<PAGE> 1
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, 1996
Commission File Number 1-1141
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. [X ]
At October 1, 1996, non-affiliates held 3,067,297 shares of the Registrant's
$1 par value common stock. On December 2, 1996, the aggregate market value of
those shares was $62,112,764.
At the close of business on December 20, 1996, the registrant had 3,243,543
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 to Shareholders Part III
in connection with Annual Meeting to be held February 5, 1997.
Page 1 of 46 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 5-6
The Retail Propane Business 6
Summary of Revenues 6
Deregulation 6-7
Competition 7
Gas Supply
General 7
Supply Contracts and Storage 7-8
Controlled Attachment Policy 8
Cost of Purchased and Produced Gas 8-9
Supervision and Regulation 9
Employees 9
Executive Officers of the Registrant 10
Item 2.Properties 10-11
Item 3.Legal Proceedings 11-12
Item 4.Submission of Matters to a Vote of Security
Holders 12
Part II
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters 13
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15-20
Item 8. Financial Statements and Supplementary Data 21-38
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 38
Part III
Item 10. Directors and Executive Officers of the
Registrant 38
Item 11. Executive Compensation 38
Item 12. Security Ownership of Certain Beneficial
Owners and Management 39
Item 13. Certain Relationships and Related Transactions 39
<PAGE> 3
TABLE OF CONTENTS (continued)
Part IV Page No(s).
--------
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K 39-41
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.
During 1996, ENPI entered into a joint venture with Northern New
England Gas Corporation, creating a limited liability company to
provide LP gas sales and service in the State of Vermont.
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
463,000 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 30 to 85 miles of Greater
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's job growth continues to be robust,
ranking first among New England states with a 1.9% growth rate.
This compares to a 1.9% average growth rate nationally and a 1.4%
average rate for New England. According to The New England
Economic Project's October 1996 Economic Outlook for New
Hampshire, new housing permits are expected to increase 3.2% in
1997 over 1996. While the New Hampshire unemployment rate for
1997 is forecasted at 4% compared to 3.8% in 1996, the labor
force is forecasted to increase by 1.2% in 1997. In fiscal 1996,
the Company experienced net growth of over 2.4% in natural gas
customers and almost 9.4% in propane customers over 1995.
<PAGE> 5
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
alternative fuels are used. In New Hampshire, fuel oil has a
penetration of over 57% of the home heating market. Currently,
the comparative full service price of natural gas for heating is
less than fuel oil. 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 natural gas heat
pumps 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. Due to continued customer conversions from other
energy sources and expansion of its service territory, ENI has an
opportunity for growth in the retail sales market. During the
past five years, ENGI has experienced an annual average customer
growth rate of about 2.0% compared to the 1.5% national average
for local distribution companies. Additional growth in
distribution operations may also occur as industrial and
commercial customers turn to natural gas for electric generation
because of a price advantage and as a means to ensure compliance
with the provisions of the Clean Air Act. As the electric
industry continues to move toward deregulation, this option
becomes more attractive. The development of new gas-burning
technologies for industry and the wider acceptance of natural gas
as a fuel for motor vehicles have provided opportunities for
increased gas usage in market sectors that are not sensitive to
the weather.
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 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, 1996, the Company's utility business served over
66,000 customers, of which approximately 88% were residential and
12% were commercial and industrial. During fiscal 1996, no ENGI
customer purchased more than 4% 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 1996,
ENGI provided transportation service to 29 customers. Under the
present regulatory environment, a switch to transportation
service will reduce sales volumes and resulting utility gross
revenues, but 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 is currently
involved in a proceeding at the Commission to determine the costs
of providing transportation service. A decision in this
proceeding may result in a reduction in current transportation
rates and a corresponding decrease in transportation margin.
ENGI cannot predict the impact, if any, that the results of this
proceeding may have on future operations.
<PAGE> 6
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 over 75% of New
Hampshire's natural gas customers.
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. During 1996, ENPI entered into a joint venture
with Northern New England Gas Corporation to provide LP gas sales
and service in Vermont. ENPI holds a 49% interest and will
provide planning and management expertise to the joint venture.
Summary of Revenues
<TABLE>
Revenues, in thousands of dollars, attributable to various
categories of gas distribution and related operations during the
last three fiscal years are as follows:
<CAPTION>
September 30,
---------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Utility (natural gas) sales service $76,007 $69,067 $88,150
Utility transportation service 1,503 749 -
Propane gas sales 11,444 8,990 8,900
Service and appliance sales 1,917 1,794 1,718
Rentals 987 964 917
------- ------- -------
$91,858 $81,564 $99,685
======= ======= =======
</TABLE>
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 provided for the unbundling and deregulation
of the interstate pipeline system and led to the beginning of
unbundling of the intrastate pipeline system in New Hampshire.
In late 1993, the Commission approved gas transportation rates
and separate standby and balancing services for commercial and
industrial customers.
<PAGE> 7
Gas transportation services have allowed customers to utilize
ENGI's distribution system for the transportation of gas
purchased from third-party gas marketers, creating competition
from gas marketers for the sale of gas to end users. At
September 30, 1996, 29 customers had entered into transportation
agreements with ENGI. These customers are, for the most part,
large commercial and industrial customers. The volume
transported for transportation customers in fiscal 1996 was
514,000 Mcf, approximately 4% 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.
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, the price of
natural gas is less than the price of oil for heating. 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 and security
of supply. Additionally, commercial and industrial customers
continue to find 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 Dths per day on a
<PAGE> 8
firm transportation basis and up to 8,000 Dths per day on an
interruptible basis. Natural gas supplies are purchased both on a
long-term contract and short-term spot market basis. During
1996, ENGI purchased approximately 6.2% of its annual natural gas
requirements in the spot market. At times during the year,
typically during the summer, ENGI will purchase lower cost spot
market natural gas supply. ENGI's long-term contracts, under
which it has firm supply for approximately 32,529 Dths per day,
have remaining terms of three to ten years.
In fiscal 1996, approximately 68% of ENGI's gas requirements came
from domestic pipeline sources, 21% from Canadian pipeline
supplies and approximately 10% from supplemental pipeline
supplies. LP and liquefied natural gas ("LNG") purchases from
both domestic and foreign sources made up approximately 1% of
ENGI's total supply requirements. Supplemental supplies of gas
are produced from plants owned and operated by ENGI.
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.
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 Dths per day on a
firm basis, is delivered to ENGI during the winter months through
the Tennessee system. ENGI owns other on-site storage facilities
capable of holding 125,438 Dths of LP and 13,057 Dths of LNG.
ENGI has contracted for 1,760,000 Dths of supplemental gas vapor,
75,000 Dths of LNG and an additional 1,000,000 gallons of LP for
the winter of 1996-1997.
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, 1996 was approximately $3.96 per Mcf compared to $3.44 per
Mcf for the same period last year. The 1996 average unit cost
reflects higher pipeline costs due to supplier rate case
settlements and higher cost of gas supply in the marketplace.
The Cost of Gas Adjustment ("CGA") clause authorized by the
Commission permits recovery by ENGI, from its customers, of gas
costs (including pipeline, LP, LNG and storage) that are higher
or lower than the
<PAGE> 9
cost of gas included in base rates. The CGA is determined twice
annually, for summer and winter periods.
Margins earned on interruptible, 280-day sales and capacity
release 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 1993 and ENGI has incurred $5.9 million in
transition costs through September 30, 1996 and is recovering
these costs through the CGA. Based on current information,
additional transition costs are expected to range from $1.7
million to $5.1 million. Meanwhile, ENGI customers are benefiting
from the restructuring, realizing long-term savings in gas costs.
Supervision and Regulation
ENI 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 ENGI 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, 1996, the Company had 250 full-time employees of
whom 136 were represented by four contracts with Local 12012 of
the United Steelworkers of America. Two union contracts covering
27 employees expire in 1997 and two covering 109 employees expire
in 2001.
<PAGE> 10
Executive Officers of the Registrant
<TABLE>
The executive officers of the Registrant are listed below,
together with age at December 20, 1996, 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.
<CAPTION>
Served Principal Occupations and
as Employement During Last Five
Name and Position Officer Years Other Than with
with the Registrant Age Since the Registrant
- -------------------- --- ------- ----------------------------
<S> <C> <C> <C>
Robert R. Giordano 58 1982 Chief Executive Officer and
President and Chief President of ENGI; Chairman
Executive Officer and Chief Executive Officer
of ENPI
Albert J. Hanlon 55 1988 Senior Vice President of ENGI
Senior Vice President
Michelle L. Chicoine 40 1990 Vice President (since 1993),
Vice President, Treasurer (since 1990) and
Treasurer and Chief Chief Financial Officer (since
Financial Officer 1996) of ENGI
Frank L. Childs 52 1995 Vice President of ENGI (since
Vice President 1995); 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 60 1988 President of ENPI and Vice
Vice President President of ENGI
David A. Skrzysowski 50 1983 Vice President and Controller
Vice President and of ENGI
Controller
</TABLE>
ITEM 2. PROPERTIES
The Company's utility gas distribution facilities constitute the
majority of its physical assets. As of September 30, 1996, ENGI
had approximately 1,020 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.
<PAGE> 11
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 currently participating in a
proceeding at the Commission to determine the costs of providing
transportation service. ENGI cannot predict the impact, if any,
a decision in this proceeding may have on future operations.
ENGI is a party to various other 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 of $3.0 million at September 30, 1996 is
excluded from rate base.
The New Hampshire Department of Environmental Services ("NHDES")
has selected a remedial action for a portion of the Concord site
at which wastes were disposed of between the late 1800's and the
mid-1900's. The estimated cost of the remedial action ranges
from $2.9 million to $4.8 million, and the Company has recorded
$2.9 million at September 30, 1996 in deferred charges.
The Company and another utility company have been directed by the
NHDES to conduct an environmental site characterization of a
former manufactured gas plant in Laconia, New Hampshire. The
Laconia manufactured gas plant operated between approximately
1887 and 1952, and the Company owned and operated the facility
for approximately the last seven years of its active life.
Without admitting liability, the Company and the other utility
have entered into an agreement under which the costs of the site
characterization are shared. The Company's share of the costs of
the site characterization and a report to the NHDES, which is
underway, is expected to total $88,000 and has been recorded in
deferred charges as of September 30, 1996. The Company is
currently unable to predict the magnitude of any liability that
may be imposed on it for the cost of additional studies or the
performance of a 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 with respect to environmental matters. The
Company intends to seek and expects to receive approval of rate
recovery methods with respect to environmental matters after it
has determined the extent of contamination, received
recommendations with regard to remediation and commenced
remediation efforts.
<PAGE> 12
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.
On December 8, 1995 ENGI filed suit in the United States District
Court for the District of New Hampshire against Associated
Electric and Gas Insurance Services, Ltd., American Home
Assurance Company, CIGNA Specialty Insurance Company,
International Insurance Company, Lloyd's, Underwriters at London,
Lexington Insurance Company, National Union Fire Insurance
Company, later adding Columbia Casualty Company as a defendant,
seeking a declaratory judgment that they owe ENGI a defense
and/or indemnification for environmental claims associated with
the Concord facility. ENGI filed suit in the New Hampshire
(Hillsborough County) Superior Court on December 8, 1995 against
the Continental Insurance Company and Netherlands Insurance
Company seeking a declaratory judgment that they owe ENGI a
defense and/or indemnification for environmental claims
associated with the Concord facility.
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 1996.
<PAGE> 13
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
<TABLE>
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 1996 and 1995 were as follows:
<CAPTION>
Fiscal 1996 Fiscal 1995
High Low High Low
-------------------------------------------------------------
<S> <C> <C> <C> <C>
First Quarter $18 3/8 $16 5/8 $18 $15 1/4
Second Quarter 20 17 18 15 1/2
Third Quarter 19 7/8 18 1/4 18 15 3/4
Fourth Quarter 19 3/4 18 1/8 18 16 3/8
<CAPTION>
As of December 2, 1996, there were approximately 2,300 holders of
record of common stock.
Quarterly cash dividends paid were as follows:
Fiscal 1996 Fiscal 1995
----------- -----------
<S> <C> <C>
First Quarter $.29 $.28
Second Quarter .29 .28
Third Quarter .305 .28
Fourth Quarter .305 .28
</TABLE>
<PAGE> 14
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
(In thousands, except per share amounts)
<CAPTION>
1996 1995 1994 1993* 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total operating revenues $ 88,954 $ 78,806 $ 97,050 $ 86,197 $ 80,007
Earnings applicable to
common stock 6,078 4,104 5,422 5,368 3,673
Earnings per share 1.89 1.30 1.74 1.74 1.22
Cash dividends per share 1.19 1.12 1.08 1.06 1.04
Total assets 132,003 121,337 121,019 113,569 106,710
Capitalization:
Common stockholders' equity 45,167 42,114 40,778 38,054 35,204
Long-term debt (including
capital lease obligations) 29,571 30,103 33,501 35,588 35,687
-------- -------- -------- -------- --------
Total capitalization $ 74,738 $ 72,217 $ 74,279 $ 73,642 $ 70,891
======== ======== ======== ======== ========
Short-term debt(including
current portion of
long-term debt) $ 11,854 $ 5,501 $ 2,308 $ 4,998 $ 5,270
</TABLE>
________________________
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.
* Results include a credit to earnings for previously disallowed
gas costs, net of tax, of $959.
<PAGE> 15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Earnings and Dividends
Earnings per share for 1996 were $1.89 on record net income of
$6.1 million, which represents a 45% increase from the $1.30 per
share earned in 1995. Return on average common equity for 1996
was 13.9%, bettering the previous year's 9.9% return. The 1996
increase in earnings was primarily due to greater margins
resulting mostly from growth in volumes delivered. Volumes of
firm gas delivered to utility customers increased 13.1% to 11.4
million Mcf, and propane gallons sold increased almost 21% in
1996. Weather in the Company's service area was near normal in
1996 but 9.5% colder than the prior year. In 1995, earnings were
reduced by approximately $.50 per share, after taxes, as a result
of warmer temperatures. In addition, 1995 earnings included a
$215,000 after-tax gain ($.07 per share) on the sale of railcars.
The Company's Board of Directors increased the quarterly dividend
8.9% during the fiscal year. The current quarterly dividend of
30.5 cents per share is equal to an annual dividend of $1.22 per
share. Cash dividends paid to common shareholders in 1996 were
$3,826,000, representing a payout ratio of 63% of 1996 earnings.
Utility Sales and Revenues
Utility gas service operating revenues were $77.5 million in
1996, compared to $69.8 million in 1995. The increase resulted
primarily from increased volumes delivered to firm residential
and commercial heating customers. The weather in 1996 was 9.5%
colder than in 1995. In addition, customer growth in 1996 was
approximately 1.7%. Revenues from gas transported for customers
under firm transportation service rates increased more than 40%
to $979,000, due to a 45% increase in volumes transported. This
increase included a shift of 162,000 Mcf from firm commercial and
industrial sales customers, representing a decrease of $516,000
in operating revenue attributable to the commodity cost of gas.
The Company generates revenues through the sale and
transportation of natural gas. Shifts between transportation and
sales gas will cause variations in natural gas revenues since the
transportation rate does not include the commodity cost of gas,
which is billed directly to the customer by its marketer. The
Company's rate structure allows for similar margins on
transported and sales gas. The Company is currently involved in
a proceeding at the New Hampshire Public Utilities Commission
(the "Commission") to determine the costs of providing
transportation service. A decision in this proceeding may result
in a reduction in current transportation rates and a
corresponding decrease in transportation margin. The Company
cannot predict the impact, if any, that the results of the
proceeding may have on future operations. At September 30, 1996,
the Company had 29 transportation customers compared to 21
customers the previous year. Interruptible revenue and
interruptible transportation revenue increased $895,000 in 1996
to $4.6 million. Interruptible margins are used to lower charges
to firm customers through the cost of gas adjustment ("CGA") and
do not impact the Company's profitability.
<PAGE> 16
The Company's tariff includes CGA rates which provide for
increases and decreases in the rates charged for gas to reflect
estimated changes in the cost of gas. Although changes in CGA
rates affect revenues, they do not affect total margin because
the CGA is a tariff mechanism designed to provide dollar-for-dollar
recovery of gas costs. Amounts recovered under CGA rates
are reconciled biannually against actual costs, and future CGA
rates are adjusted accordingly.
Utility Cost of Gas Sold
Cost of gas was $39.5 million in 1996 and $36.1 million in 1995.
The increase was primarily due to higher prices from suppliers
($5.9 million) and the increase in delivered volumes ($4.7
million), partially offset by timing differences related to the
recovery of gas costs through the CGA ($7.2 million). The
average unit cost of gas sold in 1996 was $3.96 per Mcf, compared
to $3.44 per Mcf in 1995. Increases or decreases in purchased
gas costs from suppliers have no significant impact on margin, as
they are passed on to customers through the CGA.
Retail Propane Operations
Retail propane operations contributed $646,000 to net earnings of
the Company, an increase of $276,000 over 1995 results. 1996
operating revenues increased $2.4 million to $11.4 million, as
propane gallons sold increased almost 21%. Substantial customer
growth and the colder weather accounted for the increase in
gallons sold. The average number of propane customers increased
more than 10% in 1996. Despite an increase in the unit cost of
gas of 10.5% and competitive pressure to maintain price, gross
margin increased $982,000 or 21%. Operations and maintenance
expense increased more than $425,000, primarily as a result of
increases in labor, transportation and other delivery related
expenses necessary to support an expanding customer base.
Operating Expenses
Operations and maintenance expense increased $614,000, or less
than 3%, to $21.7 million in 1996. Reductions in the work force,
other cost saving initiatives and workers' compensation and
health insurance refunds helped offset most of the increases from
liability insurance, uncollectible accounts and other
administrative expenses.
Depreciation and amortization expense increased from $5.1 million
to $5.8 million in 1996, consistent with the Company's continued
investment in the expansion and upgrading of its distribution
system and facilities. Net additions to property, plant and
equipment were $8.8 million and $7.9 million in 1996 and 1995,
respectively.
Taxes other than income taxes increased $193,000 to $3.9 million
primarily due to increases in property taxes, resulting from
property tax rate increases and additions to taxable property.
<PAGE> 17
A higher level of pretax income was the main reason for the $1.7
million increase in total Federal and state income taxes in 1996.
In addition, as a result of the resolution of certain tax issues,
the Company reduced Federal income taxes by $200,000 in 1995.
Total other income for 1995 includes a gain of $350,000 from the
sale of railcars formerly used to transport liquid propane.
Fiscal 1996 interest expense decreased 12.9% from 1995 due mainly
to the repayment of $3.8 million of long-term debt and a decrease
in average short-term borrowings and average short-term interest
rates.
Capital Resources and Liquidity
Because of the seasonal nature of the Company's operations, a
substantial portion of cash receipts are generated during the
November-March heating season, which results in the highest cash
inflow during late winter and early spring. However, cash
requirements for capital expenditures, dividends, long-term debt
retirement and working capital do not track this pattern of cash
receipts. The greatest demand for cash is in the fall and early
winter to support the completion of the annual construction
program, and to fund gas inventories and other working capital
requirements.
Cash provided by operations and financing activities was
sufficient to fund investing activities in 1996. Higher earnings
due to increased margins from greater sales volumes had a
favorable impact on funds provided by operating activities.
Additionally, during 1996, the Company raised almost $802,000 of
common equity through the Dividend Reinvestment and Stock
Purchase Plan. Borrowings against lines of credit during 1996
ranged from zero to a high of $9.5 million. In addition, the
Company refinanced a $1.5 million mortgage note. The Company's
major uses of cash were capital expenditures of $8.8 million,
environmental remediation of $672,000 and retirement of $3.8
million of long-term debt. Deferred gas costs increased $9.4
million, due to the timing of the recovery of increased gas costs
through the CGA. In addition, dividend payments to shareholders
totaled $3.8 million in 1996.
