FORM 10-K
SECURlTlES AND EXCHANGE COMMlSSlON
WASHINGTON, D. C. 20549
___________________
(Mark One)
(X) Annual Report Pursuant to Section 13 or l5(d) of the Securities
Exchange Act of 1934
(Fee Required)
For the fiscal year ended December 31, 1993
-------------------------------------------
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
(Fee Required)
For the transition period from__________________to__________________
Commission I.R.S. Employer
File State of Identification
Number Registrant Incorporation Number
---------- ---------- ------------- ---------------
1-3132-2 Indianapolis Power Indiana 35-0413620
& Light Company
25 Monument Circle
Indianapolis, Indiana 46204
Telephone Number: 317-261-8261
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
518,985 Shares of Cumulative Preferred Stock
______________________________________________________________________
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days. Yes X No
------ ------
As of January 31, 1994, there were issued and outstanding
17,206,630 shares of the registrant's common stock without par
value, all of which were held beneficially and of record by
IPALCO Enterprises, Inc.
____________________________________________
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Indianapolis Power & Light Company definitive
Information Statement for the Annual Meeting of Shareholders on
April 20, 1994 are incorporated by reference into Part III of
this Report.
PART I
Item 1. BUSINESS
ORGANIZATION
Indianapolis Power & Light Company (IPL) is an operating
public utility incorporated under the laws of the State of Indiana
on October 27, 1926. IPL is a subsidiary of IPALCO Enterprises,
Inc. (IPALCO). IPALCO is a holding company incorporated under the
laws of the State of Indiana on September 14, 1983. All common
stock of IPL is owned by IPALCO.
GENERAL
IPL is engaged primarily in generating, transmitting,
distributing and selling electric energy in the City of
Indianapolis and neighboring cities, towns, communities, and
adjacent rural areas, all within the State of Indiana, the most
distant point being about forty miles from Indianapolis. It also
produces, distributes and sells steam within a limited area in
such city. There have been no changes in the services rendered,
or in the markets or methods of distribution, since the beginning
of the fiscal year. IPL intends to do business of the same
general character as that in which it is now engaged. No private
or municipally-owned electric public utility companies are
competing with IPL in the territory it serves.
IPL operates under indeterminate permits subject to the
jurisdiction of the Indiana Utility Regulatory Commission (IURC).
Such permits are subject to revocation by the IURC for cause. The
Public Service Commission Act of Indiana (the PSC Act), which
provides for the issuance of such permits, also provides that if
the PSC Act is repealed, indeterminate permits will cease and a
utility will again come into possession of such franchises as were
surrendered at the time of the issue of the permit, but in no
event shall such reinstated franchise be terminated within less
than five years from the date of repeal of the PSC Act.
The electric utility business is affected by the various
seasonal weather patterns throughout the year and, therefore, the
operating revenues and associated operating expenses are not
generated evenly by months during the year.
IPL's electric system is directly interconnected with the
electric systems of Indiana Michigan Power Company, PSI Energy,
Inc., Southern Indiana Gas and Electric Company, Wabash Valley
Power Association and Hoosier Energy Rural Electric Cooperative,
Inc.
Also, IPL and 28 other electric utilities, known as the East
Central Area Reliability Group (the Group), are cooperating under
an agreement which provides for coordinated planning of generating
and transmission facilities and the operation of such facilities
to provide maximum reliability of bulk power supply in the nine-
state region served by the Group.
In 1993, approximately 99.7% of the total kilowatthours sold
by IPL were generated from coal, .2% from middle distillate fuel
oil and .1% from secondary steam purchased from the Indianapolis
Resource Recovery Project. In addition to use in oil-fired
generating units, fuel oil is used for start up and flame
stabilization in coal-fired generating units as well as for coal
thawing and coal handling.
IPL's long-term coal contracts provide for the supply of the
major portion of its burn requirements through the year 1999,
assuming environmental regulations can be met. The long-term coal
agreements are with six suppliers and the coal is produced
entirely in the State of Indiana (these six suppliers are located
in the following counties: Clay, Daviess, Greene, Knox, Pike,
Sullivan and Warrick, and are not affiliates of IPL). See
Exhibits listed under Part IV Item 14(a)3(10). It is presently
believed that all coal used by IPL will be mined by others. IPL
normally carries a 70-day supply of coal and fuel oil to offset
unforeseen occurrences such as labor disputes, equipment
breakdowns, power sales to other utilities, etc. When strikes are
anticipated in the coal industry, IPL increases its stockpile to
an approximate 103-day supply.
The combined cost of coal and fuel oil used in the generation
of electric energy for 1993 averaged 1.151 cents per kilowatthour
or $24.49 per equivalent ton of coal, compared with the 1992
average fuel cost for electric generation of 1.146 cents per
kilowatthour or $24.55 per equivalent ton of coal. Fuel costs are
expected to experience only moderate changes in the near future
due to increased supplier productivity, the stabilizing of coal
prices and a low dependency on oil. However, an acceleration of
inflation and/or changes in laws, regulations or ordinances which
impact the mining industry or place more restrictive environmental
controls on utilities could have a detrimental effect on such
prices.
IPL has a long-term contract to purchase steam for use in its
steam distribution system with Ogden Martin Systems of
Indianapolis, Inc. (Ogden Martin). Ogden Martin owns and operates
the Indianapolis Resource Recovery Project which is a waste-to-
energy facility located in Marion County, Indiana. During 1993,
IPL's steam system purchased 49.4% of its total therm requirement
from Ogden Martin. Additionally, 33.3% of its 1993 one-hour peak
load was met with steam purchased from Ogden Martin. IPL also
purchased 3.2 million secondary therms which represent Ogden
Martin send-out in excess of the IPL steam system requirements.
Such secondary steam is used to produce electricity at the IPL
Perry K and Perry W facilities.
CONSTRUCTION
The cost of IPL's construction program during 1993, 1992 and
1991 was $149.3 million, $115.3 million and $96.3 million,
respectively, including Allowances for Funds Used During
Construction (AFUDC) of $3.6 million, $3.2 million and $1.6
million, respectively.
IPL's construction program is reviewed periodically and is
updated to reflect among other things the changes in economic
conditions, revised load forecasts and cost escalations under
construction contracts. The most recent projections indicate that
IPL will need about 800 megawatts (MW) of additional energy
resources by the year 2000. IPL plans to meet this need through
the combination of the use of Demand Side Management, power
purchases, peaking turbines and base-load generation.
During 1992, IPL entered into a five-year firm power purchase
agreement with Indiana Michigan Power Company (IMP), which will
supply additional capacity for the near-term requirements. IPL
receives 200 MW of capacity. IPL can also elect to extend the
agreement through November 1999. See Item 7, "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" under "Capital Requirements" for additional
information regarding the IMP agreement.
IPL's construction program for the five-year period 1994-
1998, is estimated to cost $1.0 billion including AFUDC. The
estimated cost of the program by year (in millions) is $234.4 in
1994; $191.9 in 1995; $116.6 in 1996; $221.4 in 1997; and $251.8
in 1998. It includes $113.7 million for four 80 MW combustion
turbines with in-service dates of 1994, 1995, 1998 and 1999,
respectively, and $217.2 million for base-load capacity with in-
service dates of 2000 and 2002, or beyond. The forecast also
includes $284.4 million for additions, improvements and extensions
to transmission and distribution lines, substations, power factor
and voltage regulating equipment, distribution transformers and
street lighting distribution. With respect to the expenditures
for pollution control facilities to comply with the Clean Air Act
and with respect to the regulatory authority of the IURC as it
relates to the integrated resource plan, see "REGULATORY MATTERS"
and Item 7, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS".
FINANCING
IPL's 1994-1998 long-term financing program anticipates sales
of debt and equity securities totaling $447.7 million. The timing
and amounts of such activities are contingent upon the timing and
cost of any new capacity, as well as market conditions and other
factors near the dates of the required financings. In addition to
the sale of new securities, IPL has authority from the IURC to
redeem and replace certain of its existing securities should
favorable market conditions arise. Such action, if considered,
may result in additional financing in the form of long-term debt.
(With respect to restrictions on the issuance of certain
securities, see Item 7, "LIQUIDITY AND CAPITAL RESOURCES".)
EMPLOYEE RELATIONS
As of December 31, 1993, IPL had 2,276 employees of whom
1,155 were represented by the International Brotherhood of
Electrical Workers, AFL-CIO (IBEW) and 411 were represented by the
Electric Utility Workers Union (EUWU), an unaffiliated labor
organization. In December 1993, the membership of the IBEW
ratified a new labor agreement which remains in effect until
December 16, 1996. The agreement provides for general pay
adjustments of 4% in 1993, 3.5% in both 1994 and 1995, and changes
in pension and health care coverage. In March, 1992, the
membership of the EUWU ratified a new labor agreement which
remains in effect until February 27, 1995. The agreement provides
for general pay adjustments of 4.5% in both 1992 and 1993, and 3%
in 1994, as well as changes in health care coverage.
REGULATORY MATTERS
IPL is subject to regulation by the IURC as to its services
and facilities, valuation of property, the construction, purchase
or lease of electric generating facilities, classification of
accounts, rates of depreciation, rates and charges, issuance of
securities (other than evidences of indebtedness payable less than
twelve months after the date of issue), the acquisition and sale
of public utility properties or securities, and certain other
matters.
In addition, IPL is subject to the jurisdiction of the
Federal Energy Regulatory Commission, in respect of short-term
borrowings not regulated by the IURC, the transmission of electric
energy in interstate commerce, the classification of its accounts
and the acquisition and sale of utility property in certain
circumstances as provided by the Federal Power Act.
IPL is also subject to federal, state, and local
environmental laws and regulations, particularly as to generating
station discharges affecting air and water quality. The impact of
such regulations on the capital and operating costs of IPL has
been and will continue to be substantial. IPL's 1994-1998
construction program includes $335 million in environmental costs,
including AFUDC, of which approximately $207 million pertains to
the Clean Air Act. Accordingly, IPL has developed a plan to
reduce sulfur dioxide and nitrogen oxide emissions from several
generating units. This plan has been approved by the IURC.
Annual costs for all air, solid waste, and water environmental
compliance measures are $106 million and $112 million in 1994 and
1995, respectively.
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
STATISTICAL INFORMATION - ELECTRIC
The following table of statistical information presents additional data on IPL's operation.
<CAPTION>
Year Ended December 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Operating Revenues (In Thousands):
Residential $ 225,138 $ 212,757 $ 224,039 $ 207,734 $ 205,066
Small industrial and commercial 127,551 126,588 135,456 134,514 137,207
Large industrial and commercial 255,945 243,446 237,200 225,586 214,047
Public lighting 7,186 7,133 7,106 7,122 7,095
Miscellaneous 7,373 6,018 6,960 6,598 6,352
---------- ---------- ---------- ---------- ----------
Revenues - ultimate consumers 623,193 595,942 610,761 581,554 569,767
Sales for resale - REMC 897 861 900 759 825
Sales for resale - other 5,237 2,400 4,197 10,418 4,590
---------- ---------- ---------- ---------- ----------
Total electric revenues $ 629,327 $ 599,203 $ 615,858 $ 592,731 $ 575,182
========== ========== ========== ========== ==========
Kilowatthour Sales (In Millions):
Residential 4,014 3,675 3,960 3,585 3,585
Small industrial and commercial 2,202 2,171 2,331 2,322 2,399
Large industrial and commercial 6,169 5,843 5,612 5,399 5,178
Public lighting 62 64 64 65 65
---------- ---------- ---------- ---------- ----------
Sales - ultimate consumers 12,447 11,753 11,967 11,371 11,227
Sales for resale - REMC 24 23 23 20 21
Sales for resale - other 321 169 256 555 228
---------- ---------- ---------- ---------- ----------
Total kilowatthours sold 12,792 11,945 12,246 11,946 11,476
========== ========== ========== ========== ==========
Customers at End of Year:
Residential 356,015 352,139 347,718 344,094 339,004
Small industrial and commercial 38,359 38,171 38,011 37,863 37,619
Large industrial and commercial 3,342 3,163 2,952 2,714 2,440
Public lighting 252 239 229 212 197
---------- ---------- ---------- ---------- ----------
Total ultimate consumers 397,968 393,712 388,910 384,883 379,260
Sales for resale - REMC 1 1 1 1 1
---------- ---------- ---------- ---------- ----------
Total electric customers 397,969 393,713 388,911 384,884 379,261
========== ========== ========== ========== ==========
Miscellaneous Statistics:
Kilowatthour output (In Millions):
Generated (net after station use) 13,254 12,525 12,851 12,254 11,930
Purchased 325 126 160 300 331
---------- ---------- ---------- ---------- ----------
Total generated and purchased 13,579 12,651 13,011 12,554 12,261
Company use, line loss, etc. 787 706 765 608 785
---------- ---------- ---------- ---------- ----------
Energy sold 12,792 11,945 12,246 11,946 11,476
========== ========== ========== ========== ==========
Load factor (percent) 57.44 56.72 56.37 54.83 57.55
Average BTU per net kilowatthour 10,503 10,385 10,455 10,474 10,466
Cost of fuel per million BTU $ 1.096 $ 1.103 $ 1.113 $ 1.109 $ 1.103
Cost of fuel per ton (includes oil
stated in equivalent tons of coal) $ 24.488 $ 24.547 $ 24.804 $ 24.711 $ 24.459
Summer plant capability (megawatts)* 2,829 2,829 2,829 2,829 2,829
Maximum demand on IPL system (megawatts)* 2,635 2,505 2,583 2,498 2,387
Average use per residential
customer (kilowatthours) 11,345 10,515 11,460 10,514 10,668
Average revenue per residential customer $ 636.28 $ 608.68 $ 648.36 $ 609.29 $ 610.13
Average revenue per small industrial and
commercial customer $ 3,310.59 $ 3,305.94 $ 3,552.03 $ 3,566.13 $ 3,668.15
Average revenue per large industrial and
commercial customer $78,055.83 $79,324.43 $83,816.09 $87,065.08 $93,429.69
Average residential revenue per
kilowatthour (cents) 5.609 5.789 5.658 5.795 5.720
* All figures are net of station use.
</TABLE>
Item 2. PROPERTIES
IPL owns and operates five primarily coal-fired generating
plants, three of which are used for total electric generation and
two of which are used for a combination of electric and steam
generation. In relation to electric generation, there exists a
total gross nameplate rating of 2,885 MW, a winter capability of
2,862 MW and a summer capability of 2,829 MW. All figures are net
of station use. In relation to steam generation, there exists a
gross capacity of 2,290 Mlbs. per hour.
Total Electric Stations:
H. T. Pritchard plant (Pritchard), 25 miles southwest of
Indianapolis (six units in service - one in 1949,
1950, 1951, two in 1953 and one in 1956) with 367 MW
nameplate rating and net winter and summer
capabilities of 344 MW and 341 MW, respectively.
E. W. Stout plant (Stout) located in southwest part of
Marion County (five units in service - one each in
1941, 1947, 1958, 1961 and 1973) with 771 MW nameplate
rating and net winter and summer capabilities of 798
MW and 767 MW, respectively.
Petersburg plant (Petersburg), located in Pike County,
Indiana (four units in service - one each in 1967,
1969, 1977 and 1986) with 1,716 MW nameplate rating
and net winter and summer capabilities of 1,690 MW and
1,690 MW, respectively.
Combination Electric and Steam Stations:
C.C. Perry Section K plant (Perry K), in the city of
Indianapolis with 20 MW nameplate rating (net winter
capability 20 MW, summer 19 MW) for electric and a
gross capacity of 1,990 Mlbs. per hour for steam.
C.C. Perry Section W plant (Perry W), in the city of
Indianapolis with 11 MW nameplate rating (net winter
capability 10 MW, summer 12 MW) for electric and a
gross capacity of 300 Mlbs. per hour for steam.
Net electrical generation during 1993, at the Petersburg,
Stout and Pritchard stations accounted for about 74.9%, 19.6% and
5.5%, respectively, of IPL's total net generation. All steam
generation by IPL for the steam system was produced by the Perry K
and Perry W stations.
Included in the above totals are three gas turbine units at
the Stout station added in 1973 with a combined nameplate rating
of 64 MW, one diesel unit each at Pritchard and Stout stations,
and three diesel units at Petersburg station, all added in 1967.
Each diesel unit has a nameplate rating of 3 MW.
IPL's transmission system includes 454 circuit miles of
345,000 volt lines, 353 circuit miles of 138,000 volt lines and
275 miles of 34,500 volt lines. Distribution facilities include
4,686 pole miles and 19,785 wire miles of overhead lines.
Underground distribution and service facilities include 436 miles
of conduit and 4,900 wire miles of conductor. Underground street
lighting facilities include 110 miles of conduit and 668 wire
miles of conductor. Also included in the system are 74 bulk power
substations and 85 distribution substations.
Steam distribution properties include 22 miles of mains with
286 services. Other properties include coal and other minerals,
underlying 798 acres in Sullivan County and coal underlying about
6,215 acres in Pike and Gibson Counties, Indiana. Additional
land, approximately 4,722 acres in Morgan County, and
approximately 884 acres in Switzerland County has been purchased
for future plant sites.
Item 3. LEGAL PROCEEDINGS
On March 16, 1993, Smith Cogeneration of Indiana, Inc., and
its affiliates (Smith) filed a petition with the Indiana Utility
Regulatory Commission (IURC) requesting that IPL be ordered to
enter into a power sales agreement to purchase power from Smith's
proposed 240 megawatt plant. On September 24, 1993, IPL filed a
motion for summary adjudication of Smith's petition. This motion
is currently pending, has been fully briefed and no further
proceedings have been scheduled in this matter.
In June 1993, IPL received a Notice of Violation from the
Indianapolis Air Pollution Control Section (IAPCS) regarding
fugitive dust emissions at its Perry K Generating Station. IPL
met with IAPCS to discuss four alleged violations over a span of
15 months. Each violation was subject to a fine of up to $2,500.
IPL agreed to a settlement in the amount of $3,500 for all
violations, but settlement has not yet been finalized.
On August 18, 1993, the IURC entered an order in Cause No.
39437, approving IPL's Environmental Compliance Plan to comply
with the Clean Air Act Amendments of 1990. The estimated cost of
IPL's Environmental Compliance Plan is approximately $250 million
before including allowance for funds used during construction. A
primary part of IPL's Plan, scrubbing IPL's Petersburg 1 and 2
coal-fired units by 1996 to enable IPL to continue to burn high
sulfur coal, was opposed by the Office of Utility Consumer
Counselor (OUCC), the Citizens Action Coalition, and the
Industrial Intervenors Group (IIG). OUCC and IIG are in the
process of appealing the Commission's order to the Indiana Court
of Appeals.
In October 1993, IPL received a Findings of Violation from
EPA, Region V, regarding IPL's compliance with the thermal
limitations of the NPDES (water discharge) permit under which IPL
operates its Petersburg Generating Station. On February 20, 1992,
IPL filed an application for renewal of that permit but the
application has not been acted upon by the Indiana Department of
Environmental Management. Although unclear to IPL, EPA's action
seems to have resulted from its misinterpretation of data IPL
supplied to EPA in response to the latter's Clean Water Act
information request that preceded issuance of the Findings of
Violation. IPL believes it continues to be in compliance with the
requirements of the permit and has made continuing efforts to meet
with EPA to discuss the matter. If IPL is found to be in
violation of its permit, it could be subject to maximum fines of
$25,000 per day per violation.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT AT FEBRUARY 22, 1994
Name, age (at December 31, 1993), and positions and offices held for
the past five years:
From To
John R. Hodowal (48)
Chairman of the Board February, 1990
Chief Executive Officer May, 1989
Executive Vice President April, 1987 May, 1989
Ramon L. Humke (61)
President and Chief Operating
Officer February, 1990
President and Chief Executive
Officer of Ameritech Services
and Senior Vice President of
Ameritech Bell Group September, 1989 February, 1990
President and Chief Executive
Officer of Indiana Bell
Telephone Company October, 1983 September, 1989
John R. Brehm (40)
Senior Vice President - Finance
and Information Services May, 1991
Senior Vice President -
Financial Services May, 1989 May, 1991
Treasurer August, 1987 May, 1989
Robert W. Rawlings (52)
Senior Vice President -
Electric Production May, 1991
Vice President - Electric
Production May, 1989 May, 1991
Vice President - Engineering
and Construction April, 1986 May, 1989
From To
Gerald D. Waltz (54)
Senior Vice President -
Business Development May, 1991
Senior Vice President -
Engineering and Operations April, 1986 May, 1991
Max Califar (40)
Vice President - Human
Resources December, 1992
Treasurer May, 1989 December, 1992
Assistant Controller July, 1987 May, 1989
Stephen J. Plunkett (45)
Controller May, 1991
Assistant Controller May, 1989 May, 1991
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
All common stock of IPL is owned by Enterprises and is not
publicly traded on any stock exchange.
Aggregate quarterly dividends paid on the common stock during 1993
and 1992 were as follows (in thousands):
1993 1992
First Quarter $18,445 $17,648
Second Quarter 19,209 18,399
Third Quarter 19,209 18,400
Fourth Quarter 19,209 18,443
The IPL Board of Directors at its meeting on February 22, 1994,
declared a regular quarterly dividend on common stock of $19,979,921.98
in total, payable April 15, 1994.
Dividend Restrictions
So long as any of the several series of bonds of IPL issued under
the Mortgage and Deed of Trust, dated as of May 1, 1940, as
supplemented and modified, executed by IPL to American National Bank
and Trust Company of Chicago, as Trustee, remain outstanding, IPL is
restricted in the declaration and payment of dividends, or other
distribution on shares of its capital stock of any class, or in the
purchase or redemption of such shares, to the aggregate of its net
income, as defined in Section 47 of such Mortgage, after December 31,
1939, available for dividends. The amount which these Mortgage
provisions would have permitted IPL to declare and pay as dividends at
December 31, 1993 exceeded retained earnings at that date. Such
restrictions do not apply to the declaration or payment of dividends
upon any shares of capital stock of any class to an amount in the
aggregate not in excess of $1,107,155, or to the application to
purchase or redemption of any shares of capital stock of any class of
amounts not to exceed in the aggregate the net proceeds received by IPL
from the sale of any shares of its capital stock of any class
subsequent to December 31, 1939.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On a national basis, competition for wholesale and retail sales
within the electric utility industry has been increasing. In
Indiana, competition has been primarily focused on the wholesale
power markets. Existing Indiana law provides for public utilities to
have an exclusive permit at the retail level. The impact of
continuing competitive pressures on IPL's wholesale and retail
electric and steam markets cannot be determined at this time.
Rate Matters
Environmental Compliance Plan
IPL is subject to the new air quality provisions specified in the
federal Clean Air Act Amendments of 1990 and related regulations (the
Act). During 1993, IPL obtained an order from the Indiana Utility
Regulatory Commission (IURC) approving its environmental compliance
plan, together with the costs and expenses associated therewith,
which provides for the installation of sulfur dioxide and nitrogen
oxide emissions abatement equipment and the installation of
continuous emission monitoring systems to meet the requirements of
both Phase I and Phase II of the Act - See "Capital Requirements".
Certain intervenors in the hearing before the IURC have requested a
transcript preparatory to an appeal of that order which appeal has
not yet been perfected. As required by the Act, IPL filed its
proposed compliance plan with the Environmental Protection Agency in
February 1993.
As provided in the Act, effective January 1, 1995, IPL is
scheduled to receive annual emission "allowances" for certain of its
generating units. Each allowance would permit the emission of one
ton of sulfur dioxide. IPL presently expects that annual sulfur
dioxide emissions will not exceed annual allowances provided to IPL
under the Act. Allowances not required in the operation of IPL
facilities may be reserved for future periods or sold. The value of
such unused allowances that may be available to IPL for use in future
periods or for sale is subject to a developing market and is unknown
at this time. The IURC Order provides for the deferral of net gains
and losses resulting from any sale of emission allowances for future
amortization to cost of service on a basis to be determined in the
next general retail electric rate proceeding.
Demand Side Management Program
On September 8, 1993, IPL obtained an order from the IURC
approving a Stipulation of Settlement Agreement between IPL, the
Office of Utility Consumer Counsel, Citizens Action Coalition of
Indiana, Inc., an industrial group, the Trustees of Indiana
University and the Indiana Alliance for Fair Competition relating to
IPL's Demand Side Management Program (DSM). The order provides for
the deferral and subsequent recovery in rates of certain approved DSM
costs. The order also provides for the recording of a return on
deferred costs until recognized in rates.
Postretirement Benefits
On December 30, 1992, the IURC issued an order authorizing
Indiana utilities to account for postretirement benefits on the basis
required by the Statement of Financial Accounting Standard No. 106 --
Accounting for Postretirement Benefits other than Pensions (SFAS
106). Generally, SFAS 106 requires the use of an accrual basis
accounting method for determining annual costs of postretirement
benefits. Prior to 1993, IPL used a pay-as-you-go method to account
for such costs. IPL was required to adopt SFAS 106 effective January
1, 1993. Additionally, the order authorized the deferral of SFAS 106
costs in excess of such costs determined on a pay-as-you-go and the
recording of a resulting regulatory asset. The order further
provides for the recovery in rates of such costs in a subsequent
general rate proceeding on an individual company basis in an amount
to be determined in each such proceeding. IPL is deferring as a
regulatory asset the non-construction related SFAS 106 costs
associated with its electric business. IPL is expensing its non-
construction related SFAS 106 costs associated with its steam
business.
Regulatory Asset Deferrals
Balance sheet deferrals of regulatory assets for DSM,
postretirement benefits, income taxes and other such costs amounted
to $33.1 million in 1993. Future deferrals for such items are
expected to increase due to SFAS 106, and DSM and related carrying
charges until IPL's next retail electric rate order.
Future Rate Relief
IPL presently anticipates that it will petition the IURC to
increase its electric rates and charges during 1994. A final IURC
order on such a request may not occur until 1995. IPL's last
authorized increase in electric rates and charges occurred in August,
1986.
Steam Rate Order
The IURC authorized IPL to increase its steam system rates and
charges over a six-year period beginning January 13, 1993.
Accordingly, IPL implemented new steam tariffs effective on that date
which were designed to produce estimated additional annual steam
operating revenues as follows:
<TABLE>
<CAPTION>
Additional Cumulative
Annual Annual
Year Revenues Revenues
---- ----------- -----------
<S> <C> <C>
1994 $2,051,000 $3,983,000
1995 1,552,000 5,535,000
1996 1,625,000 7,160,000
1997 2,384,000 9,544,000
1998 370,000 9,914,000
</TABLE>
Capital Requirements
The capital requirements of IPL are primarily driven by the need
for facilities to ensure customer service reliability and
environmental compliance and by the impact of maturing long-term
debt.
Forecasted Demand & Energy
From 1994 to 1998, annual peak demand is forecasted to experience
a compound 1.5% increase, while retail kilowatthour (KWH) sales are
anticipated to increase at a 2.0% compound growth rate. Both
compound growth rates are computed assuming normal weather conditions
and include the effects of DSM. IPL expects a reduction of about 120
megawatts (MW) of annual peak demand by the year 2000 as a result of
DSM programs.
Integrated Resource Plan
Sales growth projections indicate a need for about 800 MW of
additional capacity resources by the year 2000. These resource
requirements can be met in a variety of ways including, but not
limited to, a combination of the use of DSM, power purchases, peaking
turbines and base-load generation. IPL continues to review its
integrated resource plan to consider the appropriateness of all
resource options to meet capacity requirements over the decade of the
1990's and beyond.
IPL has a well-defined, near-term integrated resource plan and is
considering all reasonable options to meet its long-term capacity
requirements. The following discussion makes certain assumptions
regarding IPL's plans to meet these requirements.
In order to maintain adequate summer capacity reserve margins in
the near-term, IPL entered into a five-year firm power purchase
agreement with Indiana Michigan Power Company (IMP), which expires
March 31, 1997. Under this agreement, IPL is receiving 200 MW of
capacity. The agreement provides for monthly capacity payments by
IPL of $1.2 million through March 31, 1997. IPL can terminate the
agreement, should the ability to recover future demand charges
through rates be disallowed. IPL and IMP will also exchange 50 MW of
seasonal power over the 1995-1998 period.
IPL plans to add two 80 MW combustion turbines with in-service
dates in 1994 and 1995. Under Indiana law, IPL must obtain from the
IURC a certificate of "public convenience and necessity"
(Certificate) prior to purchasing or commencing construction of any
new electric generation facility. IPL received Certificates from the
IURC for construction of these combustion turbines during 1992.
IPL is considering a variety of options to meet its long-term
capacity requirements through the year 2000 including DSM, utility
and nonutility power purchases, additional peaking turbines and base-
load generating units. Presently, IPL plans to add two additional 80
MW combustion turbines with in-service dates in 1998 and 1999. IPL
also has options to extend the 200 MW firm power purchase agreement
with IMP through December 31, 1997 and subsequently through November
30, 1999, with capacity payments of $1.2 million per month and $1.55
million per month, respectively. Under a recent agreement, IPL has
an option to purchase up to 250 MW from PSI Energy over the 1996 to
2000 period. IPL is also evaluating the installation, on a joint
ownership basis, of two 426 MW base-load generating units to be
placed in service in 2000 and 2002, respectively, or beyond. Of the
total 852 MW, IPL proposes to own 400 MW, with other partners owning
the remaining 452 MW. There is no assurance that IPL will be able to
ultimately reach a joint ownership agreement with any other party.
IPL has not applied for Certificates for the additional combustion
turbines or the base load unit.
Environmental Compliance Construction Requests
IPL estimates that the capital cost of complying with the Act
through 1997 will be approximately $240 million, including Allowance
for Funds Used During Construction (AFUDC), of which $33.0 million
has been expended prior to 1994. IPL further estimates that,
subsequent to December 31, 1997, no significant capital expenditures
will be required to bring generating units into compliance with the
Act until the year 2010 or beyond.
Cost of Construction Program
The cost of IPL's construction program during 1993, 1992 and 1991
was $149.3 million, $115.3 million and $96.3 million, including AFUDC
of $3.6 million, $3.2 million and $1.6 million, respectively.
IPL estimates the cost of the construction program for the five
years, 1994-1998, to be approximately $1.0 billion including AFUDC of
$73.1 million. This program is subject to continuing review and is
revised from time to time in light of changes in the actual customer
demand for electric energy, IPL's financial condition and
construction cost escalations. In addition to costs of environmental
compliance, the five-year construction program includes
$113.7 million for the four 80 MW combustion turbines and $217.2
million for the base-load capacity, mentioned above. Additional
expenditures will be incurred beyond 1998 for the capacity with in-
service dates subsequent to 1998. Transmission and substation
facilities relating to the planned base-load capacity amount to $29.0
million in the five-year construction program. Expenditures for the
new capacity are contingent upon the review of other long-term and
near-term options previously discussed and subsequent receipt of the
necessary Certificates.
