<PAGE>
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 1995
Commission File Number 0-11035
ENERGYNORTH, INC.
(Exact name of registrant as specified in its charter)
New Hampshire 02-0363755
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1260 Elm Street, P.O. Box 329, Manchester, New Hampshire 03105 (603-625-4000)
(Address, zip code and telephone number of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $1.00 Par Value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of 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. [ ]
At October 1, 1995, non-affiliates held 3,024,109 shares of the
Registrant's $1 par value common stock. On December 1, 1995, the
aggregate market value of those shares was $55,189,989.
At the close of business on December 21, 1995, the registrant had
3,208,501 outstanding shares of its $1.00 par value common stock.
DOCUMENTS INCORPORATED BY REFERENCE
Incorporated Document Location in Form 10-K
- --------------------- ---------------------
Portions of the Proxy Statement furnished Part III
to Shareholders in connection with Annual
Meeting to be held February 7, 1996.
Page 1 of 45 pages.
Exhibit Index appears on Pages 43 through 45.
<PAGE> 2
TABLE OF CONTENTS
Part I Page No(s).
-----------
Item 1. Business
General................................................ 4-5
The Utility Gas Distribution Business.................. 5
The Retail Propane Business............................ 5-6
Summary of Revenues.................................... 6
Deregulation........................................... 6
Competition............................................ 7
Gas Supply
General............................................. 7
Supply Contracts and Storage........................ 7-8
Controlled Attachment Policy........................ 8
Cost of Purchased and Produced Gas.................. 8
Supervision and Regulation............................. 9
Employees.............................................. 9
Executive Officers of the Registrant................... 9-10
Item 2. Properties....................................... 10
Item 3. Legal Proceedings................................ 10-11
Item 4. Submission of Matters to a Vote of
Security Holders................................. 11
Part II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters...................... 12
Item 6. Selected Financial Data.......................... 13
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.... 14-19
Item 8. Financial Statements and Supplementary Data...... 20-39
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure........... 39
Part III
Item 10. Directors and Executive Officers of the
Registrant....................................... 39
Item 11. Executive Compensation........................... 39
Item 12. Security Ownership of Certain Beneficial
Owners and Management............................ 40
Item 13. Certain Relationships and Related Transactions... 40
<PAGE> 3
TABLE OF CONTENTS (continued)
Part IV. Page No(s).
-----------
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K.......................... 40-41
Signatures................................................ 42
Exhibit Index............................................. 43-45
<PAGE> 4
ENERGYNORTH, INC.
FORM 10-K
PART I
ITEM 1. BUSINESS
General
The business of EnergyNorth, Inc., incorporated in the State of
New Hampshire in 1982, is the ownership of 100% of the
outstanding common stock of EnergyNorth Natural Gas, Inc.
("ENGI"), EnergyNorth Propane, Inc. ("ENPI"), and EnergyNorth
Realty, Inc. EnergyNorth, Inc. ("ENI" or the "Registrant"), and
its subsidiaries, collectively referred to as the "Company", are
headquartered at 1260 Elm Street, Manchester, New Hampshire,
except for ENPI which is headquartered at 75 Regional Drive,
Concord, New Hampshire. All subsidiaries are incorporated in the
State of New Hampshire.
The business of ENGI, the Registrant's principal subsidiary, is
the purchase, transportation and sale of natural gas for
residential, commercial and industrial use in New Hampshire.
ENPI is a retailer of liquefied petroleum gas ("propane" or "LP")
and serves customers in central and southern New Hampshire.
In general, the senior management of ENI serves as the senior
management of all subsidiaries. The Company provides for the
subsidiaries' administrative support and services and establishes
policies, plans and goals.
The service territory of ENGI has a population of approximately
459,000 in 27 communities situated in southern and central New
Hampshire, which includes the communities of Nashua, Manchester,
Concord and Laconia. The service area encompasses approximately
911 square miles. Located within 100 miles of Boston, ENGI's
service territory offers a favorable business climate with no
general sales or personal income taxes, a productive labor force
and a comfortable, safe and clean environment for residents and
tourists.
The State of New Hampshire ranked 14th nationally in job growth
last year and first in the Northeast with a 4% growth rate. This
compares to a 2.8% average growth rate nationally and a 2%
average rate for New England. According to The New England
Economic Project, October 1995 Economic Outlook for New
Hampshire, new housing permits are expected to increase 8.4% in
1995 over 1994. The New Hampshire unemployment rate for 1995 is
forecasted at 3.9% compared to 4.6% in 1994, as the labor force
is forecasted to increase by 1.4% in 1995. In fiscal 1995, the
Company experienced net growth of over 1.3% in natural gas
customers and more than 12% in propane customers over 1994.
ENGI's marketing focus continues to stress low cost growth by
concentrating on adding new customers along the Company's more
than 1,000 miles of gas mains, and adding load from the existing
customer base. ENGI has a 30% - 35% share of the home heating
market within its service territory, creating a potential for
increased sales where the natural gas pipeline is located and
<PAGE> 5
alternative fuels are used. In New Hampshire, fuel oil has a
penetration of over 50% of the home heating market. Currently,
the comparative full service price of fuel oil for heating is
slightly lower than natural gas. However, from a total energy
perspective, natural gas is a strong competitor with a complete
range of gas appliances and uses, including ranges, water
heaters, clothes dryers, fireplaces and gas logs, outdoor lights
and the natural gas heat pump for heating and cooling. While
these multiple uses provide opportunities to be the total energy
provider to new customers, it also provides opportunities for
expansion within the existing customer base.
The Utility Gas Distribution Business
ENGI distributes natural gas as a regulated utility pursuant to
franchise authority granted by the New Hampshire Public Utilities
Commission (the "Commission"). No operations are outside of New
Hampshire. While the franchise area of ENGI is primarily
residential in character, sales volumes are almost evenly split
between residential and commercial/industrial customers. As of
September 30, 1995, the Company's utility business served over
64,000 customers, of which approximately 88% were residential and
12% were commercial and industrial. During fiscal year 1995, no
ENGI customer purchased more than 5% of the total ENGI annual
sales volume.
In fiscal 1994, ENGI unbundled its services by providing a new
transportation-only service for both firm and interruptible,
large commercial and industrial customers. Transportation service
allows customers to purchase a natural gas supply directly from
gas marketers who deliver that gas supply to an ENGI gate
station, and contract with ENGI for local transportation to their
facilities. To ensure a continual, uninterrupted supply, ENGI
also provides an optional separate standby service as a backup to
the gas supplies of transportation customers. During 1995, ENGI
entered into transportation agreements with several customers.
ENGI believes that while a switch to transportation service will
reduce sales volumes and resulting utility gross revenues, it
will not have an impact on gross margin. Current rates
established for firm transportation by the Commission provide the
same margin as firm sales service.
ENGI distributes gas to substantially all of its utility
customers through a system of underground pipelines connected
with its three operations centers in Manchester, Nashua and
Tilton, six take stations located in Manchester, Londonderry,
Windham, Concord, Hooksett and Suncook and four production plant
facilities in Manchester, Nashua, Concord and Tilton. The
pipelines are generally located in public ways and are subject to
licenses granted by municipalities. ENGI serves approximately
80% of New Hampshire's natural gas customers.
<PAGE>
The Retail Propane Business
ENPI sells propane to residential, commercial and industrial
customers in more than 100 communities primarily located within a
50-mile radius of Concord. Propane distribution does not require
a regulatory franchise. Propane is delivered to customers by
trucks from ENPI's liquid propane storage facilities located in
communities within ENPI's service territory. ENPI purchases the
majority of its liquid propane requirements on a firm contractual
basis. The remaining liquid propane requirement is purchased in
the spot market.
<PAGE> 6
Summary of Revenues
Revenues, in thousands of dollars, attributable to various
categories of gas distribution and related operations during the
last three fiscal years follow:
September 30,
-------------------------
1995 1994 1993
-------------------------
Utility (natural gas) service $69,816 $88,150 $78,495
Propane gas sales 8,990 8,900 7,702
Service and appliance sales 1,794 1,718 1,683
Rentals 964 917 884
-------------------------
$81,564 $99,685 $88,764
=========================
During the winter period November 1 through March 31, the
Company's gas revenues are substantially higher than during the
summer months. The increase in gas revenues during the winter,
and the concomitant increase in gas supply requirements, occurs
because approximately 89% of ENGI's customers use natural gas for
heating.
Deregulation
The implementation of Federal Energy Regulatory Commission
("FERC") Order 636, which provided for the unbundling and
deregulation of the interstate pipeline system, has resulted in
significant change for the gas industry. The responsibility for
purchasing, transporting and storing gas supplies no longer rests
with the major pipeline companies but with the local distribution
companies like ENGI. The unbundling of the intrastate pipeline
system in New Hampshire began in late 1993 with the Commission's
approval of gas transportation rates and separate standby and
balancing services for commercial and industrial customers.
Gas transportation services have allowed customers to utilize
ENGI's distribution system for the transportation of gas
purchased from third party gas marketers, creating the potential
for competition from gas marketers for the sale of gas to end-
users. At September 30, 1995, 21 customers had entered into
transportation agreements with ENGI. These customers are large
commercial and industrial customers. The volume transported for
these customers in fiscal 1995 was 352,113 Mcf, less than 3% of
ENGI's total gas sales.
ENGI is the sole distributor and transporter of natural gas in
its franchise area. The Tennessee Gas Pipeline Company
("Tennessee") is the only interstate pipeline to serve ENGI's
franchise area. For that reason and because installation of
private transmission mains would typically be impractical,
customers have not attempted to bypass ENGI's distribution
system.
<PAGE> 7
Competition
Natural gas competes mainly with electricity and fuel oil. The
principal competitive factors between natural gas and alternative
fuels are the price of the fuel and the conversion costs from one
fuel to another. Competition is greatest among ENGI's commercial
and industrial customers who have the capability to use
alternative fuels. ENGI provides flexible rates for users with
dual-fuel capabilities in order to better compete with the
alternative fuels.
Natural gas has a significant price advantage over electricity.
Natural gas heating costs are typically less than one-half of
electric heating costs. At the present time, oil has a small
price advantage over natural gas for heating. Despite this price
disadvantage, ENGI continues to add customers because energy
decisions are also based on factors other than cost. Demand is
expected to continue to increase as national attention remains
focused on natural gas because of its environmental advantages,
efficiency, price stability and security of supply.
Additionally, commercial and industrial customers are finding gas
technologies and equipment attractive as they deal with the
requirements of the Clean Air Act Amendments of 1990 and other
Federal environmental legislation.
The retail propane market is very competitive and several other
retail propane operations exist within the communities served by
ENPI. The principal competitive factors in the industry are
price, dependability of delivery and service.
Gas Supply
General. The Company's gas supply goal is to maintain a balanced
portfolio of supply that will continue to minimize the overall
cost of gas while providing the necessary security to meet demand
requirements.
Supply Contracts and Storage. ENGI's gas supply is principally
natural gas transported by the interstate pipeline system. ENGI
has contracted with Tennessee to deliver 56,833 Dth per day on a
firm transportation basis and up to 8,000 Dth per day on an
interruptible basis. Natural gas supplies are purchased both on a
long-term contract and short-term spot market basis. During
1995, ENGI purchased approximately 2% of its annual natural gas
requirements in the spot market. At times during the year,
typically during the summer, the Company will purchase lower cost
spot market natural gas supply. The Company's long-term
contracts, under which it has firm supply for approximately
32,529 Dth per day, all have remaining terms of four to eleven
years.
In fiscal 1995, approximately 73% of ENGI's gas requirements came
from domestic pipeline sources, 25% from Canadian pipeline
supplies and approximately 2% from supplemental supplies of LP
and liquefied natural gas ("LNG") purchased from both domestic
and foreign sources. Supplemental supplies of gas are produced
from plants owned and operated by ENGI.
<PAGE>
All pipeline volumes are transported by Tennessee under FERC
tariffed rate schedules. The supply from Canada is transported
to Tennessee's system using the TransCanada and the Iroquois Gas
transmission systems.
<PAGE> 8
In addition to long-term supply sources, ENGI stores gas during
the summer months under long-term contracts with the owners of
storage facilities located in Pennsylvania and New York. Gas
from these storage facilities, up to 24,304 Dth per day on a firm
basis, is delivered to the Company during the winter months
through the Tennessee system. ENGI owns other on-site storage
facilities capable of holding 122,259 Dth of LP and 12,421 Dth of
LNG.
ENGI has contracted for 1,333,000 Dth of supplemental gas vapor,
75,000 Dth of LNG and an additional 1,000,000 gallons of LP.
The Company expects to be able to secure the gas supply required
to meet new customer demands through long-term commitments and
purchases in the spot market.
Controlled Attachment Policy. The controlled attachment policy is
a tariff provision that restricts sales to large commercial and
industrial firm customers. The controlled attachment policy for
year-round natural gas customers provides for a reasonable
balance between gas supply and the requirements of current and
future customers in the ENGI franchise area. Sales to new
customers and additional sales to existing customers are limited
to 250 Mcf per day per customer. The daily Mcf limits do not
apply for interruptible and 280-day customers who have available
standby fuel and equipment and who agree to limit their
consumption if requested by ENGI.
Cost of Purchased and Produced Gas. The average unit cost of gas
purchased and produced during the twelve months ended September
30, 1995 was approximately $3.44 per Mcf compared to $4.03 per
Mcf for the same period last year. The 1995 average unit cost
reflects lower pipeline costs due to supplier rate case
settlements and lower commodity costs available in the
marketplace. The Cost of Gas Adjustment ("CGA") clause
authorized by the Commission permits recovery by ENGI, or its
customers, of gas costs (including pipeline, LP, LNG and storage)
which are higher, or lower, than the cost of gas included in base
rates. The CGA is determined semi-annually, for summer and
winter periods.
Margins earned on interruptible and 280-day sales are passed on
to firm customers through the CGA. In addition, costs associated
with a gas inventory trust, including administration fees and
carrying costs, are recovered through the CGA.
ENGI is subject to payment of transition costs associated with
FERC Order 636 restructuring. Tennessee began billing these costs
late in fiscal year 1993 and ENGI has incurred $4.5 million in
transition costs through September 30, 1995 and is recovering
these costs through the CGA. Based on current information,
additional transition costs are expected to range from $1.7
million to $6.4 million. Meanwhile, ENGI customers are benefiting
from the restructuring, realizing long-term savings in gas costs.
<PAGE> 9
Supervision and Regulation
The Registrant is generally exempt from regulation under the
Public Utility Holding Company Act of 1935, because its utility
operations are predominantly intrastate in character.
ENGI is subject to regulation by the Commission, which has
authority over accounting, rates and charges, the issuance of
securities, and certain operating matters. Changes in utility
rates and charges cannot be made without 30 days notice to the
Commission, which has the power to suspend, investigate and
change any proposed increase in rates and charges. Neither New
Hampshire statutes nor regulations of the Commission, by their
terms, subject the Registrant to direct supervision or regulation
by the Commission except with respect to the acquisition of other
New Hampshire public utility holding companies or public
utilities.
The gas distribution businesses of ENGI and ENPI are subject to
extensive safety regulations and reporting requirements
promulgated by the United States Department of Transportation,
but are not otherwise subject to direct regulation by Federal
agencies except as to environmental matters. These subsidiaries
are also subject to zoning and other regulations by local
authorities, and their capital expenditures, earnings and
operations have not been materially affected by environmental and
local regulation.
Employees
At September 30, 1995, the Company had 266 full-time employees of
whom 146 were represented by four contracts with Local 12012 of
the United Steelworkers of America. Two union contracts covering
121 employees expire in 1996 and two covering 25 employees expire
in 1997.
Executive Officers of the Registrant
The executive officers of the Registrant are listed below
together with age at December 21, 1995, position and other
information as to each. The term of office of each executive
officer terminates when his successor shall have been duly
elected and qualified.
Served as Principal Occupations and Employment
Name and Position Officer During Last Five Years Other Than
with the Registrant Age Since with the Registrant
- -----------------------------------------------------------------------------
Robert R. Giordano 57 1982 Chief Executive Officer and President
President and Chief of ENGI
Executive Officer
Albert J. Hanlon 54 1988 Senior Vice President of ENGI
Senior Vice President
Michael J. Mancini, Jr. 47 1983 Senior Vice President and Chief
Senior Vice President Financial Officer of ENGI
and Chief Financial
Officer
<PAGE> 10
Michelle L. Chicoine 39 1990 Vice President (since 1993) and
Vice President and Treasurer of ENGI
Treasurer
Frank L. Childs 51 1995 Vice President of ENGI (since 1995);
Vice President formerly (1992-1994) Executive Vice
President and Chief Administrative
Officer of UNITIL Corporation;
formerly President (until 1994) and
Chief Operating Officer (until 1992)
of Fitchburg Gas and Electric Light
Company
Richard P. Demers 59 1988 President of ENPI and Vice President
Vice President of ENGI
David A. Skrzysowski 49 1983 Vice President and Controller of ENGI
Vice President and
Controller
ITEM 2. PROPERTIES
The Company's utility gas distribution facilities constitute the
majority of its physical assets. As of September 30, 1995, ENGI
had approximately 1,014 miles of mains and 640 miles of service
connections. The utility's mains and service connections are
adequate to meet service requirements and are maintained through
a regular program of inspection and repair. Offices and
operations centers located in Nashua, Manchester, Concord and
Tilton are adequate for the needs of the Company and are
regularly maintained and in good condition. Substantially all of
the Company's properties are fully utilized.
Substantially all of the Company's utility properties are subject
to the liens of the indentures securing the ENGI General and
Refunding Bonds. In some cases, motor vehicles and nonutility
assets are subject to purchase money security interests held by
banks. The Manchester office building and substantially all of
ENPI's assets are subject to first mortgages. The Company also
has long-term leases for motor vehicles, office equipment and
computer equipment.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party in several routine proceedings. Such
actions, for the most part, are covered by insurance and, to the
extent that they are not fully covered, the damages sought are
not material in amount. ENGI is a party to various Commission
proceedings relating to operations, none of which is expected to
have a material impact on the Company's earnings or assets.
In 1995, ENGI completed the disposal of the contents of the
gasholder situated on a former gas manufacturing site in Concord,
New Hampshire. Total remediation costs amounted to approximately
$3.5 million. Recovery of these costs from customers began on
July 1, 1995 and will extend over a seven-year period. The
unamortized balance is excluded from rate base.
<PAGE> 11
Initial sampling and analysis of certain compounds identified at
various locations in the area of the Concord gasholder site has
been completed. Costs of approximately $167,000 have been
incurred as of September 30, 1995. Field work for a
hydrogeologic characterization was completed in October 1995. A
Hydrogeologic Characterization and Risk Evaluation Report was
submitted for review to the New Hampshire Department of
Environmental Services ("NHDES") in November 1995. The Company
is unable to predict the magnitude of any liability that may be
imposed on it for the cost of any additional studies or the
performance of remedial action in connection with the Concord
site until the NHDES has reviewed the Report and issued a
decision on what, if any, remedial action will be required.
The Company has held discussions with another utility regarding a
site assessment and cost sharing of investigation costs
concerning a former manufactured gas site in Laconia, New
Hampshire. The scope of the study and the investigation cost
sharing agreement have not been finalized such that the Company
is unable to predict at this time the magnitude of any liability
that may be imposed on it for the cost of site assessment,
additional studies or the performance of remedial action in
connection with the Laconia site.
The Company will pursue recovery from insurance carriers and
claims against any other responsible parties seeking to ensure
that they contribute appropriately to reimburse the Company for
any costs incurred. The Company intends to seek approval of rate
recovery at such time that it has determined the extent of the
contamination and has received recommendations with regards to
remediation at the Concord and Laconia sites.
On September 12, 1995 the Company filed a Complaint in the United
States District Court for the District of New Hampshire against
UGI Utilities, Inc., as the successor to United Gas Improvement
Company. The Company seeks contribution for expenses incurred at
the Concord site based upon the operation of the manufactured gas
plant by the United Gas Improvement Company, a predecessor of UGI
Utilities, Inc., during a period of time the manufactured gas
plant was in operation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security-holders in the
fourth quarter of fiscal 1995.
<PAGE> 12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Outstanding shares of the Company's common stock are listed and
traded on the New York Stock Exchange with the symbol "EI". High
and low sales prices during 1995 and 1994 were:
Fiscal 1995 Fiscal 1994
High Low High Low
-------------------------------------------------------
First Quarter $18 $15 1/4 $22 1/4 $20 1/2
Second Quarter 18 15 1/2 22 1/4 18
Third Quarter 18 15 3/4 19 16 1/4
Fourth Quarter 18 16 3/8 19 16 3/4
As of December 1, 1995, there were approximately 2,400 holders of
record of common stock.
Quarterly cash dividends paid were:
Fiscal 1995 Fiscal 1994
------------------------------------------------------
First Quarter $0.28 $0.27
Second Quarter 0.28 0.27
Third Quarter 0.28 0.27
Fourth Quarter 0.28 0.27
<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
1995 1994 1993*** 1992 1991**
--------------------------------------
Total operating revenues $78,806 $97,050 $86,197 $80,007 $70,385
Earnings applicable to common stock 4,104 5,422 5,368 3,673 738
Earnings per share 1.30 1.74 1.74 1.22 .27*
Cash dividends per share 1.12 1.08 1.06 1.04 1.02*
Total assets 121,337 121,019 113,569 106,710 101,844
Capitalization:
Common stockholders' equity 42,114 0,778 38,054 35,204 31,586
Redeemable cumulative preferred
stock - - - - 250
Long-term debt (including capital
lease obligations) 30,103 33,501 35,588 35,687 34,576
--------------------------------------
Total capitalization 72,217 74,279 73,642 70,891 66,412
======================================
Short-term debt (including current
portion of long-term debt) 5,501 2,308 4,998 5,270 8,202
- ---------------------
See notes 8 and 9 to the consolidated financial statements for information
related to accounting changes.
Reclassifications are made periodically to previously issued financial data to
conform to the current presentation.
* After giving retroactive effect to applicable stock dividends
** Results include a charge for disallowed gas costs, net of tax, of $935
***Results include a credit to earnings for previously disallowed gas costs,
net of tax, of $959
<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Earnings and Dividends
Earnings per share in 1995 were $1.30, compared to $1.74 in 1994.
Earnings applicable to common stock declined to $4,104,000, from
a record $5,422,000 in 1994. Warmer weather in the Company's
service territory significantly impacted financial results. The
effect of weather, when compared to normal, reduced 1995 earnings
by approximately $.50 per share, after taxes. In 1994, earnings
increased $.30 per share, after taxes, as a result of the record
colder than normal temperatures. The 1995 decrease in earnings
was partially offset by continued customer growth and successful
efforts to contain operating costs. In addition, the Company
earned a $215,000 after tax gain on the sale of railcars. The
earnings achieved represent a return on average common equity of
9.9%. Cash dividends paid on common stock were $1.12
representing a payout ratio of 86.2% of 1995 earnings. The
Company's Board of Directors continued its commitment to provide
an attractive return to shareholders by increasing the dividend
at its October 1995 meeting. The current quarterly dividend of
$.29 per share is equal to an annual dividend of $1.16 per share,
a 3.6% increase over 1995 dividends.
Utility Sales and Revenues
Total operating revenues decreased 18.8% to $78.8 million in
1995. Utility gas service revenues were $69.8 million in 1995
compared to $88.2 million in 1994, a 20.9% decrease. The total
volume of gas sendout declined 7.5% from 1994, due primarily to
temperatures that were 13.2% warmer than 1994 and 9.2% warmer
than normal. As a consequence of warmer weather and a pass
through of lower purchased gas costs, revenues from firm
customers decreased $19.3 million. Reduced rates primarily in
the form of lower purchased gas costs, due mostly to supplier
refunds, resulted in a revenue decrease of approximately $11.7
million. In addition, a weather-related reduction in the volume
of gas sold to firm customers contributed approximately $7.6
million of the decrease.
Revenues from interruptible and 280-day service customers
increased $1.6 million, reflecting a favorable price relationship
between natural gas and other alternative fuels. Margins earned
on interruptible and 280-day sales are used to directly lower
charges to firm sales customers through the cost of gas
adjustment and do not impact the Company's profitability.
