Low High
---------- ------ ------
<S> <C> <C>
2003 net income............................................. 1.056x 1.536x
2003 book value............................................. 1.135x 1.862x
2003 EBITDA................................................. 1.005x 1.560x
</TABLE>
26
<PAGE>
Stock Trading History. Merrill Lynch also calculated an implied exchange
ratio of Vectren common shares for SIGCORP common shares based upon a
comparison of the 52-week stock trading history of the Indiana Energy common
shares to the 52-week stock trading history of the SIGCORP common shares. This
range of implied exchange ratios was calculated by comparing the lowest
trading price of the SIGCORP common shares during the period to the highest
trading price of the Indiana Energy common shares during the period and the
highest trading price of the SIGCORP common shares during the period to the
lowest trading price of the Indiana Energy common shares during the period.
The resulting implied exchange ratios of Vectren common shares per SIGCORP
common share ranged from 1.266x to 1.449x, as compared to the SIGCORP Ratio in
the merger of 1.333 Vectren common shares for each SIGCORP common share.
Contribution Analysis. Using projections provided by each company's
respective management, Merrill Lynch reviewed Indiana Energy's and SIGCORP's
relative contribution to the pro forma revenues, EBITDA, net income and
earnings before interest and taxes of Vectren during the calendar years 1999
through 2002. The resulting implied exchange ratio of Vectren common shares
per SIGCORP common share ranged from 1.143x to 1.332x, as compared to the
SIGCORP Ratio in the merger of 1.333 Vectren common shares for each SIGCORP
common share. Merrill Lynch did not view the SIGCORP Ratio as being materially
outside the 1.143x to 1.332x range indicated by this analysis.
Pro Forma Merger Analysis. Merrill Lynch also analyzed selected pro forma
effects resulting from the merger. Using the projected earnings of the
combined company for the years 2000 through 2002 provided by the managements
of Indiana Energy and SIGCORP, including estimates of annual pre-tax synergies
expected to be achieved as a result of the merger, Merrill Lynch compared the
projected earnings per share and dividends per share of Indiana Energy on a
stand alone basis (assuming the merger did not occur) to the per share
earnings of an Indiana Energy shareholder, as a holder of Vectren common
shares, assuming the merger occurs with the merger consideration contemplated
by the merger agreement. The analysis indicated that the merger would have no
effect on dividends and would be accretive to projected earnings per share as
follows:
<TABLE>
<CAPTION>
Earnings
--------
Year Accretion/(Dilution)
---- --------------------
<S> <C>
2000................................................. (15.8%)
2001................................................. (0.2%)
2002................................................. 3.3%
</TABLE>
This summary of analyses performed by Merrill Lynch does not purport to be
a complete description of the analyses performed by Merrill Lynch in arriving
at its opinion. The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial or summary description. Accordingly,
Merrill Lynch believes that its analyses must be considered as a whole and
that selecting portions of its analyses and the factors considered by Merrill
Lynch, without considering all analyses and factors, could create an
incomplete view of the processes underlying the Merrill Lynch opinion. Merrill
Lynch did not assign relative weights to any of its analyses in preparing its
opinion. The matters considered by Merrill Lynch in its analyses were based on
numerous macroeconomic, operating and financial assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond Indiana Energy's and Merrill Lynch's control
and involve the application of complex methodologies and educated judgment.
Any estimates contained in Merrill Lynch analyses are not necessarily
indicative of actual past or future results or values, which may be
significantly more or less favorable than the estimates. Estimated values do
not purport to be appraisals and do not necessarily reflect the prices at
which businesses or companies may be sold in the future, and the estimates are
inherently subject to uncertainty.
No company utilized as a comparison in the analyses described above is
identical to Indiana Energy or SIGCORP. In addition, various analyses
performed by Merrill Lynch incorporate projections prepared by research
analysts using only publicly available information. These estimates may or may
not prove to be accurate. An analysis of publicly traded comparable companies
is not mathematical; rather it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
comparable
27
<PAGE>
companies and other factors that could affect the public trading value of the
comparable companies or company to which they are being compared.
The Indiana Energy board selected Merrill Lynch to act as its financial
advisor because of Merrill Lynch's reputation as an internationally recognized
investment banking firm with substantial experience in transactions similar to
this merger and because Merrill Lynch is familiar with Indiana Energy and its
business. As part of Merrill Lynch's investment banking businesses, Merrill
Lynch is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, leveraged buyouts,
negotiated underwritings, secondary distributions of listed and unlisted
securities and private placements.
The terms of a letter agreement between Indiana Energy and Merrill Lynch,
dated May 21, 1999, require Indiana Energy to pay Merrill Lynch a retainer fee
of $50,000 payable in cash on the date of the letter agreement and an
additional fee of $2.35 million, against which the $50,000 retainer fee will
be credited. This additional fee is payable in cash in three installments as
follows: (a) one-third of the fee was payable upon the execution of the merger
agreement; (b) one-third of the fee is payable upon the approval of the merger
agreement by the holders of Indiana Energy common shares; and (c) any
remaining unpaid portion of the fee is payable upon the closing of the merger.
In addition, Indiana Energy has agreed that if the merger or a similar
transaction is not completed and Indiana Energy receives a termination fee or
any similar type of payment, Indiana Energy will pay Merrill Lynch 10% of the
termination fee, subject to a maximum of $1.8 million and reduced by the
amount of any fees paid to Merrill Lynch as described above. Indiana Energy
also has agreed to reimburse Merrill Lynch for its reasonable out-of-pocket
expenses, including, subject to limitations, the reasonable fees and
disbursements of legal counsel, and to indemnify Merrill Lynch and related
parties from and against liabilities, including liabilities under the federal
securities laws, arising out of its engagement.
Merrill Lynch has, in the past, provided financial advisory and financing
services to Indiana Energy and/or its affiliates and may continue to do so and
has received, and may receive, fees for the rendering of those services. In
addition, in the ordinary course of Merrill Lynch's business, Merrill Lynch
and its affiliates may actively trade Indiana Energy common shares and other
securities of Indiana Energy, as well as SIGCORP common shares and other
securities of SIGCORP, for their own accounts and for the accounts of
customers. Accordingly, Merrill Lynch and its affiliates may at any time hold
a long or short position in the Indiana Energy or SIGCORP securities.
Recommendation of SIGCORP Board of Directors; Reasons of SIGCORP for the
Merger
At a meeting of the SIGCORP board on June 11, 1999, the SIGCORP board
received and considered the presentations of SIGCORP's management and its
financial and legal advisors regarding the proposed merger and thereafter
voted to approve the merger agreement. The SIGCORP board believes that the
terms of the merger are fair to, and in the best interests of SIGCORP and its
shareholders. Accordingly, the SIGCORP board has approved the merger
agreement, and recommends that the SIGCORP shareholders approve the merger
agreement. In reaching its decision to approve the merger agreement and
recommend its approval to the SIGCORP shareholders, the SIGCORP board
considered the following material factors:
. the SIGCORP board's review and analysis of SIGCORP's current and future
condition, current earnings and earnings prospects, and the belief, based
upon analyses of cost savings and operating synergies estimated to result
from the transactions contemplated by the merger agreement prepared by
the managements of SIGCORP and Indiana Energy, that a combined company
will have an improved future condition and earnings prospects;
. the results of SIGCORP's investigation of Indiana Energy, including
information concerning the business, assets, capital structure, financial
performance and prospects of Indiana Energy and its subsidiaries;
28
<PAGE>
. the competitive business environment and changing regulatory environment
facing the energy industry and the belief by the SIGCORP board that in
order for SIGCORP to be a successful participant in that industry, it
must be able to offer a broad array of services and products to its
customers, made increasingly possible by combination with another
company;
. the belief that a larger combined company may reduce the impact of
changes in economic conditions on any given segment of its businesses;
. the expected federal income tax treatment of the merger as a tax-free
reorganization to SIGCORP shareholders to the extent they receive Vectren
common shares;
. the terms of the merger agreement as a "merger of equals" providing
exceptionally close exchange ratios for both SIGCORP and Indiana Energy
and identical representations and warranties, conditions to closing and
rights upon termination;
. the provision of a termination fee payable to SIGCORP under certain
circumstances if the merger agreement is terminated by Indiana Energy;
. Indiana Energy's closely comparable size to SIGCORP, which, as evidenced
by the close exchange ratio, would permit its shareholders to have
approximately the same degree of ownership and control of the new
corporation as that of the Indiana Energy shareholders;
. the similarity of corporate cultures of SIGCORP and Indiana Energy;
. SIGCORP's and Indiana Energy's individual and combined perceived
abilities to sustain growth and to continue to perform successfully in an
increasingly deregulated and competitive energy industry;
. the belief that SIGCORP's customers will benefit in the long term from
improved service and lower costs as a result of the economies of scale
and operating efficiencies of a larger, combined company;
. the belief that the merger will enhance overall opportunities for
SIGCORP's employees, particularly as a result of retaining corporate
headquarters of the combined company in SIGCORP's home city of
Evansville; and
. the opinion of SIGCORP's financial advisor, Goldman Sachs that the
SIGCORP Ratio was fair to the holders of SIGCORP common shares from a
financial point of view.
In view of the variety and complexity of factors considered by the SIGCORP
board in connection with its evaluation of the merger, the SIGCORP board did
not consider it practicable to, nor did it attempt to, quantify, rank or
otherwise assign relative weights to the specific factors it considered in
reaching its decision. In addition, the SIGCORP board did not undertake to
make any specific determination as to whether any particular factor (or any
aspect of any particular factor) was determinative to its ultimate conclusion
or assign any particular weight to any factor, but rather conducted a
discussion of the factors described above, including asking questions of
SIGCORP's management and legal and financial advisors, and reached a general
consensus that the merger was advisable and in the best interests of SIGCORP
and SIGCORP's shareholders. In considering the factors described above,
individual members of the SIGCORP board may have given different weight to
different factors.
Based on these factors, the SIGCORP board unanimously recommends that SIGCORP
shareholders vote "FOR" approval of the merger agreement.
In considering the recommendation of the SIGCORP board with respect to the
merger agreement, SIGCORP shareholders should be aware that members of
SIGCORP's management and the SIGCORP board have interests in the merger that
are different from, or in addition to, the interests of shareholders of
SIGCORP generally and that could potentially represent conflicts of interest.
The SIGCORP board was aware of these interests and considered them, among
other matters, in approving the merger agreement. See "--Conflicts of
Interest."
29
<PAGE>
Opinion of Financial Advisor to SIGCORP
Goldman Sachs delivered its written opinion, dated June 11, 1999, to the
SIGCORP board that, as of the date of the opinion, the SIGCORP Ratio was fair
from a financial point of view to the holders of SIGCORP common shares.
The full text of the written opinion of Goldman Sachs dated June 11, 1999,
which includes assumptions Goldman Sachs made, matters Goldman Sachs
considered and limitations on the review Goldman Sachs undertook in connection
with the opinion, is attached as Appendix E to this document. The following
summary describes the material assumptions Goldman Sachs made and material
matters Goldman Sachs considered in, and the material limitations on, Goldman
Sachs' review that it undertook in providing its opinion. However, it does not
purport to be a complete description of the opinion. Accordingly, the
following summary of the opinion is qualified in its entirety by reference to
the full text of the opinion. Shareholders of SIGCORP are urged to, and
should, read the opinion in its entirety.
The following summaries of the financial analyses include information in
tabular format. You should read these tables together with the text of each
summary.
In connection with its opinion, Goldman Sachs reviewed:
. the merger agreement;
. annual reports to shareholders and annual reports on Form 10-K of SIGCORP
for the five years ended December 31, 1998 and of Indiana Energy for the
five fiscal years ended September 30, 1998;
. recent interim reports to shareholders and quarterly reports on Form 10-Q
of SIGCORP and Indiana Energy;
. other recent communications from SIGCORP and Indiana Energy to their
respective shareholders;
. internal financial analyses and forecasts for SIGCORP and Indiana Energy
prepared by their respective managements; and
. analyses of cost savings and operating synergies estimated to result from
the transactions contemplated by the merger agreement prepared by the
managements of SIGCORP and Indiana Energy with the assistance of their
consultant.
Goldman Sachs also held discussions with members of the senior management
of SIGCORP and Indiana Energy regarding the strategic rationale for, and the
potential benefits of, the transactions contemplated by the merger agreement
and the past and current business operations, financial condition and future
prospects of their respective companies. In addition, Goldman Sachs reviewed
the reported price and trading activity for the SIGCORP common shares and the
Indiana Energy common shares, compared financial and stock market information
for SIGCORP and Indiana Energy with similar information for other companies
whose securities are publicly traded, reviewed the financial terms of recent
business combinations in the electric and gas utility industry specifically
and in other industries generally, and performed other studies and analyses as
it considered appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and assumed this accuracy and
completeness for purposes of rendering its opinion. In that regard, Goldman
Sachs assumed, with the consent of SIGCORP, that the cost savings and
operating synergies estimated to result from the transactions contemplated by
the merger agreement had been reasonably prepared on a basis reflecting the
best currently available estimates and judgments of SIGCORP and Indiana
Energy. Goldman Sachs also assumed, with the consent of SIGCORP, that the
merger will be accounted for as a pooling of interests under generally
accepted accounting principles. In addition, Goldman Sachs did not make an
independent evaluation or appraisal of the assets and liabilities of SIGCORP
or Indiana Energy or any of their subsidiaries, and Goldman Sachs has not been
furnished with any evaluation or appraisal of the assets and liabilities of
SIGCORP or Indiana Energy or any of their subsidiaries. Goldman Sachs also
assumed that all material governmental, regulatory or
30
<PAGE>
other consents and approvals necessary for the consummation of the transaction
would be obtained without adverse effect on SIGCORP and Indiana Energy or on
the contemplated benefits of the merger. Goldman Sachs' advisory services and
the opinion of Goldman Sachs were provided for the information and assistance
of the SIGCORP board in connection with its consideration of the merger and
the transactions contemplated by the merger agreement. Goldman Sachs' opinion
does not constitute a recommendation as to how any holder of SIGCORP common
shares should vote with respect to the merger agreement and the merger.
The following summarizes the material financial analyses used by Goldman
Sachs in connection with presenting its opinion to the SIGCORP board. Although
the summary does not purport to be a complete description of the analyses
performed or factors considered by Goldman Sachs, it summarizes the material
analyses performed and factors considered by Goldman Sachs in providing its
written opinion to the SIGCORP board.
(a) Historical Stock Trading Analysis. Goldman Sachs reviewed the
historical trading prices and volumes for SIGCORP common shares and Indiana
Energy common shares for the period from May 31, 1994 to May 31, 1999. Goldman
Sachs reviewed the historical trading prices on an indexed basis for SIGCORP
common shares, Indiana Energy common shares and composite indexes of gas and
electric utilities for the same five-year period. Goldman Sachs also reviewed
historical ratios for the exchange of Indiana Energy common shares for SIGCORP
common shares for the periods from June 6, 1994 through June 4, 1999 and from
June 10, 1998 through June 10, 1999. These ratios were based on the daily
closing prices of the SIGCORP common shares and Indiana Energy common shares
during the period. This analysis showed exchange ratios ranging from
approximately 1.02 to approximately 1.60 for the five-year period, a range
from approximately 1.27 to 1.60 for the one-year period and an exchange ratio
of approximately 1.322 at June 10, 1999. Under the merger agreement, holders
of SIGCORP common shares are entitled to receive 1.333 Vectren common shares
for each SIGCORP common share, while holders of Indiana Energy common shares
are entitled to receive one Vectren common share for each Indiana Energy
common share.
(b) Selected Companies Analysis. Goldman Sachs reviewed market valuation
information for 11 publicly traded, primarily gas utilities and 14 publicly
traded, primarily electric utilities.
Gas Utilities Electric Utilities
NICOR Inc. DTE Energy Company
MCN Energy Group Inc. Ameren Corp.
Peoples Energy Corp. Cinergy Corp.
Washington Gas Light Company CMS Energy Corp.
AGL Resources Inc. NiSource Inc.
Piedmont Natural Gas Inc. DPL Inc.
Oneok Inc. LG&E Energy Corp.
Eastern Enterprises UtiliCorp United Inc.
Atmos Energy Corp. IPALCO Enterprises, Inc.
New Jersey Resources Corp. Illinova Corporation
Laclede Gas Company Minnesota Power, Inc.
WPS Resources Corporation
Central Hudson Gas & Electric
Corp.
Madison Gas & Electric Company
These electric and gas utilities were chosen because they are publicly
traded companies with operations that for purposes of analysis may be
considered similar to SIGCORP and Indiana Energy, respectively. We refer to
these companies as the comparison companies. Goldman Sachs calculated and
compared the price-to-earnings per share multiples of SIGCORP, Indiana Energy
and the comparison companies for the calendar years 1999 and 2000. The
multiples of SIGCORP were calculated using a price of $30.00 per SIGCORP
common share, the per share price of SIGCORP common shares on June 4, 1999.
The multiples of Indiana Energy were calculated using
31
<PAGE>
a price of $22.06 per Indiana Energy common share, the per share price of
Indiana Energy common shares on June 4, 1999. The multiples were based on the
most recent publicly available information. The estimates of 1999 and 2000
earnings per share and EBITDA were based on the latest estimates provided by
the Institutional Brokers Estimate Service, or IBES, a data service that
monitors and publishes a compilation of earnings estimates produced by
selected research analysts on publicly traded companies.
The following table lists the low, median and high price-to-earnings per
share multiples for the comparison companies, as compared to the price-to-
earnings per share multiples for SIGCORP and Indiana Energy. Price-to-earnings
multiples are presented based on both 1999 and 2000 earnings estimates.
Price-to-Earnings Per Share Multiples
Comparison Companies
<TABLE>
<CAPTION>
Gas
Utilities Electric Utilities
----------- -------------------
1999 2000 1999 2000
----- ----- --------- ---------
<S> <C> <C> <C> <C>
Low....................................... 13.1x 11.5x 12.1x 11.7x
Median.................................... 14.6x 12.8x 14.1x 13.2x
High...................................... 17.2x 14.6x 23.7x 15.3x
SIGCORP and Indiana Energy
<CAPTION>
1999 2000
----- -----
<S> <C> <C> <C> <C>
SIGCORP................................... 14.3x 13.3x
Indiana Energy............................ 15.1x 13.1x
</TABLE>
Goldman Sachs also considered the five-year earnings per share growth rate
estimates provided by IBES for the comparison companies. The following table
lists the low, median and high five-year earnings per share growth rate
estimates for the comparison companies as compared to the growth rate
estimates for SIGCORP and Indiana Energy.
Five-Year Earnings per Share Growth Rates
Comparison Companies
<TABLE>
<CAPTION>
Gas Utilities Electric Utilities
------------- ------------------
<S> <C> <C>
Low...................................... 4.0% 1.0%
Median................................... 6.0% 5.0%
High..................................... 8.0% 9.5%
SIGCORP and Indiana Energy
SIGCORP.................................. 5.0%
Indiana Energy........................... 6.3%
</TABLE>
Goldman Sachs also considered the ratio of total enterprise value (market
value of equity plus total net debt) to earnings before interest, taxes,
depreciation and amortization, or EBITDA, over the most recently available
twelve-month period for the comparison companies. The following table lists
the low, median and high ratios for the comparison companies, as compared to
the ratios for SIGCORP and Indiana Energy.
32
<PAGE>
Enterprise Value/Last Twelve Months EBITDA
Comparison Companies
<TABLE>
<CAPTION>
Gas Utilities Electric Utilities
------------- ------------------
<S> <C> <C>
Low...................................... 6.2x 6.5x
Median................................... 8.1x 8.0x
High..................................... 14.1x 11.3x
SIGCORP and Indiana Energy
SIGCORP.................................. 8.3x
Indiana Energy........................... 7.1x
</TABLE>
(c) Pro Forma Merger Analysis. Goldman Sachs performed a pro forma analysis
of the financial impact of the merger on SIGCORP shareholders. Using earnings
estimates for SIGCORP and Indiana Energy from IBES ("calendarized" in the case
of Indiana Energy by deleting the results of its first fiscal quarter of each
fiscal year and adding the results of the first fiscal quarter of the
following fiscal year) for the years 1999, 2000 and 2001, Goldman Sachs
compared the earnings per share of SIGCORP common shares, on a stand-alone
basis, with the earnings per share of the common shares of Vectren on a pro
forma basis. Based on estimates of the net cost savings realized from the
merger of $4.1 million in 2000 and $7.6 million in 2001 (with no savings in
1999), this analysis showed the following accretion or dilution over the
estimated earnings per share of SIGCORP common shares on a stand-alone basis:
<TABLE>
<CAPTION>
Accretion (Dilution)
over Estimated
Year Earnings Per Share
---- --------------------
<S> <C>
1999................................................ (3.5)%
2000................................................ 2.2%
2001................................................ 4.9%
</TABLE>
Before giving effect to estimated cost savings resulting from the merger,
this analysis showed the following accretion or dilution in the estimated
earnings per share of SIGCORP common shares on a stand-alone basis:
<TABLE>
<CAPTION>
Accretion (Dilution)
in Estimated
Year Earnings Per Share
---- --------------------
<S> <C>
1999................................................. (3.5)%
2000................................................. (0.2)%
2001................................................. 0.5%
</TABLE>
(d) Contribution Analysis. Goldman Sachs reviewed selected historical and
estimated future operating and financial information for SIGCORP and Indiana
Energy and the relative contribution of SIGCORP and Indiana Energy to Vectren
based on estimates provided by SIGCORP's and Indiana Energy's respective
managements and, for net income, also based on IBES estimates. The information
that Goldman Sachs reviewed included, among other things:
. equity market capitalization;
. earnings before interest, taxes, depreciation and amortization, or
EBITDA;
. net income; and
. book value.
The statistics were compared to an implied ownership by the SIGCORP
shareholders of 51.4% of the equity of Vectren.
33
<PAGE>
The results of this analysis were as follows:
Contribution of SIGCORP to Vectren's:
<TABLE>
<S> <C>
Equity market capitalization.......................................... 51%
Book value............................................................ 53%
</TABLE>
<TABLE>
<CAPTION>
Net Income
--------------------
Management IBES
Year EBITDA Estimates Estimates
-------------- ------ ---------- ---------
<S> <C> <C> <C>
1998 (actual)................................. 52% 56% 56%
1999.......................................... 51% 52% 54%
2000.......................................... 51% 47% 52%
2001.......................................... 51% 49% 52%
</TABLE>
(e) Discounted Cash Flow Analysis. Goldman Sachs performed a discounted
cash flow analysis using projections for SIGCORP and Indiana Energy prepared
by their respective managements. This discounted cash flow analysis is an
analysis of the present value of projected cash flows based in this case on
projections through 2003 and assumed perpetual growth rates of cash flows
after 2003. The cash flows were divided into regulated and unregulated
segments of the respective companies' businesses and discounted to present
value using discount rates ranging from 6.5% to 7.5% for the regulated
businesses and from 12% to 24% for the unregulated businesses. This analysis
showed a value per SIGCORP common share in the following ranges:
<TABLE>
<CAPTION>
Discount Rates
---------------
Low High
------- -------
<S> <C> <C> <C>
Growth Rate.......................................... 2.5% $ 35.36 $ 18.46
4.5% $ 85.40 $ 39.81
</TABLE>
This analysis showed a value per Indiana Energy common share in the
following ranges:
<TABLE>
<CAPTION>
Discount
Rates
-------------
Low High
------ ------
<S> <C> <C> <C>
Growth Rate............................................ 2.5% $34.41 $19.68
4.5% $63.79 $33.71
</TABLE>
(f) Dividend Discount Analysis. Goldman Sachs performed an analysis of the
present value at June 4, 1999 of the potential equity value per SIGCORP common
share and Indiana Energy common share using an indicated annual dividend of
$1.24 per SIGCORP common share and $0.93 per Indiana Energy common share, in
each case as of June 4, 1999, and assuming that the holders of SIGCORP common
shares and the holders of Indiana Energy common shares will receive dividends
at a rate based on dividend growth rates ranging from 2.5% to 4.5%. Goldman
Sachs calculated the present value per SIGCORP common share and per Indiana
Energy common share applying discount rates ranging from 7.0% to 9.0%. This
analysis indicated present values per SIGCORP common share in the following
ranges:
<TABLE>
<CAPTION>
Dividend
Growth Rate
-------------
2.5% 4.5%
------ ------
<S> <C> <C> <C>
Discount Rate.......................................... 7.0% $27.56 $49.60
9.0% $19.08 $27.56
</TABLE>
This analysis indicated present values per Indiana Energy common share in
the following ranges:
<TABLE>
<CAPTION>
Dividend
Growth Rate
-------------
2.5% 4.5%
------ ------
<S> <C> <C> <C>
Discount Rate.......................................... 7.0% $20.67 $37.20
9.0% $14.31 $20.67
</TABLE>
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<PAGE>
(g) Break-Even Multiple Analysis. Goldman Sachs performed an analysis of
the change in earnings per share multiple that would be necessary to offset
any earnings per share accretion or dilution per SIGCORP common share as a
result of the merger. The analysis was based on IBES estimates of earnings per
share for 2000 (calendarized in the case of Indiana Energy). This analysis
shows an increase in multiple of 0.2% necessary if no synergies result and a
decrease in multiple of 2.2% necessary with net pre-tax synergies of $4.1
million.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the above summary, without considering the
analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its opinion, Goldman Sachs
considered the results of all of its analyses as a whole. No other company or
transaction used in the analyses referred to above is identical to SIGCORP or
Indiana Energy or the merger. In performing its analysis, Goldman Sachs made
numerous assumptions with respect to industry performance and general business
and economic conditions, many of which are beyond the control of SIGCORP and
Indiana Energy.
Goldman Sachs prepared the analyses described above solely for purposes of
providing its opinion to the SIGCORP board. The analyses do not purport to be
appraisals or necessarily reflect the prices at which businesses or securities
actually may be sold. Analyses based upon forecasts of future results are not
necessarily indicative of actual future results, which may be significantly
more or less favorable than suggested by these analyses. These analyses are
inherently subject to uncertainty because they are based upon numerous factors
or events beyond the control of SIGCORP or Indiana Energy or their advisors.
See "FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE."
As described above, Goldman Sachs' opinion to the SIGCORP board was one of
many factors the SIGCORP board considered in making its determination to
approve the merger agreement and the merger.
As part of its investment banking business, Goldman Sachs is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with SIGCORP, having provided investment banking services to SIGCORP
and its subsidiaries from time to time, including having acted as lead
managing underwriter of a public offering of three series of pollution control
refunding revenue bonds in April 1998 and of Senior Notes in July 1999, and
having acted as its financial advisor in connection with, and having
participated in some of the negotiations leading to, the merger agreement.
Goldman Sachs also has provided investment banking services to Indiana Energy
from time to time.
By a letter agreement dated May 1, 1999, SIGCORP engaged Goldman Sachs to
act as its financial advisor in connection with the contemplated transactions.
The terms of that letter agreement require SIGCORP to pay Goldman Sachs a
transaction fee of $3,500,000 payable in installments in connection with the
merger or another transaction involving the acquisition of 50% or more of the
outstanding common shares or assets of Indiana Energy. SIGCORP has also agreed
to reimburse Goldman Sachs for its reasonable out-of-pocket expenses,
including attorneys' fees, and to indemnify Goldman Sachs and related persons
against various liabilities in connection with its engagement, including some
liabilities under the federal securities laws.
Conflicts of Interest
Some members of the Indiana Energy board and management and some members of
the SIGCORP board and management may have interests in the merger that are in
addition to their interests as holders of their own company's common shares.
The Indiana Energy board and the SIGCORP board recognized these interests and
determined that these interests neither supported nor detracted from the
fairness of the merger to Indiana Energy and its shareholders or to SIGCORP
and its shareholders. The following are the interests identified by the board
of each company:
Vectren Officers and Directors. The merger agreement requires that specific
individuals serve as executive officers of Vectren after the merger and
provides that each of Indiana Energy and SIGCORP will have the right
35
<PAGE>
to designate eight individuals to serve on the board of directors of Vectren
(see "MANAGEMENT AND OPERATIONS OF VECTREN AFTER THE MERGER").
. Ownership of SIGCORP Common Shares. Mr. Anton H. George, a director of
Indiana Energy, is a director, officer or similar official of various
entities that beneficially own, directly or indirectly, an aggregate of
1,123,658 SIGCORP common shares, or approximately 4.76% of the
outstanding shares. Because of his positions with these entities, Mr.
George may be deemed to share voting and investment power with respect to
the SIGCORP common shares owned by these entities. Mr. George disclaims
beneficial ownership with respect to all of the shares owned by these
entities.
. Employment Agreements. Vectren has agreed to use its reasonable best
efforts to enter into employment contracts with current employees of
Indiana Energy and SIGCORP on or before the effective time of the merger.
The following table identifies current officers of either Indiana Energy
or SIGCORP to whom Vectren expects to offer employment agreements to
serve in the capacities indicated:
<TABLE>
<CAPTION>
Name Current Position Vectren Position
---- ---------------- ----------------
<S> <C> <C>
Niel C. President and Chief Executive Chairman of the Board and Chief
Ellerbrook Officer of Indiana Energy Executive Officer
Andrew E. President and Chief Operating President and Chief Operating
Goebel Officer of SIGCORP Officer
Jerome A. Vice President and Controller of Executive Vice President and Chief
Benkert Indiana Energy Financial Officer
Carl L. Senior Vice President and Chief Executive Vice President and
Chapman Financial Officer of Indiana Energy President of the Nonutility Group
Ronald E. Vice President and General Senior Vice President, General
Christian Counsel of Indiana Energy Counsel and Secretary
J. Gordon President of SIGECO Executive Vice President and
Hurst President of the Utility Group
Richard G. Vice President-Human Resources Senior Vice President-Human
Lynch and Administration of SIGCORP Resources and Administration
</TABLE>
Vectren expects the material terms of the employment agreements
to be:
. the executive agrees to be employed and Vectren agrees to employ
the executive for a three year term that is extended
automatically until 36 months after one party gives notice of
termination to the other party;
. a requirement that the executive devote full time to the
business;
. a minimum salary at the rate in effect for the executive
immediately before the effective date of the employment
agreement;
. bonus opportunities based on targets established by Vectren for
the executive's employment level;
. participation in all long-term incentive, savings and retirement,
health and welfare plans applicable to executives of Vectren;
. the right of the executive to terminate the executive's
employment if, after a change in control of Vectren, the
executive is demoted, is reassigned to lesser duties, the
executive's compensation or benefits are reduced or the executive
is required to move the executive's residence;
. the right of the executive to terminate the executive's
employment for any reason during a thirty day period commencing
one year following a change in control of Vectren;
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<PAGE>
. a severance payment, payable if the executive terminates
employment as provided in the two preceding items or is
terminated by Vectren without cause, of three times the
executive's salary and bonus, the actuarial value of retirement
benefits, and the continuation of health and welfare benefits;
. an agreement by the executive not to compete with Vectren if the
executive is terminated by Vectren for good cause or the
executive terminates employment other than as described in the
second and third preceding bullet points; and
. a "gross up" payment to the executive if the severance payments
are subject to the excise tax on excess parachute payments, in an
amount calculated to insure that the executive receives a net
benefit equal to the benefit the executive would have received
had the excise tax not applied.
. Indemnification. The merger agreement requires Vectren to provide
indemnification to the present and former officers and directors of
Indiana Energy and SIGCORP and to maintain directors' and officers'
liability insurance for those individuals for a period of six years. For
further details regarding these indemnification arrangements, see "THE
MERGER AGREEMENT--Covenants--Indemnification."
Options
At the time the merger agreement was executed, Indiana Energy and SIGCORP
entered into cross option agreements. The first, entitled "SIGCORP, Inc. Stock
Option Agreement," grants an option to Indiana Energy to purchase 4,702,483
SIGCORP common shares. The SIGCORP Option Agreement provides for an exercise
price of $29.70 per SIGCORP common share. The second, entitled "Indiana
Energy, Inc. Stock Option Agreement" grants an option to SIGCORP to purchase
5,927,524 Indiana Energy common shares. The Indiana Energy Option Agreement
provides for an exercise price of $22.27 per Indiana Energy common share.
Neither Indiana Energy nor SIGCORP paid any consideration in connection with
the Option Agreements other than the execution of the merger agreement.
The Indiana Energy Option and the SIGCORP Option may be exercised at any
time after the merger agreement becomes terminable as a result of a "Trigger
Event." A Trigger Event is:
. a material breach of any material representation or warranty or of any
covenant or agreement under the merger agreement; or
. any one of the following,
. the expiration of the merger agreement,
. receipt by a party of a competing bid which the board of directors of
that party determines must, in the exercise of their fiduciary duties,
be accepted,
. failure to obtain shareholder approval of the merger; with-
drawal or modification of the recommendation of the Indiana Energy
board or the SIGCORP board that the shareholders approve the merger,
. the acquisition by a third party of more than 25% of the voting power
of Indiana Energy or SIGCORP; or
. failure to approve replacement executive officers of Vectren if the
officers contemplated by the merger agreement are unable or unwilling
to serve, provided that in each case, Indiana Energy or SIGCORP fails
to reject a third party tender or exchange offer.
Upon exercise of the SIGCORP Option or the Indiana Energy Option, the
exercising company would own up to 16.6% of the outstanding common shares of
the other company.
The Indiana Energy Option and the SIGCORP Option terminate upon the
earliest of:
. the effective time of the merger;
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<PAGE>
. the termination of the merger agreement for reasons other than a Trigger
Event; or
. 180 days following the termination of the merger agreement upon or
during the continuance of a Trigger Event (or if the option cannot be
exercised at the end of the 180-day period due to legal action, until
ten business days after the impediment is removed, but in no event later
than June 11, 2002).
The Option Agreements may have the effect of delaying, deferring or
preventing a competing takeover or change in control of Indiana Energy or
SIGCORP.
Dissenters' Rights
Dissenters' rights are not available to shareholders of either of Indiana
Energy or SIGCORP under the Indiana Business Corporation Law (the "IBCL")
because the Indiana Energy common shares and the SIGCORP common shares are
each listed on the New York Stock Exchange.
New York Stock Exchange Listing of Vectren Common Shares
The completion of the merger is conditioned upon the listing of the Vectren
common shares on the New York Stock Exchange. The Vectren common shares are
expected to trade under the symbol "VVC."
Delisting and Deregistration of Indiana Energy Common Shares and SIGCORP
Common Shares
If the merger is completed, the Indiana Energy common shares and the
SIGCORP common shares will be delisted from the New York Stock Exchange and
deregistered under the Securities Exchange Act of 1934.
Federal Securities Law Consequences
We have registered the Vectren common shares issuable to holders of Indiana
Energy common shares and SIGCORP common shares upon consummation of the merger
under the Securities Act of 1933. The Vectren common shares may be traded
freely without restriction by those shareholders who are not deemed to be
"affiliates" of Vectren, Indiana Energy or SIGCORP, as that term is defined in
the rules promulgated under the Securities Act.
Certificates representing Vectren common shares issued in accordance with
the terms of the merger agreement in exchange for Certificates surrendered by
any "affiliate" of Indiana Energy or SIGCORP for purposes of Rule 145(c) under
the Securities Act, and the rules and regulations promulgated thereunder, will
bear the following legend:
THESE SHARES WERE ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THESE SHARES MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF THE RULE AND AN AFFILIATE'S
AGREEMENT BETWEEN THE ORIGINAL HOLDER OF THE SHARES AND VECTREN
CORPORATION, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES
OF VECTREN CORPORATION.
Vectren common shares received by those holders of Indiana Energy common
shares or SIGCORP common shares who are deemed to be "affiliates" of Indiana
Energy or SIGCORP at the time of the special meetings may be resold without
registration under the Securities Act only as permitted by Rule 145 under the
Securities Act or as otherwise permitted by law. The merger agreement requires
each of Indiana Energy and SIGCORP to use its best efforts to cause the
delivery to Vectren by each of their respective affiliates a written agreement
providing for certificates representing Vectren common shares issued in
exchange for Indiana Energy common shares or SIGCORP common shares surrendered
by any affiliate of Indiana Energy or SIGCORP, to bear a restrictive legend to
the effect that the shares may be transferred only in accordance with Rule
145, under an effective registration statement or upon receipt of an opinion
of counsel reasonably satisfactory to Vectren that the transfer is otherwise
exempt from registration under the Securities Act.
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<PAGE>
REGULATORY MATTERS
The merger will not proceed without the required regulatory approvals. We
can give no assurance that the regulatory approvals will be obtained or when
that will occur. Nor can we give any assurance that the approvals will satisfy
the conditions contained in the merger agreement. See "THE MERGER AGREEMENT--
Conditions to the Merger."
The Public Utility Holding Act of 1935. Section 9(a)(2) of the 1935 Act
requires the approval of the SEC before any person may complete an acquisition
that would result in its ownership of 5% or more of the outstanding voting
securities of more than one public utility company (as defined in the 1935
Act). Indiana Energy and SIGCORP both have at least one subsidiary that is a
public utility company. Accordingly, SEC approval of the merger is required
under Section 9(a)(2) of the 1935 Act because the merger will result in
Vectren's owning all of the outstanding voting securities of the subsidiaries
of Indiana Energy and SIGCORP.
