FORM 10-K
SECURlTlES AND EXCHANGE COMMlSSlON
WASHINGTON, D. C. 20549
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended
December 31, 1997 Commission File Number 1-3132-2
INDIANAPOLIS POWER & LIGHT COMPANY
(Exact name of Registrant as specified in its charter)
Indiana 35-0413620
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One Monument Circle
Indianapolis, Indiana 46204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 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 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
--- ---
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)
As of January 31, 1998, there were 17,206,630 shares of the registrant's
common stock (without par value)issued and outstanding.
-------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Indianapolis Power & Light Company definitive Information
Statement for the Annual Meeting of Shareholders to be held on April 15, 1998
are incorporated by reference into Part III of this Report.
<PAGE>
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 was incorporated under the laws of the state of Indiana in 1926 and
is a wholly owned subsidiary of IPALCO. 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 40
miles from Indianapolis. It also produces, distributes and sells steam within a
limited area in such city. There have been no significant 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. Existing Indiana law provides for
electric suppliers to have an exclusive retail service area.
IPL's business is not dependent on any single customer or group of a few
customers. IPL's historical retail sales to ultimate consumers for 1993-1997 are
depicted at page I-4.
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 generation, transmission and distribution facilities (electric
system) are described in Item 2, "PROPERTIES." 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, Hoosier Energy Rural Electric Cooperative, Inc. and the Indiana
Municipal Power Agency.
Also, IPL is a member of the East Central Area Reliability Group (ECAR),
and is cooperating under an agreement which provides for coordinated planning of
generating and transmission facilities and the operation of such facilities to
promote reliability of bulk power supply in the nine-state region served by
ECAR. Smaller electric utility systems, independent power producers and power
marketers participate as associate members.
REGULATION
IPL is subject to regulation by the Indiana Utility Regulatory Commission
(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 (see Note 10 in the Notes to
Financial Statements).
<PAGE>
In addition, IPL is subject to the jurisdiction of the Federal Energy
Regulatory Commission (FERC), in respect of short-term borrowings not regulated
by the IURC, the sale and 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 compliance with such regulations on the capital and
operating costs of IPL has been and will continue to be substantial. IPL has
developed and implemented a plan to reduce sulfur dioxide and nitrogen oxide
emissions from several generating units. This plan was approved by the
Environmental Protection Agency (EPA) in 1994. Estimated new annual capital
expenditures for all other air, solid waste and water environmental compliance
measures are $10 million, $1 million and $.5 million in 1998, 1999 and 2000,
respectively.
RETAIL RATEMAKING
IPL's tariffs for electric and steam service to retail customers (basic
rates and charges) are set and approved by the IURC after public hearings. Such
proceedings, which have occurred at irregular intervals, involve IPL, the staff
of the IURC, the Office of the Indiana Utility Consumer Counselor, as well as
other interested consumer groups and IPL customers. In Indiana, basic rates and
charges are determined after giving consideration, on a proforma basis, to all
allowable costs for ratemaking purposes including a fair return on the fair
value of the utility property dedicated to providing service to customers. Once
set, the basic rates and charges authorized do not assure the realization of a
fair return on the fair value of property. Other numerous factors including
weather, inflation, customer growth and usage, the level of actual maintenance
and capital expenditures and IURC restrictions on the level of operating income
can impact the return realized. Substantially all of IPL's retail tariffs
provide for the monthly billing or crediting to customers of increases or
decreases, respectively, in the actual costs of fuel consumed from estimated
fuel costs embedded in base tariffs. Additionally, all such retail tariffs
provide for billing of "lost revenue margins" on estimated kilowatt-hour (KWH)
sales reductions along with current and deferred costs resulting from IPL's
approved demand side management programs (DSM). IPL maintains its books and
records consistent with generally accepted accounting principles reflecting the
impact of regulation (see Note 1 in the Notes to Financial Statements and Item
7, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" under "Nature of Operations and Regulatory Matters").
Future events, including the advent of retail competition within IPL's
service territory, could result in the deregulation of all or part of IPL's
existing regulated businesses. Upon deregulation, adjustments to IPL's
accounting records may be required to eliminate the historical impact of
regulatory accounting. Such adjustments, as required by Statement of Financial
Accounting Standards No. 101 (SFAS 101), "Regulated Enterprises - Accounting for
the Discontinuation of Application of FASB Statement No. 71," would eliminate
the "effects of any actions of regulators that have been recognized as assets
and liabilities...." Required adjustments could include expensing of any
unamortized net regulatory assets, elimination of certain tax liabilities and a
write down of any impaired utility plant balances. IPL does not expect to be in
a position to be required to adopt SFAS 101 in the near term and accordingly has
not attempted to estimate the impact of adopting SFAS 101.
FUEL
In 1997, approximately 99.5% of the total KWH sold by IPL were generated
from coal, .2% from middle distillate fuel oil, .2% from gas and .1% from
purchased steam. 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. Gas is used in IPL's newer combustion
turbines.
<PAGE>
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 three suppliers
and the coal is mined entirely in the state of Indiana. See Exhibits listed
under Part IV Item 14(a)2(10.1 to 10.5) for a list of coal contracts. It is
presently believed that all coal used by IPL will be mined by others. IPL
normally carries fuel oil and a 60-day supply of coal to offset unforeseen
occurrences such as labor disputes, equipment breakdowns and power sales to
other utilities. IPL increases its stockpile to an approximate 80-day supply
when strikes are anticipated in the coal industry.
EMPLOYEE RELATIONS
As of December 31, 1997, IPL had 2,095 employees of whom 1,050 were
represented by the International Brotherhood of Electrical Workers, AFL-CIO
(IBEW) and 350 were represented by the Electric Utility Workers Union (EUWU), an
independent labor organization. In December 1996, the membership of the IBEW
ratified a new labor agreement which remains in effect until December 13, 1999.
The agreement provided for general pay adjustments of 3.5% in 1996 and 3.0% in
both 1997 and 1998, and changes in pension and health care coverage. In March
1995, the membership of the EUWU ratified a new labor agreement which remains in
effect until February 23, 1998. Negotiations are currently underway with the
EUWU for a new contract. The old agreement provided for general pay adjustments
of 2% in 1995, 1996 and 1997; lump sum payments of $500 in both 1995 and 1996;
and changes in pension and health care coverage.
DISPOSITION OF ASSETS
In 1997, IPL retired and sold its CC Perry W Plant site, including land
and improvements, to the State of Indiana White River State Park Commission.
<PAGE>
<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,
-----------------------------------------------------------------------------------------------
Operating Revenues (In Thousands): 1997 (1) 1996 1995 1994 1993
- -------------------------------------------------- --------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Residential $ 261,832 $ 261,819 $ 243,055 $ 230,805 $ 225,138
Small industrial and commercial 125,998 132,361 130,780 129,346 127,551
Large industrial and commercial 306,761 298,720 275,803 266,703 255,945
Public lighting 8,457 8,147 7,598 6,949 7,186
Miscellaneous 12,050 9,264 8,289 7,186 7,373
--------------- --------------- ---------------- --------------- ----------------
Revenues - ultimate consumers 715,098 710,311 665,525 640,989 623,193
Sales for resale - REMC 1,082 1,141 1,105 1,098 897
Sales for resale - other 21,954 13,312 6,758 7,680 5,237
--------------- --------------- ---------------- --------------- ----------------
Total electric revenues $ 738,134 $ 724,764 $ 673,388 $ 649,767 $ 629,327
=============== =============== ================ =============== ================
Kilowatt-hour Sales (In Millions):
Residential 4,255 4,367 4,277 4,077 4,014
Small industrial and commercial 1,972 2,130 2,209 2,207 2,202
Large industrial and commercial 6,834 6,772 6,509 6,306 6,169
Public lighting 57 58 61 64 62
--------------- --------------- ---------------- --------------- ----------------
Sales - ultimate consumers 13,118 13,327 13,056 12,654 12,447
Sales for resale - REMC 29 29 28 26 24
Sales for resale - other 1,111 725 394 456 321
--------------- --------------- ---------------- --------------- ----------------
Total kilowatt-hours sold 14,258 14,081 13,478 13,136 12,792
=============== =============== ================ =============== ================
Customers at End of Year:
Residential 374,686 370,029 365,163 360,347 356,015
Small industrial and commercial 41,148 40,403 39,781 38,849 38,359
Large industrial and commercial 3,960 3,657 3,557 3,525 3,342
Public lighting 346 303 281 266 252
--------------- --------------- ---------------- --------------- ----------------
Total ultimate consumers 420,140 414,392 408,782 402,987 397,968
Sales for resale - REMC 1 1 1 1 1
--------------- --------------- ---------------- --------------- ----------------
Total electric customers 420,141 414,393 408,783 402,988 397,969
=============== =============== ================ =============== ================
(1) 1997 includes estimated electric operating revenue and kilowatt-hour sales
for services delivered but not billed during the period (see Note 3 in the Notes
to Consolidated Financial Statements).
</TABLE>
<PAGE>
Item 2. PROPERTIES
----------
IPL's executive offices are in the IPALCO Corporate Center located at One
Monument Circle, Indianapolis, Indiana. This facility contains approximately
201,300 square feet of space and contains certain administrative operations of
IPALCO's subsidiaries.
IPL also owns two distribution service centers located at 1230 West
Morris Street and 3600 North Arlington Avenue, both in Indianapolis, Indiana.
IPL's customer service center is located at 2102 North Illinois Street in
Indianapolis.
IPL owns and operates four primarily coal-fired generating plants, three
of which are used for only electric generation and one which is used for a
combination of electric and steam generation. For electric generation, the total
gross nameplate rating is 3,024 MW, winter capability is 3,036 MW and summer
capability is 2,956 MW. For steam generation, gross capacity is 1,990 Mlbs.
(thousands of pounds) per hour.
Total Electric Stations:
H. T. Pritchard plant (Pritchard), located 25 miles southwest of
Indianapolis (seven units in service - one in 1949, 1950, 1951, 1956
and 1967 and two in 1953) 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 the southwest part of Marion County
(eleven units in service - one each in 1941, 1947, 1958, 1961, 1967, 1994
and 1995 and four in 1973) with 921 MW nameplate rating and net winter
and summer capabilities of 1,000 MW and 924 MW, respectively.
Petersburg plant (Petersburg), located in Pike County, Indiana (seven
units in service - four in 1967 and one each in 1969, 1977 and 1986)with
1,716 MW nameplate rating and net winter and summer capabilities of
1,672 MW.
Combination Electric and Steam Station:
C.C.Perry Section K plant (Perry K), located 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.
Net electrical generation during 1997, at the Petersburg, Stout and
Pritchard stations accounted for about 72.9%, 20.3% and 6.7%, respectively, of
IPL's total net generation. Perry K and Perry W produced .1% net electrical
generation and all of the steam generated by IPL for the steam system. In
addition, IPL purchases steam from an independent resource recovery system
located within the city of Indianapolis. During 1997, the C.C. Perry Section W
plant (Perry W), located in downtown 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 was retired in place and subsequently sold to the
State of Indiana White River State Park Commission.
Included in the above totals are three gas turbine units at the Stout
station added in 1973, one gas turbine added in 1994 and one gas turbine added
in 1995 with a combined nameplate rating of 214 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.
<PAGE>
IPL's transmission system includes 457 circuit miles of 345,000 volt
lines, 359 circuit miles of 138,000 volt lines and 268 miles of 34,500 volt
lines. Distribution facilities include 4,709 pole miles and 19,877 wire miles of
overhead lines. Underground distribution and service facilities include 505
miles of conduit and 5,520 wire miles of conductor. Underground street lighting
facilities include 109 miles of conduit and 686 wire miles of conductor. Also
included in the system are 73 bulk power substations and 76 distribution
substations.
Steam distribution properties include 22 miles of mains with 257
services. Other properties include coal and other minerals, underlying 798 acres
in Sullivan County, Indiana, and coal underlying about 6,215 acres in Pike and
Gibson Counties, Indiana. Additional land, approximately 4,882 acres in Morgan
County, Indiana and approximately 876 acres in Switzerland County, Indiana has
been purchased for future plant sites.
All of the facilities owned by IPL are well-maintained, in good condition
and meet the present needs of IPL.
The Mortgage and Deed of Trust of IPL, together with the Supplemental
Indentures thereto (the "Mortgage"), secure first mortgage bonds issued by IPL.
Pursuant to the terms of the Mortgage, substantially all property owned by IPL
is subject to a direct first mortgage lien.
Item 3. LEGAL PROCEEDINGS
-----------------
On August 18, 1997, Region V of the U. S. Environmental Protection
Agency issued to IPL a Notice of Violation (NOV) under the Clean Air Act. The
NOV alleged that particulate matter emissions from IPL's Perry K Units 11 and 12
exceeded applicable limits on three dates in 1995, that particulate matter
emissions from Perry K Units 15 and 16 exceeded applicable limits on a single
date in each of 1994 and 1995, and that sulfur dioxide emissions exceeded the
applicable limit on four days in the first quarter of 1997. IPL disagrees with
the Agency's interpretations of the applicable rules and believes that the Perry
K Plant has been in compliance with applicable limits. Representatives of IPL
met with the Agency on September 24, 1997, in an attempt to resolve the matter
and have subsequently provided the Agency with additional information on the
operation of the Plant. If IPL were adjudged to have violated applicable
emission limits, it could be subject to maximum penalties of $27,500 per day of
violation. While the results of this proceeding cannot be predicted with
certainty, management, based upon the advice of counsel, believes that the final
outcome will not have a material adverse effect on the consolidated financial
statements.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
At a special meeting on October 9, 1997, an amendment to Article 6A of
the Company's Amended Articles of Incorporation was approved. This amendment
removed the limitation on the issuance of unsecured indebtedness. 17,206,630
shares of the Company's common stock were cast in favor of the amendment
representing 100% of the total common stock. Of the 518,985 shares outstanding
of the Company's cumulative preferred stock, 415,337 shares were cast for the
amendment, 2,716 votes were cast against the amendment and 364 shares abstained
from voting. Having received at least 2/3 approval of the holders of its
cumulative preferred stock, the amendment was duly adopted.
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT AT FEBRUARY 24, 1998
Name, age (at December 31, 1997), and positions and offices held for the
past five years:
From To
John R. Hodowal (52)
Chairman of the Board February, 1990
Chief Executive Officer May, 1989
Ramon L. Humke (65)
President and Chief Operating
Officer February, 1990
John R. Brehm (44)
Senior Vice President - Finance
and Information Services May, 1991
Robert W. Rawlings (56)
Senior Vice President -
Electric Production May, 1991
Bryan G. Tabler (54)
Senior Vice President -
Secretary and General Counsel January, 1995
Partner, Barnes & Thornburg January, 1979 October, 1994
Gerald D. Waltz (58)
Senior Vice President -
Electric Delivery May, 1996
Senior Vice President -
Business Development May, 1991 May, 1996
Paul S. Mannweiler (48)
Senior Vice President -
External Affairs January, 1997
Partner, Locke Reynolds Boyd
and Weisell July, 1980 December, 1996
Max Califar (44)
Vice President - Human
Resources December, 1992
Steven L. Meyer (39)
Treasurer December, 1992
Stephen J. Plunkett (49)
Controller May, 1991
<PAGE>
PART II
-------
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS
------------------------------------------------------------------------
All common stock of IPL is owned by IPALCO and is not publicly traded on
any stock exchange.
Aggregate dividends paid on the common stock were $93.5 million and $83.6
million during 1997 and 1996, respectively. Dividends were paid on a quarterly
basis during 1996 and on a monthly basis during 1997.
IPL's Board of Directors declared dividends on common stock of
$25 million on January 27, 1998, and $16 million on February 24, 1998, payable
February 1, 1998 and March 1, 1998,respectively.
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. The amount which these Mortgage provisions would have permitted IPL to
declare and pay as dividends at December 31, 1996, 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 the 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. In addition,
pursuant to IPL's Articles of Incorporation, no dividends may be paid or accrued
and no other distribution may be made on IPL's common stock unless dividends on
all outstanding shares of IPL preferred stock have been paid or declared and set
apart for payment. The management of IPL believes these restrictions will not
materially restrict anticipated dividends.
<PAGE>
<TABLE>
Item 6. SELECTED FINANCIAL DATA
-----------------------
<CAPTION>
(In Thousands) 1997 1996 1995 1994 1993
- --------------------------------------------- --------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Total operating revenues (1) $ 776,427 $ 762,503 $ 709,206 $ 686,076 $ 664,303
Operating income 167,315 163,219 147,588 143,310 142,368
Allowance for funds used
during construction 4,407 9,321 11,370 9,381 5,527
Income before cumulative effect
of accounting change (1) 133,402 122,588 106,273 103,823 102,766
Cumulative effect of accounting change (1) 18,347 - - - -
Net income 151,749 122,588 106,273 103,823 102,766
Preferred dividend requirements 2,760 3,182 3,182 3,182 3,182
Income applicable to
common stock 148,989 119,406 103,091 100,641 99,584
Utility plant - net 1,766,383 1,787,969 1,792,007 1,711,772 1,608,871
Total assets 2,049,772 2,052,400 2,108,816 2,000,380 1,870,306
Construction expenditures 73,130 78,543 166,874 178,295 145,765
Common shareholder's equity 835,492 782,249 747,129 725,762 705,149
Nonredeemable cumulative
preferred stock 9,135 51,898 51,898 51,898 51,898
Long-term debt (less current
maturities and sinking
fund requirements) 627,840 627,791 669,000 654,121 532,260
See financial statements.
(1) In 1997, IPL adopted the unbilled revenues method of accounting for
electricity and steam delivered during the period. Revenues are accrued for
services provided but unbilled at the end of each month (see Note 3 in the
Notes to Financial Statements).
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
-------------
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the Reform Act), IPL is hereby filing cautionary
statements identifying important factors that could cause IPL's actual results
to differ materially from those projected in forward-looking statements of IPL.
This Form 10-K, and particularly Management's Discussion and Analysis, contains
forward-looking statements, and many of these statements are contained in this
Item 7 under the section, "Future Performance." The Reform Act defines
forward-looking statements as statements that express an expectation or belief
and contain a projection, plan or assumption with regard to, among other things,
future revenues, income, earnings per share or capital structure. Such
statements of future events or performance are not guarantees of future
performance and involve estimates, assumptions, and uncertainties and are
qualified in their entirety by reference to, and are accompanied by, the
following important factors that could cause IPL's actual results to differ
materially from those contained in forward-looking statements made by or on
behalf of IPL. The words "anticipate", "believe", "estimate", "expect",
"forecast", "project", "objective" and similar expressions are intended to
identify forward-looking statements
Some important factors that could cause IPL's actual results or outcomes
to differ materially from those discussed in the forward-looking statements
include, but are not limited to, fluctuations in customer growth and demand,
weather, fuel costs and availability, regulatory action, Federal and State
legislation, interest rates, labor strikes, maintenance and capital expenditures
and local economic conditions. In addition, IPL's ability to have available an
appropriate amount of production capacity in a timely manner can significantly
impact IPL's financial performance. The timing of deregulation and competition,
product development and introductions of technology changes are also important
potential factors.
All such factors are difficult to predict, contain uncertainties which
may materially affect actual results and are beyond the control of IPL.
LIQUIDITY AND CAPITAL RESOURCES
Nature of Operations and Regulatory Matters
-------------------------------------------
Regulation
- ----------
IPL is a regulated public utility and is principally engaged in providing
electric and steam service to the Indianapolis metropolitan area. As a regulated
entity, IPL is required to use certain accounting methods prescribed by
regulatory bodies which may differ from those accounting methods required to be
used by nonregulated entities (see Note 1 in the Notes to Financial Statements).
Electric Rate Settlement Agreement
- ----------------------------------
On August 24, 1995, the Indiana Utility Regulatory Commission (IURC)
issued an order approving, without amendment, a Stipulation and Settlement
Agreement (Settlement Agreement) resolving all issues in IPL's then pending
electric general rate proceeding. The Settlement Agreement authorized IPL to
increase its basic rates and charges for electric service in two steps, to begin
the amortization of certain regulatory assets and approved IPL's plan to expense
and to fund its annual postretirement benefits. These issues are discussed
further in Notes 1, 5, 10 and 12 in the Notes to Financial Statements.
<PAGE>
Demand Side Management Agreement
- --------------------------------
On July 30, 1997, the IURC issued an order approving, without amendment,
a new settlement agreement for IPL's DSM program. The new agreement resulted in
a reduction in required DSM expenditures, authorization to amortize certain
deferred DSM regulatory assets and the recovery of certain additional DSM costs
through a tracker (see Note 10 in the Notes to Financial Statements).
Authorized Annual Operating Income
- ----------------------------------
During quarterly fuel adjustment clause proceedings, the annual operating
income of IPL's electric and steam businesses is subject to review. Customer
refunds could result if actual annual operating income exceeds levels authorized
by the IURC (see Note 1 in the Notes to Financial Statements). IPL does not
anticipate any customer refunds to result from such reviews during 1998.
Optional Pricing and Service Plan
- ---------------------------------
During 1997, IPL filed with the IURC a plan that, if approved, will allow
IPL to offer customers with less than 2,000 kilowatts of demand an opportunity
to choose from three new payment options. This plan would allow eligible IPL
customers to enter into written agreements for:
Fixed Rate - Pay a guaranteed fixed rate per unit of consumption for up to
three years.
Green Power - Purchase environmentally friendly or "green" power.
Additionally, residential customers may choose a "Sure Bill" option, paying the
same bill amount each month for 12 months regardless of how much electricity is
used. All customers may also opt to continue paying for electricity in the same
way as in the past.
In January, 1998, a Settlement Agreement between IPL and the parties
intervening in this filing was reached, and subsequently filed with the IURC. If
approved by the IURC, IPL can begin to offer the option programs.
Competition and Industry Changes
--------------------------------
In recent years, various forms of proposed industry restructuring
legislation and/or rulemakings have been introduced at the federal level and by
some states. Generally, the intent of these initiatives is to encourage an
increase in competition within the regulated electric utility industry. While
federal rulemaking to date has addressed only the electric wholesale market,
various state legislatures are considering or have enacted new laws impacting
the retail energy markets within their respective states. A discussion of the
legislative and regulatory initiatives most likely to impact IPL follows:
Wholesale Energy Market
- -----------------------
In April 1996, the Federal Energy Regulatory Commission (FERC) issued
Orders 888 and 889 concerning open access transmission service for wholesale
sales. These orders require all utilities under FERC jurisdiction to: 1. file
open, nondiscriminatory transmission access tariffs with FERC; 2. offer
transmission to eligible customers comparable to service they provide
themselves; and 3. take service under the tariffs for their own wholesale sales
and purchases of electricity. FERC order 888 also provides for the recovery of
utility stranded costs. Stranded cost is defined by FERC as the difference
between revenues received by utilities under traditional ratemaking and
market-based prices.
<PAGE>
IPL requested and was initially denied a waiver from compliance with
orders 888 and 889. On October 11, 1996, IPL was granted a stay by FERC pending
disposition of its request for rehearing. IPL requested a waiver because, among
other reasons, the estimated costs of compliance are expected to exceed revenue
derived from its transmission service for others.
Retail Energy Market
- --------------------
The legislatures of a few states have enacted, and many other states are
considering, new laws that would allow various forms of competition, at the
retail level, for the energy requirements of electric consumers within their
respective states. While each state proposal is different, most provide for some
recovery of a utility's stranded costs and require an extended transition period
before the intended full competition is fully effective. Additionally, a few
states have implemented pilot "limited direct access" programs that experiment
with allowing some form of customer choice of electricity suppliers.
In Indiana, competition among electric energy providers for sales has
primarily focused on the wholesale power markets or the sale of bulk power to
other public and municipal utilities. Existing Indiana law provides for
electricity suppliers to have an exclusive retail service area.
In 1995, the Indiana General Assembly, anticipating increasing
competitive forces in the regulated public utility industry, enacted into law
legislation codified at I.C. 8-1-2.5 and commonly referred to as "Senate Bill
637." This new law enables the IURC to consider and approve, on an individual
utility basis, utility company initiated proposals providing nontraditional
forms of determining customer tariffs. The IPL "Optional Pricing and Service
Plan" presently under consideration by the IURC was filed under this law.
During 1997, the Indiana General Assembly authorized a legislative study
committee to assess the issue of electric utility competition and restructuring.
A comprehensive restructuring bill was introduced in the Indiana Senate in 1998,
but was subsequently amended to deal only with authorizing Indiana utilities to
participate in a transmission independent system operator organization. This
bill failed to pass the Senate.
IPL's Position on Industry Deregulation
- ---------------------------------------
In general, the foregoing FERC wholesale and state-by-state retail
initiatives are inconsistent with IPL beliefs. IPL favors federal legislation to
deregulate the industry for all companies and all customers across the country
at the same time. IPL believes that customers, particularly residential and
small businesses, are best served by the creation of large, diverse markets.
Such markets enable the development of residential aggregators who can deliver
the same benefits of volume purchasing to residential customers as are enjoyed
by large industrial customers. IPL advocates a single, nondistance based
transmission access price over wide geographic areas to maximize competition;
turning over transmission system operation to an independent system operator to
avoid gamesmanship by incumbents who own both transmission and generation
assets; rejecting the piecemeal opening of markets in favor of national access
to all markets and rejecting recovery of "stranded costs" due to competition
because such recovery would subsidize certain high-cost generators to the
detriment of competition. Absent a comprehensive national approach, IPL believes
state policy makers must recognize and make allowances for the distorted markets
that will inevitably be created by state-by-state approaches.
There can be no assurance as to the outcome of the debate on electric
utility industry restructuring. IPL intends to remain competitive in the face of
increasing competition through maintaining its low cost structure and continuing
to serve existing customers well, while accessing the wholesale market as it
continues to open.
<PAGE>
New Environmental Standards
- ---------------------------
On July 16, 1997, the United States Environmental Protection Agency
promulgated final regulations which amended the National Ambient Air Quality
Standards by introducing standards for fine particulate matter and creating new
ozone standards. Existing sources that cause or contribute to nonattainment
regions will likely be subject to additional regulatory requirements, including
possible emission reductions. New facilities in nonattainment areas may also be
subject to additional control requirements and may be required to offset their
emissions. Because power plants emit certain air pollutants that could
contribute to the formation of ambient ozone and fine particulate matter, there
is a possibility that existing IPL sources will be required to be retrofitted
with additional air pollution controls in the future. Congressional intervention
and/or litigation regarding the standards are probable. Due to these
uncertainties, it is not presently possible to predict the potential impacts
associated with implementation of these standards on IPL's facilities.
Year 2000 System Requirements
- -----------------------------
IPL is performing an analysis of its systems and is working with
suppliers and service organizations with whom we interact electronically in
order to determine the impact of year 2000 issues. Management is unable to
predict at this time the full impact year 2000 issues will have on IPL's
operations or future financial condition. Management presently estimates that
the total cost of required changes to systems owned or controlled by IPL to
allow for year 2000 issues should not exceed $3 million.
Liquidity, Financing Requirements and Capital Market Access
-----------------------------------------------------------
Liquidity is the ability of an entity to meet its short-term and
long-term cash needs. IPL's liquidity is a function of its ability to generate
internal funds, its construction program, its mortgage covenants and loan
agreements and its access to external capital markets.
Sustaining investment grade debt ratings is also a key element for having
adequate liquidity and financial flexibility. As of December 31, 1997, IPL's
senior secured debt was rated AA- by Standard & Poor's, Aa2 by Moody's Investor
Services and AA by Duff & Phelps, and IPL's commercial paper was rated A-1+ by
Standard & Poor's and P-1 by Moody's Investor Services. IPL expects to be able
to maintain investment grade debt ratings into the foreseeable future.
IPL has no long-term debt which matures during 1998. However, other
existing higher-rate debt may be refinanced depending upon market conditions.
See the following section for discussion of the construction program.
IPALCO purchased shares of IPL's preferred stock on October 17, 1997,
pursuant to the terms of a tender offer concluded October 8, 1997. Such shares
were subsequently purchased from IPALCO by IPL at cost and canceled. On October
28, 1997, the Board of Directors of IPL called for redemption of all remaining
shares of IPL's 6.0% and 8.2% Cumulative Preferred Stock issued and outstanding
on December 15, 1997, at a price per share, payable to shareholders of record of
$102 and $101, respectively, together with dividends accrued through the date of
redemption.
On January 13, 1998, IPL issued $50 million of Cumulative Preferred Stock
with a rate of 5.65%. The stock will be redeemable at par value, subject to
certain restrictions, in whole or in part, at any time on or after January 1,
2008, at the option of IPL.
<PAGE>
During the next five years, IPL is forecasted to meet its cash
requirements without any additional permanent financing. Cash flows from
operations and temporary short-term borrowings are forecasted to provide the
funds required for IPL's construction program and the retirement of maturing
long-term debt.
Future Performance
------------------
IPL expects operating revenue growth based on a projected five-year 2.3%
forecasted compound annual increase in retail KWH sales and increasing sales
opportunities in the wholesale power market.
The 2.3% annual KWH sales growth estimate compares to growth rates IPL
actually achieved of 2.2% and 2.2% for the periods 1992 through 1997 and 1987
through 1997, respectively, weather adjusted. The Indianapolis economy grew at
annual rates of 2.7% and 2.6% for those same periods and is expected to grow
2.4% from 1997 through 2002.
Operating and maintenance expenses were $399.5 million in 1997.
These expenses in 1998 will be influenced by inflation, as well as ongoing
cost controls. .
IPL's construction program for the three-year period 1998-2000 is
estimated to cost $237.2 million including AFUDC. The estimated cost of the
program by year (in millions) is $102.2 in 1998, $69.4 in 1999 and $65.6 in
2000. It includes $149.1 million for additions, improvements and extensions to
transmission and distribution lines, substations, power factor and voltage
regulating equipment, distribution transformers and street lighting
distribution. At December 31, 1997, IPL had completed installation of all of its
Environmental Compliance Plan facilities.
IPL will amortize approximately $35.4 million of its nontax-regulatory
assets at December 31, 1997, over the next three years.
Other
-----
Cumulative Effect of Accounting Change
- --------------------------------------
On December 31, 1997, effective January 1, 1997, IPL adopted the unbilled
revenues method of accounting for all electric and steam sales to more closely
match revenues with expenses. Under this method, IPL accrues revenues for all
electric and steam energy delivered to customers during the period whether
billed or not. Previously IPL recognized these revenues only as customers were
billed, with the service rendered after monthly meter reading dates through the
end of a calendar month recognized as operating revenues in the following month.
The cumulative effect of this change in accounting method as of January 1, 1997,
net of income taxes, is a one-time income increase of $18.3 million and is
reported as a separate component of net income for 1997. This accounting change
does not impact IPL's cash flow or liquidity (see Note 3 of Notes to financial
statements for additional information concerning this accounting change).
Preferred Stock, Debt Issuance and Dividend 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 12 months ended December 31, 1997, the ratios under the Articles and the
Mortgage are 5.03 and 10.68, respectively. IPL believes these requirements will
not restrict any anticipated future financings (see Note 6 in the Notes to
Financial Statements). At December 31, 1997, and considering all existing
restrictions, IPL had the capacity to issue approximately $1.1 billion of
additional long-term debt.
<PAGE>
RESULTS OF OPERATIONS
Income applicable to common stock increased by $29.6 million in 1997
compared to 1996. Income applicable to common stock increased by $16.3 million
in 1996 compared to 1995. The following discussion highlights the factors
contributing to these increases.
The 1997 income applicable to common stock includes a one-time cumulative
effect adjustment of $18.3 million, net of taxes, resulting from IPL's change to
the unbilled revenue method of accounting. The 1997 income applicable to common
stock also includes a $5.7 million ($3.5 million, net of taxes) gain from the
sale of a retired plant site (see Notes 2 and 3 in the Notes to Financial
Statements).
Operating Revenues
- ------------------
Operating revenues in 1997 and 1996 increased from the prior
year by $13.9 million and by $53.3 million, respectively. The increases in
revenues resulted from the following:
Increase (Decrease)
-------------------
1997 over 1996 1996 over 1995
-------------- --------------
(Millions of Dollars)
Electric:
Increase in retail basic rates $ 12.7 $ 40.8
Change in retail KWH sales - net of fuel (7.4) 9.3
Fuel revenue (4.7) (8.7)
Wholesale revenue 8.6 6.6
DSM tracker revenue 1.3 2.4
Steam revenue .6 1.9
Other revenue 2.8 1.0
------- -------
Total change in operating revenues $ 13.9 $ 53.3
======= =======
The increase in retail basic rates is the result of new tariffs,
effective July 1, 1996, and September 1, 1995, designed to produce additional
annual base revenues of $25 million and $35 million, respectively. The decrease
in retail KWH sales in 1997 reflects a decrease in cooling and heating degree
days in 1997, compared to 1996, due to milder weather. During 1996, retail KWH
sales increased as a result of customer growth and the net impact of weather. In
both years, total KWH sales, including wholesale KWH sales, increased. Actual
and percentage changes in electric customers and in heating and cooling degree
days for these periods are as follows:
Increase (Decrease)
-------------------
1997 over 1996 1996 over 1995
-------------- --------------
Electric Residential Customers 4,657 1.3% 4,866 1.3%
Commercial & Industrial Customers 1,048 2.4% 722 1.7%
Heating Degree Days (203) (3.4)% 315 5.7%
Cooling Degree Days (121) (12.2)% (223) (18.4)%
The changes in fuel revenues in 1997 and 1996 from the prior year reflect
decreases in fuel costs billed customers. The changes in wholesale revenues in
1997 and 1996 reflect increased wholesale marketing efforts and energy
requirements of other utilities in those years. The changes in other revenues
represent increased service revenues.
<PAGE>
Utility Operating Expenses
- --------------------------
Fuel expense increased slightly in 1997 while decreasing in 1996 by $4.9
million from the prior years. The 1997 increase was due to increased total KWH
sales. The decrease in 1996 was due to decreased unit costs of coal and oil of
$9.7 million and decreased deferred fuel expense of $2.5 million, partially
offset by increased fuel consumption of $7.3 million.
Other operating expenses in 1997 and 1996 increased from the prior year
by $6.1 million and by $20.8 million, respectively. The increase in 1997 was
primarily due to increased administrative and general expense of $6.0 million
resulting from increased outside services and labor costs. Also contributing to
the 1997 increase was increased amortization of Demand Side Management (DSM)
program expenses of $2.3 million partially offset by decreased expense at the
production plants. The increase during 1996 was due to increased administrative
and general expenses of $13.5 million resulting from postretirement benefit
expenses recognized since the 1995 electric rate order. Other factors
contributing to increased other operating expenses in 1996 were increased
electric plant operations of $4.0 million, increased amortization of DSM program
expenses of $1.2 million, increased uncollectible expenses of $1.3 million and
increased electric distribution operating expense of $1.2 million, partially
offset by $2.0 million of gain from the sale of emission allowances.
Power purchased decreased in 1997 compared to 1996 by $10.5 million. This
decrease was primarily due to reduced demand charges as a result of a new power
purchase contract that became effective in May 1997.
Maintenance expenses increased by $8.9 million during 1997 and by $4.8
million during 1996. The increase in 1997 was primarily due to an overhaul of
Unit 3 at Petersburg, as well as repairs to Unit 7 at the Stout plant. The
increase for 1996 maintenance expenses was mostly due to increased planned
outage expenses of $4.6 million for Unit 3 at IPL's Petersburg generating plant.
Depreciation and amortization expense increased in 1997 and 1996 from the
prior year by $.5 million and by $1.8 million, respectively. These changes
resulted primarily from increases in the depreciable utility plant balances, the
1995 electric rate order and adjustments to spare parts inventory in 1997 and
1996. Depreciable utility plant reflects the addition of new SO2 removal
facilities at IPL's Petersburg generating plant in June 1996. Adjustments of $.6
million and $4.5 million were made in 1997 and 1996, respectively, to spare
parts inventory resulting from the recognition of impairment in value of excess
spare parts.
Taxes other than income taxes decreased $.3 million in 1997 due to
decreased property and gross income taxes. During 1996, these other taxes
increased $1.7 million due primarily to an increase in property and gross income
taxes.
Income taxes - net, increased in both 1997 and 1996 from the prior
years by $5.1 million and $13.7 million, respectively. These changes
reflect increases in pretax operating income.
Other Income And Deductions
- ---------------------------
Allowance for equity funds used during construction decreased by $2.5
million in 1997, while remaining unchanged in 1996. In 1997, the amortization of
deferred carrying charges on a plant asset ended, and carrying charges on other
regulatory assets decreased $1.2 million.
<PAGE>
Other - net, which includes the non-operating income from IPL, increased
by $7.0 million and decreased by $0.5 million from the prior year during 1997
and 1996, respectively. The change during 1997 was due to a $5.7 million pretax
gain from the sale of a retired plant site. Also contributing to the increase in
other - net in 1997 was an increase in net revenues for contract work by IPL.
The decrease in 1996 was due to decreased non-operating income at IPL.
Interest Charges
- ----------------
Interest on long-term debt decreased by $4.6 million in 1997 and
decreased by $2.2 million in 1996 from the prior year. The decrease in interest
expense for 1997 was due to the redemption of $15 million 5 1/8% Series in
April, 1996, $50 million 9 5/8% Series in December, 1996 and $11.3 million 5
5/8% Series in May, 1997, partially offset by the issuance of $20 variable rate
notes in November 1996. Partially offsetting the decreased interest from these
redemptions was the issuance of $20 million variable rate bonds. The decrease in
1996 was due to the refinancing of two of the higher rate First Mortgage Bonds,
10 5/8% Series and 9 5/8% Series in 1995, with debt instruments carrying lower
interest rates.
Other interest charges decreased by $2.4 million during 1997 from the
prior year and decreased by $1.1 million during 1996 from the prior year. The
decreases during 1997 and 1996 were primarily due to decreased short-term debt
borrowings.
Also contributing to the 1996 decrease were decreased interest rates.
As compared to the prior year, the allowance for borrowed funds used
during construction decreased in 1997 and 1996 by $2.4 million and by $2.0
million, respectively. These decreases reflect a comparable change in the
construction base in those years, as well as decreased carrying charges on
regulatory assets in 1996.
Cumulative Effect of Accounting Change
- --------------------------------------
A cumulative effect of accounting change in the amount of $18.3 million,
net of taxes, was recorded during 1997. Effective January 1, 1997, IPL adopted
the unbilled revenues method of accounting for electricity and steam delivered
during the period. Revenues are accrued for services provided but unbilled at
the end of each month (see Note 3 in the Notes to Financial Statements).
New Accounting Pronouncements
- -----------------------------
The Financial Accounting Standards Board has issued Statements 130
and 131 that IPL will be required to adopt in future periods (see Note 1 in the
Notes to Financial Statements).
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
INDEPENDENT AUDITORS' REPORT
============================
To the Board of Directors of Indianapolis Power & Light Company:
We have audited the accompanying balance sheets of Indianapolis Power & Light
Company as of December 31, 1997 and 1996, and the related statements of income,
retained earnings and cash flows for each of the three years in the period ended
December 31, 1997. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits 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, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.