Capital expenditures for 1997 are currently projected at
approximately $10.3 million, and annual sinking fund requirements
and maturities of long-term debt are scheduled to be $2.3 million
in 1997. Additional cash requirements will be necessary for the
payment of dividends, environmental remediation and working
capital. Cash to fund these requirements is expected to be
provided principally by internally generated funds and short-term
bank borrowings under the Company's lines of credit. At
September 30, 1996, the Company had available lines of credit
aggregating $13.0 million with $9.5 million outstanding. In
addition, a credit line of $9.5 million was available at
September 30, 1996 under the Company's inventory trust financing
plan. At September 30, 1996, the Company's inventory in trust on
the consolidated balance sheet was $7.8 million with an
outstanding purchase obligation of $7.9 million.
<PAGE> 18
On September 30, 1996, the Company's capitalization ratio
consisted of 52% common equity and 48% debt, including short-term
debt. Return on average common equity was 13.9%. In order to
contribute to both stability and the ability to market new
securities when appropriate, the Company attempts to maintain a
balanced capital structure. The Company will seek future debt
and equity financing based upon the amount and timing of
internally generated funds, rate relief, regulatory actions and
market conditions.
Environmental Matters
The Company and certain of its predecessors owned or operated
facilities for the manufacture of gas from coal, a process used
through the mid-1900's that produced by-products that may be
considered contaminated or hazardous under current law, and some
of which may still be present at such facilities. The Company
accrues environmental investigation and clean-up costs with
respect to former manufacturing sites and other environmental
matters when it is probable that a liability exists and the
amount or range of amounts is reasonably certain.
A former manufactured gas facility in Concord, New Hampshire has
been investigated and partially remediated. Disposal of the
contents of the gasholder situated at this former gas
manufacturing facility has been completed. Total remediation
costs amounted to approximately $3.5 million and were recorded in
deferred charges. Recovery of costs from customers began on July
1, 1995 and will extend over a seven-year period. The
unamortized balance of $3.0 million at September 30, 1996 is
excluded from rate base.
The New Hampshire Department of Environmental Services ("NHDES")
has selected a remedial action for a portion of the Concord site
at which wastes were disposed of between the late 1800's and
mid-1900's. The estimated cost of the remedial action ranges from
$2.9 million to $4.8 million, and the Company has recorded $2.9
million at September 30, 1996 in deferred charges.
The Company is pursuing recovery from its insurance carriers as
well as from insurance carriers of its predecessors with respect
to the Concord site. In addition, the Company is pursuing
recovery against an entity that the Company alleges owned or
operated the manufactured gas plant during the late 1800's and
early 1900's.
The Company and another utility company have been directed by the
NHDES to conduct an environmental site characterization of a
former manufactured gas plant in Laconia, New Hampshire. The
Laconia manufactured gas plant operated between approximately
1887 and 1952, and the Company owned and operated the facility
for approximately the last seven years of its active life.
Without admitting liability, the Company and the other utility
have entered into an agreement under which costs of the site
characterization are shared. The Company's share of the costs of
the site characterization and a report to the NHDES, which is
underway, is expected to total $88,000 and has been recorded in
deferred charges as of September 30, 1996. The Company is
currently unable to predict the magnitude of any liability that
may be imposed on it for the cost of additional studies or the
performance of a remedial action in connection with the Laconia
site.
<PAGE> 19
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 with respect to environmental matters. The
Company intends to seek and expects to receive approval of rate
recovery methods with respect to environmental matters after it
has determined the extent of contamination, received
recommendations with regard to remediation and commenced
remediation efforts.
Results of Operations 1995 Compared to 1994
Net income declined to $4.1 million in 1995 from record 1994 net
income of $5.4 million. Earnings per share in 1995 were $1.30
compared to $1.74 in 1994. A key reason for the decrease in net
income was the impact on operations of significantly warmer
weather during the 1995 heating season. The effect of weather,
when compared to normal, reduced 1995 net income by approximately
$.50 per share, after taxes. In 1994, net income increased $.30
per share, after taxes, as a result of the record colder than
normal temperatures.
Operating revenues were approximately $78.8 million in 1995, a
decrease of 18.8% from 1994. The total volume of gas sendout
declined 7.5% as temperatures in 1995 were 13.3% warmer than in
1994 and 9.2% warmer than normal. The average number of utility
customers increased 2.1% to more than 65,000 in 1995. Utility
gas service revenues, which represented 88.6% of total operating
revenues, decreased by $18.4 million or 20.9%.
Propane operations recorded $9.0 million in total operating
revenues in 1995, a slight increase over 1994. The increase was
primarily due to a 12% increase in the average number of propane
customers to 10,800 in 1995. Propane gallons sold decreased
almost 2% in 1995 due to the effect of warmer weather.
The average unit cost of gas purchased and produced decreased to
$3.44 per Mcf in 1995 from $4.03 per Mcf in 1994.
Operations and maintenance expense decreased 3.5% in 1995,
primarily because of reductions in the work force combined with
reductions in workers' compensation insurance and bad debt
expense.
Capital expenditures for the Company's continuing expansion and
system improvement programs were the reason for the 4.5% increase
in depreciation and amortization in 1995.
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 in 1995, or 9.3% greater
than 1994. The Company's total average short-term borrowings and
the weighted average short-term interest rate were greater than
in 1994.
<PAGE> 20
Total Federal and state income taxes decreased $644,000 in 1995.
The lower level of pretax income and the resolution of certain
tax issues are the principal reasons for the decrease. Partially
offsetting the decrease was the impact of the repeal of the
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.
Factors That May Affect Future Results
The Private Securities Litigation Reform Act of 1995 encourages
the use of cautionary statements accompanying forward-looking
statements. The preceding Management's Discussion and Analysis
of Financial Condition and Results of Operations includes forward-
looking statements concerning the impact of transportation
customers on the Company's profitability; the impact of changes
in the cost of gas and of the CGA mechanism on total margin;
projected capital expenditures and sources of cash to fund
expenditures; and estimated costs of environmental remediation
and anticipated regulatory approval of recovery mechanisms. The
Company's future results, generally and with respect to such
forward-looking statements, may be affected by many factors,
among which are uncertainty as to the precise rates for
transportation of gas that will be allowed by the regulators and
as to the number and size of sales gas customers who become
transportation-only customers; uncertainty as to the regulatory
allowance of recovery of changes in the cost of gas; uncertain
demands for capital expenditures and the availability of cash
from various sources; and uncertainty as to the regulatory
approval of the full recovery of environmental costs, transition
costs, and other regulatory assets.
<PAGE> 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
(a) Financial Statements required by Regulation S-X
<TABLE>
Consolidated Statements of Income EnergyNorth, Inc.
<CAPTION>
(In thousands, except per share amounts)
For the years ended September 30, 1996 1995 1994
- -------------------------------------------------------------------
<S> <C> <C> <C>
Operating revenues:
Utility gas service $77,510 $69,816 $88,150
Propane gas service 11,444 8,990 8,900
-------- -------- -------
Total operating revenues 88,954 78,806 97,050
-------- -------- -------
Operating expenses:
Cost of gas sold 44,941 39,961 55,130
Operations and maintenance 21,660 21,046 21,800
Depreciation and amortization 5,825 5,071 4,854
Taxes other than income taxes 3,946 3,753 3,911
Federal and state income taxes 3,635 1,972 2,616
-------- -------- -------
Total operating expenses 80,007 71,803 88,311
-------- -------- -------
Operating income 8,947 7,003 8,739
-------- -------- -------
Other income (expense):
Net rentals, service and
appliance sales 948 827 649
Other, net (41) 607 (1)
-------- -------- -------
Total other income (expense) 907 1,434 648
Interest expense:
Interest on long-term debt 3,004 3,161 3,285
Other interest 800 1,206 705
Interest charged to construction (28) (34) (25)
-------- -------- -------
Total interest expense 3,776 4,333 3,965
-------- -------- -------
Net income $ 6,078 $ 4,104 $ 5,422
======== ======== =======
Weighted average shares outstanding 3,216 3,166 3,120
======== ======== =======
Earnings per share $ 1.89 $ 1.30 $ 1.74
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 22
<TABLE>
Consolidated Balance Sheets EnergyNorth, Inc.
<CAPTION>
(In thousands)
September 30, 1996 1995
- ---------------------------------------------------------------------
<S> <C> <C>
Assets
Property:
Utility plant, at cost $136,229 $129,895
Accumulated depreciation and amortization 44,683 41,452
-------- --------
Net utility plant 91,546 88,443
Net nonutility property, at cost 7,748 7,989
-------- --------
Net property 99,294 96,432
-------- --------
Current assets:
Cash and temporary cash investments 770 575
Note receivable 39 -
Accounts receivable (net of allowances of
$1,211 in 1996 and $950 in 1995) 2,029 2,171
Unbilled revenues 582 586
Deferred gas costs 3,783 -
Materials and supplies 1,590 1,624
Supplemental gas supplies 9,039 8,074
Prepaid and deferred taxes 1,603 1,671
Recoverable FERC 636 transition costs 1,733 1,733
Prepaid expenses and other 1,304 1,341
-------- --------
Total current assets 22,472 17,775
-------- --------
Deferred charges:
Regulatory asset - income taxes 2,401 2,401
Recoverable environmental costs 6,840 3,741
Other deferred charges 996 988
-------- --------
Total deferred charges 10,237 7,130
-------- --------
Total assets $132,003 $121,337
======== ========
Stockholders' equity and liabilities
Capitalization (see accompanying statements) $ 74,738 $ 72,217
-------- --------
Current liabilities:
Notes payable to banks 9,535 1,750
Current portion of long-term debt 2,090 3,495
Current portion of capital lease obligations 229 256
Inventory purchase obligation 7,867 7,130
Accounts payable 6,189 4,768
Deferred gas costs - 5,645
Accrued interest 838 874
Accrued taxes 1,642 214
Accrued FERC 636 transition costs 1,733 1,733
Customer deposits, environmental and other 5,062 2,353
-------- --------
Total current liabilities 35,185 28,218
-------- --------
Commitments and contingencies
Deferred credits:
Deferred income taxes 16,525 15,180
Unamortized investment tax credits 1,870 2,010
Regulatory liability - income taxes 1,374 1,497
Contributions in aid of construction and other 2,311 2,215
-------- --------
Total deferred credits 22,080 20,902
-------- --------
Total stockholders' equity and liabilities $132,003 $121,337
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 23
<TABLE>
Consolidated Statements of Capitalization EnergyNorth, Inc.
<CAPTION>
(In thousands, except share information)
September 30, 1996 1995
- -----------------------------------------------------------------
<S> <C> <C>
Capitalization:
Common stockholders' equity:
Common stock - par value of $1 per share,
10,000,000 shares authorized; 3,239,148
and 3,196,162 shares issued and
outstanding in 1996 and 1995,
respectively $ 3,239 $ 3,196
Amount in excess of par 30,342 29,583
Retained earnings 11,586 9,335
------- -------
Total common stockholders' equity 45,167 42,114
------- -------
Long-term debt:
General and Refunding Bonds
Due 2002 8.67% 7,088 8,270
Due 2009 8.44% 4,333 4,667
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
Due 1999 8.75% 1,425 -
Due 2008 8.75% 1,013 1,063
Notes payable
Due through 2001 prime plus .50% 756 696
------- -------
31,615 33,324
Less current portion 2,090 3,495
------- -------
Total long-term debt 29,525 29,829
------- -------
Capital lease obligations 275 530
Less current portion 229 256
------- -------
Total capital lease obligations 46 274
------- -------
Total capitalization $74,738 $72,217
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 24
<TABLE>
Consolidated Statements of
Common Stockholders'Equity EnergyNorth, Inc.
<CAPTION>
Common stock Total common
$1.00 Amount in Retained stockholders'
(In thousands, par excess earnings equity
except per share amounts) value of par
<S> <C> <C> <C> <C>
Balance, September 30, 1993 $3,104 $28,229 $6,721 $38,054
Net income - - 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
Net income - - 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
Net income - - 6,078 6,078
Common stock
- cash dividend ($1.19 per share) - - (3,827) (3,827)
Issuance of common stock under the
Dividend Reinvestment and
Stock Purchase Plan 43 759 - 802
------ ------- ------- -------
Balance, September 30, 1996 $3,239 $30,342 $11,586 $45,167
====== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements
<PAGE> 25
<TABLE>
Consolidated Statements of Cash Flows EnergyNorth, Inc.
<CAPTION>
(In thousands)
For the years ended September 30, 1996 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 6,078 $ 4,104 $ 5,422
Noncash items:
Depreciation and amortization 6,606 5,841 5,594
Deferred taxes and investment tax credits, net 1,081 1,106 1,347
Changes in:
Accounts receivable, net 103 90 (367)
Unbilled revenues 4 (42) (76)
Inventories (931) (1) 716
Prepaid expenses and other 37 (115) 342
Deferred gas costs (9,428) 909 5,499
Accounts payable 1,421 (80) 281
Accrued liabilities (287) (253) (102)
Accrued/prepaid taxes 1,495 (403) (599)
Payments for environmental costs and other (823) (2,550) (1,400)
----------------------------
Net cash provided by operating activities 5,356 8,606 16,657
----------------------------
Cash flows from investing activities:
Additions to property (8,783) (7,915) (7,731)
----------------------------
Cash flows from financing activities:
Issues of common stock 802 777 669
Issues of long-term debt 1,827 412 262
Change in notes payable to banks 7,785 1,750 (3,050)
Increase in inventory purchase obligation 9,284 6,770 9,962
Change in customer deposits and other 88 13 120
Cash dividends on common stock (3,826) (3,545) (3,367)
Refunding requirements:
Repayment of long-term debt (3,536) (2,095) (1,731)
Repayment of capital lease obligations (256) (272) (264)
Repayment of inventory purchase obligation (8,546) (6,974) (9,655)
----------------------------
Net cash provided by (used for) financing activities 3,622 (3,164) (7,054)
----------------------------
Net increase (decrease) in cash and temporary
cash investments 195 (2,473) 1,872
Cash and temporary cash investments, beginning of year 575 3,048 1,176
----------------------------
Cash and temporary cash investments, end of year $ 770 $ 575 $ 3,048
============================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 26
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
revenues 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 ("CGA")
clause 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> 27
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, 1996, 1995 and
1994. The depreciation rates for nonregulated property, plant
and equipment were 8.2%, 7.8% and 8.0% for the years ended
September 30, 1996, 1995 and 1994, 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, 1996, regulatory assets include $6.8
million for environmental investigation and disposal costs and
$2.4 million of unrecovered deferred state income taxes (see Note 7).
The unamortized cost of issuing debt at September 30, 1996 is
$675,000. 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.
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for 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 any assets, including regulatory assets, which are
no longer probable of recovery through future revenues, be
revalued based on estimated future cash flows. If the
revaluation is less than the book value of the asset, an
impairment loss would 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 will have a material impact on
the Company's financial position or results of operations.
Investment Tax Credits
Investment tax credits are being amortized over the estimated
useful life of the property that gave rise to the credit.
Fair Value of Financial Instruments
Because of the short maturity of certain assets, which include
cash, temporary cash investments and accounts receivable, and
certain liabilities, which include accounts payable and notes
payable to banks, these instruments are stated at amounts that
approximate fair value.
<PAGE> 28
If long-term debt outstanding at September 30, 1996 was
refinanced using new issue debt rates of interest that on average
are lower than the outstanding rates, the present value of those
obligations would increase from the amounts outstanding on the
September 30, 1996 balance sheet by 10.8%.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and assumptions that affect assets and liabilities, the
disclosure of contingent assets and liabilities, and revenues and
expenses. Actual amounts could differ from those estimates.
Reclassifications
Reclassifications are made periodically to previously issued
financial statements to conform to the current year's
presentation.
Note 2. Cash Flows
<TABLE>
Supplemental disclosures of cash flow information are as follows
(in thousands):
<CAPTION>
1996 1995 1994
- -----------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Interest (net of amount capitalized) $3,642 $4,415 $3,657
Income taxes 899 1,074 1,861
</TABLE>
In preparing the accompanying consolidated statements of cash
flows, all highly liquid investments having maturities of three
months or less when acquired 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 credit line and interest at prime (8.25% at September 30, 1996)
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 1997.
As of September 30, 1996 and 1995, the gas inventories under the
trust agreement and controlled by the Company totaled $7.8
million and $7.1 million, respectively, and are included in
<PAGE> 29
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, 1996, the Company had available $13.0 million
under various unsecured bank lines of credit that are renewed
annually, $9.5 million of which was outstanding. The weighted
average interest rate on borrowings outstanding on September 30,
1996 was 6.6%. 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.
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.
<TABLE>
The aggregate amounts of principal due for all long-term debt for
each of the five years subsequent to September 30, 1996 are as
follows (in thousands):
<CAPTION>
Fiscal year Amount
- -----------------------------------------------------------------
<S> <C>
1997 $2,090
1998 2,035
1999 2,706
2000 1,662
2001 1,601
</TABLE>
Note 6. 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% 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% 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% or more of its consolidated assets or
earning power is sold or transferred, any person acquires 15% 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
<PAGE> 30
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% 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 7. 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 that SFAS No. 109 will significantly impact
future results of operations or cash flows based on current
ratemaking policy.
At September 30, 1996 and 1995, the SFAS No. 109 regulatory
liability amounted to $1.0 million and $1.1 million,
respectively, for the tax benefit of unamortized investment tax
credits, and $339,000 and $384,000, 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; therefore, no deferred state income
taxes related to temporary differences were recorded.
<PAGE> 31
<TABLE>
The tax effects of cumulative differences that gave rise to the
deferred tax liabilities and deferred tax assets for the years
ended September 30, 1996 and 1995 were as follows (in thousands):
<CAPTION>
1996 1995
- -------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Contributions in aid of construction $ 696 $ 666
Unamortized investment tax credits 636 683
Allowance for doubtful accounts 468 367
Deferred gas costs - 1,373
Other 910 729
-----------------
Total deferred tax assets 2,710 3,818
-----------------
Deferred tax liabilities:
Property-related 15,650 14,701
Deferred gas costs 1,773 -
Environmental costs 1,499 1,445
Other 1,461 1,321
-----------------
Total deferred tax liabilities 20,383 17,467
-----------------
Net deferred tax liability $17,673 $13,649
=================
<CAPTION>
Deferred income taxes were classified in the accompanying
consolidated balance sheets at September 30, 1996 and 1995 as
follows (in thousands):
1996 1995
- -------------------------------------------------------------------
<S> <C> <C>
Current $ 1,148 $(1,531)
Long-term 16,525 15,180
-----------------
Total $17,673 $13,649
=================
<CAPTION>
The components of Federal and state income taxes reflected in the
accompanying consolidated statements of income for the years
ended September 30, 1996, 1995 and 1994 were as follows (in
thousands):
1996 1995 1994
- --------------------------------------------------------------
<S> <C> <C> <C>
Federal:
Current $ (32) $1,090 $2,165
Deferred 3,165 625 539
Investment tax credits (140) (141) (145)
--------------------------
Total Federal 2,993 1,574 2,559
--------------------------
State:
Current (65) 254 47
Deferred 707 144 10
--------------------------
Total state 642 398 57
--------------------------
Total provision for income taxes $3,635 $1,972 $2,616
==========================
</TABLE>
<PAGE> 32
<TABLE>
The total Federal and state income tax provision, as a percentage
of income before Federal and state income taxes, was 37.4%, 32.5%
and 32.5% for the years ended September 30, 1996, 1995 and 1994,
respectively. The following table reconciles the income tax
provision calculated using the Federal statutory tax rate of 34%
to the book provision for Federal and state income taxes (in
thousands):
<CAPTION>
1996 1995 1994
- ------------------------------------------------------------------
<S> <C> <C> <C>
Tax calculated at statutory rate $3,302 $2,066 $2,733
Increase (reduction) in effective
tax resulting from:
Amortization of investment tax credit (140) (141) (145)
Adjustment due to change in tax rates (28) (28) (28)
State taxes, net of Federal tax benefit 424 266 38
Other, net 77 (191) 18
--------------------------
Total provision for income taxes $3,635 $1,972 $2,616
==========================
</TABLE>
Note 8. 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.