Under the 1935 Act, the SEC is directed to approve the merger unless it
finds that (1) the merger would tend toward detrimental interlocking relations
or a detrimental concentration of control, (2) the consideration to be paid in
connection with the merger is not reasonable, (3) the merger would unduly
complicate the capital structure of Vectren's proposed holding company system
or would be detrimental to the proper functioning of that holding company
system, or (4) the merger would violate applicable state law. To approve the
merger, the SEC also must find that the merger would tend toward the
development of an integrated public utility system.
Currently, both Indiana Energy and SIGCORP are holding companies exempt
under Section 3(a)(1) of the 1935 Act from all provisions of the 1935 Act
except Section 9(a)(2). The basis for their exemptions under Section 3(a)(1)
of the 1935 Act is that each of Indiana Energy and SIGCORP and their
respective public utility subsidiaries are predominantly intrastate in
character and carry on their businesses substantially in Indiana, the state in
which they are both organized. A Section 3(a)(1) exemption will be available
to Vectren after consummation of the merger.
Federal Power Act. Section 203 of the Federal Power Act provides, among
other things, that no public utility may directly or indirectly merge or
consolidate its "jurisdictional" facilities with the jurisdictional facilities
of any other person (including another public utility) without first having
obtained authorization from the FERC. As a result, the approval of the FERC is
required to complete the merger. Under Section 203 of the Federal Power Act,
the FERC will approve the merger if it finds the merger to be "consistent with
the public interest." On August 13, 1999, SIGECO, and Indiana Energy and
Vectren filed a joint application with the FERC requesting that it approve the
merger under Section 203 of the Federal Power Act. To date, approval has not
been obtained from the FERC.
IURC Merger Review. On June 17, 1999, Indiana Energy and SIGCORP filed a
joint petition with the IURC requesting approval of the merger. After that
filing, the Indiana Supreme Court confirmed in an unrelated case that the IURC
does not have authority to approve or disapprove a merger of two public
utility holding companies. Receipt by Indiana Energy and SIGCORP of IURC
approval of the merger is not required to complete the merger.
Indiana Energy and SIGCORP have modified their joint petition to convert
the matter before the IURC from an approval process to an investigation of the
effect of the merger on Indiana Gas and SIGECO, to seek approval of deferral
and amortization of the expenses of the merger over a period of years, and to
extend by one month the time for the IURC to conduct the investigation. The
IURC has scheduled a hearing on the matter for mid-December 1999.
HSR Act. Under the HSR Act and the rules promulgated thereunder by the FTC,
transactions like the merger may not be completed unless notice has been given
and information has been furnished to the Antitrust Division of the DOJ and
the FTC and specified waiting period requirements have been satisfied. On July
15, 1999, Vectren, Indiana Energy and SIGCORP filed Pre-Merger Notification
and Report Forms with the FTC and
39
<PAGE>
the DOJ under the HSR Act. The DOJ has requested additional information from
Indiana Energy and SIGCORP. The waiting period with respect to the Pre-Merger
Notification and Report Forms will expire 20 days after the requested
information is furnished to the DOJ. If the merger is not completed within
twelve months after the expiration of the waiting period, Indiana Energy and
SIGCORP would be required to submit new notices to the DOJ and the FTC and a
new waiting period would have to expire or be terminated before the merger
could be completed.
At any time before or after the effective time of the merger, the FTC or
the DOJ could take any action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the merger or
seeking divestiture of substantial assets of Indiana Energy or SIGCORP or
their respective subsidiaries. Private parties and state attorneys general may
also bring an action under the antitrust laws. Based upon an examination of
information available to Indiana Energy and SIGCORP relating to the businesses
in which the companies and their respective subsidiaries are engaged, Indiana
Energy and SIGCORP believe that the consummation of the merger will not
violate the antitrust laws. However, we can give no assurance that a challenge
to the merger on antitrust grounds will not be made or, if a challenge is
made, of the result.
40
<PAGE>
RECENT DEVELOPMENTS
On November 3, 1999, the United States Environmental Protection Agency
filed a lawsuit against SIGECO. The EPA alleges that, beginning in 1992,
SIGECO violated the Clean Air Act by:
. making modifications to its Culley Generating Station in Yankeetown,
Indiana without obtaining required permits;
. making major modifications to the Culley Generating Station without
installing the best available emission control technology; and
. failing to notify the EPA of the modifications.
In addition, the lawsuit alleges that the modifications to the Culley
Generating Station required SIGECO to begin complying with federal new source
performance standards.
SIGECO believes it performed only proper maintenance at the Culley
Generating Station. Because proper maintenance does not require permits,
application of the best available emission control technology, notice to the
EPA, or compliance with new source performance standards, SIGECO believes that
the lawsuit is without merit, and intends to defend the lawsuit vigorously.
The lawsuit seeks fines against SIGECO in the amount of $27,500 per day per
violation. The lawsuit does not specify the number of days or violations the
EPA believes occurred. The lawsuit also seeks a court order requiring SIGECO
to install the best available emissions technology at the Culley Generating
Station. If the EPA is successful in obtaining an order, SIGECO estimates that
it would incur capital costs of approximately $40 to $50 million complying
with the order.
The EPA has also issued an administrative notice of violation to SIGECO
making the same allegations, but alleging that violations began in 1977.
Under applicable rules, SIGECO could be subjected to criminal penalties if
the Culley Generating Station continues to operate without complying with the
new source performance standards and the allegations are determined by a court
to be valid. SIGECO anticipates at this time that the plant will continue to
operate while the matter is being decided.
41
<PAGE>
MANAGEMENT AND OPERATIONS OF VECTREN AFTER THE MERGER
Trading Symbol. We anticipate that after the merger the Vectren common
shares will be listed on the New York Stock Exchange under the symbol "VVC."
Directors of Vectren. Initially, the Vectren board will be composed of
sixteen persons, eight of whom were designated by the Indiana Energy board,
and eight of whom were designated by the SIGCORP board.
Indiana Energy has designated the following persons to serve on the Vectren
board:
Niel C. Ellerbrook
L. A. Ferger
Anton H. George
William G. Mays
J. Timothy McGinley
Richard P. Rechter
James C. Shook
Jean L. Wojtowicz
SIGCORP has designated the following persons to serve on the Vectren board:
John M. Dunn
John D. Engelbrecht
Andrew E. Goebel
Robert L. Koch II
Donald A. Rausch
Ronald G. Reherman
Richard W. Shymanski
James S. Vinson
Executive Officers of Vectren. The merger agreement provides that Mr.
Ellerbrook will serve as Chairman of the Board and Chief Executive Officer of
Vectren following the merger. Mr. Goebel will serve as President and Chief
Operating Officer of Vectren following the merger. In addition, Vectren
expects that the following persons, each of whom is an officer or employee of
Indiana Energy or SIGCORP, will hold the offices of Vectren indicated:
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
Jerome A. Benkert Executive Vice President and Chief Financial Officer
Carl L. Chapman Executive Vice President and President of the Nonutility Group
Ronald E. Christian Senior Vice President, General Counsel and Secretary
J. Gordon Hurst Executive Vice President and President of the Utility Group
Richard G. Lynch Senior Vice President--Human Resources and Administration
</TABLE>
Operations of Vectren after the Merger. Following the merger, Vectren will
own all the outstanding common shares of the direct subsidiaries of each of
Indiana Energy and SIGCORP. Immediately after the merger, the former holders
of Indiana Energy common shares and SIGCORP common shares will own all of the
outstanding Vectren common shares.
The corporate headquarters and principal executive offices of Vectren will
be located in Evansville, Indiana. The corporate office of SIGECO will remain
in Evansville, Indiana, and the corporate office of Indiana Gas will remain in
Indianapolis.
42
<PAGE>
THE MERGER AGREEMENT
The following is a brief summary of the material provisions of the merger
agreement, a copy of which is attached as Appendix A to this Joint Proxy
Statement/Prospectus. Because this is a summary, it does not contain all the
information that may be important to you. You should read the summary in
conjunction with the complete text of the merger agreement.
The Merger
The merger agreement provides that, subject to the satisfaction (or where
permitted by law, the waiver) of various conditions, at the effective time of
the merger, Indiana Energy and SIGCORP will be merged into Vectren, with
Vectren continuing as the surviving corporation.
Vectren will file Articles of Merger with the Indiana Secretary of State
and Vectren's Articles of Incorporation and By-laws, as in effect immediately
before the effective time of the merger and copies of which are attached as
Appendices B and C to this Joint Proxy Statement/Prospectus, will be the
Articles of Incorporation and By-laws of the surviving corporation until
changed or amended.
Conversion of Securities
At the effective time of the merger, each outstanding Indiana Energy common
share will automatically be converted into the right to receive one Vectren
common share and each outstanding SIGCORP common share will automatically be
converted into the right to receive 1.333 Vectren common shares and cash in
lieu of any fractional Vectren common shares (collectively, the "Merger
Consideration"). After the effective time of the merger, and until they are
surrendered to the exchange agent, each certificate of Indiana Energy common
shares or SIGCORP common shares (collectively, the "Certificates") will only
represent the right to receive Vectren common shares, dividends and other
distributions paid after the effective time of the merger and cash in lieu of
any fractional Vectren common share.
No fractional shares will be issued in the merger. As soon as practicable
after the effective time of the merger, the exchange agent will sell the
fractional shares at then prevailing prices on the New York Stock Exchange
and, after deducting taxes and other expenses, will distribute those amounts
to SIGCORP shareholders in lieu of fractional shares.
Also at the effective time of the merger, all Vectren common shares that
are outstanding immediately before the effective time of the merger will be
canceled and cease to exist and all Indiana Energy common shares or SIGCORP
common shares that are owned by either company or any of their subsidiaries
will be canceled and cease to exist.
Conversion of Options
Some SIGCORP and SIGECO employees hold options to purchase SIGCORP common
shares granted under the 1994 SIGECO Stock Option Plan and other employee
compensation and benefit arrangements. At the effective time of the merger,
each unexpired and unexercised option to purchase SIGCORP common shares will
automatically be converted into an option to purchase the number of Vectren
common shares that could have been purchased under the original option
multiplied by 1.333. The exercise price per Vectren common share under the new
option will be equal to the original per share option exercise price divided
by 1.333. The new Vectren options will otherwise be subject to the same terms
and conditions as the original SIGCORP options.
Conversion of Restricted Stock
Some Indiana Energy and Indiana Gas employees hold shares of "restricted
stock" of Indiana Energy granted under employee compensation and benefit
arrangements. On the date immediately before the effective
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<PAGE>
time of the merger, the restrictions on each outstanding share of restricted
stock of Indiana Energy will lapse and at the effective time of the merger,
all shares of Indiana Energy which were issued as restricted stock will be
treated as unrestricted shares of Indiana Energy to be exchanged in the
merger.
Exchange of Stock Certificates
After the effective time of the merger, the exchange agent will mail a
transmittal letter to you as a holder of record of Indiana Energy common
shares and SIGCORP common shares. The transmittal letter will contain
instructions for surrender of your Certificates in exchange for Vectren common
shares.
You should not send in your certificates until you receive a transmittal
letter.
Once you have surrendered your Certificates to the exchange agent, together
with a duly executed transmittal letter and any other required documents, you
will be entitled to receive, without interest:
. the Vectren common shares to which you are entitled under the merger
agreement, in respect of the surrendered Certificates;
. dividends and other distributions as provided in the merger agreement;
and
. cash in lieu of any fractional Vectren common share.
You will not receive dividends or other distributions that are declared on
Vectren common shares on or after the effective time of the merger until you
have exchanged your Certificates for Vectren common shares.
One year after the effective time of the merger, the exchange agent will
distribute to Vectren, any portion of the Merger Consideration payable in the
merger to Indiana Energy or SIGCORP shareholders that remain unpaid. Any
former Indiana Energy or SIGCORP shareholders who have not exchanged their
Certificates by that time will have to look to Vectren for payment of the
Merger Consideration. Vectren will not be liable to any former holder of
Indiana Energy common shares or SIGCORP common shares for any Merger
Consideration which has been delivered to a state agency in connection with
any abandoned property, escheatment or similar law.
Representations and Warranties
Each of Indiana Energy and SIGCORP has made representations and warranties
to the other relating to, among other things:
. due organization and corporate power of itself and its subsidiaries;
. capital structure;
. authorization and absence of conflicts with, violations of, or default
under agreements and obligations that bind it, or any applicable federal,
state, local or foreign order, injunction, decree, statute, rule or
regulation, unless the conflict, violation or default would not be
reasonably likely to materially and adversely affect the other company;
. documents and reports filed with the SEC and that the information in
those filings is accurate and complete, including the financial
statements;
. absence of material changes or events since December 31, 1998 that would
be reasonably likely to materially and adversely affect the business, and
the absence of undisclosed liabilities;
. absence of pending or threatened investigations or litigation;
. accuracy and completeness of information in this Proxy
Statement/Prospectus;
. compliance with tax obligations;
. employee benefit plans and compliance of the plans with applicable laws
and the absence of any labor or employment problems;
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<PAGE>
. compliance with environmental and safety laws;
. regulation as a utility;
. required shareholder vote;
. accounting matters related to pooling of interests;
. inapplicability of state anti-takeover statutes;
. receipt of a fairness opinion from its financial advisor;
. maintenance of adequate insurance coverage; and
. absence of beneficial ownership of any of the other company's common
shares.
All representations and warranties of Indiana Energy and SIGCORP will
expire at the effective time of the merger.
Covenants of Indiana Energy and SIGCORP
Indiana Energy and SIGCORP have agreed, among other things, that during the
period between the signing of the merger agreement and the effective time of
the merger, each company will carry on its businesses and that of its
subsidiaries in the usual and ordinary course. Each of Indiana Energy and
SIGCORP has also agreed to use all commercially reasonable efforts to preserve
its current business organizations and goodwill, and preserve its
relationships with its customers, suppliers, distributors and others having
business dealings with it, and keep available its present officers and
employees.
In addition, each company has agreed to restrictions on the conduct of its
businesses, including among other things, restrictions on its ability to:
. declare, set aside or pay any dividends (other than in the ordinary
course);
. split, combine or reclassify any of its capital shares;
. purchase any of its capital shares or the capital shares of its
subsidiaries;
. issue, sell, dispose of or otherwise encumber any of its capital shares,
other than
. the issuance of shares under existing employee stock options and
employee benefit plans consistent with past practice, and
. the issuance by any of its wholly owned subsidiaries to the parent
company or another direct or indirect parent of that subsidiary;
. amend its articles of incorporation or by-laws in a manner adverse to the
other company;
. acquire or publicly propose to acquire any other business;
. make or become obligated to make any capital expenditure except for the
repair or replacement of destroyed or damaged facilities or other capital
expenditures that in the aggregate do not exceed $10 million;
. sell or otherwise dispose of, any significant amount of assets or become
obligated to sell, lease, license, encumber or otherwise dispose of any
significant amount of assets, except for
. dispositions not exceeding $5 million in the aggregate and which do not
have a material adverse affect on the other company,
. dispositions required by law, and
. dispositions in the ordinary course of business consistent with past
practice;
. incur any indebtedness for borrowed money except for
. short-term debt in the ordinary course of business,
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<PAGE>
. long-term debt to refinance existing debt,
. additional long-term debt aggregating not more than $10 million, or
. debt in connection with refunding any preferred shares of any of its
subsidiaries;
. increase the compensation payable to its officers or employees, except
for increases in the ordinary course of business consistent with past
practice;
. engage in any activity that would cause it to lose its exemption from
registration as a "holding company" under the 1935 Act;
. except as required by law or generally accepted accounting principles,
take any action with respect to accounting policies or procedures;
. take any action that would prevent pooling-of-interests treatment for the
merger;
. take any action that would adversely affect the status of the merger as a
tax-free reorganization;
. make any filing to change rates or agree to any change in the methodology
used to compute the fuel adjustment clause; or
. use any confidential information in connection with the solicitation of
customers.
Other Covenants. The merger agreement also contains other agreements
relating to the conduct of Indiana Energy and SIGCORP before the effective
time of the merger, including, among other things, those requiring each of
them to:
. call a meeting of its shareholders, to be held on the same day as the
meeting of shareholders of the other company, and recommend that its
shareholders approve the merger and the merger agreement (except to the
extent doing so would violate the fiduciary obligations of its board);
. cooperate in the preparation of this Joint Proxy Statement/Prospectus and
the Registration Statement of which it forms a part and take the actions
reasonably required to have the Registration Statement declared effective
by the SEC as soon as practicable;
. confer on a regular and frequent basis regarding the material operational
matters and general status of ongoing operations;
. promptly notify the other company of any significant changes in the
business;
. advise the other company of any change or event that could reasonably be
likely to materially and adversely affect the other company;
. consult with the other company before making any federal or state filing
in connection with the merger;
. use commercially reasonable efforts to obtain all required consents to
complete the merger;
. use commercially reasonable efforts to maintain in effect all existing
material permits;
. afford the other company's accountants, counsel, financial advisors and
other representatives reasonable access to properties, books, records and
contracts;
. use its reasonable best efforts to timely file all reports required to be
filed under state or federal law, including any notification required
under the HSR Act;
. use commercially reasonable efforts to cause its independent auditor to
deliver a "cold comfort" letter in substantially the form and substance
as is customarily given in similar mergers;
. consult with the other company before issuing any press release or
otherwise making any public announcements with respect to the merger;
. deliver to the other company a letter identifying all the "affiliates" of
each company, and use its reasonable best efforts to have each affiliate
sign a written agreement restricting the sale of Vectren common shares
received by the affiliates in the merger;
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<PAGE>
. maintain its employee benefit plans, arrangements and programs and
employment contracts until Vectren assumes those plans or terminates
them;
. use its commercially reasonable best efforts to obtain any governmental
approval required for completion of the merger;
. take the actions necessary to cause 16 persons to be appointed to the
board of directors of Vectren, with eight persons designated by Indiana
Energy and eight persons designated by SIGCORP;
. create a special transition management task force generally to evaluate
and recommend the manner in which to best organize and manage the
business of Vectren after the effective time of the merger, and to, among
other tasks, develop regulatory plans and proposals, corporate
organizational and management plans;
. coordinate with the other company regarding declaration and payment of
any dividends in respect of Vectren common shares, Indiana Energy common
shares or SIGCORP common shares; and
. use all commercially reasonable efforts to do all things necessary,
proper or advisable under applicable laws and regulations to complete the
merger and the other transactions contemplated by the merger agreement.
Covenants of Vectren. After the effective time of the merger, Vectren will
honor all contracts, agreements, collective bargaining agreements and
commitments of Indiana Energy and SIGCORP in existence at the time the merger
agreement was executed. Vectren will also assume the Indiana Energy and
SIGCORP employee benefit plans in existence immediately before the effective
time of the merger and will use its reasonable best efforts to enter into
employment contracts with Jerome A. Benkert, Carl L. Chapman, Niel C.
Ellerbrook, Andrew E. Goebel, Timothy E. Hewitt and J. Gordon Hurst, current
employees of Indiana Energy or SIGCORP.
No Solicitation of Takeover Proposals. Each of Indiana Energy and SIGCORP
has agreed that it will not, and will use its best efforts to cause any of its
officers, directors, employees, attorneys, financial advisors, agents or other
representatives and those of any of its subsidiaries not to:
. actively seek or encourage any proposal or offer from any person that
would be, or might lead to, a "Takeover Proposal" (as defined below); or
. engage in discussions or negotiations relating to a Takeover Proposal.
A Takeover Proposal means any:
. tender or exchange offer, proposal for a merger, reorganization,
consolidation, share exchange, recapitalization or other business
combination ("Business Combination") involving either Indiana Energy or
SIGCORP or any of their respective material subsidiaries;
. proposal or offer to acquire an equity interest of 10% or more in, or a
significant portion of the assets of, Indiana Energy or SIGCORP, or any
of their respective material subsidiaries.
However, before shareholder approval of the merger, Indiana Energy and
SIGCORP each may engage in discussions or negotiations with, or furnish
information about itself to any other party which makes an unsolicited, bona
fide written Takeover Proposal if the company's board of directors concludes,
in good faith based on a written opinion of its outside counsel, that failing
to act on that Takeover Proposal would violate its fiduciary obligations.
In deciding to act on a Takeover Proposal, the board must conclude, in good
faith:
. that the Takeover Proposal includes necessary financing arrangements and
reasonably can be completed after taking into account legal, financial
and regulatory factors; and
. that the Takeover Proposal would, if completed, be more favorable, from a
financial point of view, to the shareholders of the company than the
merger between Indiana Energy and SIGCORP.
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<PAGE>
Fees and Expenses. Generally, regardless of whether or not the merger is
completed, each company will pay its own expenses in connection with the
merger agreement and the related transactions. However, each of Indiana Energy
and SIGCORP will pay one-half of the costs and expenses, including filing
fees, incurred in connection with the filing under the HSR Act and the filing,
printing and mailing of this Joint Proxy Statement/Prospectus and the
Registration Statement.
Indemnification. To the extent not already provided by a current
indemnification right or agreement, from and after the effective time of the
merger, Vectren will, to the fullest extent permitted under applicable law,
indemnify and hold harmless all past and present officers, directors and
employees of Indiana Energy or SIGCORP and of their subsidiaries to the same
extent those persons are indemnified as of the date of the execution of the
merger agreement by Indiana Energy or SIGCORP for acts or omissions occurring
in their capacities as a director, officer or employee of Indiana Energy or
SIGCORP at or before the effective time of the merger, including, without
limitation, acts or omissions occurring in connection with the approval of the
merger agreement and the completion of the transactions contemplated by the
merger agreement. Vectren will provide, for a period of six years from the
effective time of the merger, Indiana Energy's and SIGCORP's current directors
and officers an insurance and indemnification policy that is no less favorable
than Indiana Energy's or SIGCORP's policy existing at the effective time of
the merger. If substantially equivalent insurance coverage is unavailable,
Vectren will provide the best available coverage. However, Vectren will not be
required to pay annual premiums for the new insurance and indemnification
policies in excess of 200% of the last aggregate annual premiums paid by
Indiana Energy and SIGCORP.
Directors. Indiana Energy and SIGCORP have agreed that the board of Vectren
will have 16 members, eight designated by Indiana Energy and eight designated
by SIGCORP. Each director will serve until the next regularly scheduled annual
meeting of Vectren or until a successor has been duly elected or appointed and
qualified or until the director's earlier death, resignation or removal in
accordance with Vectren's Articles of Incorporation and By-laws.
Officers. From and after the effective time of the merger, Mr. Ellerbrook,
or a replacement, subject to the approval of SIGCORP if Mr. Ellerbrook is not
able or willing to serve, will serve as Chairman of the Board and Chief
Executive Officer of Vectren. Mr. Goebel, or a replacement, subject to the
approval of Indiana Energy if Mr. Goebel is not able or willing to serve, will
serve as President and Chief Operating Officer of Vectren.
Conditions to the Merger
Conditions to the Obligations of the Parties. The obligations of each of
the companies to complete the merger are subject to the following conditions,
among others:
. approval and adoption of the merger agreement by the required vote of
shareholders of each of Indiana Energy and SIGCORP;
. absence of any temporary restraining order or preliminary or permanent
injunction or other order issued by any federal or state court preventing
completion of the merger and absence of any federal, state or local law
or regulation prohibiting the transactions contemplated by the merger
agreement;
. effectiveness of the Registration Statement;
. authorization for listing of the Vectren common shares issuable in the
merger on the New York Stock Exchange upon official notice of issuance;
. receipt of letters from each of Indiana Energy's and SIGCORP's
independent public accountants stating that each of Indiana Energy and
SIGCORP is eligible to participate in a transaction accounted for as a
pooling of interests, and a letter from Vectren's independent accountants
stating that the merger will qualify as a pooling-of-interests
transaction.
. obtainment of final regulatory approvals (see "THE MERGER--Regulatory
Matters") that do not contain terms or conditions that would have or
would be reasonably likely to have a material adverse effect on Vectren;
and
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. continuance of Vectren as a validly existing Indiana corporation.
Conditions to SIGCORP's Obligations. The obligations of SIGCORP to complete
the merger are further conditioned on each of the following:
. performance by Indiana Energy in all material respects of each of its
obligations contained in the merger agreement;
. the accuracy in all material respects of each of the representations and
warranties of Indiana Energy contained in the merger agreement and
receipt by SIGCORP of a certificate signed on behalf of Indiana Energy by
its Chief Executive Officer and its Chief Financial Officer to that
effect;
. delivery to SIGCORP of an opinion from special counsel to SIGCORP
substantially to the effect that
. the merger will be a tax-free reorganization under Code Section 368(a),
and
. SIGCORP, Vectren and the shareholders of SIGCORP who exchange their
SIGCORP common shares solely for Vectren common shares will recognize
no gain or loss as a result of the merger for U.S. federal income tax
purposes; and
. obtainment by Indiana Energy of all consents required to complete the
merger except those that in the aggregate would not be reasonably likely
to materially and adversely affect Vectren.
Conditions to Indiana Energy's Obligations. The obligations of Indiana
Energy to complete the merger are further conditioned on each of the
following:
. performance by SIGCORP in all material respects of each of its
obligations contained in the merger agreement;
. the accuracy in all material respects of each of the representations and
warranties of SIGCORP contained in the merger agreement and receipt by
Indiana Energy of a certificate signed on behalf of SIGCORP by its Chief
Executive Officer and its Chief Financial Officer (or similar officer) to
that effect;
. delivery to Indiana Energy of an opinion from special counsel to Indiana
Energy substantially to the effect that
. the merger will be a tax-free reorganization under Code Section 368(a),
and
. Indiana Energy, Vectren and the shareholders of Indiana Energy who
exchange their Indiana Energy common shares solely for Vectren common
shares will recognize no gain or loss as a result of the merger for
U.S. federal income tax purposes; and
. obtainment by SIGCORP of all consents required to complete the merger
except those that in the aggregate would not be reasonably likely to
materially and adversely affect Vectren.
If either Indiana Energy or SIGCORP waives the conditions relating to the
accountants' letters with respect to pooling or the legal opinions with
respect to the qualification of the merger as a tax-free reorganization, we
will resolicit your approval of the merger.
Termination
The merger agreement may be terminated at any time before the effective
time of the merger by mutual written consent of the Indiana Energy board and
the SIGCORP board.
In addition, either Indiana Energy or SIGCORP may terminate the merger
agreement at any time before the effective time of the merger if:
. the merger has not been effected on or before the close of business on
June 11, 2000 (the "Termination Date"); provided, however, that the
Termination Date will automatically be changed to December 31, 2000 if,
on June 11, 2000
. the required statutory approvals have not been obtained or waived,
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<PAGE>
. the other conditions to completion of the merger have been or can be
satisfied, and
. any statutory approvals that have not been obtained are being
diligently pursued (however, neither company will have the right to
terminate the merger agreement if it has caused the failure to complete
the merger by the effective time of the merger);
. the Indiana Energy or SIGCORP shareholders do not approve the merger;
. there is any law, order or regulation that makes completion of the merger
illegal or otherwise prohibited;
. one of the companies receives a tender or exchange offer or a written
offer with respect to a Business Combination, upon five days' prior
notice to the other company if a majority of its board members determine
that it would be a breach of the board's fiduciary obligations to reject
a tender or exchange offer, subject to procedural requirements, including
renegotiation of the merger agreement, if possible, before the
termination;
. there has been a material breach by the other company of any material
representation or warranty or any material breach of a covenant or
agreement, in each case which breach has not been cured within thirty
days following receipt by the breaching party of written notice of the
breach;
. the Indiana Energy board or SIGCORP board
. has not recommended or has withdrawn, modified or changed its approval
or recommendation of the merger and the merger agreement,
. has failed to reaffirm its approval or recommendation upon request of
the other company,
. has recommended or accepted any Business Combination, or
. has resolved to do any of the above.
. a third party becomes the beneficial owner of more than 25% of the voting
power of the outstanding voting securities of Indiana Energy or SIGCORP;
or
. on or before the Termination Date, a replacement Chief Executive Officer
or replacement Chief Operating Officer is required, but has not been
approved.
Termination Fees and Cross Options
Termination Fees. If the merger agreement is terminated, the merger
agreement will become void, except that:
. covenants relating to confidentiality, payment of expenses of this
transaction and damages for termination survive termination; and
. termination will not relieve any company from any liability for any
willful breach of a representation, warranty or covenant contained in the
merger agreement.
If the merger agreement is terminated because of a material breach of
warranty, representation, covenant or agreement, the breaching party will pay
to the nonbreaching party $3 million in cash for out-of-pocket expenses. If
the merger agreement:
. is terminated for any reason, other than the existence of a law,
regulation, order, decree by a court or other governmental entity that
makes completion of the transactions contemplated by the merger agreement
illegal; and
. at the time of the termination, a third-party offer or proposal for a
Business Combination ("Acquisition Proposal") involving the breaching
party ("Target Party") existed; and
. within 24 months of any termination, the Target Party accepts an
Acquisition Proposal, then
the Target Party will pay to the other party a termination fee of $35 million
in cash and $3 million in cash for out-of-pocket expenses. A company will also
be liable for costs and expenses in connection with any action to recover
amounts due under the termination provisions, subject to a $41 million limit
on the aggregate amount of
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termination fees, out-of-pocket expenses, the aggregate amounts payable under
the Option Agreements and costs and expenses of any collection action.
Amendment and Waiver
The merger agreement may be amended in writing, by action taken by both
companies' boards of directors at any time before the effective time of the
merger. However, after approval of the merger by the SIGCORP and Indiana
Energy shareholders, no amendment will be made which by law requires further
approval by the SIGCORP or Indiana Energy shareholders without further
approval.
At any time before the effective time of the merger, the parties may:
. extend the time for the performance of any of the obligations or other
acts of the other parties to the merger agreement;
. waive any inaccuracies in the representations and warranties contained
in the merger agreement or in any document delivered as required by the
merger agreement; or
. waive compliance with any of the agreements or conditions contained in
the merger agreement that may legally be waived.
ACCOUNTING TREATMENT
We expect the merger to be accounted for as a "pooling of interests" under
generally accepted accounting principles. As a result, the consolidated
financial statements of Vectren after the merger will be restated to include
the assets, liabilities, shareholders' equity and results of operations of
each of Indiana Energy and SIGCORP at their historical cost. The obligations
of Vectren, Indiana Energy and SIGCORP to complete the merger are subject to
Indiana Energy's receipt of a letter from its independent accountants, Arthur
Andersen LLP, in customary form, to the effect that no conditions exist which
would preclude accounting for the merger as a pooling of interests, and
SIGCORP's receipt of a letter from its independent accountants, Arthur
Andersen LLP, in customary form, to the effect that no conditions exist which
would preclude accounting for the merger as a pooling of interests.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
General. The following discussion is a summary of the material U.S. federal
income tax consequences of the merger to the shareholders of Indiana Energy
and SIGCORP and, where specifically noted, represents the opinion of Simpson
Thacher & Bartlett, special counsel to Indiana Energy, and Winthrop, Stimson,
Putnam & Roberts, special counsel to SIGCORP. The discussion which follows is
based on the Code, Treasury regulations promulgated under the Code,
administrative rulings and pronouncements and judicial decisions as of the
date of this Joint Proxy Statement/Prospectus, all of which are subject to
change, possibly with retroactive effect. The discussion below does not
address the effects of any state, local or foreign tax laws. The tax treatment
of an Indiana Energy or SIGCORP shareholder may vary depending upon his or her
particular situation, and certain shareholders (including insurance companies,
tax-exempt organizations, financial institutions or broker-dealers, persons
who do not hold Indiana Energy common shares or SIGCORP common shares as
capital assets within the meaning of Section 1221 of the Code, and individuals
who received Indiana Energy common shares or SIGCORP common shares upon the
exercise of employee stock options or otherwise as compensation, and foreign
persons) may be subject to special rules not discussed below.
Consequences of the Merger. Consummation of the merger is conditioned upon
the receipt by each of Indiana Energy and SIGCORP of an opinion of its counsel
dated the date on which the merger is completed. The opinion of Indiana
Energy's counsel, Simpson Thacher & Bartlett, is that the merger will be a
tax-free reorganization under Section 368(a) of the Code, and that Vectren,
Indiana Energy and the shareholders of Indiana Energy who exchange their
shares for Vectren common shares will recognize no gain or loss for federal
income tax purposes as a result of the consummation of the merger. The opinion
of SIGCORP's counsel, Winthrop, Stimson, Putnam & Roberts, is that the merger
will be a tax-free reorganization under Section 368(a)
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of the Code, and that Vectren, SIGCORP and the shareholders of SIGCORP who
exchange their shares for Vectren common shares will recognize no gain or loss
for federal income tax purposes (other than, in the case of SIGCORP
shareholders, with respect to the receipt of cash in lieu of a fractional
Vectren common share) as a result of the consummation of the merger. The
opinions of counsel are based on customary representations as to factual
matters made by, among others, Indiana Energy and SIGCORP. Those
representations, if incorrect in any material respect, could change the
conclusions reached in the opinions. Neither Indiana Energy nor SIGCORP is
currently aware of any facts or circumstances which would cause any of the
representations that will be made to counsel to be untrue or incorrect in any
material respect. Any opinion of counsel is not binding on the Internal
Revenue Service or the courts.
Based upon representations as to factual matters made by Indiana Energy and
SIGCORP (which are assumed to be true as of the effective date of the merger),
in the opinion of Simpson Thacher & Bartlett with respect to Indiana Energy
and its shareholders and Winthrop, Stimson, Putnam & Roberts with respect to
SIGCORP and its shareholders, the material U.S. federal income tax
consequences that will result from the merger will be as follows:
. The merger will be a tax-free reorganization under Section 368(a) of the
Code;
. No income, gain or loss will be recognized by Vectren, Indiana Energy or
SIGCORP as a result of the merger;
. An Indiana Energy shareholder will not recognize any income, gain or loss
as a result of the receipt of Vectren common shares;
. A SIGCORP shareholder will not recognize any income, gain or loss as a
result of the receipt of Vectren common shares, but a SIGCORP shareholder
may recognize gain or loss as a result of the receipt of cash in lieu of
a fractional Vectren common share;
. A shareholder's aggregate tax basis for the Vectren common shares
received in the merger, including any fractional Vectren common share
interest for which cash is received, will equal the shareholder's
aggregate tax basis in the Indiana Energy common shares or SIGCORP common
shares, as the case may be, exchanged for the Vectren common shares;
. A shareholder's holding period for the Vectren common shares received in
the merger will include the holding period of the Indiana Energy common
shares or SIGCORP common shares surrendered in exchange for the Vectren
common shares assuming that the Indiana Energy common shares or SIGCORP
common shares, as the case may be, were held by the shareholders as
capital assets; and
. A SIGCORP shareholder that receives cash in lieu of a fractional Vectren
common share interest in the merger will be treated as having received
the cash in exchange for the fractional share interest and generally will
recognize gain or loss on the deemed exchange in an amount equal to the
difference between the amount of cash received and the basis of the
SIGCORP common share allocable to the fractional share. In general, the
gain or loss will constitute capital gain or loss if the SIGCORP common
shares were held as a capital asset at the effective time of the merger
and the gain or loss will be long-term capital gain or loss if the
SIGCORP common shares were held by the shareholder for more than one
year.
Because of the individual nature of tax consequences, shareholders of
Indiana Energy and SIGCORP are urged to consult their tax advisors with
respect to the tax consequences of the merger, including the effect of U.S.
federal, state and local, foreign and other tax rules, and the effect of
possible changes in tax laws.
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UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma condensed financial statements give
effect to the merger under the pooling of interests method of accounting. The
managements of Indiana Energy and SIGCORP prepared these unaudited pro forma
condensed financial statements based upon their respective financial
statements, as well as available information and assumptions which the
managements believe are reasonable. Pro forma combined per share amounts are
based on the exchange ratios of one Vectren common share for each Indiana
Energy common share and 1.333 Vectren common shares for each SIGCORP common
share. These unaudited pro forma condensed financial statements are presented
for illustrative purposes only, and therefore are not necessarily indicative
of the operating results and financial position that might have been achieved
had the merger occurred as of an earlier date, nor are they necessarily
indicative of operating results and financial position which may occur in the
future.
The unaudited pro forma condensed financial statements should be read in
conjunction with the historical consolidated financial statements and notes
thereto in:
. Indiana Energy's Annual Report on Form 10-K for the year ended September
30, 1998;
. SIGCORP's Annual Report on Form 10-K for the year ended December 31,
1998;
. SIGCORP's Quarterly Report on Form 10-Q for the period ended September
30, 1999;
. Indiana Energy's Quarterly Reports on Form 10-Q for the periods ended
December 31, 1998 and June 30, 1999; and
. Indiana Energy's Summary Financial Information on Form 8-K for the
period ended September 30, 1999 and filed on October 29, 1999.
incorporated by reference in this Joint Proxy Statement/Prospectus. See "WHERE
YOU CAN FIND MORE INFORMATION."