Retirement of Long-term Debt and Equity Securities
During 1993, 1992 and 1991, IPL retired long-term debt, including
sinking fund payments, of $96.9 million, $75.0 million and $96.4
million, respectively, which required replacement with other debt
securities at a lower cost.
IPL will retire $7.5 million, $15.0 million, $11.25 million and
$18.75 million of maturing long-term debt during 1994, 1996, 1997 and
1998, respectively, which may require replacement in whole or in part
with other debt or equity securities. In addition, other existing
higher rate debt may be refinanced depending upon market conditions.
Financing
Financing Requirements
During the three-year period ended December 31, 1993, IPL's
permanent financing totaled $275.3 million in long-term debt. The
net proceeds of these securities were used, along with internal
funds, to retire existing long-term debt. All of IPL's construction
expenditures during this three-year period were funded with
internally generated cash and short-term debt.
IPL's permanent financing requirements for the five-year period,
1994-1998, are forecasted to include additional sales of debt and
equity securities totaling $447.7 million. This amount is highly
contingent on the timing and cost of any new capacity. The timing,
number and dollar amounts of such financings will depend on market
conditions and other factors, including required regulatory
approvals. In addition to the sale of new securities, IPL has
authority from the IURC to redeem and replace certain of its existing
securities, should favorable market conditions dictate.
Internally generated funds supplemented by temporary short-term
borrowings are forecasted to provide the remaining funds required for
the five-year construction program. Uncertainties which could affect
this forecast include the impact of inflation on operating expenses,
the actual degree of growth in KWH sales, the level of interchange
sales with other utilities and the receipt of Certificates required
for new electric generation facilities.
Mortgage Restrictions
IPL is limited in its ability to issue certain securities by
restrictions under its Mortgage and Deed of Trust (Mortgage) and its
Amended Articles of Incorporation (Articles). The restriction under
the Articles requires that the net income of IPL, as specified
therein, shall be at least one and one-half times the total interest
on the funded debt and the pro forma dividend requirements on the
outstanding preferred stock and on any preferred stock proposed to be
issued, before any additional preferred stock can be issued. The
Mortgage restriction requires that net earnings as calculated
thereunder be two and one-half times the annual interest requirements
before additional bonds can be authenticated on the basis of property
additions. Based on IPL's net earnings for the twelve months ended
December 31, 1993, the ratios under the Articles and the Mortgage are
3.28 and 7.33, respectively. IPL believes these requirements will
not restrict any anticipated future financings.
RESULTS OF OPERATIONS
1993 vs. 1992
Income applicable to common stock increased by $9.7 million in
1993 compared to 1992. The following discussion highlights the
factors contributing to the increase.
Operations
Utility operating income increased $8.1 million in 1993 compared
to 1992. Contributing to this increase was an increase in electric
operating revenues of $30.1 million, due to increases in retail sales
of $25.9 million, wholesale sales of $2.8 million and miscellaneous
electric revenue of $1.4 million. Retail electric sales were higher
due to increased retail KWH sales of $31.1 million and decreased fuel
cost recoveries of $5.2 million. The increase in retail KWH sales
this year resulted primarily from the return to normal weather
conditions in 1993 as compared to the abnormally mild summer weather
conditions in 1992. During 1992, cooling degree days were 26.5
percent below normal. Wholesale sales were higher as a result of
increased energy requirements of other utilities, who were also
affected by the mild summer during 1992. The continuing health of
the Indianapolis economy also contributed to the growth in KWH sales,
particularly in the large industrial class.
Fuel costs increased $3.3 million due to increases in fuel
consumption of $9.6 million, partially offset by decreased unit costs
of coal and oil of $.5 million and deferred fuel costs of
$5.8 million. Power purchased increased $11.6 million due to
increased capacity payments of $7.2 million to IMP in accordance with
a five-year power purchase agreement, and by increased purchases of
energy as a result of the near normal weather conditions in 1993 as
compared to 1992.
Maintenance expenses increased $4.9 million. This increase
reflects higher unit overhaul and outage expenses in 1993, partially
offset by decreased distribution maintenance expenses as a result of
a severe storm in 1992 that cost $3.9 million. Amortization of the
deferred return--rate phase-in plan, decreased due to the completion
in August 1992 of the five-year amortization period.
Taxes other than income taxes decreased $1.7 million as a result
of lower property assessments. Income taxes - net, increased
$4.3 million as a result of the increase in pretax utility operating
income and a one percentage point increase in the federal income tax
rate.
Other Income And Deductions
Other - net, increased $1.6 million as a result of a $1.5 million
contribution to customer energy assistance programs expensed last
year.
Interest Charges
Interest on long-term debt decreased $1.3 million as a result of
refinancing six series of IPL's First Mortgage Bonds as follows: the
10 1/4% Series, First Mortgage Bonds in October 1993 (replaced with
the 5.50% Series, First Mortgage Bonds); the 5.80% Series, First
Mortgage Bonds in October, 1993 (replaced with the 5.40% Series,
First Mortgage Bonds); the 6.90% and the 6.60% Series, First Mortgage
Bonds (replaced with the 6.10% Series, First Mortgage Bonds); and the
9.30% and 9 1/2% Series, First Mortgage Bonds in September 1992
(replaced with the 7 3/8% Series, First Mortgage Bonds). The
allowance for borrowed funds used during construction increased due
primarily to an increased construction base. Other interest charges
increased $1.1 million due to higher notes payable balances carried
during 1993.
1992 vs. 1991
Income applicable to common stock decreased by $10.8 million in
1992 compared to 1991. The following discussion highlights the
factors contributing to the decrease.
Operations
Utility operating income decreased $15.6 million in 1992 compared
to 1991. Contributing to this decrease were lower electric operating
revenues of $16.7 million, due to lower retail electric sales of
$13.9 million, lower wholesale sales of $1.8 million and lower
miscellaneous electric revenue of $1.0 million. Retail electric
sales were lower due to decreased retail KWH sales of $10.6 million
and decreased fuel cost recoveries of $3.3 million. The decrease in
retail KWH sales in 1992 resulted primarily from unusual weather
conditions in both 1992 and 1991. Abnormally mild summer weather
conditions in 1992 resulted in lower KWH sales, while the unusually
hot weather during the summer of 1991 significantly increased KWH
sales in that year. During 1992, cooling degree days were 48 percent
lower than 1991 and 26.5 percent below normal. Wholesale sales were
lower as a result of decreased energy requirements of other
utilities, who were also affected by the mild summer.
Fuel costs decreased $7.4 million due to decreases in fuel
consumption of $4.3 million, decreased unit costs of coal and oil of
$2.0 million and deferred fuel costs of $1.1 million. Other
operating expenses increased $2.9 million due primarily to an
increase in administrative and general expenses of $1.4 million
(primarily as a result of increased salaries and group insurance
costs), and a $2.0 million expense related to the FAC Agreement.
Power purchased increased $3.9 million due to capacity payments of
$5.4 million to IMP in accordance with a five-year power purchase
agreement, partially offset by decreased purchases of energy as a
result of the mild summer weather.
Maintenance expenses increased $2.0 million, reflecting
transmission and distribution system repair expenses as a result of a
severe storm in June that cost a total of $3.9 million. These
expenses were partially offset by decreased unit overhaul expenses in
1992, compared to 1991. Amortization of the deferred return--rate
phase-in plan, decreased due to the completion in August 1992, of the
five-year amortization period.
Taxes other than income taxes increased $2.7 million as a result
of increased property assessments and higher property tax rates.
Income taxes-net, decreased $3.0 million primarily due to the
decrease in pretax utility operating income.
Other Income And Deductions
Allowance for equity funds used during construction increased
$1.3 million due to an increased construction base in 1992.
Other - net, decreased $3.9 million due to decreased interest and
dividend income earned by IPL of $2.4 million, and as a result of a
$1.5 million contribution to customer energy assistance programs
expensed in 1992. IPL received interest and dividend income in 1991
from investments, special deposits and other sources which did not
occur this year.
Income taxes - net, decreased $1.1 million as a result of
decreased pretax operating income of the unregulated subsidiaries,
decreased IPL interest and dividend income and the increased
contribution expense previously mentioned.
Interest Charges
Interest and other charges - net, decreased $6.4 million
primarily due to decreased interest on long-term debt of $3.8
million. This decrease is the result of refinancing four series of
IPL's First Mortgage Bonds as follows: the 12% Series, First
Mortgage Bonds in August 1991 (replaced with the long-term note at a
floating interest rate that approximates tax-exempt Commercial Paper
Rates); the 9 7/8% Series, First Mortgage Bonds in November 1991
(replaced with the 8% Series, First Mortgage Bonds); and the 9.30%
and 9 1/2% Series, First Mortgage Bonds in September 1992 (replaced
with the 7 3/8% Series, First Mortgage Bonds). The allowance for
borrowed funds used during construction increased due primarily to an
increased construction base. Other interest charges decreased $1.4
million due to lower interest rates during 1992.
1994
Factors having a bearing on 1994 earnings compared to 1993 will
include the impact of economic conditions, weather conditions, an
increased level of construction expenditures, an increase in monthly
capacity payments and the implementation of new steam system tariff
rates.
Authorized electric operating income for 1994 as determined by
the IURC is approximately $144.0 million. (IPL earned $141.2 million
during 1993 and $133.4 million during 1992.)
Affecting 1994 earnings will be the cost of the IMP purchases
mentioned previously. Annual capacity payments will increase by $1.8
million.
The overall effect these factors will have on 1994 earnings
cannot be accurately determined at this time.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
Indianapolis Power & Light Company:
We have audited the accompanying balance sheets and statements of
capitalization of Indianapolis Power & Light Company as of December 31,
1993 and 1992, and the related statements of income, retained earnings, and
cash flows for each of the three years in the period ended December 31,
1993. Our audits also included the financial statement schedules listed in
the Index at Item 14(a). These financial statements and financial
statement schedules are the responsibility of the Company's management.
Our responsibility is to express an opinion on the financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Indianapolis Power & Light Company as
of December 31, 1993 and 1992, and the results of its operations and its
cash flows for each of the three years in the period ended December 31,
1993 in conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedules, when considered in
relation to the basic financial statements taken as a whole, present fairly
in all material respects the information set forth therein.
As discussed in Notes 1 and 9 to the financial statements, the Company
changed its method of accounting for income taxes and postretirement
benefits other than pensions effective January 1, 1993.
/s/ Deloitte & Touche
Deloitte & Touche
Indianapolis, Indiana
January 21, 1994
<TABLE>
<CAPTION>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Income
For the Years Ended December 31, 1993, 1992 and 1991
- --------------------------------------------------------------------------------------------------
1993 1992 1991
- --------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
OPERATING REVENUES (Note 8):
Electric $ 629,327 $ 599,203 $ 615,858
Steam 34,976 34,000 32,015
----------- ----------- -----------
Total operating revenues 664,303 633,203 647,873
----------- ----------- -----------
OPERATING EXPENSES:
Operation:
Fuel 158,390 155,072 162,466
Other 100,890 100,447 97,538
Power purchased 19,407 7,804 3,954
Purchased steam 8,051 7,612 7,599
Maintenance 67,326 62,446 60,491
Depreciation and amortization 78,372 74,829 72,344
Amortization of deferred return - rate phase-in plan - 3,786 6,282
Taxes other than income taxes 29,627 31,348 28,683
Income taxes - net (Note 7) 59,872 55,619 58,640
----------- ----------- -----------
Total operating expenses 521,935 498,963 497,997
----------- ----------- -----------
OPERATING INCOME 142,368 134,240 149,876
----------- ----------- -----------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used during construction 2,010 1,985 686
Other - net (1,237) (2,872) 992
Income taxes - net (Note 7) 599 1,143 113
----------- ----------- -----------
Total other income and (deductions) - net 1,372 256 1,791
----------- ----------- -----------
INCOME BEFORE INTEREST CHARGES 143,740 134,496 151,667
----------- ----------- -----------
INTEREST CHARGES:
Interest on long-term debt 41,399 42,663 46,464
Allowance for borrowed funds used during construction (3,517) (3,096) (1,925)
Other interest 2,305 1,251 2,596
Amortization of redemption premiums and expenses on
debt and preferred stock - net 787 620 666
----------- ----------- -----------
Total interest charges 40,974 41,438 47,801
----------- ----------- -----------
NET INCOME 102,766 93,058 103,866
PREFERRED DIVIDEND REQUIREMENTS 3,182 3,182 3,182
----------- ----------- -----------
INCOME APPLICABLE TO COMMON STOCK $ 99,584 $ 89,876 $ 100,684
=========== =========== ===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
INDIANAPOLIS POWER & LIGHT COMPANY
Balance Sheets
December 31, 1993 and 1992
- ------------------------------------------------------------------------------------------------
ASSETS 1993 1992
- ------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
UTILITY PLANT:
Utility plant in service (Note 2) $ 2,300,682 $ 2,225,017
Less accumulated depreciation 876,054 818,319
-------------- --------------
Utility plant in service - net 1,424,628 1,406,698
Construction work in progress 168,480 110,506
Property held for future use 15,763 15,760
-------------- --------------
Utility plant - net 1,608,871 1,532,964
-------------- --------------
OTHER PROPERTY -
At cost, less accumulated depreciation 1,873 1,513
-------------- --------------
CURRENT ASSETS:
Cash and cash equivalents 8,349 10,581
Accounts receivable (less allowance for doubtful
accounts - 1993, $626,000 and 1992, $647,000) 47,365 48,943
Receivable from parent 5,482 442
Fuel - at average cost 35,213 47,174
Materials and supplies - at average cost 54,847 53,519
Prepayments and other current assets 3,240 2,160
-------------- --------------
Total current assets 154,496 162,819
-------------- --------------
DEFERRED DEBITS:
Unamortized Petersburg Unit #4 carrying charges 30,587 28,661
Unamortized redemption premiums and expenses on debt and
preferred stock (Note 5) 25,453 23,893
Other regulatory assets 32,954 1,811
Miscellaneous 16,072 11,585
-------------- --------------
Total deferred debits 105,066 65,950
-------------- --------------
TOTAL $ 1,870,306 $ 1,763,246
============== ==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES 1993 1992
- ------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
CAPITALIZATION (See Statements of Capitalization):
Common shareholder's equity $ 705,149 $ 682,413
Cumulative preferred stock 51,898 51,898
Long-term debt 532,260 540,641
------------- -------------
Total capitalization 1,289,307 1,274,952
------------- -------------
CURRENT LIABILITIES:
Notes payable - banks and commercial paper (Note 6) 90,000 40,000
Current maturities and sinking fund requirements 8,729 1,706
Accounts payable 74,187 66,958
Dividends payable 20,024 19,244
Payrolls accrued 4,505 3,674
Taxes accrued 21,377 23,572
Interest accrued 11,150 11,474
Other current liabilities 5,316 8,201
------------- -------------
Total current liabilities 235,288 174,829
------------- -------------
DEFERRED CREDITS:
Accumulated deferred income taxes - net (Note 7) 270,182 252,253
Unamortized investment tax credit 57,029 60,297
Accrued postretirement benefits (Note 9) 17,668 -
Miscellaneous 832 915
------------- -------------
Total deferred credits 345,711 313,465
------------- -------------
COMMITMENTS AND CONTINGENCIES (Note 10)
TOTAL $ 1,870,306 $ 1,763,246
============= =============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Cash Flows
For the Years Ended December 31, 1993, 1992 and 1991
- ------------------------------------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net income $ 102,766 $ 93,058 $ 103,866
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 79,412 75,511 72,860
Amortization of deferred return - rate phase-in plan - 3,786 6,282
Deferred income taxes and investment tax
credit adjustments, net (430) 216 (1,179)
Allowance for funds used during construction (5,476) (5,081) (2,611)
Decrease (increase) in certain assets:
Accounts receivable (3,462) (5,659) 691
Fuel, materials and supplies 10,633 (7,992) 2,254
Other current assets (1,080) (110) 5,953
Increase (decrease) in certain liabilities:
Accounts payable 7,229 14,470 7,511
Taxes accrued (2,195) 1,054 2,773
Other current liabilities (2,458) 2,801 (1,637)
---------- ---------- ----------
Net cash provided by operating activities 184,939 172,054 196,763
---------- ---------- ----------
CASH FLOWS FROM INVESTING:
Construction expenditures (145,765) (112,037) (94,633)
Other (8,447) (13,676) 163
---------- ---------- ----------
Net cash used in investing activities (154,212) (125,713) (94,470)
---------- ---------- ----------
CASH FLOWS FROM FINANCING:
Issuance of long-term debt 96,500 80,000 98,800
Retirement of long-term debt - including premiums (98,978) (79,958) (101,372)
Short-term debt - net 50,000 37,000 (23,500)
Dividends paid (79,253) (76,072) (73,023)
Other (1,228) (1,142) (1,208)
---------- ---------- ----------
Net cash used in financing activities (32,959) (40,172) (100,303)
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,232) 6,169 1,990
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,581 4,412 2,422
---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,349 $ 10,581 $ 4,412
========== ========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 42,489 $ 41,649 $ 50,484
========== ========== ==========
Income taxes $ 61,806 $ 56,136 $ 58,562
========== ========== ==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Capitalization
December 31, 1993 and 1992
- -----------------------------------------------------------------------------------------------------------------
1993 1992
- -----------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
COMMON SHAREHOLDER'S EQUITY:
Common stock, no par, authorized - 20,000,0000 shares
issued and outstanding - 17,206,630 shares (Note 4) $ 324,537 $ 324,537
Premium on 4% cumulative preferred stock 1,363 1,363
Retained earnings 379,249 356,513
------------- -------------
Total common shareholder's equity $ 705,149 $ 682,413
============= =============
CUMULATIVE PREFERRED STOCK (Note 4):
Non-redeemable - $100 par value, authorized
2,000,000 shares Call Price at
December 31, 1993
-----------------
4% Series, 100,000 shares $118.00 $ 10,000 $ 10,000
4.20% Series, 39,000 shares 103.00 3,900 3,900
4.60% Series, 30,000 shares 103.00 3,000 3,000
4.80% Series, 50,000 shares 101.00 5,000 5,000
6% Series, 100,000 shares 102.00 10,000 10,000
8.20% Series, 199,985 shares 101.00 19,998 19,998
------------- -------------
Total cumulative preferred stock $ 51,898 $ 51,898
============= =============
VARIABLE CLASS PREFERRED STOCK:
Par value undetermined, authorized
3,000,000 shares, none issued
LONG-TERM DEBT (Notes 2 and 5):
First mortgage bonds:
4 1/2% Series, due August 1994 $ 7,500 $ 7,500
5 1/8% Series, due April 1996 15,400 15,575
5 5/8% Series, due May 1997 11,629 11,629
7 1/8% Series, due May 1998 19,750 19,913
7.40% Series, due March 2002 33,200 33,579
7.65% Series, due March 2003 25,200 25,489
6.90% Series, due July 2006 - 19,650
8% Series, due October 2006 58,800 58,800
5.80% Series, due August 2007 - 25,000
7 3/8% Series, due August 2007 80,000 80,000
6.60% Series, due September 2008 - 22,200
9 5/8% Series, due September 2012 40,000 40,000
10 1/4% Series, due November 2013 - 30,000
10 5/8% Series, due December 2014 40,000 40,000
6.10% Series, due January 2016 41,850 -
5.40% Series, due August 2017 24,650 -
9 5/8% Series, due June 2019 50,000 50,000
7.45% Series, due August 2019 23,500 23,500
5.50% Series, due October 2023 30,000 -
Unamortized premium (discount) - net (490) (488)
------------- -------------
Total first mortgage bonds 500,989 502,347
Long-term note, due August 2021 40,000 40,000
Current maturities and sinking fund requirements (8,729) (1,706)
------------- -------------
Total long-term debt $ 532,260 $ 540,641
============= =============
TOTAL CAPITALIZATION $ 1,289,307 $ 1,274,952
============= =============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Retained Earnings
For the Years Ended December 31, 1993, 1992 and 1991
- ------------------------------------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
RETAINED EARNINGS AT BEGINNING OF YEAR $ 356,513 $ 340,323 $ 310,231
NET INCOME 102,766 93,058 103,866
----------- ---------- ----------
Total 459,279 433,381 414,097
DEDUCT:
Cash dividends declared:
Cumulative preferred stock - at prescribed
rate of each series (See Statements of
Capitalization) 3,182 3,182 3,182
Common stock 76,848 73,686 70,592
----------- ---------- ----------
Total 80,030 76,868 73,774
----------- ---------- ----------
RETAINED EARNINGS AT END OF YEAR $ 379,249 $ 356,513 $ 340,323
=========== ========== ==========
See notes to financial statements.
</TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Notes to Financial Statements
For the Years Ended December 31, 1993, 1992 and 1991
- ---------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
All the outstanding common stock of Indianapolis Power & Light Company
(IPL) is owned by IPALCO Enterprises, Inc. At December 31, 1993 and 1992,
IPL had a receivable, which is due on demand, for advances made to IPALCO.
System of Accounts--The accounts of IPL are maintained in accordance
with the system of accounts prescribed by the Indiana Utility Regulatory
Commission (IURC), which system substantially conforms to that prescribed
by the Federal Energy Regulatory Commission.
Revenues--Revenues are recorded as billed to customers on a monthly
cycle billing basis. Revenue is not accrued for energy delivered but
unbilled at the end of the year. A fuel adjustment charge provision, which
is established after public hearing, is applicable to substantially all the
rate schedules of IPL, and permits the billing or crediting of fuel costs
above or below the levels included in such rate schedules.
Under current IURC practice, future fuel adjustment revenues may be
temporarily reduced should actual operating expenses be less than or income
levels be above amounts authorized by the IURC.
Authorized Annual Operating Income--In an IURC order dated May 6,
1992, IPL's maximum authorized annual electric operating income, for
purposes of quarterly earnings tests, was established at approximately $147
million through July 31, 1992, declining ratably to approximately $144
million at July 31, 1993. This level will be maintained until IPL's next
general electric rate order. Additionally, through the date of IPL's next
general electric rate order, IPL is required to file upward and downward
adjustments in fuel cost credits and charges on a quarterly basis.
As provided in an order dated December 21, 1992, IPL's authorized
annual steam net operating income is $6.2 million, plus any cumulative
annual underearnings occurring during the five-year period subsequent to the
implementation of the new rate tariffs.
Deferred Fuel Expense--Fuel costs recoverable in subsequent periods
under the fuel adjustment charge provision are deferred.
Allowance For Funds Used During Construction (AFUDC)--In accordance
with the prescribed uniform system of accounts, IPL capitalizes an
allowance for the net cost of funds (interest on borrowed and a reasonable
rate on equity funds) used for construction purposes during the period of
construction with a corresponding credit to income. IPL capitalized
amounts using pre-tax composite rates of 8.0%, 9.5% and 9.6% during 1993,
1992 and 1991, respectively.
Utility Plant and Depreciation--Utility plant is stated at original
cost as defined for regulatory purposes. The cost of additions to utility
plant and replacements of retirement units of property, as distinct from
renewals of minor items which are charged to maintenance, are charged to
plant accounts. Units of property replaced or abandoned in the ordinary
course of business are retired from the plant accounts at cost; such
amounts plus removal costs, less salvage, are charged to accumulated
depreciation. AFUDC is capitalized and depreciated over the life of the
related facility. Depreciation was computed by the straight-line method
based on the functional rates and averaged 3.4% during each of the years
1993, 1992 and 1991.
Statements of Cash Flows - Cash Equivalents--IPL considers all highly
liquid investments purchased with original maturities of 90 days or less to
be cash equivalents.
Unamortized Deferred Return - Rate Phase-in Plan--IPL deferred the pre-
tax debt and equity costs relating to its investment in plant which did not
earn a cash return during the first year of a two-year, two-step retail
electric rate phase-in plan authorized August 6, 1986. This deferred
return and the related income taxes were amortized to cost of service over
a five-year period commencing with the August 8, 1987 implementation of the
second step of the phase-in plan. The deferred return was fully amortized
in August, 1992.
Unamortized Petersburg Unit 4 Carrying Charges--IPL has deferred
certain post in-service date carrying charges of its investment in
Petersburg Unit 4 (Unit 4). These carrying charges include both AFUDC on
and depreciation of Unit 4 costs from the April 28, 1986 in-service date
through the August 6, 1986 IURC rate order date in which IPL's investment
in Unit 4 was included in rate base. Subsequent to April 28, 1986, IPL has
capitalized interest on these deferred carrying charges. In addition, IPL
has capitalized $7.0 million of additional allowance for earnings on
shareholders' investment for rate-making purposes but not for financial
reporting purposes. As provided in the rate order, the total amount of
deferred carrying charges will be included in IPL's next general electric
rate case.
Unamortized Redemption Premiums and Expenses on Debt and Preferred
Stock--In accordance with regulatory treatment, IPL defers non-sinking fund
debt redemption premiums and expenses, and amortizes such costs over the
life of the original debt or, in the case of preferred stock redemption
premiums, over twenty years.
Other Regulatory Assets--At December 31, 1993 and 1992, IPL has
deferred certain costs and expenses which are recoverable in future rates
as follows:
<TABLE>
<CAPTION>
1993 1992
- --------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Postretirement benefit costs in excess of
cash payments and amounts capitalized $12,893 $ -
SFAS 109 15,091 -
Other 4,970 1,811
------- -------
Total $32,954 $ 1,811
======= =======
</TABLE>
Income Taxes--Deferred taxes are provided for all significant timing
differences between book and taxable income. Such differences include the
use of accelerated depreciation methods for tax purposes, the use of
different book and tax depreciable lives, rates and in-service dates, and
the accelerated tax amortization of pollution control facilities.
Investment tax credits which reduced Federal income taxes in the years
they arose have been deferred and are being amortized to income over the
useful lives of the properties in accordance with regulatory treatment.
Effective January 1, 1993, IPL adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," on a
prospective basis. This statement requires the current recognition of
income tax expense for (a) the amount of income taxes payable or refundable
for the current year, and (b) for deferred tax liabilities and assets for
the future tax consequences of events that have been recognized in IPL's
financial statements or income tax returns. The effects of income taxes
are measured based on enacted laws and rates. Substantially all of the
adjustments required by SFAS 109 were recorded to deferred tax balance
sheet accounts, with the offsetting adjustments to regulatory assets and
liabilities. The adoption of this standard did not have a material impact
on IPL's cash flows or results of operations due to the effect of rate
regulation.
Employee Benefit Plans--Substantially all employees of IPL are covered
by a non-contributory, defined benefit pension plan which is funded through
two trusts. Additionally, a select group of management employees of IPL
are covered under a funded supplemental retirement plan. Collectively,
these two plans are referred to as Plans. Benefits are based on each
individual employee's years of service and compensation. IPL's funding
policy is to contribute annually not less than the minimum required by
applicable law, nor more than the maximum amount which can be deducted for
Federal income tax purposes.
IPL also sponsors the Employees' Thrift Plan of Indianapolis Power &
Light Company (Thrift Plan), a defined contribution plan covering
substantially all employees of IPL. Employees elect to make contributions
to the plan based on a percentage of their annual base compensation. IPL
matches each employee's contributions in amounts up to, but not exceeding
four percent of the employee's annual base compensation.
Reclassification--Certain amounts from prior years' financial
statements have been reclassified to conform to the current year
presentation.
2. UTILITY PLANT IN SERVICE:
The original cost of utility plant in service at December 31,
segregated by functional classifications, follows:
<TABLE>
<CAPTION>
1993 1992
- ---------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Production $1,387,239 $1,351,207
Transmission 218,369 210,699
Distribution:
Electric 551,217 528,233
Steam 42,205 40,092
General 101,652 94,786
---------- ----------
Total utility plant in service $2,300,682 $2,225,017
========== ==========
</TABLE>
Substantially all of IPL's property is subject to the lien of the
indentures securing IPL's First Mortgage Bonds.
3. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments". The estimated
fair value amounts have been determined by IPL, using available market
information and appropriate valuation methodologies. However, considerable
judgment is necessarily required in interpreting market data to develop the
estimates of fair value. Accordingly, the estimates presented herein are
not necessarily indicative of the amounts that IPL could realize in a
current market exchange. The use of different market assumptions and/or
estimation methodologies may have an effect on the estimated fair value
amounts.
Cash, cash equivalents and notes payable--The carrying amount
approximates fair value due to the short maturity of these instruments.
Long-term debt, including current maturities and sinking fund
requirements--Interest rates that are currently available to IPL for
issuance of debt with similar terms and remaining maturities are used to
estimate fair value. At December 31, 1993 and 1992 the carrying amount of
IPL's long-term debt, including current maturities and sinking fund
requirements, and the approximate fair value are as follows:
<TABLE>
<CAPTION>
1993 1992
------------------------------------------------
(In Thousands)
<S> <C> <C>
Carrying amount $540,989 $542,347
Approximate fair value 576,621 567,577
</TABLE>
4. CAPITAL STOCK:
Common Stock:
There were no changes in IPL common stock during 1993, 1992 and 1991.
Restrictions on the payment of cash dividends or other distributions
on common stock and on the purchase or redemption of such shares are
contained in the indenture securing IPL's First Mortgage Bonds. All of the
retained earnings at December 31, 1993, were free of such restrictions.
Cumulative Preferred Stock:
Preferred stock shareholders are entitled to two votes per share, and
if four full quarterly dividends are in default, they are entitled to elect
the smallest number of Directors to constitute a majority.
5. LONG-TERM DEBT:
The 9 5/8% Series due 2012, 10 5/8% Series due 2014, 6.10% Series due
2016, 5.40% Series due 2017, and 5.50% Series due 2023 were each issued to
the City of Petersburg, Indiana (City) by IPL to secure the loan of proceeds
received from a like amount of tax-exempt Pollution Control Revenue Bonds
issued by the City for the purpose of financing pollution control facilities
at IPL's Petersburg Generating Station.
On August 6, 1992, IPL issued $80 million of First Mortgage Bonds,
7 3/8% series, due 2007. The net proceeds from this issue were used to
redeem on September 1, 1992, IPL's First Mortgage Bonds, 9.3% series, due
2006 and 9 1/2% series, due 2016, at the prices of $104.17 and $107.13,
respectively, plus accrued interest.
On April 13, 1993, IPL issued a First Mortgage Bond, 6.10% Series, due
2016, in the principal amount of $41.85 million, in connection with the
issuance of the same amount of Pollution Control Refunding Revenue Bonds by
the City of Petersburg, Indiana. The net proceeds, along with other IPL
funds were used to redeem on June 1, 1993, IPL's $19.65 million First
Mortgage Bonds, 6.90% Series, due 2006, and IPL's $22.2 million First
Mortgage Bonds, 6.60% Series, due 2008, at the prices of $100 and $101,
respectively, plus accrued interest.