As discussed in Note 3 to the financial statements, in 1997 the Company
changed its method of accounting for unbilled revenue.
Deloitte & Touche LLP
Indianapolis, Indiana
January 23, 1998
<PAGE>
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Income
For the Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
(In Thousands)
OPERATING REVENUES (Note 10):
<S> <C> <C> <C>
Electric $ 738,134 $ 724,764 $ 673,388
Steam 38,293 37,739 35,818
------------- ------------- -------------
Total operating revenues 776,427 762,503 709,206
------------- ------------- -------------
OPERATING EXPENSES:
Operation:
Fuel 164,578 164,339 169,206
Other 143,311 137,192 116,428
Power purchased 7,833 18,365 19,102
Purchased steam 7,075 7,240 6,680
Maintenance 76,679 67,768 63,013
Depreciation and amortization 103,230 102,769 100,984
Taxes other than income taxes 33,071 33,363 31,706
Income taxes - net (Note 9) 73,335 68,248 54,499
------------- ------------- -------------
Total operating expenses 609,112 599,284 561,618
------------- ------------- -------------
OPERATING INCOME 167,315 163,219 147,588
------------- ------------- -------------
OTHER INCOME AND (DEDUCTIONS):
Allowance for equity funds used during construction 3,462 5,967 6,003
Other - net 4,507 (2,527) (2,020)
Income taxes - net (Note 9) (1,105) 982 931
------------- ------------- -------------
Total other income - net 6,864 4,422 4,914
------------- ------------- -------------
INCOME BEFORE INTEREST CHARGES 174,179 167,641 152,502
------------- ------------- -------------
INTEREST CHARGES:
Interest on long-term debt 38,809 43,425 45,656
Other interest 1,243 3,638 4,728
Allowance for borrowed funds used during construction (945) (3,354) (5,367)
Amortization of redemption premiums and expenses on
debt - net 1,670 1,344 1,212
------------- ------------- -------------
Total interest charges 40,777 45,053 46,229
------------- ------------- -------------
INCOME BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 133,402 122,588 106,273
------------- ------------- -------------
CUMULATIVE EFFECT OF ACCOUNTING CHANGE (Note 3) 18,347 - -
------------- ------------- -------------
NET INCOME 151,749 122,588 106,273
------------- ------------- -------------
PREFERRED DIVIDEND REQUIREMENTS 2,760 3,182 3,182
------------- ------------- -------------
INCOME APPLICABLE TO COMMON STOCK $ 148,989 $ 119,406 $ 103,091
============= ============= =============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Balance Sheets
December 31, 1997 and 1996
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
ASSETS 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
(In Thousands)
UTILITY PLANT:
<S> <C> <C>
Utility plant in service (Note 2) $ 2,800,446 $ 2,763,305
Less accumulated depreciation 1,121,317 1,048,492
------------------ -----------------
Utility plant in service - net 1,679,129 1,714,813
Construction work in progress 77,030 63,243
Property held for future use 10,224 9,913
------------------ -----------------
Utility plant - net 1,766,383 1,787,969
------------------ -----------------
OTHER PROPERTY -
At cost, less accumulated depreciation 5,171 5,799
------------------ -----------------
CURRENT ASSETS:
Cash and cash equivalents 4,950 8,840
Accounts receivable and unbilled revenue (less allowance for doubtful
accounts - 1997, $1,005,000 and 1996, $907,000) (Note 3) 43,053 6,710
Receivable from parent - 1,182
Fuel - at average cost 35,000 30,121
Materials and supplies - at average cost 47,648 52,027
Prepayments and other current assets 8,486 9,612
------------------ -----------------
Total current assets 139,137 108,492
------------------ -----------------
DEFERRED DEBITS:
Regulatory assets (Note 5) 126,784 137,974
Miscellaneous 12,297 12,166
------------------ -----------------
Total deferred debits 139,081 150,140
------------------ -----------------
TOTAL $ 2,049,772 $ 2,052,400
================== =================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES 1997 1996
- -------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
CAPITALIZATION (See Notes 6 and 7):
Common shareholder's equity
<S> <C> <C>
Common stock, no par, authorized - 20,000,000 shares, issued and outstanding
- 17,206,630 shares in 1997, 17,206,630 shares in 1996
$ 324,537 $ 324,537
Premium and net gain on preferred stock 2,329 1,363
Retained earnings 508,626 456,349
------------------ ------------------
Total common shareholder's equity 835,492 782,249
Cumulative preferred stock (Note 6) 9,135 51,898
Long-term debt (Note 7) 627,840 627,791
------------------ ------------------
Total capitalization 1,472,467 1,461,938
------------------ ------------------
CURRENT LIABILITIES:
Notes payable - banks and commercial paper (Note 8) 23,700 34,000
Current maturities and sinking fund requirements (Note 7) - 11,250
Accounts payable and accrued expenses 63,970 56,537
Dividends payable 13,290 21,910
Taxes accrued 18,674 19,621
Interest accrued 13,258 13,301
Other current liabilities 12,556 14,519
------------------ ------------------
Total current liabilities 145,448 171,138
------------------ ------------------
DEFERRED CREDITS AND OTHER LONG-TERM LIABILITIES:
Deferred income taxes - net (Note 9) 325,386 304,854
Unamortized investment tax credit 44,783 47,722
Accrued postretirement benefits (Note 12) 17,144 23,635
Accrued pension benefits (Note 11) 39,821 37,283
Miscellaneous 4,723 5,830
------------------ ------------------
Total deferred credits and other long-term liabilities 431,857 419,324
------------------ ------------------
COMMITMENTS AND CONTINGENCIES (Note 14)
TOTAL $ 2,049,772 $ 2,052,400
================== ==================
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Cash Flows
For the Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------
(In Thousands)
CASH FLOWS FROM OPERATIONS:
<S> <C> <C> <C>
Net income $ 151,749 $ 122,588 $ 106,273
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 98,908 97,313 99,300
Amortization of regulatory assets 15,405 17,680 6,748
Deferred income taxes and investment tax credit adjustments - net 12,669 3,195 (4,564)
Allowance for funds used during construction (4,407) (9,321) (11,370)
Cumulative effect of accounting change - before taxes (Note 3) (29,915) - -
Premiums on redemptions of debt - (3,128) (2,506)
Change in certain assets and liabilities:
Accounts receivable - excluding cumulative effect
of accounting change (5,246) 49,260 (9,174)
Fuel, materials and supplies (500) 4,293 6,362
Accounts payable 7,433 (16,516) 4,199
Taxes accrued (947) 598 2,236
Accrued pension benefits 2,538 5,449 4,731
Other - net (17,337) (17,177) 3,978
------------- -------------- -------------
Net cash provided by operating activities 230,350 254,234 206,213
------------- -------------- -------------
CASH FLOWS FROM INVESTING:
Construction expenditures (73,130) (78,543) (166,874)
Other (1,528) (13,488) (20,307)
------------- -------------- -------------
Net cash used in investing activities (74,658) (92,031) (187,181)
------------- -------------- -------------
CASH FLOWS FROM FINANCING:
Issuance of long-term debt - 20,000 110,000
Retirement of long-term debt (11,250) (65,150) (80,350)
Preferred stock redemptions (Note 6) (41,814) - -
Short-term debt - net (10,300) (31,022) 38,622
Dividends paid (96,247) (86,811) (84,471)
Other 29 (365) (683)
------------- -------------- -------------
Net cash used in financing activities (159,582) (163,348) (16,882)
------------- -------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,890) (1,145) 2,150
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,840 9,985 7,835
------------- -------------- -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,950 $ 8,840 $ 9,985
============= ============== =============
- -----------------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash flow information: Cash paid during the year for:
Interest (net of amount capitalized) $ 39,837 $ 45,339 $ 46,792
============= ============== =============
Income taxes $ 75,621 $ 67,979 $ 53,049
============= ============== =============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY
Statements of Retained Earnings
For the Years Ended December 31, 1997, 1996 and 1995
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
RETAINED EARNINGS AT BEGINNING OF YEAR $ 456,349 $ 421,229 $ 399,862
NET INCOME 151,749 122,588 106,273
----------- ----------- -----------
Total 608,098 543,817 506,135
DEDUCT:
Cash dividends declared:
Cumulative preferred stock - at prescribed
rate of each series (See Note 6) 2,760 3,182 3,182
Common stock 96,712 84,286 81,724
------------- -------------- -------------
Total 99,472 87,468 84,906
------------- -------------- -------------
RETAINED EARNINGS AT END OF YEAR $ 508,626 $ 456,349 $ 421,229
============= ============== =============
See notes to financial statements.
</TABLE>
<PAGE>
INDIANAPOLIS POWER & LIGHT COMPANY
==================================
Notes to Financial Statements
For the Years Ended December 31, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
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, 1997 and 1996, IPL
had a receivable, which is due on demand, for advances made to IPALCO.
Nature of Operations: IPL is engaged principally in providing electric
and steam service to the Indianapolis metropolitan area.
Concentrations of Risk: Substantially all of IPL's business activity is
with customers located within the Indianapolis area. In addition, approximately
67% of IPL's employees are covered by collective bargaining agreements. On
February 23, 1998, the contract of approximately 25% of those employees covered
by collective bargaining agreements will expire.
Regulation: The retail utility operations of IPL are subject to the
jurisdiction of the Indiana Utility Regulatory Commission (IURC). IPL's
wholesale power transactions are subject to the jurisdiction of the Federal
Energy Regulatory Commission. These agencies regulate IPL's utility business
operations, tariffs, accounting, depreciation allowances, services, security
issues and the sale and acquisition of utility properties. The financial
statements of IPL are based on generally accepted accounting principles,
including the provisions of Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation," which gives
recognition to the ratemaking and accounting practices of these agencies.
Revenues: Effective January 1, 1997, IPL adopted the unbilled revenues
method of accounting for electric and steam delivered during the period (see
Note 3). Revenues are accrued for services provided but unbilled at the end of
each month.
A fuel adjustment charge provision, which is established after public
hearing, is applicable to most of the rate schedules of IPL, and permits the
billing or crediting of estimated fuel costs above or below the levels included
in such rate schedules. Actual fuel costs in excess of or under estimated fuel
costs billed are deferred or accrued, respectively.
Authorized Annual Operating Income: Indiana law requires electric
utilities under the jurisdiction of the IURC to meet operating expense and
income requirements as a condition for approval of requested changes in fuel
adjustment charges. Additionally, customer refunds may result if the utilities
rolling 12-month operating income, determined at quarterly measurement dates,
exceeds the utilities' authorized annual operating income and cannot be offset
by applicable cumulative net operating income deficiencies. In such a
circumstance, the required customer refund for the quarterly measurement period
is calculated to be one-fourth of the excess annual operating income grossed up
for federal and state taxes.
Effective July 1, 1996, IPL's authorized annual electric operating
income, for purposes of quarterly operating income tests, is $163 million, as
established in an IURC order dated August 24, 1995. This level will be
maintained until changed by an IURC order. During 1997, IPL's rolling annual
electric operating income was less than the authorized annual operating income
at each of the quarterly measurement dates (January, April, July and October).
At October 31, 1997, IPL's most recent quarterly measurement date, IPL had a
cumulative net operating deficiency of $78.9 million, of which $39.9 million
expires at varying amounts during the period ending September 1, 2000. The
operating deficiency is calculated by summing the 20 most recent quarterly
measurement period results. As a consequence, IPL could, for a period of time,
earn above $163 million of electric net operating income without being required
to make a customer refund.
<PAGE>
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, based on changes in the cost of fuel, irrespective
of its level of earnings.
Pursuant to an order of the IURC, 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.
Allowance For Funds Used During Construction: In accordance with the
prescribed uniform system of accounts, IPL capitalizes an allowance for the net
cost of funds (interest on borrowed funds 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 pretax composite
rates of 9.1%, 7.3% and 8.5% during 1997, 1996 and 1995, 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. Depreciation is computed by the
straight-line method based on functional rates approved by the IURC and averaged
3.5% during 1997, 3.4% during 1996 and 3.5% during 1995. Depreciation expense
for 1997 and 1996 includes adjustments to spare parts inventory of $0.6 million
and $4.5 million, respectively, resulting from recognition of the impairment in
value of excess spare parts. Depreciation expense for 1995 includes adjustments
to property held for future use of approximately $12.3 million. The adjustments
in 1995 reflect incurred costs of expired regulatory permits and for designing
and engineering a future generating station in Patriot, Indiana.
Sale of Accounts Receivable: At December 31, 1997, IPL had sold, on a
revolving basis, an undivided percentage interest in $50 million of its
accounts receivable.
Regulatory Assets: Regulatory assets represent deferred costs that have
been, or that are expected to be, included as allowable costs for ratemaking
purposes. IPL has recorded regulatory assets relating to certain costs as
authorized by the IURC. Specific regulatory assets are disclosed in Note 5. As
of December 31, 1997, all nontax-related regulatory assets have been included as
allowable costs in orders of the IURC (see Note 10). IPL is amortizing such
regulatory assets to expense over periods authorized by these orders.
Tax-related regulatory assets represent the net income tax costs to be
considered in future regulatory proceedings generally as the tax related amounts
are paid .
In accordance with regulatory treatment, IPL deferred as a regulatory
asset certain post in-service date carrying charges and certain other costs
related to its investment in Petersburg Unit 4. As authorized in the 1995
Electric Rate Settlement (see Note 10), IPL, effective September 1, 1995, is
amortizing this deferral to expense over a life which generally approximates the
useful life of the related facility.
Also in accordance with regulatory treatment, IPL defers as regulatory
assets nonsinking fund debt and preferred stock 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 20 years.
<PAGE>
Derivatives: IPL has only limited involvement with derivative financial
instruments and does not use them for trading purposes. IPL entered into an
interest rate swap agreement as a means of managing the interest rate exposure
on one of its debt facilities. This interest rate swap is accounted for under
the accrual method. Under this method, the differential to be paid or received
on the interest rate swap agreement is recognized over the life of the agreement
in interest expense. Changes in market value of the interest swap accounted for
under the accrual method are not reflected in the accompanying financial
statements.
Income Taxes: Deferred taxes are provided for all significant temporary
differences between book and taxable income. The effects of income taxes are
measured based on enacted laws and rates. 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. Deferred tax assets and
liabilities are recognized for the expected future tax consequences of existing
differences between the financial reporting and tax reporting basis of assets
and liabilities.
IPL has recorded as regulatory assets and net deferred tax liabilities,
income taxes payable and includable in allowable costs for ratemaking purposes
in future years.
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.
IPL participates in a tax sharing agreement with the consolidated IPALCO
group which allocates taxes as if each company had filed a return on a stand
alone basis.
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.
Employee Benefit Plans: Substantially all employees of IPL are
covered by a defined benefit pension plan, a defined contribution plan and a
group benefits plan.
The defined benefit pension plan is noncontributory and 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 the 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.
The defined contribution plan is sponsored by IPL as the Employees'
Thrift Plan of Indianapolis Power & Light Company (Thrift Plan). Employees elect
to make contributions to the Thrift Plan based on a percentage of their annual
base compensation. IPL matches each employee's contributions in amounts up to,
but not exceeding, 4% of the employee's annual base compensation.
The group benefits plan is sponsored by IPL and provides certain
health-care and life insurance benefits to active employees and employees who
retire from active service on or after attaining age 55 and have rendered at
least 10 years of service. The postretirement benefit obligations of this plan
are funded through a Voluntary Employee Beneficiary Association (VEBA) Trust.
IPL's policy is to fund the annual actuarially determined postretirement benefit
cost.
<PAGE>
New Accounting Pronouncements: In 1997, IPL adopted Statement of
Financial Accounting Standards No. 125 (SFAS 125), "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" which
established standards for asset and liability recognition when transfers occur.
Adoption of SFAS 125 had no impact on IPL's financial position or results of
operations.
In June 1997, SFAS 130, "Comprehensive Income," was issued and becomes
effective in 1998 and requires reclassification of earlier financial statements
for comparative purposes. SFAS 130 requires that changes in the amounts of
certain items, including foreign currency translation adjustments and gains and
losses on certain securities be shown in the financial statements. SFAS 130 does
not require a specific format for the financial statement in which comprehensive
income is reported, but does require that an amount representing total
comprehensive income be reported in that statement. IPL anticipates adopting
this statement on January 1, 1998, and does not expect that it will have a
material impact on its financial statements.
Also in 1997, SFAS 131, "Disclosures about Segments of an Enterprise and
Related Information," was issued. The statement will change the way public
companies report information about segments of their business in their annual
financial statements and requires them to report selected segment information in
their quarterly reports issued to shareholders. It also requires entity-wide
disclosures about the products and services an entity provides, the material
countries in which it holds assets and reports revenues, and its major
customers. SFAS 131 is effective for fiscal years beginning after December 15,
1997. However, interim reporting of segments is not required until 1999.
Use of Management Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires that
management make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. The reported amounts of
revenues and expenses during the reporting period may also be affected by the
estimates and assumptions management is required to make. Actual results may
differ from those estimates.
Reclassifications: 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:
1997 1996
- --------------------------------------------------------------------------------
(In Thousands)
Production......................... $1,687,190 $1,684,705
Transmission....................... 237,547 235,218
Distribution....................... 743,251 712,391
General .......................... 132,458 130,991
----------- -----------
Total utility plant in service.. $2,800,446 $2,763,305
=========== ===========
Substantially all of IPL's property is subject to the lien of the
indentures securing IPL's First Mortgage Bonds.
In 1997, IPL retired and sold its CC Perry W Plant site, including land
and improvements, to the state of Indiana White River State Park Commission at
an approximate pretax net gain of $5.7 million included in other income and
deductions, other net.
<PAGE>
3. CUMULATIVE EFFECT OF ACCOUNTING CHANGE
In December 1997, IPL changed its method of accounting (retroactive to
January 1, 1997) to record revenues of all electricity and steam delivered
during the period. Prior to 1997, IPL recognized revenues on a cycle basis as
meters were read. The new accounting method more accurately reports revenues in
the period in which electricity and steam is used by customers. The cumulative
effect of the change in accounting at January 1, 1997 was $18.3 million (net of
income taxes of $11.2 million and other taxes of $.4 million). The change had
the effect of decreasing 1997 income before cumulative effect of the accounting
change by $1.9 million (net of taxes).
If this method had been applied retroactively, net income would have
been $120.4 million and $107.7 million for the years ended December 31, 1996,
and 1995, respectively.
4. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value amounts of financial instruments have been
determined by IPL, using available market information and appropriate valuation
methodologies. However, considerable judgment is 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. The variable rate debt has been included at the face amount for both
carrying amount and fair value. The fair value of the interest rate swap
agreement has been estimated at $3.3 million and $1.2 million, which represents
the amount that IPL would have to pay to enter into an equivalent agreement at
December 31, 1997, and 1996, respectively, with a swap counter party. The fair
value of the debt outstanding has been determined on the basis of the specific
securities issued and outstanding. Accordingly, the purpose of this disclosure
is not to approximate the value on the basis of how the debt might be
refinanced. At December 31, 1997, and 1996, the carrying amount of IPL's
long-term debt, including current maturities and sinking fund requirements, and
the approximate fair value are as follows:
1997 1996
- ----------------------------------------------------------------------
(In Thousands)
Carrying amount $627,840 $639,041
Approximate fair value $651,620 $644,988
<PAGE>
5. REGULATORY ASSETS
The amounts of regulatory assets at December 31, 1997, and 1996, are as
follows:
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C>
Related to deferred taxes (Note 1) $ 44,099 $ 39,175
Postretirement benefit costs in excess of cash payments
and amounts capitalized (Note 12) 17,152 23,584
Unamortized reacquisition premium on debt (Note 1) 23,751 25,151
Unamortized Petersburg Unit 4 carrying charges
and certain other costs (Note 1) 30,228 34,005
Demand side management costs (Note 10) 10,308 13,841
Other 1,246 2,218
----------- ------------
Total regulatory assets $ 126,784 $ 137,974
=========== ============
</TABLE>
6. CAPITAL STOCK
Common Stock: There were no changes in IPL common stock during 1997,
1996 and 1995.
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. In addition, pursuant to
IPL's Articles of Incorporation, no dividends may be paid or accrued and no
other distribution may be made on the Common Stock unless dividends on all
outstanding shares of its preferred stock have been paid or declared and set
apart for payment. All of the retained earnings at December 31, 1996, were free
of such restrictions.
Cumulative Preferred Stock of Subsidiary: Preferred stock shareholders
are entitled to two votes per share for IPL matters, and if four full quarterly
dividends are in default on all shares of the preferred stock then outstanding,
they are entitled to elect the smallest number of IPL Directors to constitute a
majority. Preferred stock is redeemable solely at the option of IPL and can be
redeemed in whole or in part at any time at specific call prices.
IPALCO purchased shares of IPL's preferred stock on October 17, 1997,
pursuant to the terms of a self-tender offer concluded on October 8, 1997. The
following table shows the number of shares purchased on October 17, 1997, for
each class of preferred stock:
Amount
Class Shares Rate (In Thousands)
- ---------------------------------------------------------------------------
4% Series............. 52,389 $71.38 $ 3,740
4.2% Series........... 19,669 77.72 1,529
4.6% Series........... 27,519 85.12 2,342
4.8% Series........... 28,070 88.82 2,493
6% Series............. 59,200 103.00 6,098
8.2% Series........... 65,828 102.00 6,714
------ -------
Shares purchased 252,675 $22,916
======= =======
All tendered shares subsequently were purchased from IPALCO by IPL at
cost and canceled.
On October 28, 1997, the Board of Directors of IPL authorized the
redemption of the remaining 40,800 shares of its 6.0% and remaining 134,157
shares of its 8.2% Cumulative Preferred Stock issued and outstanding on December
15, 1997, at a price per share, payable to shareholders of record of $102 and
$101, respectively, together with dividends accrued through the date of
redemption. IPL recorded a net gain of $1.7 million, included in "Premium and
net gain on preferred stock" at December 31, 1997, with the redemption of the
preferred stock.
<PAGE>
At December 31, preferred stock consisted of the following:
December 31, 1997
-----------------
Shares Call December 31
Outstanding Price 1997 1996
----------- ----------- ------- ------
(In Thousands)
Cumulative $100 Par Value,
authorized 2,000,000 shares
4% Series..................... 47,611 $118.00 $4,761 $10,000
4.2% Series................... 19,331 103.00 1,933 3,900
4.6% Series................... 2,481 103.00 248 3,000
4.8% Series................... 21,930 101.00 2,193 5,000
6% Series..................... - 102.00 - 10,000
8.2% Series................... - 101.00 - 19,998
------- ------ -------
Total cumulative preferred stock 91,353 $9,135 $51,898
======= ====== =======
During 1997, 1996 and 1995, preferred stock dividends were $2.8 million,
$3.2 million and $3.2 million, respectively.
On January 13, 1998, Indianapolis Power & Light Company issued
$50,000,000 of Cumulative Preferred Stock with a rate of 5.65% 500,000 shares
were issued at $100 par value each. The stock will be redeemable, subject to
certain restrictions, in whole or in part, at any time on or after January 1,
2008, at the option of IPL.
<PAGE>
7. LONG-TERM DEBT
Long-term debt consists of the following:
December 31,
------------
1997 1996
---- ----
Series Due (In Thousands)
------ ---
First Mortgage Bonds:
5 5/8% May 1997....................... $ - $ 11,250
6.05% February 2004.................. 80,000 80,000
8% October 2006................... 58,800 58,800
7 3/8% August 2007.................... 80,000 80,000
6.10% * January 2016................... 41,850 41,850
5.40% * August 2017.................... 24,650 24,650
7.45% August 2019.................... 23,500 23,500
5.50% * October 2023................... 30,000 30,000
7.05% February 2024.................. 100,000 100,000
6 5/8% * December 2024.................. 40,000 40,000
Unamortized discount - net......................... (960) (1,009)
--------- ---------
Total first mortgage bonds....................... 477,840 489,041
IPL Variable Series Notes *
1991 August 2021.................... 40,000 40,000
1994A December 2024.................. 20,000 20,000
1995B January 2023................... 40,000 40,000
1995C December 2029.................. 30,000 30,000
1996 November 2029.................. 20,000 20,000
Current maturities and sinking fund requirements... - (11,250)
--------- ---------
Total long-term debt ............................ $ 627,840 $ 627,791
========= =========
* Notes are issued to the city of Petersburg, Indiana, by IPL to secure the loan
of proceeds from various tax-exempt instruments issued by the city.
IPL redeemed the $15 million, 5 1/8% Series in May 1996 and the $50
million, 9 5/8% Series in December 1996.
The Series 1991 note provides for an interest rate which varies with the
tax-exempt commercial paper rate. The 1994A, 1995B, 1995C and 1996 notes provide
for an interest rate which varies with the tax-exempt weekly rate. IPL, at its
option, can change the interest rate mode for these notes to be based on other
short-term rates. Additionally, the variable rate notes can be converted into
long-term fixed interest rate instruments by the issuance of an IPL First
Mortgage Bond. The notes are classified as long-term liabilities because IPL
maintains long-term credit facilities supporting these agreements which were
unused at December 31, 1997.
<PAGE>
The year-end interest rates for the variable rate notes are as follows:
Interest Rate at
December 31
1997 1996
- ------------------------------------------------------------
Series 1991 3.78% 3.47%
Series 1994A 3.75% 4.10%
Series 1995B 5.21% 5.21%
Series 1995C 3.75% 4.10%
Series 1996 3.75% 4.05%
In conjunction with the issuance of the 1995B note, IPL entered into an
interest rate swap agreement. Pursuant to the swap agreement, IPL will pay
interest at a fixed rate of 5.21% to a swap counter party and will receive a
variable rate of interest in return, which is identical to the variable rate
payment made on the 1995B note. The result is to effectively establish a fixed
rate of interest on the 1995B note of 5.21%. The interest rate swap agreement is
accounted for on a settlement basis. IPL is exposed to credit loss in the event
of nonperformance by the counterparty for the net interest differential when
floating rates exceed the fixed maximum rate. However, IPL does not anticipate
nonperformance by the counterparty.
There are no maturities or sinking fund requirements on long-term debt
for the five years subsequent to December 31, 1997.
8. LINES OF CREDIT
IPL has committed lines of credit with banks of $75 million at December
31, 1997, to provide loans for interim financing and also require the payment of
commitment fees. These lines of credit, based on separate formal and informal
agreements, have expiration dates ranging from February 1, 1998, to December 31,
1998. Lines of credit used to support commercial paper were $10 million at
December 31, 1997. IPL has a Liquidity facility in the amount of $150 million to
support certain floating rate tax-exempt facilities (see Note 7). IPL has an
uncommitted line of credit with a bank in the amount of $25 million which does
not require the payment of a commitment fee. At December 31, 1997, $11.3 million
was unused. The weighted average interest rate on notes payable and commercial
paper outstanding was 6.69% and 6.16% at December 31, 1997, and 1996,
respectively.
<PAGE>
9. INCOME TAXES
<TABLE>
<CAPTION>
Federal and state income taxes charged to income are as follows:
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------
Operating Expenses: (In Thousands)
Current income taxes:
<S> <C> <C> <C>
Federal..................................................... $ 64,553 $ 56,676 $ 51,331
State....................................................... 9,474 8,378 7,732
-------- -------- --------
Total current taxes....................................... 74,027 65,054 59,063
-------- -------- --------
Deferred federal income taxes............................... 1,444 6,507 (1,748)
Deferred state income taxes................................. 803 (398) 309
-------- --------- --------
Total deferred income taxes.............................. 2,247 6,109 (1,439)
-------- --------- --------
Net amortization of investment credit......................... (2,939) (2,915) (3,125)
-------- -------- --------
Total charge to operating expenses........................ 73,335 68,248 54,499
Net credit to other income and deductions..................... 1,105 (982) (931)
-------- -------- --------
74,440 67,266 53,568
Cumulative effect of change in accounting principle........... 11,209 - -
-------- -------- --------
Total federal and state income tax provisions............. $ 85,649 $ 67,266 $ 53,568
======== ======== ========
</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 pretax income. The reasons for the difference, stated as a
percentage of pretax income, are as follows:
1997 1996 1995
- ------------------------------------------------------------------------------
Federal statutory tax rate.................. 35.0% 35.0% 35.0%
Effect of state income taxes................ (1.7) (1.5) (1.8)
Amortization of investment tax credits...... (1.2) (1.5) (2.0)
Removal cost adjustments.................... - - (1.7)
Other - net................................. (0.9) (0.7) (1.0)
----- ----- -----
Effective tax rate........................ 31.2% 31.3% 28.5%
===== ===== =====
The significant items comprising IPL's net deferred tax liability
recognized in the balance sheets as of December 31, 1997, and 1996, are as
follows:
1997 1996
- ----------------------------------------------------------------------------
(In Thousands)
Deferred tax liabilities:
Relating to utility property............ $405,164 $376,121
Other................................... 15,546 19,200
-------- --------
Total deferred tax liabilities...... 420,710 395,321
-------- --------
Deferred tax assets:
Relating to utility property............ 40,731 28,298
Investment tax credit................... 27,251 29,156
Employee Benefit Plans.................. 22,019 15,396
Unbilled revenue........................ - 10,517
Other................................... 5,143 7,100
-------- --------
Total deferred tax assets........... 95,144 90,467
-------- --------
Net deferred tax liability................... 325,566 304,854
Current deferred tax liability.......... 180 -
-------- --------
Deferred income taxes - net.................. $325,386 $304,854
======== ========
<PAGE>
10. RATE MATTERS
Electric Rate Settlement Agreement: On August 24, 1995, the IURC issued
an order approving without amendment a Stipulation and Settlement Agreement
(Settlement Agreement) resolving all issues in IPL's then pending electric
general rate proceeding.
As provided for by the Settlement Agreement, IPL increased its basic
rates and charges for retail electric service in two steps designed to provide
the following additional annual revenues:
Step 1 - $35 million on September 1, 1995
Step 2 - $25 million on July 1, 1996
Effective with the implementation of new tariffs in Step 1, IPL was
authorized to begin amortization of certain regulatory assets. Additionally,
IPL's existing depreciation rates were reapproved.
IPL has agreed not to file a request to build any large, base-load
generating capacity before January 1, 2000. This provision can be waived in
extreme circumstances. In addition, the parties agreed to, and subsequently
resolved, pending litigation involving IPL's Clean Air Act compliance plan.
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. The final
increase associated with this order took effect on January 13, 1998. The amount
of additional annual revenues from the January 13, 1998, increase is estimated
to be $370,000.
Demand Side Management Program: In compliance with certain orders, IPL is
deferring certain approved DSM costs and carrying charges. In the Settlement
Agreement approved by the IURC on August 24, 1995, IPL was authorized to
amortize $5.3 million of such costs deferred prior to February 1995, over a
four-year period beginning September 1, 1995. On December 19, 1996, IPL filed a
petition with the IURC requesting review, modification and/or termination of,
and related regulatory treatment for, DSM programs approved in the order dated
September 8, 1993. On July 30, 1997, IPL received an IURC order approving a
settlement agreement authorizing IPL to recognize in rates the existing
regulatory asset (consisting of DSM costs deferred after January 31, 1995),
along with carrying charges, and also to approve changes to IPL's DSM programs.
<PAGE>
11. EMPLOYEE PENSION BENEFIT PLANS
<TABLE>
<CAPTION>
Pension expense includes the following components:
1997 1996 1995
- ------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Service cost--benefits earned during the period..... $ 6,584 $ 6,482 $ 6,375
Interest cost on projected benefit obligation....... 16,873 16,335 15,348
Actual return on plan assets........................ (37,813) (23,307) (29,529)
Net amortization and deferral....................... 18,304 5,758 13,499
-------- -------- --------
Net periodic pension cost......................... 3,948 5,268 5,693
Less:
Amount allocated to related parties............. 60 121 98
-------- -------- --------
IPL net periodic pension cost....................... 3,888 5,147 5,595
Less amount capitalized........................... 621 1,061 1,199
-------- -------- --------
Amount charged to expense........................... $ 3,267 $ 4,086 $ 4,396
======== ======== ========
</TABLE>
A summary of the Plans' funding status at their October 31, 1997, plan
year-end, evaluation date and the amount recognized in the balance sheets at
December 31, 1997 and 1996, follows:
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------------------------------------------------------------------
(In Thousands)
Actuarial present value of benefit obligations:
<S> <C> <C>
Vested benefit obligation.............................................. $(194,352) $(173,654)
Nonvested benefit obligation........................................... (35,293) (32,705)
--------- ---------
Accumulated benefit obligation............................................. (229,645) (206,359)
========= =========
Projected benefit obligation........................................... (254,540) (229,937)
Plan assets at fair value.............................................. 262,126 235,250
--------- ---------
Funded status.............................................................. 7,586 5,313
Unrecognized net gain from past experience different
from that assumed.................................................. (46,671) (36,126)
Unrecognized past service costs........................................ 12,477 8,132
Unrecognized net asset at January 1, 1987, being
amortized over an original life of 18.9 years...................... (11,169) (12,583)
Adjustment required to recognize minimum liability..................... (2,044) (2,019)
--------- ---------
Net accrued pension benefits included in other long-term
liabilities at December 31............................................. $ (39,821) $ (37,283)
========= =========
</TABLE>
Approximately 45.2% of the Plans' assets were in equity securities at
October 31, 1997, with the remainder in fixed income securities.
Assumptions used in determining this information were:
1997 1996 1995
- -------------------------------------------------------------------------------
Discount rate...................................... 7.25% 7.50% 7.50%
Rate of increase in future compensation levels..... 5.10% 5.10% 5.10%
Expected long-term rate of return on assets........ 8.00% 8.00% 8.00%
<PAGE>
12. EMPLOYEE POSTRETIREMENT BENEFITS
Postretirement benefit expense includes the following components:
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C>
Service cost -- benefits earned during the period...................... $ 3,942 $ 3,891 $ 3,855
Interest cost on accumulated postretirement benefit obligation......... 11,088 10,450 10,796
Actual (return) loss on plan assets.................................... 314 1,280 (319)
Net amortization and deferral.......................................... 1,497 2,233 4,661
--------- --------- --------
Net periodic postretirement benefit cost............................. 16,841 17,854 18,993
Less:
Amount capitalized................................................. 2,930 3,511 3,891
Regulatory asset deferral.......................................... - - 6,978
--------- --------- --------
Amount charged to expense.............................................. $ 13,911 $ 14,343 $ 8,124
========= ========= ========
</TABLE>
Also, during 1997 and 1996, IPL expensed postretirement regulatory asset
amortization of $6.4 million each year.
A summary of the retiree health-care and life insurance plan's funding
status, and the amount recognized in the balance sheets at December 31, 1997 and
1996, follows:
<TABLE>
<CAPTION>
1997 1996
- ---------------------------------------------------------------------------------------------------------------
Actuarial present value of accumulated postretirement (In Thousands)
benefit obligation:
<S> <C> <C>
Retirees............................................................... $ (59,125) $ (62,856)
Fully eligible active plan participants................................ (18,944) (21,314)
Other active plan participants......................................... (57,913) (61,879)
--------- ---------
Total...................................................................... (135,982) (146,049)
Plan assets at fair value ............................................. 68,006 49,274
--------- ---------
Funded status.............................................................. (67,976) (96,775)
Unrecognized net gain from past experience different from that assumed. (40,568) (24,354)
Unrecognized net obligation at January 1, 1993, being amortized over
an original life of 20 years....................................... 91,400 97,494
--------- ---------
Net accrued postretirement benefit cost included in deferred liabilities at
December 31............................................................ $ (17,144) $ (23,635)
========= =========
</TABLE>
IPL has expensed its non-construction related postretirement benefits
costs associated with its regulated steam business and, subsequent to August
1995, with its regulated electric business. IPL's electric business
postretirement benefit costs incurred prior to September 1, 1995, net of amounts
capitalized for construction and benefits paid to participants, were deferred as
a regulatory asset on the balance sheets. The Settlement Agreement approved the
amortization to operating expense of this regulatory asset over five years
beginning September 1, 1995. The annual amortization is $6.4 million. IPL funds
its annual postretirement benefit costs in excess of actual benefits paid to
participants to an irrevocable VEBA Trust. Annual funding is discretionary and
is based on the projected cost over time of benefits to be provided to covered
persons consistent with acceptable actuarial methods. The VEBA Trust provides
for full funding of IPL's accumulated postretirement benefit obligation in the
event of certain change of control transactions. During 1997 and 1996, IPL
contributed $19.0 million and $20.8 million, respectively, of these costs to the
VEBA.
Plan assets consist of life insurance policies on certain active and
retired employees.
<PAGE>
The assumed health-care cost trend rate used in measuring the accumulated
postretirement benefit obligation is 8.1% for 1998, gradually declining to 4.5%
in 2003. A 1% increase in the assumed health care cost trend rate for each year
would increase the accumulated postretirement benefit obligation, as of December
31, 1997, by approximately $19.4 million and the combined service cost and
interest cost for 1997 by approximately $2.4 million.
Assumptions used in determining the information above were:
1997 1996 1995
- ------------------------------------------------------------------------------
Discount rate................................... 7.25% 7.50% 7.25%
Rate of increase in future compensation levels.. 5.10% 5.10% 5.10%
Expected long-term rate of return on assets..... 8.00% 8.00% 8.00%
13. OTHER EMPLOYEE BENEFIT PLANS
IPL's contributions to the Thrift Plan, net of amounts allocated to
related parties were $3.3 million, $3.4 million and $3.2 million in 1997, 1996
and 1995, respectively.
14. COMMITMENTS AND CONTINGENCIES
In 1998, IPL anticipates the cost of its construction program to be
approximately $102 million.
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.
With respect to environmental issues, IPL has ongoing discussions with
various regulatory authorities and continues to believe that IPL is in
compliance with its various permits.
<PAGE>
15. QUARTERLY RESULTS (UNAUDITED)
Operating results for the years ended December 31, 1997, and 1996 by
quarter, are as follows (in thousands):
<TABLE>
<CAPTION>
1997
----
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Operating revenues......................... $ 195,299 $ 183,777 $ 203,872 $ 193,479
Operating income........................... $ 44,534 $ 39,092 $ 48,820 $ 34,869
Income before cumulative effect
of accounting change.................... $ 34,766 $ 30,130 $ 39,507 $ 28,999
Cumulative effect of
accounting change....................... $ 18,347 - - -
Net income................................. $ 53,113 $ 30,130 $ 39,507 $ 28,999
Net income (as originally reported)........ $ 37,826 $ 27,025 $ 43,605 -
1996
----
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Operating revenues......................... $ 196,446 $ 177,621 $ 205,672 $ 182,764
Operating income........................... $ 44,844 $ 36,122 $ 51,163 $ 31,090
Net income................................. $ 35,880 $ 26,980 $ 39,632 $ 20,096
</TABLE>
The 1997 results have been restated for the change in accounting method
to the unbilled revenues method. The change in method was made on December 31,
1997, but each quarter's results have been restated to reflect the results as if
the change had occurred on January 1, 1997, in accordance with generally
accepted accounting principles (see Note 3 regarding the change in accounting
method).