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VECTREN CORPORATION
Pro Forma Condensed Balance Sheet at September 30, 1999
(Thousands--Unaudited)
<TABLE>
<CAPTION>
Indiana
Energy(1) SIGCORP(1) Pro Forma
ASSETS (historical) (historical) Combined
------ ------------ ------------ ----------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents................... $ 20 $ 11,648 $ 11,668
Accounts receivable......................... 17,195 72,861 90,056
Accrued unbilled revenues................... 8,136 11,837 19,973
Inventories................................. 10,311 40,277 50,588
Prepayments and other current assets........ 38,989 15,031 54,020
-------- ---------- ----------
Total current assets...................... 74,651 151,654 226,305
-------- ---------- ----------
Utility Plant:
Original cost............................... 990,780 1,360,350 2,351,130
Less accumulated depreciation and
amortization............................... 398,912 624,435 1,023,347
-------- ---------- ----------
Net utility plant......................... 591,868 735,915 1,327,783
-------- ---------- ----------
Other Investments and Property................ 89,126 159,842 248,968
-------- ---------- ----------
Deferred Charges and Other Assets(3).......... 21,733 49,004 65,820
-------- ---------- ----------
TOTAL ASSETS.................................. $777,378 $1,096,415 $1,868,876
======== ========== ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
Current Liabilities:
Current maturities of long-term debt and
other obligations.......................... $ 180 $ 54,386 $ 54,566
Notes payable............................... 86,521 80,990 167,511
Accounts payable(3)......................... 26,311 44,887 75,281
Refunds to customers........................ 25,905 4,196 30,101
Accrued taxes............................... 12,860 5,264 18,124
Accrued interest............................ 1,182 6,401 7,583
Other current liabilities................... 26,386 25,094 51,480
-------- ---------- ----------
Total current liabilities................. 179,345 221,218 404,646
-------- ---------- ----------
Deferred Credits and Other Liabilities:
Deferred income taxes....................... 60,931 147,688 208,619
Accrued postretirement benefits other than
pensions................................... 28,286 13,996 42,282
Unamortized investment tax credit........... 8,383 17,730 26,113
Other....................................... 5,625 2,451 8,076
-------- ---------- ----------
Total deferred credits and other
liabilities.............................. 103,225 181,865 285,090
-------- ---------- ----------
Capitalization:
Long-term debt and other obligations........ 183,183 284,588 467,771
-------- ---------- ----------
Preferred stock of subsidiary:
Redeemable.................................. -- 8,192 8,192
Nonredeemable............................... -- 11,090 11,090
-------- ---------- ----------
Total preferred stock..................... -- 19,282 19,282
-------- ---------- ----------
Common stock................................ 136,760 78,258 215,018
Retained earnings(3)........................ 174,865 311,281 477,146
Accumulated other comprehensive income...... -- (77) (77)
-------- ---------- ----------
Total common shareholders' equity......... 311,625 389,462 692,087
-------- ---------- ----------
Total capitalization.................... 494,808 693,332 1,179,140
-------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.... $777,378 $1,096,415 $1,868,876
======== ========== ==========
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.
54
<PAGE>
VECTREN CORPORATION
Pro Forma Condensed Statement of Income for Nine Months Ended September 30,
1999
(Thousands, Except Per Share Amounts--Unaudited)
<TABLE>
<CAPTION>
Indiana Pro
Energy SIGCORP (1) Forma
(1) (2) (2) Combined
(historical) (historical) (3) (4)
------------ ------------ --------
<S> <C> <C> <C>
OPERATING REVENUES:
Electric utility.......................... $ -- $238,960 $238,960
Gas utility............................... 294,114 47,973 342,087
Energy services and other................. 1,108 153,111 154,219
-------- -------- --------
Total operating revenues................ 295,222 440,044 735,266
-------- -------- --------
OPERATING EXPENSES:
Fuel for electric generation.............. -- 51,529 51,529
Purchased electric energy................. -- 18,731 18,731
Cost of gas sold.......................... 147,754 26,826 174,580
Cost of energy services and other......... -- 150,507 150,507
Other operating........................... 59,483 76,403 135,886
Depreciation and amortization............. 30,697 33,976 64,673
Taxes other than income taxes............. 11,634 9,781 21,415
-------- -------- --------
Total operating expenses................ 249,568 367,753 617,321
-------- -------- --------
OPERATING INCOME............................ 45,654 72,291 117,945
OTHER INCOME
Equity in earnings of unconsolidated
affiliates............................... 7,739 734 8,473
Other--net................................ 157 8,609 8,766
-------- -------- --------
Total other income...................... 7,896 9,343 17,239
-------- -------- --------
INTEREST EXPENSE............................ 12,426 18,157 30,583
-------- -------- --------
INCOME BEFORE PREFERRED DIVIDENDS AND INCOME
TAXES...................................... 41,124 63,477 104,601
PREFERRED DIVIDEND REQUIREMENTS OF
SUBSIDIARY................................. -- 809 809
-------- -------- --------
INCOME BEFORE INCOME TAXES.................. 41,124 62,668 103,792
INCOME TAXES................................ 13,649 21,630 35,279
-------- -------- --------
NET INCOME.................................. $ 27,475 $ 41,038 $ 68,513
======== ======== ========
AVERAGE COMMON SHARES OUTSTANDING(5)........ 29,848 23,631 61,348
BASIC EARNINGS PER AVERAGE SHARE OF COMMON
STOCK...................................... $ 0.92 $ 1.74 $ 1.12
DILUTED EARNINGS PER AVERAGE SHARE OF COMMON
STOCK...................................... $ 0.92 $ 1.73 $ 1.12
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.
55
<PAGE>
VECTREN CORPORATION
Pro Forma Condensed Statement of Income for the Year Ended December 31, 1998
(Thousands, Except Per Share Amounts--Unaudited)
<TABLE>
<CAPTION>
Indiana
Energy SIGCORP (1) Pro Forma
(1) (2) (2) Combined
(historical) (historical) (3)
------------ ------------ ----------
<S> <C> <C> <C>
OPERATING REVENUES:
Electric utility............................ $ -- $297,865 $ 297,865
Gas utility................................. 465,644 66,801 532,445
Energy services and other................... 790 192,445 193,235
-------- -------- ----------
Total operating revenues.................. 466,434 557,111 1,023,545
-------- -------- ----------
OPERATING EXPENSES:
Fuel for electric generation................ -- 65,222 65,222
Purchased electric energy................... -- 20,762 20,762
Cost of gas sold............................ 269,487 39,627 309,114
Cost of energy services and other........... -- 187,742 187,742
Other operating............................. 75,589 101,983 177,572
Depreciation and amortization............... 37,655 42,733 80,388
Taxes other than income taxes............... 14,735 12,963 27,698
-------- -------- ----------
Total operating expenses.................. 397,466 471,032 868,498
-------- -------- ----------
OPERATING INCOME.............................. 68,968 86,079 155,047
OTHER INCOME
Equity in earnings of unconsolidated
affiliates................................. 7,226 422 7,648
Other--net.................................. 2,499 13,060 15,559
-------- -------- ----------
Total other income........................ 9,725 13,482 23,207
-------- -------- ----------
INTEREST EXPENSE.............................. 16,640 23,980 40,620
-------- -------- ----------
INCOME BEFORE PREFERRED DIVIDENDS AND INCOME
TAXES........................................ 62,053 75,581 137,634
PREFERRED DIVIDEND REQUIREMENTS OF SUBSIDIARY. -- 1,095 1,095
-------- -------- ----------
INCOME BEFORE INCOME TAXES.................... 62,053 74,486 136,539
INCOME TAXES.................................. 21,849 24,010 45,859
-------- -------- ----------
NET INCOME.................................... $ 40,204 $ 50,476 $ 90,680
======== ======== ==========
AVERAGE COMMON SHARES OUTSTANDING (5)......... 30,116 23,631 61,616
BASIC EARNINGS PER AVERAGE SHARE OF COMMON
STOCK........................................ $ 1.33 $ 2.14 $ 1.47
DILUTED EARNINGS PER AVERAGE SHARE OF COMMON
STOCK........................................ $ 1.33 $ 2.12 $ 1.47
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.
56
<PAGE>
VECTREN CORPORATION
Pro Forma Condensed Statement of Income for the Year Ended December 31, 1997
(Thousands, Except Per Share Amounts--Unaudited)
<TABLE>
<CAPTION>
Indiana
Energy SIGCORP (1) Pro Forma
(1) (2) (6) (2) Combined
(historical) (historial) (3) (6)
------------ ----------- ---------
<S> <C> <C> <C>
OPERATING REVENUES:
Electric utility.......................... $ -- $272,545 $272,545
Gas utility............................... 530,407 85,561 615,968
Energy services and other................. 152 75,131 75,283
-------- -------- --------
Total operating revenues................ 530,559 433,237 963,796
-------- -------- --------
OPERATING EXPENSES:
Fuel for electric generation.............. -- 62,630 62,630
Purchased electric energy................. -- 13,985 13,985
Cost of gas sold.......................... 322,141 54,060 376,201
Cost of energy services and other......... -- 73,668 73,668
Other operating........................... 80,012 89,950 169,962
Restructuring costs....................... 39,531 -- 39,531
Depreciation and amortization............. 35,162 40,373 75,535
Taxes other than income taxes............. 16,962 12,989 29,951
-------- -------- --------
Total operating expenses................ 493,808 347,655 841,463
-------- -------- --------
OPERATING INCOME............................ 36,751 85,582 122,333
OTHER INCOME
Equity in earnings of unconsolidated
affiliates............................... 8,712 341 9,053
Other--net................................ 3,120 7,162 10,282
-------- -------- --------
Total other income...................... 11,832 7,503 19,335
-------- -------- --------
INTEREST EXPENSE............................ 17,131 21,987 39,118
-------- -------- --------
INCOME BEFORE PREFERRED DIVIDENDS AND
INCOME TAXES................................ 31,452 71,098 102,550
PREFERRED DIVIDEND REQUIREMENTS
OF SUBSIDIARY............................... -- 1,097 1,097
-------- -------- --------
INCOME BEFORE INCOME TAXES.................. 31,452 70,001 101,453
INCOME TAXES................................ 10,949 23,861 34,810
-------- -------- --------
NET INCOME.................................. $ 20,503 $ 46,140 $ 66,643
======== ======== ========
AVERAGE COMMON SHARES OUTSTANDING (5)....... 30,107 23,631 61,607
BASIC EARNINGS PER AVERAGE SHARE
OF COMMON STOCK............................. $ 0.68 $ 1.95 $ 1.08
DILUTED EARNINGS PER AVERAGE SHARE
OF COMMON STOCK............................. $ 0.68 $ 1.95 $ 1.08
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.
57
<PAGE>
VECTREN CORPORATION
Pro Forma Condensed Statement of Income for the Year Ended December 31, 1996
(Thousands, Except Per Share Amounts--Unaudited)
<TABLE>
<CAPTION>
Indiana
Energy SIGCORP
(1)(2) (1)(2) Pro Forma
(historical) (historical) Combined(3)
------------ ------------ -----------
<S> <C> <C> <C>
OPERATING REVENUES:
Electric utility....................... $ -- $276,479 $276,479
Gas utility............................ 530,594 96,251 626,845
Energy services and other.............. 12,832 32,008 44,840
-------- -------- --------
Total operating revenues............. 543,426 404,738 948,164
-------- -------- --------
OPERATING EXPENSES:
Fuel for electric generation........... -- 74,860 74,860
Purchased electric energy.............. -- 8,295 8,295
Cost of gas sold....................... 320,131 66,105 386,236
Cost of energy services and other...... 6,720 28,553 35,273
Other operating........................ 84,984 90,669 175,653
Depreciation and amortization.......... 33,340 39,140 72,480
Taxes other than income taxes.......... 16,564 14,399 30,963
-------- -------- --------
Total operating expenses............. 461,739 322,021 783,760
-------- -------- --------
OPERATING INCOME......................... 81,687 82,717 164,404
OTHER INCOME
Equity in earnings of unconsolidated
affiliates............................ (88) -- (88)
Other--net............................. 606 5,116 5,722
-------- -------- --------
Total other income................... 518 5,116 5,634
-------- -------- --------
INTEREST EXPENSE......................... 16,279 21,509 37,788
-------- -------- --------
INCOME BEFORE PREFERRED DIVIDENDS AND
INCOME TAXES............................. 65,926 66,324 132,250
PREFERRED DIVIDEND REQUIREMENTS
OF SUBSIDIARY............................ -- 1,097 1,097
-------- -------- --------
INCOME BEFORE INCOME TAXES............... 65,926 65,227 131,153
INCOME TAXES............................. 23,725 21,963 45,688
-------- -------- --------
NET INCOME............................... $ 42,201 $ 43,264 $ 85,465
======== ======== ========
AVERAGE COMMON SHARES OUTSTANDING (5).... 30,017 23,631 61,517
BASIC EARNINGS PER AVERAGE SHARE
OF COMMON STOCK.......................... $ 1.41 $ 1.83 $ 1.39
DILUTED EARNINGS PER AVERAGE SHARE
OF COMMON STOCK.......................... $ 1.41 $ 1.83 $ 1.39
</TABLE>
See accompanying Notes to Unaudited Pro Forma Condensed Financial Statements.
58
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS
(1) Reclassifications have been made to the Indiana Energy and SIGCORP
historical financial statements to conform to the presentation expected to
be used by the combined companies.
(2) Indiana Energy's fiscal year ends on September 30. SIGCORP's fiscal year
ends on December 31. Vectren's fiscal year will end on December 31. The
financial statements for Vectren for the year in which the combination
occurs will reflect the operations of the combining companies for the same
reporting period as Vectren. The historical financial statements for prior
years will reflect the combined results of the combining companies with no
adjustment, except that the operating results for Indiana Energy for the
period met included in the statements of income (October 1, 1999 through
December 31, 1999), will be charged or credited to retained earnings,
assuming the transaction is completed in the year 2000. No specific
request has been filed with the IURC regarding sharing the cost savings
from the merger. The managements of Indiana Energy and SIGCORP do
anticipate that customers of the utilities will realize benefits from the
merger over time. However, the managements cannot estimate the precise
level of benefits at this time. The pro forma financial information for
the years ended December 31, 1996-1998 reflects fiscal years ended
December 31 for SIGCORP and September 30 for Indiana Energy. The financial
information for the nine months ended September 30, 1999, are the results
of the nine months ended September 30, 1999, for Indiana Energy and
SIGCORP. The Indiana Energy unaudited results of operations for the three
months ended December 31, 1998, in thousands, are as follows: Operating
Revenues, $125,241, Operating Income, $23,812, Net Income, $14,276, and
Basic and Diluted Earnings Per Share, $0.48. These operating results have
not been reflected in the statements of income but have been reflected in
the pro forma balance sheet as of December 31, 1998. In the opinion of
management, the historical combined financial statements would not exhibit
materially different results or trends if the results of the combining
companies had been combined for identical periods.
(3) The companies have deferred approximately $4,917,000 of transaction costs
associated with the merger, including the investment banking, legal and
other professional fees, pending the merger close. The total estimated
transaction costs of $9,000,000, inclusive of amounts already recorded,
have been reflected as a decrease in retained earnings in the accompanying
pro forma balance sheet. Further, amounts deferred of $4,917,000 were
eliminated and accounts payable was increased by $4,083,000 for pro forma
purposes. The expenses have not been reflected in the accompanying pro
forma statements of income. Expenses directly related to the transaction
may be deducted in determining the net income of the combined enterprise
in the period the combination is completed. However, Indiana Energy and
SIGCORP have filed with the Indiana Utility Regulatory Commission a
request for approval to defer and amortize these costs in the future. If
the IURC grants this request, some portion up to 100% of the transaction
expenses would be deferred and amortized over a period of years.
(4) Because of the seasonal factors that affect Indiana Energy's and SIGCORP's
operations, the pro forma results of operations for interim periods are
not indicative of the pro forma results of operations for an annual
period.
(5) The pro forma condensed financial statements reflect the conversion of
each Indiana Energy common share into one Vectren common share and the
conversion of each SIGCORP common share into 1.333 Vectren common shares.
(6) Reflects Indiana Energy's fiscal 1997 restructuring costs of $39.5 million
($24.5 million after-tax) or $.81 per Indiana Energy historical common
share and $.40 per Vectren pro forma common share.
59
<PAGE>
DESCRIPTION OF VECTREN CAPITAL SHARES
General Matters
The total amount of authorized capital shares of Vectren is 190,000,000
common shares, and 10,000,000 preferred shares. As of October 25, 1999, 100
common shares and no preferred shares were issued and outstanding. The
following summary highlights the material provisions of the Vectren Articles,
the Vectren By-laws and the IBCL relating to Vectren's capital shares. The
Vectren Articles and the Vectren By-laws are included in Appendices B and C of
this Joint Proxy Statement/Prospectus.
The Vectren Articles and the Vectren By-laws contain provisions that are
intended to enhance the likelihood of continuity and stability in the
composition of the Vectren board and which may have the effect of delaying,
deferring or preventing a future takeover or change in control of Vectren
unless the takeover or change in control is approved by the Vectren board.
Common Shares
All of the Vectren common shares to be issued by Vectren to holders of
Indiana Energy common shares and SIGCORP common shares, when authorized,
approved, issued and delivered under the terms of the merger agreement will
be, validly issued, fully paid and nonassessable. The holders of outstanding
Vectren common shares are entitled to receive dividends out of assets legally
available therefor at the time and in the amounts as the Vectren board may
from time to time determine. The Vectren common shares are not convertible and
the holders of Vectren common shares have no preemptive or subscription rights
to purchase any securities of Vectren. Upon liquidation, dissolution or
winding up of Vectren, the holders of Vectren common shares are entitled to
receive pro rata the assets of Vectren which are legally available for
distribution, after payment of all debts and other liabilities and subject to
the prior rights of any holders of preferred shares then outstanding. Each
outstanding Vectren common share is entitled to one vote on all matters
submitted to a vote of Vectren's shareholders. Except as otherwise required by
law or the Vectren Articles, the holders of Vectren common shares vote
together on all matters submitted to a vote of the shareholders, including the
election of directors.
Preferred Shares
The Vectren board may, without further action by Vectren's shareholders,
from time to time, direct the issuance of preferred shares in series and may,
at the time of issuance, determine the rights, preferences and limitations of
each series. Satisfaction of any dividend preferences of outstanding preferred
shares would reduce the amount of funds available for the payment of dividends
on Vectren common shares. Holders of preferred shares may be entitled to
receive a preference payment in the event of any liquidation, dissolution or
winding-up of Vectren before any payment is made to the holders of Vectren
common shares. The issuance of preferred shares may render more difficult or
tend to discourage a merger, tender offer or proxy contest, the assumption of
control by a holder of a large block of Vectren's securities or the removal of
incumbent management. The board, without shareholder approval, may issue
preferred shares with voting and conversion rights which could adversely
affect the holders of Vectren common shares. At the effective time of the
merger, there will be no preferred shares outstanding, and Vectren has no
present intention to issue any preferred shares.
Shareholder Rights Agreement
The Vectren board has adopted a Shareholder Rights Agreement which is
generally designed to deter coercive takeover tactics and to encourage all
persons interested in potentially acquiring control of Vectren to treat each
shareholder on a fair and equal basis. Under the Shareholder Rights Agreement,
the board has declared a dividend distribution of one right for each
outstanding Vectren common share. A right will attach to each Vectren common
share Vectren issues, including Vectren common shares it issues to Indiana
Energy and SIGCORP shareholders in connection with the merger. Each right
entitles the holder to purchase from Vectren one common share at a price of
$65.00 per share (subject to adjustment to prevent dilution). Initially, the
rights
60
<PAGE>
will not be exercisable. The rights become exercisable 10 days following a
public announcement that a person or group of affiliated or associated persons
(a "Vectren Acquiring Person") has acquired beneficial ownership of 15% or
more of the outstanding Vectren common shares (or a 10% acquiror who is
determined by the Vectren board to be an adverse person), or 10 days following
the announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in any person or group becoming a Vectren
Acquiring Person. The Vectren Shareholder Rights Agreement expires October 21,
2009. See "COMPARISON OF RIGHTS OF INDIANA ENERGY SHAREHOLDERS, SIGCORP
SHAREHOLDERS AND VECTREN SHAREHOLDERS--Shareholder Rights Agreement."
Indiana Statutes
The IBCL limits some transactions between a company and any person who
acquires 10% or more of the company's common shares (an "interested
shareholder"). During the five-year period after the acquisition, an
interested shareholder cannot enter into a business combination with the
company unless, before the interested shareholder acquired the common shares,
the board of directors of the company approved the acquisition of common
shares or approved the business combination. After the five-year period, an
interested shareholder can enter into only the following three types of
business combinations with the company: (i) a business combination approved by
the board of directors of the company before the interested shareholder
acquired the common shares; (ii) a business combination approved by holders of
a majority of the common shares not owned by the interested shareholder; and
(iii) a business combination in which the shareholders receive a price for
their common shares at least equal to a formula price based on the highest
price per common share paid by the interested shareholder.
In addition, a shareholder acquiring common shares of an Indiana company
may lose the right to vote those common shares unless a majority of the
disinterested common shares approve the exercise of voting rights. The
company's articles of incorporation or by-laws can also permit the redemption
of the acquiring shareholder's common shares if the permissive provision was
adopted prior to the time the person becomes an interested shareholder.
Vectren has not adopted any redemption provisions.
Transfer Agent and Registrar
EquiServe Trust Company N.A. is the transfer agent and registrar for the
Vectren common shares.
61
<PAGE>
COMPARISON OF RIGHTS OF
INDIANA ENERGY SHAREHOLDERS, SIGCORP SHAREHOLDERS
AND VECTREN SHAREHOLDERS
Each of Indiana Energy, SIGCORP and Vectren is an Indiana corporation
organized under the IBCL. The rights of shareholders of Indiana Energy are
governed by the IBCL, Indiana Energy's Articles of Incorporation and its Code
of By-laws. The rights of shareholders of SIGCORP are governed by the IBCL,
SIGCORP's Articles of Incorporation and its Code of By-laws. As a result of
the merger, the rights of Indiana Energy shareholders and SIGCORP shareholders
who become shareholders of Vectren will be governed by the IBCL, the Vectren
Articles and Vectren By-laws. The following is a summary of the material
differences among the rights of Indiana Energy shareholders, SIGCORP
shareholders and Vectren shareholders.
Right to Call Special Meetings
Indiana Energy. The Indiana Energy By-laws provide that a special meeting
of the Indiana Energy shareholders will be held upon the call of the Indiana
Energy board, the Chief Executive Officer or the President of Indiana Energy.
A special meeting will also be held upon the written request of shareholders
of record holding not less than a majority of the voting power of all shares
issued and outstanding, but in calculating the majority only shares which have
been beneficially held of record for at least three years are included.
SIGCORP. The SIGCORP By-laws provide that a special meeting of shareholders
may be called by the SIGCORP board, the Chairman of the Board or the Chief
Executive Officer of SIGCORP. A special meeting will also be called upon the
written request of holders of not less than 70% of the voting shares of
SIGCORP.
Vectren. The Vectren By-laws provide that a special meeting of shareholders
may be called by the Vectren board or the Chief Executive Officer of Vectren.
Shareholders have no right to call a special meeting of Vectren shareholders.
Quorum for Shareholder Meetings
Indiana Energy. The Indiana Energy By-laws provide that the representation,
in person or by proxy, of a majority of the voting power of Indiana Energy
shares at a meeting of shareholders constitutes a quorum for conducting
business.
SIGCORP. The SIGCORP By-laws provide that the representation, in person or
by proxy, of one-third of the outstanding shares of SIGCORP at a meeting of
shareholders constitutes a quorum for conducting business.
Vectren. The Vectren By-laws provide that the representation, in person or
by proxy, of a majority of the shares outstanding and entitled to vote at a
meeting of shareholders constitutes a quorum for conducting business.
Supermajority Voting Provisions
Indiana Energy. The Indiana Energy Articles provide that the following
actions may be taken only upon the affirmative vote of holders of 80% of the
voting power of all shares entitled to vote:
. removal for cause of a director;
. amendment or repeal of the provision regarding director removal for
cause;
. amendment or repeal of the Indiana Energy By-laws if Indiana Energy
shareholders become entitled by law to amend or repeal the By-laws; and
. business combinations unless the business combination is approved by a
majority of Continuing Directors or the business combination satisfies a
fair price test.
"Continuing Director" means any member of the Indiana Energy board who is
unaffiliated with the other party to a business combination and became a
member of the Indiana Energy board before that person became
62
<PAGE>
the beneficial owner of 10% of the voting power of Indiana Energy shares, and
any successor to the Continuing Director who is recommended to succeed the
Continuing Director by a majority of the Continuing Directors then on the
Indiana Energy board.
SIGCORP. The SIGCORP Articles provide that the following actions may be
taken only with the affirmative vote of holders of 70% of the combined voting
power of the outstanding SIGCORP shares entitled to vote:
. removal for cause of a director;
. amendment or repeal of the provision regarding removal of directors;
. business combinations unless the business combination is approved by a
majority of Continuing Directors or the business combination satisfies a
fair price test.
"Continuing Director" means a person was a member of the SIGCORP board on
April 1, 1995, became a director before the other party to the business
combination became the beneficial owner of 20% of the voting shares of
SIGCORP, or is designated as a Continuing Director by a majority of the then
Continuing Directors.
Vectren. The provisions of the Vectren Articles regarding supermajority
votes are substantially identical to the provisions of SIGCORP Articles,
except that Vectren shareholders have no right to amend the Vectren By-laws.
Size of the Board
Indiana Energy. The Indiana Energy Articles provide for a minimum of nine
and a maximum of 15 members of the board, the actual number to be nine unless
otherwise fixed in the Indiana Energy By-laws. The Indiana Energy By-laws
provide for a 12-member Indiana Energy board. The Indiana Energy board is
divided into three classes, each class serving a term of three years, with the
terms of one class expiring each year.
SIGCORP. The SICORP Articles provide for a minimum of nine members of the
board, with the actual number to be fixed in the SIGCORP By-laws. The SIGCORP
By-laws provide for a 10-member board. The SIGCORP board is divided into three
classes, each class serving a term of three years, with the terms of one class
expiring each year.
Vectren. The Vectren Articles provide for a minimum of one and a maximum
of 16 members of the Vectren board, the actual number to be specified in the
Vectren By-laws. The Vectren By-laws provide that the number of directors will
be two until the Vectren By-laws are amended. Vectren expects to amend the
Vectren By-laws at the effective time of the merger to provide for a 16-member
Vectren board. The Vectren Articles provide that the Vectren By-laws may
provide for classes of directors. Vectren expects to amend the Vectren By-laws
at the effective time of the merger to provide for three classes of directors.
Nominations for Director by Shareholders
Indiana Energy. The Indiana Energy By-laws require that notice of
nominations of persons to the Indiana Energy board by Indiana Energy
shareholders must be sent to Indiana Energy not less than 50 nor more than 90
days before the meeting at which directors will be elected.
SIGCORP. The SIGCORP Articles contain no provision regarding shareholder
nominations.
Vectren. The Vectren By-laws contain provisions identical to the Indiana
Energy By-laws regarding shareholder nominations.
63
<PAGE>
Notice of Shareholder Business
Indiana Energy. The Indiana Energy By-laws require that notice of any
business proposed by a shareholder to be conducted at any meeting of
shareholders must be sent to Indiana Energy not less than 50 nor more than 90
days before the meeting at which the business is conducted.
SIGCORP. The SIGCORP By-laws contain no provision regarding notice of
shareholder business.
Vectren. The Vectren By-laws contain provisions identical to the Indiana
Energy By-laws regarding notice of shareholder business.
Shareholder Rights Agreement
Indiana Energy. Indiana Energy has entered into an Amended and Restated
Shareholder Rights Agreement dated April 26, 1996 between Indiana Energy and
First Chicago Trust Company of New York, as rights agent. Indiana Energy has
granted rights to shareholders. Each right allows a shareholder to purchase
one Indiana Energy common share at a price of $45.00 per share (subject to
adjustment to prevent dilution).
The rights become exercisable 10 days following a public announcement that
a person or group of affiliated or associated persons (an "Indiana Energy
Acquiring Person") has acquired beneficial ownership of 15% or more of the
outstanding Indiana Energy common shares (or a 10% acquiror who is determined
by the Indiana Energy board to be an adverse person), or 10 days following the
announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in any person or group becoming an Indiana
Energy Acquiring Person. The Indiana Energy Shareholder Rights Agreement
expires May 31, 2006.
The outstanding rights will not become exercisable as a result of the
consummation of this merger. However, they may have the effect of delaying,
deferring or preventing a competing takeover or change in control of Indiana
Energy unless the Indiana Energy board approves the takeover or change in
control.
SIGCORP. SIGCORP has entered into a Shareholder Rights Agreement dated
December 31, 1995 between SIGCORP and Continental Stock Transfer & Trust
Company, as rights agent. SIGCORP has granted rights to shareholders. Each
right allows a shareholder to purchase 1/100th of one SIGCORP common share at
a price of $43.00 per share (subject to adjustment to prevent dilution).
The rights become exercisable 10 calendar days following a public
announcement that a person or group of affiliated or associated persons (a
"SIGCORP Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 10% or more of the outstanding SIGCORP common shares,
or 10 days following the announcement by any person of an intention to make a
tender offer or exchange offer the consummation of which would result in any
person or group becoming a SIGCORP Acquiring Person. The SIGCORP Shareholder
Rights Agreement expires December, 2005.
The outstanding rights will not become exercisable as a result of the
consummation of this merger. However, they may have the effect of delaying,
deferring or preventing a competing takeover or change in control of SIGCORP
unless the SIGCORP board approves the takeover or change in control.
Vectren. Vectren has entered into a Shareholder Rights Agreement dated
October 21, 1999 between Vectren and EquiServ Trust Company N.A. as rights
agent. Vectren has granted rights to its shareholders. Each right allows a
shareholder to purchase one Vectren common share at a price of $65.00 per
share (subject to adjustment to prevent dilution).
The rights become exercisable 10 days following a public announcement that
a Vectren Acquiring Person has acquired beneficial ownership of 15% or more of
the outstanding Vectren common shares (or a 10% acquiror who is determined by
the Vectren board to be an adverse person), or 10 days following the
announcement of an intention to make a tender offer or exchange offer the
consummation of which would result in any person or group becoming a Vectren
Acquiring Person. The Vectren Shareholder Rights Agreement expires October 21,
2009.
64
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Rights outstanding as of the effective time of this merger, including
rights attached to Vectren shares issued to Indiana Energy shareholders and
SIGCORP shareholders in the merger, will not become exercisable as a result of
the merger. However, the rights may have the effect of delaying, deferring or
preventing a competing takeover or change in control of Vectren unless the
Vectren board approves the takeover or change in control. See "DESCRIPTION OF
VECTREN CAPITAL STOCK--Shareholder Rights Agreement."
Fiscal Year End
Indiana Energy. Indiana Energy's fiscal year ends on September 30 of each
year.
SIGCORP. SIGCORP's fiscal year ends on December 31 of each year.
Vectren. Vectren's fiscal year will end on December 31 of each year.
SHAREHOLDER PROPOSALS
Indiana Energy. The deadline for receipt by Indiana Energy of shareholder
proposals for inclusion in Indiana Energy's proxy statement for the annual
meeting of shareholders in 2000 was August 6, 1999. Indiana Energy received no
proposals. Indiana Energy's annual meeting will not be held if the merger is
completed before the scheduled date of the 2000 annual meeting.
SIGCORP. Shareholder proposals intended to be presented at the annual
meeting of SIGCORP shareholders in 2000 must be received by SIGCORP not later
than November 23, 1999 to be considered for inclusion in SIGCORP's 2000 proxy
materials. As of November 9, 1999, no shareholder proposals had been received
by SIGCORP with respect to the 2000 annual meeting. SIGCORP's meeting will not
be held if the merger is completed before the scheduled date of the 2000
annual meeting.
LEGAL MATTERS
The due authorization, validity of the issuance and the nonassessability of
the Vectren common shares will be passed upon for Vectren by Sommer & Barnard,
Attorneys at Law, PC, Indianapolis, Indiana. United States federal income tax
matters related to the merger will be passed upon for Indiana Energy by
Simpson Thacher & Bartlett, New York, New York and for SIGCORP will be passed
upon by Winthrop, Stimson, Putnam & Roberts, New York, New York. See "MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES."
EXPERTS
The consolidated financial statements and related financial statement
schedule of Indiana Energy as of September 30, 1998 and 1997 and for each of
the three years in the period ended September 30, 1998 incorporated in this
Joint Proxy Statement/Prospectus by reference from the Indiana Energy 10-K and
elsewhere in the Registration Statement have been incorporated by reference in
reliance on the report of Arthur Andersen, LLP, independent accountants, given
on the authority of that firm as experts in accounting and auditing in giving
said reports.
The consolidated financial statements and related financial statement
schedule of SIGCORP as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998 incorporated in this Joint Proxy
Statement/Prospectus by reference from the SIGCORP 10-K and elsewhere in the
Registration Statement have been incorporated by reference in reliance on the
report of Arthur Andersen, LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing in giving said
reports.
65
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WHERE YOU CAN FIND DEFINITIONS OF TERMS USED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS
<TABLE>
<CAPTION>
Location of
Term Defined Terms
---- -------------
<S> <C>
Acquisition Proposal.............................................. 50
Business Combination.............................................. 47
Certificates...................................................... 43
IBCL.............................................................. 38
Indiana Energy Acquiring Person................................... 64
Indiana Energy Ratio.............................................. 2
Merger Consideration.............................................. 43
SIGCORP Acquiring Person.......................................... 64
SIGCORP Ratio..................................................... 2
SIGECO............................................................ 1
Takeover Proposal................................................. 47
Target Party...................................................... 50
Trigger Event..................................................... 37
</TABLE>
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<PAGE>
APPENDIX A
Agreement and Plan of Merger
by and among
INDIANA ENERGY, INC.