In addition, transportation revenue, which is billed to customers
who transport their own gas through the Company's system, was
$721,000 in 1995. There was no transportation revenue in 1994 as
firm transportation tariffs were not approved until late 1994.
Currently, the Company has transportation agreements with 21
customers. While a switch by customers to transportation rates
from firm service rates reduced utility gas service revenues, it
did not have an impact on gross margin. Rates established for
firm transportation by the New Hampshire Public Utilities
Commission (the "Commission") provide the same margins as firm
gas sales.
<PAGE> 15
Utility Cost of Gas Sold
The cost of utility gas sold decreased to $36.1 million in 1995
compared to $51.4 million in 1994. The significant decrease was
attributable to a decline in the unit cost (approximately $7.2
million), lower volumes of gas sold (approximately $3.1 million)
and timing differences related to the recovery of gas costs
through the cost of gas adjustment (approximately $5.0 million).
The unit cost of gas purchased and produced decreased to $3.44
per Mcf from $4.03 per Mcf in 1994. The reduction in the unit
cost was a result of lower pipeline costs due to supplier rate
case settlements and lower commodity cost of gas available in the
marketplace.
Retail Propane Operations
The retail propane operations contributed $370,000 to net
earnings of the Company compared to $576,000 in 1994. An
effective marketing and conversion program resulted in an
increase of almost 12% in the average number of retail propane
customers in 1995. Despite the substantial customer growth, the
warmer weather accounted for a net decrease in propane gallons
sold of almost 2%. While 1995 operating revenue of $9.0 million
was slightly better than 1994, competitive pressures on price
resulted in a gross margin decrease of approximately $200,000 as
the unit cost per gallon of propane sold increased over 9%. Cost
control practices were effective in keeping operating and
maintenance expenses at approximately the same level as 1994.
Operating Expenses
Operations and maintenance expense decreased 3.5% in 1995.
Improved productivity and reductions in the workforce combined
with reductions in workers' compensation insurance and bad debt
expense more than offset increases in wages and wage-related
expenses.
The 4.5% increase in depreciation and amortization expense is
directly related to the investment the Company has made in the
expansion and upgrading of its distribution system and
facilities.
Taxes other than income taxes decreased $158,000 in 1995 as a
result of the June 1994 repeal of the franchise tax. This
decrease was partially offset by an increase in property taxes
resulting from higher property tax rates and increased
assessments.
Total Federal and state income taxes decreased $644,000 in 1995.
The lower level of pre-tax income is the principal reason for the
decrease. In addition, the Company reduced Federal income taxes
by $200,000 upon the resolution of certain tax issues in 1995.
Partially offsetting the decrease was the impact of the repeal of
the state utility franchise tax. The Company's gas distribution
subsidiary recorded state income taxes of $359,000 in 1995. No
state income taxes were recorded in 1994 for this subsidiary.
<PAGE> 16
A gain of $350,000 from the sale of railcars formerly used to
transport liquid propane is included in total other income for
1995.
Total interest expense was $4.3 million, or 9.3% greater than
1994. The Company's total average short-term borrowings and the
weighted average short-term interest rates were greater in 1995.
Capital Resources and Liquidity
The Company's capital requirements are primarily for capital
expenditures for its construction program, the retirement of
outstanding debt and the payment of dividends. Capital resources
available to meet these requirements are generally funded from
cash provided by operations and external financing.
The Company generates almost 70% of its operating revenue during
the November-March heating season. Due to this seasonal nature
of gas sales, a major portion of positive cash flow occurs during
late winter and early spring. The greatest demand for cash is in
the fall and early winter to support the completion of the annual
construction program and to fund working capital requirements.
Since cash requirements do not track the pattern of cash
receipts, additional cash needs are satisfied by short-term debt
borrowings from traditional lines of credit and demand loans
under gas inventory purchase agreements. Short-term debt is
either repaid from internally generated funds or funded on a
permanent basis with long-term debt or equity depending on the
prevailing interest rates and other markets, conditions and
capital structure considerations.
Capital expenditures for additions, replacements and improvements
to plant were $7.9 million in 1995 and $7.7 million in 1994.
Retirements of long-term debt amounted to $2.4 million and cash
dividends paid were $3.5 million.
The Company received supplier refunds totaling $3.2 million in
1995. The refunds are being returned to firm gas customers
through the cost of gas adjustment. In addition, the Company's
Dividend Reinvestment and Stock Purchase Plan ("DRIP") has
provided a stream of common equity financing from year to year.
In 1995, DRIP proceeds amounted to $845,000.
Capital expenditures are currently projected at approximately
$9.2 million and sinking fund requirements and maturities of long-
term debt will amount to $3.8 million in 1996. Additional cash
requirements will be necessary for the payment of dividends,
environmental remediation and working capital. During 1996, the
Company expects to rely on short-term borrowings and its DRIP to
supplement internally generated funds. At September 30, 1995, the
Company had available lines of credit aggregating $13 million
with $1.75 million outstanding. In addition, a credit line of
$9.5 million was available at September 30, 1995 under the
Company's inventory trust financing plan. At September 30, 1995,
the Company's inventory in trust, included as inventory on the
consolidated balance sheet, was $7.1 million with an outstanding
purchase obligation of $7.1 million.
<PAGE> 17
The Company's rate of return will be monitored and any adjustment
in rates will be requested through the regulatory process when
warranted. At September 30, 1995, the Company's capitalization
consisted of 54% common equity and 46% debt, including short-term
debt. The Company attempts to maintain a balanced capital
structure which contributes to both stability and the ability to
market new securities when appropriate.
Environmental Matters
In 1995, disposal of the contents of the gasholder situated on
the former gas manufacturing site in Concord, New Hampshire was
completed. Total remediation costs amounted to approximately
$3.5 million and have been recorded in deferred charges. Recovery
of these costs from customers began on July 1, 1995 and will
extend over a seven-year period. The unamortized balance is
excluded from rate base.
Initial sampling and analysis of certain compounds identified at
various locations in the area of the Concord site has been
completed. Costs of approximately $167,000 have been recorded in
deferred charges at September 30, 1995. Field work for a
hydrogeologic characterization was completed in October 1995. A
Hydrogeologic Characterization and Risk Evaluation Report was
submitted for review to the New Hampshire Department of
Environmental Services ("NHDES") in November 1995. The Company is
unable to predict the magnitude of any liability that may be
imposed on it for the cost of any additional studies or the
performance of remedial action in connection with the Concord
site until the NHDES has reviewed the Report and issued a
decision on what, if any, remedial action will be required.
The Company has held discussions with another utility regarding a
site assessment and cost sharing of investigation costs
concerning a former manufactured gas site in Laconia, New
Hampshire. The scope of the study and the investigation cost
sharing agreement have not been finalized such that the Company
is unable to predict at this time the magnitude of any liability
that may be imposed on it for the cost of site assessment,
additional studies or the performance of remedial action in
connection with the Laconia site.
The Company will pursue recovery from insurance carriers and
claims against any other responsible parties seeking to ensure
that they contribute appropriately to reimburse the Company for
any costs incurred. The Company intends to seek approval of rate
recovery at such time that it has determined the extent of the
contamination and has received recommendations with regards to
remediation at the Concord and Laconia sites.
FERC Order 636
Federal Energy Regulatory Commission ("FERC") Order 636 allows
interstate pipeline companies to recover transition costs created
as they buy out of long-term, fixed-price gas contracts. Since
the Company's supplier began direct billing these costs on
September 1, 1993 as a component of demand charges, $4.5 million
has been billed through September 30, 1995. The Company is
recovering transition costs through the cost of gas adjustment.
<PAGE> 18
Based on current information, additional transition costs are
expected to total between $1.7 million and $6.4 million and will
be billed over a period of approximately one to three years.
New Accounting Standards
On October 1, 1993, the Company adopted the standard on
accounting for income taxes, SFAS No. 109, which requires an
asset and liability approach for financial accounting and
reporting for income taxes. Upon implementation of SFAS No. 109,
the Company created additional deferred tax assets and
liabilities to give recognition to certain temporary differences
previously not recognized in the Company's financial statements.
These additional deferred taxes will be returned to, or collected
from, ratepayers in future periods. The regulatory liability
related to income taxes recorded at September 30, 1995 is $1.5
million. The implementation of SFAS No. 109 had no material
impact on the Company's results of operations or cash flows for
the fiscal years ended 1995 and 1994. Additionally, the Company
does not believe SFAS No. 109 will significantly impact future
results of operations or cash flows based on current ratemaking
policy. During 1994, as a result of a change in New Hampshire tax
law, a deferred state income tax liability and a corresponding
regulatory asset of approximately $2.4 million, representing
revenues to be recovered from utility gas service customers, was
established.
On October 1, 1993, the Company adopted SFAS No. 106, the
standard on accounting for postretirement health care and other
benefits. SFAS No. 106 requires the Company to use accrual
accounting for postretirement benefits other than pensions. The
expense recorded for providing postretirement benefits under the
new standard was $646,000 in 1995 and $878,000 in 1994. Current
ratemaking allows for full recovery in rates of the total cost of
these benefits. The Company has funded these benefit costs
through cash contributions at the same level of expense recorded
to voluntary employee benefit association ("VEBA") trusts
established separately for salaried and hourly paid employees.
SFAS No. 121, effective October 1, 1996, establishes accounting
standards for the impairment of long-lived assets. SFAS No. 121
requires that regulatory assets which are no longer probable of
recovery through future revenues be charged to earnings. While
circumstances may change, based on the current regulatory
environment in the Company's service area, it is not expected
that the adoption of SFAS No. 121 would have a material impact on
the Company's financial position or results of operations.
Results of Operations 1994 Compared to 1993
Earnings applicable to common stock increased to a record
$5,422,000 in 1994 from 1993 earnings of $5,368,000. Earnings
per share was $1.74 for both years. Key factors for the increase
in earnings were the impact on operations of significantly colder
weather during the 1994 heating season, continued customer growth
and success in controlling operating costs. Also, the 1993
results include the recovery of $959,000, or $.31 per share, of
take-or-pay gas costs disallowed by the Commission in 1991.
<PAGE> 19
Operating revenues were approximately $97,050,000 in 1994, an
increase of $10,853,000, or 12.6%, from 1993. Temperatures in
1994 were 4.3% colder than 1993. The average number of utility
customers increased 2.2% to approximately 64,000 in 1994.
Utility gas service revenues, which represented 91% of total
operating revenues, increased by $9,656,000, or 12.3%.
Propane operations recorded $8,900,000 in total operating
revenues in 1994, a 15.6% increase over 1993. The increase was
primarily due to a 22.1% increase in the average number of
propane customers to 9,600 in 1994 and the effect of colder
weather on the volume of propane gallons sold. Gallons sold
increased 20% in 1994 to 9,911,000.
The average unit cost of gas increased to $4.03 in 1994, compared
to $3.99 in 1993.
Operations and maintenance expenses increased 6.5% in 1994
primarily due to increases in wages and fringe benefit costs.
Capital expenditures for the Company's continuing expansion and
system improvement programs was the reason for the 6.6% increase
in depreciation and amortization in 1994.
Total interest expense increased $200,000 in 1994. Interest due
to customers on deferred cost of gas adjustment balances was
greater than 1993. In addition, the recovery of take-or-pay gas
costs through the cost of gas adjustment also served to
significantly reduce short-term interest expense in 1993.
Total Federal and state income taxes increased $387,000 in 1994.
The higher level of pre-tax income is the principal reason for
this increase.
<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Financial Statements required by Regulation S-X
Consolidated Statements of Income EnergyNorth, Inc.
(In thousands, except per share amounts)
For the years ended September 30, 1995 1994 1993
- ----------------------------------------------------------------
Operating revenues:
Utility gas service $69,816 $88,150 $78,495
Propane gas service 8,990 8,900 7,702
--------------------------
Total operating revenues 78,806 97,050 86,197
--------------------------
Operating expenses:
Cost of gas sold 39,961 55,130 47,804
Operations and maintenance 21,046 21,800 20,473
Depreciation and amortization 5,071 4,854 4,555
Taxes other than income taxes 3,753 3,911 3,715
Federal and state income taxes 1,972 2,616 2,229
--------------------------
Total operating expenses 71,803 88,311 78,776
--------------------------
Operating income 7,003 8,739 7,421
--------------------------
Other income (expense):
Net rentals, service and
appliance sales 827 649 624
Recovery of gas costs disallowed,
net of tax - - 959
Other, net 607 (1) 129
--------------------------
Total other income (expense) 1,434 648 1,712
--------------------------
Interest expense:
Interest on long-term debt 3,161 3,285 3,375
Other interest 1,206 705 420
Interest charged to construction (34) (25) (30)
--------------------------
Total interest expense 4,333 3,965 3,765
--------------------------
Earnings applicable to common stock $ 4,104 $ 5,422 $ 5,368
==========================
Weighted average shares outstanding 3,166 3,120 3,082
===========================
Earnings per share $ 1.30 $ 1.74 $ 1.74
===========================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 21
Consolidated Balance Sheets EnergyNorth, Inc.
(In thousands)
September 30, 1995 1994
- -----------------------------------------------------------------
Assets
Property:
Utility plant, at cost $129,895 $124,617
Accumulated depreciation and amortization 41,452 38,521
-----------------
Net utility plant 88,443 86,096
Net nonutility property, at cost 7,989 7,907
-----------------
Net property 96,432 94,003
-----------------
Current assets:
Cash and temporary cash investments 575 3,048
Accounts receivable (net of allowances of
$950 in 1995 and $1,050 in 1994) 2,171 2,261
Unbilled revenues 586 544
Materials and supplies 1,624 1,650
Supplemental gas supplies 8,074 8,047
Prepaid and deferred taxes 1,671 1,468
Recoverable FERC 636 transition costs 1,733 2,351
Prepaid expenses and other 1,341 1,226
-----------------
Total current assets 17,775 20,595
-----------------
Deferred charges:
Regulatory asset - income taxes 2,401 2,370
Recoverable environmental costs 3,741 2,901
Other deferred charges 988 1,150
-----------------
Total deferred charges 7,130 6,421
-----------------
Total assets $121,337 $121,019
=================
Stockholders' Equity and Liabilities
Capitalization (see accompanying statements) $ 72,217 $ 74,279
-----------------
Current liabilities:
Notes payable to banks 1,750 -
Current portion of long-term debt 3,495 2,036
Current portion of capital lease obligations 256 272
Inventory purchase obligation 7,130 7,334
Accounts payable 4,768 4,848
Deferred gas costs 5,645 4,736
Accrued interest 874 843
Accrued taxes 214 414
Accrued FERC 636 transition costs 1,733 2,351
Customer deposits, environmental and other 2,353 4,109
-----------------
Total current liabilities 28,218 26,943
-----------------
Commitments and contingencies
<PAGE>
Deferred credits:
Deferred income taxes 15,180 13,779
Unamortized investment tax credits 2,010 2,151
Regulatory liability - income taxes 1,497 1,620
Contributions in aid of construction
and other 2,215 2,247
-----------------
Total deferred credits 20,902 19,797
-----------------
Total stockholders' equity and liabilities $121,337 $121,019
=================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 22
Consolidated Statements of Capitalization EnergyNorth, Inc.
(In thousands, except share information)
September 30, 1995 1994
- -----------------------------------------------------------------
Capitalization:
Common stockholders' equity
Common stock - par value of $1 per share,
10,000,000 shares authorized; 3,196,162
and 3,141,572 shares issued and
outstanding in 1995 and 1994,
respectively $ 3,196 $ 3,142
Amount in excess of par 29,583 28,860
Retained earnings 9,335 8,776
----------------
Total common stockholders' equity 42,114 40,778
----------------
Long-term debt:
General and Refunding Bonds
Due 2002 8.67% 8,270 9,453
Due 2009 8.44% 4,667 5,000
Due 2019 9.70% 7,000 7,000
Due 2020 9.75% 10,000 10,000
Mortgage notes payable
Due 1996 8.25% 1,628 1,837
Due 2008 8.75% 1,063 1,108
Notes payable
Due through 2000 prime plus .50% 696 609
----------------
33,324 35,007
Less current portion 3,495 2,036
----------------
Total long-term debt 29,829 32,971
----------------
Capital lease obligations 530 802
Less current portion 256 272
----------------
Total capital lease obligations 274 530
----------------
Total capitalization $72,217 $74,279
================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>23
Consolidated Statements of Common Stockholders' Equity EnergyNorth, Inc.
Common Stock
---------------------
$1.00 Amount in Total common
(In thousands, par excess Retained stockholders'
except per share amounts) value of par earnings equity
- -----------------------------------------------------------------------------
Balance, September 30, 1992 $3,065 $27,527 $ 4,612 $35,204
Earnings applicable to common stock - - 5,368 5,368
Common stock - cash dividend
($1.06 per share) - - (3,259) (3,259)
Issuance of common stock under the
Dividend Reinvestment and Stock
Purchase Plan 39 702 - 741
------------------------------------------
Balance, September 30, 1993 3,104 28,229 6,721 38,054
Earnings applicable to common stock - - 5,422 5,422
Common stock - cash dividend
($1.08 per share) - - (3,367) (3,367)
Issuance of common stock under the
Dividend Reinvestment and Stock
Purchase Plan 38 631 - 669
------------------------------------------
Balance, September 30, 1994 3,142 28,860 8,776 40,778
Earnings applicable to common stock - - 4,104 4,104
Common stock - cash dividend
($1.12 per share) - - (3,545) (3,545)
Issuance of common stock under the
Dividend Reinvestment and Stock
Purchase Plan 54 723 - 777
------------------------------------------
Balance, September 30, 1995 $3,196 $29,583 $ 9,335 $42,114
==========================================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 24
Consolidated Statements of Cash Flows EnergyNorth, Inc.
(In thousands)
For the years ended September 30, 1995 1994 1993
- ----------------------------------------------------------------------------
Cash flows from operating activities:
Earnings applicable to common stock $4,104 $ 5,422 $ 5,368
Noncash items:
Depreciation and amortization 5,841 5,594 5,302
Deferred taxes and investment tax credits,net 852 588 1,186
------------------------
Total funds provided by operating
activities 10,797 11,604 11,856
Changes in:
Accounts receivable, net 90 (367) 872
Unbilled revenues (42) (76) 338
Inventories (1) 716 (342)
Prepaid expenses and other (115) 342 (165)
Deferred gas costs 909 5,499 (774)
Accounts payable (80) 281 337
Accrued liabilities (253) (102) (143)
Accrued/prepaid taxes (149) 160 (273)
Payments for environmental costs and other (2,550) (1,400) 89
------------------------
Net cash provided by operating activities 8,606 16,657 11,795
------------------------
Cash flows from investing activities:
Additions to property (7,915) (7,731) (7,745)
------------------------
Cash flows from financing activities:
Issues of common stock 777 669 741
Issues of long-term debt 412 262 2,399
Change in notes payable to banks 1,750 (3,050) (355)
Change in inventory purchase obligation (204) 307 10
Change in customer deposits 45 46 (178)
Change in contributions in aid of construction
and other (32) 74 108
Cash dividends on common stock (3,545) (3,367) (3,259)
Refunding requirements:
Repayment of long-term debt (2,095) (1,731) (2,894)
Repayment of capital lease obligations (272) (264) (248)
-------------------------
Net cash used for financing activities (3,164) (7,054) (3,676)
-------------------------
Net (decrease) increase in cash and temporary
cash investments (2,473) 1,872 374
Cash and temporary cash investments,
beginning of year 3,048 1,176 802
-------------------------
Cash and temporary cash investments,
end of year $ 575 $ 3,048 $ 1,176
=========================
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 25
EnergyNorth, Inc.
Notes to Consolidated Financial Statements
Note 1. Accounting Policies
The significant accounting policies followed by EnergyNorth,
Inc. and subsidiaries (the "Company") are set forth below.
Principles of Consolidation
---------------------------
The accompanying financial statements of the Company include
the accounts of all subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
the accompanying consolidated financial statements.
Business Organization
---------------------
The Company's principal business activity is the management
and operation of a regulated gas distribution subsidiary
located in southern and central New Hampshire. The rates and
accounting practices followed by the gas distribution
subsidiary are regulated by the New Hampshire Public Utilities
Commission (the "Commission"). The Company's accounting
policies conform to generally accepted accounting principles
applicable to rate-regulated enterprises and reflect the
effects of the ratemaking process in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 71, "Accounting
for Certain Types of Regulation".
The Company also operates a nonregulated propane distribution
subsidiary and provides service and sells appliances through
its utility subsidiary.
Revenue Recognition
-------------------
Utility revenues derived from the sale and transportation of
natural gas are based on rates authorized by the Commission.
Customers' meters are read and bills are rendered on a cycle
basis throughout the month. The Company records unbilled reve
nues related to gas delivered but not billed at the end of the
accounting period.
Cost of Gas Adjustment Clause
-----------------------------
The Company's tariff includes a cost of gas adjustment clause
("CGA"), that permits billings to customers for changes in its
cost of gas over a base period cost. The tariff provides for
a CGA calculation for a summer period and a winter period.
Any difference between the cost of gas incurred and amounts
billed to customers is deferred for ratemaking and accounting
purposes to the next corresponding period. Interest accrues
on these amounts at the prime rate, adjusted quarterly.
Inventories
-----------
Inventories are valued on the basis of the lower of average
cost or market.
<PAGE> 26
Depreciation
------------
The Company provides depreciation on the straight-line basis.
The rates applied by the regulated subsidiary are approved by
the Commission. Such rates were equivalent to a composite
rate of 3.4% for each of the years ended September 30, 1995,
1994 and 1993. The depreciation rates for nonregulated
property, plant and equipment were 7.8%, 8.0%, and 7.8% for
the years ended September 30, 1995, 1994 and 1993,
respectively. Under depreciation practices required by the
Commission, when gas utility assets under the composite method
are retired from service, the cost of the retired assets are
removed from the property accounts and charged, together with
any cost of removal, to the accumulated depreciation accounts.
For all other assets, when assets are sold or retired, the
cost of the assets and their related accumulated depreciation
are removed from the respective accounts, net removal costs
are recorded and any gain or loss is included in income.
Deferred Charges
----------------
Total deferred charges consist primarily of regulatory
assets and the cost of issuing debt. The Company has
established various regulatory assets in cases where the
Commission has permitted, or is expected to permit, recovery of
specific costs over a period of time. At September 30, 1995,
regulatory assets include $3.7 million for environmental
investigation and disposal costs, and $2.4 million for SFAS No.
109 related to deferred state income taxes (See Note 8). SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed of", issued in March 1995
and effective October 1, 1996, establishes accounting standards
for the impairment of long-lived assets. SFAS No. 121 requires
that regulatory assets which are no longer probable of recovery
through future revenues be charged to earnings. While
circumstances may change, based on the current regulatory
environment in the Company's service area, it is not expected
that the adoption of SFAS No. 121 would have a material impact
on the Company's financial position or results of operations.
The unamortized cost of issuing debt at September 30, 1995 is
$734,000. Deferred financing costs are amortized over the
life of the related security. Other deferred charges are
amortized over the recovery period specified by the Commission.
Investment Tax Credits
----------------------
Investment tax credits are being amortized over the estimated
useful life of the property that gave rise to the credit.
Reclassifications
-----------------
Reclassifications are made periodically to previously issued
financial statements to conform to the current year's
presentation.
<PAGE> 27
Note 2. Cash Flows
Supplemental disclosures of cash flow information are as
follows (in thousands):
1995 1994 1993
----------------------
Cash paid during the year for:
Interest (net of amount capitalized) $4,415 $3,657 $4,163
Income taxes 1,074 1,861 1,834
Noncash activities:
Capital lease obligations - 6 727
In preparing the accompanying consolidated statements of cash
flows, all highly liquid investments having maturities of
three months or less were considered to be cash equivalents.
Note 3. Inventory Financing
The Company finances gas inventory purchases through the use
of a single purpose trust, which purchases gas with funds
loaned to it by a bank. As the Company requires gas to
service customers, gas is repurchased from the trust at
original product cost plus financing costs and trust fees.
The cost of gas and related financing are recoverable under
the CGA.
The bank credit agreement provides for a .375% commitment fee
on the line and interest at prime (8.75% at September 30,
1995) with a fixed rate interest option at less than prime on
the outstanding balance. The trust agreement provides for a
management fee of $8,000 annually. The credit agreement
between the trust and the bank provides for a total commitment
of up to $9.5 million through February 1996.