The quarterly figures reflect seasonal and weather-related fluctuations
which are normal to IPL's operations (see Note 10 regarding rate increases).
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
-----------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
None.
<PAGE>
PART III
--------
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
Information relating to the directors of the registrant, set
forth in the Information Statement of Indianapolis Power &
Light Company dated March 9, 1998 (the registrant's
Information Statement), under "Proposal 1-Election of 14
Directors" at pages 3-5 is incorporated herein by reference.
Information relating to the registrant's executive officers is
set forth at page I-7 of this Form 10-K under "Executive
Officers of the Registrant at February 24, 1998."
Item 11. EXECUTIVE COMPENSATION
----------------------
Information relating to executive compensation, set forth in
the registrant's Information Statement under "Compensation of
Executive Officers" at pages 12-15, "Compensation of
Directors" at page 7, "Compensation Committee Interlocks and
Insider Participation" at page 6, "Pensions Plans" at pages
17-18, and "Employment Contracts and Termination of Employment
and Change in Control Arrangements" at pages 18-19, is
incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
Information relating to ownership of the registrant's common
stock by persons known by the registrant to be the beneficial
owners of more than 5% of the outstanding shares of common
stock and by management, set forth in the registrant's
Information Statement under "Voting Securities and Beneficial
Owners" at page 2 is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Information relating to certain relationships and related
transactions, set forth in the registrant's Informaiton
Statement under "Certain Business Relationships" at page 7,
is incorporated herein by reference.
<PAGE>
PART IV
-------
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(a) The Financial Statements under this Item 14 (a) 1
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 Income for the Years Ended
December 31, 1997, 1996 and 1995
Balance Sheets, December 31, 1997 and 1996
Statements of Cash Flows for the Years
Ended December 31, 1997, 1996 and 1995
Statements of Retained Earnings for the Years
Ended December 31, 1997, 1996 and 1995
Notes to Financial Statements
2. Exhibits
--------
The Exhibit Index beginning on page IV-6 of
this Annual Report on Form 10-K lists the exhibits
that are filed as part of this report.
3. Financial Statement Schedules
-----------------------------
None
(b) Reports on Form 8-K
-------------------
A report 8-K was filed on November 12, 1997. The Form
8-K reported IPL's notice of redemption for its 6.0%
Series and 8.2% Series of Cumulative Preferred Stock.
<PAGE>
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY EXHIBIT 12.1
Ratio of Earnings to Fixed Charges
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1997 1996 1995
---------- ----------- ----------
(Thousands of Dollars)
Earnings, as defined:
<S> <C> <C> <C>
Net income (1) $133,402 $122,588 $106,273
Income taxes 74,440 67,266 53,568
Fixed charges, as below 41,893 48,570 51,778
-------- -------- --------
Total earnings, as defined $249,735 $238,424 $211,619
======== ======== ========
Fixed charges, as defined:
Interest charges $41,721 $ 48,406 $ 51,596
Rental interest factor 172 164 182
-------- -------- --------
Total fixed charges, as defined $41,893 $ 48,570 $ 51,778
======== ======== ========
Ratio of earnings to fixed charges 5.96 4.91 4.09
======== ======== ========
(1) 1997 Net income excludes after-tax effect of cumulative effect of accounting
change
</TABLE>
<PAGE>
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 /s/ John R. Hodowal
--------------------------------------
(John R. Hodowal, Chairman of the Board
and Chief Executive Officer)
Date: February 24, 1998
-----------------
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 and February 24, 1998
----------------------- Chief Executive Officer
(John R. Hodowal)
(ii) Principal Financial Officer:
/s/ John R. Brehm Senior Vice President - February 24, 1998
------------------------ Financial and Information
(John R. Brehm) Services
(iii) Principal Accounting Officer:
/s/ Stephen J. Plunkett Controller February 24, 1998
-------------------------
(Stephen J. Plunkett)
<PAGE>
(iv) A majority of the Board of Directors of Indianapolis Power & Light
Company:
/s/ Joseph D. Barnette, Jr. Director February 24, 1998
- ----------------------------
(Joseph D. Barnette, Jr.)
/s/ Robert A. Borns Director February 24, 1998
- ----------------------------
(Robert A. Borns)
/s/ Rexford C. Early Director February 24, 1998
- -----------------------------
(Rexford C. Early)
/s/ Otto N. Frenzel III Director February 24, 1998
- -----------------------------
(Otto N. Frenzel III)
/s/ Max L. Gibson Director February 24, 1998
- -----------------------------
(Max L. Gibson)
/s/ Dr. Earl B. Herr, Jr. Director February 24, 1998
- ------------------------------
(Dr. Earl B. Herr, Jr.)
/s/ John R. Hodowal Director February 24, 1998
- ------------------------------
(John R. Hodowal)
/s/ Ramon L. Humke Director February 24, 1998
- ------------------------------
(Ramon L. Humke)
/s/ Sam H. Jones Director February 24, 1998
- ------------------------------
(Sam H. Jones)
/s/ L. Ben Lytle Director February 24, 1998
- -------------------------------
(L. Ben Lytle)
/s/ Sallie W. Rowland Director February 24, 1998
- --------------------------------
(Sallie W. Rowland)
/s/ Thomas H. Sams Director February 24, 1998
- --------------------------------
(Thomas H. Sams)
<PAGE>
EXHIBIT INDEX
-------------
Copies of documents listed below which are identified with an asterisk (*)
are incorporated herein by reference and made a part hereof. The management
contracts or compensatory plans are marked with a double asterisk (**) after the
description of the contract or plan.
Exhibit
No. Description
--- -----------
3.1 Articles of Incorporation of Indianapolis Power & Light Company, as
amended.
3.2* Bylaws of Indianapolis Power & Light Company, as amended (Exhibit
3.2 to the Form 10-Q for the quarter ended 3-31-97.)
4.1* Mortgage and Deed of Trust, dated as of May 1, 1940, between
Indianapolis Power & Light Company and American National Bank and Trust
Company of Chicago, Trustee, as supplemented and modified by 30
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 year ended 12-31-85.)
4.2* Thirty-Second Supplemental Indenture dated as of June 1, 1989.
(Form 10-K for year ended 12-31-89.)
4.3* Thirty-Third Supplemental Indenture dated as of August 1, 1989.
(Form 10-K for year ended 12-31-89.)
4.4* Thirty-Fourth Supplemental Indenture dated as of October 15, 1991.
(Form 10-K for year ended 12-31-91.)
4.5* Thirty-Fifth Supplemental Indenture dated as of August 1, 1992.
(Form 10-K for year ended 12-31-92.)
4.6* Thirty-Sixth Supplemental Indenture dated as of April 1, 1993.
(Form 10-Q for quarter ended 9-30-93.)
4.7* Thirty-Seventh Supplemental Indenture dated as of October 1, 1993.
(Form 10-Q for quarter ended 9-30-93.)
4.8* Thirty-Eighth Supplemental Indenture dated as of October 1, 1993.
(Form 10-Q for quarter ended 9-30-93.)
4.9* Thirty-Ninth Supplemental Indenture dated as of February 1, 1994.
(Form 8-K, dated 1-25-94.)
4.10* Fortieth Supplemental Indenture dated as of February 1, 1994.
(Form 8-K, dated 1-25-94.)
4.11* Forty-First Supplemental Indenture dated as of January 15, 1995.
(Exhibit 4.12 to the Form 10-K dated 12-31-94.)
4.12* Forty-Second Supplemental Indenture dated as of October 1, 1995.
(Exhibit 4.12 to the Form 10-K dated 12-31-95.)
10.1* Coal Supply Agreement between Indianapolis Power & Light Company
and Peabody Coal Company effective as of January 1, 1992 and dated
April 7, 1993. Confidential portions of this Contract have been
omitted and filed separately with the SEC pursuant to 17 CFR 240.24b-2.
(Form 10-Q for quarter ended 3-31-93.)
10.2* Amendment to Coal Supply Agreement dated July 5, 1985, between
Indianapolis Power & Light Company and Black Beauty Coal Company, Inc.
(Form 10-K for year ended 12-31-86.)
10.3* Amendment to Coal Supply Agreement dated February 27, 1987,
between Indianapolis Power & Light Company and Black Beauty Coal
Company, Inc. (Form 10-K for year ended 12-31-87.)
10.4* Transportation Contract dated September 28, 1987, between
Indianapolis Power & Light Company and Consolidated Rail Corporation,
together with Amendment Number 1, 2, 3 and 4. (Exhibit 10.4 to the
Form 10-K dated 12-31-95.)
10.5* Coal Supply Agreement between Indianapolis Power & Light Company
and Triad Mining of Indiana, Inc. and Marine Coal Sales Company dated
December 7, 1994. Confidential portions of this Contract have been
omitted and filed separately with the SEC pursuant to 17 CFR 240.24b-2.
(Exhibit 10.2 to the Form 10-Q dated 3-31-95.)
10.6* Interconnection Agreement, dated December 30, 1960, between
IPL and Indiana & Michigan Electric Company (nka Indiana
Michigan Power Company) as modified through Modification 17
and Addendum IV. (Exhibit 10.6 to the Form 10-K dated 12-31-95.)
10.7 Interconnection Agreement dated May 1, 1992, among Indianapolis Power &
Light Company, PSI Energy, Inc. and CINERGY Services, Inc. as modified
through Amendment Number 6.
10.8* 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.)
10.9* Facilities Agreement dated August 16, 1977, between Indianapolis Power
& Light Company and Public Service Company of Indiana, Inc., together
with Amendment Number 1 and 2. (Exhibit 10.9 to the Form 10-K dated
12-31-95.)
10.10* East Central Area Reliability Agreement dated August 1, 1967,
between Indianapolis Power & Light Company and 23 other electric
utility companies as supplemented. (Exhibit 10.10 to the Form 10-K
dated 12-31-96.)
10.11* Interconnection Agreement dated December 2, 1969, between Indianapolis
Power & Light Company and Southern Indiana Gas and Electric Company as
modified through Modification Number 9.
10.12* Interconnection Agreement dated December 1, 1981, between
Indianapolis Power & Light Company and Hoosier Energy Rural Electric
Cooperative, Inc., as modified through Modification 4.
10.13* Interconnection Agreement, dated October 7, 1987, between Indianapolis
Power & Light Company and Wabash Valley Power Association, as modified
through Modification 1.
10.14* Interchange Agreement between Indianapolis Power & Light Company
and ENRON Power Marketing, Inc. dated August 1, 1995.
10.15* Interconnection Agreement between Indianapolis Power & Light Company
and Indiana Municipal Power Agency as modified through Modification 1.
10.16* Employment Agreement between Indianapolis Power & Light Company and
Ramon L. Humke dated January 1, 1997. (Exhibit 10.1 to the Form 10-Q
dated 3-31-97.) **
10.17* Employment Agreement by and among IPALCO Enterprises, Inc.,
Indianapolis Power & Light Company and John R. Hodowal dated
July 29, 1986. (Exhibit 10.32 to the Form 10-K dated 12-31-94.) **
10.18 Directors' and Officers' Liability Insurance Policy No. DO392B1A97
effective June 1, 1997 to June 1, 1998. **
10.19* Unfunded Deferred Compensation Plan for Indianapolis Power & Light
Company Directors dated February 22, 1983, as amended. (Exhibit 10.34
to the Form 10-K dated 12-31-94.) **
10.20* Unfunded Deferred Compensation Plan for Indianapolis Power & Light
Company Officers effective January 1, 1994 as amended December 1, 1996.
(Exhibit 10.20 to the Form 10-K dated 12-31-96.) **
10.21* Indianapolis Power & Light Company Supplemental Retirement Plan
and Trust Agreement For a Select Group of Management Employees
(As Amended and Restated Effective March 1, 1996.) (Exhibit 10.21 to
the Form 10-K dated 12-31-95.) **
10.22 1997 Management Incentive Program. **
10.23 Form of Termination Benefits Agreement together with schedule of
parties to, and dates of, the Termination Benefits Agreements. **
12.1 Ratio of Earnings to Fixed Charges.
18.1 Letter regarding change in accounting principle.
21.1* Subsidiaries of the Registrant. (Exhibit 21.1 to the Form 10-K
dated 12-31-96.)
27.1 Financial Data Schedule.
99.1* 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.)
99.2* Amendment to Agreement dated October 27, 1994, 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.
(Exhibit 99.2 to the Form 10-K dated 12-31-94.)
EXHIBIT 3.1
AMENDED
ARTICLES OF INCORPORATION
OF
INDIANAPOLIS POWER & LIGHT COMPANY
Dated April 20, 1979
As Amended By
ARTICLES OF AMENDMENT
Dated April 17, 1991
As Amended By
ARTICLES OF AMENDMENT
Dated October 9, 1997
As Amended By
ARTICLES OF AMEMDMENT
Dated January 8, 1998
AMENDED
ARTICLES OF INCORPORATION
OF
INDIANAPOLIS POWER & LIGHT COMPANY
The undersigned officers of INDIANAPOLIS POWER & LIGHT
COMPANY (hereinafter referred to as the "Company"), existing
pursuant to the provisions of The Indiana General Corporation
Act, as amended (hereinafter referred to as the "Act"),
desiring to give notice of corporate action effectuating
certain amendments of its Amended Articles of Incorporation by
the adoption of new Amended Articles of Incorporation to
supersede and take the place of its heretofore existing
Amended Articles of Incorporation approved and filed in
accordance with the Act on April 23, 1976, certifying the
following facts:
SUBDIVISION A
AMENDED ARTICLES
1. Text of Amended Articles
The exact text of the entire Amended Articles of
Incorporation of the Company (hereinafter referred to as the
"Amended Articles"), now is as follows:
AMENDED
ARTICLES OF INCORPORATION*
OF
INDIANAPOLIS POWER & LIGHT COMPANY
ARTICLE 1
Name
The name of the Company is INDIANAPOLIS POWER & LIGHT
COMPANY.
ARTICLE 2
Purposes and Powers
Section 1. Purposes. The purposes for which the Company
is formed are as follows:
(a) General. To generate, produce, transmit,
distribute, purchase and sell, furnish and supply, or
otherwise dispose of, as a public utility or otherwise, to the
public or to any city, town or community within or without the
State of Indiana, for public or private use, electricity,
heat, light, steam, steam heat, hot water, power, and any
other commodities or services now or hereafter furnished or
supplied by public utilities, for compensation; to construct,
purchase, lease or otherwise acquire, hold, own, operate,
manage or control, either alone or in conjunction with others,
any plant, property, equipment or facilities of any kind,
character and description whatsoever and wheresoever located,
used and useful or to be used and useful for or in connection
with the foregoing purposes; and to conduct, engage in and
carry on any manufacturing, merchandising and mercantile
business, and any other business whatsoever, not prohibited by
law.
(b) Ancillary Purposes. To do everything necessary,
proper, advisable or convenient for the accomplishment of the
purposes specified in subsection (a) of this Section; to
render services and to engage in allied and incidental lines
of business in connection therewith, and to do all other
things not forbidden by the Act, ** by other law, or by these
Amended Articles.
Section 2. Powers. The Company, subject to any
limitations or restrictions imposed by the Act, other law or
by these Amended Articles, shall have the following general
rights, privileges and powers:
(a) Personal Property. To acquire (by purchase,
exchange, lease, hire or otherwise), hold, own, operate,
manage, control, use, lease, mortgage, pledge, give as
security, sell, convey, exchange or otherwise deal in and
dispose of, either alone or in conjunction with others,
personal property, tangible or intangible, and commodities of
every kind, character and description whatsoever and any
interests therein.
* Herein referred to as "Amended Articles".
** As used herein, refers to The Indiana General Corporation
Act, as amended.
(b) Real Estate. To acquire (by purchase, exchange,
lease, hire or otherwise), hold, own, operate, manage,
control, use, lease, mortgage, sell, convey, exchange or
otherwise deal in and dispose of, either alone or in
conjunction with others, real estate of every kind, character
and description whatsoever and wheresoever located, and any
interests therein, and any improvements thereon or
appurtenances thereto.
(c) Eminent Domain. To have and enjoy the right of
eminent domain to the full extent provided by law, and in the
exercise of such power to take, acquire, condemn and
appropriate lands, and any interests therein, including,
without limitation, easements, rights-of-way, grants,
concessions, and any other property or rights, for its
corporate purposes, together with all accommodations and
privileges necessary to accomplish the use or uses for which
the same are taken, all in the manner and upon the conditions
prescribed by the laws of the state or states in which such
power of eminent domain may be exercised from time to time by
the Company.
(d) Permits and Concessions. To acquire (by grant,
purchase, lease or otherwise) franchises, permits, licenses,
certificates of convenience and necessity, certificates of
authority, concessions, grants, rights, privileges and other
authorizations, of every kind and nature; to hold, own, use,
develop, operate under, lease, mortgage, pledge, sell, convey,
exchange or otherwise deal with and dispose of the same to the
extent permitted by law.
(e) Acquisition of Assets, Properties, Plants, Business,
and Good Will. To acquire (by purchase, exchange, lease, hire
or otherwise) so far as may be permitted by law, either alone
or in conjunction with others, all or any part of the assets,
properties, plants, business, or good will of any person,
firm, association, partnership, corporation, or other
entities, either domestic or foreign; to pay for the same in
cash, shares of capital stock, or obligations of the Company
or otherwise; to assume in connection therewith any
liabilities of any such transferor; and to hold, own, operate,
manage, control, use, develop, and to lease, mortgage, sell,
convey, exchange or otherwise deal in and dispose of, the
whole, or any part, of the assets, properties, plants,
business or good will so acquired.
(f) Securities. To purchase, take, receive, subscribe
for, or otherwise acquire, guarantee, own, hold, vote, use,
employ, sell, mortgage, lend, pledge or otherwise deal in and
dispose of, shares or other interests in, or obligations of,
other domestic or foreign corporations, associations,
partnerships, individuals, or other entities, for whatever
purpose or purposes organized or operating, including direct
or indirect obligations or other securities of the United
States of America or of any other government, state,
territory, governmental district or municipality or of any
instrumentality thereof.
(g) Partnership Arrangements. To enter into any lawful
arrangement for sharing profits, union of interest, reciprocal
association, or cooperative association or partnership with
any one or more domestic or foreign corporations,
associations, partnerships, individuals or other entities, and
to enter into any general or limited partnership.
(h) Agency. To act as agent of or representative for any
one or more domestic or foreign corporations, associations,
partnerships, individuals, or other entities.
(i) To Raise Funds. To borrow or raise monies from time
to time, without limit as to amount; to execute, accept,
endorse, and deliver, as evidence of such borrowing, all kinds
of securities, including, but without limiting the generality
thereof, promissory notes, drafts, bills of exchange, bonds,
debentures, and other negotiable or non-negotiable instruments
and evidences of indebtedness; and to secure the payment and
performance of the obligations thereunder by mortgage on,
pledge of, or other security interest in the whole or any part
of the assets, properties, plants, business, franchises and
other operating rights, or good will of the Company, whether
at the time owned or thereafter acquired.
(j) To Loan and Invest Funds. To lend money for its
corporate purposes, invest and reinvest its funds from time to
time, and take and hold any property as security for the
payment of funds so loaned or invested; and to lend money to
its employees, but to make no advancement on account of
services to be performed in the future or any loan of money or
property to any officer or director of the Company.
(k) Contracts. To enter into, perform, terminate and
rescind contracts and other agreements.
(l) Guaranties. To make any guaranty respecting the
shares, dividends, securities, indebtedness, interest,
contracts or other obligations created by any one or more
domestic or foreign corporations, associations, partnerships,
individuals, or other entities.
(m) Dealing in Its Own Shares. To purchase, take,
receive or otherwise acquire, hold, own, sell, pledge,
transfer or otherwise dispose of its own shares; and purchases
of its own shares may be made, directly or indirectly, out of
its unreserved and unrestricted earned surplus, and, to the
extent permitted by the Act, out of its capital surplus.
(n) Donations. To make contributions out of the gross
income of the Company to such entities, and for any one or
more of such purposes, including the public welfare, or for
charitable, scientific, or educational purposes, as the Board
of Directors may reasonably believe will constitute such
contributions deductions from such gross income in computing
the net income of the Company subject to tax pursuant to the
provisions of the Internal Revenue Code as amended from time
to time.
(o) Capacity to Act. To have the capacity to act
possessed by natural persons, but the Company shall have
authority to perform only such acts as are necessary,
convenient or expedient to accomplish the purposes for which
it is formed and such as are not repugnant to law.
(p) Officers, Agents, and Employees. To elect officers,
to appoint agents and to hire employees; to define their
duties; to determine and fix their compensation; to establish
and to pay for life, disability, hospitalization, surgical
benefits and other insurance plans, pension plans, profit-
sharing plans, stock bonus plans, stock option plans, thrift
plans, and other incentive plans, for any or all of its
directors, officers and employees.
(q) Indemnification. To indemnify any director or
officer, or former director or officer, of the Company, or any
person who may serve at its request as a director or officer
of another corporation in which it owns shares or of which it
is a creditor, against expenses actually and reasonably
incurred by him in connection with the defense of any action,
suit or proceeding, civil or criminal, in which he is made a
party by reason of being or having been such director or
officer, or against judgments, fines, penalties, court costs
and attorney's fees, or reasonable amounts paid by him in
settlement in connection with any such action, suit or
proceeding, if he has acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best
interests of the Company, or, in respect to any criminal
action or proceeding, if he had no reasonable cause to believe
his conduct was unlawful; provided that no such director or
officer shall be so indemnified in relation to matters as to
which he shall be adjudged in any such action, suit or
proceeding to be liable for negligence or misconduct in the
performance of duty.
The termination of any action, suit or proceeding by
settlement, or upon a plea of nolo contendere, or its
equivalent, shall not, of itself, create a presumption that
the director or officer involved therein did not act in good
faith and in a manner which he reasonably believed to be in,
or not opposed to, the best interests of the Company, or, in
respect to any criminal action or proceeding, that he had
reasonable cause to believe his conduct was unlawful.
Any indemnification shall be made by the Company only as
authorized in a specific case upon the determination that
indemnification of the director or officer is proper in the
circumstances because he has met the applicable standard of
conduct set forth in this subsection (q). Such determination
shall be made by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such
action, suit or proceeding, or if such a quorum is not
obtainable, or if a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion.
Any such indemnification of a director or officer shall
not be deemed exclusive of any other rights to which he may be
entitled as a matter of law or under any other provision of
these Amended Articles, or any resolution, or other
authorization heretofore or hereafter adopted, after notice,
by a majority vote of all the voting shares of the Company
then issued and outstanding.
(r) Statutory Powers. To have and to exercise all the
general rights, privileges and powers conferred by the laws of
the State of Indiana upon corporations formed under the Act,
and all amendments made thereto from time to time, and all
applicable subsequent laws of the State of Indiana.
(s) Ancillary Powers. To do all acts and things
necessary, convenient or expedient to carry out the purposes
for which the Company is organized.
Section 3. Construction of Powers as Purposes. The
powers enumerated in Section 2 of this Article shall be
construed as purposes as well as powers, and the matters
expressed in each clause thereof shall be in no wise limited
by reference to, or inference from, the terms of any other
clause, each of such clauses being regarded as creating
independent powers and purposes. The enumeration of specific
additional powers in the clauses of Section 2 shall not be
construed as limiting or restricting in any manner either the
meaning of general terms used in this Article or the scope of
the powers of the Company created thereby; nor shall the
expression of one thing be deemed to exclude another not
expressed although it be of like nature.
Section 4. Carrying Out of Purposes and Exercise of
Powers in Any Jurisdiction. The Company may carry out its
purposes, conduct its business, and exercise its powers in any
state, territory, district or possession of the United States
of America, or in any foreign country, to the extent that such
purposes and powers are not forbidden by the laws of such
state, territory, district or possession of the United States
of America, or by such foreign country; and, in the case of
any state, territory, district or possession of the United
States of America, or any foreign country, in which one or
more of such purposes or powers are forbidden by law, the
Company may limit the purpose or purposes which it proposes to
carry on or the powers it proposes to exercise in such state,
territory, district or possession of the United States of
America, or foreign country, to such purpose or purposes or
powers as are not forbidden by the law thereof in any
application to do business in such state, territory, district
or possession of the United States of America, or foreign
country.
Section 5. Limiting Provision. Nothing in these Amended
Articles shall be construed to authorize the conduct by the
Company of rural loan and savings associations, credit unions,
a banking, railroad, insurance, surety, trust, safe deposit,
mortgage guarantee, or building and loan business, or to
authorize the Company to carry on the business of receiving
deposits of money, bullion, or foreign coins, or issuing
bills, notes or other evidences of debt for circulation as
money.
ARTICLE 3
Term of Existence
The period during which the Company shall continue is
perpetual.
ARTICLE 4
Principal Office and Resident Agent
The post office address of the principal office of the
Company is:
25 Monument Circle,
Indianapolis, Marion County, Indiana
and the name and post office address of its Resident Agent is:
Marcus E. Woods
25 Monument Circle,
Indianapolis, Marion County, Indiana.
ARTICLE 5
Number of Shares
The total number of shares which the Company shall have
authority to issue is twenty-two million (22,000,000) shares,
consisting of two million (2,000,000) shares of the par value
of one hundred dollars ($100) per share, and twenty million
(20,000,000) shares without par value.
(Amended by Articles of Amendment, see page 19)
ARTICLE 6
Terms of Shares
The designation of the different classes of shares, the
number and the par value, if any, of the shares of each class,
and a statement of the relative rights, preferences,
limitations and restrictions of each class, including the
authority of the Board of Directors with respect thereto, are
as follows:
A. Preferred Stock
Section 1. Designation of Class, Number and Par Value of
Shares. The two million (2,000,000) shares of the par value
of $100 per
share shall constitute a single class designated as the
"Cumulative Preferred Stock" (herein referred to as the
"Preferred Stock").
Section 2. Preferred Stock Issuable in Series. The
Preferred Stock may be issued from time to time in one or more
series, with such distinctive serial designations as shall be
stated and expressed in the resolution or resolutions providing
for the issue of such stock from time to time adopted by the
Board of Directors. All shares of the Preferred Stock of any one
series shall be identical with each other in all respects except,
if so determined by the Board of Directors, as to the dates from
which dividends thereon shall be cumulative; and all shares of
the Preferred Stock shall be of equal rank with each other,
regardless of series, and shall be identical with each other in
all respects except as herein provided.
Section 3. Authority of Board of Directors. In the
resolution or resolutions providing for the issue of shares of
each particular series of the Preferred Stock, the Board of
Directors is hereby expressly authorized to fix and determine, so
far as not inconsistent with the provisions of these Amended
Articles, and to the full extent now or hereafter permitted by
the laws of the State of Indiana in respect of the matters set
forth in the following subparagraphs (a) to (f), inclusive:
(a) Dividends. The annual dividend rate for such series.
(b) Redemption. The redemption price or prices per share of
such series.
(c) Liquidation. The amount per share which the shares of
such series shall be entitled to receive in the event of a
voluntary liquidation, dissolution, or winding up of the Company.
(d) Sinking Fund. The terms and amount of any sinking fund
provided for the purchase or redemption of the shares of such
series.
(e) Conversion. The rights, if any, of the holders of
shares of such series to convert such shares into shares of
Common Stock or other junior stock of the Company, with any
provisions for the subsequent adjustment of such conversion
rights.
(f) Miscellaneous. The maximum number of shares of such
series issuable.
Section 4. General Provisions Applicable to Preferred
Stock. The following provisions shall apply to all the Preferred
Stock of the Company irrespective of series:
(a) Dividends. The Preferred Stock of each series shall be
entitled, in preference to the Common Stock, to receive dividends
at, but not exceeding, the dividend rate fixed for such series
and expressed in the certificates therefor, payable quarter-
yearly, when and as declared by the Board of Directors, out of
the surplus earnings or net profits or surplus paid in in cash of
the Company, on the first days of January, April, July and
October in each year. Such dividends shall be cumulative from
and after the date of issue in the case of the first 100,000
shares of Preferred Stock issued by the Company, and, in the case
of all additional shares of Preferred Stock issued, such
dividends shall be cumulative from the quarterly dividend payment
date on or next preceding the date on which they shall have been
issued, except that, if so determined by the Board of Directors,
another date may be fixed therefor.
If, at the time of the issue of additional shares of
Preferred Stock, dividends upon the shares of Preferred Stock at
the time outstanding shall not then have been paid or declared
and set apart for payment at the fixed dividend rate from the
date or dates after which dividends on said shares became
cumulative to the beginning of the then current dividend period,
no dividend shall be declared or paid on the additional shares of
Preferred Stock issued at such date until all such dividends in
arrears shall have been paid or declared and set apart for
payment as aforesaid and none of the provisions hereof shall be
deemed to prevent the declaration and payment of such dividends
in arrears without a declaration or payment of dividends on the
additional shares so issued.
If at any time the payment of dividends to any particular
holder of record of outstanding shares of Preferred Stock would
require the payment of a sum which would include a fraction of a
cent, then the Company may pay to such shareholder of record the
next higher integral amount in cents.
When dividends upon all shares of Preferred Stock then
outstanding at the fixed dividend rate from the date or dates
after which dividends on said shares became cumulative to the end
of the current dividend period shall have been paid or declared
and set apart for payment, the Board of Directors in its
discretion may declare dividends on the Common Stock of the
Company out of the surplus earnings or net profits or surplus
paid in in cash of the Company, and no holders of any shares of
Preferred Stock, as such, shall be entitled to share therein.
Unless dividends on all outstanding shares of Preferred
Stock, at the fixed dividend rate from the date or dates after
which dividends on said shares became cumulative to the end of
the current dividend period shall have been paid or declared and
set apart for payment, no dividends shall be paid or declared and
no other distribution shall be made on the Common Stock, and no
Common Stock shall be purchased or otherwise acquired for value
by the Company.
(b) Liquidation. Upon any voluntary liquidation,
dissolution or winding up of the Company, the Preferred Stock of
each series shall be entitled, before any distribution shall be
made to the holders of the Common Stock, to be paid the full
preferential amount fixed by the Board of Directors for such
series as herein authorized, and, in the event of involuntary
liquidation, dissolution or winding up of the Company, the
Preferred Stock of each series shall be entitled to be paid the
sum of $100 per share plus an amount which shall be equal to the
dividends accrued and unpaid thereon; but the holders of the
Preferred Stock shall be entitled to no further participation in
such distribution; and the holders of the Common Stock shall be
entitled, to the exclusion of the holders of the Preferred Stock,
to share ratably in all assets of the Company remaining after
payment to the holders of the Preferred Stock of the full
preferential amounts aforesaid. If upon such liquidation,
dissolution or winding up of the Company, the assets
distributable among the holders of the Preferred Stock shall be
insufficient to permit the payment in full to such holders of the
preferential amounts aforesaid, then the entire assets of the
Company to be distributed shall be distributed among the holders
of the Preferred Stock, then outstanding, ratably in proportion
to the full preferential amounts to which they are respectively
entitled.
As used herein, the expression "dividends accrued or in
arrears" means, in respect of each share of the Preferred Stock,
an amount equal to simple interest upon the sum of $100 per share
at the annual rate equal to the dividend rate fixed for such
series from the date from which dividends thereon commenced to
accrue to the date as of which the computation is to be made,
less the aggregate amount (without interest thereon) of all
dividends theretofore paid or declared and set apart for payment
in respect thereof.
Nothing in this subsection (b) shall be deemed to prevent
the redemption of Preferred Stock in any manner permitted by the
next succeeding subsection (c).
A consolidation or merger of the Company with any other
corporation or corporations shall not be regarded as a
liquidation, dissolution or winding up of the Company within the
meaning of this subsection (b), providing that such consolidation
or merger does not materially impair the rights and preferences
of the Preferred Stock.
(c) Redemption. The Company, by action of its Board of
Directors, may redeem the whole or any part of the Preferred
Stock or of any series thereof, at any time or from time to time,
at a price for each series thereof equal to the par value
thereof, plus a premium of such additional amount per share, if
any, as shall have been fixed as payable in case of redemption in
respect of such series and expressed in the certificates
therefor, together with the amount of all dividends accrued or in
arrears thereon to the date fixed for redemption. At least
thirty (30) days and not more than ninety (90) days prior to the
date fixed for such redemption, notice of such redemption shall
be mailed to the holders of record of the shares of the Preferred
Stock so to be redeemed, at their respective addresses as the
same shall appear on the books of the Company.
In case of the redemption of a part only of the Preferred
Stock at the time outstanding, the Company shall select by lot,
or in such other manner as the Board of Directors may determine,
the shares so to be redeemed. The Board of Directors shall have
full power and authority, subject to the limitations and
provisions herein contained, to prescribe the manner in which,
and the terms and conditions upon which, the shares of the
Preferred Stock shall be redeemed from time to time.
If such notice of redemption shall have been duly given as
hereinbefore provided and if on or before the redemption date
specified in such notice all funds necessary for such redemption
shall have been set aside by the Company, separate and apart from
its other funds, in trust for the account of the holders of the
shares to be redeemed, so as to be and continue to be available
therefor, then, notwithstanding that any certificate for such
shares so called for redemption shall not have been surrendered
for cancellation, from and after the date fixed for redemption,
the shares represented thereby shall no longer be deemed
outstanding, the right to receive dividends thereon shall cease
to accrue and all rights with respect to such shares so called
for redemption shall forthwith on such redemption date cease and
terminate, except only the right of the holders thereof to
receive, out of the funds so set aside in trust, the amount
payable upon redemption thereof, without interest; provided,
however, that the Company may, after giving notice of any such
redemption as hereinbefore provided or after giving to the bank
or trust company hereinafter referred to irrevocable
authorization to give such notice and, at any time prior to the
redemption date specified in such notice, deposit in trust, for
the account of the holders of the shares to be redeemed, funds
necessary for such redemption with a bank or trust company in
good standing, organized under the laws of the United States of
America or of the State of New York, doing business in the
Borough of Manhattan, the City of New York, or of the State of
Illinois, doing business in the City of Chicago, having capital,
surplus and undivided profits aggregating at least $2,000,000,
designated in such notice of redemption, and upon such deposit in
trust, all shares with respect to which such deposit shall have
been made shall no longer be deemed to be outstanding, and all
rights with respect to such shares shall forthwith cease and
terminate, except only the right of the holders thereof to
receive, out of the funds so deposited in trust, from and after
the date of such deposit, the amount payable upon the redemption
thereof, without interest.
Nothing herein contained shall limit any legal right of the
Company to purchase or otherwise acquire any shares of the
Preferred Stock.
(d) Limitation Upon Issue of Parity Preferred Stock or
Merger or Consolidation. So long as any shares of the Preferred
Stock are outstanding, the Company shall not, without the consent
(given by vote at a meeting called for that purpose) of the
holders of at least a majority of the total number of shares of
the Preferred Stock then outstanding;
(i) create or authority any class of
stock ranking on a parity with the Preferred
Stock, or create or authorize any obligation
or security convertible into shares of stock
of any such class; or
(ii) merge or consolidate with or into
any other corporation or corporations.
(e) Limitation Upon Issue of Prior Preferred Stock or
Amendment of Preferred Stock. So long as any shares of the
Preferred Stock are outstanding, the Company shall not, without
the consent (given by vote at a meeting called for that purpose)
of the holders of at least two-thirds of the total number of
shares of the Preferred Stock then outstanding:
(i) create or authorize any class of
stock ranking prior to the Preferred Stock,
or create or authorize any obligation or
security convertible into shares of stock or
any such class; or
(ii) amend, alter, change or repeal any
of the express terms of the Preferred Stock
then outstanding in a manner prejudicial to
the holder thereof.
(f) Net Income Limitation Upon Issue of Preferred Stock.
So long as any shares of the Preferred Stock are outstanding, the
Company shall not, without the consent (given by vote at a
meeting called for that purpose) of the holders of at least a
majority of the total number of shares of Preferred Stock then
outstanding, issue any shares of Preferred Stock in addition to
the first 100,000 shares of the Preferred Stock issued by the
Company, unless the net income of the Company applicable to the
payment of interest on the funded debt of the Company and the
dividends on the Preferred Stock for any twelve consecutive
calendar months within the fifteen calendar months immediately
preceding the calendar month within which such additional shares
of Preferred Stock shall be issued, shall have been at least one
and one-half times the aggregate of the interest on the funded
debt of the Company for a twelve months' period and the dividend
requirements for a twelve months' period upon the entire amount
of the Preferred Stock then outstanding and such additional
shares of the Preferred Stock proposed to be issued.
(g) Limitation Upon Issue of Unsecured Indebtedness. So
long as any shares of the Preferred Stock are outstanding, the
Company shall not, without the consent (given by vote at a
meeting called for that purpose) of the holders of a majority of
the total number of shares of the Preferred Stock then
outstanding, issue any unsecured notes, debentures or other
securities representing unsecured indebtedness, or assume any
such unsecured securities, for purposes other than the refunding
of outstanding unsecured securities theretofore issued or assumed
by the Company or the redemption or other retirement of all
outstanding shares of the Preferred Stock, if, immediately after
such issue or assumption, the total principal amount of all
unsecured notes, debentures or other securities representing
unsecured indebtedness issued or assumed by the Company and then
outstanding (including the unsecured securities then to be issued
or assumed) would exceed twenty per centum (20%) of the aggregate
of (i) the total principal amount of all bonds or other
securities representing secured indebtedness issued by the
Company, and then to be outstanding and (ii) the capital and
surplus of the Company as then to be stated on the books of
account of the Company.
B. Common Stock
Section 1. Designation of Class, Number and Par Value of
Shares. The twenty million (20,000,000) shares without par value
shall constitute a single class designated as the "Common Stock"
(herein referred to as the "Common Stock").
Section 2. General Provisions Applicable to Common Stock.
The following provisions shall apply to all shares of the Common
Stock of the Company:
(a) Preferences and Equality of Shares. The shares of the
Common Stock shall not be entitled to any preferences and each
share of Common Stock shall be equal to every other share of such
stock in every respect.
(b) Dividends. When dividends upon all shares of Preferred
Stock then outstanding at the fixed dividend rate from the date
or dates after which dividends on said shares became cumulative
to the end of the current dividend period shall have been paid or
declared and set apart for payment, the Board of Directors in its
discretion may declare dividends on the Common Stock of the
Company out of the surplus earnings or net profits or surplus
paid in in cash of the Company, and no holders of any shares of
Preferred Stock, as such, shall be entitled to share therein.
Unless dividends on all outstanding shares of Preferred
Stock, at the fixed dividend rate from the date or dates after
which dividends on said shares became cumulative to the end of
the current dividend period shall have been paid or declared and
set apart for payment, no dividends shall be paid or declared and
no other distribution shall be made on the Common Stock, and no
Common Stock shall be purchased or otherwise acquired for value
by the Company.
(c) Liquidation. Upon any liquidation, dissolution or
winding up of the Company, the holders of the Common Stock shall
be entitled, to the exclusion of the holders of the Preferred
Stock, to share ratably in all assets of the Company remaining
after payment to the holders of the Preferred Stock of the full
preferential amounts referred to in Article 6, A, Section 4,
subsection (b).