SIGCORP, INC.
and
VECTREN CORPORATION
Dated as of June 11, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE I................................................................. A-1
THE MERGER.............................................................. A-1
Section 1.1 THE MERGER................................................. A-1
Section 1.2 EFFECTIVE TIME OF THE MERGER............................... A-1
Section 1.3 ARTICLES OF INCORPORATION.................................. A-1
Section 1.4 BYLAWS..................................................... A-1
Section 1.5 EFFECTS OF MERGER.......................................... A-1
ARTICLE II................................................................ A-2
CONVERSION OF SHARES.................................................... A-2
Section 2.1 EFFECT OF MERGER ON CAPITAL STOCK.......................... A-2
Section 2.2 EXCHANGE OF CERTIFICATES................................... A-2
ARTICLE III............................................................... A-4
THE CLOSING............................................................. A-4
Section 3.1 CLOSING.................................................... A-4
ARTICLE IV................................................................ A-4
REPRESENTATIONS AND WARRANTIES OF SIGCORP............................... A-4
Section 4.1 ORGANIZATION AND QUALIFICATION............................. A-4
Section 4.2 SUBSIDIARIES............................................... A-5
Section 4.3 CAPITALIZATION............................................. A-5
Section 4.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.................................................... A-5
Section 4.5 REPORTS AND FINANCIAL STATEMENTS........................... A-7
Section 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS: ABSENCE OF
UNDISCLOSED LIABILITIES....................................... A-8
Section 4.7 LITIGATION................................................. A-8
Section 4.8 REGISTRATION STATEMENT AND PROXY STATEMENT................. A-8
Section 4.9 TAX MATTERS................................................ A-8
Section 4.10 EMPLOYEE MATTERS: ERISA.................................... A-9
Section 4.11 ENVIRONMENTAL PROTECTION................................... A-10
Section 4.12 REGULATION AS A UTILITY.................................... A-12
Section 4.13 VOTE REQUIRED.............................................. A-12
Section 4.14 ACCOUNTING MATTERS......................................... A-12
Section 4.15 APPLICABILITY OF CERTAIN INDIANA LAW....................... A-12
Section 4.16 OPINION OF FINANCIAL ADVISOR............................... A-13
Section 4.17 INSURANCE.................................................. A-13
Section 4.18 OWNERSHIP OF INDIANA COMMON STOCK.......................... A-13
ARTICLE V................................................................. A-13
REPRESENTATIONS AND WARRANTIES OF INDIANA............................... A-13
Section 5.1 ORGANIZATION AND QUALIFICATION............................. A-13
Section 5.2 SUBSIDIARIES............................................... A-14
Section 5.3 CAPITALIZATION............................................. A-14
Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS;
COMPLIANCE.................................................... A-14
Section 5.5 REPORTS AND FINANCIAL STATEMENTS........................... A-16
Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS; ABSENCE OF
UNDISCLOSED LIABILITIES....................................... A-16
</TABLE>
A-i
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<TABLE>
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Section 5.7 LITIGATION................................................. A-16
Section 5.8 REGISTRATION STATEMENT AND PROXY STATEMENT................. A-17
Section 5.9 TAX MATTERS................................................ A-17
Section 5.10 EMPLOYEE MATTERS; ERISA.................................... A-17
Section 5.11 ENVIRONMENTAL PROTECTION................................... A-18
Section 5.12 REGULATION AS A UTILITY.................................... A-19
Section 5.13 VOTE REQUIRED.............................................. A-20
Section 5.14 ACCOUNTING MATTERS......................................... A-20
Section 5.15 APPLICABILITY OF CERTAIN INDIANA LAW....................... A-20
Section 5.16 OPINION OF FINANCIAL ADVISOR............................... A-20
Section 5.17 INSURANCE.................................................. A-20
Section 5.18 OWNERSHIP OF SIGCORP COMMON STOCK.......................... A-21
ARTICLE VI................................................................ A-21
CONDUCT OF BUSINESS PENDING THE MERGER.................................. A-21
Section 6.1 ORDINARY COURSE OF BUSINESS................................ A-21
Section 6.2 DIVIDENDS.................................................. A-21
Section 6.3 ISSUANCE OF SECURITIES..................................... A-21
Section 6.4 CHARTER DOCUMENTS.......................................... A-22
Section 6.5 NO ACQUISITIONS............................................ A-22
Section 6.6 CAPITAL EXPENDITURES....................................... A-22
Section 6.7 NO DISPOSITIONS............................................ A-22
Section 6.8 INDEBTEDNESS............................................... A-22
Section 6.9 COMPENSATION, BENEFITS..................................... A-23
Section 6.10 1935 ACT................................................... A-23
Section 6.11 ACCOUNTING................................................. A-23
Section 6.12 POOLING.................................................... A-23
Section 6.13 TAX-FREE STATUS............................................ A-23
Section 6.14 INSURANCE.................................................. A-24
Section 6.15 COOPERATION, NOTIFICATION.................................. A-24
Section 6.16 RATE MATTERS............................................... A-24
Section 6.17 THIRD PARTY CONSENTS....................................... A-24
Section 6.18 TAX-EXEMPT STATUS.......................................... A-24
Section 6.19 PERMITS.................................................... A-24
Section 6.20 CERTAIN INFORMATION RELATING TO CUSTOMERS.................. A-24
ARTICLE VII............................................................... A-25
ADDITIONAL AGREEMENTS................................................... A-25
Section 7.1 ACCESS TO INFORMATION...................................... A-25
Section 7.2 JOINT PROXY STATEMENT AND REGISTRATION STATEMENT........... A-25
Section 7.3 REGULATORY MATTERS......................................... A-26
Section 7.4 SHAREHOLDER APPROVALS...................................... A-26
Section 7.5 DIRECTORS' AND OFFICERS' INDEMNIFICATION................... A-27
Section 7.6 DISCLOSURE SCHEDULES....................................... A-28
Section 7.7 PUBLIC ANNOUNCEMENTS....................................... A-29
Section 7.8 RULE 145 AFFILIATES........................................ A-29
Section 7.9 ASSUMPTION OF SIGCORP AND INDIANA AGREEMENTS AND
ARRANGEMENTS.................................................. A-29
Section 7.10 INCENTIVE, STOCK AND OTHER PLANS........................... A-29
Section 7.11 EMPLOYEE BENEFIT PLANS..................................... A-30
Section 7.12 NO SOLICITATIONS........................................... A-31
Section 7.13 COMPANY BOARD OF DIRECTORS................................. A-31
</TABLE>
A-ii
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Section 7.14 COMPANY OFFICERS........................................... A-32
Section 7.15 EMPLOYMENT CONTRACTS....................................... A-32
Section 7.16 CORPORATE OFFICES AND NAME................................. A-33
Section 7.17 TRANSITION MANAGEMENT...................................... A-33
Section 7.18 EXPENSES................................................... A-33
Section 7.19 COVENANT TO SATISFY CONDITIONS............................. A-33
Section 7.20 COORDINATION OF DIVIDENDS.................................. A-34
ARTICLE VIII.............................................................. A-34
CONDITIONS.............................................................. A-34
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. A-34
Section 8.2 CONDITIONS TO OBLIGATION OF SIGCORP TO EFFECT THE MERGER... A-35
Section 8.3 CONDITIONS TO OBLIGATION OF INDIANA TO EFFECT THE MERGER... A-35
ARTICLE IX................................................................ A-36
TERMINATION, AMENDMENT AND WAIVER....................................... A-36
Section 9.1 TERMINATION................................................ A-36
Section 9.2 EFFECT OF TERMINATION...................................... A-38
Section 9.3 TERMINATION DAMAGES........................................ A-38
Section 9.4 AMENDMENT.................................................. A-39
Section 9.5 WAIVER..................................................... A-39
ARTICLE X................................................................. A-40
GENERAL PROVISIONS...................................................... A-40
Section 10.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS.................................................... A-40
Section 10.2 BROKERS.................................................... A-40
Section 10.3 NOTICES.................................................... A-40
Section 10.4 MISCELLANEOUS.............................................. A-41
Section 10.5 INTERPRETATION............................................. A-41
Section 10.6 COUNTERPARTS; EFFECT....................................... A-41
Section 10.7 PARTIES IN INTEREST........................................ A-42
Section 10.8 SPECIFIC PERFORMANCE....................................... A-42
Section 10.9 FURTHER ASSURANCES......................................... A-42
</TABLE>
A-iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
Agreement and Plan of Merger, dated as of June 11, 1999 (this "AGREEMENT"),
by and among Indiana Energy, Inc., an Indiana corporation ("INDIANA"),
SIGCORP, Inc., an Indiana corporation ("SIGCORP"), and Vectren Corporation, an
Indiana corporation, 50% of whose outstanding capital stock is owned by
Indiana and 50% of whose outstanding capital stock is owned by SIGCORP (the
"COMPANY").
Whereas, Indiana and SIGCORP have determined to engage in a strategic
business combination and, accordingly, have formed the Company to participate
in such business combination;
Whereas, in furtherance thereof, the respective Boards of Directors of
Indiana, SIGCORP and the Company have approved the merger of Indiana and
SIGCORP with and into the Company (the "MERGER"), all pursuant to the terms
and conditions set forth in this Agreement and, in connection therewith, have
approved the execution and delivery of the SIGCORP Stock Option Agreement
dated as of the date hereof between SIGCORP and Indiana (the "SIGCORP OPTION")
and the Indiana Stock Option Agreement dated as of the date hereof between
Indiana and SIGCORP (the "INDIANA OPTION");
Whereas, for federal income tax purposes, it is intended that the Merger
will be a reorganization described in Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "CODE"), and the regulations thereunder, and
that Indiana, SIGCORP, the Company and the shareholders of each of Indiana and
SIGCORP who exchange their shares solely for stock of the Company will
recognize no gain or loss for federal income tax purposes as a result of the
consummation of the Merger; and
Whereas, for accounting purposes, it is intended that the Merger will be
accounted for as a pooling of interests in accordance with generally accepted
accounting principles ("GAAP") and applicable regulations of the Securities
and Exchange Commission (the "SEC").
Now, Therefore, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
The Merger
Section 1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.2), each of
Indiana and SIGCORP shall be merged with and into the Company in accordance
with the laws of Indiana. The Company shall be the surviving corporation in
the Merger and shall continue its existence under the laws of Indiana.
Section 1.2 EFFECTIVE TIME OF THE MERGER. On the Closing Date (as defined
in Section 3.1), articles of merger shall be executed and filed by the Company
with the Secretary of State of Indiana pursuant to the Indiana Business
Corporation Law ("IBCL"). The Merger shall become effective at such time as
such articles of merger have all been so filed, such time being herein called
the "EFFECTIVE TIME."
Section 1.3 ARTICLES OF INCORPORATION. The Articles of Incorporation of the
Company shall be amended prior to closing to provide for those matters set
forth on Exhibit 1.3, and such other matters generally covered in such
Articles of Incorporation and, as so amended, shall be the Articles of
Incorporation of the Company after the Effective Time until duly amended.
Section 1.4 BYLAWS. The Bylaws of the company shall be amended prior to
closing to provide, for a period of three years after Closing, for those
matters set forth on Exhibit 1.4, and such other matters as are generally
covered in such By-laws and, as so amended, shall be the Bylaws of the Company
after the Effective Time until duly amended.
Section 1.5 EFFECTS OF MERGER. The Merger shall have the effects set forth
in the IBCL.
A-1
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ARTICLE II
Conversion of Shares
Section 2.1 EFFECT OF MERGER ON CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of any
capital stock of Indiana, SIGCORP or the Company:
(a) CANCELLATION OF COMPANY CAPITAL STOCK. Each share of the capital stock
of the Company issued and outstanding immediately prior to the Effective Time
shall be canceled and cease to exist, and no consideration shall be delivered
in exchange therefor.
(b) CANCELLATION OF CERTAIN COMMON STOCK. Each share of Common Stock, no
par value, of Indiana (the "INDIANA COMMON STOCK") that is owned by Indiana or
any of its subsidiaries (as defined in Section 4.1) or by SIGCORP or any of
its subsidiaries shall be canceled and cease to exist. Each share of Common
Stock, no par value, of SIGCORP (the "SIGCORP COMMON STOCK") that is owned by
SIGCORP or any of its subsidiaries or by Indiana or any of its subsidiaries
shall be canceled and cease to exist.
(c) CONVERSION OF CERTAIN COMMON STOCK. Each issued and outstanding share
of Indiana Common Stock (other than shares canceled pursuant to Section
2.1(b)) shall be converted into the right to receive 1.0 (the "INDIANA RATIO")
duly authorized, validly issued, fully paid and nonassessable shares of Common
Stock, no par value, of the Company (the "COMPANY COMMON STOCK"), and each
issued and outstanding share of SIGCORP Common Stock (other than shares
canceled pursuant to Section 2.1 (b)) shall be converted into the right to
receive 1.333 (the "SIGCORP RATIO") duly authorized, validly issued, fully
paid and nonassessable shares of Company Common Stock. Upon such conversions,
all such shares of Indiana Common Stock and SIGCORP Common Stock shall be
canceled and cease to exist, and each holder of a certificate representing any
such shares shall cease to have any rights with respect thereto, except the
right to receive the number of whole shares of Company Common Stock to be
issued in consideration therefor and any cash in lieu of fractional shares in
accordance with Section 2.2.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) DEPOSIT WITH EXCHANGE AGENT. As soon as practicable after the Effective
Time, the Company shall deposit with a bank or trust company mutually
agreeable to Indiana and SIGCORP (the "EXCHANGE AGENT") certificates
representing shares of Company Common Stock required to effect the exchanges
referred to in Section 2.1, and shares that would be issued to the holders of
Indiana and SIGCORP Common Stock but for the provisions of Section 2.2(d).
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective Time,
the Exchange Agent shall mail to each holder of record of a certificate or
certificates that, immediately prior to the Effective Time, represented
outstanding shares of Indiana Common Stock or SIGCORP Common Stock
(collectively, the "CERTIFICATES") that were converted (collectively, the
"CONVERTED SHARES") into the right to receive shares of Company Common Stock
(collectively, the "COMPANY SHARES") pursuant to Section 2.1, (i) a form of
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to any Certificate shall pass, only upon actual
delivery of such Certificate to the Exchange Agent) and (ii) instructions for
use in effecting the surrender of Certificates or affecting any necessary
book-entry transfers in the case of uncertificated shares of Indiana Common
Stock or SIGCORP Common Stock in exchange for certificates representing
Company Shares. Upon surrender of a Certificate to the Exchange Agent (or to
such other agent or agents as may be appointed by agreement of Indiana and
SIGCORP) or evidence of any necessary book-entry transfers in the case of
uncertificated shares, together with a duly executed letter of transmittal and
such other documents as the Exchange Agent shall require, the holder of such
Certificate or person on whose behalf such book-entry transfer is made shall
be entitled to receive in exchange therefor a certificate representing the
number of whole Company Shares that such holder has the right to receive
pursuant to the provisions of this Section 2.1. In the event of a transfer of
ownership of Converted Shares that is not registered in the transfer records
of Indiana
A-2
<PAGE>
or SIGCORP, as the case may be, a certificate representing the proper number
of Company Shares may be issued to the transferee if the Certificate
representing such Converted Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer. If
any Certificate shall have been lost, stolen, mislaid or destroyed, then upon
receipt of (x) an affidavit of that fact from the holder claiming such
Certificate to be lost, mislaid, stolen or destroyed, (y) such bond, security
or indemnity as the Company or the Exchange Agent may reasonably require, and
(z) any other documentation necessary to evidence and effect the bona fide
exchange thereof, the Exchange Agent shall issue to such holder a certificate
representing the number of Company Shares into which the shares represented by
such lost, stolen, mislaid or destroyed Certificate shall have been converted.
Until surrendered as contemplated by this Section 2.2, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender a certificate representing Company Common Stock as
contemplated by this Section 2.2.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other
distributions declared or made after the Effective Time with respect to
Company Shares with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the Company Shares
represented thereby, and no cash payment in lieu of fractional shares shall be
made to any such holder pursuant to Section 2.2(d), until the holder of record
of such Certificate shall surrender such Certificate as contemplated by
Section 2.3(b). Subject to the effect of unclaimed property, escheat and other
applicable laws, following surrender of any such Certificate there shall be
paid the holder of the certificates representing whole Company Shares issued
in exchange therefor, without interest, (i) at the time of such surrender or
as soon thereafter as may be practicable, the amount of any cash payable in
lieu of a fractional Company Share to which such holder is entitled pursuant
to Section 2.2(d) and the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole Company Shares and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time
but prior to surrender and a payment date subsequent to surrender payable with
respect to such whole Company Shares.
(d) NO FRACTIONAL SECURITIES.
(i) No certificates or scrip representing fractional Company Shares
shall be issued upon the surrender for exchange of Certificates, and such
fractional share interests will not entitle the owner thereof to vote or to
any rights of a shareholder of Company Shares.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (x) the number of full shares
of Company Common Stock delivered to the Exchange Agent by the Company
pursuant to Section 2.2(a) over (y) the aggregate number of whole shares of
Company Common Stock to be issued pursuant to Section 2.1, such excess
being herein called the "EXCESS SHARES." As soon after the Effective Time
as practicable, the Exchange Agent, as agent for the holders of Indiana and
SIGCORP Common Stock, shall sell the Excess Shares at then prevailing
prices on the New York Stock Exchange, Inc. ("NYSE"), all in the manner
provided in paragraph (iii) of this Section 2.2(d).
(iii) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE through one or more member firms of the NYSE and shall
be executed in round lots to the extent practicable. Until the net proceeds
of such sale or sales have been distributed to the holders of Indiana and
SIGCORP Common Stock, the Exchange Agent shall hold such proceeds in trust
for the holders of Indiana and SIGCORP Common Stock (the "COMMON SHARES
TRUST"). The company shall pay all commissions, transfer taxes and other
out-of-pocket transfer taxes and other out-of-pocket transaction costs,
including the expenses and compensation, of the Exchange Agent incurred in
connection with such sale of the Excess Shares. The Exchange Agent shall
determine the portion of the Common Shares Trust to which each holder of
Indiana and SIGCORP Common Stock is entitled.
(iv) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Indiana and SIGCORP Common Stock in
lieu of any fractional share interests, the Exchange Agent shall distribute
such amounts to such holders of Indiana and SIGCORP Common Stock in
accordance with this Section 2.2.
A-3
<PAGE>
(e) CLOSING OF TRANSFER BOOKS. From and after the Effective Time, the stock
transfer books of Indiana and SIGCORP shall be closed and no further
registration of transfers of shares of Indiana and SIGCORP Common Stock shall
thereafter be made. If after the Effective Time Certificates are presented to
the Company for registration or transfer, they shall be canceled and exchanged
for certificates representing the number of whole Company Shares and the cash
amount, if any, determined in accordance with this Article II.
(f) TERMINATION OF DUTIES OF EXCHANGE AGENT. Any certificates representing
Company Shares deposited with the Exchange Agent pursuant to Section 2.2(a)
and not exchanged within one year after the Effective Time pursuant to this
Section 2.2 shall be returned by the Exchange Agent to the Company, which
shall thereafter act as Exchange Agent. All funds held by the Exchange Agent
which are unclaimed at the end of one year from the Effective Time shall be
returned to the Company whereupon any holder of unsurrendered Certificates
shall look as a general unsecured creditor only to the Company for payment of
any funds to which such holder may be entitled, subject to applicable law. The
Company shall not be liable to any person for such shares or funds delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
ARTICLE III
The Closing
Section 3.1 CLOSING. The closing of the Merger (the "CLOSING") shall take
place at the offices of Sommer & Barnard, 4000 Bank One Tower, 111 Monument
Circle, Indianapolis, Indiana 46204 at 10:00 A.M., local time, on the second
business day immediately following the date on which the last of the
conditions set forth in Article VIII is fulfilled or waived (or, if such
second business day immediately falls on a record date for the payment of
dividends on the SIGCORP or Indiana Common Stock, on the first business day
thereafter that is not such a record date), or at such other time, date and
place as SIGCORP and Indiana shall mutually agree (the "CLOSING DATE").
ARTICLE IV
Representations and Warranties of Sigcorp
SIGCORP represents and warrants to Indiana as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION.
(a) Except as set forth in Section 4.1 or 4.2 of the SIGCORP Disclosure
Schedule (as defined in Section 7.6(a)(i)), (i) SIGCORP is a corporation duly
organized and validly existing under the laws of Indiana and (ii) each of
SIGCORP's subsidiaries is a corporation duly organized, validly existing and
in good standing (if relevant) under the laws of its jurisdiction of
incorporation and each of SIGCORP and its subsidiaries has all requisite
corporate power and authority, and is duly authorized by all necessary
regulatory approvals and orders, to own, lease and operate its assets and
properties and to carry approvals and orders, to own, lease and operate its
assets and properties and to carry on its business as it is now being
conducted, and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing
of its assets and properties makes such qualification necessary, other than,
in the case of clause (ii), such failures which, when taken together with all
other such failures, will not have a material adverse effect on the business,
operations, properties, assets, condition (financial or otherwise) or results
of operations of SIGCORP and its subsidiaries taken as a whole or on the
consummation of the transactions contemplated by this Agreement (any such
material adverse effect being hereinafter referred to as a "SIGCORP MATERIAL
ADVERSE EFFECT").
(b) As used in this Agreement the term "subsidiary" with respect to any
person shall mean any corporation or other entity (including partnerships and
other business associations) in which such person directly or indirectly owns
at least a majority of the outstanding voting securities or other equity
interests having the power, under
A-4
<PAGE>
ordinary circumstances, to elect a majority of the directors, or otherwise to
direct the management and policies, of such corporation or other entity.
Section 4.2 SUBSIDIARIES.
(a) Section 4.2 of the SIGCORP Disclosure Schedule sets forth a description
as of the date hereof of all subsidiaries and joint ventures (as defined in
Section 4.2(d)) of SIGCORP, including the name of each such entity, the state
or jurisdiction of its formation, a brief description of the principal line or
lines of business conducted by each such entity and SIGCORP's interest
therein.
(b) Except as set forth in Section 4.2 of the SIGCORP Disclosure Schedule,
none of the entities listed in such Section 4.2 is a "public utility company",
a "holding company", a "subsidiary company" or an "affiliate" within the
meaning of Section 2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(11) of the Public Utility
Holding Company Act of 1935, as amended (the "1935 ACT"), respectively.
(c) Except as set forth in Section 4.2 of the SIGCORP Disclosure Schedule,
all of the issued and outstanding shares of capital stock of each subsidiary
of SIGCORP are validly issued, fully paid, nonassessable and free of
preemptive rights and are owned directly or indirectly by SIGCORP free and
clear of any liens, claims, encumbrances, security interests, equities,
charges and options of any nature whatsoever, and there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of its capital stock or obligating it to grant, extend or enter into any such
agreement or commitment.
(d) As used in this Agreement, the term "joint venture" with respect to any
person shall mean any corporation or other entity (including partnerships and
other business associations and joint ventures) in which such person or one or
more of its subsidiaries owns an equity interest that is less than a majority
of any class of the outstanding voting securities or equity, other than equity
interests held for passive investment purposes that are less than 5% of any
class of the outstanding voting securities or equity.
Section 4.3 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of SIGCORP consists
of 75,000,000 shares of SIGCORP Common Stock and 10,000,000 shares of SIGCORP
preferred stock.
(b) As of the close of business on June 10, 1999, 23,630,568 shares of
SIGCORP Common Stock were issued and outstanding and no shares of SIGCORP
preferred stock were issued and outstanding.
(c) All of the issued and outstanding shares of the capital stock of
SIGCORP are validly issued, fully paid, nonassessable and free of preemptive
rights.
(d) Except for the SIGCORP Option and as set forth in Section 4.3(a) of the
SIGCORP Disclosure Schedule, there are no outstanding subscriptions, options,
calls, contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating SIGCORP or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the
capital stock of SIGCORP or obligating SIGCORP or any of its subsidiaries to
grant, extend or enter into any such agreement or commitment.
Section 4.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE.
(a) AUTHORITY.
(i) SIGCORP has all requisite power and authority to enter into this
Agreement and the SIGCORP Option and, subject in the case of this Agreement
to the SIGCORP Shareholders' Approval (as defined in
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Section 4.13) and the SIGCORP Required Statutory Approval (as defined in
Section 4.4(c)), to consummate the transactions contemplated hereby and
thereby.
(ii) The execution and delivery of this Agreement and the SIGCORP Option
and, subject in the case of this Agreement to obtaining the SIGCORP
Shareholders' Approval, the consummation by SIGCORP of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of SIGCORP.
(iii) This Agreement and the SIGCORP Option have been duly and validly
executed and delivered by SIGCORP and, assuming the due authorization,
execution and delivery hereof and thereof by Indiana and, in the case of
this Agreement, the Company, constitute the valid and binding obligations
of SIGCORP, enforceable against SIGCORP in accordance with their respective
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally, and except that the
availability of equitable remedies, including specific performance, may be
subject to the discretion of any court before which any proceedings may be
brought.
(b) NON-CONTRAVENTION. Except as set forth in Section 4.4(b) of the
SIGCORP Disclosure Schedule, the execution and delivery of this Agreement and
the SIGCORP Option by SIGCORP do not, and the consummation of the transactions
contemplated hereby and thereby will not, violate, conflict with or result in
a breach of any provisions of, or constitute a default (with or without notice
or lapse of time or both) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination,
cancellation or acceleration of any obligation or the loss of material benefit
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets (any such violation,
conflict, breach, default, right of termination, cancellation or acceleration,
loss or creation, a "VIOLATION") of, SIGCORP or any of its subsidiaries or, to
the knowledge of SIGCORP, any of its joint ventures, under any provisions of:
(i) the articles of incorporation, bylaws or similar governing documents
of SIGCORP or any of its subsidiaries or joint ventures;
(ii) subject in the case of this Agreement to obtaining the SIGCORP
Required Statutory Approvals and the receipt of the SIGCORP Shareholders'
Approval, any statute, law, ordinance, rule, regulation, judgement, decree,
order, injunction, writ, permit or license of any court, governmental or
regulatory body (including a stock exchange or other self-regulatory body)
or authority, domestic or foreign (each, a "Governmental Authority")
applicable to SIGCORP or any of its subsidiaries or joint ventures or any
of their respective properties or assets; or
(iii) subject in the case of this Agreement to obtaining the third-party
consents or other approvals set forth in Section 4.4(b) of the SIGCORP
Disclosure Schedule (the "SIGCORP REQUIRED CONSENTS"), any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which SIGCORP or any of its subsidiaries or joint ventures is now a party
or by which it or any of its properties or assets may be bound or affected;
excluding from the foregoing clauses (ii) and (iii) such Violations as would
not, in the aggregate, reasonably be likely to have a SIGCORP Material Adverse
Effect.
(c) STATUTORY APPROVALS. Except as set forth in Section 4.4(c) of the
SIGCORP Disclosure Schedule, no declaration, filing or registration with, or
notice to or authorization, consent or approval of any Governmental Authority
is necessary for the execution and delivery of this Agreement or the SIGCORP
Option by SIGCORP or the consummation by SIGCORP of the transactions
contemplated hereby or thereby, the failure to obtain, make or give which
would reasonably be likely to have a SIGCORP Material Adverse Effect (the
"SIGCORP REQUIRED STATUTORY APPROVALS"), it being understood that references
in this Agreement to
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"obtaining" such SIGCORP Required Statutory Approvals shall mean making such
declarations, filings or registrations; giving such notice; obtaining such
consents or approvals; and having such waiting periods expire as are necessary
to avoid a violation of law.
(d) COMPLIANCE.
(i) Except as set forth in Section 4.4(d) or 4.11 of the SIGCORP
Disclosure Schedule, or as disclosed in the SIGCORP SEC Reports (as defined
in Section 4.5), neither SIGCORP nor any of its subsidiaries nor, to the
knowledge of SIGCORP, any of its joint ventures is in violation of or under
investigation with respect to, or has been given notice or been charged
with any violation of, any law, statute, order, rule, regulation, ordinance
or judgement (including, without limitation, any applicable environmental
law, ordinance or regulation) of any Governmental Authority, except for
violations that do not have, and, would not reasonably likely have, a
SIGCORP Material Adverse Effect.
(ii) Except as set forth in Section 4.4(d) or 4.11 of the SIGCORP
Disclosure Schedule, SIGCORP, its subsidiaries and, to the knowledge of
SIGCORP, its joint ventures have all permits, licenses, franchises and
other governmental authorizations, consents and approvals necessary to
conduct their respective businesses as currently conducted, except those
the failure to obtain which would not reasonably be likely to have a
SIGCORP Material Adverse Effect.
Section 4.5 REPORTS AND FINANCIAL STATEMENTS.
(a) Since January 1, 1997, the filings required to be made by SIGCORP and
its subsidiaries under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
applicable Indiana laws and regulations, the Federal Power Act (the "POWER
ACT"), the Natural Gas Act (the "GAS ACT"), the Federal Communications Act
(the "Communications Act") or the 1935 Act have been filed with the SEC, the
Indiana Utility Regulatory Commission (the "IURC"), or the Federal Energy
Regulatory Commission (the "FERC"), as required by each such law or
regulation, including all forms, statements, reports, agreements and all
documents, exhibits, amendments and supplements appertaining thereto, and
complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder.
(b) SIGCORP has made available to Indiana a true and complete copy of each
report, schedule, registration statement and definitive proxy statement filed
by SIGCORP with the SEC since January 1, 1996 (as such documents have since
the time of their filing been amended, the "SIGCORP SEC REPORTS").
(c) The SIGCORP SEC Reports, including without limitation any financial
statements or schedules included therein, at the time filed, and any forms,
reports or other documents filed by SIGCORP with the SEC after the date
hereof, did not and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) The audited consolidated financial statements and unaudited interim
financial statements of SIGCORP included in the SIGCORP SEC Reports
(collectively, the "SIGCORP FINANCIAL STATEMENTS") have been prepared, and
will be prepared, in accordance with GAAP applied on a consistent basis
(except as may be indicated therein or in the notes thereto and except with
respect to unaudited statements as permitted by Form 10-Q) and fairly present
in all material respects the financial position of SIGCORP as of the
respective dates thereof or the results of operations and cash flows for the
respective periods then ended, as the case may be, subject, in the case of the
unaudited interim financial statements, to normal, recurring audit
adjustments.
(e) True, accurate and complete copies of the Articles of Incorporation and
Bylaws of SIGCORP, as in effect on the date hereof, have been delivered to
Indiana.
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Section 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS: ABSENCE OF UNDISCLOSED
LIABILITIES.
(a) Except as set forth in the SIGCORP SEC Reports or Section 4.6 of the
SIGCORP Disclosure Schedule, from December 31, 1998 through the date hereof
each of SIGCORP and each of its subsidiaries has conducted its business
only in the ordinary course of business consistent with past practice and
there has not been, and no fact or condition exists that would reasonably
likely have, a SIGCORP Material Adverse Effect.
(b) Neither SIGCORP nor any of its subsidiaries has any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of a
nature required by GAAP to be reflected in a consolidated corporate balance
sheet, except liabilities, obligations or contingencies that are accrued or
reserved against in the consolidated financial statements of SIGCORP or
reflected in the notes thereto for the year ended December 31, 1998 or that
were incurred after December 31, 1998 in the ordinary course of business
and would not reasonably be likely to have a SIGCORP Material Adverse
Effect.
Section 4.7 LITIGATION. Except as set forth in the SIGCORP SEC Reports or
as set forth in Section 4.7 or 4.11 of the SIGCORP Disclosure Schedule, there
are no:
(a) claims, suits, actions or proceedings, pending or, to the knowledge
of SIGCORP, threatened, nor are there, to the knowledge of SIGCORP, any
investigations or reviews pending or threatened against, relating to or
affecting SIGCORP or any of its subsidiaries or joint ventures; or
(b) judgements, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority
or any arbitrator applicable to SIGCORP or any of its subsidiaries or joint
ventures;
that would reasonably be likely to have a SIGCORP Material Adverse Effect.
Section 4.8 REGISTRATION STATEMENT AND PROXY STATEMENT.
(a) None of the information supplied or to be supplied by or on behalf of
SIGCORP for inclusion or incorporation by reference in:
(i) the registration statement on Form S-4 to be filed with the SEC by
the Company in connection with the issuance of shares of Company Common
Stock in the Merger (the "REGISTRATION STATEMENT") will, at the time the
Registration Statement becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading; and
(ii) the joint proxy statement in definitive form relating to the
meetings of the shareholders of Indiana and SIGCORP to be held in
connection with the Merger and the prospectus relating to the Company
Common Stock (the "JOINT PROXY STATEMENT") will, at the date mailed to such
shareholders and, as the same may be amended or supplemented, at the times
of such meetings, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(b) Each of the Registration Statement and the Joint Proxy Statement, as of
their respective dates, will comply as to form in all material respects with
the applicable provisions of the Securities Act and the Exchange Act and the
rules and regulations thereunder.
Section 4.9 TAX MATTERS.
(a) Except as set forth on Schedule 4.9(a) of the SIGCORP Disclosure
Schedule, SIGCORP and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for tax purposes of which SIGCORP or any
of its subsidiaries is or has been a member, has:
(i) filed all material Tax Returns required to be filed by it within the
time and in the manner prescribed by law;
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(ii) paid all material Taxes that are shown on such Tax Returns as due
and payable within the time and in the manner prescribed by law; and
(iii) paid all material Taxes otherwise required to be paid.
(b) Except as set forth on Schedule 4.9(b) of the SIGCORP Disclosure
Schedule, as of the date hereof there are no material claims, assessments,
audits or administrative or court proceedings pending against SIGCORP or any
of its subsidiaries for any alleged deficiency in Taxes.
(c) SIGCORP has established adequate accruals for Taxes and for any
liability for deferred Taxes in the SIGCORP Financial Statements in accordance
with GAAP.
(d) "TAXES," as used in this Agreement, means, including but not limited
to, any federal, state, county, local or foreign taxes, charges, fees, levies
or other assessments, including, without limitation, all net income, gross
income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipt, capital stock,
production, business and occupation, disability, employment, payroll, license,
estimated, stamp, custom duties, severance or withholding taxes or charges
imposed by any governmental entity, and includes any interest and penalties
(civil or criminal) on or additions to any such taxes, charges, fees, levies
or other assessments, and any expenses incurred in connection with the
determination, settlement or litigation of any liability for any of the
foregoing.
(e) "TAX RETURN," as used in this Agreement, means any report, return or
other information required to be supplied to any governmental entity with
respect to Taxes, including, where permitted or required, combined or
consolidated returns for any group of entities that includes SIGCORP or any of
its subsidiaries on the one hand, or Indiana or any of its subsidiaries on the
other hand.
Section 4.10 EMPLOYEE MATTERS: ERISA.
(a) BENEFIT PLANS. Section 4.10(a) of the SIGCORP Disclosure Schedule
contains a true and complete list of each material employee benefit plan,
program or arrangement, including, but not limited to, any employee benefit
plan within the meaning of Section 3(3) of ERISA and any vacation, severance,
change-in-control, stock purchase or stock option plan, program or arrangement
maintained or contributed to by SIGCORP, any of the SIGCORP Subsidiaries or
any other entity which would be treated under Section 414 of the Code as a
single employer with SIGCORP (collectively, with SIGCORP Subsidiaries, a
"SIGCORP COMMONLY CONTROLLED ENTITY") for the benefit of any current or former
employee, officer or director or their dependents or beneficiaries
(collectively, the "SIGCORP PLANS") and each employment, consulting,
severance, change-in-control, termination, compensation, collective bargaining
or indemnification agreement, arrangement or understanding between SIGCORP or
any of the SIGCORP Commonly Controlled Entities (or by which they are bound)
and any current or former employee, officer or director of SIGCORP or any of
the SIGCORP Subsidiaries (collectively, the "SIGCORP EMPLOYMENT
ARRANGEMENTS").
(b) Except as set forth in the SIGCORP SEC Reports or in Section 4.10(b) of
the SIGCORP Disclosure Schedule and except as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect:
(i) QUALIFICATION; COMPLIANCE. Each SIGCORP Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS that it is so qualified. Each SIGCORP
Plan and each SIGCORP Employment Arrangement has been operated in all
respects in accordance with its terms and the requirements of applicable
laws, rules and regulations. There are no pending or, to the knowledge of
SIGCORP, threatened or anticipated claims under or with respect to any
SIGCORP Plan or SIGCORP Employment Arrangement by or on behalf of any
current employee, officer or director, or dependent or beneficiary thereof,
or otherwise (other than routine claims for benefits);
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(ii) LIABILITIES. Neither SIGCORP nor any of the SIGCORP Commonly
Controlled Entities has incurred any direct or indirect liability under,
arising out of or by operation of the Code, Title IV of ERISA, or any other
applicable law (other than for premium payments and contributions in the
ordinary course of business), and no fact or event exists that could
reasonably be expected to give rise to such liability.
(iii) PAYMENTS RESULTING FROM THE MERGER. No SIGCORP Plan or SIGCORP
Employment Arrangement exists which could result in the payment to any
current, former or future director, officer or employee of SIGCORP, any
SIGCORP Commonly Controlled Entity or to any trustee under any "rabbi
trust" or similar arrangement of any money or other property or rights or
accelerate, vest or provide any other rights or benefits to or in any such
employee or director as a result of the consummation, announcement of or
other action relating to the transactions contemplated by this Agreement,
whether or not such payment, acceleration, vesting or provision would
constitute a "parachute payment" (within the meaning of Section 280G of the
Code) or whether or not some other subsequent action or event would be
required to cause such payment, acceleration, vesting or provision to be
triggered.
(iv) LABOR AGREEMENTS. Neither SIGCORP nor any of the SIGCORP
Subsidiaries is a party to any collective bargaining agreements. Since
January 1, 1995, neither SIGCORP nor any of the SIGCORP Subsidiaries has
had any employee strikes, work stoppages, slowdowns or lockouts or received
any requests for collective bargaining. There is no unfair labor practice,
employment discrimination or other complaint against SIGCORP or any of the
SIGCORP Subsidiaries pending or, to the best knowledge of SIGCORP,
threatened.
Section 4.11 ENVIRONMENTAL PROTECTION.
(a) COMPLIANCE.
(i) Except as set forth in Section 4.11(a) of the SIGCORP Disclosure
Schedule, each of SIGCORP and each of its subsidiaries is in compliance
with all applicable Environmental Laws (as hereinafter defined), except
where the failure to be so in compliance would not reasonably be likely to
have a SIGCORP Material Adverse Effect.
(ii) Except as set forth in Section 4.11(a) of the SIGCORP Disclosure
Schedule, neither SIGCORP nor any of its subsidiaries has received any
written communication from any person or Governmental Authority that
alleges that SIGCORP or any of its subsidiaries is not in compliance with
applicable Environmental Laws, except where the failure to be so in
compliance would not reasonably be likely to have a SIGCORP Material
Adverse Effect.
(b) ENVIRONMENTAL PERMITS. Except as set forth in Section 4.11(b) of the
SIGCORP Disclosure Schedule, SIGCORP and each of its subsidiaries has obtained
or applied for all environmental, health and safety permits and authorizations
(collectively, "ENVIRONMENTAL PERMITS") necessary for the construction of
their facilities and the conduct of their operations, and all such permits are
in good standing or, where applicable, a renewal application has been timely
filed and is pending agency approval, and SIGCORP and its subsidiaries are in
compliance with all terms and conditions of all such Environmental Permits and
are not required to make any expenditure in order to obtain or renew any
Environmental Permits, except where the failure to obtain or be in such
compliance and the requirement to make such expenditures would not reasonably
be likely to have a SIGCORP Material Adverse Effect.