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.
<TABLE>
Net periodic pension cost included the following components (in
thousands):
<CAPTION>
1996 1995 1994
- -----------------------------------------------------------------
<S> <C> <C> <C>
Service cost for benefits earned $ 624 $ 614 $ 592
Interest cost on projected
benefit obligations 1,193 1,138 1,073
Actual return on plan assets (1,230) (2,085) 542
Net amortization and deferral (103) 885 (1,647)
-----------------------------
Net periodic pension cost $ 484 $ 552 $ 560
=============================
</TABLE>
<PAGE> 33
<TABLE>
<CAPTION>
The following table sets forth the funded status of the plans at
September 30, 1996 and 1995 (in thousands):
<S> <C> <C> <C> <C>
1996 1995
Accumulated Accumulated
Assets benefits Assets benefits
exceed exceed exceed exceed
accumulated assets accumulated assets
benefits (unfunded) benefits (unfunded)
----------- ----------- ----------- -----------
Vested benefit obligation $12,807 $ 1,017 $11,283 $ 860
=========== =========== =========== ===========
Accumulated benefit obligation $13,336 $ 1,127 $11,804 $ 947
=========== =========== =========== ===========
Projected benefit obligation $16,239 $ 1,645 $14,877 $ 1,321
Plan assets at fair value 16,584 - 15,243 -
----------- ----------- ----------- -----------
Funded status 345 (1,645) 366 (1,321)
Unrecognized transition
(asset) obligation (522) 375 (605) 437
Unrecognized prior service cost 622 7 709 -
Unrecognized net (gain)loss 777 280 376 (14)
Additional minimum liability - (144) - (49)
----------- ----------- ----------- -----------
Prepaid pension (pension liability) $ 1,222 $(1,127) $ 846 $ (947)
=========== =========== =========== ===========
<CAPTION>
Assumptions used to determine the projected benefit obligation
were as follows:
1996 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.5% 7.5% 7.5%
Rate of increase in future compensation levels 4.0% - 5.5% 4.5% - 5.5% 4.5% - 5.5%
Expected long-term rate of return on assets 9.0% 9.0% 9.0%
</TABLE>
Plan assets are invested in common stocks and bonds.
The Company has employee 401(k) savings and investment plans
covering substantially all employees. The Company made
contributions of $216,000, $210,000 and $178,000 for the years
ended September 30, 1996, 1995 and 1994, 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 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 1996, 1995 and 1994 for providing
<PAGE> 34
postretirement benefits, including amortization of the
accumulated projected benefit obligation over a 20-year period,
was $588,000, $646,000 and $878,000, respectively.
The Company has funded 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.
<TABLE>
The following table sets forth the funded status of the plans at
September 30, 1996 and 1995 (in thousands):
<CAPTION>
1996 1995
- ----------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation as of July 31:
Retirees $ 2,383 $ 2,217
Fully eligible active plan participants 933 904
Other active participants 1,686 1,745
------- -------
5,002 4,866
Plan assets at fair market value (1,704) (1,193)
Unrecognized transition obligation (4,445) (4,706)
Unrecognized net gain 1,319 1,209
------- -------
Accrued postretirement benefit cost at July 31 172 176
Contributions for the two-month period ending September 30 144 159
------- -------
Accrued postretirement benefit cost at September 30 $ 28 $ 17
======= =======
<CAPTION>
The components of net periodic postretirement benefit cost at
September 30, 1996 and 1995 are as follows (in thousands):
1996 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
Service cost-benefits attributed to services during the year $ 143 $ 139
Interest cost on accumulated postretirement benefit obligation 358 347
Actual asset return (104) (149)
Net amortization and deferral 191 309
----- -----
Net periodic postretirement benefit cost $ 588 $ 646
===== =====
</TABLE>
An 11% average annual rate of increase in the per capita costs of
covered health care benefits was assumed for fiscal year 1996,
reduced 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 $434,000 increase in the accumulated postretirement benefit
obligation as of July 31, 1996 and an increase in the aggregate
of the service cost and interest cost components of net periodic
postretirement benefit cost for fiscal year 1996 of $37,000. 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 bonds.
<PAGE> 35
Note 9. 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.
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 from coal, a process used
through the mid-1900's that produced by-products that may be
considered contaminated or hazardous under current law, and some
of which may still be present at such facilities. The Company
accrues environmental investigation and clean-up costs with
respect to former manufacturing sites and other environmental
matters when it is probable that a liability exists and the
amount or range of amounts is reasonably certain.
A former manufactured gas facility in Concord, New Hampshire has
been investigated and partially remediated. Disposal of the
contents of the gasholder situated at this former gas
manufacturing facility has been completed. Total remediation
costs amounted to approximately $3.5 million and were recorded in
deferred charges. Recovery of costs from customers began on July
1, 1995 and will extend over a seven-year period. The
unamortized balance of $3.0 million at September 30, 1996 is
excluded from rate base.
The New Hampshire Department of Environmental Services ("NHDES")
has selected a remedial action for a portion of the Concord site
at which wastes were disposed of between the late 1800's and
mid-1900's. The estimated cost of the remedial action ranges from
$2.9 million to $4.8 million, and the Company has recorded $2.9
million at September 30, 1996 in deferred charges.
The Company is pursuing recovery from its insurance carriers as
well as from insurance carriers of its predecessors with respect
to the Concord site. In addition, the Company is pursuing
recovery against an entity that the Company alleges owned or
operated the manufactured gas plant during the late 1800's and
early 1900's.
The Company and another utility company have been directed by the
NHDES to conduct an environmental site characterization of a
former manufactured gas plant in Laconia, New Hampshire. The
Laconia manufactured gas plant operated between approximately
1887 and 1952, and the Company owned and operated the facility
for approximately the last seven years of its active life.
Without admitting liability, the Company and the other utility
have entered
<PAGE> 36
into an agreement under which costs of the site characterization
are shared. The Company's share of the costs of the site
characterization and a report to the NHDES, which is underway, is
expected to total $88,000 and has been recorded in deferred
charges as of September 30, 1996. The Company is currently
unable to predict the magnitude of any liability that may be
imposed on it for the cost of additional studies or the
performance of a 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 with respect to environmental matters. The
Company intends to seek and expects to receive approval of rate
recovery methods with respect to environmental matters after it
has determined the extent of contamination, received
recommendations with regard to remediation and commenced
remediation efforts.
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, 1996, the Company has been billed $5.9 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 $5.1 million and will
continue to be billed over a period of approximately one to three
years. At September 30, 1996, the Company has recorded an
estimated liability of $1.7 million for transition costs and a
corresponding regulatory asset.
<PAGE> 37
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, 1996
and 1995, 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, 1996. 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, 1996
and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended September
30, 1996, in conformity with generally accepted accounting
principles.
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.
/s/ Arthur Andersen LLP
Boston, Massachusetts
November 1, 1996
<PAGE> 38
<TABLE>
(b) Supplementary Financial Information
<CAPTION>
Selected Quarterly Financial Data (Unaudited) EnergyNorth, Inc.
<S> <C> <C> <C> <C> <C>
(In thousands, Operating Operating Net income Earnings Cash
except per share revenues income (loss) (loss) dividend
amounts) (loss) per share paid per
share
First Quarter
1996 $25,976 $ 4,653 $ 3,751 $1.17 $.29
1995 22,472 3,155 2,324 .74 .28
Second Quarter
1996 39,661 7,379 6,671 2.07 .29
1995 35,209 6,743 5,904 1.87 .28
Third Quarter
1996 14,901 (1,104) (1,693) (.53) .305
1995 13,678 (717) (1,487) (.47) .28
Fourth Quarter
1996 8,416 (1,981) (2,651) (.82) .305
1995 7,447 (2,178) (2,637) (.83) .28
</TABLE>
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, 1996.
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 and 4 of the Registrants' Proxy Statement
for its Annual Meeting to be held February 5, 1997, 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 5
through 7 of the Registrant's Proxy Statement for its Annual
Meeting to be held February 5, 1997.
<PAGE> 39
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information called for by this Item is incorporated by
reference to pages 2 and 3 of the Registrant's Proxy Statement
for its Annual Meeting to be held February 5, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information called for by this Item is incorporated by
reference to "Compensation Committee Interlocks and Insider
Participation" on page 5 of the Registrant's Proxy Statement for
its Annual Meeting to be held February 5, 1997.
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, 1996, 1995 and 1994 21
Consolidated Balance Sheets at September 30, 1996 and 1995 22
Consolidated Statements of Capitalization at September 30,
1996 and 1995 23
Consolidated Statements of Common Stockholders' Equity for
the years ended September 30, 1996, 1995 and 1994 24
Consolidated Statements of Cash Flows for the years ended
September 30, 1996, 1995 and 1994 25
Notes to Consolidated Financial Statements 26-36
Report of Independent Public Accountants 37
<PAGE> 40
(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:
Schedule Page No. in
Number Description this Report
II Consolidated Valuation and Qualifying Accounts
for the three years ended September 30, 1996 41
Report of Independent Public Accountants 37
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, 1996.
(c) Exhibits - See Exhibit Index on pages 43 through 45.
(d) Financial Statement Schedules
<PAGE> 41
SCHEDULE II
ENERGYNORTH, INC.
CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
<TABLE>
<CAPTION>
Reserves which are deducted in the balance sheets
from assets to that they apply:
Additions
----------------------
<S> <C> <C> <C> <C> <C> <C>
Year ended Balance at Charged to Charged to Balance
September beginning costs and other at end of
30, Description of period expenses accounts(1) Deductions period
--------------------------------------------------------------------------------------------------
1996 Allowance for
doubtful accounts $ 950 $1,137 $143 $1,019 $1,211
1995 Allowance for
doubtful accounts 1,050 982 172 1,254 950
1994 Allowance for
doubtful accounts 890 1,307 149 1,296 1,050
</TABLE>
________________________________________
(1) Represents recoveries on accounts previously written off
<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 20, 1996 by: /s/ 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 20, 1996.
<TABLE>
<S> <C>
/s/ Robert R. Giordano Director, President and Chief
Robert R. Giordano Executive Officer (principal
executive officer)
/s/ Michelle L. Chicoine Vice President,Treasurer and Chief
Michelle L. Chicoine Financial Officer (principal
financial officer)
/s/ David A. Skrzysowski Vice President & Controller
David A. Skrzysowski (principal accounting officer)
/s/ Edward T. Borer Director
Edward T. Borer
/s/ N. George Mattaini Director
N. George Mattaini
/s/ Constance B. Girard-diCarlo Director
Constance B. Girard-diCarlo
/s/ Richard B. Couser Director
Richard B. Couser
/s/ Sylvio L. Dupuis Director
Sylvio L. Dupuis
</TABLE>
<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 to EnergyNorth, Inc.'s Post-Effective
Amendment No. 2 to Registration Statement on Form S-3,
No. 33-58127, dated November 21, 1996.
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 Fifth Supplemental Indenture, dated as of February 1,
1995, to Gas Service, Inc. General and Refunding
Mortgage Indenture, dated as of June 30, 1987.
4.5 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.
4.6 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.
<PAGE> 44
10.1 Gas transportation agreement (FT-A), dated as of
September 1, 1993, between Tennessee Gas Pipeline
Company and EnergyNorth Natural Gas, Inc. is
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
incorporated by reference to Exhibit 10.2 of
EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for the
fiscal year ended September 30, 1995.
10.3 Supplemental Executive Retirement Plan of
EnergyNorth, Inc., as amended.
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 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.
10.6 Amendment to Deferred Compensation Agreement,
dated as of October 1, 1996, between Robert R. Giordano
and the Registrant.
10.7 Amendment to Deferred Compensation Agreement,
dated as of October 1, 1996, between Albert J. Hanlon
and the Registrant.
10.8 Deferred Compensation Agreement, dated as of
November 30, 1993, between Richard P. Demers and the
Registrant, as amended.
10.9 Deferred Compensation Agreement, dated as of November
30, 1995, between Frank L. Childs and the Registrant, as
amended.
10.10 Deferred Compensation Agreement, dated as of November
30, 1993, between Michelle L. Chicoine and the
Registrant, as amended.
10.11 EnergyNorth, Inc. 1992 Directors' Deferred
Compensation Plan, as amended.
10.12 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.
10.13 Amendment No. 1 to Consulting Agreement dated as
of February 7, 1996 between N. George Mattaini and the
Registrant.
<PAGE> 45
10.14 Employment Agreement, dated as of December 1,
1995, between Robert R. Giordano and the Registrant is
incorporated by reference to Exhibit 10.9 of
EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for the
fiscal year ended September 30, 1995.
10.15 Employment Agreement, dated as of December 1,
1995, between Albert J. Hanlon and the Registrant is
incorporated by reference to Exhibit 10.11 of
EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for the
fiscal year ended September 30, 1995.
10.16 Management Continuity Agreement, dated as of
December 7, 1995, between Robert R. Giordano and the
Registrant is incorporated by reference to Exhibit 10.12
of EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for
the fiscal year ended September 30, 1995.
10.17 Management Continuity Agreement, dated as of
December 7, 1995, between Albert J. Hanlon and the
Registrant is incorporated by reference to Exhibit 10.14
of EnergyNorth, Inc.'s Form 10-K (File No. 0-11035) for
the fiscal year ended September 30, 1995.
10.18 Management Continuity Agreement, dated as of
December 2, 1996, between Michelle L. Chicoine and the
Registrant.
10.19 Management Continuity Agreement, dated as of
December 2, 1996, between Frank L. Childs and the
Registrant.
10.20 Management Continuity Agreement, dated as of
December 7, 1995, between Richard P. Demers and the
Registrant.
10.21 EnergyNorth, Inc. Key Employee Performance and
Equity Incentive Plan, as amended, is incorporated by
reference to Exhibit 10.15 of EnergyNorth, Inc.'s Form
10-K (File No. 0-11035) for the fiscal year ended
September 30, 1995.
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.
27 Financial Data Schedule of the Registrant.
99 EnergyNorth, Inc.'s Dividend Reinvestment and
Stock Purchase Plan, as amended is incorporated by
reference to Exhibit 99 of EnergyNorth Inc.'s Post-
Effective Amendment No. 2 to Registration Statement on
Form S-3, No. 33-58127, dated November 21, 1996.
<PAGE>
ENERGYNORTH NATURAL GAS, INC.
(Formerly Gas Service, Inc.)
TO
BANK OF NEW HAMPSHIRE
Trustee
FIFTH SUPPLEMENTAL INDENTURE
Dated as of
February 1, 1995
Supplemental
To
General and Refunding Mortgage Indenture
Dated as of June 30, 1987
<PAGE>
FIFTH SUPPLEMENTAL INDENTURE
THIS FIFTH SUPPLEMENTAL INDENTURE dated and entered into as
of February 1, 1995, by and between ENERGYNORTH NATURAL GAS,
INC., a corporation duly organized and existing under and by
virtue of the laws of the State of New Hampshire, having its
principal office and place of business in Manchester, County of
Hillsborough, in the State of New Hampshire (hereinafter called
the "Company") and BANK OF NEW HAMPSHIRE, a New Hampshire trust
company, as successor trustee to Bank of New Hampshire, N.A.,
having its principal corporate trust office and place of business
in Concord, New Hampshire, and a current mailing address of 143
North Main Street, Concord, New Hampshire 03301, as Trustee
(hereinafter referred to as the "Trustee") under the General and
Refunding Mortgage Indenture dated as of June 30, 1987 (the
"Original Indenture") from Gas Service, Inc. (corporate
predecessor of the Company), as heretofore amended and
supplemented by a First Supplemental Indenture dated as of
October 1, 1988, a Second Supplemental Indenture dated as of
August 31, 1989, a Third Supplemental Indenture dated as of
September 1, 1990, and a Fourth Supplemental Indenture dated as
of January 10, 1992, (said General and Refunding Mortgage
Indenture together with the First Supplemental Indenture, the
Second Supplemental Indenture, the Third Supplemental Indenture,
the Fourth Supplemental Indenture and this Fifth Supplemental
Indenture being sometimes hereinafter referred to as the
"Indenture"); and
WHEREAS, Section 17.02 of the Original Indenture provides
that the Company and the Trustee, with the consent of the holders
of not less than sixty-six and two-thirds percent (66 2/3%) in
principal amount of the bonds of each series outstanding under
this Indenture, may modify certain provisions contained in this
Indenture, subject to certain limitations contained within said
Section 17.02; and
WHEREAS, the Company has obtained the written authorization
of the holders of all bonds outstanding under the Indenture
consenting to and authorizing the amendments and revisions to the
Original Indenture, as previously amended, that are contained
within this Fifth Supplemental Indenture; and
WHEREAS, the Company has, by proper resolution of its Board
of Directors, duly voted to execute, acknowledge and file with
the Trustee and to request the Trustee to execute this Fifth
Supplemental Indenture; and
<PAGE>
WHEREAS, the Company and the Trustee desire to amend Section
4.01(4)(a) of the Original Indenture in order to enable the
Company to obtain real property title insurance in connection
with the addition of real property mortgaged under the Indenture
in lieu of obtaining an Opinion of Counsel as to title;
NOW THEREFORE, pursuant to the amendment power contained in
Section 17.02 of the Original Indenture, the Company hereby
covenants and agrees with the Trustee as follows:
ARTICLE I
Amendment to Gas Service General and
Refunding Mortgage Indenture
1.1 Article I of the Original Indenture shall be
amended by adding to Section 1.01 the following defined term:
"(59) "Acceptable Title Policy" means a
current lender's policy or policies of title insurance
issued by a reputable title insurance company or
companies, reasonably acceptable to the Trustee,
written on a standard American Land Title Association
form or forms and insuring the Trustee in its capacity
as Trustee under the Indenture (i) in an amount at
least equal to the amount attributable to each tract
and parcel of land and improvement included in Property
Additions as set forth on the Certificates delivered in
compliance with Section 4.01, (ii) stating that the
Company has title in fee simple to all tracts and
parcels of land and improvements included in Property
Additions, subject only to Permitted Liens, (iii)
stating that any easements or rights of way, which are
described in the Certificate, have been duly obtained,
and (iv) stating that the Indenture has been recorded
and constitutes a valid, perfected and enforceable lien
upon the Property Additions described in the
Certificate, subject only to Permitted Liens."
1.2 Article I of the Original Indenture shall be
amended by amending and restating clause (c) of the definition of
"Trust Moneys" set forth in Section 1.01(56) as follows:
"(c) as proceeds of insurance upon any part
of the trust estate, including proceeds of any title
insurance; or"
<PAGE>
1.3 Article IV of the Original Indenture shall be
amended by adding at the end of Section 4.01(4)(a) the following:
"provided however, that if the Company has
obtained an Acceptable Title Policy, the Opinion of
Counsel may state in lieu of such opinion that the
Company has obtained a title policy insuring the
matters covered by clauses (i) through (iv) of the
definition of Acceptable Title Policy;"
ARTICLE II
Miscellaneous
2.1 The provisions of this Fifth Supplemental
Indenture shall be effective from and after the execution hereof;
and the Indenture, as previously and as hereby modified and
amended, shall remain in full force and effect.
2.2 Each reference in the Indenture to any article,
section, term or provision of the Indenture shall mean and be
deemed to refer to such article, section, term or provision of
the Indenture, as amended, except where the context otherwise
indicates.
2.3 In the event of any inconsistency between the
provisions of this Fifth Supplemental Indenture and the
provisions of the Original Indenture, the First Supplemental
Indenture, the Second Indenture, the Third Supplemental
Indenture, or the Fourth Supplemental Indenture, this Fifth
Supplemental Indenture shall control.