C. Preferred and Common Stock
Section 1. Issue and Consideration for Shares. The
authorized shares of the Company of any class may be issued, sold
or otherwise disposed of by the Company for such amount of
consideration, in whole or in part, either in cash, property,
services or otherwise, whether less than, equal to, or in excess
of the par value, if any, of such shares, and upon such other
terms and conditions and to such persons, firms, corporations or
other legal entities, as may be determined from time to time by
the Board of Directors; and such shares, if Common Stock, may be
issued as dividends on, or to effect a split-up or division of,
the outstanding Common Stock of the Company, upon such terms and
conditions as the Board of Directors may by resolution fix and
determine, from time to time; and when so issued, sold or
otherwise disposed of, and the consideration specified therefor
has been received by the Company, such shares shall be deemed
fully paid and non-assessable.
Section 2. Registered Owners. To the extent permitted by
law, the Company shall be entitled to treat the person in whose
name any share is registered on the books of the Company as the
owner thereof, and shall not be bound to recognize any equitable
or other claim to, or interest in, such share on the part of any
other person, whether or not the Company shall have notice
thereof.
Section 3. Preemptive Rights. No holder of any shares of
the Company shall have any preemptive right to purchase or
subscribe to any shares of any class of the Company, whether now
or hereafter authorized, or any bonds, debentures or other
securities convertible into or exchangeable for shares of the
Company, except such rights, if any, as the Board of Directors in
its discretion may from time to time grant to such holder.
(Amended by Articles of Amendment to add
Subdivision D, see page 19)
ARTICLE 7
Voting Rights of Shares
Section 1. General Voting Rights. Every holder of the
Preferred Stock shall have two votes for each share of stock held
by him, and every holder of the Common Stock shall have one vote
for each share of Stock held by him, for the election of
directors and upon all other matters, except as otherwise
provided by these Amended Articles.
Section 2. Voting Rights in Event of Preferred Stock
Dividend Default. If and when dividends payable on the Preferred
Stock shall be in default in an amount equivalent to four (4)
full quarter-yearly dividends on all shares of Preferred Stock
then outstanding, the holders of all shares of the Preferred
Stock, voting separately as one class, shall be entitled to
elect, at annual meetings of shareholders for the election of
directors until such default shall have been remedied, the
smallest number of directors necessary to constitute a majority
of the full Board of Directors, and the holders of the Common
Stock, voting separately as a class, shall be entitled to elect
the remaining directors of the Company.
If and when all dividends then in default on the Preferred
Stock then outstanding shall be paid (and such dividends shall be
declared and paid out of any funds legally available therefor as
soon as reasonably practicable), the Preferred Stock shall
thereupon be divested of any special right with respect to the
election of directors provided in the immediately preceding
paragraph hereof, and the voting power of the Preferred Stock and
the Common Stock shall revert to the status existing before the
occurrence of such default; but always subject to the same
provisions for vesting such special rights in the Preferred Stock
in case of further like default or defaults in dividends thereon.
Whenever the holders of the Preferred Stock, as a class,
become entitled to elect directors of the Company, as herein
provided, and a vacancy shall occur among such directors, such
vacancy shall be filled by the vote of a majority of the
remaining directors elected by the holders of the Preferred
Stock; and in like manner whenever the holders of the Common
Stock, as a class, become entitled to elect directors of the
Company, as herein provided, and a vacancy shall occur among such
directors, such vacancy shall be filled by the vote of a majority
of the remaining directors elected by the holders of the Common
Stock. In all other cases, any vacancy occurring among the
directors shall be filled by the vote of a majority of the
remaining directors.
ARTICLE 8
Stated Capital
The amount of stated capital of the Company at the time of
filing of these Amended Articles is at least $100,000,000.
ARTICLE 9
Number and Qualifications of Directors
Section 1. Number. The number of directors of the Company
shall be not less than three, and the exact number of directors
shall be specified, from time to time, in the by-laws. Subject
to this limitation, the number of directors may be increased or
decreased from time to time by amendment to the by-laws, but no
decrease shall have the effect of shortening the term of any
incumbent director. If and whenever the by-laws do not contain a
provision specifying the number of directors, the number shall be
eleven.
Section 2. Qualifications. Directors need not be
shareholders of the Company. A majority of the directors at any
time shall be citizens of the United States of America and bona
fide residents and citizens of the State of Indiana.
ARTICLE 10
Names, Addresses and Citizenship of Directors
Section 1. Names and Post Office Addresses. The names and
post office addresses of the members of the Board of Directors of
the Company holding office at the time of the adoption of these
Amended Articles are as follows:
Name Address
Charles A. Barnes P. O. Box 706 Indianapolis Indiana
Thomas W. Binford One Indiana Square Indianapolis Indiana
Harriet H. Capehart 445 Pine Drive Indianapolis Indiana
Raymond E. Crandall 740 S. Alabama Street Indianapolis Indiana
Otto N. Frenzel, III One Merchants Plaza Indianapolis Indiana
Louis A. Highmark 11 S. Meridian St. Indianapolis Indiana
Ralph W. Husted 25 Monument Circle Indianapolis Indiana
Frank E. McKinney, Jr. 101 Monument Circle Indianapolis Indiana
John D. Phelan 500 N. Meridian Street Indianapolis Indiana
Alfred J. Stokely 941 N. Meridian Street Indianapolis Indiana
Joseph T. Taylor 1219 W. Michigan St. Indianapolis Indiana
Zane G. Todd 25 Monument Circle Indianapolis Indiana
Carl B. Vance 25 Monument Circle Indianapolis Indiana
Section 2. Citizenship. All such directors are citizens of
the United States of America and a majority thereof are bona fide
residents and citizens of the State of Indiana.
ARTICLE 11
President and Secretary
The name and address of the President of the Company is Zane
G. Todd, 25 Monument Circle, Indianapolis, Marion County,
Indiana, and the name and address of its Secretary is Marcus E.
Woods, 25 Monument Circle, Indianapolis, Marion County, Indiana.
ARTICLE 12
Provisions for Regulations of Business and
Conduct of Affairs of Company
Section 1. Meetings of Shareholders. Meetings of the
shareholders of the Company shall be held at such place, within
or without the State of Indiana, as may be specified from time to
time in the respective notices, or waivers of notice, thereof, or
by the by-laws or by resolution of the shareholders or the Board
of Directors. Any action required or permitted to be taken at
any meeting of the shareholders may be taken without a meeting
if, prior to such action, a written consent thereto is signed by
all of the shareholders entitled to vote with respect to the
subject matter thereof, and such written consent is filed with
the minutes of the proceedings of the shareholders.
Section 2. Meetings of Directors. Meetings of the Board of
Directors of the Company, regular or special, shall be held at
such place, within or without the State of Indiana, as may be
specified from time to time in the respective notices, or
waivers of notice, thereof, or by the by-laws. Any action
required or permitted to be taken at any meeting of the Board of
Directors, or of any committee thereof, may be taken without a
meeting if, prior to such action, a written consent is filed with
the minutes of the proceedings of such Board or committee.
Section 3. By-laws. The Board of Directors of the Company
shall have power, without the assent or vote of the shareholders,
to make, alter, amend or repeal the by-laws of the Company, but
the affirmative vote of a number of directors equal to a majority
of the number who would constitute the full Board of Directors at
the time of such action shall be necessary to take any action for
the making, alteration, amendment or repeal of the by-laws.
Section 4. Executive Committee. If the by-laws of the
Company, for the time being in force, so provide, the Board of
Directors may, by resolution adopted by a majority of the actual
number of directors elected and qualified, from time to time,
designate two or more of its members to constitute an executive
committee, and one or more other committees; each of which
committees, to the extent provided in the resolution or by-laws
and not otherwise limited by the provisions of the Act, shall
have and exercise all of the authority of the Board of Directors,
and shall have power to authorize the execution of, and
affixation of the seal of the Company to, all papers or documents
which may require it.
Section 5. Places of Keeping of Books of Account, etc.
Subject to the limitations existing by virtue of the laws of the
State of Indiana, the books of account, records, documents and
papers of the Company may be kept at any place or places within
or without the State of Indiana. Rules governing the place or
places where the books of account, records, documents and papers
of the Company are to be kept may be made from time to time by
the by-laws of the Company.
Section 6. Reliance by Directors on Books of Account, etc.
Each director of the Company shall be fully protected in relying
in good faith upon the books of account of the Company or
statements prepared by any of its officers and employees as to
the value and amount of the assets, liabilities and net income of
the Company, or any of such items; or in relying in good faith
upon any other information pertinent to the existence and amount
of surplus or other funds from which dividends might properly be
declared and paid.
Section 7. Provisions for Working Capital. The Board of
Directors of the Company shall have power, from time to time, to
fix and determine and to vary the amount to be reserved as
working capital of the Company and, before the payment of any
dividends, it may set aside out of the net income of the Company
such sum or sums as it may from time to time in its absolute
discretion determine to be proper whether as a reserve fund to
meet contingencies or for the equalizing of dividends, or for
repairing or maintaining any property of the Company, or for an
addition to corporate surplus, or for any corporate purposes that
the Board of Directors shall think conducive to the best interest
of the Company, subject only to such limitations as the by-laws
of the Company may impose from time to time.
Section 8. Interest of Directors in Contracts. A director
of this Company shall not in the absence of fraud be disqualified
by his office from dealing or contracting with this Company
either as a vendor, purchaser or otherwise, nor in the absence of
fraud shall any transaction or contract of this Company be void
or voidable or affected by reason of the fact that any director,
or any firm of which any director is a member, or any corporation
of which any director is an officer, director or shareholder, is
in any way interested in such transaction or contract, provided
that at the meeting of the Board of Directors or of a committee
thereof having authority in the premises, authorizing or
confirming said contract or transaction, the interest of such
director, firm or corporation is disclosed or made known and
there shall be present a quorum of the Board of Directors or of
the directors constituting such committee, and such contract or
transaction shall be approved by a majority of such quorum, which
majority shall consist of directors not so interested or
connected. Nor shall any director be liable to account to this
Company for any profit realized by him from or through any such
transaction or contract of this Company ratified or approved as
aforesaid, by reason of the fact that he or any firm of which he
is a member, or any corporation of which he is a shareholder,
director or officer, was interested in such transaction or
contract. Directors so interested may be counted when present at
meetings of the Board of Directors or of such committee for the
purpose of determining the existence of a quorum. Any contract,
transaction or act of this Company or of the Board of Directors
or of any committee thereof which shall be ratified by a majority
in interest of a quorum of the shareholders having voting power
at any annual meeting or any special meeting called for such
purpose, shall be as valid and as binding as though ratified by
every shareholder of this Company.
Section 9. Indemnification of Directors and Officers. The
Company may indemnify any director or officer, or former director
or officer, of the Company, or any person who may serve at its
request as a director or officer of another corporation in which
it owns shares or of which it is a creditor, against expenses
actually and reasonably incurred by him in connection with the
defense of any action, suit or proceeding, civil or criminal, in
which he is made a party by reason of being or having been such
director or officer, or against judgments, fines, penalties,
court costs and attorney's fees, or reasonable amounts paid by
him in settlement in connection with any such action, suit or
proceeding, if he has acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best
interests of the Company, or, in respect to any criminal action
or proceeding, if he had no reasonable cause to believe his
conduct was unlawful; provided that no such director or officer
shall be so indemnified in relation to matters as to which he
shall be adjudged in any such action, suit or proceeding to be
liable for negligence or misconduct in the performance of duty.
The termination of any action, suit or proceeding by
settlement, or upon a plea of nolo contendere, or its equivalent,
shall not, of itself, create a presumption that the director or
officer involved therein did not act in good faith and in a
manner which he reasonably believed to be in, or not opposed to,
the best interests of the Company, or, in respect to any criminal
action or proceeding, that he had reasonable cause to believe his
conduct was unlawful.
Any indemnification shall be made by the Company only as
authorized in a specific case upon the determination that
indemnification of the director or officer is proper in the
circumstances because he has met the applicable standard of
conduct set forth in this section. Such determination shall be
made by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit
or proceeding, or if such a quorum is not obtainable, or if a
quorum of disinterested directors so directs, by independent
legal counsel in a written opinion.
Any such indemnification of a director or officer shall not
be deemed exclusive of any other rights to which he may be
entitled as a matter of law or under any other provision of these
Amended Articles, or any resolution, or other authorization
heretofore or hereafter adopted, after notice, by a majority vote
of all the voting shares of the Company then issued and
outstanding.
Section 10. Additional Power of Directors. In addition to
the powers and authorities hereinabove or by statute expressly
conferred, the Board of Directors is hereby authorized to
exercise all such powers and do all such acts and things as may
be exercised or done by a corporation organized and existing
under the provisions of the Act.
Section 11. Direction of Purposes and Exercise of Powers by
Directors. The Board of Directors, subject to any specific
limitations or restrictions imposed by the Act or these Amended
Articles, shall direct the carrying out of the purposes and
exercise the powers of the Company, without previous
authorization or subsequent approval by the shareholders of the
Company.
Section 12. Compensation of Directors. The Board of
Directors is hereby specifically authorized, in and by the by-
laws of the Company, or by resolution duly adopted by such Board,
to make provision for reasonable compensation to its members for
their services as Directors, and to fix the basis and conditions
upon which such compensation shall be paid. Any Director of the
Company may also serve the Company in any other capacity and
receive compensation therefor in any form.
Section 13. Amendments of Amended Articles. Except as
otherwise expressly provided in Article 6, A, Section 4 hereof,
and subject to the provisions applicable to particular series of
Preferred Stock, the Company reserves the right from time to time
to increase or decrease its authorized shares, or any class or
series thereof, and to reclassify the same, and to amend, alter,
change or repeal any provision contained in these Amended
Articles, or in any amendment hereto, or to add any provision to
these Amended Articles or to any amendment hereto, in any manner
now or hereafter prescribed or permitted by the provisions of the
Act or any amendment thereto, or by the provisions of any other
applicable statute of the State of Indiana; and all rights
conferred upon shareholders in these Amended Articles or any
amendment hereto granted subject to this reservation.
2. Effect of Amended Articles of Incorporation
These Amended Articles effectuate certain amendments of (See
Subdivision B below), and shall supersede and take the place of,
the heretofore existing Amended Articles of Incorporation of the
Company approved and filed in accordance with the Act on April 23, 1976.
SUBDIVISION B
MANNER OF ADOPTION AND VOTE
1. Action of Directors
The Board of Directors of the Company, at a meeting thereof,
duly called, constituted and held on January 30, 1979, at which a
quorum of such Board of Directors was present, duly adopted
resolutions proposing to the shareholders of the Company entitled
to vote in respect thereof that Article 5 and Section 1of
Subdivision B of Article 6 of the Amended Articles of
Incorporation of the Company approved and filed on April 23,
1976, be amended to read as set forth in these Amended Articles,
and directed the submission of such amendments to vote of such
shareholders at the annual meeting of shareholders to be held on
April 18, 1979, to adopt or reject the same.
2. Action by Shareholders
The Shareholders of the company entitled to vote in respect
of the amendments described above under the caption "Action by
Directors," at the annual meeting of shareholders of the Company,
duly noticed, constituted and held on April 18, 1979, at which
the holders of more than a majority of the outstanding shares of
both the Common Stock and the Preferred Stock of the Company were
present in person or by proxy, adopted such amendments.
The holders of the Common Stock and of the Preferred Stock
were each entitled to vote separately as a class in respect of
such amendments.
The number of shares entitled to vote in respect of such
amendments, the number of shares voted in favor of the adoption
of such amendments, the number of shares voted against such
adoption, and the percentage of the total outstanding shares
voted in favor of the adoption of such amendments, and the
percentage of the total outstanding shares voted against such
adoption, are as follows:
Shares Shares Shares
Entitled Voted Voted Percent Percent
To Vote In Favor Against In Favor Against
Common Stock 13,061,048 10,212,105 329,053 78.19 2.52
Preferred Stock 983,976 759,991 16,872 77.24 1.71
Both Common Stock
and Preferred Stock 14,045,024 10,972,096 345,925 78.12 2.46
3. Compliance With Legal Requirements
The manner of adoption of the amendments effectuated by
these Amended Articles and the vote by which such amendments were
adopted, constitute full legal compliance with the provisions of
the Act, the Amended Articles of Incorporation of the Company in
effect at the time of such adoption, and the By-Laws of the
Company.
SUBDIVISION C
STATEMENT OF CHANGES MADE WITH RESPECT TO THE
SHARES HERETOFORE AUTHORIZED
The total number of shares of which the Company had
authority to issue immediately prior to adoption of the
amendments effectuated by these Amended Articles was as follows:
Number of
Class Authorized Shares
Preferred Stock
of the par value of $100 per share 2,000,000
Common Stock
without par value 15,000,000
----------
Total 17,000,000
==========
The additional number of shares authorized by the aforesaid
amendments is 5,000,000, consisting of 5,000,000 shares of Common
Stock without par value, so that the total number of authorized
shares of the Company following the effectiveness of such
amendments is as follows:
Number of
Class Authorized Shares
Preferred Stock
of the par value of $100 per share 2,000,000
Common Stock
without par value 20,000,000
----------
Total 22,000,000
==========
IN WITNESS WHEREOF, the undersigned officers execute these
Amended Articles of Incorporation of the Company and certify to
the truth of the facts herein stated, this 20th day of April,
1979.
/s/ MARCUS E. WOODS /s/ ZANE G. TODD
MARCUS E. WOODS, Secretary ZANE G. TODD, President
STATE OF INDIANA )
) SS:
COUNTY OF MARION )
I, the undersigned, a Notary Public duly commissioned to
take acknowledgements and administer oaths in the State of
Indiana, certify that Zane G. Todd, President, and Marcus E.
Woods, Secretary, of Indianapolis Power & Light Company, an
Indiana corporation, the officers executing the foregoing Amended
Articles of Incorporation, personally appeared before me,
acknowledged the execution thereof and swore to the truth of the
facts therein stated.
WITNESS my hand and Notarial Seal this 20th day of April,
1979.
/s/ KATHLEEN M. KLOTZBIER
KATHLEEN M. KLOTZBIER, Notary Public
My Commission Expires: My County of Residence is:
March 29, 1982 MARION
(S E A L)
This instrument prepared by Marcus E. Woods, Attorney at Law
25 Monument Circle, Indianapolis, Indiana 46204
APPROVED AND FILED
April 20, 1979
EDWIN J. SIMCOX,
Secretary of State of Indiana
ARTICLES OF AMENDMENT OF THE Provided by EVAN BAYH
ARTICLES OF INCORPORATION Secretary of State
State Form 38333 (R 3/ 1-88) Room 155 State House
"Approved by State Board of Indianapolis, Indiana 46204
Account, (Revised) 1988" (317) 232-6576
INSTRUCTIONS: Use 8 1/2 x 11 inch Indiana Code 23-1-38-1 et seg.
white paper for inserts. FILING FEE $30.00
Filing requirements -
Present original and
one copy to address in
upper right corner
of this form.
APPROVED AND FILED
/s/ Joseph H. Hogsett
STATE OF INDIANA
ARTICLES OF AMENDMENT OF THE AMENDED
ARTICLES OF INCORPORATION OF:
INDIANAPOLIS POWER & LIGHT COMPANY
The undersigned officers of
Indianapolis Power & Light Company
(hereinafter referred to as the "Corporation") existing pursuant
to the provisions of:
(indicate appropriate act)
x Indiana Business Corporation Law __ Indiana Professional Corporation
Act of 1983
as amended (hereinafter referred to as the "Act"), desiring to
give notice of corporate action effectuating amendment of certain
provisions of its Articles of Incorporation, certify the
following facts:
ARTICLE I Amendment(s)
SECTION 1 The date of incorporation of the corporation is:
October 27, 1926
SECTION 2 The name of the corporation following this amendment to
the Articles of Incorporation is:
Indianapolis Power & Light Company
SECTION 3
The exact text to Article(s) 5 and new subdivision D of Article 6
of the Amended Articles of Incorporation is now as follows:
Article 5. Number of Shares. The total number of shares which
the Company shall have the authority to issue is twenty-five
(25,000,000) shares, consisting of two million (2,000,000) shares
of the par value of one hundred dollars ($100) per share, three
million (3,000,000) shares with a par value established by the
Board of Directors pursuant to Article 6, Subdivision D, of these
Amended articles and twenty million (20,000,000) shares without
par value.
D. Variable Class Preferred Stock (added to Article 6)
Section 1. Designation of Class, Number and Par Value of
Shares. Three million (3,000,000) shares shall constitute a
single class designated as the "Variable Class Preferred Stock"
having the par value established by the Board of Directors in
accordance with Section 3 of this Subdivision D (herein referred
to as "Variable Class Preferred").
Section 2. Variable Class Preferred Issuable in Series. The
Variable Class Preferred may be issued from time to time in one
or more series.
Section 3. Authority of the Board of Directors. The Board of
Directors is vested with authority to determine and state the par
value, if any, and the designations and relative preferences,
limitations, voting rights, if any, and other rights of each such
series of the Variable Class Preferred, subject to the
limitations set forth in Article 6, Subdivision A, Section 4(e)
of these Amended Articles. Before the issuance of any shares of
such series, an amendment or amendments to these Amended Articles
determining the terms of each such series shall be adopted and
filed in accordance with laws of the State of Indiana. All
shares of Variable Class Preferred of the same series shall be
identical with each other in all respects.
ARTICLE II Manner of Adoption and Vote
SECTION 1 Action of Directors:
The Board ofDirectors of the Corporation duly adopted a
resolution proposing to amend the terms and provisions of
Article(s) 5 and 6 (as set forth in Article II, Section 3 hereof)
of the Amended Articles of Incorporation and directing a meeting
of the Shareholders, to be held on April 17, 1991, allowing such
Shareholders to vote on the proposed amendment.
The resolution was adopted by: (Select appropriate paragraph)
a) Vote of the Board of Directors at a meeting held on January
29, 1991, at which a quorum of such Board was present.
b) Written consent executed on _____________________, 19____,
and signed by all members of the Board of Directors.
SECTION 2 Action by Shareholders:
The Shareholders of the Corporation entitled to vote in
respect of the Articles of Amendment adopted the proposed
amendment. The amendment was adopted by: (Select appropriate
paragraph) majority vote of the holders of the outstanding shares
of the Corporation's Common Stock and Cumulative Preferred Stock,
each voting separately as a class:
a) Vote of such Shareholders during the meeting called by the
Board of Directors. The result of such vote is as follows:
Common* TOTAL Preferred**
SHAREHOLDERS ENTITLED TO VOTE: 17,206,630 518,895
SHAREHOLDERS VOTEDIN FAVOR: 17,206,630 334,095
SHAREHOLDERS VOTED AGAINST: -0- 14,861
b) Written consent executed on _________________________,
19_____, and signed by all such Shareholders.
SECTION 3 Compliance with Legal Requirements.
The manner of the adoption of the Articles of Amendment and
the vote by which they were adopted constitute full legal
compliance with the provisions of the Act, the Articles of
Incorporation, and the By-Laws of the Corporation.
I hereby verify subject to the penalties of perjury that the
statements contained are true this 17th day of April, 1991.
Current Officer's Signature Officer's Name Printed
/s/ Marcus E. Woods Marcus E. Woods
Officer's Title
Vice President, Secretary and General Counsel
* All the Common Stock of the Corporation are owned by its
parent, IPALCO Enterprises, Inc.
** Of the 518,985 shares of Cumulative Preferred Stock
outstanding: 406,353 shares were present in person and by proxy,
constituting a quorum. Each share is entitled to two votes. In
addition to shares voted in favor of and against the proposed
amendment, 19,705 shares abstained and 37,692 did not vote on
that issue.
ARTICLES OF AMENDMENT OF THE SUE ANNE GILROY
ARTICLES OF INCORPORATION SECRETARY OF STATE
State Form 38333 (R7 / 4-95) CORPORATIONS DIVISION
Approved by State Board of Accounts 1995 302 W. Washington St.,
Rm. E018
INSTRUCTIONS: Use 8 1/2" x 11" white paper Indianapolis, IN 46204
for inserts. Telephone: (317) 232-6576
Present original and one copy
to address in upper right
hand corner of this form. Indiana Code 23-1-38-1 et seq.
PLEASE TYPE or PRINT Filing Fee: $30.00
APPROVED AND FILED
INDIANA SECRETARY OF STATE
ARTICLES OF AMENDMENT OF THE
ARTICLES OF INCORPORATION OF:
Name of Corporation
Indianapolis Power & Light Company
The undersigned officers of:
Indianapolis Power & Light Company
(hereinafter referred to as the "Corporation") existing pursuant
to the provisions of: (indicate appropriate act)
x Indiana Business Corporation Law __ Indiana Professional
Corporation Act of 1983
as amended (hereinafter referred to as the "Act"), desiring to
give notice of corporate action effectuating amendment of certain
provisions of its Amended Articles of Incorporation, certify the
following facts:
ARTICLE I Amendment(s)
SECTION 1 The date of incorporation of the Corporation is:
October 27, 1926
SECTION 2 The name of the Corporation following this amendment to
the Articles of Incorporation is:
Indianapolis Power & Light Company
SECTION 3
The exact text to Article 6A, Section 4 of the Amended Articles
of Incorporation is now as follows:
See Attached.
SECTION 4 Date of each amendment's adoption:
Board of Directors - July 29, 1997 Shareholders - October 9,
1997
(Continued on the reverse side)
ARTICLE II Manner of Adoption and Vote
Strike inapplicable section:
_____ SECTION 1 This amendment was adopted by the Board of
Directors or incorporators and shareholder action was not
required.
X SECTION 2 The shareholders of the Corporation entitled to
vote in respect to the amendment adopted the proposed amendment.
The amendment was adopted by:
A. Vote of such shareholders during a meeting called by
the Board of Directors. The result of such vote is as follows:
_____ Shares entitled to vote 17,206,630* 518,985**
_____ Number of shares represented
at the meeting 17,206,630 418,417
_____ Shares voted in favor 17,206,630 415,337
_____ Shares voted against. -0- 2,716
_____ Shares abstained -0- 364
B. Written consent executed on ___________________, 19___ and signed
by all such shareholders.
SECTION III Compliance with Legal Requirements
The manner of the adoption of the Articles of Amendment and
the vote by which they were adopted constitute full legal
compliance with the provisions of the Act, the Amended Articles
of Incorporation, and the By-Laws of the Corporation.
I hereby verify subject to the penalties of perjury that the
statements contained herein are true, this 9th day of October,
1997.
Signature of current officer Printed name of officer
/s/ Bryan G. Tabler Bryan G. Tabler
Officer's Title
Senior Vice President, Secretary and General Counsel
* Common Stock. All the common stock of the corporation is
owned by its parent, IPALCO Enterprises, Inc.
** Preferred Stock. Each shares of preferred stock is
entitled to two votes.
Indianapolis Power &
Light Company
Articles of Amendment
ARTICLE 6A
Section 4. General Provisions Applicable to Preferred
Stock. The following provisions shall apply to all the Preferred
Stock of the Company irrespective of series:
(a) Dividends. The Preferred Stock of each series shall be
entitled, in preference to the Common Stock, to receive dividends
at, but not exceeding, the dividend rate fixed for such series
and expressed in the certificates therefor, payable quarter-
yearly, when and as declared by the Board of Directors, out of
the surplus earnings or net profits or surplus paid in in cash of
the Company, on the first days of January, April, July and
October in each year. Such dividends shall be cumulative from
and after the date of issue in the case of the first 100,000
shares of Preferred Stock issued by the Company, and, in the case
of all additional shares of Preferred Stock issued, such
dividends shall be cumulative from the quarterly dividend payment
date on or next preceding the date on which they shall have been
issued, except that, if so determined by the Board of Directors,
another date may be fixed therefor.
If, at the time of the issue of additional shares of
Preferred Stock, dividends upon the shares of Preferred Stock at
the time outstanding shall not then have been paid or declared
and set apart for payment at the fixed dividend rate from the
date or dates after which dividends on said shares became
cumulative to the beginning of the then current dividend period,
no dividend shall be declared or paid on the additional shares of
Preferred Stock issued at such date until all such dividends in
arrears shall have been paid or declared and set apart for
payment as aforesaid and none of the provisions hereof shall be
deemed to prevent the declaration and payment of such dividends
in arrears without a declaration or payment of dividends on the
additional shares so issued.
If at any time the payment of dividends to any particular
holder of record of outstanding shares of Preferred Stock would
require the payment of a sum which would include a fraction of a
cent, then the Company may pay to such shareholder of record the
next higher integral amount in cents.
When dividends upon all shares of Preferred Stock then
outstanding at the fixed dividend rate from the date or dates
after which dividends on said shares became cumulative to the end
of the current dividend period shall have been paid or declared
and set apart for payment, the Board of Directors in its
discretion may declare dividends on the Common Stock of the
Company out of the surplus earnings or net profits or surplus
paid in in cash of the Company, and no holders of any shares of
Preferred Stock, as such, shall be entitled to share therein.
Unless dividends on all outstanding shares of Preferred
Stock, at the fixed dividend rate from the date or dates after
which dividends on said shares became cumulative to the end of
the current dividend period shall have been paid or declared and
set apart for payment, no dividends shall be paid or declared and
no other distribution shall be made on the Common Stock, and no
Common Stock shall be purchased or otherwise acquired for value
by the Company.
(b) Liquidation. Upon any voluntary liquidation,
dissolution or winding up of the Company, the Preferred Stock of
each series shall be entitled, before any distribution shall be
made to the holders of the Common Stock, to be paid the full
preferential amount fixed by the Board of Directors for such
series as herein authorized, and, in the event of involuntary
liquidation, dissolution or winding up of the Company, the
Preferred Stock of each series shall be entitled to be paid the
sum of $100 per share plus an amount which shall be equal to the
dividends accrued and unpaid thereon; but the holders of the
Preferred Stock shall be entitled to no further participation in
such distribution; and the holders of the Common Stock shall be
entitled, to the exclusion of the holders of the Preferred Stock,
to share ratably in all assets of the Company remaining after
payment to the holders of the Preferred Stock, of the full
preferential amounts aforesaid. If upon such liquidation,
dissolution or winding up of the Company, the assets
distributable among the holders of the Preferred Stock shall be
insufficient to permit the payment in full to such holders of the
preferential amounts aforesaid, then the entire assets of the
Company to be distributed shall be distributed among the holders
of the Preferred Stock, then outstanding, ratably in proportion
to the full preferential amounts to which they are respectively
entitled.
As used herein, the expression "dividends accrued or in
arrears" means, in respect of each share of the Preferred Stock,
an amount equal to simple interest upon the sum of $100 per share
at the annual rate equal to the dividend rate fixed for such
series from the date from which dividends thereon commenced to
accrue to the date as of which the computation is to be made,
less the aggregate amount (without interest thereon) of all
dividends theretofore paid or declared and set apart for payment
in respect thereof.
Nothing in this subsection (b) shall be deemed to prevent
the redemption of Preferred Stock in any manner permitted by the
next succeeding subsection (c).
A consolidation or merger of the Company with any other
corporation or corporations shall not be regarded as a
liquidation, dissolution or winding up of the Company within the
meaning of this subsection (b), providing that such consolidation
or merger does not materially impair the rights and preferences
of the Preferred Stock.
(c) Redemption. The Company, by action of its Board of
Directors, may redeem the whole or any part of the Preferred
Stock or of any series thereof, at any time or from time to time,
at a price for each series thereof equal to the par value
thereof, plus a premium of such additional amount per share, if
any, as shall have been fixed as payable in case of redemption
in respect of such series and expressed in the certificates
therefor, together with the amount of all dividends accrued or in
arrears thereon to the date fixed for redemption. At least
thirty (30) days and not more than ninety (90) days prior to the
date fixed for such redemption, notice of such redemption shall
be mailed to the holders of record of the shares of the Preferred
Stock so to be redeemed, at their respective addresses as the
same shall appear on the books of the Company.
In case of the redemption of a part only of the Preferred
Stock at the time outstanding, the Company shall select by lot,
or in such other manner as the Board of Directors may determine,
the shares so to be redeemed. The Board of Directors shall have
full power and authority, subject to the limitations and
provisions herein contained, to prescribe the manner in which,
and the terms and conditions upon which, the shares of the
Preferred Stock shall be redeemed from time to time.
If such notice of redemption shall have been duly given as
hereinbefore provided and if on or before the redemption date
specified in such notice all funds necessary for such redemption
shall have been set aside by the Company, separate and apart from
its other funds, in trust for the account of the holders of the
shares to be redeemed, so as to be and continue to be available
therefor, then, notwithstanding that any certificate for such
shares so called for redemption shall not have been surrendered
for cancellation, from and after the date fixed for redemption,
the shares represented thereby shall no longer be deemed
outstanding, the right to receive dividends thereon shall cease
to accrue and all rights with respect to such shares so called
for redemption shall forthwith on such redemption date cease and
terminate, except only the right of the holders thereof to
receive, out of the funds so set aside in trust, the amount
payable upon redemption thereof, without interest; provided,
however, that the Company may, after giving notice of any such
redemption as hereinbefore provided or after giving to the bank
or trust company hereinafter referred to irrevocable
authorization to give such notice and, at any time prior to the
redemption date specified in such notice, deposit in trust, for
the account of the holders of the shares to be redeemed, funds
necessary for such redemption with a bank or trust company in
good standing, organized under the laws of the United States of
America or of the State of New York, doing business in the
Borough of Manhattan, the City of New York, or of the State of
Illinois, doing business in the City of Chicago, having capital,
surplus and undivided profits aggregating at least $2,000,000,
designated in such notice of redemption, and upon such deposit in
trust, all shares with respect to which such deposit shall have
been made shall no longer be deemed to be outstanding, and all
rights with respect to such shares shall forthwith cease and
terminate, except only the right of the holders thereof to
receive, out of the funds so deposited in trust, from and after
the date of such deposit, the amount payable upon the redemption
thereof, without interest.
Nothing herein contained shall limit any legal right of the
Company to purchase or otherwise acquire any shares of the
Preferred Stock.
(d) Limitation Upon Issue of Parity Preferred Stock or
Merger or Consolidation. So long as any shares of the Preferred
Stock are outstanding, the Company shall not, without the consent
(given by vote at a meeting called for that purpose) of the
holders of at least a majority of the total number of shares of
the Preferred Stock then outstanding;
(i) create or authorize any class of
stock ranking on a parity with the Preferred
Stock, or create or authorize any obligation
or security convertible into shares of stock
of any such class; or
(ii) merge or consolidate with or into
any other corporation or corporations.
(e) Limitation Upon Issue of Prior Preferred Stock or
Amendment of Preferred Stock. So long as any shares of the
Preferred Stock are outstanding, the Company shall not, without
the consent (given by vote at a meeting called for that purpose)
of the holders of at least two-thirds of the total number of
shares of the Preferred Stock then outstanding:
(i) create or authorize any class of
stock ranking prior to the Preferred Stock,
or create or authorize any obligation or
security convertible into shares of stock of
any such class; or
(ii) amend, alter, change or repeal any of the express terms
of the Preferred Stock then outstanding in a manner prejudicial
to the holder thereof.
(f) Net Income Limitation Upon Issue of Preferred Stock.
So long as any shares of the Preferred Stock are outstanding, the
Company shall not, without the consent (given by the vote at a
meeting called for that purpose) of the holders of at least a
majority of the total number of shares of Preferred Stock then
outstanding, issue any shares of Preferred Stock in addition to
the first 100,000 shares of the Preferred Stock issued by the
Company, unless the net income of the Company applicable to the
payment of interest on the funded debt of the Company and the
dividends on the Preferred Stock for any twelve consecutive
calendar months within the fifteen calendar months immediately
preceding the calendar month within which such additional shares
of Preferred Stock shall be issued, shall have been at least one
and one-half times the aggregate of the interest on the funded
debt of the Company for a twelve months' period and the dividend
requirements for a twelve months' period upon the entire amount
of the Preferred Stock then outstanding and such additional
shares of the Preferred Stock proposed to be issued.
ARTICLES OF AMENDMENT OF THE SUE ANNE GILROY
ARTICLES OF INCORPORATION SECRETARY OF STATE
State Form 38333 (R7 / 4-95) CORPORATIONS DIVISION
Approved by State Board of Accounts 1995 302 W. Washington St., Rm. E018
INSTRUCTIONS: Use 8 1/2" x 11" white paper
Indianapolis, IN 46204
for inserts.
Present original and one Telephone: (317) 232-6576
copy to address in upper Indiana Code 23-1-38-1 et seq.
right hand corner of
this form. Filing Fee: $30.00
Please TYPE or PRINT
APPROVED AND FILED
INDIANA SECRETARY OF STATE
ARTICLES OF AMENDMENT OF THE
ARTICLES OF INCORPORATION OF:
Name of Corporation
Indianapolis Power & Light Company
The undersigned officers of:
Indianapolis Power & Light Company
(hereinafter referred to as the "Corporation") existing pursuant
to the provisions of: (indicate appropriate act)
x Indiana Business Corporation Law __ Indiana Professional
Corporation Act of 1983
as amended (hereinafter referred to as the "Act"), desiring to
give notice of corporate action effectuating amendment of certain
provisions of its Amended Articles of Incorporation, certify the
following facts:
ARTICLE I Amendment(s)
SECTION 1 The date of incorporation of the Corporation is:
October 27, 1926
SECTION 2 The name of the Corporation following this amendment to
the Articles of Incorporation is:
Indianapolis Power & Light Company
SECTION 3
The exact text to Article 6A, Section 5 of the Amended Articles
of Incorporation is now as follows:
See attached Exhibit "A".
SECTION 4 Date of each amendment's adoption:
November 25, 1997
(Continued on the reverse side)
ARTICLE II Manner of Adoption and Vote
Strike inapplicable section:
X SECTION 1 This amendment was adopted by the Board of
Directors or incorporators and shareholder action was not
required.
____ SECTION 2 The shareholders of the Corporation entitled to
vote in respect to the amendment adopted the proposed amendment.
The amendment was adopted by:
A. Vote of such shareholders during a meeting called by
the Board of Directors. The result of such vote is as follows:
_____ Shares entitled to vote
_____ Number of shares represented
at the meeting
_____ Shares voted in favor
_____ Shares voted against
_____ Shares abstained
B. Written consent executed on ___________________, 19___
and signed by all such shareholders.
SECTION III Compliance with Legal Requirements
The manner of the adoption of the Articles of Amendment and
the vote by which they were adopted constitute full legal
compliance with the provisions of the Act, the Amended Articles
of Incorporation, and the By-Laws of the Corporation.
I hereby verify subject to the penalties of perjury that the
statements contained herein are true, this 8th day of January,
1998.
Signature of current officer Printed name of officer
/s/ Bryan G. Tabler Bryan G. Tabler
Officer's Title
Senior Vice President, Secretary and General Counsel
EXHIBIT "A"
ARTICLES OF AMENDMENT
INDIANAPOLIS POWER & LIGHT COMPANY
Section 5. (a) The Company hereby classifies 500,000 shares
of its Cumulative Preferred Stock as a series of such Cumulative
Preferred Stock, which shall be designated as `5.65% Cumulative
Preferred Stock' consisting of 500,000 shares of the par value of
$100.00 per share.