(c) ENVIRONMENTAL CLAIMS. Except as set forth in Section 4.11(c) of the
SIGCORP Disclosure Schedule, there is no Environmental Claim (as hereinafter
defined) pending, or to the knowledge of SIGCORP and its subsidiaries,
threatened
(i) against SIGCORP or any of its subsidiaries or joint ventures,
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(ii) against any person or entity whose liability for any Environmental
Claim SIGCORP or any of its subsidiaries or joint ventures has or may have
retained or assumed either contractually or by operation of law, or
(iii) against any real or personal property or operations that SIGCORP
or any of its subsidiaries or joint ventures owns, leases or manages, in
whole or in part,
that, if adversely determined, would reasonably be likely to have a SIGCORP
Material Adverse Effect.
(d) RELEASES. Except as set forth in Section 4.11(c) or 4.11(d) of the
SIGCORP Disclosure Schedule, SIGCORP has no knowledge of any Release (as
hereinafter defined) of any Hazardous Material (as hereinafter defined) that
would be reasonably likely to form the basis of any Environmental Claim
against SIGCORP or any subsidiaries or joint ventures of SIGCORP, or against
any person or entity whose liability for any Environmental Claim SIGCORP or
any subsidiaries or joint ventures of SIGCORP has or may have retained or
assumed either contractually or by operation of law, except for Releases of
Hazardous Materials the liability for which would not reasonably be likely to
have a SIGCORP Material Adverse Effect.
(e) PREDECESSORS. Except as set forth in Section 4.11(c) of the SIGCORP
Disclosure Schedule, SIGCORP has no knowledge, with respect to any predecessor
of SIGCORP or any subsidiary or joint venture of SIGCORP, of any Environmental
Claims pending or threatened, or of any Release of Hazardous Materials that
would be reasonably likely to form the basis of any Environmental Claims that
would have, or that SIGCORP reasonably believes would be reasonably likely to
have, a SIGCORP Material Adverse Effect.
(f) DISCLOSURE. To SIGCORP's knowledge, SIGCORP has disclosed to Indiana
all material facts that SIGCORP reasonably believes form the basis of a
SIGCORP Material Adverse Effect arising from:
(i) the cost of pollution control equipment currently required or known
to be required in the future;
(ii) current remediation costs or remediation costs known to be required
in the future; or
(iii) any other environmental matter affecting SIGCORP or its
subsidiaries that would have, or that SIGCORP reasonably believes would
reasonably be likely to have, a SIGCORP Material Adverse Effect.
As used in this Agreement:
(iv) "Environmental Claim" means
(A) any and all administrative, regulatory or judicial actions,
suits, demands, demand letters, directives, claims, liens,
investigations, proceedings or notices of noncompliance or violation in
writing by any person or entity (including any Governmental Authority)
or
(B) any oral information provided to SIGCORP (or to Indiana, for
purposes of Section 5.11) by a Governmental Authority that written
action of the type described in clause (A) above is in process,
alleging potential liability (including, without limitation, potential
liability for enforcement, investigatory costs, cleanup costs, governmental
response costs, removal costs, remedial costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on
or resulting from (a) the presence, or Release or threatened Release into
the environment, of any Hazardous Materials at any location, whether or not
owned, operated, leased or managed by SIGCORP or any of its subsidiaries or
joint ventures (for purposes of this Section 4.11), or by Indiana or any of
its subsidiaries or joint ventures (for purposes of Section 5.11), (b)
circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law or (c) any and all claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any Hazardous
Materials.
(v) "Environmental Laws" means all federal, state and local laws, rules
and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air,
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surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
(vi) "Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation, and transformers or
other equipment that contain dielectric fluid containing polychlorinated
biphenyls, (b) any chemicals, materials or substances which are now defined
as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", or words, of
similar import, under any Environmental Law and (c) any other chemical,
material, substance or waste, exposure to which is now prohibited, limited
or regulated under Environmental Law in a jurisdiction in which SIGCORP or
any of its subsidiaries or joint ventures operates (for purposes of this
Section 4.11) or in which Indiana or any of its subsidiaries or joint
ventures operates (for purposes of Section 5.11).
(vii) "Release" means any release, spill, emission, leaking, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
atmosphere, soil, surface water, groundwater or property.
Section 4.12 REGULATION AS A UTILITY.
(a) SIGCORP is a public utility holding company as defined in the 1935 Act
exempt from all provisions of the 1935 Act except section 9(a)(2), by order of
the SEC pursuant to section 3(a)(1) of the 1935 Act. SIGCORP is not regulated
as a public utility in any state.
(b) Except as set forth in Section 4.12 of the SIGCORP Disclosure Schedule,
no subsidiary company or affiliate of SIGCORP is subject to regulation as a
public utility or public service company (or similar designation) by any state
in the United States or by any foreign country.
(c) As used in this Section 4.12 and in Section 5.12, the terms "subsidiary
company" and "affiliate" shall have the respective meanings ascribed to them
in the 1935 Act.
Section 4.13 VOTE REQUIRED. The approval of the Merger by a majority of all
votes entitled to be cast by all holders of SIGCORP Common Stock (the "SIGCORP
SHAREHOLDERS' APPROVAL") is the only votes of the holders of the capital stock
of SIGCORP or any subsidiaries of SIGCORP required to approve this Agreement,
the Merger and the other transactions contemplated hereby.
Section 4.14 ACCOUNTING MATTERS. SIGCORP has not, through the date hereof,
in contemplation of the Merger, taken or agreed to take any action that would
prevent the Company from accounting for the business combination to be
effected by the Merger as a pooling-of-interests in accordance with GAAP and
applicable SEC regulations.
Section 4.15 APPLICABILITY OF CERTAIN INDIANA LAW.
(a) Assuming the accuracy of the representation by Indiana set forth in
Section 5.18, neither the control share acquisition provisions of Chapter 40
of the IBCL nor the business combination provisions of Chapter 41 of the IBCL
or any similar provisions of the IBCL, the Articles of Incorporation or Bylaws
of SIGCORP are applicable to the transactions contemplated by this Agreement
or the SIGCORP Option.
(b) SIGCORP shall take all action requested in writing by Indiana to render
the rights granted to the holders of SIGCORP Common Stock (the "SIGCORP
RIGHTS") pursuant to the Rights Agreement dated as of December 31, 1995
between SIGCORP and Continental Stock Transfer Company, as Rights Agent, as
amended (the "SIGCORP RIGHTS AGREEMENT"), inapplicable to the Merger and the
other transactions contemplated
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by this Agreement and the SIGCORP Option. Except as approved in writing by
Indiana, the Board of SIGCORP shall not (i) amend the SIGCORP Rights
Agreement, (ii) redeem the SIGCORP Rights, or (iii) take action with respect
to, or make any determination under, the SIGCORP Rights Agreement, provided,
that nothing contained in this Section 4.15(b) shall require the Board of
Directors of SIGCORP to take any action or refrain from taking any action that
a majority of such Board determines in good faith, based upon the written
opinion of outside counsel, would result in a breach of its fiduciary duties
under applicable law. If any Distribution Date or Shares Acquisition Date
occurs under the SIGCORP Rights Agreement at any time during the period from
the date of this Agreement to the Effective Time, SIGCORP and Indiana shall
make such adjustment to the Indiana Ratio as SIGCORP and Indiana shall
mutually agree so as to preserve the economic benefits that SIGCORP and
Indiana each reasonably expected on the date of this Agreement to receive as a
result of the consummation of the Merger and the other transactions
contemplated by this Agreement.
Section 4.16 OPINION OF FINANCIAL ADVISOR. SIGCORP has received the opinion
of Goldman Sachs & Co., dated the date hereof, to the effect that, as of the
date hereof, the SIGCORP Ratio is fair from a financial point of view to the
holders of SIGCORP Common Stock.
Section 4.17 INSURANCE.
(a) Except as set forth in Section 4.17 of the SIGCORP Disclosure Schedule,
each of SIGCORP and each of its subsidiaries is, and has been continuously
since January 1, 1995, insured in such amounts and against such risks and
losses as are customary for companies conducting the respective businesses
conducted by SIGCORP and its subsidiaries during such time period.
(b) Except as set forth in Section 4.17 of the SIGCORP Disclosure Schedule,
neither SIGCORP nor any of its subsidiaries has received any notice of
cancellation or termination with respect to any material insurance policy
thereof.
(c) To the knowledge of SIGCORP, all material insurance policies of SIGCORP
and its subsidiaries are valid and enforceable policies.
Section 4.18 OWNERSHIP OF INDIANA COMMON STOCK. SIGCORP does not
"beneficially own" (as such term is defined in Rule 13d-3 under the Exchange
Act) any shares of Indiana Common Stock.
ARTICLE V
Representations and Warranties of Indiana
Indiana Energy represents and warrants to SIGCORP as follows:
Section 5.1 ORGANIZATION AND QUALIFICATION. Except as set forth in Section
5.1 or 5.2 of the Indiana Disclosure Schedule (as defined in Section
7.6(a)(ii)), (i) Indiana is a corporation duly organized and validly existing
under the laws of Indiana and (ii) each of Indiana's subsidiaries is a
corporation duly organized, validly existing and in good standing (if
relevant) under the laws of its jurisdiction of incorporation and each of
Indiana and its subsidiaries has requisite corporate power and authority, and
is duly authorized by all necessary regulatory approvals and orders, to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted, and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its assets and properties makes such qualification
necessary, other than, in the case of clause (ii) such failures, which, when
taken together with all other such failures, will not have a material adverse
effect on the business, operations, properties, assets, condition (financial
or otherwise) or results of operations of Indiana and its subsidiaries taken
as a whole or on the consummation of the transactions contemplated by this
Agreement (any such material adverse effect being hereinafter referred to as
an "INDIANA MATERIAL ADVERSE EFFECT").
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Section 5.2 SUBSIDIARIES.
(a) Section 5.2 of the Indiana Disclosure Schedule sets forth a description
as of the date hereof of all subsidiaries and joint ventures of Indiana,
including the name of each such entity, the state or jurisdiction of its
formation, a brief description of the principal line or lines of business
conducted by each such entity and Indiana's interest therein.
(b) Except as set forth in Section 5.2 of the Indiana Disclosure Schedule,
none of the entities listed in Section 5.2 is a "public utility company", a
"holding company", a "subsidiary company" or an "affiliate" within the meaning
of Section 2(a)(5), 2(a)(7), 2(a)(8) or 2(a)(ll) of the 1935 Act,
respectively.
(c) Except as set forth in Section 5.2 of the Indiana Disclosure Schedule,
all of the issued and outstanding shares of capital stock of each subsidiary
of Indiana are validly issued, fully paid, nonassessable and free of
preemptive rights and are owned directly or indirectly by Indiana free and
clear of any liens, claims, encumbrances, security interests, equities,
charges and options of any nature whatsoever, and there are no outstanding
subscriptions, options, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding security,
instrument or other agreement, obligating any such subsidiary to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares
of its capital stock or obligating it to grant, extend or enter into any such
agreement or commitment.
Section 5.3 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of Indiana consists
of 200,000,000 shares of Indiana Common Stock and 4,000,000 shares of Indiana
preferred stock.
(b) As of the close of business on June 10, 1999, 29,786,555 shares of
Indiana Common Stock were issued and outstanding and no shares of preferred
stock were issued and outstanding.
(c) All of the issued and outstanding shares of the capital stock of
Indiana are validly issued, fully paid, nonassessable and free of preemptive
rights.
(d) Except for the Indiana Option and as set forth in Section 5.3(a) of the
Indiana Disclosure Schedule, there are no outstanding subscriptions, options,
calls, contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement, obligating Indiana or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the
capital stock of Indiana or obligating Indiana or any of its subsidiaries to
grant, extend or enter into any such agreement or commitment.
Section 5.4 AUTHORITY; NON-CONTRAVENTION; STATUTORY APPROVALS; COMPLIANCE.
(a) AUTHORITY.
(i) Indiana has all requisite power and authority to enter into this
Agreement and the Indiana Option and, subject in the case of this Agreement
to the Indiana Shareholders' Approval (as defined in Section 5.13(c)) (and
the Indiana Required Statutory Approvals (as defined in Section 5.4(c)), to
consummate the transactions contemplated hereby and thereby;
(ii) The execution and delivery of this Agreement and the Indiana Option
and, subject in the case of this Agreement to obtaining the Indiana
Shareholders' Approval, the consummation by Indiana of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Indiana;
(iii) This Agreement and the Indiana Option have been duly and validly
executed and delivered by Indiana and, assuming the due authorization,
execution and delivery hereof and thereof by SIGCORP and, in the case of
this Agreement, the Company, constitute the valid and binding obligations
of Indiana,
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enforceable against Indiana in accordance with their respective terms,
except as would be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or other similar laws affecting the
enforcement of creditors' rights generally and except that the availability
of equitable remedies, including specific performance, may be subject to
the discretion of any court before which any proceeding therefor may be
brought;
(b) NON-CONTRAVENTION. Except as set forth in Section 5.4(b) of the Indiana
Disclosure Schedule, the execution and delivery of this Agreement and the
Indiana Option by Indiana do not, and the consummation of the transactions
contemplated hereby and thereby will not result in any Violation by Indiana or
any of its subsidiaries or, to the knowledge of Indiana, any of its joint
ventures, under any provisions of
(i) the articles of incorporation, bylaws or similar governing documents
of Indiana or any of its subsidiaries or joint ventures;
(ii) subject in the case of this Agreement to obtaining the Indiana
Required Statutory Approvals and the receipt of the Indiana Shareholders'
Approval, any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any Government Authority
applicable to Indiana or any of its subsidiaries or joint ventures or any
of their respective properties or assets; or
(iii) subject in the case of this Agreement to obtaining the third-party
consents or other approvals set forth in Section 5.4(b) of the Indiana
Disclosure Schedule (the "INDIANA REQUIRED CONSENTS"), any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which Indiana or any of its subsidiaries or joint ventures is now a party
or by which it or any of its properties or assets may be bound or affected;
excluding from the foregoing clauses (ii) and (iii) such Violations as would
not, in the aggregate, reasonably be likely to have an Indiana Material
Adverse Effect.
(c) STATUTORY APPROVALS. Except as set forth in Section 5.4(c) of the
Indiana Disclosure Schedule, no declaration, filing or registration with, or
notice to or authorization, consent or approval of any Governmental Authority
is necessary for the execution and delivery of this Agreement or the Indiana
Option by Indiana or the consummation by Indiana of the transactions
contemplated hereby or thereby, the failure to obtain, make or give which
would reasonably be likely to have an Indiana Material Adverse Effect (the
"INDIANA REQUIRED STATUTORY APPROVALS"), it being understood that references
in this Agreement to "obtaining" such Indiana Required Statutory Approvals
shall mean making such declarations, filings or registrations; giving such
notice; obtaining such consents or approvals; and having such waiting periods
expire as are necessary to avoid a violation of law.
(d) COMPLIANCE.
(i) Except as set forth in Section 5.4(d) or 5.11 of the Indiana
Disclosure Schedule or as disclosed in the Indiana SEC Reports (as defined
in Section 5.5), neither Indiana nor any of its subsidiaries nor, to the
knowledge of Indiana, any of its joint ventures, is in violation of or
under investigation with respect to, or has been given notice or been
charged with any violation of, any law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any Governmental Authority,
except for violations that do not have, and, would not reasonably likely
have, an Indiana Material Adverse Effect.
(ii) Except as set forth in Section 5.4(d) or 5.11 of the Indiana
Disclosure Schedule, Indiana, its subsidiaries and, to the knowledge of
Indiana, its joint ventures have all permits, licenses, franchises and
other governmental authorizations, consents and approvals necessary to
conduct their respective businesses as currently conducted, except those
the failure to obtain which would not reasonably be likely to have an
Indiana Material Adverse Effect.
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Section 5.5 REPORTS AND FINANCIAL STATEMENTS.
(a) Since October 1, 1996, the filings required to be made by Indiana and
its subsidiaries under the Securities Act, the Exchange Act, applicable
Indiana laws and regulations, the Power Act, the Gas Act, the
Telecommunications Act or the 1935 Act have been filed with the SEC, the IURC,
the Federal Communications Commission or the FERC, as required by each such
law or regulation, including all forms, statements, reports, agreements and
all documents, exhibits, amendments and supplements appertaining thereto, and
complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder.
(b) Indiana has made available to SIGCORP a true and complete copy of each
report, schedule, registration statement and definitive proxy statement filed
by Indiana with the SEC since October 1, 1996 (as such documents have since
the time of their filing been amended, the "Indiana SEC Reports").
(c) The Indiana SEC Reports, including without limitation any financial
statements or schedules included therein, at the time filed, and any forms,
reports or other documents filed by Indiana with the SEC after the date
hereof, did not and will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) The audited consolidated financial statements and unaudited interim
financial statements of Indiana included in the Indiana SEC Reports
(collectively, the "INDIANA FINANCIAL STATEMENTS") have been prepared, and
will be prepared in accordance with GAAP applied on a consistent basis (except
as may be indicated therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q) and fairly present in all
material respects the financial position of Indiana as of the respective dates
thereof or the results of operations and cash flows for the respective periods
then ended, as the case may be, subject, in the case of the unaudited interim
financial statements, to normal, recurring audit adjustments.
(e) True, accurate and complete copies of the Articles of Incorporation and
Bylaws of Indiana, as in effect on the date hereof, have been delivered to
SIGCORP.
Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS; ABSENCE OF UNDISCLOSED
LIABILITIES.
(a) Except as set forth in the Indiana SEC Reports or Section 5.6 of the
Indiana Disclosure Schedule, from December 31, 1998 through the date hereof
each of Indiana and each of its subsidiaries has conducted its business only
in the ordinary course of business consistent with past practice and there has
not been, and no fact or condition exists that would reasonably likely have,
an Indiana Material Adverse Effect.
(b) Neither Indiana nor any of its subsidiaries has any liabilities or
obligations (whether absolute, accrued, contingent, or otherwise) of a nature
required by GAAP to be reflected in a consolidated corporate balance sheet,
except liabilities, obligations or contingencies that are accrued or reserved
against in the consolidated financial statements of Indiana or reflected in
the notes thereto for the year ended September 30, 1998, or that were incurred
after September 30, 1998, in the ordinary course of business and would not
reasonably be likely to have an Indiana Material Adverse Effect.
Section 5.7 LITIGATION. Except as set forth in the Indiana SEC Reports or
as set forth in Section 5.7 or 5.11 of the Indiana Disclosure Schedule, there
are no:
(i) claims, suits, actions or proceedings, pending or, to the knowledge
of Indiana, threatened, nor are there, to the knowledge of Indiana, any
investigations or reviews pending or threatened against, relating to or
affecting Indiana or any of its subsidiaries or joint ventures;
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(ii) judgments, decrees, injunctions, rules or orders of any court,
governmental department, commission, agency, instrumentality or authority
or any arbitrator applicable to Indiana or any of its subsidiaries or joint
ventures;
that would have, or would reasonably likely have, an Indiana Material Adverse
Effect.
Section 5.8 REGISTRATION STATEMENT AND PROXY STATEMENT.
(a) None of the information supplied or to be supplied by or on behalf of
Indiana for inclusion or incorporation by reference in:
(i) the Registration Statement will, at the time the Registration
Statement becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading; and
(ii) the Joint Proxy Statement will, at the date mailed to the
shareholders of Indiana and SIGCORP and, as the same may be amended or
supplemented, at the times of the meetings of such shareholders to be held
in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading.
(b) Each of the Registration Statement and the Joint Proxy Statement, as of
their respective dates, will comply as to form in all material respects with
the applicable provisions of the Securities Act and the Exchange Act and the
rules and regulations thereunder.
Section 5.9 TAX MATTERS.
(a) Except as set forth on Schedule 5.9(a) of the Indiana Disclosure
Schedule, Indiana and each of its subsidiaries, and any consolidated combined,
unitary or aggregate group for tax purposes of which Indiana or any of its
subsidiaries is or has been a member has:
(i) filed all material Tax Returns required to be filed by it within the
time and in the manner prescribed by law;
(ii) paid all material Taxes that are shown on such Tax Returns as due
and payable within the time and in the manner prescribed by law, and
(iii) paid all material Taxes otherwise required to be paid.
(b) Except as set forth on Schedule 5.9(b) of the Indiana Disclosure
Schedule, as of the date hereof there are no material claims, assessments,
audits or administrative or court proceedings pending against Indiana or any
of its subsidiaries for any alleged deficiency in Taxes.
(c) Indiana has established adequate accruals for Taxes and for any
liability for deferred Taxes in the Indiana Financial Statements in Accordance
with GAAP.
Section 5.10 EMPLOYEE MATTERS; ERISA.
(a) BENEFIT PLANS. Section 5.10(a) of the Indiana Disclosure Schedule
contains a true and complete list of each material employee benefit plan,
program or arrangement, including, but not limited to, any employee benefit
plan within the meaning of Section 3(3) of ERISA and any vacation, severance,
change-in-control, stock purchase or stock option plan, program or arrangement
maintained or contributed to by Indiana, any of the Indiana Subsidiaries or
any other entity which would be treated under Section 414 of the Code as a
single employer with Indiana (collectively, with Indiana Subsidiaries, an
"INDIANA COMMONLY CONTROLLED ENTITY") for the benefit of any current or former
employee, officer or director or their dependents or
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beneficiaries (collectively, the "INDIANA PLANS") and each employment,
consulting, severance, change-in-control, termination, compensation,
collective bargaining or indemnification agreement, arrangement or
understanding between Indiana or any of the Indiana Commonly Controlled
Entities (or by which they are bound) and any current or former employee,
officer or director of Indiana or any of the Indiana Subsidiaries
(collectively, the "INDIANA EMPLOYMENT ARRANGEMENTS").
(b) Except as set forth in the Indiana SEC Reports or in Section 5.10(b) of
the Indiana Disclosure Schedule and except as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect:
(i) QUALIFICATION; COMPLIANCE. Each Indiana Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS that it is so qualified. Each Indiana
Plan and each Indiana Employment Arrangement has been operated in all
respects in accordance with its terms and the requirements of applicable
laws, rules and regulations. There are no pending or, to the knowledge of
Indiana, threatened or anticipated claims under or with respect to any
Indiana Plan or Indiana Employment Arrangement by or on behalf of any
current employee, officer or director, or dependent or beneficiary thereof,
or otherwise (other than routine claims for benefits);
(ii) LIABILITIES. Neither Indiana nor any of the Indiana Commonly
Controlled Entities has incurred any direct or indirect liability under,
arising out of or by operation of the Code, Title IV of ERISA, or any other
applicable law (other than for premium payments and contributions in the
ordinary course of business), and no fact or event exists that could
reasonably be expected to give rise to such liability.
(iii) PAYMENTS RESULTING FROM THE MERGER. No Indiana Plan or Indiana
Employment Arrangement exists which could result in the payment to any
current, former or future director, officer or employee of Indiana, any
Indiana Commonly Controlled Entity or to any trustee under any "rabbi
trust" or similar arrangement of any money or other property or rights or
accelerate, vest or provide any other rights or benefits to or in any such
employee or director as a result of the consummation, announcement of or
other action relating to the transactions contemplated by this Agreement,
whether or not such payment, acceleration, vesting or provision would
constitute a "parachute payment" (within the meaning of Section 280G of the
Code) or whether or not some other subsequent action or event would be
required to cause such payment, acceleration, vesting or provision to be
triggered.
(iv) LABOR AGREEMENTS. Neither Indiana nor any of the Indiana
Subsidiaries is a party to any collective bargaining agreements. Since
January 1, 1995, neither Indiana nor any of the Indiana Subsidiaries has
had any employee strikes, work stoppages, slowdowns or lockouts or received
any requests for collective bargaining. There is no unfair labor practice,
employment discrimination or other complaint against Indiana or any of the
Indiana Subsidiaries pending or, to the best knowledge of Indiana,
threatened.
Section 5.11 ENVIRONMENTAL PROTECTION.
(a) COMPLIANCE.
(i) Except as set forth in Section 5.11(a) of the Indiana Disclosure
Schedule, each of Indiana and each of its subsidiaries and joint ventures
is and has been in compliance with all applicable Environmental Laws,
except where the failure to be so in compliance would not reasonably be
likely to have an Indiana Material Adverse Effect.
(ii) Except as set forth in Section 5.11(a) of the Indiana Disclosure
Schedule, neither Indiana nor any of its subsidiaries and joint ventures
has received any written communication from any person or Governmental
Authority that alleges that Indiana or any of its subsidiaries and Joint
ventures is not in compliance with applicable Environmental Laws, except
where the failure to be so in compliance would not reasonably be likely to
have an Indiana Material Adverse Effect.
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(b) ENVIRONMENTAL PERMITS. Except as set forth in Section 5.11(b) of the
Indiana Disclosure Schedule, Indiana and each of its subsidiaries and Joint
ventures has obtained or has applied for all Environmental Permits necessary
for the construction of their facilities and the conduct of their operations,
and all such permits are in good standing or, where applicable, a renewal
application has been timely filed and is pending agency approval, and Indiana
and its subsidiaries and Joint ventures are in compliance with all terms and
conditions of all such Environmental Permits and are not required to make any
expenditure in order to obtain or renew any Environmental Permits, except
where the failure to obtain or be in such compliance and the requirement to
make such expenditures would not reasonably be likely to have an Indiana
Material Adverse Effect.
(c) ENVIRONMENTAL CLAIMS. Except as set forth in Section 5.11(c) of the
Indiana Disclosure Schedule, there is no Environmental Claim pending, or to
the knowledge of Indiana and its subsidiaries, threatened:
(i) against Indiana or any of its subsidiaries or joint ventures;
(ii) against any person or entity whose liability for any Environmental
Claim Indiana or any of its subsidiaries or joint ventures has or may have
retained or assumed either contractually or by operation of law; or
(iii) against any real or personal property or operations that Indiana
or any of its subsidiaries or joint ventures owns, leases or manages, in
whole or in part;
that, if adversely determined, would reasonably be likely to have an Indiana
Material Adverse Effect.
(d) RELEASES. Except as set forth in Section 5.11(c) or 5.11(d) of the
Indiana Disclosure Schedule, Indiana has no knowledge of any Release of any
Hazardous Material that would be reasonably likely to form the basis of any
Environmental Claim against Indiana or any of its subsidiaries or joint
ventures of Indiana, or against any person or entity whose liability for any
Environmental Claim Indiana or any subsidiaries or joint ventures of Indiana
has or may have retained or assumed either contractually or by operation of
law, except for Releases of Hazardous Materials the liability for which would
not reasonably be likely to have an Indiana Material Adverse Effect.
(e) PREDECESSORS. Except as set forth in Section 5.11(e) of the Indiana
Disclosure Schedule, Indiana has no knowledge, with respect to any predecessor
of Indiana or any subsidiary or joint venture of Indiana, of any Environmental
Claims pending or threatened, or of any Release of Hazardous Materials that
would be reasonably likely to form the basis of any Environmental Claims that
would have, or that Indiana reasonably believes would reasonably be likely to
have an Indiana Material Adverse Effect.
(f) DISCLOSURE. To Indiana's knowledge, Indiana has disclosed to SIGCORP
all material facts that Indiana reasonably believes form the basis of an
Indiana Material Adverse Effect arising from:
(i) the cost of pollution control equipment currently required or known
to be required in the future;
(ii) current remediation costs or remediation costs known to be required
in the future; or
(iii) any other environmental matter affecting Indiana or its
subsidiaries that would have, or that Indiana reasonably believes would
reasonably be likely to have an Indiana Material Adverse Effect.
Section 5.12 REGULATION AS A UTILITY.
(a) Indiana is a public utility holding company as defined in the 1935 Act
exempt from all provisions of the 1935 Act except section 9(a)(2), by order of
the SEC pursuant to section 3(a)(1) of the 1935 Act. Indiana is not regulated
as a public utility in any state.
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(b) Except as set forth in Section 5.12 of the Indiana Disclosure Schedule,
no subsidiary company or affiliate of Indiana is subject to regulation as a
public utility or public service company (or similar designation) by any other
state in the United States or by any foreign country.
Section 5.13 VOTE REQUIRED. The approval of the Merger by a majority of all
votes entitled to be cast by all holders of Indiana Common Stock ( the
"INDIANA SHAREHOLDERS' APPROVAL") is the only vote of the holders of any class
or series of the capital stock of Indiana or any subsidiaries of Indiana
required to approve this Agreement, the Merger and the other transactions
contemplated hereby.
Section 5.14 ACCOUNTING MATTERS. Indiana has not, through the date hereof,
in contemplation of the Merger, taken or agreed to take any action that would
prevent the Company from accounting for the business combination to be
effected by the Merger as a pooling-of-interests in accordance with GAAP and
applicable SEC regulations.
Section 5.15 APPLICABILITY OF CERTAIN INDIANA LAW.
(a) Assuming the accuracy of the representation by SIGCORP set forth in
Section 4.18, neither the control share acquisition provisions of Chapter 40
of the IBCL nor the business combination provisions of Chapter 41 of the IBCL
or any similar provisions of the IBCL, the Articles of Incorporation or Bylaws
of Indiana are applicable to the transactions contemplated by this Agreement
or the Indiana Option.
(b) Indiana shall take all action requested in writing by SIGCORP to render
the rights granted to the holders of Indiana Common Stock (the "INDIANA
RIGHTS") pursuant to the Rights Agreement dated as of July 30, 1986 between
Indiana and First Chicago Trust Company of New York, as Rights Agent, as
amended (the "Indiana Rights Agreement"), inapplicable to the Merger and the
other transactions contemplated by this Agreement and the Indiana Option.
Except as approved in writing by SIGCORP, the Board of Indiana shall not (i)
amend the Indiana Rights Agreement, (ii) redeem the Indiana Rights, or (iii)
take action with respect to, or make any determination under, the Indiana
Rights Agreement, provided, that nothing contained in this Section 5.15(b)
shall require the Board of Directors of Indiana to take any action or refrain
from taking any action that a majority of such Board determines in good faith,
based upon the written opinion of outside counsel, would result in a breach of
its fiduciary duties under applicable law. If any Distribution Date or Shares
Distribution Date occurs under the Indiana Rights Agreement at any time during
the period from the date of this Agreement to the Effective Time, Indiana and
SIGCORP shall make such adjustment to the SIGCORP Ratio as Indiana and SIGCORP
shall mutually agree so as to preserve the economic benefits that Indiana and
SIGCORP each reasonably expected on the date of this Agreement to receive as a
result of the consummation of the Merger and the other transactions
contemplated by this Agreement.
Section 5.16 OPINION OF FINANCIAL ADVISOR. Indiana has received the opinion
of Merrill Lynch, Pierce, Fenner & Smith Incorporated, as of the date hereof,
to the effect that, as of the date hereof, the Indiana Ratio is fair to the
holders of Indiana Common Stock.
Section 5.17 INSURANCE.
(a) Except as set forth in Section 5.17 of the Indiana Disclosure Schedule,
each of Indiana and each of its subsidiaries is, and has been continuously
since January 1, 1995, insured in such amounts and against such risks and
losses as are customary for companies conducting the respective businesses
conducted by Indiana and its subsidiaries during such time period.
(b) Except as set forth in Section 5.17 of the Indiana Disclosure Schedule,
neither Indiana nor any of its subsidiaries has received any notice of
cancellation or termination with respect to any material insurance policy
thereof.
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(c) To the knowledge of Indiana, all material insurance policies of Indiana
and its subsidiaries are valid and enforceable policies.
Section 5.18 OWNERSHIP OF SIGCORP COMMON STOCK. Indiana does not
"beneficially own" (as such term is defined in Rule 13d-3 under the Exchange
Act) any shares of SIGCORP Common Stock.
ARTICLE VI
Conduct of Business Pending the Merger
Prior to the date hereof, each of SIGCORP and Indiana has delivered to the
other a five-year plan and a strategic plan (respectively, the "SIGCORP
Financial Plan" and the "Indiana Financial Plan"). After the date hereof and
prior to the Effective Time or earlier termination of this Agreement, each of
Indiana and SIGCORP agrees, as to itself and their respective subsidiaries, to
comply with the provisions of this Article VI. Notwithstanding the foregoing,
Section 6.1 through Section 6.8 (inclusive except for Section 6.2(a) and
Section 6.5) shall not apply in the case of actions by SIGCORP or Indiana that
are (i) in the case of SIGCORP, contemplated by the SIGCORP Financial Plan or
consented to in writing by Indiana, or (ii) in the case of Indiana,
contemplated by the Indiana Financial Plan or consented to in writing by
SIGCORP.
Section 6.1 ORDINARY COURSE OF BUSINESS. Each of SIGCORP and Indiana shall,
and shall cause their respective subsidiaries to, conduct their respective
businesses in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted and use all commercially reasonable efforts to
preserve their respective business organizations and goodwill, preserve the
goodwill and relationships with customers, suppliers, distributors and others
having business dealings with them and, subject to prudent management of
workforce needs and ongoing programs currently in force, keep available the
services of their present officers and employees.
Section 6.2 DIVIDENDS. Neither SIGCORP nor Indiana shall, nor shall either
permit any of its subsidiaries to:
(a) declare or pay any dividends or make other distributions in respect
of any of their capital stock other than to such party or its subsidiaries
and other than regular quarterly dividends on SIGCORP and Indiana Common
Stock with usual record and payment dates not, during any calendar year, in
excess of dividends consistent with prior practice subject to increases
that do not result in a dividend rate in excess of the indicated annual
dividend rate agreed to by SIGCORP and Indiana for the Company following
the Effective Time;
(b) split, combine or reclassify any of their capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of, or in substitution for, shares of its capital stock; or
(c) redeem, repurchase or otherwise acquire any shares of their capital
stock, other than:
(i) redemptions, purchases or acquisitions required by the
respective terms of any series of preferred stock of any subsidiary of
either SIGCORP or Indiana;
(ii) in connection with refunding of any preferred stock with
preferred or preference stock or debt at a lower cost of funds;
(iii) intercompany acquisitions of capital stock; or
(iv) in connection with the administration of employee benefit and
dividend reinvestment plans as in effect on the date hereof in the
ordinary course of the operation of such plans.
Section 6.3 ISSUANCE OF SECURITIES. Except as set forth on Schedule 6.3 of
the SIGCORP Disclosure Schedule or the Indiana Disclosure Schedule, neither
SIGCORP nor Indiana shall, nor shall either permit any of its subsidiaries to,
issue, agree to issue, deliver or sell, or authorize or propose the issuance,
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delivery or sale of, any shares of their capital stock or any class or any
securities convertible into or exchangeable for, or any rights, warrants or
options to acquire, any such shares or convertible or exchangeable securities
except for:
(a) the issuance of capital stock upon the conversion of convertible
securities or the exercise of employee stock options outstanding on the
date hereof or permitted to be issued under the terms hereof;
(b) the issuance of common stock, employee stock options or other
securities by Indiana or SIGCORP pursuant to the employee benefit plans
listed on Schedule 6.3 of the Indiana Disclosure Schedule or the SIGCORP
Disclosure Schedule, in each case in the ordinary course of the operation
of such programs or plans in accordance with their present terms; or
(c) issuances by a wholly owned subsidiary of its capital stock to a
direct or indirect parent.
Section 6.4 CHARTER DOCUMENTS. Except as set forth in Section 6.4 of the
SIGCORP Disclosure Schedule or the Indiana Disclosure Schedule, neither
SIGCORP nor Indiana shall amend or propose to amend its respective articles of
incorporation or bylaws in any way adverse to the other party except as
contemplated herein.
Section 6.5 NO ACQUISITIONS. Except as set forth in Section 6.5 of the
SIGCORP Disclosure Schedule or the Indiana Disclosure Schedule, neither
SIGCORP nor Indiana shall, nor shall either permit any of its subsidiaries to,
acquire, or publicly propose to acquire, or agree to acquire, by merger or
consolidation, by purchase or otherwise, an equity interest in or any assets
of any business of any corporation, partnership, association or other business
organization or division thereof, except for:
(a) the purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with past practice; and
(b) acquisitions by SIGCORP and its subsidiaries on the one hand, and
Indiana and its subsidiaries on the other, within existing lines of
business, of less than $5.0 million in the aggregate.
Section 6.6 CAPITAL EXPENDITURES. Except as set forth in Section 6.6 of the
SIGCORP Disclosure Schedule or the Indiana Disclosure Schedule or as required
by law, neither SIGCORP nor Indiana shall, nor shall either permit any of its
subsidiaries to make or obligate itself to make any capital expenditures,
except for:
(a) capital expenditures to repair or replace facilities destroyed or
damaged due to casualty or accident (whether or not covered by insurance),
or
(b) additional capital expenditures that in the aggregate do not exceed
$10.0 million.