As of September 30, 1995 and 1994, the gas inventories under
the trust agreement and controlled by the Company totaled $7.1
million and $7.2 million, respectively, and are included in
inventories in the accompanying consolidated balance sheets.
Inventory purchase obligations under this financing agreement
are reflected as a current liability on the accompanying
consolidated balance sheets.
Note 4. Notes Payable to Banks
As of September 30, 1995, the Company had available $13
million under various unsecured bank lines of credit that are
renewed annually, $1.75 million of which was outstanding. The
weighted average interest rate on borrowings outstanding on
September 30, 1995 was 8.82%. The lines bear interest at
prime, or less than prime on certain of the lines for fixed
periods of time, and are due on demand. For some lines, the
terms of the credit agreements require annual commitment fees
of .25% to .35% of the lines.
<PAGE> 28
Note 5. Long-Term Debt
Interest payments for the General and Refunding Bonds are due
semi-annually. The General and Refunding Bonds are
collateralized by first mortgage liens on substantially all
real property and operating plant facilities of the Company's
gas utility operations.
The aggregate amounts of principal due for all long-term debt
for each of the five years subsequent to September 30, 1995
are as follows (in thousands):
Fiscal year Amount
------------------------
1996 $3,495
1997 1,773
1998 1,712
1999 1,636
2000 1,596
Note 6. Capital Leases
The Company leases certain vehicles and equipment under
various long-term capital lease agreements. Assets held under
capital leases, which are classified with utility plant,
amounted to $1.3 million and $1.4 million at September 30,
1995 and 1994, respectively. Accumulated depreciation on
assets held under capital leases amounted to $767,000 and
$624,000 at September 30, 1995 and 1994, respectively. Total
depreciation ($272,000) and interest expense ($53,000) were
equal to the rental payments included in operations and
maintenance expense in the accompanying consolidated statement
of income for the year ended September 30, 1995.
At September 30, 1995, the future minimum lease payments
under capital lease agreements are as follows (in thousands):
Fiscal year Amount
--------------------------------------------------------
1996 $286
1997 241
1998 54
----
Total minimum lease payments 581
Less - amount representing interest 51
----
Present value of minimum lease payments 530
Less - portion currently payable 256
----
Long-term portion $274
====
<PAGE> 29
Note 7. Common Stock
On June 6, 1990, the Board of Directors declared a dividend
distribution of one Right for each outstanding share of common
stock of the Company. The Rights will not be exercisable
until a person ("Acquiring Person") or group of affiliated or
associated persons acquires 10 percent or more of the
Company's outstanding common stock or announces an intention
to make a tender offer that would result in ownership by such
person or persons of 20 percent or more of the Company's
outstanding common stock. Following such an event and unless
earlier redeemed or expired, each Right entitles its holder to
purchase from the Company one share of common stock for
$48.00.
In the event the Company is acquired in a merger or other
business combination, 50 percent or more of its consolidated
assets or earning power is sold or transferred, any person
acquires 15 percent or more of the Company's outstanding
common stock, or an Acquiring Person engages in one or more
self-dealing transactions with the Company, each Right will
entitle its holder to purchase, at the Rights' exercise price,
a number of shares of common stock of the Company or of the
acquiring company having a value of twice such exercise price.
Any Rights held by an Acquiring Person or its affiliate or
associate become null and void upon the occurrence of any such
events.
Prior to expiration of the Rights and except in certain
instances following acquisitions of 10 percent or more of the
Company's common stock, the Company may redeem all of the
Rights for one cent per Right. The Rights do not carry voting
or dividend rights and have no dilutive effect or effect on
the earnings of the Company.
The distribution of the Rights was made on June 18, 1990 to
shareholders of record on that date and attach to all common
shares issued at and after that date. The Rights will expire
on June 18, 2000 unless such date is extended or unless the
Rights are earlier redeemed by the Company.
Note 8. Income Taxes
On October 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes". SFAS No. 109 requires
adjustments of deferred tax assets and liabilities to reflect
the future tax consequences, consistent with currently enacted
tax laws and rates, of items already reflected in the
financial statements. The implementation of SFAS No. 109 on
October 1, 1993 had no material impact on the earnings or cash
flows of the Company. A regulatory liability of approximately
$440,000 was established for the excess reserves for deferred
taxes as a result of pre-July 1, 1987 deferred income taxes
that were recorded in excess of the current Federal statutory
income tax rate. Also, a regulatory liability of
approximately $1,183,000 was established for the tax benefit
of unamortized investment tax credits, which SFAS No. 109
requires to be treated as a temporary difference. This
benefit will be passed on to customers over the lives of the
property giving rise to the investment tax credits. The
Company does not believe SFAS No. 109 will significantly
impact future results of operations or cash flows based on
current ratemaking policy.
<PAGE> 30
At September 30, 1995 and 1994, the regulatory liability
amounted to $1.1 million and $1.2 million, respectively, for
the tax benefit of unamortized investment tax credits, and
$384,000 and $428,000, respectively, for the excess reserves
for deferred taxes as a result of pre-July 1, 1987 deferred
income taxes that were recorded in excess of the current
Federal statutory income tax rate.
A deferred state income tax liability and a corresponding
regulatory asset of approximately $2.4 million, representing
revenues the Company expects to recover from utility gas
service customers, were established at September 30, 1994, as
a result of recording deferred state income taxes on the
cumulative temporary differences due to a change in New
Hampshire tax law. Effective June 2, 1994, the 1% franchise
tax assessed on sales of natural gas was repealed. Prior to
the change in tax law, the franchise tax was permitted as a
credit against the New Hampshire Business Profits Tax
("NHBPT"). Because franchise tax payments exceeded the NHBPT,
the Company's gas distribution subsidiary never incurred a
NHBPT liability; and, therefore, no deferred state income
taxes related to temporary differences were recorded.
The tax effects of cumulative differences that gave rise to
the deferred tax liabilities and deferred tax assets for the
year ended September 30, 1995 and 1994 were as follows (in
thousands):
1995 1994
-----------------
Deferred tax assets:
Deferred gas costs $ 1,373 $ 1,046
Unamortized investment tax credits 683 731
Contributions in aid of construction 666 664
Allowance for doubtful accounts 367 406
Other 729 613
-----------------
Total deferred tax assets 3,818 3,460
-----------------
Deferred tax liabilities:
Property-related 14,701 13,761
Environmental costs 1,445 1,120
Other 1,321 1,080
-----------------
Total deferred tax liabilities 17,467 15,961
-----------------
Net deferred tax liability $13,649 $12,501
=================
<PAGE> 31
Deferred income taxes were classified in the accompanying
consolidated balance sheets at September 30, 1995 and 1994 as
follows (in thousands):
1995 1994
-----------------
Current $(1,531) $(1,278)
Long-term 15,180 13,779
-----------------
Total $13,649 $12,501
=================
The components of Federal and state income taxes reflected in
the accompanying consolidated statements of income for the
years ended September 30, 1995, 1994 and 1993 were as follows
(in thousands):
1995 1994 1993
--------------------------
Federal:
Current $ 625 $2,165 $1,813
Deferred 1,090 539 1,016
Investment tax credits (141) (145) (150)
--------------------------
Total Federal 1,574 2,559 2,679
--------------------------
State:
Current 254 47 27
Deferred 144 10 17
--------------------------
Total state 398 57 44
--------------------------
Total provision for income taxes $1,972 $2,616 $2,723
==========================
The provision for income taxes is included in the
accompanying consolidated statements of income as follows (in
thousands):
1995 1994 1993
---------------------------
Operations $1,972 $2,616 $2,229
Other income - recovery of
gas costs disallowed - - 494
---------------------------
Total provision for income taxes $1,972 $2,616 $2,723
===========================
Prior to the adoption of SFAS No. 109, the following table
detailing significant timing differences for 1993 which
resulted in deferred income taxes, was required to be
disclosed. The deferred Federal income tax provisions arise
from differences in the timing of recognition of revenue and
expenses for tax and for financial reporting purposes. The
sources of these differences and the tax effects for each
significant timing difference for the year ended September 30,
1993 were as follows (in thousands):
<PAGE> 32
Related to current items:
Deferred gas costs $ 258
Allowance for doubtful accounts (57)
Other, net (16)
------
Total current deferred 185
------
Related to noncurrent items:
Property-related 787
Contributions in aid of construction (42)
Adjustment due to rate treatment
of change in tax rates (28)
Other, net 114
------
Total noncurrent deferred 831
------
Total deferred income tax expense $1,016
======
The deferred state income tax provision arose principally
from a difference in the timing of recognition of depreciation
expense of a nonregulated subsidiary.
The total Federal and state income tax provision as a
percentage of income before Federal and state income taxes was
32.5%, 32.5% and 33.7% for the years ended September 30, 1995,
1994 and 1993, respectively. The following table reconciles
the income tax provision calculated using the Federal statuto
ry tax rate of 34% to the book provision for Federal and state
income taxes (in thousands).
1995 1994 1993
----------------------
Tax calculated at statutory rate $2,066 $2,733 $2,751
Increase (reduction) in effective tax
resulting from:
Amortization of investment tax credit (141) (145) (150)
Adjustment due to change in tax rates (28) (28) (28)
State taxes, net of Federal tax benefit 266 38 29
Other, net (191) 18 121
----------------------
Total provision for income taxes $1,972 $2,616 $2,723
======================
Note 9. Employee Benefit Plans
Pension Plans
-------------
The Company has noncontributory defined benefit plans
covering substantially all employees. Benefits are based on
years of credited service and average earnings during the five
highest consecutive years of earnings prior to the normal
retirement date.
<PAGE> 33
The Company's funding policy is to annually contribute to the
plans an amount that is not less than the minimum amount
required by the Employee Retirement Income Security Act of
1974 and not more than the maximum amount deductible for
income tax purposes.
The Company also has a Supplemental Executive Retirement Plan
("SERP") for certain management employees. Benefits are based
on the employee's service and earnings as defined in the SERP.
The SERP is a non-qualified plan under the Internal Revenue
Code and has no advance funding. Benefit payments are made
directly by the Company to retired employees or their
beneficiaries.
Net periodic pension cost included the following components
(in thousands):
1995 1994 1993
-------------------------
Service cost for benefits earned $ 614 $ 592 $ 573
Interest cost on projected benefit
obligations 1,138 1,073 970
Actual return on plan assets (2,085) 542 (1,411)
Net amortization and deferral 885 (1,647) 437
-------------------------
Net periodic pension cost $ 552 $ 560 $ 569
=========================
The following table sets forth the funded status of the plans
at September 30 (in thousands):
1995 1994
--------------------------------------------------
Accumulated Accumulated
Assets benefits Assets benefits
exceed exceed exceed exceed
accumulated assets accumulated assets
benefits (unfunded) benefits (unfunded)
--------------------------------------------------
Vested benefit obligation $11,283 $ 860 $10,578 $ 893
==================================================
Accumulated benefit
obligation $11,804 $ 947 $11,071 $ 893
==================================================
Projected benefit
obligation $14,877 $ 1,321 $14,057 $1,412
Plan assets at fair value 15,243 - 12,893 -
--------------------------------------------------
Funded status 366 (1,321) (1,164) (1,412)
Unrecognized transition
(asset) obligation (605) 437 (688) 500
Unrecognized prior
service cost 709 - 796 -
Unrecognized net
(gain) loss 376 (14) 1,518 114
Additional minimum
liability - (49) - (95)
--------------------------------------------------
Prepaid pension
(pension liability) $ 846 $ (947) $ 462 $ (893)
==================================================
<PAGE> 34
Assumptions used to determine the projected benefit
obligation were:
1995 1994 1993
---------------------------
Discount rate 7.5% 7.5% 8.0%
Rate of increase in future
compensation levels 4.5-5.5% 4.5%-5.5% 5.0%-6.0%
Expected long-term rate of
return on assets 9.0% 9.0% 9.0%
Plan assets are invested in common stocks, bonds and certif-
icates of deposit.
The Company has employee 401(k) savings and investment plans
covering substantially all employees. The Company made
contributions of $210,000, $178,000 and $148,000 for the years
ended September 30, 1995, 1994 and 1993, respectively.
Other Postemployment Benefits
- -----------------------------
In addition to providing pension benefits, the Company
provides certain health care and life insurance benefits to
qualified retired employees.
In 1994, the Company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" .
Prior to 1994, expense was recognized when incurred (i.e., on a
pay-as-you-go cash basis of accounting). Expense was $129,000
in 1993. In accordance with SFAS No. 106, the Company began
recording the cost of postretirement benefits on an accrual
basis in 1994. The expense recorded in fiscal 1995 and 1994
for providing postretirement benefits, including amortization
of the accumulated projected benefit obligation over a 20-year
period, was $646,000 and $878,000, respectively.
The Company began funding these benefit costs by making cash
contributions, at the same level of expense recorded, to
voluntary employee benefit association ("VEBA") trusts
established separately for salaried and hourly paid employees.
<PAGE> 35
The following table sets forth the funded status of the plans
at September 30, 1995 and 1994 (in thousands):
1995 1994
----------------
Accumulated postretirement benefit
obligation as of July 31:
Retirees $ 2,217 $2,396
Fully eligible active plan participants 904 755
Other active participants 1,745 1,582
----------------
4,866 4,733
Plan assets at fair market value 1,193 545
Unrecognized transition obligation 4,706 4,968
Unrecognized net gain (1,209) (1,005)
----------------
Accrued postretirement benefit cost
at July 31 176 225
Contributions for the two-month period
ending September 30 159 217
----------------
Accrued postretirement benefit cost
at September 30 $ 17 $ 8
================
The components of net periodic postretirement benefit cost at
September 30, 1995 and 1994 are as follows (in thousands):
1995 1994
----------------
Service cost - benefits attributed to
services during the year $ 139 $ 173
Interest cost on accumulated postretirement
benefit obligation 347 443
Actual asset return (149) (11)
Net amortization and deferral 309 273
----------------
Net periodic postretirement benefit cost $ 646 $ 878
================
A 12% average annual rate of increase in the per capita costs
of covered health care benefits was assumed for fiscal year
1995, reducing in steps of 1% to a level of 5% at 2002 and
thereafter. This decrease results from changes in estimates of
future health care inflation, assumed changes in health care
utilization and related effects. Increasing the assumed health
care cost trend rates by one percentage point in each year
would have resulted in a $476,000 increase in the accumulated
postretirement benefit obligation as of July 31, 1995 and an
increase in the aggregate of the service cost and interest cost
components of net periodic postretirement benefit cost for
fiscal year 1995 of $44,000. A discount rate of 7.5% was used
to determine the accumulated postretirement benefit obligation.
The expected long-term rate of return on plan assets is 9%.
Plan assets are invested in common stocks and U.S. Government
obligations.
Note 10. Commitments and Contingencies
Contracts
---------
The Company has various contractual agreements covering the
transportation of natural gas, underground storage facilities
and the purchase of natural gas, which are recoverable under
the Company's CGA. These contracts expire at various times
from 1996 to 2011.
<PAGE> 36
Litigation
----------
The Company and its subsidiaries have been named in certain
lawsuits arising from normal operations. In the opinion of
management, the outcome of these lawsuits will not have a
material adverse effect on the financial position or results of
operations of the Company.
Environmental Issues
--------------------
The Company and certain of its predecessors owned or
operated facilities for the manufacture of gas, a process used
through the mid 1900's which produced byproducts that may be
considered contaminated or hazardous under current law and some
of which may still be present at the sites of such facilities.
A site in Concord, New Hampshire, has been investigated and
partially remediated, and another utility has requested the
Company's participation in an investigation of another site in
Laconia, New Hampshire. The Company will accrue
environmental investigation and clean-up costs when it is
probable that a liability exists and the amount or range of
amounts is reasonably certain. The Company will pursue
recovery of such costs through various means, including
regulatory relief and claims against other contributing
parties.
Disposal of the contents of the gasholder situated on the
former gas manufacturing site in Concord, New Hampshire, has
been completed. Total remediation costs amounted to
approximately $3.5 million and were recorded in deferred
charges. Recovery of costs began on July 1, 1995 and will
extend over a seven-year period. The unamortized balance is
excluded from rate base. Initial sampling and analysis of
certain compounds identified at various locations in the area
of the Concord site has been completed. Costs of approximately
$167,000 have been recorded in deferred charges at September
30, 1995. Field work for a hydrogeologic characterization was
completed in October 1995. A Hydrogeologic Characterization
and Risk Evaluation Report was submitted for review to the New
Hampshire Department of Environmental Services ("NHDES") in
November 1995. The Company is unable to predict the magnitude
of any liability that may be imposed on it for the cost of any
additional studies or the performance of remedial action in
connection with the Concord site until the NHDES has reviewed
the Report and issued a decision on what, if any, remediation
action will be required.
The Company has held discussions with another utility
regarding a site assessment and cost sharing of investigation
costs concerning the Laconia site. The scope of the study and
the investigation cost sharing agreement have not been
finalized such that the Company is unable to predict at this
time the magnitude of any liability that may be imposed on it
for the cost of site assessment, additional studies or the
performance of remedial action in connection with the Laconia
site.
The Company will pursue recovery from insurance carriers and
claims against any other responsible parties seeking to ensure
that they contribute appropriately to reimburse the Company for
any costs incurred. The Company intends to seek approval of
rate recovery at such time that it has determined the extent of
the contamination and has received recommendations with regard
to remediation at the Concord and Laconia sites.
<PAGE> 37
Transition Costs
----------------
Federal Energy Regulatory Commission Order 636 allows
interstate pipeline companies to recover transition costs
created, for the most part, as they buy out of long-term,
fixed-price gas contracts. The Company's pipeline supplier,
Tennessee Gas Pipeline Company, began direct billing these
costs to the Company on September 1, 1993 as a component of
demand charges. Through September 30, 1995, the Company has
been billed $4.5 million for transition costs and has charged
these costs to deferred gas costs. The Company is recovering
transition costs through the CGA. Based on current
information, additional transition costs are expected to range
from $1.7 million to $6.4 million and will continue to be
billed over a period of approximately one to three years. At
September 30, 1995, the Company has recorded an estimated
liability of $1.7 million for transition costs and a
corresponding regulatory asset.
<PAGE> 38
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and the Shareholders of EnergyNorth, Inc.:
We have audited the accompanying consolidated balance sheets
and statements of capitalization of EnergyNorth, Inc. (a New
Hampshire corporation) and subsidiaries as of September 30, 1995
and 1994, and the related consolidated statements of income,
common stockholders' equity and cash flows for each of the three
years in the period ended September 30, 1995. These consolidated
financial statements and the schedule referred to below are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and
schedule 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, the financial statements referred to above
present fairly, in all material respects, the financial position
of EnergyNorth, Inc. and subsidiaries as of September 30, 1995
and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended September
30, 1995, in conformity with generally accepted accounting
principles.
As explained in Notes 8 and 9 to the consolidated financial
statements, effective October 1, 1993, the Company changed its
method of accounting for income taxes and postretirement benefits
other than pensions.
Our audit was made for the purpose of forming an opinion on
the basic consolidated financial statements taken as a whole.
The financial statement schedule under part IV, Item 14, is
presented for purposes of additional analysis and is not a
required part of the basic consolidated financial statements.
This information has been subjected to the auditing procedures
applied in our audit of the basic consolidated financial
statements and, in our opinion, is fairly stated, in all material
respects, in relation to the basic consolidated financial
statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
November 9, 1995
<PAGE> 39
(b)Supplementary Financial Information
Selected Quarterly Financial Data (Unaudited) EnergyNorth, Inc.
Earnings Cash
(loss) Earnings dividend
(In thousands, Operating applicable (loss) paid
except per Operating income to common per per
share amounts) revenues (loss) stock share share
- ----------------------------------------------------------------------------
First Quarter
1995 $22,472 $ 3,155 $ 2,324 $ 0.74 $0.28
1994 25,914 4,037 3,243 1.04 0.27
- ----------------------------------------------------------------------------
Second Quarter
1995 35,209 6,743 5,904 1.87 0.28
1994 47,008 8,089 7,283 2.34 0.27
- ----------------------------------------------------------------------------
Third Quarter
1995 13,678 (717) (1,487) (.47) 0.28
1994 15,504 (1,292) (1,978) (.63) 0.27
- ----------------------------------------------------------------------------
Fourth Quarter
1995 7,447 (2,178) (2,637) (.83) 0.28
1994 8,624 (2,095) (3,126) (1.00) 0.27
- ----------------------------------------------------------------------------
Note: Earnings (loss) per share are based on the weighted
average shares outstanding at the end of the quarter. In the
opinion of the Company, the quarterly financial data include
all adjustments, consisting of normal recurring adjustments and
reclassifications, necessary for a fair presentation of such
information. Quarterly amounts vary significantly due to
seasonal weather conditions.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There were no such matters during the fiscal year ended September 30, 1995.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by this Item is incorporated by
reference to pages 3 through 5 of the Registrants' Proxy
Statement for its Annual Meeting to be held February 7, 1996,
except for information relating to identification of Executive
Officers of the Registrant which is contained in Part I of the
Report.
ITEM 11. EXECUTIVE COMPENSATION
The information called for by this Item is incorporated by
reference to "Compensation of Directors", "Executive
Compensation" and "Non-Contributory Retirement Plan" on pages 4,
6 and 7 of the Registrant's Proxy Statement for its Annual
Meeting to be held February 7, 1996.
<PAGE> 40
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information called for by this Item is incorporated by
reference to page 2 of the Registrant's Proxy Statement for its
Annual Meeting to be held February 7, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this Item is incorporated by
reference to "Other Transactions" and "Compensation Committee
Interlocks and Insider Participation" on pages 4 and 5 of the
Registrant's Proxy Statement for its Annual Meeting to be held
February 7, 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) List of documents filed as part of this Report:
(1) Financial Statements
The following financial statements are included herein
under Part II, Item 8.
Page No(s).
in this Report
--------------
Consolidated Statements of Income for the
years ended September 30, 1995, 1994 and 1993 20
Consolidated Balance Sheets at September 30,
1995 and 1994 21
Consolidated Statements of Capitalization at
September 30, 1995 and 1994 22
Consolidated Statements of Common Shareholders'
Equity for the years ended September 30, 1995,
1994 and 1993 23
Consolidated Statements of Cash Flows for the
years ended September 30, 1995, 1994 and 1993 24
Notes to Consolidated Financial Statements 25-37
Report of Independent Public Accountants 38
(2) Financial Statement Schedules
The following supplementary financial statement
schedules required by Rule 5-04 of Regulation S-X, and
report thereon, are filed as part of this Form 10-K on
the page indicated below:
<PAGE> 41
Schedule Page No. in
Number Description this Report
-------- ----------- -----------
II Consolidated Valuation and Qualifying
Accounts for the three years ended
September 30, 1995 41
Report of Independent Public Accountants 38
Schedules other than the one listed above are either
not required or not applicable, or the required
information is shown in the financial statements or
notes thereto.
(3) Exhibits Required by Item 601 of Regulation S-K
See Exhibit Index on pages 43 through 45.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the
quarter ended September 30, 1995.
(c) Exhibits - See Exhibit Index on pages 43 through 45.
(d) Financial Statement Schedules
<TABLE>
SCHEDULE II
ENERGYNORTH, INC.
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Reserves which are deducted in the balance sheets
from assets to which they apply:
Additions
-----------
Year Balance Charged Charged
ended at to costs to Balance
September beginning and other at end
30, Description of period expenses accounts(1) Deductions of period
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Allowance for
1995 doubtful accounts $1,050 $ 982 $172 $1,254 $ 950
Allowance for
1994 doubtful accounts 890 1,307 149 1,296 1,050
Allowance for
1993 doubtful accounts 723 1,195 151 1,179 890
- ---------------
(1) Represents recoveries on accounts previously written off
</TABLE>
<PAGE> 42
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.
ENERGYNORTH, INC.
Date: December 21, 1995 by: Robert R. Giordano
------------------
Robert R. Giordano
President & Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities indicated on
December 21, 1995.