On October 14, 1993, IPL issued a First Mortgage Bond, 5.40% Series,
due 2017, in the principal amount of $24.65 million, in connection with
the issuance of the same amount of Pollution Control Refunding Revenue
Bonds by the City of Petersburg, Indiana. The net proceeds, along with
other IPL funds, were used to redeem on November 15, 1993, IPL's $24.65
million First Mortgage Bonds, 5.80% Series, due 2007, at the price of
$100 plus accrued interest.
Also, on October 14, 1993, IPL issued a First Mortgage Bond, 5.50%
Series, due 2023, in the principal amount of $30.0 million, in connection
with the issuance of the same amount of Pollution Control Refunding
Revenue Bonds by the City of Petersburg, Indiana. The net proceeds,
along with other IPL funds, were used to redeem on November 15, 1993,
IPL's $30.0 million First Mortgage Bonds, 10 1/4% Series, due 2013, at
the price of $103 plus accrued interest.
IPL has a 30-year unsecured promissory note which was issued to the
City of Petersburg, Indiana, in connection with the issuance of $40 million
of Pollution Control Refunding Revenue Bonds, due 2021, by the City of
Petersburg. This note and the related bonds provide for a floating interest
rate that approximates tax-exempt Commercial Paper Rates. The average
interest rate on this note was 2.40% for 1993 and 3.00% for 1992. At the
option of IPL, the bonds can be converted to First Mortgage Bonds which
would bear interest at a fixed rate.
Maturities and sinking fund requirements on long-term debt for the
five years subsequent to December 31, 1993, are as follows:
<TABLE>
<CAPTION>
Net Sinking Fund
Maturities Requirements Total
- --------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
1994 $ 7,500 $1,229 $ 8,729
1995 - 1,300 1,300
1996 15,000 1,100 16,100
1997 11,250 950 12,200
1998 18,750 700 19,450
</TABLE>
6. LINES OF CREDIT:
IPL has lines of credit with banks of $100 million at December 31,
1993, to provide loans for interim financing. These lines of credit, based
on separate formal and informal agreements, have expiration dates ranging
from January 31, 1994 to November 30, 1994 and require the payment of
commitment fees. At December 31, 1993, these credit lines were unused.
Lines of credit supporting commercial paper were $90 million at December
31, 1993.
7. INCOME TAXES:
Federal and State income taxes charged to income are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
- -------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Operating Expenses:
Current income taxes:
Federal $52,321 $48,504 $52,324
State 7,761 7,500 8,050
------- ------- -------
Total current taxes 60,082 56,004 60,374
======= ======= =======
Deferred income taxes, net--Federal and State:
Excess of tax depreciation over book
depreciation 7,109 5,254 5,939
Early retirement of bonds 592 1,965 1,415
Allowance for borrowed funds used during
construction (net of capitalized interest
for tax purposes) (1,214) (1,050) (1,157)
Amortization of deferred return - rate
phase-in plan (debt portion) - (676) (1,122)
Unbilled revenues (1,768) 436 (156)
Accrued pension expense (1,865) (1,965) (2,100)
Miscellaneous 204 (890) (1,411)
------- ------- -------
Total deferred taxes 3,058 3,074 1,408
------- ------- -------
Net amortization of investment credit (3,268) (3,459) (3,142)
------- ------- -------
Total charge to operating expenses 59,872 55,619 58,640
Net credit to other income and deductions (599) (1,143) (113)
------- ------- -------
Total Federal and State income tax provisions $59,273 $54,476 $58,527
======= ======= =======
</TABLE>
The provision for Federal income taxes (including net investment tax
credit adjustments) is less than the amount computed by applying the
statutory tax rate to pre-tax income. The reasons for the difference,
stated as a percentage of pre-tax income, are as follows:
<TABLE>
<CAPTION>
1993 1992 1991
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 34.0% 34.0%
Effect of State income taxes (1.8) (1.9) (1.8)
Amortization of investment tax credits (2.0) (2.3) (2.0)
Other - net 0.1 1.5 0.6
---- ---- ----
Effective tax rate 31.3% 31.3% 30.8%
==== ==== ====
</TABLE>
The significant items comprising IPL's net deferred tax liability
recognized in the balance sheet as of December 31, 1993 are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
(In Thousands)
<S> <C>
Deferred tax liabilities:
Relating to utility property $335,824
Early retirement of bonds 7,377
Other 1,626
--------
Total deferred tax liabilities 344,827
--------
Deferred tax assets:
Unbilled revenue 10,148
Pension 9,033
Investment tax credit 34,842
Other 20,622
--------
Total deferred tax assets 74,645
--------
Net deferred tax liability $270,182
========
</TABLE>
8. RATE MATTERS
Steam Rate Order
By an order dated January 13, 1993, the IURC authorized IPL to
increase its steam system rates and charges over a six-year period.
Accordingly, IPL implemented new steam tariffs designed to produce
estimated additional annual steam operating revenues as follows:
<TABLE>
<CAPTION>
Additional Cumulative
Annual Annual
Year Revenues Revenues
---- ---------- ----------
<S> <C> <C>
January 13, 1993 $1,932,000 $1,932,000
January 13, 1994 2,051,000 3,983,000
January 13, 1995 1,552,000 5,535,000
January 13, 1996 1,625,000 7,160,000
January 13, 1997 2,384,000 9,544,000
January 13, 1998 370,000 9,914,000
</TABLE>
Environmental Compliance Plan
On August 18, 1993, IPL obtained an Order from the IURC approving
its Environmental Compliance Plan, together with the costs and expenses
associated therewith, which provides for the installation of sulfur
dioxide and nitrogen oxide emissions abatement equipment and the installation
of continuous emission monitoring systems to meet the requirements of both
Phase I and Phase II of the Federal Clean Air Act Amendments of 1990.
The order provides for the deferral of net gains and losses resulting
from any sale of emission allowances for future amortization to cost of
service on a basis to be determined in the next general electric rate
proceeding.
Demand Side Management Program
IPL obtained an Order from the IURC approving a Stipulation of
Settlement Agreement between IPL, the Office of Utility Consumer Counsel,
Citizens Action Coalition of Indiana, Inc., an industrial group, the
Trustees of Indiana University and the Indiana Alliance for Fair
Competition relating to the Company's Demand Side Management Program
(DSM). The order provides for the deferral and subsequent recovery in
rates of certain approved DSM costs. The order also provides for the
recording of a return on deferred costs until recognized in rates.
9. EMPLOYEE BENEFIT PLANS AND OTHER POST-RETIREMENT BENEFITS:
IPL's contributions to the Thrift Plan, net of amounts allocated to
related parties were $3.1 million, $3.1 million and $2.8 million in 1993,
1992 and 1991, respectively.
Net pension cost including amounts charged to construction for 1993,
1992 and 1991 are comprised of the following components:
<TABLE>
<CAPTION>
1993 1992 1991
- ------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Service cost--benefits earned during the period $ 6,355 $ 5,563 $ 4,890
Interest cost on projected benefit obligation 14,192 13,739 13,036
Actual return on plan assets (40,045) (18,865) (28,203)
Net amortization and deferral 25,689 5,366 16,318
------- ------- -------
Net periodic pension cost 6,191 5,803 6,041
Less amount allocated to related parties 87 71 87
------- ------- -------
IPL net periodic pension cost $ 6,104 $ 5,732 $ 5,954
======= ======= =======
</TABLE>
A summary of the Plans' funding status, and the amount recognized in the
balance sheets at December 31, 1993 and 1992, follows:
<TABLE>
<CAPTION>
1993 1992
- ------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $(128,449) $(112,823)
Non-vested benefit obligation (28,532) (24,389)
---------- ----------
Accumulated benefit obligation $(156,981) $(137,212)
========== ==========
Projected benefit obligation $(224,037) $(193,653)
Plan assets at fair value 218,312 185,752
---------- ----------
Funded status--plan assets less than projected
benefit obligation (5,725) (7,901)
Unrecognized net gain from past experience different
from that assumed (22,922) (14,909)
Unrecognized past service costs 22,932 23,219
Unrecognized net asset at January 1, 1987 being
amortized over 18.9 years (16,825) (18,238)
---------- ----------
Net accrued pension costs included in current
liabilities at December 31 $ (22,540) $ (17,829)
========== ==========
</TABLE>
As of the October 31, 1993 valuation date, approximately 10.5% of the
Plans' assets were in equity securities, with the remainder in fixed income
securities.
IPL also provides certain postretirement health care and life
insurance benefits for employees who retire from active service on or after
attaining age 55 and have rendered at least 10 years of service. On
January 1, 1993, IPL adopted the provisions of SFAS No. 106 -- Employers'
Accounting for Postretirement Benefits Other than Pensions (SFAS 106).
Generally, SFAS 106 requires the use of an accrual basis accounting method
for determining annual costs of postretirement benefits. The January 1,
1993 transition obligation of $122.4 million is being amortized over a 20
year period. Prior to 1993, the cost of such benefits was recognized when
incurred and amounted to $3.5 million and $2.8 million in 1992 and 1991,
respectively.
Net postretirement benefit cost, including amounts charged to
construction for 1993 is comprised of the following components:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
(In Thousands)
<S> <C>
Service cost -- benefits earned during the period $ 4,760
Interest cost on accumulated postretirement benefit obligation 10,792
Actual return on plan assets (297)
Net amortization and deferral 5,732
-------
Net periodic postretirement benefit cost $20,987
=======
</TABLE>
A summary of the retiree health care and life insurance plan's funding
status, and the amount recognized in the consolidated balance sheet at
December 31, 1993 follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
(In Thousands)
<S> <C>
Actuarial present value of accumulated postretirement benefit obligation
Retirees $ (60,110)
Fully eligible active plan participants (21,344)
Other active plan participants (73,872)
--------
Total (155,326)
Plan assets at fair value 10,135
--------
Funded status--accumulated postretirement benefit obligation in excess
of plan assets (145,191)
Unrecognized net gain from past experience different from that assumed 11,322
Unrecognized net obligation at January 1, 1993 being amortized over
20 years 116,201
--------
Net accrued postretirement benefit cost included in deferred liabilities at
December 31 $ (17,668)
=========
</TABLE>
IPL is expensing its non-construction related SFAS 106 costs associated
with its steam business. The SFAS 106 costs, net of amounts paid and
capitalized for construction, associated with IPL's electric business is
being deferred as a regulatory asset on the balance sheet, as authorized by
an order of the IURC on December 30, 1992, which provided for deferral of
SFAS 106 costs in excess of such costs determined on a cash basis. A
request for recovery in rates of these costs will be included in IPL's next
general electric rate petition.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation is 12.6 % for 1994, gradually
declining to 5.0% in 2003. A one-percentage point increase in the assumed
health care cost trend rate for each year would increase the accumulated
postretirement benefit obligation as of December 31, 1993 by approximately
$24.3 million and the combined service cost and interest cost for 1993 by
approximately $3.4 million.
Plan assets consist of the cash surrender value of life insurance
policies on certain retired employees. The expected long-term rate of
return on plan assets is 8 percent.
Assumptions used in determining the accumulated benefit obligation for
the pension plans for 1993, 1992 and 1991 and for the accumulated
postretirement benefit obligation for 1993 were:
<TABLE>
<CAPTION>
1993 1992 1991
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate - pension plans 7.0% 7.5% 8.0%
Discount rate - postretirement benefits 7.0% - -
Rate of increase in future compensation levels 6.1% 6.1% 6.1%
Expected long-term rate of return on assets 8.0% 8.0% 8.0%
</TABLE>
10. COMMITMENTS AND CONTINGENCIES:
In 1994, IPL anticipates the cost of its construction program to be
approximately $234 million.
IPL will comply with the provisions of "The Clean Air Act Amendments of
1990" (the Act) through the installation of SO2 scrubbers and NOx
facilities. The cost of complying with the Act from 1994 through 1997,
including AFUDC, is estimated to be approximately $207 million, of which $80
million is anticipated in 1994. During 1993, expenditures for compliance
with the Act were $13.7 million.
IPL has a five-year firm power purchase agreement with Indiana
Michigan Power Company (IMP) for 100 megawatts (MW) of capacity effective
April 1992, with the purchase of an additional 100 MW (for a total of 200
MW) beginning in April 1993. The agreement provides for monthly capacity
payments by IPL of $.6 million from April 1992 through March 1993,
increasing to a monthly amount of $1.2 million which began in April 1993
and continue through March 31, 1997. The agreement further provides that
IPL can elect to extend purchases through December 31, 1997, and
subsequently through November 30, 1999, with capacity payments of $1.2
million per month and $1.55 million per month, respectively. IPL can
terminate the agreement, should the ability to recover future demand
charges through rates be disallowed. Capacity payments in 1993 and 1992
under this agreement totaled $12.6 million and $5.4 million, respectively.
In October 1993, IPL received a Findings of Violation regarding
compliance with the thermal limits of the National Pollutant Discharge
Elimination System permit for its Petersburg Generating Station. IPL
expects to meet with the Environmental Protection Agency in early 1994 to
resolve this matter. IPL believes it has met all the requirements of its
permit, but if IPL's position is found erroneous, IPL could be subject to
fines of up to $25,000 per day of violation.
IPL is involved in litigation arising in the normal course of
business. While the results of such litigation cannot be predicted with
certainty, management, based upon advice of counsel, believes that the
final outcome will not have a material adverse effect on the financial
position and results of operations.
11. QUARTERLY RESULTS (UNAUDITED):
Operating results for the years ended December 31, 1993 and 1992 by
quarter, are as follows (in thousands):
<TABLE>
<CAPTION>
1993
- --------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Operating revenues $169,042 $153,127 $183,264 $158,870
Operating income 40,068 27,354 44,520 30,426
Net income 30,038 17,551 34,331 20,846
<CAPTION>
1992
- --------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Operating revenues $159,974 $150,446 $166,153 $156,630
Operating income 37,829 25,915 39,262 31,234
Net income 27,755 15,108 28,999 21,196
</TABLE>
The quarterly figures reflect seasonal and weather-related
fluctuations which are normal to IPL's operations. Weather conditions in
1993 reflected near normal conditions, while weather conditions in 1992
were considerably moderate.
The quarter ended June 30, 1992, includes a $3.9 million expense as a
result of severe storm damage to IPL's transmission and distribution
systems, and a $2.8 million expense in connection with the settlement of
disputes regarding fuel adjustment issues.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
Items 10,
11, 12 Indianapolis Power & Light Company has filed with the
and 13 Securities and Exchange Commission a definitive information
statement pursuant to Regulation 14C. This document will
incorporate by reference the information required by these
items, except for the information regarding executive
officers which is set forth in Part I, following Item 4
hereof under the heading "EXECUTIVE OFFICERS OF THE
REGISTRANT."
PART IV
Item 14 (a). DOCUMENT LIST
The Financial Statements and Supplemental Schedules under
this Item 14 (a) 1 and 2 filed in this Form 10-K are those of
Indianapolis Power & Light Company.
1. Financial Statements
Included in Part II of this report:
Independent Auditors' Report
Statements of Cash Flows for the Years
Ended December 31, 1993, 1992 and 1991
Statements of Income for the Years Ended
December 31, 1993, 1992 and 1991
Balance Sheets, December 31, 1993 and 1992
Statements of Capitalization
December 31, 1993 and 1992
Statements of Retained Earnings for the Years
Ended December 31, 1993, 1992 and 1991
Notes to Financial Statements
2. Supplementary Data and Financial Statement Schedules
Included in Part IV of this report:
For each of the years ended December 31, 1993, 1992
and 1991
Schedule V - Utility Property, Plant, and Equipment
Schedule VI - Accumulated Depreciation of Utility
Property, Plant, and Equipment
Schedule IX - Short-Term Borrowings
Schedule X - Supplemental Income Statement
Information
The schedules, other than those listed above, are omitted
because of the absence of the conditions under which they are
required or because the information is furnished in the
financial statements or notes thereto.
3. Exhibits Required by Securities and Exchange Commission
Regulation S-K
Copies of the documents listed below which are
identified with an asterisk (*) are incorporated herein
by reference and made part hereof and have heretofore
been classified as basic documents under Rule 24(b) of
the SEC Rules of Practice.
(3) Articles of Incorporation and By-Laws
* --Copy of Amended Articles of Incorporation of IPL.
(Form 8-K dated May 19, 1982.)
* --Copy of Amended Articles of Incorporation including
Articles of Amendment dated April 17, 1991. (Form 10-Q
for quarter ended March 31, 1991.)
* --Copy of Amended By-Laws dated August 23, 1993. (Form
10-Q for quarter ended September 30, 1993.)
(4) Instruments defining the rights of security holders,
including indentures
* --Copy of Mortgage and Deed of Trust, dated as of May 1,
1940, between IPL and American National Bank and Trust
Company of Chicago, Trustee, as supplemented and modified
by 33 Supplemental Indentures.
Exhibits D in File No. 2-4396; B-1 in File No. 2-6210;
7-C File No. 2-7944; 7-D in File No. 2-72944; 7-E in File
No. 2-8106; 7-F in File No. 2-8749; 7-G in File No. 2-8749;
4-Q in File No. 2-10052; 2-I in File No. 2-12488; 2-J in
File No. 2-13903; 2-K in File No. 2-22553; 2-L in File No.
2-24581; 2-M in File No. 2-26156; 4-D in File No. 2-26884;
2-D in File No. 2-38332; Exhibit A to Form 8-K for October
1970; Exhibit 2-F in File No. 2-47162; 2-F in File No.
2-50260; 2-G in File No. 2-50260; 2-F in File No. 2-53541, 2E
in File No. 2-55154; 2E in File no. 2-60819; 2F in File No.
2-60819; 2-G in File No. 2-60819; Exhibit A to Form 10-Q
for the quarter ended 9-30-78 File No. 1-3132; 13-4 in File
No. 2-73213; Exhibit 4 in File No. 2-93092. Twenty-eighth,
Twenty-ninth and Thirtieth Supplemental Indentures. (Form
10-K dated for the year ended December 31, 1985.)
* --Copy of Thirty-First Supplemental Indenture dated as
of October 1, 1986. (Form 10-K for the year ended
December 31, 1986.)
* --Copy of Thirty-Second Supplemental Indenture dated as
of June 1, 1989. (Form 10-K for year ended 12-31-89.)
* --Copy of Thirty-Third Supplemental Indenture dated as of
August 1, 1989. (Form 10-K for year ended 12-31-89.)
Exhibits Required by Securities and Exchange Commission
Regulation S-K (Continued)
* --Copy of Thirty-Fourth Supplemental Indenture dated as
of October 15, 1991. (Form 10-K for year ended 12-31-91.)
* --Copy of Thirty-Fifth Supplemental Indenture dated as of
August 1, 1992. (Form 10-K for year ended 12-31-92.)
* --Copy of Thirty-Sixth Supplemental Indenture dated as of
April 1, 1993. (Form 10-Q for quarter ended 9-30-93.)
* --Copy of Thirty-Seventh Supplemental Indenture dated as
of October 1, 1993. (Form 10-Q for quarter ended 9-30-93.)
* --Copy of Thirty-Eighth Supplemental Indenture dated as
of October 1, 1993. (Form 10-Q for quarter ended 9-30-93.)
* --Copy of Thirty-Ninth Supplemental Indenture dated as of
February 1, 1994. (Form 8-K, dated 1-25-94.)
* --Copy of Fortieth Supplemental Indenture dated as of
February 1, 1994. (Form 8-K, dated 1-25-94.)
(10) Material Contracts
* --Copy of Amended Coal Supply Agreement between IPL and
Peabody Coal Company dated as of January 1, 1982. (Form
10-K for the year ended 12-31-82.)
* --Copy of Coal Supply Agreement between IPL and Peabody
Coal Company effective as of January 1, 1992 and dated
April 7, 1993. (Form 10-Q for quarter ended 3-31-93.)
* --Copy of Amendment to Coal Supply Agreement dated July
15. 1985, between IPL and Black Beauty Coal Company, Inc.
(Form 10-K for year ended 12-31-86.)
* --Copy of Coal Supply Agreement dated December 26,1984,
between IPL and AMAX Coal Company. (Form 10-K for year
ended 12-31-84.)
* --Copy of Amendment to Coal Supply Agreement dated
February 27, 1987, between IPL and Black Beauty Coal
Company, Inc. (Form 10-K for year ended 12-31-87.)
* --Copy of Transportation Contract dated September
28,1987, between IPL and Consolidated Rail Corporation.
(Form 10-K for year ended 12-31-87.)
* --Copy of Amendment No. 1 to Transportation Contract
between IPL and Consolidated Rail Corporation dated
November 1, 1988. (Form 10-Q for quarterly period ended
June 30, 1989.)
Exhibits Required by Securities and Exchange Commission
Regulation S-K (Continued)
* --Copy of Amendments No. 2 and 3 to Transportation
Contract between IPL and Consolidated Rail Corporation
dated August 1, 1989 and August 2, 1989, respectively.
(Form 10-Q for quarterly period ended September 30, 1989.)
* --Copy of Amendment No. 4 to Transportation Contract
between IPL and Consolidated Rail Corporation dated July
30, 1990. (Form 10-Q for quarterly period ended
September 30, 1990.)
* --Copy of Coal Supply Agreement dated September 23, 1988,
between IPL and Shand Mining, Inc. (Form 10-K for year
ended 12-31-88.)
* --Copy of Coal Supply Agreement dated March 29, 1988,
between IPL and Coal, Inc. (Form 10-K for year ended
12-31-88.)
* --Copy of First Amendment to Coal Supply Agreement
between IPL and Coal, Inc. dated July 17, 1989. (Form
10-K for year ended 12-31-89.)
* --Copy of Coal Supply Agreement between IPL and Triad
Mining of Indiana, Inc. and Marine Coal Sales Company.
(Form 10-Q for quarterly period ended March 31, 1991.)
--Directors' and Officers' Liability Insurance Policy No.
DO392B1A93 effective June 30, 1993, to June 1, 1994.
* --Certificate of the Resolution amending the Unfunded
Deferred Compensation Plan for IPL Directors dated
February 22, 1983. (Form 10-K for year ended 12-31-82.)
* --Copy of the Resolution amending the Unfunded Deferred
Compensation Plan for IPL Directors effective January 1,
1992. (Form 10-K for year ended 12-31-92.)
--Copy of the Resolution amending the Unfunded Deferred
Compensation Plan for IPL Directors effective January 1,
1994.
--Copy of the resolution adopting the Unfunded Deferred
Compensation Plan for IPL Officers effective January 1,
1994.
* --Eighth Amendment to and Complete Restatement of the IPL
Unfunded Supplemental Retirement Plan for a Select Group
of Management Employees effective November 1, 1988.
(Form 10-K for year ended 12-31-88.)
* --Copy of IPL Supplemental Retirement Plan and Trust
Agreement for a Select Group of Management Employees (As
Amended and Restated Effective January 1, 1992). (Form
10-K for year ended 12-31-92.)
Exhibits Required by Securities and Exchange Commission
Regulation S-K (Continued)
--Copy of IPL Supplemental Retirement Plan and Trust
Agreement For a Select Group of Management Employees (As
Amended and Restated Effective May 1, 1993).
--Copy of First Amendment to the Indianapolis Power &
Light Company Supplemental Retirement Plan and Trust
Agreement For A Select Group of Management Employees (As
Last Amended and Restated Effective May 1, 1993).
--Management Performance Program for 1993.
* --Interconnection Agreement, dated December 30, 1960,
between IPL and Indiana & Michigan Electric Company as
modified. (Exhibits 4-A in File No. 2-24581; 5-F in
File No. 2-28756; 5-R in File No. 2-43038; 5-S in File
No. 2-47162 and 5-L in File No. 2-53541.)
* --Modification 14
to Interconnection Agreement between IPL and Indiana &
Michigan Electric Company. (Form 10-K for year ended
12-31-82.)
* --Modification 15
to Interconnection Agreement dated September 1, 1985,
between IPL and Indiana & Michigan Electric Company.
(Form 10-K for year ended 12-31-88.)
* --Modification 16
to Interconnection Agreement dated September 1, 1991,
between IPL and Indiana Michigan Power Company (formerly
Indiana & Michigan Electric Company). (Form 10-K for
year ended 12-31-91.)
* --Interconnection Agreement, dated May 1, 1962, between
IPL and Public Service of Indiana, Inc. as supplemented.
(Exhibits 4-B in File No. 2-24581; 5-L in File No.
2-38332; 5-N in File No. 2-41916; 5-P in File No. 2-41916;
5-B in File No. 2-60819 and Forms 10-K for years ended
12-31-82 and 12-31-87.)
* --Ninth Supplemental Agreement dated May 1, 1992, to
Interconnection Agreement between IPL and PSI Energy,
Inc. (Form 10-K for year ended 12-31-92.)
* --Facilities Agreement effective in 1968 among
Indianapolis Power & Light Company, Public Service
Company of Indiana, Inc. and Indiana & Michigan Electric
Company. (Exhibit 5-G in File No. 2-28756.)
* --Facilities Agreement dated August 16, 1977, between IPL
and Public Service Company of Indiana, Inc. (Form 10-K
for year ended 12-31-81.)
Exhibits Required by Securities and Exchange Commission
Regulation S-K (Continued)
* --Amendment No. 1 dated June 1, 1981, to Facilities
Agreement between IPL and Public Service Company of
Indiana, Inc. (Form 10-K for year ended 12-31-81.)
* --Amendment No. 2 dated October 1, 1984, to Facilities
Agreement between IPL and Public Service of Indiana, Inc.
(Form 10-K for year ended 12-31-86.)
* --East Central Area Reliability Agreement dated August 1,
1967, between IPL and 23 other electric utility companies
as supplemented. (Exhibits 5-I in File No. 2-38332 and
5-J in File No. 2-38332.)
* --Interconnection Agreement dated December 2, 1969,
between IPL and Southern Indiana Gas and Electric Company
as modified. (Exhibits 5-K in File No. 2-38332 and 5-Q
in File No. 2-43038.)
* --Modification 2,
Modification 3, and
Modification 4
to Interconnection Agreement between IPL and Southern
Indiana Gas and Electric Company. (Form 10-K for year
ended 12-31-80.)
* --Modification 5 and
Modification 6
to Interconnection Agreement between IPL and Southern
Indiana Gas and Electric Company. (Form 10-K for year
ended 12-31-81.)
* --Modification 7
to Interconnection Agreement between IPL and Southern
Indiana Gas and Electric Company. (Form 10-K for year
ended 12-31-82.)
* --Modification 8
to Interconnection Agreement between IPL and Southern
Indiana Gas and Electric Company. (Form 10-K for year
ended 12-31-89.)
* --Interconnection Agreement dated December 1, 1981,
between IPL and Hoosier Energy Rural Electric
Cooperative, Inc. (Form 10-K for year ended 12-31-81.)
* --Modification 1
to Interconnection Agreement between IPL and Hoosier
Energy Rural Electric Cooperative, Inc. (Form 10-K for
year ended 12-31-82.)
* --Modification 2
to Interconnection Agreement between IPL and Hoosier
Energy Rural Electric Cooperative, Inc. (Form 10-K for
year ended 12-31-83.)
Exhibits Required by Securities and Exchange Commission
Regulation S-K (Continued)
* --Modification 3
to Interconnection Agreement between IPL and Hoosier
Energy Rural Electric Cooperative, Inc. (Form 10-K for
year ended 12-31-89.)
* --Interconnection Agreement, dated October 7, 1987,
between IPL and Wabash Valley Power Association. (Form
10-K for year ended 12-31-87.)
(23) Consents of Experts and Counsel
--Independent Auditors' Consent
(99) Additional Exhibits
* --Agreement, dated as of October 27, 1993, by and among
IPALCO Enterprises, Inc., Indianapolis Power & Light
Company, PSI Resources, Inc., PSI Energy, Inc. The
Cincinnati Gas & Electric Company, CINergy Corp., James
E. Rogers, John R. Hodowal and Ramon L. Humke. (Form
10-Q for quarterly period ended 9-30-93.)
Item 14 (b). REPORTS ON FORM 8-K
A report on Form 8-K, dated January 25, 1994, reporting Item
5, "Other Events", and Item 7, "Exhibits", with respect to
financial results for the fiscal year ending 1993, and the
39th and 40th Supplemental Indentures.
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY SCHEDULE V
Utility Property, Plant and Equipment
For the Years Ended December 31, 1993, 1992 and 1991
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
BALANCE AT OTHER BALANCE AT
BEGINNING ADDITIONS RETIREMENTS CHANGES- CLOSE OF
CLASSIFICATION OF PERIOD AT COST OR SALES NOTE <Fa> PERIOD
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
Utility plant:
Electric plant:
Production $1,286,423 $ 37,381 $ 6,400 $ 3 $1,317,407
Transmission 210,699 8,515 992 147 218,369
Distribution 528,233 28,750 5,331 (435) 551,217
General 94,786 8,627 1,761 - 101,652
Intangible 10,312 3,259 - - 13,571
---------- --------- ----------- -------- ----------
Total electric plant in service 2,130,453 86,532 14,484 (285) 2,202,216
Common plant - production 54,472 1,826 37 - 56,261
Steam plant - distribution 40,092 2,984 871 - 42,205
---------- --------- ----------- -------- ----------
Total utility plant in service 2,225,017 91,342 15,392 (285) 2,300,682
Construction in progress 110,506 57,974 <Fb> - - 168,480
Property held for future use 15,760 - - 3 15,763
---------- --------- ----------- -------- ----------
Total utility plant $2,351,283 $ 149,316 $ 15,392 $ (282) $2,484,925
========== ========= =========== ======== ==========
YEAR ENDED DECEMBER 31, 1992:
Utility plant:
Electric plant:
Production $1,265,568 $ 21,788 $ 984 $ 51 $1,286,423
Transmission 205,234 6,643 962 (216) 210,699
Distribution 499,503 32,230 3,169 (331) 528,233
General 86,522 9,150 1,327 441 94,786
Intangible 6,552 3,760 - - 10,312
---------- --------- ----------- -------- ----------
Total electric plant in service 2,063,379 73,571 6,442 (55) 2,130,453
Common plant - production 50,454 5,370 1,354 2 54,472
Steam plant - distribution 30,493 10,763 1,125 (39) 40,092
---------- --------- ----------- -------- ----------
Total utility plant in service 2,144,326 89,704 8,921 (92) 2,225,017
Construction in progress 84,959 25,547 <Fb> - - 110,506
Property held for future use 15,748 13 1 - 15,760
---------- --------- ----------- -------- ----------
Total utility plant $2,245,033 $ 115,264 $ 8,922 $ (92) $2,351,283
========== ========= =========== ======== ==========
YEAR ENDED DECEMBER 31, 1991:
Utility plant:
Electric plant:
Production $1,254,793 $ 16,162 $ 5,812 $ 425 $1,265,568
Transmission 200,438 7,108 1,860 (452) 205,234
Distribution 477,007 26,389 3,921 28 499,503
General 78,948 12,520 4,946 - 86,522
Intangible 5,452 1,100 - - 6,552
---------- --------- ----------- -------- ----------
Total electric plant in service 2,016,638 63,279 16,539 1 2,063,379
Common plant - production 48,627 2,024 468 271 50,454
Steam plant - distribution 29,217 2,533 986 (271) 30,493
---------- --------- ----------- -------- ----------
Total utility plant in service 2,094,482 67,836 17,993 1 2,144,326
Construction in progress 56,534 28,425 <Fb> - - 84,959
Property held for future use 15,749 - - (1) 15,748
---------- --------- ----------- -------- ----------
Total utility plant $2,166,765 $ 96,261 $ 17,993 $ - $2,245,033
========== ========= =========== ======== ==========
<FN>
<Fa> Reclassifications of items during the year between utility plant and other property groups.