Section 6.7 NO DISPOSITIONS. Except as set forth on Schedule 6.7 of the
SIGCORP Disclosure Schedule or the Indiana Disclosure Schedule, neither
SIGCORP nor Indiana shall, nor shall either permit any of its subsidiaries to,
sell, lease, license, encumber or otherwise dispose of, any significant amount
of assets, or become obligated to sell, lease, license, encumber or otherwise
dispose of such assets, except for:
(a) dispositions not exceeding $5.0 million in the aggregate, in the
case of SIGCORP and its subsidiaries on the one hand, and Indiana and its
subsidiaries on the other hand, which dispositions do not have a SIGCORP
Material Adverse Effect or an Indiana Material Adverse Effect, as the case
may be;
(b) subject to the provisions of Section 7.3, as may be required by law
to consummate the transactions contemplated hereby; or
(c) in the ordinary course of business consistent with prior practice.
Section 6.8 INDEBTEDNESS. Except as set forth in Section 6.8 of the SIGCORP
Disclosure Schedule or the Indiana Disclosure Schedule, no party shall, nor
shall any party permit any of its subsidiaries to, incur or
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guarantee any indebtedness (including any debt borrowed or guaranteed or
otherwise assumed, including, without limitation, the issuance of debt
securities), except for:
(a) short-term indebtedness in the ordinary course of business
consistent with past practice;
(b) long-term indebtedness in connection with the refinancing of
existing indebtedness either at its stated maturity or at a lower cost of
funds;
(c) additional long-term indebtedness aggregating not more than $10.0
million in the case of SIGCORP and its subsidiaries, on one hand, and $10.0
million in the case of Indiana and its subsidiaries, on the other hand; or
(d) in connection with the refunding of any subsidiary preferred stock
as permitted in Section 6.3.
Section 6.9 COMPENSATION, BENEFITS. Except as set forth on Schedule 6.9 of
the SIGCORP Disclosure Schedule or the Indiana Disclosure Schedule, as may be
required by applicable law to facilitate or obtain a determination from the
IRS that a plan is "qualified within the meaning of Section 401(a) of the Code
or as contemplated by this Agreement, no party shall, nor shall any party
permit any of its subsidiaries to, enter into, adopt or amend or increase the
amount of or accelerate the payment or vesting of any benefit or amount
payable under any employee benefit plan or any other contract, agreement,
commitment, arrangement, plan or policy maintained by, contributed to or
entered into by such party or any of its subsidiaries, or increase, or enter
into any contract, agreement, commitment or arrangement to increase in any
manner, the compensation or fringe benefits, or otherwise to extend, expand or
enhance the engagement, employment or any related rights, of any director,
officer or other employee of such party or any of its subsidiaries, except for
normal increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase in
benefits or compensation expense to such party or any of its subsidiaries, or
enter into or amend any employment, severance, or special pay arrangement with
respect to the termination of employment or other similar contract, agreement
or arrangement with any director or officer or other employee.
Section 6.10 1935 ACT. Except as required or contemplated by this
Agreement:
(a) SIGCORP shall not, nor shall SIGCORP permit any of its subsidiaries
to engage in any activities that cause it to lose its exemption from
registration as a "holding company" under the 1935 Act; and
(b) Indiana shall not, nor shall Indiana permit any of its subsidiaries
to engage in any activities that cause it to lose its exemption from
registration as a "holding company" under the 1935 Act.
Section 6.11 ACCOUNTING. No party shall, nor shall any party permit any of
its subsidiaries to make any changes in its or their accounting methods,
except as required by law, rule, regulation or GAAP.
Section 6.12 POOLING. No party shall, nor shall any party permit any of its
subsidiaries to, take or become obligated to take any actions that would, or
would be reasonably likely to, prevent the Company from accounting for the
business combination to be effected by the Merger as a pooling-of-interests in
accordance with GAAP and applicable SEC regulations. If any impediments to
accounting for the business combination as a pooling-of-interests are
discovered at any time, each party shall use all commercially reasonable
efforts to achieve pooling-of-interests accounting (including taking such
actions as may be necessary to cure any facts or circumstances that could
prevent such transactions from qualifying for pooling-of-interests accounting
treatment).
Section 6.13 TAX-FREE STATUS. No party shall, nor shall any party permit
any of its subsidiaries to, take any actions that would, or would be
reasonably likely to, adversely affect the status of the Merger as a tax-free
reorganization under Code Section 368(a) (except as to shareholders of Indiana
or SIGCORP who receive cash in lieu of fractional shares) and each party shall
use all commercially reasonable efforts to achieve such result.
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Section 6.14 INSURANCE. Each of SIGCORP and Indiana shall, and shall cause
its respective subsidiaries to, maintain with financially responsible
insurance companies (or through self-insurance not inconsistent with such
party's past practice) insurance in such amounts and against such risks and
losses as are customary for companies engaged in the electric and gas utility
industry and such other businesses as conducted by such party and its
subsidiaries and employing methods of generating electric power and fuel
sources similar to those methods employed and fuels used by the respective
party or such party's subsidiaries.
Section 6.15 COOPERATION, NOTIFICATION. Each of SIGCORP and Indiana shall
and shall cause its subsidiaries (directly or acting through its parent
company representative) to:
(a) confer on a regular and frequent basis with one or more
representatives of the other party to discuss material operational matters
and the general status of its ongoing operations;
(b) promptly notify the other party of any significant changes in its
business, properties, assets, condition (financial or otherwise) or results
of operations;
(c) advise the other party of any change or event that has had or, to
the knowledge of such party, would reasonably be likely to have a SIGCORP
Material Adverse Effect or an Indiana Material Adverse Effect; and
(d) consult with each other prior to making any filings with any state
or federal court, administrative agency, commission or other Governmental
Authority in connection with this Agreement and the transactions
contemplated hereby, and promptly after each such filing provide the other
with a copy thereof.
Section 6.16 RATE MATTERS. (a) No party shall make any filing to change its
or any of its utility subsidiaries' rates on file with any Governmental
Authority nor, except as set forth in Section 6.16 of the SIGCORP Disclosure
Schedule, shall SIGCORP consent to any change by any Governmental Authority in
the methodology used to compute any fuel adjustment from the methodology
applied in computing any fuel adjustment applied in the normal course
consistent with prior practice that could have a material adverse effect on
the benefits associated with the business combination provided herein.
Section 6.17 THIRD PARTY CONSENTS. Each of SIGCORP and Indiana shall, and
shall cause its subsidiaries to, use all commercially reasonable efforts to
obtain all SIGCORP Required Consents or Indiana Required Consents, as the case
may be. Each party shall promptly notify the other party of any failure or
prospective failure to obtain any such consents and, if requested by the other
party, shall provide to the other party copies of all SIGCORP Required
Consents or Indiana Required Consents, as the case may be, obtained by such
party.
Section 6.18 TAX-EXEMPT STATUS. No party shall, nor shall any party permit
any subsidiary to, take any action that would likely jeopardize the exclusion
from gross income, for purposes of federal income taxation, of the interest on
the outstanding revenue bonds issued for the benefit of any subsidiary of
SIGCORP or Indiana, as the case may be, which qualify on the date hereof under
Code Section 142(a) as "exempt facility bonds" or as tax-exempt industrial
development bonds under Section 103(b)(4) of the Internal Revenue Code of
1954, as amended prior to the Tax Reform Act of 1986.
Section 6.19 PERMITS. Each of SIGCORP and Indiana shall use commercially
reasonable efforts to maintain in effect all existing material permits
pursuant to which such party operates.
Section 6.20 CERTAIN INFORMATION RELATING TO CUSTOMERS. Without limiting
the application of the Confidentiality Agreement, dated April 7, 1999, between
SIGCORP and Indiana (the "CONFIDENTIALITY AGREEMENT") no party shall, nor
shall any party permit any of its subsidiaries to, use any Evaluation Material
(as defined in the Confidentiality Agreement) in connection with any
solicitation, inquiry, proposal, arrangement, understanding or agreement with
any person relating to the provision of electric or gas utility service by
SIGCORP or any of its subsidiaries, on the one hand, or Indiana or any of its
subsidiaries, on the other hand, to commercial and industrial customers in the
service territory of the other party.
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ARTICLE VII
Additional Agreements
Section 7.1 ACCESS TO INFORMATION.
(a) Upon reasonable notice and during normal business hours, each of
SIGCORP and Indiana shall, and shall cause its subsidiaries to, afford to the
officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives of the other (collectively,
"REPRESENTATIVES") reasonable access, during normal business hours throughout
the period prior to the Effective Time, to all of its properties, books,
contracts, commitments and records (including, but not limited to, Tax
Returns) and, during such period, each shall, and shall cause its subsidiaries
to, furnish promptly to the other:
(i) a copy of each report, schedule and other document filed by it or
any of its subsidiaries with the SEC and any other document pertaining to
the transactions contemplated hereby filed with any Governmental Authority
that is not filed as an exhibit to an SEC filing or described in an SEC
filing; and
(ii) all information concerning themselves, their subsidiaries,
directors, officers and shareholders and such matters as may be reasonably
requested by the other party in connection with any filings, applications
or approvals required or contemplated by this Agreement.
(b) Without limiting the application of the Confidentiality Agreement, all
documents and information furnished pursuant to Section 7.1(a) shall be
subject to the Confidentiality Agreement.
Section 7.2 JOINT PROXY STATEMENT AND REGISTRATION STATEMENT.
(a) PREPARATION AND FILING.
(i) As promptly as reasonably practicable after the date hereof, the
parties shall prepare and file with the SEC the Registration Statement and
the Joint Proxy Statement (together the "JOINT PROXY/REGISTRATION
STATEMENT").
(ii) The parties shall take such actions as may be reasonably required
to cause the Registration Statement to be declared effective under the
Securities Act as promptly as practicable after such filing.
(iii) The parties shall also take such action as may be reasonably
required to cause the shares of Company Common Stock issuable in connection
with the Merger to be registered or to obtain an exemption from
registration under applicable state "blue sky" or securities laws;
PROVIDED, HOWEVER, that none of the Company, SIGCORP or Indiana shall be
required to register or qualify as a foreign corporation or to take any
other action that would subject it to general service of process in any
jurisdiction in which it will not, following the Merger, be so subject.
(iv) Each of the parties shall furnish all information concerning itself
that is required or customary for inclusion in the Joint Proxy/Registration
Statement.
(v) No representation, covenant or agreement contained in this Agreement
is made by any party hereto with respect to information supplied by any
other party hereto for inclusion in the Joint Proxy/Registration Statement.
(vi) The Joint Proxy/Registration Statement shall comply as to form in
all material respects with the Securities Act, the Exchange Act and the
rules and regulations thereunder.
(vii) The parties shall take such action as may be reasonably required
to cause the shares of Company Common Stock to be approved for listing on
the NYSE and to cause such shares to be approved for listing on such other
national and international securities exchanges as the parties may select
upon official notice of issuance.
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(b) LETTER OF INDIANA'S ACCOUNTANTS. Following receipt by Arthur Andersen,
L.L.P. ("AA"), Indiana's independent auditors, of an appropriate request from
SIGCORP pursuant to SAS No. 72, Indiana shall use commercially reasonable
efforts to cause to be delivered to the Company and SIGCORP a letter of AA,
dated a date within two business days before the effective date of the
Registration Statement, and addressed to the Company and SIGCORP, in form and
substance reasonably satisfactory to the Company and SIGCORP and customary in
scope and substance for "cold comfort" letters delivered by independent public
accountants in connection with registration statements and proxy statements
similar to the Joint Proxy/Registration Statement.
(c) LETTER OF SIGCORP'S ACCOUNTANTS. Following receipt by AA, SIGCORP's
independent auditors, of an appropriate request from Indiana pursuant to SAS
No. 72, SIGCORP shall use commercially reasonable efforts to cause to be
delivered to the Company and Indiana a letter of AA, dated a date within two
business days before the effective date of the Registration Statement, and
addressed to the Company and Indiana, in form and substance reasonably
satisfactory to the Company and Indiana and customary in scope and substance
for "cold comfort" letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Joint Proxy/Registration Statement.
Section 7.3 REGULATORY MATTERS.
(a) HSR FILINGS. Each party hereto shall file or cause to be filed with the
Federal Trade Commission and the Department of Justice any notifications
required to be filed by their respective "ultimate parent" companies under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and the rules and regulations promulgated thereunder with respect to
the transactions contemplated hereby, and shall respond promptly to any
requests for additional information made by either of such agencies.
(b) OTHER REGULATORY APPROVALS.
(i) Each party hereto shall cooperate and use its reasonable best
efforts to promptly prepare and file all necessary documentation, to effect
all necessary applications, notices, petitions, filings and other
documents, and to use all commercially reasonable efforts to obtain all
necessary permits, consents, approvals and authorizations of all
Governmental Authorities and all other persons necessary or advisable to
consummate the transactions contemplated by this Agreement, including,
without limitation, the Indiana Required Statutory Approvals and the
SIGCORP Required Statutory Approvals.
(ii) SIGCORP shall have the right to review and approve in advance all
characterizations of the information relating to SIGCORP, on the one hand,
and Indiana shall have the right to review and approve in advance all
characterizations of the information relating to Indiana, on the other
hand, in either case, which appear in any filing made in connection with
the transactions contemplated by this Agreement or the Merger.
(iii) Indiana and SIGCORP shall each consult with the other with respect
to the obtaining of all such necessary or advisable permits, consents,
approvals and authorizations of Governmental Authorities.
Section 7.4 SHAREHOLDER APPROVALS.
(a) APPROVAL OF SIGCORP SHAREHOLDERS. SIGCORP shall, as promptly as
reasonably practicable after the date hereof:
(i) take all steps reasonably necessary to duly call, give notice of,
convene and hold a special meeting of its shareholders (the "SIGCORP
SPECIAL MEETING") for the purpose of securing the SIGCORP Shareholders'
Approval;
(ii) distribute to its shareholders the Joint Proxy Statement in
accordance with applicable federal and state law and its Articles of
Incorporation and Bylaws;
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(iii) recommend to its shareholders the approval of the Merger, this
Agreement and the transactions contemplated hereby; and
(iv) cooperate and consult with Indiana with respect to each of the
foregoing matters;
PROVIDED, that nothing contained in this Section 7.4(a) shall require the
Board of Directors of SIGCORP to take any action or refrain from taking any
action that a majority of such Board determines in good faith based upon the
written opinion of outside counsel would result in a breach of its fiduciary
duties under applicable law.
(b) APPROVAL OF INDIANA SHAREHOLDERS. Indiana shall, as promptly as
reasonably practicable after the date hereof:
(i) take all steps reasonably necessary to duly call, give notice of,
convene and hold a special meeting of its shareholders (the "INDIANA
SPECIAL MEETING") for the purpose of securing the Indiana Shareholders'
Approval;
(ii) distribute to its shareholders the Joint Proxy Statement in
accordance with applicable federal and state law and its Articles of
Incorporation and Bylaws;
(iii) recommend to its shareholders the approval of the Merger, this
Agreement and the transactions contemplated hereby; and
(iv) cooperate and consult with SIGCORP with respect to each of the
foregoing matters;
PROVIDED that nothing contained in this Section 7.4(b) shall require the Board
of Directors of Indiana to take any action or refrain from taking any action
that a majority of such Board determines in good faith based upon the written
opinion of outside counsel would result in a breach of its fiduciary duties
under applicable law.
(c) MEETING DATE. The Indiana Special Meeting and the SIGCORP Special
Meeting shall be held on the same day unless otherwise agreed by Indiana and
SIGCORP.
Section 7.5 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) INDEMNIFICATION.
(i) To the extent, if any, not provided by an existing right to
indemnification or other agreement or policy, from and after the Effective
Time, the Company shall, to the fullest extent not prohibited by applicable
law, indemnify, defend and hold harmless the present and former directors,
officers and employees of the parties hereto and their respective
subsidiaries (each an "INDEMNIFIED PARTY" and, collectively, the
"INDEMNIFIED PARTIES") against
(A) all losses, expenses (including reasonable attorneys' fees and
expenses), claims, damages, costs, liabilities, judgments or amounts
that are paid in settlement of or in connection with any claim, action,
suit, proceeding or investigation (collectively, "INDEMNIFIED
LIABILITIES") (x) based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director, officer
or employee of such party or any subsidiary thereof, and (y) pertaining
to any matter existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time;
and
(B) all Indemnified Liabilities based in whole or in part on, or
arising in whole or in part out of, or pertaining to this Agreement,
the SIGCORP Option, the Indiana Option or the transactions contemplated
hereby or thereby;
(ii) In the event of any such loss, expense, claim, damage, cost,
liability, judgment or settlement (whether or not arising before the
Effective Time):
(A) the Company shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to the Company, promptly after
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statements therefor are received, and otherwise advance to the
Indemnified Parties upon request reimbursement of documented expenses
reasonably incurred, in either case to the extent not prohibited by
applicable law;
(B) the Company shall cooperate in the defense of any such matter;
and
(C) any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards under
applicable law or as set forth in the Company's Articles of
Incorporation or Bylaws shall be made by independent counsel mutually
acceptable to the Company and the Indemnified Party;
PROVIDED, HOWEVER, that the Company shall not be liable for any settlement
effected without its written consent (which consent shall not be unreasonably
withheld).
(iii) The Indemnified Parties as a group may retain only one law firm
(other than local counsel) with respect to each related matter except to
the extent there is, in the sole opinion of counsel to an Indemnified
Party, under applicable standards of professional conduct, a conflict on
any significant issue between positions of any two or more Indemnified
Parties, in which case each Indemnified Party with a conflicting position
on a significant issue shall be entitled to separate counsel.
(b) INSURANCE. For a period of six (6) years after the Effective Time, the
Company shall cause to be maintained in effect the policies of directors' and
officers' liability insurance maintained by Indiana and SIGCORP; provided that
the Company may substitute therefor policies of at least the same coverage
containing terms that are no less advantageous with respect to matters
occurring prior to the effective Time to the extent such liability insurance
can be maintained annually at a cost to the Company not greater than 200
percent of the current aggregate annual premiums for the policies currently
maintained by Indiana and SIGCORP for their directors' and officers' liability
insurance; provided, further, that if such insurance cannot be so maintained
or obtained at such cost, the Company shall maintain or obtain as much of such
insurance can be so maintained or obtained at a cost equal to 200 percent of
the current aggregate annual premiums of each of Indiana and SIGCORP for their
directors' and officers' liability insurance.
(c) SUCCESSORS. In the event the Company or any of its successor or
assigns:
(i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger; or
(ii) transfers all or substantially all of its properties and assets to
any person;
then and in either such case, proper provision shall be made so that the
successors and assigns of the Company shall assume the obligations set forth
in this Section 7.5.
(d) SURVIVAL OF INDEMNIFICATION. To the fullest extent, not prohibited by
law, from and after the Effective Time, all rights to indemnification now
existing in favor of the employees, agents, directors or officers of Indiana,
SIGCORP and their respective subsidiaries and joint ventures with respect to
their activities as such prior to the Effective Time, as provided in their
respective Articles of Incorporation or Bylaws in effect on the date of such
activities or otherwise in effect on the date hereof, shall survive the Merger
and shall continue in full force and effect for a period of six years from the
Effective Time.
(e) The provisions of this Section 7.5 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs and
his or her representatives.
Section 7.6 DISCLOSURE SCHEDULES.
(a) On or before the date of this Agreement:
(i) SIGCORP shall deliver to Indiana a schedule (the "SIGCORP DISCLOSURE
SCHEDULE"), which shall be accompanied by a certificate signed by the chief
financial officer or other principal financial officer of SIGCORP stating
that the Disclosure Schedule is being delivered pursuant to this Section
7.6(a)(i); and
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(ii) Indiana shall deliver to SIGCORP a schedule (the "INDIANA
DISCLOSURE SCHEDULE"), which shall be accompanied by a certificate signed
by the chief financial officer of Indiana stating that the Indiana
Disclosure Schedule is being delivered pursuant to this Section 7.6(a)(ii).
(b) The Disclosure Schedules shall constitute an integral part of this
Agreement and shall modify or otherwise affect the respective representations,
warranties, covenants or agreements of the parties hereto contained herein to
the extent that such representations, warranties, covenants or agreements
expressly refer to the Disclosure Schedules.
(c) Any and all statements, representations, warranties or disclosures set
forth in the Disclosure Schedules shall be deemed to have been made on and as
of the date of this Agreement.
(d) The SIGCORP Disclosure Schedule and the Indiana Disclosure Schedule are
collectively referred to herein as the "DISCLOSURE SCHEDULES."
(e) Without limiting the application of the Confidentiality Agreement, the
parties shall use their best efforts to keep the Disclosure Schedules
confidential.
Section 7.7 PUBLIC ANNOUNCEMENTS. Indiana and SIGCORP shall cooperate with
each other in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and shall not issue any public announcement
or statement prior to consultation with the other party; provided, that
however, each party recognizes the other party's obligations imposed by law or
any applicable national securities exchange, and will endeavor to accommodate
such obligations.
Section 7.8 RULE 145 AFFILIATES. SIGCORP shall identify in a letter to
Indiana, and Indiana shall identify in a letter to SIGCORP, all persons who
are, at the Closing Date, "affiliates" of SIGCORP and Indiana, respectively,
as such term is used in Rule 145 under the Securities Act. SIGCORP and Indiana
shall use their respective reasonable best efforts to cause their respective
affiliates to deliver to the Company on or prior to the Closing Date a written
agreement substantially in the form of Exhibit 7.8.
Section 7.9 ASSUMPTION OF SIGCORP AND INDIANA AGREEMENTS AND ARRANGEMENTS.
(a) Subject to Section 7.10, Section 7.11, and Section 7.14, the Company
shall honor and perform, without modification, all contracts, agreements,
collective bargaining agreements and commitments of SIGCORP and Indiana in
effect prior to the date hereof (or as established or amended in accordance
with or permitted by this Agreement), including, but not limited to, the
SIGCORP Plans, the SIGCORP Employment Arrangements, the Indiana Plans and the
Indiana Employment Arrangements, which apply to any current or former
employee, or current or former director of the parties hereto or any of their
subsidiaries; provided, however, that this undertaking is not intended to
prevent the Company from enforcing such contracts, agreements, collective
bargaining agreements and commitments in accordance with their terms,
including any reserved right to amend, modify, suspend, revoke or terminate
any such contract, agreement, collective bargaining agreement or commitment.
(b) Each of SIGCORP and Indiana shall promptly furnish to the other, upon
reasonable request by the other, detailed information, together with
underlying documentation, with respect to all existing or proposed individual
employment or severance agreements or amendments thereto.
Section 7.10 INCENTIVE, STOCK AND OTHER PLANS.
With respect to each of the plans and programs of SIGCORP and Indiana
identified in Section 6.3 of the SIGCORP and Indiana Disclosure Schedules that
the parties later determine shall survive the Closing and each other employee
benefit plan, program or arrangement of the Company under which the delivery
of SIGCORP Common Stock, Indiana Common Stock or Company Common Stock, as the
case may be, is required to be used for purposes of the payment of benefits,
grant of awards or exercise of options (each a "STOCK PLAN"),
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(i) Indiana and SIGCORP shall take such action as may be necessary so
that, after the Effective Time, such Stock Plan shall provide for the
issuance only of Company Common Stock such that:
(A) with respect to options to purchase SIGCORP Common Stock
("SIGCORP STOCK OPTION"), the number of shares of Company Common Stock
purchasable upon exercise of such SIGCORP Stock Option shall be equal
to that number of shares of Company Common Stock determined by
multiplying the number of shares of SIGCORP Common Stock subject to
such SIGCORP Stock Option by the SIGCORP Ratio, rounded, if necessary,
to the nearest whole share of Company Common Stock, at a price per
share (rounded to the nearest one-hundredth of a cent) equal to the per
share exercise price specified in such SIGCORP Stock Option divided by
the SIGCORP Ratio; provided, however, that in the case of any SIGCORP
Stock Option to which Section 421 of the Code applies by reason of its
qualification under Section 422 of the Code, the option price, the
number of shares subject to such option and the terms and conditions of
exercise of such option shall be determined in a manner consistent with
the requirements of Section 424(a) of the Code; and
(B) with respect to any restricted stock plan of Indiana (the
"INDIANA RESTRICTED STOCK PLANS"), Indiana and the Company shall take
such actions as may be necessary so that, at the Effective Time, all
restrictions on any restricted stock granted pursuant to the Indiana
Restricted Stock Plans shall lapse on the date immediately prior to the
Effective Time; provided, further, that upon the Effective Time, all
shares of stock issued pursuant to the Indiana Restricted Stock Plans
shall be treated in accordance with Section 2.1 herein.
(ii) The Company shall:
(A) take all corporate action necessary or appropriate to obtain
shareholder approval with respect to such Stock Plan to the extent such
approval is required for purposes of the Code or other applicable law
or stock exchange regulation, or, to the extent the Company deems it
desirable, to enable such Stock Plan to comply with Rule 16b-3
promulgated under the Exchange Act;
(B) reserve for issuance under such Stock Plan or otherwise provide
a sufficient number of shares of Company Common Stock for delivery upon
payment of benefits, grants of awards or exercise of options under such
Stock Plan; and
(C) as soon as practicable after the Effective Time, file one or
more registration statements under the Securities Act with respect to
the shares of Company Common Stock subject to such Stock Plan to the
extent such filing is required under applicable law and use its best
efforts to maintain the effectiveness of such registration statement(s)
(and the current status of the prospectuses contained therein or
related thereto) so long as such benefits, grants or awards remain
payable or such options remain outstanding, as the case may be.
Section 7.11 EMPLOYEE BENEFIT PLANS. Each of the Indiana Plans and SIGCORP
Plans and Indiana Employment Arrangements and SIGCORP Employment Arrangements,
in effect on the date hereof (or as amended or established in accordance with
or as permitted by this Agreement) shall be maintained in effect (except as
otherwise provided in Section 7.14), with respect to the employees, former
employees, directors or former directors of Indiana and any of its
subsidiaries and of SIGCORP and any of its subsidiaries, respectively, who are
covered by such plans or arrangements immediately prior to the Effective Time
until the Company determines otherwise on or after the Effective Time and the
Company shall assume as of the Effective Time each SIGCORP Plan and Indiana
Plan or SIGCORP Employment Arrangement maintained by SIGCORP immediately prior
to the Effective Time and Indiana Employment Arrangement maintained by Indiana
immediately prior to the Effective Time and perform such plan or arrangement
in the same manner and to the same extent that SIGCORP and Indiana would,
respectively, be required to perform thereunder; provided, however, that
nothing herein contained, other than the provisions of Section 6.9, shall
limit any reserved right contained in any such Indiana Benefit Plan or Indiana
Employment Arrangement or SIGCORP Benefit Plan or
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SIGCORP Employment Arrangement to amend, modify, suspend, revoke or terminate
any such plan or arrangement. Without limiting the foregoing, each participant
in any Indiana Benefit Plan or SIGCORP Benefit Plan shall receive credit for
purposes of eligibility to participate, vesting and eligibility to receive
benefits under any benefit plan of the Company or any of its subsidiaries or
affiliates for service credited for the corresponding purpose under any such
benefit plan; provided, however, that such crediting of service shall not
operate to cause any such plan or arrangement to fail to comply with the
applicable provisions of the Code and ERISA. Indiana and SIGCORP will
cooperate on and after the date hereof to develop appropriate employee benefit
plans, programs and arrangements, including but not limited to, executive and
incentive compensation, stock option and supplemental executive retirement
plans, for employees and directors of the Surviving Company and its
subsidiaries from and after the Effective Time. However, no provision
contained in this Section 7.11 shall be deemed to constitute an employment
contract between the Company and any individual, or a waiver of the Company's
right to discharge any employee at any time, with or without cause.
Section 7.12 NO SOLICITATIONS.
(a) No party hereto shall, and each such party shall cause its subsidiaries
not to, permit any of its Representatives to, and shall use its best efforts
to cause such persons not to, directly or indirectly, initiate, solicit or
encourage, or take any action to facilitate the making of any offer or
proposal that constitutes or is reasonably likely to lead to any Takeover
Proposal (as defined below), or, in the event of any unsolicited Takeover
Proposal, engage in negotiations, discussions or provide any confidential
information or data to any person relating to any Takeover Proposal.
(b) SIGCORP and Indiana shall notify the other orally and in writing of any
such inquiries, offers or proposals (including, without limitation, the terms
and conditions of any such proposal and the identity of the person making it)
within 24 hours of the receipt thereof and shall give the other ten days'
advance notice of any agreement to be entered into with or any information to
be supplied to any person making such inquiry, offer or proposal.
(c) Each party hereto shall immediately cease and cause to be terminated
all existing discussions and negotiations, if any, with any other persons
conducted heretofore with respect to any Takeover Proposal.
(d) Notwithstanding anything in this Section 7.12 to the contrary, unless
the Indiana Shareholders' Approvals or the SIGCORP Shareholders' Approvals, as
the case may be, have been obtained, Indiana or SIGCORP may, subject to (b)
above, to the extent that a majority of the Board of Directors of such party
determines in good faith on the basis of the written opinion of outside
counsel that a failure to do so would result in a breach of its fiduciary
duties under applicable law, participate in discussions or negotiations with,
furnish information to, and afford access to the properties, books and records
of such party and its subsidiaries to any person in connection with a written
bona fide Takeover Proposal with respect to such party by such person. Prior
to providing any information or data to any person in connection with a
Takeover Proposal by such person, the Indiana Board of Directors or the
SIGCORP Board of Directors as the case may be, shall receive from such person
an executed confidentiality agreement containing customary terms and
provisions.
(e) As used in this Section 7.12, "TAKEOVER PROPOSAL" shall mean any tender
or exchange offer, proposal for a merger, reorganization, share exchange,
recapitalization, consolidation or other business combination involving
SIGCORP, Indiana or any of their respective material subsidiaries, or any
proposal or offer to acquire in any manner an equity interest of 10% or more
in, or a significant portion of the assets of, SIGCORP, Indiana or any of
their respective material subsidiaries, other than pursuant to the
transactions contemplated by this Agreement.
Section 7.13 COMPANY BOARD OF DIRECTORS.
Indiana Energy's and SIGCORP's Boards of Directors shall take such action
as may be necessary to cause the number of directors comprising the full Board
of Directors of the Company (the "COMPANY BOARD") at
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the Effective Time to be 16 persons, consisting of 8 persons designated by
Indiana prior to the Effective Time and 8 persons designated by SIGCORP prior
to the Effective Time; provided, however, that if, prior to the Effective
Time, any of such designees shall decline or be unable to serve, the party
that designated such person shall designate another person to serve in such
person's stead. In the event one or more of the designees dies, retires,
resigns or otherwise becomes unable or unwilling to serve within the first
three years following the Effective Time, the designees of the then majority
may, to maintain the equal allocation as nearly as practicable among SIGCORP
and Indiana designees, reduce their representation on the Company Board
through removal or resignation. Such decision must be made as promptly as
practicable, and in no event later than the next meeting of the Company Board
members. Should the majority fail to reduce the number of designees serving on
the Company Board, the minority may designate a successor director who shall
be elected to the Company Board as soon as practicable.
(a) The initial designation of directors among the three classes of the
Company Board shall be allocated among SIGCORP and Indiana designees.
(b) The initial Company Board committees and committee memberships shall be
determined by the Company Board; provided, however that as nearly as practical
an equal number of committees shall be chaired by a designee of the SIGCORP
Board; on the one hand and by a designee of the Indiana Board on the other
hand. Each such committee shall have, as near as is practicable, an equal
number of members designated by SIGCORP and by Indiana.
(c) From the Effective Time until three years after the Closing Date, a
vote of sixty six and two thirds percent (66 2/3%) of the members of the
Company Board shall be required to approve a change in the Company's name or
the location of its headquarters or principal executive offices, to amend the
employment contracts identified in Section 7.15 or otherwise change any of the
titles or functions of the particular individuals referred to in Section 7.14
as set forth in such employment contracts as in effect at the Effective Time
or to amend any bylaw provisions corresponding to the provisions of this
Section 7.13(d) adopted pursuant to Section 1.4.
Section 7.14 COMPANY OFFICERS.
(a) From the Effective Time until the earlier of his resignation or removal
by the Company Board of Directors, Mr. Niel C. Ellerbrook shall serve as
Chairman of the Board and Chief Executive Officer. If Mr. Ellerbrook is not
available at the Effective Time to serve as Chief Executive Officer, then
Indiana shall designate a new Chief Executive Officer of the Company (the
"REPLACEMENT CEO"), subject to the approval of SIGCORP.
(b) From the Effective Time until the earlier of his resignation or removal
by the Company Board of Directors, Mr. Andrew E. Goebel shall serve as
President and Chief Operating Officer of the Company. If Mr. Goebel is not
available at the Effective Time to serve as President and Chief Operating
Officer of the Company, then SIGCORP shall designate a new President and Chief
Operating Officer of the Company (the "REPLACEMENT COO"), subject to the
approval of Indiana.
(c) The provisions of this Section 7.14 are subject to the fiduciary duties
of the Company Board and to the specific terms of the employment contracts
referred to in Section 7.15, and the duties and responsibilities attributable
to the positions referred to in this Section 7.14 shall be as set forth in
such contracts.
Section 7.15 EMPLOYMENT CONTRACTS.
The Company shall, as of or prior to the Effective Time, use its reasonable
best efforts to enter into employment contracts with the individuals set forth
in Exhibit 7.15.
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Section 7.16 CORPORATE OFFICES AND NAME.
As soon as reasonably possible after the Effective Time, the corporate
headquarters and principal executive offices of the Company shall be located
in Evansville, Indiana, and the Company shall maintain significant operations
in Indianapolis, Indiana. The corporate headquarters and principal offices of
Indiana Gas Company, Inc. shall be located in Indianapolis, Indiana.
Section 7.17 TRANSITION MANAGEMENT.
(a) As promptly as practicable after the date hereof, Indiana and SIGCORP
shall create special transition management task forces (the "TASK FORCES")
that shall comprise representatives from each of the primary business
functions of each company and headed by Mr. Niel C. Ellerbrook (or an
individual designated by him) and Mr. Andrew E. Goebel (or an individual
designated by him).
(b) The functions of the Task Forces shall include (i) to serve as a
conduit for the flow of information and documents between the companies and
their subsidiaries as contemplated by Section 6.15, (ii) to review and
evaluate proposed exceptions to the restrictions on the conduct of business
pending the Merger set forth in Article VI, (iii) development of regulatory
plans and proposals, corporate organizational and management plans, workforce
combination proposals, and such other matters as they deem appropriate, and
(iv) to evaluate and recommend the manner in which best to organize and manage
the business of the Company after the Effective Time. A consent by either
SIGCORP or Indiana to an exception to the restrictions set forth in Article VI
shall be effective only if set forth in a writing that describes in reasonable
detail the actions proposed to be taken and that is signed by Mr. Ellerbrook
(or his designee) or Mr. Goebel (or his designee), as the case may be.
(c) After the date hereof and prior to the Effective Time, Mr. Goebel shall
be invited to attend meetings of Indiana's Board of Directors and Mr.
Ellerbrook shall be invited to attend meetings of SIGCORP's Board of Directors
as appropriate in consultation with each other.
(d) In connection with their responsibilities as co-heads of the Task
Force, Messrs. Ellerbrook and Goebel shall together recommend organizational
matters and candidates to serve as the officers of the Company who are not
otherwise designated by this Agreement to their respective boards. All such
organizational matters and appointment of officers shall be subject to final
approval by a majority of the members of the Board of Directors of the
Company.
Section 7.18 EXPENSES. Except as disclosed in Section 7.18 of the
Disclosure Schedules and subject to Section 9.3, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, except that those
expenses incurred in connection with printing the Joint Proxy/Registration
Statement, as well as the filing fee relating thereto, shall be shared equally
by Indiana, on the one hand, and SIGCORP, on the other.
Section 7.19 COVENANT TO SATISFY CONDITIONS.
(a) Each of SIGCORP and Indiana shall take all reasonable actions necessary
to comply promptly with all legal requirements that may be imposed on it with
respect to this Agreement.
(b) Subject to the terms and conditions hereof, and taking into account the
circumstances and giving due weight to the materiality of the matter involved
or the action required, SIGCORP and Indiana shall each use its commercially
reasonable efforts to take or cause to be taken all actions, and to do or
cause to be done all things, necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the Merger and the other
transactions contemplated hereby (subject to the votes of its shareholders
described in Sections 4.13 and 5.13, respectively), including fully
cooperating with the other in obtaining the SIGCORP Required Statutory
Approvals, the Indiana Required Statutory Approvals and all other approvals
and authorizations of any Governmental Authorities necessary or advisable to
consummate the transactions contemplated hereby.
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Section 7.20 COORDINATION OF DIVIDENDS. Each of Indiana and SIGCORP shall
coordinate with the other regarding the declaration and payment of any
dividends in respect of the Company Common Stock and Indiana and SIGCORP
Common Stock and the record dates and the payment dates relating thereto, it
being the intention of Indiana and SIGCORP that holders of the Company Common
Stock shall not receive two dividends, or fail to receive one dividend, for
any single calendar quarter with respect to their shares of Indiana or SIGCORP
Common Stock and/or any shares of Company Common Stock that any such holder
receives in exchange therefor pursuant to the Merger.