(b) The relative rights, preferences, limitations and
restrictions of the shares of such 5.65% Cumulative Preferred
Stock, in the respect in which the shares of such series may vary
from shares of other series of the Cumulative Preferred Stock,
shall be, and hereby are, fixed and determined to be as follows:
(i) The annual dividend rate for such series shall be
5.65%, and the date from which dividends thereon shall accrue
shall be the date of original issuance thereof. If, prior to 18
months after the date of the original issuance of the 5.65%
Cumulative Preferred Stock, one or more amendments to the
Internal Revenue Code of 1986, as amended (the "Code"), are
enacted that reduce the percentage of the dividends-received
deduction (currently 70%) as specified in section 243(a)(1) of
the Code or any successor provision (the "Dividends-Received
Percentage"), certain adjustments may be made in respect of the
dividends payable by the Company, and Post Declaration Date
Dividends and Retroactive Dividends (as such terms are defined
below) may become payable, as described below.
The amount of each dividend payable (if declared) per share
of 5.65% Cumulative Preferred Stock for dividend payments made on
or after the effective date of such change in the Code will be
adjusted by multiplying the amount of the dividend payable
described above (before adjustment) by a factor, which will be
the number determined in accordance with the following formula
(the "DRD Formula"), and rounding the result to the nearest cent
(with one-half cent rounded up):
1- .35(1- .70)
1- .35(1- DRP)
For the purposes of the DRD Formula, "DRP" means the
Dividends-Received Percentage (expressed as a decimal) applicable
to the dividend in question; provided, however, that if the
Dividends-Received Percentage applicable to the dividend in
question shall be less than 50%, then the DRP shall equal .50.
No amendment to the Code, other than a change in the percentage
of the dividends-received deduction set forth in section
243(a)(1) of the Code or any successor provision thereto, will
give rise to an adjustment. Notwithstanding the foregoing
provisions, if, with respect to any such amendment, the Company
receives either an unqualified opinion of nationally recognized
independent tax counsel selected by the Company or a private
letter ruling or similar form of authorization from the Internal
Revenue Service ("IRS") to the effect that such amendment does
not apply to a dividend payable on the 5.65% Cumulative Preferred
Stock, then such amendment will not result in the adjustment
provided for pursuant to the DRD Formula with respect to such
dividend. The opinion referenced in the previous sentence shall
be based upon the legislation amending or establishing the DRP or
upon a published pronouncement of the IRS addressing such
legislation. The Company's calculation of the dividends payable,
as so adjusted and as certified accurate as to calculation and
reasonable as to method by the independent certified public
accountants then regularly engaged by the Company, shall be final
and not subject to review absent manifest error.
Notwithstanding the foregoing, if any such amendment to the
Code is enacted after the dividend payable on a dividend payment
date has been declared but before the dividend has been paid, the
amount of the dividend payable on such dividend payment date will
not be increased; instead, additional dividends (the "Post
Declaration Date Dividends") equal to the excess, if any, of (x)
the product of the dividend paid by the Company on such dividend
payment date and the DRD Formula (where the DRP used in the DRD
Formula would be equal to the greater of the Dividend-Received
Percentage applicable to the dividend in question and .50) over
(y) the dividend paid by the Company on such dividend payment
date, will be payable (if declared) to the holders of 5.65%
Cumulative Preferred Stock on the record date applicable to the
next succeeding dividend payment date or, if the 5.65% Cumulative
Preferred Stock is called for redemption prior to such record
date, to holders of 5.65% Cumulative Preferred Stock on the
applicable redemption date, as the case may be, in addition to
any other amounts payable on such date.
If any such amendment to the Code is enacted and the
reduction in the Dividends-Received Percentage retroactively
applies to a dividend payment date as to which the Company
previously paid dividends on the 5.65% Cumulative Preferred Stock
(each, an "Affected Dividend Payment Date"), the Company will pay
(if declared) additional dividends (the "Retroactive Dividends")
to holders of 5.65% Cumulative Preferred Stock on the record date
applicable to the next succeeding dividend payment date (or, if
such amendment is enacted after the dividend payable on such
dividend payment date has been declared, to holders of 5.65%
Cumulative Preferred Stock on the record date following the date
of enactment) or, if the 5.65% Cumulative Preferred Stock is
called for redemption prior to such record date, to holders of
5.65% Cumulative Preferred Stock on the applicable redemption
date, as the case may be, in an amount equal to the excess of (x)
the product of the dividend paid by the Company on each Affected
Dividend Payment Date and the DRD Formula (where the DRP used in
the DRD Formula would be equal to the greater of the Dividends-
Received Percentage and .50 applied to each Affected Dividend
Payment Date) over (y) the sum of the dividend paid by the
Company on each Affected Dividend Payment Date. The Company will
only make one payment of Retroactive Dividends for any such
amendment. Notwithstanding the foregoing provisions, if, with
respect to any such amendment, the Company receives either an
unqualified opinion of nationally recognized independent tax
counsel selected by the Company or a private letter ruling or
similar form of authorization from the IRS to the effect that
such amendment does not apply to a dividend payable on an
Affected Dividend Payment Date for the 5.65% Cumulative Preferred
Stock, then such amendment will not result in the payment of
Retroactive Dividends with respect to such Affected Dividend
Payment Date. The opinion referenced in the previous sentence
shall be based upon the legislation amending or establishing the
DRP or upon a published pronouncement of the IRS addressing such
legislation.
Notwithstanding the foregoing, no adjustment in the
dividends payable by the Company shall be made, and no Post
Declaration Date Dividends or Retroactive Dividends shall be
payable by the Company, in respect of the enactment of any
amendment to the Code 18 months or more after the date of
original issuance of the 5.65% Cumulative Preferred Stock that
reduces the Dividends-Received Percentage.
In the event that the amount of dividends payable per share
of the 5.65% Cumulative Preferred Stock is adjusted pursuant to
the DRD Formula and/or Post Declaration Date Dividends or
Retroactive Dividends are to be paid, the Company will give
notice of each such adjustment and, if applicable, any Post
Declaration Date Dividends and Retroactive Dividends to the
holders of 5.65% Cumulative Preferred Stock;
(ii) The 5.65% Cumulative Preferred Stock shall be
redeemable at a price of $100.00 per share on or after January 1,
2008, together with an amount equal to all dividends accumulated
and unpaid to the date fixed for redemption;
(iii) The amount payable to the holders of the 5.65%
Cumulative Preferred Stock upon the voluntary liquidation,
dissolution or winding up of the Company shall be the redemption
price per share in effect at the time of such voluntary
liquidation, dissolution or winding up, and upon the involuntary
liquidation, dissolution or winding up of the Company shall be
$100.00 per share, together with a sum, in each case, equal to
all dividends accumulated and unpaid to the date fixed for the
payment of such distributive amounts;
(iv) There shall be no sinking fund or preemptive rights
for the purchase or redemption of the shares of such series;
(v) There shall be no right of conversion of the shares of
such series into shares of Common Stock or other junior stock of
the Company;
(vi) The maximum number of shares of such series issuable
shall be 500,000.
Exhibit 10.7
THIRD AMENDMENT
to the
INTERCONNECTION AGREEMENT
,dated May 1, 1992,
among
INDIANAPOLIS POWER & LIGHT COMPANY
and
PSI ENERGY, INC.
and
CINERGY SERVICES, INC.
Dated June 30, 1995
INDIANAPOLIS POWER & LIGHT COMPANY
FEDERAL ENERGY REGULATORY COMMISSION
Rate Schedule FERC No. 23
CINERGY COMPANIES
FEDERAL ENERGY REGULATORY COMMISSION
Rate Schedule FERC No. 10
INDEX
SECTION ONE: Agreement As Amended
Interconnection Agreement Between
Indianapolis Power & Light Company, and
The Cincinnati Gas & Electric Company,
PSI Energy, Inc., and CINergy Services, Inc.,
dated June 30, 1995
SECTION TWO: Agreement As Signed
Interconnection Agreement Between
Indianapolis Power & Light Company, and
The Cincinnati Gas & Electric Company,
PSI Energy, Inc., and CINergy Services, Inc.,
dated June 30, 1995
THIRD AMENDMENT
TO THE
INTERCONNECTION AGREEMENT
AMONG
INDIANAPOLIS POWER & LIGHT COMPANY
and
PSI ENERGY, INC.
AND CINERGY SERVICES, INC.
0.01 THIS THIRD AMENDMENT, dated on the 30th day of June
1995, among INDIANAPOLIS POWER & LIGHT COMPANY (hereinafter
referred to as "IPL"), a corporation organized and existing
under the laws of the State of Indiana and PSI ENERGY, INC.
(hereinafter referred to as "PSI"), a corporation organized
and existing under the laws of the State of Indiana, and
CINERGY SERVICES, INC. (hereinafter referred to as "CINergy
Services"), a corporation organized and existing under the
laws of the State of Delaware. IPL, PSI and CINergy Services
are sometimes hereinafter referred to individually as "Party"
and collectively as "Parties" where appropriate.
W I T N E S S E T H:
0.02 WHEREAS, There is now in force and effect between
IPL and PSI an Interconnection Agreement, dated as of May 1,
1992, (said Interconnection Agreement being the Ninth
Supplement to the 1962 Interconnection Agreement between IPL
and PSI, herein called the "1992 Agreement"); and
0.03 WHEREAS, The Cincinnati Gas & Electric Company
("CG&E") and PSI merged on October 24, 1994, and formed
CINergy Corp. with CG&E and PSI now being called the "CINergy
Operating Companies"; and
0.04 WHEREAS, CG&E, PSI and CINergy Services are parties
to a Service Agreement, dated March 2, 1994, which has been
approved by the Securities and Exchange Commission and the
Indiana Utility Regulatory Commission (IURC), under which
CINergy Services will act as PSI*s agent in administering
PSI*s interconnection agreements and the three companies are
also parties to an Operating Agreement, dated March 2, 1994,
on file with and accepted by the FERC and approved by the
IURC under which CINergy Services will dispatch the
generating units of CG&E, PSI and CINergy Services; and
0.05 WHEREAS, the Parties desire to modify the 1992
Agreement, as hereinafter set forth; and
0.06 NOW, THEREFORE, in consideration of the premises
and mutual covenants and agreements of the Parties, as herein
set forth, the Parties hereby agree as follows:
ARTICLE 1
PROVISIONS FOR, AND CONTINUITY OF
INTERCONNECTED OPERATION
1.01. Interconnection Points. The respective
138,00 volt and 345,000 volt transmission systems of IPL and
PSI are presently interconnected at the following points:
(i) The 138kV Five Points Interconnection Point
(ii) The 345kV Whitestown Interconnection Point
(iii) The 345kV Gwynneville Interconnection Point
(iv) The 138kV Petersburg Interconnection Point
(v) The 345kV Petersburg Interconnection Point
(vi) The 138kV Centerton Interconnection Point
(vii) The 138kV Carmel Tap Point
1.02. Future Interconnection Points. The services
provided for by the 1992 Agreement may also be rendered
through such other points of interconnection as the Parties
may later agree upon by amending the 1992 Agreement.
1.03. Synchronous Operation. The Parties mutually
agree that, except as provided in Service Schedule D hereof,
their respective systems will be continuously operated in
parallel (except in cases of interruption of such parallel
operation due to mutually agreed upon maintenance or due to
causes beyond the control of either Party, or due to the
necessity of an interruption of parallel operation in order
that the native load directly served by either Party may
continue to receive adequate service from such Party). If
synchronous operation of the systems through a particular
line or lines become interrupted either manually or
automatically because of any of the above-stated reasons, the
Parties shall cooperate so as to remove the cause of such
interruption as soon as practicable and restore such line or
lines to normal operating condition.
1.03.1. Inadvertent Flow. It is recognized that
in interconnected system operation, power and reactive
flow will exist on an interconnection due to scheduled
power flow from either Party to third parties or between
third parties. This inadvertent power flow depends
mainly on the design of the internal systems of the
Parties and the interconnected system, and the schedules
of power flows on the interconnections.
1.03.2. Interruption of Operation. If, in the
sole judgment of either Party, the power or reactive
flow over the interconnection facilities of either Party
is excessive to the extent that it jeopardizes the
reliability of either Party*s service to its customers,
the Parties shall attempt to agree upon adequate
corrective measures to eliminate or control such
excessive power or reactive flow; provided, however,
that in the event such a situation exists, the Party so
burdened shall have the right, with notice when possible
to the other Party, to open and leave open one or all of
the interconnections between the respective systems of
the Parties until corrective action has been taken. The
Parties further agree to study and negotiate the
installation, ownership, and cost of any additional
equipment necessary to effect a long-term solution to
any such excessive loading as herein described in the
event either Party determines that this interconnection
contributes to the excessive loading and requests such
negotiation.
1.04. Maintenance of Equipment. Each of the
Parties shall keep, or shall cause to be kept, the
transmission lines together with all associated equipment and
appurtenances that are located on their respective sides of
the Interconnection Points specified in Section 1.01 hereof,
or agreed upon pursuant to Section 1.02 hereof, in a
suitable condition of repair at all times, each at its own
expense, in order that said transmission lines will operate
in a reliable and satisfactory manner and in order that
reduction in the effective capacity of said transmission
lines will be avoided to the extent practicable.
ARTICLE 2
SERVICES TO BE RENDERED
2.01. Interconnection Services Schedules. It is
the purpose of the Parties to seek and realize, on an
equitable basis, all benefits which may be practicably
effected through coordination in the operation and
development of their respective systems. It is understood by
the Parties that such benefits may be realized by each of
them by carrying out under stated terms and conditions
various interconnection services and transactions that may
from time to time include among others:
(i) The furnishing of emergency service,
(ii) The interchange, sale, and purchase of energy to
effect operating economies,
(iii) The sale and purchase of short term electric
power and energy available on the system of one
Party and needed on the system of the other, and
(iv) The transmission of power and energy on the basis
of simultaneous transfers.
In furtherance of such purpose, the Parties shall create, and
continue the functioning of, an Operating Committee, as
provided in Article 7 hereof.
2.02. Specific Terms and Conditions. Since the
specific services to be rendered in furtherance of such
purpose will vary during the term of the 1992 Agreement, and
the terms and conditions applicable to such services may
require modification from time to time, it is intended that
such specific services and the terms and conditions
applicable thereto will be set forth in Service Schedules
mutually agreed upon between the parties. Such Service
Schedules, unless and until changed, terminated, or
supplemented, shall be those specified in Section 2.03
hereof. If a Service Schedule under the 1992 Agreement is
changed or supplemented, such Service Schedule shall be fully
restated in order to reflect such change or supplement.
2.03. Service Schedules. The respective Service
Schedules designated
Service Schedule A - Emergency Service
Service Schedule B - Interchange Energy
Service Schedule C - Short Term Power and Energy
Service Schedule D - Carmel Southeast Tap Power & Energy
Transfer
have been agreed upon between the Parties, are identified as
Exhibits I, II, III, and IV, respectively, to the 1992
Agreement and are attached hereto and made a part hereof the
same as if incorporated herein. It is contemplated by the
Parties that all additional mutually agreed upon Service
Schedules will be made a part of the 1992 Agreement upon
presentation and acceptance thereof.
2.04. Out-Of-Pocket Costs. The term "Out-of-
Pocket Cost" of energy from generating units on the system of
a Party shall consist of any costs that are directly incurred
by IPL or PSI by reason of its generation of such energy and
which otherwise would not have been incurred by such system
including, but not limited to, fuel, labor, operation,
maintenance, start-up, fuel handling, taxes, regulatory
commission charges, and emission allowances.
"Out-of-Pocket Cost" of energy purchased from a third party
by the supplying Party shall consist of the total amount paid
therefore by the supplying Party which otherwise would not
have been paid by such Party, plus any cost which otherwise
would not have been incurred, including, but not limited to,
regulatory commission charges, emission allowances,
transmission losses and taxes related to such transaction.
Tax expenses will be the expenses that are incurred as taxes
either in connection with the sale or production of such
energy.
2.05. Emission Allowances. The federal Clean Air Act,
as amended, 42 U.S.C. Section 7401 et seq. (hereinafter
referred to as "Clean Air Act"), establishes certain annual
maximum sulfur dioxide ("SO2") levels, stated in terms of
required emission allowances, for flue gases emitted by
electric generating units, including units operated by IPL,
PSI and other electric utilities who may supply electric
energy for transactions under this 1992 Agreement. The
generator of the electric energy supplied and delivered under
this 1992 Agreement is required by the Clean Air Act to have
adequate "allowances" (as defined by Section 402(3) of the
Clean Air Act in conjunction with Section 403(f) of the Clean
Air Act) in order to generate such electric energy. To the
extent that either IPL or PSI are required by the Clean Air
Act to have additional allowances by reason of its generation
of electric energy to be supplied by it under this 1992
Agreement, which allowances would otherwise not have been
required by such supplying Party, then, unless the supplying
Party otherwise agrees in advance in writing, at the
discretion of the supplying Party, the Party receiving such
energy shall be responsible for the cost or the actual
furnishing (without cost to the supplying Party) of adequate
allowances to the supplying Party in order for such Party to
supply such energy under this Agreement. The Parties shall
establish, by mutual agreement, appropriate procedures in
order to carry out the provisions of this Section 2.05,
including a statement of costs before any transactions under
the Service Schedules attached hereto are started. Also,
prior to implementation of every transaction under the
Service Schedules attached hereto, the purchasing Party must
declare whether they will pay in cash or return SO2
Allowances in-kind for any consumption of SO2 Allowances
directly attributed to such transaction, if any.
It shall be the responsibility of the supplying Party to
provide the receiving Party, before the transaction begins,
with a statement of the estimated emission allowance charges
associated with the transaction which the supplying Party is
seeking to add to the rates to be charged under the
applicable Service Schedule. Failure of the supplying Party
to provide a statement of such charges before the transaction
begins shall constitute a waiver of the recovery of any such
costs. In establishing such procedures, the Parties shall
recognize that the determination of the additional allowances
required in order to generate the electric energy to be
supplied hereunder is subject to variables contingent upon
the loading and operating conditions on the system where the
actual generation occurs. The procedures so established by
the Parties shall be in accord with sound engineering
principles of power plant and system operation, and shall
require the furnishing of such additional allowances at such
times and in such amounts as will be equitable to the
supplying Party.
When IPL is the supplier of energy and emission allowances,
the recovery of the applicable costs for the actual
furnishing of adequate allowances in order for IPL to
generate and supply such energy will be implemented in the
following manner:
(1) The Buyer shall compensate IPL for the consumption
of Sulfur Dioxide Emissions Allowances ("SO2 Allowances")
directly attributed to electric energy sales by IPL to Buyer
under the Service Schedules. Such compensation shall, at
Buyer*s option, be made by either supplying IPL with the
number of SO2 Allowances directly attributed to such energy
sales, or by reimbursing IPL for the incremental cost of such
number of SO2 Allowances, rounded to the nearest whole SO2
Allowance.
(1) If Buyer opts to reimburse IPL in cash for SO2
Allowances associated with Buyer*s energy purchases for
the month, the cash amount due at billing will be
determined by multiplying the number of SO2 Allowances
attributed to the sale by the incremental cost of the
SO2 Allowances, as determined in Subsection 2(b) of this
Section 2.05, at the time of the sale.
If Buyer opts to reimburse IPL in SO2 Allowances, Buyer
will record or transfer to IPL*s account, the number of
SO2 Allowances calculated below, at the time cash
settlement for the energy is due. In all cases, Buyer
will transfer to IPL*s account the number of SO2
Allowances due IPL for calendar year no later than
January 15 of the following year. "Transfer to IPL*s
account" shall mean, for purposes of the Amendment, the
transfer by the USEPA of the requisite number of SO2
Allowances to IPL*s Allowance Tracking System account
and the receipt by IPL of the Allowance Transfer
Confirmation.
(2) Determination of SO2 Emission Allowances Due IPL
(a) Number of SO2 Allowances
The number of SO2 Allowances directly attributed to
an energy sale made by IPL shall be determined for
each hour, by determining the contribution from
each of the unit(s) from which the energy sale is
being made for that hour. For each unit, the
emission rate in pounds of SO2 per million Btu will
be determined each month, from fuel sulfur content,
control equipment performance, and continuous
emissions monitoring data. The emission rate and
the unit heat rate will be used to determine the
SO2 Allowances used per megawatt-hour ("MWH"). The
energy from each unit attributable to the sale, and
the SO2 Allowances per MWH for each unit, will be
used to determine the number of SO2 Allowances
attributable to the sale.
(b) Cost of SO2 Allowances
The incremental SO2 Allowance cost used to
determine economic dispatch of IPL*s generating
units in any month, will also be the basis used to
determine compensation for IPL*s energy sales. The
incremental SO2 Allowances cost, in dollars per ton
of SO2, shall be determined each month and will be
based on the Cantor Fitzgerald offer price for SO2
Allowances, or if such is not available, then
another nationally recognized SO2 Allowance trading
market price or market price index, at the
beginning of the month. The SO2 Allowance value
may be changed at any time during the month to
reflect the more current incremental cost, or
market price, for SO2 Allowances. Buyer will be
notified of the new SO2 Allowance value prior to
dispatch of IPL energy to Buyer.
When PSI is the supplier of energy and emission
allowances, the recovery of the applicable costs for the
actual furnishing of adequate allowances in order for
PSI to generate and supply such energy will be
implemented in the following manner:
(1) The current Environmental Protection Agency ("EPA")
auction price to value emission allowances will be used
for energy sales transactions. The dispatch criteria
may be revised from time to time if the emission
allowance purchases on the average are determined to be
significantly different than the EPA auction price.
(2) For each hour in which there is a transaction for energy
services using an Out-of-Pocket Cost rate under this
1992 Agreement, PSI will:
(a) identify the generation sources used to provide the
transaction*s energy by identifying the energy that
would not have been used had the transaction not
been in effect that hour by using the same after-
the-fact incrementing costing model that is used to
calculate the incremental cost of fuel under this
1992 Agreement;
(b) determine, using the following formula, the
quantity of emission allowances related to the
energy transaction: (i) by calculating an
incremental heat rate for the appropriate
generating unit and the corresponding incremental
SO2 emission levels, as determined by the computer
based tools, for the identified units dispatched to
serve the transaction; (ii) applying the following
formula for each such unit; (iii) adding together
the total number of tons of SO2 produced per
million BTU (i.e., British Thermal Unit) of fuel
burned by each such unit for the transaction; and
(iv) letting one (1) emission allowance equal one
(1) ton of SO2 so produced.
# OF UNITS
E [MBTU SALE - MBTU NO SALE] * [SO2] * [100%-SE]
100%
MBTU SALE = Million BTU consumed on unit n with sale.
MBTU NO SALE = Million BTU consumed on unit n without sale.
SO2 = Tons of SO2 produced per million BTU of fuel burned.
SE = Scrubber Efficiency in %.
PSI will perform periodic tests to maintain the
accuracy and validity of such emission rate
information. Because some generating sources may
not be subject to the Clean Air Act during Phase I
or Phase II thereunder, there will be no emission
allowance charges included for the utilization of
such an energy source while it is not subject to
such requirements. One (1) emission allowance
shall be assigned to each ton of SO2 emitted to
serve the transaction. Fractions of emission
allowance tons will be rounded up to the next whole
number when the fraction is equal to or greater
than .5 and rounded down when the fraction is less
than .5.
(3) The purchasing Party of energy shall have the
option of purchasing or providing emission
allowances for each transaction. The purchasing
Party shall notify PSI of its election to purchase
or provide emission allowances prior to the start
of the transaction. The running quantity of
emission allowances charged or furnished will be
shown on the monthly invoices to the purchasing
Party.
(4) When the purchasing Party of energy elects to
purchase the emission allowances from PSI, then the
quantity of emission allowances used will be
included as part of the charges on the monthly
invoices to the purchasing Party.
(5) By January 15th of the year following the calendar
year in which the transaction occurred, the
purchasing Party of energy shall transfer the
appropriate emission allowances to PSI for the
emission allowances used when the allowances are
provided in kind.
(6) PSI has adopted the same incremental cost
calculation to value emission allowances for
dispatch criteria as for billing energy
transactions.
ARTICLE 3
SERVICE CONDITIONS
3.01. Control of System Disturbance. Each Party
shall maintain and operate its system so as to minimize, in
accordance with sound operating practice, the likelihood of
disturbance originating in either Party*s system which might
cause impairment to the service of the system of the other
Party or of any system interconnected with the system of the
other Party.
3.02. Control of Kilovar Exchange. It is the intent
that neither Party shall be obligated to deliver kilovars for
the benefit of the other Party; also that neither Party shall
be obligated to receive kilovars when to do so may introduce
objectionable operating conditions on its system. The
Operating Committee shall be responsible for the
establishment of operating procedures and schedules in
respect of carrying kilovar loads by one Party*s system for
the other Party*s system in order to secure adequate service
and economical use of facilities of both Parties* systems and
in respect of proper charges, if any, for the use of
facilities carrying kilovar loads. In discharging such
duties, the Operating Committee shall recognize that in the
transmission and delivery of power and energy hereunder the
carrying of kilovar loads by either Party, in harmony with
sound engineering principles of transmission operation with
their systems interconnected, is subject to numerous
variables contingent upon loading and operating conditions
existing simultaneously on the systems of both Parties. The
operating procedures and schedules so established by the
Operating Committee shall be in accord with such principles
and shall require each Party to carry kilovar loads at such
times and in such amounts as will be equitable to both
Parties.
3.03. Control of Unscheduled Power Deliveries. The
Parties shall exercise due diligence and foresight in
carrying out all matters related to the providing and
operating of their respective electric power resources so as
to minimize to the extent practicable deviations between
actual and scheduled deliveries of electric power and energy
between their systems. The Parties shall provide and install
on their respective systems such communication and
telemetering facilities as are essential to so minimize such
deviations and, in developing and executing operating
procedures that will enable the Parties to avoid to the
extent practicable deviation from scheduled deliveries, shall
fully cooperate with each other and with third parties whose
systems are either directly or indirectly interconnected with
the systems of the Parties and who of necessity, together
with the Parties, must unify their efforts cooperatively to
achieve effective and efficient interconnected operation.
The Parties recognize, however, that, despite their best
efforts to prevent the same, unscheduled deliveries of
electric energy from one Party to the other may occur. In
such event, electric energy delivered hereunder shall be
settled for by the return of equivalent energy. Equivalent
energy shall be returned at times when the load conditions of
the Party receiving it are equivalent to the load conditions
of such Party at the time the energy for which it is returned
was delivered or, if such Party elects to have equivalent
energy returned under different conditions, it shall be
returned in such amounts, to be agreed upon by the Operating
Committee, as will compensate for the difference in
conditions.
ARTICLE 4
DELIVERY POINTS, MEETING POINTS,
AND METERING
4.01. Delivery Points. All electric energy
delivered under the 1992 Agreement shall be of the character
commonly known as three-phase sixty Hertz energy, and shall
be delivered at the Interconnection Points specified under
Section 1.01 hereof, at a nominal voltage of 138,000 volts at
the Five Points and Centerton Interconnection Points, at the
138KV Petersburg Interconnection Point, and at the Carmel Tap
Point; and at a nominal voltage of 345,000 volts at the
Whitestown and Gwynneville Interconnection Points, and at the
345KV Petersburg Interconnection Point; and at such other
points and voltages as hereafter may be agreed upon by the
parties pursuant to Section 1.02 hereof.
4.02. Billing Based on Scheduled Transaction. As
IPL and PSI systems are interconnected with other systems
forming a network, it is recognized that, because of the
physical and electrical characteristics of the facilities
involved, a part or all of the energy being transferred from
one Party to the other may flow through such other systems
rather than through the point or points of connection between
the systems of the Parties. A part or all of the power being
transferred between other systems in the network may flow
through the point or points of connection between the systems
of the Parties, and as a result be included in the demand and
energy meter readings at the point or points of
interconnection. Therefore, all billings shall be based on
scheduled transactions or upon methods determined by the
Operating Committee which may result from development of
arrangements with other interconnected systems and which
provide a basis for accounting for the power and energy
transfers actually contracted for between the Parties.
4.03. Metering Points. Electric power and energy
supplied and delivered under the 1992 Agreement shall be
measured by suitable metering equipment which shall be
provided, owned and maintained by PSI or ILP as designated
below at the following metering points:
(i) 138,000 volt metering equipment installed by PSI at
the Five Points Substation; 138,000 volt metering
equipment installed by PSI at the Centerton
Substation; 138,000 and 345,000 volt metering
equipment installed by IPL at the Petersburg
Station; 345,000 volt metering equipment installed
by IPL at its Sunnyside Substation and at PSI*s
Gwynneville and Whitestown Substations; and 12.47kV
metering equipment installed by PSI at its Carmel
Southeast Substation, and
(ii) At such other locations as hereafter may be agreed
upon by the Parties pursuant to Section 1.02
hereof.
4.04. Metering Equipment. Suitable metering
equipment at the metering points as described in Section 4.03
above shall include electric meters, potential and current
transformers, and such other appurtenances as shall be
necessary to give for each direction of flow the following
quantities: (i) an automatic record of the kilowatt-hours
for each clock-hour, and (ii) a continuous integration record
of the kilowatt-hours.
4.05. Measurement of Electric Energy. Measurements
of electric energy for the purpose of effecting settlements
under the 1992 Agreement shall be made by standard types of
electric meters installed and maintained (unless otherwise
provided for in the Agreement) by the owner at the metering
points described in Section 4.03 above. The timing devices
of all meters having such devices shall be maintained in time
synchronism as closely as practicable.
The meters shall be sealed and the seals shall be broken
only upon occasions when the meters are to be tested or
adjusted. for the purpose of checking the records of the
metering equipment installed by one of the Parties as
hereinabove provided, the other Party shall have the right to
install check metering equipment at the aforesaid metering
points. Metering equipment so installed by one Party on the
premises of the other Party, unless otherwise provided for in
the 1992 Agreement, shall be owned and maintained by the
Party installing such equipment. Upon termination of the
1992 Agreement, the Party owning such metering equipment
shall remove it from the premises of the other Party.
Authorized representatives of both Parties shall have access
at all reasonable hours to the premises where the meters are
located and to the records made by the meters.
4.06. Testing and Access to Meters and Records. The
aforesaid metering equipment shall be tested by the owner at
suitable intervals and its accuracy of registration
maintained in accordance with good practice. On request of
either Party, a special test may be made at the expense of
the Party requesting such special test. Representatives of
both Parties shall be afforded the opportunity to be present
at all routine or special tests and upon occasions when any
readings, for purposes of settlements hereunder, are taken
from meters not bearing an automatic record.
4.07. Adjustments Due to Inaccuracies. If at any
test of metering equipment an inaccuracy shall be disclosed
exceeding two percent, the account between the Parties for
service theretofore delivered shall be adjusted to correct
for the inaccuracy disclosed over the shorter of the
following two periods: (i) for the thirty (30) day period
immediately preceding the day of the test, or (ii) for the
period that such inaccuracy may be determined to have
existed. Should the metering equipment described in Section
4.04 above at any time fail to register, the electric power
and energy delivered shall be determined from the check
meters, if installed, or otherwise shall be determined from
the best available data.
ARTICLE 5
RECORDS AND STATEMENTS
5.01. Records. In addition to records of the
metering provided for in Article 4 hereof, the Parties shall
keep in duplicate such other records as may be needed to
afford a clear history of the various deliveries of electric
energy made by one Party to the other and of the clock-hour
integrated demands in kilowatt-hours delivered by one Party
to the other. In maintaining such records, the Parties shall
effect such segregations and allocations of demands and
electric energy delivered into classes representing the
various services and conditions as may be needed in
connection with settlements under the 1992 Agreement. The
originals of all such records shall be retained by the Party
keeping the records and the duplicates shall be delivered
monthly to the other Party, except that the Parties may agree
upon a different time interval for such delivery.
5.02. Statements. As promptly as practicable after
the end of each calendar month, the Parties shall prepare a
statement setting forth the electric power and energy
transactions between the Parties during such month in such
detail and with such segregations as may be needed for
operating records or for settlements under the provisions of
the 1992 Agreement.
ARTICLE 6
BILLINGS AND PAYMENTS
6.01. Billing Period. Unless otherwise agreed upon
by the Parties, the calendar month shall be the standard
billing period for all settlements under the 1992 Agreement.
6.02. Billing Scheduled Transactions. All billing
shall be based on scheduled transactions unless otherwise
determined as provided in Section 4.02 hereof.
6.03. Billing Payments. All bills for amounts owed
by one Party to the other Party shall be due on the first
business day following the twentieth (20th) day after the end
of the calendar month or period service was rendered, or on
the fifteenth (15th) business day following receipt of a
bill, whichever is later. Payments shall be made by
electronic transfer or by such other mutually agreeable
method as shall cause such payment to be available for the
account of the payee on or before the due date. Interest on
unpaid amounts, both principal and interest, shall accrue
daily at the then current prime interest rate per annum of
The Chase Manhattan Bank, N.A., New York, New York, plus two
percent (2%) per annum, or the maximum rate permitted by law,
whichever is less, from the date due until the date upon
which payment is made.
6.04. Estimated Billing Factors. In order that
bills may be rendered promptly after the end of the each
month, it may be necessary, from time to time, to estimate
certain factors involved in calculating the monthly billing.
Adjustments for errors in such estimates shall be included in
the bill for the month following the time when information
becomes available to make such corrections or adjustments in
the billing for the preceding month or months.
6.05. Billing Disputes. If a Party disputes the
correctness of a bill, such Party will, nevertheless, pay the
undisputed portion of such bill, plus a minimum of one-half
(1/2) of the disputed amount, and shall submit to the other
Party a written statement detailing the items disputed. If
the Parties are unable to agree upon the disputed items, such
items shall be submitted to the Operating Committee for
further action consistent with the 1992 Agreement.
ARTICLE 7
OPERATING COMMITTEE
7.01. Operating Committee Organization and Duties.
To coordinate the operation of their respective generation,
transmission, and substation facilities in order that the
benefits of the 1992 Agreement may be realized by the Parties
to the fullest practicable extent, the Parties shall
establish a committee of authorized representatives to be
known as the Operating Committee. Each of the Parties shall
designate in writing delivered to the other Party, the person
who is to act as its authorized representative (the "OC
Representative") on said committee (and the person or persons
who may serve as Alternate whenever the OC Representative is
unable to act). The OC Representative and Alternate or
Alternates shall each be persons familiar with the
generation, transmission, and substation facilitates of the
system of the Party he represents, and each shall be fully
authorized (i) to cooperate with the other OC Representative
(or Alternates) and (ii) as the need arises and subject to
the declared intentions of the Parties as herein set forth
and to the terms hereof and the terms of any other agreements
then in effect between the Parties, to determine and agree
from time to time upon the following:
(i) All matters pertaining to the coordination of
maintenance of the generation and transmission
facilities of the Parties.
(ii) All matters pertaining to the control of time,
frequency, energy flow, kilovar exchange, power
factor, voltage, and other similar matters bearing
upon the satisfactory synchronous operation of the
systems of the Parties.
(iii) Such other matters not specifically provided
for herein upon which cooperation, coordination and
agreement as to quantity, time, method, terms and
conditions are necessary, in order that the
operation of the respective systems of the Parties
may be coordinated to the end that the potential
benefits anticipated by the Parties will be
realized to the fullest extent practicable.
7.02. Operating Committee Access. For the purpose
of inspection and reading of meters, checking of records, and
all other pertinent matters, the OC Representative and their
Alternates shall have the right of entry at any reasonable
time to all property of the Parties used in connection with
the performance of the 1992 Agreement.
7.03. Unanimous Action. All actions taken by said
Operating Committee must be by unanimous vote or consent of
all OC Representatives (including Alternates acting during OC
Representatives* absence).
7.04. Expenses. The expenses for establishing and
maintaining the Operating Committee shall be the
responsibility of each individual Party as regards to its
respective personnel. Any expenses jointly incurred by said
Operating Committee in carrying out its duties, other than
for the Parties* personnel, shall be shared equally by the
Parties.
7.05. Authority to Amend or Supplement. The
Operating Committee may recommend changes to the 1992
Agreement, but said Operating Committee shall not have
authority to amend or supplement the 1992 Agreement.
ARTICLE 8
CONTINUITY AND SUSPENSION OF SERVICE
RELATIVE RESPONSIBILITIES AND
LIABILITY LIMITS
8.01. Continuity and Suspension of Service. Each
Party shall exercise reasonable care and foresight to
maintain continuity of service as provided in the 1992
Agreement. In no event shall one Party be liable to the
other Party or its customers for loss or damage arising from
failure to provide or for the interruption or suspension of
any service provided for herein. Each Party reserves the
right to suspend service without liability at such times and
for such periods and in such manner as it deems advisable,
including, without limitation, suspensions for the purpose of
making necessary adjustments to, changes in, or repairs on,
its facilities and to suspend service in cases where, in its
sole opinion, the continuance of service to the other Party
would endanger persons or property. Both Parties shall use
their best efforts to provide each other with reasonable
notice in the event of suspension of service.
8.02. Relative Responsibilities. Each Party assumes
all responsibility for receipt and delivery of electricity on
its system to and from the Points of Interconnection
specified in Section 1.01 hereof or agreed upon pursuant to
Section 1.02 hereof. Neither Party assumes any
responsibility with respect to the construction,
installation, maintenance or operation of the system of the
other Party or of the systems of third parties, in whole or
in part. In no event shall one Party be liable to the other
Party for damage or injury to any person or property,
whatsoever, arising, accruing or resulting from, in any
manner, the receiving, transmission, control, use,
application or distribution of said electric power and
energy. Each Party shall use reasonable diligence to
maintain its facilities in proper and serviceable condition,
and shall take reasonable steps and precautions for
maintaining the services agreed to be provided and received
under the 1992 Agreement. Each Party shall be responsible
for its own compliance with all applicable environmental
regulations and shall bear all costs arising from its failure
to comply with such environmental regulations.
8.03. Limitation of Liability. In no event shall
one Party be liable to the other Party for any indirect,
special, incidental or consequential damages with respect to
any claim arising out of the 1992 Agreement.
ARTICLE 9
TERM OF AGREEMENT
9.01. The term of the 1992 Agreement and of the
annexed Service Schedules shall begin as of May 1, 1992 and
(except for Service Schedule D) shall continue through April
30, 2022 (the "Initial Term"); thereafter, the Agreement and
Service Schedules (except Service Schedule D) shall continue
for successive terms of three (3) years each unless and until
terminated by either Party by giving notice to the other
Party of its intention to terminate the 1992 Agreement at
least two (2) years prior to the end of the Initial Term or
any successive term; provided, that the 1992 Agreement shall
not be deemed to have terminated until all prior commitments
for sales or purchases of power and energy hereunder shall
have been fulfilled and all payments shall have been made.
The term of Service Schedule D shall be as provided therein.
Any notice of termination hereunder shall be given to the
President or Chief Operations Officer of a Party with a copy
to the OC Representative of such Party.