2.4 All terms contained in the Fifth Supplemental
Indenture which are defined in the Original Indenture, as
amended and supplemented by the First Supplemental Indenture, the
Second Supplemental Indenture, the Third Supplemental Indenture
and the Fourth Supplemental Indenture, shall, except as otherwise
specifically provided herein or as the context clearly otherwise
indicates, have the meanings given to such terms in the Original
Indenture, as so amended and supplemented. The use and
construction herein of terms is in accordance with the use and
construction thereof in the Original Indenture, as amended and
supplemented by the First Supplemental Indenture, the Second
Supplemental Indenture, the Third Supplemental Indenture and the
Fourth Supplemental Indenture.
<PAGE>
2.5 This Fifth Supplemental Indenture shall become
void when the Indenture shall be void.
2.6 The covenants, stipulations, promises and
agreements contained in this Fifth Supplemental Indenture, made
by or on behalf of the Company or the Trustee, respectively,
shall inure to the benefit of and bind their respective
successors and assigns.
2.7 This Fifth Supplemental Indenture is, among other
things, a security agreement and is signed as such by the Company
and by the Trustee as secured party.
2.8 This Fifth Supplemental Indenture may be
simultaneously executed in several counterparts, each of which
shall be an original and all of which shall constitute but one
and the same instrument.
2.9 The cover of this Fifth Supplemental Indenture and
all article and descriptive headings are inserted for convenience
only, and shall not affect any construction or interpretation
hereof.
2.10 This Fifth Supplemental Indenture shall be
governed by, and construed and enforced in accordance with, the
laws of the State of New Hampshire.
ARTICLE III
Confirmation
3.1 As supplemented and modified by this Fifth
Supplemental Indenture, this Indenture is in all respects
ratified and confirmed, and this Indenture and the First, Second,
Third, Fourth and Fifth Supplemental Indentures shall be read,
taken and construed as one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, ENERGYNORTH NATURAL GAS, INC. has caused
this instrument to be executed in its corporate name by its
President or one of its Vice-Presidents and by its Treasurer or
one of its Assistant Treasurers and its corporate seal to be
hereunto affixed and to be attested to by its Secretary or
Assistant Secretary and BANK OF NEW HAMPSHIRE, to evidence its
acceptance of the trust hereby created, has caused this
instrument to be executed in its corporate name by its Trust
Officer and its corporate seal to be hereunto affixed and to be
attested by its Secretary, all as of the day and year first above
written.
ENERGYNORTH NATURAL GAS, INC.
By: /s/ Michael J. Mancini, Jr.
Its: Senior Vice President
and /s/ Michelle L. Chicoine
Its: Treasurer
[Corporate Seal]
ATTEST:
/s/ Michelle L. Chicoine
Its Secretary
Signed, sealed and delivered
by EnergyNorth Natural Gas, Inc.
in the presence of:
/s/ Bonnie J. Richards
BANK OF NEW HAMPSHIRE
By: /s/ Lorraine M. Graciano
Its: Trust Officer
[Corporate Seal]
ATTEST
/s/ Lorraine M. Graciano
Its: Trust Officer
Signed, sealed and delivered
by Bank of New Hampshire
in the presence of:
/s/ Pauline P. Kolf
<PAGE>
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH, SS.
On this 9th day of February, 1995 before me personally
appeared Michael J. Mancini, Jr. and Michelle L. Chicoine, to
me personally known, who being by me duly sworn, did say that
they are Sr. Vice President & CFO and Vice President & Treasurer,
respectively, of ENERGYNORTH NATURAL GAS, INC., that the seal
affixed to the foregoing instrument is the corporate seal of said
corporation, and that said instrument was signed by them and
sealed on behalf of said corporation, and that said instrument
was signed by them and sealed on behalf of said corporation by
authority of its Board of Directors; and the said
Michael J. Mancini, Jr. and Michelle L. Chicoine acknowledged
said instrument to be the free act and deed of said corporation.
/s/ Bonnie J. Richards
Notary Public
[NOTARIAL SEAL]
My commission expires October 27, 1997
STATE OF NEW HAMPSHIRE
COUNTY OF Merrimack, SS.
On this 16th day of February, 1995 before me personally
appeared Lorraine M. Graciano and ______________________, to
me personally known, who being by me duly sworn, did say that
they are Trust Officer and _________________________,
respectively, of BANK OF NEW HAMPSHIRE, that the seal affixed to
the foregoing instrument is the corporate seal of said
corporation, and that said instrument was signed by them and
sealed on behalf of said corporation, and that said instrument
was signed by them and sealed on behalf of said corporation by
authority of its Board of Directors; and the said
Lorraine M. Graciano and _______________________ acknowledged
said instrument to be the free act and deed of said corporation.
/s/ Pauline P. Kolf
Notary Public
[NOTARIAL SEAL]
My commission expires October 16, 1996
<PAGE>
ENERGYNORTH, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
<PAGE>
TABLE OF CONTENTS
ARTICLE I
1.01 Name and Purpose...............................................1
1.02 Effective Date.................................................1
ARTICLE II
2.01 "Accrued Supplemental Benefit".................................2
2.02 "Actuarial Equivalent".........................................2
2.03 "Annual Compensation"..........................................2
2.04 "Average Annual Compensation"..................................3
2.05 "Board of Directors"...........................................3
2.06 "Benefit Service"..............................................3
2.07 "Code".........................................................3
2.08 "Company"......................................................3
2.09 "Eligible Employee"............................................3
2.10 "Employee".....................................................3
2.11 "Governmental Plan Benefit"....................................3
2.12 "Plan".........................................................3
2.13 "Qualified Plan"...............................................4
2.14 "Retirement Plan"..............................................4
2.15 "Retirement Plan Benefit"......................................4
2.16 "Social Security Benefit"......................................4
2.17 "Supplemental Benefit".........................................5
2.18 "Trust Agreement"..............................................6
ARTICLE III
3.01 Normal Retirement Date.........................................7
3.02 Early Retirement Date..........................................7
3.03 Deferred Retirement Date.......................................7
ARTICLE IV
4.01 Supplemental Normal Retirement Benefit........................8
4.02 Supplemental Earlv Retirement Benefit.........................8
4.021 Temporary Annuity.............................................9
4.03 Supplemental Deferred Retirement Benefit......................9
4.04 Accrued Supplemental Benefit Before October 1,1995 ...........9
4.041 Accrued Supplemental Benefit on or After October 1,1995 ......9
4.05 Offset Amounts Fixed.........................................10
4.06 Disclosure...................................................10
4.061 Noncompliance with Disclosure................................10
<PAGE>
ARTICLE V
5.01 Normal Form of Payment.......................................11
5.02 Joint and Survivor Annuity...................................11
5.03 Optional Forms...............................................11
5.04 Time of Payments.............................................12
ARTICLE VI
6.01 Vested Benefit...............................................13
6.011 Change in Control............................................13
6.02 Early Commencement of Vested Benefit.........................13
ARTICLE VII
7.01 Death of Eligible Employee...................................14
7.02 Surviving Spouse Benefit.....................................14
7.03 Death Benefit................................................14
7.04 Beneficiary Entitled to Payment..............................14
ARTICLE VIII
8.01 Funding......................................................15
8.02 Change in Control............................................15
ARTICLE IX
9.01 Non-Guarantee of Employment..................................16
9.02 Rights Under Retirement Plan.................................16
9.03 Amendments/Termination.......................................16
9.04 Nonassignability.............................................16
9.05 Plan Administration..........................................16
9.06 Suspension of Benefits.......................................17
9.07 Successor Company............................................17
9.08 Governing Law................................................17
APPENDIX A...............................................................18
APPENDIX B...............................................................19
APPENDIX C...............................................................23
<PAGE> 1
ENERGYNORTH, INC.
SUPPLEMENTAL EXECUTIVE
RETIREMENT PLAN
ARTICLE I
NAME, PURPOSE AND EFFECTIVE DATE
1.01 Name and Purpose. The supplemental executive retirement
plan set forth herein shall be known as "The EnergyNorth, Inc. Supplemental
Executive Retirement Plan." The plan is established, and shall be
maintained, solely for the purpose of providing supplemental retirement
benefits for executive officers of EnergyNorth, Inc. who are so designated to
participate in the SERP by the Board of Directors.
1.02 Effective Date. The Plan was established effective as of
January 1, 1985. The effective date of this amendment and restatement shall
be October 1, 1995. Unless otherwise specified herein, the terms of this
restatement shall apply to Eligible Employees who retire or terminate their
employment with the Company after the effective date of this statement.
<PAGE> 2
ARTICLE II
DEFINITIONS
Whenever used in this Plan, unless the context clearly indicates
otherwise,the following terms shall have the following meanings:
2.01 "Accrued Supplemental Benefit" shall mean the amount
calculated under Section 4.04 based on the Eligible Employee's completed
years of Benefit Service and Average Annual Compensation as of the date of
determination.
2.02 "Actuarial Equivalent" shall have the same meaning as set
forth under Section 2.01 of the Retirement Plan (see Appendix B of this
Plan).
2.03 "Annual Compensation" means the compensation payable by the
Company to an employee for the previous calendar year and reported to the
Federal government for Federal income tax purposes on Form W-2, plus: (i)
the Employee's incentive award amount for the Company's fiscal year
ending in such calendar year under the Key Employee Performance and Equity
Incentive Plan, regardless of when such award is paid or the manner of
payment; provided, however, that in the event that shares of Company Common
Stock awarded to the Employee are forfeited, the amount of the award
attributable to such shares shall not be considered Annual Compensation;
ii) any amounts otherwise payable in such calendar year that are deferred as
part of any compensation agreement with the Employee or under a voluntary non-
qualified arrangement with the company; and (iii) any amounts otherwise
payable in such calendar year that are deferred under a Code Section 401(k)
or 125 plan.
Annual Compensation shall not include any irregular payments from
the Company such as bonuses and severance pay. In addition any amounts
attributable to amounts included as Annual Compensation for a calendar year
under (i), (ii) or (iii) above, shall not again be included in Annual
Compensation when paid in any later year. The determination of the amounts
properly includable or excludable as Annual Compensation hereunder shall be
made by the Board of Directors.
<PAGE> 3
2.04 "Average Annual Compensation" means the average of an Employee's highest
Annual Compensation amounts for any five consecutive years preceding
the later of the Employee's Normal Retirement Date or Deferred
Retirement Date or date of other termination of service, if earlier.
2.05 "Board of Directors" shalll mean the Board of Directors of EnergyNorth,
Inc., in office from time to time.
2.06 "Benefit Service" shall be measured in accordance with Sections 3.08
and 3.09 of the Retirement Plan (see Appendix B of this Plan).
2.07 "Code" shall mean the Internal Revenue Code of 1986, as the same may
be amended from time to time.
2.08 "Company" shall mean EnergyNorth, Inc.
2.09 "Eligible Employee" shall mean any Employee who is an executive
officer, designated by the Board of Directors to participate in the
Plan and who is a Member of Retirement Plan, as defined by Section 2.14
of the Retirement Plan (see Appendix B) and who is named in Appendix A
attached to this Plan.
2.10 "Employee" shall mean any person who, on or after January 1, 1985, is
receiving remuneration directly from the Company for personal services
rendered to the Company (or would be receiving such remuneration except for
any absence from service with the Company within the meaning of Section 3.05
of the Retirement Plan--see appendix B).
2.11 "Governmental Plan Benefit" shall mean any benefit amount payable from a
retirement plan sponsored by a governmental unit for its employees or its
citizens. A Governmental Plan Benefit shall include a Social Security Benefit
and any other similar program maintained by a state, national, provincial or
local government entity.
2.12 "Plan" shall mean the EnergyNorth, Inc., Supplemental Executive
Retirement Plan as set forth herein, together with any and all amendments and
supplements hereto.
<PAGE> 4
2.13 "Qualified Plan" shall mean any employer-sponsored retirement income
benefit plan that meets the qualification requirements of Section 401(a) of
the Code, or any successor section, other than (i) the Retirement
Plan, (ii) the EnergyNorth, Inc. Employee Savings and Investment Plan and
Trust and (iii) a plan for a self-employed individual while an employee of
EnergyNorth, Inc. A Qualified Plan shall also include any simplified employee
pension plan under Section 408 of the Code and any tax-sheltered annuity plan
under Section 403(b) of the Code. For purposes of this Section 2.13 of the Plan
all such plans of prior employers shall be taken into account.
Notwithstanding the foregoing, any benefit provided under a Qualified Plan
which is attributable to the eligible Employee's own salary deferrals
(including any income or gain on such deferral shall be excluded in
determining the benefit payable under such Qualifed Plan for the purpose of
Section 4.01(d).
2.14 "Retirement Plan" shall mean the provisions of the EnergyNorth, Inc.
Retirement Plan for Salaried Employees as may be in effect from time to time.
2.15 "Retirement Plan Benefit" shall mean the amount payable under the
applicable revisions of the Retirement Plan, including Normal, Early and
Deferred Retirement Benefits, Vested Benefits and Death Benefits.
2.16 "Social Security Benefit" means, for the purpose of determining the
Governmental Benefit, the monthly amount as determined by the Committee as an
Old-Age Insurance Benefit under the provisions of Title II of the Federal
Social Security Act payable as of the social security beginning date of such
Eligible Employee. For this purpose, "social security beginning date" shall
be determined according to the following chart:
Age at Termination of Employment Social Security Beginning Date
- -------------------------------- -----------------------------
prior to age 60 65
age 60 62
age 61 62
age 62 or later actual date of retirement
<PAGE> 5
The amount of the Social Security Benefit shall be determined in
accordance with the standard adjustments for early and late retirement
prescribed by Title II of the Federal Social Security Act.
2.161 Notwithstanding anything contained herein to the contrary, in the case of
an Eligible Employee who retires on an Early Retirement Date or who is entitled
to a Vested Benefit under the Retirement Plan, the earnings used in
determining the Social Security Benefit shall be based on the assumption that
the Eligible Employee continues to receive the same Annual Compensation he is
receiving at his Early Retirement Date or termination date until he reaches
age 65.
2.162 The income used for purposes of computing an Eligible Employee's Social
Security Benefit will be his income which is treated as wages for purposes of
the Social Security Act. The Eligible Employee's income earned prior to the
date he becomes an Employee hereunder is estimated by applying a salary scale
projected backwards to his compensation earned on the date he became an
Employee and the salary scale is a level percentage per year, that is not less
than six percent (6%) per annum.
In the event the Eligible Employee furnishes the Company with documentation
from the Social Security Administration of (i) his actual salary history on a
year-by-year basis or (ii) the actual Social Security Benefit awarded to him
by the Social Security Administration, the Eligible Employee's Social
Security Benefit will be adjusted accordingly. Such documentation must be
provided during a reasonable period of six months or longer as determined by
the Company beginning on the later of (i) the date the Eligible Employee ceases
working for the Company and (ii) the date the Eligible Employee is notified of
his entitlement to a benefit under this Plan. If an Eligible Employee's
benefit is adjusted in accordance with Section 2.162, the adjusted benefit
will commence after the date the Eligible Employee furnishes to the Company
documentation of either his actual salary histoy or his actual Social Security
Benefit.
2.17 "Supplemental Benefit" shall mean the amount determined in accordance
with Section 4.01 of this Plan.
<PAGE> 6
2.18 "Trust Agreement" shall mean the provisions of the Grantor Trust
Agreement for the EnergyNorth, Inc. Supplemental Executive Retirement Plan as
may be in effect from time to time.
<PAGE> 7
ARTICLE III
RETIREMENT DATES
3.01 Normal Retirement Date. The Normal Retirement Date of an Eligible
Employee shall be the first day of the month next following the date on which
he reaches age sixty-five.
3.02 Early Retirement Date. The Early Retirement Date of an Eligible
Employee shall be, at his option, the first day of any month following the
date on which the Eligible Employee reaches age fifty-five and completes
fifteen years of Benefit Service.
3.03 Deferred Retirement Date. An Eligible Employee may defer his retirement
past his Normal Retirement Date; in such case his Deferred Retirement Date
shall be the first day the month following the date on which he actually
retires from the Company.
<PAGE> 8
ARTICLE IV
SUPPLEMENTAL BENEFIT AMOUNT
4.01 Supplemental Normal Retirement Benefit. An Eligible Employee who has
completed fifteen years of Benefit Service and who retires on his Normal
Retirement Date shall be entitled to an annual Supplemental Normal Retirement
Benefit equal to the following:
(a) 75% of Average Annual Compensation, less
(b) 100% of any Governmental Plan Benefit, less
(c) 100% of any benefit amount to which the Eligible
Employee is entitled under the Retirement Plan, less
(d) the benefit amount to which the Eligible Employee
is entitled from any Qualified Plan (of a previous
employer or self-employed).
The amount computed above shall then be adjusted actuarially to
reflect the Normal Form of Payment described under Section 5.01.
4.011 For purposes of computing the amount described under Section 4.01 above,
any amounts received as a lump-sum benefit by the Eligible Employee to which
paragraphs (b), (c) or (d) apply shall be converted to an annuity based on the
interest rates and mortality basis determined by the Company. For purposes of
computing the offset amounts in paragraphs (c) and (d) above, any benefit
received by the Eligible Employee shall be adjusted actuarially to reflect the
payment guarantees described in Section 5.01.
4.012 In the case of an Eligible Employee who has completed less than fifteen
years of Benefit Service at Normal Retirement Date, his Supplemental Normal
Retirement Benefit shall be calculated by taking the benefit computed under
Section 4.01(a) pro-rated for less than fifteen years of Benefit Service, then
reduced by the amounts determined under the remaining paragraphs of Section
4.01.
4.02 Supplemental Early Retirement Benefit. An Eligible Employee's annual
Supplemental Early Retirement Benefit shall be equal to the amount determined
under 4.01 payable at the Eligible Employee's option:
<PAGE> 9
(a) commencing at his Early Retirement Date in an amount reduced by
1/4 of 1% for each of the first twenty-four months commencement
precedes the Eligible Employee's sixty-second birthday and by 1/2
of l% for each additional month commencement precedes such date;
(b) commencing on an Early Retirement Date after the Eligible
Employees sixty-second birthday with no reduction for early
commencement; or
(c) commencing after the Eligible Employee has both (i) attained age
60 and (ii) completed twenty-five years of Benefit Service with no
reduction for early commencement notwithstanding the provisions of
subpart (a) hereo
4.021 Temporary Annuity. An Eligible Employee who terminates employment on
or after his sixtieth birthday but prior to his sixty-second birthday shall
receive a temporary annuity commencing on the later of (i) his date of actual
retirement or (ii) the date on which he attains age sixty and ending on the
date on which he attains age sixty-two; provided, however, that in no event
shall an Eligible Employee receive the temporary annuity described herein if
such Eligible Employee is not otherwise receiving payment pursuant another
section of this Article IV. The amount of the monthly benefit provided under
this Section 4.021 shall be the amount of his Social Security Benefit.
4.03 Supplemental Deferred Retirement Benefit. An Eligible Employee's annual
Supplemental Deferred Retirement Benefit shall be computed as in Section 4.01
based upon his Annual Compensation and Benefit Service to his Deferred
Retirement Date.
4.04 Accrued Supplemental Benefit Before October 1, 1995. Effective for
Employees who became Eligible Employees before October 1, 1995, an Eligible
Employee's Accrued Supplemental Benefit at any point in time prior to
retirement shall equal the amount determined under Section 4.01(a) pro-rated
for less than fifteen years of Benefit Service, then reduced by the amounts
determined under the remaining paragraphs of Section 4.01.