ARTICLE VIII
Conditions
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of the following conditions,
except, to the extent permitted by applicable law, that such conditions may be
waived in writing pursuant to Section 9.5.
(a) SHAREHOLDER APPROVALS. The SIGCORP Shareholders' Approvals and the
Indiana Shareholders' Approvals shall have been obtained.
(b) NO INJUNCTION. No temporary restraining order or preliminary or
permanent injunction or other order by any federal or state court preventing
consummation of the Merger shall have been issued and continuing in effect,
and the Merger and the other transactions contemplated hereby shall not have
been prohibited under any applicable federal or state law or regulation.
(c) REGISTRATION STATEMENT. The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act, and no stop
order suspending such effectiveness shall have been issued and remain in
effect.
(d) LISTING OF SHARES. The shares of Company Common Stock issuable in the
Merger pursuant to Article II shall have approved for listing on the NYSE upon
official notice of issuance.
(e) POOLING. Each of Indiana and SIGCORP shall have received a letter of
its independent public accountants, dated the Closing Date, in form and
substance reasonably satisfactory to SIGCORP and Indiana, respectively,
stating that each of Indiana and SIGCORP is a "poolable entity" under GAAP and
applicable SEC regulations and Company shall have received a letter of its
independent public accountants, dated the Closing Date and in form and
substance reasonably satisfactory to it, stating that the Merger will qualify
as a pooling-of-interests transaction under GAAP and applicable SEC
regulations.
(f) STATUTORY APPROVALS. The Indiana Required Statutory Approvals and the
SIGCORP Required Statutory Approvals shall have been obtained at or prior to
the Effective Time, such approvals shall have become Final Orders (as
hereinafter defined), and no Final Order shall impose terms or conditions that
would have, or would be reasonably likely to have, a material adverse effect
on the business, operations, properties, assets, condition (financial or
otherwise) or results of operations of the Company (a "COMPANY MATERIAL
ADVERSE EFFECT"). A "FINAL ORDER" means action by the relevant regulatory
authority that has not been reversed, stayed, enjoined, set aside, annulled or
suspended, with respect to which any waiting period prescribed by law before
the transactions contemplated hereby may be consummated has expired, and as to
which all conditions to the consummation of such transactions prescribed by
law, regulation or order have been satisfied, and as to which all
opportunities for rehearing are exhausted (whether or not any appeal thereof
is pending).
(g) INDIANA INCORPORATION. The Company shall continue to be validly
existing as a domestic corporation of the State of Indiana.
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Section 8.2 CONDITIONS TO OBLIGATION OF SIGCORP TO EFFECT THE MERGER. The
obligation of SIGCORP to effect the Merger shall be further subject to the
satisfaction, on or prior to the Closing Date, of the following conditions,
except as may be waived by SIGCORP in writing pursuant to Section 9.5:
(a) PERFORMANCE OF OBLIGATIONS OF INDIANA. Indiana shall have performed in
all material respects its agreements and covenants contained in or
contemplated by this Agreement required to be performed by it at or prior to
the Effective Time;
(b) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Indiana contained in this Agreement that is qualified as to
materiality shall be true and correct in all respects and each of those that
is not so qualified as to materiality shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing as
though made again at and as of the Closing (except for representations and
warranties that expressly speak only as of a specific date or time other than
the date hereof or the Closing Date which need only be true and correct as of
such date);
(c) CLOSING CERTIFICATES. SIGCORP shall have received a certificate signed
by the Chief Executive Officer and Chief Financial Officer of Indiana, dated
the Closing Date, to the effect that, to each such officer's knowledge, the
conditions set forth in Sections 8.2(a) and (b) have been satisfied;
(d) TAX OPINION. SIGCORP shall have received an opinion of counsel, in form
and substance reasonably satisfactory to SIGCORP, dated the Closing Date,
which opinion may be based on appropriate representations of Indiana, SIGCORP
and the Company, in form and substance reasonably satisfactory to such
counsel, to the effect that the Merger will be a tax-free reorganization under
Code Section 368(a) and that SIGCORP, the Company and the shareholders of
SIGCORP who exchange their shares solely for stock of the Company will
recognize no gain or loss for federal income tax purposes as a result of the
consummation of the Merger;
(e) INDIANA REQUIRED CONSENTS. The Indiana Required Consents shall have
been obtained, except those that in the aggregate would not result in and
would not reasonably likely result in a Company Material Adverse Effect.
Section 8.3 CONDITIONS TO OBLIGATION OF INDIANA TO EFFECT THE MERGER. The
obligation of Indiana to effect the Merger shall be further subject to the
satisfaction, on or prior to the Closing Date, of the following conditions,
except as may be waived by Indiana in writing pursuant to Section 9.5:
(a) PERFORMANCE OF OBLIGATIONS OF SIGCORP. SIGCORP shall have performed in
all material respects its agreements and covenants contained in or
contemplated by this Agreement required to be performed by it at or prior to
the Effective Time;
(b) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of SIGCORP contained in this Agreement that is qualified as to
materiality shall be true and correct in all respects and each of those that
is not so qualified as to materiality shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing as
though made again at and as of the Closing (except for representations and
warranties that expressly speak only as of a specific date or time other than
the date hereof or the Closing Date which need only be true and correct as of
such date);
(c) CLOSING CERTIFICATES. Indiana shall have received a certificate signed
by the Chief Executive Officer and Chief Financial Officer of SIGCORP, dated
the Closing Date, to the effect that, to each such officer's knowledge, the
conditions set forth in Sections 8.3(a) and (b) have been satisfied;
(d) TAX OPINION. Indiana shall have received an opinion of counsel, in form
and substance reasonably satisfactory to Indiana, dated the Closing Date,
which opinion may be based on appropriate representations of Indiana, SIGCORP
and the Company, in form and substance reasonably satisfactory to such
counsel, to the effect
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that the Merger will be a tax-free reorganization under Code Section 368(a)
and that Indiana, the Company and the shareholders of Indiana who exchange
their shares solely for stock of the Company will recognize no gain or loss
for federal income tax purposes as a result of the consummation of the Merger;
(e) SIGCORP REQUIRED CONSENTS. The SIGCORP Required Consents shall have
been obtained except those that in the aggregate would not result in and would
not reasonably likely result in a Company Material Adverse Effect.
ARTICLE IX
Termination, Amendment and Waiver
Section 9.1 TERMINATION. This Agreement may be terminated and the Merger
abandoned at any time prior to the Closing Date, whether before or after
approval by the shareholders of the respective parties hereto contemplated by
this Agreement:
(a) by mutual written consent of the Boards of Directors of Indiana and
SIGCORP;
(b) by SIGCORP or Indiana, by written notice to the other, if the
Effective Time shall not have occurred on or before June 11, 2000;
provided, however, that such date shall automatically be changed to
December 31, 2000 if, on June 11, 2000:
(i) the condition set forth in Section 8.1(f) has not been satisfied
or waived;
(ii) the other conditions to the consummation of the transactions
contemplated hereby are then satisfied or capable of being satisfied;
and
(iii) any approvals required by Section 8.1(f) that have not yet
been obtained are being pursued with diligence; provided, however, that
the right to terminate this Agreement under this Section 9.1(b) shall
not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure
of the Effective Time to occur on or before the termination date;
(c) by SIGCORP or Indiana, by written notice to the other party if the
Indiana Shareholders' Approval shall not have been obtained at a duly held
Indiana Special Meeting, including any adjournments thereof, or the SIGCORP
Shareholders' Approval shall not have been obtained at a duly held SIGCORP
Special Meeting, including any adjournments thereof;
(d) by SIGCORP or Indiana, if any state or federal law, order, rule or
regulation is adopted or issued, that has the effect, as supported by the
written opinion of outside counsel for such party, of prohibiting the
Merger, or by SIGCORP or Indiana, if any court of competent jurisdiction in
the United States or any State shall have issued an order, judgment or
decree permanently restraining, enjoining or otherwise prohibiting the
Merger, and such order, judgment or decree shall have become final and
nonappealable;
(e) by SIGCORP, at any time prior to the SIGCORP Shareholders' Approval,
upon five days' prior notice to Indiana, if, as a result of a tender or
exchange offer or any bona fide written offer or proposal with respect to a
merger, sale of a material portion of its assets, voting securities or
other business combination (each, a "BUSINESS COMBINATION"), in each case
by a party other than Indiana or any of its affiliates, a majority of the
Board of Directors of SIGCORP determines in good faith that the fiduciary
obligations of such directors under applicable law require that such tender
or exchange offer or other bona fide written offer or proposal be accepted;
provided, however, that:
(i) the Board of Directors of SIGCORP shall have received the
written opinion of outside counsel to the effect that, notwithstanding
a binding commitment to consummate an agreement of the nature of this
Agreement entered into in the proper exercise of their applicable
fiduciary duties, such fiduciary duties would also require the
directors to reconsider such commitment as a result of such tender or
exchange offer or such bona fide written offer or proposal;
(ii) SIGCORP shall have complied with Section 7.12; and
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(iii) prior to any such termination, SIGCORP shall, and shall cause
its respective financial and legal advisors to, negotiate with Indiana
to make such adjustments in the terms and conditions of this Agreement
as would enable SIGCORP to proceed with the transactions contemplated
herein;
(f) by Indiana, at any time prior to the Indiana Shareholders' Approval,
upon five days' prior notice to SIGCORP, if, as a result of a tender or
exchange offer or any bona fide written offer or proposal with respect to a
Business Combination, in each case by a party other than SIGCORP or any of
its affiliates, a majority of the Board of Directors of Indiana determines
in good faith that the fiduciary obligations of such directors under
applicable law require that such tender or exchange offer or other bona
fide written offer or proposal be accepted; provided, however, that:
(i) the Board of Directors of Indiana shall have received the
written opinion of outside counsel to the effect that, notwithstanding
a binding commitment to consummate an agreement of the nature of this
Agreement entered into in the proper exercise of their applicable
fiduciary duties, such fiduciary duties would also require the
directors to reconsider such commitment as a result of such tender or
exchange offer or such bona fide written offer or proposal;
(ii) Indiana shall have complied with Section 7.12; and
(iii) prior to any such termination, Indiana shall, and shall cause
its respective financial and legal advisors to, negotiate with SIGCORP
to make such adjustments in the terms and conditions of this Agreement
as would enable Indiana to proceed with the transactions contemplated
herein;
(g) by SIGCORP, by written notice to Indiana, if:
(i) there shall have been any material breach of any material
representation or warranty, or any material breach of any covenant or
agreement, of Indiana hereunder, and such breach shall not have been
remedied within thirty days after receipt by Indiana of notice in
writing from SIGCORP, specifying the nature of such breach and
requesting that it be remedied; or
(ii) the Board of Directors of Indiana shall (A) withdraw or modify
in any manner materially adverse to SIGCORP its approval or
recommendation of this Agreement or the Merger, (B) fail to reaffirm
such approval or recommendation upon SIGCORP's request, (C) approve or
recommend a Business Combination, or (D) resolve to take any of the
actions specified in clauses (A), (B) or (C); or
(h) by Indiana, by written notice to SIGCORP, if:
(i) there shall have been any material breach of any material
representation or warranty, or any material breach of any covenant or
agreement, of SIGCORP hereunder, and such breach shall not have been
remedied within thirty days after receipt by SIGCORP of notice in
writing from Indiana, specifying the nature of such breach and
requesting that it be remedied; or
(ii) the Board of Directors of SIGCORP shall (A) withdraw or modify
in any manner materially adverse to Indiana its approval or
recommendation of this Agreement or the Merger, (B) fail to reaffirm
such approval or recommendation upon Indiana's request, (C) approve or
recommend a Business Combination, or (D) resolve to take any of the
actions specified in clauses (A), (B) or (C).
(i) by SIGCORP or Indiana, by written notice to the other party if:
(i) a third party acquires securities representing greater than 25%
of the voting power of the outstanding voting securities of such other
party; or
(ii) individuals who as of the date hereof constitute the board of
directors of such other party (together with any new directors whose
election by such board of directors or whose nomination for election by
the stockholders of such party was approved by a vote of a majority of
the directors of such party then still in office who are either
directors as of the date hereof or whose election or nomination for
election was previously so approved) cease for any reason to constitute
a majority of the board of directors of such party then in office.
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(j) by SIGCORP or Indiana, by written notice to the other party if on or
before June 11, 2000 (or December 31, 2000 if the conditions of Section
9.1(b) have been satisfied), the Replacement CEO or the Replacement COO, as
the case may be, has not been approved pursuant to Sections 7.14(a) and
(b), respectively.
Section 9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Indiana or SIGCORP pursuant to Section 9.1, there shall be
no liability on the part of either Indiana or SIGCORP or their respective
officers or directors hereunder, except that:
(i) Section 6.20, Section 7.1(b), Section 7.6(e), Section 7.18, Section
9.3 and Section 10.2 shall survive; and
(ii) no such termination shall relieve any party from liability by
reason of any willful breach of any representation, warranty or covenant
contained in this Agreement.
Section 9.3 TERMINATION DAMAGES.
(a) DAMAGES PAYABLE UPON TERMINATION FOR BREACH. If this Agreement is
terminated pursuant to Section 9.1(g)(i) or Section 9.1(h)(i) (breach of
representation, warranty, covenant or agreement), then the breaching party
shall promptly (but not later than five business days after receipt of notice
that the amount is due from the other party) pay to the other party, as
liquidated damages, $3 million in cash in respect of out-of-pocket expenses
and fees incurred by the other party, including, without limitation, fees and
expenses payable to all legal, accounting, financial, public relations and
other professional advisors arising out of, in connection with or related to
the Merger or the transactions contemplated by this Agreement (collectively,
"OUT-OF-POCKET EXPENSES").
(b) DAMAGES PAYABLE IN CERTAIN OTHER EVENTS. If this Agreement:
(i) is terminated:
(A) pursuant to 9.1(b) (expiration date);
(B) pursuant to Section 9.1(e) or Section 9.1(f) (fiduciary out);
(C) pursuant to Section 9.1(c) (failure to obtain shareholder
approval), following a failure of the shareholders of SIGCORP or
Indiana to grant the necessary approvals described in Section 4.13 or
Section 5.13, as the case may be (a "SHAREHOLDER DISAPPROVAL");
(D) pursuant to Section 9.1(g)(i) or Section 9.1(h)(i) (breach);
(E) pursuant to Section 9.1(g)(ii) or Section 9.1(h)(ii) (board
withdrawal or modification of approval or recommendation); or
(F) pursuant to Section 9.1(i) (third party acquisition);
(G) pursuant to 9.1(j) (replacement officers);
and,
(ii) at the time of such termination (or, in the case of any termination
following a Shareholder Disapproval, prior to the shareholder meeting at
which such Shareholder Disapproval occurred), there shall have been a
third-party tender or exchange offer for shares of, or a third-party offer
or proposal with respect to a Business Combination (an "ACQUISITION
PROPOSAL") involving the breaching party or party whose board has exercised
its fiduciary out or changed its recommendation or whose voting stock has
been acquired or whose board has changed, or who has failed to approve the
Replacement CEO or the Replacement COO, as the case may be, the ("TARGET
PARTY") or the affiliates thereof which, at the time of such termination
(or of the meeting of the Target Party's shareholders, as the case may be)
shall not have been (x) rejected by the Target Party and its Board of
Directors and (y) withdrawn by the third-party; and
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<PAGE>
(iii) within twenty-four months of any such termination described in
clause (i) above, the Target Party or any of its affiliates accepts a
written offer or enters into a written agreement to consummate or
consummates any Acquisition Proposal, then such Target Party (jointly and
severally with its affiliates), upon the earlier of the signing of a
definitive agreement relating to such Acquisition Proposal, or, the closing
(and as a condition to the closing) of such Target Party consummating such
Business Combination,
the Target Party shall pay the other party a termination fee equal to $35
million in cash and $3 million in cash in respect of Out-of-Pocket Expenses.
(c) EXPENSES.
(i) The parties agree that the agreements contained in this Section 9.3
are an integral part of the transactions contemplated by this Agreement and
constitute liquidated damages and not a penalty.
(ii) If one party fails to promptly pay to the other any amounts due
under this Section 9.3, such defaulting party shall pay the costs and
expenses (including reasonable legal fees and expenses) in connection with
any action, including the filing of any lawsuit or other legal action,
taken to collect payment, together with interest on the amount of any
unpaid fee at the publicly announced prime rate of The Chase Manhattan Bank
in effect from time to time from the date such fee was required to be paid.
(d) LIMITATION OF FEES. Notwithstanding anything herein to the contrary,
the aggregate amount payable by Indiana and its affiliates pursuant to Section
9.3(a), Section 9.3(b) and the terms of the Indiana Stock Option Agreement
shall not exceed $41.0 million and the aggregate amount payable by SIGCORP and
its affiliates pursuant to Section 9.3(a), Section 9.3(b) and the terms of the
SIGCORP Stock Option Agreement shall not exceed $41.0 million. For purposes of
this Section 9.3(d), the amount payable pursuant to the terms of the SIGCORP
Option or the Indiana Option, as the case may be, shall be the amount paid
pursuant to Sections 7(a)(i) and 7(a)(ii) thereof.
Section 9.4 AMENDMENT.
(a) This Agreement may be amended by parties hereto pursuant to action of
their respective Boards of Directors, at any time before or after approval
hereof by the shareholders of Indiana and SIGCORP and prior to the Effective
Time, but after such approvals, no such amendment shall:
(i) alter or change the amount or kind of shares, to be received or
exchanged for or on conversion of any class or series of capital stock of
either corporation as provided under Article II;
(ii) alter or change any of the terms and conditions of this Agreement
if any of the alterations or changes, alone or in the aggregate, would
materially and adversely affect the rights of holders of Indiana Common
Stock or SIGCORP Common Stock; or
(iii) alter or change any term of the Articles of Incorporation of the
Company, except for alterations or changes that could otherwise be adopted
by the Board of Directors of the Company, without the further approval of
such shareholders, as applicable.
(b) This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
Section 9.5 WAIVER.
(a) At any time prior to the Effective Time, the parties hereto may:
(i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto;
(ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions
contained herein.
(b) Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
a duly authorized officer of such party.
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<PAGE>
ARTICLE X
GENERAL PROVISIONS
Section 10.1 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. All representations, warranties, covenants and agreements in this
Agreement shall not survive the Merger, except the covenants and agreements
contained in this Section 10.1 and in Article II, Section 7.1(b) (Access to
Information), Section 7.5 (Directors' and Officers Indemnification), Section
7.6(e) (Disclosure Schedules), Section 7.10 (Incentive, Stock and Other
Plans), Section 7.13 (Company Board of Directors), Section 7.14 (Company
Officers), Section 7.15 (Employment Contracts), Section 7.16 (Corporate
Officers and Name), and Section 10.7 (Parties In Interest), each of which
shall survive in accordance with its terms.
Section 10.2 BROKERS.
(a) Indiana represents and warrants that, except for Merrill Lynch, Pierce,
Fenner and Smith Incorporated and Credit Suisse First Boston, its investment
banking firms, whose fees have been disclosed to SIGCORP prior to the date
hereof, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Indiana.
(b) SIGCORP represents and warrants that, except for Goldman, Sachs & Co.,
its investment banking firm, whose fees have been disclosed to Indiana prior
to the date hereof, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger
or the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of SIGCORP.
Section 10.3 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given (a) if delivered personally, or (b) if
sent by overnight courier service (receipt confirmed in writing), or (c) if
delivered by facsimile transmission (with receipt confirmed), or (d) five days
after being mailed by registered or certified mail (return receipt requested)
to the parties, in each case to the following addresses (or at such other
address for a party as shall be specified by like notice):
(i) If to Indiana, two copies, one each to:
By Mail: and Hand: Indiana Energy, Inc.
1630 North Meridian Street
Indianapolis, IN 46202-1496
Attention: Niel C. Ellerbrook
Fax: (317) 321-0498
with a copy to: Sommer & Barnard, PC
111 Monument Circle
4000 Bank One Tower
Indianapolis, Indiana 46204
Attention: James A. Strain, Esq.
Fax: (317) 236-9802
and a copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: James M. Cotter, Esq.
Fax: (212) 455-2502
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<PAGE>
(ii) If to SIGCORP, to:
By Mail and Hand: SIGCORP, Inc.
20 N.W. Fourth Street
Evansville, IN 47741-001
Attention: Andrew E. Goebel
Fax: (812) 464-4554
with a copy to: Winthrop, Stimson, Putnam &
Roberts
One Battery Park Plaza
New York, NY 10004-1490
Attention: Stephen R. Rusmisel, Esq.
Fax: (212) 858-1500
Section 10.4 MISCELLANEOUS.
(a) This Agreement (including the documents and instruments referred to
herein and any side letters between the parties executed on the date hereof):
(i) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof other than the
Confidentiality Agreement;
(ii) shall not be assigned by operation of law or otherwise; and
(iii) shall be governed by and construed in accordance with the laws of
the State of Indiana applicable to contracts executed in and to be fully
performed in such State, without giving effect to its conflicts of laws
statutes, rules or principles.
If any provision of this Agreement, or the application thereof to any person,
place or circumstance, shall be held by a court of competent jurisdiction to
be invalid or unenforceable;
(i) such provision shall be enforced to the extent that it is not
illegal or unenforceable,
(ii) the invalidity or unenforceability of such provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect,
and
(iii) the parties hereto shall negotiate in good faith to replace such
provision of this Agreement so held invalid or unenforceable with a valid
provision that is as similar as possible in substance to the invalid or
unenforceable provision.
Section 10.5 INTERPRETATION.
(a) When reference is made in this Agreement to Articles, Sections or
Exhibits, such reference shall be to an Article, Section or Exhibit of this
Agreement, as the case may be, unless otherwise indicated.
(b) The table of contents and headings contained in this Agreement are
for reference purposes and shall not affect in any way the meaning or
interpretation of this Agreement.
(c) Whenever the words "include", "includes", or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 10.6 COUNTERPARTS; EFFECT. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
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Section 10.7 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and, except for rights of Indemnified Parties and their
heirs and representatives as set forth in Section 7.5, nothing in this
Agreement, express or implied, is intended to confer upon any person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 10.8 SPECIFIC PERFORMANCE.
(a) The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached.
(b) It is accordingly agreed that the parties hereto shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof in the Southern
District of Indiana (or if such court refuses to assert jurisdiction, then
to any Indiana state court), this being in addition to any other remedy to
which they are entitled at law or in equity.
Section 10.9 FURTHER ASSURANCES. Each party hereto shall execute such
further documents and instruments and take such further actions as may
reasonably be requested by any other party hereto in order to consummate the
Merger in accordance with the terms hereof.
In Witness Whereof, Indiana, SIGCORP and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
Indiana Energy, Inc.
/s/ Niel C. Ellerbrook
By: _________________________________
Niel C. Ellerbrook
President and Chief Executive
Officer
Sigcorp, Inc.
/s/ Andrew E. Goebel
By: _________________________________
Andrew E. Goebel
President and Chief Operating
Officer
Vectren Corporation
/s/ Niel C. Ellerbrook
By: _________________________________
Niel C. Ellerbrook
Chief Executive Officer
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<PAGE>
APPENDIX B
Articles of Incorporation
OF
VECTREN CORPORATION
<PAGE>
ARTICLES OF INCORPORATION
OF
VECTREN CORPORATION
ARTICLE 1
Name
The name of the Corporation is Vectren Corporation.
ARTICLE 2
Registered Office and Registered Agent
The street address of the Corporation's initial registered office in
Indiana and the name of its initial registered agent at that office are One
North Capital Avenue, Indianapolis, Indiana 46204 and CT Corporation System.
ARTICLE 3
Purpose
The Corporation is formed for the purpose of engaging in any lawful
business.
ARTICLE 4
Shares
Section 4.1 Amount. The Corporation has authority to issue Two Hundred
Million (200,000,000) shares of capital stock ("Stock").
Section 4.2 Preferred Stock. The Corporation has the authority to issue up
to Ten Million (10,000,000) of the initial Two Hundred Million (200,000,000)
shares as a separate and single class of shares known as Preferred Stock,
which may be issued in one or more series. The Board of Directors of the
Corporation ("Board") is vested with authority to determine and state the
designations and the preferences, limitations, relative rights and voting
rights, if any, of each such series by the adoption and filing in accordance
with the Act, before the issuance of any shares of such series, of an
amendment or amendments to these Articles determining the terms of such
series, which amendment need not be approved by the shareholders or the
holders of any class or series of shares except as provided by law. All shares
of Preferred Stock of the same series shall be identical with each other in
all respects and the Board shall designate each series to distinguish it from
all other series of stock.
Section 4.3 Common Stock. Of the Two Hundred Million (200,000,000) shares
the Corporation has authority to issue, One Hundred and Ninety Million
(190,000,000) shares which constitute a separate class of shares known as
Common Stock, which shall have no par value and may be issued in one or more
series. The class of Common Stock authorized hereby has unlimited voting
rights and is entitled to receive the net assets of the Corporation upon
dissolution. The holders of shares of Common Stock have the right, voting
separately by class, to cast one vote for each duly authorized, issued and
outstanding share of Common Stock held by them upon each question or matter in
respect of which, under the Act, such holders are entitled to vote by class.
Such holders also have the right to cast one vote for each duly authorized,
issued and outstanding share of Common Stock held by them upon each question
or matter submitted generally to the holders of shares of the Corporation in
respect of which, under the Act, voting by class or by series is not required.
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Section 4.4 Distributions. The Board has authority to authorize and direct
in respect of the issued and outstanding shares of Preferred Stock and Common
Stock (i) the payment of dividends and the making of other distributions by
the Corporation at such times, in such amounts and forms, from such sources
and upon such terms and conditions as it may, from time to time with respect
to each class of stock, determine subject only to the restrictions,
limitations, conditions and requirements imposed by the Act, other applicable
laws and these Articles, as the same may, from time to time, be amended, and
(ii) the making by the Corporation of share dividends and share splits, pro
rata and without consideration, in shares of the same class or series or in
shares of any other class or series without obtaining the affirmative vote or
the written consent of the holders of the shares of the class or series in
which the payment or distribution is to be made.
Section 4.5 Acquisition of Shares. The Board has authority to authorize and
direct the acquisition by the Corporation of the issued and outstanding shares
of Preferred Stock and Common Stock at such times, in such amounts, from such
persons, for such considerations, from such sources and upon such terms and
conditions as it may, from time to time, determine, subject only to the
restrictions, limitations, conditions and requirements imposed by the Act,
other applicable laws and these Articles, as the same may, from time to time,
be amended.
Section 4.6 Record Ownership of Shares or Rights. The Corporation, to the
extent permitted by law, shall be entitled to treat the person in whose name
any share or right of the Corporation is registered on the books of the
Corporation as the owner thereof, for all purposes, and shall not be bound to
recognize any equitable or other claim to, or interest in, such share or right
on the part of any other person, whether or not the Corporation shall have
notice thereof.
ARTICLE 5
Board of Directors
Section 5.1 Number. The number of directors of the Corporation shall not be
less than one (1) nor more than sixteen (16), as may be specified in the
initial Code of By-Laws of the Corporation ("By-Laws") or by amendment to the
By-Laws. The Code of By-Laws may provide for a classified board of directors.
The number of initial directors of the Corporation shall be two (2). Directors
need not be shareholders of the Corporation. Subject to express limitations
contained in these Articles, (i) the business and affairs of the corporation
shall be managed under the direction of the Board, and (ii) the Board shall
have full, exclusive and absolute power, control and authority over any and
all property of the Corporation. The Board may take any action as in its sole
judgment and discretion is necessary or appropriate to conduct the business
and affairs of the Corporation without any action by shareholders of the
Corporation, on behalf of the Corporation.
Section 5.2 Vacancies. Except as may be expressly provided by law, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board resulting from death, resignation,
retirement, disqualification, removal from office or other cause shall be
filled by a majority vote of the directors then in office.
Section 5.3 Removal. Subject to the rights, if any, of holders of one or
more classes or series of Preferred Stock to elect one or more directors, any
director, or the entire Board, may be removed from office at any time, but
only for cause and only by the affirmative vote of the holders of at least 80%
of the voting power of all of the shares of the Corporation entitled to vote
generally in the election of directors, voting together as a single class.
Section 5.4 Amendment, Repeal. Notwithstanding anything contained in these
Articles of Incorporation to the contrary, the affirmative vote of the holders
of at least 80% of the voting power of all of the shares of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to alter, amend or repeal this Article 5.
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ARTICLE 6
Meetings of the Shareholders
Section 6.1 Place of Meetings. All meetings of shareholders of the
Corporation shall be held at such place, within or without the State of
Indiana, as may be specified in the respective notices or waivers of notice
thereof.
Section 6.2 Annual Meeting. The annual meeting of shareholders for the
purpose of electing directors and transacting such other business as may
properly come before the meeting shall be set each year by resolution of the
Board. Failure to hold the annual meeting shall not work any forfeiture or a
dissolution of the Corporation or affect the validity of any corporate action.
Section 6.3 Special Meetings. Special meetings of the shareholders may be
called by the Chief Executive Officer or by the Board.
Section 6.4 Notice of Meetings and Waiver. A written or printed notice,
stating the place, day and hour of the meeting, and in case of a special
meeting the purpose or purposes for which the meeting is called, shall be
delivered or mailed by the Secretary or by the officers or persons calling the
meeting, to each shareholder of the Corporation at the time entitled to vote,
at such address as appears upon the records of the Corporation, no fewer than
ten nor more than sixty days before the date of the meeting. Notice of any
such meeting may be waived in writing by any shareholder, before or after the
date and time stated in the notice, if the waiver is delivered to the
Corporation for inclusion in the minutes for filing with the corporate
records. Attendance at a meeting, in person or by proxy, waives objection to
lack of notice or defective notice of the meeting unless the shareholder at
the beginning of the meeting objects to holding the meeting or transacting the
business at the meeting. Further, a shareholder's attendance at a meeting
waives objection to consideration of a particular matter at the meeting that
is not within the purpose or purposes described in the meeting notice unless
the shareholder objects to considering the matter when it is presented.
Section 6.5 Voting at Meetings.
Clause (a). Voting Rights. Except as otherwise provided by law or by the
provisions of the Articles of Incorporation, every holder of Common Stock
of the Corporation shall have the right at all meetings of the shareholders
of the Corporation to one vote for each share of Common Stock standing in
his name on the books of the Corporation.
Clause (b). Proxies. A shareholder may vote, either in person or by
proxy executed as provided by the Indiana Business Corporation Law by the
shareholder or a duly authorized attorney-in-fact. No proxy shall be valid
after eleven (11) months, unless a shorter or longer time is expressly
provided in the appointment form.
Clause (c). Quorum. At any meeting of shareholders, a majority of the
shares outstanding and entitled to vote on the business to be transacted at
such meeting, represented in person or by proxy, shall constitute a quorum.
Section 6.6 Action by Shareholders Without Meeting. Any action required or
permitted to be taken at any meeting of the shareholders may be taken without
a meeting if the action is taken by all shareholders entitled to vote on the
action and is evidenced by one or more written consents describing the action
taken, signed by all shareholders entitled to vote on the action and delivered
to the Corporation for inclusion in the minutes for filing with the
Corporation's records.
Section 6.7 Participation in Meetings by Means of Conference or Other
Similar Communications Equipment. Any shareholder may participate in an annual
or special meeting of the shareholders by, or through the use of, any means of
communication by which all shareholders participating may simultaneously hear
each other during the meeting. A shareholder participating in such a meeting
by this means is deemed to be present in person at the meeting.
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<PAGE>
ARTICLE 7
Indemnification
Section 7.1 Definitions. Terms defined in Chapter 37 of the Indiana
Business Corporation Law (IND. CODE (S)(S) 23-1-37, et seq.) which are used in
this Article 7 shall have the same definitions for purposes of this Article 7
they have in such chapter of the Indiana Business Corporation Law.
Section 7.2 Indemnification of Directors and Officers. The Corporation
shall indemnify any individual who is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner or trustee of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise whether or not for profit, against liability and expenses,
including attorneys fees, incurred by him in any action, suit, or proceeding,
whether civil, criminal, administrative, or investigative, and whether formal
or informal, in which he is made or threatened to be made a party by reason of
being or having been in any such capacity, or arising out of his status as
such, except (i) in the case of any action, suit, or proceeding terminated by
judgment, order, or conviction, in relation to matters as to which he is
adjudged to have breached or failed to perform the duties of his office and
the breach or failure to perform constituted willful misconduct or
recklessness; and (ii) in any other situation, in relation to matters as to
which it is found by a majority of a committee composed of all directors not
involved in the matter in controversy (whether or not a quorum) that the
person breached or failed to perform the duties of his office and the breach
or failure to perform constituted willful misconduct or recklessness. The
Corporation may pay for or reimburse reasonable expenses incurred by a
director or officer in defending any action, suit, or proceeding in advance of
the final disposition thereof upon receipt of (i) a written affirmation of the
director's or officer's good faith belief that such director or officer has
met the standard of conduct prescribed by Indiana law; and (ii) an undertaking
of the director or officer to repay the amount paid by the Corporation if it
is ultimately determined that the director or officer is not entitled to
indemnification by the Corporation.
Section 7.3 Other Employees or Agents of the Corporation. The Corporation
may, in the discretion of the Board, fully or partially provide the same
rights of indemnification and reimbursement as hereinabove provided for
directors and officers of the Corporation to other individuals who are or were
employees or agents of the Corporation or who are or were serving at the
request of the Corporation as employees or agents of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise whether or not for profit.
Section 7.4 Nonexclusive Provision. The indemnification authorized under
this Article 7 is in addition to all rights to indemnification granted by
Chapter 37 of the Indiana Business Corporation Law (IND. CODE (S)(S) 23-1-37,
et seq.) and in no way limits the indemnification provisions of such Chapter.
ARTICLE 8
Provisions for Certain Business Combinations
Section 8.1 Vote Required.
Clause (a). Higher Vote for Certain Business Combinations. In addition
to any affirmative vote required by law or these Articles of Incorporation,
and except as otherwise expressly provided in Section 8.2 of this Article
8:
(1) Any merger or consolidation or any similar transaction of the
Corporation or any Subsidiary (as hereinafter defined) with (A) any
Interested Shareholder (as hereinafter defined), or (B) any other
corporation (whether or not itself an Interested Shareholder) which is,
or after such merger or consolidation would be, an Affiliate (as
hereinafter defined) of an Interested Shareholder;
(2) Any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with
any Interested Shareholder or any Affiliate of any Interested
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<PAGE>
Shareholder of any assets of the Corporation or any Subsidiary having an
aggregate Fair Market Value of Ten Million Dollars ($10,000,000) or
more;
(3) The issuance or transfer by the Corporation or any Subsidiary (in
one transaction or a series of transactions) of any securities of the
Corporation or any Subsidiary to any Interested Shareholder or any
Affiliate of any Interested Shareholder in exchange for cash, securities
or other property (or a combination thereof) having an aggregate Fair
Market Value of Ten Million Dollars ($10,000,000) or more;
(4) The adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Shareholder or any Affiliate of any Interested Shareholder; or
(5) Any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or any
other transaction (whether or not with or into or otherwise involving an
Interested Shareholder) which has the effect, directly or indirectly, of
increasing the proportionate share of the outstanding shares of any
class of equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any Interested
Shareholder or any Affiliate of any Interested Shareholder;
shall require the affirmative vote of the holders of at least 80% of the
voting power of the then outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors (the
"Voting Stock"), voting together as a single class (it being understood that
for purposes of this Article 8, each share of the Voting Stock shall have the
number of votes granted to it pursuant to Article 4 of these Articles of
Incorporation). Such affirmative vote shall be required, notwithstanding the
fact that no vote may be required, or that a lesser percentage may be
specified, by law or in any agreement with any national securities exchange or
otherwise.
Clause (b). Definition of "Business Combination." The term "Business
Combination" as used in this Article 8 shall mean any transaction which is
referred to in any one or more of paragraphs (1) through (5) of Clause (a)
of this Section 8.1.
Section 8.2 When Higher Vote is Not Required. The provisions of Section 8.1
of this Article 8 shall not be applicable to any particular Business
Combination, and such Business Combination shall require only such affirmative
vote as is required by law and any other provision of these Articles of
Incorporation, if all of the conditions specified in either of the following
Clauses (a) and (b) are met:
Clause (a). Approval by Continuing Directors. The Business Combination
shall have been approved by a majority of the Continuing Directors (as
hereinafter defined).