ARTICLE 10
WAIVERS
10.01. Any waiver at any time by either party of
their rights with respect to a default under the 1992
Agreement, or with respect to any other matter arising in
connection with the 1992 Agreement shall not be deemed a
waiver with respect to any subsequent default or matter. Any
delay, short of the statutory period of limitation, in
asserting or enforcing any right under the 1992 Agreement
shall not be deemed a waiver of such right.
ARTICLE 11
TAXES
11.01. If at any time during the term hereof there
should be levied or assessed against either Party any direct
tax by any taxing authority on the capacity or energy (or
both) generated, purchased, sold, transmitted, interchanged
or exchanged by it, which tax is in addition to or different
from the forms of such direct tax as are being levied or
assessed as of the date hereof and such direct tax results in
increasing the cost of either or both the Parties in carrying
out the provisions of the 1992 Agreement, then such increase
shall be reflected in the charges for capacity or energy (or
both) furnished by one Party to the other hereunder as is
necessary in order to make adequate and equitable allowances
for such tax.
ARTICLE 12
NOTICES
12.01. Notices Relating to Provisions of the 1992
Agreement. Except as herein otherwise provided, any notice
which may be given to or made upon either Party by the other
Party, under any of the provisions of the 1992 Agreement,
shall be in writing unless it is otherwise specifically
provided herein, and shall be treated as duly delivered when
the same is either (a) personally delivered to the President
or Chief Operations Officer of the other Party or (b)
deposited in the United States mail, postage prepaid and
properly addressed to the President or Chief Operations
Officer of the other Party; provided, however, that either
Party may alter its recipient for notice hereunder by written
notice to the other Party in accordance with the provisions
of this Section 12.01.
12.02. Notices of An Operating Nature. Any notice,
request or demand pertaining to matters of an operating
nature may be served in person or by United States mail,
messenger, telephone, or telegraph, facsimile transmission or
orally, as circumstances dictate, from the OC Representative
of one Party to the OC Representative of the other Party;
provided, that should the same not be written, confirmation
thereof shall be made in writing as soon as practicable
thereafter, upon request of the Party being served.
ARTICLE 13
REGULATORY AUTHORITIES
13.01. Regulatory Authority. The 1992 Agreement is
made subject to the authority of the Federal Energy
Regulatory Commission or any other governmental regulatory
agency having jurisdiction in the premises and, if any of the
terms and conditions hereof are altered or made impossible of
performance by order, rule, or regulation of any such
regulatory agency, and the Parties hereto are unable to agree
upon a modification of such terms and conditions that will
satisfy such order, rule, or regulation, then neither Party
shall be liable to the other for failure thereafter to comply
with such terms and conditions; provided, that if either
Party deems that the failure of such performance results in a
substantial breach of the 1992 Agreement, then the 1992
Agreement may be terminated forthwith upon thirty (30) days*
advance written notice.
13.02. Amendments. The 1992 Agreement and the
annexed Service Schedules may be amended by mutual agreement
of the Parties, which amendment shall be in writing and shall
become effective in accordance with Section 13.01 hereof.
The rates and charges set forth in the annexed Service
Schedules are subject to amendment and change, and each party
reserves the right from time to time to seek unilaterally,
from any regulatory agency having jurisdiction, amendments or
changes in its rates and charges set forth therein in
accordance with the applicable law. Nothing contained in the
1992 Agreement, any annexed Service Schedule or any
supplements thereto shall be construed as affecting in any
way the right of either Party unilaterally to make
application to the Federal Energy Regulatory Commission (or
any successor regulatory agency having jurisdiction) for a
change in rates under Section 205 of the Federal Power Act
and pursuant to the Commission*s Rules and Regulation
promulgated thereunder (or under comparable statutes and
regulations of a successor regulatory agency having
jurisdiction).
ARTICLE 14
MISCELLANEOUS
14.01. No Partnerships; Tax Matters. Notwithstanding
any provision of the 1992 Agreement to the contrary, the
Parties do not intend to create hereby any joint venture,
partnership, association taxable as a corporation, or other
entity for the conduct of any business for profit, and any
construction of the 1992 Agreement to the contrary which has
an adverse tax effect on either Party shall render the 1992
Agreement null and void from its inception.
14.02. Computation of Time. In computing any period
of time prescribed or allowed by the 1992 Agreement, the day
of the act, event, or default from which the designated
period of time begins to run shall be excluded but the last
day of such period shall be included, unless it is a
Saturday, Sunday, or legal holiday, in which event the period
shall run until the end of the next business day which is not
a Saturday, Sunday, or legal holiday.
14.03. Section Headings Not to Affect Meaning. The
descriptive headings of the Articles, Sections, Subsections
and paragraphs of the 1992 Agreement have been inserted for
convenience only and shall not modify or restrict any of the
terms and provisions thereof.
ARTICLE 15
ASSIGNMENT
15.01. The 1992 Agreement shall inure to the benefit
of, and be binding upon, the respective successors and
assigns of the Parties, but the assignment thereof by a Party
shall not relieve such Party, without the written consent of
the other Party, of any obligation to supply, or to take and
pay for, as the case may be, the services hereunder.
ARTICLE 16
ENTIRE AGREEMENT CONTAINED HEREIN
16.01. The 1992 Agreement contains the entire
agreement between the Parties in respect of the subject
matter hereof, and there are no other understanding or
agreements between the Parties in respect thereof; provided,
however, that nothing contained in the 1992 Agreement shall
be deemed to affect in any manner whatsoever any rights or
claims either Party may have against the other Party pursuant
to any other agreement in effect before the effective date of
the 1992 Agreement with respect to any matter, including any
right or claim to payments after the effective date of the
1992 Agreement pursuant to other preexisting agreements.
ARTICLE 17
1962 AGREEMENT SUPERSEDED
17.01. The 1992 Agreement constitutes an amendment to
and complete restatement of the 1962 Agreement and, as such,
supersedes the 1962 Agreement from and after the date the
1992 Agreement becomes effective.
ARTICLE 18
AGENCY OF CINERGY SERVICES, INC.
18.01. CINergy Services joins in the execution of
this Agreement for the sole purpose of serving and acting as
agent for PSI.
IN WITNESS WHEREOF the Parties have caused the 1992 Agreement
to be executed by their respectable duly authorized officers
and their respective corporate seal to be hereunder affixed
as of the date first above mentioned.
INDIANAPOLIS POWER & LIGHT
(IPL)
By: /s/ John R. Brehm
John R. Brehm
Senior Vice President
Finance and
Information Services
Attest:
By: /s/ Bryan G. Tabler
Bryan G. Tabler
Senior Vice President
Secretary and
General Counsel
CINERGY SERVICES, INC.
(CINergy Services)
By: /s/ Terry E. Bruck
Terry E. Bruck
Group Vice President
PSI ENERGY, INC.
(PSI)
By: /s/ John M. Mutz
John M. Mutz
President
EXHIBIT I
(First Revision)
SERVICE SCHEDULE A
EMERGENCY SERVICE
SECTION 1 - DURATION
1.1 This Service Schedule A, being a part of and under the
Interconnection Agreement (referred to herein as the "1992
Agreement"), dated as of May 1, 1992, among Indianapolis
Power & Light Company (hereinafter called "IPL") and PSI
Energy, Inc., formerly named Public Service Company of
Indiana, Inc. (hereinafter called "PSI") and CINergy
Services, Inc. (hereinafter called "CINergy Services"), shall
become effective as of the effective date of the Third
Amendment, dated June 30, 1995, to the 1992 Agreement and
shall continue in effect throughout the duration of the 1992
Agreement. IPL, PSI and CINergy Services are sometimes
hereinafter referred to individually as "Party" or
collectively as "Parties" where appropriate.
SECTION 2 - SERVICES TO BE RENDERED
2.1 Conditional Service. Subject to the provisions of
Subsection 2.2 of this Section 2, in the event of a breakdown
or other emergency in or on the system of any Party involving
either sources of power or transmission facilities, or both,
impairing or jeopardizing the ability of the Party suffering
the emergency to meet the loads of its system, another Party
shall deliver to such Party electric energy that it is
requested to deliver; provided, however, that a Party shall
not be obligated to deliver such energy which, in its sole
judgment, it cannot deliver without interposing a hazard to
or economic burden upon its operations or without impairing
or jeopardizing the other load requirements of its system and
provided further, that a Party shall be obligated to deliver
electric energy to another Party for a period in excess of
forty-eight (48) consecutive hours during any single
emergency.
2.2 Non-performance. The Parties recognize that the
delivery of electric energy as provided in Subsection 2.1 of
this Section 2 is subject to two conditions which may
preclude the delivery of such energy as so provided: (a) the
Party requested to deliver electric energy may be suffering
an emergency in or on its own system as described in said
Subsection 2.1, or (b) the system of a Party may be
delivering electric energy, under a mutual emergency
interchange agreement, to the system of another
interconnected company which is suffering any emergency in or
on its system. Under conditions as cited under (a) above, a
Party shall not be considered to be in default hereunder if
it is unable to comply with the provisions of said Subsection
2.1. Under conditions as cited under (b) above, a Party
shall not be considered to be in default hereunder if it is
unable to comply with the provisions of said Subsection 2.1;
provided, however, that such Party shall make every effort
consistent with the terms of its contract with said other
interconnected company to make the electric energy as
provided in Subsection 2.1 available to another Party hereto
as soon as possible.
2.3 Reserve Generating Capacity Review. If at any time the
record over a reasonable prior period shows clearly that one
of the Parties has failed to deliver energy in accordance
with and subject to the provisions of Subsection 2.1 and
Subsection 2.2 of this Section 2, a Party, by written notice
given to another Party, may call for a joint study by the
Parties of the reserve generating capacity in and provided
for their respective systems and of their respective system
transmission facilities affecting the supply and delivery of
power and energy under the 1992 Agreement. It shall be the
purpose of such study to determine the adequacy or inadequacy
of reserve generating capacity and transmission facilities
being provided to meet the requirements of the Parties
respective systems, reflecting obligations under the 1992
Agreement, and, if inadequate, the extent of the burden that
a Party may be placing upon another Party. If it should be
found that a Party is placing an unreasonable burden upon
another Party, the Party causing such burden shall take such
measures as are necessary to remove the burden from another
Party, or the Parties shall enter into such arrangements as
shall provide for equitable compensation to the Party being
burdened.
SECTION 3 - COMPENSATION
3.1 When IPL is the Supplying Party:
3.11 Emergency Energy delivered that is generated by
IPL shall be settled for, at the option of IPL, either by the
return of equivalent energy at a mutually acceptable time
upon request of IPL or by payment of the greater of (a) 110%
of the Out-Of-Pocket Cost (such cost being as of the delivery
point or points, as referred to in Section 4.01 of the 1992
Agreement, taking into account electrical losses incurred
from the source or sources of such energy to the delivery
point or points) of supplying such energy, or (b) $0.10 per
kilowatt-hour.
3.12 Emergency Energy delivered that is purchased by
IPL from a third party shall be settled for by payment of an
energy charge of 100% of the Out-Of-Pocket Cost paid therefor
by IPL, plus an amount to be agreed upon by the Parties at
the time of the transactions of up to 4.6 mills per kilowatt-
hour (consisting of up to 3.6 mills per kilowatt-hour for
bulk transmission charge plus 1 mill per kilowatt-hour for
difficult to quantify energy-related costs), plus any
transmission losses resulting on IPL's system on account of
the transaction, and plus any taxes incurred by IPL on
account of the transaction.
3.2 When PSI is the Supplying Party:
3.21 Emergency Energy delivered that is generated by
PSI shall be settled for by payment of the greater of
(a) 110% of the Out-Of-Pocket Cost (such cost being as
of the interconnection point or points, as referred to
in Section 4.01 or the 1992 Agreement, taking into
account electrical losses incurred from the source or
sources of such energy to the interconnection point or
points) of supplying such energy. Non-firm transmission
service per the provisions of the CINergy Services,
Inc., FERC Electric Tariff, Original Volume No. 3, Non-
Firm Point-to-Point Transmission Service Standard Tariff
- NFT (or any successor transmission tariff of similar
service) must be obtained, or (b) $100 per megawatt-
hour.
3.22 Emergency Energy delivered that is purchased by
PSI from a third party shall be settled for by payment
of the greater of (a) of an energy charge of 100% of the
Out-Of-Pocket Cost paid therefor by PSI plus $1.00 per
megawatt-hour (for difficult to quantify energy-related
costs), plus any transmission losses resulting on the
system of the CINergy Operating Companies on account of
the transaction. Non-firm transmission service per the
provisions of the CINergy Services, Inc., FERC Electric
Tariff, Original Volume No. 3, Non-Firm Point-to-Point
Transmission Service Standard Tariff - NFT (or any
successor transmission tariff of similar service) must
be obtained, and plus any regulatory commission charges
and taxes incurred by PSI on account of the transaction,
or (b) $100 per megawatt-hour.
3.3 If the option of returning electric energy under
Subsection 3.11 is exercised, then it shall be returned at
times when the load conditions of the Party receiving it are
equivalent to the load conditions of such Party at the time
the energy for which it is returned was delivered or, if such
Party elects to have equivalent energy returned under
different conditions, it shall be returned in such amounts,
to be agreed upon by the Operating Committee under the
Agreement, as will compensate the Party for the difference in
conditions.
EXHIBIT II
(First Revision)
SERVICE SCHEDULE B
INTERCHANGE ENERGY
SECTION 1 - DURATION
1.1 This Service Schedule B, being a part of and under the
Interconnection Agreement (referred to herein as the "1992
Agreement"), dated as of May 1, 1992, among Indianapolis
Power & Light Company (hereinafter called "IPL") and PSI
Energy, Inc., formerly named Public Service Company of
Indiana, Inc. (hereinafter called "PSI") and CINergy
Services, Inc. (hereinafter called "CINergy Services"), shall
become effective as of the effective date of the Third
Amendment, dated June 30, 1995 to the 1992 Agreement and
shall continue in effect throughout the duration of the 1992
Agreement. IPL, PSI and CINergy Services are sometimes
hereinafter referred to individually as "Party" or
collectively as "Parties" where appropriate.
SECTION 2 - SERVICES TO BE RENDERED
Economy Energy
2.1 It is recognized that from time to time that any of the
Parties may have electric energy (herein called "Economy
Energy") available from surplus capacity either on its own
system or from sources outside its own system, or both, and
that Economy Energy could be supplied to another Party at a
cost that would result in operating savings to such another
Party. Such operating savings would result from the
displacement of electric energy that otherwise would be
supplied from capacity either on such other Party's system or
from sources outside its own system, or both. To promote the
economy of electric power supply and to achieve efficient
utilization of production capacity, any Party, whenever it in
its sole judgment determines Economy Energy is available,
may, but shall not be obligated to, offer Economy Energy to
another Party. Promptly upon receipt of any such offer said
Party shall notify the offering Party of the extent to which
it desires to use such Economy Energy, and schedules
providing the periods and extent of use shall be mutually
agreed upon by the Parties. Such energy is non-firm and may
be withdrawn by the supplying Party with a ten (10) minute
notification. A transaction made by PSI and CINergy Services
under this Service Schedule B shall not extend beyond twelve
(12) months.
Non-Displacement Energy
2.2 It is further recognized that from time to time
occasions will arise when the effecting of transactions, as
provided in Subsection 2.1 of this Section 2, will be
impracticable, but at the same time one of the Parties may
have electric energy (herein called "Non-Displacement
Energy") which it is willing to make available from surplus
capacity either on its own system or from sources outside its
own system, or both, that can be utilized advantageously for
short intervals by another Party. It shall be the
responsibility of the Party desiring the receipt of Non-
Displacement Energy to initiate the receipt and delivery of
such energy. Any Party desiring such receipt of energy shall
inform another Party of the extent to which it desires to use
Non-Displacement Energy, and whenever in its sole judgment
such another Party determines that it has Non-Displacement
Energy available, schedules providing the periods and extent
of use shall be mutually agreed upon by the Parties. Any
Party shall not be obligated to make any Non-Displacement
Energy available to another Party.
2.3 PSI may reduce or discontinue the supply of Hourly Non-
Displacement Energy at any time. To the extent possible,
however, PSI shall advise IPL of its intention to reduce
materially or discontinue the supply of Hourly Non-
Displacement Energy.
2.4 PSI shall supply Daily and Weekly Non-Displacement
Energy for three (3) hours after they have notified IPL of
its intention to discontinue such supply of energy; however,
PSI shall be under no obligation to continue the supply of
said energy for more than three (3) hours after said
notification.
2.5 A transaction made by PSI under Subsection 2.2 above
shall not extend beyond twelve (12) months.
SECTION 3 - COMPENSATION
Economy Energy
3.1 The charge for Economy Energy purchased by a Party from
another Party shall be based on the principle that the Party
purchasing it shall pay the Out-Of-Pocket Cost (including all
operating, maintenance, tax, regulatory commission charges,
transmission losses and other expenses incurred that would
not have been incurred if the energy had not been supplied)
being at the interconnection points (as defined in Article 4
of the 1992 Agreement), of the Party supplying such energy
and that the resulting savings to the receiving Party shall
be equally shared by the supplying and receiving Parties.
Prior to any transaction involving the delivery and receipt
of Economy Energy, authorized representatives of the Parties
shall determine and agree upon the compensation applicable to
such transaction. Compensation so agreed upon shall not be
subject to later review or adjustment. PSI shall dedicate an
amount at the time of the transactions for non-firm
transmission service per the provisions of the CINergy
Services, Inc., FERC Electric Tariff, Original Volume No. 3,
Non-Firm Point-to-Point Transmission Service Standard Tariff
- - NFT (or any successor transmission tariff of similar
service) from its portion of the resulting savings.
3.2 When Economy Energy is obtained from or delivered to
other systems interconnected with the Parties, but not
signatories to the 1992 Agreement, payments shall be based on
the Out-Of-Pocket Cost of the supplying Party or system
providing the energy and an allocation of the gross savings
which are defined as the difference between (1) what such Out-
Of-Pocket Costs of the receiving Party or system would have
been to generate such energy, and (2) such Out-Of-Pocket
Costs of the supplying Party or system providing the energy.
Such allocation shall be made as provided in Subsections 3.21
and 3.22 hereinbelow:
3.21 The transmitting Party shall be paid (a) its costs
of purchasing the energy supplied, plus (b) its
costs of additional transmission losses plus (c)
the following:
(1) When IPL is such transmitting Party: Fifteen
percent (15%) of the gross savings remaining
after deducting all such payments for
transmission losses.
(2) When PSI is the transmitting Party, they shall
receive the greater of (a) 15% (such charge
pertains to the reservation of transmission)
of the gross savings remaining after deducting
all such payments for transmission losses or
(b) the sum of a demand charge rate per
megawatt reserved per hour at the time such
Economy Energy is reserved for non-firm
transmission service per the provisions of the
CINergy Services, Inc., FERC Electric Tariff,
Original Volume No. 3, Non-Firm Point-to-Point
Transmission Service Standard Tariff - NFT (or
any successor transmission tariff of similar
service), plus $1.00 per megawatt-hour (for
difficult to quantify energy-related costs),
plus any transmission losses resulting on the
system of the CINergy Operating Companies on
account of the transaction and plus any
regulatory commission charges and taxes
incurred by PSI on account of the transaction.
3.22 The supplying Party or system shall be paid its Out-
Of-Pocket Cost of providing the energy, plus one-
half of the gross savings remaining after deducting
all (b) and (c) payments made under Subsection
3.21. The receiving Party or system shall be
entitled to the other one-half of the gross savings
remaining after deducting all (b) and (c) payments
made under Subsection 3.21.
Non-Displacement Energy
3.3 Non-Displacement Energy delivered hereunder shall be
settled for either by the return of equivalent energy (only
in the case where IPL is the supplying Party) or, at the
option of the Party that supplied such energy, by payment of
an energy charge of up to 110% of the Out-Of-Pocket Cost
(such cost being as of the delivery point or points, as
provided in Section 4.01 of Article 4 of the 1992 Agreement,
taking into account electrical losses incurred from the
source or sources of such energy to said delivery point or
points) to the supplying Party generating such energy plus
(the applicable demand charge rates per this Subsection are
limited by Subsections 3.7 and 3.8):
3.31 When IPL is the supplying Party:
3.31.1 IPL, at its option, may impose a demand
charge of up to 48.6 mills per kilowatt reserved
per hour, but the total demand charge in any one
day shall be no more than the product of $0.778
times the highest amount in kilowatts reserved in
any hour during the day. Or,
3.31.2 IPL, at its option, may choose to supply
such energy without imposing a demand charge in
which case no additional payment is included.
However, if this option is chosen, the cost of such
energy will be calculated as 110% of the actual Out-
Of-Pocket Cost (such cost being as of the delivery
point or points, as provided in Section 4.01 of
Article 4 of the 1992 Agreement, taking into
account electrical losses incurred from the source
or sources of such energy to said delivery point or
points) to the supplying Party generating such
energy.
3.32 When PSI is the supplying Party by payment of the
following:
(1) For energy generated, the agreed upon demand charge
rate of up to $50 per megawatt-hour (such charge
pertains to the production component only), the
total demand charge in any one day shall be no more
than the product of $797 and the greatest amount of
megawatts reserved in any hour during said day and
the total charge in any one week shall be no more
than the product of $4,781 and the greatest number
of megawatts reserved in any hour during said week.
Non-firm transmission service per the provisions of
the CINergy Services, Inc., FERC Electric Tariff,
Original Volume No. 3, Non-Firm Point-to-Point
Transmission Service Standard Tariff - NFT (or any
successor transmission tariff of similar service)
must be obtained;
(2) For daily energy which is purchased by PSI from a
third party for economic reasons to meet system
needs but in subsequent system resources accounting
calculations is determined to have been used to
supply a Daily Non-Displacement Energy transaction
and for which PSI stands by to supply from its own
resources: (a) the amount paid by PSI to the third
party for such energy, plus (b) the cost of
transmission losses, regulatory commission charges
and taxes incurred which would not otherwise have
been incurred, plus (c) $1.00 per megawatt-hour for
difficult-to-quantify energy related costs, and,
plus (d) up to $50 per megawatt-hour (such charge
pertains to the production component only), the
total charge in any one day shall be no more than
the product of $797 and the greatest number of
megawatts reserved in any hour during said day and
the total charge in any one week shall be no more
than the product of $4,781 and the greatest number
of megawatts reserved in any hour during said week.
Non-firm transmission service per the provisions of
the CINergy Services, Inc., FERC Electric Tariff,
Original Volume No. 3, Non-Firm Point-to-Point
Transmission Service Standard Tariff - NFT (or any
successor transmission tariff of similar service)
must be obtained.
3.33 If equivalent energy is returned to IPL, it shall
be returned at times when the load conditions of
the Party receiving it are equivalent to the load
conditions of such Party at the time the energy for
which it is returned was delivered or, if such
Party elects to have equivalent energy returned
under different conditions, it shall be returned in
such amounts, to be agreed upon by the Operating
Committee, as will compensate for the difference in
conditions.
3.4 Non-Displacement Energy delivered under Subsection 2.2
above that is purchased by the supplying Party from another
interconnected system which is not a signatory to the 1992
Agreement ("Third Party") at the request of the receiving
Party shall be settled for as follows:
3.41 When IPL is the supplying Party, by a payment of 100
percent of the amount paid to such Third Party, plus a
demand charge in an amount to be agreed upon by the
Parties at the time of the reservation of up to 3.6
mills per kilowatt reserved per hour, but the total
demand charge in any one day shall be no more than the
product of $0.058 times the highest amount in kilowatts
reserved in any hour during the day, plus 1 mill per
kilowatt-hour (for difficult to quantify energy-related
costs), plus the cost of any quantifiable transmission
losses, taxes, and other expenses incurred that would
not have been incurred if such transaction had not been
made.
3.42 When PSI is the supplying Party: by (a) non-firm
transmission service per the provisions of the CINergy
Services, Inc., FERC Electric Tariff, Original Volume
No. 3, Non-Firm Point-to-Point Transmission Service
Standard Tariff - NFT (or any successor transmission
tariff of similar service) must be obtained and (b) an
energy charge of 100% of the Out-of-Pocket Cost paid
therefor by PSI, plus $1.00 per megawatt-hour (for
difficult to quantify energy-related costs), plus any
transmission losses resulting on the system of the
CINergy Operating Companies on account of the
transaction, and plus any regulatory commission charges
and taxes incurred by PSI on account of the transaction.
3.5 Notwithstanding the rates stated in Subsection 3.3
above, when IPL is the supplying Party, if the "demand
charge" option of Section 3.31.1 is chosen, the sum of the
demand and energy charges for each specific reservation made
pursuant to Section 2.2 of this Service Schedule B which
includes a demand charge shall not:
(1) exceed the total of:
(i) The product of the number of kilowatts
reserved for such reservation times the
maximum hourly demand charge specified above
in Subsection 3.3; and
(ii) The product of the number of kilowatt-hours
sup-plied for such reservation times 110% of
the average cost per kilowatt-hour of energy
generated by IPL's Petersburg Unit No. 4 for
the last preceding month during which it was
run; or
(2) be less than 100% of the total Out-Of-Pocket Cost
of supplying the Non-Displacement Energy for such
reservation.
3.6 Notwithstanding the rates stated in Subsection 3.3
above, when PSI and CINergy Services are the supplying Party,
the sum of the demand and energy charges for each specific
reservation made pursuant to Section 2.2 of this Service
Schedule B shall not:
(1) exceed the total of:
(i) The product of the number of megawatts
reserved for such reservation times the
maximum hourly demand charge specified above
in Subsection 3.3; and plus
(ii) The product of the number of megawatt-hours
supplied for such reservation times 110% of
the average cost per megawatt-hour of energy
generated by the CINergy Operating Companies*
Zimmer Unit No. 1 and Gibson Unit No. 5 for
the preceding month; nor
(2) be less than 100% of the total Out-Of-Pocket Cost
of supplying the Non-Displacement Energy for such
reservation.
3.7 The aggregate instant total capacity of all IPL sales
under this and other Service Schedules which are a part of
this and other IPL Agreements, for which the rates charged
have been supported on the basis that total revenues will not
exceed the costs of Petersburg Unit No. 4, is limited to 515
MW.
3.8 The total power of all sales by the CINergy Operating
Companies and CINergy Services under this and other
agreements of the CINergy Operating Companies and CINergy
Services, for which the agreed upon demand charge is
determined based on Zimmer Unit No. 1 and Gibson Unit No. 5,
is limited to 925 MWs (CINergy Operating Companies* Zimmer
Unit No. 1 Net Demonstrated Capability of 612 MWs and Gibson
Unit No. 5 Net Demonstrated Capability of 313 MWs) on an
hourly basis. For sales in excess of the capacity limitation
of 925 MWs noted above, the rate shall consist of an energy
charge of up to 110% of Out-of-Pocket Cost and a demand
charge of up to $ 13 per megawatt per hour (such charge
pertains to the production component only), the total charge
in any one day shall be no more than the product of $209 and
the greatest number of megawatts reserved in any hour during
said day and the total charge in any one week shall be no
more than the product of $1,252 and the greatest number of
megawatts reserved in any hour during said week. Non-firm
transmission service per the provisions of the CINergy
Services, Inc., FERC Electric Tariff, Original Volume No. 3,
Non-Firm Point-to-Point Transmission Service Standard Tariff
- - NFT (or any successor transmission tariff of similar
service) must be obtained; but in no event shall the total
revenue (energy charge and demand charge combined) be less
than 100% of the Out-of-Pocket Costs for supplying the Non-
Displacement Energy for such reservation. Notwithstanding
all previous Subsections, when power is sold under both this
Subsection and Subsection 3.3 in any month, the total demand
charge will be the applicable weighted average demand charges
in this Subsection and Subsection 3.3. Such weighting will
be developed by adding the number of hours that power was
provided under this Subsection times the applicable demand
charge under this Subsection and the number of hours that
power was provided under Subsection 3.3 times the applicable
demand charge in Subsection 3.3, with the sum being divided
by the applicable number of hours of the transaction (month,
week, day or hours).
EXHIBIT III
(First Revision)
SERVICE SCHEDULE C
SHORT TERM POWER AND ENERGY
SECTION 1 - DURATION
1.1 This Service Schedule C, being a part of and under the
Interconnection Agreement (referred to herein as the "1992
Agreement"), dated as of May 1, 1992, among Indianapolis
Power & Light Company (hereinafter called "IPL") and PSI
Energy, Inc., formerly named Public Service Company of
Indiana, Inc. (hereinafter called "PSI") and CINergy
Services, Inc. (hereinafter called "CINergy Services"), shall
become effective as of the effective date of the Third
Amendment, dated June 30, 1995, to the 1992 Agreement and
shall continue in effect throughout the duration of the 1992
Agreement. IPL, PSI and CINergy Services are sometimes
hereinafter referred to individually as "Party" or
collectively as "Parties" where appropriate.
SECTION 2 - SERVICES TO BE RENDERED
2.1 Any Party, by giving the other Parties notice, may
reserve from the other Parties (a) electric power ("Weekly
Short Term Power") for periods of one or more weeks or (b)
electric power ("Daily Short Term Power") for periods of one
or more days whenever the Party requested to reserve the same
is willing to make such power available. Under ordinary
circumstances such reservation shall extend for not less than
a calendar week if it begins with Sunday or for the balance
of the calendar week if it begins with any day subsequent to
Sunday; however, under unusual circumstances, the Parties may
mutually agree upon a reservation of Daily or Weekly Short
Term Power for a lesser number of days. In all cases the
Party asked to supply Daily or Weekly Short Term Power shall
be the sole judge as to the amounts and periods that it has
electric power available that may be reserved by another
Party as Short Term Power. A transaction made by any Party
under this Service Schedule C shall not extend beyond twelve
(12) months.
2.11 Prior to each reservation of Weekly or Daily Short
Term Power, the number of megawatts to be reserved, the
period of the reservation, the terms of such reservation, and
the source of such power if the supplying Party is in turn
reserving such power from another interconnected system which
is not a signatory to the 1992 Agreement ("Third Party"),
shall be determined by the Parties. Such reservation shall
be confirmed in writing at the request of any Party. If
during such period the conditions arise that could not have
been reasonably foreseen at the time of the reservation and
cause the reservation to be burdensome to the supplying
Party, such Party may by oral notice to the reserving Party,
such oral notice to be later confirmed in writing if
requested by any Party, reduce the number of megawatts
reserved by such amount and for such time as it shall specify
in such notice, but kilowatts reserved hereunder that the
supplying Party is in turn reserving from a Third Party may
be reduced only to the extent they are reduced by such Third
Party.
2.12 During each period that Weekly or Daily Short Term
Power has been reserved, the Party that has agreed to
supply such power shall upon call by the reserving Party
deliver associated electric energy ("Weekly or Daily
Short Term Energy") to the reserving Party as of the
interconnection point or points, as provided in Section
4.01 of Article 4 of the 1992 Agreement at a rate during
each hour of up to and including the number of megawatts
reserved.
SECTION 3 - COMPENSATION
3.1 Weekly Short-Term Power and Energy
3.1.1 Except as otherwise provided in Subsection 3.1.3
below, when IPL is the supplying Party, PSI shall pay
all of the following which are applicable (the
applicable demand charge rate per this Subsection is
limited by Subsection 3.5):
(a) for any week that Weekly Short-Term Power and
Energy is reserved, a demand charge rate to be
agreed upon by the Parties at the time such
Weekly Short-Term Power and Energy is
reserved, at a rate of up to $3.89 per
kilowatt reserved, except, for each day (other
than Sunday) during any part of which the
amount of such Weekly Short-Term Power and
Energy is reduced by IPL, the total demand
charge shall be reduced by one-sixth (1/6) of
said agreed upon demand charge rate for each
megawatt of the reduction;
(b) for Weekly Short-Term Energy delivered that is
generated by IPL, an energy charge to be
agreed upon by the Parties at the time of the
transaction of up to 110% of the Out-Of-Pocket
Cost (such cost being as of the
interconnection point or points, as defined in
Article 4 of the 1992 Agreement, taking into
account electrical losses incurred from the
source or sources of such energy to the
interconnection point or points) of supplying
such energy;
(c) for Weekly Short-Term Energy delivered that is
purchased by IPL from a Third Party, an energy
charge of 100% of the Out-Of-Pocket Cost paid
therefor by IPL, plus one (1) mill per
kilowatt-hour of such purchased energy (for
difficult to quantify energy-related costs),
plus any transmission losses resulting on
IPL*s system on account of the transaction,
and plus any taxes incurred by IPL on account
of the transaction.
3.1.2 Except as otherwise provided in Subsection 3.1.3
below, when PSI is the supplying Party, IPL shall pay
all of the following which are applicable (the
applicable demand charge rate per this Subsection is
limited by Subsection 3.6):
(a) for any week that Weekly Short-Term Power and
Energy is reserved, a demand charge rate to be
agreed upon by the Parties at the time such
Weekly Short-Term Power and Energy is
reserved. Said demand charge rate shall be at
a rate of up to $4,781 per megawatt reserved
(such charge pertains to the production
component only), except for each day (other
than Sunday) during any part of which the
amount of such Weekly Short-Term Power and
Energy is reduced by PSI, the total demand
charge shall be reduced by one-sixth (1/6) of
said agreed upon demand charge rate (rounded
to the nearest $0.10 per megawatt) for each
megawatt of the reduction. Non-firm
transmission service per the provisions of the
CINergy Services, Inc., FERC Electric Tariff,
Original Volume No. 3, Non-Firm Point-to-Point
Transmission Service Standard Tariff - NFT (or
any successor transmission tariff of similar
service) must be obtained;
(b) for Weekly Short-Term Energy delivered that is
generated by PSI, an energy charge to be
agreed upon by the Parties at the time of the
transaction of up to 110% of the Out-Of-Pocket
Cost (such cost being as of the
interconnection point or points, as defined in
Article 4 of the 1992 Agreement, taking into
account electrical losses incurred from the
source or sources of such energy to the
interconnection point or points) of supplying
such energy;
(c) for Weekly Short-Term Energy delivered that is
purchased by PSI from a Third Party, an energy
charge of 100% of the Out-Of-Pocket Cost paid
therefor by PSI, plus $1.00 per megawatt-hour
of such purchased energy (for difficult to
quantify energy-related costs), plus any
transmission losses resulting on the system of
the CINergy Operating Companies on account of
the transaction, and plus any regulatory
commission charges and taxes incurred by PSI
on account of the transaction.
3.1.3 When Weekly Short-Term Power and Energy is
purchased by the supplying Party from a Third Party
specifically for the reserving Party, the reserving
Party shall pay the supplying Party all of the following
which are applicable:
(a) the demand charge paid therefor by the supplying
Party to the Third Party for such electric power
and energy;
(b) when IPL is the supplying Party:
(1) for any week such Weekly Short-Term Power and
Energy is reserved, a demand charge rate per
kilowatt to be agreed upon by the Parties at
the time such Weekly Short-Term Power and
Energy is reserved, at a rate of up to $0.29
per kilowatt reserved (such charge pertains to
the reservation of transmission). In the
event the amount of such Weekly Short-Term
Power and Energy is reduced by IPL, said
demand charge shall be reduced by the sum of
(i) one-sixth (1/6) of the said agreed upon
weekly rate per kilowatt of the reduction for
each day (other than Sunday) during which such
reduction is in effect, and (ii) the
reduction, if any, in the demand charge paid
by IPL to the Third Party;
(c) when PSI is the supplying Party:
(1) Non-firm transmission service per the
provisions of the CINergy Services, Inc., FERC
Electric Tariff, Original Volume No. 3, Non-
Firm Transmission Service Standard Tariff -
NFT (or any successor transmission tariff of
similar service) must be obtained. In the
event the amount of such Weekly Short-Term
Power and Energy is reduced by PSI, said
demand charge shall be reduced by the sum of
(i) one-sixth (1/6) of the said agreed upon
weekly rate per megawatt of the reduction for
each day (other than Sunday) during which such
reduction is in effect, and (ii) the
reduction, if any, in the demand charge paid
by PSI to the Third Party;
(2) for each megawatt-hour purchased by PSI from a
Third Party to supply Weekly Short-Term Energy
delivered during such period, an energy charge
of 100% of the Out-Of-Pocket Cost paid
therefor by PSI, plus $1.00 per megawatt-hour
(for difficult to quantify energy-related
costs), plus any transmission losses resulting
on the system of the CINergy Operating
Companies on account of the transaction, and
plus any regulatory commission charges and
taxes incurred by PSI on account of the
transaction.
3.2 Daily Short-Term Power and Energy
3.2.1 Except as otherwise provided in Subsection 3.2.3
below, when IPL is the supplying Party, PSI shall pay
all of the following which are applicable (the
applicable demand charge rate per this Subsection is
limited by Subsection 3.5):
(a) for any day that Daily Short-Term Power and Energy
is reserved, a demand charge rate to be agreed upon
by the Parties at the time such Daily Short-Term
Power and Energy is reserved, at a rate of up to
$0.778 per kilowatt reserved, except, for any day
during any part of which the amount of such Daily
Short-Term Power and Energy is reduced by IPL, the
agreed upon demand charge will only be paid for the
power still available;
(b) for Daily Short-Term Energy delivered that is
generated by IPL, an energy charge of up to 110% of
the Out-of-Pocket Cost (such cost being as of the
interconnection point or points, as defined in
Article 4 of the 1992 Agreement, taking into
account electrical losses incurred from the source
or sources of such energy to the interconnection
point or points) of supplying such energy;
(c) for Daily Short-Term Energy delivered that is
purchased by IPL from a Third Party, an energy
charge of 100% of the Out-of-Pocket Cost paid
therefor by IPL, plus one (1) mill per kilowatt-
hour of such purchased energy (for difficult to
quantify energy-related costs), plus any
transmission losses resulting on IPL*s system on
account of the transaction, and plus any taxes
incurred by IPL on account of the transaction.
3.2.2 Except as otherwise provided in Subsection 3.2.3
below, when PSI is the supplying Party, IPL shall pay all of
the following which are applicable (the applicable demand
charge rates per this Subsection are limited by Subsection
3.6):
(a) for any day that Daily Short-Term Power and Energy
is reserved, a demand charge rate to be agreed upon
by the Parties at the time such Daily Short-Term
Power and Energy is reserved. Said demand charge
rate shall be at a rate of up to $797 per megawatt
reserved (such charge pertains to the production
component only), the total charge in any week shall
be no more than the product of $4,781 and the
greatest number of megawatts reserved in any day
during said week, except for any day during any
part of which the amount of such Daily Short-Term
Power and Energy is reduced by PSI, the agreed upon
demand charge will only be paid for the power still
available. Non-firm transmission service per the
provisions of the CINergy Services, Inc., FERC
Electric Tariff, Original Volume No. 3, Non-Firm
Point-to-Point Transmission Service Standard Tariff
- NFT (or any successor transmission tariff of
similar service) must be obtained;
(b) for Daily Short-Term Energy delivered that is
generated by PSI, an energy charge of up to 110% of
the Out-of-Pocket Cost (such cost being as of the
interconnection point or points, as defined in
Article 4 of the 1992 Agreement, taking into
account electrical losses incurred from the source
or sources of such energy to the interconnection
point or points) of supplying such energy;
(c) for Daily Short-Term Energy delivered that is
purchased by PSI from a Third Party, an energy
charge of 100% of the Out-of-Pocket Cost paid
therefor by PSI, plus $1.00 per megawatt-hour of
such purchased energy (for difficult to quantify
energy-related costs), plus any transmission losses
resulting on the system of the CINergy Operating
Companies on account of the transaction, and plus
any regulatory commission charges and taxes
incurred by PSI on account of the transaction.