4.041 Accrued Supplemental Benefit on or After October 1, 1995. Effective
for Employees who became Eligible Employees on or after October 1, 1995, the
Accrued Supplemental Benefit at any point prior to retirement shall equal the
amount determined under 4.01(a) multiplied by a fraction, the numerator of
<PAGE> 10
which is the Eligible Employees' actual number of years of Benefit Service
and the denominator of which is the greater of: (i) fifteen or (ii) the
total years of Benefit Service that he would havee completed if his
employment had continued until his Normal Retirement Date. Such amount shall
then reduced by the amounts determined under the remaining paragraphs of
Section 4.01.
4.05 Offset Amounts Fixed. The offset amounts described in Section 4.01
shall be determined as of the date the Eligible Employee retires or otherwise
terminates employment with the Company. No adjustments will be made after the
Eligible Employee's date of retirement or termination other than for
reasonable errors in calculating benefit amounts or for failure of an Eligible
Employee to meet his disclosure obligations under Section 4.06.
4.06 Disclosure. It shall be the obligation of each Eligible Employee to
disclose to the company any amounts to be used as offset amounts under Section
4.01. Such disclosure shall include information on annuity payments and lump-
sum cash payments from Qualified Plans. Payment of benefits hereunder shall
be conditioned on full disclosure of any such relevant amounts.
4.061 Noncompliance with Disclosure. Failure of an Eligible Employee to
comply with the preceding Section 4.06 shall entitle the Company to
restitution of amounts which were overpaid as a result of such noncompliance.
<PAGE> 11
ARTICLE V
FORMS AND TIME OF PAYMENT
5.01 Normal Form of Payment. Except as provided in Section 5.02 for a
married eligible Employee, the normal form of payment shall be an
annuity, payable monthly for life, commencing on the first day of the
month next following his retirement date and terminating with the payment
preceding his death; provided that if the Eligible Employee dies before he has
received benefits for one hundred and twenty months, the same monthly
benefit will be continued to the Eligible Employee's beneficiary until the
balance of such one hundred and twenty monthly payments have been paid,
either in a lump sum or on a monthly, basis as determined by the Company.
The Eligible Employee shall designate the beneficiary entitled to receive
payments under this Section 5.01. In the event that no designated beneficiary
survives a retired Eligible Employee and any payments remain to be made under
this Section 5.01 to a beneficiary, any such payment shall be made to the
Eligible Employee's spouse, if living, and if not, by right of representation
to his issue who survive him, and if none, to the executors or administrators
of his estate.
5.02 Joint and Survivor Annuity. If the Eligible Employee is married at the
time his benefits commence and his benefit under the Retirement Plan is to be
paid as a Joint and Survivor Annuity under such Retirement Plan, then the
Eligible Employee's retirement or vested benefit, instead of being paid under
the normal form of benefit described in Section 5.01, shall be paid in the
form of a Joint and Survivor Annuity under this Plan based upon the Actuarial
Equivalent of the Eligible Employee's benefit payable under Section 5.01,
subject to the conditions described in Sections 6.02, 6.021 and 6.022 of the
Retirement Plan.
5.03 Optional Forms. An Eligible Employee may elect to receive his benefit
under the Plan in any other form provided under the Retirement Plan. An
Eligible Employee's election of a form of payment and beneficiary designtion
under the Retirement Plan shall be deemed an election of the same form of
payment and beneficiary desigation under this Plan.
<PAGE> 12
5.04 Time of Payments. Payments under this Plan will commence at the same
time that payments commence under the Retirement Plan.
<PAGE> 13
6.01 Vested Benefit. An Eligible Employee whose employment terminates after
he has either, (a) reached age sixty-five, or (b) completed at least 10 years
of service as measured under the Retirement Plan shall be entitled to a
deferred vested benefit, in an amount equal to his Accrued Supplemental
Benefit. Such benefit shall commence on the Eligible Employee's Normal
Retirement Date.
6.011 Change in Control. In the event of a change in control, as defined in
he Trust Agreement (see Appendix C), Section 6.01 shall be applied by
substituting the number "5" for the number "10" where it appears in subpart
(b) thereof.
6.02 Early Commencement of Vested Benefit. An Eligible Employee who has
separated from service and is entitled to a Vested Benefit under 6.01 may
elect to have his benefit commence at any time after he reaches his fifty-
fifth birthdy and prior to his sixty-fifth birthday. In the event that
benefits commence prior to attainment of age sixty-five, the deferred vested
benefit shall be paid in an actuarially reduced amount. The provisions of
this Section 6.02 shall not apply to Eligible Employees who retire pursuant to
Section 4.02.
<PAGE> 14
ARTICLE VII
PRERETIREMENT DEATH BENEFITS
7.01 Death of Eligible Employee. If an Eligible Employee who is entitled to
a Vested Benefit under Section 6.01 dies prior to age sixty-five or his actual
retirement under the Retirement Plan, if later, a benefit shall be paid to his
surviving spouse or beneficiary. Such benefit shall be payable under this
Section 7.02 or 7.03 of this Plan, whichever is applicable, to such surviving
spouse or beneficiary in the same form and at the same time as the benefit
payable under the Retirement Plan to such surviving spouse or beneficiary.
7.02 Surviving Spouse Benefit. The surviving spouse of an Eligible Employee
who meets the requirements of Section 9.04 of the Retirement Plan shall be
eligible for a Surviving Spouse Benefit under this Plan. Such benefit shall
be equal to 50% of the amount payable under this Plan as if the Eligible
Employee had elected an Early Retirement Date on the first day of the month in
which he died and had been receiving a Joint and Survivor Annuity under
Section 5.02. The Surviving Spouse Benefit payable under this Plan to such
surviving spouse shall be paid in the same form and at the same time as the
benefit payable under the Retirement Plan to such surviving spouse.
7.03 Death Benefit. The beneficiary of an Eligible Employee who does not
meet the requirements for a Surviving Spouse Benefit set forth by Section 9.04
of the Retirement Plan shall be entitled to a death benefit from this Plan upon
the death of the Eligible Employee. Such benefit shall be equal to the amount
payable to a beneficiary as if the Eligible Employee had elected an Early
Retirement Date on the first day of the month in which he died and had been
receiving the Normal Form of Payment under Section 5.01.
7.04 Beneficiary Entitled to Payment. The spouse, or beneficiary, entitled to
payment benefits under this Article VII shall be the same spouse, or
beneficiary, entitled to the payment of benefits under Article IX of the
Retirement Plan.
<PAGE> 15
ARTICLE VIII
FUNDING
8.01 Funding. There is no fund associated with this Plan. The Company shall
be required to make payments only as benefits become due and payable. No
person shall have any right, other than the right of an unsecured general
creditor, against the Company with respect to the benefits payable hereunder,
or which may be payable hereunder, to any Employee, Eligible Employee,
surviving spouse or beneficiary hereunder. If the Company, acting on its sole
discretion establishes a reserve or other fund associated with this Plan, no
person shall have any right to or interest in any specific amount or asset of
such reserve or fund by reason of amounts which may be payable to such person
under this Plan, nor shall such person have any right to receive any payment
under this Plan except as and to the extent expressly provided in this Plan.
The assets in any such reserve or fund shall be subject to the control of the
Company, and need not be used to pay benefits hereunder.
8.02 Change in Control. In the event of a change in control as defined in
the Trust Agreement (see Appendix C), the Company shall establish (or continue
to maintain) a fund for the purpose of providing benefits hereunder. The
Company, or its successor, shall be obligated to deposit with the Trustee as
defined in the Trust Agreement (see Appendix C) all amounts required to fund
benefits under the Plan.
<PAGE> 16
ARTICLE IX
MISCELLANEOUS
9.01 Non-Guarantee of Employment. Nothing contained in this Plan shall be
construed as a contract of employment between the Company and any Employee or
Eligible Employee, or as a right of any such Employee or Eligible Employee to
be continued in the employment of the Company, or as a limitation on the right
of the Company to deal with any Employee or Eligible Employee, as to their
hiring, discharge, layoff, compensation, and all other conditions of
employment in all respects as though this Plan did not exist.
9.02 Rights Under Retirement Plan. Nothing in this Plan shall be construed
to limit, broaden, restrict, or grant any right to an Employee, Eligible
Employee, surviving spouse or any beneficiary thereof under the Retirement
Plan, nor to grant any additional rights to any such Employee, Eligible
Employee, surviving spouse or beneficiary thereof under the Retirement Plan,
nor in any way to limit, modify, repeal or otherwise affect the Company's
right to amend or modify the Retirement Plan.
9.03 Amendments/Termination. The Company reserves the right to make from time
time amendments to or terminate this Plan by vote duly adopted by the Board of
Directors, provided, however, that no such amendment or termination shall
Cause reduction or cessation of Supplemental Benefits which have commenced or
accrued prior to the effective date of such amendment or termination.
9.04 Nonassignability. The Supplemental Benefit payable under this Plan
shall not be subject to alienation, assignment, garnishment, execution or levy
of any kind and any attempt to cause any Supplemental Benefit to be so
subjected shall not be recognized, except to the extent required by applicable
law.
9.05 Plan Administration. The Plan shall be operated and administered by the
Board Directors or its duly authorized representative whose decision on all
matters involving interpretation and administration of the Plan shall be final
and binding. The claims procedures under this Plan shall be the same as those
specified under the Retirement Plan.
<PAGE> 17
9.06 Suspension of Benefits. Payment of benefits under this Plan to a
retired Eligible Employee who is re-employed by the Company may be suspended
as provided by Section 7.09 of the Retirement Plan. Upon such Eligible
Employee's subsequent retirement or termination of employment, his
Supplemental Benefit may be recomputed accumulating both periods
of employment and may be actuarially adjusted to reflect any benefit payments
previously made to the Eligible Emplovee. No deferral or suspension shall
be allowed if it is prohibited by any provision of applicable law.
9.07 Successor Company. In the event of the dissolution, merger,
consolidation or reorganization of the Company, provision shall
be made by which a successor to all or a major portion of the Company's
property or business shall be obligated to provide any and all benefits
accrued by members of the Plan as of the date of such dissolution, merger,
consolidation or reorganization. If a successor employer adopts the Plan,
said successor shall have all of the powers, duties and responsibilities of
the Company under the Plan.
9.08 Governing Law. This Plan shall be construed and enforced in accordance
with, and governed by, the laws of the State of New Hampshire.
IN WITNESS WHEREOF, EnergyNorth, Inc. has caused this instrument to be
executed in its name and on its behalf this 19th day of December 1996.
ENERGYNORTH, INC.
By: /s/ Robert R. Giordano
Robert R. Giordano
President and Chief
Executive Officer
<PAGE> 18
APPENDIX A
EnergyNorth, Inc. Supplemental Executive Retirement Plan
Covered Employees as of October 1, 1995
Actives Date Entered Plan
Michelle L. Chicoine 10/01/96
Frank L. Childs 10/01/96
Richard P. Demers 09/01/88
Robert R Giordano 01/01/85
Albert J. Hanlon 11/29/89
David A. Skrzysowski 01/01/85
Terminated Vested Date of Termination
Christopher P. Fleming 12/23/94
Michael J. Mancini, Jr. 06/30/96
Ronald A. Nichols 01/31/87
Retired Date of Retirement
Cedric H. Dustin. Jr. 10/01/88
George N. Mattaini 03/01/91
Clifford G. Ufford 06/01/85
<PAGE> 19
APPENDIX B
The following sections are excerpted from the EnergyNorth, Inc.
Retirement Plan for Salaried Employees and are incorporated by reference
into the EnergyNorth, Inc. Supplemental Executive Retirement Plan.
2.01 "Actuarial Equivalent" or any term or similar import, wherever used in
the Plan, to the exclusion of lump-sum payments as highlighted in Section
12.01, means a benefit of equivalent actuarial value, based upon the 1971
Group Annuity Mortality Table, weighted eighty-five percent (85%) male and
fifteen percent (15%) female and an interest rate of six percent (6%), applied
to all Members.
2.14 "Member" means any Employee of the Company who meets the requirements
for participation in the Plan as provided in Article IV.
3.05 Breaks in Service. Service shall not be considered broken due to:
(a) authorized leave of abence up to one (1) year;
(b) leave of absence to enter active service in the Armed Forces of
the United States, provided that the Employee returns to the
employ of the Company within the time and under the conditions
entitling him to reemployment rights under Federal law;
(c) layoff up to one (1) year;
(d) absence for any period during which an Employee is receiving
disability benefits under any long-term disability program
established by the Company, provided that such Member had reached
age forty-five (45) and
<PAGE> 20
completed ten (10) years of service at the time such disability
commenced. Such Employee shall continue to accrue benefits under
the Plan during the period of his long-term disability prior to
Normal Retirement Date. If such disability continues until the
Employee's Normal Retirement Date, his Normal Retirement Benefit
under the Plan shall commence as of such date in accordance with
the normal form of benefit described in Section 6.01 or Section
6.02, whichever is applicable, or any Optional Retirement
Benefit, if elected by the Employee, as set forth in Article X.
(e) absence due to Maternity or Paternity Leave of Absence, subject to
Section 3.04.
3.051 Service shall be deemed to be broken by absence due to the following:
provided, however, Service shall not be deemed broken during any Plan Year in
which an Employee has more than five hundred (500) Hours of Service:
(a) An Employee quits;
(b) An Employee retires;
(c) An Employee is discharged by the Company; or
(d) An Employee fails to return to the service of the Company after an
approved leave of absence or upon recall from layoff.
For purposes of the Plan, a "one-year break in Service" shall be deemed to
have occurred at the end of a Plan Year in which an Employee fails to
accumulate more than five hundred (500) Hours of Service.
<PAGE> 21
3.08 Benefit Service Prior to October 1, 1989. Benefit Service prior to
October 1, 1989 shall be credited in accordance with the provisions of the
Plan in effect at such time.
3.09 Benefit Service After October 1, 1989. Benefit Service is used to
determine an Employee's eligibility for early retirement and the amount of his
benefit under the Plan. An Employee's Benefit Service shall equal his
Service, excluding the following:
(a) absence in excess of one (1) ear due to industrial illness or
accident for which the Employee is receiving benefits under the
Workers Compensation law or any similar law;
(b) absence in military service in excess of the period for which
reemployment rights are guaranteed under Federal law and
(c) absence due to Maternity or Paternity Leave of Absence.
3.092 Change in Computation Period for Benefit Service. In the event that
the period which a year of Benefit Service is measured is changed and
the Member accumulates at least one thousand (1,000) Hours of Service during
the original year as well as in the amended year, he shall be credited with
two (2) years of Benefit Service.
3.10 Benefit Service Upon Reemployment. If an Employee is entitled to
reinstatement of his Service under Section 3.06, his Benefit Service for the
same period(s) of employment also shall be reinstated as of his reemployment
date.
9.02 Eligibility Requirements for Beneficiary Benefit. If an unmarried
Member or a married Member who does not satisfy the requirements of Section
9.03(b) below dies while in the Service of the Company but prior to his Normal
<PAGE> 22
Retirement Age, his Beneficiary shall be eligible to receive a Beneficiary
Benefit if the Member has fulfilled the following conditions:
(a) he has met the requirements for a Vested Benefit under Section
8.01; and
(b) his death occurs on or after October 1, 1989.
<PAGE> 23
APPENDIX C
The following sections are excerpted from Grantor Trust Agreement
for the EnergyNorth, Inc. Supplemental Executive Retirement Plan and are
incorporated by reference into the EnergyNorth, Inc. Supplemental Executive
Retirement Plan.
4.(c) "Change in 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 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 in
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
<PAGE> 24
office occurs as a result of either an actual or threatened
election contest (as such terms are sued 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
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,
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
<PAGE> 25
(4) Approval by the shareholders of the Company of (i) a complete
liquidation of dissolution of the Company or (ii) the sale
or other disposition of all or substantially a11 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 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
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.
4.(n) "Trustee" shall mean State Street Bank and Trust Company of New
Hampshire, N.A., or any other individual or entity appointed
by the Company to be the trustee of the Trust pursuant to this
Agreement.
AMENDMENT TO DEFERRED COMPENSATION AGREEMENT
Amendment, dated as of October 1, 1996, to Deferred
Compensation Agreement dated as of November 30, 1993,
("Agreement") by and between Robert R. Giordano ("Employee") and
ENERGYNORTH, INC. ("Company" or "ENI").
1. Recitals. The Employee and ENI are parties to the
Agreement, and each of them desires to amend the Agreement to
modify the rate of interest at which additional sums are credited
to the Deferred Compensation Account as defined in the Agreement.
2. Amendment. The Employee and ENI hereby agree to amend
Section 4(a)a. by deleting it in its entirety and replacing it
with the following:
a. ENI shall credit to the Deferred Compensation Account
at the end of each month during which any balance
remains in the Account, whether before or after
payments from the Account have commenced, an amount
which shall be the equivalent of interest on the
amounts credited to the Account throughout the previous
month computed at ENI's overall embedded cost of long-
term debt, plus 50 basis points, on the last day of the
preceding fiscal year of ENI; provided,however, the
rate shall not be less than nine percent (9%) or
greater than sixteen percent (16%).
3. Confirmation. Except as amended by this Amendment, the
provisions of the Agreement are ratified and confirmed and shall
remain in full force.
ENERGYNORTH, INC.
By:/s/ Michelle L. Chicoine
Michelle L. Chicoine,
duly authorized
EMPLOYEE
By:/s/ Robert R. Giordano
Robert R. Giordano
AMENDMENT TO DEFERRED COMPENSATION AGREEMENT
Amendment, dated as of October 1, 1996, to Deferred
Compensation Agreement dated as of November 30, 1993,
("Agreement") by and between Albert J. Hanlon ("Employee") and
ENERGYNORTH, INC. ("Company" or "ENI").
1. Recitals. The Employee and ENI are parties to the
Agreement, and each of them desires to amend the Agreement to
modify the rate of interest at which additional sums are credited
to the Deferred Compensation Account as defined in the Agreement.
2. Amendment. The Employee and ENI hereby agree to amend
Section 4(a)a. by deleting it in its entirety and replacing it
with the following:
a. ENI shall credit to the Deferred Compensation Account
at the end of each month during which any balance
remains in the Account, whether before or after
payments from the Account have commenced, an amount
which shall be the equivalent of interest on the
amounts credited to the Account throughout the previous
month computed at ENI's overall embedded cost of long-
term debt, plus 50 basis points, on the last day of the
preceding fiscal year of ENI; provided,however, the
rate shall not be less than nine percent (9%) or
greater than sixteen percent (16%).
3. Confirmation. Except as amended by this Amendment, the
provisions of the Agreement are ratified and confirmed and shall
remain in full force.
ENERGYNORTH, INC.
By:/s/ Robert R. Giordano
Robert R. Giordano,
duly authorized
EMPLOYEE
By:/s/ Albert J. Hanlon
Albert J. Hanlon
<PAGE> 1
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made as of November 30, 1993, by and between
ENERGYNORTH, INC. ("ENI") a New Hampshire corporation with a
principal place of business in Manchester, New Hampshire, and
Richard P. Demers of Manchester, New Hampshire ("Employee").
W I T N E S S E T H
WHEREAS, Employee is employed by ENI in an executive position
and performs valuable services to ENI in such position; and
WHEREAS, Employee possesses great ability in the gas
distribution business, an intimate knowledge of ENI, its operating
methods, personnel and goals; and
WHEREAS, ENI desires further to compensate Employee for past
services, to secure Employee's future services, to secure
Employee's commitment to furnish advisory services to ENI following
Employee's termination of employment by ENI and to compensate
Employee therefor;
NOW, THEREFORE, ENI and Employee mutually agree as follows:
1. ENI agrees to continue to employ Employee and Employee
agrees to continue to serve ENI devoting Employee's normal
working time to the interests and activities of ENI in the
capacity of Vice President, or such other capacity as the Board
of Directors of ENI from time to time may assign for the period
agreed between Employee and ENI.
2. During the term of Employee's employment,
Employee shall devote substantially all of Employee's time,
<PAGE> 2
attention, skill and efforts to the performance of Employee's
duties for ENI.