Robert R. Giordano Director, President and Chief
- ----------------------- Executive Officer (principal
Robert R. Giodano executive officer)
Michael J. Mancini, Jr. Senior Vice President and Chief
- ----------------------- Financial Officer (principal
Michael J. Mancini, Jr. financial officer)
David A. Skrzysowski Vice President & Controller
- ----------------------- (principal accounting officer)
David A. Skrzysowski
Edward T. Borer Director
- -----------------------
Edward T. Borer
N. George Mattaini Director
- -----------------------
N. George Mattaini
Davis P. Thurber Director
- -----------------------
Davis P. Thurber
Richard B. Couser Director
- -----------------------
Richard B. Couser
Sylvio L. Dupuis Director
- -----------------------
Sylvio L. Dupuis
<PAGE> 43
EXHIBIT INDEX
The exhibits listed below are filed herewith, or are
incorporated herein by reference to other filings.
Exhibit
Number Description
------- -----------
3.1 Articles of Incorporation of EnergyNorth, Inc.
are incorporated by reference to Exhibit 4.1 of
EnergyNorth, Inc.'s Registration Statement on Form S-3,
No. 33-41579, dated July 2, 1991.
3.2 By-Laws of EnergyNorth, Inc., dated as of February 1, 1995,
are incorporated by reference to Exhibit 4.2 to EnergyNorth,
Inc.'s Registration Statement on Form S-3, No. 33-58127,
dated March 17, 1995.
4.1 Gas Service, Inc. General and Refunding Mortgage
Indenture, dated as of June 30, 1987, as amended and
supplemented by a First Supplemental Indenture, dated as
of October 1, 1988, and by a Second Supplemental
Indenture, dated as of August 31, 1989, is incorporated
by reference to Exhibit 4.1 of EnergyNorth, Inc.'s Form
10-K (File No. 0-11035) for the fiscal year ended
September 30, 1989.
4.2 Third Supplemental Indenture, dated as of
September 1, 1990, to Gas Service, Inc. General and
Refunding Mortgage Indenture, dated as of June 30, 1987,
is incorporated by reference to Exhibit 4.2 of
EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for the
fiscal year ended September 30, 1990.
4.3 Fourth Supplemental Indenture, dated as of
January 10, 1992, to Gas Service, Inc. General and
Refunding Mortgage Indenture, dated as of June 30, 1987,
is incorporated by reference to Exhibit 4.3 of
EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for the
fiscal year ended September 30, 1992.
4.4 Copies of Bond Indentures and a note and credit
agreement defining the rights of holders of long-term
debt of certain subsidiaries of EnergyNorth, Inc., under
which the amounts of bonds or the note issued do not
exceed 10% of the consolidated assets of EnergyNorth,
Inc. will be furnished to the Securities and Exchange
Commission upon request.
4.5 Rights Agreement, dated as of June 18, 1990,
between the Registrant and State Street Bank & Trust
Company as Rights Agent is incorporated by reference to
Exhibit I-2 to EnergyNorth, Inc.'s Registration
Statement on Form 8-A, dated June 18, 1990.
10.1 Gas transportation agreement (FT-A), dated as of
September 1, 1993, between Tennessee Gas Pipeline
Company and EnergyNorth Natural Gas, Inc. is
<PAGE> 44
incorporated by reference to Exhibit 10.1 to
EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for
the fiscal year ended September 30, 1993.
10.2 Gas transportation agreement (contract No. 632),
dated as of September 1, 1993, between Tennessee Gas
pipeline Company and EnergyNorth Natural Gas, Inc. is
filed herewith.
10.3 Supplemental Executive Retirement Plan of
EnergyNorth, Inc. is incorporated by reference to
Exhibit 10.2 to EnergyNorth, Inc.'s Form 10-K (File No.
0-11035) for the fiscal year ended September 30, 1993.
10.4 Deferred Compensation Agreement, dated as of
November 30, 1993, between Robert R. Giordano and the
Registrant is incorporated by reference to Exhibit 10.3
to EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for
the fiscal year ended September 30, 1993.
10.5 Deferred Compensation Agreement, dated as of
November 30, 1993, between Michael J. Mancini, Jr. and
the Registrant is incorporated by reference to Exhibit
10.4 to EnergyNorth, Inc.'s Form 10-K (File No. 0-
11035) for the fiscal year ended September 30, 1993.
10.6 Deferred Compensation Agreement, dated as of
November 30, 1993, between Albert J. Hanlon and the
Registrant is incorporated by reference to Exhibit 10.5
to EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for
the fiscal year ended September 30, 1993.
10.7 EnergyNorth, Inc. 1992 Directors' Deferred
Compensation Plan is incorporated by reference to
Exhibit 10.6 to EnergyNorth, Inc.'s Form 10-K (File No.
0-11035) for the fiscal year ended September 30, 1993.
10.8 Consulting Agreement, dated as of October 12, 1990,
between N. George Mattaini and the Registrant is
incorporated by reference to Exhibit 10.17 of
EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for
the fiscal year ended September 30, 1990.
10.9 Employment Agreement, dated as of December 1, 1995,
between Robert R. Giordano and the Registrant is filed
herewith.
10.10 Employment Agreement, dated as of December 1,
1995, between Michael J. Mancini, Jr. and the Registrant
is filed herewith.
10.11 Employment Agreement, dated as of December 1,
1995, between Albert J. Hanlon and the Registrant is
filed herewith.
10.12 Management Continuity Agreement, dated as of
December 7, 1995, between Robert R. Giordano and the
Registrant is filed herewith.
<PAGE> 45
10.13 Management Continuity Agreement, dated as of
December 7, 1995, between Michael J. Mancini, Jr. and
the Registrant is filed herewith.
10.14 Management Continuity Agreement, dated as of
December 7, 1995, between Albert J. Hanlon and the
Registrant is filed herewith.
10.15 EnergyNorth, Inc. Key Employee Performance and
Equity Incentive Plan, as amended, is filed herewith.
21 Subsidiaries of the Registrant is incorporated by
reference to Exhibit 22 of EnergyNorth, Inc.'s Form 10-K
(File No. 0-11035) for the fiscal year ended September
30, 1990.
23 Consent of Arthur Andersen LLP is filed herewith.
27 Financial Data Schedule of the Registrant is
filed herewith.
99 EnergyNorth, Inc.'s Dividend Reinvestment and
Stock Purchase Plan, as amended is incorporated by
reference to Exhibit 99 of EnergyNorth Inc.'s
Registration Statement on Form S-3, No. 33-58127, dated
March 17, 1995.
Contract No.: 632
GAS TRANSPORTATION AGREEMENT
(For Use Under FT-A Rate Schedule)
THIS AGREEMENT is made and entered into as of the 20th day
of August, 1993, by and between TENNESSEE GAS PIPELINE COMPANY, a
Delaware corporation, hereinafter referred to as "Transporter"
and EnergyNorth Natural Gas, Inc., a New Hampshire corporation,
hereinafter referred to as "Shipper." Transporter and Shipper
shall collectively be referred to herein as the "Parties."
ARTICLE I
DEFINITIONS
1.1 TRANSPORTATION QUANTITY - shall mean the maximum daily
quantity of gas which Transporter agrees to receive and
transport on a firm basis, subject to Article II herein, for
the account of Shipper hereunder on each day during each
year during the term hereof which shall be 12,624 dekatherms
(Dth). Any limitations of the quantities to be received
from each Point of Receipt and/or delivered to each Point of
Delivery shall be as specified on Exhibit A attached hereto.
1.2 EQUIVALENT QUANTITY - shall be as defined in Article I of
the General Terms and Conditions of Transporter's FERC Gas
Tariff.
ARTICLE II
TRANSPORTATION
Transportation Service - Transporter agrees to accept and
receive daily on a firm basis, at the Point(s) of Receipt
from Shipper or for Shipper's account such quantity of gas
as Shipper makes available up to the Transportation
Quantity, and to deliver to or for the account of Shipper to
the Point(s)of Delivery an Equivalent Quantity of gas.
ARTICLE III
POINT(S) OF RECEIPT AND DELIVERY
The Primary Point(s) of Receipt and Delivery shall be those
points specified on Exhibit A attached hereto.
ARTICLE IV
All facilities are in place to render the service provided
for in this Agreement.
ARTICLE V
QUALITY SPECIFICATIONS AND STANDARDS FOR MEASUREMENT
For all gas received, transported and delivered hereunder
the parties agree to the Quality Specifications and
Standards for Measurement as specified in the General Terms
and Conditions of Transporter's FERC Gas Tariff Volume No.
1. To the extent that no new measurement facilities are
installed to provide service hereunder, measurement
operations will continue in the manner in which they have
previously been handled. In the event that such facilities
are not operated by Transporter then responsibility for
operations shall be deemed to be Shipper's.
ARTICLE VI
RATES AND CHARGES FOR GAS TRANSPORTATION
6.1 TRANSPORTATION RATES - Commencing upon the date of
execution, the rates, charges, and surcharges to be paid by
Shipper to Transporter for the transportation service
provided herein shall be in accordance with Transporter's
Rate Schedule FT-A and the General Terms and Conditions of
Transporter's FERC Gas Tariff.
6.2 INCIDENTAL CHARGES - Shipper agrees to reimburse Transporter
for any filing or similar fees, which have not been
previously paid for by Shipper, which Transporter incurs in
rendering service hereunder.
6.3 CHANGES IN RATES AND CHARGES - Shipper agrees that
Transporter shall have the unilateral right to file with the
appropriate regulatory authority and make effective changes
in (a) the rates and charges applicable to service pursuant
to Transporter's Rate Schedule FT-A, (b) the rate
schedule(s) pursuant to which service hereunder is rendered,
or (c) any provision of the General Terms and Conditions
applicable to those rate schedules. Transporter agrees that
Shipper may protest or contest the aforementioned filings,
or may seek authorization from duly constituted regulatory
authorities for such adjustment of Transporter's existing
FERC Gas Tariff as may be found necessary to assure
Transporter's just and reasonable rates.
ARTICLE VII
BILLINGS AND PAYMENTS
Transporter shall bill and Shipper shall pay all rates and
charges in accordance with Articles V and VI, respectively,
of the General Terms and Conditions of Transporter's FERC
Gas Tariff.
ARTICLE VIII
GENERAL TERMS AND CONDITIONS
This Agreement shall be subject to the effective provisions
of Transporter's Rate Schedule FT-A and to the General Terms
and Conditions incorporated therein, as the same may be
changed or superseded from time to time in accordance with
the rules and regulations of the FERC.
ARTICLE IX
REGULATION
9.1 This Agreement shall be subject to all applicable and lawful
governmental statutes, orders, rules and regulations and is
contingent upon the receipt and continuation of all
necessary regulatory approvals or authorizations upon
terms acceptable to Transporter. This Agreement shall be
void and of no force and effect if any necessary regulatory
approval is not so obtained or continued. All parties hereto
shall cooperate to obtain or continue all necessary
approvals or authorizations, but no party shall be liable to
any other party for failure to obtain or continue such
approvals or authorizations.
9.2 The transportation service described herein shall be
provided subject to Part 284, Subpart G of the FERC
Regulations.
ARTICLE X
RESPONSIBILITY DURING TRANSPORTATION
Except as herein specified the responsibility for gas during
transportation shall be stated in the General Terms and
Conditions of Transporter's FERC Gas Tariff Volume No. 1.
ARTICLE XI
WARRANTIES
11.1 In addition to the warranties set forth in Article IX of the
General Terms and Conditions of Transporter's FERC Gas
Tariff, Shipper warrants the following:
(a) Shipper warrants that all upstream and downstream
transportation arrangements are in place, or will be in
place as of the requested effective date of service, and
that it has advised the upstream and downstream transporters
of the receipt and delivery points under this Agreement and
any quantity limitations for each point as specified on
Exhibit A attached hereto. Shipper agrees to indemnify and
hold Transporter harmless for refusal to transport gas
hereunder in the event any upstream or downstream
transporter fails to receive or deliver gas as contemplated
by this Agreement.
(b) Shipper agrees to indemnify and hold Transporter
harmless from all suits, actions, debts, accounts, damages,
costs, losses and expenses (including reasonable attorneys
fees) arising from or out of breach of any warranty, express
or implied, by Shipper herein.
11.2 Transporter shall not be obligated to provide or continue
service hereunder in the event of any breach of warranty.
ARTICLE XII
TERM
12.1 This contract shall be effective as of ______________ and
shall remain in force and effect until November 1, 2000
("Primary Term") and on a month to month basis thereafter
unless terminated by either Party upon at least thirty (30)
days prior written notice to the other Party; provided,
however, that if the Primary Term is one year or more, then
unless Shipper elects upon one year's prior written notice
to Transporter to request a lesser extension term, the
Agreement shall automatically extend upon the expiration of
the primary term for a term of five years; and shall
automatically extend for successive five year terms
thereafter unless shipper provides notice described above in
advance of the expiration of a succeeding term; provided
further, if the FERC or other governmental body having
jurisdiction over the service rendered pursuant to this
Agreement authorizes abandonment of such service, this
Agreement shall terminate on the abandonment date permitted
by the FERC or such other governmental body.
12.2 Any portions of this Agreement necessary to resolve or cash-
out imbalances under this Agreement as required by the
General Terms and Conditions of Transporter's FERC Gas
Tariff Volume No. 1, shall survive the other parts of this
Agreement until such time as such balancing has been
accomplished.
12.3 This Agreement will terminate upon notice from Transporter
in the event Shipper fails to pay all of the amount of any
bill for service rendered by Transporter hereunder in accord
with the terms and conditions of Article VI of the General
Terms and Conditions of Transporter's FERC Tariff.
ARTICLE XIII
NOTICE
Except as otherwise provided in the General Terms and
Conditions applicable to this Agreement, any notice under
this Agreement shall be in writing and mailed to the post
office address of the party intended to receive the same, as
follows:
TRANSPORTER: Tennessee Gas Pipeline Company
P. O. Box 2511
Houston, Texas 77252-2511
Attention: Transportation Marketing
SHIPPER:
NOTICES: EnergyNorth Natural Gas, Inc.
1260 Elm Street
Manchester, NH 03105-0329
Attention: Don Carroll
BILLING: EnergyNorth Natural Gas, Inc.
1260 Elm Street
Manchester, NH 03105-0329
Attention: Don Carroll
or to such other address as either Party shall designate by
formal written notice to the other.
ARTICLE XIV
ASSIGNMENTS
14.1 Either Party may assign or pledge this Agreement and all
rights and obligations hereunder under the provisions of any
mortgage, deed of trust, indenture, or other instrument
which it has executed or may execute hereafter as security
for indebtedness. Either Party may, without relieving
itself of its obligation under this Agreement, assign any of
its rights hereunder to a company with which it is
affiliated, otherwise, Shipper shall not assign this
Agreement or any of its rights hereunder, except in accord
with Article III, Section II of the General Terms and
Conditions of Transporter's FERC Gas Tariff.
14.2 Any person which shall succeed by purchase, merger, or
consolidation to the properties, substantially as an
entirety, of either Party hereto shall be entitled to the
rights and shall be subject to the obligations of its
predecessor in interest under this Agreement.
ARTICLE XV
MISCELLANEOUS
15.1 The interpretation and Performance of this contract shall be
in accordance with and controlled by the laws of the State
of Texas, without regard to the doctrines governing choice
of law.
15.2 If any provisions of this Agreement is declared null and
void, or viodable, by a court of competent jurisdiction,
then that provision will be considered severable at either
party's option; and if the severability option is exercised,
the remaining provisions of the Agreement shall remain in
full force and effect.
15.3 Unless otherwise expressly provided in this Agreement or
Transporter's Gas Tariff, no modification of or supplement
to the terms and provisions stated in this agreement shall
be or become effective, except by the execution of by both
Parties of a written amendment.
15.4 Exhibit A attached hereto is incorporated herein by
reference and made a part hereof for all purposes.
IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be duly executed in several counterparts as of the
date first hereinabove written.
TENNESSEE GAS PIPELINE COMPANY
BY: Byron S. Wright
---------------
Byron S. Wright
Agent and Attorney-in-Fact
ENERGYNORTH NATURAL GAS, INC.
BY: Christopher P. Fleming
----------------------
TITLE: VICE PRESIDENT
DATE: AUGUST 20 RED'D
Contract No.: 632
GAS TRANSPORTATION AGREEMENT
(For Use under FT-A Rate Schedule)
EXHIBIT "A"
TO GAS TRANSPORTATION AGREEMENT
DATED September 1st, 1993
BETWEEN
TENNESSEE GAS PIPELINE COMPANY
AND
ENERGYNORTH NATURAL GAS, INC.
SERVICE PACKAGE: 632
CONTRACT MDQ: 15,265
AMENDMENT EFFECTIVE DATE: September 1st, 1993
EMPLOYMENT AGREEMENT
AGREEMENT dated as of December 1, 1995, between ENERGYNORTH,
INC., a New Hampshire corporation (the "Company") and ROBERT R.
GIORDANO, residing in Bedford, New Hampshire (the "Executive').
WHEREAS, the Executive has been employed by the Company or its
subsidiaries for more than thirty (30) years in various executive
positions and has performed valuable services to the Company; and
WHEREAS, the Executive is willing to continue in the employ of
the Company, and the Company desires to retain the services of
the Executive;
NOW, THEREFORE, in consideration of the foregoing and the
respective covenants and agreements of the Executive and the
Company herein contained, the parties hereto agree as follows:
1. Employment.
The Company agrees to employ the Executive and may assign the
Executive to work for it and for any subsidiary or affiliated
company, and the Executive agrees to perform the duties assigned
to him upon the terms and conditions herein provided.
2. Position and Responsibilities.
The Company shall employ the Executive and the Executive agrees
to serve, as President & Chief Executive Officer or any other
comparable office to which he is elected for the term and on the
conditions hereinafter set forth. The Executive agrees to
perform such services not inconsistent with his position as shall
be assigned to him by the Board of Directors of the Company
("Board'). If elected, the Executive shall also serve as an
officer of any of the Company's subsidiary or affiliated
corporations.
3. Term of Agreement and Duties.
(a) Term of Employment. The period of the Executive's
employment under this Agreement shall be deemed to have commenced
as of the date first mentioned above and shall continue for a
period of at least sixty (60) full calendar months thereafter,
subject to renewal in accordance with Section 3(b) below.
(b) One-Year Evergreen Provision. This Agreement shall be
reviewed annually by the Board at its meeting held for the review
of compensation and in all events prior to December 1 of each
year. At such yearly review, the Board shall consider whether or
not to extend the term of this Agreement for an additional year.
Unless the Board affirmatively votes not to extend this
Agreement, the term of employment and the termination of this
Agreement shall be extended for a period of one year from the
previous termination date. In the event the Board votes not to
extend this Agreement, the termination date of this Agreement
shall be the later of the expiration of sixty (60) months from
the effective date of this Agreement or sixty (60) months from
December 1st of the year in which this Agreement was last
extended.
(c) Duties. During such period of his employment
hereunder, except for illness, vacation periods, and reasonable
leaves of absence, the Executive shall devote substantially all
of his business time, attention, skill and efforts to the
faithful performance of his duties. With the approval of the
Board, however, the Executive may serve, or continue to serve, on
the boards of directors of, and hold any other offices or
positions in, companies or organizations, when, in the Board's
judgment, that service will not conflict with the interests of
the Company or any of its subsidiaries or affiliates or divisions
or materially affect the performance of the Executive's duties
pursuant to this Agreement.
4. Compensation.
For all services to be rendered by the Executive in any
capacity during the period of his employment under this
Agreement, including, without limitation, services as an
executive, officer, director, or member of any committee of the
Company or of any subsidiary, affiliate or division thereof, the
Company will pay or cause to be paid to the Executive and will
provide or cause to be provided to the Executive the following:
(a) Salary. The Executive shall be compensated by the
Company for his services in such capacities at the aggregate base
salary rate of one hundred ninety six thousand dollars ($196,000)
per year or such higher rate as the Board may, in its discretion,
determine, payable in equal installments no less frequently than
monthly. In addition, the Executive shall be compensated by the
Company crediting to his Deferred Compensation Account,
maintained in accordance with the Deferred Compensation Agreement
between the Executive and the Company dated November 30, 1993, as
amended or replaced, six thousand dollars ($6,000) per year or
such higher amount as the Board may, in its discretion,
determine, payable in equal installments no less frequently than
monthly.
(b) Incentive Compensation. The Executive shall be
entitled to participate in any existing or future incentive
compensation, stock option, stock purchase or other bonus plans
covering the employees of the Company (or any subsidiary or
affiliate) on the same basis as other officers; and where
applicable, in any such plans of any subsidiary, affiliate or
division thereof from which he receives compensation.
(c) Deferred Compensation. The Executive shall have the
right to defer what would otherwise be current compensation in
accordance with a Deferred Compensation Agreement entered into
between the Executive and the Company effective as of November
30, 1993, as amended or replaced. The Executive, may, in
addition, be compensated by the Company crediting amounts to his
Deferred Compensation Account, maintained in accordance with such
Deferred Compensation Agreement, as such intervals during each
year as the Company may determine.
(d) Automobile. The Company shall provide to the Executive
an automobile for his exclusive use on the same basis as other
officers and in any event on a basis no less favorable than that
enjoyed by him at the date of this Agreement.
(e) Vacations. The Executive shall be entitled to vacation
pursuant to that policy applicable to other employees of similar
rank and stature at the Company.
5. Expenses.
The Company (or its subsidiaries or affiliates, as the case may
be) shall reimburse the Executive for all reasonable expenses,
including travel, and other disbursements incurred by him for or
on behalf of the Company (or its subsidiaries or affiliates) in
the performance of his duties hereunder consistent with the
current reimbursement policies of the Company, but in no event
less favorable than the reimbursement policies in existence on
the effective date of this Agreement.
6. Participation in Benefit and Incentive Plans.
The Executive shall participate in any retirement, pension, group
life, health or accident insurance, stock option, stock purchase,
restricted stock, bonus or any other employee benefit or
incentive plans generally available to the executives and
employees of the Company (or any subsidiary or affiliate),
whether now in force or hereafter adopted, in accordance with
their terms. In the event the Executive is employed by the
Company pursuant to this Agreement and elects to retire under the
provisions of the EnergyNorth, Inc. Retirement Plan for Salaried
Employees ("Pension Plan"), the Executive shall be entitled to
the same post-retirement medical, life and other applicable
benefits that other officer level executives at the Company
receive upon retirement in accordance with the Company's then
existing policies. Further, the Executive shall be entitled to
receive post-retirement medical, life and other applicable
benefits that other officer level executives at the Company
receive upon retirement in accordance with the Company's then
existing policies and at the time the Executive elects to retire
under the provisions of the Pension Plan if within five years
after a Change of Control of the Company, the Executive is
discharged without Cause or resigns for Good Reason as each of
those terms is defined in the Management Continuity Agreement
("MCA") between the Executive and the Company, dated as of
December 7, 1995 as amended.
7. Termination of Employment.
(a) Discharge for Cause. Notwithstanding any of the
foregoing provisions of this Agreement, the Executive may, at any
time during the term of this Agreement, be discharged by the
Board for Cause. For the purposes of this Section 7 cause shall
mean: conviction of a felony or crime involving an act of moral
turpitude, dishonesty, or misfeasance which substantially
interferes with the orderly business of the Company or any of its
subsidiaries, action that directly or indirectly causes the
Company or its subsidiaries to suffer substantial loss or damage,
refusal to follow or material neglect of reasonable requests of
the Company made pursuant to this Agreement, and conduct that
substantially interferes with or damages the standing or
reputation of the Company or any of its subsidiaries. In the
event of termination of employment for Cause, this Agreement and
all of the rights and obligations of the parties hereto shall
forthwith terminate, except where this Agreement expressly
provides that any provisions survive termination of this
Agreement.
(b) Termination by the Company. If the Company terminates
the Executive prior to termination of this Agreement (except for
Cause), the Company shall pay semimonthly to the Executive, or if
he is not living, to his estate or to his beneficiary designated
hereunder, as the case may be, as severance pay and as liquidated
damages an amount equal to the average monthly rate of salary
paid and accrued plus one-twenty-fourth (1/24) of the previous
three years' annual average total incentive compensation award
earned under the EnergyNorth, Inc. Key Employee Performance and
Equity Incentive Plan to the Executive, including any amounts the
Executive has elected to defer, during the 12 months immediately
prior to his termination of employment. Such payments shall
commence on the last day of the month following the date of his
termination of employment and shall continue through the end of
the term of this Agreement. The Executive shall continue to
receive medical, dental, vision and life insurance benefits paid
by the Company which shall continue through the end of the term
of this Agreement and at the time the Executive elects to retire
under the provisions of the Pension Plan, the Executive shall
receive post-retirement medical benefits in accordance with the
Company's then existing policies.