<Fb> Represents the net change in unfinished construction.
See Notes to Financial Statements for methods and rates of depreciation.
</TABLE>
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY SCHEDULE VI
Accumulated Depreciation of Utility Property, Plant and Equipment
For the Years Ended December 31, 1993, 1992 and 1991
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
_______OTHER CHARGES_______
BALANCE AT ADDITIONS PROPERTY (DEDUCT) BALANCE AT
BEGINNING CHARGED TO RETIRED _______ADD_______ REMOVAL CLOSE OF
DESCRIPTION OF PERIOD EXPENSE<Fb> OR SOLD SALVAGE OTHER COSTS PERIOD
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
Depreciation utility plant:
Electric plant:
Production $ 433,705 $ 37,253 $ 6,400 $ 115 $ - $ (3,540) $ 461,133
Transmission 84,676 5,115 978 222 9 (421) 88,623
Distribution 248,477 27,320 5,313 2,220 (9) (3,898) 268,797
General 17,560 3,940 1,761 226 83 138 20,186
Intangible 2,936 1,653 - - - - 4,589
---------- ---------- -------- ------- --------- -------- -----------
Total depreciation of
electric plant 787,354 75,281 14,452 2,783 83 (7,721) 843,328
Common plant - production 24,215 1,489 37 - - (73) 25,594
Steam plant - distribution 6,750 1,602 871 - (83) (267) 7,131
---------- ---------- -------- ------- --------- -------- -----------
Total depreciation of
utility plant $ 818,319 $ 78,372 $ 15,360<Fa> $ 2,783 $ - $ (8,061) $ 876,053
========== ========== ======== ======= ========= ======== ===========
YEAR ENDED DECEMBER 31, 1992:
Depreciation utility plant:
Electric plant:
Production $ 401,888 $ 36,506 $ 985 $ 5 $ 8 $ (3,717) $ 433,705
Transmission 80,241 4,961 961 104 15 316 84,676
Distribution 226,402 26,051 3,119 1,088 (55) (1,890) 248,477
General 14,356 3,628 1,327 389 (28) 542 17,560
Intangible 1,985 951 - - - - 2,936
---------- ---------- -------- ------- --------- -------- -----------
Total depreciation of
electric plant 724,872 72,097 6,392 1,586 (60) (4,749) 787,354
Common plant - production 24,624 1,386 1,353 24 3 (469) 24,215
Steam plant - distribution 6,597 1,343 1125 1 57 (123) 6,750
---------- ---------- -------- ------- --------- -------- -----------
Total depreciation of
utility plant $ 756,093 $ 74,826 $ 8,870<Fa> $ 1,611 $ - $ (5,341) $ 818,319
========== ========== ======== ======= ========= ======== ===========
YEAR ENDED DECEMBER 31, 1991:
Depreciation utility plant:
Electric plant:
Production $ 373,299 $ 36,091 $ 5,812 $ 12 $ 63 $ (1,765) $ 401,888
Transmission 76,057 4,875 1,860 1,525 (64) (292) 80,241
Distribution 207,009 24,773 3,921 1,160 1 (2,620) 226,402
General 15,432 3,364 4,946 522 - (16) 14,356
Intangible 1,195 790 - - - - 1,985
---------- ---------- -------- ------- --------- -------- -----------
Total depreciation of
electric plant 672,992 69,893 16,539 3,219 - (4,693) 724,872
Common plant - production 23,676 1,327 468 182 8 (101) 24,624
Steam plant - distribution 6,475 1,124 986 316 (8) (324) 6,597
---------- ---------- -------- ------- --------- -------- -----------
Total depreciation of
utility plant $ 703,143 $ 72,344 $ 17,993<Fa> $ 3,717 $ - $ (5,118) $ 756,093
========== ========== ======== ======= ========= ======== ===========
<FN>
1993 1992 1991
<Fa> Retirements, per Schedule V $ 15,392 $ 8,922 $17,993
Charged to other accounts 32 52 -
---------- -------- -------
Retirements, per above $ 15,360 $ 8,870 $17,993
<Fb> See Notes to Financial Statements for methods and rates of depreciation.
</TABLE>
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY SCHEDULE IX
Short-Term Borrowings <F1>
For the Years Ended December 31, 1993, 1992 and 1991
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Weighted
Average Maximum Average Weighted
Category of Interest Amount Amount Average
Aggregate Balance Rate of Outstanding Outstanding Interest Rate
Short-Term At End of Year-End During the During the During the
Borrowings Period Balance Period Period <F2> Period <F3>
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1993:
Commercial
Paper $90,000,000 3.37% $95,000,000 $ 57,000,000 3.20%
Bank Notes
Payable $ - - $13,000,000 $ 5,000,000 3.40%
YEAR ENDED DECEMBER 31, 1992:
Commercial
Paper $40,000,000 3.76% $41,000,000 $ 23,000,000 3.51%
Bank Notes
Payable $ - - $10,000,000 $ 5,000,000 3.81%
YEAR ENDED DECEMBER 31, 1991:
Commercial
Paper $ 1,000,000 4.55% $37,000,000 $ 14,000,000 6.32%
Bank Notes
Payable $ 2,000,000 4.38% $10,000,000 $ 3,000,000 6.01%
<FN>
<F1> Under provisions of the FERC Docket No. ES92-56-000, authority was
granted to IPL in 1992 to issue unsecured promissory notes not to exceed
$150,000,000 outstanding at any one time and maturing within one year after
the date of issue. Such notes can be in the form of commercial paper (which
cannot exceed 25% of IPL's gross operating revenues during the preceding
12 months) or commercial bank loans. At December 31, 1993, IPL had available
to it $110,000,000 under the terms of this FERC order. Under the authority
granted above, the final maturity date for all notes may not be later than
December 31, 1994.
<F2> The average amount outstanding during the period is based on the
average daily principal balance outstanding.
<F3> The weighted average interest rate is determined by dividing
interest expense on short-term borrowings during the period by average
short-term borrowings.
</TABLE>
<TABLE>
SCHEDULE X
INDIANAPOLIS POWER & LIGHT COMPANY
Supplemental Income Statement Information
For the Years Ended December 31, 1993, 1992 and 1991
(In Thousands)
<CAPTION>
COLUMN A COLUMN B
ITEM 1993 1992 1991
<S> <C> <C> <C>
Taxes other than payroll and income taxes:
Real estate and personal
property tax $15,117 $17,214 $14,500
Indiana tax on gross receipts 7,948 7,639 7,764
<FN>
There are no other items requiring disclosure in this schedule, due to
the fact that they are either less than 1% of total operating revenues
or are disclosed in the Statements of Income.
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
INDIANAPOLIS POWER & LIGHT COMPANY
By John R. Hodowal
-----------------------------------
(John R. Hodowal, Chairman of the
Board and Chief Executive Officer)
Date February 22, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
(i) Principal Executive Officer:
/s/ John R. Hodowal Chairman of the Board February 22, 1994
---------------------- and Chief Executive
(John R. Hodowal) Officer
(ii) Principal Financial Officer:
/s/ John R. Brehm Senior Vice President February 22, 1994
---------------------- Finance and Information
(John R. Brehm) Services
(iii) Principal Accounting Officer:
/s/ Stephen J. Plunkett Controller February 22, 1994
------------------------
(Stephen J. Plunkett)
(iv) A majority of the Board of Directors of Indianapolis Power & Light
Company:
/s/ Joseph D. Barnette, Jr. Director February 22, 1994
----------------------------
(Joseph D. Barnette, Jr.)
/s/ Robert A. Borns Director February 22, 1994
----------------------------
(Robert A. Borns)
SIGNATURES (Continued)
/s/ Mitchell E. Daniels, Jr. Director February 22, 1994
----------------------------
(Mitchell E. Daniels, Jr.)
/s/ Rexford C. Early Director February 22, 1994
----------------------------
(Rexford C. Early)
/s/ Otto N. Frenzel III Director February 22, 1994
----------------------------
(Otto N. Frenzel III)
/s/ Max L. Gibson Director February 22, 1994
----------------------------
(Max L. Gibson)
/s/ Edwin J. Goss Director February 22, 1994
----------------------------
(Edwin J. Goss)
/s/ Dr. Earl B. Herr, Jr. Director February 22, 1994
----------------------------
(Dr. Earl B. Herr, Jr.)
/s/ John R. Hodowal Director February 22, 1994
----------------------------
(John R. Hodowal)
/s/ Ramon L. Humke Director February 22, 1994
----------------------------
(Ramon L. Humke)
/s/ Sam H. Jones Director February 22, 1994
----------------------------
(Sam H. Jones)
/s/ Andre B. Lacy Director February 22, 1994
----------------------------
(Andre B. Lacy)
/s/ L. Ben Lytle Director February 22, 1994
----------------------------
(L. Ben Lytle)
/s/ Michael S. Maurer Director February 22, 1994
----------------------------
(Michael S. Maurer)
SIGNATURES (Continued)
/s/ Thomas M. Miller Director February 22, 1994
----------------------------
(Thomas M. Miller)
/s/ Sallie W. Rowland Director February 22, 1994
----------------------------
(Sallie W. Rowland)
/s/ Thomas H. Sams Director February 22, 1994
----------------------------
(Thomas H. Sams)
/s/ Zane G. Todd Director February 22, 1994
----------------------------
(Zane G. Todd)
DIRECTORS AND OFFICERS LIABILITY
INSURANCE POLICY
THIS IS A "CLAIMS-FIRST-MADE" INSURANCE POLICY. PLEASE READ IT CAREFULLY.
Words and phrases which appear in all capital letters have the special
meanings set forth in Section II Definitions
AEGIS
ASSOCIATED ELECTRIC & GAS
INSURANCE SERVICES LIMITED
HAMILTON, BERMUDA
DECLARATIONS
POLICY No. D0392BlA93
DECLARATIONS NO. 1
Item 1: This POLICY provides indemnification with respect to the
DIRECTORS and OFFICERS of:
IPALCO Enterprises, Inc.
25 Monument Circle
P. 0. Box 1595
Indianapolis, IN 46206
Item 2: POLICY PERIOD: from the 30th day of June, 1993, to the 1st day of
June, 1994 both days at 12:01 A.M. Standard Time
at the address of the COMPANY
Item 3: RETROACTIVE DATE: the 4th day of December, 1970 at 12:01 A.M.
Standard Time at the address of the COMPANY
Item 4: A. POLICY PREMIUM: $ 215,169.
B. MINIMUM PREMIUM: $ 86,068.
Item 5: Limits of Liability:
A. $ 35,000,000 Each WRONGFUL ACT
B. $ 35,000,000 Aggregate Limit of Liability for the POLICY
PERIOD
Item 6: UNDERLYING LIMITS:
This POLICY is written as primary insurance
A. If this POLICY is written as Primary insurance with respect to
insuring Agreement 1(A)(2) only:
(1) $ 200,000 Each WRONGFUL ACT not arising from NUCLEAR
OPERATIONS
(2) $ 1,000,000 Each WRONGFUL ACT arising from NUCLEAR
OPERATIONS
(1 of 2)
DECLARATIONS
continued
POLICY NO. 0039281AS3
DECLARATIONS NO. 1
B. If this POLICY is written as Excess Insurance:
(1) (a) $ --------------- Each WRONGFUL ACT
(b) $ --------------- In the Aggregate for all WRONGFUL
ACTS
(2) $ --------------- Each WRONGFUL ACT not
covered under Underlying Insurance
(3) In the Event of Exhaustion of the UNDERLYING LIMIT stated
in Item 6(B)(1)(b)above with respect to Insuring Agreement
I(A)(2) only:
(a) $ --------------- Each WRONGFUL ACT not arising
from NUCLEAR OPERATIONS
(b) $ --------------- Each WRONGFUL ACT arising
from NUCLEAR OPERATIONS
Item 7: Any notice to be provided or any payment to be made hereunder to
the COMPANY shall be made to:
NAME Mr. Bruce H. Smith
TITLE Administrator, Risk Management
ADDRESS IPALCO Enterprises, Inc.
25 Monument Circle
P. 0. Box 1595
Indianapolis, IN 46206
Item 8: Any notice to be provided or any payment to be made hereunder to
the INSURER shall be made to:
NAME Aegis Insurance Services, Inc.
ADDRESS Harborside Financial Center
700 Plaza Two
Jersey City, New Jersey 07311-3994
ENDORSEMENTS ATTACHED AT POLICY ISSUANCE: 1-3
Countersigned at Jersey City, New Jersey
on July 23, 1993
Aegis Insurance Services, Inc.
By /s/ Karen Larson
Authorized Representative
(2 of 2)
POLICY OF DIRECTORS AND OFFICERS LIABILITY INSURANCE EFFECTED
WITH ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
HAMILTON, BERMUDA
(hereinafter referred to as the "POLICY")
THIS IS A "CLAIMS-FIRST-MADE" INSURANCE POLICY. PLEASE READ IT CAREFULLY.
Words and phrases which appear in all capital letters have the special
meanings set forth in Section II - Definitions.
In consideration of the payment of premium, and in reliance upon all
statements made and information furnished to Associated Electric & Gas
Insurance Services Limited (hereinafter referred to as the 'INSURER'
by the Application attached hereto which is hereby made a part hereof, and
subject to all the terms hereinafter provided, the INSURER agrees as
follows:
I. INSURING AGREEMENT
(A) Indemnity
(1) The INSURER shall indemnify the DIRECTORS and OFFICERS for
any and all sums which they shall become legally obligated
to pay as ULTIMATE NET LOSS for which the COMPANY has not
provided reimbursement, by reason of any WRONGFUL ACT which
takes place during the COVERAGE PERIOD and is actually or
allegedly caused, committed or attempted by the DIRECTORS or
OFFICERS while acting in their respective capacities as
DIRECTORS or OFFICERS, provided such ULTIMATE NET LOSS
arises from a CLAIM first made against the DIRECTORS or
OFFICERS during the POLICY PERIOD or during the DISCOVERY
PERIOD, if purchased.
(2) The INSURER shall indemnify the COMPANY for any and all sums
required to reimburse it for ULTIMATE NET LOSS it has
incurred, as required or permitted by applicable common or
statutory law or under provisions of the COMPANY'S Charter
or Bylaws effected pursuant to such law, to indemnify
DIRECTORS or OFFICERS for ULTIMATE NET LOSS which they are
legally obligated to pay by reason of any WRONGFUL ACT which
takes place during the COVERAGE PERIOD and is actually or
allegedly caused, committed or attempted by such DIRECTORS
or OFFICERS while acting in their respective capacities as
DIRECTORS or OFFICERS, provided the ULTIMATE NET LOSS arises
from a CLAIM first made against the DIRECTORS or OFFICERS
during the POLICY PERIOD or during the DISCOVERY PERIOD, if
purchased.
(B) Limits Of Liability
(1) The INSURER shall only be liable hereunder for the amount of
ULTIMATE NET LOSS in excess of the UNDERLYING LIMITS as
stated in Item 8 of the Declarations as a result of each
WRONGFUL ACT covered under Insuring Agreement I(A)(1) or
I(A)(2) or both, and then only up to the Limit of Liability
stated in Item 5A of the Declarations and further subject to
the aggregate Limit of Liability stated in Item 5B of the
Declarations as the maximum amount payable hereunder in the
aggregate for all CLAIMS first made against the DIRECTORS or
OFFICERS during both:
(a) the POLICY PERIOD and
(b) the DISCOVERY PERIOD, if purchased.
Notwithstanding the foregoing, in the event that the INSURER
cancels or refuses to renew this POLICY, and a DISCOVERY
PERIOD extension is purchased by the COMPANY, then the
aggregate Limit of Liability stated in Item 5B of the
Declarations shall be reinstated but only with respect to
CLAIMS first made against the DIRECTORS or OFFICERS during
such DISCOVERY PERIOD.
(1 of 11)
(2) Multiple CLAIMS arising out of the same WRONGFUL ACT, even
if made against different DIRECTORS or OFFICERS, shall be
deemed to be a single CLAIM arising from a single WRONGFUL
ACT and to have been reported during the POLICY PERIOD or,
if purchased, during the DISCOVERY PERIOD in which the first
of such multiple CLAIMS is made against any of the DIRECTORS
or OFFICERS. The Limits of Liability and UNDERLYING LIMITS,
stated in Items 5 and 6 of the Declarations respectively,
shall apply only once regardless of the number of CLAIMS
arising out of the same WRONGFUL ACT. All interrelated acts
shall be deemed to be a single WRONGFUL ACT.
(3) The inclusion herein of more than one DIRECTOR or OFFICER,
or the application of both Insuring Agreements I(A)(1) and
l(A)(2), shall not operate to increase the INSURER'S Limits
of Liability as stated in Item 5 of the Declarations.
(4) With respect to ULTIMATE NET LOSS arising out of any
WRONGFUL ACT in connection with service for a NOT-FOR-PROFIT
ORGANIZATION as provided in Section 11 (E) (2), if:
(a) such WRONGFUL ACT results in liability being imposed
upon one or more DIRECTORS and OFFICERS under this
POLICY and also upon directors and officers and general
partners under any other directors and officers or
general partner liability insurance policies issued by
the INSURER to any organization; and
(b) the total of the ULTIMATE NET LOSS under this POLICY and
the ultimate net loss under such other policies issued
by the INSURER equals or exceeds $35,000,000;
the maximum amount payable by the INSURER under this POLICY
in the aggregate for all ULTIMATE NET LOSS resulting from
such WRONGFUL ACT shall be the lesser of the applicable
Limit of Liability provided by this POLICY or the product
of:
(i) the applicable Limit of Liability provided by this
POLICY divided by the total limits of liability per
wrongful act applicable to such wrongful act under all
policies issued by the INSURER: and
(ii) $35,000,000.
If the amount paid under this POLICY with respect to such
WRONGFUL ACT exceeds the COMPANY'S proportionate share of
the $35,000,000 as determined above, the COMPANY shall
refund such excess to the INSURER promptly.
(C) UNDERLYING LIMITS
(1) If this POLICY is written as Primary Insurance with respect
to Insuring Agreement I(A)(2), the UNDERLYING LIMIT for the
COMPANY for each WRONGFUL ACT shall be as stated in Item
6A(l) of the Declarations, unless it is based upon, arises
out of or is attributable to NUCLEAR OPERATIONS, in which
event it shall be as stated in Item 6A(2) of the
Declarations;
(2) If this POLICY is written as Excess Insurance:
(a) with respect to Insuring Agreements I(A)(1) and I(A)(2),
the UNDERLYING LIMIT for each WRONGFUL ACT shall be as
stated in Item 6B(1)(a) of the Declarations and the
maximum UNDERLYING LIMIT for all WRONGFUL ACTS shall be
as stated in Item 6B(1)(b) of the Declarations;
(b) with respect to ULTIMATE NET LOSS covered hereunder:
(i) In the event of reduction of the underlying
aggregate limit as stated in Item 6B(1)(b)), the
UNDERLYING LIMIT shall be such reduced underlying
aggregate limit; or
(ii) In the event of exhaustion of the underlying
aggregate limit as stated in Item 6B(1)(b)), the
UNDERLYING LIMIT shall be as stated in Item 6B(3)
of the Declarations;
(2 of 11)
(c) with respect to any WRONGFUL ACT covered hereunder but
not covered under such Underlying Insurance, the
UNDERLYING LIMIT shall be as stated in Item 6B(2) of
the Declarations; and
(d) nothing herein shall make this POLICY subject to the
terms and conditions of any Underlying Insurance.
(3) Only payment of indemnity or defense expenses which, except
for the amount thereof, would have been indemnifiable under
this POLICY, may reduce or exhaust an UNDERLYING LIMIT.
(4) In the event that both Insuring Agreement I(A)(1) and
I(A)(2) are applicable to INDEMNITY and DEFENSE COST
resulting from a WRONGFUL ACT then:
(a) If this POLICY is written as Primary Insurance, the
UNDERLYING LIMIT applicable to such WRONGFUL ACT shall
be the UNDERLYING LIMIT stated in Item 6A of the
Declarations; and
(b) If this POLICY is written as Excess Insurance and the
UNDERLYING LIMIT has been exhausted, the UNDERLYING
LIMIT applicable to such WRONGFUL ACT shall be the
UNDERLYING LIMIT stated in Item 6B(3);
and there shall be no UNDERLYING LIMIT applicable with
respect to coverage provided under Insuring Agreement
I(A)(1).
(5) The UNDERLYING LIMITS stated in Item 6 of the Declarations
applicable to Insuring Agreement I(A)(2) shall apply to all
INDEMNITY and/or DEFENSE COST for which indemnification of
the DIRECTORS and/or OFFICERS by the COMPANY is legally
permissible, whether or not such indemnification is granted
by the COMPANY.
II. DEFINITIONS
(A) CLAIM: The term 'CLAIM' shall mean:
(1) any demand, suit or proceeding against any DIRECTORS and/or
OFFICERS during the POLICY PERIOD or during the DISCOVERY
PERIOD, if purchased, which seeks actual monetary damages or
other relief and which may result in any DIRECTORS and/or
OFFICERS becoming legally obligated to pay ULTIMATE NET LOSS
by reason of any WRONGFUL ACT actually or allegedly caused,
committed or attempted during the COVERAGE PERIOD by the
DIRECTORS and/or OFFICERS while acting in their capacity as
such; or
(2) written notice to the INSURER during the POLICY PERIOD or
during the DISCOVERY PERIOD, if purchased, by the DIRECTORS,
OFFICERS and/or the COMPANY, describing with the specificity
set forth in Condition (C) hereof, circumstances of which
they are aware involving an identifiable WRONGFUL ACT
actually or allegedly caused, committed or attempted during
the COVERAGE PERIOD by the DIRECTORS and/or OFFICERS while
acting in their capacity as such, which circumstances are
likely to give rise to a demand, suit or proceeding being
made against such DIRECTORS and/or OFFICERS.
A CLAIM shall be deemed to be first made against a DIRECTOR
or OFFICER at the earlier of the time at which a demand,
suit or proceeding 13 first made against the DIRECTOR or
OFFICER, as set forth in section (1) of this Definition or
the time at which written notice is given to the INSURER, as
set forth in section (2) of this Definition.
Multiple demands or suits arising out of the same WRONGFUL
ACT or interrelated acts shall be deemed to be a single
'CLAIM'.
(B) COMPANY: The term 'COMPANY' shall mean the organization(s) named in
Item 1 of the Declarations and, subject to Condition (A) hereof,
any SUBSIDIARIES of such organization(s).
(3 of 11)
(C) COVERAGE PERIOD: The term 'COVERAGE PERIOD' shall mean the period
of time from the RETROACTIVE DATE to the termination of the POLICY
PERIOD.
(D) DEFENSE COST: The term 'DEFENSE COST' shall mean all expenses
incurred by or on behalf of the DIRECTORS, OFFICERS or the
COMPANY, where reimbursable under I(A)(2), in the investigation,
negotiation, settlement and defense of any CLAIM except all
salaries, wages and benefit expenses of DIRECTORS, OFFICERS or the
COMPANY.
(E) DIRECTOR and OFFICER: The terms 'DIRECTOR' and 'OFFICER' as used
herein, either in the singular or plural, shall mean:
(1) any person who was, is now, or shall be a director, officer
or trustee of the COMPANY and any other employee of the
COMPANY who may be acting in the capacity of a director,
officer or trustee of the COMPANY with the express
authorization of a director, officer or trustee of the
COMPANY;
(2) any director, officer or trustee of the COMPANY who is
serving or has served at the specific request of the COMPANY
as a director, officer or trustee of any
outside NOT-FOR-PROFIT ORGANIZATION; or
(3) the estates, heirs, legal representatives or assigns of
deceased persons who were directors, officers or trustees of
the COMPANY at the time the WRONGFUL ACTS upon which such
CLAIMS were based were committed, and the legal
representatives or assigns of directors, officers or
trustees of the COMPANY in the event of their incompetency,
insolvency or bankruptcy;
provided, however, that the terms 'DIRECTOR' and 'OFFICER'
shall not include a trustee appointed pursuant to Title 11,
United States Code, or pursuant to the Securities Investor
Protection Act, a receiver appointed for the benefit of
creditors by Federal or State courts, as assignee for the
benefit of creditors or similar fiduciary appointed under
Federal or State laws for the protection of creditors or the
relief of debtors.
(F) DISCOVERY PERIOD: The term 'DISCOVERY PERIOD' shall mean the period
of time set forth in Condition (L).
(G) INDEMNITY: The term 'INDEMNITY' shall mean all sums which the
DIRECTORS, OFFICERS or COMPANY, where reimbursable under I(A)(2),
shall become legally obligated to pay as damages either by
adjudication or compromise with the consent of the INSURER, after
making proper deduction for the UNDERLYING LIMITS and all
recoveries, salvages and other valid and collectible insurance.
(H) INSURER: The term 'INSURER' shall mean Associated Electric & Gas
Insurance Services Limited, Hamilton, Bermuda, a non-assessable
mutual insurance company.
(I) NOT-FOR-PROFIT ORGANIZATION: The term 'NOT-FOR-PROFIT ORGANIZATION'
shall mean:
(1) an organization, no part of the income or assets of which is
distributable to its owners, stockholders or members and
which is formed and operated for a purpose other than the
pecuniary profit or financial gain of its owners,
stockholders or members; or
(2) a political action committee which is defined for these
purposes as a separate segregated fund to be utilized for
political purposes as described in the United States Federal
Election Campaign Act (2 U.S.C. 44 1b(2)(C)).
(J) NUCLEAR OPERATIONS: The term 'NUCLEAR OPERATIONS' shall mean the
design, engineering, financing, construction, operation,
maintenance, use, ownership, conversion or decommissioning of any
'nuclear facility' as defined in the Broad Form Nuclear Energy
Liability Exclusion, which is endorsed hereto.
(K) POLICY: The term 'POLICY' shall mean this insurance policy,
including the Application, the Declarations and any endorsements
issued by the INSURER to the organization first named in Item 1 of
the Declarations for the POLICY PERIOD listed in Item 2 of the
Declarations.
(L) POLICY PERIOD: The term 'POLICY PERIOD' shall mean the period of
time stated in Item 2 of the Declarations.
(4 of 11)
(M) RETROACTIVE DATE: The term 'RETROACTIVE DATE' shall mean the date
stated in Item 3 of the Declarations; provided, however, with
respect to any WRONGFUL ACT actually or allegedly caused,
committed or attempted by the DIRECTORS or OFFICERS of any
SUBSIDIARY formed or acquired by the COMPANY or any of its
SUBSIDIARIES after inception of the POLICY PERIOD of this POLICY,
or after inception of any other policy issued by the INSURER to
the COMPANY for a prior policy period, the term 'RETROACTIVE DATE'
shall mean the date of such formation or acquisition.
.
(N) SUBSIDIARIES: The term 'SUBSIDIARY' shall mean any entity more than
fifty (50) percent of whose outstanding securities representing
the present right to vote for election of directors are owned by
the COMPANY and/or one or more of its 'SUBSIDIARIES'.
(0) ULTIMATE NET LOSS: The term 'ULTIMATE NET LOSS' shall mean the
total INDEMNITY and DEFENSE COST with respect to each WRONGFUL ACT
to which this POLICY applies.
(P) UNDERLYING LIMITS: The term 'UNDERLYING LIMITS' shall mean the
amounts stated in Item 6 of the Declarations.
(Q) WRONGFUL ACT: The term 'WRONGFUL ACT' shall mean any actual or
alleged breach of duty, neglect, error, misstatement, misleading
statement or omission actually or allegedly caused, committed or
attempted by any DIRECTOR or OFFICER while acting individually or
collectively in their capacity as such, or claimed against them
solely by reason of their being DIRECTORS or OFFICERS.
All such interrelated breaches of duty, neglects, errors,
misstatements, misleading statements or omissions actually or
allegedly caused, committed or attempted by or claimed against one
or more of the DIRECTORS or OFFICERS shall be deemed to be a
single 'WRONGFUL ACT'.
III. EXCLUSIONS
The INSURER shall not be liable to make any payment for ULTIMATE NET
LOSS arising from any CLAIM(S) made against any DIRECTOR or OFFICER:
(A) (1) for any fines or penalties imposed in a criminal suit,
action or proceeding;
(2) for any fines or penalties imposed in conjunction with
political contributions, payments, commissions or
gratuities; or
(3) for any other fines or penalties imposed by final
adjudication of a court of competent jurisdiction or any
agency or commission possessing quasi-judicial authority, or
(4) where, at inception of the POLICY PERIOD, such DIRECTOR or
OFFICER had knowledge of a fact or circumstance which was
likely to give rise to such CLAIM(S) and which such DIRECTOR
or OFFICER failed to disclose or misrepresented in the
Application or in the process of preparation of the
Application, other than in a Renewal Application; provided,
however, that this exclusion shall not apply to such
CLAIM(S) made against any DIRECTOR or OFFICER other than
such DIRECTOR or OFFICER who failed to disclose or
misrepresented such fact or circumstance; provided further
that this exclusion shall not limit the INSURER'S right to
exercise any remedy available to it with respect to such
failure to disclose or misrepresentation other than the
remedy provided for in this Exclusion.
(B) with respect to Insuring Agreement I(A)(1) only:
(1) based upon, arising out of or attributable to such DIRECTOR
or OFFICER having gained any personal profit, advantage or
remuneration to which such DIRECTOR or OFFICER was not
legally entitled if.