3. ENI shall pay Employee during the term of Employee's
employment such salary as the Board of Directors shall from time to time
determine, together with the deferred compensation
payable as provided in paragraph 4 below.
4. (a) ENI, on the last day of each month, commencing as of
January 1994, shall credit to a book reserve (the "Deferred
Compensation Account" or the "Account") in Employee's name
established for this purpose, the amount stated on the Deferred
Compensation Election Form; the amounts credited under
this Section 4(a) shall continue to be credited monthly during the
continuance of the Employee's employment hereunder.
In addition, EnergyNorth, Inc. shall credit to the account a
percentage or an amount of any cash incentive award paid to Employee
pursuant to the EnergyNorth, Inc. Key Employee Performance and
Equity Incentive Plan earned in connection with the 1994 Plan Year
and subsequent Plan Years.
a. ENI shall credit to the Deferred Compensation Account at the
end of each month during which any balance remains in the
Account, whether before or after payments from the Account
<PAGE> 3
have commenced, an amount which shall be the equivalent of
interest on the amounts credited to the Account throughout the
previous month computed at the prime rate reported by the Wall
Street Journal or, in its absence, an equivalent publication,
on the last day of each month; provided, however, the rate
shall not be less than eight percent (8%) or greater than
fifteen percent (15%).
(b) In addition, ENI shall pay to Employee, monthly over
the same period as specified in Section 6 below, an additional
amount of money equal to the monthly increase in the qualified
pension plan benefits to which Employee would then have been
entitled had the amount that was credited to the Deferred
Compensation Account under Section 4(a) above been paid to
Employee and had it qualified as "earnings" as defined in
ENI's qualified pension plan. Such additional payment shall
be payable only to the extent that such deferred compensation
hereunder does not qualify as "earnings" under ENI's qualified
pension plan and shall be payable only to the extent Employee
would otherwise have received greater pension benefits from
ENI's qualified pension plan. Such payments shall commence at
<PAGE> 4
the same time as the other payments hereunder. The amount due
shall be computed actuarially using the same assumptions as used
in the qualified pension plan.
(c) ENI is not required to fund this Agreement in any
way, but if it chooses to set aside funds for the Account, any
such funds may be kept in cash, or invested in
mutual funds, stocks, bonds, securities, or any other assets as
may be selected by the Board of Directors, in its discretion,
and also may be utilized by ENI from time to time for any other
purpose. Title to and beneficial ownership of any funds,
whether cash or investments, which ENI may earmark to pay the
contingent deferred compensation obligation hereunder, at all
times shall remain in ENI, and the Employee and Employee's
designated beneficiary shall not have any property interest
whatsoever in any such funds or in any specific assets of ENI.
5. Employee may change the amounts of Employee's salary to
be deferred under Section 4(a) above for the ensuing calendar
year by filing in writing with the Board of Directors of ENI
<PAGE> 5
not less than thirty (30) days prior to the end of the prior
calendar year, the amount of Employee's salary not yet earned
or paid that is to be deferred and credited to Employee's
Deferred Compensation Account. Employee may change the amounts
of Employee's Cash Incentive Award to be deferred under Section
4(a) above for ensuing plan years by filing in writing with the
Board of Directors of ENI not less than thirty (30) days prior
to the end of that Plan year, the percentage or amount of
Employee's cash incentive award not yet paid that is to be
deferred and credited to the Employee's Deferred Compensation
Account.
6. The benefits to be paid as deferred compensation are as follows:
(a) If the Employee's employment hereunder is terminated on or
after the Employee shall have reached the age of 65, ENI shall pay
to Employee in 15 annual installments the amount in Employee's
Deferred Compensation Account as of such date together with the
interest added pursuant to Section 4(b). The Account shall be
valued as of the date the first payment is to be made, one fifteenth
(1/15th) of that amount shall be paid in the first year and
that same amount shall be paid in the succeeding fourteen (14)
years. In addition, in each of the succeeding fourteen (14)
years, any interest credited to the Account with respect to the
previous year shall be paid with each annual payment. If the
Employee should die on or after Employee's 65th birthday and
before the 15 annual payments are made, the unpaid balance will
continue to be paid in installments for the unexpired portion
of such 15 year period to Employee's designated beneficiary in
the same amount as set forth above.
<PAGE> 6
(b) If the Employee's employment by ENI is terminated for any
reason other than death and disability but before the Employee shall
have reached the age of 65, no payments shall be made until the
Employee shall have reached the age of 65 at which time payments
shall be made in the same manner and to the same extent as set forth in
Section 6(a) above. Notwithstanding the foregoing, if prior to reaching
age 65 the Employee should die, or if prior to reaching age 65
Employee should become disabled, then payments shall be made in
the same manner and to the same extent as set forth in Section 6(c),
below.
(c) If the Employee's employment is terminated because of
disability or death before the Employee has reached the age of 65
and while in the employ of ENI, then ENI, during Employee's
disability, shall make annual payments not to exceed fifteen (15) to
the Employee or, in the event of Employee's death, make fifteen (15)
annual payments to Employee's designated beneficiary, all in the same
manner and to the same extent as provided herein.
(d) If both the Employee and Employee's designated
beneficiary should die before a total of fifteen (15) annual
payments are made by ENI, then the remaining amount in the
<PAGE> 7
Deferred Compensation Account shall be determined as of the date
of the death of the designated beneficiary and shall be paid, with
interest accrued to the date of payment, as promptly as possible
in one lump sum to the Employee's estate.
(e) The designated beneficiary (which may include alternate
beneficiaries) referred to in this paragraph may be designated or
changed by the Employee (without the consent of any prior
beneficiary) on a form provided by ENI and delivered by Employee to
ENI before Employee's death. If no such beneficiary shall have been
designated, or if no designated beneficiary shall survive the
Employee, the installment payments payable under this paragraph shall
be payable to the Employee's estate.
(f) For purposes of Section 6(c) above, disability is defined
as provided in any long-term disability plan of ENI covering
Employee, or, if none, as defined under the EnergyNorth Inc.
Retirement Plan for Salaried Employees.
(g) The installment payments to be made to the Employee under
Sections 6(a) and 6(c) above shall commence on the first day of the
month next following the date of the termination of Employee's
employment, and the installment payments to be made to the
<PAGE> 8
Employee under Section 6(b) above shall commence on the first day of
the month next following the date on which Employee shall have
reached the age of 65. The installment payments to be made to the
designated beneficiary under the provisions of this Section 6 shall
commence on a date to be selected by ENI but within six months from
the date of death of the Employee.
(h) Notwithstanding anything herein contained to the
contrary, the Board shall have the right, with the written
consent of Employee, to vary the manner and time of making the
installment distributions provided in this paragraph and may make
such distributions in lump sums or over a shorter period of time
than 15 years as it may find appropriate, but not over a longer
period of time than fifteen (15) years or less frequently then
once per year.
(i) The Board may, in its sole discretion, permit a
withdrawal of funds from a Participant's Account to meet a severe
financial hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or of a dependent
of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
<PAGE> 9
the Participant (an "Unforeseen Emergency") at such time and under
such circumstances as deemed by the Board to be an Unforeseen
Emergency. Distribution of funds from the Participant's Account
shall be in an amount sufficient only to meet the Unforeseen Emergency
presented by the Participant to the Board, and under no
circumstances may a participant's withdrawal of funds exceed
the amount required to satisfy the Unforeseen Emergency.
7. Employee is accorded the right by this Agreement to
defer receipt of compensation and earnings that, but for the
Employee's election, would be paid currently. The right to receive
payment of the amounts accrued shall vest absolutely and become
nonforfeitable on the crediting of such amount at the end of each
month. The obligation of ENI to make the payments shall not be excused
by any breach of this Agreement or of any other agreement between
Employee and ENI.
8. Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be
construed to create a trust of any kind, or a fiduciary
relationship between ENI and the Employee, Employee's designated
beneficiary or any other person. Any funds that may be invested
under the provision of this Agreement shall continue for all
purposes to be part of the general funds of ENI and no person other
than ENI shall by virtue of the provisions of this Agreement have
any interest in such funds. To the extent that any person acquires
<PAGE> 10
a right to receive payments from ENI under this Agreement, such
right shall be no greater than the right of any unsecured general
creditor of ENI.
9. The right of the Employee or any other person to the
payment of deferred compensation or other benefits under this
Agreement shall not be assigned, transferred, pledged or encumbered
except by will or by the laws of descent and distribution.
10. If the Board shall find that any person to whom any
payment is payable under this Agreement is unable to care for his or
her affairs because of illness or accident, or is a minor, any
payment due (unless a prior claim therefore shall have been made by
a duly appointed guardian, committee or other legal representative)
may be paid to the spouse, a child, a parent, or a brother or
sister, or to any person deemed by the Board to have incurred
expense for such person otherwise entitled to payment, in such
manner and proportions as the Board may determine. Any such payment
shall be a complete discharge of the liabilities of
ENI under this Agreement.
11. Nothing contained herein shall be construed as
conferring upon the Employee the right to continue in the employ
of ENI other than as stated in Section 1; provided, however, this
Agreement shall be construed to be consistent with an employment
agreement entered into between Employee and ENI.
12. Any deferred compensation payable under this Agreement
shall be deemed salary or other compensation to the Employee for
the purpose of computing benefits to which the Employee may be
<PAGE> 11
entitled under any pension plan, life insurance plan, or other
arrangement of ENI for the benefit of its employees, to the extent
allowable under the Internal Revenue Code or other applicable laws
and regulations, and the other plans and arrangements; provided,
however, the payments under Section 4(c) shall be made only to the
extent the deferred compensation may not be deemed salary or
"earnings" or other compensation under the qualified pension plan.
13. This Deferred Compensation Agreement constitutes the
entire agreement between the Employee and ENI with respect to its
subject matter and supercedes all previous agreements with respect
to such subject matter.
14. This Agreement shall be binding upon and inure to the
benefit of ENI, its successors and assigns, and Employee and
Employee's heirs, executors, administrators and legal
representatives.
IN WITNESS WHEREOF, ENI has caused this Agreement to be
executed and its seal to be affixed hereto by its agent thereunto
duly authorized, and Employee has signed this Agreement, all as of
the day and year first above written.
/s/ Richard. P Demers
Richard P. Demers
ENERGYNORTH, INC.
By: /s/ Robert R. Giordano
Robert R. Giordano
<PAGE>
AMENDMENT TO DEFERRED COMPENSATION
AGREEMENT
Amendment, dated as of October 1, 1996, to Deferred Compensation
Agreement dated as of November 30, 1993, ("Agreement") by and between
Richard P. Demers ("Employee") and ENERGYNORTH, INC. ("Company" or
"ENI").
1. Recitals. The Employee and ENI are parties to the Agreement, and each
of them desires to amend the Agreement to modify the rate of interest at
which additional sums are credited to the Deferred Compensation Account as
defined in the Agreement.
2. Amendment. The Employee and ENI hereby agree to amend Section
4(a)a. by deleting it in its entirety and replacing it with the following:
a. ENI shall credit to the Deferred Compensation Account at the
end of each month during which any balance remains in the Account, whether
before or after payments from the Account have commenced, an amount which
shall be the equivalent of interest on the amounts credited to the Account
throughout the previous month computed at ENI's overall embedded
cost of long-term debt, plus 50 basis points, on the last day of the
preceding fiscal year of ENI; provided, however, the rate shall not be less
than nine percent (9%) or greater than sixteen percent (16%).
3. Confirmation. Except as amended by this Amendment, the
provisions of the Agreement are ratified and confirmed and shall
remain in full force.
ENERGYNORTH, INC.
By: /s/ Robert R. Giordano
Robert R. Giordano,
duly authorized
EMPLOYEE
By: /s/ Richard P. Demers
Richard P. Demers
<PAGE> 1
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made as of November 30, 1995, by and between
ENERGYNORTH, INC. ("ENI") a New Hampshire corporation with a
principal place of business in Manchester, New Hampshire, and Frank
L. Childs of Manchester, New Hampshire ("Employee").
W I T N E S S E T H
WHEREAS, Employee is employed by ENI in an executive position
and performs valuable services to ENI in such position; and
WHEREAS, Employee possesses great ability in the gas
distribution business, an intimate knowledge of ENI, its operating
methods, personnel and goals; and
WHEREAS, ENI desires further to compensate Employee for past
services, to secure Employee's future services, to secure
Employee's commitment to furnish advisory services to ENI following
Employee's termination of employment by ENI and to compensate
Employee therefor;
NOW, THEREFORE, ENI and Employee mutually agree as follows:
1. ENI agrees to continue to employ Employee and Employee
agrees to continue to serve ENI devoting Employee's normal
working time to the interests and activities of ENI in the
capacity of Vice President, or such other capacity as the Board
of Directors of ENI from time to time may assign for the period
agreed between Employee and ENI.
2. During the term of Employee's employment,
Employee shall devote substantially all of Employee's time,
<PAGE> 2
attention, skill and efforts to the performance of Employee's
duties for ENI.
3. ENI shall pay Employee during the term of Employee's
employment such salary as the Board of Directors shall from time to time
determine, together with the deferred compensation
payable as provided in paragraph 4 below.
4. (a) ENI, on the last day of each month, commencing as of
January 1994, shall credit to a book reserve (the "Deferred
Compensation Account" or the "Account") in Employee's name
established for this purpose, the amount stated on the Deferred
Compensation Election Form; the amounts credited under this Section
4(a) shall continue to be credited monthly during the continuance of
the Employee's employment hereunder.
In addition, EnergyNorth, Inc. shall credit to the account a
percentage or an amount of any cash incentive award paid
to Employee pursuant to the EnergyNorth, Inc. Key
Employee Performance and Equity Incentive Plan earned in
connection with the 1994 Plan Year and subsequent Plan Years.
a. ENI shall credit to the Deferred Compensation Account at the
end of each month during which any balance remains in the
Account, whether before or after payments from the Account have
<PAGE> 3
commenced, an amount which shall be the equivalent of interest
on the amounts credited to the Account throughout the previous
month computed at the prime rate reported by the Wall Street
Journal or, in its absence, an equivalent publication, on the last
day of each month; provided, however, the rate shall not be
less than eight percent (8%) or greater than fifteen percent
(15%).
(b) In addition, ENI shall pay to Employee, monthly
over the same period as specified in Section 6 below, an
additional amount of money equal to the monthly increase in the
qualified pension plan benefits to which Employee would then have
been entitled had the amount that was credited to the Deferred
Compensation Account under Section 4(a) above been paid to
Employee and had it qualified as "earnings" as defined in ENI's
qualified pension plan. Such additional payment shall be payable
only to the extent that such deferred compensation hereunder does
not qualify as "earnings" under ENI's qualified pension plan and
shall be payable only to the extent Employee would otherwise have
received greater pension benefits from ENI's qualified pension
plan. Such payments shall commence at the same time as the
<PAGE> 4
other payments hereunder. The amount due shall be computed
actuarially using the same assumptions as used in the qualified
pension plan.
(c) ENI is not required to fund this
Agreement in any way, but if it chooses to set aside funds for
the Account, any such funds may be kept in cash, or invested in
mutual funds, stocks, bonds, securities, or any other assets as
may be selected by the Board of Directors, in its discretion,
and also may be utilized by ENI from time to time for any other
purpose. Title to and beneficial ownership of any funds,
whether cash or investments, which ENI may earmark to pay the
contingent deferred compensation obligation hereunder, at all
times shall remain in ENI, and the Employee and Employee's
designated beneficiary shall not have any property interest
whatsoever in any such funds or in any specific assets of ENI.
5. Employee may change the amounts of Employee's salary to
be deferred under Section 4(a) above for the ensuing calendar
year by filing in writing with the Board of Directors of ENI
not less than thirty (30) days prior to the end of the prior
calendar year, the amount of Employee's salary not yet earned
or paid that is to be deferred and credited to Employee's
Deferred Compensation Account. Employee may change the amounts
of Employee's Cash Incentive Award to be deferred under Section
4(a) above for ensuing plan years by filing in writing with the
<PAGE> 5
Board of Directors of ENI not less than thirty (30) days prior
to the end of that Plan year, the percentage or amount of
Employee's cash incentive award not yet paid that is to be
deferred and credited to the Employee's Deferred Compensation
Account.
6. The benefits to be paid as deferred compensation are as follows:
(a) If the Employee's employment hereunder is terminated on
or after the Employee shall have reached the age of 65, ENI shall
pay to Employee in 15 annual installments the amount in Employee's
Deferred Compensation Account as of such date together with the
interest added pursuant to Section 4(b). The Account shall be
valued as of the date the first payment is to be made, one fifteenth
(1/15th) of that amount shall be paid in the first year and
that same amount shall be paid in the succeeding fourteen (14)
years. In addition, in each of the succeeding fourteen (14)
years, any interest credited to the Account with respect to the
previous year shall be paid with each annual payment. If the
Employee should die on or after Employee's 65th birthday and
before the 15 annual payments are made, the unpaid balance will
continue to be paid in installments for the unexpired portion
of such 15 year period to Employee's designated beneficiary in
the same amount as set forth above.
<PAGE> 6
(b) If the Employee's employment by ENI is terminated for
any reason other than death and disability
but before the Employee shall have reached the age of 65, no
payments shall be made until the Employee shall have reached
the age of 65 at which time payments shall be made in the same
manner and to the same extent as set forth in Section 6(a)
above. Notwithstanding the foregoing, if prior to reaching age
65 the Employee should die, or if prior to reaching age 65
Employee should become disabled, then payments shall be made in
the same manner and to the same extent as set forth in Section 6(c),
below.
(c) If the Employee's employment is
terminated because of disability or death before the Employee has
reached the age of 65 and while in the employ of ENI, then ENI,
during Employee's disability, shall make annual payments not to
exceed fifteen (15) to the Employee or, in the event of Employee's
death, make fifteen (15) annual payments to Employee's designated
beneficiary, all in the same manner and to the same extent as
provided herein.
(d) If both the Employee and Employee's
designated beneficiary should die before a total of fifteen (15)
annual payments are made by ENI, then the remaining amount in the
<PAGE> 7
Deferred Compensation Account shall be determined as of the date
of the death of the designated beneficiary and shall be paid, with
interest accrued to the date of payment, as promptly as possible
in one lump sum to the Employee's estate.
(e) The designated beneficiary (which
may include alternate beneficiaries) referred to in this
paragraph may be designated or changed by the Employee (without
the consent of any prior beneficiary) on a form provided by ENI
and delivered by Employee to ENI before Employee's death. If no
such beneficiary shall have been designated, or if no designated
beneficiary shall survive the Employee, the installment payments
payable under this paragraph shall be payable to the Employee's
estate.
(f) For purposes of Section 6(c) above,
disability is defined as provided in any long-term disability
plan of ENI covering Employee, or, if none, as defined under the
EnergyNorth Inc. Retirement Plan for Salaried Employees.
(g) The installment payments to be made
to the Employee under Sections 6(a) and 6(c) above shall commence
on the first day of the month next following the date of the
termination of Employee's employment, and the installment payments
<PAGE> 8
to be made to the Employee under Section 6(b) above shall commence
on the first day of the month next following the date on which
Employee shall have reached the age of 65. The installment
payments to be made to the designated beneficiary under the
provisions of this Section 6 shall commence on a date to be
selected by ENI but within six months from the date of death of
the Employee.
(h) Notwithstanding anything herein contained
to the contrary, the Board shall have the right, with the written
consent of Employee, to vary the manner and time of making the
installment distributions provided in this paragraph and may make
such distributions in lump sums or over a shorter period of time
than 15 years as it may find appropriate, but not over a longer
period of time than fifteen (15) years or less frequently then
once per year.