The Executive shall be required to mitigate his damages by
attempting to secure comparable employment, and if he does accept
other employment, any benefits or payments received pursuant to
this Section 7 shall be reduced by any compensation earned and/or
the value of other benefits received (other than qualified
pension benefit plans) as a result of such employment.
In addition to the severance payment described in the first
paragraph of this Section 7(b), if the Company terminates the
Executive prior to the termination of this Agreement (except for
Cause), the Company shall pay to the Executive in one payment,
within ten days of the Date of Termination (as defined below), an
amount of cash equal to the product of (1) the number of shares
of Company Common Stock forfeited by the Executive pursuant to
Section 9.1 of the EnergyNorth, Inc. Key Employee Performance
and Equity Incentive Plan and (2) the average closing prices of
Company Common Stock on the New York Stock Exchange on the five
trading days ending on the Date of Termination (as defined
below).
If the Company terminates the Executive prior to the
termination of this Agreement, the Company's obligations to the
Executive shall be limited to those specified in this Section
7(b). It is understood that the Company shall not be under any
obligation to make payments pursuant to this Section 7(b) upon
any termination of employment which gives rise to payments under
the MCA.
(c) Executive Default or Death. If the Executive defaults
hereunder, or is unwilling to perform services hereunder, or dies
while employed, the Company shall have no further obligation
hereunder to make payments to the Executive beyond the Date of
Termination (as defined below) of employment.
(d) Disability.
(i) In the event that the Executive, because of accident,
disability or physical or mental illness, is incapable of
performing the essential functions of the job with or without
reasonable accommodation, the Company shall have the right to
terminate the Executive's employment under this agreement upon
thirty (30) days' written notice to the Executive. In the event
of such determination, the Company shall make semi-monthly
payments to the Executive in an amount equal to the monthly rate
of salary paid and accrued to the Executive in the most recent
month in which he was paid prior to the determination of his
disability plus one-twenty-fourth (1/24) of the previous three
years' annual average total incentive compensation award earned
under the EnergyNorth, Inc. Key Employee Performance and Equity
Incentive Plan, reduced by the amount of monthly payments made
under any long-term disability insurance or plan, if any. Such
semi-monthly payments shall continue for the number of months
remaining in the term of the agreement following the date of his
disability. In addition, if the Executive becomes disabled and
the Executive has twenty (20) years or more of service at the
time of disability, the Company will continue to provide the same
medical, dental and life insurance benefits as provided to other
active employees until such time as the Executive elects to
retire under the provisions of the Pension Plan. Disability for
purposes of this section shall have the same meaning as provided
under any long-term disability policy of the Company which
covers the Executive, or, if none, as defined in the EnergyNorth,
Inc. Retirement Plan for Salaried Employees.
(ii) Prior to a determination of disability as provided
in Subsection (i) of this Section 7(d), if the Executive fails to
perform under this contract due to mental or physical illness,
the period of such failure to perform prior to such determination
of disability but subsequent to any accrued sick days, vacation
days and reasonable leaves of absence shall be considered paid
leave, and the Company shall continue to make salary payments to
the Executive for the duration of such paid leave. Any period
during which the Executive is receiving benefits under any long-
term disability plan of the Company shall be considered unpaid
leave.
(e) Notice of Termination. Any termination by the Company
for Cause (as such term is defined in Section 7(a) hereunder),
shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 15. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and
(iii) if the Date of Termination (as defined below) is
other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after
the giving of such notice).
(f) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the
Company for Cause, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may
be,
(ii) if the Executive's employment is terminated by the
Company other than for Cause, death or disability pursuant to
Section 7 (d), the Date of Termination shall be the date on which
the Company notifies the Executive of such termination, and
(iii) if the Executive's employment is terminated by
reason of death or disability pursuant of Section 7 (d), the Date
of Termination shall be the date of death of the Executive or the
date the Executive is determined to be incapable of performance
in accordance with Section 7(d) of this Agreement, as the case
may be.
(g) Nothing under this Agreement shall affect the
Executive's right to receive payments under his Deferred
Compensation Agreement.
8. Executive's Obligations.
(a) Non-Competition. While receiving payments from the
Company under this Agreement or under the MCA, and for a period
of twelve months thereafter, the Executive will not directly or
indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control of, or be connected
as an officer, employee, partner, director or otherwise with, or
have any financial interest in, or aid or assist anyone else in
the conduct of, any business (other than the businesses of the
Company) which is in direct competition with the business
conducted by the Company or any of its subsidiaries, in any
geographic area where such business is being conducted during
such period. Nothing in this Section 8, however, shall restrict
the right of the Executive to own, whether for himself or as a
fiduciary, not more than 1% of the equity securities of a company
any of the securities of a company any of the securities of which
are registered under Sections 11(b) or 11(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) Non-Disclosure. During the term of this Agreement and
thereafter, the Executive shall not, without the written consent
of the Board or a person authorized thereby, disclose or use
(except in the course of his employment hereunder and in
furtherance of the business of the Company or any subsidiaries or
affiliates thereof) any confidential information or proprietary
data of the Company or any of its subsidiaries or affiliates
thereof, including, without limitation, customer lists, cost
information or pricing information.
(c) Solicitation for Employment. While he is receiving
payments from the Company under this Agreement or under the MCA,
and for a period of six months thereafter, the Executive will
not, directly or indirectly, employ, solicit for employment, or
advise or recommend to any other person that they employ or
solicit for employment, any person employed at the time by the
Company or any of its subsidiaries for the purpose of competing
with the Company in such manner as is described in Subsection (a)
of this Section 8.
9. Successor.
The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company
to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no successor had taken place. As used
in this Agreement, "Company" shall mean the company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
10. Entire Agreement.
This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof.
This Agreement shall supersede the agreement between the Company
and the Executive dated as of December 1, 1988 (the "Prior
Agreement") in all respects, unless this Agreement is held
invalid or unenforceable by a court of competent jurisdiction, in
which case the Prior Agreement shall remain, and shall be deemed
to have remained at all times, in full force and effect.
11. Arbitration.
Any dispute or controversy between the parties relating to this
Agreement shall be settled by binding arbitration in the City of
Manchester, State of New Hampshire, pursuant to the governing
rules of the American Arbitration Association and shall be
subject to the provisions of New Hampshire Revised Statutes
Annotated Chapter 542. Judgment upon the award may be entered in
any court of competent jurisdiction.
12. Assignability.
This Agreement is binding on and is for the benefit of the
parties hereto and their respective successors, heirs, executors,
administrators and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be assigned
by the Company (except to any subsidiary or affiliate) or by the
Executive.
13. Withholding.
The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be
permitted to be withheld pursuant to any applicable law or
regulation. The Company may withhold such other amounts as may
be permitted by law.
14. Amendment; Waiver.
This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be
waived only by an instrument in writing signed by the party or
parties against whom or which enforcement of such waiver is
sought. The failure of either party hereto at any time to
require the performance by the other party hereto of any
provision hereof shall in no way affect the full right to require
such performance at any time thereafter, nor shall the waiver by
either party hereto of a breach of any provision hereof be taken
or held to be a waiver of any succeeding breach of such provision
or a waiver of the provision itself or a waiver of any other
provision of this Agreement.
15. Notices.
All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Robert R. Giordano
12 Cobbler Lane
Bedford, NH 03110
If to the Company:
Director of Human Resources
EnergyNorth, Inc.
1260 Elm Street
P.O. Box 329
Manchester, NH 03105
Copy:
Richard Samuels, Esquire
McLane, Graf, Raulerson & Middleton
900 Elm Street
P.O. Box 326
Manchester, NH 03105
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
16. Validity.
The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect, nor shall the invalidity
or unenforceability of a portion of any provision of this
Agreement affect the validity or enforceability of the balance of
such provision. If any provision of this Agreement, or portion
thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
17. Beneficiary.
The Executive hereby designates as his beneficiary under this
Agreement Priscilla L. Giordano, provided that the Executive may
change his beneficiary, or provide for alternate beneficiaries,
at any time by notifying the Company in writing of such change,
and no consent shall be required from the beneficiary or from the
Company.
18. Independent Covenants.
The obligations of the Executive set forth in paragraph 8
represent independent covenants by which the Executive is and
will remain bound notwithstanding any breach by the Company, and
shall survive the termination of this Agreement.
19. Applicable Law.
This Agreement shall be governed by and construed in accordance
with the substantive internal law and not the conflict of law
provisions of the State of New Hampshire.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first mentioned above.
ENERGYNORTH, INC.
BY: Edward T. Borer
---------------
Edward T. Borer
Chairman, Board of
Directors
Robert R. Giordano
------------------
Robert R. Giordano
EMPLOYMENT AGREEMENT
AGREEMENT dated as of December 1, 1995, between ENERGYNORTH,
INC., a New Hampshire corporation (the "Company") and MICHAEL J.
MANCINI, JR., residing in Litchfield, New Hampshire (the
"Executive').
WHEREAS, the Executive has been employed by the Company or its
subsidiaries in various executive positions and has performed
valuable services to the Company; and
WHEREAS, the Executive is willing to continue in the employ of
the Company, and the Company desires to retain the services of the
Executive;
NOW, THEREFORE, in consideration of the foregoing and the
respective covenants and agreements of the Executive and the
Company herein contained, the parties hereto agree as follows:
1. Employment.
The Company agrees to employ the Executive and may assign the
Executive to work for it and for any subsidiary or affiliated
company, and the Executive agrees to perform the duties assigned to
him upon the terms and conditions herein provided.
2. Position and Responsibilities.
The Company shall employ the Executive and the Executive agrees
to serve, as Senior Vice President Officer or any other office to
which he is elected for the term and on the conditions hereinafter
set forth. The Executive agrees to perform such services not
inconsistent with his position as shall be assigned to him by the
Board of Directors of the Company ("Board'). If elected, the
Executive shall also serve as an officer of any of the Company's
subsidiary or affiliated corporations.
3. Term of Agreement and Duties.
(a) Term of Employment. The period of the Executive's
employment under this Agreement shall be deemed to have commenced
as of the date first mentioned above and shall continue for a
period of at least twenty-four (24) full calendar months
thereafter, subject to renewal in accordance with Section 3(b)
below.
(b) One-Year Evergreen Provision. This Agreement shall be
reviewed annually by the Board at its meeting held for the review
of compensation and in all events prior to December 1 of each year.
At such yearly review, the Board shall consider whether or not to
extend the term of this Agreement for an additional year. Unless
the Board affirmatively votes not to extend this Agreement, the
term of employment and the termination of this Agreement shall be
extended for a period of one year from the previous termination
date. In the event the Board votes not to extend this Agreement,
the termination date of this Agreement shall be the later of the
expiration of twenty-four (24) months from the effective date of
this Agreement or twenty-four months (24) from December 1st of the
year in which this Agreement was last extended.
(c) Duties. During such period of his employment hereunder,
except for illness, vacation periods, and reasonable leaves of
absence, the Executive shall devote substantially all of his
business time, attention, skill and efforts to the faithful
performance of his duties. With the approval of the Board,
however, the Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in,
companies or organizations, when, in the Board's judgment, that
service will not conflict with the interests of the Company or any
of its subsidiaries or affiliates or divisions or materially affect
the performance of the Executive's duties pursuant to this
Agreement.
4. Compensation.
For all services to be rendered by the Executive in any capacity
during the period of his employment under this Agreement,
including, without limitation, services as an executive, officer,
director, or member of any committee of the Company or of any
subsidiary, affiliate or division thereof, the Company will pay or
cause to be paid to the Executive and will provide or cause to be
provided to the Executive the following:
(a) Salary. The Executive shall be compensated by the
Company for his services in such capacities at the aggregate base
salary rate of one hundred seventeen thousand five hundred dollars
($117,500) per year or such higher rate as the Board may, in its
discretion, determine, payable in equal installments no less
frequently than monthly. In addition, the Executive shall be
compensated by the Company crediting to his Deferred Compensation
Account, maintained in accordance with the Deferred Compensation
Agreement between the Executive and the Company dated November 30,
1993, as amended or replaced, such amount as the Board may, in its
discretion, determine, payable in equal installments no less
frequently than monthly.
(b) Incentive Compensation. The Executive shall be entitled
to participate in any existing or future incentive compensation,
stock option, stock purchase or other bonus plans covering the
employees of the Company (or any subsidiary or affiliate) on the
same basis as other officers; and where applicable, in any such
plans of any subsidiary, affiliate or division thereof from which
he receives compensation.
(c) Deferred Compensation. The Executive shall have the
right to defer what would otherwise be current compensation in
accordance with a Deferred Compensation Agreement entered into
between the Executive and the Company effective as of November 30,
1993, as amended or replaced. The Executive, may, in addition, be
compensated by the Company crediting amounts to his Deferred
Compensation Account, maintained in accordance with such Deferred
Compensation Agreement, as such intervals during each year as the
Company may determine.
(d) Automobile. The Company shall provide to the Executive
an automobile for his exclusive use on the same basis as other
officers and in any event on a basis no less favorable than that
enjoyed by him at the date of this Agreement.
(e) Vacations. The Executive shall be entitled to vacation
pursuant to that policy applicable to other employees of similar
rank and stature at the Company.
5. Expenses.
The Company (or its subsidiaries or affiliates, as the case may
be) shall reimburse the Executive for all reasonable expenses,
including travel, and other disbursements incurred by him for or on
behalf of the Company (or its subsidiaries or affiliates) in the
performance of his duties hereunder consistent with the current
reimbursement policies of the Company, but in no event less
favorable than the reimbursement policies in existence on the
effective date of this Agreement.
6. Participation in Benefit and Incentive Plans.
The Executive shall participate in any retirement, pension, group
life, health or accident insurance, stock option, stock purchase,
restricted stock, bonus or any other employee benefit or incentive
plans generally available to the executives and employees of the
Company (or any subsidiary or affiliate), whether now in force or
hereafter adopted, in accordance with their terms. In the event
the Executive is employed by the Company pursuant to this Agreement
and elects to retire under the provisions of the EnergyNorth, Inc.
Retirement Plan for Salaried Employees ("Pension Plan"), the
Executive shall be entitled to the same post-retirement medical,
life and other applicable benefits that other officer level
executives at the Company receive upon retirement in accordance
with the Company's then existing policies. Further, the Executive
shall be entitled to receive post-retirement medical, life and
other applicable benefits that other officer level executives at
the Company receive upon retirement in accordance with the
Company's then existing policies and at the time the Executive
elects to retire under the provisions of the Pension Plan if within
two years after a Change of Control of the Company, the Executive
is discharged without Cause or resigns for Good Reason as each of
those terms is defined in the Management Continuity Agreement
("MCA") between the Executive and the Company, dated as of
December 7, 1995 as amended.
7. Termination of Employment.
(a) Discharge for Cause. Notwithstanding any of the
foregoing provisions of this Agreement, the Executive may, at any
time during the term of this Agreement, be discharged by the Board
for Cause. For the purposes of this Section 7 cause shall mean:
conviction of a felony or crime involving an act of moral
turpitude, dishonesty, or misfeasance which substantially
interferes with the orderly business of the Company or any of its
subsidiaries, action that directly or indirectly causes the Company
or its subsidiaries to suffer substantial loss or damage, refusal
to follow or material neglect of reasonable requests of the Company
made pursuant to this Agreement, and conduct that substantially
interferes with or damages the standing or reputation of the
Company or any of its subsidiaries. In the event of termination of
employment for Cause, this Agreement and all of the rights and
obligations of the parties hereto shall forthwith terminate, except
where this Agreement expressly provides that any provisions survive
termination of this Agreement.
(b) Termination by the Company. If the Company terminates
the Executive prior to termination of this Agreement (except for
Cause), the Company shall pay semi-monthly to the Executive, or if
he is not living, to his estate or to his beneficiary designated
hereunder, as the case may be, as severance pay and as liquidated
damages an amount equal to the average monthly rate of salary paid
and accrued plus one-twenty-fourth (1/24) of the previous three
years' annual average total incentive compensation award earned
under the EnergyNorth, Inc. Key Employee Performance and Equity
Incentive Plan to the Executive, including any amounts the
Executive has elected to defer, during the 12 months immediately
prior to his termination of employment. Such payments shall
commence on the last day of the month following the date of his
termination of employment and shall continue through the end of the
term of this Agreement. The Executive shall continue to receive
medical, dental, vision and life insurance benefits paid by the
Company which shall continue through the end of the term of this
Agreement and at the time the Executive elects to retire under the
provisions of the Pension Plan, the Executive shall receive post-
retirement medical benefits in accordance with the Company's then
existing policies.
The Executive shall be required to mitigate his damages by
attempting to secure comparable employment, and if he does accept
other employment, any benefits or payments received pursuant to
this Section 7 shall be reduced by any compensation earned and/or
the value of other benefits received (other than qualified pension
benefit plans) as a result of such employment.
In addition to the severance payment described in the first
paragraph of this Section 7(b), if the Company terminates the
Executive prior to the termination of this Agreement (except for
Cause), the Company shall pay to the Executive in one payment,
within ten days of the Date of Termination (as defined below), an
amount of cash equal to the product of (1) the number of shares of
Company Common Stock forfeited by the Executive pursuant to Section
9.1 of the EnergyNorth, Inc. Key Employee Performance and Equity
Incentive Plan and (2) the average closing prices of Company Common
Stock on the New York Stock Exchange on the five trading days
ending on the Date of Termination (as defined below).
If the Company terminates the Executive prior to the termination
of this Agreement, the Company's obligations to the Executive shall
be limited to those specified in this Section 7(b). It is
understood that the Company shall not be under any obligation to
make payments pursuant to this Section 7(b) upon any termination of
employment which gives rise to payments under the MCA.
(c) Executive Default or Death. If the Executive defaults
hereunder, or is unwilling to perform services hereunder, or dies
while employed, the Company shall have no further obligation
hereunder to make payments to the Executive beyond the Date of
Termination (as defined below) of employment.
(d) Disability.
(i) In the event that the Executive, because of accident,
disability or physical or mental illness, is incapable of
performing the essential functions of the job with or without
reasonable accommodation, the Company shall have the right to
terminate the Executive's employment under this agreement upon
thirty (30) days' written notice to the Executive. In the event of
such determination, the Company shall make semi-monthly payments to
the Executive in an amount equal to the monthly rate of salary paid
and accrued to the Executive in the most recent month in which he
was paid prior to the determination of his disability plus one-
twenty-fourth (1/24) of the previous three years' annual average
total incentive compensation award earned under the EnergyNorth,
Inc. Key Employee Performance and Equity Incentive Plan, reduced by
the amount of monthly payments made under any long-term disability
insurance or plan, if any. Such semi-monthly payments shall
continue for the number of months remaining in the term of the
agreement following the date of his disability. In addition, if
the Executive becomes disabled and the Executive has twenty (20)
years or more of service at the time of disability, the Company
will continue to provide the same medical, dental and life
insurance benefits as provided to other active employees until such
time as the Executive elects to retire under the provisions of the
Pension Plan. Disability for purposes of this section shall have
the same meaning as provided under any long-term disability policy
of the Company which covers the Executive, or, if none, as defined
in the EnergyNorth, Inc. Retirement Plan for Salaried Employees.
(ii) Prior to a determination of disability as provided in
Subsection (i) of this Section 7(d), if the Executive fails to
perform under this contract due to mental or physical illness, the
period of such failure to perform prior to such determination of
disability but subsequent to any accrued sick days, vacation days
and reasonable leaves of absence shall be considered paid leave,
and the Company shall continue to make salary payments to the
Executive for the duration of such paid leave. Any period during
which the Executive is receiving benefits under any long-term
disability plan of the Company shall be considered unpaid leave.
(e) Notice of Termination. Any termination by the Company
for Cause (as such term is defined in Section 7(a) hereunder),
shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 15. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and
(iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination
date (which date shall be not more than 15 days after the giving of
such notice).
(f) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the
Company for Cause, the date of receipt of the Notice of Termination
or any later date specified therein, as the case may be,
(ii) if the Executive's employment is terminated by the
Company other than for Cause, death or disability pursuant to
Section 7 (d), the Date of Termination shall be the date on which
the Company notifies the Executive of such termination, and
(iii) if the Executive's employment is terminated by reason
of death or disability pursuant to Section 7 (d), the Date of
Termination shall be the date of death of the Executive or the date
the Executive is determined to be incapable of performance in
accordance with Section 7(d) of this Agreement, as the case may be.
(g) Nothing under this Agreement shall affect the Executive's
right to receive payments under his Deferred Compensation
Agreement.
8. Executive's Obligations.
(a) Non-Competition. While receiving payments from the
Company under this Agreement or under the MCA, and for a period of
twelve months thereafter, the Executive will not directly or
indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control of, or be connected as
an officer, employee, partner, director or otherwise with, or have
any financial interest in, or aid or assist anyone else in the
conduct of, any business (other than the businesses of the Company)
which is in direct competition with the business conducted by the
Company or any of its subsidiaries, in any geographic area where
such business is being conducted during such period. Nothing in
this Section 8, however, shall restrict the right of the Executive
to own, whether for himself or as a fiduciary, not more than 1% of
the equity securities of a company any of the securities of which
are registered under Sections 11(b) or 11(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) Non-Disclosure. During the term of this Agreement and
thereafter, the Executive shall not, without the written consent of
the Board or a person authorized thereby, disclose or use (except
in the course of his employment hereunder and in furtherance of the
business of the Company or any subsidiaries or affiliates thereof)
any confidential information or proprietary data of the Company or
any of its subsidiaries or affiliates thereof, including, without
limitation, customer lists, cost information or pricing
information.
(c) Solicitation for Employment. While he is receiving
payments from the Company under this Agreement or under the MCA,
and for a period of six months thereafter, the Executive will not,
directly or indirectly, employ, solicit for employment, or advise
or recommend to any other person that they employ or solicit for
employment, any person employed at the time by the Company or any
of its subsidiaries for the purpose of competing with the Company
in such manner as is described in Subsection (a) of this Section 8.
9. Successor.
The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company
to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no successor had taken place. As used in this
Agreement, "Company" shall mean the company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
10. Entire Agreement.
This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof. This
Agreement shall supersede the agreement between the Company and the
Executive dated as of December 1, 1988 (the "Prior Agreement") in
all respects, unless this Agreement is held invalid or
unenforceable by a court of competent jurisdiction, in which case
the Prior Agreement shall remain, and shall be deemed to have
remained at all times, in full force and effect.
11. Arbitration.
Any dispute or controversy between the parties relating to this
Agreement shall be settled by binding arbitration in the City of
Manchester, State of New Hampshire, pursuant to the governing rules
of the American Arbitration Association and shall be subject to the
provisions of New Hampshire Revised Statutes Annotated Chapter 542.
Judgment upon the award may be entered in any court of competent
jurisdiction.
12. Assignability.
This Agreement is binding on and is for the benefit of the
parties hereto and their respective successors, heirs, executors,
administrators and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be assigned by
the Company (except to any subsidiary or affiliate) or by the
Executive.
13. Withholding.
The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be permitted
to be withheld pursuant to any applicable law or regulation. The
Company may withhold such other amounts as may be permitted by law.
14. Amendment; Waiver.
This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be
waived only by an instrument in writing signed by the party or
parties against whom or which enforcement of such waiver is sought.
The failure of either party hereto at any time to require the
performance by the other party hereto of any provision hereof shall
in no way affect the full right to require such performance at any
time thereafter, nor shall the waiver by either party hereto of a
breach of any provision hereof be taken or held to be a waiver of
any succeeding breach of such provision or a waiver of the
provision itself or a waiver of any other provision of this
Agreement.
15. Notices.
All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Michael J. Mancini, Jr.
11 Cranberry Lane
Litchfield, NH 03051
If to the Company:
Robert R. Giordano
President and CEO
EnergyNorth, Inc.