(a) a judgment or other final adjudication adverse to such
DIRECTOR or OFFICER establishes that he in fact gained
such personal profit, advantage or remuneration; or
(b) such DIRECTOR or OFFICER has entered into a settlement
agreement to repay such personal profit, advantage or
remuneration to the COMPANY;
(5 of 11)
(2) for an accounting of profits made from the purchase or sale
by such DIRECTOR or OFFICER of securities of the COMPANY
within the meaning of Section 18(b) of the Securities
Exchange Act of 1934 and amendments thereto or similar
provisions of any other federal or state statutory or
common law;
(3) brought about or contributed to by the dishonest,
fraudulent, criminal or malicious act or omission of such
DIRECTOR or OFFICER if a final adjudication establishes that
acts of active and deliberate dishonesty were committed or
attempted with actual dishonest purpose and intent and were
material to the cause of action so adjudicated; or
(4) where such payment would be contrary to applicable law.
(C) for bodily injury, mental anguish, mental illness, emotional upset,
sickness or disease sustained by any person, death of any person
or for physical injury to or destruction of tangible property or
the loss of use thereof.
(D) for injury based upon, arising out of or attributable to:
(1) false arrest, wrongful detention or wrongful imprisonment or
malicious prosecution;
(2) wrongful entry, wrongful eviction or other invasion of the
right of private occupancy;
(3) discrimination or sexual harassment;
(4) publication or utterance:
(a) of a libel or slander or other defamatory or disparaging
material; or
(b) in violation of an individual's right of privacy; or
(5) with respect to the COMPANY'S advertising activities:
piracy, plagiarism, unfair competition, idea
misappropriation under implied contract, or infringement of
copyright, title, slogan, registered trademark, service
mark, or trade name.
(E) based upon, arising out of or attributable to the violation of any
responsibility, obligation or duty imposed upon fiduciaries by the
Employee Retirement Income Security Act of 1974 or amendments
thereto or by similar common or statutory law of the United States
of America or any state or other jurisdiction therein.
(F) based upon, arising out of or attributable to:
(1) the rendering of advice with respect to;
(2) the interpreting of; or
(3) the handling of records in connection with the enrollment,
termination or cancellation of employees under the COMPANY'S
group life insurance, group accident or health insurance,
pension plans, employee stock subscription plans, workers'
compensation, unemployment insurance, social security,
disability benefits and any other employee benefit programs.
(G) based upon, arising out of or attributable to any failure or
omission on the part of the DIRECTORS, OFFICERS and/or the COMPANY
to effect and maintain insurance(s) of the type and amount which
is customary with companies in the same or similar business.
(H) (1) arising from any circumstances, written notice of which has
been given under any policy or any DISCOVERY PERIOD thereof,
which policy expired prior to or upon the inception of this
POLICY; or
(2) which is one of a number of CLAIMS arising out of the same
WRONGFUL ACT, if any CLAIM of such multiple CLAIMS was made
against the DIRECTORS or OFFICERS during any policy or any
DISCOVERY PERIOD thereof, which policy expired prior to or
upon the inception of this POLICY.
(6 of 11)
(I) If any other policy or policies also afford(s) coverage in whole or
in part for such CLAIM(S); except, this exclusion shall not apply:
(1) to the amount of ULTIMATE NET LOSS with respect to such
CLAIMS) which is in excess of the limit of liability of such
other policy or policies and any applicable deductible or
retention thereunder; or
(2) with respect to coverage afforded such CLAIM(S) by any other
policy or policies purchased or issued specifically as
insurance underlying or in excess of the coverage afforded
under this POLICY;
provided always that nothing herein shall be construed to
cause this POLICY to contribute with any other policy or
policies or to make this POLICY subject to any of the terms
of any other policy or policies.
(J) for any WRONGFUL ACT which took place in whole or in part prior to
the RETROACTIVE DATE.
(K) by, on behalf of, in the right of, at the request of, or for the
benefit of, any security holder of the COMPANY, any DIRECTOR or
OFFICER, or the COMPANY, unless such CLAIM is:
(1) made derivatively by any shareholder of the COMPANY for the
benefit of the COMPANY and such shareholder is:
(a) acting totally independent of, and totally without the
suggestion, solicitation, direction, assistance,
participation or intervention of, any DIRECTOR or
OFFICER, the COMPANY, or any affiliate of the COMPANY;
and
(b) not an affiliate of the COMPANY nor any entity within
the definition of the term 'COMPANY'; or
(2) made non-derivatively by a security holder who is not:
(a) a DIRECTOR or OFFICER; or
(b) an affiliate of the COMPANY or any entity within the
definition of the term 'COMPANY'; or
(3) made non-derivatively by an OFFICER acting totally independent
of, and totally without the suggestion, solicitation,
direction, assistance, participation or intervention of, any
other DIRECTOR or OFFICER, the COMPANY, or any affiliate of
the COMPANY and (subject to all the other exclusions and
POLICY provisions) arising from the wrongful termination of
that OFFICER.
(L) where such CLAIM(S)) arise out of such DIRECTOR'S or OFFICER'S
activities as a director, officer or trustee of any entity other
than:
(1) the COMPANY; or
(2) any outside NOT-FOR-PROFIT ORGANIZATION as provided in
Section II(E)(2).
IV. CONDITIONS
(A) Acquisition, Merger and Dissolution
(1) If, after inception of the POLICY PERIOD, the COMPANY or any
of its SUBSIDIARIES forms or acquires any SUBSIDIARY, the
COMPANY shall report such formation or acquisition within
sixty (6O) days thereafter and, if so reported, upon payment
of an additional premium and upon terms as may be required
by the INSURER, coverage shall be provided for the DIRECTORS
and OFFICERS of such newly formed or acquired SUBSIDIARY
from the date of its formation or acquisition respectively,
but only with respect to WRONGFUL ACTS actually or allegedly
caused, committed or attempted during that part of the
POLICY PERIOD which is subsequent to the formation or
acquisition.
(7 of 11)
(2) If, prior to or after inception of the POLICY PERIOD, the
COMPANY or any of its SUBSIDIARIES is or has been acquired
by or merged with any other entity, or is or has been
dissolved, coverage under this POLICY shall continue for the
POLICY PERIOD but only for DIRECTORS and OFFICERS of the
COMPANY or its SUBSIDIARIES who were serving as such prior
to such acquisition, merger or dissolution and only with
respect to WRONGFUL ACTS actually or allegedly caused,
committed or attempted during that part of the COVERAGE
PERIOD which is prior to such acquisition, merger or
dissolution.
(B) Non-Duplication of Limits
To avoid the duplication of the INSURER'S Limits of Liability
stated in Item 5 of the Declarations, the DIRECTORS, OFFICERS and
COMPANY agree that:
(1) In the event the INSURER provides INDEMNITY or DEFENSE COSTS
for any WRONGFUL ACT under this POLICY, neither the
DIRECTORS, OFFICERS nor the COMPANY shall have any right to
additional INDEMNITY or DEFENSE COSTS for such WRONGFUL ACT
under any other policy issued by the INSURER to the
DIRECTORS, OFFICERS or COMPANY that otherwise would apply to
such WRONGFUL ACT; and
(2) In the event the INSURER provides INDEMNITY or DEFENSE COSTS
for any WRONGFUL ACT under any policy issued by the INSURER
to the DIRECTORS, OFFICERS, or COMPANY, neither the
DIRECTORS, OFFICERS nor the COMPANY shall have any right to
additional INDEMNITY or DEFENSE COSTS for such WRONGFUL ACT
under this POLICY.
(C) Notice of Claim
As a condition precedent to any rights under this POLICY, the
DIRECTORS, OFFICERS and/or the COMPANY, shall give written notice
to the INSURER as soon as practicable of any CLAIM, which notice
shall include the nature of the WRONGFUL ACT, the alleged injury,
the names of the claimants, and the manner in which the DIRECTOR,
OFFICER or COMPANY first became aware of the CLAIM, and shall
cooperate with the INSURER and give such additional information as
the INSURER may reasonably require.
The Application or any information contained therein for this
POLICY shall not constitute a notice of CLAIM.
(D) Cooperation and Settlements
In the event of any WRONGFUL ACT which may involve this POLICY, the
DIRECTORS, OFFICERS or COMPANY without prejudice as to liability,
may proceed immediately with settlements which in their aggregate
do not exceed the UNDERLYING LIMITS. The COMPANY shall notify the
INSURER of any such settlements made.
The INSURER shall not be called upon to assume charge of the
investigation, settlement or defense of any demand, suit or
proceeding, but the INSURER shall have the right and shall be
given the opportunity to associate with the DIRECTORS, OFFICERS
and COMPANY or any underlying insurer, or both, in the
investigation, settlement, defense and control of any demand, suit
or proceeding relative to any WRONGFUL ACT where the demand, suit
or proceeding involves or may involve the INSURER. At all times,
the DIRECTORS, OFFICERS and COMPANY and the INSURER shall
cooperate in the investigation, settlement and defense of such
demand, suit or proceeding.
The DIRECTORS, OFFICERS and COMPANY and their underlying insurer(s)
shall, at all times, use diligence and prudence in the
investigation, settlement and defense of demands, suits or other
proceedings.
(E) Appeals
In the event that the DIRECTORS, OFFICERS, COMPANY or any
underlying insurer elects not to appeal a judgment in excess of
the UNDERLYING LIMITS, the INSURER may elect to conduct such
appeal at its own cost and expense and shall be liable for any
taxable court costs and interest incidental thereto, but in no
event shall the total liability of the INSURER, exclusive of the
cost and expense of appeal exceed its Limits of Liability stated
in Item 5 of the Declarations.
(8 of 11)
(F) Subrogation
In the event of any payment under this POLICY, the INSURER shall be
subrogated to the extent of such payment to all rights of recovery
thereof, and the DIRECTORS, OFFICERS and COMPANY shall execute all
papers required and shall do everything that may be necessary to
enable the INSURER to bring suit in the name of the DIRECTORS,
OFFICERS or COMPANY.
(G) Bankruptcy or Insolvency
Bankruptcy or insolvency of the COMPANY shall not relieve the
INSURER of any of its obligations hereunder.
(H) Uncollectibility of Underlying Insurance
Notwithstanding any of the terms of this POLICY which might be
construed otherwise, if this POLICY is written as excess over any
Underlying Insurance, it shall drop down only in the event of
reduction or exhaustion of any aggregate limits contained in such
Underlying Insurance and shall not drop down for any other reason
including, but not limited to, uncollectibility (in whole or in
part) because of the financial impairment or insolvency of an
underlying insurer. The risk of uncollectibility of such
Underlying Insurance (in whole or in part) whether because of
financial impairment or insolvency of an underlying insurer or for
any other reason, is expressly retained by the DIRECTORS, OFFICERS
and the COMPANY and is not in any way or under any circumstances
insured or assumed by the INSURER.
(I) Maintenance of UNDERLYING LIMITS
If this POLICY is written as Excess Insurance, it is a condition of
this POLICY that any UNDERLYING LIMITS stated in Item 6 of the
Declarations shall be maintained in full force and effect, except
for reduction or exhaustion of any underlying aggregate limits of
liability, during the currency of this POLICY. Failure of the
COMPANY to comply with the foregoing shall not invalidate this
POLICY but in the event of such failure, without the agreement of
the INSURER, the INSURER shall only be liable to the same extent
as it would have been had the COMPANY compiled with this
Condition.
(J) Changes and Assignment
The terms of this POLICY shall not be waived or changed, nor shall
an assignment of interest be binding, except by an endorsement to
this POLICY issued by the INSURER.
(K) Outside NOT-FOR-PROFIT ORGANIZATION
If any DIRECTOR or OFFICER is serving or has served at the specific
request of the COMPANY as a DIRECTOR or OFFICER of an outside NOT-
FOR-PROFIT ORGANIZATION, the coverage afforded by this POLICY:
(1) shall be specifically excess of any other indemnity or
insurance available to such DIRECTOR or OFFICER by reason of
such service; and
(2) shall not be construed to extend to the outside NOT-FOR-
PROFIT ORGANIZATION in which the DIRECTOR or OFFICER is
serving or has served, nor to any other director, officer or
employee of such outside NOT-FOR-PROFIT ORGANIZATION.
(L) DISCOVERY PERIOD
(1) In the event of cancellation or nonrenewal of this POLICY by
the INSURER, the COMPANY shall have the right, upon
execution of a warranty that all known CLAIMS and facts or
circumstances likely to give rise to a CLAIM have been
reported to the INSURER and payment of an additional premium
to be determined by the INSURER which shall not exceed two
hundred (200) percent of the Policy Premium stated in Item 4
of the Declarations, to an extension of the coverage
afforded by this POLICY with respect to any CLAIM first made
against any DIRECTOR or, OFFICER during the period of twelve
(12) months after the effective date of such cancellation or
nonrenewal, but only with respect to any WRONGFUL ACT
committed during the COVERAGE PERIOD. This right of
extension shall terminate unless written notice of such
election is received by the INSURER within thirty (30) days
after the effective date of cancellation or nonrenewal.
(9 of 11)
The offer by the INSURER of renewal on terms, conditions or
premiums different from those in effect during the POLICY
PERIOD shall not constitute cancellation or refusal to renew
this POLICY.
(2) In the event of cancellation or nonrenewal of this POLICY by
the COMPANY, the COMPANY shall have the right upon payment
of an additional premium, which shall not exceed one hundred
(100) percent of the Policy Premium stated in Item 4 of the
Declarations, to an extension of coverage afforded by this
POLICY with respect to any CLAIM first made against any
DIRECTOR or OFFICER during the period of twelve (12) months
after the effective date of such cancellation or nonrenewal,
but only with respect to any WRONGFUL ACT during the
COVERAGE PERIOD. This right of extension shall terminate
unless written notice of such election is received by the
INSURER within thirty (30) days after the effective date of
cancellation or nonrenewal.
(3) In the event of renewal an terms and conditions different
from those in effect during the POLICY PERIOD, the COMPANY
shall have the right, upon execution of a warranty that all
known CLAIMS and facts or circumstances likely to give rise
to a CLAIM have been reported to the INSURER and payment of
an additional premium to be determined by the INSURER which
shall not exceed two hundred (200) percent of the Policy
Premium stated in Item 4 of the Declarations, to an
extension of the original terms and conditions with respect
to any CLAIM first made against any DIRECTOR or OFFICER
during the period of twelve (12) months after the effective
date of renewal, but only with respect to any WRONGFUL ACT
committed during the COVERAGE PERIOD and not covered by the
renewal terms and conditions. This right of extension shall
terminate unless written notice of such election is received
by the INSURER within thirty (30) days after the effective
date of renewal.
(M) Cancellation
This POLICY may be cancelled:
(1) at any time by the COMPANY by mailing written notice to the
INSURER stating when thereafter cancellation shall be
effective; or
(2) at any time by the INSURER by mailing written notice to the
COMPANY stating when, not less than ninety (90) days from
the date such notice was mailed, cancellation shall be
effective, except in the event of cancellation for
nonpayment of premiums, such cancellation shall be effective
ten (10) days after the date notice thereof is mailed.
The proof of mailing of notice to the address of the COMPANY stated
in Item 7 of the Declarations or the address of the INSURER stated
in Item 8 of the Declarations shall be sufficient proof of notice
and the insurance under this POLICY shall end on the effective
date and hour of cancellation stated in the notice. Delivery of
such notice either by the COMPANY or by the INSURER shall be
equivalent to mailing.
With respect to all cancellations, the premium earned and retained
by the INSURER shall be the sum of (a) the Minimum Premium stated
in Item 4B of the Declarations plus (b) the pro-rata proportion,
for the period this POLICY has been in force, of the difference
between (1) the Policy Premium stated in Item 4A of the
Declarations and (11) the Minimum Premium stated in Item 4B of the
Declarations.
The offer by the INSURER of renewal an terms, conditions or
premiums different from those in effect during the POLICY PERIOD
shall not constitute cancellation or refusal to renew this POLICY.
(N) Currency
All amounts stated herein are expressed in United States Dollars
and all amounts payable hereunder are payable in United States
Dollars.
(0) Sale Agent
The COMPANY first named in Item 1 of the Declarations shall be
deemed the sole agent of each DIRECTOR and OFFICER for the purpose
of requesting any endorsement to this POLICY, making premium
payments and adjustments, receipting for payments of INDEMNITY and
receiving notifications, including notice of cancellation from the
INSURER.
(10 of 11)
(P) Acts, Omissions or Warranties
The acts, omissions or warranties of any DIRECTOR or OFFICER shall
not be imputed to any other DIRECTOR or OFFICER with respect to
the coverages applicable under this POLICY.
(Q) Arbitration and Service of Suit
Any controversy or dispute arising out of or relating to an
interpretation or breach of this POLICY, shall be settled by
binding arbitration in accordance with the Rules of the American
Arbitration Association and judgment upon the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction
thereover. The arbitration process shall be governed by and
conducted in accordance with the laws of the State of Now York.
The terms of this POLICY are to be construed in an evenhanded
fashion as between the DIRECTORS, OFFICERS or COMPANY and the
INSURER in accordance with the laws of the jurisdiction in which
the situation forming the basis for this controversy arose. Where
the language of this POLICY is deemed to be ambiguous or otherwise
unclear, the issue shall be resolved in a manner most consistent
with the relevant terms of the POLICY without regard to authorship
of the language and without any presumption or arbitrary
interpretation or construction in favor of either the DIRECTORS,
OFFICERS or COMPANY or the INSURER. in reaching any decision the
arbitrators shall give due consideration for the customs and
usages of the insurance industry.
In the event of a judgment entered against the INSURER on an
arbitration award, the INSURER at the request of the DIRECTORS,
OFFICERS or COMPANY, shall submit to the jurisdiction of any court
of competent jurisdiction within the United States of America, and
shall comply with all requirements necessary to give such court
jurisdiction and all matters relating to such judgment and its
enforcement shall be determined in accordance with the law and
practice of such court.
Service of process in such suit or any other suit against the
INSURER, may be made upon Messrs. LeBoeuf, Lamb, Leiby & MacRae,
125 West 55th Street, New York, New York 10019, and, in any suit
instituted against it under this POLICY, the INSURER will abide by
the final decision of such court or of any appellate court in the
event of any appeal.
Messrs. LeBoeuf, Lamb, Leiby & MacRae are authorized and directed
to accept service of process on behalf of the INSURER in any such
suit and, upon the DIRECTORS, OFFICERS or 'COMPANY'S request, to
give a written undertaking to the DIRECTORS, OFFICERS or COMPANY
that they will enter a general appearance on the INSURER'S behalf
in the event such suit is instituted.
(R) Severability
In the event that any provision of this POLICY shall be declared or
deemed to be invalid or unenforceable under any applicable law,
such invalidity or unenforceability shall not affect the validity
or enforceability of the remaining portion of this POLICY.
(S) Non-assessability
The COMPANY (and, accordingly, any DIRECTOR or OFFICER for whom the
COMPANY acts as agent) shall only be liable under this POLICY for
the premium stated in Item 4 of the Declarations. Neither the
COMPANY nor any DIRECTOR or OFFICER for whom the COMPANY acts as
agent shall be subject to any contingent liability or be required
to pay any dues or assessments in addition to the premium
described above.
IN WITNESS WHEREOF, Associated Electric & Gas Insurance Services
Limited has caused this POLICY to be signed by its Chairman at
Hamilton, Bermuda. However, this POLICY shall not be binding upon
the INSURER unless countersigned on the Declaration Page by a duly
authorized representative of the INSURER.
/s/ Robert R. Fortune
Robert R. Fortune, Chairman
(11 of 11)
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Endorsement No. 1 Effective Date of Endorsement
June 30, 1993
Attached to and forming part of POLICY No. D0392B1A93
COMPANY IPALCO Enterprises, Inc.
It is understood and agreed that this POLICY is hereby amended as
indicated. All other terms and conditions of this POLICY remain unchanged.
NUCLEAR ENERGY LIABILITY EXCLUSION (BROAD FORM)
It is agreed that:
I. This POLICY does not apply:
(A) Under any Liability Coverage, to bodily injury or property damage:
(1) with respect to which the DIRECTORS, OFFICERS or COMPANY
under this POLICY is also an insured under a nuclear energy
liability policy issued by Nuclear Energy Liability
Insurance Association, Mutual Atomic Energy Liability
Underwriters, Nuclear Insurance Association of Canada or any
of their successors, or would be an insured under any such
policy but for its termination upon exhaustion of its limit
of liability; or
(2) resulting from hazardous properties of nuclear material and
with respect to which (a) any person or organization is
required to maintain financial protection pursuant to the
Atomic Energy Act of 1954, or any law amendatory thereof, or
(b) the DIRECTORS, OFFICERS or COMPANY is, or had this
POLICY not been issued would be, entitled to indemnity from
the United States of America, or any agency thereof, under
any agreement entered into by the United States of America,
or any agency thereof, with any person or organization.
(B) Under any Medical Payments Coverage, or under any Supplementary
Payments provision relating to immediate medical or surgical
relief, to expenses incurred with respect to bodily injury
resulting from the hazardous properties of nuclear material and
arising out of the operation of a nuclear facility by any person
or organization.
(C) Under any Liability Coverage, to bodily injury or property damage
resulting from the hazardous properties of nuclear material if:
(1) the nuclear material (a) is at any nuclear facility owned by,
or operated by or on behalf of the COMPANY or (b) has been
discharged or dispersed therefrom;
(2) the nuclear material is contained in spent fuel or waste at
any time possessed, handled, used, processed, sorted,
transported or disposed of by or on behalf of the COMPANY;
or
(3) the bodily injury or property damage arises out of the
furnishing by the COMPANY of services, materials, parts or
equipment in connection with the planning, construction,
maintenance, operation or use of any nuclear facility, but
if such facility is located within the United States of
America, its territories or possessions or Canada, this
exclusion (3) applies only to property damage to such
nuclear facility and any property thereat.
(1 of 2)
II. As used in this endorsement:
hazardous properties include radioactive, toxic or explosive properties;
nuclear material means source material, special nuclear material or
byproduct material;
source material, special nuclear material and byproduct material have
the meanings given them in the Atomic Energy Act of 1954 or in any law
amendatory thereof;
spent fuel means any fuel element or fuel component, solid or liquid,
which has been used or exposed to radiation in a nuclear reactor;
waste means any waste material (1) containing byproduct material other
than the tailings or wastes produced by the extraction or
concentration of uranium or thorium from any ore processed primarily
for its source material content, and (2) resulting from the operation
by any person or organization of any nuclear facility included under
the first two paragraphs of the definition of nuclear facility;
nuclear facility means:
(a) any nuclear reactor,
(b) any equipment or device designed or used for (i) separating the
isotopes of uranium or plutonium, (ii) processing or utilizing
spent fuel, or (iii) handling, processing or packing waste,
(c) any equipment or device used for the processing, fabricating or
alloying of special nuclear material if at any time the total
amount of such material in the custody of the COMPANY at the
premises where such equipment or device is located consists of or
contains more than 25 grams of plutonium or uranium 233 or any
combination thereof; or more than 250 grams of uranium 235, or
(d) any structure, basin, excavation, premises or place prepared or
used for the storage or disposal of waste,
and includes the site on which any of the foregoing is located, all
operations conducted on such site and all premises used for such
operations;
nuclear reactor means any apparatus designed or used to sustain
nuclear fission in a self-supporting chain reaction or to contain a
critical mass of fissionable material;
property damage includes all forms of radioactive contamination of
property.
/s/ Karen Larson
Signature of Authorized Representative
(2 of 2)
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Endorsement No. 2 Effective Date of Endorsement June
30, 1993
Attached to and forming part of POLICY No. D0392B1A93
COMPANY IPALCO Enterprises, Inc.
It is understood and agreed that this POLICY is hereby amended as
indicated. All other terms and conditions of this POLICY remain unchanged.
DELETION OF FAILURE TO MAINTAIN INSURANCE EXCLUSION
Section III, EXCLUSIONS (G) Failure to Maintain Insurance Exclusion, is
deleted in its entirety.
/s/ Karen Larson
Signature of Authorized Representative
(1 of 1)
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Endorsement No. 3 Effective Date of Endorsement
June 30, 1993
Attached to and forming part of POLICY No. D0392B1A93
COMPANY IPALCO Enterprises, Inc.
It is understood and agreed that this POLICY is hereby amended as
indicated. All other terms and conditions of this POLICY remain unchanged.
OUTSIDE POSITION COVERAGE - FOR-PROFIT ORGANIZATIONS
I. Definition (E) DIRECTOR and OFFICER is amended to include the
following:
(4) (a) any director, officer or trustee of the COMPANY who is named
in attachment OPC-FP1 and who is serving at the specific
written request of the COMPANY in the position of a
director, officer or trustee of the outside FOR-PROFIT
ORGANIZATION, which position and FOR-PROFIT ORGANIZATION are
named in attachment OPC-FP1, while such director, officer or
trustee is acting in such capacity; and
(b) any present or former director, officer or trustee of the
COMPANY who has served at the specific written request of
the COMPANY in the position of a director, officer or
trustee of an outside FOR-PROFIT ORGANIZATION in respect to
WRONGFUL ACTS committed while such directors, officers or
trustee is acting in such capacity; provided, however, that
such director, officer or trustee, such outside FOR-PROFIT
ORGANIZATION and such position were named in an endorsement
(similar to this Endorsement) to the Directors' and
Officers' Policy of the INSURER in force at the time at
which such director, officer or trustee was acting in such
capacity.
II. The following Definition is added to the POLICY:
(R) FOR-PROFIT ORGANIZATION: The term 'FOR-PROFIT ORGANIZATION' shall
mean an organization other than a NOT-FOR-PROFIT ORGANIZATION.
III. Exclusion (L) is hereby deleted in its entirety and replaced with the
following:
(L) where such CLAIM(S) arises out of such DIRECTOR'S or OFFICER'S
activities as a director, officer or trustee of any entity other
than:
(1) the COMPANY; or
(2) any outside NOT-FOR PROFIT ORGANIZATION as provided in
Section II(E)(2); or
(3) any outside FOR-PROFIT ORGANIZATION as provided in an OUTSIDE
POSITION COVERAGE - FOR-PROFIT ORGANIZATIONS Endorsement.
(1 of 2)
OUTSIDE POSITION COVERAGE - FOR-PROFIT ORGANIZATIONS
IV. Notwithstanding any other provision of the POLICY to the contrary, the
insurance provided by this Endorsement is specifically in excess of
and shall not contribute with any indemnification or insurance
provided by an outside FOR-PROFIT ORGANIZATION, to any DIRECTOR or
OFFICER of the COMPANY.
Under no circumstances shall the insurance provided by this
Endorsement apply to:
(1) any director, officer or trustee of the outside FOR-PROFIT
ORGANIZATION who is not a DIRECTOR or OFFICER of the COMPANY and
who is not named in attachment OPC-FP1; or
(2) the outside FOR-PROFIT ORGANIZATION
V. The Limits of Liability stated in Item 5 of the Declarations and the
UNDERLYING LIMITS stated in Item 6 of the Declarations shall apply
unless a specific Limit of Liability or UNDERLYING LIMIT is stated
below:
$ - - - - - - - - - - Each WRONGFUL ACT
$ - - - - - - - - - - In the aggregate for all WRONGFUL ACTS
$ - - - - - - - - - - Each WRONGFUL ACT not covered under
Underlying Insurance
/s/ Karen Larson
Signature of Authorized Representative
(2 of 2)
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Attachment OPC-FP1 to Endorsement No. 3 Effective Date of Endorsement
June 30, 1993
Attached to and forming part of POLICY No. D0392B1A93
COMPANY IPALCO Enterprises, Inc.
Name, FOR-PROFIT ORGANIZATION and position of each director, officer or
trustee of the COMPANY covered under Endorsement No. 3
NAME FOR-PROFIT ORGANIZATION POSITION
J. R. Hodowal Tecumseh Coal Corporation Director
Dan Fitzgibbon Evergreen Media Corporation Director
R. L. Humke Tecumseh Coal Corporation Director
(1 of 1)
AEGIS
ASSOCIATED ELECTRIC & GAS
INSURANCE SERVICES LIMITED
HAMILTON, BERMUDA
DIRECTORS & OFFICERS LIABILITY INSURANCE
RENEWAL APPLICATION
THIS IS AN APPLICATION FOR A CLAIMS-FIRST-MADE POLICY.
ATTACHED HERETO IS A SPECIMEN POLICY. PLEASE READ THE
SPECIMEN POLICY CAREFULLY. THIS POLICY PROVIDES
COVERAGE WHICH MAY BE DIFFERENT FROM THAT PROVIDED BY
OTHER POLICIES. THIS POLICY ALSO DOES PROVIDE FOR
MANDATORY ARBITRATION OF ALL DISPUTES WHICH MAY ARISE
UNDER THE POLICY. A LONG FORM APPLICATION IS REQUIRED
FOR INCREASED LIMITS OR A REDUCED ATTACHMENT POINT.
IPALCO ENTERPRISES, INC., and Subsidiaries, et al
NAME OF CORPORATION
25 Monument Circle
PRINCIPAL ADDRESS
Indianapolis, IN 46204
CITY, STATE, ZIP CODE
Indiana
STATE OF INCORPORATION
September 14, 1983
DATE OF INCORPORATION
35-1575582
FEDERAL INCOME TAX I.D. NUMBER
(1 of 5)
1. Coverage Requested:
a. Limit of Insurance - Each Wrongful Act/Aggregate: $ 35,000,000
b. Underlying Limits - Each Wrongful Act:
Corporate Reimbursement: I. Nuclear $ -0- (Minimum $200,000)
II. Non-Nuclear $200,000 (Minimum $200,000)
c. Policy inception - 12:01 A.M. Standard Time on: June 1, 1993
d. Retroactive date - 12:01 A.M. Standard Time on: December 4, 1970
e. Are nuclear operations to be covered? Yes ( ) No (XXX)
If yes, provide the following information as to each nuclear facility.
Status:
Facility Under Construction Ownership
Name Operating or Other Interest
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Provide brief answers with cross-reference to 10-K etc., for complete
information.
2. Stock Ownership (Corporation):
Name and percentage of holdings of any shareholder who owns 5% or more
of the common shares directly or beneficially:
IPALCO Employees' Thrift Plan - 8 36% As of: January 31, 1993
--------------------------------------- ----------------
3. Name and Title of individual to whom notice and all communications are
to be given.
Name: Bruce H Smith
Title: Administrator, Risk Management
Company: Indianapolis Power & Light Company
Address: 25 Monument Circle P.0. Box 1595, Indianapolis , IN
46206
Telephone: 317 / 261-8121
FAX number: 317 / 630-5642
(2 of 5)
4. Subsidiaries: See Attachment A
List all subsidiary companies and include the following information
(attach a separate sheet if necessary}:
Firm Business or Type Percentage Year Acquired
Name of Operation Owned or Created
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
5. Director or Officer Positions:
NOTE: Coverage for positions with outside for-profit organizations is
extended only if specifically requested. This coverage is provided
by endorsement.