(i) The Board may, in its sole
discretion, permit a withdrawal of funds from a Participant's
Account to meet a severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent of the Participant, loss of the
Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant (an "Unforeseen
<PAGE> 9
Emergency") at such time and under such circumstances as deemed by
the Board to be an Unforeseen Emergency. Distribution of funds
from the Participant's Account shall be in an amount sufficient
only to meet the Unforeseen Emergency presented by the Participant
to the Board, and under no circumstances may a participant's
withdrawal of funds exceed the amount required to satisfy the
Unforeseen Emergency.
7. Employee is accorded the right by this Agreement to
defer receipt of compensation and earnings that, but for the
Employee's election, would be paid currently. The right to receive
payment of the amounts accrued shall vest absolutely and become
nonforfeitable on the crediting of such amount at the end of each
month. The obligation of ENI to make the payments shall not be excused
by any breach of this Agreement or of any other agreement between
Employee and ENI.
8. Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be
construed to create a trust of any kind, or a fiduciary
relationship between ENI and the Employee, Employee's designated
beneficiary or any other person. Any funds that may be invested
under the provision of this Agreement shall continue for all
purposes to be part of the general funds of ENI and no person other
than ENI shall by virtue of the provisions of this Agreement have
any interest in such funds. To the extent that any person acquires
<PAGE> 10
a right to receive payments from ENI under this Agreement, such
right shall be no greater than the right of any unsecured general
creditor of ENI.
9. The right of the Employee or any other person to the
payment of deferred compensation or other benefits under this
Agreement shall not be assigned, transferred, pledged or encumbered
except by will or by the laws of descent and distribution.
10. If the Board shall find that any person to whom any
payment is payable under this Agreement is unable to care for his or
her affairs because of illness or accident, or is a minor, any
payment due (unless a prior claim therefore shall have been made by
a duly appointed guardian, committee or other legal representative)
may be paid to the spouse, a child, a parent, or a brother or
sister, or to any person deemed by the Board to have incurred
expense for such person otherwise entitled to payment, in such
manner and proportions as the Board may determine. Any such payment
shall be a complete discharge of the liabilities of
ENI under this Agreement.
11. Nothing contained herein shall be construed as
conferring upon the Employee the right to continue in the employ
of ENI other than as stated in Section 1; provided, however, this
Agreement shall be construed to be consistent with an employment
agreement entered into between Employee and ENI.
12. Any deferred compensation payable under this Agreement
shall be deemed salary or other compensation to the Employee for
the purpose of computing benefits to which the Employee may be
<PAGE> 11
entitled under any pension plan, life insurance plan, or other
arrangement of ENI for the benefit of its employees, to the extent
allowable under the Internal Revenue Code or other applicable laws
and regulations, and the other plans and arrangements; provided,
however, the payments under Section 4(c) shall be made only to the
extent the deferred compensation may not be deemed salary or
"earnings" or other compensation under the qualified pension plan.
13. This Deferred Compensation Agreement constitutes the
entire agreement between the Employee and ENI with respect to its
subject matter and supercedes all previous agreements with respect
to such subject matter.
14. This Agreement shall be binding upon and inure to the
benefit of ENI, its successors and assigns, and Employee and
Employee's heirs, executors, administrators and legal
representatives.
IN WITNESS WHEREOF, ENI has caused this Agreement to be
executed and its seal to be affixed hereto by its agent thereunto
duly authorized, and Employee has signed this Agreement, all as of
the day and year first above written.
/s/ Frank L. Childs
Frank L. Childs
ENERGYNORTH, INC.
By: /s/ Robert R. Giordano
Robert R. Giordano
<PAGE>
AMENDMENT TO DEFERRED COMPENSATION
AGREEMENT
Amendment, dated as of October 1, 1996, to Deferred Compensation
Agreement dated as of November 30, 1995, ("Agreement") by and between
Frank L. Childs ("Employee") and ENERGYNORTH, INC. ("Company" or
"ENI").
1. Recitals. The Employee and ENI are parties to the
Agreement, and each of them desires to amend the Agreement to modify the
rate of interest at which additional sums are credited to the Deferred
Compensation Account as defined in the Agreement.
2. Amendment. The Employee and ENI hereby agree to amend Section
4(a)a. by deleting it in its entirety and replacing it with the following:
a. ENI shall credit to the Deferred Compensation Account at the
end of each month during which any balance remains in the Account, whether
before or after payments from the Account have commenced, an amount which
shall be the equivalent of interest on the amounts credited to the Account
throughout the previous month computed at ENI's overall embedded
cost of long-term debt, plus 50 basis points, on the last day of the
preceding fiscal year of ENI; provided, however, the
rate shall not be less than nine percent (9%) or greater than sixteen
percent (16%).
3. Confirmation. Except as amended by this Amendment, the
provisions of the Agreement are ratified and confirmed and shall
remain in full force.
ENERGYNORTH, INC.
By:/s/ Robert R. Giordano
Robert R. Giordano,
duly authorized
EMPLOYEE
By:/s/ Frank L. Childs
Frank L. Childs
<PAGE> 1
DEFERRED COMPENSATION AGREEMENT
THIS AGREEMENT, made as of November 30, 1995, by and between
ENERGYNORTH, INC. ("ENI") a New Hampshire corporation with a
principal place of business in Manchester, New Hampshire, and
Michelle L. Chicoine of Bedford, New Hampshire ("Employee").
W I T N E S S E T H
WHEREAS, Employee is employed by ENI in an executive position
and performs valuable services to ENI in such position; and
WHEREAS, Employee possesses great ability in the gas
distribution business, an intimate knowledge of ENI, its operating
methods, personnel and goals; and
WHEREAS, ENI desires further to compensate Employee for past
services, to secure Employee's future services, to secure
Employee's commitment to furnish advisory services to ENI following
Employee's termination of employment by ENI and to compensate
Employee therefor;
NOW, THEREFORE, ENI and Employee mutually agree as follows:
1. ENI agrees to continue to employ Employee and Employee
agrees to continue to serve ENI devoting Employee's normal
working time to the interests and activities of ENI in the
capacity of Vice President and Treasurer, or such other
capacity as the Board of Directors of ENI from time to time may
assign for the period agreed between Employee and ENI.
2. During the term of Employee's employment, Employee
shall devote substantially all of Employee's time, attention,
<PAGE> 2
skill and efforts to the performance of Employee's duties for
ENI.
3. ENI shall pay Employee during the term of Employee's
employment such salary as the Board of Directors shall from
time to time determine, together with the deferred compensation
payable as provided in paragraph 4 below.
4. (a) ENI, on the last day of each month,
commencing as of January 1994, shall credit to a book reserve
(the "Deferred Compensation Account" or the "Account") in
Employee's name established for this purpose, the amount stated
on the Deferred Compensation Election Form; the amounts credited
under this Section 4(a) shall continue to be credited monthly
during the continuance of the Employee's employment hereunder.
In addition, EnergyNorth, Inc.
shall credit to the account a percentage or an
amount of any cash incentive award paid to
Employee pursuant to the EnergyNorth, Inc. Key
Employee Performance and Equity Incentive Plan
earned in connection with the 1994 Plan Year and
subsequent Plan Years.
a. ENI shall credit to the Deferred Compensation
Account at the end of each month during which any balance remains
in the Account, whether before or after payments from the Account
<PAGE> 3
have commenced, an amount which shall be the equivalent of
interest on the amounts credited to the Account throughout the
previous month computed at the prime rate reported by the Wall
Street Journal or, in its absence, an equivalent publication, on
the last day of each month; provided, however, the rate shall not
be less than eight percent (8%) or greater than fifteen percent
(15%).
(b) In addition, ENI shall pay to Employee, monthly
over the same period as specified in Section 6 below, an
additional amount of money equal to the monthly increase in the
qualified pension plan benefits to which Employee would then have
been entitled had the amount that was credited to the Deferred
Compensation Account under Section 4(a) above been paid to
Employee and had it qualified as "earnings" as defined in ENI's
qualified pension plan. Such additional payment shall be payable
only to the extent that such deferred compensation hereunder does
not qualify as "earnings" under ENI's qualified pension plan and
shall be payable only to the extent Employee would otherwise have
received greater pension benefits from ENI's qualified pension
plan. Such payments shall commence at the same time as the other
<PAGE> 4
payments hereunder. The amount due shall be computed actuarially
using the same assumptions as used in the qualified pension plan.
(c) ENI is not required to fund this Agreement in any way,
but if it chooses to set aside funds for the Account, any such funds
may be kept in cash, or invested in mutual funds, stocks, bonds,
securities, or any other assets as may be selected by the Board of
Directors, in its discretion, and also may be utilized by ENI from
time to time for any other purpose. Title to and beneficial
ownership of any funds, whether cash or investments, which ENI may
earmark to pay the contingent deferred compensation obligation
hereunder, at all times shall remain in ENI, and the Employee
and Employee's designated beneficiary shall not have any property
interest whatsoever in any such funds or in any specific assets of
ENI.
5. Employee may change the amounts of Employee's salary to
be deferred under Section 4(a) above for the ensuing calendar
year by filing in writing with the Board of Directors of ENI not less than
thirty (30) days prior to the end of the prior calendar year, the amount of
Employee's salary not yet earned or paid that is to be deferred and
credited to Employee's Deferred Compensation Account. Employee may change
the amounts of Employee's Cash Incentive Award to be deferred under Section
4(a) above for ensuing plan years by filing in writing with the Board of
<PAGE> 5
Directors of ENI not less than thirty (30) days prior to the end of that
Plan year, the percentage or amount of Employee's cash incentive award not
yet paid that is to be deferred and credited to the Employee's Deferred
Compensation Account.
6. The benefits to be paid as deferred compensation are as
follows:
(a) If the Employee's employment hereunder is
terminated on or after the Employee shall have reached the age of
65, ENI shall pay to Employee in 15 annual installments the amount
in Employee's Deferred Compensation Account as of such date
together with the interest added pursuant to Section 4(b). The
Account shall be valued as of the date the first payment is to be
made, one fifteenth (1/15th) of that amount shall be paid in the
first year and that same amount shall be paid in the succeeding
fourteen (14) years. In addition, in each of the succeeding
fourteen (14) years, any interest credited to the
Account with respect to the previous year shall be paid with each
annual payment. If the Employee should die on or after Employee's
65th birthday and before the 15 annual payments are made, the
unpaid balance will continue to be paid in installments for the
unexpired portion of such 15 year period to Employee's designated
beneficiary in the same amount as set forth above.
<PAGE> 6
(b) If the Employee's employment by ENI is terminated for
any reason other than death and disability but before the
Employee shall have reached the age of 65, no payments shall be
made until the Employee shall have reached the age of 65 at which
time payments shall be made in the same manner and to the same
extent as set forth in Section 6(a) above. Notwithstanding the
foregoing, if prior to reaching age 65 the Employee should die, or
if prior to reaching age 65 Employee should become disabled, then
payments shall be made in the same manner and to the same extent
as set forth in Section 6(c), below.
(c) If the Employee's employment is terminated because of
disability or death before the Employee has reached the age of 65
and while in the employ of ENI, then ENI, during Employee's
disability, shall make annual payments not to exceed fifteen (15)
to the Employee or, in the event of Employee's death, make fifteen
(15) annual payments to Employee's designated beneficiary, all in
the same manner and to the same extent as provided herein.
(d) If both the Employee and Employee's designated
beneficiary should die before a total of fifteen (15) annual
payments are made by ENI, then the remaining amount in the
<PAGE> 7
Deferred Compensation Account shall be determined as of the date
of the death of the designated beneficiary and shall be paid, with
interest accrued to the date of payment, as promptly as possible
in one lump sum to the Employee's estate.
(e) The designated beneficiary (which may include alternate
beneficiaries) referred to in this paragraph may be designated or
changed by the Employee (without the consent of any prior
beneficiary) on a form provided by ENI and delivered by Employee
to ENI before Employee's death. If no such beneficiary shall have
been designated, or if no designated beneficiary shall survive the
Employee, the installment payments payable under this paragraph
shall be payable to the Employee's estate.
(f) For purposes of Section 6(c) above, disability is
defined as provided in any long-term disability plan of ENI
covering Employee, or, if none, as defined under the EnergyNorth
Inc. Retirement Plan for Salaried Employees.
(g) The installment payments to be made to the Employee
under Sections 6(a) and 6(c) above shall commence on the first day
of the month next following the date of the termination of
Employee's employment, and the installment payments to be made to
<PAGE> 8
the Employee under Section 6(b) above shall commence on the first
day of the month next following the date on which Employee shall
have reached the age of 65. The installment payments to be made
to the designated beneficiary under the provisions of this Section
6 shall commence on a date to be selected by ENI but within six
months from the date of death of the Employee.
(h) Notwithstanding anything herein contained to the
contrary, the Board shall have the right, with the written consent
of Employee, to vary the manner and time of making the installment
distributions provided in this paragraph and may make such
distributions in lump sums or over a shorter period of time than
15 years as it may find appropriate, but not over a longer period
of time than fifteen (15) years or less frequently then
once per year.
(i) The Board may, in its sole discretion, permit a
withdrawal of funds from a Participant's Account to meet a severe
financial hardship to the Participant resulting from a sudden and
unexpected illness or accident of the Participant or of a
dependent of the Participant, loss of the Participant's property
due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
<PAGE> 9
the Participant (an "Unforeseen Emergency") at such time and under
such circumstances as deemed by the Board to be an Unforeseen
Emergency. Distribution of funds from the Participant's Account
shall be in an amount sufficient only to meet the Unforeseen
Emergency presented by the Participant to the Board, and under no
circumstances may a participant's withdrawal of funds exceed the
amount required to satisfy the Unforeseen Emergency.
7. Employee is accorded the right by this Agreement to
defer receipt of compensation and earnings that, but for the
Employee's election, would be paid currently. The right to receive
payment of the amounts accrued shall vest absolutely and become
nonforfeitable on the crediting of such amount at the end of each
month. The obligation of ENI to make the payments shall not be
excused by any breach of this Agreement or of any other agreement
between Employee and ENI.
8. Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be
construed to create a trust of any kind, or a fiduciary
relationship between ENI and the Employee, Employee's designated
beneficiary or any other person. Any funds that may be invested
under the provision of this Agreement shall continue for all
purposes to be part of the general funds of ENI and no person other
than ENI shall by virtue of the provisions of this Agreement have
any interest in such funds. To the extent that any person acquires
<PAGE> 10
a right to receive payments from ENI under this Agreement, such
right shall be no greater than the right of any unsecured general
creditor of ENI.
9. The right of the Employee or any other person to the
payment of deferred compensation or other benefits under this
Agreement shall not be assigned, transferred, pledged or encumbered
except by will or by the laws of descent and distribution.
10. If the Board shall find that any person to whom any
payment is payable under this Agreement is unable to care for his
or her affairs because of illness or accident, or is a minor, any
payment due (unless a prior claim therefore shall have been made by
a duly appointed guardian, committee or other legal representative)
may be paid to the spouse, a child, a parent, or a brother or
sister, or to any person deemed by the Board to have incurred
expense for such person otherwise entitled to payment, in such
manner and proportions as the Board may determine. Any such
payment shall be a complete discharge of the liabilities of ENI
under this Agreement.
11. Nothing contained herein shall be construed as
conferring upon the Employee the right to continue in the employ
of ENI other than as stated in Section 1; provided, however, this
Agreement shall be construed to be consistent with an employment
agreement entered into between Employee and ENI.
12. Any deferred compensation payable under this Agreement
shall be deemed salary or other compensation to the Employee for
the purpose of computing benefits to which the Employee may be
<PAGE> 11
entitled under any pension plan, life insurance plan, or other
arrangement of ENI for the benefit of its employees, to the extent
allowable under the Internal Revenue Code or other applicable laws
and regulations, and the other plans and arrangements; provided,
however, the payments under Section 4(c) shall be made only to the
extent the deferred compensation may not be deemed salary or
"earnings" or other compensation under the qualified pension plan.
13. This Deferred Compensation Agreement constitutes the
entire agreement between the Employee and ENI with respect to its
subject matter and supercedes all previous agreements with respect
to such subject matter.
14. This Agreement shall be binding upon and inure to the
benefit of ENI, its successors and assigns, and Employee and
Employee's heirs, executors, administrators and legal
representatives.
IN WITNESS WHEREOF, ENI has caused this Agreement to be
executed and its seal to be affixed hereto by its agent thereunto
duly authorized, and Employee has signed this Agreement, all as of
the day and year first above written.
/s/ Michelle L. Chicoine
Michelle L. Chicoine
ENERGYNORTH, INC.
By: /s/ Robert R. Giordano
Robert R. Giordano
<PAGE>
AMENDMENT TO DEFERRED COMPENSATION AGREEMENT
Amendment, dated as of October 1, 1996, to Deferred Compensation
Agreement dated as of November 30, 1993, ("Agreement") by and between Michelle
L. Chicoine ("Employee") and ENERGYNORTH, INC. ("Company" or "ENI").
1. Recitals. The Employee and ENI are parties to the Agreement, and
each of them desires to amend the Agreement to modify the rate of interest
at which additional sums are credited to the Deferred Compensation Account as
defined in the Agreement.
2. Amendment. The Employee and ENI hereby agree to amend Section
4(a)a. by deleting it in its entirety and replacing it with the following:
a. ENI shall credit to the Deferred Compensation Account at the end of
each month during which any balance remains in the Account, whether before or
after payments from the Account have commenced, an amount which shall be the
equivalent of interest on the amounts credited to the Account throughout the
previous month computed at ENI's overall embedded cost of long-term debt,
plus 50 basis points, on the last day of the preceding fiscal year of ENI;
provided, however, the rate shall not be less than nine percent (9%) or
greater than sixteen percent (16%).
3. Confirmation. Except as amended by this Amendment, the
provisions of the Agreement are ratified and confirmed and shall remain in
full force.
ENERGYNORTH, INC.
By:/s/ Robert R. Giordano
Robert R. Giordano,
duly authorized
EMPLOYEE
By:/s/ Michelle L. Chicoine
Michelle L. Chicoine
<PAGE>
ENERGYNORTH, INC.
1992 DIRECTORS' DEFERRED COMPENSATION PLAN
(As amended, as of October 1, 1996)
<PAGE>
ENERGYNORTH, INC.
1992 DIRECTORS' DEFERRED COMPENSATION PLAN
(As amended, as of October 1, 1996)
1. Name and Purpose. The name of this Plan is the "1992
Directors' Deferred Compensation Plan" (the "Plan"). The purpose
of the Plan is to provide Directors who are not employees of
EnergyNorth, Inc. (the "Company") or any of its subsidiaries the
opportunity to defer receipt of retainer or meeting income earned
for services rendered. The Plan is an unfunded deferred
compensation arrangement for purposes of federal taxation and for
purposes of Title I of the Employee Retirement Income Security
Act of 1974.
2. Definitions. For purposes of this Plan, the following
definitions shall be applicable:
a) The term "Board of Directors" shall mean the Board of
Directors of the Company.
b) The term "Committee" shall mean the Compensation Committee
of the Company's Board of Directors whose responsibility it shall
be to administer the Plan.
c) The term "Deferral Account" shall mean the cumulative amount
of a Participant's deferred compensation plus accumulated
interest and earnings.
<PAGE>
d) The term "Directors' Compensation" shall mean the annual
retainer, meeting and committee fee income earned by the
Participant for the Plan Year.
e) The term "Minimum Deferral Amount" shall mean $2,500.
f) The term "Participant" shall mean any Director of the
Company who is not in an employee of the Company or any of its
subsidiaries, and who has elected to defer part of his or her
Directors' Compensation for any year during which this Plan is in
effect.
g) The term "Plan Year" shall mean the calendar year concluding
December 31.
h) The term "Separation Date" shall mean the date of the
Participant's severance from the Company, its affiliates, or
successor organizations, by reason of the Participant's death,
retirement, disability, resignation, discharge, expiration of
term without reelection or otherwise.
i) The term "Unforseen Emergency" shall mean severe financial
hardship to the Participant resulting from a sudden and
<PAGE>
unexpected illness or accident of the Participant or of a
dependent of the Participant, loss of the Participant's property
due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
the Participant.
j) The term "Unforseen Emergency Payout" shall mean a
withdrawal of funds from a Deferred Account to meet an Unforeseen
Emergency to a Participant in the Plan, with the amount of such
withdrawal being limited to the amount required to satisfy the
emergency need.