1260 Elm Street
P.O. Box 329
Manchester, NH 03105
Copy:
Richard Samuels, Esquire
McLane, Graf, Raulerson & Middleton
900 Elm Street
P.O. Box 326
Manchester, NH 03105
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
16. Validity.
The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in
full force and effect, nor shall the invalidity or unenforceability
of a portion of any provision of this Agreement affect the validity
or enforceability of the balance of such provision. If any
provision of this Agreement, or portion thereof is so broad, in
scope or duration, as to be unenforceable, such provision or
portion thereof shall be interpreted to be only so broad as is
enforceable.
17. Beneficiary.
The Executive hereby designates as his beneficiary under this
Agreement Michael J. Mancini, Sr., provided that the Executive may
change his beneficiary, or provide for alternate beneficiaries, at
any time by notifying the Company in writing of such change, and no
consent shall be required from the beneficiary or from the Company.
18. Independent Covenants.
The obligations of the Executive set forth in paragraph 8
represent independent covenants by which the Executive is and will
remain bound notwithstanding any breach by the Company, and shall
survive the termination of this Agreement.
19. Applicable Law.
This Agreement shall be governed by and construed in accordance
with the substantive internal law and not the conflict of law
provisions of the State of New Hampshire.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first mentioned above.
ENERGYNORTH, INC.
BY: Robert R. Giordano
------------------
Robert R. Giordano
President & CEO
Michael J. Mancini, Jr.
-----------------------
Michael J. Mancini, Jr.
EMPLOYMENT AGREEMENT
AGREEMENT dated as of December 1, 1995, between ENERGYNORTH,
INC., a New Hampshire corporation (the "Company") and ALBERT J.
HANLON, residing in Concord, New Hampshire (the "Executive').
WHEREAS, the Executive has been employed by the Company or its
subsidiaries in various executive positions and has performed
valuable services to the Company; and
WHEREAS, the Executive is willing to continue in the employ of
the Company, and the Company desires to retain the services of
the Executive;
NOW, THEREFORE, in consideration of the foregoing and the
respective covenants and agreements of the Executive and the
Company herein contained, the parties hereto agree as follows:
1. Employment.
The Company agrees to employ the Executive and may assign the
Executive to work for it and for any subsidiary or affiliated
company, and the Executive agrees to perform the duties assigned
to him upon the terms and conditions herein provided.
2. Position and Responsibilities.
The Company shall employ the Executive and the Executive agrees
to serve, as Senior Vice President Officer or any other office to
which he is elected for the term and on the conditions
hereinafter set forth. The Executive agrees to perform such
services not inconsistent with his position as shall be assigned
to him by the Board of Directors of the Company ("Board'). If
elected, the Executive shall also serve as an officer of any of
the Company's subsidiary or affiliated corporations.
3. Term of Agreement and Duties.
(a) Term of Employment. The period of the Executive's
employment under this Agreement shall be deemed to have commenced
as of the date first mentioned above and shall continue for a
period of at least twenty-four (24) full calendar months
thereafter, subject to renewal in accordance with Section 3(b)
below.
(b) One-Year Evergreen Provision. This Agreement shall be
reviewed annually by the Board at its meeting held for the review
of compensation and in all events prior to December 1 of each
year. At such yearly review, the Board shall consider whether or
not to extend the term of this Agreement for an additional year.
Unless the Board affirmatively votes not to extend this
Agreement, the term of employment and the termination of this
Agreement shall be extended for a period of one year from the
previous termination date. In the event the Board votes not to
extend this Agreement, the termination date of this Agreement
shall be the later of the expiration of twenty-four (24) months
from the effective date of this Agreement or twenty-four (24)
months from December 1st of the year in which this Agreement was
last extended.
(c) Duties. During such period of his employment
hereunder, except for illness, vacation periods, and reasonable
leaves of absence, the Executive shall devote substantially all
of his business time, attention, skill and efforts to the
faithful performance of his duties. With the approval of the
Board, however, the Executive may serve, or continue to serve, on
the boards of directors of, and hold any other offices or
positions in, companies or organizations, when, in the Board's
judgment, that service will not conflict with the interests of
the Company or any of its subsidiaries or affiliates or divisions
or materially affect the performance of the Executive's duties
pursuant to this Agreement.
4. Compensation.
For all services to be rendered by the Executive in any
capacity during the period of his employment under this
Agreement, including, without limitation, services as an
executive, officer, director, or member of any committee of the
Company or of any subsidiary, affiliate or division thereof, the
Company will pay or cause to be paid to the Executive and will
provide or cause to be provided to the Executive the following:
(a) Salary. The Executive shall be compensated by the
Company for his services in such capacities at the aggregate base
salary rate of one hundred fiftieth thousand five hundred dollars
($115,500) per year or such higher rate as the Board may, in its
discretion, determine, payable in equal installments no less
frequently than monthly. In addition, the Executive shall be
compensated by the Company crediting to his Deferred Compensation
Account, maintained in accordance with the Deferred Compensation
Agreement between the Executive and the Company dated November
30, 1993, as amended or replaced, such amount as the Board may,
in its discretion, determine, payable in equal installments no
less frequently than monthly.
(b) Incentive Compensation. The Executive shall be
entitled to participate in any existing or future incentive
compensation, stock option, stock purchase or other bonus plans
covering the employees of the Company (or any subsidiary or
affiliate) on the same basis as other officers; and where
applicable, in any such plans of any subsidiary, affiliate or
division thereof from which he receives compensation.
(c) Deferred Compensation. The Executive shall have the
right to defer what would otherwise be current compensation in
accordance with a Deferred Compensation Agreement entered into
between the Executive and the Company effective as of November
30, 1993, as amended or replaced. The Executive, may, in
addition, be compensated by the Company crediting amounts to his
Deferred Compensation Account, maintained in accordance with such
Deferred Compensation Agreement, as such intervals during each
year as the Company may determine.
(d) Automobile. The Company shall provide to the Executive
an automobile for his exclusive use on the same basis as other
officers and in any event on a basis no less favorable than that
enjoyed by him at the date of this Agreement.
(e) Vacations. The Executive shall be entitled to vacation
pursuant to that policy applicable to other employees of similar
rank and stature at the Company.
5. Expenses.
The Company (or its subsidiaries or affiliates, as the case may
be) shall reimburse the Executive for all reasonable expenses,
including travel, and other disbursements incurred by him for or
on behalf of the Company (or its subsidiaries or affiliates) in
the performance of his duties hereunder consistent with the
current reimbursement policies of the Company, but in no event
less favorable than the reimbursement policies in existence on
the effective date of this Agreement.
6. Participation in Benefit and Incentive Plans.
The Executive shall participate in any retirement, pension, group
life, health or accident insurance, stock option, stock purchase,
restricted stock, bonus or any other employee benefit or
incentive plans generally available to the executives and
employees of the Company (or any subsidiary or affiliate),
whether now in force or hereafter adopted, in accordance with
their terms. In the event the Executive is employed by the
Company pursuant to this Agreement and elects to retire under the
provisions of the EnergyNorth, Inc. Retirement Plan for Salaried
Employees ("Pension Plan"), the Executive shall be entitled to
the same post-retirement medical, life and other applicable
benefits that other officer level executives at the Company
receive upon retirement in accordance with the Company's then
existing policies. Further, the Executive shall be entitled to
receive post-retirement medical, life and other applicable
benefits that other officer level executives at the Company
receive upon retirement in accordance with the Company's then
existing policies and at the time the Executive elects to retire
under the provisions of the Pension Plan if within two years
after a Change of Control of the Company, the Executive is
discharged without Cause or resigns for Good Reason as each of
those terms is defined in the Management Continuity Agreement
("MCA") between the Executive and the Company, dated as of
December 7, 1995 as amended.
7. Termination of Employment.
(a) Discharge for Cause. Notwithstanding any of the
foregoing provisions of this Agreement, the Executive may, at any
time during the term of this Agreement, be discharged by the
Board for Cause. For the purposes of this Section 7 cause shall
mean: conviction of a felony or crime involving an act of moral
turpitude, dishonesty, or misfeasance which substantially
interferes with the orderly business of the Company or any of its
subsidiaries, action that directly or indirectly causes the
Company or its subsidiaries to suffer substantial loss or damage,
refusal to follow or material neglect of reasonable requests of
the Company made pursuant to this Agreement, and conduct that
substantially interferes with or damages the standing or
reputation of the Company or any of its subsidiaries. In the
event of termination of employment for Cause, this Agreement and
all of the rights and obligations of the parties hereto shall
forthwith terminate, except where this Agreement expressly
provides that any provisions survive termination of this
Agreement.
(b) Termination by the Company. If the Company terminates
the Executive prior to termination of this Agreement (except for
Cause), the Company shall pay semi-
monthly to the Executive, or if he is not living, to his estate
or to his beneficiary designated hereunder, as the case may be,
as severance pay and as liquidated damages an amount equal to the
average monthly rate of salary paid and accrued plus one-twenty-
fourth (1/24) of the previous three years' annual average total
incentive compensation award earned under the EnergyNorth, Inc.
Key Employee Performance and Equity Incentive Plan to the
Executive, including any amounts the Executive has elected to
defer, during the 12 months immediately prior to his termination
of employment. Such payments shall commence on the last day of
the month following the date of his termination of employment and
shall continue through the end of the term of this Agreement.
The Executive shall continue to receive medical, dental, vision
and life insurance benefits paid by the Company which shall
continue through the end of the term of this Agreement and at the
time the Executive elects to retire under the provisions of the
Pension Plan, the Executive shall receive post-retirement medical
benefits in accordance with the Company's then existing policies.
The Executive shall be required to mitigate his damages by
attempting to secure comparable employment, and if he does accept
other employment, any benefits or payments received pursuant to
this Section 7 shall be reduced by any compensation earned and/or
the value of other benefits received (other than qualified
pension benefit plans) as a result of such employment.
In addition to the severance payment described in the first
paragraph of this Section 7(b), if the Company terminates the
Executive prior to the termination of this Agreement (except for
Cause), the Company shall pay to the Executive in one payment,
within ten days of the Date of Termination (as defined below), an
amount of cash equal to the product of (1) the number of shares
of Company Common Stock forfeited by the Executive pursuant to
Section 9.1 of the EnergyNorth, Inc. Key Employee Performance
and Equity Incentive Plan and (2) the average closing prices of
Company Common Stock on the New York Stock Exchange on the five
trading days ending on the Date of Termination (as defined
below).
If the Company terminates the Executive prior to the
termination of this Agreement, the Company's obligations to the
Executive shall be limited to those specified in this Section
7(b). It is understood that the Company shall not be under any
obligation to make payments pursuant to this Section 7(b) upon
any termination of employment which gives rise to payments under
the MCA.
(c) Executive Default or Death. If the Executive defaults
hereunder, or is unwilling to perform services hereunder, or dies
while employed, the Company shall have no further obligation
hereunder to make payments to the Executive beyond the Date of
Termination (as defined below) of employment.
(d) Disability.
(i) In the event that the Executive, because of accident,
disability or physical or mental illness, is incapable of
performing the essential functions of the job with or without
reasonable accommodation, the Company shall have the right to
terminate the Executive's employment under this agreement upon
thirty (30) days' written notice to the Executive. In the event
of such determination, the Company shall make semi-monthly
payments to the Executive in an amount equal to the monthly rate
of salary paid and accrued to the Executive in the most recent
month in which he was paid prior to the determination of his
disability plus one-twenty-fourth (1/24) of the previous three
years' annual average total incentive compensation award earned
under the EnergyNorth, Inc. Key Employee Performance and Equity
Incentive Plan, reduced by the amount of monthly payments made
under any long-term disability insurance or plan, if any. Such
semi-monthly payments shall continue for the number of months
remaining in the term of the agreement following
the date of his disability. In addition, if the Executive
becomes disabled and the Executive has twenty (20) years or more
of service at the time of disability, the Company will continue
to provide the same medical, dental and life insurance benefits
as provided to other active employees until such time as the
Executive elects to retire under the provisions of the Pension
Plan. Disability for purposes of this section shall have the
same meaning as provided under any long-term disability policy
of the Company which covers the Executive, or, if none, as
defined in the EnergyNorth, Inc. Retirement Plan for Salaried
Employees.
(ii) Prior to a determination of disability as provided
in Subsection (i) of this Section 7(d), if the Executive fails to
perform under this contract due to mental or physical illness,
the period of such failure to perform prior to such determination
of disability but subsequent to any accrued sick days, vacation
days and reasonable leaves of absence shall be considered paid
leave, and the Company shall continue to make salary payments to
the Executive for the duration of such paid leave. Any period
during which the Executive is receiving benefits under any long-
term disability plan of the Company shall be considered unpaid
leave.
(e) Notice of Termination. Any termination by the Company
for Cause (as such term is defined in Section 7(a) hereunder),
shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 15. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this
Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated, and
(iii) if the Date of Termination (as defined below) is
other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after
the giving of such notice).
(f) Date of Termination. "Date of Termination" means
(i) if the Executive's employment is terminated by the
Company for Cause, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may
be,
(ii) if the Executive's employment is terminated by the
Company other than for Cause, death or disability pursuant to
Section 7 (d), the Date of Termination shall be the date on which
the Company notifies the Executive of such termination, and
(iii) if the Executive's employment is terminated by
reason of death or disability pursuant to Section 7 (d), the Date
of Termination shall be the date of death of the Executive or the
date the Executive is determined to be incapable of performance
in accordance with Section 7(d) of this Agreement, as the case
may be.
(g) Nothing under this Agreement shall affect the
Executive's right to receive payments under his Deferred
Compensation Agreement.
8. Executive's Obligations.
(a) Non-Competition. While receiving payments from the
Company under this Agreement or under the MCA, and for a period
of twelve months thereafter, the Executive will
not directly or indirectly, own, manage, operate, control or
participate in the ownership, management, operation or control
of, or be connected as an officer, employee, partner, director or
otherwise with, or have any financial interest in, or aid or
assist anyone else in the conduct of, any business (other than
the businesses of the Company) which is in direct competition
with the business conducted by the Company or any of its
subsidiaries, in any geographic area where such business is being
conducted during such period. Nothing in this Section 8,
however, shall restrict the right of the Executive to own,
whether for himself or as a fiduciary, not more than 1% of the
equity securities of a company any of the securities of which are
registered under Sections 11(b) or 11(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) Non-Disclosure. During the term of this Agreement and
thereafter, the Executive shall not, without the written consent
of the Board or a person authorized thereby, disclose or use
(except in the course of his employment hereunder and in
furtherance of the business of the Company or any subsidiaries or
affiliates thereof) any confidential information or proprietary
data of the Company or any of its subsidiaries or affiliates
thereof, including, without limitation, customer lists, cost
information or pricing information.
(c) Solicitation for Employment. While he is receiving
payments from the Company under this Agreement or under the MCA,
and for a period of six months thereafter, the Executive will
not, directly or indirectly, employ, solicit for employment, or
advise or recommend to any other person that they employ or
solicit for employment, any person employed at the time by the
Company or any of its subsidiaries for the purpose of competing
with the Company in such manner as is described in Subsection (a)
of this Section 8.
9. Successor.
The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company
to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be
required to perform it if no successor had taken place. As used
in this Agreement, "Company" shall mean the company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
10. Entire Agreement.
This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof.
This Agreement shall supersede the agreement between the Company
and the Executive dated as of December 1, 1988 (the "Prior
Agreement") in all respects, unless this Agreement is held
invalid or unenforceable by a court of competent jurisdiction, in
which case the Prior Agreement shall remain, and shall be deemed
to have remained at all times, in full force and effect.
11. Arbitration.
Any dispute or controversy between the parties relating to this
Agreement shall be settled by binding arbitration in the City of
Manchester, State of New Hampshire, pursuant to the governing
rules of the American Arbitration Association and shall be
subject to the provisions of New Hampshire Revised Statutes
Annotated Chapter 542. Judgment upon the award may be entered in
any court of competent jurisdiction.
12. Assignability.
This Agreement is binding on and is for the benefit of the
parties hereto and their respective successors, heirs, executors,
administrators and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be assigned
by the Company (except to any subsidiary or affiliate) or by the
Executive.
13. Withholding.
The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be
permitted to be withheld pursuant to any applicable law or
regulation. The Company may withhold such other amounts as may
be permitted by law.
14. Amendment; Waiver.
This Agreement may be amended only by an instrument in writing
signed by the parties hereto, and any provision hereof may be
waived only by an instrument in writing signed by the party or
parties against whom or which enforcement of such waiver is
sought. The failure of either party hereto at any time to
require the performance by the other party hereto of any
provision hereof shall in no way affect the full right to require
such performance at any time thereafter, nor shall the waiver by
either party hereto of a breach of any provision hereof be taken
or held to be a waiver of any succeeding breach of such provision
or a waiver of the provision itself or a waiver of any other
provision of this Agreement.
15. Notices.
All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Albert J. Hanlon
55 Peterson Circle
Concord, NH 03301
If to the Company:
Robert R. Giordano
President and CEO
EnergyNorth, Inc.
1260 Elm Street
P.O. Box 329
Manchester, NH 03105
Copy:
Richard Samuels, Esquire
McLane, Graf, Raulerson & Middleton
900 Elm Street
P.O. Box 326
Manchester, NH 03105
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
16. Validity.
The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect, nor shall the invalidity
or unenforceability of a portion of any provision of this
Agreement affect the validity or enforceability of the balance of
such provision. If any provision of this Agreement, or portion
thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
17. Beneficiary.
The Executive hereby designates as his beneficiary under this
Agreement Claire P. Hanlon, provided that the Executive may
change his beneficiary, or provide for alternate beneficiaries,
at any time by notifying the Company in writing of such change,
and no consent shall be required from the beneficiary or from the
Company.
18. Independent Covenants.
The obligations of the Executive set forth in paragraph 8
represent independent covenants by which the Executive is and
will remain bound notwithstanding any breach by the Company, and
shall survive the termination of this Agreement.
19. Applicable Law.
This Agreement shall be governed by and construed in accordance
with the substantive internal law and not the conflict of law
provisions of the State of New Hampshire.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first mentioned above.
ENERGYNORTH, INC.
BY: Robert R. Giordano
------------------
Robert R. Giordano
President & CEO
Albert J. Hanlon
----------------
Albert J. Hanlon
-9-
December 7, 1995
Robert R. Giordano
12 Cobbler Lane
Bedford, New Hampshire 03110
Management Continuity Agreement
Dear Mr. Giordano:
The Board of Directors (the "Board") of EnergyNorth, Inc.
(the "Company") recognizes that, as is the case with many
publicly held corporations, there always exists the possibility
of a change of control of the Company. This possibility and the
uncertainty it creates may result in the loss or distraction of
members of management of the Company and its subsidiaries to the
detriment of the Company and its shareholders.
The Board considers the establishment, maintenance, and
continuity of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and
its shareholders. The Board also believes that when a change of
control is perceived as imminent, or is occurring, the Board
should be able to receive and rely on disinterested advice from
management regarding the best interests of the Company and its
shareholders without concern that members of management might be
distracted or concerned by the personal uncertainties and risks
created by the perception of an imminent or occurring change of
control.
Accordingly, the Board has determined that appropriate steps
should be taken to assure the Company of the continued employment
and attention and dedication to duty of certain members of
management of the Company and to ensure the availability of their
disinterested advice, notwithstanding the possibility, threat or
occurrence of a change of control.
Therefore, in order to fulfill the above purposes, the Board
has designated you as eligible for severance benefits as set
forth below.
1. Offer: In order to induce you to remain in the employ of
the Company and to provide continued services to the Company now
and in the event that a change of control is imminent or
occurring, this letter agreement (the "Agreement") sets forth
severance benefits which the Company offers to pay to you in the
event of a termination of your employment (as described in
Section 5 below, excluding a termination for Cause, disability,
death or retirement) subsequent to a Change of Control of the
Company (as defined in Section 4 below).
2. Operation: This Agreement shall be effective immediately
upon its execution but, anything in this Agreement to the
contrary notwithstanding, neither this Agreement nor any of its
provisions shall be operative unless and until there has been a
Change of Control while you are still an employee of the Company,
nor shall this Agreement govern or affect your employment
relationship with the Company except as explicitly set forth
herein. Upon a Change of Control, if you are still employed by
the Company, this Agreement and all of its provisions shall
become operative immediately. If your employment relationship
with the Company is terminated before a Change of Control, you
shall have no rights or obligations under this Agreement.
3. Term:
a) Term of Agreement. The term of this Agreement shall
commence immediately upon the date hereof and continue for a
period of at least sixty full calendar months thereafter.
b) One-Year Evergreen Provision. This Agreement shall be
reviewed annually by the Board at its meeting held for the review
of compensation and in all events prior to December 1 of each
year. At such yearly review, the Board shall consider whether or
not to extend the term of this Agreement for an additional year.
Unless the Board affirmatively votes not to extend this
Agreement, the term of this Agreement shall be extended for a
period of one year from the previous termination date. In the
event the Board votes not to extend this Agreement, the
termination date of this Agreement shall be the later of sixty
months from the effective date of this Agreement or sixty months
from December 1st of the year in which this Agreement was last
extended.
4. Change in Control: For the purpose of this Agreement, a
"Change of Control" shall mean:
(1) 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 20% or more of
either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly
from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and
(iii) of Subparagraph (3) of this Subsection (b) are satisfied;
or
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company'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
(3) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation,(i) more
than 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 Company Common Stock and
Outstanding Company 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
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger or consolidation, directly
or indirectly, 20% or more of the Outstanding Company Common
Stock or Outstanding Company Voting Securities, as the case may
be) beneficially owns, directly or indirectly, 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 (iii) 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; or
(4) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect
to which following such sale or other disposition, (A) more than
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 Company Common Stock and
Outstanding Company 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 Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding the Company and any employee benefit plan (or
related trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 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 (C) 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 the Company.
5. Severance Benefit:
a. Severance Benefits. If, within five years after a
Change of Control (as defined above) of the Company, you are
discharged without Cause or resign for Good Reason (as defined
below), the Company shall pay to you within ten business days
following the Date of Termination (as defined below) a lump sum
severance benefit equal to five times the greater of (1) your
annual salary, including deferrals, as in effect immediately
prior to the Change of Control, plus the average of the previous
three years' annual incentive compensation award earned under the
EnergyNorth, Inc. Key Employee Performance and Equity Incentive
Plan, or (2) your annual salary, including deferrals, as in
effect on the Date of Termination, plus the average of the
previous three years' annual incentive compensation award earned
under the EnergyNorth, Inc. Key Employee Performance and Equity
Incentive Plan, plus interest on any delayed payment at the rate
of 150% of the Prime Rate as posted by the Bank of Boston.
b. Good Reason. If any of the following events occurs
within five years after a Change of Control, you may voluntarily
terminate your employment within 30 days of the occurrence of
such event and be entitled to the severance benefits set forth in
Subsection (a) above:
(1) the Company assigns any duties to you which are
inconsistent with your position, duties, offices, titles,
responsibilities, reporting requirements or status with the
Company immediately prior to a Change of Control; or
(2) the Company reduces your base salary, including
deferrals, as in effect immediately prior to a Change of Control;
or
(3) the Company discontinues any bonus or other
compensation plans or any other benefit, stock ownership plan,
stock purchase plan, stock option plan, life insurance plan,
health plan, disability plan or similar plan (as the same existed
immediately prior to the Change of Control) in which you
participated or were eligible to participate in immediately prior
to the Change of Control and in lieu thereof does not make
available plans providing at least comparable benefits; or
(4) the Company takes action which adversely affects
your participation in, or eligibility for, or materially reduces
your benefits under, any of the plans described in (3) above, or
which deprives you of any material fringe benefit enjoyed by you
immediately prior to the Change of Control, or fails to provide
you with the number of paid vacation days to which you were
entitled in accordance with normal vacation policy immediately
prior to the Change of Control; or
(5) the Company requires you to be based at any office
or location other than one within a 50-mile radius of the
boundaries of EnergyNorth Natural Gas, Inc.'s franchise territory
as such boundaries existed immediately prior to the Change in
Control; or
(6) the Company purports to terminate your employment
otherwise than as expressly permitted by this Agreement; or
(7) the Company fails to comply with and satisfy
Section 7, provided that such successor has received at least ten
days prior written notice from the Company or from you of the
requirements of Section 7.