Coverage for positions with outside not-for-profit organizations
is provided as defined in the Policy. Coverage for employees
serving at the specific request of the Company, on not-for-profit
organizations as a director, officer or trustee must be
specifically requested and is provided by endorsement.
a. Is coverage requested for outside for-profit director, officer. or
trustee positions held by directors or officers of the Corporation
and/or subsidiary? Yes (XXX) No ( )
If the answer is yes, list the directors and officers and their
outside for-profit positions for which coverage is requested:
<TABLE>
<CAPTION>
Outside Organization
---------------------------------------------------------
Name of Director Name of Name of Business or Position Held
or Officer Organizations Type of Operation
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
John R. Hodowal Tecumseh Coal Coal and Oil Director
Corporation Mining
- ----------------------------------------------------------------------------------
Ramon L. Humke Tecumseh Coal Coal and Oil Director
Corporation Mining
- ----------------------------------------------------------------------------------
Daniel H. FitzGibbon Evergreen Media Radio Station Director
Corporation
- ----------------------------------------------------------------------------------
</TABLE>
b. Is coverage requested for outside not-for-profit director, officer, or
trustee positions, as defined by the Policy, held by an employee of
the Corporation and/or subsidiary?
Yes (XXX) No ( )
(3 of 5)
6. Corporate Changes:
a. Has the Corporation publicly revealed that it now has or within the
past or next 1 2 months had or has under consideration any
acquisitions. divestitures, dissolutions, tender offers, or mergers?
Yes (XXX) No ( )
If yes, attach full details including Prospectus, if any.
The attached Registration Statement on Form 5-4 and related Prospectus
sets forth the full details of IPALCO's s tender offer to acquire
shares of PSI Resources, Inc.
b. Has the Corporation publicly announced any new public offering of
common stock, convertible securities or equity warrants pursuant to
the Securities Act of 1933 or qualification of such securities under
Regulation A within the past or next 12 months?
Yes :(XXX) No ( )
If yes, attach full details including Prospectus, if any.
Offering is made in connection with proposed acquisition referenced in
6.a.
7. Additional information:
As Part of this Application, attach the following:
a. Latest audited annual report.
b. Latest 10-K, and all 1O-Q and 8-K reports subsequently filed with the
SEC (if publicly traded).
c. Latest interim financial statement available.
d. Latest Notice of Annual Meeting of Shareholders, including Proxy
Statement.
e. Copy of the indemnification provisions of the corporate bylaws of the
Corporation, unless attached to a prior Aegis application in current
form. Previously provided.
f. List of directors and officers of Corporation and each subsidiary. See
Attachment B
8. How will this insurance be placed with AEGIS? Complete appropriate
section.
__ Through a licensed surplus lines XXX As an independently procured or
or excess lines broker in direct placement to AEGlS.
accordance with local surplus Please indicate below the name
lines requirements. and address of any insurance
Please indicate below the name and consultant providing services
address of such broker. to you in connection with this
insurance.
Charles J. Lehr
Alexander & Alexander
251 N. Illinois - Suite l500
P.0. Box 7019
Indianapolis, IN 46207
9. Continuity:
IT IS AGREED THAT THIS RENEWAL APPLICATION IS A SUPPLEMENT TO THE
CORPORATION S LATEST LONG FORM APPLICATION DATED APRIL 19, 1989 AND
THAT APPLICATION TOGETHER WITH THIS AND ANY OTHER RENEWAL APPLICATION
CONSTITUTE THE COMPLETE APPLICATION WHICH SHALL BE THE BASIS OF THE
POLICY AND WILL BE ATTACHED TO AND BECOME PART OF THE POLICY.
THE ACTS, OMISSIONS OR WARRANTIES OF ANY DIRECTOR OR OFFICER SHALL NOT
BE IMPUTED TO ANY OTHER DIRECTOR OR OFFICER WITH RESPECT TO THE
COVERAGES APPLICABLE UNDER THE REQUESTED POLICY SHOULD A POLICY BE
ISSUED.
(4 of 5)
THE UNDERSIGNED AUTHORIZED REPRESENTATIVE OF THE CORPORATION, BASED ON
REASONABLE INQUIRY, WARRANTS, TO THE BEST OF HIS KNOWLEDGE AND BELIEF, THAT
THE STATEMENTS SET FORTH HEREIN ARE TRUE.
SIGNING OF THIS APPLICATION DOES NOT BIND THE INSURER TO OFFER, NOR THE
UNDERSIGNED TO ACCEPT INSURANCE, BUT IT IS AGREED THAT THIS APPLICATION
SHALL BE THE BASIS OF THE INSURANCE SHOULD A POLICY BE ISSUED. AND IT WILL
BE ATTACHED TO AND MADE A PART OF THE POLICY. THE INSURER MAY REQUEST
ADDITIONAL INFORMATION WHICH, WHEN SUBMITTED, SHALL BE ATTACHED TO AND MADE
A PART OF THIS APPLICATION.
BY SIGNING THIS APPLICATION, THE UNDERSIGNED DECLARES THAT HE HAS READ THE
MANDATORY ARBITRATION PROVISION IN THE ATTACHED SPECIMEN POLICY AND AGREES
TO BE BOUND BY THE MANDATORY ARBITRATION PROVISION SHOULD A POLICY BE
ISSUED.
THE UNDERSIGNED FURTHER WARRANTS THAT IF THE INFORMATION SUPPLIED IN THIS
APPLICATION CHANGES MATERIALLY BETWEEN THE DATE OF THIS APPLICATION AND THE
INCEPTION DATE OF THE POLICY PERIOD, THE APPLICANT WILL IMMEDIATELY NOTIFY
THE INSURER AND ANY SUCH CHANGES SHALL BE ATTACHED TO AND MADE A PART OF
THIS APPLICATION.
Signed: /s/ John R. Hodowal
------------------------------------
JOHN R. HODOWAL
Title: Chairman of the Board and President
-------------------------------------
(Must be signed by the Chairman
of the Board or President
of the Corporation)
Date Of Application: May 14, 1993
-------------------------------------
Please return the original application to:
Aegis insurance Services. Inc.
Harborside Financial Center
700 Plaza Two
Jersey City, New Jersey 07311-3994
Attention: Underwriting Department
(5 of 5)
Attachment A
<TABLE>
COMPANIES FOR WHICH COVERAGE IS REQUIRED
<CAPTION>
Business or Year Acquired
Firm Name Type of Operation Percentage Owned or Created
--------- ----------------- ---------------- -------------
<S> <C> <C> <C>
IPALCO Enterprises, Inc. Holding Company - 1983
(Parent)
Indianapolis Power & Light Company Electric and 100% Common Stock Owned 1926
(Subsidiary of Enterprises) Steam Utility by Enterprises
Mid-America Capital Resources, Inc. Holding Company for 100% Ownership by Enterprises 1984
(Subsidiary of Enterprises) Non-Utility Business
Property and Land Company, Inc. Management and 100% Ownership by 1965
(Subsidiary of IPL) Acquisition of IPL
Real Estate
Mid-America Energy Resources, Inc. Operate Non-Utility 100% Ownership by 1989
(Subsidiary of District Cooling Mid-America Capital
Mid-America Capital) Business
Cleveland Thermal Energy Corporation Non-Utility District 100% Ownership by 1991
(Subsidiary of Cooling and Heating Mid-America Energy
Mid-America Energy)
Cleveland District Cooling Corporation Utility District 100% Ownership by 1992
(Subsidiary of Cooling Services Mid-America Energy
Mid-America Energy)
Indianapolis Campus Energy Non-Utility Production 100% Ownership by 1991
(Subsidiary of and Distribution of Mid-America Capital
Mid-America Capital) Chilled Water
Store Heat and Produce Energy, Inc. Energy Storage 70% Ownership by 1992/93
(Subsidiary of Technology Research Mid-America Capital
Mid-America Capital) and Development
</TABLE>
Attachment B
Page 1 of 5
IPALCO ENTERPRISES, INC.
Directors and Officers
IPALCO ENTERPRISES, INC.
Holding Company
Directors
Joseph D. Barnette, Jr. L. Ben Lytle
Mitchell E. Daniels, Jr. Michael S. Maurer
Otto N. Frenzel III Thomas M. Miller
John R. Hodowal Sallie W. Rowland
Ramon L. Humke Thomas H. Sams
Sam H. Jones Zane G. Todd
Andre B. Lacy
Officers
John R. Hodowal Chairman of the Board and President
Ramon L. Humke Vice-Chairman
John R. Brehm Vice President and Treasurer
Maurice O. Edmonds Vice President - Corporate Affairs
N. Stuart Grauel Vice President - Public Affairs
Marcus E. Woods Secretary and General Counsel
Stephen J. Plunkett Controller
Clark L. Snyder Assistant Secretary
Steven L. Meyer Assistant Treasurer
Page 2 of 5
IPALCO ENTERPRISES, INC.
Directors and Officers (continued)
INDIANAPOLIS POWER & LIGHT COMPANY
Subsidiary of IPALCO Enterprises. Inc.
Directors
Joseph D. Barnette, Jr. L. Ben Lytle
Mitchell E. Daniels, Jr. Michael S. Maurer
Otto N. Frenzel III Thomas M. Miller
John R. Hodowal Sallie W. Rowland
Ramon L. Humke Thomas H. Sams
Sam H. Jones Zane G. Todd
Andre B. Lacy
Officers Title
John R. Hodowal Chairman of the Board and Chief Executive Officer
Ramon L. Humke President and Chief Operating Officer
John R. Brehm Senior V. P. - Finance and Information Services
Michael M. Minter Senior V. P. - Planning and Engineering
Robert W. Rawlings Senior V. P. - Electric Production
Gerald D. Waltz Senior V. P. - Business Development
John C. Berlier, Jr. V. P. - Resource Planning and Rates
Max Califar V. P. - Human Resources
Arthur G. Haan V. P. - Strategic Affairs
Donald W. Knight V. P. - Fuel Supply
Robert A. McKnight, Jr. V. P. - Major Project Management
Michael E. Shriner V. P. - Customer Services and Marketing
Joseph A. Slash V. P. - General Services
Thomas A. Steiner V. P. - Transmission and Distribution
John D. Wilson V. P. - Information Services
Marcus E. Woods V. P., Secretary and General Counsel
Steven L. Meyer Treasurer
Stephen J. Plunkett Controller
Arnold A. Gordus Assistant V.P. - Environmental Affairs
Clark L. Snyder Assistant Secretary and Assistant General Counsel
Page 3 of 5
IPALCO ENTERPRISES, INC.
Directors and Officers (continued)
Property and Land Company, Inc.
Subsidiary of Indianapolis Power & Light Company
Directors Officers
John R. Hodowal John R. Hodowal, President
Ramon L. Humke Ramon L. Humke, Vice President
Thomas A. Steiner Marcus E. Woods, Secretary
Marcus E. Woods John R. Brehm, Treasurer
Gerald D. Waltz Clark L. Snyder, Assistant Secretary
John D. Wilson, Assistant Treasurer
Mid-America Capital Resources, Inc.
Subsidiary of IPALCO Enterprises, Inc.
Directors Officers
Joseph S. Dawson John R. Hodowal, Chairman of the Board,
Otto N. Frenzel III Chief Executive Officer, and President
John R. Hodowal Joseph A. Gustin, Vice President
Ramon L. Humke Clark L. Snyder, Secretary
Andre B. Lacy John R. Brehm, Treasurer
Zane G. Todd Steven L. Meyer, Assistant Secretary and
Assistant Treasurer
Page 4 of 5
IPALCO ENTERPRISES, INC.
Directors and Officers (continued)
Mid-America Energy Resources, Inc.
Subsidiary of Mid-America Capital Resources, Inc.
Directors
John R. Hodowal, Chairman
John R. Brehm
Joseph A. Gustin
Ramon L. Humke
Steven L. Meyer
Clark L. Snyder
Officers
Joseph A. Gustin President
David C. Kiesel V. P. - Engineering and Construction
Daniel L. Short V. P. - Business Development
William A. Tracy V. P. - Operations
Clark L. Snyder Secretary
John R. Brehm Treasurer
Steven L. Meyer Assistant Secretary
and Assistant Treasurer
Cleveland Thermal Energy Corporation
Subsidiary of Mid-America Energy Resources, Inc.
Directors Officers
John R. Hodowal, Chairman James B. Cookinham, President
Ramon L. Humke William A. Tracy, Vice President
Joseph A. Gustin Clark L. Snyder, Secretary
James B. Cookinham Daniel L. Short, Treasurer
Faithe Arden, Assistant Secretary
Gerald Hoover, Assistant Treasurer
Page 5 of 5
IPALCO ENTERPRISES, INC.
Directors and Officers (continued)
Cleveland District Cooling Corporation
Subsidiary of Mid-America Energy Resources, Inc.
Directors Officers
John R. Hodowal, Chairman James B. Cookinham, President
James 8. Cookinham William A. Tracy, Vice President
Joseph A. Gustin Clark L. Snyder, Secretary
Gerald Hoover Gerald Hoover, Treasurer
Indianapolis Campus Energy (ICE)
Subsidiary of Mid-America Energy Resources, Inc.
Directors Officers
John R. Hodowal, Chairman Joseph A. Gustin, President
Joseph A. Gustin David C. Kiesel, Vice President
Clark L. Snyder, Secretary
Nicholas C. Anthony, Treasurer
Store Heat and Produce Energy, Inc. (SHAPE)
Subsidiary of Mid-America Energy Resources, Inc.
Directors Officers
John R. Hodowal, Chairman William J. Longardner, President
Joseph A. Gustin Joseph A. Gustin, Vice President
William J. Longardner Clark L. Snyder, Secretary
Clark L. Snyder Nicholas C. Anthony, Treasurer
CERTIFICATE
The undersigned Marcus E. Woods, hereby certifies that he is
Secretary of Indianapolis Power & Light Company, an Indiana
corporation, and as such he has custody of the records and seal
of said Company; that at a duly constituted meeting of the Board
of Directors of said Company held November 30, 1993, the
following resolution was duly adopted and is now in full force
and effect:
RESOLVED, that effective January 1, 1994, the
Indianapolis Power & Light Company Unfunded
Deferred Compensation Plan for Directors be, and
the same hereby is, amended by deleting Paragraph
(10) and Paragraph (11) thereof and replacing them
with the following paragraph, to wit:
"(10) The term "Current Interest Rate" shall mean
the rate in effect on December 31 of each calendar
year that is equal to the Company's cost of
capital as determined by the Indiana Utility
Regulatory Commission in the Company's last
general retail electric rate order, unless
otherwise determined by this Board of Directors."
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the seal of said Company this 1st day of February, 1994.
/s/ Marcus E. Woods
---------------------------
Marcus E. Woods, Secretary
(SEAL)
CERTIFICATE
The undersigned Marcus E. Woods, hereby certifies that he is
Secretary of Indianapolis Power & Light Company, an Indiana
corporation, and as such he has custody of the records and seal
of said Company; that at a duly constituted meeting of the Board
of Directors of said Company held November 30, 1993, the
following resolution was duly adopted and is now in full force
and effect:
RESOLVED, that the Indianapolis Power &
Light Company Unfunded Deferred Compensation
Plan for Officers, substantially in the form
presented to this meeting, be, and the same
hereby is, approved, effective January 1,
1994.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the seal of said Company this 1st day of February, 1994.
/s/ Marcus E. Woods
---------------------------
Marcus E. Woods, Secretary
(SEAL)
INDIANAPOLIS POWER & LIGHT COMPANY
SUPPLEMENTAL RETIREMENT PLAN AND TRUST AGREEMENT
FOR A SELECT GROUP OF MANAGEMENT EMPLOYEES
(AS AMENDED AND RESTATED EFFECTIVE MAY 1, 1993)
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 3
Section 1.01. Accrued Benefit 3
Section 1.02. Actuarial Equivalent 3
Section 1.03. Adjusted Accrued Benefit 4
Section 1.04. Adjusted Preretirement Surviving Spouse
Death Benefit 4
Section 1.05. Administrator 4
Section 1.06. Board 4
Section 1.07. Break In Service 5
Section 1.08. Company 5
Section 1.09. Company Retirement Plan 5
Section 1.10. Compensation 5
Section 1.11. Effective Date 6
Section 1.12. Employer 6
Section 1.13. ERISA 6
Section 1.14. Hour of Service 6
Section 1.15. Maximum Benefit Liability 7
Section 1.16. Normal Retirement Age 9
Section 1.17. Participant 9
Section 1.18. Participant Account 9
Section 1.19. Plan 9
Section 1.20. Plan Year 9
Section 1.21. Preretirement Surviving Spouse Death
Benefit 9
Section 1.22. Prior Plan 10
Section 1.23. Service 10
Section 1.24. Tax Distributions 10
Section 1.25. Total Disability 10
Section 1.26. Trust Fund 11
Section 1.27. Trustee 11
Section 1.28. Valuation Date 11
Section 1.29. Vested Portion 11
Section 1.30. Participating Employers 12
Section 1.31. Available Net Income 12
Section 1.32. Compensation Committee 13
ARTICLE II PARTICIPATION 13
Section 2.01. Participants 13
Section 2.02. Reemployment 17
ARTICLE III MONTHLY SUPPLEMENTAL PENSION BENEFITS 18
Section 3.01. Senior Executive Officer's Monthly
Supplemental Pension Benefits 18
Section 3.02. Other Executive Officer's Monthly
Supplemental Pension Benefits 19
Section 3.03. Special Monthly Supplemental Pension
Benefits 20
ARTICLE IV PAYMENT OF RETIREMENT BENEFITS 20
Section 4.01. Entitlement to Retirement Benefits 20
Section 4.02. Non-Vested Benefits 22
Section 4.03. Tax Distribution Payments 23
Section 4.04. Reduction in Accrued Benefit and
Preretirement Surviving Spouse
Death Benefit 28
Section 4.05. Distribution and Recontribution of
Income 31
ARTICLE V MONTHLY DEATH BENEFITS 33
ARTICLE VI CONTRIBUTIONS TO THE TRUST FUND 34
Section 6.01. Initial Company Contribution 34
Section 6.02. Annual Company Contribution 34
Section 6.03. Additional Company Contributions 35
Section 6.04. Form of Contribution 35
ARTICLE VII ESTABLISHMENT OF TRUST FUND 36
Section 7.01. Trust Fun 36
Section 7.02. Establishment of Participant Accounts 36
Section 7.03. Allocation of Contributions 36
Section 7.04. Valuations 37
Section 7.05. Reallocation of Excess Participant
Account Balances 38
Section 7.06. Payment of Expenses 39
Section 7.07. Accounting and Record Keeping 39
Section 7.08. Limitation on Liability 40
Section 7.09. Consultation and Indemnification 40
Section 7.10. Litigation 41
Section 7.11. Waiver of Bond 41
ARTICLE VIII INVESTMENT OF TRUST FUND 41
Section 8.01. Management of Trust Fund and
Appointment of Investment Manager 41
Section 8.02. Powers of Trustee 42
ARTICLE IX RESIGNATION, REMOVAL, AND APPOINTMENT
OF SUCCESSOR TRUSTEE 47
Section 9.01. Resignation 47
Section 9.02. Removal 47
Section 9.03. Successor Trustee 47
Section 9.04. Accounting by Trustee 48
Section 9.05. Merger or Consolidation of Trustee 48
ARTICLE X NON-DIVERSION OF TRUST FUND 49
ARTICLE XI ADMINISTRATION 49
Section 11.01. Delegation of Responsibility 49
Section 11.02. Construction of Plan 50
Section 11.03. Tax Information to Participants 50
Section 11.04. Determinations 50
ARTICLE XII MISCELLANEOUS 51
Section 12.01. Amendment or Termination of Plan 51
Section 12.02. Right to Merge Plan 52
Section 12.03. Successors and Assigns 53
Section 12.04. Choice of Law 53
Section 12.05. No Employment Contract 53
Section 12.06. Non-Alienation 53
Section 12.07. Gender and Number 54
Section 12.08. Headings 54
Section 12.09. Payment to Incompetents 54
Section 12.10. Illegal or Invalid Provisions 54
INDIANAPOLIS POWER & LIGHT COMPANY
SUPPLEMENTAL RETIREMENT PLAN AND TRUST
AGREEMENT FOR A SELECT GROUP OF MANAGEMENT EMPLOYEES
(AS AMENDED AND RESTATED EFFECTIVE MAY 1, 1993)
Pursuant to Section 12.01 of the Indianapolis Power & Light Company
Supplemental Retirement Plan and Trust Agreement for a Select Group of
Management Employees (the "Plan") which was originally executed on
November 1, 1988 by and between Indianapolis Power & Light Company, Inc.
(the "Company") and National City Bank, Indiana (the "Trustee") and last
amended and restated effective January 1, 1992, the Company hereby amends
and completely restates the Plan, effective as of May 1, 1993, as follows:
WITNESSETH:
WHEREAS, effective May 1, 1983, the Company established the Unfunded
Supplemental Retirement Plan for a Select Group of Management Employees
(the "Prior Plan") which was designed to meet applicable exemptions under
Sections 201(2), 301(a)(3), 401(a)(1) and 4021(b)(6) of ERISA (as
hereinafter defined) and under Department of Labor Regulation Section
2520.104-23; and
WHEREAS, in order to provide the active participants in the Prior Plan
with greater assurance that the benefits provided under such Prior Plan
will be duly made, the Company desires to establish a successor plan and
trust (the "Plan") for the active participants in the Prior Plan (and has
contemporaneously limited their participation in the Prior Plan to preclude
a duplication of benefits) and to transfer thereto sufficient assets to be
held therein and applied against the benefit obligations of the Company
under the terms of the Plan, until paid or returned in accordance with the
terms of this Agreement; and
WHEREAS, in recognition of the management services and other benefits
provided to the Employer (as hereinafter defined) by the key employees who
are Participants (as hereinafter defined) under the Plan, it is the
intention of the Company to make contributions to the Plan in accordance
with the terms of this Agreement; and
WHEREAS, the Plan is not intended to be a tax qualified plan under
Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), but is intended to meet and comply with the requirements of
ERISA and shall be interpreted accordingly to effect the intent of the
parties;
NOW, THEREFORE, in consideration of the services which have been and
shall be performed by such Plan Participants, of the premises and of the
mutual covenants herein contained, the receipt and sufficiency of which are
hereby expressly acknowledged, the parties do hereby covenant and agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Accrued Benefit. The term "Accrued Benefit" means the
monthly amount payable to a Participant at age sixty-five (65), based on
such Participant's average Compensation at the date of determination, under
Section 3.01 or Section 3.02, whichever is applicable, multiplied by a
fraction (not to exceed one (1)), the numerator of which is such
Participant's Service at the date of determination and the denominator of
which is the lesser of thirty (30) or the total Service such Participant
would have completed if his employment by the Employer had continued until
his attainment of the Normal Retirement Age; provided, however, that if the
Participant's employment with the Employer is terminated by reason of his
incurring a Total Disability, the fraction described above shall be one
(1), regardless of his Service at the date he incurs a Total Disability.
Section 1.02. Actuarial Equivalent. The term "Actuarial Equivalent"
means the equivalent in value of the aggregate amounts expected to be paid
under different forms of payment under this Plan, on the basis of an
assumed rate of interest of seven percent (7%) and mortality rates under
the Unisex Pension 1984 Mortality Table (UP-84) with no age set back for
the Participant and a three (3) year age set back for the Participant's
spouse.
Section 1.03. Adjusted Accrued Benefit. The term "Adjusted Accrued
Benefit" means the Accrued Benefit of each Participant after it is adjusted
in accordance with Section 4.04(a) to reflect any Tax Distributions made to
such Participant and in accordance with Section 4.04(b) to reflect any
distributions made under Section 4.05 and not recontributed to the Plan.
Section 1.04. Adjusted Preretirement Surviving Spouse Death Benefit.
The term "Adjusted Preretirement Surviving Spouse Death Benefit" means the
Preretirement Surviving Spouse Death Benefit of a surviving spouse of a
deceased Participant after it is adjusted in accordance with Section
4.04(a) to reflect any Tax Distributions made to such deceased Participant
or to such surviving spouse and in accordance with Section 4.04(b) to
reflect any distributions made under Section 4.05 and not recontributed to
the Plan.
Section 1.05. Administrator. The term "Administrator" means the
Company, which shall have the sole authority to manage and to control the
operation and administration of this Plan.
Section 1.06. Board. The term "Board" means the Board of Directors
of the Company. Whenever the provisions of this Plan require action by the
Board, it may be taken by the Executive Committee of the Board with the
same force and effect as though taken by the entire Board.
Section 1.07. Break In Service. The term "Break in Service" means
the last calendar day of any consecutive twelve (12) month computation
period as provided in Section 1.24 during which a person completes fewer
than five hundred and one (501) Hours of Service.
Section 1.08. Company. The term "Company" means Indianapolis Power &
Light Company and any successor thereto or predecessor thereof.
Section 1.09. Company Retirement Plan. The term "Company Retirement
Plan" means the Employees' Retirement Plan of Indianapolis Power & Light
Company as now in effect or hereafter amended. The Company Retirement Plan
is not amended or modified in any manner by this Plan, and any benefits
payable to Participants or to their surviving spouses under this Plan shall
have no effect on the benefits payable to Participants or to their
surviving spouses under the Company Retirement Plan.
Section 1.10. Compensation. The term "Compensation" means the
remuneration received by a Participant from the Employer for services
rendered to the Employer, including incentive and length-of-service pay but
specifically excluding bonus payments, prizes or reimbursements and any
payments made pursuant to the Executive Incentive Compensation Plan of
IPALCO Enterprises, Inc. and the IPALCO Enterprises, Inc. Annual Incentive
Plan and 1990 Long-Term Performance Incentive Plan; provided, however, that
the term "Compensation" shall also include any current compensation
deferred by a Participant under any qualified or nonqualified plan
sponsored or maintained by the Employer or under any agreement entered into
between a Participant and the Employer other than the Executive Incentive
Compensation Plan of IPALCO Enterprises, Inc.
Section 1.11. Effective Date. The term "Effective Date" means
November 1, 1988.
Section 1.12. Employer. The term "Employer" means the Company, any
entity which is affiliated with the Company within the meaning of Sections
210(b) and 210(c) of ERISA, and any successor thereto or predecessor
thereof.
Section 1.13. ERISA. The term "ERISA" means the Employee Retirement
Income Security Act of 1974, as now in effect or hereinafter amended and
shall also include any regulations promulgated thereunder.
Section 1.14. Hour of Service. The term "Hour of Service" means the
hours which are recognized as such under the Company Retirement Plan.
Section 1.15. Maximum Benefit Liability. The term "Maximum Benefit
Liability" means with respect to each Participant Account established
hereunder the greater of:
(a) the present value (as of the date of determination) of the
Vested Portion of a Participant's Adjusted Accrued Benefit (or, if the
payment of monthly benefits has already commenced, the remaining
payments) due under Article IV to the Participant for whom such
Participant Account is established or, if applicable, his surviving
spouse, and
(b) with respect to a married Participant or the surviving spouse
of a deceased Participant, the present value (as of the date of
determination) of the Adjusted Preretirement Surviving Spouse Death
Benefit (or, if the payment of death benefits has already commenced,
the remaining payments) due under Article V to the surviving spouse of
the Participant for whom such Participant Account is established.
In calculating the Maximum Benefit Liability as of a determination date,
any reductions in the Accrued Benefits and Preretirement Surviving Spouse
Death Benefits of Participants or their surviving spouses, where
applicable, which are to be made as of the date of determination under
Section 4.04 shall be given effect, whether or not the Tax Distribution
payments (or distributions of Available Net Income not recontributed under
Section 4.05) attributable to such reduction have been made as of the date
of calculation; provided, however, that if such Tax Distribution payment is
not ultimately made by the Company under Section 4.03 (or such distribution
of Available Net Income is not ultimately made under Section 4.05), the
reduction shall not be given effect in any calculations of the Maximum
Benefit Liability of a Participant's Accrued Benefit or Preretirement
Surviving Spouse Death Benefit which are made after the due date of the Tax
Distribution payment (or distribution of Available Net Income). For
purposes of making the calculation of present value, the present value
discount rate shall be eight percent (8%), and the mortality assumption
shall be computed in accordance with the 1983 Group Annuity Mortality
Table; provided, however, that the eight percent (8%) present value
discount rate shall be adjusted as of each October 31 by multiplying eight
percent (8%) by a fraction, the numerator of which is equal to the asked
discount rate on ninety (90) day maturity U.S. Treasury Bills for the first
trading date coinciding with or immediately following the Effective Date as
reported in The Wall Street Journal and the denominator of which is equal
to the asked discount rate on ninety (90) day maturity U.S. Treasury Bills
for the first trading date coinciding with or immediately following the
October 31 as of which the adjustment in the rate is made as reported in
The Wall Street Journal. The Maximum Benefit Liability shall be calculated
and certified by an actuary designated by the Company who is acceptable to
the Trustee and who is enrolled by the Joint Board for the Enrollment of
Actuaries.
Section 1.16. Normal Retirement Age. The term "Normal Retirement
Age" means for each Participant age sixty-five (65).
Section 1.17. Participant. The term "Participant" means any
individual designated in Article II of this Plan who is eligible for
benefits under this Plan.
Section 1.18. Participant Account. The term "Participant Account"
means the separate account maintained by the Trustee for each Participant.
Section 1.19. Plan. The term "Plan" means the Indianapolis Power &
Light Company Supplemental Retirement Plan and Trust Agreement for a Select
Group of Management Employees, which is intended to be a continuation of
the Prior Plan with respect to the active participants in the Prior Plan at
the Effective Date.
Section 1.20. Plan Year. The term "Plan Year" means a consecutive
twelve (12) month period beginning on November 1 and ending on October 31.
Section 1.21. Preretirement Surviving Spouse Death Benefit. The term
"Preretirement Surviving Spouse Death Benefit" means the monthly amount
payable to a surviving spouse of a deceased Participant under Article V.
Section 1.22. Prior Plan. The term "Prior Plan" means the
Indianapolis Power & Light Company Unfunded Supplemental Retirement Plan
for a Select Group of Management Employees, as amended through October 31,
1988. The retired participants or, if applicable, the surviving spouses of
deceased participants in the Prior Plan shall continue to receive their
benefits in accordance with the Prior Plan.
Section 1.23. Service. The term "Service" means the period of
employment of an individual by the Employer and, for purposes of vesting
and benefit accrual, shall be measured in consecutive twelve (12) month
computation periods (hereinafter sometimes referred to as "years")
beginning on the first (1st) calendar day of an individual's employment by
the Employer and anniversaries thereof and disregarding any such periods in
which such individual completes fewer than one thousand (1,000) Hours of
Service. Notwithstanding the above, upon termination of his employment
with the Employer, an individual shall receive credit for a fractional year
of Service for the period from the last such anniversary date.