3.2.3 When Daily Short-Term Power and Energy is
purchased by the supplying Party from a Third Party
specifically for the reserving Party, the reserving
Party shall pay the supplying Party all of the following
which are applicable:
(a) the demand charge paid therefor by the supplying
Party to the Third Party for such electric power
and energy;
(b) when IPL is the supplying Party:
(1) for any day such Daily Short-Term Power and
Energy is reserved, a demand charge per kilowatt to
be agreed upon by the Parties at the time such
Daily Short-Term Power and Energy is reserved, at a
rate of up to $0.058 per kilowatt reserved (such
charge pertains to the reservation of
transmission). In the event the amount of such
Daily Short-Term Power and Energy is reduced by
IPL, said demand charge shall be reduced by the sum
of (i) one-sixteenth (1/16) of the said agreed upon
daily rate per kilowatt of the reduction for each
hour in any day during which such reduction is in
effect, such reduction not to exceed the agreed
upon demand charge for such day, and (ii) the
reduction, if any, in the demand charge paid by IPL
to the Third Party;
(2) for each kilowatt-hour purchased by IPL from a
Third Party to supply Daily Short-Term Energy
delivered during such period, an energy charge of
100% of the Out-of-Pocket Cost paid therefor by
IPL, plus one (1) mill per kilowatt-hour (for
difficult to quantify energy-related costs), plus
any transmission losses resulting on IPL*s system
on account of the transaction, and plus any taxes
incurred by IPL on account of the transaction;
(c) when PSI is the supplying Party:
(1) Non-firm transmission service per the
provisions of the CINergy Services, Inc., FERC
Electric Tariff, Original Volume No. 3, Non-Firm
Transmission Service Standard Tariff - NFT (or any
successor transmission tariff of similar service)
must be obtained. In the event the amount of such
Daily Short-Term Power and Energy is reduced by
PSI, said demand charge shall be reduced by the sum
of (i) one-sixteenth (1/16) of the said agreed upon
daily rate per megawatt of the reduction for each
hour in any day during which any such reduction is
in effect, such reduction not to exceed the agreed
upon demand charge for such day, and (ii) the
reduction, if any in the demand charge paid by PSI
to the Third Party;
(2) for each megawatt-hour purchased by PSI from a
Third Party to supply Daily Short-Term Energy
delivered during such period, an energy charge of
100% of the Out-of-Pocket Cost paid therefor by
PSI, plus $1.00 per megawatt-hour (for difficult to
quantify energy-related costs), plus any
transmission losses resulting on the system of the
CINergy Operating Companies on account of the
transaction, and plus any regulatory commission
charges and taxes incurred by PSI on account of the
transaction.
3.3 Notwithstanding the rates stated in the Subsections
3.1.1, 3.1.3, 3.2.1 and 3.2.3 above, when IPL is the
supplying Party, the sum of the demand and energy charges for
each specific reservation made pursuant to Section 2 of this
Service Schedule C shall not:
(1) exceed the total of:
(i) the product of the number of kilowatts
reserved for such reservation times the maximum
Weekly or Daily demand charge, whichever is
applicable, specified above in Subsections 3.1.1,
3.1.3, 3.2.1 and 3.2.3, as appropriate; and
(ii) the product of the number of kilowatt-hours
supplied for such reservation times 110% of the
average cost per kilowatt-hour of energy generated
by IPL's Petersburg Unit No. 4 for the last
preceding month during which it was run; or
(2) be less than 110% of the total Out-Of-Pocket Cost
of supplying the Short Term Energy for such reservation.
3.4 Notwithstanding the rates stated in Subsections 3.1.2,
3.1.3, 3.2.2 and 3.2.3 above, when PSI and CINergy Services
are the supplying Party, the sum of the demand and energy
charges for each specific reservation made pursuant to
Section 2 of this Service Schedule C shall not:
(1) exceed the total of:
(i) the product of the number of megawatts reserved
for such reservation times the maximum Weekly or
Daily demand charge, whichever is applicable,
specified above in Subsections 3.1.2, 3.1.3, 3.2.2
and 3.2.3, as appropriate, and plus
(ii) the product of the number of megawatt-hours
supplied for such reservation times 110% of the
average cost per megawatt-hour of energy generated
by the CINergy Operating Companies* Zimmer Unit No.
1 and Gibson Unit No. 5 for the preceding month;
nor
(2) be less than 100% of the Out-Of-Pocket Costs of
supplying the Short Term Energy for such reservation.
3.5 The aggregate instant total capacity of all IPL sales
under this and other Service Schedules which are a part of
this and other IPL Agreements, for which the rates charged
have been supported on the basis that total revenues will not
exceed the costs of Petersburg Unit No. 4, is limited to
515MW.
3.6 The total power of all sales by the CINergy Operating
Companies and CINergy Services under this and other
agreements of the CINergy Operating Companies and CINergy
Services, for which the agreed upon demand charge is
determined based on Zimmer Unit No. 1 and Gibson Unit No. 5,
is limited to 925 MWs (CINergy Operating Companies* Zimmer
Unit No. 1 Net Demonstrated Capability of 612 MWs and Gibson
Unit No. 5 Net Demonstrated Capability of 313 MWs) on an
hourly basis. For sales in excess of the power limitation of
925 MWs noted above, the rate shall consist of an energy
charge of up to 110% of Out-of-Pocket Cost and a demand
charge of up to $1,252 per megawatt per week or a demand
charge of up to $209 per megawatt per day, the total charge
in any one week shall be no more than the product of $1,252
and the greatest number of megawatts reserved in any hour
during said week (such charge pertains to the production
component only). Non-firm transmission service per the
provisions of the CINergy Services, Inc., FERC Electric
Tariff, Original Volume No. 3, Non-Firm Point-to-Point
Transmission Service Standard Tariff - NFT (or any successor
transmission tariff of similar service) must be obtained; but
in no event shall the total revenue (energy charge and demand
charge combined) be less than 100% of the Out-of-Pocket Costs
of supplying the Short-Term Energy for such reservation.
Notwithstanding all previous Subsections, when power is sold
under both this Subsection and Subsection 3.1.2 in any week,
the total demand charge will be the weighted average demand
charges in this Subsection and Subsection 3.1.2. Such
weighting will be developed by adding the number of hours
that power was provided under this Subsection times the
demand charge under this Subsection and the number of hours
that power was provided under Subsection 3.1.2 times the
demand charge in Subsection 3.1.2, with such sum being
divided by the total number of hours in the week. Also, when
power is sold under both this Subsection and Subsection 3.2.2
in any day, the total demand charge will be the weighted
average demand charges in this Subsection and Subsection
3.2.2. Such weighting will be developed by adding the number
of hours that power was provided under this Subsection times
the demand charge under this Subsection and the number of
hours that power was provided under Subsection 3.2.2 times
the demand charge in Subsection 3.2.2, with such sum being
divided by the total number of hours in the day.
EXHIBIT IV
(SECOND REVISION)
SERVICE SCHEDULE D
CARMEL SOUTHEAST TAP NETWORK POWER AND ENERGY TRANSFER
SECTION 1 - DURATION
1.1 This Service Schedule, being a part of and under the
Interconnection Agreement (referred to herein as the "1992
Agreement") dated as of May 1, 1992 between Indianapolis
Power & Light Company (hereinafter called "IPL") and PSI
Energy, Inc., formerly named Public Service Company of
Indiana, Inc., (hereinafter called "PSI") and CINergy
Services, Inc. (hereinafter called "CINergy Services"), shall
become effective as of the earlier date of either September
1, 1995 or the effective date of the Third Amendment, dated
June 30, 1995, and shall continue in effect through August
31, 1996, unless extended as provided in Section 6 hereof.
IPL, PSI and CINergy Services are sometimes hereinafter
referred to individually as "Party" or collectively as
"Parties" where appropriate.
SECTION 2 - FACILITIES TO BE PROVIDED
2.1 PSI shall provide, install, operate and maintain, at its
own expense, during the term of this Service Schedule D as
defined in Section 6 hereof, the following facilities:
(i) At its Carmel Southeast Substation - a 138,000 volt
three-phase interrupting device, a 24/40 MVA transformer,
12,470 volt metering equipment, relaying, switching, a
supervisory control remote terminal unit, a communication
circuit from the supervisory unit to IPL*s Load Dispatch
Office and appurtenant equipment, all of which shall be
subject to the prior approval of IPL. PSI shall be
responsible for installing, owning and maintaining all
necessary protection equipment required by IPL to protect
IPL*s facilities associated with Carmel Tap. PSI*s remote
terminal unit shall provide data acquisition, remote status
and control of the load and allow PSI to provide real time
dispatch of their generation to their load as well as load
control while IPL will be provided real time breaker status
and load data.
(ii) A 138,000 volt transmission line extending from
Carmel Southeast Substation to Transmission Tower
Number 7 (Map Section 173A) on IPL's 138,000 volt
North-River Road (132-57) transmission line,
together with a 138,000 volt tap at such tower, to
be known as the Carmel Tap Point.
2.2 IPL shall provide, install, operate and maintain, as
direct assignment facilities at the sole benefit and expense
of PSI, during the term of the Carmel Tap Point as defined in
Section 6 hereof, a 138,000 volt two-way switching point with
supervisory controlled 138,000 volt line interrupting
disconnect switches and associated facilities such as a
switch tower, supervisory terminal unit and communication
circuit at the Carmel Tap Point.
SECTION 3 - SERVICES TO BE RENDERED
3.1 The Parties hereto mutually agree that their respective
radial distribution systems will not be operated in parallel
through the Carmel Tap Point. Electric energy supplied by
IPL to PSI at the Carmel Tap Point will be treated as
capacity and energy simultaneously transferred into IPL's
system by PSI through the other interconnection points of the
Parties and will be used only to supply the ultimate
consumers of PSI who are or may be served from PSI's Carmel
Southeast Substation. Any capacity or energy delivered by
IPL to PSI through the Carmel Tap Point shall be
simultaneously supplied by PSI to IPL through any of the
interconnection points of the Parties. PSI*s supplied energy
shall include an adder of approximately 3%-5% to the capacity
and energy delivered to the Carmel Tap by IPL to compensate
IPL for capacity and energy losses occurring on IPL*s system
and PSI*s tapped transmission line and transformer bank
(metered at secondary voltage) due to the transfer of energy
to the Carmel Tap Point.
3.2 IPL shall provide PSI with the following services:
1) Firm, network transmission service including a
capacity reservation (34,500 volt, 138,000 volt and
above) of up to and including 20 MW*s (measured at
the other IPL/PSI interconnection points as defined
in the 1992 Agreement). Said service and
reservation shall be planned for and provided on
the same basis as IPL*s firm native load customers
only during the term of this service schedule as
set forth in Section 6 herein of this Agreement.
2) Non-firm transmission service (34,500 volt, 138,000
volt and above) up to and including 30 MW*s
(measured at the other IPL/PSI interconnection
points in the 1992 Agreement) in addition to the
firm transmission listed in Point 1 above. Said
non-firm service shall be on an as available,
interruptible basis when requested by PSI.
Upon IPL*s request, PSI shall immediately curtail and/or
interrupt its firm load served by the 20 MW firm network
transmission and reservation service on the same basis as
IPL*s firm native load customers. If PSI*s demand exceeds
their reservation (herein called "excess loading") PSI shall
demonstrate that all such demand exceeding their reservation
is 1) immediately interruptible by contract or 2) that such
excess loading occurred due to emergency switching lasting
less than a total of two (2) weeks within any six-month
period. Otherwise such excess loading shall be treated as
having automatically increased PSI*s reservation, for billing
purposes only, until IPL is satisfied PSI has taken actions
to permanently eliminate such excess loading. IPL shall
coordinate non-emergency maintenance outages with PSI and
provide a minimum notification by 12:00 noon of the day
before the scheduled outage.
3.3 IPL and PSI shall periodically conduct independent
and/or joint studies of their future systems to serve the
Indianapolis northeast metropolitan area. PSI shall annually
update and provide IPL with their ten year demand projections
for the Carmel Tap Point. If such studies indicate problems
due to PSI*s 20 MW reservation or projected increase in
reservation, then IPL and PSI shall jointly or independently,
as soon as practicable, develop plans and estimates of cost
for the installation of any additional equipment or
facilities necessary to effect a long term solution to such
problem so that transmission services hereunder may be
reliably continued in accordance with IPL standards.
IPL*s studies of this service cover the first five years and
identified facilities during that period which may need to be
upgraded if area demand grows faster than presently
projected. If facility upgrades are required, PSI shall pay
annual carrying costs on a monthly basis during the time
period from the in-service date of the facilities until IPL*s
area load increases by the amount of PSI*s 20 MW reservation
plus actual and projected increases in reservation (herein
called "period of advancement") after which the remaining
costs shall be rolled into IPL*s rate analysis. Any time
PSI*s reservation, as determined under 3.2 above, requires
IPL to install facilities in advance of its need, PSI shall
pay annual carrying cost on such facilities during the period
of advancement. Increased reservations beyond 20 MWs shall
be treated as interruptible until all necessary facilities to
reliably accommodate these loads are placed in service. IPL
will not increase or upgrade the capacity of its existing or
planned transmission facilities in order to provide service
under this Agreement if doing so would unduly 1) impair IPL*s
system reliability or 2) jeopardize the benefits of service
or 3) increase the cost of service to IPL*s Native Load
Customers and other customers to whom IPL has a pre-existing
contractual obligation.
In the event PSI does not elect to continue its reservation
after the term of this Service Schedule, PSI shall pay 1) the
stranded cost of all IPL*s facilities directly assignable to
providing firm service for PSI*s reservation and 2) the
remaining annual cost on a monthly basis of all system
improvements from the termination date until IPL*s area load
increase equals the amount of PSI*s reservation. In the
event IPL can*t obtain regulatory approvals for facility
modifications needed to increases PSI*s reservation, then
firm service shall not be provided for the amount of the
increased service reservation.
3.4 PSI shall provide for ancillary services such as dynamic
reactive var/voltage support, all generation reserves, real
time generation dispatch, load following and dispatch control
services needed to support the operation of the Carmel Tap
Point.
3.5 IPL shall file with the FERC an amendment to Service
Schedule D for all direct assignment facilities (not covered
in Section 2.2) to be provided for PSI by IPL under this
Service Schedule and for all costs for advanced system
improvements during the "period of advancement" due to the
PSI transmission reservation provided under Service Schedule
D. FERC*s failure to accept the cost assignments for either
direct assignment facilities and/or advanced system
improvements due to the PSI network load service provided in
this Service Schedule D shall result in 1) IPL terminating
its obligation to provide and plan for PSI*s transmission
reservation as covered in Section 3.2 and Section 3.3 above
or 2) PSI may elect to reduce the level and/or firmness of
PSI*s transmission reservation so that additional direct
assignment facilities and/or system improvement facility
advancements won*t be needed or 3) PSI may elect to terminate
service provided hereunder provided that upon termination of
this Service Schedule D by PSI, PSI shall remain responsible
for paying IPL all costs remaining for all direct assignment
facilities provided by IPL and all remaining costs for all
advanced system improvements attributed to PSI during the
period of advancement where said facilities have been filed
with and accepted by the FERC including the direct assignment
facilities provided initially under Section 2.2. The
stranded cost of the direct assignment facilities provided
under Section 2.2 shall be calculated and marked up for tax
effects as shown in Attachment 1 and shall be paid by PSI
within 30 days of receipt of the bill from IPL.
SECTION 4 - DEVIATIONS IN DELIVERIES AT CARMEL TAP POINT
4.1 The Parties agree that with respect to the Carmel Tap
Point, PSI shall simultaneously supply (including adjustments
for losses) to IPL from PSI*s other interconnection points
with IPL the capacity and energy delivered to PSI by IPL.
The Parties recognize, however, that despite their best
efforts to simultaneously supply and deliver capacity and
energy (including adjustments for losses) deviations between
actual and scheduled energy transfers may occur. Electric
energy resulting from such deviations shall, at the option of
IPL, be settled for either by return of equivalent energy or
by payment of Out-Of-Pocket Costs. If equivalent energy is
returned, it shall be returned at times when the generating
costs of IPL are equivalent to the generating costs of IPL at
the time of the deviations or, if IPL elects to have
equivalent energy returned under different conditions, it
shall be returned in such amounts, to be mutually agreed
upon, as will compensate IPL for the difference in
conditions.
IPL, at its option, may elect to bill for such Out-Of-Pocket
Costs, plus ten percent of such cost, for any energy supplied
over and above that scheduled by PSI for any hour or hours
during the billing period. Such costs shall be determined at
the Carmel Tap Point by taking into account electrical losses
incurred from the source or sources of such energy to said
Tap Point.
4.2 If IPL elects to bill for any energy supplied over and
above that scheduled by PSI for any hour or hours during the
billing period where the energy was supplied by a Third Party
then in accordance with the FERC Order 84 the maximum amount
to be billed by IPL to PSI shall be 100% of the Third Party
demand and energy charge plus 1 mill/kwhr (the 1 mill/kwhr
adder is applicable only to transactions with a duration of
less than one year) plus IPL*s network transmission rate as
accepted by the FERC under this Service Schedule D.
SECTION 5 - COMPENSATION
5.1 FIRM SERVICE - Electric power measured in kilowatts
supplied by PSI and delivered at the Carmel Tap Point under
the 1992 Agreement by IPL to PSI shall be billed on a monthly
basis the annual cost of IPL*s transmission system multiplied
by the ratio of the sum of PSI*s twelve 20 MW reservations
divided by IPL*s annual system peak demand which equals
$283,200 annually as calculated in the cost support Appendix
A. The loss factors consisting of a 3-5% adder, as noted in
Section 3.1 hereof, shall include PSI*s radial transmission
line and transformer bank associated with the Carmel Tap
Point and IPL*s 34,500 volt and above transmission system.
The loss factors shall include PSI*s radial transmission line
and transformer bank associated with the Carmel Tap Point and
IPL*s transmission system. The loss factors shall be
determined by the annual transmission system loss studies
performed by IPL and PSI. Also, increases in PSI*s
reservation shall be billed by using the same methodology.
5.2 NON-FIRM SERVICE - Electric power measured in kilowatts
supplied by PSI and delivered at the Carmel Tap Point under
the 1992 Agreement by IPL to PSI shall be billed at $1.18 per
kilowatt-month plus $0.01 per kilowatt-month for IPL dispatch
control. This demand charge for non-firm service applies to
usage above PSI*s firm service reservation and shall be based
upon the difference in maximum hourly demand in kilowatts
measured and the amount of PSI*s reservation in the calendar
month of billing. The loss factors consisting of a 3-5%
adder, as noted in Section 3.1 hereof, shall include PSI*s
radial transmission line and transformer bank associated with
the Carmel Tap Point and IPL*s 34,500 volt and above
transmission system. The loss factors shall be determined by
the annual transmission system loss studies performed by IPL
and PSI.
5.3 DIRECT ASSIGNMENT FACILITIES - PSI shall pay IPL on a
monthly basis IPL*s annual charges on the total installed
cost of the facilities provided in Section 2.2 above
multiplied by IPL*s annual carrying charges as calculated in
Attachment 1 and revisions will be filed with the FERC.
SECTION 6 - TERM OF AGREEMENT
6.1 This Service Schedule shall terminate August 31, 1996
unless PSI notifies IPL at least six (6) months prior to such
termination date that it desires to continue service to the
Carmel Tap Point; provided however, that any continued
service is subject to such terms and conditions as are
mutually agreed to by the Parties.
Fourth Amendment
June 26, 1996
Mr. Ron C. Snead
Cinergy Corporation
139 East Fourth Street
Cincinnati, OH 45201
Re: IPL/PSI Interconnection Agreement - Service Schedule D
Dear Ron:
This is to confirm the phone conversation on June 10, 1996,
in which you and Jerry Fohey, Director, Electric System
Planning, discussed extending our agreement regarding
transmission service IPL provides PSI Energy at the Carmel
Southeast Tap by one year to and including August 31, 1997.
You indicated that PSI Energy was agreeable to so extending
Service Schedule D (Carmel Southeast Tap Network Power and
Energy Transfer).
Please confirm by signature below, Cinergy's agreement that
the existing Service Schedule D, under which IPL currently
provides service to PSI Energy at the Carmel Southeast Tap,
will be extended by one year to and including August 31,
1997, with the same rates, terms and conditions. Further,
Cinergy and IPL agree that PSI Energy also has the option to
take transmission service for the Carmel Southeast Tap under
any open access transmission tariffs that may be filed by IPL
and which become effective after the date of this letter
agreement.
Three original copies of this letter are provided for your
signature. Please return two signed copies to IPL.
Regards,
/s/ John C. Berlier, Jr.
John C. Berlier, Jr.
Vice President - Resource
Planning & Rates
Enclosures
ACKNOWLEDGEMENT
By: /s/ John C. Procario
Title: General Manager
Company: Cinergy
Fifth Amendment
June 10, 1997
Mr. Ron C. Snead
Cinergy Corporation
139 East Fourth Street
Cincinnati, OH 45201
Re: IPL/PSI Interconnection Agreement - Service Schedule D
Dear Ron:
This letter seeks to extend our existing agreement regarding
transmission service IPL provides PSI Energy at the Carmel
Southeast Tap, which expires August 31. IPL proposes to
extend Service Schedule D (Carmel Southeast Tap Network Power
and Energy Transfer), a part of the existing interconnection
agreement between IPL and Cinergy, dated June 30, 1995, by
one year, to and including August 31, 1998.
Please confirm by signature below, Cinergy's agreement that
the existing Service Schedule D, under which IPL currently
provides service to PSI Energy at the Carmel Southeast Tap,
will be extended by one year to and including August 31,
1998, with the same rates, terms and conditions. Further,
Cinergy and IPL agree that PSI Energy also has the option to
take transmission service for the Carmel Southeast Tap under
any open access transmission tariffs that may be filed by IPL
and which become effective after the date of this letter
agreement.
Three original copies of this letter are provided for your
signature. Please return one signed original copy to me and
retain one copy for your files.
Regards,
/s/ John C. Berlier
John C. Berlier
Vice President
Resource Planning & Rates
Enclosures
ACKNOWLEDGEMENT
By: /s/ John C. Procario
Title: Vice President
Electric System Operations
Company: Cinergy Corp.
SIXTH AMENDMENT
TO THE
INTERCONNECTION AGREEMENT
AMONG
INDIANAPOLIS POWER & LIGHT COMPANY
PSI ENERGY, INC.
AND CINERGY SERVICES, INC.
0.01 THIS SIXTH AMENDMENT, dated on the 16th day of December,
1997, among INDIANAPOLIS POWER & LIGHT COMPANY ("IPL"), PSI
ENERGY ("PSI"), INC., and CINERGY SERVICES, INC. ("Cinergy
Services"). IPL, PSI, and Cinergy Services are referred to
individually as "Party" and collectively as "Parties" where
appropriate.
WITNESSETH:
0.02 WHEREAS, There is now in force and effect between IPL,
PSI, and Cinergy Services an Interconnection Agreement, dated
as of May 1, 1992 (the "1992 Agreement"); and
0.03 WHEREAS, the Parties desire to modify the 1992
Agreement, and
0.04 NOW, THEREFORE, in consideration of the premises and
mutual covenants and agreements of the Parties, as herein set
forth, the Parties agree as follows:
1.01 The following provisions of the 1992 Agreement are
modified as follows:
1.01.1 Section 4.01 of the 1992 Agreement shall read
as follows:
"4.01. Delivery Points. All electric energy
delivered under the 1992 Agreement shall be of the
character commonly known as three-phase sixty Hertz
energy, and shall be delivered at the
Interconnection Points specified under Section 1.01
hereof, at a nominal voltage of 138,000 volts at
the Five Points and Centerton Interconnection
Points, at the 138 kV Petersburg Interconnection
Point, and at the Carmel Tap Point; and at a
nominal voltage of 345,000 volts at the Whitestown
and Gwynneville Interconnection Points, and at the
345 kV Petersburg Interconnection Point; and at
such other points and voltages as hereafter may be
agreed upon by the Parties pursuant to Section 1.02
hereof. In addition to the interconnection points
provided in Sections 1.01 and 1.02, PSI may request
IPL deliver electric energy under the 1992
Agreement at interconnection points IPL may have
with third parties (hereinafter referred to as
"Alternate Delivery Points")."
1.01.2 Section 4.03 of the 1992 Agreement shall read
as follows:
"4.03. Metering Points. Electric power and energy
supplied and delivered under the 1992 Agreement
shall be measured by suitable metering equipment
which shall be provided, owned and maintained by
PSI or IPL as designated below at the following
metering points:
(i) 138,000 volt metering equipment installed
by PSI at the Five Points Substation;
138,000 volt metering equipment installed
by PSI at the Centerton Substation;
138,000 and 345,000 volt metering
equipment installed by IPL at the
Petersburg Station; 345,000 volt metering
equipment installed by IPL at its
Sunnyside Substation and at PSI's
Gwynneville and Whitestown Substations;
and 12.47 kV metering equipment installed
by PSI at its Carmel Southeast
Substation, and
(ii) At such other locations as hereafter may
be agreed upon by the Parties pursuant to
Section 1.02 hereof.
Electric power and energy supplied and delivered at
the Alternate Delivery Points specified in Section
4.01 shall be measured by metering equipment either
provided, owned and maintained by IPL or third
parties. Such metering equipment shall not be
subject to Sections 4.04 through 4.07 but shall
meet the reasonable requirements of the Operating
Committee."
1.01.3 Section 6.03 of the 1992 Agreement shall read
as follows:
"6.03. Billing Payments. All bills for amounts
owed by one Party to the other Party shall be due
on the first business day following the fifteenth
(15th) day after the end of the calendar month or
period service was rendered, or on the tenth (10th)
business day following receipt of a bill, whichever
is later. Payments shall be made by electronic
transfer or by such other mutually agreeable method
as shall cause such payment to be available for the
account of the payee on or before the due date.
Interest on unpaid amounts, both principal and
interest, shall accrue daily at the then current
prime interest rate per annum of The Chase
Manhattan Bank, N.A., New York, New York, plus two
percent (2%) per annum, or the maximum rate
permitted by law, whichever is less, from the date
due until the date upon which payment is made."
1.01.4 Section 7.01 of the 1992 Agreement shall read
as follows:
"7.01. Operating Committee Organization and
Duties. To coordinate the operation of their
respective generation, transmission, and
substation facilities in order that the benefits of
the 1992 Agreement may be realized by the Parties
to the fullest practicable extent, the Parties
shall establish a committee of authorized
representatives to be known as the Operating
Committee. Each of the Parties shall designate in
writing delivered to the other Party, the person
who is to act as its authorized representative (the
"OC Representative") on said committee (and the
person or persons who may serve as Alternate
whenever the OC Representative is unable to act).
The OC Representative and Alternate or Alternates
shall each be persons familiar with the generation,
transmission, and substation facilitates of the
system of the Party he represents, and each shall
be fully authorized (i) to cooperate with the other
OC Representative (or Alternates) and (ii) as the
need arises and subject to the declared intentions
of the Parties as herein set forth and to the terms
hereof and the terms of any other agreements then
in effect between the Parties, to determine and
agree from time to time upon the following:
(i) All matters pertaining to the
coordination of maintenance of the
generation and transmission facilities of
the Parties.
(ii) All matters pertaining to the control of
time, frequency, energy flow, kilovar
exchange, power factor, voltage, and
other similar matters bearing upon the
satisfactory synchronous operation of the
systems of the Parties.
(iii) Such other matters not specifically
provided for herein upon which
cooperation, coordination and agreement
as to quantity, time, method, terms and
conditions are necessary, in order that
the operation of the respective systems
of the Parties may be coordinated to the
end that the potential benefits
anticipated by the Parties will be
realized to the fullest extent
practicable.
(iv) All matters pertaining to the delivery of
electric power and energy pursuant to the
1992 Agreement."
1.01.5 Section 8.02 of the 1992 Agreement shall read
as follows:
"8.02. Relative Responsibilities. Each Party
assumes all responsibility for receipt and delivery
of electricity on its system to and from the Points
of Interconnection specified in Section 1.01 hereof
or agreed upon pursuant to Section 1.02 hereof or
as requested by PSI pursuant to Section 4.01.
Neither Party assumes any responsibility with
respect to the construction, installation,
maintenance or operation of the system of the other
Party or of the systems of third parties, in whole
or in part. In no event shall one Party be liable
to the other Party for damage or injury to any
person or property, whatsoever, arising, accruing
or resulting from, in any manner, the receiving,
transmission, control, use, application or
distribution of said electric power and energy.
Each Party shall use reasonable diligence to
maintain its facilities in proper and serviceable
condition, and shall take reasonable steps and
precautions for maintaining the services agreed to
be provided and received under the 1992 Agreement.
Each Party shall be responsible for its own
compliance with all applicable environmental
regulations and shall bear all costs arising from
its failure to comply with such environmental
regulations."
2.01 This Sixth Amendment shall be effective as of February
15, 1998 or as of the date it becomes effective under
applicable regulations or orders of FERC, whichever is later.
3.01 This Sixth Amendment is made subject to the jurisdiction
of any governmental authorities having jurisdiction in the
premises.
IN WITNESS WHEREOF, the Parties have caused this Sixth
Amendment to the 1992 Agreement to be executed by their
respective duly authorized officers, as of the day, month and
year first above-written.
INDIANAPOLIS POWER & LIGHT COMPANY
By /s/ Ramon L. Humke
Ramon L. Humke, President and
Chief Operating Officer
CINERGY SERVICES, INC.
By /s/ Michael E. Martin
Michael E. Martin, Vice President
PSI ENERGY, INC.
By /s/ John Mutz
John Mutz, President
EXHIBIT 10.18
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. D0392B1A97
DECLARATIONS NO. 1
Item 1: This POLICY provides indemnification with respect to the
DIRECTORS and OFFICERS of:
IPALCO Enterprises, Inc.
25 Monument Circle
Indianapolis, IN 46204
Item 2: POLICY PERIOD: from the 1st day of June, 1997, to
the 1st day of June, 1998 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: $219,948.
B. MINIMUM PREMIUM: $ 87,979.
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 I(A)(2)
only:
(1) $ 200,000 Each WRONGFUL ACT not
arising from NUCLEAR OPERATIONS
(2) $ 200,000 Each WRONGFUL ACT arising from
NUCLEAR OPERATIONS
DECLARATIONS
continued
POLICY NO. D0392B1A97
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
ENTITY Indianapolis Power & Light Company
ADDRESS 25 Monument Circle
P.O. Box 1595 (Zip 46206-1595)
Indianapolis, IN 46204
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 10 Exchange Place
Jersey City, New Jersey 07302
ENDORSEMENTS ATTACHED AT POLICY ISSUANCE: 1-4
Countersigned at Jersey City, New Jersey
On June 6, 1997
AEGIS Insurance Services, Inc.
By /s/ Melford H. Butts
Authorized Representative
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 pay on behalf of the
DIRECTORS and OFFICERS 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 pay on behalf of the COMPANY any and
all sums 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, as
ULTIMATE NET LOSS, 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 6 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.
(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 I(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 II(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(1)
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;
(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 is 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).
(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 expense incurred by or on behalf of the
DIRECTORS, OFFICERS or, where reimbursable under
Insuring Agreement I(A)(2), the COMPANY 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, an 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.
In the event that a CLAIM which is within the
coverage afforded under this POLICY is made against
any DIRECTOR or OFFICER and such CLAIM includes a
claim against the lawful spouse of such DIRECTOR or
OFFICER solely by reason of (a) such spousal status
or (b) such spouse's ownership interest in property
or assets which are sought as recovery for WRONGFUL
ACTS of a DIRECTOR or OFFICER, such spouse shall be
deemed to be a DIRECTOR or OFFICER hereunder, but
solely with respect to such claim. In no event,
however, shall the lawful spouse of a DIRECTOR or
OFFICER be deemed to be a DIRECTOR or OFFICER as
regards any CLAIM in respect of which there is a
breach of duty, neglect, error, misstatement,
misleading statement or omission actually or
allegedly caused, committed or attempted by or
claimed against such spouse, acting individually or
in his or her capacity as the spouse of a DIRECTOR
or OFFICER.
(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, where
reimbursable under Insuring Agreement I(A)(2), the
COMPANY 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. 441b(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.
(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.
(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 percent (50%) of whose
outstanding securities or financial interest
representing the present right to vote for election
of directors (or the appointment of a general
partner in respect of a limited partnership or
manager in respect of a limited liability company)
are owned by the COMPANY and/or one or more of its
"SUBSIDIARIES".
(O) 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, provided that ULTIMATE NET LOSS
does not include any amount allocated, pursuant to
Condition (T), to CLAIMS against persons or
entities other than DIRECTORS and OFFICERS or to
non-covered matters.
(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;
(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 16(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; and
(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) for violation(s) 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.
The term "any policy" refers to any Directors and
Officers Liability Insurance Policy, any General
Partners Liability Insurance Policy or any other
policy affording substantially similar coverage
(whether issued by the INSURER or any other
carrier).
(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 CLAIM(S) 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, or the COMPANY; and
(b) not 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) 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, or 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) (a) If, after inception of the POLICY PERIOD,
(i) the COMPANY or any of its
SUBSIDIARIES forms or acquires any
SUBSIDIARY or acquires any entity by
merger into or consolidation with
the COMPANY or any SUBSIDIARY, and
(ii) the operations of such formed or
acquired entity are related to,
arising from or associated with the
production, transmission, delivery
or furnishing of electricity, gas,
water or sewer service to the public
or the conveyance of telephone
messages for the public; and
(iii) the total assets of such formed
or acquired entity are not greater
than the lesser of $100,000,000 or
ten percent (10%) of the COMPANY'S
total assets,
coverage shall be provided for the
DIRECTORS and OFFICERS of such entity
from the date of formation, acquisition,
merger or consolidation, 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, acquisition, merger or
consolidation.
(b) In respect of any SUBSIDIARY formed or
acquired after the inception of the
POLICY PERIOD and not subject to
paragraph (a) above, or of any entity
acquired by merger into or consolidation
with the COMPANY or any SUBSIDIARY after
the inception of the POLICY PERIOD and
not subject to paragraph (a) above, the
COMPANY shall report such formation or
acquisition within ninety (90) days
thereafter and, if so reported, upon
payment of an additional premium and upon
terms as may be required by the INSURER,
such coverage shall be provided for the
DIRECTORS and OFFICERS of such newly
formed or acquired SUBSIDIARY or merged
or consolidated entity, but only with
respect to WRONGFUL ACTS actually or
allegedly caused, committed, or attempted
during that part of the COVERAGE PERIOD
which is subsequent to such acquisition,
merger or consolidation.
(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 into 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
other 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.
(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.
In the event of bankruptcy or insolvency of the
COMPANY, subject to all the terms of this POLICY,
the INSURER shall pay on behalf of the DIRECTORS
and OFFICERS under Insuring Agreement I(A)(1) (in
excess of the UNDERLYING LIMITS, if any, applicable
to Insuring Agreement I(A)(1)) for ULTIMATE NET
LOSS they shall become legally obligated to pay
which would have been indemnified by the COMPANY
and reimbursable by the INSURER under Insuring
Agreement I(A)(2) but for such bankruptcy or
insolvency; provided, however, that the INSURER
shall be subrogated, to the extent of any payment,
to the rights of the DIRECTORS and OFFICERS to
receive indemnification from the COMPANY but only
up to the amount of the UNDERLYING LIMITS
applicable to Insuring Agreement I(A)(2) less the
amount of the UNDERLYING LIMITS, if any, applicable
to Insuring Agreement I(A)(1).
(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 complied 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
percent (200%) 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.
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
percent (100%) 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 on 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
percent (200%) 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 (i) the Policy Premium stated in
Item 4A of the Declarations and (ii) the Minimum
Premium stated in Item 4B of the Declarations.
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.
(N) Currency
All amounts stated herein are expressed in United
States Dollars and all amounts payable hereunder
are payable in United States Dollars.
(O) Sole 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.
(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) Dispute Resolution and Service of Suit
Any controversy or dispute arising out of or
relating to this POLICY, or the breach, termination
or validity thereof, shall be resolved in
accordance with the procedures specified in this
Section IV (Q), which shall be the sole and
exclusive procedures for the resolution of any such
controversy or dispute.
(1) Negotiation. The COMPANY and the INSURER
shall attempt in good faith to resolve any
controversy or dispute arising out of or
relating to this POLICY promptly by
negotiations between executives who have
authority to settle the controversy. Any
party may give the other party written notice
of any dispute not resolved in the normal
course of business. Within fifteen (15) days
the receiving party shall submit to the other
a written response. The notice and the
response shall include (a) a statement of each
party's position and a summary of arguments
supporting that position, and (b) the name and
title of the executive who will represent that
party and of any other person who will
accompany the executive. Within thirty (30)
days after delivery of the disputing party's
notice, the executives of both parties shall
meet at a mutually acceptable time and place,
and thereafter as often as they reasonably
deem necessary, to attempt to resolve the
dispute. All reasonable requests for
information made by one party to the other
will be honored. If the matter has not been
resolved within sixty (60) days of the
disputing party's notice, or if the parties
fail to meet within thirty (30) days, either
party may initiate mediation of the
controversy or claim as provided hereinafter.
All negotiations pursuant to this clause will
be kept confidential and shall be treated as
compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and
state rules of evidence.
(2) Mediation. If the dispute has not been
resolved by negotiation as provided herein,
the parties shall endeavor to settle the
dispute by mediation under the then current
CPR Institute Model Procedure for Mediation of
Business Disputes. The neutral third party
will be selected from the CPR Institute Panels
of Neutrals, with the assistance of the CPR
Institute.
(3) Arbitration. Any controversy or dispute
arising out of or relating to this POLICY, or
the breach, termination or validity thereof,
which has not been resolved by non-binding
means as provided herein within ninety (90)
days of the initiation of such procedure,
shall be settled by binding arbitration in
accordance with the CPR Institute Rules for
Non-Administered Arbitration of Business
Disputes (the "CPR Rules") by three (3)
independent and impartial arbitrators. The
COMPANY and the INSURER each shall appoint one
arbitrator; the third arbitrator, who shall
serve as the chair of the arbitration panel,
shall be appointed in accordance with the CPR
Rules. If either the COMPANY or the INSURER
has requested the other to participate in a
non-binding procedure and the other has failed
to participate, the requesting party may
initiate arbitration before expiration of the
above period. The arbitration shall be
governed by the United States Arbitration Act,
9 U.S.C. Subsection 1 et seq., and judgment
upon the award rendered by the arbitrators may
be entered by any court having jurisdiction
thereof. The terms of this POLICY are to be
construed in an evenhanded fashion as between
the COMPANY and the INSURER in accordance with
the laws of the jurisdiction in which the
situation forming the basis for the
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 this POLICY without regard to authorship of
the language and without any presumption or
arbitrary interpretation or construction in
favor of either the COMPANY or the INSURER.