You shall have the sole right to determine, in good faith,
whether any of the above events has occurred. Anything in this
Agreement to the contrary notwithstanding, a termination of
employment by you for any reason during the 30-day period
immediately following the first anniversary of a Change of
Control ("Window Period") shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
c) Cause. Cause shall mean: conviction of a felony or
crime involving an act of moral turpitude, dishonesty, or
misfeasance which substantially interferes with the orderly
business of the Company or any of its subsidiaries, action that
directly or indirectly causes the Company or its subsidiaries to
suffer substantial loss or damage, refusal to follow or material
neglect of reasonable requests of the Company made pursuant to
this Agreement, and conduct that substantially interferes with or
damages the standing or reputation of the Company or any of its
subsidiaries.
d) Notice of Termination. Any termination by the Company
for Cause, or by you for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in
accordance with Section 9. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide
a basis for termination of your employment under the provision so
indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after
the giving of such notice).
e) Date of Termination. "Date of Termination" means (A)
if your employment is terminated by the Company for Cause, or by
you for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may
be, (B) if your employment is terminated by the Company other
than for Cause or disability, the Date of Termination shall be
the date on which the Company notifies you of such termination
and (C) if your employment is terminated by reason of death or
disability, the Date of Termination shall be the date of your
death or the date you are determined to have a disability under
any long-term disability policy of the Company which covers you,
or, if none, as defined in the EnergyNorth, Inc. Retirement Plan
for Salaried Employees, as the case may be.
(f) Other Benefits Payable. The severance benefit
described in Subsection (a) above shall be payable in addition
to, and not in lieu of, all other accrued or vested or earned by
deferred compensation, rights, options or other benefits which
may be owed to you following discharge or resignation (and not
contingent on any Change of Control preceding such termination),
including but not limited to accrued vacation or sick pay,
amounts or benefits payable, if any, under any bonus or other
compensation plans, stock option plan, stock ownership plan,
stock purchase plan, life insurance plan, health plan, disability
plan or similar plan.
g) Payment Obligations Absolute. Upon a Change of Control
the Company's obligations to pay the severance benefits or make
any other payments described in this Section 5 shall be absolute
and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company or any of
its subsidiaries may have against you or anyone else. You shall
not be required to mitigate damages, and if you do accept other
employment, any benefits or payments hereunder shall not be
reduced by any compensation earned or other benefits received as
a result of such employment.
h) Legal Fees and Expenses. Subject to and contingent
upon the occurrence of a Change of Control the Company agrees to
pay promptly as incurred, to the full extent permitted by law,
all legal fees and expenses which you may reasonably thereafter
incur as a result of any contest, litigation or arbitration
(regardless of the outcome thereof) by the Company, you or others
of the validity or enforceability of, or liability under, any
provision of this Agreement (including any contest by you about
the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the rate of 150%. of
the Prime Rate posted by the Bank of Boston.
i) Retirement. If your employment is terminated due to
retirement, you shall not be entitled to severance benefits under
this Agreement, regardless of the occurrence of a Change of
Control. A termination by retirement shall have occurred where
your termination is caused by the fact that you have reached
normal retirement age for employees in your position.
6. Assignability. This Agreement is binding on and is for the
benefit of the parties hereto and their respective successors,
heirs, executors, administrators and other legal representatives.
Neither this Agreement nor any right or obligation hereunder may
be assigned by the Company (except to any subsidiary or
affiliate) or by you.
7. Successor. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform. As used in this Agreement,
"Company" shall mean the company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
8. Amendment: Waiver. This Agreement may be amended only by an
instrument in writing signed by the parties hereto, and any
provision hereof may be waived only by an instrument in writing
signed by the party or parties against whom or which enforcement
of such waiver is sought. The failure of either party hereto at
any time to require the performance by the other party hereto of
any provision hereof shall in no way affect the full right to
require such performance at any time thereafter, nor shall the
waiver by either party hereto of a breach of any provision hereof
be taken or held to be a waiver of any succeeding breach of such
provision or a waiver of the provision itself or a waiver of any
other provision of this Agreement.
9. Notices . All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to you:
Robert R. Giordano
12 Cobbler Lane
Bedford, NH 03110
If to the Company:
Director of Human Resources
EnergyNorth, Inc.
1260 Elm Street
P.O. Box 329
Manchester, NH 03105-0329
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
10. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect, nor shall
the invalidity or unenforceability of a portion of any provision
of this Agreement affect the validity or enforceability of the
balance of such provision. If any provision of this Agreement,
or portion thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
11. Arbitration. Any dispute or controversy between the parties
relating to this Agreement shall be settled by binding
arbitration in the City of Manchester, State of New Hampshire,
pursuant to the governing rules of the American Arbitration
Association and shall be subject to the provisions of New
Hampshire Revised Statutes Annotated Chapter 542. Judgment upon
the award may be entered in any court of competent jurisdiction.
12. Withholding. The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes
as shall be permitted to be withheld pursuant to any applicable
law or regulation. The Company may withhold such other amounts
as may be permitted by law.
13. Entire Agreement. This Agreement contains the entire
understanding of the Company and you with respect to the subject
matter hereof.
14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the substantive internal law and not
the conflict of law provisions of the State of New Hampshire.
If the terms of the foregoing Agreement are acceptable to
you, please sign and return to the Company the enclosed copy of
this Agreement whereupon this Agreement shall become a valid and
legally binding contract between you and the Company.
Very truly yours,
EnergyNorth, Inc.
By: Edward T. Borer
---------------
Edward T. Borer
Chairman of the Board
Accepted and Agreed as of
the date first above written:
Robert R. Giordano
-----------------
Robert R. Giordano
-11-
December 7, 1995
Michael J. Mancini Jr.
11 Cranberry Lane
Litchfield, NH 03052
Management Continuity Agreement
Dear Mr. Mancini:
The Board of Directors (the "Board") of EnergyNorth, Inc.
(the "Company") recognizes that, as is the case with many
publicly held corporations, there always exists the possibility
of a change of control of the Company. This possibility and the
uncertainty it creates may result in the loss or distraction of
members of management of the Company and its subsidiaries to the
detriment of the Company and its shareholders.
The Board considers the establishment, maintenance, and
continuity of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and
its shareholders. The Board also believes that when a change of
control is perceived as imminent, or is occurring, the Board
should be able to receive and rely on disinterested advice from
management regarding the best interests of the Company and its
shareholders without concern that members of management might be
distracted or concerned by the personal uncertainties and risks
created by the perception of an imminent or occurring change of
control.
Accordingly, the Board has determined that appropriate steps
should be taken to assure the Company of the continued employment
and attention and dedication to duty of certain members of
management of the Company and to ensure the availability of their
disinterested advice, notwithstanding the possibility, threat or
occurrence of a change of control.
Therefore, in order to fulfill the above purposes, the Board
has designated you as eligible for severance benefits as set
forth below.
1. Offer: In order to induce you to remain in the employ of
the Company and to provide continued services to the Company now
and in the event that a change of control is imminent or
occurring, this letter agreement (the "Agreement") sets forth
severance benefits which the Company offers to pay to you in the
event of a termination of your employment (as described in
Section 5 below, excluding a termination for Cause, disability,
death or retirement) subsequent to a Change of Control of the
Company (as defined in Section 4 below).
2. Operation: This Agreement shall be effective immediately
upon its execution but, anything in this Agreement to the
contrary notwithstanding, neither this Agreement nor any of its
provisions shall be operative unless and until there has been a
Change of Control while you are still an employee of the Company,
nor shall this Agreement govern or affect your employment
relationship with the Company except as explicitly set forth
herein. Upon a Change of Control, if you are still employed by
the Company, this Agreement and all of its provisions shall
become operative immediately. If your employment relationship
with the Company is terminated before a Change of Control, you
shall have no rights or obligations under this Agreement.
3. Term:
a) Term of Agreement. The term of this Agreement shall
commence immediately upon the date hereof and continue for a
period of at least twenty-four full calendar months thereafter.
b) One-Year Evergreen Provision. This Agreement shall be
reviewed annually by the Board at its meeting held for the review
of compensation and in all events prior to December 1 of each
year. At such yearly review, the Board shall consider whether or
not to extend the term of this Agreement for an additional year.
Unless the Board affirmatively votes not to extend this
Agreement, the term of this Agreement shall be extended for a
period of one year from the previous termination date. In the
event the Board votes not to extend this Agreement, the
termination date of this Agreement shall be the later of twenty-
four months from the effective date of this Agreement or twenty-
four months from December 1st of the year in which this Agreement
was last extended.
4. Change in Control: For the purpose of this Agreement, a
"Change of Control" shall mean:
(1) 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 20% or more of
either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly
from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and
(iii) of Subparagraph (3) of this Subsection (b) are satisfied;
or
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company'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
(3) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i)
more than 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 Company
Common Stock and Outstanding Company 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 Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii)
no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or such corporation resulting from
such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 20% or more of
the Outstanding Company Common Stock or Outstanding Company
Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 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 (iii) 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; or
(4) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect
to which following such sale or other disposition, (A) more than
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 Company Common Stock and
Outstanding Company 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 Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding the Company and any employee benefit plan (or
related trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 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 (C) 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 the Company.
5. Severance Benefit:
a. Severance Benefits. If, within two years after a
Change of Control (as defined above) of the Company, you are
discharged without Cause or resign for Good Reason (as defined
below), the Company shall pay to you within ten business days
following the Date of Termination (as defined below) a lump sum
severance benefit equal to 2.95 multiplied by your annual salary,
including deferrals, as in effect on the Date of Termination,
plus the average of the previous three years' annual incentive
compensation award earned under the EnergyNorth, Inc. Key
Employee Performance and Equity Incentive Plan, plus interest on
any delayed payment at the rate of 150% of the Prime Rate as
posted by the Bank of Boston.
b. Good Reason. If any of the following events occurs
within two years after a Change of Control, you may voluntarily
terminate your employment within 30 days of the occurrence of
such event and be entitled to the severance benefits set forth in
Subsection (a) above:
(1) the Company assigns any duties to you which are
inconsistent with your position, duties, offices, titles,
responsibilities, reporting requirements or status with the
Company immediately prior to a Change of Control; or
(2) the Company reduces your base salary, including
deferrals, as in effect immediately prior to a Change of Control;
or
(3) the Company discontinues any bonus or other
compensation plans or any other benefit, stock ownership plan,
stock purchase plan, stock option plan, life insurance plan,
health plan, disability plan or similar plan (as the same existed
immediately prior to the Change of Control) in which you
participated or were eligible to participate in immediately prior
to the Change of Control and in lieu thereof does not make
available plans providing at least comparable benefits; or
(4) the Company takes action which adversely affects
your participation in, or eligibility for, or materially reduces
your benefits under, any of the plans described in (3) above, or
which deprives you of any material fringe benefit enjoyed by you
immediately prior to the Change of Control, or fails to provide
you with the number of paid vacation days to which you were
entitled in accordance with normal vacation policy immediately
prior to the Change of Control; or
(5) the Company requires you to be based at any office
or location other than one within a 50-mile radius of the
boundaries of EnergyNorth Natural Gas, Inc.'s Franchise territory
as such boundaries existed immediately prior to the Change in
Control; or
(6) the Company purports to terminate your employment
otherwise than as expressly permitted by this Agreement; or
(7) the Company fails to comply with and satisfy
Section 7, provided that such successor has received at least ten
days prior written notice from the Company or from you of the
requirements of Section 7.
You shall have the sole right to determine, in good faith,
whether any of the above events has occurred. Anything in this
Agreement to the contrary notwithstanding, a termination of
employment by you for any reason during the 30-day period
immediately following the first anniversary of a Change of
Control ("Window Period") shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
c) Cause. Cause shall mean: conviction of a felony or
crime involving an act of moral turpitude, dishonesty, or
misfeasance which substantially interferes with the orderly
business of the Company or any of its subsidiaries, action that
directly or indirectly causes the Company or its subsidiaries to
suffer substantial loss or damage, refusal to follow or material
neglect of reasonable requests of the Company made pursuant to
this Agreement, and conduct that substantially interferes with or
damages the standing or reputation of the Company or any of its
subsidiaries.
d) Notice of Termination. Any termination by the Company
for Cause, or by you for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in
accordance with Section 9. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide
a basis for termination of your employment under the provision so
indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after
the giving of such notice).
e) Date of Termination. "Date of Termination" means (A)
if your employment is terminated by the Company for Cause, or by
you for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may
be, (B) if your employment is terminated by the Company other
than for Cause or disability, the Date of Termination shall be
the date on which the Company notifies you of such termination
and (C) if your employment is terminated by reason of death or
disability, the Date of Termination shall be the date of your
death or the date you are determined to have a disability under
any long-term disability policy of the Company which covers you,
or, if none, as defined in the EnergyNorth, Inc. Retirement Plan
for Salaried Employees, as the case may be.
(f) Other Benefits Payable. The severance benefit
described in Subsection (a) above shall be payable in addition
to, and not in lieu of, all other accrued or vested or earned by
deferred compensation, rights, options or other benefits which
may be owed to you following discharge or resignation (and not
contingent on any Change of Control preceding such termination),
including but not limited to accrued vacation or sick pay,
amounts or benefits payable, if any, under any bonus or other
compensation plans, stock option plan, stock ownership plan,
stock purchase plan, life insurance plan, health plan, disability
plan or similar plan.
g) Payment Obligations Absolute. Upon a Change of Control
the Company's obligations to pay the severance benefits or make
any other payments described in this Section 5 shall be absolute
and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company or any of
its subsidiaries may have against you or anyone else. You shall
not be required to mitigate damages, and if you do accept other
employment, any benefits or payments hereunder shall not be
reduced by any compensation earned or other benefits received as
a result of such employment.
h) Legal Fees and Expenses. Subject to and contingent
upon the occurrence of a Change of Control the Company agrees to
pay promptly as incurred, to the full extent permitted by law,
all legal fees and expenses which you may reasonably thereafter
incur as a result of any contest, litigation or arbitration
(regardless of the outcome thereof) by the Company, you or others
of the validity or enforceability of, or liability under, any
provision of this Agreement (including any contest by you about
the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the rate of 150%. of
the Prime Rate posted by the Bank of Boston.
i) Retirement. If your employment is terminated due to
retirement, you shall not be entitled to severance benefits under
this Agreement, regardless of the occurrence of a Change of
Control. A termination by retirement shall have occurred where
your termination is caused by the fact that you have reached
normal retirement age for employees in your position.
(j) Ceiling on Severance Benefits. In order to comply with
certain provisions of the Internal Revenue Code of 1986, as
amended (the "Code") severance benefits payable under this
Agreement shall be subject to the following ceiling
notwithstanding anything in this Agreement to the contrary: The
"aggregate present value" of severance benefits payable under
this Agreement and of payments to you or for your benefit which
would be "parachute payments" if their "aggregate present value"
equalled or exceeded 300% of your "base amount" shall in no event
exceed 295% of your "base amount" (within those terms' meaning
under Section 280G of the Code).
It is the intention of the parties to this Agreement that no
severance benefits hereunder will be paid to the extent that such
benefits (either alone or when aggregated with other benefits
paid to you or for your benefit) constitute "excess parachute
payments" within the meaning of Section 280G of the Code as
amended from time to time.
6. Assignability. This Agreement is binding on and is for the
benefit of the parties hereto and their respective successors,
heirs, executors, administrators and other legal representatives.
Neither this Agreement nor any right or obligation hereunder may
be assigned by the Company (except to any subsidiary or
affiliate) or by you.
7. Successor. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform. As used in this Agreement,
"Company" shall mean the company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
8. Amendment: Waiver. This Agreement may be amended only by an
instrument in writing signed by the parties hereto, and any
provision hereof may be waived only by an instrument in writing
signed by the party or parties against whom or which enforcement
of such waiver is sought. The failure of either party hereto at
any time to require the performance by the other party hereto of
any provision hereof shall in no way affect the full right to
require such performance at any time thereafter, nor shall the
waiver by either party hereto of a breach of any provision hereof
be taken or held to be a waiver of any succeeding breach of such
provision or a waiver of the provision itself or a waiver of any
other provision of this Agreement.
9. Notices . All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to you:
Michael J. Mancini Jr.
11 Cranberry Lane
Litchfield, NH 03052
If to the Company:
Director of Human Resources
EnergyNorth, Inc.
1260 Elm Street
P.O. Box 329
Manchester, NH 03105-0329
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
10. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect, nor shall
the invalidity or unenforceability of a portion of any provision
of this Agreement affect the validity or enforceability of the
balance of such provision. If any provision of this Agreement,
or portion thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
11. Arbitration. Any dispute or controversy between the parties
relating to this Agreement shall be settled by binding
arbitration in the City of Manchester, State of New Hampshire,
pursuant to the governing rules of the American Arbitration
Association and shall be subject to the provisions of New
Hampshire Revised Statutes Annotated Chapter 542. Judgment upon
the award may be entered in any court of competent jurisdiction.
12. Withholding. The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes
as shall be permitted to be withheld pursuant to any applicable
law or regulation. The Company may withhold such other amounts
as may be permitted by law.
13. Entire Agreement. This Agreement contains the entire
understanding of the Company and you with respect to the subject
matter hereof.
14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the substantive internal law and not
the conflict of law provisions of the State of New Hampshire.
If the terms of the foregoing Agreement are acceptable to
you, please sign and return to the Company the enclosed copy of
this Agreement whereupon this Agreement shall become a valid and
legally binding contract between you and the Company.
Very truly yours,
EnergyNorth, Inc.
By: Robert R. Giordano
------------------
Robert R. Giordano
President and Chief
Executive Officer
Accepted and Agreed as of the
date first above written:
Michael J. Mancini, Jr.
-----------------------
Michael J. Mancini, Jr.
-9-
December 7, 1995
Albert J. Hanlon
55 Peterson Circle
Concord, NH 03301
Management Continuity Agreement
Dear Mr. Hanlon:
The Board of Directors (the "Board") of EnergyNorth, Inc.
(the "Company") recognizes that, as is the case with many
publicly held corporations, there always exists the possibility
of a change of control of the Company. This possibility and the
uncertainty it creates may result in the loss or distraction of
members of management of the Company and its subsidiaries to the
detriment of the Company and its shareholders.
The Board considers the establishment, maintenance, and
continuity of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and
its shareholders. The Board also believes that when a change of
control is perceived as imminent, or is occurring, the Board
should be able to receive and rely on disinterested advice from
management regarding the best interests of the Company and its
shareholders without concern that members of management might be
distracted or concerned by the personal uncertainties and risks
created by the perception of an imminent or occurring change of
control.
Accordingly, the Board has determined that appropriate steps
should be taken to assure the Company of the continued employment
and attention and dedication to duty of certain members of
management of the Company and to ensure the availability of their
disinterested advice, notwithstanding the possibility, threat or
occurrence of a change of control.
Therefore, in order to fulfill the above purposes, the Board
has designated you as eligible for severance benefits as set
forth below.
1. Offer: In order to induce you to remain in the employ of
the Company and to provide continued services to the Company now
and in the event that a change of control is imminent or
occurring, this letter agreement (the "Agreement") sets forth
severance benefits which the Company offers to pay to you in the
event of a termination of your employment (as described in
Section 5 below, excluding a termination for Cause, disability,
death or retirement) subsequent to a Change of Control of the
Company (as defined in Section 4 below).
2. Operation: This Agreement shall be effective immediately
upon its execution but, anything in this Agreement to the
contrary notwithstanding, neither this Agreement nor any of its
provisions shall be operative unless and until there has been a
Change of Control while you are still an employee of the Company,
nor shall this Agreement govern or affect your employment
relationship with the Company except as explicitly set forth
herein. Upon a Change of Control, if you are still employed by
the Company, this Agreement and all of its provisions shall
become operative immediately. If your employment relationship
with the Company is terminated before a Change of Control, you
shall have no rights or obligations under this Agreement.
3. Term:
a) Term of Agreement. The term of this Agreement shall
commence immediately upon the date hereof and continue for a
period of at least twenty-four full calendar months thereafter.
b) One-Year Evergreen Provision. This Agreement shall be
reviewed annually by the Board at its meeting held for the review
of compensation and in all events prior to December 1 of each
year. At such yearly review, the Board shall consider whether or
not to extend the term of this Agreement for an additional year.
Unless the Board affirmatively votes not to extend this
Agreement, the term of this Agreement shall be extended for a
period of one year from the previous termination date. In the
event the Board votes not to extend this Agreement, the
termination date of this Agreement shall be the later of twenty-
four months from the effective date of this Agreement or twenty-
four months from December 1st of the year in which this Agreement
was last extended.
4. Change in Control: For the purpose of this Agreement, a
"Change of Control" shall mean:
(1) 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 20% or more of
either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly
from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii) and
(iii) of Subparagraph (3) of this Subsection (b) are satisfied;
or
(2) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company'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
(3) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i)
more than 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 Company
Common Stock and Outstanding Company 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 Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii)
no Person (excluding the Company, any employee benefit plan (or
related trust) of the Company or such corporation resulting from
such reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 20% or more of
the Outstanding Company Common Stock or Outstanding Company
Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 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 (iii) 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; or
(4) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect
to which following such sale or other disposition, (A) more than
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 Company Common Stock and
Outstanding Company 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 Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding the Company and any employee benefit plan (or
related trust) of the Company or such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 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 (C) 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 the Company.
5. Severance Benefit:
a. Severance Benefits. If, within two years after a
Change of Control (as defined above) of the Company, you are
discharged without Cause or resign for Good Reason (as defined
below), the Company shall pay to you within ten business days
following the Date of Termination (as defined below) a lump sum
severance benefit equal to 2.95 multiplied by your annual salary,
including deferrals, as in effect on the Date of Termination,
plus the average of the previous three years' annual incentive
compensation award earned under the EnergyNorth, Inc. Key
Employee Performance and Equity Incentive Plan, plus interest on
any delayed payment at the rate of 150% of the Prime Rate as
posted by the Bank of Boston.
b. Good Reason. If any of the following events occurs
within two years after a Change of Control, you may voluntarily
terminate your employment within 30 days of the occurrence of
such event and be entitled to the severance benefits set forth in
Subsection (a) above:
(1) the Company assigns any duties to you which are
inconsistent with your position, duties, offices, titles,
responsibilities, reporting requirements or status with the
Company immediately prior to a Change of Control; or
(2) the Company reduces your base salary, including
deferrals, as in effect immediately prior to a Change of Control;
or
(3) the Company discontinues any bonus or other
compensation plans or any other benefit, stock ownership plan,
stock purchase plan, stock option plan, life insurance plan,
health plan, disability plan or similar plan (as the same existed
immediately prior to the Change of Control) in which you
participated or were eligible to participate in immediately prior
to the Change of Control and in lieu thereof does not make
available plans providing at least comparable benefits; or
(4) the Company takes action which adversely affects
your participation in, or eligibility for, or materially reduces
your benefits under, any of the plans described in (3) above, or
which deprives you of any material fringe benefit enjoyed by you
immediately prior to the Change of Control, or fails to provide
you with the number of paid vacation days to which you were
entitled in accordance with normal vacation policy immediately
prior to the Change of Control; or
(5) the Company requires you to be based at any office
or location other than one within a 50-mile radius of the
boundaries of EnergyNorth Natural Gas, Inc.'s Franchise territory
as such boundaries existed immediately prior to the Change in
Control; or
(6) the Company purports to terminate your employment
otherwise than as expressly permitted by this Agreement; or
(7) the Company fails to comply with and satisfy
Section 7, provided that such successor has received at least ten
days prior written notice from the Company or from you of the
requirements of Section 7.
You shall have the sole right to determine, in good faith,
whether any of the above events has occurred. Anything in this
Agreement to the contrary notwithstanding, a termination of
employment by you for any reason during the 30-day period
immediately following the first anniversary of a Change of
Control ("Window Period") shall be deemed to be a termination for
Good Reason for all purposes of this Agreement.
c) Cause. Cause shall mean: conviction of a felony or
crime involving an act of moral turpitude, dishonesty, or
misfeasance which substantially interferes with the orderly
business of the Company or any of its subsidiaries, action that
directly or indirectly causes the Company or its subsidiaries to
suffer substantial loss or damage, refusal to follow or material
neglect of reasonable requests of the Company made pursuant to
this Agreement, and conduct that substantially interferes with or
damages the standing or reputation of the Company or any of its
subsidiaries.
d) Notice of Termination. Any termination by the Company
for Cause, or by you for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in
accordance with Section 9. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide
a basis for termination of your employment under the provision so
indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after
the giving of such notice).
e) Date of Termination. "Date of Termination" means (A)
if your employment is terminated by the Company for Cause, or by
you for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may
be, (B) if your employment is terminated by the Company other
than for Cause or disability, the Date of Termination shall be
the date on which the Company notifies you of such termination
and (C) if your employment is terminated by reason of death or
disability, the Date of Termination shall be the date of your
death or the date you are determined to have a disability under
any long-term disability policy of the Company which covers you,
or, if none, as defined in the EnergyNorth, Inc. Retirement Plan
for Salaried Employees, as the case may be.