Section 1.24. Tax Distributions. The term "Tax Distributions" means
the cash payments made by the Company under Section 4.03.
Section 1.25. Total Disability. The term "Total Disability" means a
physical or mental condition which prevents a Participant from performing
his duties for the Employer; provided, however, that a Participant shall
not be deemed to have incurred a Total Disability unless such Participant
is eligible for Disability Retirement under the Company Retirement Plan.
Section 1.26. Trust Fund. The term "Trust Fund" means the trust fund
created hereunder.
Section 1.27. Trustee. The term "Trustee" means the initial Trustee
of the Trust Fund, and any successor acting as Trustee of the Trust Fund.
Section 1.28. Valuation Date. The term "Valuation Date" means each
and every October 31 and December 31.
Section 1.29. Vested Portion. The term "Vested Portion" means the
portion of a Participant's Accrued Benefit or Adjusted Accrued Benefit,
whichever is applicable, which is vested and nonforfeitable as determined
based on that Participant's Service in accordance with the following
schedule:
Years of Service
Completed by Participant Vested Portion
Less than one (1) year 0%
One (1) year 20%
Two (2) years 40%
Three (3) years 60%
Four (4) years 80%
Five (5) years or more 100%
provided, however, that notwithstanding the above, the Accrued Benefit or,
if applicable, Adjusted Accrued Benefit of a Participant shall become one
hundred percent (100%) vested and nonforfeitable upon the Participant's
attainment of age sixty-five (65) or upon his incurring a Total Disability.
Section 1.30. Participating Employers. The term "Participating
Employers" means the Company, IPALCO Enterprises, Inc., Mid-America Capital
Resources, Inc. and any other Employer who has adopted this Plan, whose
participation has been approved by the Company and who has agreed to
reimburse the Company for their pro-rata costs of the benefits provided
under the Plan to their respective employees.
Section 1.31. Available Net Income. The term "Available Net Income"
means, with respect to a Participant for a calendar year, the taxable
income (including all items of ordinary income and capital gains recognized
for federal income tax purposes in that calendar year and reduced by all
ordinary and capital losses recognized for federal income tax purposes in
that calendar year) of the Trust Fund for that calendar year multiplied by
a fraction, the numerator of which is the value of that Participant's
Participant Account at the Valuation Date immediately preceding that
calendar year and the denominator of which is the value of all Participant
Accounts at the Valuation Date immediately preceding that calendar year;
provided, however, that for purposes of these allocations, the value of
each Participant Account shall be decreased by fifty percent (50%) of any
distributions from such Participant Account under Article V and under
Section 4.01 since the applicable Valuation Date. The term "Available Net
Income" shall not include income or loss attributable to any portion of the
Trust Fund that is treated as being owned by a Participant under Sections
671-678 of the Code.
Section 1.32. Compensation Committee. The term "Compensation
Committee" means the Compensation Committee of the Board of Directors of
IPALCO Enterprises, Inc.
ARTICLE II
PARTICIPATION
Section 2.01. Participants. The individuals eligible to participate
in this Plan on the Effective Date shall include only the Senior Executive
Officers and the Other Executive Officers of the Company who are designated
in this Section. Effective May 1, 1993, the Senior Executive Officers
selected to participate in this Plan are as follows:
Name Current Title
John R. Hodowal Indianapolis Power & Light Company - Chairman
of the Board and Chief Executive Officer;
IPALCO Enterprises, Inc. - Chairman of the
Board and President
Ramon L. Humke Indianapolis Power & Light Company - President
and Chief Operating Officer; IPALCO
Enterprises, Inc. - Vice Chairman
Gerald D. Waltz Indianapolis Power & Light Company - Senior
Vice President, Business Development
John R. Brehm Indianapolis Power & Light Company - Senior
Vice President, Finance and Information
Services; IPALCO Enterprises, Inc. - Vice
President and Treasurer
Michael M. Minter Indianapolis Power & Light Company - Senior
Vice President, Planning and Engineering
Robert W. Rawlings Indianapolis Power & Light Company - Senior
Vice President, Electric Production
Maurice O. Edmonds IPALCO Enterprises, Inc. - Vice President,
Corporate Affairs
N. Stuart Grauel IPALCO Enterprises, Inc. - Vice President,
Public Affirs
Joseph A. Gustin Mid-America Capital Resources, Inc. - Vice
President; Mid-America Energy Resources, Inc.
- President
Zane G. Todd Former Indianapolis Power & Light Company -
Chairman of the Board and Chief Executive
Officer (Retired)
Robert W. Hill Former IPALCO Enterprises, Inc. - Vice
Chairman (Retired)
Richard Q. Cooper Former Indianapolis Power & Light Company -
Senior Vice President, Steam System (Retired)
Charles E. Ohlman Former Indianapolis Power & Light Company -
Senior Vice President, Consumer Services
(Retired)
Thomas A. King Former IPALCO Enterprises, Inc. - Vice
President, Corporate Affairs (Terminated
8/31/92)
Effective May 1, 1993, the Other Executive Officers selected to
participate in this Plan are as follows:
Name Current Title
Arthur G. Haan Indianapolis Power & Light Company - Vice
President, Strategic Affairs
Don W. Knight Indianapolis Power & Light Company - Vice
President, Fuel Supply
Thomas A. Steiner Indianapolis Power & Light Company - Vice
President, Transmission and Distribution
John D. Wilson Indianapolis Power & Light Company - Vice
President, Information Services
Marcus E. Woods Indianapolis Power & Light Company - Vice
President, Secretary and General Counsel;
IPALCO Enterprises, Inc. - Secretary and
General Counsel
Max Califar Indianapolis Power & Light Company - Vice
President, Human Resources
Arnold A. Gordus Indianapolis Power & Light Company - Assistant
Vice President, Environmental Affairs
John C. Berlier, Jr. Indianapolis Power & Light Company - Vice
President, Resource Planning and Rates
Robert A. McKnight, Jr. Indianapolis Power & Light Company - Vice
President, Major Project Management
Michael E. Shriner Indianapolis Power & Light Company - Vice
President, Customer Services & Marketing
Stephen J. Plunkett Indianapolis Power & Light Company -
Controller; IPALCO Enterprises, Inc. -
Controller
Clark L. Snyder Indianapolis Power & Light Company - Assistant
Secretary and Assistant General Counsel;
IPALCO Enterprises, Inc. - Assistant Secretary
Joseph A. Slash Indianapolis Power & Light Company - Vice
President, General Services
Steven L. Meyer Indianapolis Power & Light Company -
Treasurer; IPALCO Enterprises, Inc. -
Assistant Treasurer
Donald E. Blue Former Indianapolis Power & Light Company -
Vice President, Power Production (Retired)
Joseph E. Butler Former Indianapolis Power & Light Company -
Vice President, Community Affairs and
Residential Sales (Terminated 2/1/91)
Jan E. Lower Former Indianapolis Power & Light Company -
Vice President, Community Affairs (Terminated
4/30/93)
An Other Executive Officer who is listed above and who subsequently
becomes a Senior Vice President, an Executive Vice President, the
President, Chief Operating Officer, Chief Executive Officer or Chairman of
the Board of the Company or who subsequently becomes a Vice President or
Vice Chairman of the Board of IPALCO Enterprises, Inc. shall be deemed to
be a Senior Officer under this Plan without the necessity of a Plan
amendment.
Additional management employees of the Company or officers and
management employees of any other Participating Employer may be added as
Participants to this Plan by action of the Compensation Committee, provided
such corporations have adopted this Plan and each has agreed to reimburse
the Company for their pro-rata costs of the benefits provided under the
Plan to their respective employees. The Committee shall specify whether
such officers or management employees are to be considered Senior Officers
or Other Executive Officers under this Section 2.01.
Section 2.02. Reemployment. Any former Participant whose employment
with the Employer is terminated and who subsequently returns to work for
the Employer after he has a Break in Service shall be reinstated as a
Participant and shall have his prior Service restored in determining his
vested rights and his Accrued Benefits under this Plan; provided, however,
that if a reemployed Participant is receiving monthly benefits under
Section 4.01 at the time of his reemployment, such monthly benefits shall
cease for such period as he shall remain employed by the Employer and
complete at least forty (40) Hours of Service per month, and any monthly
benefits payable to him or to his surviving spouse thereafter under Article
IV or V, whichever is applicable, shall be adjusted to reflect any payments
previously made to such Participant before the date he returned to work for
the Employer and any payments made subsequent to the date he returned to
work for the Employer with respect to months in which he fails to complete
at least forty (40) Hours of Service; provided, further, that suspension of
benefit payments to any such reemployed Participant shall be made only
after written notice has been given to him by the Company by personal
delivery or certified mail, and such benefit suspensions shall comply with
all requirements imposed pursuant to Section 2530.203-3 of the Department
of Labor regulations which are incorporated herein by reference.
ARTICLE III
MONTHLY SUPPLEMENTAL PENSION BENEFITS
Section 3.01. Senior Executive Officer's Monthly Supplemental
Pension Benefits. Except as provided by Section 3.03, the monthly
supplemental pension benefits for any Senior Executive Officer shall be
equal to sixty-five percent (65%) of the average monthly Compensation paid
to that Senior Executive Officer with respect to the last thirty-six (36)
consecutive months (or, if lesser, his entire period of employment with the
Employer) ending on or before the date his employment with the Employer is
terminated, less the benefits that would be payable to him for the month he
attains age fifty-five (55) or, if later, the first (1st) month following
the date his employment with the Employer is terminated under the Company
Retirement Plan on a single-life basis regardless of the form in which such
benefits are actually paid; provided, however, that if the Senior Executive
Officer's benefits under the Company Retirement Plan are not payable until
his attainment of age sixty-five (65) because of his not meeting the
requirements for early retirement under the Company Retirement Plan and his
employment with the Employers is terminated before his attainment of age
sixty-five (65), his Company Retirement Plan benefit offset under this
Section shall be equal to the monthly amount payable at the later of his
attainment of age fifty-five (55) or the date on which his employment with
the Employers is terminated on a single life basis which is the Actuarial
Equivalent to the monthly amount payable to him at age sixty-five (65) on a
single life basis under the Company Retirement Plan.
Section 3.02. Other Executive Officer's Monthly Supplemental Pension
Benefits. Except as provided by Section 3.03, the monthly supplemental
pension benefits for any Other Executive Officer shall be equal to sixty
percent (60%) of the average monthly Compensation paid to that Other
Executive Officer with respect to the last thirty-six (36) consecutive
months (or, if lesser, his entire period of employment with the Employer)
ending on or before the date his employment with the Employer is
terminated, less the benefits that would be payable to him for the month he
attains age fifty-five (55) or, if later, the first (1st) month following
the date his employment with the Employer is terminated under the Company
Retirement Plan on a single-life basis regardless of the form in which such
benefits are actually paid; provided, however, that if the Other Executive
Officer's benefits under the Company Retirement Plan are not payable until
his attainment of age sixty-five (65) because of his not meeting the
requirements for early retirement under the Company Retirement Plan and his
employment with the Employers is terminated before his attainment of age
sixty-five (65), his Company Retirement Plan benefit offset under this
Section shall be equal to the monthly amount payable at the later of his
attainment of age fifty-five (55) or the date on which his employment with
the Employers is terminated on a single life basis which is the Actuarial
Equivalent to the monthly amount payable to him at age sixty-five (65) on a
single life basis under the Company Retirement Plan.
Section 3.03. Special Monthly Supplemental Pension Benefits. From
time to time the Board, in its sole discretion, may provide for alternative
supplemental pension benefits under this Section 3.03 for any Senior
Executive Officer or Other Executive Officer in lieu of, and not in
addition to, the benefits described in Section 3.01 or Section 3.02,
whichever Section is applicable, because of special circumstances relating
to such Executive's employment with the Employer. If the Board takes
action to add new Participants or to modify the benefits of current
Participants, the action shall designate the name of the individual and the
applicable benefit to be provided for such individual. If the benefits
provided under this Section are offset by the Company Retirement Plan
benefit, the offsets shall be calculated consistent with and in accordance
with the manner the offsets are determined under Sections 3.01 and 3.02.
ARTICLE IV
PAYMENT OF RETIREMENT BENEFITS
Section 4.01. Entitlement to Retirement Benefits. A Participant who
retires or otherwise terminates his employment with the Employer for
reasons other than his death shall be entitled to receive monthly
supplemental pension benefits under this Plan only if:
(a) his employment with the Employer terminates on or after his
attainment of the Normal Retirement Age,
(b) his employment with the Employer terminates by reason of his
incurring a Total Disability, or
(c) his employment with the Employer terminates after his
completion of at least one (1) Year of Service.
The amount of the monthly supplemental pension benefits to which an
eligible Participant is entitled upon his retirement or other termination
of employment shall be equal to the Vested Portion of his Adjusted Accrued
Benefit. The non-Vested Portion of a Participant's Adjusted Accrued
Benefit shall be governed by Section 4.02. The monthly payments shall
begin on the first (1st) calendar day of the month coinciding with or next
following the date on which a Participant attains his Normal Retirement Age
or, if later, the date his employment with the Employer is terminated and
shall continue through the month in which his death occurs; provided,
however, that if a Participant's employment with the Employer is terminated
before his attainment of the Normal Retirement Age, he may elect with the
consent of the Company to have his benefits begin on the first (1st)
calendar day of the month following the date on which his employment with
the Employer is terminated or, if later, the first (1st) day of the
calendar month immediately following his attainment of age fifty-five (55);
provided, further, that if benefit payments to a Participant begin before
his attainment of the Normal Retirement Age, the amount of such
Participant's monthly supplemental pension benefits shall be reduced to the
extent and in the same manner as such payments would be reduced if made
from the Company Retirement Plan. If a Participant is married at the date
his benefit payments are to commence and notwithstanding anything contained
in this Plan to the contrary, his monthly benefits shall be paid in the
form of an actuarially equivalent joint and survivor annuity determined in
the same manner as the Joint and Survivor Annuity Option under Section
205.50 of the Company Retirement Plan, unless such Participant, with the
written consent of his spouse witnessed by a Notary Public, elects not to
have his benefits paid in such form.
Payment of benefits under this Section 4.01 shall be made in
accordance with and consistent with the requirements set forth in Section
205 of ERISA; provided, however, that subject to the applicable spousal
consent requirements contained in Section 205 of ERISA, a Participant may
elect for his benefits to be paid in any actuarially equivalent form of
payment which is available under the Company Retirement Plan (other than a
single lump sum payment).
Section 4.02. Non-Vested Benefits. If a Participant's employment
with the Employer is terminated before his completion of at least five (5)
years of Service, before his attainment of his Normal Retirement Age and
not by reason of his incurring a Total Disability, such Participant shall
only be entitled to the Vested Portion of his Adjusted Accrued Benefit, the
non-Vested Portion of his Adjusted Accrued Benefit shall be forfeited and
the portion of his Participant Account attributable to the non-Vested
Portion of his Adjusted Accrued Benefit shall be reallocated as provided in
Section 7.05; provided, however, that if such Participant subsequently
returns to work for the Employer, the non-Vested Portion of his Adjusted
Accrued Benefit shall be immediately reinstated, his Participant Account
shall be reestablished and funded in accordance with Section 6.02 and he
shall be entitled to receive monthly supplemental pension benefits upon his
subsequent termination of employment with the Employer to the extent
otherwise provided under this Plan, less any benefits already paid to him
under this Plan before his reemployment with the Employer.
Section 4.03. Tax Distribution Payments. On or before December 20 of
each calendar year in which a Participant or, if applicable, his surviving
spouse is required to take amounts into income for Federal income tax
purposes by reason of his participation in, or eligibility for benefits
(including benefits received under an annuity contract purchased in
accordance with Article X) under this Plan, the Company shall make a Tax
Distribution payment to each Participant or, if applicable, to the
surviving spouse of each deceased Participant equal to the product of:
(a) the amount (excluding amounts paid by the Company under this
Section) which such Participant or, if applicable, his surviving
spouse is required to recognize as income for Federal income tax
purposes by reason of his participation in, or eligibility for
benefits under, this Plan in such calendar year; and
(b) the maximum marginal individual composite Federal, Indiana
and Marion County income tax rate (taking into account the
deductibility for Federal income tax purposes of state and local
income taxes, if then allowable, and, except as otherwise provided
below, without regard to Section 1(g) of the Code) in effect for the
calendar year during which the amount described in (a) above is
required to be recognized as income by such Participant, whether or
not such Participant is subject to such maximum rate; and
(c) one hundred percent (100%) divided by the amount by which
one hundred percent (100%) exceeds the rate in (b) above expressed as
a percent.
The amount of the required Tax Distribution payments shall be certified to
the Company on or before December 10 of each calendar year by the actuary
designated by the Company to calculate the Maximum Benefit Liability under
Section 1.15. For purposes of determining the amount of each Tax
Distribution payment, the amount described in (a) above shall be estimated
by assuming that each Participant, if applicable, shall continue his
employment with the Employer for the remainder of the calendar year, each
Participant's rate of Compensation shall remain unchanged for the remainder
of such calendar year and, if applicable, that the Trust Fund (including
the portion of the Trust Fund attributable to Company contribution made in
such calendar year) shall earn investment income, both realized and
unrealized, for the period of October 31 to December 31 (or, with respect
to Company contributions made after October 31 but before December 31, for
the remainder of period beginning on the date of contribution and ending on
such December 31) of such calendar year at the same rate of return earned
by the Trust Fund for the Plan Year ending on October 31 of such calendar
year; provided, however, that the assumed rate of interest to be applied
against the initial Company contribution made under Section 6.01 shall be
ten percent (10%). Notwithstanding anything contained herein to the
contrary, if before November 1 of a calendar year a Participant or, if
applicable, his surviving spouse files a statement with the Company
certifying that to the best of his or her knowledge all or a portion of his
or her taxable income by reason or his or participation in this Plan shall
be subject to the additional Federal income tax under Section 1(g) of the
Code and provides the Company with information which will enable the
actuary designated by the Company to calculate the additional Federal
income tax under Section 1(g) of the Code resulting from his participation
in this Plan, including his or her estimated taxable income for such
calendar year, the table in Section 1 of the Code to be used by the
Participant or, if applicable, his surviving spouse for his Federal income
tax return for such calendar year and the number of personal exemptions
that the Participant or, if applicable, his surviving spouse intends to
claim on his or her Federal income tax return for such calendar year, the
Company shall have its actuary recalculate the amount of the Tax
Distribution payment required under this Section based on the information
provided by the Participant or, if applicable, his surviving spouse, so
that the amount of the Tax Distribution payment made to the Participant or,
if applicable, his surviving spouse shall equal the estimated tax liability
of the Participant or, if applicable, his surviving spouse for such
calendar year by reason of his participation in this Plan; provided,
however, that any adjustments in the Tax Distribution payments under this
sentence shall be limited to adjustments reflecting the applicability of
Section 1(g) of the Code. If the amount described in (a) above which was
estimated for purposes of calculating the amount of any Tax Distribution
payment to a Participant or, if applicable, his surviving spouse is less
than the actual (a) amount, the Company shall pay to such Participant or,
if applicable, his surviving spouse as soon as practicable after the end of
such calendar year and in no event later than the March 15 immediately
following such calendar year during which such amount was recognized as
income an amount equal to the product of:
(d) the amount by which the actual (a) amount exceeded the
estimated (a) amount; and
(e) the rate described in (b) above; and
(f) one hundred percent (100%) divided by the amount by which
one hundred percent (100%) exceeds the maximum marginal individual
composite Federal, Indiana and Marion County income tax rate expressed
as a percent (taking into account the deductibility for Federal income
tax purposes of state and local income taxes, if then allowable) in
effect for the calendar year during which such additional Tax
Distribution payment is to be made, whether or not such Participant is
subject to such maximum rate.
If the amount described in (a) above which was estimated for purpose of
calculating the amount of any Tax Distribution payment to a Participant or,
if applicable, his surviving spouse is greater than the actual (a) amount,
the amount of the Tax Distribution payment shall be recalculated by
substituting for the estimated (a) amount the actual (a) amount, and the
amount by which the Tax Distribution payment exceeds the recalculated
amount shall be offset against future Tax Distribution payments due until
exhausted. Notwithstanding anything contained herein to the contrary, Tax
Distribution payments shall not be made by the Company to a married
Participant without the written consent of his spouse witnessed by a Notary
Public.
Section 4.04. Reduction in Accrued Benefit and Preretirement
Surviving Spouse Death Benefit. Each Participant's Accrued Benefit and
Preretirement Surviving Spouse Death Benefit shall be adjusted as follows:
(a) As of the Effective Date and as of each Valuation Date, a
Participant's Accrued Benefit and the Preretirement Surviving Spouse
Death Benefit payable to the surviving spouse of a deceased
Participant who dies while still employed by the Employer shall be
reduced to the extent provided below to reflect the value of each Tax
Distribution payment made under Section 4.03 attributable to his
initial Accrued Benefit and the initial Preretirement Surviving Spouse
Death Benefit at the Effective Date and attributable to increases in
the amount of his vested Accrued Benefit or Preretirement Surviving
Spouse Death Benefit. The amount of the Accrued Benefit and
Preretirement Surviving Spouse Death Benefit reduction to be effected
as of the Effective Date shall be determined by multiplying the
Accrued Benefit of a Participant or, if applicable, Preretirement
Surviving Spouse Death Benefit as of the Effective Date which such
Participant or, if applicable, his surviving spouse is required to
recognize as income for Federal income tax purposes in 1988 by a
percentage equal to the rate described in Section 4.03(b) or, if the
amount of the 1988 Tax Distribution payment for the Participant or, if
applicable, his surviving spouse was recalculated in accordance with
Section 4.03 based on tax information provided by the Participant or,
if applicable, his surviving spouse, a percentage equal to the
individual composite Federal, Indiana and Marion County income tax
rate used in recalculating the amount of the Tax Distribution payment
under Section 4.03 in 1988 in effect on the Effective Date. The
amount of each Accrued Benefit and Preretirement Surviving Spouse
Death Benefit reduction for each Valuation Date shall be determined by
multiplying any increase in the Adjusted Accrued Benefit of a
Participant or, if applicable, Preretirement Surviving Spouse Death
Benefit which as of the preceding Valuation Date has not yet been
recognized as income for Federal income tax purposes and which such
Participant or, if applicable, his surviving spouse is required to
recognize as income for Federal income tax purposes in the calendar
year during which such Valuation Date falls by a percentage equal to
the rate described in Section 4.03(b) in effect on the Valuation Date
as of which the adjustment under this Section is made or, if the
amount of the Tax Distribution payment made in the calendar year
during which the Valuation Date occurs for the Participant or, if
applicable, his surviving spouse was recalculated in accordance with
Section 4.03 based on tax information provided by the Participant or,
if applicable, his surviving spouse, a percentage equal to the
individual composite Federal, Indiana and Marion County income tax
rate used in recalculating the amount of the Tax Distribution payment
under Section 4.03 for such calendar year. No reduction in the
Accrued Benefits and Preretirement Surviving Spouse Death Benefits of
a Participant or, if applicable, his surviving spouse shall be made
under this Section with respect to Tax Distribution payments which are
not attributable to increases in the Accrued Benefits or Preretirement
Surviving Spouse Death Benefits. Notwithstanding anything contained
herein to the contrary, if the Tax Distribution payments required
under Section 4.03 attributable to such Participant's Accrued Benefit
or Preretirement Surviving Spouse Death Benefit, or increase therein,
are not timely paid by the Company, the amount of the reduction in
such Participant's Accrued Benefit or Preretirement Surviving Spouse
Death Benefit shall be retroactively reinstated as of the date on
which the reduction was made.
(b) In the event a Participant fails to recontribute to the Plan
the entire amount of Available Net Income distributed to him under
Section 4.05 with respect to a calendar year, his Accrued Benefit and
Preretirement Surviving Spouse Death Benefit shall be reduced as of
the date such distribution is treated under Section 4.05 as having
been made to him by an amount equal to the product of:
(i) his Accrued Benefit (or Preretirement Surviving Spouse
Death Benefit, as the case may be) as of the December 31
Valuation Date of the calendar year to which the distribution of
Available Net Income relates, but before any adjustment has been
made under Section 4.04(a) with respect to such calendar year;
times
(ii) a fraction, the numerator of which is the amount of
Available Net Income distributed to the Participant (and not
recontributed by him to the Plan) and the denominator of which is
the amount of his Participant Account that has, as of the date of
distribution, been taxed to the Participant for federal income
tax purposes;
provided, however, that a Participant's Accrued Benefit and
Preretirement Surviving Spouse Death Benefit shall not be reduced
under this Section 4.04(b) below the Adjusted Accrued Benefit and
Adjusted Preretirement Surviving Spouse Death Benefit accrued by that
Participant as of October 31, 1992 without regard to this Section
4.04(b).
Section 4.05. Distribution and Recontribution of Income. The
Administrator shall, as of each January 1 (or the first business day
thereafter if January 1 falls on a weekend), distribute to each Participant
the entire amount of that Participant's Available Net Income for the
immediately preceding calendar year; provided, however, that the amount of
distribution to which a Participant shall be entitled under this Section
4.05 shall be reduced (but not below zero (0)) by the amount of monthly
pension benefits paid to that Participant under this Plan during that
immediately preceding calendar year. Each Participant to whom a
distribution is made under the preceding sentence shall be deemed to have
immediately recontributed such distribution to his Participant Account
unless such Participant elects (by completing, signing and delivering the
appropriate form to the Administrator on the date such distribution is
made) to receive such distribution in a single lump sum cash payment. A
Participant who elects to receive the entire amount of his Available Net
Income in a single lump sum cash payment shall receive a distribution of
such amount as soon after the Administrator receives his election as is
administratively feasible (but no later than sixty-five (65) days after the
end of the immediately preceding calendar year) and shall have his Adjusted
Accrued Benefit and Preretirement Surviving Spouse Death Benefit reduced in
accordance with Section 4.04(b). For all purposes of this Plan, any
distribution under the preceding sentence shall be treated as having been
made on January 1 (or the first business day thereafter if January 1 falls
on a weekend) regardless of when the Participant actually receives a lump
sum payment of such distribution. The Trustee may, in its sole discretion,
elect each year on the appropriate Internal Revenue Service form to have
each distribution under this Section 4.05 treated as having been made in
the taxable year of the Trust Fund that ends within sixty-five (65) days
prior to the date on which such distribution is actually made.
ARTICLE V
MONTHLY DEATH BENEFITS
If any Participant shall die while still employed by the Employer,
such deceased Participant's surviving spouse, if any, shall be entitled to
receive monthly death benefits ("Preretirement Surviving Spouse Death
Benefits") under this Plan equal to fifty percent (50%) of such deceased
Participant's average monthly Compensation with respect to the last thirty-
six (36) consecutive months (or, if lesser, the deceased Participant's
entire period of employment with the Employer) ending on or before his
death, less the monthly benefits payable to such deceased Participant's
surviving spouse for that month under the Company Retirement Plan;
provided, however, that the monthly Preretirement Surviving Spouse Death
Benefits shall be reduced, where applicable, so that they are actuarially
equivalent to the monthly death benefits that would be payable for the life
of an individual who is the same age and sex as the Participant at the date
of his death; provided, further, that the amount of the monthly
Preretirement Surviving Spouse Death Benefits shall be adjusted in
accordance with Section 4.04. For purposes of determining actuarial
equivalency under this Article V, a seven percent (7%) interest assumption
and the 1971 Group Annuity Mortality Table shall be used. The monthly
payments shall begin on the first (1st) calendar day of the month
coinciding with or next following a Participant's death and shall continue
through the month in which the surviving spouse's death occurs.
Notwithstanding anything contained in this Article V to the contrary, the
surviving spouse of a deceased Participant who immediately before his death
met the requirements for benefits under Section 4.01 shall be entitled to a
qualified preretirement survivor annuity (as such term is defined in
Section 205(e) of ERISA) with respect to such deceased Participant's
Adjusted Accrued Benefit in lieu of the monthly death benefits otherwise
provided under this Article if payment in such form would result in a
greater monthly benefit to such surviving spouse.
ARTICLE VI
CONTRIBUTIONS TO THE TRUST FUND
Section 6.01. Initial Company Contribution. On or before
December 10, 1988, the Company contributed to the Trust Fund with respect
to each Participant Account established hereunder as of the Effective Date
an amount equal to the Maximum Benefit Liability of such Participant
Account (determined as of the Effective Date).
Section 6.02. Annual Company Contributions. The Maximum Benefit
Liability for each Participant Account established hereunder shall be re-
computed as of each October 31. If the balance credited to a Participant
Account as of any October 31 is less than the Maximum Benefit Liability of
such Participant Account as of such date after the allocation of income and
the reallocation of excess Participant Account balances are completed for
such Valuation Date under Sections 7.04 and 7.05 respectively, the Company
shall within forty (40) calendar days after such October 31 contribute to
the Trust Fund the amount of the deficiency.
Section 6.03. Additional Company Contributions. The Company may at
any time or from time to time make additional contributions of cash or
other property to the Trust Fund.
Section 6.04. Form of Contribution. The Company's contributions
under Sections 6.01, 6.02 and 6.03 shall be paid directly by the Company to
the Trustee in cash or, at the option of the Company, in any other form
permissible under ERISA and acceptable to the Trustee; provided, however,
that the Company shall be permitted to meet all or any portion of its
funding requirements by transferring to the Trust Fund insurance policies
insuring the life of one (1) or more Participants in which case the value
of the insurance policies shall be determined based on their respective
cash surrender values.
ARTICLE VII
ESTABLISHMENT OF TRUST FUND
Section 7.01. Trust Fund. The Trustee shall hold all assets
contributed to, or earned by it, under the terms and conditions of this
Plan and subject to applicable requirements under ERISA.
Section 7.02. Establishment of Participant Accounts. The Trustee
shall establish and maintain a Participant Account for each Participant.
The Participant Accounts as established hereunder shall be adjusted as
provided in this Plan. Payment of benefits under Article V and Section
4.01 shall be charged against the Participant Account of the Participant
for whom the payments are attributable. The maintenance of the Participant
Accounts is for accounting purposes only, and a segregation of Trust Fund
assets shall not be required. Any insurance policies held by the Trust
Fund in accordance with this Plan shall be commingled with the other assets
of the Trust Fund and shall not be credited to the Participant Account of
the Participant on whose life the policy is based.