Clause (b). Price and Procedure Requirements. All of the following
conditions shall have been met:
(1) The aggregate amount of the cash and the Fair Market Value (as
hereinafter defined) as of the date of the consummation of the Business
Combination of consideration other than cash to be received per share by
holders of Common Stock in such Business Combination shall be at least
equal to the highest of the following:
(A) The highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid by
the Interested Shareholders for any shares of Common Stock acquired
by it (i) within the two-year period immediately prior to the first
public announcement of the proposal of the Business Combination (the
"Announcement Date") or (ii) in the transaction in which it became
an Interested Shareholder, whichever is higher;
(B) The Fair Market Value Per Share of Common Stock on the
Announcement Date or on the date on which the Interested Shareholder
became an Interested Shareholder (such latter date is referred to in
this Article 7 as the "Determination Date"), whichever is higher;
and
(C) The price per share equal to the Fair Market Value per share
of Common Stock determined pursuant to Clause (b)(1)(B) above,
multiplied by the ratio of (i) the highest per share
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price (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Shareholder for any
shares of Common Stock acquired by it within the two-year period
immediately prior to the Announcement Date to (ii) the Fair Market
Value per share of Common Stock on the first day in such two-year
period upon which the Interested Shareholder acquired any shares of
Common Stock.
(2) The aggregate amount of the cash and the Fair Market Value as of
the date of the consummation of the Business Combination of
consideration other than cash to be received per share by holders of
shares of any other class or series of outstanding Voting Stock shall
be at least equal to the highest of the following (it being intended
that the requirements of this Clause (b)(2) shall be required to be met
with respect to every class of outstanding Voting Stock whether or not
the Interested Shareholder has previously acquired any Shares of a
particular class of Voting Stock):
(A) The highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid by
the Interested Shareholder for any shares of such class of Voting
Stock acquired by it (i) within the two-year period immediately
prior to the Announcement Date or (ii) in the transaction in which
it became an Interested Shareholder, whichever is higher;
(B) The highest preferential amount per share to which the
holders of shares of such class of Voting Stock are entitled in the
event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation;
(C) The Fair Market Value per share of such class of Voting Stock
on the Announcement Date or on the Determination Date, whichever is
higher; and
(D) The price per share equal to the Fair Market Value per share
of such class of Voting Stock determined pursuant to Clause
(b)(2)(C) above, multiplied by the ratio of (i) the highest per
share price (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Shareholder for any
shares of such class of Voting Stock acquired by it within the two-
year period immediately prior to the Announcement Date or (ii) the
Fair Market Value per share of such class of Voting Stock on the
first day in such two-year period upon which the Interested
Shareholder acquired any shares of such class of Voting Stock;
(3) The consideration to be received by holders of a particular
class of outstanding Voting Stock (including Common Stock) shall be in
cash or in the same form as the Interested Shareholder has previously
paid for shares of such class of Voting Stock. If the Interested
Shareholder has paid for shares of any class of Voting Stock with
varying forms of consideration, the form of consideration for such
class of Voting Stock shall be either cash or the form used to acquire
the largest number of shares of such class of Voting Stock previously
acquired by it.
(4) After such Interested Shareholder has become an Interested
Shareholder and prior to the consummation of such Business Combination:
(A) except as approved by a majority of the Continuing Directors,
there shall have been no failure to declare and pay at the regular
date therefor any full quarterly dividends (whether or not
cumulative) on any outstanding Preferred Stock;
(B) there shall have been (i) no reduction in the annual rate of
dividends paid on the Common Stock (except as necessary to reflect
any subdivision of the Common Stock), except as approved by a
majority of the Continuing Directors, and (ii) an increase in such
annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction which
has the effect of reducing the number of outstanding shares of the
Common Stock, unless the failure so to increase such annual rate is
approved by a majority of the Continuing Directors; and
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(C) such Interested Shareholder shall have not become the
beneficial owner of any additional shares of Voting Stock except as
part of the transaction which results in such Interested Shareholder
becoming an Interested Shareholder.
(5) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the
benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other
financial assistance or any tax credits or other tax advantages
provided by the Corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(6) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall be mailed to shareholders of the Corporation at
least 30 days prior to the consummation of such Business Combination
(whether or not such proxy or information statement is required to be
mailed pursuant to such Act or subsequent provisions).
Section 8.3 Certain Definitions. For the purposes of this Article 8:
Clause (a). A "person" shall include any individual, firm, corporation
or other entity. When two or more persons act as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring voting
stock of the Company, such partnership, syndicate or group shall be deemed
a "person."
Clause (b). "Interested Shareholder" shall mean any person (other than
the Corporation or any Subsidiary) who or which:
(1) is the beneficial owner, directly or indirectly, of more than
10% of the voting power of the outstanding Voting Stock;
(2) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of 10% or more of the voting
power of the then outstanding Voting Stock; or
(3) is an assignee of or has otherwise succeeded to any shares of
Voting Stock which were at any time within the two-year period
immediately prior to the date in question beneficially owned by any
Interested Shareholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act of
1933.
Clause (c). A person shall be a "beneficial owner" of any Voting Stock:
(1) which such person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns, directly or indirectly;
(2) which such person or any of its Affiliates or Associates has (A)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement, arrangement
or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding; or
(3) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
Clause (d). For the purpose of determining whether a person is an
Interested Shareholder pursuant to Clause (b) of this Section 8.3, the
number of shares of Voting Stock deemed to be outstanding shall include
shares deemed owned through application of Clause (c) of this Section 8.3,
but shall not include any other
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shares of Voting Stock which may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
Clause (e). "Affiliate" or "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.
Clause (f). "Subsidiary" means any corporation of which a majority of
any class of equity security is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition of
Interested Shareholders set forth in Clause (b) of this Section 8.3, the
term "Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the
Corporation.
Clause (g). "Continuing Director" means any member of the Board of the
Corporation who is unaffiliated with the Interested Shareholder and was a
member of the Board prior to the time that the Interested Shareholder
became an Interested Shareholder, and any successor of a Continuing
Director who is unaffiliated with the Interested Shareholder and is
recommended to succeed a Continuing Director by a majority of Continuing
Directors then on the Board.
Clause (h). "Fair Market Value" means:
(1) In the case of stock, the highest closing sale price during the
30-day period immediately preceding the date in question of a share of
such stock on the Composite Tape for New York Stock Exchange listed
stock, or if such stock is not quoted on the Composite Tape, on the New
York Stock Exchange, or, if such stock is not listed on such Exchange,
on the principal United States securities exchange registered under the
Securities Exchange Act of 1934 on which such stock is listed, or, if
such stock is not listed on any such exchange, the highest closing bid
quotation with respect to a share of such stock during the 30-day
period preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System or any system then
in use, or if no such quotation of a share of such stock as determined
by the Board in good faith; and
(2) In the case of property other than cash or stock, the fair
market value of such property on the date in question as determined by
the Board in good faith.
Clause (i). In the event of any Business Combination in which the
Corporation survives, the phrase "other consideration to be received" as
used in Clauses (b)(1) and (2) of Section 8.2 of this Article 8 shall
include the shares of Common Stock and/or the shares of any other class of
outstanding Voting Stock by the holders of such shares.
Section 8.4 Powers of the Board. A majority of the directors of the
Corporation shall have the power and duty to determine for the purposes of
this Article 8, on the basis of information known to them after reasonable
inquiry, (a) whether a person is an Interested Shareholder, (b) the number of
shares of Voting Stock beneficially owned by any person, (c) whether a person
is an Affiliate or Associate of another and (d) whether the assets which are
the subject of any Business Combination have, or the consideration to be
received for the issuance or transfer of securities by the Corporation or any
Subsidiary in any Business Combination has, an aggregate Fair Market Value of
Ten Million Dollars ($10,000,000) or more.
Section 8.5 No Effect on Fiduciary Obligations of Interested Shareholders.
Nothing contained in this Article 8 shall be construed to relieve any
Interested Shareholder from any fiduciary obligation imposed by law.
Section 8.6 Amendment, Repeal, etc. Notwithstanding any other provisions of
these Articles of Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that a lesser percentage may be specified by law,
these Articles of Incorporation or the By-Laws of the Corporation), the
affirmative vote of the holders of 80% or more of the voting power of the
shares of the then outstanding Voting Stock, voting together as a single
class, shall be required to amend or repeal, or adopt provisions inconsistent
with, this Article 8 of these Articles of Incorporation.
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ARTICLE 10
Incorporator
The name and address of the incorporator of the Corporation are James A.
Strain, Sommer & Barnard, PC, 4000 Bank One Tower, 111 Monument Circle,
Indianapolis, Indiana 46204-5140.
/s/ James A. Strain
_____________________________________
James A. Strain
Dated June 10, 1999
This instrument was prepared by James A. Strain.
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APPENDIX C
By-Laws of
VECTREN CORPORATION
<PAGE>
CODE OF BY-LAWS
OF
VECTREN CORPORATION
ARTICLE 1
Identification
Section 1.1. Name. The name of the Corporation is Vectren Corporation (the
"Corporation").
Section 1.2. Fiscal Year. The fiscal year of the Corporation shall begin at
the beginning of the first day of January in each year and end at the close of
the last day of December next succeeding.
ARTICLE 2
Shares
Section 2.1. Certificates for Shares. Pursuant to Ind. Code ' 23-1-26-7,
the Board of Directors (the "Board") is authorized to issue shares without
certificates. If the Board issues share certificates, such certificates shall
be in such form as the Board may prescribe from time to time signed (either
manually or in facsimile) by the Chief Operating Officer and President of the
Corporation and either the Secretary or an Assistant Secretary of the
Corporation.
Section 2.2. Transfer of Shares. The shares of the Corporation shall be
transferable on the books of the Corporation. If certificates are issued, the
transfer of the shares shall occur upon surrender of the certificate or
certificates representing the same, properly endorsed by the registered holder
or by his duly authorized attorney, such endorsement or endorsements to be
witnessed by one witness. The requirement for such witnessing may be waived in
writing upon the form of endorsement by the President of the Corporation.
Section 2.3. Record Ownership of Shares or Rights. The Corporation, to the
extent permitted by law, shall be entitled to treat the person in whose name
any share or right of the Corporation (a "Right") is registered on the books
of the Corporation as the owner thereof, for all purposes, and shall not be
bound to recognize any equitable or other claim to, or interest in, such share
or Right on the part of any other person, whether or not the Corporation shall
have notice thereof.
ARTICLE 3
Meetings of Shareholders
Section 3.1. Place of Meetings. All meetings of shareholders of the
Corporation shall be held at such place, within or without the State of
Indiana, as may be specified in the respective notices or waivers of notice
thereof.
Section 3.2. Annual Meeting. The annual meeting of shareholders for the
purpose of electing directors and transacting such other business as may
properly come before the meeting shall be set each year by resolution of the
Board. Failure to hold the annual meeting shall not work any forfeiture or a
dissolution of the Corporation or affect the validity of any corporate action.
Section 3.3. Special Meetings. Special meetings of the shareholders may be
called by the Chief Executive Officer or by the Board.
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Section 3.4. Notice and Waiver. A written or printed notice, stating the
place, day and hour of the annual meeting, and additionally, in case of a
special meeting the purpose or purposes for which the meeting is called, shall
be delivered or mailed by the Secretary or by the officers or persons calling
the meeting, to each shareholder of the Corporation at the time entitled to
vote, at such address as appears upon the records of the Corporation, no fewer
than ten nor more than sixty days before the date of the meeting. Notice of
any such meeting may be waived in writing by any shareholder, before or after
the date and time stated in the notice, if the waiver is delivered to the
Corporation for inclusion in the minutes for filing with the corporate
records. Attendance at a meeting, in person or by proxy, waives objection to
lack of notice or defective notice of the meeting unless the shareholder at
the beginning of the meeting objects to holding the meeting or transacting the
business at the meeting. Further, a shareholder's attendance at a meeting
waives objection to consideration of a particular matter at the meeting that
is not within the purpose or purposes described in the meeting notice unless
the shareholder objects to considering the matter when it is presented.
Section 3.5. Notice of Shareholder Business. At any meeting of the
shareholders, only such business may be conducted as shall have been properly
brought before the meeting, and as shall have been determined to be lawful and
appropriate for consideration by shareholders at the meeting. To be properly
brought before a meeting, business must be (a) specified in the notice of
meeting given in accordance with Section 3.4, (b) otherwise properly brought
before the meeting by or at the direction of the board of directors or the
chief officer, or (c) otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before a meeting by a
shareholder pursuant to clause (c), the shareholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to, or mailed and received at, the
principal office of the Corporation, not less than fifty days nor more than
ninety days prior to the meeting; provided, however, that in the event that
less than sixty days notice of the date of the meeting is given to
shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the tenth day following the day on which
such notice of the date of the meeting was given. A shareholder's notice to
the Secretary shall set forth as to each matter the shareholder proposes to
bring before the meeting (a) a brief description of the business desired to be
brought before the meeting, (b) the name and address, as they appear on the
Corporation's stock records, of the shareholder proposing such business, (c)
the class and number of shares of the Corporation which are beneficially owned
by the shareholder, and (d) any interest of the shareholder in such business.
Notwithstanding anything in these By-Laws to the contrary, no business shall
be conducted at a meeting except in accordance with the procedures set forth
in this Section 3.5. The person presiding at the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the By-Laws, or that business
was not lawful or appropriate for consideration by shareholders at the
meeting, and if he should so determine, he shall so declare to the meeting and
any such business shall not be transacted.
Section 3.6. Notice of Shareholder Nominees. Nominations of persons for
election to the Board may be made at any meeting of the shareholders by or at
the direction of the Board or by any shareholder of the Corporation entitled
to vote for the election of directors at the meeting. Shareholder nominations
shall be made pursuant to timely notice given in writing to the Secretary of
the Corporation in accordance with Section 3.5. Such shareholder's notice
shall set forth, in addition to the information required by Section 3.5, as to
each person whom the shareholder proposes to nominate for election or re-
election as a director, (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the Corporation which are
beneficially owned by such person, (iv) any other information relating to such
person that is required to be disclosed in solicitation of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended
(including, without limitation, such person's written consent to being named
in the proxy statement as a nominee and to serving as a director, if elected),
and (v) the qualifications of the nominee to serve as a director of the
Corporation. No shareholder nomination shall be effective unless made in
accordance with the procedures set forth in this Section 3.6. The person
presiding at the meeting shall, if the facts warrant, determine and declare to
the meeting that a shareholder nomination was not made in accordance with the
By-Laws, and if he should so determine, he shall so declare to the meeting and
the defective nomination shall be disregarded.
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Section 3.7. Voting at Meetings.
(a) Voting Rights. Except as otherwise provided by law or by the
provisions of the Articles of Incorporation, every holder of the Common
Stock of the Corporation shall have the right at all meetings of the
shareholders of the Corporation to one vote for each share of stock
standing in his name on the books of the Corporation.
(b) Proxies. A shareholder may vote, either in person or by proxy
executed as provided by the Indiana Business Corporation Law by the
shareholder or a duly authorized attorney-in-fact. No proxy shall be valid
after eleven (11) months, unless a shorter or longer time is expressly
provided in the appointment form.
(c) Quorum. At any meeting of shareholders, a majority of the shares
outstanding and entitled to vote on the business to be transacted at such
meeting, represented in person or by proxy, shall constitute a quorum.
Section 3.8. Action By Shareholders Without Meeting. Any action required or
permitted to be taken at any meeting of the shareholders may be taken without
a meeting if the action is taken by all shareholders entitled to vote on the
action and is evidenced by one or more written consents describing the action
taken, signed by all shareholders entitled to vote on the action and delivered
to the Corporation for inclusion in the minutes for filing with the
Corporation=s records.
Section 3.9. Participation in Meetings by Means of Conference or Other
Similar Communications Equipment. Any shareholder may participate in an annual
or special meeting of the shareholders by, or through the use of, any means of
communication by which all shareholders participating may simultaneously hear
each other during the meeting. A shareholder participating in such a meeting
by this means is deemed to be present in person at the meeting.
ARTICLE 4
Board of Directors
Section 4.1. Number and Election. The Board shall consist of a minimum of
one (1) and a maximum of twenty-five (25) members. The actual number of
directors shall be fixed from time to time by amendment to the By-Laws adopted
by a majority vote of the directors then in office. The initial number of
directors is two (2). Initial directors shall serve until the first
shareholder's meeting at which directors are elected. Each director shall hold
office until his successor is elected and qualified. Directors need not be
shareholders.
Section 4.2. Annual Meeting. The Board shall meet each year immediately
after the annual meeting of the shareholders at the place established by
resolution of the Board, for the purpose of organization, election of
officers, and consideration of any other business that may be brought before
the meeting. If the Board does not establish a place for such meeting by
resolution, the meeting will be held at the place where the shareholders
meeting was held. No notice shall be necessary for the holding of this annual
meeting. If such meeting is not held as above provided, the election of
officers may be had at any subsequent meeting of the Board specifically called
in the manner provided in Section 4.3 of this Article.
Section 4.3. Other Meetings. Regular meetings of the Board may be held as
provide for in a Board resolution, without notice of the date, time, place or
purpose of the meeting. Special meetings of the Board may be held upon the
call of the Chief Operating Officer, or of any member of the Board, at any
place within or without the State of Indiana, upon forty-eight hours' notice,
specifying the time, place and general purposes of the meeting, given to each
director, either personally, by mailing, or by facsimile. Such notice may be
waived in writing by any director, before or after the date stated in the
notice, if the waiver is signed by the director and filed with the
Corporation's minutes or records. In addition, a director's attendance at or
participation in a meeting waives any required notice of the meeting unless
the director at the beginning of the meeting (or promptly upon his arrival)
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at the meeting.
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Section 4.4. Quorum. At any meeting of the Board, the presence of a
majority of the members of the Board shall constitute a quorum for the
transaction of any business except the filling of vacancies in the Board.
Section 4.5. Action By Directors Without Meeting. Any action required or
permitted to be taken at any meeting of the Board, or any committee thereof,
may be taken without a meeting if the action is taken by all members of the
Board and is evidenced by one or more written consents describing the action
taken, signed by each director, and is included in the minutes or filed with
the corporate records reflecting the action taken.
Section 4.6. Compensation of Directors. The Board is empowered and
authorized to fix and determine the compensation of directors for attendance
at meetings of the Board, and additional compensation for any additional
services that the directors may perform for the Corporation.
Section 4.7. Participation in Meetings by Means of Conference or Other
Similar Communications Equipment. A member of the Board or of a committee
designated by the Board may participate in a regular or special meeting by, or
conduct the meeting through the use of, any means of communication by which
all directors participating may simultaneously hear each other during the
meeting. A director participating in such a meeting by this means is deemed to
be present in person at the meeting.
Section 4.8. Resignations. A director may resign at any time by delivering
notice to the Board or the Secretary of the Corporation. A resignation is
effective when the notice is delivered unless the notice specifies a later
effective date. If a resignation is made effective at a later date and the
Corporation accepts the future effective date, the Board may fill the pending
vacancy before the effective date if the Board provides that the successor
does not take office until the effective date.
ARTICLE 5
Officers
Section 5.1. Number. The officers of the Corporation shall consist of a
Chairman and Chief Executive Officer, Chief Operating Officer and President,
Chief Financial Officer, Secretary, and such other officers as may be chosen
by the Board at such time and in such manner and for such terms as the Board
may prescribe. The Chairman and Chief Executive Officer may appoint one or
more officers as he may deem necessary or advisable to carry on the operations
of the Corporation. The Board may appoint one or more assistant officers as it
may deem necessary or advisable to carry on the operations of the Corporation.
Such appointed officer(s) or assistant officer(s) shall hold office until the
next annual meeting of the Board unless removed by resolution of the Board
prior to such meeting date. Any two or more offices may be held by the same
person.
Section 5.2. Election and Term of Office. The officers shall be chosen
annually by the Board. Each officer shall hold office until his successor is
chosen, or until his death, or until he shall have resigned or shall have been
removed in the manner hereinafter provided.
Section 5.3. Removal. Any officer may be removed, either with or without
cause, at any time, by a majority vote of the Board.
Section 5.4. Resignations. An officer may resign at any time by delivering
notice to the Board or the Secretary of the Corporation. A resignation is
effective when the notice is delivered unless the notice specifies a later
effective date. If a resignation is made effective at a later date and the
Corporation accepts the future effective date, the Board may fill the pending
vacancy before the effective date if the Board provides that the successor
does not take office until the effective date.
Section 5.5. Chairman and Chief Executive Officer. The Chairman and Chief
Executive Officer shall be, subject to the control of the Board, in general
charge of the affairs of the Corporation and perform such other duties as the
Code of By-Laws or the Board may prescribe. He shall also preside at all
meetings of shareholders and directors, discharge all the duties which devolve
upon a presiding officer, and shall perform such other duties as the Code of
By-Laws or Board may prescribe all meetings of the Board of Directors.
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Section 5.6. Chief Operating Officer and President. The Chief Operating
Officer and President shall be, subject to the control of the Board, in charge
of the daily affairs of the Corporation and shall have such powers and duties
as may be determined by the Board. If no Chairman of the Board is elected or
appointed, the Chief Operating Officer shall preside at all meetings of
shareholders, discharge all the duties which devolve upon a presiding officer,
and shall perform such other duties as the Code of By-Laws or Board may
prescribe.
Section 5.7. Chief Financial Officer. The Chief Financial Officer shall be
the financial officer of the Corporation; shall have charge and custody of,
and be responsible for, all funds of the Corporation, and deposit all such
funds in the name of the Corporation in such banks, trust companies or other
depositories as shall be selected by the Board; shall receive, and give
receipts for, monies due and payable to the Corporation from any source
whatsoever; and, in general, shall perform all the duties incident to the
office of Treasurer and such other duties as this Code of By-Laws provides or
as may, from time to time, be assigned by the Board.
Section 5.8. The Vice Presidents. Each Vice President (if one or more Vice
Presidents be elected or appointed) shall have such powers and perform such
duties as this Code of By-Laws provides or as the Chairman and Chief Executive
Officer, from time to time, prescribe or delegate to him.
Section 5.9. The Secretary. The Secretary shall prepare or cause to be
prepared the minutes of the meetings of the shareholders and of the Board;
shall see that all notices are duly given in accordance with the provisions of
the Code of By-Laws and as required by law; shall be custodian and responsible
for the authentication of the records; and, in general, shall perform all
duties incident to the office of Secretary and such other duties as this Code
of By-Laws provides or as may, from time to time, be assigned by the Board.
Section 5.10. Delegation of Authority. In case of the absence of any
officer of the Corporation, or for any other reason that the Board may deem
sufficient, the Board may delegate the powers or duties of such officer to any
other officer, for the time being, provided a majority of the entire Board
concurs therein.
Section 5.11. Salaries. The salaries of the officers shall be fixed, from
time to time, by the Board. No officer shall be prevented from receiving such
salary by reason of the fact he is also a director of the Corporation.
ARTICLE 6
Negotiable Instruments, Deeds, Contracts and Shares
Section 6.1. Execution of Negotiable Instruments. All checks, drafts,
notes, bonds, bills of exchange and orders for the payment of money of the
Corporation shall, unless otherwise directed by the Board, or unless otherwise
required by law, be signed by the Chief Financial Officer and one other
officer, or such other officers or employees as may be directed by the Board.
Section 6.2. Execution of Deeds, Contracts, Etc. All deeds and mortgages
made by the Corporation and other material written contracts and agreements
into which the Corporation enters other than transactions in the ordinary
course of business shall, unless otherwise directed by the Board or required
by law, be executed in its name by any authorized officer of the Corporation,
signing singly, and, when necessary or required, shall be duly attested by the
Secretary or Assistant Secretary. Written contracts and agreements in the
ordinary course of business operations may be executed by any officer or
employee of the Corporation designated by the Chief Financial Officer to
execute such contracts and agreements.
Section 6.3. Endorsement of Stock Certificates. Subject always to the
further orders and directions of the Board, any share or shares of stock
issued by any other corporation and owned by the Corporation (including
retired shares of stock of the Corporation) may, for sale or transfer, be
endorsed in the name of the Corporation by the Chief Operating Officer and
President and the Secretary.
Section 6.4. Voting of Stock Owned by Corporation. Subject always to the
further orders and directions of the Board, any share or shares of stock
issued by any other corporation and owned or controlled by the
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Corporation may be voted at any shareholder's meeting of such other
corporation by the Chief Operating Officer of the Corporation or, in his
absence, by the Secretary of the Corporation. Whenever, in the judgment of the
Chief Operating Officer, it is desirable for the Corporation to execute a
proxy or give a shareholder's consent in respect to any share or shares of
stock issued by any other corporation and owned by the Corporation, such proxy
or consent shall be executed in the name of the Corporation and shall be
attested by the Secretary of the Corporation. Any person or persons designated
in the manner above stated as the proxy or proxies of the Corporation shall
have the full right, power, and authority to vote the share or shares of stock
issued by such other corporation and owned by the Corporation the same as such
share or shares might be voted by the Corporation.
ARTICLE 7
Provisions for Regulation of Business and Conduct of Affairs of Corporation
Section 7.1. Contracts. Any contract or other transaction between the
Corporation and one or more of its directors, or between the Corporation and
any firm of which one or more of its directors are members or employees, or in
which they are interested, or between the Corporation and any corporation or
association of which one or more of its directors are shareholders, members,
directors, officers, or employees, or in which they are interested, shall be
valid for all purposes, notwithstanding the presence of such director or
directors at the meeting of the Board of the Corporation which acts upon, or
in reference to, such contract or transaction, and notwithstanding his or
their participation in such action, if the fact of such interest shall be
disclosed or known to the Board and the Board shall, nevertheless, authorize,
approve, and ratify such contract or transaction by a vote of a majority of
the directors on the Board who have no direct or indirect interest in the
contract or transaction or, if all directors have such an interest, then by a
vote of a majority of the directors. If a majority of such directors vote to
authorize, approve or ratify such contract or transaction, a quorum is deemed
to be present for purposes of taking such action. This Section shall not be
construed to invalidate any contract or other transaction which would
otherwise be valid under the common and statutory law applicable thereto.
Section 7.2. Indemnification.
(a) Definitions. Terms defined in Chapter 37 of the Indiana Business
Corporation Law (IND. CODE " 23-1-37, et seq.) which are used in this
Article 7 shall have the same definitions for purposes of this Article 7 as
they have in such chapter of the Indiana Business Corporation Law.
(b) Indemnification of Directors and Officers. The Corporation shall
indemnify any individual who is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, partner or trustee of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise whether or not for profit, against liability and expenses,
including attorneys fees, incurred by him in any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, and
whether formal or informal, in which he is made or threatened to be made a
party by reason of being or having been in any such capacity, or arising
out of his status as such, except (i) in the case of any action, suit, or
proceeding terminated by judgment, order, or conviction, in relation to
matters as to which he is adjudged to have breached or failed to perform
the duties of his office and the breach or failure to perform constituted
willful misconduct or recklessness; and (ii) in any other situation, in
relation to matters as to which it is found by a majority of a committee
composed of all directors not involved in the matter in controversy
(whether or not a quorum) that the person breached or failed to perform the
duties of his office and the breach or failure to perform constituted
willful misconduct or recklessness. The Corporation may pay for or
reimburse reasonable expenses incurred by a director or officer in
defending any action, suit, or proceeding in advance of the final
disposition thereof upon receipt of (i) a written affirmation of the
director's or officer's good faith belief that such director or officer has
met the standard of conduct prescribed by Indiana law; and (ii) an
undertaking of the director or officer to repay the amount paid by the
Corporation if it is ultimately determined that the director or officer is
not entitled to indemnification by the Corporation.
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(c) Other Employees or Agents of the Corporation. The Corporation may,
in the discretion of the Board, fully or partially provide the same rights
of indemnification and reimbursement as herein above provided for directors
and officers of the Corporation to other individuals who are or were
employees or agents of the Corporation or who are or were serving at the
request of the Corporation as employees or agents of another foreign or
domestic corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise whether or not for profit.
(d) Non-exclusive Provision. The indemnification authorized under this
Section 7.2 is in addition to all rights to indemnification granted by
Chapter 37 of the Indiana Business Corporation Law (IND. CODE " 23-1-37, et
seq.) and in no way limits the indemnification provisions of such Chapter.
ARTICLE 8
Amendments
Section 8.1. In General. The powers to make, alter, amend or repeal this
Code of By-Laws is vested exclusively in the Board, but the affirmative vote
of a majority of the number of directors in office at the time of such vote
shall be necessary to effect any alteration, amendment or repeal of this Code
of By-Laws.
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<PAGE>
APPENDIX D
Opinion of
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
<PAGE>
June 11, 1999
Board of Directors
Indiana Energy, Inc.
1630 North Meridian Street
Indianapolis, Indiana 46202
Members of the Board of Directors:
Indiana Energy, Inc. (the "Company"), SIGCORP, Inc. (the "Merger Partner")
and a newly-formed corporation ("Newco") propose to enter into an Agreement and
Plan of Merger (the "Agreement") pursuant to which the Company and the Merger
Partner will be merged into Newco in a transaction (the "Merger") in which each
share of the Company's common stock, without par value (the "Company Shares"),
would be converted into the right to receive 1.000 share (the "Exchange Ratio")
of Newco's common stock, without par value (the "Newco Shares") and each share
of the Merger Partner's common stock, without par value (the "Merger Partner
Shares") will be converted into the right to receive 1.333 Newco Shares.
You have asked us whether, in our opinion, the proposed Exchange Ratio
pursuant to the Merger is fair to the holders of the Company Shares from a
financial point of view.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to the Company and the Merger Partner that we deemed to be
relevant;
(2) Reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets, liabilities and prospects
of the Company and the Merger Partner, as well as the amount and timing
of the cost savings and related expenses and synergies expected to
result from the Merger (the "Estimated Synergies") furnished to us by
the Company and the Merger Partner, respectively;
(3) Conducted discussions with members of senior management and
representatives of the Company and the Merger Partner concerning the
matters described in clauses 1 and 2 above, as well as their respective
businesses and prospects before and after giving effect to the Merger
and the Estimated Synergies;
(4) Reviewed the market prices and valuation multiples for the Company
Shares and the Merger Partner Shares and compared them with those of
certain publicly traded companies that we deemed to be relevant;
(5) Reviewed the results of operations of the Company and the Merger
Partner and compared them with those of certain publicly traded
companies that we deemed to be relevant;
(6) Participated in discussions and negotiations among representatives of
the Company and the Merger Partner and their financial and legal
advisors;
(7) Reviewed the potential pro forma impact of the Merger;
(8) Reviewed a draft dated June 10, 1999 of the Agreement; and
(9) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and we have not
assumed any responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the assets or
liabilities of the Company or the Merger Partner or
D-1
<PAGE>
been furnished with any such evaluation or appraisal. In addition, we have not
assumed any obligation to conduct any physical inspection of the properties or
facilities of the Company or the Merger Partner. With respect to the financial
forecast information and the Estimated Synergies furnished to or discussed
with us by the Company or the Merger Partner, we have assumed that they have
been reasonably prepared and reflect the best currently available estimates
and judgment of the Company's or the Merger Partner's management as to the
expected future financial performance of the Company or the Merger Partner, as
the case may be, and the Estimated Synergies. We have further assumed that the
Merger will be free of federal income tax to the Company, the Merger Partner
and Newco and the respective holders of Company Shares and Merger Partner
Shares and that the Merger will be accounted for as a pooling of interests. We
have also assumed that the final form of the Agreement will be substantially
similar to the last draft reviewed by us.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available
to us as of, the date hereof. We have assumed that in the course of obtaining
the necessary regulatory or other consents or approvals (contractual or
otherwise) for the Merger, no restrictions, including any divestiture
requirements or amendments or modifications, will be imposed that will have a
material adverse effect on the contemplated benefits of the Merger.
In connection with the preparation of this opinion, we have not been
authorized by the Company or its Board of Directors to solicit, nor have we
solicited, third party indications of interest for the acquisition of all or
any part of the Company.
We are acting as financial advisor to the Company in connection with the
Merger and will receive a fee from the Company for our services, a significant
portion of which is contingent upon the consummation of the Merger. In
addition, the Company has agreed to indemnify us for certain liabilities
arising out of our engagement. We have, in the past, provided financial
advisory and financing services to the Company and/or its affiliates and may
continue to do so and have received, and may receive, fees for the rendering
of such services. In addition, in the ordinary course of our business, we may
actively trade the Company Shares and other securities of the Company, as well
as the Merger Partner Shares and other securities of the Merger Partner, for
our own account and for the accounts of customers and, accordingly, may at any
time hold a long or short position in such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company. Our opinion does not address the merits of the underlying decision by
the Company to engage in the Merger and does not constitute a recommendation
to any shareholder of the Company as to how such shareholder should vote on
the proposed Merger or any matter related thereto.
We are not expressing any opinion herein as to the prices at which the
Company Shares, the Merger Partner Shares or the Newco Shares will trade
following the announcement or consummation, as the case may be, of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Exchange Ratio pursuant to the Merger is fair from
a financial point of view to the holders of the Company Shares.
Very truly yours,
Merrill Lynch, Pierce, Fenner &
Smith Incorporated
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<PAGE>
APPENDIX E
Opinion of
GOLDMAN, SACHS & CO.
<PAGE>
[LETTERHEAD OF GOLDMAN, SACHS & CO.]
Goldman, Sachs & Co. | 85 Broad Street | New York, New York 10004
Tel: 212-902-1000
PERSONAL AND CONFIDENTIAL
- ------------------------
June 11, 1999
Board of Directors
SIGCORP, Inc.
20 N. W. Fourth Street
Evansville, IN 47741-0001
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the holders of the outstanding shares of Common Stock, without par
value (the "Shares"), of SIGCORP, Inc. (the "Company") of the exchange ratio of
1.333 shares of Common Stock, without par value (the "Vectren Shares"), of
Vectren Corporation ("Vectren") to be received for each Share (the "Exchange
Ratio") pursuant to the Agreement and Plan of Merger, dated as of June 11,
1999, by and among Vectren, Indiana Energy, Inc. ("IEI"), and the Company (the
"Agreement"). The Agreement provides that the Company and IEI will concurrently
merge with and into Vectren, with Vectren being the surviving corporation. The
holders of outstanding Common Stock, without par value (the "IEI Shares"), of
IEI will receive 1.000 Vectren Shares for each IEI Share.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having provided certain investment banking services
to the Company from time to time, including having acted in April 1998 as lead
managing underwriter of a public offering of three series of Pollution Control
Refunding Revenue Bonds through the Indiana Development Finance Authority with
an aggregate principal amount of $80.34 million, and as its financial advisor
in connection with, and having participated in certain of the negotiations
leading to, the Agreement. We have also provided investment banking services,
from time to time, for IEI. Goldman Sachs & Co. provides a full range of
financial advisory and securities services, and, in the course of its normal
trading activities, may from time to time effect transactions and hold
securities, including derivative securities, of the Company or IEI for its own
account and for the accounts of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of
the Company for the five years ended December 31, 1998 and of IEI for the five
fiscal years ended September 30, 1998; certain interim reports to stockholders
and Quarterly Reports on Form 10-Q of the Company and of IEI; certain other
communications from the Company and IEI to their respective stockholders;
certain internal financial analyses and forecasts for the Company and
[LOGO OF GOLDMAN SACHS DIVISIONS]
<PAGE>
IEI prepared by their respective managements; and certain analyses of cost
savings and operating synergies expected to result from the transactions
contemplated by the Agreement prepared by the managements of the Company and
IEI with the assistance of a third party consultant (the "Synergies"). We also
have held discussions with members of the senior management of the Company and
IEI regarding the strategic rationale for, and the potential benefits of, the
transactions contemplated by the Agreement and the past and current business
operations, financial condition and future prospects of their respective
companies. In addition, we have reviewed the reported price and trading
activity for the Shares and the IEI Shares, compared certain financial and
stock market information for the Company and IEI with similar information for
certain other companies the securities of which are publicly traded, reviewed
the financial terms of certain recent business combinations in the electric
and gas utility industry specifically and in other industries generally and
performed such other studies and analyses as we considered appropriate.
We have relied upon the accuracy and completeness of all of the financial
and other information reviewed by us and have assumed such accuracy and
completeness for purposes of rendering this opinion. In that regard, we have
assumed with your consent that the Synergies have been reasonably prepared on
a basis reflecting the best currently available estimates and judgments of the
Company and IEI. We also have assumed with your consent that the transaction
contemplated by the Agreement will be accounted for as a pooling-of-interests
under generally accepted accounting principles. In addition, we have not made
an independent evaluation or appraisal of the assets and liabilities of the
Company or IEI or any of their subsidiaries and we have not been furnished
with any such evaluation or appraisal. We also have assumed that all material
governmental, regulatory or other consents and approvals necessary for the
consummation of the transaction contemplated by the Agreement will be obtained
without adverse effect on the Company and IEI or on the contemplated benefits
of the transaction contemplated by the Agreement. Our advisory services and
the opinion expressed herein are provided for the information and assistance
of the Board of Directors of the Company in connection with its consideration
of the transaction contemplated by the Agreement and such opinion does not
constitute a recommendation as to how any holder of Shares should vote with
respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters
as we consider relevant, it is our opinion that as of the date hereof the
Exchange Ratio pursuant to the Agreement is fair from a financial point of
view to the holders of the Shares.
Very truly yours,
/s/ Goldman Sachs & Co.
-------------------------------------
(Goldman, Sachs & Co.)
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