(f) Other Benefits Payable. The severance benefit
described in Subsection (a) above shall be payable in addition
to, and not in lieu of, all other accrued or vested or earned by
deferred compensation, rights, options or other benefits which
may be owed to you following discharge or resignation (and not
contingent on any Change of Control preceding such termination),
including but not limited to accrued vacation or sick pay,
amounts or benefits payable, if any, under any bonus or other
compensation plans, stock option plan, stock ownership plan,
stock purchase plan, life insurance plan, health plan, disability
plan or similar plan.
g) Payment Obligations Absolute. Upon a Change of Control
the Company's obligations to pay the severance benefits or make
any other payments described in this Section 5 shall be absolute
and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company or any of
its subsidiaries may have against you or anyone else. You shall
not be required to mitigate damages, and if you do accept other
employment, any benefits or payments hereunder shall not be
reduced by any compensation earned or other benefits received as
a result of such employment.
h) Legal Fees and Expenses. Subject to and contingent
upon the occurrence of a Change of Control the Company agrees to
pay promptly as incurred, to the full extent permitted by law,
all legal fees and expenses which you may reasonably thereafter
incur as a result of any contest, litigation or arbitration
(regardless of the outcome thereof) by the Company, you or others
of the validity or enforceability of, or liability under, any
provision of this Agreement (including any contest by you about
the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the rate of 150%. of
the Prime Rate posted by the Bank of Boston.
i) Retirement. If your employment is terminated due to
retirement, you shall not be entitled to severance benefits under
this Agreement, regardless of the occurrence of a Change of
Control. A termination by retirement shall have occurred where
your termination is caused by the fact that you have reached
normal retirement age for employees in your position.
(j) Ceiling on Severance Benefits. In order to comply with
certain provisions of the Internal Revenue Code of 1986, as
amended (the "Code") severance benefits payable under this
Agreement shall be subject to the following ceiling
notwithstanding anything in this Agreement to the contrary: The
"aggregate present value" of severance benefits payable under
this Agreement and of payments to you or for your benefit which
would be "parachute payments" if their "aggregate present value"
equalled or exceeded 300% of your "base amount" shall in no event
exceed 295% of your "base amount" (within those terms' meaning
under Section 280G of the Code).
It is the intention of the parties to this Agreement that no
severance benefits hereunder will be paid to the extent that such
benefits (either alone or when aggregated with other benefits
paid to you or for your benefit) constitute "excess parachute
payments" within the meaning of Section 280G of the Code as
amended from time to time.
6. Assignability. This Agreement is binding on and is for the
benefit of the parties hereto and their respective successors,
heirs, executors, administrators and other legal representatives.
Neither this Agreement nor any right or obligation hereunder may
be assigned by the Company (except to any subsidiary or
affiliate) or by you.
7. Successor. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform. As used in this Agreement,
"Company" shall mean the company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
8. Amendment: Waiver. This Agreement may be amended only by an
instrument in writing signed by the parties hereto, and any
provision hereof may be waived only by an instrument in writing
signed by the party or parties against whom or which enforcement
of such waiver is sought. The failure of either party hereto at
any time to require the performance by the other party hereto of
any provision hereof shall in no way affect the full right to
require such performance at any time thereafter, nor shall the
waiver by either party hereto of a breach of any provision hereof
be taken or held to be a waiver of any succeeding breach of such
provision or a waiver of the provision itself or a waiver of any
other provision of this Agreement.
9. Notices . All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to you:
Albert J. Hanlon
55 Peterson Circle
Concord, NH 03301
If to the Company:
Director of Human Resources
EnergyNorth, Inc.
1260 Elm Street
P.O. Box 329
Manchester, NH 03105-0329
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
10. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect, nor shall
the invalidity or unenforceability of a portion of any provision
of this Agreement affect the validity or enforceability of the
balance of such provision. If any provision of this Agreement,
or portion thereof is so broad, in scope or duration, as to be
unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable.
11. Arbitration. Any dispute or controversy between the parties
relating to this Agreement shall be settled by binding
arbitration in the City of Manchester, State of New Hampshire,
pursuant to the governing rules of the American Arbitration
Association and shall be subject to the provisions of New
Hampshire Revised Statutes Annotated Chapter 542. Judgment upon
the award may be entered in any court of competent jurisdiction.
12. Withholding. The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes
as shall be permitted to be withheld pursuant to any applicable
law or regulation. The Company may withhold such other amounts
as may be permitted by law.
13. Entire Agreement. This Agreement contains the entire
understanding of the Company and you with respect to the subject
matter hereof.
14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the substantive internal law and not
the conflict of law provisions of the State of New Hampshire.
If the terms of the foregoing Agreement are acceptable to
you, please sign and return to the Company the enclosed copy of
this Agreement whereupon this Agreement shall become a valid and
legally binding contract between you and the Company.
Very truly yours,
EnergyNorth, Inc.
By: Robert R. Giordano
------------------
Robert R. Giordano,
President
and Chief Executive
Officer
Accepted and Agreed as
of the date first
above written:
Albert J. Hanlon
----------------
Albert J. Hanlon
ENERGYNORTH, INC.
KEY EMPLOYEE PERFORMANCE AND
EQUITY INCENTIVE PLAN
This Key Employee Performance and Equity Incentive Plan has
been adopted on November 18, 1992 and amended as of October 1,
1995 by the Board of Directors of EnergyNorth, Inc. for the
benefit of its key employees.
1. DEFINITIONS.
The following terms shall have the following meanings:
1.1 "Award Agreement" shall mean the written agreement between
the Company and a Key Employee setting forth the terms and
conditions under which an Incentive Award is made.
1.2 "Change of Control" shall mean:
1.2.1 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 20% or more of
either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control:(i)any acquisition directly from
the Company (excluding an acquisition by virtue of the exercise
of a conversion privilege),(ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corpora-
tion controlled by the Company or (iv) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i),(ii) and
(iii)of subparagraph 1.2.3 of this subsection are satisfied; or
1.2.2 Individuals who, as of the date hereof, constitute the
Board (the"Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date of adop-
tion of this Plan whose election, or nomination for election by
the Company'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
1.2.3 Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation,(i) more
than 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 Company Common Stock and
Outstanding Company 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
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (ii) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately
prior to such reorganization, merger or consolidation, directly
or indirectly, 20% or more of the Outstanding Company Common
stock or Outstanding Company Voting Securities, as the case may
be) beneficially owns, directly or indirectly, 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 (iii) 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; or
1.2.4 Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect
to which following such sale or other disposition, (A) more than
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 Company Common Stock and
Outstanding Company 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 Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding the Company and any employee benefit plan (or
related trust) of the Company or Such corporation and any Person
beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 20% or more of the
Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly 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 (C) 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 the Company.
1.3 "Committee" shall mean the Compensation Committee of the
Board of Directors of the Company.
1.4 "Company" shall mean EnergyNorth, Inc.
1.5 "Deferred Retirement" shall have the same meaning as in the
EnergyNorth, Inc. Retirement Plan for Salaried Employees dated
January 4, 1984, as amended, restated, or replaced from time to
time.
1.6 "Early Retirement" shall have the same meaning as in the
EnergyNorth, Inc. Retirement Plan for Salaried Employees dated
January 4, 1984, as amended, restated or replaced from time to
time.
1.7 "Effective Date" shall mean November 18, 1992.
1.8 "Extraordinary Items" shall mean those items of income or
expense that are determined to be unusual or extraordinary and of
a nature that would be inappropriate to affect incentive
compensation in the Committee's sole judgment.
1.9 "Forfeiture Period" shall have the meaning set forth in
section 9.1 of the Plan.
1.10 "Incentive Award" shall mean awards of cash and shares
granted to Participants pursuant to the terms of the Plan.
1.11 "Key Employees" shall mean those officers and employees of
the Company whose performance and retention, in the judgment of
the Committee, is of distinct importance to the operation and
financial results of the Company.
1.12 "Normal Retirement" shall have the same meaning as in the
EnergyNorth, Inc.'s Retirement Plan for Salaried Employees dated
January 1, 1984, as amended, restated, or replaced from time to
time.
1.13 "Participant" shall have the meaning set forth in Section 6
of the Plan.
1.14 "Plan" shall mean the EnergyNorth, Inc. Key Employee
Performance and Equity Incentive Plan.
1.15 "Plan Year" shall mean the Company's fiscal year during each
year of the term of the Plan, beginning with the fiscal year
ending September 30, 1993.
1.16 "Ratepayer Interests" shall have the meaning set forth
subsection 7.2.1 of the Plan.
1.17 "Salary Midpoint of the Market Interval" shall mean the
midpoint between the minimum and maximum base salary within the
salary range for a Key Employee, as such salary range may be
established from time to time by the Board of Directors.
1.18 "Shareholder Interests" shall have the meaning set forth in
subsection 7.2.2 of the Plan.
1.19 "Shares" shall mean shares of the Company's common stock,
$1.00 par value, granted pursuant to Incentive Awards.
1.20 "Share Award Date" shall have the meaning set forth in
subsection 8.3 of the Plan.
2. PURPOSE.
The Plan is intended to compensate Key Employees based upon
performance standards and objectives and to reward performance
with share ownership in the Company so that Key Employees have a
greater proprietary interest in the Company. The Plan is
intended to provide for competitive, market-based total
compensation for Key Employees comprised of base salary plus
incentive salary that is at risk. By encouraging share
ownership, the Company seeks to attract, retain and motivate
highly qualified Key Employees, and to align the interests of Key
Employees with the interests of shareholders and ratepayers.
3. TERM.
The Plan was approved by the Company's Board of Directors on
November 18, 1992 (the "Effective Date"), subject to approval by
the Company's shareholders at the Company's February 3, 1993
annual meeting. The Plan shall expire ten years from the
Effective Date on November 17, 2002.
4. SHARES SUBJECT TO PLAN.
The number of shares of the Company's $1.00 par value common
stock that may be awarded under the Plan is 200,000.
5. PLAN ADMINISTRATION.
The Plan shall be administered by the Compensation Committee
of the Company's Board of Directors. Members of the Committee
shall not participate in the Plan. The Committee shall
determine, subject to the express provisions of the Plan, the Key
Employees to whom Incentive Awards will be granted, the
performance criteria upon which Incentive Awards will be based in
a Plan Year, and the terms and provisions (including amendments
thereto) of the respective Award Agreements (which need not be
identical), including such terms and provisions (and amendments)
as shall be required in the judgment of the Committee to conform
to any change in any applicable law or regulation. The Committee
shall have full power to construe and interpret the Plan and to
establish rules and regulations for its administration. The
Committee's determination on the foregoing matters shall be by a
majority of the Committee, and its determinations and decisions
shall be final and binding upon all persons. Notwithstanding the
foregoing or any other provision of the Plan, no Incentive Award
shall be made by the Committee without the prior approval of a
majority of the members of the Board of Directors of the Company
who at the time are ineligible to participate in the Plan.
6. ELIGIBLE EMPLOYEES.
Incentive Awards may be granted to such Key Employees of the
Company or its subsidiaries (including members of the Board of
Directors who are also employees) as may be selected by the
Committee (a "Participant").
7. INCENTIVE AWARDS.
The Plan allows Participants to earn a portion of their
compensation based upon performance criteria established annually
by the Committee.
7.1 Percentage of Salary. Prior to or early in each Plan Year,
the Committee shall establish the maximum amount of Incentive
Awards to be awarded for the ensuing Plan Year, expressed as a
percentage of each Participant's Salary Midpoint of the Market
Interval.
7.2 Performance Criteria. Prior to the beginning of each Plan
Year, the Committee shall establish the performance criteria upon
which Incentive Awards for the ensuing Plan year will be based.
The specific performance criteria selected by the Committee shall
encompass the following general areas:
7.2.1 Criteria directed at promoting efficiency of
operations, controlling cost of service, improving costs measured
against those of peer companies, and other operational criteria
("Ratepayer Interests");
7.2.2 criteria directed at achieving income objectives,
profitability, shareholder return and other financial performance
criteria ("Shareholder Interests"); and
7.3 Discretion. In addition to the performance criteria
described above, a discretionary assessment of a Participant's
individual contribution to Ratepayer Interests and Shareholder
Interests shall be made. Such discretionary assessment shall be
made by the Committee.
7.4 Annual Establishment of Standards. The Committee shall
establish performance standards in each general performance area
and the relative weight, expressed as a percentage, given to each
general performance area for each Plan Year. The specific
performance criteria and the relative weight given to Ratepayer
Interests, Shareholder Interests and the discretionary assessment
shall be set forth in writing for each Plan Year and shall be
attached as an Appendix of Annual Performance Criteria.
7.5 Earnings Threshold. The Committee shall annually set
earnings thresholds based upon a comparison of actual earnings of
the Company for a Plan Year to (i) its forecasted earnings for
that Plan Year and (ii) the amount of dividends paid during the
Plan Year. No Incentive Awards shall be made by the Committee if
Company earnings (adjusted for Extraordinary Items) in a Plan
Year are below the threshold levels established for that year.
The earnings thresholds for each Plan Year shall be set forth in
the Appendix of Annual Performance Criteria.
8. PAYMENT OF INCENTIVE AWARDS.
Within a reasonable time after all necessary information is
available to the Committee following each Plan Year, the
Committee shall determine the amount of Incentive Award grants
for the previous Plan Year in accordance with the provisions of
the Plan and subject to the prior approval of a majority of the
members of the Board of Directors of the Company who at the time
are ineligible to participate in the Plan. Twenty-five percent
of any Incentive Award will be awarded in the form of Shares, and
the balance awarded in cash, subject to the terms and conditions
set forth below.
8.1 Payment of Cash Awards. That portion of a Participant's
Incentive Award payable in cash shall be paid as soon as
practicable following the close of the Plan Year.
8.2 Grant of Shares. Shares granted pursuant to an Incentive
Award for a Plan Year shall be issued as follows:
8.2.1 Shares shall be issued as compensation for employment,
without payment of additional consideration;
8.2.2 The number of Shares issued shall be determined by
dividing an amount equal to twenty-five percent of a
Participant's total Incentive Award by the average of the closing
prices of the Company's common stock, as reported on the New York
Stock Exchange, during the last ten trading days of the Plan Year
to which the incentive Award applies; and
8.2.3 the Shares shall be subject to certain transfer
restrictions and risk of forfeiture in accordance with the terms
of Section 9 of the Plan.
8.3 Award Agreement. At the time that Shares are granted
pursuant to an Incentive Award ("Share Award Date"), each
Participant shall be required to execute an Award Agreement which
shall provide, among other things, for escrow of Shares
consistent with Section 10 hereof, forfeiture and
nontransferability consistent with Section 9 hereof, such
representations of the Participant as are appropriate in the
Committee's discretion, and such other terms and provisions as
are appropriate in the sole judgment of the Committee.
9. RESTRICTIONS ON TRANSFER; FORFEITURE.
Shares awarded pursuant to Incentive Awards shall be subject
to forfeiture to the Company and shall not be transferred by a
Participant for a period of three years from the Share Award
Date.
9.1 Forfeiture. Shares shall be forfeited to the Company by a
Participant if his or her employment is terminated within three
years from the Share Award Date (the "Forfeiture Period"),
provided, however, that a Participant's Shares shall not be
forfeited for a termination of employment by reason of:
9.1.1 the death of a Participant;
9.1.2 the total disability of a Participant, as that term is
defined in Section 72(m)(7) of the Internal Revenue Code of 1986,
as amended; and
9.1.3 Early, Normal or Deferred Retirement from employment of
a Participant.
9.2 Nontransferability. For a period of three years from the
Share Award Date, a Participant shall not sell, assign, convey,
pledge or otherwise transfer any shares, except by will or the
laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined by the Internal Revenue Code
of 1986, as amended, or by Title I of the Employee Retirement
Income Security Act ("ERISA") or the rules thereunder. No shares
shall be reached by, or be subject to, any legal, equitable or
other process, including any bankruptcy proceeding,or be subject
to the interference or control of creditors of a Participant, or
in any other way or manner including execution, attachment or
similar process except with the consent of the Company.
9.3 Termination of Restrictions. The Forfeiture Period and the
restrictions on transfer set forth in Sections 9.1 and 9.2 shall
automatically terminate in the event of the death, disability (as
defined in Section 9.1.2) or the later of Normal Retirement or
Deferred Retirement of a Participant, or in the event of a Change
of Control.
10. ESCROW OF SHARES - RIGHTS AS SHAREHOLDER.
10.1 Escrow. During the Forfeiture Period, the Shares shall be
held in escrow by the Company or its agent pursuant to the terms
of the underlying Award Agreement with a Participant.
Certificates representing the Shares, together with executed
stock powers to be used by the Company in the event of forfeiture
or use of the Shares for payment of federal withholding tax,
shall be deposited with the Company. The Company shall release
the Shares held in escrow to a Participant (or a Participant's
estate) upon the termination of the Forfeiture Period, subject to
the terms of the Plan and the underlying Award Agreement.
10.2 Participant Rights. Participants shall have all of the
rights of a shareholder of the Company with respect to Shares
registered in his or her name, during the Forfeiture Period,
including the right to vote the Shares and receive dividends and
other distributions paid with respect to the Shares.
11. CORPORATE CHANGES.
The Company's Board of Directors shall adjust the number of
Shares subject to the Plan to give effect to any stock dividends,
stock splits, stock combinations, recapitalizations, or other
such changes in the Company's capital structure. The terms and
conditions of the Plan shall apply to any other capital Shares of
the Company and any other securities that may be acquired by a
Participant as a result of a stock dividend, stock split, stock
combination or exchange for other Company securities resulting
from any recapitalization, reorganization or other transaction
affecting Shares.
12. TAX WITHHOLDING.
Incentive Awards are subject to federal income tax
withholding. In the case of the cash component of an Incentive
Award, the Company shall withhold at the time of payment that
amount of the cash award required to be withheld under the
Internal Revenue Code of 1986, as amended, and the regulations
thereunder. In the case of the Shares component of an Incentive
Award, the Company shall withhold the applicable amount at the
time that the Forfeiture Period terminates or at such earlier
time as may be required by law, in the sole judgment of the
Committee. If the Participant elects under Section 83 of the
Internal Revenue Code of 1986, as amended, to accelerate the
recognition of income attributable to the receipt of Shares, the
Participant shall furnish the Company with a copy of such
election form concurrently with filing with the Internal Revenue
Service. The Participant shall, in the first instance, be
required to pay the applicable amount to be withheld to the
Company before the Shares are released from escrow. In the event
that the Participant does not pay such withholding amount to the
Company, the Company shall be entitled to offset any obligation
that it may have to Participant, including salary or wage
obligations, in any amount equal to such withholdings, or, at the
option of the Company, the Company shall be entitled to pay such
withholding by using that number of the Shares it will hold in
escrow pursuant to Section 10 of this Plan sufficient to generate
cash proceeds to it necessary to pay such withholding. The
Participant's agreement to allow Company use of Shares for
withholding shall be set forth in the underlying Award Agreement.
13. TERMINATION OR AMENDMENT.
Except as provided in Section 13.3 below, the Board of
Directors may at any time suspend, reinstate, or terminate the
Plan or make such changes in or additions to the Plan as it deems
advisable without further action on the part of the shareholders
of the Company, except:
13.1 that no such termination or amendment shall adversely affect
or impair any then issued and outstanding Shares without the
consent of the Participant holding such Shares;
13.2 that no such amendment which (a) materially increase the
maximum number of Shares subject to this Plan; (b) materially
increase the benefits accruing to Participants under the Plan;
(c) remove the administration of the Plan from the Committee; or
(d) materially modify the requirements as to eligibility for
participation in the Plan may be made without first obtaining
shareholder approval; and
13.3 that in the event of a Change in Control, the Company may
neither terminate the Plan nor reduce benefits under the Plan
with respect to those individuals who are Participants as of the
date of the Change in Control.
14. EMPLOYMENT.
Nothing in the Plan shall confer upon any employee the right
to continue in the employ of the Company, and it is understood
and agreed that all Key Employees are employees at will, except
as may be provided in specific employment agreements.
15. OTHER PLANS.
The adoption of the Plan shall not affect any other
compensation plan in effect for the Company, nor shall the Plan
preclude the Company from establishing any other forms of
incentive or other compensation for employees of the Company.
16. INDEMNIFICATION.
In addition to other rights of indemnification as directors
or otherwise, the members of the Committee shall at all times be
indemnified by the Company against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred in
connection with the assertion of any claim, action, suit or
proceeding, or in connection with any appeal thereof, to which
they, or any of them, may be a party by reason of any action
taken or failure to act in connection with the Plan and against
all amounts paid by them in settlement thereof approved by
independent legal counsel selected by the Company, or paid by
them in satisfaction of a judgment in any such action, suit or
proceeding, provided that within sixty (60) days after
institution of such action, suit or proceeding, the member shall
make written offer to the Company to handle and defend the same
at its own expense.
17. SECTION 16 COMPLIANCE
With respect to persons subject to Section 16 of the
Securities Exchange Act of 1934 ("1934 Act"), transactions under
the Plan are intended to comply with all applicable conditions of
Rule 16b-3 or its successors under the 1934 Act. To the extent
any provisions of the Plan or action by the Committee fails to so
comply, it shall be deemed null and void, to the extent permitted
by law and deemed advisable by the Committee.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of EnergyNorth, Inc.:
As independent public accountants, we hereby consent to the
incorporation by reference in the registration statement on Form
S-3, File No. 33-58127 of our reports dated November 9, 1995,
included in EnergyNorth, Inc.'s Form 10-K for the year ended
September 30, 1995, and to all references to our firm included in
this registration statement.
Boston, Massachusetts
December 21, 1995
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ENERGYNORTH, INC. CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF
CAPITALIZATION AT SEPTEMBER 30, 1995 AND FROM THE CONSOLIDATED STATEMENT OF
INCOME AND STATEMENT OF CASH FLOWS FOR THE TWELVE MONTHS ENDED SEPTEMBER 30,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 88,443<F1>
<OTHER-PROPERTY-AND-INVEST> 7,989<F2>
<TOTAL-CURRENT-ASSETS> 17,775
<TOTAL-DEFERRED-CHARGES> 7,130
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 121,337
<COMMON> 3,196
<CAPITAL-SURPLUS-PAID-IN> 29,583
<RETAINED-EARNINGS> 9,335
<TOTAL-COMMON-STOCKHOLDERS-EQ> 45,114
0
0
<LONG-TERM-DEBT-NET> 29,829
<SHORT-TERM-NOTES> 1,750
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 3,495
0
<CAPITAL-LEASE-OBLIGATIONS> 274
<LEASES-CURRENT> 256
<OTHER-ITEMS-CAPITAL-AND-LIAB> 43,619
<TOT-CAPITALIZATION-AND-LIAB> 121,337
<GROSS-OPERATING-REVENUE> 78,806
<INCOME-TAX-EXPENSE> 1,972
<OTHER-OPERATING-EXPENSES> 69,831
<TOTAL-OPERATING-EXPENSES> 71,803
<OPERATING-INCOME-LOSS> 7,003
<OTHER-INCOME-NET> 1,434
<INCOME-BEFORE-INTEREST-EXPEN> 8,437
<TOTAL-INTEREST-EXPENSE> 4,333
<NET-INCOME> 4,104
0
<EARNINGS-AVAILABLE-FOR-COMM> 4,104
<COMMON-STOCK-DIVIDENDS> 3,545
<TOTAL-INTEREST-ON-BONDS> 2,852
<CASH-FLOW-OPERATIONS> 8,606
<EPS-PRIMARY> 1.30
<EPS-DILUTED> 0.00
<FN>
<F1>NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION OF $41.452 MILLION
<F2>NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION OF $7.456 MILLION
</FN>
</TABLE>