3. Administration. The Board of Directors designates the
Committee to administer, construe and interpret this Plan.
The construction and interpretation by the Committee of any
provisions of this Plan shall be final, conclusive and
binding upon all parties, including the Company and the
Participants. No member of the Committee shall be liable for
any action taken or omitted or determination made in good faith
in connection with the administration of this Plan.
<PAGE>
4. Deferred Compensation Account. The Company shall establish
a Deferral Account for each Participant, which shall be a
bookkeeping account for purposes of recording the amounts
deferred according to the provisions of Section 5 and interest
and earnings thereon as set forth below.
The Company shall credit each Participant's Deferral
Account in the amount of the portion of the Director's
Compensation designated in the Participant's written
election described in Section 5. Such credit shall be made
at the time the payment to the Participant of the current
compensation would have been made if the Participant had not
elected deferral under this Plan.
Additionally, the Company shall credit each
Participant's Deferral Account at the end of each month
during which any balance remains in the Deferral Account,
whether before or after payments from the Deferral Account
have commenced, an amount equal to the balance in the
Participant's Deferral Account multiplied by ENI's overall
embedded cost of long-term debt, plus 50 basis points, on
the last day of the preceding fiscal year of ENI; provided,
<PAGE>
however, the rate shall not be less than nine percent (9%)
or greater than sixteen percent (16%).
The Company shall provide each Participant with an
annual statement setting forth the balance in his or her
Deferral Account as soon as practical following the close of
the Plan Year.
5. Participant's Election.
a) For each Plan Year beginning in 1993, a Participant may
elect to defer payment of all or a portion of his or her
Directors' Compensation that would have otherwise been paid for
services performed by the Participant during such Plan Year, by
filing a written election with the Committee at any time prior to
30 days prior the end of previous Plan Year. However, the amount
of Directors' Compensation a Participant may elect to defer
during any such Plan Year shall not be less than the Minimum
Deferral Amount nor will an amount greater than 100 percent of
the Participant's Director's Compensation for such Plan Year be
credited to the Director's Deferral Account.
<PAGE>
Notwithstanding the above, in the year
in which the Plan is first implemented, a Participant
may make a written election to defer compensation, for
services to be performed subsequent to the written
election, within thirty (30) days after the effective
date of the Plan. Further, in the first Plan Year in
which a Participant becomes eligible to participate in
the Plan, the newly eligible Participant may make a
written election to defer compensation, for services to
be performed subsequent to the written election, within
thirty (30) days after the Participant becomes
eligible.
b) A Participant's written election shall not be effective
unless the Participant also specifies the deferral term, by
reference to either a specific future date or the Participant's
Separation Date from the Company on which date Deferral Account
distributions will commence. The Participant shall also
designate on the written election whether amounts in the
Participant's Deferral Account shall be payable in a lump sum or
<PAGE>
in annual or monthly installments for ten (10) years in the
manner provided in Section 6.
c) Any election by a Participant to defer compensation under
this Section 5 shall be irrevocable except in the event of an
Unforseen Emergency Payout pursuant to Section 6.
6. Distribution of Deferral Account. Upon the earlier of a Participant's
Separation Date or attainment of the specified date indicated by the
Participant on the Participant's written election form, the Company shall pay
the amount in the Participant's Deferral Account to the Participant in a
lump sum or in annual or monthly installments for ten (10) years. Payments
made in installments shall be calculated by dividing the value of the Deferral
Account or portion of a Deferral Account to be distributed as of the date
that the first payment is to be made by the number of installments, and
distributing such amount at the date of each installment plus all interest
credited to such Deferral Account portion of such Deferral Account
from the date of the previous installment.
<PAGE>
The Committee may, in its sole discretion, permit an
Unforseen Emergency Payout to a Participant at such time and
under such circumstances as deemed by the Committee to be an
Unforseen Emergency. Distribution of funds from the
Participant's Deferral Account shall be in an amount sufficient
only to meet the Unforseen Emergency presented by the Participant
to the Committee. Under no circumstances may a Participant's
withdrawal of funds exceed the amount required to satisfy the
Unforseen Emergency.
7. Nature of Accounts and Plan Funding. The Deferral
Account shall exist only for the purpose of facilitating
the computation of benefits hereunder and nothing contained
in this Plan and no action taken pursuant to the
provisions of this Plan shall create or be construed to
create a trust or escrow of any kind, or a fiduciary
relationship between the Company and the Participant, a
Participant's designated beneficiary or any other
person. To the extent that any person acquires a right
to receive payments from the Company under this Plan,
such rights shall be no greater than the right of any
unsecured general creditor of the Company.
<PAGE>
The Company is not required to fund this Plan but may
choose to set aside funds for payment of amounts deferred, in its
sole discretion. Any such funds may be kept in cash, or invested
in mutual funds, stocks, bonds, securities, or any other assets
as may be selected by the Committee, in its discretion, and such
funds may be utilized by the Company from time to time for any
other purpose. Title to and beneficial ownership of any funds,
whether cash or investments, which the Company may set aside to
make payments pursuant to this Plan shall at all times remain in
the Company, no Participant shall have any property interest
whatsoever in any such funds or in any specific assets of the
Company.
8. Beneficiary Designation. A Participant may designate a
primary beneficiary or primary beneficiaries to receive all
amounts that are payable under Section 4 in the event of the
Participant's death and an alternate beneficiary or
alternate beneficiaries to receive such amounts in the event
of the deaths of all primary beneficiaries. If the
Participant designates such beneficiaries, payments of
<PAGE>
amounts due under Section 4 shall be made to the
beneficiaries in accordance with the Participant's written
election form described in Section 5. Such beneficiary
designation and any subsequent changes to it shall be made
in writing and delivered to the Committee. In the event the
Participant dies prior to receipt of the total Deferral
Account or Accounts and without so designating a beneficiary
or if there are no surviving beneficiaries, the balance of
the Participant's Deferral Account shall be paid to the
Participant's spouse, if living, otherwise to the
Participant's estate.
9. Non-Transferability. No right to payment under this Plan
shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance or charge and any attempt to
anticipate, alienate, sell, assign, pledge, encumber, attach
or charge the same shall be void.
If, at the time when payments are to be made under this
Plan, the Participant or the Participant's beneficiaries are
indebted to the Company, any payments remaining to be made may,
<PAGE>
at the discretion of the Company, be reduced by the amount of
such indebtedness. An election by the Company not to reduce such
payments shall not constitute a waiver of its claim for such
indebtedness.
10. Plan Interpretation. The Committee shall have full
power and authority to interpret, construe and
administer this Plan and the Committee's interpretations
and construction of the Plan and actions taken under
the Plan, including any valuation of the Deferral Account
or the amount or recipient of the payment to be made from
a Deferral Account, shall be binding and conclusive on all
persons for all purposes. No member of the Committee
shall be liable to any person for any action taken or
omitted in connection with the interpretation and
administration of this Plan unless attributable to
their own willful misconduct or lack of good faith.
11. Successors and Assigns. This Plan shall be binding upon and
inure to the benefit of the Company, its successors and
assigns, and the Participants and the Participants' heirs,
executors, administrators and legal representatives.
<PAGE>
12. Amendment and Termination. The Committee may, at its sole
discretion at any time, amend or terminate this Plan with
respect to any future period, and no such amendment or
termination shall reduce the Participant's benefits which had
accrued prior to such amendment or termination. Notice of
any such amendment or termination shall be given to the
Participants ninety (90) days before the effective date(s)
thereof.
13. Applicable Law. This Plan shall be construed in accordance
with and governed by the laws of the State of New Hampshire.
14. Effective Date. The Plan shall be effective as of the third
day of February, 1993.
IN WITNESS WHEREOF, the Company has caused this Plan to
be executed by its duly authorized officer, as of the 18th
day of November, 1992.
ENERGYNORTH, INC.
By:/s/ Robert R. Giordano
Robert R. Giordano
AMENDMENT NO. 1 TO CONSULTING AGREEMENT
THIS AGREEMENT made and entered into as of this 7th day of
February, 1996, by and between ENERGYNORTH, INC., a New Hampshire
Corporation with a principal place of business at 1260 Elm
Street, Manchester, New Hampshire ("ENI") and N. GEORGE MATTAINI
of Manchester, New Hampshire ("Consultant").
WHEREAS, ENI and the Consultant executed a Consulting
Agreement dated as of December 1, 1988 (the "Consulting
Agreement");
WHEREAS, the term of the Consulting Agreement expires on
March 1, 1996;
WHEREAS, ENI and the Consultant wish to extend the term of
the Consulting Agreement to December 31, 1996 and wish to provide
for an adjustment in the Consultant' compensation; and
WHEREAS, Section 10.6 of the Consulting Agreement provides
that the Consulting Agreement may be amended.
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, ENI and the Consultant, each
intending to be legally bound, agree as follows:
1. Term. The term specified in Section 2 of the
Consulting Agreement shall be extended such that the Consulting
Agreement shall expire on the 31st day of December, 1996.
2. Compensation. The Consultant shall continue to be paid
by ENI pursuant to Section 3.1 of the Consulting Agreement,
through February 29, 1996, at the rate of Five Thousand Dollars
($5,000.00) per month. Beginning on March 1, 1996, the
Consultant shall be paid by ENI at the rate of Fifteen Hundred
Dollars ($1,500.00) per month for the service provided under the
Consulting Agreement by the Consultant.
3. Remaining Provisions of Consulting Agreement.
Excepting the provisions of the Consulting Agreement modified by
this Agreement, the Consulting Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
ENERGYNORTH, INC.
By:/s/ Robert R. Giordano
Robert R. Giordano, President
/s/ N. George Mattaini
N. George Mattaini
<PAGE> 1
December 2, 1996
Michelle L. Chicoine
8 Boxwood Road
Bedford, NH 03110
Management Continuity Agreement
Dear Ms. Chicoine:
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
<PAGE> 2
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
<PAGE> 3
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
<PAGE> 4
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
<PAGE> 5
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
<PAGE> 6
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
<PAGE> 7
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
<PAGE> 8
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
<PAGE> 9
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
<PAGE> 10
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
<PAGE> 11
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.
<PAGE> 12
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"
<PAGE> 13
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
<PAGE> 14
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:
Michelle L. Chicoine
8 Boxwood Road
Bedford, NH 03110
If to the Company:
Vice President 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.
<PAGE> 15
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.
<PAGE> 16
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:/s/ Robert R. Giordano
Robert R. Giordano,
President and Chief
Executive Officer
Accepted and Agreed as of
the date first above
written:
/s/Michelle L. Chicoine
MICHELLE L. CHICOINE
<PAGE> 1
December 2, 1996
Frank L. Childs
100 Tiffany Lane
Manchester, NH 03104
Management Continuity Agreement
Dear Mr. Childs:
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
<PAGE> 2
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
<PAGE> 3
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
<PAGE> 4
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
<PAGE> 5
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
<PAGE> 6
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
<PAGE> 7
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
<PAGE> 8
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
<PAGE> 9
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
<PAGE> 10
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
<PAGE> 11
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.
<PAGE> 12
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"
<PAGE> 13
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
<PAGE> 14
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:
Frank L. Childs
100 Tiffany Lane
Manchester, NH 03104
If to the Company:
Vice President 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.
<PAGE> 15
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.
<PAGE> 16
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:/s/ Robert R. Giordano
Robert R. Giordano,
President and Chief
Executive Officer
Accepted and Agreed as of
the date first above
written:
/s/ Frank L. Childs
FRANK L. CHILDS
<PAGE> 1
December 7, 1995
Richard P. Demers
55 North Gate Road
Manchester, NH 03104
Management Continuity Agreement
Dear Mr. Demers:
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.
<PAGE> 2
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
<PAGE> 3
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: The term of this Agreement shall commence immediately
upon the date hereof and continue until December 1, 1997. At the
conclusion of the initial term this Agreement shall be deemed
automatically renewed for a two-year term and, unless notice of
nonrenewal is furnished by you or by the Company as provided
below, shall be automatically renewed in like fashion at the end
of that and each succeeding two-year term. Either party hereto
may provide written notice to the other of nonrenewal of this
Agreement, to take effect at the conclusion of any term of this
Agreement but in no event shall such nonrenewal take effect less
than two years from the date on which notice is given. Such
notice shall be furnished in accordance with Section 10 of this
Agreement.
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
<PAGE> 4
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
<PAGE> 5
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
<PAGE> 6
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
<PAGE> 7
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. Termination of Employment:
a. Terminations Which Give Rise to Severance Benefits
Under this Agreement.
i. Any termination of your employment by action of
the Company except for Cause (as defined below) or any
termination of your employment by you for Good Reason (as defined
below) within two years of a Change of Control shall entitle you
to the severance benefits set forth in Section 6 of this
Agreement.
ii. 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
<PAGE> 8
occurrence of such event and be entitled to the severance
benefits set forth in Section 6 of this Agreement:
(1) the Company assigns any duties to you which
diminish your position, duties, offices, titles,
responsibilities, reporting requirements or status with the
Company from that in effect 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
<PAGE> 9
(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 8, provided that such successor has received at least ten
days prior written notice from the Company or you of the
requirements of Section 8.
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.
iii. Notice of Termination. Any termination by the Company
for Cause, or by you without any reason during the Window Period
or for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with
Section 10. 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
<PAGE> 10
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).
iv. Date of Termination. "Date of Termination" means
(A) if your employment is terminated by the Company for Cause, or
by you during the Window Period or 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
<PAGE> 11
disability as provided under Section 5(b) of this Agreement, as
the case may be.
(b) Terminations Which Do Not Give Rise to
Severance Benefits Under This Agreement. If your employment is
terminated due to Cause, disability, or retirement (as those
terms are defined below), you shall not be entitled to severance
benefits under this Agreement, regardless of the occurrence of a
Change of Control.
(i) A termination for disability shall have
occurred where you are determined to have a disability under any
long-term disability policy of the Company which covers you, or,
<PAGE> 11
if none, as defined in the EnergyNorth, Inc. Retirement Plan for
Salaried Employees.
(ii) 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.
(iii) A termination for Cause
shall have occurred where you are terminated because of:
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.
6. Severance Benefits:
(a) Amount of Severance Benefits. If your employment is
terminated in circumstances described in Section 5(a) of this
Agreement, the Company shall pay you, within ten days of the date
such termination takes effect, a lump sum severance benefit in an
<PAGE> 12
amount determined with reference to the chart below in this
Subsection (a). For purposes of this Subsection, "Salary" shall
mean the amount of your salary as in effect immediately prior to
the Change of Control, including deferrals, plus the average of
the previous three years' annual incentive compensation award
earned under the EnergyNorth, Inc. Key Employee Performance and
Equity Incentive Plan. Any delayed payment shall include
interest at a rate of 150% of the Prime Rate posted by the Bank
of Boston.
Number of full years
of employment with Amount of
the Company severance benefit
One year 1.6 times Salary
Two years 1.7 times Salary
Three years 1.8 times Salary
Four years 1.9 times Salary
Five years or more The greater of: (a) 2.0 times Salary
or (b) 275% of the average aggregate
compensation paid by the Company or
any of its subsidiaries to you which was
includible in your gross income for federal
tax purposes for the five tax years ending
immediately prior to the Change of
Control.
(b) Other Benefits Payable. Except as required by
Subsection (c) below, 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 termination (and not contingent on any Change of
Control preceding such termination), including but not limited to
<PAGE> 13
accrued vacation or sick pay, amounts or benefits payable 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. You may elect to have any
life insurance, health plan, disability plan or similar plan
which was in effect immediately prior to your termination
extended for a period of one year beyond when your eligibility
for such plan would otherwise have ended, provided that (i) you
so notify the Company within five days of the Date of Termination
and (ii) the cost of extending your eligibility as described
above shall be subtracted from the first payment of your
severance benefit. The "cost" for this purpose shall be deemed
to be the most recent rate charged to employees of the Company or
its subsidiaries for such benefits.
(c) 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
<PAGE> 14
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.
(d) Payment Obligations Absolute. Except to the extent set
forth in Subsection (c) above, upon a Change of Control the
Company's obligations to pay the severance benefits or make any
other payments described in this Section 6 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.
(e) Legal Fees and Expenses. The Company agrees to pay to
you promptly, as incurred, to the full extent permitted by law,
all legal fees and expenses which you may reasonably incur as a
result of any contest (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 or any guarantee
of performance thereof (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 10%.
7. 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.
<PAGE> 15
8. 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.
9. 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.
10. 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:
<PAGE> 16
If to you:
Richard P. Demers
55 North Gate Road
Manchester, NH 03104
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.
11. 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.
12. 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
<PAGE> 17
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.
13. Withholding. The Company may withhold from any amounts
payable under this Agreement such Federal, state or local taxes
as shall be required to be withheld pursuant to any applicable
law or regulation.
14. Entire Agreement. This Agreement contains the entire
understanding of the Company and you with respect to the subject
matter hereof.
15. 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:/s/ Robert R. Giordano
Robert R. Giordano,
President and Chief
Executive Officer
Accepted and Agreed as of the
date first above written:
/s/ Richard P. Demers
RICHARD P. DEMERS
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 1, 1996,
included in EnergyNorth, Inc.'s Form 10-K for the year ended
September 30, 1996, and to all references to our firm included in
this registration statement.
/s/ Arthur Andersen LLP
Boston, Massachusetts
December 20, 1996
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ENERGYNORTH, INC. CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF
CAPITALIZATION AT SEPTEMBER 30, 1996 AND FROM THE CONSOLIDATED STATEMENT OF
INCOME AND STATEMENT OF CASH FLOWS FOR THE TWELVE MONTHS ENDED SEPTEMBER 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 91,546<F1>
<OTHER-PROPERTY-AND-INVEST> 7,748<F2>
<TOTAL-CURRENT-ASSETS> 22,472
<TOTAL-DEFERRED-CHARGES> 10,237
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 132,003
<COMMON> 3,239
<CAPITAL-SURPLUS-PAID-IN> 30,342
<RETAINED-EARNINGS> 11,586
<TOTAL-COMMON-STOCKHOLDERS-EQ> 45,167
0
0
<LONG-TERM-DEBT-NET> 29,525
<SHORT-TERM-NOTES> 9,535
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 2,090
0
<CAPITAL-LEASE-OBLIGATIONS> 46
<LEASES-CURRENT> 229
<OTHER-ITEMS-CAPITAL-AND-LIAB> 45,411
<TOT-CAPITALIZATION-AND-LIAB> 132,003
<GROSS-OPERATING-REVENUE> 88,954
<INCOME-TAX-EXPENSE> 3,635
<OTHER-OPERATING-EXPENSES> 76,372
<TOTAL-OPERATING-EXPENSES> 80,007
<OPERATING-INCOME-LOSS> 8,947
<OTHER-INCOME-NET> 907
<INCOME-BEFORE-INTEREST-EXPEN> 9,854
<TOTAL-INTEREST-EXPENSE> 3,776
<NET-INCOME> 6,078
0
<EARNINGS-AVAILABLE-FOR-COMM> 6,078
<COMMON-STOCK-DIVIDENDS> 3,827
<TOTAL-INTEREST-ON-BONDS> 2,721
<CASH-FLOW-OPERATIONS> 5,356
<EPS-PRIMARY> 1.89
<EPS-DILUTED> 0.00
<FN>
<F1>NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION OF $44.683 MILLION
<F2>NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION OF $8.422 MILLION
</FN>
</TABLE>