Section 7.03. Allocation of Contributions. Any contributions made
pursuant to Sections 6.01 and 6.02 of this Plan shall be credited to the
Participants Accounts upon which the contribution was based; provided,
however, that if the amount of the Company contribution is less than the
aggregate required contribution for the Participant Accounts for which the
contribution relates, the amount of the contribution to be allocated to
each Participant Account shall be determined by multiplying the amount of
the contribution by a fraction, the numerator of which is the required
contribution for such Participant Account at the date of contribution and
the denominator of which is the aggregate required contributions for all
Participants Accounts (for which the contribution relates) at the date of
contribution; provided, further, that if the amount of Company contribution
is greater than the aggregate required contributions for all Participant
Accounts, the amount of the excess shall be allocated proportionately among
all Participant Accounts in accordance with the respective Maximum Benefit
Liabilities of such Participant Accounts as of the Valuation Date for which
the contribution relates.
Section 7.04. Valuations. As of each Valuation Date, the Trustee
shall adjust the Participant Accounts to reflect contributions,
distributions, income earned, expenses not paid by the Company, increases
or decreases in the value of the Trust Fund assets and all other
transactions since the last preceding Valuation Date. Any income or losses
with respect to the Trust Fund and appreciation or depreciation in Trust
Fund assets shall be allocated proportionally among all Participant
Accounts in accordance with the value of such Participant Accounts at the
last preceding Valuation Date; provided, however, that for purposes of
these allocations, each Participant Account shall be decreased by fifty
percent (50%) of any distributions from such Participant Account under
Article V and under Section 4.01 since the last preceding Valuation Date;
provided, further, that gains or losses from the sale or exchange of
capital assets shall be treated as items of income or loss and shall be
allocated to Participant Accounts accordingly.
Section 7.05. Reallocation of Excess Participant Account Balances.
If any Participant Account is liquidated because payments from such
Participant Account have been made in full or because the Participant on
whose behalf the Participant Account was established has terminated his
employment with the Employer before meeting the vesting requirements
described in Section 4.01, the entire remaining balance in the liquidated
Participant Account shall be re-allocated as of such Valuation Date as
follows:
(a) first, to the extent that other Participant Accounts on such
Valuation Date have balances less than their Maximum Benefit
Liabilities, the amount available for reallocation under this Section
shall be re-allocated proportionally among the Participant Accounts
not fully funded based on the respective amount of the deficiency of
each such Participant Account at such Valuation Date; and
(b) second, any remaining amount to be re-allocated under this
Section shall be allocated proportionally among all outstanding
Participant Accounts based on their Maximum Benefit Liabilities at
such Valuation Date.
Section 7.06. Payment of Expenses. The Trustee shall be entitled to
receive such reasonable annual compensation for its services as shall be
agreed upon between the Company and the Trustee. The Trustee shall also be
entitled to receive payment of all reasonable and necessary expenses in
administering the affairs of the Trust Fund including, without limitation,
all expenses which may be incurred in connection with the establishment and
administration of the Trust Fund, the employment of such administrative,
legal, accounting, actuarial or other expert and clerical assistance as the
Trustee, in its sole discretion, deems necessary or appropriate in the
performance of its duties, unless the Company elects to pay such
compensation or expenses. Any compensation or expenses for which the
Trustee is entitled to payment or reimbursement under this Section shall be
paid out of the Trust Fund to the fullest extent then permitted under
ERISA, unless the Company elects to pay such compensation or expenses.
Section 7.07. Accounting and Record Keeping. The Trustee shall keep
accurate and detailed accounts of all investments, receipts, disbursements
and other transactions relating to each Participant Account, and all such
records shall be open to inspection and audit at all reasonable times by
any person designated by the Company. As soon as practicable after each
Valuation Date, the Trustee shall file with the Company a written report
for each Participant Account setting forth all gains or losses (both
realized and unrealized) and other transactions relating to the Trust Fund
since the last preceding Valuation Date. As soon as practicable after each
Valuation Date, the Trustee shall provide each Participant with a statement
of the balance credited to his Participant Account at such Valuation Date.
Section 7.08. Limitation on Liability. As long as the Trustee has
performed its duties and met its obligations pursuant to the terms and
conditions of this Plan, it shall have no liability whatsoever to pay any
claims for benefits or expenses or other payments authorized hereunder from
any Participant Accounts, if the assets of such Participant Account shall
at any time be depleted. Except as otherwise provided by ERISA, the duties
and responsibilities of the Trustee shall be governed solely by the terms
and conditions of this Plan, and any amendments thereto.
Section 7.09. Consultation and Indemnification. The Trustee may
consult with counsel, who may, but need not, be counsel to the Company, and
the Trustee shall not be deemed imprudent by taking or refraining from
taking any action in accordance with the opinion of such counsel. The
Company agrees, to the fullest extent then permitted by law, to indemnify
and hold the Trustee harmless from and against any liability which the
Trustee may incur in the administration of the Trust Fund, unless such
liability arises from the Trustee's willful breach of the provisions of
this Plan.
Section 7.10. Litigation. The Trustee shall not be required to
commence or defend any litigation or dispute arising in connection with
this Plan, unless the Trustee is first indemnified by the Company against
its prospective costs, expenses and liability, and the Company hereby
agrees to indemnify the Trustee for any such costs, expenses and liability.
Section 7.11. Waiver of Bond. The Trustee shall not be required to
give bond or any other security for the faithful performance of its duties
under this Plan, except such as may be required by a law which prohibits
the waiver thereof.
ARTICLE VIII
INVESTMENT OF TRUST FUND
Section 8.01. Management of Trust Fund and Appointment of Investment
Manager. The Trust Fund shall be managed, invested, and reinvested by the
Trustee, subject, however, to the right of the Company to designate in
writing an investment manager in accordance with Section 402(c)(3) of ERISA
to manage or invest or reinvest the Trust Fund or any part thereof, in
which event the Trustee shall not be liable for the acts or omissions of
such investment manager or have any authority to manage or invest the
assets of the Trust Fund which are subject to management by such investment
manager until said investment manager is dismissed by the Company. Any
such investment manager so designated shall have the same powers and duties
with respect to the management and investment of that portion of the Trust
Fund managed by such investment manager as those granted to the Trustee
hereunder, except to the extent otherwise provided in the instrument
designating such investment manager. Notwithstanding anything contained in
this Plan to the contrary, the Company shall have the right to direct the
Trustee to take the following action with respect to insurance policies:
(a) to maintain or hold insurance policies which are transferred
to the Trust Fund by the Company;
(b) to apply Company contributions to the Trust Fund towards the
purchase of insurance policies or the payment of premiums with respect
to insurance policies transferred to, or purchased by, the Trust Fund;
or
(c) to convert to paid-up form, to surrender for the cash value
thereof or to terminate any insurance policies held by the Trust Fund.
Section 8.02. Powers of Trustee. Except as otherwise provided by
ERISA, the Trustee shall have the following powers in investing the Trust
Fund:
(a) To invest or reinvest all or any part of the Trust Fund in
any real or personal property as the Trustee may deem advisable,
including but not limited to:
(i) any securities normally traded by and obtainable
through a stockbroker or "over the counter" dealer or on a
recognized exchange;
(ii) any shares of an investment company registered under
the Investment Company Act of 1940, as amended;
(iii) any insurance contracts or annuities;
(iv) the deposit of all or any part of the Trust Fund with
an insurer for the payment of interest thereon;
(v) any securities issued or guaranteed by the United
States of America or any of the instrumentalities or states
thereof or of any county, city, town, village, school district or
other political subdivision of any of said states;
(vi) certificates of deposit, time deposits or savings
accounts including, but not limited to, those issued by its own
departments or divisions or related financial institutions;
(vii) commercial paper, money market funds, treasury bills
and similar investments; and
(viii) any combination of (i) through (vii) above and, except
as otherwise provided by ERISA, without being restricted by any
statute or rule of law governing the investments in which a
trustee may invest funds held by it.
(b) To sell or exchange any part of the assets of the Trust
Fund.
(c) To vote in person or by proxy the securities and investment
company shares which its holds as Trustee and to delegate such power.
(d) To consent to or participate in dissolutions,
reorganizations, consolidations, mergers, sales, transfers, or other
changes in securities and investment company shares which it holds as
Trustee, and, in such connection, to delegate its powers and to pay
all assessments, subscriptions, and other charges relating thereto.
(e) To exercise all rights, privileges, options and elections
with respect to any insurance policies and to pay the premiums
thereon; provided, however, that any action taken by the Trustee with
respect to any such insurance contracts, including the payment of
premiums, shall be subject to the approval of the Company.
(f) To retain in cash and keep unproductive of income such
amount as the Trustee may deem advisable in its sole discretion, and
the Trustee shall not be required to pay interest on such cash
balances or on cash in its hands pending investment.
(g) To sell, exchange, convey or transfer any property at any
time held by the Trustee upon such terms as it may deem advisable, and
no person dealing with the Trustee shall be bound to see to the
application of the purchase money or to inquire into the propriety of
any such transaction.
(h) To enter into, compromise, compound and settle any debt or
obligation due to or from the Trustee and to reduce the rate of
interest on, to extend or otherwise modify or to foreclose upon,
default or otherwise enforce any such obligation.
(i) To cause any bonds, stocks or other securities held by the
Trustee to be registered in or transferred into its name as Trustee or
the name of its nominee or nominees or to hold them unregistered or in
form permitting transferability by delivery, but at all times with
full responsibility therefor as Trustee.
(j) To manage, administer, operate, repair, improve and mortgage
or lease for any number of years, regardless of any restrictions on
leases made by trustees, or otherwise to deal with any real property
or interest therein; to renew or extend or to participate in the
renewal or extension of any mortgage, and to agree to the reduction in
the interest on any mortgage or other modification or change in terms
of any mortgage or guarantee thereof in any manner and upon such terms
as may be deemed advisable; to waive any defaults whether in
performance of any covenant or condition of any mortgage or in the
performance of any guarantee or to enforce any such default in such
manner as may be deemed advisable, including the exercise and
enforcement of any and all rights of foreclosure.
(k) To make, execute and deliver as Trustee any and all deeds,
leases, mortgages, advances, contracts, waivers, releases or other
instruments in writing necessary or proper in the employment of any of
the foregoing powers.
(l) To settle, compromise or abandon all claims and demands in
favor of or against the Trust Fund.
(m) To exercise, generally, any of the powers which an
individual owner might exercise in connection with any property,
either real, personal or mixed, held by the Trust Fund, and to do all
other acts which the Trustee may deem necessary or proper to carry out
any of the powers set forth in this Article or otherwise in the best
interests of the Trust Fund and the Participants.
ARTICLE IX
RESIGNATION, REMOVAL, AND APPOINTMENT
OF SUCCESSOR TRUSTEE
Section 9.01. Resignation. The Trustee may resign upon sixty (60)
calendar days' prior notice in writing to the Company. Such prior written
notice may be waived by the Company.
Section 9.02. Removal. The Company may remove the Trustee, with or
without cause, upon sixty (60) calendar days' prior written notice to the
Trustee. Such prior written notice may be waived by the Trustee.
Section 9.03. Successor Trustee. Upon the resignation or removal of
the Trustee or inability of the Trustee for any reason to perform its
duties hereunder, the Company shall promptly appoint a successor Trustee,
which shall be a national bank or a state bank having its deposits insured
by the Federal Deposit Insurance Corporation, having capital and surplus of
at least fifty million dollars ($50,000,000). Any such successor Trustee
shall have the same powers and duties as those conferred upon the initial
Trustee hereunder and shall evidence its acceptance of such appointment by
written instrument addressed to the Company. Upon written notice from the
Company of the acceptance of such appointment by the successor Trustee, the
Trustee shall promptly assign, transfer and pay over the Trust Fund to such
successor Trustee; provided, however, that the Trustee may reserve such sum
of money as it shall deem advisable for payment of its fees and expenses in
connection with the settlement of its account or otherwise.
Section 9.04. Accounting by Trustee. Within sixty (60) calendar days
after the date or resignation or removal of the Trustee, the Trustee shall
furnish a written accounting of the Trust Fund with respect to the period
since the last Valuation Date to the Company, and to the successor Trustee,
which report shall set forth all investments, receipts, disbursements, and
other transactions during such period.
Section 9.05. Merger or Consolidation of Trustee. If the Trustee
shall at any time merge or consolidate with or shall sell or transfer all
or substantially all of its assets and business to another corporation,
state or federal, the corporation resulting therefrom shall be Trustee
hereof in lieu of its predecessor in interest without the execution of any
instrument and without action on the part of the Company; provided,
however, that such successor corporation shall be qualified under the laws
of the State of Indiana to undertake the duties of the Trustee hereunder.
ARTICLE X
NON-DIVERSION OF TRUST FUND
Except as otherwise expressly provided in this Plan and then permitted
by ERISA, the Company shall not have the right or power to direct the
Trustee to return all or any part of the Trust Fund to the Company or to
divert to others any of the assets held in the Trust Fund until all Accrued
Benefits or Preretirement Surviving Spouse Death Benefits under this Plan
have been paid in full or satisfied by the purchase and delivery of single
premium non-transferable deferred annuity contracts.
ARTICLE XI
ADMINISTRATION
Section 11.01. Delegation of Responsibility. The Administrator may
delegate duties involved in the administration of this Plan to the
Compensation Committee or to the Executive Committee of the Board or to
such other person or persons whose services are deemed necessary or
convenient. However, the ultimate responsibility for the administration of
this Plan shall remain with the Administrator.
Section 11.02. Construction of Plan. The Compensation Committee
shall have the power to construe this Plan and to determine all questions
of fact or law arising under it. It may correct any defect, supply any
omission or reconcile any inconsistency in this Plan in such manner and to
such extent as it may deem expedient. Except as otherwise permitted by
ERISA, all acts and determinations of the Compensation Committee shall be
final and conclusive on the Participants and on the surviving spouses of
any deceased Participants and shall not be subject to appeal or review
except in those instances where the Compensation Committee, in its sole
discretion, refers such matter to the Board.
Section 11.03. Tax Information to Participants. The Administrator
shall timely provide necessary tax information to the Plan Participants
relating to their participation in this Plan to enable the Participants to
report properly any income required to be recognized by the Participants.
Section 11.04. Determinations. The Company shall make all
determinations as to the right of any person to a benefit. Any denial by
the Company of a claim for benefits under this Plan by a Participant or by
any deceased Participant's surviving spouse shall be stated in writing by
the Company and delivered or mailed within ninety (90) calendar days to the
Participant or to such deceased Participant's surviving spouse; and such
notice shall comply with all requirements imposed by ERISA and shall set
forth the specific reasons for the denial, written to the best of the
Company's ability in a manner that may be understood without legal or
actuarial counsel. In addition, the Company shall afford a reasonable
opportunity to any Participant or to such deceased Participant's surviving
spouse whose claim for benefits has been denied for a review of its
decision denying the claim in accordance with Section 503 of ERISA.
ARTICLE XII
MISCELLANEOUS
Section 12.01. Amendment or Termination of Plan. This Plan may be
amended, modified, supplemented in any respect or terminated by Board
action if the continued operation of this Plan is deemed imprudent by the
Board as a result of changes in the law or other circumstances outside of
the control of the Company; provided, however, that no amendment,
modification, supplement or termination of this Plan shall have the effect
of:
(a) discontinuing, reducing or eliminating:
(1) the Adjusted Accrued Benefit of a Participant,
(2) the Adjusted Preretirement Surviving Spouse Death
Benefits which would have been payable to a deceased
Participant's surviving spouse under Article V of this Plan, or
(3) any optional form of distribution permitted under this
Plan;
(b) substantially increasing the duties of the Trustee without
its prior written consent;
(c) permitting a reversion of Trust Fund assets to the Company
before the benefits provided under this Plan have been paid in full or
otherwise satisfied as provided in Article X; or
(d) discharging the Company from its obligation to make the Tax
Distribution payments provided under Section 4.03.
Section 12.02. Right to Merge Plan. The Company reserves the right,
by action of its Board, to merge or to consolidate this Plan with, or to
transfer the assets or liabilities of this Plan to, any other similar
retirement plan at any time, except that no such merger, consolidation or
transfer shall be authorized unless each Participant would receive a
benefit immediately after the merger, consolidation or transfer (if the
merged, consolidated or transferred plan then terminated) equal to or
greater than the benefit to which he would have been entitled immediately
before the merger, consolidation or transfer (if this Plan then
terminated).
Section 12.03. Successors and Assigns. This Plan shall be binding
upon the successors and assigns of the Company.
Section 12.04. Choice of Law. Except as otherwise required by ERISA,
this Plan shall be construed and interpreted pursuant to, and in accordance
with, the laws of the State of Indiana.
Section 12.05. No Employment Contract. This Plan shall not be
construed as an agreement, consideration or inducement of employment or as
affecting in any manner the rights or obligations of the Employer or of any
Participant to continue or to terminate the employment relationship any
time.
Section 12.06. Non-Alienation. Neither a Participant nor his spouse
shall have any right to anticipate, to pledge, to alienate or to assign any
rights under this Plan, and any effort to do so shall be null and void.
The monthly benefits payable under this Plan shall be exempt from the
claims of creditors or other claimants and from all orders, decrees, levies
and executions and any other legal process to the fullest extent then
permitted by law. The preceding sentences shall also apply to the
creation, assignment or recognition of a right to any benefit payable with
respect to a Participant pursuant to a domestic relations order, unless
such order is determined to be a qualified domestic relations order as
defined in Section 206(d) of ERISA.
Section 12.07. Gender and Number. Words in the masculine gender
shall be construed to include the feminine gender in all cases where
appropriate; words in the singular or plural shall be construed as being in
the plural or singular in all cases where appropriate.
Section 12.08. Headings. The headings in this Plan are solely for
convenience of reference and shall not affect its interpretation.
Section 12.09. Payment to Incompetents. If any Participant or
surviving spouse of a deceased Participant, entitled to benefits under this
Plan is, in the judgment of the Company, legally, physically or mentally
incapable of personally receiving and receipting for any payment due
hereunder, payment may be made to the guardian or other legal
representative of such Participant or such surviving spouse.
Section 12.10. Illegal or Invalid Provisions. If any provision of
this Plan or the application of any such provision to any person or
circumstance shall be invalid under any law of the United States of America
or of any State or any political subdivision thereof, neither the
application of such provision to persons or circumstances other than those
as to which such provision is invalid nor any other provisions of this Plan
shall be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement of the Plan to be signed on this 28th day of April , 1993 and
to be effective as of May 1, 1993. The terms of this Amendment and
Restatement only apply to Employees who have completed at least one (1)
Hour of Service on or after May 1, 1993.
INDIANAPOLIS POWER & LIGHT
COMPANY
By: /s/ John R. Hodowal
----------------------------
John R. Hodowal, Chairman
of the Board and Chief
Executive Officer
ATTEST:
By: /s/ Marcus E. Woods
------------------------
Marcus E. Woods,
Secretary
FIRST AMENDMENT TO THE
INDIANAPOLIS POWER & LIGHT COMPANY
SUPPLEMENTAL RETIREMENT PLAN AND TRUST AGREEMENT
FOR A SELECT GROUP OF MANAGEMENT EMPLOYEES
(AS LAST AMENDED AND RESTATED
EFFECTIVE MAY 1, 1993)
Pursuant to Section 12.01 of the Indianapolis Power & Light Company
Supplemental Retirement Plan and Trust Agreement for a Select Group of
Management Employees (the "Plan"), as last amended and restated effective
May 1, 1993, Indianapolis Power & Light Company (the "Company") hereby
further amends the Plan as follows:
1. Section 1.15 of the Plan is amended to provide, in its entirety,
as follows:
Section 1.15. Maximum Benefit Liability. The term "Maximum Benefit
Liability" means with respect to each Participant Account established
hereunder the greater of:
(a) the present value (as of the date of determination) of the
Vested Portion of a Participant's Adjusted Accrued Benefit (or, if the
payment of monthly benefits has already commenced, the remaining
payments) due under Article IV to the Participant for whom such
Participant Account is established or, if applicable, his surviving
spouse, and
(b) with respect to a married Participant or the surviving
spouse of a deceased Participant, the present value (as of the date of
determination) of the Adjusted Preretirement Surviving Spouse Death
Benefit (or, if the payment of death benefits has already commenced,
the remaining payments) due under Article V to the surviving spouse of
the Participant for whom such Participant Account is established.
In calculating the Maximum Benefit Liability as of a determination date,
the following rules are applicable:
(c) any reductions in the Accrued Benefits and Preretirement
Surviving Spouse Death Benefits of Participants or their surviving
spouses, where applicable, which are to be made as of the date of
determination under Section 4.04 shall be given effect, whether or not
the Tax Distribution payments (or distributions of Available Net
Income not recontributed under Section 4.05) attributable to such
reduction have been made as of the date of calculation; provided,
however, that if such Tax Distribution payment is not ultimately made
by the Company under Section 4.03 (or such distribution of Available
Net Income is not ultimately made under Section 4.05), the reduction
shall not be given effect in any calculations of the Maximum Benefit
Liability of a Participant's Accrued Benefit or Preretirement
Surviving Spouse Death Benefit which are made after the due date of
the Tax Distribution payment (or distribution of Available Net
Income); and
(d) the Participant's Adjusted Accrued Benefit and Adjusted
PreretirePP. PLAN 1ST AMEND.Megan J. DavisMegan J. Davishall be
computed in accordance with the 1983 Group Annuity Mortality Table.
The Maximum Benefit Liability shall be calculated and certified by an
actuary designated by the Company who is acceptable to the Trustee and
who is enrolled by the Joint Board for the Enrollment of Actuaries.
2. Section 4.03 of the Plan is amended to provide, in its entirety,
as follows:
Section 4.03. Tax Distribution Payments. On or before December 20 of
each calendar year in which a Participant or, if applicable, his surviving
spouse is required to take amounts into income for Federal income tax
purposes by reason of his participation in, or eligibility for benefits
(including benefits received under an annuity contract purchased in
accordance with Article X) under this Plan, the Company shall make a Tax
Distribution payment to each Participant or, if applicable, to the
surviving spouse of each deceased Participant equal to the product of:
(a) the amount (excluding amounts paid by the Company under this
Section) which such Participant or, if applicable, his surviving
spouse is required to recognize as income for Federal income tax
purposes by reason of his participation in, or eligibility for
benefits under, this Plan in such calendar year; and
(b) the Participant's marginal individual composite Federal,
Indiana and Marion County income tax rate (based on the Participant's
estimated aggregate Compensation from the Employer during the calendar
year and taking into account the deductibility for Federal income tax
purposes of state and local income taxes, if then allowable, and,
except as otherwise provided below, without regard to Section 1(g) of
the Code) in effect for the calendar year during which the amount
described in (a) above is required to be recognized as income by such
Participant; and
(c) one hundred percent (100%) divided by the amount by which
one hundred percent (100%) exceeds the rate in (b) above expressed as
a percent.
The amount of the required Tax Distribution payments shall be certified to
the Company on or before December 10 of each calendar year by the actuary
designated by the Company to calculate the Maximum Benefit Liability under
Section 1.15. For purposes of determining the amount of each Tax
Distribution payment, the amount described in (a) above shall be estimated
by assuming that each Participant, if applicable, shall continue his
employment with the Employer for the remainder of the calendar year, each
Participant's rate of Compensation shall remain unchanged for the remainder
of such calendar year and, if applicable, that the Trust Fund (including
the portion of the Trust Fund attributable to Company contribution made in
such calendar year) shall earn investment income, both realized and
unrealized, for the period of October 31 to December 31 (or, with respect
to Company contributions made after October 31 but before December 31, for
the remainder of period beginning on the date of contribution and ending on
such December 31) of such calendar year at the same rate of return earned
by the Trust Fund for the Plan Year ending on October 31 of such calendar
year; provided, however, that the assumed rate of interest to be applied
against the initial Company contribution made under Section 6.01 shall be
ten percent (10%). Notwithstanding anything contained herein to the
contrary, if before November 1 of a calendar year a Participant or, if
applicable, his surviving spouse files a statement with the Company
certifying that to the best of his or her knowledge all or a portion of his
or her taxable income by reason or his or participation in this Plan shall
be subject to the additional Federal income tax under Section 1(g) of the
Code and provides the Company with information which will enable the
actuary designated by the Company to calculate the additional Federal
income tax under Section 1(g) of the Code resulting from his participation
in this Plan, including his or her estimated taxable income for such
calendar year, the table in Section 1 of the Code to be used by the
Participant or, if applicable, his surviving spouse for his Federal income
tax return for such calendar year and the number of personal exemptions
that the Participant or, if applicable, his surviving spouse intends to
claim on his or her Federal income tax return for such calendar year, the
Company shall have its actuary recalculate the amount of the Tax
Distribution payment required under this Section based on the information
provided by the Participant or, if applicable, his surviving spouse, so
that the amount of the Tax Distribution payment made to the Participant or,
if applicable, his surviving spouse shall equal the estimated tax liability
of the Participant or, if applicable, his surviving spouse for such
calendar year by reason of his participation in this Plan; provided,
however, that any adjustments in the Tax Distribution payments under this
sentence shall be limited to adjustments reflecting the applicability of
Section 1(g) of the Code. If the amount described in (a) above which was
estimated for purposes of calculating the amount of any Tax Distribution
payment to a Participant or, if applicable, his surviving spouse is less than
the actual (a) amount, the Company shall pay to such Participant or, if
applicable, his surviving spouse as soon as practicable after the end of such
calendar year and in no event later than the March 15 immediately following
such calendar year during which such amount was recognized as income an amount
equal to the product of:
(d) the amount by which the actual (a) amount exceeded the
estimated (a) amount; and
(e) the rate described in (b) above; and
(f) one hundred percent (100%) divided by the amount by which
one hundred percent (100%) exceeds the marginal individual composite
Federal, Indiana and Marion County income tax rate expressed as a
percent (based on the Participant's estimated aggregate Compensation
from the Employer during the calendar year and taking into account the
deductibility for Federal income tax purposes of state and local
income taxes, if then allowable) in effect for the calendar year
during which such additional Tax Distribution payment is to be made.
If the amount described in (a) above which was estimated for purpose of
calculating the amount of any Tax Distribution payment to a Participant or,
if applicable, his surviving spouse is greater than the actual (a) amount,
the amount of the Tax Distribution payment shall be recalculated by
substituting for the estimated (a) amount the actual (a) amount, and the
amount by which the Tax Distribution payment exceeds the recalculated
amount shall be offset against future Tax Distribution payments due until
exhausted. Notwithstanding anything contained herein to the contrary, Tax
Distribution payments shall not be made by the Company to a married
Participant without the written consent of his spouse witnessed by a Notary
Public.
This First Amendment to the Plan has been executed on this 30th day of
November, 1993 and shall be effective as of November 1, 1992.
INDIANAPOLIS POWER & LIGHT COMPANY
By: /s/ John R. Hodowal
----------------------------------
John R. Hodowal, Chairman of the
Board and Chief Executive Officer
ATTEST:
By: /s/ Marcus E. Woods
----------------------------
Marcus E. Woods, Secretary
__________________________________________________________________________
INDIANAPOLIS POWER & LIGHT COMPANY
INTRACOMPANY CORRESPONDENCE
__________________________________________________________________________
DATE: March 31, 1993
TO: See Distribution Below AT: Various Locations
FROM: Mr. Ramon L. Humke AT: Electric Building
SUBJECT: 1993 MANAGEMENT INCENTIVE PROGRAM
DISTRIBUTION: Officers Superintendents
Managers Assistant Superintendents
Directors Division Supervisors
I am pleased to provide you the guidelines for the 1993 Management
Incentive Program (MIP) which was approved yesterday by the IPL Board of
Directors. As you know, the MIP is established to provide additional
incentive and recognition to selected individuals who contribute to the
achievement of company objectives.
Awards in 1993, will be based on each participant's individual
performance during the year, directly keyed to organization and department
objectives through specifically documented Performance Management
"Expectations" and "Objectives" for each participant. The evaluator should
be able to identify demonstrable and measurable results as the criteria for
recommending to their Senior Vice President an award for each participant.
Awards are not automatic and not all participants may receive an award.
Guidelines for 1993 MIP awards are as follows:
Performance Management
Expectations and Objectives Award range
---------------------------- -----------
Above Performance 5% - 7%
At or Below Performance 0% - 5%
The 1993 MIP participants include supervisors from the division head
level to the manager level. Special requests for inclusion in the program
need to be submitted for approval to the Vice President of Human Resources
by May 1. Documentation supporting inclusion in the program is required.
In addition, at year-end Organization Heads may recommend to their Senior
Vice Presidents other IPL associates who had specific work assignments that
significantly affected the Organization's and/or IPL's performance.
If a participant retires, becomes disabled, or dies during 1993, or if
a person becomes eligible after the year begins, any award payable to such
person shall be prorated. Awards will be calculated as a percent of base
annual salary at the December 31, 1993 rate.
Additionally, the Big Dollar Award Program for other associates who
deserve special recognition for making an extraordinary contribution to
Corporate Objectives or organizational assignments is being continued. A
formal Big Dollar Award Program description is attached.
/s/ Ramon L. Humke
RLH/rly
Attachment
Program Name: Big Dollar Award Program
Purpose: The program exists to provide an immediate cash reward
to an associate who makes significant contribution
which will have a substantial positive impact on the
Company.
Eligibility: Any non-officer associate who is not part of the
Management Incentive Program is potentially eligible to
receive a reward under this program.
Award Basis: Associates whose recommendations, acts, or achievements
are outside their normal work requirements should be
considered for awards. Extraordinary contributions to
Corporate Objectives and organization assignments are
the principal criteria for these awards. Superior work
on normal work assignments alone does not qualify an
individual for an award. More efficient operations,
greater productivity, better customer service, reduced
costs, higher earnings, and enhanced public image are
examples of results which would warrant consideration
for an award.
Award Amount: The amount of the award will depend upon the
significance and long-term benefit to the Company. As
a general rule, awards should be no less than $200.
Process: All associates and supervisors are asked to identify
recommendations, acts, or achievements of other
associates which should be considered for an award.
Descriptions of such acts should be directed to the
organization officer who will assess the achievement
and, if warranted, forward a recommendation through the
appropriate senior officer to the President.
Recommendations should include suggested award amounts.
The President will approve and present these special
awards as these extraordinary contributions are
identified and evaluated throughout the year. The
intent is that an award follow these acts or
achievements as closely as practical. Therefor,
recommendations for awards should be expedited. When
possible, Mr. Humke will present the award to the
associate personally.
Administration: The Vice President, Human Resources, will administer
this program, with the assistance of the Controller.
All checks will represent the award, less necessary tax
withholding. The organization officer should contact
Corporate Communications to arrange appropriate
publicity.
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-51737 on Form S-3 of Indianapolis Power & Light Company and Registration
Statement No. 2-88352 on Form S-8 of IPALCO Enterprises, Inc. of our report
dated January 21, 1994, appearing in the Annual Report on Form 10-K of
Indianapolis Power & Light Company for the year ended December 31, 1993.
/s/ Deloitte & Touche
Deloitte & Touche
Indianapolis, Indiana
February 22, 1994