In reaching any decision the arbitrators shall
give due consideration for the customs and
usages of the insurance industry. The
arbitrators are not empowered to award damages
in excess of compensatory damages and each
party hereby irrevocably waives any such
damages.
In the event of a judgment being entered
against the INSURER on an arbitration award,
the INSURER at the request of the 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.
(4) Service of Suit. Service of process in such
suit or any other suit instituted against the
INSURER under this POLICY may be made upon
Messrs. LeBoeuf, Lamb, Greene, & MacRae,
L.L.P., 125 West 55th Street, New York, New
York 10019. The INSURER will abide by the
final decision of the court in such suit or of
any appellate court in the event of any
appeal. Messrs. LeBoeuf, Lamb, Greene &
MacRae, L.L.P. are authorized and directed to
accept service of process on behalf of the
INSURER in any such suit and, upon the
COMPANY's request, to give a written
undertaking to the COMPANY's that they will
enter a general appearance upon the INSURER's
behalf in the event such suit is instituted.
Nothing in this clause constitutes or should
be understood to constitute a waiver of the
INSURER's right to commence an action in any
court of competent jurisdiction in the United
States, to remove an action to a United States
District Court, or to seek to transfer a case
to another court as permitted by the laws of
the United States or of any state in the
United States.
(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.
(T) Allocation
If a CLAIM is made against both the DIRECTORS and
OFFICERS and others, including the COMPANY, or if a
CLAIM against the DIRECTORS and OFFICERS includes
both covered and non-covered matters, the DIRECTORS
and OFFICERS, the COMPANY and the INSURER shall
allocate any defense costs, settlement, judgment or
other loss on account of such CLAIM between covered
ULTIMATE NET LOSS attributable to the CLAIM against
the DIRECTORS and OFFICERS and non-covered loss.
Such allocation shall be based upon the relative
exposure of each party to such CLAIM for covered
and non-covered matters and the relative benefit to
each party from the defense or settlement of such
CLAIM.
If the DIRECTORS and OFFICERS, COMPANY and the INSURER
agree on an allocation of DEFENSE COSTS, the INSURER
shall advance on a current basis DEFENSE COSTS allocated
to the covered ULTIMATE NET LOSS. If the DIRECTORS and
OFFICERS, COMPANY and the INSURER cannot agree on an
allocation:
(1) no presumption as to allocation shall exist in any
arbitration, suit or other proceeding;
(2) the INSURER shall advance on a current basis
DEFENSE COSTS which the INSURER believes to be
covered under this Policy until a different
allocation is negotiated, mediated or arbitrated;
and
(3) any disagreement on the allocation of DEFENSE COSTS
is to be settled in accordance with Condition (Q).
Any negotiated, mediated or arbitrated allocation of
DEFENSE COSTS on account of a CLAIM shall be applied
retroactively to all DEFENSE COSTS on account of such CLAIM,
notwithstanding any prior advancement to the contrary. Any
allocation or advancement of DEFENSE COSTS on account of a
CLAIM shall not apply to or create any presumption with
respect to the allocation of INDEMNITY on account of such
CLAIM. Advancement by the INSURER of DEFENSE COSTS shall be
conditioned upon the DIRECTORS, OFFICERS or COMPANY, as
applicable, providing a satisfactory written undertaking to
repay the INSURER any DEFENSE COSTS finally established not
be insured.
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/ Bernard J. Kennedy /s/ Alan J. Maguire
Bernard J. Kennedy, Chairman Alan J. Maguire, President
and Chief Executive Officer and Chief Operating Officer
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Endorsement No. 1 Effective Date of Endorsement June 1, 1997
Attached to and forming part of POLICY No. D0392B1A97
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/ Melford H. Butts
Signature of Authorized Representative
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Endorsement No. 2 Effective Date of Endorsement June 1, 1997
Attached to and forming part of POLICY No. D0392B1A97
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
INCLUDING MANAGEMENT OR OPERATING COMMITTEE
I. Definition (E) DIRECTOR and OFFICER is amended to
include the following:
(4) (a) any director, officer, trustee or
employee of the COMPANY who is serving at the
specific written request of the COMPANY in the
position of a director, officer, trustee or
member of the Management or Operating
Committees of the outside FOR-PROFIT
ORGANIZATION, which position and FOR-PROFIT
ORGANIZATION are named in attachment OPC-FPM1,
while such director, officer, trustee or
employee is acting in such capacity; and
(b) any present or former director,
officer, trustee or employee of the COMPANY
who has served at the specific written request
of the COMPANY in the position of a director,
officer, trustee or member of the Management
or Operating Committees of an outside FOR-
PROFIT ORGANIZATION while such director,
officer, trustee or employee, 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, trustee or
employee 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.
OUTSIDE POSITION COVERAGE - FOR-PROFIT ORGANIZATIONS
INCLUDING MANAGEMENT OR OPERATING COMMITTEE
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, officer,
trustee or employee 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 or was not a director,
officer, trustee or employee of the COMPANY and who
is not named in attachment OPC-FPM1; 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:
Item 5: Limits of Liablity:
A. $ Each WRONGFUL ACT
B. $ Aggregate Limit of
Liability for the POLICY PERIOD
Item 6: UNDERLYING LIMITS:
This POLICY is written as Insurance
A. If this POLICY is written as Primary Insurance
with respect to Insuring Agreement I(A)(2)
only:
(1) $ Each WRONGFUL ACT not arising
from NUCLEAR OPERATIONS
(2) $ Each WRONGFUL ACT arising from
NUCLEAR OPERATIONS
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
The Limit of Liability stated in this section is
part of and not in addition to the Limits of
Liability stated in Item 5 of the Declarations.
/s/ Melford H. Butts
Signature of Authorized Representative
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Attachment OPC-FPM1 to Endorsement No. 2 Effective Date
of Endorsement June 1, 1997
Attached to and forming part of POLICY No. D0392B1A97
COMPANY IPALCO Enterprises, Inc.
Name, FOR-PROFIT ORGANIZATION and position of each director,
officer, trustee or employee of the COMPANY covered under
Endorsement No. 2
NAME FOR-PROFIT ORGANIZATION POSITION
John R. Hodowal Tecumseh Coal Corp Director
Ramon L. Humke Tecumseh Coal Corp Director
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Endorsement No. 3 Effective Date of Endorsement June 1, 1997
Attached to and forming part of POLICY No. D0392B1A97
COMPANY IPALCO Enterprises, Inc.
It is understood and agreed to that this POLICY is hereby
amended as indicated. All other terms and conditions of this
POLICY remain unchanged.
WRONGFUL TERMINATION EXCLUSION ENDORSEMENT
The POLICY is amended as follows:
1. Exclusion (D)(3) is deleted in its entirety and replaced
with the following:
(3) discrimination, sexual harassment or wrongful termination
2. Exclusion (K)(3) is deleted in its entirety. The word
"or" at the end of Exclusion (K)(2) is deleted and the semi-
colon is changed to a period.
/s/ Melford H. Butts
Signature of Authorized Representative
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
Endorsement No. 4 Effective Date of Endorsement June 1, 1997
Attached to and forming part of POLICY No. D0392B1A97
COMPANY IPALCO Enterprises, Inc.
It is understood and agreed to that this POLICY is hereby
amended as indicated. All other terms and conditions of this
POLICY remain unchanged.
CORPORATE ENTITY COVERAGE ENDORSEMENT
(SEPARATE LIMIT)
A) Except as provided in paragraph (B) below, if the
COMPANY is made a defendant in any suit or proceeding in
which a DIRECTOR or OFFICER is also a defendant, in his
respective capacity as a DIRECTOR or OFFICER, the INSURER
shall indemnify the COMPANY for any and all sums required to
reimburse it for ULTIMATE NET LOSS it has incurred in
connection with CLAIMS made against the COMPANY in such suit
or proceeding, provided (i) a DIRECTOR or OFFICER is a
defendant in such suit or proceeding as of the date the
COMPANY is first named as a defendant, (ii) such ULTIMATE NET
LOSS of the COMPANY directly relates to a CLAIM which, if
made against a DIRECTOR or OFFICER, would be covered by the
POLICY and (iii) 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.
B) The coverage under paragraph (A) above shall not apply
to, and there shall be no coverage under this Endorsement for
ULTIMATE NET LOSS incurred by the COMPANY in connection with
any CLAIM brought by or on behalf of the COMPANY.
C) The maximum amount payable by the INSURER under this
Endorsement for all ULTIMATE NET LOSS arising out of any one
WRONGFUL ACT shall be the amount slated as the limit of
liability each WRONGFUL ACT in Section (H) of this
Endorsement. The maximum amount payable by the INSURER under
this Endorsement during the POLICY PERIOD for all ULTIMATE
NET LOSS arising out of all WRONGFUL ACTS shall be the amount
stated as the Aggregate Limit of Liability for the POLICY
PERIOD in Section (H) of this Endorsement.
D) For purposes of determining and applying the UNDERLYING
LIMITS applicable to the POLICY and this Endorsement, any
ULTIMATE NET LOSS of the COMPANY for which the INSURER shall
be liable under this Endorsement shall be included within and
considered a portion of the ULTIMATE NET LOSS covered under
Insuring Agreement I(A)(2) with respect to the WRONGFUL ACT
for which a CLAIM is made against a co-defendant DIRECTOR or
OFFICER. Subject to the foregoing, the INSURER shall only be
liable under this Endorsement for the amount of ULTIMATE NET
LOSS which, together with ULTIMATE NET LOSS covered under
this POLICY without regard to this Endorsement, is in excess
of the amount stated as the UNDERLYING LIMITS applicable to
ULTIMATE NET LOSS covered under Insuring Agreement I(A)(2).
E) For purposes of determining the INSURER'S Limits of
Liability under the POLICY and this Endorsement, all defense
costs, settlement, judgment or other loss on account of any
CLAIM shall be fairly allocated between the COMPANY and the
DIRECTORS and OFFICERS consistent with the terms of the
POLICY.
F) All capitalized terms under in this Endorsement shall
have the same meaning as ascribed to them in the POLICY,
except that for purposes of the coverage supplied by this
Endorsement:
(1) references to "DIRECTORS and OFFICERS" in the
definitions of the terms "CLAIM", "DEFENSE COSTS" and
"INDEMNITY" shall be deemed also to be references to the
COMPANY; and
(2) "WRONGFUL ACT" shall also mean any alleged breach of
duty, neglect, error, misstatement, misleading statement or
omission actually or allegedly caused, committed or attempted
by the COMPANY, but only if such breach, neglect, error,
misstatement, misleading statement or omission is
interrelated with WRONGFUL ACTS of DIRECTORS or OFFICERS that
are alleged in the same suit or proceeding. All interrelated
breaches of duty, neglects, errors, misstatements, misleading
statements or omissions actually or allegedly caused,
committed or attempted by the COMPANY shall be deemed to be a
single "WRONGFUL ACT".
G) (1) Except as otherwise specifically provided in
Paragraph (G)(2) below, all Conditions set forth in the
POLICY shall apply to the coverage supplied under this
Endorsement.
(2) (i) The second sentence of Condition (G) shall have no
applicability to the coverage supplied under this
Endorsement, and the bankruptcy or insolvency of the
COMPANY shall not relieve the INSURER of any of its
obligations under this Endorsement.
(ii) For purposes of this Endorsement, reference in
any Condition to "Limits of Liability" shall be
deemed to refer to the Limits of Liability set
forth in paragraph (H) below.
(iii) For purposes of this Endorsement,
reference in Condition (L) to a CLAIM first made
against any DIRECTOR or OFFICER shall be deemed to
refer to CLAIMS first made against the COMPANY.
(iv) For purposes of this Endorsement, reference in
Condition (T) to "covered ULTIMATE NET LOSS
attributable to the CLAIM against the DIRECTORS and
OFFICERS" shall be deemed to include CLAIM(S)
against the COMPANY for which coverage is supplied
under this Endorsement.
H) Endorsement Limits of Liability:
A. $10,000,000 Each WRONGFUL ACT
B. $10,000,000 Aggregate Limit of Liability for the POLICY PERIOD
I) The INSURER shall not be liable, under this Endorsement,
to make any payment for ULTIMATE NET LOSS arising from any
CLAIMS arising from any prior or pending litigation as of
6/1/97, as well as all future CLAIMS or litigation based upon
the prior or pending litigation or derived from the same or
essentially the same facts (actual or alleged) that gave rise
to the prior or pending litigation.
/s/ Melford H. Butts
Signature of Authorized Representative
Exhibit 10.22
Indianapolis Power & Light Company
M E M O R A N D U M
DATE: April 29, 1997
TO: See Distribution Below
FROM: R.L. Humke
SUBJECT: 1997 Management Incentive Plan
DISTRIBUTION:
Officers Directors Section or Shift Supervisor
Superintendents Assistant Foremen and Multi-Foremen
Superintendents
Managers Division Other First-Line
Supervisors Supervisors
The 1997 Management Incentive Program (MIP) is established to
provide additional incentive and recognition while focusing
on the financial performance of IPL, the performance of our
Strategic Business Units (SBUs) and individual performance.
The Management Incentive Plan for 1997 is being expanded to
include all supervision from the section supervisor or
foreman level to the manager level.
MIP awards will be based on:
- - IPL's Financial Performance
The measurement of IPL financial performance is Net
Income. A threshold, or minimum amount of IPL net
income must be achieved before any award will be
paid. In 1997 that threshold amount is $112.7
million.
- - SBU Performance
Each SBU has established performance goals which
can modify half of the bonus pool for employees of
that SBU. For associates who are part of the
Corporate staff (non-SBU), the actual results of
all four SBU performance goals are averaged to
modify half the bonus pool.
- - Individual Performance
Since the amount of the maximum potential award
under the MIP has been significantly increased over
prior years, a greater importance will be placed on
individual performance. The ultimate award any
participant receives will be based on merit and as
such some awards will be reduced. The measure for
individual performance will range from 0% to 100%.
Participants performing at a high level can expect
to receive a full award. Less amounts will be
granted to those participants where further
improvement is needed. Participants whose
performance is unsatisfactory will not receive an
award.
Special requests for inclusion in the MIP need to be
submitted for approval to the Vice President of Human
Resources. Documentation supporting inclusion in the Plan is
required. In addition, at year-end, Organizational Heads may
recommend other associates who have specific work assignments
that have significantly affected IPL's performance.
If a participant retires, becomes disabled or dies during
1997, or if a person becomes eligible after the year begins,
any award payable to such person shall be prorated.
Additionally, the Big Dollar Award Program is being
continued. It is designed to reward other associates who
have made an extraordinary contribution toward Company
performance. A formal Big Dollar Award Program description
is attached.
If you have any questions concerning these programs, please
contact the leadership of your organization.
R.L. Humke
/s/ R.L. Humke
Attachment
Program Name: Big Dollar Award Program
Purpose: The program exist 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 acts, or
achievements are outside their normal
work requirement 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 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. Therefore, recommendations
for awards should be expedited.
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 10.23
FORM OF
TERMINATION BENEFITS AGREEMENT
AS AMENDED AND RESTATED, EFFECTIVE JANUARY 1, 1993
[See Schedule A attached hereto for a list of parties to,
and dates of, the Termination Benefits Agreements]
This Agreement, dated as of January 1, 1993, by and
among IPALCO ENTERPRISES, INC., an Indiana corporation
having its principal executive offices at 25 Monument
Circle, Indianapolis, Indiana 46204 ("IPALCO"),
INDIANAPOLIS POWER & LIGHT COMPANY, an Indiana
corporation having its principal executive offices at 25
Monument Circle, Indianapolis, Indiana 46204 ("IPL")
(both IPALCO and IPL being collectively referred to
herein as the "Company"), and , an Indiana resident
whose mailing address is (the "Executive").
R E C I T A L S
The following facts are true:
A. The Executive is serving the Company as a key
executive officer, and is expected to continue to make a
major contribution to the profitability, growth, and
financial strength of the Company.
B. The Company considers the continued services of
the Executive to be in the best interests of the Company
and its shareholders, and desires to assure itself of the
availability of such continued services in the future on
an objective and impartial basis and without distraction
or conflict of interest in the event of an attempt to
obtain control of the Company.
C. The Executive is willing to remain in the employ
of the Company upon the understanding that the Company
will provide him with income security upon the terms and
subject to the conditions contained herein if his
employment is terminated by the Company without cause or
if he voluntarily terminates his employment for good
reason.
D. If the Company and Executive entered into one or
more Termination Benefits Agreements prior to this
Agreement (the "Prior Termination Benefits Agreements"),
this Agreement is intended to supersede and replace the
Prior Termination Benefits Agreements.
A G R E E M E N T
In consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the
Company and the Executive agree as follows:
1. Undertaking. The Company agrees to pay to the
Executive the termination benefits specified in paragraph
2 hereof if (a) control of IPALCO is acquired (as defined
in paragraph 3(a) hereof) during the term of this
Agreement (as described in paragraph 5 hereof) and (b)
within three (3) years after the acquisition of control
occurs (i) the Company terminates the employment of the
Executive for any reason other than Cause (as defined in
paragraph 3(b) hereof), death, the Executive's attainment
of age sixty-five (65) or total and permanent disability,
or (ii) the Executive voluntarily terminates his
employment for Good Reason (as defined in paragraph 3(c)
hereof).
2. Termination Benefits. If the Executive is
entitled to termination benefits pursuant to paragraph 1
hereof, the Company agrees to pay to the Executive as
termination benefits in a lump-sum payment within five
(5) calendar days of the termination of the Executive's
employment an amount to be computed by multiplying (i)
the Executive's average annual compensation (as defined
in Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code")) payable by the Company which was
includable in the gross income of the Executive for the
most recent five (5) calendar years ending coincident
with or immediately before the date on which control of
the Company is acquired (or such portion of such period
during which the Executive was an employee of the
Company), by (ii) two hundred ninety-nine and ninety-nine
one hundredths percent (299.99%). For purposes of this
Agreement, employment and compensation paid by any direct
or indirect subsidiary of the Company will be deemed to
be employment and compensation paid by the Company.
3. Definitions.
(a) As used in this Agreement, the
"acquisition of control" means:
(i) The acquisition by any individual,
entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange
Act) of twenty percent (20%) or more of
either (A) the then outstanding shares of
common stock of IPALCO (the "Outstanding
IPALCO Common Stock") or (B) the combined
voting power of the then outstanding voting
securities of IPALCO entitled to vote
generally in the election of directors (the
"Outstanding IPALCO Voting Securities");
provided, however, that the following
acquisitions shall not constitute an
acquisition of control: (A) any acquisition
directly from IPALCO (excluding an
acquisition by virtue of the exercise of a
conversion privilege), (B) any acquisition
by IPALCO, (C) any acquisition by any
employee benefit plan (or related trust)
sponsored or maintained by IPALCO, IPL or
any corporation controlled by IPALCO or (D)
any acquisition by any corporation pursuant
to a reorganization, merger or
consolidation, if, following such
reorganization, merger or consolidation, the
conditions described in clauses (A), (B) and
(C) of subsection (iii) of this paragraph
3(a) are satisfied;
(ii) Individuals who, as of the date
hereof, constitute the Board of Directors of
IPALCO (the "Incumbent Board") cease for any
reason to constitute at least a majority of
the Board of Directors of IPALCO (the
"Board"); provided, however, that any
individual becoming a director subsequent to
the date hereof whose election, or
nomination for election by IPALCO's
shareholders, was approved by a vote of at
least a majority of the directors then
comprising the Incumbent Board shall be
considered as though such individual were a
member of the Incumbent Board, but
excluding, for this purpose, any such
individual whose initial assumption of
office occurs as a result of either an
actual or threatened election contest (as
such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the
Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) Approval by the shareholders of
IPALCO of a reorganization, merger or
consolidation, in each case, unless,
following such reorganization, merger or
consolidation, (A) more than sixty percent
(60%) of, respectively, the then outstanding
shares of common stock of the corporation
resulting from such reorganization, merger
or consolidation and the combined voting
power of the then outstanding voting
securities of such corporation entitled to
vote generally in the election of directors
is then beneficially owned, directly or
indirectly, by all or substantially all of
the individuals and entities who were the
beneficial owners, respectively, of the
Outstanding IPALCO Common Stock and
Outstanding IPALCO Voting Securities
immediately prior to such reorganization,
merger or consolidation in substantially the
same proportions as their ownership,
immediately prior to such reorganization,
merger or consolidation, of the Outstanding
IPALCO Stock and Outstanding IPALCO Voting
Securities, as the case may be, (B) no
Person (excluding IPALCO, any employee
benefit plan or related trust of IPALCO, IPL
or such corporation resulting from such
reorganization, merger or consolidation and
any Person beneficially owning, immediately
prior to such reorganization, merger or
consolidation and any Person beneficially
owning, immediately prior to such
reorganization, merger or consolidation,
directly or indirectly, twenty percent (20%)
or more of the Outstanding IPALCO Common
Stock or Outstanding Voting Securities, as
the case may be) beneficially owns, directly
or indirectly, twenty percent (20%) or more
of, respectively, the then outstanding
shares of common stock of the corporation
resulting from such reorganization, merger
or consolidation or the combined voting
power of the then outstanding voting
securities of such corporation entitled to
vote generally in the election of directors
and (C) at least a majority of the members
of the board of directors of the corporation
resulting from such reorganization, merger
or consolidation were members of the
Incumbent Board at the time of the execution
of the initial agreement providing for such
reorganization, merger or consolidation;
(iv) Approval by the shareholders of
IPALCO of (A) a complete liquidation or
dissolution of IPALCO or (B) the sale or
other disposition of all or substantially
all of the assets of IPALCO, other than to a
corporation, with respect to which following
such sale or other disposition (1) more than
sixty percent (60%) of, respectively, the
then outstanding shares of common stock of
such corporation and the combined voting
power of the then outstanding voting
securities of such corporation entitled to
vote generally in the election of directors
is then beneficially owned, directly or
indirectly, by all or substantially all of
the individuals and entities who were the
beneficial owners, respectively, of the
Outstanding IPALCO Common Stock and
Outstanding IPALCO Voting Securities
immediately prior to such sale or other
disposition in substantially the same
proportion as their ownership, immediately
prior to such sale or other disposition, of
the Outstanding IPALCO Common Stock and
Outstanding IPALCO Voting Securities, as the
case may be, (2) no Person (excluding IPALCO
and any employee benefit plan or related
trust of IPALCO, IPL or such corporation and
any Person beneficially owning, immediately
prior to such sale or other disposition,
directly or indirectly, twenty percent (20%)
or more of the Outstanding IPALCO Common
Stock or Outstanding IPALCO Voting
Securities, as the case may be) beneficially
owns, directly or indirectly, twenty percent
(20%) or more of, respectively, the then
outstanding shares of common stock of such
corporation and the combined voting power of
the then outstanding voting securities of
such corporation entitled to vote generally
in the election of directors and (3) at
least a majority of the members of the board
of directors of such corporation were
members of the Incumbent Board at the time
of the execution of the initial agreement or
action of the Board providing for such sale
or other disposition of assets of IPALCO; or
(v) The closing, as defined in the
documents relating to, or as evidenced by a
certificate of any state or federal
governmental authority in connection with, a
transaction approval of which by the
shareholders of IPALCO would constitute an
"acquisition of control" under subsection
(iii) or (iv) of this section 3(a) of this
Agreement.
Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's
employment is terminated before an "acquisition
of control" as defined in this section 3(a) and
the Executive reasonably demonstrates that such
termination (i) was at the request of a third
party who has indicated an intention or taken
steps reasonably calculated to effect an
"acquisition of control" and who effectuates an
"acquisition of control" (a "Third Party") or
(ii) otherwise occurred in connection with, or in
anticipation of, an "acquisition of control"
which actually occurs, then for all purposes of
this Agreement, the date of an "acquisition of
control" with respect to the Executive shall mean
the date immediately prior to the date of such
termination of the Executive's employment.
(b) As used in this Agreement, the term
"Cause" means fraud, dishonesty, theft of
corporate assets, or other gross misconduct by
the Executive. Notwithstanding the foregoing,
the Executive shall not be deemed to have been
terminated for cause unless and until there shall
have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less
than a majority of the entire membership of the
Board at a meeting of the Board called and held
for the purpose (after reasonable notice to him
and an opportunity for him, together with his
counsel, to be heard before the Board), finding
that in the good faith opinion of the Board the
Executive was guilty of conduct set forth above
in the first sentence of the subsection and
specifying the particulars thereof in detail.
(c) As used in this Agreement, the term
"Good Reason" means, without the Executive's
written consent, (i) a demotion in the
Executive's status, position or responsibilities
which, in his reasonable judgment, does not
represent a promotion from his status, position
or responsibilities as in effect immediately
prior to the change in control; (ii) the
assignment to the Executive of any duties or
responsibilities which, in his reasonable
judgment, are inconsistent with such status,
position or responsibilities; or any removal of
the Executive from or failure to reappoint or
reelect him to any of such positions, except in
connection with the termination of his employment
for total and permanent disability, death or
Cause or by him other than for Good Reason; (iii)
a reduction by the Company in the Executive's
base salary as in effect on the date hereof or as
the same may be increased from time to time
during the term of this Agreement or the
Company's failure to increase (within twelve (12)
months of the Executive's last increase in base
salary) the Executive's base salary after a
change in control in an amount which at least
equals, on a percentage basis, the average
percentage increase in base salary for all
executive and senior officers of the Company
effected in the preceding twelve (12) months;
(iv) the relocation of the principal executive
offices of IPALCO or IPL, whichever entity on
behalf of which the Executive performs a
principal function of that entity as part of his
employment services, to a location outside the
Indianapolis, Indiana metropolitan area or the
Company's requiring him to be based at any place
other than the location at which he performed his
duties prior to a change in control, except for
required travel on the Company's business to an
extent substantially consistent with his business
travel obligations at the time of a change in
control; (v) the failure by the Company to
continue in effect any incentive, bonus or other
compensation plan in which the Executive
participates, including but not limited to the
Company's stock option and restricted stock
plans, unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan),
with which he has consented, has been made with
respect to such plan in connection with the
change in control, or the failure by the Company
to continue his participation therein, or any
action by the Company which would directly or
indirectly materially reduce his participation
therein; (vi) the failure by the Company to
continue to provide the Executive with benefits
substantially similar to those enjoyed by him or
to which he was entitled under any of the
Company's pension, profit sharing, life
insurance, medical, dental, health and accident,
or disability plans in which he was participating
at the time of a change in control, the taking of
any action by the Company which would directly or
indirectly materially reduce any of such benefits
or deprive him of any material fringe benefit
enjoyed by him or to which he was entitled at the
time of the change in control, or the failure by
the Company to provide him with the number of
paid vacation and sick leave days to which he is
entitled on the basis of years of service with
the Company in accordance with the Company's
normal vacation policy in effect on the date
hereof; (vii) the failure of the Company to
obtain a satisfactory agreement from any
successor or assign of the Company to assume and
agree to perform this Agreement; (viii) any
purported termination of the Executive's
employment which is not effected pursuant to a
Notice of Termination satisfying the requirements
of paragraph 4(c) hereof (and, if applicable,
paragraph 3(b) hereof); and for purposes of this
Agreement, no such purported termination shall be
effective; or (ix) any request by the Company
that the Executive participate in an unlawful act
or take any action constituting a breach of the
Executive's professional standard of conduct.
Notwithstanding anything in this paragraph
3(c) to the contrary, the Executive's right to
terminate his employment pursuant to this
paragraph 3(c) shall not be affected by his
incapacity due to physical or mental illness.
4. Additional Provisions.
(a) Enforcement of Agreement. The Company
is aware that upon the occurrence of a change in
control the Board of Directors or a shareholder
of the Company may then cause or attempt to cause
the Company to refuse to comply with its
obligations under this Agreement, or may cause or
attempt to cause the Company to institute, or may
institute, litigation seeking to have this
Agreement declared unenforceable, or may take or
attempt to take other action to deny the
Executive the benefits intended under this
Agreement. In these circumstances, the purpose
of this Agreement could be frustrated. It is the
intent of the Company that the Executive not be
required to incur the expenses associated with
the enforcement of his rights under this
Agreement by litigation or other legal action,
nor be bound to negotiate any settlement of his
rights hereunder, because the cost and expense of
such legal action or settlement would
substantially detract from the benefits intended
to be extended to the Executive hereunder.
Accordingly, if following a change in control it
should appear to the Executive that the Company
has failed to comply with any of its obligations
under this Agreement or in the event that the
Company or any other person takes any action to
declare this Agreement void or unenforceable, or
institutes any litigation or other legal action
designed to deny, diminish or to recover from the
Executive the benefits entitled to be provided to
the Executive hereunder and that the Executive
has complied with all of his obligations under
this Agreement, the Company irrevocably
authorizes the Executive from time to time to
retain counsel of his choice, at the expense of
the Company as provided in this paragraph 4(a),
to represent the Executive in connection with the
initiation or defense of any litigation or other
legal action, whether such action is by or
against the Company or any director, officer,
shareholder, or other person affiliated with the
Company, in any jurisdiction. Notwithstanding
any existing or prior attorney-client
relationship between the Company and such
counsel, the Company irrevocably consents to the
Executive entering into an attorney-client
relationship with such counsel, and in that
connection the Company and the Executive agree
that a confidential relationship shall exist
between the Executive and such counsel. The
reasonable fees and expenses of counsel selected
from time to time by the Executive as hereinabove
provided shall be paid or reimbursed to the
Executive by the Company on a regular, periodic
basis upon presentation by the Executive of a
statement or statements prepared by such counsel
in accordance with its customary practices, up to
a maximum aggregate amount of $500,000. Any
legal expenses incurred by the Company by reason
of any dispute between the parties as to
enforceability of or the terms contained in this
Agreement, notwithstanding the outcome of any
such dispute, shall be the sole responsibility of
the Company, and the Company shall not take any
action to seek reimbursement from the Executive
for such expenses.
(b) Severance Pay; No Duty to Mitigate.
The amounts payable to the Executive under this
Agreement shall not be treated as damages but as
severance compensation to which the Executive is
entitled by reason of termination of his
employment in the circumstances contemplated by
this Agreement. The Company shall not be
entitled to set off against the amounts payable
to the Executive any amounts earned by the
Executive in other employment after termination
of his employment with the Company, or any
amounts which might have been earned by the
Executive in other employment had he sought such
other employment.
(c) Notice of Termination. Any purported
termination by the Company or by the Executive
shall be communicated by written Notice of
Termination to the other party hereto in
accordance with paragraph 4(k) hereof. For
purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall
indicate the specific termination provision in
this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances
claimed to provide a basis for termination of his
employment under the provision so indicated. For
purposes of this Agreement, no such purported
termination shall be effective without such
Notice of Termination.
(d) Internal Revenue Code. Anything in
this Agreement to the contrary notwithstanding,
in the event that Deloitte & Touche determines
that any payment by the Company to or for the
benefit of the Executive pursuant to the terms of
this Agreement would be nondeductible by the
Company for federal income tax purposes because
of Section 280G of the Code, then the amount
payable to or for the benefit of the Executive
pursuant to this Agreement shall be reduced (but
not below zero) to the maximum amount payable
without causing the payment to be nondeductible
by the Company because of Section 280G of the
Code. Such determination by Deloitte & Touche
shall be conclusive and binding upon the parties.
(e) Assignment. This Agreement shall inure
to the benefit of and be binding upon the parties
hereto and their respective executors,
administrators, heirs, personal representatives,
successors, and assigns, but neither this
Agreement nor any right hereunder may be assigned
or transferred by either party hereto, any
beneficiary, or any other person, nor be subject
to alienation, anticipation, sale, pledge,
encumbrance, execution, levy, or other legal
process of any kind against the Executive, his
beneficiary or any other person. Notwithstanding
the foregoing, the Company will assign this
Agreement to any corporation or other business
entity succeeding to substantially all of the
business and assets of the Company by merger,
consolidation, sale of assets, or otherwise and
shall obtain the assumption of this Agreement by
such successor.
(f) Entire Agreement. This Agreement
contains the entire agreement between the parties
with respect to the subject matter hereof. All
representations, promises, and prior or
contemporaneous understandings among the parties
with respect to the subject matter hereof,
including any Prior Termination Benefits
Agreements, are merged into and expressed in this
Agreement, and any and all prior agreements
between the parties with respect to the subject
matter hereof are hereby cancelled.
(g) Amendment. This Agreement shall not be
amended, modified, or supplemented without the
written agreement of the parties at the time of
such amendment, modification, or supplement.
(h) Governing Law. This Agreement shall be
governed by and subject to the laws of the State
of Indiana.
(i) Severability. The invalidity or
unenforceability of any particular provision of
this Agreement shall not affect the other
provisions, and this Agreement shall be construed
in all respects as if such invalid or
unenforceable provision had not been contained
herein.
(j) Captions. The captions in this
Agreement are for convenience and identification
purposes only, are not an integral part of this
Agreement, and are not to be considered in the
interpretation of any part hereof.
(k) Notices. Except as otherwise
specifically provided in this Agreement, all
notices and other communications hereunder shall
be in writing and shall be deemed to have been
duly given if delivered in person or sent by
registered or certified mail, postage prepaid,
addressed as set forth above, or to such other
address as shall be furnished in writing by any
party to the others.
(l) Waivers. Except as otherwise
specifically provided in this Agreement, no
waiver by either party hereto of any breach by
the other party hereto of any condition or
provision of this Agreement to be performed by
such other party shall be deemed to be a valid
waiver unless such waiver is in writing or, even
if in writing, shall be deemed to be a waiver of
a subsequent breach of such condition or
provision or a waiver of a similar or dissimilar
provision or condition at the same or at any
prior or subsequent time.
(m) Gender. The use of the masculine
gender throughout this Agreement is solely for
convenience; thus, in cases where the Executive
is female, the feminine gender shall be deemed to
be used in place of the masculine gender.
5. Term of this Agreement. This Agreement shall
remain in effect until January 1, 1998 or until the
expiration of any extension thereof. The term of this
Agreement shall be automatically extended for one (1)
year periods without further action of the parties as of
January 1, 1994 and each succeeding January 1 thereafter,
unless IPALCO shall have served written notice to the
Executive prior to January 1, 1994 or prior to January 1
of each succeeding year, as the case may be, of its
intention that the Agreement shall terminate at the end
of the five (5) year period that begins with the
January 1 following the date of such written notice.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
IPALCO ENTERPRISES, INC.
By:
Attest:
INDIANAPOLIS POWER & LIGHT COMPANY
By:
Attest:
SCHEDULE A
TO
TERMINATION BENEFITS AGREEMENT
As Amended and Restated, Effective January 1, 1993
By and among IPALCO Enterprises, Inc., Mid-America
Capital Resources, Inc. and the following individuals:
Joseph A. Gustin
Daniel L. Short
Clark L. Snyder (effective January 1, 1995)
William A. Tracy
Kevin P. Greisl (effective December 25, 1995)
By and among IPALCO Enterprises, Inc., Indianapolis Power
& Light Company and the following individuals:
Michael G. Banta (effective July 1, 1995)
John C. Berlier, Jr.
John R. Brehm
Max Califar
Ralph E. Canter (effective May 1, 1995)
John R. Hodowal
Ramon L. Humke
Donald W. Knight
David J. McCarthy (effective January 1, 1996)
Paul S. Mannweiler (effective January 1, 1997)
Steven L. Meyer
Stephen J. Plunkett
Robert W. Rawlings
Joseph A. Slash
Bryan G. Tabler (effective as of October 1, 1994)
Gerald D. Waltz
John D. Wilson
By and between IPALCO Enterprises, Inc. and the following
individuals:
N. Stuart Grauel
Susan Hanafee (effective May 1, 1995)
Michael P. Holstein (effective May 1, 1996)
Thomas A. Steiner (effective May 1, 1996)
By and among IPALCO Enterprises, Inc. and Store Heat and
Produce Energy, Inc. and the following individual:
Michael J. Farmer (effective as of February 6, 1995)
<TABLE>
INDIANAPOLIS POWER & LIGHT COMPANY EXHIBIT 12.1
Ratio of Earnings to Fixed Charges
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995
--------- --------- ---------
(Thousands of Dollars)
<S> <C> <C> <C>
Earnings, as defined:
Net income (1) $133,402 $122,588 $106,273
Income taxes 74,440 67,266 53,568
Fixed charges, as below 41,893 48,570 51,778
--------- --------- ---------
Total earnings, as defined $249,735 $238,424 $211,619
========= ========= =========
Fixed charges, as defined:
Interest charges $ 41,721 $ 48,406 $ 51,596
Rental interest factor 172 164 182
--------- --------- ---------
Total fixed charges, as defined $ 41,893 $ 48,570 $ 51,778
========= ========= =========
Ratio of earnings to fixed charges 5.96 4.91 4.09
========= ========= =========
(1) 1997 Net income excludes after-tax effect of cumulative effect of accounting change
</TABLE>
Exhibit 18.1
Indianapolis Power & Light Company
One Monument Circle, P.O. Box 1595
Indianapolis, IN 46206
We have audited the financial statements of Indianapolis Power & Light Company
as of December 31, 1997 and 1996, and for each of the three years in the
period ended December 31, 1997, included in your Annual Report on Form 10-K to
the Securities and Exchange Commission and have issued our report thereon dated
January 23, 1998. Note 3 to such financial statements contains a description
of your adoption during the year ended December 31, 1997, of the method of
accounting for accrued revenues for services provided but unbilled at the end
of each month. In our judgment, such change is to an alternative accounting
principle that is preferable under the circumstances.
Deloitte & Touche, LLP
January 23, 1998
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000050217
<NAME> INDIANAPOLIS POWER & LIGHT COMPANY
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,766,383
<OTHER-PROPERTY-AND-INVEST> 5,171
<TOTAL-CURRENT-ASSETS> 139,137
<TOTAL-DEFERRED-CHARGES> 139,081
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 2,049,772
<COMMON> 324,537
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 508,626
<TOTAL-COMMON-STOCKHOLDERS-EQ> 835,492
0
9,135
<LONG-TERM-DEBT-NET> 627,840
<SHORT-TERM-NOTES> 23,700
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 553,605
<TOT-CAPITALIZATION-AND-LIAB> 2,049,772
<GROSS-OPERATING-REVENUE> 776,427
<INCOME-TAX-EXPENSE> 73,335
<OTHER-OPERATING-EXPENSES> 535,777
<TOTAL-OPERATING-EXPENSES> 609,112
<OPERATING-INCOME-LOSS> 167,315
<OTHER-INCOME-NET> 6,864
<INCOME-BEFORE-INTEREST-EXPEN> 174,179
<TOTAL-INTEREST-EXPENSE> 40,777
<NET-INCOME> 151,749
2,760
<EARNINGS-AVAILABLE-FOR-COMM> 148,989
<COMMON-STOCK-DIVIDENDS> 93,487
<TOTAL-INTEREST-ON-BONDS> 38,809
<CASH-FLOW-OPERATIONS> 230,350
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
